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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¨
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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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2018 Annual Report | Northern Trust Corporation
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2018 Annual Report | Northern Trust Corporation
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8
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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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13.7
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%
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12.9
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%
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15.0
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%
|
14.1
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%
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16.9
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%
|
16.1
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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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7.0
|
%
|
The Northern Trust Company
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14.1
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%
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13.1
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%
|
14.1
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%
|
13.1
|
%
|
15.8
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%
|
14.8
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%
|
7.3
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%
|
7.3
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%
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6.4
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%
|
Minimum required ratio
|
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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%
|
6.0
|
%
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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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3.0
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%
|
“Well-capitalized” minimum ratios, as applicable
|
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Northern Trust Corporation
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N/A
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N/A
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6.0
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%
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6.0
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%
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10.0
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%
|
10.0
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%
|
N/A
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N/A
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N/A
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The Northern Trust Company
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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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3.0
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%
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2018 Annual Report | Northern Trust Corporation
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2018 Annual Report | Northern Trust Corporation
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2018 Annual Report | Northern Trust Corporation
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2018 Annual Report | Northern Trust Corporation
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14
2018 Annual Report | Northern Trust Corporation
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•
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Average Consolidated Balance Sheets with Analysis of Net Interest Income for the years ended
December 31, 2018
,
2017
and
2016
.
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•
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Changes in Net Interest Income for the years ended
December 31, 2018
and
2017
.
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•
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Remaining Maturity and Average Yield of Debt Securities Held to Maturity and Available for Sale as of
December 31, 2018
.
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•
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Remaining Maturity of Selected Loans and Leases as of
December 31, 2018
.
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•
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Distribution of Non-U.S. Loans by Type as of
December 31, 2018
,
2017
,
2016
,
2015
and
2014
.
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•
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Allowance for Credit Losses Relating to Non-U.S. Operations for the years ended
December 31, 2018
,
2017
,
2016
,
2015
and
2014
.
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•
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Analysis of Allowance for Credit Losses for the years ended
December 31, 2018
,
2017
,
2016
,
2015
and
2014
.
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•
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Average Deposits by Type as of
December 31, 2018
,
2017
and
2016
.
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•
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Distribution of Non-U.S. Deposits by Type as of
December 31, 2018
,
2017
and
2016
.
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•
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Remaining Maturity of Time Deposits $100,000 or More as of
December 31, 2018
.
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•
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Average Rates Paid on Interest-Related Deposits by Type for the years ended
December 31, 2018
,
2017
and
2016
.
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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, 2018
,
2017
,
2016
,
2015
and
2014
.
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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, 2018
,
2017
,
2016
,
2015
and
2014
.
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•
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Non-U.S. Outstandings as of
December 31, 2018
,
2017
and
2016
.
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•
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Purchased Funds as of
December 31, 2018
,
2017
and
2016
.
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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 debt securities as of
December 31, 2018
,
2017
and
2016
.
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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, 2018
,
2017
,
2016
,
2015
and
2014
.
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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, 2018
,
2017
,
2016
,
2015
and
2014
.
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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, 2018
and
2017
.
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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, 2018
and
2017
.
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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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2018 Annual Report | Northern Trust Corporation
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2018 Annual Report | Northern Trust Corporation
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18
2018 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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defects in product design or delivery;
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•
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difficulty in accurately pricing assets, which can be aggravated by market volatility and illiquidity and lack of reliable pricing from third-party vendors;
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2018 Annual Report | Northern Trust Corporation
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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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•
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external events that are wholly or partially beyond our control, such as natural disasters, pandemics, computer viruses, geopolitical events, political unrest or acts of terrorism.
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20
2018 Annual Report | Northern Trust Corporation
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2018 Annual Report | Northern Trust Corporation
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2018 Annual Report | Northern Trust Corporation
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2018 Annual Report | Northern Trust Corporation
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2018 Annual Report | Northern Trust Corporation
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2018 Annual Report | Northern Trust Corporation
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2018 Annual Report | Northern Trust Corporation
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2018 Annual Report | Northern Trust Corporation
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30
2018 Annual Report | Northern Trust Corporation
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2018 Annual Report | Northern Trust Corporation
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32
2018 Annual Report | Northern Trust Corporation
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2018 Annual Report | Northern Trust Corporation
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34
2018 Annual Report | Northern Trust Corporation
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PERIOD
|
TOTAL NUMBER OF SHARES PURCHASED
|
|
AVERAGE PRICE PAID PER SHARE
|
|
TOTAL NUMBER OF SHARES PURCHASED AS PART OF A PUBLICLY ANNOUNCED PLAN (1)
|
|
MAXIMUM NUMBER OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLAN
|
|
|
October 1 - 31, 2018
|
797,315
|
|
$
|
97.04
|
|
797,315
|
|
22,085,658
|
|
November 1 - 30, 2018
|
545,459
|
|
96.25
|
|
545,459
|
|
21,540,199
|
|
|
December 1 - 31, 2018
|
1,139,328
|
|
88.53
|
|
1,139,328
|
|
20,400,871
|
|
|
|
|
|
|
|
|||||
Total (Fourth Quarter)
|
2,482,102
|
|
$
|
92.96
|
|
2,482,102
|
|
20,400,871
|
|
|
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2018 Annual Report | Northern Trust Corporation
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DECEMBER 31,
|
|||||||||||||||||
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
||||||
Northern Trust
|
$
|
100
|
|
$
|
111
|
|
$
|
121
|
|
$
|
153
|
|
$
|
174
|
|
$
|
149
|
|
S&P 500
|
100
|
|
114
|
|
115
|
|
129
|
|
157
|
|
150
|
|
||||||
KBW Bank Index
|
100
|
|
109
|
|
110
|
|
141
|
|
167
|
|
138
|
|
|
|
|
36
2018 Annual Report | Northern Trust Corporation
|
|
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
|||||
FOR THE YEAR ENDED DECEMBER 31,
|
|
|
|
|
|
||||||||||
CONDENSED STATEMENTS OF INCOME (In Millions)
|
|
|
|
|
|
||||||||||
Noninterest Income
|
$
|
4,337.5
|
|
$
|
3,946.1
|
|
$
|
3,726.9
|
|
$
|
3,632.5
|
|
$
|
3,325.7
|
|
Net Interest Income
|
1,622.7
|
|
1,429.2
|
|
1,234.9
|
|
1,070.1
|
|
1,005.5
|
|
|||||
Total Revenue
|
$
|
5,960.2
|
|
$
|
5,375.3
|
|
$
|
4,961.8
|
|
$
|
4,702.6
|
|
$
|
4,331.2
|
|
Provision for Credit Losses
|
(14.5
|
)
|
(28.0
|
)
|
(26.0
|
)
|
(43.0
|
)
|
6.0
|
|
|||||
Noninterest Expense
|
4,016.9
|
|
3,769.4
|
|
3,470.7
|
|
3,280.6
|
|
3,135.0
|
|
|||||
Income before Income Taxes
|
$
|
1,957.8
|
|
$
|
1,633.9
|
|
$
|
1,517.1
|
|
$
|
1,465.0
|
|
$
|
1,190.2
|
|
Provision for Income Taxes
|
401.4
|
|
434.9
|
|
484.6
|
|
491.2
|
|
378.4
|
|
|||||
Net Income
|
$
|
1,556.4
|
|
$
|
1,199.0
|
|
$
|
1,032.5
|
|
$
|
973.8
|
|
$
|
811.8
|
|
Preferred Stock Dividends
|
46.4
|
|
49.8
|
|
23.4
|
|
23.4
|
|
9.5
|
|
|||||
Net Income Applicable to Common Stock
|
$
|
1,510.0
|
|
$
|
1,149.2
|
|
$
|
1,009.1
|
|
$
|
950.4
|
|
$
|
802.3
|
|
|
|
|
|
|
|
||||||||||
PER COMMON SHARE
|
|
|
|
|
|
||||||||||
Net Income – Basic
|
$
|
6.68
|
|
$
|
4.95
|
|
$
|
4.35
|
|
$
|
4.03
|
|
$
|
3.34
|
|
– Diluted
|
6.64
|
|
4.92
|
|
4.32
|
|
3.99
|
|
3.32
|
|
|||||
Cash Dividends Declared Per Common Share
|
1.94
|
|
1.60
|
|
1.48
|
|
1.41
|
|
1.30
|
|
|||||
Book Value – End of Period (EOP)
|
43.95
|
|
41.28
|
|
38.88
|
|
36.27
|
|
34.54
|
|
|||||
Market Price – EOP
|
83.59
|
|
99.89
|
|
89.05
|
|
72.09
|
|
67.40
|
|
|||||
|
|
|
|
|
|
||||||||||
SELECTED BALANCE SHEET DATA (In Millions)
|
|
|
|
|
|
||||||||||
At Year End:
|
|
|
|
|
|
||||||||||
Earning Assets
|
$
|
122,847.3
|
|
$
|
129,656.6
|
|
$
|
115,446.4
|
|
$
|
106,848.9
|
|
$
|
100,889.8
|
|
Total Assets
|
132,212.5
|
|
138,590.5
|
|
123,926.9
|
|
116,749.6
|
|
109,946.5
|
|
|||||
Deposits
|
104,496.8
|
|
112,390.8
|
|
101,651.7
|
|
96,868.9
|
|
90,757.0
|
|
|||||
Senior Notes
|
2,011.3
|
|
1,497.3
|
|
1,496.6
|
|
1,497.4
|
|
1,497.0
|
|
|||||
Long-Term Debt
|
1,112.4
|
|
1,449.5
|
|
1,330.9
|
|
1,371.3
|
|
1,615.1
|
|
|||||
Stockholders’ Equity
|
10,508.3
|
|
10,216.2
|
|
9,770.4
|
|
8,705.9
|
|
8,448.9
|
|
|||||
Average Balances:
|
|
|
|
|
|
||||||||||
Earning Assets
|
$
|
113,731.0
|
|
$
|
111,178.3
|
|
$
|
107,037.6
|
|
$
|
102,249.8
|
|
$
|
95,947.5
|
|
Total Assets
|
122,946.6
|
|
119,607.4
|
|
115,570.3
|
|
110,715.1
|
|
104,083.5
|
|
|||||
Deposits
|
95,103.1
|
|
96,504.8
|
|
93,613.9
|
|
90,768.0
|
|
84,656.6
|
|
|||||
Senior Notes
|
1,704.0
|
|
1,496.9
|
|
1,496.6
|
|
1,497.2
|
|
1,661.2
|
|
|||||
Long-Term Debt
|
1,296.8
|
|
1,519.4
|
|
1,392.4
|
|
1,426.4
|
|
1,654.9
|
|
|||||
Stockholders’ Equity
|
10,228.9
|
|
9,980.6
|
|
9,085.3
|
|
8,624.5
|
|
8,166.5
|
|
|||||
|
|
|
|
|
|
||||||||||
CLIENT ASSETS (In Billions)
|
|
|
|
|
|
||||||||||
Assets Under Custody/Administration
|
$
|
10,125.3
|
|
$
|
10,722.6
|
|
$
|
8,541.3
|
|
$
|
7,797.0
|
|
N/A
|
|
|
Assets Under Custody
|
7,593.9
|
|
8,084.6
|
|
6,720.5
|
|
6,072.1
|
|
5,968.8
|
|
|||||
Assets Under Management
|
1,069.4
|
|
1,161.0
|
|
942.4
|
|
875.3
|
|
934.1
|
|
|||||
|
|
|
|
|
|
||||||||||
SELECTED RATIOS AND METRICS
|
|
|
|
|
|
||||||||||
Financial Ratios and Metrics:
|
|
|
|
|
|
||||||||||
Return on Average Common Equity
|
16.2
|
%
|
12.6
|
%
|
11.9
|
%
|
11.5
|
%
|
10.0
|
%
|
|||||
Return on Average Assets
|
1.27
|
|
1.00
|
|
0.89
|
|
0.88
|
|
0.78
|
|
|||||
Dividend Payout Ratio
|
29.2
|
|
32.5
|
|
34.3
|
|
35.3
|
|
39.2
|
|
|||||
Net Interest Margin
(*)
|
1.46
|
|
1.33
|
|
1.18
|
|
1.07
|
|
1.08
|
|
|||||
Average Stockholders’ Equity to Average Assets
|
8.3
|
|
8.3
|
|
7.9
|
|
7.8
|
|
7.8
|
|
Capital Ratios:
|
DECEMBER 31,
2018 |
DECEMBER 31,
2017 |
DECEMBER 31,
2016 |
DECEMBER 31,
2015 |
DECEMBER 31,
2014 |
|||||||||||||||
|
ADVANCED
APPROACH
|
STANDARDIZED
APPROACH
(a)
|
ADVANCED
APPROACH
|
STANDARDIZED
APPROACH
(a)
|
ADVANCED
APPROACH
|
STANDARDIZED
APPROACH
(a)
|
ADVANCED
APPROACH
|
STANDARDIZED
APPROACH (a) |
ADVANCED
APPROACH
|
STANDARDIZED
APPROACH (a) |
||||||||||
Common Equity Tier 1
|
13.7
|
%
|
12.9
|
%
|
13.5
|
%
|
12.6
|
%
|
12.4
|
%
|
11.8
|
%
|
11.9
|
%
|
10.8
|
%
|
12.4
|
%
|
12.5
|
%
|
Tier 1
|
15.0
|
|
14.1
|
|
14.8
|
|
13.8
|
|
13.7
|
|
12.9
|
|
12.5
|
|
11.4
|
|
13.2
|
|
13.3
|
|
Total
|
16.9
|
|
16.1
|
|
16.7
|
|
15.8
|
|
15.1
|
|
14.5
|
|
14.2
|
|
13.2
|
|
15.0
|
|
15.5
|
|
Tier 1 Leverage
|
8.0
|
|
8.0
|
|
7.8
|
|
7.8
|
|
8.0
|
|
8.0
|
|
7.5
|
|
7.5
|
|
N/A
|
|
7.8
|
|
Supplementary Leverage
(b)
|
7.0
|
|
N/A
|
|
6.8
|
|
N/A
|
|
6.8
|
|
N/A
|
|
6.2
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
37
|
|
|
|
38
2018 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
39
|
n
|
|
63% Trust, Investment and Other Servicing Fees
|
|
|
|
n
|
|
27% Net Interest Income
|
|
|
|
n
|
|
5% Foreign Exchange Trading Income
|
|
|
|
n
|
|
5% Other Noninterest Income
|
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2018
|
|
2017
|
|
2016
|
|
2018 / 2017
|
|
2017 / 2016
|
|
|||
Trust, Investment and Other Servicing Fees
|
$
|
3,753.7
|
|
$
|
3,434.3
|
|
$
|
3,108.1
|
|
9
|
%
|
10
|
%
|
Foreign Exchange Trading Income
|
307.2
|
|
209.9
|
|
236.6
|
|
46
|
|
(11
|
)
|
|||
Treasury Management Fees
|
51.8
|
|
56.4
|
|
62.8
|
|
(8
|
)
|
(10
|
)
|
|||
Security Commissions and Trading Income
|
98.3
|
|
89.6
|
|
81.4
|
|
10
|
|
10
|
|
|||
Other Operating Income
|
127.5
|
|
157.5
|
|
241.2
|
|
(19
|
)
|
(35
|
)
|
|||
Investment Security Losses, net
|
(1.0
|
)
|
(1.6
|
)
|
(3.2
|
)
|
(33
|
)
|
(50
|
)
|
|||
|
|
|
|
|
|
||||||||
Total Noninterest Income
|
$
|
4,337.5
|
|
$
|
3,946.1
|
|
$
|
3,726.9
|
|
10
|
%
|
6
|
%
|
|
DAILY AVERAGES
|
YEAR-END
|
||||||||||
|
2018
|
|
2017
|
|
CHANGE
|
|
2018
|
|
2017
|
|
CHANGE
|
|
|
|
|
|
|
|
|
||||||
S&P 500
|
2,746
|
|
2,448
|
|
12
|
%
|
2,507
|
|
2,674
|
|
(6
|
)%
|
MSCI EAFE (U.S. dollars)
|
1,966
|
|
1,886
|
|
4
|
|
1,720
|
|
2,051
|
|
(16
|
)
|
MSCI EAFE (local currency)
|
1,125
|
|
1,105
|
|
2
|
|
1,008
|
|
1,164
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
40
2018 Annual Report | Northern Trust Corporation
|
|
|
|
AS OF DECEMBER 31,
|
|||||
|
2018
|
|
2017
|
|
CHANGE
|
|
|
|
|
|
|||
Barclays Capital U.S. Aggregate Bond Index
|
2,047
|
|
2,046
|
|
—
|
%
|
Barclays Capital Global Aggregate Bond Index
|
479
|
|
485
|
|
(1
|
)
|
|
|
|
|
|
DECEMBER 31,
|
|
CHANGE
|
|||||||||||||
($ In Billions)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2018 /2017
|
|
2017 /2016
|
|
||||
Corporate & Institutional
|
$
|
9,490.5
|
|
$
|
10,066.8
|
|
$
|
7,987.0
|
|
$
|
7,279.7
|
|
(6
|
)%
|
26
|
%
|
Wealth Management
|
634.8
|
|
655.8
|
|
554.3
|
|
517.3
|
|
(3
|
)
|
18
|
|
||||
|
|
|
|
|
|
|
||||||||||
Total Assets Under Custody/Administration
|
$
|
10,125.3
|
|
$
|
10,722.6
|
|
$
|
8,541.3
|
|
$
|
7,797.0
|
|
(6
|
)%
|
26
|
%
|
|
DECEMBER 31,
|
CHANGE
|
FIVE-YEAR
COMPOUND
GROWTH
RATE
|
|
|||||||||||||||||
($ In Billions)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2018 /2017
|
|
2017 / 2016
|
|
|
||||||
Corporate & Institutional
|
$
|
6,971.0
|
|
$
|
7,439.1
|
|
$
|
6,176.9
|
|
$
|
5,565.8
|
|
$
|
5,453.1
|
|
(6
|
)%
|
20
|
%
|
7
|
%
|
Wealth Management
|
622.9
|
|
645.5
|
|
543.6
|
|
506.3
|
|
515.7
|
|
(4
|
)
|
19
|
|
5
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Assets Under Custody
|
$
|
7,593.9
|
|
$
|
8,084.6
|
|
$
|
6,720.5
|
|
$
|
6,072.1
|
|
$
|
5,968.8
|
|
(6
|
)%
|
20
|
%
|
6
|
%
|
|
DECEMBER 31,
|
|||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
Equities
|
45
|
%
|
47
|
%
|
46
|
%
|
44
|
%
|
45
|
%
|
Fixed Income Securities
|
37
|
|
35
|
|
36
|
|
37
|
|
36
|
|
Cash and Other Assets
|
16
|
|
16
|
|
17
|
|
17
|
|
17
|
|
Securities Lending Collateral
|
2
|
|
2
|
|
1
|
|
2
|
|
2
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
41
|
|
DECEMBER 31,
|
CHANGE
|
FIVE-YEAR
COMPOUND
GROWTH
RATE
|
|
|||||||||||||||||
($ In Billions)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2018 / 2017
|
|
2017 / 2016
|
|
|
||||||
Corporate & Institutional
|
$
|
790.8
|
|
$
|
871.2
|
|
$
|
694.0
|
|
$
|
648.0
|
|
$
|
709.6
|
|
(9
|
)%
|
26
|
%
|
4
|
%
|
Wealth Management
|
278.6
|
|
289.8
|
|
248.4
|
|
227.3
|
|
224.5
|
|
(4
|
)
|
17
|
|
5
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Assets Under Management
|
$
|
1,069.4
|
|
$
|
1,161.0
|
|
$
|
942.4
|
|
$
|
875.3
|
|
$
|
934.1
|
|
(8
|
)%
|
23
|
%
|
4
|
%
|
|
DECEMBER 31,
|
|||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
Equities
|
50
|
%
|
51
|
%
|
51
|
%
|
51
|
%
|
52
|
%
|
Fixed Income Securities
|
17
|
|
16
|
|
17
|
|
17
|
|
17
|
|
Cash and Other Assets
|
19
|
|
19
|
|
20
|
|
20
|
|
18
|
|
Securities Lending Collateral
|
14
|
|
14
|
|
12
|
|
12
|
|
13
|
|
|
DECEMBER 31,
|
|||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
Index
|
49
|
%
|
46
|
%
|
47
|
%
|
47
|
%
|
49
|
%
|
Active
|
38
|
|
41
|
|
40
|
|
40
|
|
39
|
|
Multi-Manager
|
5
|
|
5
|
|
5
|
|
4
|
|
6
|
|
Other
|
8
|
|
8
|
|
8
|
|
9
|
|
6
|
|
|
|
|
42
2018 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2018
|
|
2017
|
|
2016
|
|
2018 / 2017
|
|
2017 / 2016
|
|
|||
Loan Service Fees
|
$
|
48.9
|
|
$
|
50.7
|
|
$
|
56.6
|
|
(4
|
)%
|
(10
|
)%
|
Banking Service Fees
|
46.4
|
|
48.6
|
|
50.6
|
|
(5
|
)
|
(4
|
)
|
|||
Other Income
|
32.2
|
|
58.2
|
|
134.0
|
|
(44
|
)
|
(57
|
)
|
|||
|
|
|
|
|
|
||||||||
Total Other Operating Income
|
$
|
127.5
|
|
$
|
157.5
|
|
$
|
241.2
|
|
(19
|
)%
|
(35
|
)%
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
43
|
|
|
|
44
2018 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2018
|
|
2017
|
|
2016
|
|
2018 / 2017
|
|
2017 / 2016
|
|
|||
Compensation
|
$
|
1,806.9
|
|
$
|
1,733.7
|
|
$
|
1,541.1
|
|
4
|
%
|
13
|
%
|
Employee Benefits
|
356.7
|
|
319.9
|
|
293.3
|
|
12
|
|
9
|
|
|||
Outside Services
|
739.4
|
|
668.4
|
|
627.1
|
|
11
|
|
7
|
|
|||
Equipment and Software
|
582.2
|
|
524.0
|
|
467.4
|
|
11
|
|
12
|
|
|||
Occupancy
|
201.1
|
|
191.8
|
|
177.4
|
|
5
|
|
8
|
|
|||
Other Operating Expense
|
330.6
|
|
331.6
|
|
364.4
|
|
—
|
|
(9
|
)
|
|||
|
|
|
|
|
|
||||||||
Total Noninterest Expense
|
$
|
4,016.9
|
|
$
|
3,769.4
|
|
$
|
3,470.7
|
|
7
|
%
|
9
|
%
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
45
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2018
|
|
2017
|
|
2016
|
|
2018 / 2017
|
|
2017 / 2016
|
|
|||
Business Promotion
|
$
|
98.3
|
|
$
|
95.4
|
|
$
|
83.6
|
|
3
|
%
|
14
|
%
|
FDIC Insurance Premiums
|
27.4
|
|
34.7
|
|
31.7
|
|
(21
|
)
|
9
|
|
|||
Staff Related
|
33.6
|
|
42.8
|
|
43.0
|
|
(22
|
)
|
(1
|
)
|
|||
Other Intangibles Amortization
|
17.4
|
|
11.4
|
|
8.8
|
|
52
|
|
30
|
|
|||
Other Expenses
|
153.9
|
|
147.3
|
|
197.3
|
|
4
|
|
(25
|
)
|
|||
|
|
|
|
|
|
||||||||
Total Other Operating Expense
|
$
|
330.6
|
|
$
|
331.6
|
|
$
|
364.4
|
|
—
|
%
|
(9
|
)%
|
|
|
|
46
2018 Annual Report | Northern Trust Corporation
|
|
|
(In Millions)
|
2018
|
|
2017
|
|
||
Federal Taxes on Mandatory Deemed Repatriation
|
$
|
(16.8
|
)
|
$
|
150.0
|
|
Impact Related to Federal Deferred Taxes
|
12.7
|
|
(210.0
|
)
|
||
Other Adjustments
|
(0.7
|
)
|
6.9
|
|
||
|
|
|
||||
Provision (Benefit) for Income Taxes
|
$
|
(4.8
|
)
|
$
|
(53.1
|
)
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
47
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2018
|
|
2017
|
|
2016
|
|
2018 / 2017
|
|
2017 / 2016
|
|
|||
Noninterest Income
|
|
|
|
|
|
||||||||
Trust, Investment and Other Servicing Fees
|
$
|
3,753.7
|
|
$
|
3,434.3
|
|
$
|
3,108.1
|
|
9
|
%
|
10
|
%
|
Foreign Exchange Trading Income
|
307.2
|
|
209.9
|
|
236.6
|
|
46
|
|
(11
|
)
|
|||
Other Noninterest Income
|
276.6
|
|
301.9
|
|
382.2
|
|
(8
|
)
|
(21
|
)
|
|||
Net Interest Income (Note)
|
1,663.9
|
|
1,475.0
|
|
1,260.0
|
|
13
|
|
17
|
|
|||
|
|
|
|
|
|
||||||||
Revenue (Note)
|
6,001.4
|
|
5,421.1
|
|
4,986.9
|
|
11
|
|
9
|
|
|||
Provision for Credit Losses
|
(14.5
|
)
|
(28.0
|
)
|
(26.0
|
)
|
(48
|
)
|
8
|
|
|||
Noninterest Expense
|
4,016.9
|
|
3,769.4
|
|
3,470.7
|
|
7
|
|
9
|
|
|||
|
|
|
|
|
|
||||||||
Income before Income Taxes (Note)
|
1,999.0
|
|
1,679.7
|
|
1,542.2
|
|
19
|
|
9
|
|
|||
Provision for Income Taxes (Note)
|
442.6
|
|
480.7
|
|
509.7
|
|
(8
|
)
|
(6
|
)
|
|||
|
|
|
|
|
|
||||||||
Net Income
|
$
|
1,556.4
|
|
$
|
1,199.0
|
|
$
|
1,032.5
|
|
30
|
%
|
16
|
%
|
|
|
|
|
|
|
||||||||
Average Assets
|
$
|
122,946.6
|
|
$
|
119,607.4
|
|
$
|
115,570.3
|
|
3
|
%
|
3
|
%
|
|
|
|
48
2018 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2018
|
|
2017
|
|
2016
|
|
2018 / 2017
|
|
2017 / 2016
|
|
|||
Noninterest Income
|
|
|
|
|
|
||||||||
Trust, Investment and Other Servicing Fees
|
$
|
2,173.1
|
|
$
|
1,984.6
|
|
$
|
1,787.8
|
|
9
|
%
|
11
|
%
|
Foreign Exchange Trading Income
|
233.4
|
|
197.9
|
|
224.4
|
|
18
|
|
(12
|
)
|
|||
Other Noninterest Income
|
183.0
|
|
176.1
|
|
147.0
|
|
4
|
|
20
|
|
|||
Net Interest Income (Note)
|
992.2
|
|
733.8
|
|
565.0
|
|
35
|
|
30
|
|
|||
|
|
|
|
|
|
||||||||
Revenue (Note)
|
3,581.7
|
|
3,092.4
|
|
2,724.2
|
|
16
|
|
14
|
|
|||
Provision for Credit Losses
|
1.9
|
|
3.4
|
|
1.9
|
|
(44
|
)
|
79
|
|
|||
Noninterest Expense
|
2,421.4
|
|
2,194.5
|
|
2,012.2
|
|
10
|
|
9
|
|
|||
|
|
|
|
|
|
||||||||
Income before Income Taxes (Note)
|
1,158.4
|
|
894.5
|
|
710.1
|
|
30
|
|
26
|
|
|||
Provision for Income Taxes (Note)
|
255.3
|
|
279.5
|
|
212.9
|
|
(9
|
)
|
31
|
|
|||
|
|
|
|
|
|
||||||||
Net Income
|
$
|
903.1
|
|
$
|
615.0
|
|
$
|
497.2
|
|
47
|
%
|
24
|
%
|
|
|
|
|
|
|
||||||||
Percentage of Consolidated Net Income
|
58
|
%
|
51
|
%
|
48
|
%
|
|
|
|||||
Average Assets
|
$
|
82,996.5
|
|
$
|
80,105.6
|
|
$
|
76,194.7
|
|
4
|
%
|
5
|
%
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2018
|
|
2017
|
|
2016
|
|
2018 / 2017
|
|
2017 / 2016
|
|
|||
Custody and Fund Administration
|
$
|
1,501.1
|
|
$
|
1,342.1
|
|
$
|
1,182.2
|
|
12
|
%
|
14
|
%
|
Investment Management
|
436.8
|
|
403.5
|
|
371.8
|
|
8
|
|
9
|
|
|||
Securities Lending
|
102.0
|
|
96.4
|
|
97.7
|
|
6
|
|
(1
|
)
|
|||
Other
|
133.2
|
|
142.6
|
|
136.1
|
|
(7
|
)
|
5
|
|
|||
|
|
|
|
|
|
||||||||
Total Trust, Investment and Other Servicing Fees
|
$
|
2,173.1
|
|
$
|
1,984.6
|
|
$
|
1,787.8
|
|
10
|
%
|
11
|
%
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
49
|
n
|
|
69% Custody and Fund Administration
|
|
|
|
n
|
|
20% Investment Management
|
|
|
|
n
|
|
5% Securities Lending
|
|
|
|
n
|
|
6% Other Services
|
|
|
|
|
DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Billions)
|
2018
|
|
2017
|
|
2016
|
|
2018 / 2017
|
|
2017 / 2016
|
|
|||
North America
|
$
|
3,693.4
|
|
$
|
3,972.1
|
|
$
|
3,334.5
|
|
(7
|
)%
|
19
|
%
|
Europe, Middle East, and Africa
|
2,538.6
|
|
2,602.4
|
|
2,152.2
|
|
(2
|
)
|
21
|
|
|||
Asia Pacific
|
589.2
|
|
697.1
|
|
578.4
|
|
(15
|
)
|
21
|
|
|||
Securities Lending
|
149.8
|
|
167.5
|
|
111.8
|
|
(11
|
)
|
50
|
|
|||
|
|
|
|
|
|
||||||||
Total Assets Under Custody
|
$
|
6,971.0
|
|
$
|
7,439.1
|
|
$
|
6,176.9
|
|
(6
|
)%
|
20
|
%
|
n
|
|
53% North America
|
|
|
|
n
|
|
36% Europe, Middle East, and Africa
|
|
|
|
n
|
|
9% Asia Pacific
|
|
|
|
n
|
|
2% Securities Lending
|
|
|
|
|
|
|
50
2018 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Billions)
|
2018
|
|
2017
|
|
2016
|
|
2018 / 2017
|
|
2017 / 2016
|
|
|||
North America
|
$
|
493.1
|
|
$
|
533.5
|
|
$
|
450.2
|
|
(8
|
)%
|
19
|
%
|
Europe, Middle East, and Africa
|
113.3
|
|
127.3
|
|
98.8
|
|
(11
|
)
|
29
|
|
|||
Asia Pacific
|
34.6
|
|
42.9
|
|
33.2
|
|
(19
|
)
|
29
|
|
|||
Securities Lending
|
149.8
|
|
167.5
|
|
111.8
|
|
(11
|
)
|
50
|
|
|||
|
|
|
|
|
|
||||||||
Total Assets Under Management
|
$
|
790.8
|
|
$
|
871.2
|
|
$
|
694.0
|
|
(9
|
)%
|
26
|
%
|
n
|
|
62% North America
|
|
|
|
n
|
|
14% Europe, Middle East, and Africa
|
|
|
|
n
|
|
5% Asia Pacific
|
|
|
|
n
|
|
19% Securities Lending
|
|
|
|
n
|
|
51% Equities
|
|
|
|
n
|
|
19% Securities Lending
|
|
|
|
n
|
|
17% Cash and Other Assets
|
|
|
|
n
|
|
13% Fixed Income Securities
|
|
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
51
|
|
|
|
52
2018 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2018
|
|
2017
|
|
2016
|
|
2018 / 2017
|
|
2017 / 2016
|
|
|||
Noninterest Income
|
|
|
|
|
|
||||||||
Trust, Investment and Other Servicing Fees
|
$
|
1,580.6
|
|
$
|
1,449.7
|
|
$
|
1,320.3
|
|
9
|
%
|
10
|
%
|
Foreign Exchange Trading Income
|
4.2
|
|
3.1
|
|
8.6
|
|
35
|
|
(64
|
)
|
|||
Other Noninterest Income
|
102.7
|
|
103.9
|
|
105.7
|
|
(1
|
)
|
(2
|
)
|
|||
Net Interest Income (Note)
|
816.5
|
|
736.2
|
|
651.4
|
|
11
|
|
13
|
|
|||
Revenue (Note)
|
2,504.0
|
|
2,292.9
|
|
2,086.0
|
|
9
|
|
10
|
|
|||
Provision for Credit Losses
|
(16.4
|
)
|
(31.4
|
)
|
(27.9
|
)
|
(48
|
)
|
13
|
|
|||
Noninterest Expense
|
1,460.0
|
|
1,405.3
|
|
1,315.3
|
|
4
|
|
7
|
|
|||
Income before Income Taxes (Note)
|
1,060.4
|
|
919.0
|
|
798.6
|
|
15
|
|
15
|
|
|||
Provision for Income Taxes (Note)
|
262.1
|
|
347.2
|
|
301.1
|
|
(25
|
)
|
15
|
|
|||
Net Income
|
$
|
798.3
|
|
$
|
571.8
|
|
$
|
497.5
|
|
40
|
%
|
15
|
%
|
Percentage of Consolidated Net Income
|
51
|
%
|
48
|
%
|
48
|
%
|
|
|
|
|
|||
Average Assets
|
$
|
26,163.7
|
|
$
|
26,599.9
|
|
$
|
26,525.0
|
|
(2
|
)%
|
—
|
%
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2018
|
|
2017
|
|
2016
|
|
2018 / 2017
|
|
2017 / 2016
|
|
|||
Central
|
$
|
607.8
|
|
$
|
575.5
|
|
$
|
523.8
|
|
6
|
%
|
10
|
%
|
East
|
401.7
|
|
356.2
|
|
334.4
|
|
13
|
|
7
|
|
|||
West
|
320.0
|
|
291.7
|
|
268.9
|
|
10
|
|
8
|
|
|||
Global Family Office
|
251.1
|
|
226.3
|
|
193.2
|
|
11
|
|
17
|
|
|||
Total Trust, Investment and Other Servicing Fees
|
$
|
1,580.6
|
|
$
|
1,449.7
|
|
$
|
1,320.3
|
|
9
|
%
|
10
|
%
|
n
|
|
39% Central
|
|
|
|
n
|
|
25% East
|
|
|
|
n
|
|
20% West
|
|
|
|
n
|
|
16% Global Family Office
|
|
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
53
|
|
DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Billions)
|
2018
|
|
2017
|
|
2016
|
|
2018 / 2017
|
|
2017 / 2016
|
|
|||
Global Family Office
|
$
|
405.5
|
|
$
|
422.9
|
|
$
|
347.7
|
|
(4
|
)%
|
22
|
%
|
Central
|
88.2
|
|
94.8
|
|
83.8
|
|
(7
|
)
|
13
|
|
|||
East
|
72.7
|
|
70.5
|
|
61.7
|
|
3
|
|
14
|
|
|||
West
|
56.5
|
|
57.3
|
|
50.4
|
|
(1
|
)
|
14
|
|
|||
Total Assets Under Custody
|
$
|
622.9
|
|
$
|
645.5
|
|
$
|
543.6
|
|
(4
|
)%
|
19
|
%
|
n
|
|
65% Global Family Office
|
|
|
|
n
|
|
14% Central
|
|
|
|
n
|
|
12% East
|
|
|
|
n
|
|
9% West
|
|
|
|
|
DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Billions)
|
2018
|
|
2017
|
|
2016
|
|
2018 / 2017
|
|
2017 / 2016
|
|
|||
Central
|
$
|
96.2
|
|
$
|
102.1
|
|
$
|
89.7
|
|
(6
|
)%
|
14
|
%
|
Global Family Office
|
83.5
|
|
87.1
|
|
69.3
|
|
(4
|
)
|
26
|
|
|||
East
|
57.0
|
|
57.0
|
|
50.9
|
|
—
|
|
12
|
|
|||
West
|
41.9
|
|
43.6
|
|
38.5
|
|
(4
|
)
|
13
|
|
|||
Total Assets Under Management
|
$
|
278.6
|
|
$
|
289.8
|
|
$
|
248.4
|
|
(4
|
)%
|
17
|
%
|
n
|
|
35% Central
|
|
|
|
n
|
|
30% Global Family Office
|
|
|
|
n
|
|
20% East
|
|
|
|
n
|
|
15% West
|
|
|
|
|
|
|
54
2018 Annual Report | Northern Trust Corporation
|
|
|
n
|
|
47% Equities
|
|
|
|
n
|
|
27% Cash and Other Assets
|
|
|
|
n
|
|
26% Fixed Income Securities
|
|
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
55
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2018
|
|
2017
|
|
2016
|
|
2018 / 2017
|
|
2017 / 2016
|
|
|||
Noninterest Income
|
$
|
60.5
|
|
$
|
30.8
|
|
$
|
133.1
|
|
96
|
%
|
(77
|
)%
|
Net Interest Income (Note)
|
(144.8
|
)
|
5.0
|
|
43.6
|
|
N/M
|
|
(89
|
)
|
|||
Revenue (Note)
|
(84.3
|
)
|
35.8
|
|
176.7
|
|
N/M
|
|
(80
|
)
|
|||
Noninterest Expense
|
135.5
|
|
169.6
|
|
143.2
|
|
(20
|
)
|
18
|
|
|||
Income (Loss) before Income Taxes (Note)
|
(219.8
|
)
|
(133.8
|
)
|
33.5
|
|
64
|
|
N/M
|
|
|||
Provision (Benefit) for Income Taxes (Note)
|
(74.8
|
)
|
(146.0
|
)
|
(4.3
|
)
|
(49
|
)
|
N/M
|
|
|||
Net Income
|
$
|
(145.0
|
)
|
$
|
12.2
|
|
$
|
37.8
|
|
N/M
|
|
(68
|
)%
|
Percentage of Consolidated Net Income
|
(9
|
)%
|
1
|
%
|
4
|
%
|
|
|
|
|
|||
Average Assets
|
$
|
13,786.4
|
|
$
|
12,901.9
|
|
$
|
12,850.6
|
|
7
|
%
|
—
|
%
|
|
|
|
56
2018 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Billions)
|
2018
|
|
2017
|
|
2016
|
|
2018 / 2017
|
|
2017 / 2016
|
|
|||
Equities
|
$
|
534.2
|
|
$
|
592.3
|
|
$
|
480.6
|
|
(10
|
)%
|
23
|
%
|
Fixed Income Securities
|
178.3
|
|
183.5
|
|
160.5
|
|
(3
|
)
|
14
|
|
|||
Cash and Other Assets
|
207.0
|
|
217.5
|
|
189.3
|
|
(5
|
)
|
15
|
|
|||
Securities Lending Collateral
|
149.9
|
|
167.7
|
|
112.0
|
|
(11
|
)
|
50
|
|
|||
Total Assets Under Management
|
$
|
1,069.4
|
|
$
|
1,161.0
|
|
$
|
942.4
|
|
(8
|
)%
|
23
|
%
|
($ In Billions)
|
2018
|
|
2017
|
|
2016
|
|
||||
Balance as of January 1,
|
$
|
1,161.0
|
|
$
|
942.4
|
|
$
|
875.3
|
|
|
Inflows by Investment Type
|
|
|
|
|||||||
|
Equities
|
174.7
|
|
192.1
|
|
136.0
|
|
|||
|
Fixed Income Securities
|
63.7
|
|
68.1
|
|
59.3
|
|
|||
|
Cash and Other Assets
|
484.3
|
|
407.9
|
|
383.4
|
|
|||
|
Securities Lending Collateral
|
165.6
|
|
132.4
|
|
93.8
|
|
|||
|
|
|
|
|
||||||
Total Inflows
|
888.3
|
|
800.5
|
|
672.5
|
|
||||
|
|
|
|
|
||||||
Outflows by Investment Type
|
|
|
|
|||||||
|
Equities
|
(179.2
|
)
|
(185.7
|
)
|
(136.1
|
)
|
|||
|
Fixed Income Securities
|
(72.5
|
)
|
(57.2
|
)
|
(48.0
|
)
|
|||
|
Cash and Other Assets
|
(487.4
|
)
|
(384.0
|
)
|
(363.6
|
)
|
|||
|
Securities Lending Collateral
|
(183.3
|
)
|
(76.7
|
)
|
(85.7
|
)
|
|||
|
|
|
|
|
||||||
Total Outflows
|
(922.4
|
)
|
(703.6
|
)
|
(633.4
|
)
|
||||
|
|
|
|
|
||||||
Net (Outflows) / Inflows
|
(34.1
|
)
|
96.9
|
|
39.1
|
|
||||
|
|
|
|
|
||||||
Market Performance, Currency and Other
|
|
|
|
|||||||
|
Market Performance and Other
|
(49.3
|
)
|
111.6
|
|
32.0
|
|
|||
|
Currency
|
(8.2
|
)
|
10.1
|
|
(4.0
|
)
|
|||
Total Market Performance, Currency and Other
|
(57.5
|
)
|
121.7
|
|
28.0
|
|
||||
|
|
|
|
|
||||||
Balance as of December 31,
|
$
|
1,069.4
|
|
$
|
1,161.0
|
|
$
|
942.4
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
57
|
|
DECEMBER 31,
|
||||||||
($ In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Debt Securities Held to Maturity
|
|
|
|
||||||
U.S. Government
|
$
|
101.6
|
|
$
|
35.0
|
|
$
|
15.0
|
|
Obligations of States and Political Subdivisions
|
18.9
|
|
34.6
|
|
63.6
|
|
|||
Government Sponsored Agency
|
4.5
|
|
5.8
|
|
7.4
|
|
|||
Other
|
14,229.0
|
|
12,973.6
|
|
8,835.1
|
|
|||
Total Debt Securities Held to Maturity
|
$
|
14,354.0
|
|
$
|
13,049.0
|
|
$
|
8,921.1
|
|
Debt Securities Available for Sale
|
|
|
|
||||||
U.S. Government
|
$
|
5,185.3
|
|
$
|
5,700.3
|
|
$
|
7,522.6
|
|
Obligations of States and Political Subdivisions
|
655.9
|
|
746.4
|
|
885.2
|
|
|||
Government Sponsored Agency
|
22,424.6
|
|
18,676.6
|
|
17,892.8
|
|
|||
Asset-Backed
|
3,244.9
|
|
2,726.4
|
|
2,556.7
|
|
|||
Auction Rate
|
—
|
|
4.3
|
|
4.7
|
|
|||
Other
|
5,378.1
|
|
5,888.1
|
|
6,717.8
|
|
|||
Total Debt Securities Available for Sale
|
$
|
36,888.8
|
|
$
|
33,742.1
|
|
$
|
35,579.8
|
|
Trading Account
|
$
|
0.3
|
|
$
|
0.5
|
|
$
|
0.3
|
|
Total Debt Securities at Year-End
|
$
|
51,243.1
|
|
$
|
46,791.6
|
|
$
|
44,501.2
|
|
Average Total Securities
|
$
|
50,281.5
|
|
$
|
44,715.7
|
|
$
|
42,041.3
|
|
|
|
|
58
2018 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
||||||||||||||
($ In Millions)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
|||||
Commercial
|
|
|
|
|
|
||||||||||
Commercial and Institutional
|
$
|
8,728.1
|
|
$
|
9,042.2
|
|
$
|
9,287.4
|
|
$
|
9,307.5
|
|
$
|
8,343.7
|
|
Commercial Real Estate
|
3,228.8
|
|
3,482.7
|
|
4,002.5
|
|
3,848.8
|
|
3,333.3
|
|
|||||
Non-U.S.
|
2,701.6
|
|
1,538.5
|
|
1,877.8
|
|
1,137.7
|
|
1,530.6
|
|
|||||
Lease Financing, net
|
90.7
|
|
229.2
|
|
293.9
|
|
544.4
|
|
916.3
|
|
|||||
Other
|
426.0
|
|
265.4
|
|
205.1
|
|
194.1
|
|
191.5
|
|
|||||
Total Commercial
|
$
|
15,175.2
|
|
$
|
14,558.0
|
|
$
|
15,666.7
|
|
$
|
15,032.5
|
|
$
|
14,315.4
|
|
Personal
|
|
|
|
|
|
||||||||||
Private Client
|
$
|
10,733.3
|
|
$
|
10,753.1
|
|
$
|
10,052.0
|
|
$
|
9,136.4
|
|
$
|
7,466.9
|
|
Residential Real Estate
|
6,514.0
|
|
7,247.6
|
|
8,077.5
|
|
8,974.7
|
|
9,820.8
|
|
|||||
Other
|
67.5
|
|
33.5
|
|
25.9
|
|
37.3
|
|
37.1
|
|
|||||
Total Personal
|
$
|
17,314.8
|
|
$
|
18,034.2
|
|
$
|
18,155.4
|
|
$
|
18,148.4
|
|
$
|
17,324.8
|
|
Total Loans and Leases
|
$
|
32,490.0
|
|
$
|
32,592.2
|
|
$
|
33,822.1
|
|
$
|
33,180.9
|
|
$
|
31,640.2
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
59
|
|
DECEMBER 31,
|
|||||
($ In Millions)
|
2018
|
|
2017
|
|
||
Commercial Mortgages:
|
|
|
||||
Office
|
$
|
811.2
|
|
$
|
825.2
|
|
Apartment/Multi-family
|
490.7
|
|
623.3
|
|
||
Retail
|
529.7
|
|
631.1
|
|
||
Industrial / Warehouse
|
254.9
|
|
311.1
|
|
||
Other
|
426.6
|
|
445.6
|
|
||
Total Commercial Mortgages
|
2,513.1
|
|
2,836.3
|
|
||
Construction, Acquisition and Development Loans
|
420.6
|
|
350.8
|
|
||
Single Family Investment
|
127.0
|
|
164.8
|
|
||
Other Commercial Real Estate Related
|
168.1
|
|
130.8
|
|
||
Total Commercial Real Estate Loans
|
$
|
3,228.8
|
|
$
|
3,482.7
|
|
|
|
|
60
2018 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
||||||||||||||
($ In Millions)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
|||||
Nonperforming Loans and Leases
|
|
|
|
|
|
||||||||||
Commercial
|
|
|
|
|
|
||||||||||
Commercial and Institutional
|
$
|
6.8
|
|
$
|
26.0
|
|
$
|
9.2
|
|
$
|
18.1
|
|
$
|
15.0
|
|
Commercial Real Estate
|
6.9
|
|
8.3
|
|
11.6
|
|
16.7
|
|
37.1
|
|
|||||
Non-U.S.
|
0.4
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Total Commercial
|
14.1
|
|
34.3
|
|
20.8
|
|
34.8
|
|
52.1
|
|
|||||
Personal
|
|
|
|
|
|
||||||||||
Residential Real Estate
|
$
|
95.0
|
|
$
|
116.4
|
|
$
|
139.1
|
|
$
|
144.9
|
|
$
|
162.4
|
|
Private Client
|
0.2
|
|
—
|
|
0.3
|
|
0.4
|
|
1.2
|
|
|||||
Total Personal
|
95.2
|
|
116.4
|
|
139.4
|
|
145.3
|
|
163.6
|
|
|||||
Total Nonperforming Loans and Leases
|
109.3
|
|
150.7
|
|
160.2
|
|
180.1
|
|
215.7
|
|
|||||
Other Real Estate Owned
|
8.4
|
|
4.6
|
|
5.2
|
|
8.2
|
|
16.6
|
|
|||||
Total Nonperforming Assets
|
$
|
117.7
|
|
$
|
155.3
|
|
$
|
165.4
|
|
$
|
188.3
|
|
$
|
232.3
|
|
90 Day Past Due Loans Still Accruing
|
$
|
16.4
|
|
$
|
8.0
|
|
$
|
31.0
|
|
$
|
7.1
|
|
$
|
22.7
|
|
Nonperforming Loans and Leases to Total Loans and Leases
|
0.34
|
%
|
0.46
|
%
|
0.47
|
%
|
0.54
|
%
|
0.68
|
%
|
|||||
Allowance for Credit Losses Assigned to Loans and Leases to Nonperforming Loans and Leases
|
1.0
|
x
|
0.9
|
x
|
1.0
|
x
|
1.1
|
x
|
1.2
|
x
|
($ In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Balance at January 1
|
$
|
153.8
|
|
$
|
192.0
|
|
$
|
233.3
|
|
Charge-Offs
|
(10.1
|
)
|
(21.5
|
)
|
(27.3
|
)
|
|||
Recoveries
|
9.0
|
|
11.3
|
|
12.1
|
|
|||
Net Charge-Offs
|
(1.1
|
)
|
(10.2
|
)
|
(15.2
|
)
|
|||
Provision for Credit Losses
|
(14.5
|
)
|
(28.0
|
)
|
(26.0
|
)
|
|||
Effects of Foreign Exchange Rates
|
—
|
|
—
|
|
(0.1
|
)
|
|||
Balance at December 31
|
$
|
138.2
|
|
$
|
153.8
|
|
$
|
192.0
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
61
|
|
DECEMBER 31,
|
||||||||||||||||||||||||
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||||||||||||
($ 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
|
$
|
10.0
|
|
—
|
%
|
$
|
5.4
|
|
—
|
%
|
$
|
2.1
|
|
—
|
%
|
$
|
3.1
|
|
—
|
%
|
$
|
21.1
|
|
—
|
%
|
Allocated Inherent Allowance
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Commercial
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Commercial and Institutional
|
33.5
|
|
27
|
|
34.7
|
|
27
|
|
34.7
|
|
27
|
|
40.4
|
|
28
|
|
73.0
|
|
26
|
|
|||||
Commercial Real Estate
|
35.5
|
|
10
|
|
43.3
|
|
11
|
|
69.2
|
|
12
|
|
69.5
|
|
12
|
|
69.4
|
|
10
|
|
|||||
Lease Financing, net
|
0.1
|
|
—
|
|
0.2
|
|
1
|
|
0.4
|
|
1
|
|
1.9
|
|
2
|
|
3.6
|
|
3
|
|
|||||
Non-U.S.
|
—
|
|
8
|
|
—
|
|
5
|
|
—
|
|
5
|
|
—
|
|
3
|
|
3.3
|
|
5
|
|
|||||
Other
|
2.7
|
|
2
|
|
1.5
|
|
1
|
|
0.6
|
|
1
|
|
—
|
|
1
|
|
—
|
|
1
|
|
|||||
Total Commercial
|
71.8
|
|
47
|
|
79.7
|
|
45
|
|
104.9
|
|
46
|
|
111.8
|
|
46
|
|
149.3
|
|
45
|
|
|||||
Personal
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Residential Real Estate
|
45.8
|
|
20
|
|
57.3
|
|
22
|
|
69.0
|
|
24
|
|
96.2
|
|
27
|
|
107.7
|
|
31
|
|
|||||
Private Client
|
9.2
|
|
33
|
|
9.5
|
|
33
|
|
13.8
|
|
30
|
|
19.7
|
|
27
|
|
17.8
|
|
24
|
|
|||||
Other
|
1.4
|
|
—
|
|
1.9
|
|
—
|
|
2.2
|
|
—
|
|
2.5
|
|
—
|
|
—
|
|
—
|
|
|||||
Total Personal
|
56.4
|
|
53
|
|
68.7
|
|
55
|
|
85.0
|
|
54
|
|
118.4
|
|
54
|
|
125.5
|
|
55
|
|
|||||
Total Allocated Inherent Allowance
|
$
|
128.2
|
|
100
|
%
|
$
|
148.4
|
|
100
|
%
|
$
|
189.9
|
|
100
|
%
|
$
|
230.2
|
|
100
|
%
|
$
|
274.8
|
|
100
|
%
|
Total Allowance for Credit Losses
|
$
|
138.2
|
|
100
|
%
|
$
|
153.8
|
|
100
|
%
|
$
|
192.0
|
|
100
|
%
|
$
|
233.3
|
|
100
|
%
|
$
|
295.9
|
|
100
|
%
|
Allowance Assigned to:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Loans and Leases
|
$
|
112.6
|
|
|
$
|
131.2
|
|
|
$
|
161.0
|
|
|
$
|
193.8
|
|
|
$
|
267.0
|
|
|
|||||
Undrawn Commitments and Standby Letters of Credit
|
25.6
|
|
|
22.6
|
|
|
31.0
|
|
|
39.5
|
|
|
28.9
|
|
|
||||||||||
Total Allowance for Credit Losses
|
$
|
138.2
|
|
|
$
|
153.8
|
|
|
$
|
192.0
|
|
|
$
|
233.3
|
|
|
$
|
295.9
|
|
|
|||||
Allowance Assigned to Loans and Leases to Total Loans and Leases
|
0.35
|
%
|
|
0.40
|
%
|
|
0.48
|
%
|
|
0.58
|
%
|
|
0.84
|
%
|
|
|
|
|
62
2018 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
63
|
|
|
|
64
2018 Annual Report | Northern Trust Corporation
|
|
|
•
|
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 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
4.47%
at
December 31, 2018
for the Qualified and Nonqualified plans, an increase from
3.79%
at
December 31, 2017
.
|
•
|
Compensation Level:
Based on a review of actual and anticipated salary experience, the compensation scale assumption continues to be 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 remains at 6.00% for
2019
.
|
•
|
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-2018, released by the Society of Actuaries in October 2018. This assumption was updated at
December 31, 2018
from improvement scale MP-2017. The updated improvement scale applies to annuity payments only and results in generally lower projected mortality improvements than estimated by the MP-2017 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 2019.
|
($ In Millions)
|
25 BASIS
POINT INCREASE
|
|
25 BASIS
POINT DECREASE
|
|
||
Increase (Decrease) in 2019 Pension Expense
|
|
|
||||
Discount Rate Change
|
$
|
(3.8
|
)
|
$
|
3.9
|
|
Compensation Level Change
|
1.8
|
|
(1.6
|
)
|
||
Rate of Return on Plan Assets Change
|
(3.6
|
)
|
3.6
|
|
||
Increase (Decrease) in 2018 Projected Benefit Obligation
|
|
|
||||
Discount Rate Change
|
(42.0
|
)
|
44.3
|
|
||
Compensation Level Change
|
6.7
|
|
(6.5
|
)
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
65
|
|
|
|
66
2018 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
67
|
|
DECEMBER 31,
|
|||||
($ In Millions)
|
2018
|
|
2017
|
|
||
Undrawn Commitments to Extend Credit
|
|
|
||||
One Year and Less
|
$
|
7,629.9
|
|
$
|
8,617.3
|
|
Over One Year
|
17,393.1
|
|
18,205.3
|
|
||
|
|
|
||||
Total
|
$
|
25,023.0
|
|
$
|
26,822.6
|
|
|
|
|
||||
Standby Letters of Credit
|
$
|
2,486.2
|
|
$
|
2,970.0
|
|
Commercial Letters of Credit
|
32.3
|
|
37.7
|
|
||
Custody Securities Lent with Indemnification
|
128,904.8
|
|
143,568.2
|
|
|
|
|
68
2018 Annual Report | Northern Trust Corporation
|
|
|
AS OF DECEMBER 31, 2018
|
COMMITMENT EXPIRATION
|
|||||||||||
($ In Millions)
|
TOTAL
COMMITMENTS
|
|
ONE YEAR
AND LESS
|
|
OVER ONE
YEAR
|
|
OUTSTANDING
LOANS
|
|
||||
Commercial
|
|
|
|
|
||||||||
Commercial and Institutional
|
|
|
|
|
||||||||
Finance and Insurance
|
$
|
3,877.6
|
|
$
|
1,745.1
|
|
$
|
2,132.5
|
|
$
|
1,644.2
|
|
Holding Companies
|
—
|
|
—
|
|
—
|
|
20.3
|
|
||||
Manufacturing
|
6,637.8
|
|
614.1
|
|
6,023.7
|
|
1,604.4
|
|
||||
Mining
|
723.1
|
|
184.9
|
|
538.2
|
|
21.1
|
|
||||
Public Administration
|
106.0
|
|
106.0
|
|
—
|
|
58.7
|
|
||||
Retail Trade
|
772.3
|
|
170.0
|
|
602.3
|
|
134.3
|
|
||||
Services
|
5,629.0
|
|
2,338.2
|
|
3,290.8
|
|
4,274.7
|
|
||||
Transportation and Warehousing
|
308.2
|
|
1.3
|
|
306.9
|
|
235.4
|
|
||||
Utilities
|
1,265.6
|
|
—
|
|
1,265.6
|
|
4.5
|
|
||||
Wholesale Trade
|
634.7
|
|
36.8
|
|
597.9
|
|
387.8
|
|
||||
Other Commercial
|
199.4
|
|
152.2
|
|
47.2
|
|
342.7
|
|
||||
|
|
|
|
|
||||||||
Commercial and Institutional (Note)
|
20,153.7
|
|
5,348.6
|
|
14,805.1
|
|
8,728.1
|
|
||||
Commercial Real Estate
|
331.4
|
|
63.9
|
|
267.5
|
|
3,228.8
|
|
||||
Lease Financing, net
|
—
|
|
—
|
|
—
|
|
90.7
|
|
||||
Non-U.S.
|
1,167.0
|
|
608.6
|
|
558.4
|
|
2,701.6
|
|
||||
Other
|
130.8
|
|
130.8
|
|
—
|
|
426.0
|
|
||||
|
|
|
|
|
||||||||
Total Commercial
|
21,782.9
|
|
6,151.9
|
|
15,631.0
|
|
15,175.2
|
|
||||
|
|
|
|
|
||||||||
Personal
|
|
|
|
|
||||||||
Residential Real Estate
|
824.0
|
|
194.0
|
|
630.0
|
|
6,514.0
|
|
||||
Private Client
|
2,395.4
|
|
1,263.3
|
|
1,132.1
|
|
10,733.3
|
|
||||
Other
|
20.7
|
|
20.7
|
|
—
|
|
67.5
|
|
||||
|
|
|
|
|
||||||||
Total Personal
|
3,240.1
|
|
1,478.0
|
|
1,762.1
|
|
17,314.8
|
|
||||
|
|
|
|
|
||||||||
Total
|
$
|
25,023.0
|
|
$
|
7,629.9
|
|
$
|
17,393.1
|
|
$
|
32,490.0
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
69
|
|
|
|
70
2018 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
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
71
|
|
PAYMENT DUE BY PERIOD
|
||||||||||||||
($ In Millions)
|
TOTAL
|
|
ONE YEAR
AND LESS
|
|
1-3
YEARS
|
|
3-5 YEARS
|
|
OVER 5
YEARS
|
|
|||||
Senior Notes
(1)
|
$
|
2,011.3
|
|
$
|
—
|
|
$
|
998.8
|
|
$
|
499.2
|
|
$
|
513.3
|
|
Subordinated Debt
(1)
|
1,112.4
|
|
—
|
|
—
|
|
—
|
|
1,112.4
|
|
|||||
Floating Rate Capital Debt
(1)
|
277.6
|
|
—
|
|
—
|
|
—
|
|
277.6
|
|
|||||
Operating Leases
(2)
|
763.1
|
|
98.8
|
|
183.7
|
|
144.9
|
|
335.7
|
|
|||||
Purchase Obligations
(3)
|
715.2
|
|
260.9
|
|
301.8
|
|
140.9
|
|
11.6
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Contractual Obligations
|
$
|
4,879.6
|
|
$
|
359.7
|
|
$
|
1,484.3
|
|
$
|
785.0
|
|
$
|
2,250.6
|
|
|
|
|
72
2018 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
73
|
($ In Millions)
|
December 31, 2018
|
December 31, 2017
|
||||||||||
|
Advanced
Approach
|
Standardized
Approach
|
Advanced
Approach
|
Standardized
Approach |
||||||||
Common Equity Tier 1 Capital
|
|
|
|
|
||||||||
Common Stockholders’ Equity
|
$
|
9,626.3
|
|
$
|
9,626.3
|
|
$
|
9,334.2
|
|
$
|
9,334.2
|
|
Net Unrealized (Gains) Losses on Debt Securities Available for Sale
|
—
|
|
—
|
|
15.0
|
|
15.0
|
|
||||
Net Unrealized (Gains) Losses on Cash Flow Hedges
|
—
|
|
—
|
|
(0.9
|
)
|
(0.9
|
)
|
||||
Goodwill and Other Intangible Assets, net of Deferred Tax Liability
|
(767.6
|
)
|
(767.6
|
)
|
(697.4
|
)
|
(697.4
|
)
|
||||
Pension and Other Postretirement Benefit Adjustments
|
—
|
|
—
|
|
68.4
|
|
68.4
|
|
||||
Other
|
(128.9
|
)
|
(128.9
|
)
|
(93.0
|
)
|
(93.0
|
)
|
||||
|
|
|
|
|
||||||||
Total Common Equity Tier 1
|
8,729.8
|
|
8,729.8
|
|
8,626.3
|
|
8,626.3
|
|
||||
Additional Tier 1 Capital
|
|
|
|
|
||||||||
Preferred Stock
|
882.0
|
|
882.0
|
|
882.0
|
|
882.0
|
|
||||
Other
|
(15.1
|
)
|
(15.1
|
)
|
(34.9
|
)
|
(34.9
|
)
|
||||
|
|
|
|
|
||||||||
Total Additional Tier 1 Capital
|
866.9
|
|
866.9
|
|
847.1
|
|
847.1
|
|
||||
|
|
|
|
|
||||||||
Total Tier 1 Capital
|
9,596.7
|
|
9,596.7
|
|
9,473.4
|
|
9,473.4
|
|
||||
Tier 2 Capital
|
|
|
|
|
||||||||
Qualifying Allowance for Credit Losses
|
—
|
|
138.2
|
|
—
|
|
153.8
|
|
||||
Qualifying Subordinated Debt
|
1,099.4
|
|
1,099.4
|
|
1,099.4
|
|
1,099.4
|
|
||||
Floating Rate Capital
|
107.7
|
|
107.7
|
|
134.6
|
|
134.6
|
|
||||
|
|
|
|
|
||||||||
Total Tier 2 Capital
|
1,207.1
|
|
1,345.3
|
|
1,234.0
|
|
1,387.8
|
|
||||
|
|
|
|
|
||||||||
Total Risk-Based Capital
|
$
|
10,803.8
|
|
$
|
10,942.0
|
|
$
|
10,707.4
|
|
$
|
10,861.2
|
|
Risk-Weighted Assets
(1)
|
$
|
63,914.8
|
|
$
|
67,837.1
|
|
$
|
64,018.7
|
|
$
|
68,616.4
|
|
Total Assets – End of Period (EOP)
|
132,212.5
|
|
132,212.5
|
|
138,590.5
|
|
138,590.5
|
|
||||
Adjusted Average Fourth Quarter Assets
(2)
|
120,402.6
|
|
120,402.6
|
|
121,517.1
|
|
121,517.1
|
|
||||
Total Loans and Leases – EOP
|
32,490.0
|
|
32,490.0
|
|
32,592.2
|
|
32,592.2
|
|
||||
Common Stockholders’ Equity to:
|
|
|
|
|
||||||||
Total Loans and Leases – EOP
|
29.63
|
%
|
29.63
|
%
|
28.64
|
%
|
28.64
|
%
|
||||
Total Assets – EOP
|
7.28
|
|
7.28
|
|
6.74
|
|
6.74
|
|
||||
Risk-Based Capital Ratios
|
|
|
|
|
||||||||
Common Equity Tier 1
|
13.7
|
%
|
12.9
|
%
|
13.5
|
%
|
12.6
|
%
|
||||
Tier 1
|
15.0
|
|
14.1
|
|
14.8
|
|
13.8
|
|
||||
Total (Tier 1 and Tier 2)
|
16.9
|
|
16.1
|
|
16.7
|
|
15.8
|
|
||||
Leverage
|
8.0
|
|
8.0
|
|
7.8
|
|
7.8
|
|
||||
Supplementary Leverage
(3)
|
7.0
|
|
N/A
|
|
6.8
|
|
N/A
|
|
|
|
|
74
2018 Annual Report | Northern Trust Corporation
|
|
|
Northern Trust Corporation Board of Directors
|
|||
Audit
Committee |
Business Risk
Committee |
Capital Governance
Committee |
Compensation and Benefits 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
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
75
|
|
|
|
76
2018 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.
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
77
|
|
|
|
78
2018 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 Measurement 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.
|
•
|
Business Continuity and Disaster Recovery 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.
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
79
|
|
|
|
80
2018 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.
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
81
|
|
|
|
82
2018 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 debt 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 is 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.
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
83
|
($ 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
|
$
|
71
|
|
200 Basis Points
|
109
|
|
|
DECREASE IN INTEREST RATES BELOW MARKET IMPLIED FORWARD RATES
|
|
||
100 Basis Points
|
(86
|
)
|
•
|
the present value of nonmaturity deposits are estimated using
dynamic decay methodologies or estimated
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
|
$
|
412
|
|
200 Basis Points
|
383
|
|
|
DECREASE IN INTEREST RATES BELOW MARKET IMPLIED FORWARD RATES
|
|
||
100 Basis Points
|
(606
|
)
|
|
|
|
84
2018 Annual Report | Northern Trust Corporation
|
|
|
($ In Millions)
|
TOTAL VaR
(SPOT AND FORWARD)
|
FOREIGN EXCHANGE
SPOT VaR
|
FOREIGN EXCHANGE
FORWARD VaR
|
|||||||||||||||
FOR THE YEAR ENDED DECEMBER 31,
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
||||||
High
|
$
|
0.3
|
|
$
|
1.6
|
|
$
|
0.2
|
|
$
|
1.6
|
|
$
|
0.3
|
|
$
|
1.2
|
|
Low
|
0.1
|
|
0.1
|
|
—
|
|
—
|
|
—
|
|
0.1
|
|
||||||
Average
|
0.1
|
|
0.6
|
|
0.1
|
|
0.1
|
|
0.1
|
|
0.5
|
|
||||||
As of December 31,
|
0.1
|
|
0.3
|
|
0.1
|
|
—
|
|
0.1
|
|
0.3
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
85
|
•
|
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 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 business. Reputation risk can arise from a range of risk events and is not limited to strategic risk.
|
|
|
|
86
2018 Annual Report | Northern Trust Corporation
|
|
|
•
|
financial market disruptions or economic recession in the United States or other countries across the globe resulting from any of a number of factors, including, for example, actual or potential changes to international trade policy;
|
•
|
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 those related to cyber-security, data security, 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;
|
•
|
changes in the method pursuant to which the London Interbank Offered Rate (LIBOR) or other interest rate benchmarks are determined;
|
•
|
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 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 the 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 with respect to the adoption of 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;
|
•
|
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;
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
87
|
•
|
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,
|
||||||||||||||||||||||||||
|
2018
|
2017
|
2016
|
||||||||||||||||||||||||
($ In Millions)
|
REPORTED
|
|
FTE ADJ.
|
|
FTE
|
|
REPORTED
|
|
FTE ADJ.
|
|
FTE
|
|
REPORTED
|
|
FTE ADJ.
|
|
FTE
|
|
|||||||||
Interest Income
|
$
|
2,321.4
|
|
$
|
41.2
|
|
$
|
2,362.6
|
|
$
|
1,769.4
|
|
$
|
45.8
|
|
$
|
1,815.2
|
|
$
|
1,416.9
|
|
$
|
25.1
|
|
$
|
1,442.0
|
|
Interest Expense
|
698.7
|
|
—
|
|
698.7
|
|
340.2
|
|
—
|
|
340.2
|
|
182.0
|
|
—
|
|
182.0
|
|
|||||||||
Net Interest Income
|
$
|
1,622.7
|
|
$
|
41.2
|
|
$
|
1,663.9
|
|
$
|
1,429.2
|
|
$
|
45.8
|
|
$
|
1,475.0
|
|
$
|
1,234.9
|
|
$
|
25.1
|
|
$
|
1,260.0
|
|
Net Interest Margin
|
1.43
|
%
|
|
1.46
|
%
|
1.29
|
%
|
|
1.33
|
%
|
1.15
|
%
|
|
1.18
|
%
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Total Revenue
|
$
|
5,960.2
|
|
$
|
41.2
|
|
$
|
6,001.4
|
|
$
|
5,375.3
|
|
$
|
45.8
|
|
$
|
5,421.1
|
|
$
|
4,961.8
|
|
$
|
25.1
|
|
$
|
4,986.9
|
|
|
|
|
88
2018 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
89
|
|
|
|
90
2018 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
|||||
(In Millions Except Share Information)
|
2018
|
|
2017
|
|
||
ASSETS
|
|
|
||||
Cash and Due from Banks
|
$
|
4,581.6
|
|
$
|
4,518.1
|
|
Federal Reserve and Other Central Bank Deposits
|
30,080.2
|
|
40,479.1
|
|
||
Interest-Bearing Deposits with Banks
|
4,264.2
|
|
5,611.9
|
|
||
Federal Funds Sold and Securities Purchased under Agreements to Resell
|
1,165.2
|
|
1,324.3
|
|
||
Debt Securities
|
|
|
||||
Available for Sale
|
36,888.8
|
|
33,742.1
|
|
||
Held to Maturity (Fair value of $14,267.0 and $13,010.9)
|
14,354.0
|
|
13,049.0
|
|
||
Trading Account
|
0.3
|
|
0.5
|
|
||
|
|
|
||||
Total Debt Securities
|
51,243.1
|
|
46,791.6
|
|
||
|
|
|
||||
Loans and Leases
|
|
|
||||
Commercial
|
15,175.2
|
|
14,558.0
|
|
||
Personal
|
17,314.8
|
|
18,034.2
|
|
||
|
|
|
||||
Total Loans and Leases (Net of unearned income of $13.2 and $35.5)
|
32,490.0
|
|
32,592.2
|
|
||
|
|
|
||||
Allowance for Credit Losses Assigned to Loans and Leases
|
(112.6
|
)
|
(131.2
|
)
|
||
Buildings and Equipment
|
428.2
|
|
464.6
|
|
||
Client Security Settlement Receivables
|
1,646.1
|
|
1,647.0
|
|
||
Goodwill
|
669.3
|
|
605.6
|
|
||
Other Assets
|
5,757.2
|
|
4,687.3
|
|
||
|
|
|
||||
Total Assets
|
$
|
132,212.5
|
|
$
|
138,590.5
|
|
|
|
|
||||
LIABILITIES
|
|
|
||||
Deposits
|
|
|
||||
Demand and Other Noninterest-Bearing
|
$
|
14,508.0
|
|
$
|
18,712.2
|
|
Savings, Money Market and Other Interest-Bearing
|
14,612.0
|
|
16,975.3
|
|
||
Savings Certificates and Other Time
|
688.7
|
|
1,152.3
|
|
||
Non U.S. Offices – Noninterest-Bearing
|
8,220.1
|
|
9,878.8
|
|
||
– Interest-Bearing
|
66,468.0
|
|
65,672.2
|
|
||
Total Deposits
|
104,496.8
|
|
112,390.8
|
|
||
Federal Funds Purchased
|
2,594.2
|
|
2,286.1
|
|
||
Securities Sold Under Agreements to Repurchase
|
168.3
|
|
834.0
|
|
||
Other Borrowings
|
7,901.7
|
|
6,051.1
|
|
||
Senior Notes
|
2,011.3
|
|
1,497.3
|
|
||
Long-Term Debt
|
1,112.4
|
|
1,449.5
|
|
||
Floating Rate Capital Debt
|
277.6
|
|
277.5
|
|
||
Other Liabilities
|
3,141.9
|
|
3,588.0
|
|
||
|
|
|
||||
Total Liabilities
|
121,704.2
|
|
128,374.3
|
|
||
|
|
|
||||
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 219,012,050 and 226,126,674
|
408.6
|
|
408.6
|
|
||
Additional Paid-In Capital
|
1,068.5
|
|
1,047.2
|
|
||
Retained Earnings
|
10,776.8
|
|
9,685.1
|
|
||
Accumulated Other Comprehensive Loss
|
(453.7
|
)
|
(414.3
|
)
|
||
Treasury Stock (26,159,474 and 19,044,850 shares, at cost)
|
(2,173.9
|
)
|
(1,392.4
|
)
|
||
|
|
|
||||
Total Stockholders' Equity
|
10,508.3
|
|
10,216.2
|
|
||
|
|
|
||||
Total Liabilities and Stockholders' Equity
|
$
|
132,212.5
|
|
$
|
138,590.5
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
91
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions Except Share Information)
|
2018
|
|
2017
|
|
2016
|
|
|||
Noninterest Income
|
|
|
|
||||||
Trust, Investment and Other Servicing Fees
|
$
|
3,753.7
|
|
$
|
3,434.3
|
|
$
|
3,108.1
|
|
Foreign Exchange Trading Income
|
307.2
|
|
209.9
|
|
236.6
|
|
|||
Treasury Management Fees
|
51.8
|
|
56.4
|
|
62.8
|
|
|||
Security Commissions and Trading Income
|
98.3
|
|
89.6
|
|
81.4
|
|
|||
Other Operating Income
|
127.5
|
|
157.5
|
|
241.2
|
|
|||
Investment Security Losses, net (Note)
|
(1.0
|
)
|
(1.6
|
)
|
(3.2
|
)
|
|||
Total Noninterest Income
|
4,337.5
|
|
3,946.1
|
|
3,726.9
|
|
|||
Net Interest Income
|
|
|
|
||||||
Interest Income
|
2,321.4
|
|
1,769.4
|
|
1,416.9
|
|
|||
Interest Expense
|
698.7
|
|
340.2
|
|
182.0
|
|
|||
Net Interest Income
|
1,622.7
|
|
1,429.2
|
|
1,234.9
|
|
|||
Provision for Credit Losses
|
(14.5
|
)
|
(28.0
|
)
|
(26.0
|
)
|
|||
Net Interest Income after Provision for Credit Losses
|
1,637.2
|
|
1,457.2
|
|
1,260.9
|
|
|||
Noninterest Expense
|
|
|
|
||||||
Compensation
|
1,806.9
|
|
1,733.7
|
|
1,541.1
|
|
|||
Employee Benefits
|
356.7
|
|
319.9
|
|
293.3
|
|
|||
Outside Services
|
739.4
|
|
668.4
|
|
627.1
|
|
|||
Equipment and Software
|
582.2
|
|
524.0
|
|
467.4
|
|
|||
Occupancy
|
201.1
|
|
191.8
|
|
177.4
|
|
|||
Other Operating Expense
|
330.6
|
|
331.6
|
|
364.4
|
|
|||
Total Noninterest Expense
|
4,016.9
|
|
3,769.4
|
|
3,470.7
|
|
|||
Income before Income Taxes
|
1,957.8
|
|
1,633.9
|
|
1,517.1
|
|
|||
Provision for Income Taxes
|
401.4
|
|
434.9
|
|
484.6
|
|
|||
NET INCOME
|
$
|
1,556.4
|
|
$
|
1,199.0
|
|
$
|
1,032.5
|
|
Preferred Stock Dividends
|
46.4
|
|
49.8
|
|
23.4
|
|
|||
Net Income Applicable to Common Stock
|
$
|
1,510.0
|
|
$
|
1,149.2
|
|
$
|
1,009.1
|
|
PER COMMON SHARE
|
|
|
|
||||||
Net Income – Basic
|
$
|
6.68
|
|
$
|
4.95
|
|
$
|
4.35
|
|
– Diluted
|
6.64
|
|
4.92
|
|
4.32
|
|
|||
Average Number of Common Shares Outstanding – Basic
|
223,148,335
|
|
228,257,664
|
|
227,580,584
|
|
|||
– Diluted
|
224,488,326
|
|
229,654,401
|
|
229,151,406
|
|
|||
|
|
|
|
||||||
Note: Changes in Other-Than-Temporary-Impairment (OTTI) Losses
|
$
|
(0.5
|
)
|
$
|
(0.2
|
)
|
$
|
(3.7
|
)
|
Other Security Gains/(Losses), net
|
(0.5
|
)
|
(1.4
|
)
|
0.5
|
|
|||
Investment Security Losses, net
|
$
|
(1.0
|
)
|
$
|
(1.6
|
)
|
$
|
(3.2
|
)
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Net Income
|
$
|
1,556.4
|
|
$
|
1,199.0
|
|
$
|
1,032.5
|
|
Other Comprehensive Income (Loss) (Net of Tax and Reclassifications)
|
|
|
|
||||||
Net Unrealized (Losses) Gains on Debt Securities Available for Sale
|
(22.3
|
)
|
(42.4
|
)
|
(1.4
|
)
|
|||
Net Unrealized Gains (Losses) on Cash Flow Hedges
|
(1.4
|
)
|
(1.6
|
)
|
9.1
|
|
|||
Foreign Currency Translation Adjustments
|
22.2
|
|
16.7
|
|
(0.9
|
)
|
|||
Pension and Other Postretirement Benefit Adjustments
|
(12.6
|
)
|
(17.0
|
)
|
(4.1
|
)
|
|||
Other Comprehensive Income (Loss)
|
(14.1
|
)
|
(44.3
|
)
|
2.7
|
|
|||
Comprehensive Income
|
$
|
1,542.3
|
|
$
|
1,154.7
|
|
$
|
1,035.2
|
|
|
|
|
92
2018 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
PREFERRED STOCK
|
|
|
|
||||||
Balance at January 1
|
$
|
882.0
|
|
$
|
882.0
|
|
$
|
388.5
|
|
Issuance of Preferred Stock, Series D
|
—
|
|
—
|
|
493.5
|
|
|||
|
|
|
|
||||||
Balance at December 31
|
882.0
|
|
882.0
|
|
882.0
|
|
|||
|
|
|
|
||||||
COMMON STOCK
|
|
|
|
||||||
Balance at January 1 and December 31
|
408.6
|
|
408.6
|
|
408.6
|
|
|||
|
|
|
|
||||||
ADDITIONAL PAID-IN CAPITAL
|
|
|
|
||||||
Balance at January 1
|
1,047.2
|
|
1,035.8
|
|
1,072.3
|
|
|||
Treasury Stock Transactions – Stock Options and Awards
|
(110.2
|
)
|
(117.1
|
)
|
(116.6
|
)
|
|||
Stock Options and Awards – Amortization
|
131.5
|
|
128.5
|
|
87.7
|
|
|||
Stock Options and Awards – Tax Benefits
|
—
|
|
—
|
|
(7.6
|
)
|
|||
|
|
|
|
||||||
Balance at December 31
|
1,068.5
|
|
1,047.2
|
|
1,035.8
|
|
|||
|
|
|
|
||||||
RETAINED EARNINGS
|
|
|
|
||||||
Balance at January 1
|
9,685.1
|
|
8,908.4
|
|
8,242.8
|
|
|||
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
|
25.3
|
|
—
|
|
—
|
|
|||
Change in Accounting Principle
|
(4.5
|
)
|
—
|
|
—
|
|
|||
Net Income
|
1,556.4
|
|
1,199.0
|
|
1,032.5
|
|
|||
Dividends Declared – Common Stock
|
(439.1
|
)
|
(372.5
|
)
|
(343.5
|
)
|
|||
Dividends Declared – Preferred Stock
|
(46.4
|
)
|
(49.8
|
)
|
(23.4
|
)
|
|||
|
|
|
|
||||||
Balance at December 31
|
10,776.8
|
|
9,685.1
|
|
8,908.4
|
|
|||
|
|
|
|
||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
|
|
|
|
||||||
Balance at January 1
|
(414.3
|
)
|
(370.0
|
)
|
(372.7
|
)
|
|||
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
|
(25.3
|
)
|
—
|
|
—
|
|
|||
Net Unrealized (Losses) Gains on Debt Securities Available for Sale
|
(22.3
|
)
|
(42.4
|
)
|
(1.4
|
)
|
|||
Net Unrealized Gains (Losses) on Cash Flow Hedges
|
(1.4
|
)
|
(1.6
|
)
|
9.1
|
|
|||
Foreign Currency Translation Adjustments
|
22.2
|
|
16.7
|
|
(0.9
|
)
|
|||
Pension and Other Postretirement Benefit Adjustments
|
(12.6
|
)
|
(17.0
|
)
|
(4.1
|
)
|
|||
|
|
|
|
||||||
Balance at December 31
|
(453.7
|
)
|
(414.3
|
)
|
(370.0
|
)
|
|||
|
|
|
|
||||||
TREASURY STOCK
|
|
|
|
||||||
Balance at January 1
|
(1,392.4
|
)
|
(1,094.4
|
)
|
(1,033.6
|
)
|
|||
Stock Options and Awards
|
142.8
|
|
225.1
|
|
350.3
|
|
|||
Stock Purchased
|
(924.3
|
)
|
(523.1
|
)
|
(411.1
|
)
|
|||
|
|
|
|
||||||
Balance at December 31
|
(2,173.9
|
)
|
(1,392.4
|
)
|
(1,094.4
|
)
|
|||
|
|
|
|
||||||
Total Stockholders’ Equity at December 31
|
$
|
10,508.3
|
|
$
|
10,216.2
|
|
$
|
9,770.4
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
93
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
||||||
Net Income
|
$
|
1,556.4
|
|
$
|
1,199.0
|
|
$
|
1,032.5
|
|
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
|
|
|
|
||||||
Investment Security Losses, net
|
1.0
|
|
1.6
|
|
3.2
|
|
|||
Amortization and Accretion of Securities and Unearned Income, net
|
95.9
|
|
105.0
|
|
100.9
|
|
|||
Provision for Credit Losses
|
(14.5
|
)
|
(28.0
|
)
|
(26.0
|
)
|
|||
Depreciation on Buildings and Equipment
|
108.6
|
|
101.2
|
|
89.2
|
|
|||
Amortization of Computer Software
|
334.9
|
|
309.1
|
|
275.3
|
|
|||
Amortization of Intangibles
|
17.4
|
|
11.4
|
|
8.8
|
|
|||
Change in Accrued Income Taxes
|
(130.0
|
)
|
36.2
|
|
(129.0
|
)
|
|||
Pension Plan Contributions
|
(74.5
|
)
|
(14.5
|
)
|
(12.8
|
)
|
|||
Deferred Income Tax Provision
|
10.5
|
|
(76.1
|
)
|
(175.8
|
)
|
|||
Change in Receivables
|
(197.0
|
)
|
(119.3
|
)
|
(129.2
|
)
|
|||
Change in Interest Payable
|
28.5
|
|
10.7
|
|
(0.1
|
)
|
|||
Change in Collateral With Derivative Counterparties, net
|
(699.6
|
)
|
486.2
|
|
(180.4
|
)
|
|||
Other Operating Activities, net
|
729.9
|
|
(302.1
|
)
|
653.4
|
|
|||
Net Cash Provided by Operating Activities
|
1,767.5
|
|
1,720.4
|
|
1,510.0
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||||
Net Change in Federal Funds Sold and Securities Purchased under Agreements to Resell
|
105.7
|
|
678.9
|
|
(372.9
|
)
|
|||
Change in Interest-Bearing Deposits with Banks
|
1,073.8
|
|
(467.7
|
)
|
1,906.1
|
|
|||
Net Change in Federal Reserve and Other Central Bank Deposits
|
9,679.6
|
|
(12,748.7
|
)
|
(4,124.2
|
)
|
|||
Purchases of Debt Securities – Held to Maturity
|
(21,463.1
|
)
|
(11,955.2
|
)
|
(8,573.2
|
)
|
|||
Proceeds from Maturity and Redemption of Debt Securities – Held to Maturity
|
20,036.7
|
|
9,924.8
|
|
4,026.5
|
|
|||
Purchases of Debt Securities – Available for Sale
|
(12,596.9
|
)
|
(9,780.0
|
)
|
(14,741.9
|
)
|
|||
Proceeds from Sale, Maturity and Redemption of Debt Securities – Available for Sale
|
8,958.7
|
|
10,103.4
|
|
11,317.3
|
|
|||
Change in Loans and Leases
|
66.1
|
|
1,451.0
|
|
(471.0
|
)
|
|||
Purchases of Buildings and Equipment
|
(97.6
|
)
|
(91.6
|
)
|
(111.3
|
)
|
|||
Purchases and Development of Computer Software
|
(408.4
|
)
|
(381.2
|
)
|
(362.1
|
)
|
|||
Change in Client Security Settlement Receivables
|
(49.7
|
)
|
(592.6
|
)
|
1,105.0
|
|
|||
Acquisition of a Business, Net of Cash Received
|
(104.2
|
)
|
(188.5
|
)
|
(16.9
|
)
|
|||
Other Investing Activities, net
|
(873.6
|
)
|
25.8
|
|
226.5
|
|
|||
Net Cash Provided by (Used in) Investing Activities
|
4,327.1
|
|
(14,021.6
|
)
|
(10,192.1
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||||
Change in Deposits
|
(6,163.2
|
)
|
8,523.6
|
|
6,737.4
|
|
|||
Change in Federal Funds Purchased
|
308.1
|
|
2,081.2
|
|
(146.7
|
)
|
|||
Change in Securities Sold under Agreements to Repurchase
|
(665.2
|
)
|
360.5
|
|
(72.9
|
)
|
|||
Change in Short-Term Other Borrowings
|
1,860.9
|
|
967.7
|
|
1,073.5
|
|
|||
Proceeds from Senior Notes and Long-Term Debt
|
497.9
|
|
350.0
|
|
—
|
|
|||
Repayments of Senior Notes and Long-Term Debt
|
(314.3
|
)
|
(208.7
|
)
|
(6.7
|
)
|
|||
Proceeds from Issuance of Preferred Stock - Series D
|
—
|
|
—
|
|
493.5
|
|
|||
Treasury Stock Purchased
|
(924.3
|
)
|
(523.1
|
)
|
(411.1
|
)
|
|||
Net Proceeds from Stock Options
|
32.6
|
|
108.0
|
|
233.8
|
|
|||
Cash Dividends Paid on Common Stock
|
(405.4
|
)
|
(356.8
|
)
|
(333.0
|
)
|
|||
Cash Dividends Paid on Preferred Stock
|
(46.4
|
)
|
(49.8
|
)
|
(23.4
|
)
|
|||
Other Financing Activities, net
|
1.1
|
|
0.1
|
|
(7.5
|
)
|
|||
Net Cash (Used In) Provided by Financing Activities
|
(5,818.2
|
)
|
11,252.7
|
|
7,536.9
|
|
|||
Effect of Foreign Currency Exchange Rates on Cash
|
(212.9
|
)
|
234.6
|
|
58.7
|
|
|||
Change in Cash and Due from Banks
|
63.5
|
|
(813.9
|
)
|
(1,086.5
|
)
|
|||
Cash and Due from Banks at Beginning of Year
|
4,518.1
|
|
5,332.0
|
|
6,418.5
|
|
|||
Cash and Due from Banks at End of Year
|
$
|
4,581.6
|
|
$
|
4,518.1
|
|
$
|
5,332.0
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
||||||
Interest Paid
|
$
|
670.2
|
|
$
|
328.8
|
|
$
|
181.6
|
|
Income Taxes Paid
|
493.5
|
|
441.2
|
|
754.2
|
|
|||
Transfers from Loans to OREO
|
11.4
|
|
8.2
|
|
14.2
|
|
|
|
|
94
2018 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
95
|
|
|
|
96
2018 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
97
|
|
|
|
98
2018 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
99
|
|
|
|
100
2018 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
101
|
|
|
|
102
2018 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
103
|
|
DECEMBER 31, 2018
|
||||||||
FINANCIAL INSTRUMENT
|
FAIR VALUE
|
|
VALUATION TECHNIQUE
|
UNOBSERVABLE INPUT
|
RANGE OF INPUTS
|
||||
Swaps Related to Sale of Certain
Visa Class B Common Shares
|
$
|
32.8
|
million
|
Discounted Cash Flow
|
Visa Class A Appreciation
|
7.0
|
%
|
–
|
11.0%
|
|
|
|
Conversion Rate
|
1.62
|
x
|
–
|
1.64x
|
||
|
|
|
Expected Duration
|
1.5
|
|
–
|
4.0 years
|
|
DECEMBER 31, 2017
|
||||||||
FINANCIAL INSTRUMENT
|
FAIR VALUE
|
|
VALUATION TECHNIQUE
|
UNOBSERVABLE INPUT
|
RANGE OF INPUTS
|
||||
Auction Rate Securities
|
$
|
4.3
|
million
|
Comparables
|
Price
|
$92
|
–
|
$100
|
|
Swap 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
|
|
|
|
104
2018 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31, 2018
|
|||||||||||||||
(In Millions)
|
LEVEL 1
|
|
LEVEL 2
|
|
LEVEL 3
|
|
NETTING
|
|
ASSETS/
LIABILITIES AT FAIR VALUE |
|
||||||
Debt Securities
|
|
|
|
|
|
|||||||||||
Available for Sale
|
|
|
|
|
|
|||||||||||
U.S. Government
|
$
|
5,185.3
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
5,185.3
|
|
|
Obligations of States and Political Subdivisions
|
—
|
|
655.9
|
|
—
|
|
—
|
|
655.9
|
|
||||||
Government Sponsored Agency
|
—
|
|
22,424.6
|
|
—
|
|
—
|
|
22,424.6
|
|
||||||
Non-U.S. Government
|
—
|
|
142.2
|
|
—
|
|
—
|
|
142.2
|
|
||||||
Corporate Debt
|
—
|
|
2,294.7
|
|
—
|
|
—
|
|
2,294.7
|
|
||||||
Covered Bonds
|
—
|
|
829.3
|
|
—
|
|
—
|
|
829.3
|
|
||||||
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds
|
—
|
|
2,096.2
|
|
—
|
|
—
|
|
2,096.2
|
|
||||||
Other Asset-Backed
|
—
|
|
2,657.7
|
|
—
|
|
—
|
|
2,657.7
|
|
||||||
Commercial Mortgage-Backed
|
—
|
|
587.2
|
|
—
|
|
—
|
|
587.2
|
|
||||||
Other
|
—
|
|
15.7
|
|
—
|
|
—
|
|
15.7
|
|
||||||
|
|
|
|
|
|
|||||||||||
Total Available for Sale
|
5,185.3
|
|
31,703.5
|
|
—
|
|
—
|
|
36,888.8
|
|
||||||
|
|
|
|
|
|
|||||||||||
Trading Account
|
—
|
|
0.3
|
|
—
|
|
—
|
|
0.3
|
|
||||||
|
|
|
|
|
|
|||||||||||
Total Available for Sale and Trading Debt Securities
|
5,185.3
|
|
31,703.8
|
|
—
|
|
—
|
|
36,889.1
|
|
||||||
|
|
|
|
|
|
|||||||||||
Other Assets
|
|
|
|
|
|
|||||||||||
Derivative Assets
|
|
|
|
|
|
|||||||||||
Foreign Exchange Contracts
|
—
|
|
2,466.1
|
|
—
|
|
—
|
|
2,466.1
|
|
||||||
Interest Rate Contracts
|
—
|
|
96.1
|
|
—
|
|
—
|
|
96.1
|
|
||||||
Other Financial Derivatives
(1)
|
—
|
|
1.3
|
|
—
|
|
—
|
|
1.3
|
|
||||||
|
|
|
|
|
|
|||||||||||
Total Derivative Assets
|
—
|
|
2,563.5
|
|
—
|
|
(1,357.1
|
)
|
1,206.4
|
|
||||||
|
|
|
|
|
|
|||||||||||
Other Liabilities
|
|
|
|
|
|
|||||||||||
Derivative Liabilities
|
|
|
|
|
|
|||||||||||
Foreign Exchange Contracts
|
—
|
|
2,262.5
|
|
—
|
|
—
|
|
2,262.5
|
|
||||||
Interest Rate Contracts
|
—
|
|
93.1
|
|
—
|
|
—
|
|
93.1
|
|
||||||
Other Financial Derivatives
(2)
|
—
|
|
—
|
|
32.8
|
|
—
|
|
32.8
|
|
||||||
|
|
|
|
|
|
|||||||||||
Total Derivative Liabilities
|
$
|
—
|
|
$
|
2,355.6
|
|
$
|
32.8
|
|
$
|
(1,796.3
|
)
|
$
|
592.1
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
105
|
|
DECEMBER 31, 2017
|
|||||||||||||||
(In Millions)
|
LEVEL 1
|
|
LEVEL 2
|
|
LEVEL 3
|
|
NETTING
|
|
ASSETS/
LIABILITIES AT FAIR VALUE |
|
||||||
Debt 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 Debt 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
|
|
||||||
Other Financial Derivative
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Total Derivatives 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 Derivative
(1)
|
—
|
|
0.7
|
|
29.7
|
|
—
|
|
30.4
|
|
||||||
Total Derivative Liabilities
|
$
|
—
|
|
$
|
2,799.3
|
|
$
|
29.7
|
|
$
|
(1,621.4
|
)
|
$
|
1,207.6
|
|
|
|
|
106
2018 Annual Report | Northern Trust Corporation
|
|
|
LEVEL 3 ASSETS
|
AUCTION RATE SECURITIES
|
|
||||
(In Millions)
|
2018
|
|
2017
|
|
||
Fair Value at January 1
|
$
|
4.3
|
|
$
|
4.7
|
|
Total Gains (Losses):
|
|
|
||||
Included in Other Comprehensive Income
(1)
|
0.1
|
|
0.2
|
|
||
Purchases, Issues, Sales, and Settlements
|
|
|
||||
Settlements
|
(4.4
|
)
|
(0.6
|
)
|
||
|
|
|
||||
Fair Value at December 31
|
$
|
—
|
|
$
|
4.3
|
|
LEVEL 3 LIABILITIES
|
SWAPS RELATED TO SALE OF CERTAIN VISA CLASS B
COMMON SHARES
|
|
||||
(In Millions)
|
2018
|
|
2017
|
|
||
Fair Value at January 1
|
$
|
29.7
|
|
$
|
25.2
|
|
Total (Gains) Losses:
|
|
|
||||
Included in Earnings
(1)
|
19.8
|
|
12.7
|
|
||
Purchases, Issues, Sales, and Settlements
|
|
|
||||
Settlements
|
(16.7
|
)
|
(8.2
|
)
|
||
Fair Value at December 31
|
$
|
32.8
|
|
$
|
29.7
|
|
Unrealized (Gains) Losses Included in Earnings Related to Financial Instruments Held at December 31
(1)
|
$
|
13.3
|
|
$
|
11.4
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
107
|
|
DECEMBER 31, 2018
|
|||||
FINANCIAL INSTRUMENT
|
FAIR VALUE
|
VALUATION TECHNIQUE
|
UNOBSERVABLE INPUT
|
RANGE OF DISCOUNTS APPLIED
|
||
Loans
|
$24.9 million
|
Market Approach
|
Discount to reflect realizable value
|
15.0%
|
–
|
30.0%
|
OREO
|
$0.4 million
|
Market Approach
|
Discount to reflect realizable value
|
15.0%
|
–
|
30.0%
|
|
DECEMBER 31, 2017
|
|||||
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%
|
|
|
|
108
2018 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31, 2018
|
||||||||||||||
|
|
|
FAIR VALUE
|
||||||||||||
(In Millions)
|
BOOK VALUE
|
|
TOTAL
FAIR VALUE |
|
LEVEL 1
|
|
LEVEL 2
|
|
LEVEL 3
|
|
|||||
ASSETS
|
|
|
|
|
|
||||||||||
Cash and Due from Banks
|
$
|
4,581.6
|
|
$
|
4,581.6
|
|
$
|
4,581.6
|
|
$
|
—
|
|
$
|
—
|
|
Federal Reserve and Other Central Bank Deposits
|
30,080.2
|
|
30,080.2
|
|
—
|
|
30,080.2
|
|
—
|
|
|||||
Interest-Bearing Deposits with Banks
|
4,264.2
|
|
4,264.2
|
|
—
|
|
4,264.2
|
|
—
|
|
|||||
Federal Funds Sold and Securities Purchased under Agreements to Resell
|
1,165.2
|
|
1,165.2
|
|
—
|
|
1,165.2
|
|
—
|
|
|||||
Debt Securities
|
|
|
|
|
|
||||||||||
Available for Sale (
Note
)
|
36,888.8
|
|
36,888.8
|
|
5,185.3
|
|
31,703.5
|
|
—
|
|
|||||
Held to Maturity
|
14,354.0
|
|
14,267.0
|
|
101.6
|
|
14,165.4
|
|
—
|
|
|||||
Trading Account
|
0.3
|
|
0.3
|
|
—
|
|
0.3
|
|
—
|
|
|||||
Loans (excluding Leases)
|
|
|
|
|
|
||||||||||
Held for Investment
|
32,287.0
|
|
32,339.2
|
|
—
|
|
—
|
|
32,339.2
|
|
|||||
Held for Sale
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Client Security Settlement Receivables
|
1,646.1
|
|
1,646.1
|
|
—
|
|
1,646.1
|
|
—
|
|
|||||
Other Assets
|
|
|
|
|
|
||||||||||
Federal Reserve and Federal Home Loan Bank Stock
|
300.3
|
|
300.3
|
|
—
|
|
300.3
|
|
—
|
|
|||||
Community Development Investments
|
606.6
|
|
606.6
|
|
—
|
|
606.6
|
|
—
|
|
|||||
Employee Benefit and Deferred Compensation
|
202.3
|
|
194.5
|
|
125.0
|
|
69.5
|
|
—
|
|
|||||
LIABILITIES
|
|
|
|
|
|
||||||||||
Deposits
|
|
|
|
|
|
||||||||||
Demand, Noninterest-Bearing, Savings and Money Market
|
$
|
37,340.1
|
|
$
|
37,340.1
|
|
$
|
37,340.1
|
|
$
|
—
|
|
$
|
—
|
|
Savings Certificates and Other Time
|
688.7
|
|
691.8
|
|
—
|
|
691.8
|
|
—
|
|
|||||
Non U.S. Offices Interest-Bearing
|
66,468.0
|
|
66,468.0
|
|
—
|
|
66,468.0
|
|
—
|
|
|||||
Federal Funds Purchased
|
2,594.2
|
|
2,594.2
|
|
—
|
|
2,594.2
|
|
—
|
|
|||||
Securities Sold Under Agreements to Repurchase
|
168.3
|
|
168.3
|
|
—
|
|
168.3
|
|
—
|
|
|||||
Other Borrowings
|
7,901.7
|
|
7,904.1
|
|
—
|
|
7,904.1
|
|
—
|
|
|||||
Senior Notes
|
2,011.3
|
|
1,994.4
|
|
—
|
|
1,994.4
|
|
—
|
|
|||||
Long-Term Debt
|
|
|
|
|
|
||||||||||
Subordinated Debt
|
1,112.4
|
|
1,089.7
|
|
—
|
|
1,089.7
|
|
—
|
|
|||||
Floating Rate Capital Debt
|
277.6
|
|
253.5
|
|
—
|
|
253.5
|
|
—
|
|
|||||
Other Liabilities
|
|
|
|
|
|
||||||||||
Standby Letters of Credit
|
28.0
|
|
28.0
|
|
—
|
|
—
|
|
28.0
|
|
|||||
Loan Commitments
|
139.9
|
|
139.9
|
|
—
|
|
—
|
|
139.9
|
|
|||||
DERIVATIVE INSTRUMENTS
|
|
|
|
|
|
||||||||||
Asset/Liability Management
|
|
|
|
|
|
||||||||||
Foreign Exchange Contracts
|
|
|
|
|
|
||||||||||
Assets
|
$
|
306.7
|
|
$
|
306.7
|
|
$
|
—
|
|
$
|
306.7
|
|
$
|
—
|
|
Liabilities
|
72.5
|
|
72.5
|
|
—
|
|
72.5
|
|
—
|
|
|||||
Interest Rate Contracts
|
|
|
|
|
|
||||||||||
Assets
|
30.0
|
|
30.0
|
|
—
|
|
30.0
|
|
—
|
|
|||||
Liabilities
|
24.5
|
|
24.5
|
|
—
|
|
24.5
|
|
—
|
|
|||||
Other Financial Derivatives
|
|
|
|
|
|
||||||||||
Assets
(1)
|
1.3
|
|
1.3
|
|
—
|
|
1.3
|
|
—
|
|
|||||
Liabilities
(2)
|
32.8
|
|
32.8
|
|
—
|
|
—
|
|
32.8
|
|
|||||
Client-Related and Trading
|
|
|
|
|
|
||||||||||
Foreign Exchange Contracts
|
|
|
|
|
|
||||||||||
Assets
|
2,159.4
|
|
2,159.4
|
|
—
|
|
2,159.4
|
|
—
|
|
|||||
Liabilities
|
2,190.0
|
|
2,190.0
|
|
—
|
|
2,190.0
|
|
—
|
|
|||||
Interest Rate Contracts
|
|
|
|
|
|
||||||||||
Assets
|
66.1
|
|
66.1
|
|
—
|
|
66.1
|
|
—
|
|
|||||
Liabilities
|
68.6
|
|
68.6
|
|
—
|
|
68.6
|
|
—
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
109
|
|
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 Securities Purchased under Agreements to Resell
|
1,324.3
|
|
1,324.3
|
|
—
|
|
1,324.3
|
|
—
|
|
|||||
Debt 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
|
|
—
|
|
|||||
Floating Rate Capital Debt
|
277.5
|
|
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
|
|
—
|
|
|
|
|
110
2018 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31, 2018
|
|||||||||||
(In Millions)
|
AMORTIZED
COST
|
|
GROSS
UNREALIZED
GAINS
|
|
GROSS
UNREALIZED
LOSSES
|
|
FAIR
VALUE
|
|
||||
U.S. Government
|
$
|
5,203.1
|
|
$
|
21.8
|
|
$
|
39.6
|
|
$
|
5,185.3
|
|
Obligations of States and Political Subdivisions
|
657.6
|
|
2.0
|
|
3.7
|
|
655.9
|
|
||||
Government Sponsored Agency
|
22,522.7
|
|
52.4
|
|
150.5
|
|
22,424.6
|
|
||||
Non-U.S. Government
|
143.3
|
|
—
|
|
1.1
|
|
142.2
|
|
||||
Corporate Debt
|
2,312.6
|
|
3.2
|
|
21.1
|
|
2,294.7
|
|
||||
Covered Bonds
|
832.7
|
|
1.4
|
|
4.8
|
|
829.3
|
|
||||
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds
|
2,087.8
|
|
11.9
|
|
3.5
|
|
2,096.2
|
|
||||
Other Asset-Backed
|
2,678.9
|
|
1.7
|
|
22.9
|
|
2,657.7
|
|
||||
Commercial Mortgage-Backed
|
587.4
|
|
4.0
|
|
4.2
|
|
587.2
|
|
||||
Other
|
15.7
|
|
—
|
|
—
|
|
15.7
|
|
||||
|
|
|
|
|
||||||||
Total
|
$
|
37,041.8
|
|
$
|
98.4
|
|
$
|
251.4
|
|
$
|
36,888.8
|
|
|
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, 2018
|
DECEMBER 31, 2017
|
||||||||||||
(In Millions)
|
AMORTIZED
COST
|
|
FAIR
VALUE
|
|
AMORTIZED
COST
|
|
FAIR
VALUE
|
|
||||||
Due in One Year or Less
|
$
|
9,206.2
|
|
$
|
9,162.8
|
|
$
|
6,249.5
|
|
$
|
6,227.0
|
|
||
Due After One Year Through Five Years
|
21,012.7
|
|
20,943.9
|
|
20,017.2
|
|
19,937.8
|
|
||||||
Due After Five Years Through Ten Years
|
5,774.1
|
|
5,740.8
|
|
6,545.3
|
|
6,535.1
|
|
||||||
Due After Ten Years
|
1,048.8
|
|
1,041.3
|
|
1,052.8
|
|
1,042.2
|
|
||||||
|
|
|
|
|
||||||||||
Total
|
$
|
37,041.8
|
|
$
|
36,888.8
|
|
$
|
33,864.8
|
|
$
|
33,742.1
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
111
|
|
DECEMBER 31, 2018
|
|||||||||||
(In Millions)
|
AMORTIZED
COST
|
|
GROSS
UNREALIZED
GAINS
|
|
GROSS
UNREALIZED
LOSSES
|
|
FAIR
VALUE
|
|
||||
U.S. Government
|
$
|
101.6
|
|
$
|
—
|
|
$
|
—
|
|
$
|
101.6
|
|
Obligations of States and Political Subdivisions
|
18.9
|
|
0.6
|
|
—
|
|
19.5
|
|
||||
Government Sponsored Agency
|
4.5
|
|
0.2
|
|
—
|
|
4.7
|
|
||||
Corporate Debt
|
472.9
|
|
0.4
|
|
1.8
|
|
471.5
|
|
||||
Covered Bonds
|
2,877.6
|
|
9.6
|
|
9.3
|
|
2,877.9
|
|
||||
Non-U.S. Government
|
6,488.2
|
|
2.1
|
|
8.7
|
|
6,481.6
|
|
||||
Certificates of Deposit
|
45.1
|
|
—
|
|
—
|
|
45.1
|
|
||||
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds
|
2,966.8
|
|
5.8
|
|
12.3
|
|
2,960.3
|
|
||||
Other Asset-Backed
|
1,146.4
|
|
—
|
|
4.0
|
|
1,142.4
|
|
||||
Other
|
232.0
|
|
—
|
|
69.6
|
|
162.4
|
|
||||
|
|
|
|
|
||||||||
Total
|
$
|
14,354.0
|
|
$
|
18.7
|
|
$
|
105.7
|
|
$
|
14,267.0
|
|
|
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, 2018
|
DECEMBER 31, 2017
|
||||||||||||
(In Millions)
|
AMORTIZED
COST
|
|
FAIR
VALUE
|
|
AMORTIZED
COST
|
|
FAIR
VALUE
|
|
||||||
Due in One Year or Less
|
$
|
6,638.2
|
|
$
|
6,635.5
|
|
$
|
5,691.9
|
|
$
|
5,695.8
|
|
||
Due After One Year Through Five Years
|
7,066.0
|
|
7,040.0
|
|
6,667.8
|
|
6,663.9
|
|
||||||
Due After Five Years Through Ten Years
|
567.9
|
|
553.0
|
|
612.2
|
|
606.3
|
|
||||||
Due After Ten Years
|
81.9
|
|
38.5
|
|
77.1
|
|
44.9
|
|
||||||
|
|
|
|
|
||||||||||
Total
|
$
|
14,354.0
|
|
$
|
14,267.0
|
|
$
|
13,049.0
|
|
$
|
13,010.9
|
|
|
|
|
112
2018 Annual Report | Northern Trust Corporation
|
|
|
AS OF DECEMBER 31, 2018
|
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
|
$
|
—
|
|
$
|
—
|
|
$
|
2,862.0
|
|
$
|
39.6
|
|
$
|
2,862.0
|
|
$
|
39.6
|
|
Obligations of States and Political Subdivisions
|
169.6
|
|
2.4
|
|
279.6
|
|
1.3
|
|
449.2
|
|
3.7
|
|
||||||
Government Sponsored Agency
|
8,368.8
|
|
33.5
|
|
6,822.4
|
|
117.0
|
|
15,191.2
|
|
150.5
|
|
||||||
Non-U.S. Government
|
5,065.2
|
|
0.8
|
|
1,274.0
|
|
9.0
|
|
6,339.2
|
|
9.8
|
|
||||||
Corporate Debt
|
712.7
|
|
4.1
|
|
1,097.4
|
|
18.8
|
|
1,810.1
|
|
22.9
|
|
||||||
Covered Bonds
|
646.4
|
|
3.7
|
|
696.9
|
|
10.4
|
|
1,343.3
|
|
14.1
|
|
||||||
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds
|
1,105.0
|
|
4.6
|
|
1,189.2
|
|
11.2
|
|
2,294.2
|
|
15.8
|
|
||||||
Other Asset-Backed
|
2,507.8
|
|
15.9
|
|
954.9
|
|
11.0
|
|
3,462.7
|
|
26.9
|
|
||||||
Commercial Mortgage-Backed
|
22.8
|
|
0.1
|
|
274.4
|
|
4.1
|
|
297.2
|
|
4.2
|
|
||||||
Other
|
50.5
|
|
18.8
|
|
112.6
|
|
50.8
|
|
163.1
|
|
69.6
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
18,648.8
|
|
$
|
83.9
|
|
$
|
15,563.4
|
|
$
|
273.2
|
|
$
|
34,212.2
|
|
$
|
357.1
|
|
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
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
113
|
|
DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Changes in Other-Than-Temporary Impairment Losses
(1)
|
$
|
(0.5
|
)
|
$
|
(0.2
|
)
|
$
|
(3.7
|
)
|
Noncredit-related Losses Recorded in / (Reclassified from) OCI
(2)
|
—
|
|
—
|
|
—
|
|
|||
|
|
|
|
||||||
Net Impairment Losses Recognized in Earnings
|
$
|
(0.5
|
)
|
$
|
(0.2
|
)
|
$
|
(3.7
|
)
|
|
|
|
114
2018 Annual Report | Northern Trust Corporation
|
|
|
|
YEAR ENDED DECEMBER 31,
|
|
||||
(In Millions)
|
2018
|
|
2017
|
|
||
Cumulative Credit-Related Losses on Debt Securities Held – Beginning of Year
|
$
|
3.6
|
|
$
|
3.4
|
|
Plus: Losses on Newly Identified Impairments
|
0.4
|
|
0.1
|
|
||
Additional Losses on Previously Identified Impairments
|
0.1
|
|
0.1
|
|
||
Less: Current and Prior Period Losses on Debt Securities Sold or Matured During the Year
|
—
|
|
—
|
|
||
|
|
|
|
|||
Cumulative Credit-Related Losses on Debt Securities Held – End of Year
|
$
|
4.1
|
|
$
|
3.6
|
|
($ In Millions)
|
2018
|
|
2017
|
|
||
Balance at December 31
|
$
|
1,031.2
|
|
$
|
1,303.3
|
|
Average Balance During the Year
|
1,478.3
|
|
1,832.0
|
|
||
Average Interest Rate Earned During the Year
|
2.22
|
%
|
1.48
|
%
|
||
Maximum Month-End Balance During the Year
|
1,942.0
|
|
2,064.1
|
|
($ In Millions)
|
2018
|
|
2017
|
|
||
Balance at December 31
|
$
|
168.3
|
|
$
|
834.0
|
|
Average Balance During the Year
|
525.2
|
|
738.9
|
|
||
Average Interest Rate Paid During the Year
|
1.48
|
%
|
0.81
|
%
|
||
Maximum Month-End Balance During the Year
|
981.3
|
|
834.0
|
|
|
December 31, 2018
|
||
(In Millions)
|
Remaining Contractual
Maturity of the
Agreements
|
||
Repurchase Agreements
|
Overnight and
Continuous
|
||
U.S. Treasury and Agency Securities
|
$
|
168.3
|
|
Total Borrowings
|
168.3
|
|
|
Gross Amount of Recognized Liabilities for Repurchase Agreements in Note 27
|
168.3
|
|
|
Amounts related to agreements not included in Note 27
|
—
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
115
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2018
|
|
2017
|
|
||
Commercial
|
|
|
||||
Commercial and Institutional
|
$
|
8,728.1
|
|
$
|
9,042.2
|
|
Commercial Real Estate
|
3,228.8
|
|
3,482.7
|
|
||
Non-U.S.
|
2,701.6
|
|
1,538.5
|
|
||
Lease Financing, net
|
90.7
|
|
229.2
|
|
||
Other
|
426.0
|
|
265.4
|
|
||
|
|
|
||||
Total Commercial
|
15,175.2
|
|
14,558.0
|
|
||
|
|
|
||||
Personal
|
|
|
||||
Private Client
|
10,733.3
|
|
10,753.1
|
|
||
Residential Real Estate
|
6,514.0
|
|
7,247.6
|
|
||
Other
|
67.5
|
|
33.5
|
|
||
|
|
|
||||
Total Personal
|
17,314.8
|
|
18,034.2
|
|
||
|
|
|
||||
Total Loans and Leases
|
$
|
32,490.0
|
|
$
|
32,592.2
|
|
Allowance for Credit Losses Assigned to Loans and Leases
|
(112.6
|
)
|
(131.2
|
)
|
||
|
|
|
||||
Net Loans and Leases
|
$
|
32,377.4
|
|
$
|
32,461.0
|
|
|
|
|
116
2018 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2018
|
|
2017
|
|
||
Direct Finance Leases
|
|
|
||||
Lease Receivable
|
$
|
9.8
|
|
$
|
26.6
|
|
Residual Value
|
23.8
|
|
72.4
|
|
||
Initial Direct Costs
|
0.3
|
|
0.7
|
|
||
Unearned Income
|
—
|
|
(1.5
|
)
|
||
|
|
|
||||
Investment in Direct Finance Leases
|
33.9
|
|
98.2
|
|
||
|
|
|
||||
Leveraged Leases
|
|
|
||||
Net Rental Receivable
|
33.9
|
|
76.1
|
|
||
Residual Value
|
33.3
|
|
85.6
|
|
||
Unearned Income
|
(10.4
|
)
|
(30.7
|
)
|
||
|
|
|
||||
Investment in Leveraged Leases
|
56.8
|
|
131.0
|
|
||
|
|
|
||||
Lease Financing, net
|
$
|
90.7
|
|
$
|
229.2
|
|
(In Millions)
|
FUTURE MINIMUM
LEASE PAYMENTS
|
|
|
2019
|
$
|
3.7
|
|
2020
|
3.7
|
|
|
2021
|
2.1
|
|
|
2022
|
—
|
|
|
2023
|
—
|
|
•
|
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.
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
117
|
|
DECEMBER 31, 2018
|
DECEMBER 31, 2017
|
||||||||||||||||||||||
(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
|
$
|
5,477.4
|
|
$
|
3,159.8
|
|
$
|
90.9
|
|
$
|
8,728.1
|
|
$
|
5,832.9
|
|
$
|
3,133.4
|
|
$
|
75.9
|
|
$
|
9,042.2
|
|
Commercial Real Estate
|
1,209.6
|
|
1,992.2
|
|
27.0
|
|
3,228.8
|
|
1,280.7
|
|
2,187.5
|
|
14.5
|
|
3,482.7
|
|
||||||||
Non-U.S.
|
1,625.3
|
|
1,075.3
|
|
1.0
|
|
2,701.6
|
|
606.6
|
|
930.5
|
|
1.4
|
|
1,538.5
|
|
||||||||
Lease Financing, net
|
78.3
|
|
12.4
|
|
—
|
|
90.7
|
|
191.4
|
|
37.8
|
|
—
|
|
229.2
|
|
||||||||
Other
|
203.3
|
|
222.7
|
|
—
|
|
426.0
|
|
155.5
|
|
109.9
|
|
—
|
|
265.4
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total Commercial
|
8,593.9
|
|
6,462.4
|
|
118.9
|
|
15,175.2
|
|
8,067.1
|
|
6,399.1
|
|
91.8
|
|
14,558.0
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
Personal
|
|
|
|
|
|
|
|
|
||||||||||||||||
Private Client
|
6,321.1
|
|
4,403.2
|
|
9.0
|
|
10,733.3
|
|
6,716.0
|
|
4,027.8
|
|
9.3
|
|
10,753.1
|
|
||||||||
Residential Real Estate
|
2,745.0
|
|
3,502.3
|
|
266.7
|
|
6,514.0
|
|
2,960.5
|
|
3,978.8
|
|
308.3
|
|
7,247.6
|
|
||||||||
Other
|
32.2
|
|
35.3
|
|
—
|
|
67.5
|
|
19.6
|
|
13.9
|
|
—
|
|
33.5
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total Personal
|
9,098.3
|
|
7,940.8
|
|
275.7
|
|
17,314.8
|
|
9,696.1
|
|
8,020.5
|
|
317.6
|
|
18,034.2
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total Loans and Leases
|
$
|
17,692.2
|
|
$
|
14,403.2
|
|
$
|
394.6
|
|
$
|
32,490.0
|
|
$
|
17,763.2
|
|
$
|
14,419.6
|
|
$
|
409.4
|
|
$
|
32,592.2
|
|
|
|
|
118
2018 Annual Report | Northern Trust Corporation
|
|
|
(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, 2017
|
|
|
|
|
|
|
|
||||||||||||||
Commercial
|
|
|
|
|
|
|
|
||||||||||||||
Commercial and Institutional
|
$
|
8,999.4
|
|
$
|
13.3
|
|
$
|
3.1
|
|
$
|
0.4
|
|
$
|
9,016.2
|
|
$
|
26.0
|
|
$
|
9,042.2
|
|
Commercial Real Estate
|
3,455.3
|
|
14.1
|
|
4.1
|
|
0.9
|
|
3,474.4
|
|
8.3
|
|
3,482.7
|
|
|||||||
Non-U.S.
|
1,538.3
|
|
0.2
|
|
—
|
|
—
|
|
1,538.5
|
|
—
|
|
1,538.5
|
|
|||||||
Lease Financing, net
|
229.2
|
|
—
|
|
—
|
|
—
|
|
229.2
|
|
—
|
|
229.2
|
|
|||||||
Other
|
265.4
|
|
—
|
|
—
|
|
—
|
|
265.4
|
|
—
|
|
265.4
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||||||||
Total Commercial
|
14,487.6
|
|
27.6
|
|
7.2
|
|
1.3
|
|
14,523.7
|
|
34.3
|
|
14,558.0
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||||||||
Personal
|
|
|
|
|
|
|
|
||||||||||||||
Private Client
|
10,687.5
|
|
55.3
|
|
9.7
|
|
0.6
|
|
10,753.1
|
|
—
|
|
10,753.1
|
|
|||||||
Residential Real Estate
|
7,059.4
|
|
53.8
|
|
11.9
|
|
6.1
|
|
7,131.2
|
|
116.4
|
|
7,247.6
|
|
|||||||
Other
|
33.5
|
|
—
|
|
—
|
|
—
|
|
33.5
|
|
—
|
|
33.5
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||||||||
Total Personal
|
17,780.4
|
|
109.1
|
|
21.6
|
|
6.7
|
|
17,917.8
|
|
116.4
|
|
18,034.2
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||||||||
Total Loans and Leases
|
$
|
32,268.0
|
|
$
|
136.7
|
|
$
|
28.8
|
|
$
|
8.0
|
|
$
|
32,441.5
|
|
$
|
150.7
|
|
$
|
32,592.2
|
|
|
|
|
Other Real Estate Owned
|
|
$
|
4.6
|
|
|
|||||||||||||
|
|
|
Total Nonperforming Assets
|
|
$
|
155.3
|
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
119
|
|
AS OF DECEMBER 31, 2018
|
AS OF DECEMBER 31, 2017
|
||||||||||||||||
(In Millions)
|
RECORDED
INVESTMENT
|
|
UNPAID
PRINCIPAL
BALANCE
|
|
SPECIFIC
ALLOWANCE
|
|
RECORDED
INVESTMENT
|
|
UNPAID
PRINCIPAL
BALANCE
|
|
SPECIFIC
ALLOWANCE
|
|
||||||
With no related specific allowance
|
|
|
|
|
|
|
||||||||||||
Commercial and Institutional
|
$
|
0.2
|
|
$
|
0.4
|
|
$
|
—
|
|
$
|
24.9
|
|
$
|
30.3
|
|
$
|
—
|
|
Commercial Real Estate
|
5.8
|
|
7.6
|
|
—
|
|
5.7
|
|
7.6
|
|
—
|
|
||||||
Residential Real Estate
|
76.7
|
|
104.7
|
|
—
|
|
90.9
|
|
124.9
|
|
—
|
|
||||||
Private Client
|
1.7
|
|
1.7
|
|
—
|
|
0.7
|
|
0.7
|
|
—
|
|
||||||
With a related specific allowance
|
|
|
|
|
|
|
||||||||||||
Commercial and Institutional
|
6.4
|
|
7.3
|
|
3.0
|
|
0.5
|
|
5.4
|
|
0.5
|
|
||||||
Commercial Real Estate
|
2.6
|
|
2.8
|
|
1.1
|
|
2.8
|
|
2.8
|
|
0.6
|
|
||||||
Residential Real Estate
|
22.8
|
|
26.1
|
|
3.1
|
|
14.3
|
|
14.9
|
|
4.3
|
|
||||||
Total
|
|
|
|
|
|
|
||||||||||||
Commercial
|
15.0
|
|
18.1
|
|
4.1
|
|
33.9
|
|
46.1
|
|
1.1
|
|
||||||
Personal
|
101.2
|
|
132.5
|
|
3.1
|
|
105.9
|
|
140.5
|
|
4.3
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
116.2
|
|
$
|
150.6
|
|
$
|
7.2
|
|
$
|
139.8
|
|
$
|
186.6
|
|
$
|
5.4
|
|
|
YEAR ENDED DECEMBER 31, 2018
|
|
YEAR ENDED DECEMBER 31, 2017
|
|
||||||||
(In Millions)
|
AVERAGE
RECORDED
INVESTMENT
|
|
INTEREST
INCOME
RECOGNIZED
|
|
AVERAGE
RECORDED
INVESTMENT
|
|
INTEREST
INCOME
RECOGNIZED
|
|
||||
With no related specific allowance
|
|
|
|
|
||||||||
Commercial and Institutional
|
$
|
6.8
|
|
$
|
—
|
|
$
|
8.7
|
|
$
|
—
|
|
Commercial Real Estate
|
6.4
|
|
0.2
|
|
9.2
|
|
0.1
|
|
||||
Residential Real Estate
|
94.9
|
|
1.9
|
|
105.0
|
|
1.5
|
|
||||
Private Client
|
0.6
|
|
0.1
|
|
0.2
|
|
—
|
|
||||
With a related specific allowance
|
|
|
|
|
||||||||
Commercial and Institutional
|
4.6
|
|
—
|
|
6.5
|
|
—
|
|
||||
Commercial Real Estate
|
2.1
|
|
—
|
|
2.6
|
|
—
|
|
||||
Residential Real Estate
|
9.2
|
|
—
|
|
17.0
|
|
—
|
|
||||
Total
|
|
|
|
|
||||||||
Commercial
|
19.9
|
|
0.2
|
|
27.0
|
|
0.1
|
|
||||
Personal
|
104.7
|
|
2.0
|
|
122.2
|
|
1.5
|
|
||||
|
|
|
|
|
||||||||
Total
|
$
|
124.6
|
|
$
|
2.2
|
|
$
|
149.2
|
|
$
|
1.6
|
|
|
|
|
120
2018 Annual Report | Northern Trust Corporation
|
|
|
($ In Millions)
|
NUMBER OF
LOANS AND
LEASES
|
|
RECORDED
INVESTMENT
|
|
UNPAID
PRINCIPAL
BALANCE
|
|
||
December 31, 2018
|
|
|
|
|||||
Commercial
|
|
|
|
|||||
Commercial and Institutional
|
1
|
|
$
|
0.3
|
|
$
|
0.5
|
|
Commercial Real Estate
|
2
|
|
2.8
|
|
2.8
|
|
||
|
|
|
|
|||||
Total Commercial
|
3
|
|
3.1
|
|
3.3
|
|
||
|
|
|
|
|||||
Personal
|
|
|
|
|||||
Residential Real Estate
|
48
|
|
27.7
|
|
30.8
|
|
||
Private Client
|
1
|
|
—
|
|
0.1
|
|
||
|
|
|
|
|||||
Total Personal
|
49
|
|
27.7
|
|
30.9
|
|
||
|
|
|
|
|||||
Total Loans and Leases
|
52
|
|
$
|
30.8
|
|
$
|
34.2
|
|
($ 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
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
121
|
|
2018
|
2017
|
2016
|
||||||||||||||||||||||||
(In Millions)
|
COMMERCIAL
|
|
PERSONAL
|
|
TOTAL
|
|
COMMERCIAL
|
|
PERSONAL
|
|
TOTAL
|
|
COMMERCIAL
|
|
PERSONAL
|
|
TOTAL
|
|
|||||||||
Balance at Beginning of Year
|
$
|
80.8
|
|
$
|
73.0
|
|
$
|
153.8
|
|
$
|
104.9
|
|
$
|
87.1
|
|
$
|
192.0
|
|
$
|
114.8
|
|
$
|
118.5
|
|
$
|
233.3
|
|
Charge-Offs
|
(0.9
|
)
|
(9.2
|
)
|
(10.1
|
)
|
(11.4
|
)
|
(10.1
|
)
|
(21.5
|
)
|
(16.6
|
)
|
(10.7
|
)
|
(27.3
|
)
|
|||||||||
Recoveries
|
1.7
|
|
7.3
|
|
9.0
|
|
5.5
|
|
5.8
|
|
11.3
|
|
4.8
|
|
7.3
|
|
12.1
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net (Charge-Offs) Recoveries
|
0.8
|
|
(1.9
|
)
|
(1.1
|
)
|
(5.9
|
)
|
(4.3
|
)
|
(10.2
|
)
|
(11.8
|
)
|
(3.4
|
)
|
(15.2
|
)
|
|||||||||
Provision for Credit Losses
|
(2.9
|
)
|
(11.6
|
)
|
(14.5
|
)
|
(18.2
|
)
|
(9.8
|
)
|
(28.0
|
)
|
2.0
|
|
(28.0
|
)
|
(26.0
|
)
|
|||||||||
Effects of Foreign Exchange Rates
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.1
|
)
|
—
|
|
(0.1
|
)
|
|||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Balance at End of Year
|
$
|
78.7
|
|
$
|
59.5
|
|
$
|
138.2
|
|
$
|
80.8
|
|
$
|
73.0
|
|
$
|
153.8
|
|
$
|
104.9
|
|
$
|
87.1
|
|
$
|
192.0
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Allowance for Credit Losses Assigned to:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loans and Leases
|
$
|
57.6
|
|
$
|
55.0
|
|
$
|
112.6
|
|
$
|
63.5
|
|
$
|
67.7
|
|
$
|
131.2
|
|
$
|
83.7
|
|
$
|
77.3
|
|
$
|
161.0
|
|
Undrawn Commitments and Standby Letters of Credit
|
21.1
|
|
4.5
|
|
25.6
|
|
17.3
|
|
5.3
|
|
22.6
|
|
21.2
|
|
9.8
|
|
31.0
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Total Allowance for Credit Losses
|
$
|
78.7
|
|
$
|
59.5
|
|
$
|
138.2
|
|
$
|
80.8
|
|
$
|
73.0
|
|
$
|
153.8
|
|
$
|
104.9
|
|
$
|
87.1
|
|
$
|
192.0
|
|
|
|
|
122
2018 Annual Report | Northern Trust Corporation
|
|
|
(In Millions)
|
COMMERCIAL
|
|
PERSONAL
|
|
TOTAL
|
|
|||
December 31, 2018
|
|
|
|
||||||
Loans and Leases
|
|
|
|
||||||
Specifically Evaluated for Impairment
|
$
|
15.0
|
|
$
|
101.2
|
|
$
|
116.2
|
|
Evaluated for Inherent Impairment
|
15,160.2
|
|
17,213.6
|
|
32,373.8
|
|
|||
|
|
|
|
||||||
Total Loans and Leases
|
15,175.2
|
|
17,314.8
|
|
32,490.0
|
|
|||
Allowance for Credit Losses on Credit Exposures
|
|
|
|
||||||
Specifically Evaluated for Impairment
|
4.1
|
|
3.1
|
|
7.2
|
|
|||
Evaluated for Inherent Impairment
|
53.5
|
|
51.9
|
|
105.4
|
|
|||
|
|
|
|
||||||
Allowance Assigned to Loans and Leases
|
57.6
|
|
55.0
|
|
112.6
|
|
|||
Allowance for Undrawn Exposures
|
|
|
|
||||||
Commitments and Standby Letters of Credit
|
21.1
|
|
4.5
|
|
25.6
|
|
|||
|
|
|
|
||||||
Total Allowance for Credit Losses
|
$
|
78.7
|
|
$
|
59.5
|
|
$
|
138.2
|
|
(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
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
123
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2018
|
|
2017
|
|
||
Commercial Mortgages
|
|
|
||||
Office
|
$
|
811.2
|
|
$
|
825.2
|
|
Apartment/ Multi-family
|
490.7
|
|
623.3
|
|
||
Retail
|
529.7
|
|
631.1
|
|
||
Industrial/ Warehouse
|
254.9
|
|
311.1
|
|
||
Other
|
426.6
|
|
445.6
|
|
||
|
|
|
||||
Total Commercial Mortgages
|
2,513.1
|
|
2,836.3
|
|
||
Construction, Acquisition and Development Loans
|
420.6
|
|
350.8
|
|
||
Single Family Investment
|
127.0
|
|
164.8
|
|
||
Other Commercial Real Estate Related
|
168.1
|
|
130.8
|
|
||
|
|
|
||||
Total Commercial Real Estate Loans
|
$
|
3,228.8
|
|
$
|
3,482.7
|
|
|
DECEMBER 31, 2018
|
||||||||
(In Millions)
|
ORIGINAL
COST
|
|
ACCUMULATED
DEPRECIATION
|
|
NET BOOK
VALUE
|
|
|||
Land and Improvements
|
$
|
15.4
|
|
$
|
1.1
|
|
$
|
14.3
|
|
Buildings
|
245.7
|
|
148.2
|
|
97.5
|
|
|||
Equipment
|
649.9
|
|
457.6
|
|
192.3
|
|
|||
Leasehold Improvements
|
406.0
|
|
281.9
|
|
124.1
|
|
|||
|
|
|
|
||||||
Total Buildings and Equipment
|
$
|
1,317.0
|
|
$
|
888.8
|
|
$
|
428.2
|
|
|
|
|
124
2018 Annual Report | Northern Trust Corporation
|
|
|
(In Millions)
|
FUTURE MINIMUM
LEASE PAYMENTS
|
|
|
2019
|
$
|
98.8
|
|
2020
|
97.8
|
|
|
2021
|
85.9
|
|
|
2022
|
77.2
|
|
|
2023
|
67.7
|
|
|
Later Years
|
335.7
|
|
|
|
|
||
Total Minimum Lease Payments
|
763.1
|
|
|
Less: Sublease Rentals
|
(23.4
|
)
|
|
|
|
||
Net Minimum Lease Payments
|
$
|
739.7
|
|
(In Millions)
|
CORPORATE &
INSTITUTIONAL
SERVICES
|
|
WEALTH
MANAGEMENT
|
|
TOTAL
|
|
|||
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
|
|
Goodwill Acquired
|
71.4
|
|
—
|
|
71.4
|
|
|||
Foreign Exchange Rates
|
(7.7
|
)
|
—
|
|
(7.7
|
)
|
|||
|
|
|
|
||||||
Balance at December 31, 2018
|
$
|
598.2
|
|
$
|
71.1
|
|
$
|
669.3
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
125
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2018
|
|
2017
|
|
||
Gross Carrying Amount
|
$
|
211.1
|
|
$
|
222.7
|
|
Less: Accumulated Amortization
|
72.5
|
|
61.3
|
|
||
|
|
|
||||
Net Book Value
|
$
|
138.6
|
|
$
|
161.4
|
|
|
|
|
126
2018 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
|||||||
($ In Millions)
|
RATE
|
|
2018
|
|
2017
|
|
||
Corporation-Senior Notes
(1)(4)
|
|
|
|
|||||
Fixed Rate Due Nov. 2020
(5)
|
3.45
|
%
|
$
|
499.7
|
|
$
|
499.6
|
|
Fixed Rate Due Aug. 2021
(6)
|
3.38
|
|
499.1
|
|
498.8
|
|
||
Fixed Rate Due Aug. 2022
(7)
|
2.38
|
|
499.2
|
|
498.9
|
|
||
Fixed Rate Due Aug. 2028
(8)(11)
|
3.65
|
|
513.3
|
|
—
|
|
||
|
|
|
|
|||||
Total Senior Notes
|
|
$
|
2,011.3
|
|
$
|
1,497.3
|
|
|
DECEMBER 31,
|
|||||
($ In Millions)
|
2018
|
|
2017
|
|
||
Bank-Subordinated Debt
(1)(3)(4)(11)
|
|
|
||||
6.50% Notes due Aug. 2018
(9)
|
$
|
—
|
|
$
|
305.5
|
|
|
|
|
||||
Corporation-Subordinated Debt
(4)
|
|
|
||||
3.95% Notes due Oct. 2025
(1)(10)(11)
|
763.1
|
|
780.4
|
|
||
3.375% Fixed-to-Floating Rate Notes due May 2032
(2)
|
349.3
|
|
349.2
|
|
||
|
|
|
||||
Total Corporation Subordinated Debt
|
1,112.4
|
|
1,129.6
|
|
||
|
|
|
||||
Capital Lease Obligations
|
—
|
|
14.4
|
|
||
|
|
|
||||
Total Long-Term Debt
|
$
|
1,112.4
|
|
$
|
1,449.5
|
|
|
|
|
||||
Long-Term Debt Qualifying as Risk-Based Capital
|
$
|
1,099.5
|
|
$
|
1,099.4
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
127
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2018
|
|
2017
|
|
||
NTC Capital I Subordinated Debentures due January 15, 2027
|
$
|
154.2
|
|
$
|
154.2
|
|
NTC Capital II Subordinated Debentures due April 15, 2027
|
123.4
|
|
123.3
|
|
||
|
|
|
||||
Total Subordinated Debentures
|
$
|
277.6
|
|
$
|
277.5
|
|
|
|
|
128
2018 Annual Report | Northern Trust Corporation
|
|
|
|
2018
|
|
2017
|
|
2016
|
|
Balance at January 1
|
226,126,674
|
|
228,605,485
|
|
229,293,783
|
|
Incentive Plan and Awards
|
1,310,778
|
|
1,320,129
|
|
1,209,124
|
|
Stock Options Exercised
|
575,662
|
|
1,997,362
|
|
4,156,728
|
|
Treasury Stock Purchased
|
(9,001,064
|
)
|
(5,796,302
|
)
|
(6,054,150
|
)
|
|
|
|
|
|||
Balance at December 31
|
219,012,050
|
|
226,126,674
|
|
228,605,485
|
|
(In Millions)
|
BALANCE AT DECEMBER 31, 2018
|
|
NET
CHANGE |
|
RECLASSIFICATION OF CERTAIN
TAX EFFECTS FROM AOCI
|
BALANCE AT DECEMBER 31, 2017
|
|
NET
CHANGE |
|
BALANCE AT DECEMBER 31, 2016
|
|
NET
CHANGE |
|
BALANCE AT DECEMBER 31, 2015
|
|
|||||||||
Net Unrealized (Losses) Gains on Debt Securities Available for Sale*
|
$
|
(114.9
|
)
|
$
|
(22.3
|
)
|
$
|
(17.8
|
)
|
$
|
(74.8
|
)
|
$
|
(42.4
|
)
|
$
|
(32.4
|
)
|
$
|
(1.4
|
)
|
$
|
(31.0
|
)
|
Net Unrealized Gains (Losses) on Cash Flow Hedges
|
4.0
|
|
(1.4
|
)
|
0.9
|
|
4.5
|
|
(1.6
|
)
|
6.1
|
|
9.1
|
|
(3.0
|
)
|
||||||||
Net Foreign Currency Adjustments
|
67.9
|
|
22.2
|
|
47.5
|
|
(1.8
|
)
|
16.7
|
|
(18.5
|
)
|
(0.9
|
)
|
(17.6
|
)
|
||||||||
Net Pension and Other Postretirement Benefit Adjustments
|
(410.7
|
)
|
(12.6
|
)
|
(55.9
|
)
|
(342.2
|
)
|
(17.0
|
)
|
(325.2
|
)
|
(4.1
|
)
|
(321.1
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total
|
$
|
(453.7
|
)
|
$
|
(14.1
|
)
|
$
|
(25.3
|
)
|
$
|
(414.3
|
)
|
$
|
(44.3
|
)
|
$
|
(370.0
|
)
|
$
|
2.7
|
|
$
|
(372.7
|
)
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
129
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||||||||||||||||||||
|
2018
|
2017
|
2016
|
||||||||||||||||||||||||
(In Millions)
|
BEFORE
TAX
|
|
TAX
EFFECT
|
|
AFTER
TAX
|
|
BEFORE
TAX
|
|
TAX
EFFECT
|
|
AFTER
TAX
|
|
BEFORE
TAX
|
|
TAX
EFFECT
|
|
AFTER
TAX
|
|
|||||||||
Unrealized Gains (Losses) on Debt Securities Available for Sale
|
|
|
|
|
|
||||||||||||||||||||||
Unrealized (Losses) Gains on Debt Securities Available for Sale
|
$
|
(31.9
|
)
|
$
|
9.2
|
|
$
|
(22.7
|
)
|
$
|
(70.2
|
)
|
$
|
26.9
|
|
$
|
(43.3
|
)
|
$
|
(1.8
|
)
|
$
|
0.7
|
|
$
|
(1.1
|
)
|
Reclassification Adjustment for (Gains) Losses Included in Net Income
|
0.5
|
|
(0.1
|
)
|
0.4
|
|
1.4
|
|
(0.5
|
)
|
0.9
|
|
(0.5
|
)
|
0.2
|
|
(0.3
|
)
|
|||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net Change
|
$
|
(31.4
|
)
|
$
|
9.1
|
|
$
|
(22.3
|
)
|
$
|
(68.8
|
)
|
$
|
26.4
|
|
$
|
(42.4
|
)
|
$
|
(2.3
|
)
|
$
|
0.9
|
|
$
|
(1.4
|
)
|
Unrealized (Losses) Gains on Cash Flow Hedges
|
|
|
|
|
|
||||||||||||||||||||||
Foreign Exchange Contracts
|
$
|
70.5
|
|
$
|
(17.6
|
)
|
$
|
52.9
|
|
$
|
32.5
|
|
$
|
(19.5
|
)
|
$
|
13.0
|
|
$
|
3.1
|
|
$
|
4.2
|
|
$
|
7.3
|
|
Interest Rate Contracts
|
(1.2
|
)
|
0.3
|
|
(0.9
|
)
|
1.3
|
|
(0.8
|
)
|
0.5
|
|
1.3
|
|
1.7
|
|
3.0
|
|
|||||||||
Reclassification Adjustment for (Gains) Losses Included in Net Income
|
(71.1
|
)
|
17.7
|
|
(53.4
|
)
|
(24.5
|
)
|
9.4
|
|
(15.1
|
)
|
(1.9
|
)
|
0.7
|
|
(1.2
|
)
|
|||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net Change
|
$
|
(1.8
|
)
|
$
|
0.4
|
|
$
|
(1.4
|
)
|
$
|
9.3
|
|
$
|
(10.9
|
)
|
$
|
(1.6
|
)
|
$
|
2.5
|
|
$
|
6.6
|
|
$
|
9.1
|
|
Foreign Currency Adjustments
|
|
|
|
|
|
||||||||||||||||||||||
Foreign Currency Translation Adjustments
|
$
|
(107.8
|
)
|
$
|
1.5
|
|
$
|
(106.3
|
)
|
$
|
156.5
|
|
$
|
(3.1
|
)
|
$
|
153.4
|
|
$
|
(126.5
|
)
|
$
|
(3.1
|
)
|
$
|
(129.6
|
)
|
Long-Term Intra-Entity Foreign Currency Transaction Losses
|
(1.8
|
)
|
0.5
|
|
(1.3
|
)
|
2.0
|
|
(0.7
|
)
|
1.3
|
|
(5.3
|
)
|
2.0
|
|
(3.3
|
)
|
|||||||||
Net Investment Hedge Gains (Losses)
|
173.0
|
|
(43.2
|
)
|
129.8
|
|
(223.2
|
)
|
85.2
|
|
(138.0
|
)
|
212.4
|
|
(80.4
|
)
|
132.0
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net Change
|
$
|
63.4
|
|
$
|
(41.2
|
)
|
$
|
22.2
|
|
$
|
(64.7
|
)
|
$
|
81.4
|
|
$
|
16.7
|
|
$
|
80.6
|
|
$
|
(81.5
|
)
|
$
|
(0.9
|
)
|
Pension and Other Postretirement Benefit Adjustments
|
|
|
|
|
|
||||||||||||||||||||||
Net Actuarial Gains (Losses)
|
$
|
(54.9
|
)
|
$
|
9.6
|
|
$
|
(45.3
|
)
|
$
|
(58.4
|
)
|
$
|
25.4
|
|
$
|
(33.0
|
)
|
$
|
(31.1
|
)
|
$
|
11.2
|
|
$
|
(19.9
|
)
|
Reclassification Adjustment for Losses Included in Net Income
|
36.3
|
|
(3.6
|
)
|
32.7
|
|
25.9
|
|
(9.9
|
)
|
16.0
|
|
25.4
|
|
(9.6
|
)
|
15.8
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net Change
|
$
|
(18.6
|
)
|
$
|
6.0
|
|
$
|
(12.6
|
)
|
$
|
(32.5
|
)
|
$
|
15.5
|
|
$
|
(17.0
|
)
|
$
|
(5.7
|
)
|
$
|
1.6
|
|
$
|
(4.1
|
)
|
|
|
|
130
2018 Annual Report | Northern Trust Corporation
|
|
|
(In Millions)
|
LOCATION OF
RECLASSIFICATION ADJUSTMENTS
RECOGNIZED IN INCOME
|
AMOUNT OF RECLASSIFICATION
ADJUSTMENTS RECOGNIZED
IN INCOME
YEAR ENDED DECEMBER 31,
|
||||||||
2018
|
2017
|
2016
|
||||||||
Debt Securities Available for Sale
|
|
|
|
|
||||||
Realized Losses (Gains) on Debt Securities Available for Sale
|
Investment Security Losses, net
|
$
|
0.5
|
|
$
|
1.4
|
|
$
|
(0.5
|
)
|
|
|
|
|
|
||||||
Realized (Gains) Losses on Cash Flow Hedges
|
|
|
|
|
||||||
Foreign Exchange Contracts
|
Other Operating Income
|
(3.9
|
)
|
(5.0
|
)
|
6.4
|
|
|||
|
Interest Income
|
(67.4
|
)
|
(19.3
|
)
|
(6.4
|
)
|
|||
|
Other Operating Expense
|
—
|
|
0.1
|
|
0.9
|
|
|||
Interest Rate Contracts
|
Interest Income
|
0.2
|
|
(0.3
|
)
|
(2.8
|
)
|
|||
|
|
|
|
|
||||||
Total Realized (Gains) on Cash Flow Hedges
|
|
(71.1
|
)
|
(24.5
|
)
|
(1.9
|
)
|
|||
Pension and Other Postretirement Benefit Adjustments
|
|
|
|
|
||||||
Amortization of Net Actuarial Losses
|
Employee Benefits
|
36.6
|
|
26.0
|
|
25.6
|
|
|||
Amortization of Prior Service Cost
|
Employee Benefits
|
(0.3
|
)
|
(0.1
|
)
|
(0.2
|
)
|
|||
|
|
|
|
|
||||||
Gross Reclassification Adjustment
|
|
$
|
36.3
|
|
$
|
25.9
|
|
$
|
25.4
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
($ In Millions Except Per Common Share Information)
|
2018
|
|
2017
|
|
2016
|
|
|||
BASIC NET INCOME PER COMMON SHARE
|
|
|
|
||||||
Average Number of Common Shares Outstanding
|
223,148,335
|
|
228,257,664
|
|
227,580,584
|
|
|||
Net Income
|
$
|
1,556.4
|
|
$
|
1,199.0
|
|
$
|
1,032.5
|
|
Less: Dividends on Preferred Stock
|
46.4
|
|
49.8
|
|
23.4
|
|
|||
|
|
|
|
||||||
Net Income Applicable to Common Stock
|
$
|
1,510.0
|
|
$
|
1,149.2
|
|
$
|
1,009.1
|
|
Less: Earnings Allocated to Participating Securities
|
20.1
|
|
18.8
|
|
18.7
|
|
|||
|
|
|
|
||||||
Earnings Allocated to Common Shares Outstanding
|
1,489.9
|
|
1,130.4
|
|
990.4
|
|
|||
Basic Net Income Per Common Share
|
6.68
|
|
4.95
|
|
4.35
|
|
|||
|
|
|
|
||||||
DILUTED NET INCOME PER COMMON SHARE
|
|
|
|
||||||
Average Number of Common Shares Outstanding
|
223,148,335
|
|
228,257,664
|
|
227,580,584
|
|
|||
Plus Dilutive Effect of Share-based Compensation
|
1,339,991
|
|
1,396,737
|
|
1,570,822
|
|
|||
|
|
|
|
||||||
Average Common and Potential Common Shares
|
224,488,326
|
|
229,654,401
|
|
229,151,406
|
|
|||
|
|
|
|
||||||
Earnings Allocated to Common and Potential Common Shares
|
$
|
1,490.0
|
|
$
|
1,130.5
|
|
$
|
990.4
|
|
Diluted Net Income Per Common Share
|
6.64
|
|
4.92
|
|
4.32
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
131
|
|
|
|
132
2018 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||
(In Millions)
|
2018
|
||
Noninterest Income
|
|
||
Trust, Investment and Other Servicing Fees
|
|
||
Custody and Fund Administration
|
$
|
1,589.1
|
|
Investment Management and Advisory
|
1,862.6
|
|
|
Securities Lending
|
102.8
|
|
|
Other
|
199.2
|
|
|
|
|
||
Total Trust, Investment and Other Servicing Fees
|
$
|
3,753.7
|
|
Other Noninterest Income
|
|
||
Foreign Exchange Income
|
$
|
307.2
|
|
Treasury Management
|
51.8
|
|
|
Securities Commissions and Trading Income
|
98.3
|
|
|
Other Operating Income
|
127.5
|
|
|
Investment Security Losses, net
|
(1.0
|
)
|
|
|
|
||
Total Other Noninterest Income
|
$
|
583.8
|
|
|
|
||
Total Noninterest Income
|
$
|
4,337.5
|
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2018
|
|
2017
|
|
||
Trust Fees Receivable, net
(1)
|
$
|
742.5
|
|
$
|
629.7
|
|
Other
|
90.1
|
|
79.0
|
|
||
Total Client Receivables
|
$
|
832.6
|
|
$
|
708.7
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
133
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Interest Income
|
|
|
|
||||||
Loans and Leases
|
$
|
1,098.8
|
|
$
|
919.1
|
|
$
|
806.5
|
|
Securities – Taxable
|
905.2
|
|
594.1
|
|
428.8
|
|
|||
– Non-Taxable
|
7.0
|
|
9.8
|
|
7.5
|
|
|||
Interest-Bearing Due from and Deposits with Banks
(1)
|
70.0
|
|
63.8
|
|
64.3
|
|
|||
Federal Reserve and Other Central Bank Deposits and Other
|
240.4
|
|
182.6
|
|
109.8
|
|
|||
|
|
|
|
||||||
Total Interest Income
|
$
|
2,321.4
|
|
$
|
1,769.4
|
|
$
|
1,416.9
|
|
|
|
|
|
||||||
Interest Expense
|
|
|
|
||||||
Deposits
|
$
|
384.6
|
|
$
|
182.1
|
|
$
|
83.5
|
|
Federal Funds Purchased
|
50.3
|
|
10.4
|
|
1.5
|
|
|||
Securities Sold under Agreements to Repurchase
|
7.8
|
|
6.0
|
|
2.3
|
|
|||
Other Borrowings
|
150.1
|
|
50.7
|
|
18.0
|
|
|||
Senior Notes
|
53.4
|
|
46.9
|
|
46.8
|
|
|||
Long-Term Debt
|
45.0
|
|
39.2
|
|
26.4
|
|
|||
Floating Rate Capital Debt
|
7.5
|
|
4.9
|
|
3.5
|
|
|||
|
|
|
|
||||||
Total Interest Expense
|
$
|
698.7
|
|
$
|
340.2
|
|
$
|
182.0
|
|
|
|
|
|
||||||
Net Interest Income
|
$
|
1,622.7
|
|
$
|
1,429.2
|
|
$
|
1,234.9
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Loan Service Fees
|
$
|
48.9
|
|
$
|
50.7
|
|
$
|
56.6
|
|
Banking Service Fees
|
46.4
|
|
48.6
|
|
50.6
|
|
|||
Other Income
|
32.2
|
|
58.2
|
|
134.0
|
|
|||
|
|
|
|
||||||
Total Other Operating Income
|
$
|
127.5
|
|
$
|
157.5
|
|
$
|
241.2
|
|
|
|
|
134
2018 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Business Promotion
|
$
|
98.3
|
|
$
|
95.4
|
|
$
|
83.6
|
|
FDIC Insurance Premiums
|
27.4
|
|
34.7
|
|
31.7
|
|
|||
Staff Related
|
33.6
|
|
42.8
|
|
43.0
|
|
|||
Other Intangibles Amortization
|
17.4
|
|
11.4
|
|
8.8
|
|
|||
Other Expenses
|
153.9
|
|
147.3
|
|
197.3
|
|
|||
|
|
|
|
||||||
Total Other Operating Expense
|
$
|
330.6
|
|
$
|
331.6
|
|
$
|
364.4
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Federal Rate
|
21.0
|
%
|
35.0
|
%
|
35.0
|
%
|
|||
Tax at Statutory Rate
|
$
|
411.1
|
|
$
|
571.9
|
|
$
|
531.0
|
|
Tax Exempt Income
|
(6.9
|
)
|
(9.6
|
)
|
(7.2
|
)
|
|||
Foreign Tax Rate Differential
|
(7.3
|
)
|
(50.0
|
)
|
(50.9
|
)
|
|||
Excess Tax Benefit Related to Share-Based Compensation
|
(16.8
|
)
|
(31.6
|
)
|
(12.3
|
)
|
|||
State Taxes, net
|
65.5
|
|
41.0
|
|
31.1
|
|
|||
Impact of Tax Cuts and Jobs Act
|
(4.8
|
)
|
(53.1
|
)
|
—
|
|
|||
Change in Accounting Method
|
(24.4
|
)
|
—
|
|
—
|
|
|||
Other
|
(15.0
|
)
|
(33.7
|
)
|
(7.1
|
)
|
|||
|
|
|
|
||||||
Provision for Income Taxes
|
$
|
401.4
|
|
$
|
434.9
|
|
$
|
484.6
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
135
|
(In Millions)
|
2018
|
|
2017
|
|
||
Federal Taxes on Mandatory Deemed Repatriation
|
$
|
(16.8
|
)
|
$
|
150.0
|
|
Impact Related to Federal Deferred Taxes
|
12.7
|
|
(210.0
|
)
|
||
Other Adjustments
|
(0.7
|
)
|
6.9
|
|
||
|
|
|
||||
Provision (Benefit) for Income Taxes
|
$
|
(4.8
|
)
|
$
|
(53.1
|
)
|
(In Millions)
|
2018
|
|
2017
|
|
||
Balance at January 1
|
$
|
27.7
|
|
$
|
17.2
|
|
Additions for Tax Positions Taken in the Current Year
|
0.5
|
|
9.9
|
|
||
Additions for Tax Positions Taken in Prior Years
|
1.7
|
|
6.2
|
|
||
Reductions for Tax Positions Taken in Prior Years
|
(7.8
|
)
|
(5.4
|
)
|
||
Reductions Resulting from Expiration of Statutes
|
(0.2
|
)
|
(0.2
|
)
|
||
|
|
|
||||
Balance at December 31
|
$
|
21.9
|
|
$
|
27.7
|
|
|
|
|
136
2018 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Current Tax Provision:
|
|
|
|
||||||
Federal
|
$
|
132.8
|
|
$
|
347.3
|
|
$
|
495.8
|
|
State
|
95.4
|
|
38.3
|
|
65.3
|
|
|||
Non-U.S.
|
162.7
|
|
125.4
|
|
99.3
|
|
|||
|
|
|
|
||||||
Total
|
390.9
|
|
511.0
|
|
660.4
|
|
|||
Deferred Tax Provision:
|
|
|
|
||||||
Federal
|
$
|
33.8
|
|
$
|
(96.4
|
)
|
$
|
(159.0
|
)
|
State
|
(13.8
|
)
|
24.6
|
|
(18.9
|
)
|
|||
Non-U.S.
|
(9.5
|
)
|
(4.3
|
)
|
2.1
|
|
|||
|
|
|
|
||||||
Total
|
10.5
|
|
(76.1
|
)
|
(175.8
|
)
|
|||
|
|
|
|
||||||
Provision for Income Taxes
|
$
|
401.4
|
|
$
|
434.9
|
|
$
|
484.6
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Current Tax Benefit (Charge) for Employee Stock Options and Other Stock-Based Plans
|
$
|
—
|
|
$
|
—
|
|
$
|
(7.6
|
)
|
Tax Effect of Other Comprehensive Income
|
25.7
|
|
(112.4
|
)
|
72.4
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
137
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2018
|
|
2017
|
|
||
Deferred Tax Liabilities:
|
|
|
||||
Lease Financing
|
$
|
43.3
|
|
$
|
85.8
|
|
Software Development
|
193.2
|
|
187.8
|
|
||
Accumulated Depreciation
|
129.5
|
|
41.0
|
|
||
Compensation and Benefits
|
10.9
|
|
—
|
|
||
State Taxes, net
|
58.9
|
|
59.4
|
|
||
Other Liabilities
|
114.5
|
|
145.7
|
|
||
|
|
|
||||
Gross Deferred Tax Liabilities
|
550.3
|
|
519.7
|
|
||
|
|
|
||||
Deferred Tax Assets:
|
|
|
||||
Allowance for Credit Losses
|
29.0
|
|
32.3
|
|
||
Compensation and Benefits
|
—
|
|
35.5
|
|
||
Other Assets
|
120.6
|
|
88.3
|
|
||
|
|
|
||||
Gross Deferred Tax Assets
|
149.6
|
|
156.1
|
|
||
|
|
|
||||
Valuation Reserve
|
(0.3
|
)
|
(1.1
|
)
|
||
Deferred Tax Assets, net of Valuation Reserve
|
149.3
|
|
155.0
|
|
||
|
|
|
||||
Net Deferred Tax Liabilities
|
$
|
401.0
|
|
$
|
364.7
|
|
|
|
|
138
2018 Annual Report | Northern Trust Corporation
|
|
|
|
U.S. PLAN
|
NON-U.S. PLANS
|
SUPPLEMENTAL PLAN
|
|||||||||||||||
($ In Millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
||||||
Accumulated Benefit Obligation
|
$
|
980.6
|
|
$
|
1,088.4
|
|
$
|
178.4
|
|
$
|
192.2
|
|
$
|
120.9
|
|
$
|
129.0
|
|
|
|
|
|
|
|
|
||||||||||||
Projected Benefit Obligation
|
1,092.0
|
|
1,209.9
|
|
183.5
|
|
198.3
|
|
135.6
|
|
144.5
|
|
||||||
Plan Assets at Fair Value
|
1,380.1
|
|
1,506.4
|
|
166.7
|
|
178.7
|
|
—
|
|
—
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Funded Status at December 31
|
$
|
288.1
|
|
$
|
296.5
|
|
$
|
(16.8
|
)
|
$
|
(19.6
|
)
|
$
|
(135.6
|
)
|
$
|
(144.5
|
)
|
Weighted-Average Assumptions:
|
|
|
|
|
|
|
||||||||||||
Discount Rates
|
4.47
|
%
|
3.79
|
%
|
2.16
|
%
|
2.08
|
%
|
4.47
|
%
|
3.79
|
%
|
||||||
Rate of Increase in Compensation Level
|
4.39
|
|
4.39
|
|
1.75
|
%
|
1.75
|
|
4.39
|
|
4.39
|
|
||||||
Expected Long-Term Rate of Return on Assets
|
6.00
|
|
6.00
|
|
2.39
|
|
2.61
|
|
N/A
|
|
N/A
|
|
|
U.S. PLAN
|
NON-U.S. PLANS
|
SUPPLEMENTAL PLAN
|
|||||||||||||||
(In Millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
||||||
Net Actuarial Loss
|
$
|
435.4
|
|
$
|
399.0
|
|
$
|
41.2
|
|
$
|
44.2
|
|
$
|
65.8
|
|
$
|
83.2
|
|
Prior Service Cost
|
(1.4
|
)
|
(1.8
|
)
|
3.6
|
|
2.5
|
|
0.4
|
|
0.6
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Gross Amount in Accumulated Other Comprehensive Income
|
434.0
|
|
397.2
|
|
44.8
|
|
46.7
|
|
66.2
|
|
83.8
|
|
||||||
Income Tax Effect
|
108.5
|
|
151.6
|
|
6.0
|
|
5.3
|
|
16.4
|
|
31.9
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Net Amount in Accumulated Other Comprehensive Income
|
$
|
325.5
|
|
$
|
245.6
|
|
$
|
38.8
|
|
$
|
41.4
|
|
$
|
49.8
|
|
$
|
51.9
|
|
|
U.S. PLAN
|
NON-U.S. PLANS
|
SUPPLEMENTAL PLAN
|
||||||||||||||||||||||||
($ In Millions)
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
|||||||||
Service Cost
|
$
|
41.4
|
|
$
|
38.3
|
|
$
|
37.4
|
|
$
|
1.7
|
|
$
|
0.4
|
|
$
|
—
|
|
$
|
4.3
|
|
$
|
3.7
|
|
$
|
3.5
|
|
Interest Cost
|
44.3
|
|
45.9
|
|
45.8
|
|
4.0
|
|
4.0
|
|
4.7
|
|
5.3
|
|
5.2
|
|
5.1
|
|
|||||||||
Expected Return on Plan Assets
|
(88.2
|
)
|
(93.8
|
)
|
(94.4
|
)
|
(4.4
|
)
|
(4.5
|
)
|
(4.6
|
)
|
N/A
|
|
N/A
|
|
N/A
|
|
|||||||||
Settlement Expense
|
—
|
|
—
|
|
—
|
|
0.5
|
|
1.1
|
|
3.7
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net Loss
|
28.2
|
|
19.0
|
|
18.8
|
|
0.9
|
|
1.3
|
|
1.0
|
|
7.4
|
|
5.7
|
|
5.8
|
|
|||||||||
Prior Service Cost
|
(0.4
|
)
|
(0.4
|
)
|
(0.4
|
)
|
0.2
|
|
0.1
|
|
—
|
|
0.2
|
|
0.2
|
|
0.2
|
|
|||||||||
Net Periodic Pension Expense
|
$
|
25.3
|
|
$
|
9.0
|
|
$
|
7.2
|
|
$
|
2.9
|
|
$
|
2.4
|
|
$
|
4.8
|
|
$
|
17.2
|
|
$
|
14.8
|
|
$
|
14.6
|
|
Weighted-Average Assumptions:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Discount Rates
|
3.79
|
%
|
4.46
|
%
|
4.71
|
%
|
2.08
|
%
|
2.33
|
%
|
3.39
|
%
|
3.79
|
%
|
4.46
|
%
|
4.71
|
%
|
|||||||||
Rate of Increase in Compensation Level
|
4.39
|
|
4.39
|
|
4.25
|
|
1.75
|
|
1.75
|
|
N/A
|
|
4.39
|
|
4.39
|
|
4.25
|
|
|||||||||
Expected Long-Term Rate of Return on Assets
|
6.00
|
|
6.75
|
|
7.00
|
|
2.61
|
|
3.13
|
|
3.73
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
139
|
|
U.S. PLAN
|
NON-U.S. PLANS
|
SUPPLEMENTAL PLAN
|
|||||||||||||||
(In Millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
||||||
Beginning Balance
|
$
|
1,209.9
|
|
$
|
1,062.7
|
|
$
|
198.3
|
|
$
|
155.9
|
|
$
|
144.5
|
|
$
|
121.1
|
|
Service Cost
|
41.4
|
|
38.3
|
|
1.7
|
|
0.4
|
|
4.3
|
|
3.7
|
|
||||||
Interest Cost
|
44.3
|
|
45.9
|
|
4.0
|
|
4.0
|
|
5.3
|
|
5.2
|
|
||||||
Employee Contributions
|
—
|
|
—
|
|
0.4
|
|
0.1
|
|
—
|
|
—
|
|
||||||
Plan Amendment
|
—
|
|
—
|
|
1.3
|
|
2.5
|
|
—
|
|
—
|
|
||||||
Actuarial (Gain) Loss
|
(112.4
|
)
|
142.6
|
|
(9.3
|
)
|
0.4
|
|
(9.7
|
)
|
21.5
|
|
||||||
Settlement
|
—
|
|
—
|
|
(2.7
|
)
|
(6.8
|
)
|
—
|
|
—
|
|
||||||
Acquisitions/Divestitures
|
—
|
|
—
|
|
—
|
|
27.0
|
|
—
|
|
—
|
|
||||||
Benefits Paid
|
(91.2
|
)
|
(79.6
|
)
|
(1.1
|
)
|
(3.0
|
)
|
(8.8
|
)
|
(7.0
|
)
|
||||||
Foreign Exchange Rate Changes
|
—
|
|
—
|
|
(9.1
|
)
|
17.8
|
|
—
|
|
—
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Ending Balance
|
$
|
1,092.0
|
|
$
|
1,209.9
|
|
$
|
183.5
|
|
$
|
198.3
|
|
$
|
135.6
|
|
$
|
144.5
|
|
(In Millions)
|
U.S.
PLAN |
|
NON-U.S.
PLANS |
|
SUPPLEMENTAL
PLAN |
|
|||
2019
|
$
|
74.0
|
|
$
|
3.4
|
|
$
|
12.0
|
|
2020
|
76.8
|
|
3.8
|
|
11.5
|
|
|||
2021
|
75.1
|
|
4.1
|
|
14.4
|
|
|||
2022
|
73.4
|
|
3.9
|
|
16.2
|
|
|||
2023
|
77.1
|
|
4.3
|
|
14.9
|
|
|||
2024-2028
|
368.9
|
|
26.4
|
|
63.6
|
|
|
U.S. PLAN
|
NON-U.S. PLANS
|
||||||||||
(In Millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
||||
Fair Value of Assets at Beginning of Period
|
$
|
1,506.4
|
|
$
|
1,393.5
|
|
$
|
178.7
|
|
$
|
139.3
|
|
Actual Return on Assets
|
(85.1
|
)
|
192.5
|
|
(2.3
|
)
|
12.4
|
|
||||
Employer Contributions
|
50.0
|
|
—
|
|
2.6
|
|
3.0
|
|
||||
Employee Contributions
|
—
|
|
—
|
|
0.4
|
|
0.1
|
|
||||
Settlement
|
—
|
|
—
|
|
(2.7
|
)
|
(6.8
|
)
|
||||
Acquisitions/Divestitures
|
—
|
|
—
|
|
—
|
|
18.5
|
|
||||
Benefits Paid
|
(91.2
|
)
|
(79.6
|
)
|
(1.1
|
)
|
(3.0
|
)
|
||||
Foreign Exchange Rate Changes
|
—
|
|
—
|
|
(8.9
|
)
|
15.2
|
|
||||
|
|
|
|
|
||||||||
Fair Value of Assets at End of Period
|
$
|
1,380.1
|
|
$
|
1,506.4
|
|
$
|
166.7
|
|
$
|
178.7
|
|
|
|
|
140
2018 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
141
|
|
December 31, 2018
|
|||||||||||
(In Millions)
|
LEVEL 1
|
|
LEVEL 2
|
|
LEVEL 3
|
|
TOTAL
|
|
||||
Domestic Common Stock
|
$
|
36.3
|
|
$
|
—
|
|
$
|
—
|
|
$
|
36.3
|
|
Foreign Common Stock
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
U.S. Government Obligations
|
—
|
|
1,010.2
|
|
—
|
|
1,010.2
|
|
||||
Northern Trust Mutual Fund
|
39.9
|
|
—
|
|
—
|
|
39.9
|
|
||||
Exchange Traded Fund
|
0.1
|
|
—
|
|
—
|
|
0.1
|
|
||||
Northern Trust Collective Trust Funds
|
—
|
|
226.5
|
|
—
|
|
226.5
|
|
||||
Northern Trust Private Equity Funds
|
—
|
|
—
|
|
25.5
|
|
25.5
|
|
||||
Northern Trust Hedge Funds
|
—
|
|
—
|
|
29.2
|
|
29.2
|
|
||||
Cash and Other
|
12.4
|
|
—
|
|
—
|
|
12.4
|
|
||||
|
|
|
|
|
||||||||
Total Assets at Fair Value
|
$
|
88.7
|
|
$
|
1,236.7
|
|
$
|
54.7
|
|
$
|
1,380.1
|
|
|
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
|
|
||||
Exchange Traded Fund
|
0.1
|
|
—
|
|
—
|
|
0.1
|
|
||||
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
|
|
|
PRIVATE EQUITY
FUNDS
|
HEDGE FUNDS
|
||||||||||
(In Millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
||||
Fair Value at January 1
|
$
|
29.3
|
|
$
|
35.7
|
|
$
|
44.6
|
|
$
|
64.8
|
|
Actual Return on Plan Assets
|
(1.5
|
)
|
(5.4
|
)
|
(2.7
|
)
|
(3.1
|
)
|
||||
Realized Gain
|
—
|
|
—
|
|
2.4
|
|
5.0
|
|
||||
Purchases
|
0.3
|
|
0.8
|
|
—
|
|
—
|
|
||||
Sales
|
(2.6
|
)
|
(1.8
|
)
|
(15.1
|
)
|
(22.1
|
)
|
||||
|
|
|
|
|
||||||||
Fair Value at December 31
|
$
|
25.5
|
|
$
|
29.3
|
|
$
|
29.2
|
|
$
|
44.6
|
|
|
|
|
142
2018 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2018
|
|
2017
|
|
||
Accumulated Postretirement Benefit Obligation at Measurement Date:
|
|
|
||||
Retirees and Dependents
|
$
|
23.5
|
|
$
|
27.7
|
|
Actives Eligible for Benefits
|
4.6
|
|
6.7
|
|
||
|
|
|
||||
Net Postretirement Benefit Obligation
|
$
|
28.1
|
|
$
|
34.4
|
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2018
|
|
2017
|
|
||
Net Actuarial Loss / (Gain)
|
$
|
(6.5
|
)
|
$
|
3.9
|
|
Prior Service Cost
|
—
|
|
—
|
|
||
|
|
|
||||
Gross Amount in Accumulated Other Comprehensive Income
|
(6.5
|
)
|
3.9
|
|
||
Income Tax Effect
|
(2.2
|
)
|
1.5
|
|
||
|
|
|
||||
Net Amount in Accumulated Other Comprehensive Income
|
$
|
(4.3
|
)
|
$
|
2.4
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Service Cost
|
$
|
—
|
|
$
|
0.1
|
|
$
|
0.1
|
|
Interest Cost
|
1.3
|
|
1.4
|
|
1.5
|
|
|||
Expected Return on Plan Assets
|
—
|
|
—
|
|
—
|
|
|||
Amortization
|
|
|
|
||||||
Net Gain
|
—
|
|
—
|
|
—
|
|
|||
Prior Service Benefit
|
—
|
|
—
|
|
—
|
|
|||
|
|
|
|
||||||
Net Periodic Postretirement Expense
|
$
|
1.3
|
|
$
|
1.5
|
|
$
|
1.6
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
143
|
|
FOR THE YEAR ENDED
DECEMBER 31,
|
|||||
(In Millions)
|
2018
|
|
2017
|
|
||
Beginning Balance
|
$
|
34.4
|
|
$
|
34.1
|
|
Service Cost
|
—
|
|
0.1
|
|
||
Interest Cost
|
1.3
|
|
1.4
|
|
||
Actuarial Loss / (Gain)
|
(6.7
|
)
|
(0.2
|
)
|
||
Net Claims Paid
|
(6.3
|
)
|
(1.0
|
)
|
||
Medicare Subsidy
|
5.4
|
|
—
|
|
||
|
|
|
||||
Ending Balance
|
$
|
28.1
|
|
$
|
34.4
|
|
(In Millions)
|
TOTAL
POSTRETIREMENT MEDICAL BENEFITS |
|
|
2019
|
$
|
2.5
|
|
2020
|
2.5
|
|
|
2021
|
2.4
|
|
|
2022
|
2.3
|
|
|
2023
|
2.2
|
|
|
2024-2028
|
10.1
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Restricted Stock Unit Awards
|
$
|
96.3
|
|
$
|
87.3
|
|
$
|
60.2
|
|
Stock Options
|
2.6
|
|
9.0
|
|
9.0
|
|
|||
Performance Stock Units
|
32.0
|
|
31.7
|
|
17.6
|
|
|||
|
|
|
|
||||||
Total Share-Based Compensation Expense
|
$
|
130.9
|
|
$
|
128.0
|
|
$
|
86.8
|
|
Tax Benefits Recognized
|
$
|
32.5
|
|
$
|
48.7
|
|
$
|
32.8
|
|
|
|
|
144
2018 Annual Report | Northern Trust Corporation
|
|
|
|
2017
|
|
2016
|
|
Expected Term (in Years)
|
6.9
|
|
7.0
|
|
Dividend Yield
|
1.81
|
%
|
2.57
|
%
|
Expected Volatility
|
23.2
|
|
32.3
|
|
Risk-Free Interest Rate
|
2.11
|
|
1.45
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
145
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions, Except Per Share Information)
|
2018
|
|
2017
|
|
2016
|
|
|||
Weighted Average Grant-Date Per Share Fair Value of Stock Options Granted
|
$
|
—
|
|
$
|
19.18
|
|
$
|
14.84
|
|
Grant-Date Fair Value of Stock Options Vested
|
8.1
|
|
7.3
|
|
9.6
|
|
|||
Stock Options Exercised
|
|
|
|
||||||
Intrinsic Value as of Exercise Date
|
28.5
|
|
74.7
|
|
83.9
|
|
|||
Cash Received
|
32.6
|
|
108.0
|
|
233.8
|
|
|||
Tax Deduction Benefits Realized
|
27.7
|
|
73.1
|
|
80.0
|
|
NONVESTED OPTIONS
|
SHARES
|
|
WEIGHTED-
AVERAGE GRANT- DATE FAIR VALUE PER SHARE |
|
|
Nonvested at December 31, 2017
|
1,246,505
|
|
$
|
17.25
|
|
Granted
|
—
|
|
—
|
|
|
Vested
|
(483,605
|
)
|
17.07
|
|
|
Forfeited or Cancelled
|
(5,162
|
)
|
19.18
|
|
|
|
|
|
|||
Nonvested at December 31, 2018
|
757,738
|
|
$
|
17.36
|
|
($ 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, 2017
|
3,073,098
|
|
$
|
60.99
|
|
|
|
||
Granted
|
—
|
|
—
|
|
|
|
|||
Exercised
|
(575,662
|
)
|
56.55
|
|
|
|
|||
Forfeited, Expired or Cancelled
|
(16,375
|
)
|
79.78
|
|
|
|
|||
|
|
|
|
|
|||||
Options Outstanding, December 31, 2018
|
2,481,061
|
|
$
|
61.90
|
|
5.1
|
$
|
55.8
|
|
|
|
|
|
|
|||||
Options Exercisable, December 31, 2018
|
1,723,323
|
|
$
|
56.82
|
|
4.2
|
$
|
46.6
|
|
|
|
|
146
2018 Annual Report | Northern Trust Corporation
|
|
|
($ In Millions)
|
NUMBER
|
|
AGGREGATE
INTRINSIC VALUE |
|
|
Restricted Stock Unit Awards Outstanding, December 31, 2017
|
3,399,438
|
|
$
|
339.6
|
|
Granted
|
815,314
|
|
|
||
Distributed
|
(1,016,846
|
)
|
|
||
Forfeited
|
(76,064
|
)
|
|
||
|
|
|
|||
Restricted Stock Unit Awards Outstanding, December 31, 2018
|
3,121,842
|
|
$
|
261.0
|
|
|
|
|
|||
Units Convertible, December 31, 2018
|
144,722
|
|
$
|
12.1
|
|
NONVESTED RESTRICTED
STOCK UNITS |
NUMBER
|
|
WEIGHTED
AVERAGE GRANT- DATE FAIR VALUE PER UNIT |
|
WEIGHTED
AVERAGE REMAINING VESTING TERM (YEARS) |
|
Nonvested at December 31, 2017
|
3,231,327
|
|
$
|
69.67
|
|
1.9
|
Granted
|
815,314
|
|
103.74
|
|
|
|
Vested
|
(993,457
|
)
|
66.82
|
|
|
|
Forfeited
|
(76,064
|
)
|
73.18
|
|
|
|
|
|
|
|
|||
Nonvested at December 31, 2018
|
2,977,120
|
|
$
|
79.92
|
|
1.9
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
147
|
|
|
|
148
2018 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
149
|
|
DECEMBER 31, 2018
|
DECEMBER 31, 2017
|
||||||||||||||||
|
|
FAIR VALUE
|
|
FAIR VALUE
|
||||||||||||||
(In Millions)
|
NOTIONAL
VALUE
|
|
ASSET
1
|
|
LIABILITY
2
|
|
NOTIONAL
VALUE
|
|
ASSET
1
|
|
LIABILITY
2
|
|
||||||
Derivatives Designated as Hedging under GAAP
|
|
|
|
|
|
|
||||||||||||
Interest Rate Contracts
|
|
|
|
|
|
|
||||||||||||
Fair Value Hedges
|
$
|
4,590.4
|
|
$
|
29.8
|
|
$
|
23.3
|
|
$
|
4,473.1
|
|
$
|
31.7
|
|
$
|
18.2
|
|
Cash Flow Hedges
|
600.0
|
|
0.2
|
|
1.2
|
|
925.0
|
|
0.2
|
|
1.2
|
|
||||||
Foreign Exchange Contracts
|
|
|
|
|
|
|
||||||||||||
Cash Flow Hedges
|
2,648.2
|
|
13.8
|
|
57.8
|
|
3,289.0
|
|
28.4
|
|
13.0
|
|
||||||
Net Investment Hedges
|
3,475.1
|
|
292.4
|
|
14.5
|
|
3,011.3
|
|
0.6
|
|
179.5
|
|
||||||
Total Derivatives Designated as Hedging under GAAP
|
$
|
11,313.7
|
|
$
|
336.2
|
|
$
|
96.8
|
|
$
|
11,698.4
|
|
$
|
60.9
|
|
$
|
211.9
|
|
|
|
|
|
|
|
|
||||||||||||
Derivatives Not Designated as Hedging under GAAP
|
|
|
|
|
|
|
||||||||||||
Non-Designated Risk Management Derivatives
|
|
|
|
|
|
|
||||||||||||
Foreign Exchange Contracts
|
$
|
122.2
|
|
$
|
0.5
|
|
$
|
0.2
|
|
$
|
214.1
|
|
$
|
1.1
|
|
$
|
0.1
|
|
Other Financial Derivatives
3
|
483.4
|
|
1.3
|
|
32.8
|
|
404.7
|
|
—
|
|
30.4
|
|
||||||
Total Non-Designated Risk Management Derivatives
|
$
|
605.6
|
|
$
|
1.8
|
|
$
|
33.0
|
|
$
|
618.8
|
|
$
|
1.1
|
|
$
|
30.5
|
|
|
|
|
|
|
|
|
||||||||||||
Client-Related and Trading Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign Exchange Contracts
|
$
|
281,864.4
|
|
$
|
2,159.4
|
|
$
|
2,190.0
|
|
$
|
317,882.5
|
|
$
|
2,527.0
|
|
$
|
2,522.5
|
|
Interest Rate Contracts
|
7,711.2
|
|
66.1
|
|
68.6
|
|
7,418.0
|
|
65.1
|
|
64.1
|
|
||||||
Total Client-Related and Trading Derivatives
|
$
|
289,575.6
|
|
$
|
2,225.5
|
|
$
|
2,258.6
|
|
$
|
325,300.5
|
|
$
|
2,592.1
|
|
$
|
2,586.6
|
|
|
|
|
|
|
|
|
||||||||||||
Total Derivatives Not Designated as Hedging under GAAP
|
$
|
290,181.2
|
|
$
|
2,227.3
|
|
$
|
2,291.6
|
|
$
|
325,919.3
|
|
$
|
2,593.2
|
|
$
|
2,617.1
|
|
|
|
|
|
|
|
|
||||||||||||
Total Gross Derivatives
|
$
|
301,494.9
|
|
$
|
2,563.5
|
|
$
|
2,388.4
|
|
$
|
337,617.7
|
|
$
|
2,654.1
|
|
$
|
2,829.0
|
|
Less: Netting
4
|
|
1,357.1
|
|
1,796.3
|
|
|
1,860.0
|
|
1,621.4
|
|
||||||||
Total Derivative Financial Instruments
|
|
$
|
1,206.4
|
|
$
|
592.1
|
|
|
$
|
794.1
|
|
$
|
1,207.6
|
|
|
|
|
150
2018 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
151
|
|
|
Location and Amount of Derivative Gain/(Loss) Recognized in Income
|
||||||||||||||||||||||||||||||||||||||
(in Millions)
|
|
Interest Income
|
|
Interest Expense
|
|
Other Operating Income
|
|
Other Operating Expense
|
||||||||||||||||||||||||||||||||
For the Year Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
||||||||||||
Total amounts on the consolidated statements of income
|
|
$
|
2,321.4
|
|
$
|
1,769.4
|
|
$
|
1,416.9
|
|
|
$
|
698.7
|
|
$
|
340.2
|
|
$
|
182.0
|
|
|
$
|
127.5
|
|
$
|
157.5
|
|
$
|
241.2
|
|
|
$
|
330.6
|
|
$
|
331.6
|
|
$
|
364.4
|
|
Gains/(Losses) on fair value hedges recognized on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Interest Rate Contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Recognized on derivatives
|
|
13.9
|
|
8.8
|
|
80.6
|
|
|
(9.5
|
)
|
(24.3
|
)
|
(33.9
|
)
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||||||||
Recognized on hedged items
|
|
(13.9
|
)
|
(8.8
|
)
|
(80.6
|
)
|
|
9.5
|
|
24.3
|
|
33.9
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||||||||
Amounts related to interest settlements on derivatives
|
|
17.8
|
|
(9.6
|
)
|
(16.9
|
)
|
|
7.9
|
|
27.7
|
|
38.9
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||||||||
Total gain/(loss) recognized on fair value hedges
|
|
$
|
17.8
|
|
$
|
(9.6
|
)
|
$
|
(16.9
|
)
|
|
$
|
7.9
|
|
$
|
27.7
|
|
$
|
38.9
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Gains/(Losses) on cash flow hedges recognized on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Foreign Exchange Contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Net gain/(loss) reclassified from AOCI to net income
|
|
67.4
|
|
19.3
|
|
6.4
|
|
|
—
|
|
—
|
|
—
|
|
|
3.9
|
|
5.0
|
|
(6.4
|
)
|
|
—
|
|
(0.1
|
)
|
(0.9
|
)
|
||||||||||||
Interest Rate Contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Net gain/(loss) reclassified from AOCI to net income
|
|
(0.2
|
)
|
0.3
|
|
2.8
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||||||||
Total gain/(loss) reclassified from AOCI to net income on cash flow hedges
|
|
$
|
67.2
|
|
$
|
19.6
|
|
$
|
9.2
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
3.9
|
|
$
|
5.0
|
|
$
|
(6.4
|
)
|
|
$
|
—
|
|
$
|
(0.1
|
)
|
$
|
(0.9
|
)
|
|
|
|
152
2018 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31, 2018
|
||||||
(In Millions)
|
CARRYING VALUE OF THE HEDGED ITEMS
|
|
|
CUMULATIVE HEDGE ACCOUNTING BASIS ADJUSTMENT
1
|
|
||
Available for Sale Debt Securities
2
|
$
|
3,831.6
|
|
|
$
|
99.4
|
|
Senior Notes and Long-Term Subordinated Debt
|
1,248.8
|
|
|
29.3
|
|
||
|
|
|
|
||||
Total
|
$
|
5,080.4
|
|
|
$
|
128.7
|
|
(In Millions)
|
LOCATION OF DERIVATIVE GAIN / (LOSS) RECOGNIZED IN INCOME
|
AMOUNT OF DERIVATIVE GAIN / (LOSS) RECOGNIZED IN INCOME
|
||||||||
2018
|
2017
|
2016
|
||||||||
Non-designated risk management derivatives
|
|
|
|
|
||||||
Foreign Exchange Contracts
|
Other Operating Income
|
$
|
(4.1
|
)
|
$
|
8.2
|
|
$
|
(6.7
|
)
|
Other Financial Derivatives
(1)
|
Other Operating Income
|
(19.2
|
)
|
(13.3
|
)
|
(6.1
|
)
|
|||
Gains/(Losses) from non-designated risk management derivatives
|
|
$
|
(23.3
|
)
|
$
|
(5.1
|
)
|
$
|
(12.8
|
)
|
|
|
|
|
|
||||||
Client-related and trading derivatives
|
|
|
|
|
||||||
Foreign Exchange Contracts
|
Foreign Exchange Trading Income
|
307.2
|
|
209.9
|
|
236.6
|
|
|||
Interest Rate Contracts
|
Security Commissions and Trading Income
|
7.7
|
|
10.7
|
|
11.4
|
|
|||
Gains/(Losses) from client-related and trading derivatives
|
|
$
|
314.9
|
|
$
|
220.6
|
|
$
|
248.0
|
|
|
|
|
|
|
||||||
Total gains/(losses) from derivatives not designated as hedging under GAAP
|
|
$
|
291.6
|
|
$
|
215.5
|
|
$
|
235.2
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
153
|
December 31, 2018
|
|||||||||||||||
(In Millions)
|
GROSS
RECOGNIZED
ASSETS
|
|
GROSS AMOUNTS OFFSET IN THE BALANCE SHEET
|
|
NET AMOUNTS PRESENTED IN THE BALANCE SHEET
|
|
GROSS AMOUNTS NOT OFFSET IN THE BALANCE SHEET
|
|
NET
AMOUNT
(3)
|
|
|||||
Derivative Assets
(1)
|
|
|
|
|
|
||||||||||
Foreign Exchange Contracts Over the Counter (OTC)
|
$
|
1,902.3
|
|
$
|
1,175.3
|
|
$
|
727.0
|
|
$
|
12.7
|
|
$
|
714.3
|
|
Interest Rate Swaps OTC
|
71.6
|
|
19.0
|
|
52.6
|
|
—
|
|
52.6
|
|
|||||
Interest Rate Swaps Exchange Cleared
|
24.5
|
|
24.4
|
|
0.1
|
|
—
|
|
0.1
|
|
|||||
Other Financial Derivative
|
1.3
|
|
—
|
|
1.3
|
|
—
|
|
1.3
|
|
|||||
Cross Product Netting Adjustment
|
—
|
|
3.9
|
|
—
|
|
—
|
|
—
|
|
|||||
Cross Product Collateral Adjustment
|
—
|
|
134.5
|
|
—
|
|
—
|
|
—
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives Subject to a Master Netting Arrangement
|
1,999.7
|
|
1,357.1
|
|
642.6
|
|
12.7
|
|
629.9
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives Not Subject to a Master Netting Arrangement
|
563.8
|
|
—
|
|
563.8
|
|
2.7
|
|
561.1
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives
|
2,563.5
|
|
1,357.1
|
|
1,206.4
|
|
15.4
|
|
1,191.0
|
|
|||||
|
|
|
|
|
|
||||||||||
Securities Purchased under Agreements to Resell
(2)
|
$
|
1,031.2
|
|
$
|
—
|
|
$
|
1,031.2
|
|
$
|
1,031.2
|
|
$
|
—
|
|
December 31, 2017
|
|||||||||||||||
(In Millions)
|
GROSS
RECOGNIZED ASSETS |
|
GROSS AMOUNTS OFFSET IN THE BALANCE SHEET
|
|
NET AMOUNTS PRESENTED IN THE BALANCE SHEET
|
|
GROSS AMOUNTS NOT OFFSET IN THE BALANCE SHEET
|
|
NET
AMOUNT (3) |
|
|||||
Derivative Assets
(1)
|
|
|
|
|
|
||||||||||
Foreign Exchange Contracts Over the Counter (OTC)
|
$
|
2,106.3
|
|
$
|
1,397.7
|
|
$
|
708.6
|
|
$
|
2.1
|
|
$
|
706.5
|
|
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
|
|
2.1
|
|
341.2
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives Not Subject to a Master Netting Arrangement
|
450.8
|
|
—
|
|
450.8
|
|
2.5
|
|
448.3
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives
|
2,654.1
|
|
1,860.0
|
|
794.1
|
|
4.6
|
|
789.5
|
|
|||||
|
|
|
|
|
|
||||||||||
Securities Purchased under Agreements to Resell
(2)
|
$
|
1,303.3
|
|
$
|
—
|
|
$
|
1,303.3
|
|
$
|
1,303.3
|
|
$
|
—
|
|
|
|
|
154
2018 Annual Report | Northern Trust Corporation
|
|
|
December 31, 2018
|
|||||||||||||||
(In Millions)
|
GROSS
RECOGNIZED
LIABILITIES
|
|
GROSS AMOUNTS OFFSET IN THE BALANCE SHEET
|
|
NET AMOUNTS PRESENTED IN THE BALANCE SHEET
|
|
GROSS AMOUNTS NOT OFFSET IN THE BALANCE SHEET
|
|
NET
AMOUNT
(2)
|
|
|||||
Derivative Liabilities
(1)
|
|
|
|
|
|
||||||||||
Foreign Exchange Contracts OTC
|
$
|
1,821.0
|
|
$
|
1,175.3
|
|
$
|
645.7
|
|
$
|
—
|
|
$
|
645.7
|
|
Interest Rate Swaps OTC
|
68.8
|
|
19.0
|
|
49.8
|
|
—
|
|
49.8
|
|
|||||
Interest Rate Swaps Exchange Cleared
|
24.4
|
|
24.4
|
|
—
|
|
—
|
|
—
|
|
|||||
Other Financial Derivatives
|
32.8
|
|
—
|
|
32.8
|
|
—
|
|
32.8
|
|
|||||
Cross Product Netting Adjustment
|
—
|
|
3.9
|
|
—
|
|
—
|
|
—
|
|
|||||
Cross Product Collateral Adjustment
|
—
|
|
573.7
|
|
—
|
|
—
|
|
—
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives Subject to a Master Netting Arrangement
|
1,947.0
|
|
1,796.3
|
|
150.7
|
|
—
|
|
150.7
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives Not Subject to a Master Netting Arrangement
|
441.4
|
|
—
|
|
441.4
|
|
—
|
|
441.4
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives
|
2,388.4
|
|
1,796.3
|
|
592.1
|
|
—
|
|
592.1
|
|
|||||
|
|
|
|
|
|
||||||||||
Securities Sold under Agreements to Repurchase
|
$
|
168.3
|
|
$
|
—
|
|
$
|
168.3
|
|
$
|
168.3
|
|
$
|
—
|
|
December 31, 2017
|
|||||||||||||||
(In Millions)
|
GROSS
RECOGNIZED LIABILITIES |
|
GROSS AMOUNTS OFFSET IN THE BALANCE SHEET
|
|
NET AMOUNTS PRESENTED IN THE BALANCE SHEET
|
|
GROSS AMOUNTS NOT OFFSET IN THE BALANCE SHEET
|
|
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
|
|
$
|
—
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
155
|
|
|
|
156
2018 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2018
|
|
2017
|
|
||
Legally Binding Commitments to Extend Credit
(1)
|
$
|
25,023.0
|
|
$
|
26,822.6
|
|
Standby Letters of Credit
(2)
|
2,486.2
|
|
2,970.0
|
|
||
Commercial Letters of Credit
|
32.3
|
|
37.7
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
157
|
|
|
|
158
2018 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
159
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Noninterest Income
|
|
||||||||
Trust, Investment and Other Servicing Fees
|
$
|
2,173.1
|
|
$
|
1,984.6
|
|
$
|
1,787.8
|
|
Foreign Exchange Trading Income
|
233.4
|
|
197.9
|
|
224.4
|
|
|||
Other Noninterest Income
|
183.0
|
|
176.1
|
|
147.0
|
|
|||
Net Interest Income (Note)
|
992.2
|
|
733.8
|
|
565.0
|
|
|||
|
|
|
|
||||||
Revenue (Note)
|
3,581.7
|
|
3,092.4
|
|
2,724.2
|
|
|||
Provision for Credit Losses
|
1.9
|
|
3.4
|
|
1.9
|
|
|||
Noninterest Expense
|
2,421.4
|
|
2,194.5
|
|
2,012.2
|
|
|||
|
|
|
|
||||||
Income before Income Taxes (Note)
|
1,158.4
|
|
894.5
|
|
710.1
|
|
|||
Provision for Income Taxes (Note)
|
255.3
|
|
279.5
|
|
212.9
|
|
|||
|
|
|
|
||||||
Net Income
|
$
|
903.1
|
|
$
|
615.0
|
|
$
|
497.2
|
|
|
|
|
|
||||||
Percentage of Consolidated Net Income
|
58
|
%
|
51
|
%
|
48
|
%
|
|||
|
|
|
|
||||||
Average Assets
|
$
|
82,996.5
|
|
$
|
80,105.6
|
|
$
|
76,194.7
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Noninterest Income
|
|
||||||||
Trust, Investment and Other Servicing Fees
|
$
|
1,580.6
|
|
$
|
1,449.7
|
|
$
|
1,320.3
|
|
Foreign Exchange Trading Income
|
4.2
|
|
3.1
|
|
8.6
|
|
|||
Other Noninterest Income
|
102.7
|
|
103.9
|
|
105.7
|
|
|||
Net Interest Income (Note)
|
816.5
|
|
736.2
|
|
651.4
|
|
|||
|
|
|
|
||||||
Revenue (Note)
|
2,504.0
|
|
2,292.9
|
|
2,086.0
|
|
|||
Provision for Credit Losses
|
(16.4
|
)
|
(31.4
|
)
|
(27.9
|
)
|
|||
Noninterest Expense
|
1,460.0
|
|
1,405.3
|
|
1,315.3
|
|
|||
|
|
|
|
||||||
Income before Income Taxes (Note)
|
1,060.4
|
|
919.0
|
|
798.6
|
|
|||
Provision for Income Taxes (Note)
|
262.1
|
|
347.2
|
|
301.1
|
|
|||
|
|
|
|
||||||
Net Income
|
$
|
798.3
|
|
$
|
571.8
|
|
$
|
497.5
|
|
|
|
|
|
||||||
Percentage of Consolidated Net Income
|
51
|
%
|
48
|
%
|
48
|
%
|
|||
|
|
|
|
||||||
Average Assets
|
$
|
26,163.7
|
|
$
|
26,599.9
|
|
$
|
26,525.0
|
|
|
|
|
160
2018 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Noninterest Income
|
$
|
60.5
|
|
$
|
30.8
|
|
$
|
133.1
|
|
Net Interest Income (Note)
|
(144.8
|
)
|
5.0
|
|
43.6
|
|
|||
|
|
|
|
||||||
Revenue (Note)
|
(84.3
|
)
|
35.8
|
|
176.7
|
|
|||
Noninterest Expense
|
135.5
|
|
169.6
|
|
143.2
|
|
|||
|
|
|
|
||||||
Income before Income Taxes (Note)
|
(219.8
|
)
|
(133.8
|
)
|
33.5
|
|
|||
Provision for Income Taxes (Note)
|
(74.8
|
)
|
(146.0
|
)
|
(4.3
|
)
|
|||
|
|
|
|
||||||
Net Income
|
$
|
(145.0
|
)
|
$
|
12.2
|
|
$
|
37.8
|
|
|
|
|
|
||||||
Percentage of Consolidated Net Income
|
(9
|
)%
|
1
|
%
|
4
|
%
|
|||
|
|
|
|
||||||
Average Assets
|
$
|
13,786.4
|
|
$
|
12,901.9
|
|
$
|
12,850.6
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Noninterest Income
|
|
|
|
||||||
Trust, Investment and Other Servicing Fees
|
$
|
3,753.7
|
|
$
|
3,434.3
|
|
$
|
3,108.1
|
|
Foreign Exchange Trading Income
|
307.2
|
|
209.9
|
|
236.6
|
|
|||
Other Noninterest Income
|
276.6
|
|
301.9
|
|
382.2
|
|
|||
Net Interest Income (Note)
|
1,663.9
|
|
1,475.0
|
|
1,260.0
|
|
|||
|
|
|
|
||||||
Revenue (Note)
|
6,001.4
|
|
5,421.1
|
|
4,986.9
|
|
|||
Provision for Credit Losses
|
(14.5
|
)
|
(28.0
|
)
|
(26.0
|
)
|
|||
Noninterest Expense
|
4,016.9
|
|
3,769.4
|
|
3,470.7
|
|
|||
|
|
|
|
||||||
Income before Income Taxes (Note)
|
1,999.0
|
|
1,679.7
|
|
1,542.2
|
|
|||
Provision for Income Taxes (Note)
|
442.6
|
|
480.7
|
|
509.7
|
|
|||
|
|
|
|
||||||
Net Income
|
$
|
1,556.4
|
|
$
|
1,199.0
|
|
$
|
1,032.5
|
|
|
|
|
|
||||||
Average Assets
|
$
|
122,946.6
|
|
$
|
119,607.4
|
|
$
|
115,570.3
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
161
|
(In Millions)
|
TOTAL ASSETS
|
|
TOTAL
REVENUE
|
|
INCOME BEFORE
INCOME TAXES
|
|
NET INCOME
|
|
||||
2018
|
|
|
|
|
||||||||
Non-U.S.
|
$
|
32,712.9
|
|
$
|
2,018.1
|
|
$
|
786.4
|
|
$
|
625.7
|
|
U.S.
|
99,499.6
|
|
3,942.1
|
|
1,171.4
|
|
930.7
|
|
||||
|
|
|
|
|
||||||||
Total
|
$
|
132,212.5
|
|
$
|
5,960.2
|
|
$
|
1,957.8
|
|
$
|
1,556.4
|
|
|
|
|
|
|
||||||||
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
|
|
|
|
|
162
2018 Annual Report | Northern Trust Corporation
|
|
|
|
December 31, 2018
|
December 31, 2017
|
||||||||||||||||||
($ 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
|
$
|
8,729.8
|
|
13.7
|
%
|
$
|
8,729.8
|
|
12.9
|
%
|
$
|
8,626.3
|
|
13.5
|
%
|
$
|
8,626.3
|
|
12.6
|
%
|
The Northern Trust Company
|
8,722.5
|
|
14.1
|
|
8,722.5
|
|
13.1
|
|
8,517.8
|
|
13.7
|
|
8,517.8
|
|
12.6
|
|
||||
Minimum to qualify as well-capitalized:
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
||||
The Northern Trust Company
|
4,007.4
|
|
6.5
|
|
4,335.9
|
|
6.5
|
|
4,032.7
|
|
6.5
|
|
4,406.8
|
|
6.5
|
|
||||
Tier 1
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
9,596.7
|
|
15.0
|
|
9,596.7
|
|
14.1
|
|
9,473.4
|
|
14.8
|
|
9,473.4
|
|
13.8
|
|
||||
The Northern Trust Company
|
8,722.5
|
|
14.1
|
|
8,722.5
|
|
13.1
|
|
8,517.8
|
|
13.7
|
|
8,517.8
|
|
12.6
|
|
||||
Minimum to qualify as well-capitalized:
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
3,834.9
|
|
6.0
|
|
4,070.0
|
|
6.0
|
|
3,841.1
|
|
6.0
|
|
4,117.0
|
|
6.0
|
|
||||
The Northern Trust Company
|
4,932.2
|
|
8.0
|
|
5,336.4
|
|
8.0
|
|
4,963.3
|
|
8.0
|
|
5,423.8
|
|
8.0
|
|
||||
Total
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
10,803.8
|
|
16.9
|
|
10,942.0
|
|
16.1
|
|
10,707.4
|
|
16.7
|
|
10,861.2
|
|
15.8
|
|
||||
The Northern Trust Company
|
9,732.5
|
|
15.8
|
|
9,870.7
|
|
14.8
|
|
9,527.8
|
|
15.4
|
|
9,681.6
|
|
14.3
|
|
||||
Minimum to qualify as well-capitalized:
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
6,391.5
|
|
10.0
|
|
6,783.7
|
|
10.0
|
|
6,401.9
|
|
10.0
|
|
6,861.6
|
|
10.0
|
|
||||
The Northern Trust Company
|
6,165.3
|
|
10.0
|
|
6,670.6
|
|
10.0
|
|
6,204.2
|
|
10.0
|
|
6,779.7
|
|
10.0
|
|
||||
Tier 1 Leverage
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
9,596.7
|
|
8.0
|
|
9,596.7
|
|
8.0
|
|
9,473.4
|
|
7.8
|
|
9,473.4
|
|
7.8
|
|
||||
The Northern Trust Company
|
8,722.5
|
|
7.3
|
|
8,722.5
|
|
7.3
|
|
8,517.8
|
|
7.0
|
|
8,517.8
|
|
7.0
|
|
||||
Minimum to qualify as well-capitalized:
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
||||
The Northern Trust Company
|
5,998.6
|
|
5.0
|
|
5,998.6
|
|
5.0
|
|
6,057.9
|
|
5.0
|
|
6,057.9
|
|
5.0
|
|
||||
Supplementary Leverage
(1)
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
9,596.7
|
|
7.0
|
|
N/A
|
|
N/A
|
|
9,473.4
|
|
6.8
|
|
N/A
|
|
N/A
|
|
||||
The Northern Trust Company
|
8,722.5
|
|
6.4
|
|
N/A
|
|
N/A
|
|
8,517.8
|
|
6.1
|
|
N/A
|
|
N/A
|
|
||||
Minimum to qualify as well-capitalized:
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
||||
The Northern Trust Company
|
4,077.2
|
|
3.0
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
163
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2018
|
|
2017
|
|
||
ASSETS
|
|
|
||||
Cash on Deposit with Subsidiary Bank
|
$
|
866.8
|
|
$
|
1,002.5
|
|
Debt Securities
|
—
|
|
0.9
|
|
||
Advances to Wholly-Owned Subsidiaries – Banks
|
2,910.0
|
|
2,460.0
|
|
||
– Nonbank
|
—
|
|
13.5
|
|
||
Investments in Wholly-Owned Subsidiaries – Banks
|
9,585.2
|
|
9,223.9
|
|
||
– Nonbank
|
182.9
|
|
212.9
|
|
||
Other Assets
|
803.1
|
|
706.4
|
|
||
Total Assets
|
$
|
14,348.0
|
|
$
|
13,620.1
|
|
LIABILITIES
|
|
|
||||
Senior Notes
|
$
|
2,011.3
|
|
$
|
1,497.3
|
|
Long Term Debt
|
1,112.4
|
|
1,129.6
|
|
||
Floating Rate Capital Debt
|
277.6
|
|
277.5
|
|
||
Other Liabilities
|
438.5
|
|
499.5
|
|
||
Total Liabilities
|
3,839.8
|
|
3,403.9
|
|
||
STOCKHOLDERS’ EQUITY
|
|
|
||||
Preferred Stock
|
882.0
|
|
882.0
|
|
||
Common Stock
|
408.6
|
|
408.6
|
|
||
Additional Paid-in Capital
|
1,068.4
|
|
1,047.2
|
|
||
Retained Earnings
|
10,776.8
|
|
9,685.1
|
|
||
Accumulated Other Comprehensive Income (Loss)
|
(453.7
|
)
|
(414.3
|
)
|
||
Treasury Stock
|
(2,173.9
|
)
|
(1,392.4
|
)
|
||
Total Stockholders’ Equity
|
10,508.2
|
|
10,216.2
|
|
||
Total Liabilities and Stockholders’ Equity
|
$
|
14,348.0
|
|
$
|
13,620.1
|
|
|
|
|
164
2018 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
OPERATING INCOME
|
|
|
|
||||||
Dividends – Bank Subsidiaries
|
$
|
1,200.9
|
|
$
|
525.0
|
|
$
|
300.0
|
|
– Nonbank Subsidiaries
|
—
|
|
—
|
|
3.4
|
|
|||
Intercompany Interest and Other Charges
|
91.9
|
|
58.2
|
|
39.8
|
|
|||
Interest and Other Income
|
(8.7
|
)
|
18.1
|
|
7.5
|
|
|||
Total Operating Income
|
1,284.1
|
|
601.3
|
|
350.7
|
|
|||
OPERATING EXPENSES
|
|
|
|
||||||
Interest Expense
|
97.3
|
|
76.5
|
|
63.5
|
|
|||
Other Operating Expenses
|
17.0
|
|
25.9
|
|
19.9
|
|
|||
Total Operating Expenses
|
114.3
|
|
102.4
|
|
83.4
|
|
|||
Income before Income Taxes and Equity in Undistributed Net Income of Subsidiaries
|
1,169.8
|
|
498.9
|
|
267.3
|
|
|||
Benefit for Income Taxes
|
24.6
|
|
43.7
|
|
28.3
|
|
|||
Income before Equity in Undistributed Net Income of Subsidiaries
|
1,194.4
|
|
542.6
|
|
295.6
|
|
|||
Equity in Undistributed Net Income of Subsidiaries – Banks
|
336.7
|
|
632.6
|
|
708.3
|
|
|||
– Nonbank
|
25.3
|
|
23.8
|
|
28.6
|
|
|||
Net Income
|
$
|
1,556.4
|
|
$
|
1,199.0
|
|
$
|
1,032.5
|
|
Preferred Stock Dividends
|
46.4
|
|
49.8
|
|
23.4
|
|
|||
Net Income Applicable to Common Stock
|
$
|
1,510.0
|
|
$
|
1,149.2
|
|
$
|
1,009.1
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
165
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
OPERATING ACTIVITIES:
|
|
|
|
||||||
Net Income
|
$
|
1,556.4
|
|
$
|
1,199.0
|
|
$
|
1,032.5
|
|
Adjustments to Reconcile Net Income to Net Cash Provided by (Used in) Operating Activities:
|
|
|
|
||||||
Equity in Undistributed Net Income of Subsidiaries
|
(362.0
|
)
|
(656.4
|
)
|
(736.9
|
)
|
|||
Change in Prepaid Expenses
|
(0.6
|
)
|
(0.3
|
)
|
3.0
|
|
|||
Change in Accrued Income Taxes
|
(141.8
|
)
|
17.2
|
|
(17.9
|
)
|
|||
Other, net
|
125.6
|
|
55.7
|
|
55.7
|
|
|||
Net Cash Provided by Operating Activities
|
1,177.6
|
|
615.2
|
|
336.4
|
|
|||
INVESTING ACTIVITIES:
|
|
|
|
||||||
Proceeds from Sale, Maturity and Redemption of Debt Securities – Available for Sale
|
1.0
|
|
—
|
|
0.2
|
|
|||
Change in Capital Investments in Subsidiaries
|
—
|
|
—
|
|
(3.0
|
)
|
|||
Advances to Wholly-Owned Subsidiaries
|
(436.5
|
)
|
100.0
|
|
(295.0
|
)
|
|||
Acquisition of a Subsidiary, net of cash acquired
|
(31.2
|
)
|
—
|
|
—
|
|
|||
Other, net
|
(3.1
|
)
|
1.9
|
|
1.2
|
|
|||
Net Cash Used in Investing Activities
|
(469.8
|
)
|
101.9
|
|
(296.6
|
)
|
|||
FINANCING ACTIVITIES:
|
|
|
|
||||||
Proceeds from Senior Notes and Long-Term Debt
|
497.9
|
|
350.0
|
|
—
|
|
|||
Proceeds from Issuance of Preferred Stock – Series D
|
—
|
|
—
|
|
493.5
|
|
|||
Treasury Stock Purchased
|
(924.3
|
)
|
(523.1
|
)
|
(411.1
|
)
|
|||
Net Proceeds from Stock Options
|
32.6
|
|
108.0
|
|
233.8
|
|
|||
Cash Dividends Paid on Common Stock
|
(405.4
|
)
|
(356.8
|
)
|
(333.0
|
)
|
|||
Cash Dividends Paid on Preferred Stock
|
(46.4
|
)
|
(49.8
|
)
|
(23.4
|
)
|
|||
Other, net
|
2.1
|
|
0.1
|
|
(0.1
|
)
|
|||
Net Cash Used in Financing Activities
|
(843.5
|
)
|
(471.6
|
)
|
(40.3
|
)
|
|||
Net Change in Cash on Deposit with Subsidiary Bank
|
(135.7
|
)
|
245.5
|
|
(0.5
|
)
|
|||
Cash on Deposit with Subsidiary Bank at Beginning of Year
|
1,002.5
|
|
757.0
|
|
757.5
|
|
|||
Cash on Deposit with Subsidiary Bank at End of Year
|
$
|
866.8
|
|
$
|
1,002.5
|
|
$
|
757.0
|
|
|
|
|
166
2018 Annual Report | Northern Trust Corporation
|
|
|
STATEMENTS OF INCOME
|
2018
|
2017
|
||||||||||||||||||||||
($ 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
|
$
|
933.9
|
|
$
|
939.2
|
|
$
|
942.9
|
|
$
|
937.7
|
|
$
|
910.0
|
|
$
|
867.9
|
|
$
|
848.2
|
|
$
|
808.2
|
|
Other Noninterest Income
|
152.7
|
|
126.9
|
|
149.9
|
|
154.3
|
|
134.5
|
|
123.1
|
|
131.5
|
|
122.7
|
|
||||||||
Net Interest Income
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest Income
|
648.6
|
|
599.2
|
|
567.7
|
|
505.9
|
|
488.1
|
|
453.8
|
|
417.2
|
|
410.3
|
|
||||||||
Interest Expense
|
231.4
|
|
191.0
|
|
154.4
|
|
121.9
|
|
108.1
|
|
99.6
|
|
75.7
|
|
56.8
|
|
||||||||
Net Interest Income
|
417.2
|
|
408.2
|
|
413.3
|
|
384.0
|
|
380.0
|
|
354.2
|
|
341.5
|
|
353.5
|
|
||||||||
Provision for Credit Losses
|
(4.0
|
)
|
(9.0
|
)
|
1.5
|
|
(3.0
|
)
|
(13.0
|
)
|
(7.0
|
)
|
(7.0
|
)
|
(1.0
|
)
|
||||||||
Noninterest Expense
|
1,021.9
|
|
1,002.3
|
|
997.4
|
|
995.3
|
|
1,001.9
|
|
935.6
|
|
937.4
|
|
894.5
|
|
||||||||
Provision for Income Taxes
|
76.0
|
|
106.5
|
|
116.8
|
|
102.1
|
|
79.0
|
|
118.2
|
|
122.9
|
|
114.8
|
|
||||||||
Net Income
|
$
|
409.9
|
|
$
|
374.5
|
|
$
|
390.4
|
|
$
|
381.6
|
|
$
|
356.6
|
|
$
|
298.4
|
|
$
|
267.9
|
|
$
|
276.1
|
|
Preferred Stock Dividends
|
5.9
|
|
17.3
|
|
5.9
|
|
17.3
|
|
5.9
|
|
17.3
|
|
5.9
|
|
20.7
|
|
||||||||
Net Income Applicable to Common Stock
|
$
|
404.0
|
|
$
|
357.2
|
|
$
|
384.5
|
|
$
|
364.3
|
|
$
|
350.7
|
|
$
|
281.1
|
|
$
|
262.0
|
|
$
|
255.4
|
|
PER COMMON SHARE
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net Income – Basic
|
$
|
1.81
|
|
$
|
1.59
|
|
$
|
1.69
|
|
$
|
1.59
|
|
$
|
1.52
|
|
$
|
1.21
|
|
$
|
1.12
|
|
$
|
1.10
|
|
– Diluted
|
1.80
|
|
1.58
|
|
1.68
|
|
1.58
|
|
1.51
|
|
1.20
|
|
1.12
|
|
1.09
|
|
||||||||
AVERAGE BALANCE SHEET ASSETS
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash and Due from Banks
|
$
|
2,400.9
|
|
$
|
2,702.9
|
|
$
|
2,440.5
|
|
$
|
2,593.2
|
|
$
|
2,838.8
|
|
$
|
2,666.8
|
|
$
|
2,701.1
|
|
$
|
2,116.6
|
|
Federal Reserve and Other Central Bank Deposits
|
21,762.6
|
|
22,889.6
|
|
24,512.8
|
|
26,495.1
|
|
25,995.8
|
|
25,182.9
|
|
22,570.0
|
|
21,806.9
|
|
||||||||
Interest-Bearing Due from and Deposits with Banks
(1)
|
5,228.9
|
|
5,410.3
|
|
6,556.9
|
|
6,920.4
|
|
7,084.7
|
|
7,145.8
|
|
7,653.9
|
|
6,684.3
|
|
||||||||
Federal Funds Sold and Securities Purchased under Agreements to Resell
|
1,334.3
|
|
1,775.2
|
|
1,417.1
|
|
1,467.1
|
|
1,389.8
|
|
1,945.8
|
|
2,059.4
|
|
2,011.7
|
|
||||||||
Securities
(2)
|
52,228.6
|
|
50,820.8
|
|
49,692.4
|
|
48,335.7
|
|
45,601.9
|
|
44,742.3
|
|
43,731.8
|
|
44,777.7
|
|
||||||||
Loans and Leases
|
31,623.8
|
|
31,798.9
|
|
32,235.4
|
|
32,468.0
|
|
33,235.6
|
|
33,468.2
|
|
33,891.4
|
|
33,671.2
|
|
||||||||
Allowance for Credit Losses Assigned to Loans and Leases
|
(120.3
|
)
|
(127.6
|
)
|
(126.4
|
)
|
(131.0
|
)
|
(149.1
|
)
|
(155.1
|
)
|
(162.3
|
)
|
(160.8
|
)
|
||||||||
Other Assets
|
6,855.4
|
|
6,885.5
|
|
7,138.0
|
|
6,344.8
|
|
6,314.5
|
|
6,162.7
|
|
5,955.4
|
|
5,568.8
|
|
||||||||
Total Assets
|
$
|
121,314.2
|
|
$
|
122,155.6
|
|
$
|
123,866.7
|
|
$
|
124,493.3
|
|
$
|
122,312.0
|
|
$
|
121,159.4
|
|
$
|
118,400.7
|
|
$
|
116,476.4
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
||||||||||||||||
Deposits
|
|
|
|
|
|
|
|
|
||||||||||||||||
Demand and Other Noninterest-Bearing
|
$
|
19,211.2
|
|
$
|
19,430.5
|
|
$
|
21,484.7
|
|
$
|
22,022.9
|
|
$
|
21,385.5
|
|
$
|
21,736.4
|
|
$
|
23,518.1
|
|
$
|
25,712.5
|
|
Savings, Money Market, and Other
|
14,349.1
|
|
14,787.6
|
|
15,565.0
|
|
15,916.4
|
|
15,996.1
|
|
15,617.1
|
|
15,236.1
|
|
15,446.7
|
|
||||||||
Savings Certificates and Other Time
|
721.1
|
|
810.5
|
|
896.6
|
|
1,058.5
|
|
1,189.2
|
|
1,255.1
|
|
1,312.7
|
|
1,338.5
|
|
||||||||
Non-U.S. Offices – Interest-Bearing
|
58,873.9
|
|
58,473.2
|
|
57,684.5
|
|
59,199.7
|
|
58,632.0
|
|
58,503.4
|
|
56,672.3
|
|
52,435.9
|
|
||||||||
Total Deposits
|
93,155.3
|
|
93,501.8
|
|
95,630.8
|
|
98,197.5
|
|
97,202.8
|
|
97,112.0
|
|
96,739.2
|
|
94,933.6
|
|
||||||||
Short-Term Borrowings
|
10,987.9
|
|
11,380.7
|
|
11,336.2
|
|
9,405.3
|
|
8,411.9
|
|
7,264.5
|
|
5,412.0
|
|
5,659.1
|
|
||||||||
Senior Notes
|
1,996.5
|
|
1,818.0
|
|
1,497.6
|
|
1,497.4
|
|
1,497.2
|
|
1,497.0
|
|
1,496.9
|
|
1,496.7
|
|
||||||||
Long-Term Debt
|
1,099.6
|
|
1,254.4
|
|
1,410.8
|
|
1,426.5
|
|
1,540.1
|
|
1,672.5
|
|
1,536.1
|
|
1,324.9
|
|
||||||||
Floating Rate Capital Debt
|
277.6
|
|
277.6
|
|
277.5
|
|
277.5
|
|
277.5
|
|
277.5
|
|
277.4
|
|
277.4
|
|
||||||||
Other Liabilities
|
3,498.5
|
|
3,648.5
|
|
3,511.7
|
|
3,551.4
|
|
3,271.7
|
|
3,295.7
|
|
2,963.1
|
|
2,993.3
|
|
||||||||
Stockholders’ Equity
|
10,298.8
|
|
10,274.6
|
|
10,202.1
|
|
10,137.7
|
|
10,110.8
|
|
10,040.2
|
|
9,976.0
|
|
9,791.4
|
|
||||||||
Total Liabilities and Stockholders’ Equity
|
$
|
121,314.2
|
|
$
|
122,155.6
|
|
$
|
123,866.7
|
|
$
|
124,493.3
|
|
$
|
122,312.0
|
|
$
|
121,159.4
|
|
$
|
118,400.7
|
|
$
|
116,476.4
|
|
ANALYSIS OF NET INTEREST INCOME
|
|
|
|
|
|
|
|
|
||||||||||||||||
Earning Assets
|
$
|
112,178.2
|
|
$
|
112,694.8
|
|
$
|
114,414.6
|
|
$
|
115,686.3
|
|
$
|
113,307.8
|
|
$
|
112,485.0
|
|
$
|
109,906.5
|
|
$
|
108,951.8
|
|
Interest-Related Funds
|
88,305.7
|
|
88,802.0
|
|
88,668.2
|
|
88,781.4
|
|
87,544.0
|
|
86,087.1
|
|
81,943.5
|
|
77,979.2
|
|
||||||||
Noninterest-Related Funds
|
$
|
23,872.5
|
|
$
|
23,892.8
|
|
$
|
25,746.4
|
|
$
|
26,904.9
|
|
$
|
25,763.8
|
|
$
|
26,397.9
|
|
$
|
27,963.0
|
|
$
|
30,972.6
|
|
Net Interest Income (Fully Taxable Equivalent)
|
430.1
|
|
418.5
|
|
422.6
|
|
392.7
|
|
396.0
|
|
366.2
|
|
350.4
|
|
362.4
|
|
||||||||
Net Interest Margin (Fully Taxable Equivalent)
|
1.52
|
%
|
1.47
|
%
|
1.48
|
%
|
1.38
|
%
|
1.39
|
%
|
1.29
|
%
|
1.28
|
%
|
1.35
|
%
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
167
|
|
2018
|
2017
|
2016
|
|||||||||||||||||||||
($ 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
|
$
|
207.1
|
|
$
|
23,899.3
|
|
0.87
|
%
|
$
|
155.1
|
|
$
|
23,903.9
|
|
0.65
|
%
|
$
|
91.4
|
|
$
|
20,434.4
|
|
0.45
|
%
|
Interest-Bearing Due from and Deposits with
Banks
(1)
|
70.0
|
|
6,022.8
|
|
1.16
|
|
63.8
|
|
7,143.3
|
|
0.89
|
|
64.3
|
|
8,742.7
|
|
0.73
|
|
||||||
Federal Funds Sold and Securities Purchased under Agreements to Resell
|
33.3
|
|
1,498.8
|
|
2.22
|
|
27.5
|
|
1,850.2
|
|
1.48
|
|
18.4
|
|
1,775.7
|
|
1.04
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Securities
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
U.S. Government
|
108.3
|
|
5,737.1
|
|
1.89
|
|
89.4
|
|
6,342.5
|
|
1.41
|
|
78.1
|
|
7,073.1
|
|
1.10
|
|
||||||
Obligations of States and Political Subdivisions
|
13.9
|
|
725.2
|
|
1.91
|
|
13.1
|
|
887.3
|
|
1.48
|
|
11.3
|
|
585.8
|
|
1.94
|
|
||||||
Government Sponsored Agency
|
456.0
|
|
20,682.7
|
|
2.20
|
|
283.2
|
|
17,987.0
|
|
1.57
|
|
177.2
|
|
17,421.0
|
|
1.02
|
|
||||||
Other
(2)
|
367.5
|
|
23,136.5
|
|
1.59
|
|
253.3
|
|
19,498.9
|
|
1.30
|
|
189.9
|
|
16,961.4
|
|
1.12
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Securities
|
945.7
|
|
50,281.5
|
|
1.88
|
|
639.0
|
|
44,715.7
|
|
1.43
|
|
456.5
|
|
42,041.3
|
|
1.09
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Loans and Leases
(3)
|
1,106.5
|
|
32,028.6
|
|
3.45
|
|
929.8
|
|
33,565.2
|
|
2.77
|
|
811.4
|
|
34,043.5
|
|
2.38
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Earning Assets
|
2,362.6
|
|
113,731.0
|
|
2.08
|
|
1,815.2
|
|
111,178.3
|
|
1.63
|
|
1,442.0
|
|
107,037.6
|
|
1.35
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Allowance for Credit Losses Assigned to Loans and Leases
|
—
|
|
(126.3
|
)
|
—
|
|
—
|
|
(156.8
|
)
|
—
|
|
—
|
|
(192.9
|
)
|
—
|
|
||||||
Cash and Due from Banks
|
—
|
|
2,534.3
|
|
—
|
|
—
|
|
2,583.1
|
|
—
|
|
—
|
|
2,035.3
|
|
—
|
|
||||||
Buildings and Equipment
|
—
|
|
438.5
|
|
—
|
|
—
|
|
466.0
|
|
—
|
|
—
|
|
445.5
|
|
—
|
|
||||||
Client Security Settlement Receivables
|
—
|
|
1,002.0
|
|
—
|
|
—
|
|
891.6
|
|
—
|
|
—
|
|
1,136.6
|
|
—
|
|
||||||
Goodwill
|
—
|
|
642.5
|
|
—
|
|
—
|
|
544.0
|
|
|
—
|
|
524.9
|
|
—
|
|
|||||||
Other Assets
|
—
|
|
4,724.6
|
|
—
|
|
—
|
|
4,101.2
|
|
—
|
|
—
|
|
4,583.3
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Assets
|
$
|
—
|
|
$
|
122,946.6
|
|
—
|
%
|
$
|
—
|
|
$
|
119,607.4
|
|
—
|
%
|
$
|
—
|
|
$
|
115,570.3
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
AVERAGE SOURCE OF FUNDS
|
|
|
|
|
|
|
|
|
||||||||||||||||
Deposits
|
|
|
|
|
|
|
|
|
||||||||||||||||
Savings, Money Market, and Other
|
$
|
82.0
|
|
$
|
15,149.3
|
|
0.54
|
%
|
$
|
24.3
|
|
$
|
15,575.6
|
|
0.16
|
%
|
$
|
11.9
|
|
$
|
15,142.4
|
|
0.08
|
%
|
Savings Certificates and Other Time
|
7.8
|
|
870.6
|
|
0.90
|
|
9.4
|
|
1,273.4
|
|
0.74
|
|
8.3
|
|
1,432.0
|
|
0.58
|
|
||||||
Non-U.S. Offices – Interest-Bearing
|
294.8
|
|
58,556.6
|
|
0.50
|
|
148.4
|
|
56,583.2
|
|
0.26
|
|
63.3
|
|
50,808.2
|
|
0.12
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Interest-Bearing Deposits
|
384.6
|
|
74,576.5
|
|
0.52
|
|
182.1
|
|
73,432.2
|
|
0.25
|
|
83.5
|
|
67,382.6
|
|
0.12
|
|
||||||
Short-Term Borrowings
|
208.2
|
|
10,783.5
|
|
1.93
|
|
67.1
|
|
6,696.0
|
|
1.00
|
|
21.8
|
|
6,337.0
|
|
0.34
|
|
||||||
Senior Notes
|
53.4
|
|
1,704.0
|
|
3.13
|
|
46.9
|
|
1,496.9
|
|
3.13
|
|
46.8
|
|
1,496.6
|
|
3.13
|
|
||||||
Long-Term Debt
|
45.0
|
|
1,296.8
|
|
3.47
|
|
39.2
|
|
1,519.4
|
|
2.58
|
|
26.4
|
|
1,392.4
|
|
1.90
|
|
||||||
Floating Rate Capital Debt
|
7.5
|
|
277.6
|
|
2.72
|
|
4.9
|
|
277.5
|
|
1.75
|
|
3.5
|
|
277.4
|
|
1.25
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Interest-Related Funds
|
698.7
|
|
88,638.4
|
|
0.79
|
|
340.2
|
|
83,422.0
|
|
0.41
|
|
182.0
|
|
76,886.0
|
|
0.24
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest Rate Spread
|
—
|
|
—
|
|
1.29
|
|
—
|
|
—
|
|
1.22
|
|
—
|
|
—
|
|
1.11
|
|
||||||
Demand and Other Noninterest-Bearing Deposits
|
—
|
|
20,526.6
|
|
—
|
|
—
|
|
23,072.6
|
|
—
|
|
—
|
|
26,231.3
|
|
—
|
|
||||||
Other Liabilities
|
—
|
|
3,552.7
|
|
—
|
|
—
|
|
3,132.2
|
|
—
|
|
—
|
|
3,367.7
|
|
—
|
|
||||||
Stockholders’ Equity
|
—
|
|
10,228.9
|
|
—
|
|
—
|
|
9,980.6
|
|
—
|
|
—
|
|
9,085.3
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Liabilities and Stockholders’ Equity
|
$
|
—
|
|
$
|
122,946.6
|
|
—
|
%
|
$
|
—
|
|
$
|
119,607.4
|
|
—
|
%
|
$
|
—
|
|
$
|
115,570.3
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net Interest Income/Margin (FTE Adjusted)
|
$
|
1,663.9
|
|
$
|
—
|
|
1.46
|
%
|
$
|
1,475.0
|
|
$
|
—
|
|
1.33
|
%
|
$
|
1,260.0
|
|
$
|
—
|
|
1.18
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net Interest Income/Margin (Unadjusted)
|
$
|
1,622.7
|
|
$
|
—
|
|
1.43
|
%
|
$
|
1,429.2
|
|
$
|
—
|
|
1.29
|
%
|
$
|
1,234.9
|
|
$
|
—
|
|
1.15
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net Interest Income/Margin Components (FTE Adjusted)
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
U.S.
|
$
|
1,079.9
|
|
$
|
88,717.0
|
|
1.22
|
%
|
$
|
1,076.4
|
|
$
|
90,090.3
|
|
1.19
|
%
|
$
|
959.5
|
|
$
|
88,514.4
|
|
1.08
|
%
|
Non-U.S.
|
584.0
|
|
25,014.0
|
|
2.33
|
|
398.6
|
|
21,088.0
|
|
1.89
|
%
|
300.5
|
|
18,523.2
|
|
1.62
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Consolidated
|
$
|
1,663.9
|
|
$
|
113,731.0
|
|
1.46
|
%
|
$
|
1,475.0
|
|
$
|
111,178.3
|
|
1.33
|
%
|
$
|
1,260.0
|
|
$
|
107,037.6
|
|
1.18
|
%
|
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
24.9%
. Total taxable equivalent interest adjustments amounted to
$41.2 million
in
2018
,
$45.8 million
in
2017
and
25.1 million
in
2016
. 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.
|
|
|
|
168
2018 Annual Report | Northern Trust Corporation
|
|
|
(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)
|
2018/2017 CHANGE DUE TO
|
2017/2016 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
|
$
|
—
|
|
$
|
52.0
|
|
$
|
52.0
|
|
$
|
17.6
|
|
$
|
46.1
|
|
$
|
63.7
|
|
Interest-Bearing Due from and Deposits with Banks
|
(6.7
|
)
|
12.9
|
|
6.2
|
|
2.5
|
|
(3.0
|
)
|
(0.5
|
)
|
||||||
Federal Funds Sold and Securities Purchased under Agreements to Resell
|
(3.5
|
)
|
9.3
|
|
5.8
|
|
0.8
|
|
8.3
|
|
9.1
|
|
||||||
Securities
|
|
|
|
|
|
|
||||||||||||
U.S. Government
|
(7.3
|
)
|
26.2
|
|
18.9
|
|
(6.5
|
)
|
17.8
|
|
11.3
|
|
||||||
Obligations of States and Political Subdivisions
|
(1.4
|
)
|
2.2
|
|
0.8
|
|
3.4
|
|
(1.6
|
)
|
1.8
|
|
||||||
Government Sponsored Agency
|
47.0
|
|
125.8
|
|
172.8
|
|
6.1
|
|
99.9
|
|
106.0
|
|
||||||
Other
|
52.0
|
|
62.2
|
|
114.2
|
|
30.6
|
|
32.8
|
|
63.4
|
|
||||||
Loans and Leases
|
(20.5
|
)
|
197.2
|
|
176.7
|
|
20.5
|
|
97.9
|
|
118.4
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
59.6
|
|
$
|
487.8
|
|
$
|
547.4
|
|
$
|
75.0
|
|
$
|
298.2
|
|
$
|
373.2
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
||||||||||||
Savings and Money Market
|
$
|
(0.7
|
)
|
$
|
58.4
|
|
$
|
57.7
|
|
$
|
0.3
|
|
$
|
12.1
|
|
$
|
12.4
|
|
Savings Certificates and Other Time
|
(4.8
|
)
|
3.2
|
|
(1.6
|
)
|
(0.7
|
)
|
1.8
|
|
1.1
|
|
||||||
Non-U.S. Offices Time
|
5.3
|
|
141.1
|
|
146.4
|
|
7.5
|
|
77.6
|
|
85.1
|
|
||||||
Short-Term Borrowings
|
55.9
|
|
85.2
|
|
141.1
|
|
1.3
|
|
44.0
|
|
45.3
|
|
||||||
Senior Notes
|
6.5
|
|
—
|
|
6.5
|
|
—
|
|
0.1
|
|
0.1
|
|
||||||
Subordinated Notes
|
|
|
|
|
|
|
||||||||||||
Long-Term Debt
|
(5.8
|
)
|
11.6
|
|
5.8
|
|
10.3
|
|
2.5
|
|
12.8
|
|
||||||
Floating Rate Capital Debt
|
—
|
|
2.6
|
|
2.6
|
|
—
|
|
1.4
|
|
1.4
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
56.4
|
|
$
|
302.1
|
|
$
|
358.5
|
|
$
|
18.7
|
|
$
|
139.5
|
|
$
|
158.2
|
|
|
|
|
|
|
|
|
||||||||||||
Increase in Net Interest Income
|
$
|
3.2
|
|
$
|
185.7
|
|
$
|
188.9
|
|
$
|
56.3
|
|
$
|
158.7
|
|
$
|
215.0
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
169
|
|
December 31, 2018
|
||||||||||||||||||||
|
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
|
|
|||||
Debt Securities Held to Maturity
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government
|
$
|
101.6
|
|
2.37
|
%
|
$
|
—
|
|
—
|
%
|
$
|
—
|
|
—
|
%
|
$
|
—
|
|
—
|
%
|
2 mo.
|
Obligations of States and Political Subdivisions
|
9.3
|
|
5.11
|
|
9.6
|
|
4.85
|
|
—
|
|
—
|
|
—
|
|
—
|
|
14 mos.
|
||||
Government Sponsored Agency
|
0.9
|
|
4.66
|
|
2.1
|
|
4.81
|
|
1.1
|
|
4.74
|
|
0.4
|
|
4.68
|
|
52 mos.
|
||||
Other – Fixed
|
6,276.5
|
|
1.05
|
|
5,517.4
|
|
0.82
|
|
194.7
|
|
0.64
|
|
81.5
|
|
2.25
|
|
19 mos.
|
||||
– Floating
|
249.9
|
|
1.85
|
|
1,536.9
|
|
1.84
|
|
372.1
|
|
0.34
|
|
—
|
|
—
|
|
48 mos.
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Debt Securities Held to Maturity
|
$
|
6,638.2
|
|
1.11
|
%
|
$
|
7,066.0
|
|
1.05
|
%
|
$
|
567.9
|
|
0.45
|
%
|
$
|
81.9
|
|
2.27
|
%
|
23 mos.
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Debt Securities Available for Sale
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government
|
$
|
1,287.1
|
|
1.46
|
%
|
$
|
3,898.2
|
|
1.63
|
%
|
$
|
—
|
|
—
|
%
|
$
|
—
|
|
—
|
%
|
29 mos.
|
Obligations of States and Political Subdivisions
|
208.0
|
|
1.13
|
|
140.4
|
|
1.88
|
|
307.5
|
|
3.37
|
|
—
|
|
—
|
|
53 mos.
|
||||
Government Sponsored Agency
|
5,725.4
|
|
2.54
|
|
10,727.3
|
|
2.59
|
|
4,963.2
|
|
2.59
|
|
1,008.7
|
|
2.67
|
|
43 mos.
|
||||
Asset-Backed – Fixed
|
547.7
|
|
1.53
|
|
966.6
|
|
2.29
|
|
234.2
|
|
3.68
|
|
6.6
|
|
3.88
|
|
25 mos.
|
||||
Asset-Backed – Floating
|
319.2
|
|
3.10
|
|
1,097.1
|
|
3.32
|
|
49.4
|
|
1.70
|
|
24.1
|
|
1.78
|
|
45 mos.
|
||||
Other – Fixed
|
812.6
|
|
1.50
|
|
2,754.2
|
|
2.42
|
|
94.9
|
|
1.82
|
|
—
|
|
—
|
|
31 mos.
|
||||
– Floating
|
262.8
|
|
2.67
|
|
1,360.1
|
|
2.91
|
|
91.6
|
|
2.74
|
|
1.9
|
|
2.94
|
|
30 mos.
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Debt Securities Available for Sale
|
$
|
9,162.8
|
|
2.23
|
%
|
$
|
20,943.9
|
|
2.43
|
%
|
$
|
5,740.8
|
|
2.66
|
%
|
$
|
1,041.3
|
|
2.66
|
%
|
39 mos.
|
|
|
|
170
2018 Annual Report | Northern Trust Corporation
|
|
|
|
December 31, 2018
|
|||||||||||
(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
|
$
|
8,728.1
|
|
$
|
5,229.7
|
|
$
|
2,111.4
|
|
$
|
1,387.0
|
|
Commercial Real Estate
|
3,228.8
|
|
635.2
|
|
2,101.9
|
|
491.7
|
|
||||
Lease Financing, net
|
90.7
|
|
4.3
|
|
33.0
|
|
53.4
|
|
||||
Other-Commercial
|
426.0
|
|
255.2
|
|
103.1
|
|
67.7
|
|
||||
Other-Personal
|
67.5
|
|
2.6
|
|
4.1
|
|
60.8
|
|
||||
|
|
|
|
|
||||||||
Total U.S.
|
$
|
12,541.1
|
|
$
|
6,127.0
|
|
$
|
4,353.5
|
|
$
|
2,060.6
|
|
|
|
|
|
|
||||||||
Non-U.S.
|
$
|
2,701.6
|
|
$
|
2,616.0
|
|
$
|
47.7
|
|
$
|
37.9
|
|
Total Selected Loans and Leases
|
$
|
15,242.7
|
|
$
|
8,743.0
|
|
$
|
4,401.2
|
|
$
|
2,098.5
|
|
Interest Rate Sensitivity of Loans and Leases:
|
|
|
|
|
||||||||
Fixed Rate
|
$
|
8,909.2
|
|
$
|
6,505.2
|
|
$
|
1,344.1
|
|
$
|
1,059.9
|
|
Variable Rate
|
6,333.5
|
|
2,340.9
|
|
3,023.9
|
|
968.7
|
|
||||
|
|
|
|
|
||||||||
Total
|
$
|
15,242.7
|
|
$
|
8,846.1
|
|
$
|
4,368.0
|
|
$
|
2,028.6
|
|
|
DECEMBER 31,
|
||||||||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
|||||
Commercial
|
$
|
117.4
|
|
$
|
289.5
|
|
$
|
318.0
|
|
$
|
335.2
|
|
$
|
154.0
|
|
Non-U.S. Governments and Official Institutions
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Banks
|
—
|
|
—
|
|
26.2
|
|
8.5
|
|
—
|
|
|||||
Other
|
2,584.2
|
|
1,249.0
|
|
1,533.6
|
|
794.0
|
|
1,376.6
|
|
|||||
|
|
|
|
|
|
||||||||||
Total
|
$
|
2,701.6
|
|
$
|
1,538.5
|
|
$
|
1,877.8
|
|
$
|
1,137.7
|
|
$
|
1,530.6
|
|
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
|||||
Balance at Beginning of Year
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3.3
|
|
$
|
2.1
|
|
Charge-Offs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Recoveries
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Provision for Credit Losses
|
—
|
|
—
|
|
—
|
|
(3.3
|
)
|
1.2
|
|
|||||
|
|
|
|
|
|
||||||||||
Balance at End of Year
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3.3
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
171
|
($ in Millions)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
|||||
Balance at Beginning of Year
|
$
|
153.8
|
|
$
|
192.0
|
|
$
|
233.3
|
|
$
|
295.9
|
|
$
|
307.9
|
|
Charge-Offs
|
|
|
|
|
|
||||||||||
Commercial
|
|
|
|
|
|
||||||||||
Commercial and Institutional
|
0.1
|
|
10.3
|
|
15.8
|
|
9.2
|
|
5.4
|
|
|||||
Commercial Real Estate
|
0.8
|
|
1.1
|
|
0.8
|
|
3.9
|
|
7.5
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Commercial
|
0.9
|
|
11.4
|
|
16.6
|
|
13.1
|
|
12.9
|
|
|||||
|
|
|
|
|
|
||||||||||
Personal
|
|
|
|
|
|
||||||||||
Residential Real Estate
|
7.3
|
|
8.0
|
|
10.4
|
|
16.7
|
|
21.2
|
|
|||||
Private Client
|
1.9
|
|
2.1
|
|
0.3
|
|
0.9
|
|
2.0
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Personal
|
9.2
|
|
10.1
|
|
10.7
|
|
17.6
|
|
23.2
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Charge-Offs
|
10.1
|
|
21.5
|
|
27.3
|
|
30.7
|
|
36.1
|
|
|||||
|
|
|
|
|
|
||||||||||
Recoveries
|
|
|
|
|
|
||||||||||
Commercial
|
|
|
|
|
|
||||||||||
Commercial and Institutional
|
1.5
|
|
3.7
|
|
3.3
|
|
1.7
|
|
1.3
|
|
|||||
Commercial Real Estate
|
0.2
|
|
1.8
|
|
1.5
|
|
3.8
|
|
9.8
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Commercial
|
1.7
|
|
5.5
|
|
4.8
|
|
5.5
|
|
11.1
|
|
|||||
|
|
|
|
|
|
||||||||||
Personal
|
|
|
|
|
|
||||||||||
Residential Real Estate
|
6.7
|
|
5.4
|
|
6.6
|
|
4.5
|
|
5.6
|
|
|||||
Private Client
|
0.6
|
|
0.4
|
|
0.7
|
|
1.2
|
|
1.4
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Personal
|
7.3
|
|
5.8
|
|
7.3
|
|
5.7
|
|
7.0
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Recoveries
|
9.0
|
|
11.3
|
|
12.1
|
|
11.2
|
|
18.1
|
|
|||||
|
|
|
|
|
|
||||||||||
Net Charge-Offs
|
1.1
|
|
10.2
|
|
15.2
|
|
19.5
|
|
18.0
|
|
|||||
Provision for Credit Losses
|
(14.5
|
)
|
(28.0
|
)
|
(26.0
|
)
|
(43.0
|
)
|
6.0
|
|
|||||
Effect of Foreign Exchange Rates
|
—
|
|
—
|
|
(0.1
|
)
|
(0.1
|
)
|
—
|
|
|||||
Net Change in Allowance
|
(15.6
|
)
|
(38.2
|
)
|
(41.3
|
)
|
(62.6
|
)
|
(12.0
|
)
|
|||||
|
|
|
|
|
|
||||||||||
Balance at End of Year
|
138.2
|
|
153.8
|
|
192.0
|
|
233.3
|
|
295.9
|
|
|||||
|
|
|
|
|
|
||||||||||
Allowance Assigned To:
|
|
|
|
|
|
||||||||||
Loans and Leases
|
$
|
112.6
|
|
$
|
131.2
|
|
$
|
161.0
|
|
$
|
193.8
|
|
$
|
267.0
|
|
Undrawn Commitments and Standby Letters of Credit
|
25.6
|
|
22.6
|
|
31.0
|
|
39.5
|
|
28.9
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Allowance for Credit Losses
|
$
|
138.2
|
|
$
|
153.8
|
|
$
|
192.0
|
|
$
|
233.3
|
|
$
|
295.9
|
|
|
|
|
|
|
|
||||||||||
Loans and Leases at Year-End
|
$
|
32,490.0
|
|
$
|
32,592.2
|
|
$
|
33,822.1
|
|
$
|
33,180.9
|
|
$
|
31,640.2
|
|
Average Total Loans and Leases
|
$
|
32,028.6
|
|
$
|
33,565.2
|
|
$
|
34,043.5
|
|
$
|
33,016.1
|
|
$
|
30,215.6
|
|
As a Percent of Year-End Loans and Leases
|
|
|
|
|
|
||||||||||
Net Loan Charge-Offs
|
—
|
%
|
0.03
|
%
|
0.04
|
%
|
0.06
|
%
|
0.06
|
%
|
|||||
Provision for Credit Losses
|
(0.04
|
)
|
(0.09
|
)
|
(0.08
|
)
|
(0.13
|
)
|
0.02
|
|
|||||
Allowance at Year-End Assigned to Loans and Leases
|
0.35
|
|
0.40
|
|
0.48
|
|
0.58
|
|
0.84
|
|
|||||
As a Percent of Average Loans and Leases
|
|
|
|
|
|
||||||||||
Net Loan Charge-Offs
|
—
|
%
|
0.03
|
%
|
0.04
|
%
|
0.06
|
%
|
0.06
|
%
|
|||||
Allowance at Year-End Assigned to Loans and Leases
|
0.35
|
|
0.39
|
|
0.47
|
|
0.59
|
|
0.88
|
|
|
|
|
172
2018 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
U.S. Offices
|
|
|
|
||||||
Demand and Noninterest-Bearing
|
|
|
|
||||||
Individuals, Partnerships, Corporations, and Other
|
$
|
14,303.4
|
|
$
|
16,412.0
|
|
$
|
20,841.1
|
|
Correspondent Banks
|
58.2
|
|
60.3
|
|
58.0
|
|
|||
|
|
|
|
||||||
Total Demand and Noninterest-Bearing
|
14,361.6
|
|
16,472.3
|
|
20,899.1
|
|
|||
|
|
|
|
||||||
Interest-Bearing
|
|
|
|
||||||
Savings, Money Market, and Other
|
15,149.3
|
|
15,575.6
|
|
15,142.4
|
|
|||
Savings Certificates less than $100,000
|
109.3
|
|
130.1
|
|
150.9
|
|
|||
Savings Certificates $100,000 and more
|
434.2
|
|
717.3
|
|
672.0
|
|
|||
Other
|
327.1
|
|
426.0
|
|
609.1
|
|
|||
|
|
|
|
||||||
Total Interest-Bearing
|
16,019.9
|
|
16,849.0
|
|
16,574.4
|
|
|||
|
|
|
|
||||||
Total U.S. Offices
|
30,381.5
|
|
33,321.3
|
|
37,473.5
|
|
|||
Non-U.S. Offices
|
|
|
|
||||||
Noninterest-Bearing
|
6,165.0
|
|
6,600.3
|
|
5,332.2
|
|
|||
Interest-Bearing
|
58,556.6
|
|
56,583.2
|
|
50,808.2
|
|
|||
|
|
|
|
||||||
Total Non-U.S. Offices
|
64,721.6
|
|
63,183.5
|
|
56,140.4
|
|
|||
|
|
|
|
||||||
Total Deposits
|
$
|
95,103.1
|
|
$
|
96,504.8
|
|
$
|
93,613.9
|
|
|
DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Commercial
|
$
|
69,899.2
|
|
$
|
70,987.1
|
|
$
|
57,354.0
|
|
Non-U.S. Governments and Official Institutions
|
4,612.7
|
|
4,246.0
|
|
3,971.8
|
|
|||
Banks
|
161.9
|
|
305.5
|
|
276.6
|
|
|||
Other Time
|
—
|
|
6.3
|
|
9.4
|
|
|||
Other Demand
|
14.3
|
|
6.1
|
|
8.8
|
|
|||
|
|
|
|
||||||
Total
|
$
|
74,688.1
|
|
$
|
75,551.0
|
|
$
|
61,620.6
|
|
|
DECEMBER 31, 2018
|
||||||||
|
U.S. OFFICES
|
NON-U.S. OFFICES
|
|||||||
(In Millions)
|
CERTIFICATES
OF DEPOSIT
|
|
OTHER
TIME
|
|
|
||||
3 Months or Less
|
$
|
214.1
|
|
$
|
—
|
|
$
|
16,786.3
|
|
Over 3 through 6 Months
|
92.9
|
|
—
|
|
10.5
|
|
|||
Over 6 through 12 Months
|
153.2
|
|
—
|
|
8.5
|
|
|||
Over 12 Months
|
120.7
|
|
—
|
|
—
|
|
|||
|
|
|
|
||||||
Total
|
$
|
580.9
|
|
$
|
—
|
|
$
|
16,805.3
|
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
173
|
|
DECEMBER 31,
|
|||||
Interest-Related Deposits – U.S. Offices
|
2018
|
|
2017
|
|
2016
|
|
Savings, Money Market, and Other
|
0.54
|
%
|
0.16
|
%
|
0.08
|
%
|
Savings Certificates less than $100,000
|
0.17
|
|
0.15
|
|
0.15
|
|
Savings Certificates $100,000 and more
|
0.76
|
|
0.46
|
|
0.35
|
|
Other Time
|
1.80
|
|
1.38
|
|
0.94
|
|
Total U.S. Offices Interest-Related Deposits
|
0.56
|
|
0.20
|
|
0.12
|
|
Total Non-U.S. Offices Interest-Related Deposits
|
0.50
|
|
0.26
|
|
0.12
|
|
Total Interest-Related Deposits
|
0.52
|
|
0.25
|
|
0.12
|
|
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
|||||
Total Assets
|
$
|
30,781.3
|
|
$
|
26,510.1
|
|
$
|
24,031.0
|
|
$
|
29,411.2
|
|
$
|
28,072.8
|
|
Time Deposits with Banks
|
3,943.2
|
|
5,013.4
|
|
6,331.3
|
|
13,712.9
|
|
16,106.9
|
|
|||||
Loans
|
2,054.6
|
|
2,014.8
|
|
1,894.3
|
|
1,759.4
|
|
1,490.2
|
|
|||||
Non-U.S. Investments
|
19,016.1
|
|
14,047.8
|
|
10,255.7
|
|
8,590.8
|
|
6,446.5
|
|
|||||
Total Liabilities
|
66,008.5
|
|
64,267.3
|
|
57,270.0
|
|
54,521.0
|
|
52,123.3
|
|
|||||
Deposits
|
64,721.6
|
|
63,183.5
|
|
56,139.8
|
|
52,981.2
|
|
49,854.7
|
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
Assets
|
25
|
%
|
22
|
%
|
21
|
%
|
27
|
%
|
27
|
%
|
Liabilities
|
54
|
%
|
54
|
%
|
50
|
%
|
49
|
%
|
50
|
%
|
|
|
|
174
2018 Annual Report | Northern Trust Corporation
|
|
|
(In Millions)
|
BANKS
|
|
COMMERCIAL
AND OTHER |
|
TOTAL
|
|
|||
AT DECEMBER 31, 2018
|
|
|
|||||||
Japan
|
$
|
391
|
|
$
|
4,858
|
|
$
|
5,249
|
|
Canada
|
1,328
|
|
359
|
|
1,687
|
|
|||
France
|
1,470
|
|
468
|
|
1,938
|
|
|||
|
|
|
|
||||||
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
|
|
|||
|
|
|
|
|
DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Balance on December 31
|
$
|
2,594.2
|
|
$
|
2,286.1
|
|
$
|
204.8
|
|
Highest Month-End Balance
|
4,395.8
|
|
2,286.1
|
|
378.5
|
|
|||
Year – Average Balance
|
2,762.8
|
|
1,102.6
|
|
617.7
|
|
|||
– Average Rate
|
1.82
|
%
|
0.95
|
%
|
0.25
|
%
|
|||
Average Rate at Year-End
|
2.25
|
%
|
1.17
|
%
|
0.07
|
%
|
|
DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Balance on December 31
|
$
|
168.3
|
|
$
|
834.0
|
|
$
|
473.7
|
|
Highest Month-End Balance
|
981.3
|
|
834.0
|
|
565.5
|
|
|||
Year – Average Balance
|
525.2
|
|
738.9
|
|
847.1
|
|
|||
– Average Rate
|
1.48
|
%
|
0.81
|
%
|
0.27
|
%
|
|||
Average Rate at Year-End
|
2.32
|
%
|
1.29
|
%
|
0.64
|
%
|
|
DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Balance on December 31
|
$
|
7,901.7
|
|
$
|
6,051.1
|
|
$
|
5,109.5
|
|
Highest Month-End Balance
|
7,901.7
|
|
7,040.4
|
|
6,037.6
|
|
|||
Year – Average Balance
|
7,495.5
|
|
4,854.5
|
|
4,872.1
|
|
|||
– Average Rate
|
2.00
|
%
|
1.04
|
%
|
0.37
|
%
|
|||
Average Rate at Year-End
|
2.38
|
%
|
1.38
|
%
|
0.57
|
%
|
|
|
|
|
|
2018 Annual Report | Northern Trust Corporation
175
|
|
DECEMBER 31,
|
||||||||
(In Millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Balance on December 31
|
$
|
10,664.2
|
|
$
|
9,171.2
|
|
$
|
5,788.0
|
|
Year – Average Balance
|
10,783.5
|
|
6,696.0
|
|
6,337.0
|
|
|||
– Average Rate
|
1.93
|
%
|
1.00
|
%
|
0.34
|
%
|
|
|
|
176
2018 Annual Report | Northern Trust Corporation
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2018 Annual Report | Northern Trust Corporation
177
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178
2018 Annual Report | Northern Trust Corporation
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2018 Annual Report | Northern Trust Corporation
179
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For Northern Trust Corporation and Subsidiaries:
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Consolidated Balance Sheets - December 31, 2018 and 2017
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Consolidated Statements of Income - Years Ended December 31, 2018, 2017, and 2016
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Consolidated Statements of Comprehensive Income - Years Ended December 31, 2018, 2017, and 2016
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Consolidated Statements of Changes in Stockholders' Equity - Years Ended December 31, 2018, 2017, and 2016
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Consolidated Statements of Cash Flows - Years Ended December 31, 2018, 2017, and 2016
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Notes to Consolidated Financial Statements
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Report of Independent Registered Public Accounting Firm
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180
2018 Annual Report | Northern Trust Corporation
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Northern Trust Corporation
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(Registrant)
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By:
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/s/ Michael G. O’Grady
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Michael G. O’Grady
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Chairman, President, and Chief Executive Officer
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Signature
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Capacity
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/s/ Michael G. O'Grady
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Chairman, President, and Chief Executive Officer
(Principal Executive Officer)
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Michael G. O’Grady
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/s/ S. Biff Bowman
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Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
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S. Biff Bowman
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/s/ Aileen B. Blake
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Executive Vice President and Controller
(Principal Accounting Officer)
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Aileen B. Blake
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/s/ Linda Walker Bynoe
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Director
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Linda Walker Bynoe
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/s/ Susan Crown
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Director
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Susan Crown
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/s/ Dean M. Harrison
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Director
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Dean M. Harrison
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/s/ Jay L. Henderson
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Director
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Jay L. Henderson
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/s/ Marcy S. Klevorn
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Director
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Marcy S. Klevorn
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/s/ Siddharth N. (Bobby) Mehta
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Director
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Siddharth N. (Bobby) Mehta
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2018 Annual Report | Northern Trust Corporation
181
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/s/ Jose Luis Prado
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Director
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Jose Luis Prado
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/s/ Thomas E. Richards
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Director
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Thomas E. Richards
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/s/ John W. Rowe
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Director
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John W. Rowe
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/s/ Martin P. Slark
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Director
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Martin P. Slark
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/s/ David H.B. Smith, Jr.
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Director
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David H.B. Smith, Jr.
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/s/ Donald Thompson
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Director
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Donald Thompson
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/s/ Charles A. Tribbett, III
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Director
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Charles A. Tribbett, III
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182
2018 Annual Report | Northern Trust Corporation
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2018 Annual Report | Northern Trust Corporation
183
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Exhibit
Number
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Description
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184
2018 Annual Report | Northern Trust Corporation
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Exhibit
Number
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Description
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2018 Annual Report | Northern Trust Corporation
185
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186
2018 Annual Report | Northern Trust Corporation
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2018 Annual Report | Northern Trust Corporation
187
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•
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an administrative assistant who can assist you during normal working hours;
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•
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basic office supplies such as stationary, printer paper, and printer toner; and
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•
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basic office equipment such as personal computers, printers, telephones for you and the administrative assistant, with the Corporation to reimburse you for related telephone and internet expense.
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Percent Owned
|
Jurisdiction of
Incorporation
|
The Northern Trust Company
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100%
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Illinois
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MFC Company, Inc.
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100%
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Delaware
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Norlease, Inc.
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100%
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Delaware
|
Clenston Ltd.*
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100%
|
Bermuda
|
NL-Camillus NMTC Fund, LLC
|
100%
|
Delaware
|
Northern CDE Corporation
|
100%
|
Illinois
|
Northern Trust Company of California
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100%
|
California
|
Northern Trust Guernsey Holdings Limited
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100%
|
Guernsey
|
Northern Trust (Guernsey) Limited
|
100%
|
Guernsey
|
Northern Trust Hedge Fund Services LLC
|
100%
|
Delaware
|
Northern Trust Holdings Limited
|
100%
|
England
|
Northern Trust Luxembourg Management Company S.A.
|
100%
|
Luxembourg
|
Northern Trust Global Services SE
|
100%
|
England
|
Northern Trust Switzerland AG
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100%
|
Switzerland
|
NT Property Nominees 1A Limited
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100%
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England
|
NT Property Nominees 1B Limited
|
100%
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England
|
Northern Trust Investments, Inc.
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100%
|
Illinois
|
Nortrust Nominees Limited
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100%
|
England
|
NTC-Dormae NMTC Fund, LLC
|
100%
|
Delaware
|
The Northern Trust Company of Delaware
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100%
|
Delaware
|
The Northern Trust Company of Nevada
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100%
|
Nevada
|
The Northern Trust Company UK Pension Plan Limited
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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 Equities Limited
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100%
|
England
|
Northern Trust Fund Managers (Ireland) Limited
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100%
|
Ireland
|
Northern Trust Global Fund Services Cayman Limited
|
100%
|
Cayman Islands, BWI
|
Northern Trust Management Services Asia Pte. Ltd.
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100%
|
Singapore
|
Northern Operating Services Asia Inc.
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99.99%
|
Philippines
|
The Northern Trust Company of Hong Kong Limited
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100%
|
Hong Kong
|
NT Securities Asia Limited
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100%
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Hong Kong
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Northern Trust Management Services Limited
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100%
|
England
|
Northern Trust Global Investments Limited
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100%
|
England
|
Northern Trust Partners Scotland Limited
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100%
|
Scotland
|
Northern Trust Securities LLP
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100%
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England
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NT Global Advisors, Inc.
|
100%
|
Ontario, Canada
|
The Northern Trust Scottish Limited Partnership
|
100%
|
Scotland
|
Northern Trust (Ireland) Limited
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100%
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Ireland
|
Northern Trust Fiduciary Services (Ireland) Limited
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100%
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Ireland
|
Northern Trust Fund Services (Ireland) Limited
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100%
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Ireland
|
Northern Trust International Fund Administration Services (Ireland) Limited
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100%
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Ireland
|
Northern Trust Management Services (Ireland) Limited
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100%
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Ireland
|
Northern Trust Nominees (Ireland) Limited
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100%
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Ireland
|
Northern Trust Pension Trustees (Ireland) Limited
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100%
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Ireland
|
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Percent Owned
|
Jurisdiction of
Incorporation
|
NTRS Nominees Limited
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100%
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Ireland
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Northern Trust GFS Holdings Limited
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100%
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Guernsey
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Northern Trust Fiduciary Services (Guernsey) Limited
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100%
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Guernsey
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Arnold Limited
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100%
|
Guernsey
|
Doyle Administration Limited
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100%
|
Guernsey
|
Barfield Nominees Limited
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100%
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Guernsey
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Truchot Limited
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100%
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Guernsey
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Vivian Limited
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100%
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Guernsey
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Northern Trust International Fund Administration Services (Guernsey) Limited
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100%
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Guernsey
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Admiral Nominees Limited
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100%
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Guernsey
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Nelson Representatives Limited
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100%
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Guernsey
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Northern Trust Luxembourg Capital S.A.R.L.
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100%
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Luxembourg
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Northern Trust Management Services (Deutschland) GmbH
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100%
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Germany
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NT EBT Limited
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100%
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England
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The Northern Trust Company of Saudi Arabia (a closed joint stock company)
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100%
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Kingdom of Saudi Arabia
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TNT-BH NMTC Fund, LLC
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100%
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Illinois
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Northern CDE 10, LLC
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100%
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Illinois
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TNT-CASFV NMTC Fund, LLC
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100%
|
Illinois
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Northern CDE 7, LLC
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100%
|
Illinois
|
TNT-DHA NMTC Fund, LLC
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100%
|
Illinois
|
Northern CDE 2, LLC
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100%
|
Illinois
|
TNT-Eastside NMTC Fund, LLC
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100%
|
Illinois
|
Northern CDE 1, LLC
|
100%
|
Illinois
|
TNT-HCCH NMTC Fund, LLC
|
100%
|
Illinois
|
TNT-HHO NMTC Fund, LLC
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100%
|
Illinois
|
Northern CDE 5, LLC
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100%
|
Illinois
|
TNT-HopeWorks NMTC Fund, LLC
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100%
|
Illinois
|
Northern CDE 6, LLC
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100%
|
Illinois
|
TNT-HW 1 NMTC Fund, LLC
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100%
|
Illinois
|
TNT-Jewel NMTC Fund, LLC
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100%
|
Illinois
|
TNT-PBSA NMTC Fund, LLC
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100%
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Illinois
|
Northern CDE 3, LLC
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100%
|
Illinois
|
TNT-Student U NMTC Fund, LLC
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100%
|
Illinois
|
Northern CDE 4, LLC
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100%
|
Illinois
|
TNT-RWA NMTC Fund, LLC
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100%
|
Illinois
|
Northern CDE 9, LLC
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100%
|
Illinois
|
50 South Capital Advisors, LLC
|
100%
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Delaware
|
BEx LLC
|
100%
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Illinois
|
Equilend Holdings LLC
|
10%
|
Delaware
|
Northern Trust European Holdings Limited
|
100%
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England
|
Northern Trust Global Investments Japan, K.K.
|
100%
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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
|
Parilux Investment Technology, LLC
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33%
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New Jersey
|
1.
|
I have reviewed this report on Form 10-K for the year ended
December 31, 2018
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;
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4.
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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 26, 2019
|
/s/ Michael G. O’Grady
|
|
|
Michael G. O’Grady
|
|
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Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this report on Form 10-K for the year ended
December 31, 2018
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 26, 2019
|
/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 26, 2019
|
/s/ S. Biff Bowman
|
S. Biff Bowman
|
Chief Financial Officer
|
(Principal Financial Officer)
|
February 26, 2019
|