Reporting Segments

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Reporting Segments

Reporting Segments

Northern Trust is organized around its two client-focused reporting segments: Corporate & Institutional Services (C&IS) and Wealth Management. Asset management and related services are provided to C&IS and Wealth Management clients primarily by the Asset Management business. The revenue and expenses of Asset Management and certain other support functions are allocated fully to C&IS and Wealth Management.

Reporting segment financial information, presented on an internal management reporting basis, is determined by accounting systems used to allocate revenue and expense to each segment, and incorporates processes for allocating assets, liabilities, equity and the applicable interest income and expense utilizing a funds transfer pricing (FTP) methodology. Under the

methodology, assets and liabilities receive a funding charge or credit that considers interest rate risk, liquidity risk, and other product characteristics on an instrument level.

Revenues, expenses and average assets are allocated to C&IS and Wealth Management, with the exception of non-recurring activities such as certain costs associated with acquisitions, divestitures, litigation, restructuring, and tax adjustments not directly attributable to a specific reporting segment.

Reporting segment results are subject to reclassification when organizational changes are made. The results are also subject to refinements in revenue and expense allocation methodologies, which are typically reflected on a prospective basis.

Effective January 1, 2021, Northern Trust implemented enhancements to its FTP methodology, including enhancements impacting the allocation of net interest income between C&IS and Wealth Management. These methodology enhancements affect the results of each of these reporting segments. Due to the lack of historical information, segment results for periods ended prior to January 1, 2021 have not been revised to reflect the methodology enhancements.

The following table presents the earnings contributions and average assets of Northern Trust’s reporting segments for the three- and six- month periods ended June 30, 2021 and 2020.

TABLE 63: RESULTS OF REPORTING SEGMENTS

($ In Millions)	CORPORATE & INSTITUTIONAL SERVICES						WEALTH MANAGEMENT						OTHER						TOTAL CONSOLIDATED
THREE MONTHS ENDED JUNE 30,	2021			2020			2021			2020			2021			2020			2021			2020
Noninterest Income
Trust, Investment and Other Servicing Fees	$	611.5		$	566.2		$	463.9		$	395.3		$	—		$	—		$	1,075.4		$	961.5
Foreign Exchange Trading Income	67.9			68.3			2.7			3.0			—			—			70.6			71.3
Other Noninterest Income	68.9			69.0			38.3			40.8			(8.5)			(8.6)			98.7			101.2
Total Noninterest Income	748.3			703.5			504.9			439.1			(8.5)			(8.6)			1,244.7			1,134.0
Net Interest Income(1)	153.1			165.4			190.8			214.4			—			—			343.9			379.8
Revenue(1)	901.4			868.9			695.7			653.5			(8.5)			(8.6)			1,588.6			1,513.8
Provision for Credit Losses	(16.8)			28.8			(10.2)			37.2			—			—			(27.0)			66.0
Noninterest Expense	703.6			655.6			398.5			372.0			18.7			9.3			1,120.8			1,036.9
Income before Income Taxes(1)	214.6			184.5			307.4			244.3			(27.2)			(17.9)			494.8			410.9
Provision for Income Taxes(1)	53.0			41.3			80.5			60.8			(6.8)			(4.5)			126.7			97.6
Net Income	$	161.6		$	143.2		$	226.9		$	183.5		$	(20.4)		$	(13.4)		$	368.1		$	313.3
Percentage of Consolidated Net Income	44		%	45		%	62		%	59		%	(6)		%	(4)		%	100		%	100		%
Average Assets	$	119,502.3		$	107,051.3		$	34,797.8		$	31,719.3		$	—		$	—		$	154,300.1		$	138,770.6

(1)    Non-GAAP financial measures stated on a fully taxable equivalent basis (FTE). Total consolidated includes FTE adjustments of $8.3 million for 2021 and $7.7 million for 2020.

($ In Millions)	CORPORATE & INSTITUTIONAL SERVICES						WEALTH MANAGEMENT						OTHER						TOTAL CONSOLIDATED
SIX MONTHS ENDED JUNE 30,	2021			2020			2021			2020			2021			2020			2021			2020
Noninterest Income
Trust, Investment and Other Servicing Fees	$	1,232.0		$	1,140.6		$	907.1		$	824.5		$	—		$	—		$	2,139.1		$	1,965.1
Foreign Exchange Trading Income	142.4			153.4			6.9			6.8			—			—			149.3			160.2
Other Noninterest Income	129.2			110.8			82.5			83.2			(12.1)			(5.7)			199.6			188.3
Total Noninterest Income	1,503.6			1,404.8			996.5			914.5			(12.1)			(5.7)			2,488.0			2,313.6
Net Interest Income(1)	313.8			376.7			376.8			419.3			—			—			690.6			796.0
Revenue(1)	1,817.4			1,781.5			1,373.3			1,333.8			(12.1)			(5.7)			3,178.6			3,109.6
Provision for Credit Losses	(22.2)			54.5			(34.8)			72.5			—			—			(57.0)			127.0
Noninterest Expense	1,416.7			1,314.9			801.6			766.4			20.0			21.2			2,238.3			2,102.5
Income before Income Taxes(1)	422.9			412.1			606.5			494.9			(32.1)			(26.9)			997.3			880.1
Provision for Income Taxes(1)	103.1			91.2			159.0			121.7			(8.0)			(6.7)			254.1			206.2
Net Income	$	319.8		$	320.9		$	447.5		$	373.2		$	(24.1)		$	(20.2)		$	743.2		$	673.9
Percentage of Consolidated Net Income	43		%	48		%	60		%	55		%	(3)		%	(3)		%	100		%	100		%
Average Assets	$	119,820.7		$	99,910.1		$	33,960.1		$	31,560.5		$	—		$	—		$	153,780.8		$	131,470.6

(1)    Non-GAAP financial measures stated on a fully taxable equivalent basis (FTE). Total consolidated includes FTE adjustments of $14.9 million for 2021 and $15.8 million for 2020.