10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2000

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                              to                            

Commission File Number 0-5965

NORTHERN TRUST CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE (State or other jurisdiction of incorporation or organization)	36-2723087 (I.R.S. Employer Identification No.)
50 SOUTH LA SALLE STREET CHICAGO, ILLINOIS (Address of principal executive offices)	60675 (Zip Code)

Registrant’s telephone number, including area code: (312)630-6000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes  x    No  ¨

221,782,062 Shares—$1.66 2/3 Par Value

(Shares of Common Stock Outstanding on September 30, 2000)

PART 1– FINANCIAL INFORMATION

Item 1.  Financial Statements
CONSOLIDATED BALANCE SHEET

	NORTHERN TRUST CORPORATION
	September 30				December 31		September 30
($ In Millions)	2000			1999			1999
Assets
Cash and Due from Banks	$	1,361.8		$	1,977.9			$	1,775.2
Federal Funds Sold and Securities Purchased under Agreements to Resell		544.6			1,083.8				1,304.7
Time Deposits with Banks		2,743.2			2,292.2				4,343.2
Other Interest-Bearing Assets		12.5			63.2				66.2
Securities
Available for Sale		9,241.2			5,480.0				8,740.0
Held to Maturity (Fair value-$788.9 at September 2000, $740.4 at         December 1999, $729.9 at September 1999)		794.9			752.7				734.4
Trading Account		13.9			11.0				13.5
Total Securities		10,050.0			6,243.7				9,487.9
Loans and Leases
Commercial and Other		11,086.6			9,116.8				8,864.3
Residential Mortgages		6,643.5			6,257.7				6,184.8
Total Loans and Leases (Net of unearned income-$421.1 at         September 2000, $321.3 at December 1999, $154.1 at September 1999)		17,730.1			15,374.5				15,049.1
Reserve for Credit Losses		(158.0	)		(150.9	)			(144.9	)
Buildings and Equipment		409.8			380.4				356.9
Customers’ Acceptance Liability		20.2			34.7				35.3
Trust Security Settlement Receivables		656.7			323.1				343.6
Other Assets		1,422.8			1,085.6				1,067.7
Total Assets	$	34,793.7		$	28,708.2			$	33,684.9
Liabilities
Deposits
Demand and Other Noninterest-Bearing	$	4,266.4		$	4,476.0			$	4,027.5
Savings and Money Market		5,379.8			5,299.7				5,239.8
Savings Certificates		2,284.6			2,338.6				2,180.3
Other Time		440.0			913.0				551.9
Foreign Offices - Demand		792.6			468.8				445.1
- Time		7,991.2			7,874.9				6,616.6
Total Deposits		21,154.6			21,371.0				19,061.2
Federal Funds Purchased		1,394.9			370.2				658.0
Securities Sold Under Agreements to Repurchase		1,043.2			997.8				2,269.4
Commercial Paper		126.7			145.1				139.0
Other Borrowings		6,175.7			1,155.3				6,710.4
Senior Notes		500.0			500.0				350.0
Long-Term Debt		638.3			659.4				659.1
Debt-Floating Rate Capital Securities		267.6			267.5				267.5
Liability on Acceptances		20.2			34.7				35.3
Other Liabilities		1,112.0			1,032.5				1,412.0
Total Liabilities		32,433.2			26,533.5				31,561.9
Stockholders’ Equity
Preferred Stock		120.0			120.0				120.0
Common Stock, $1.66 2/3 Par Value; Authorized 560,000,000 shares at September 2000 and       280,000,000 shares at December 1999 and September 1999; Outstanding 221,782,062 at       September 2000, 222,161,934 at December 1999 and 111,296,874 at September 1999		379.8			379.8				189.9
Capital Surplus		—			—				191.1
Retained Earnings		2,116.8			1,870.7				1,798.3
Net Unrealized Loss on Securities Available for Sale		(2.3	)		(2.4	)			(3.0	)
Common Stock Issuable-Stock Incentive Plans		113.9			55.0				55.0
Deferred Compensation-ESOP and Other		(78.2	)		(44.2	)			(49.3	)
Treasury Stock-(at cost, 6,139,462 shares at September 2000, 5,759,590 shares at       December 1999, and 2,663,888 shares at September 1999)		(289.5	)		(204.2	)			(179.0	)
Total Stockholders’ Equity		2,360.5			2,174.7				2,123.0
Total Liabilities and Stockholders’ Equity	$	34,793.7		$	28,708.2			$	$33,684.9

CONSOLIDATED STATEMENT OF INCOME	NORTHERN TRUST CORPORATION
	Third Quarter Ended September 30				Nine Months Ended September 30
($ In Millions Except Per Share Information)	2000		1999		2000		1999
Noninterest Income
Trust Fees	$	304.7	$	242.4	$	896.3	$	703.1
Foreign Exchange Trading Profits		37.6		25.0		113.7		79.5
Treasury Management Fees		18.1		15.8		53.4		51.2
Security Commissions and Trading Income		8.0		6.8		25.9		22.0
Other Operating Income		23.5		16.3		57.9		38.8
Investment Security Gains		—		.1		—		.2
Total Noninterest Income		391.9		306.4		1,147.2		894.8
Net Interest Income
Interest Income		531.3		404.3		1,467.0		1,144.5
Interest Expense		388.5		276.0		1,044.0		764.0
Net Interest Income		142.8		128.3		423.0		380.5
Provision for Credit Losses		5.0		.5		19.0		6.0
Net Interest Income after Provision for Credit Losses		137.8		127.8		404.0		374.5
Noninterest Expenses
Compensation		179.8		144.7		514.6		420.3
Employee Benefits		27.5		24.7		84.0		75.3
Occupancy Expense		21.8		19.0		64.8		54.8
Equipment Expense		18.1		16.0		54.5		47.2
Other Operating Expenses		97.7		71.7		291.3		216.6
Total Noninterest Expenses		344.9		276.1		1,009.2		814.2
Income before Income Taxes		184.8		158.1		542.0		455.1
Provision for Income Taxes		61.5		53.9		182.4		156.1
Net Income	$	123.3	$	104.2	$	359.6	$	299.0
Net Income Applicable to Common Stock	$	121.8	$	102.9	$	355.4	$	295.5
Net Income Per Common Share — Basic	$	.55	$	.46	$	1.61	$	1.33
— Diluted		.53		.45		1.54		1.29
Average Number of Common Shares      Outstanding — Basic		220,749,384		221,752,584		220,985,573		221,782,016
— Diluted		230,936,938		229,537,752		230,513,163		229,991,308

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	NORTHERN TRUST CORPORATION
	Third Quarter Ended September 30					Nine Months Ended September 30
(In Millions)	2000		1999			2000		1999
Net Income	$	123.3	$	104.2		$	359.6	$	299.0
Other Comprehensive Income (net of tax)
Unrealized Gains (Losses) on Securities Available for Sale
Unrealized Holding Gains (Losses) Arising during the Period (Net               of tax (provision) benefit of $(.6) and $2.5 million for the third               quarters ended September 30, 2000 and 1999 respectively. Net               of tax (provision) benefit of $(.6) million and $1.2 million for               nine months ended September 30, 2000 and 1999, respectively).		—		(4.5	)		.1		(2.3	)
Less: Reclassification Adjustments for Gains Included in Net Income                Net of tax (provision) benefit of $(.1) million for the nine months               ended September 30, 1999).		—		—			—		(.1	)
Other Comprehensive Income		—		(4.5	)		.1		(2.4	)
Comprehensive Income	$	123.3	$	99.7		$	359.7	$	296.6

CONSOLIDATED STATEMENT OF CHANGES	NORTHERN TRUST CORPORATION
IN STOCKHOLDERS’ EQUITY

	Nine Months Ended September 30
(In Millions)		2000			1999
Preferred Stock
Balance at January 1 and September 30	$	120.0		$	120.0
Common Stock
Balance at January 1 and September 30		379.8			189.9
Capital Surplus
Balance at January 1		—			212.9
Stock Issued - Incentive Plan and Awards		—			(21.8	)
Balance at September 30		—			191.1
Retained Earnings
Balance at January 1		1,870.7			1,582.9
Net Income		359.6			299.0
Dividends Declared - Common Stock		(89.9	)		(80.1	)
Dividends Declared - Preferred Stock		(4.6	)		(3.5	)
Incentive Plan and Awards		(19.0	)		—
Balance at September 30		2,116.8			1,798.3
Net Unrealized Gain (Loss) on Securities Available for Sale
Balance at January 1		(2.4	)		(.6	)
Unrealized Gain (Loss), net		0.1			(2.4	)
Balance at September 30		(2.3	)		(3.0	)
Common Stock Issuable - Stock Incentive Plans
Balance at January 1		55.0			30.4
Stock Issuable, net of Stock Issued		58.9			24.6
Balance at September 30		113.9			55.0
Deferred Compensation - ESOP and Other
Balance at January 1		(44.2	)		(44.3	)
Compensation Deferred		(51.0	)		(15.3	)
Compensation Amortized		17.0			10.3
Balance at September 30		(78.2	)		(49.3	)
Treasury Stock
Balance at January 1		(204.2	)		(150.9	)
Stock Options and Awards		87.1			74.1
Stock Purchased		(172.4	)		(102.2	)
Balance at September 30		(289.5	)		(179.0	)
Total Stockholders’ Equity at September 30	$	2,360.5		$	2,123.0

CONSOLIDATED STATEMENT OF CASH FLOWS	NORTHERN TRUST CORPORATION
	Nine Months Ended September 30
(In Millions)	2000			1999
Cash Flows from Operating Activities:
Net Income	$	359.6		$	299.0
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Provision for Credit Losses		19.0			6.0
Depreciation on Buildings and Equipment		51.1			43.3
Increase in Interest Receivable		(25.0	)		(9.5	)
Decrease in Interest Payable		(.8	)		(1.7	)
Amortization and Accretion of Securities and Unearned Income		(99.2	)		(229.9	)
Amortization of Software, Goodwill and Other Intangibles		58.4			46.7
Net Increase in Trading Account Securities		(2.9	)		(4.4	)
Other Noncash, net		(169.1	)		7.3
Net Cash Provided by Operating Activities		191.1			156.8
Cash Flows from Investing Activities:
Net (Increase) Decrease in Federal Funds Sold and Securities Purchased under           Agreements to Resell		539.2			(140.3	)
Net Increase in Time Deposits with Banks		(451.0	)		(1,078.5	)
Net (Increase) Decrease in Other Interest-Bearing Assets		50.7			(44.4	)
Purchases of Securities-Held to Maturity		(123.4	)		(137.6	)
Proceeds from Maturity and Redemption of Securities-Held to Maturity		87.4			115.5
Purchases of Securities-Available for Sale		(35,337.4	)		(29,609.0	)
Proceeds from Sale, Maturity and Redemption of Securities-Available for Sale		31,778.7			26,682.8
Net Increase in Loans and Leases		(2,468.3	)		(1,341.0	)
Purchases of Buildings and Equipment		(80.5	)		(59.9	)
Purchases and Development of Computer Software		(77.4	)		(75.2	)
Net Increase in Trust Security Settlement Receivables		(333.6	)		(6.9	)
Decrease in Cash Due to Acquisitions		(32.9	)		—
Other, net		38.9			2.4
Net Cash Used in Investing Activities		(6,409.6	)		(5,692.1	)
Cash Flows from Financing Activities:
Net Increase (Decrease) in Deposits		(216.4	)		858.5
Net Increase (Decrease) in Federal Funds Purchased		1,024.7			(1,367.1	)
Net Increase in Securities Sold under Agreements to Repurchase		45.4			154.5
Net Decrease in Commercial Paper		(18.4	)		(9.1	)
Net Increase in Short-Term Other Borrowings		5,403.9			5,582.5
Proceeds from Term Federal Funds Purchased		7,943.3			5,948.0
Repayments of Term Federal Funds Purchased		(8,326.8	)		(5,919.3	)
Proceeds from Senior Notes & Long-Term Debt		102.6			551.1
Repayments of Senior Notes & Long-Term Debt		(123.7	)		(700.1	)
Treasury Stock Purchased		(170.4	)		(101.8	)
Net Proceeds from Stock Options		21.1			19.0
Cash Dividends Paid on Common and Preferred Stock		(94.7	)		(83.7	)
Other, net		11.8			12.0
Net Cash Provided by Financing Activities		5,602.4			4,944.5
Decrease in Cash and Due from Banks		(616.1	)		(590.8	)
Cash and Due from Banks at Beginning of Year		1,977.9			2,366.0
Cash and Due from Banks at September 30	$	1,361.8		$	1,775.2
Schedule of Noncash Investing Activities:
Transfer of Securities from Available for Sale to Held to Maturity		0.00		$	239.8
Supplemental Disclosures of Cash Flow Information:
Interest Paid	$	1,044.8		$	765.7
Income Taxes Paid		87.3			6.7

Notes to Consolidated Financial Statements

1.

Basis of Presentation – The consolidated financial statements include the accounts of Northern Trust Corporation and its subsidiaries (Northern Trust), all of which are wholly-owned. Significant intercompany balances and transactions have been eliminated. The consolidated financial statements as of September 30, 2000 and 1999 have not been audited by independent public accountants. In the opinion of management, all adjustments necessary for a fair presentation of the financial position and the results of operations for the interim periods have been made. All such adjustments are of a normal recurring nature. Certain reclassifications have been made to prior periods’ consolidated financial statements to place them on a basis comparable with the current period’s consolidated financial statements. For a description of Northern Trust’s significant accounting policies, refer to Note 1 of the Notes to Consolidated Financial Statements in the 1999 Annual Report to Shareholders.

2.

Securities – The following table summarizes the book and fair values of securities.

	September 30, 2000				December 31, 1999				September 30, 1999
(In Millions)	Book Value		Fair Value		Book Value		Fair Value		Book Value		Fair Value
Held to Maturity
U.S. Government	$	54.9	$	54.9	$	55.1	$	55.0	$	55.2	$	55.2
Obligations of States and
Political Subdivisions		455.4		454.1		476.0		466.6		471.4		469.7
Federal Agency		6.0		5.8		.9		.7		.5		.4
Other		278.6		274.1		220.7		218.1		207.3		204.6
Subtotal		794.9		788.9		752.7		740.4		734.4		729.9
Available for Sale
U.S. Government		181.3		181.3		192.0		192.0		202.4		202.4
Obligations of States and
Political Subdivisions		15.6		15.6		15.3		15.3		15.7		15.7
Federal Agency		8,926.1		8,926.1		5,105.6		5,105.6		8,350.0		8,350.0
Preferred Stock		100.9		100.9		101.3		101.3		106.5		106.5
Other		17.3		17.3		65.8		65.8		65.4		65.4
Subtotal		9,241.2		9,241.2		5,480.0		5,480.0		8,740.0		8,740.0
Trading Account		13.9		13.9		11.0		11.0		13.5		13.5
Total Securities	$	10,050.0	$	10,044.0	$	6,243.7	$	6,231.4	$	9,487.9	$	9,483.4

Reconciliation of Book Values to Fair Values of Securities Held to Maturity	September 30, 2000
		Book		Gross Unrealized				Fair
(In Millions)		Value		Gains		Losses		Value
U.S. Government		$	54.9	$	—	$	—	$	54.9
Obligations of States and Political Subdivisions			455.4		4.8		6.1		454.1
Federal Agency			6.0		—		.2		5.8
Other			278.6		—		4.5		274.1
Total		$	794.9	$	4.8	$	10.8	$	788.9

Reconciliation of Amortized Cost to Fair Values of Securities Available for Sale			September 30, 2000
	Amortized		Gross Unrealized							Fair
(In Millions)	Cost		Gains		Losses					Value
U.S. Government	$	181.3	$	—		$	—-		$	181.3
Obligations of States and Political Subdivisions		16.8		—			1.2			15.6
Federal Agency		8,927.5		1.1			2.5	8,926.1
Preferred Stock		101.3		—			.4			100.9
Other		17.2		.1			—			17.3
Total	$	9,244.1	$	1.2		$	4.1		$	9,241.2

Gross unrealized gains and losses on off-balance sheet financial instruments used to hedge securities available for sale totaled $.4 million and none, respectively, as of September 30, 2000. At September 30, 2000, stockholders’ equity included a charge of $2.3 million, net of tax, to recognize the depreciation on securities available for sale and the related hedges.

3.      Pledged Assets – Securities and loans pledged to secure public and trust deposits, repurchase agreements and for other purposes as required or permitted by law were $13.7 billion on September 30, 2000, $4.9 billion on December 31, 1999 and $11.8 billion on September 30, 1999.

4.      Contingent Liabilities – Standby letters of credit outstanding were $2.1 billion on September 30, 2000, $2.0 billion on December 31, 1999 and $1.8 billion on September 30, 1999.

5.      Loans and Leases – Amounts outstanding in selected loan categories are shown below.

(In Millions)	September 30, 2000			December 31, 1999			September 30, 1999
Domestic
Residential Real Estate		$	6,643.5		$	6,257.7		$	6,184.8
Commercial			5,003.1			4,704.1			4,477.6
Broker			166.7			88.8			141.8
Commercial Real Estate			878.5			780.4			735.1
Personal			2,225.5			1,659.9			1,506.0
Other			1,008.1			566.5			792.8
Lease Financing			862.2			691.5			618.1
Total Domestic	16,787.6			14,748.9			14,456.2
International			942.5			625.6			592.9
Total Loans and Leases		$	17,730.1		$	15,374.5		$	15,049.1

At September 30, 2000, other domestic and international loans included $1.3 billion of overnight trust-related advances, primarily in connection with next day security settlements, compared with $701.8 million at December 31, 1999 and $892.5 million at September 30, 1999.

At September 30, 2000, nonperforming loans totaled $76.8 million. Included in this amount were loans with a recorded investment of $75.2 million, which were also classified as impaired. A loan is impaired when, based on current information, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans totaling $28.3 million had no portion of the reserve for credit losses allocated to them while impaired loans totaling $46.9 million had an allocated reserve of $18.4 million. For the third quarter of 2000, the total recorded investment in impaired loans averaged $58.7 million. There was no interest income recorded on impaired loans for the quarter ended September 30, 2000.

At September 30, 1999, nonperforming loans totaled $28.9 million and included $27.0 million of impaired loans. Of these impaired loans, $5.1 million had no portion of the reserve for credit losses allocated to them; $21.9 million had an allocated reserve of $9.9 million. Total recorded investment in impaired loans for the third quarter of 1999 averaged $37.6 million with $29,000 of interest income recognized on such loans.

6.      Reserve for Credit Losses – Changes in the reserve for credit losses were as follows:

	Nine Months Ended September 30
(In Millions)		2000			1999
Balance at Beginning of Period	$	150.9		$	146.8
Charge-Offs
Commercial Real Estate		(.3	)		(.2	)
Other		(12.6	)		(8.8	)
International		—			—
Total Charge-Offs		(12.9	)		(9.0	)
Recoveries		1.0			1.1
Net Charge-Offs		(11.9	)		(7.9	)
Provision for Credit Losses		19.0			6.0
Reserve Related to Acquisitions		—			—
Balance at End of Period	$	158.0		$	144.9

The reserve for credit losses represents management’s estimate of probable inherent losses that have occurred as of the date of the financial statements. The loan and lease portfolio and other credit exposures are regularly reviewed to evaluate the adequacy of the reserve for credit losses. In determining the level of the reserve, Northern Trust evaluates the reserve necessary for specific nonperforming loans and also estimates losses inherent in other credit exposures.

The result is a reserve with the following components:

Specific Reserve. The amount of specific reserve is determined through a loan-by-loan analysis of nonperforming loans that considers expected future cash flows, the value of collateral and other factors that may impact the borrower's ability to pay.

Allocated Inherent Reserve. The amount of the allocated portion of the inherent loss reserve is based on loss factors assigned to Northern Trust’s credit exposures, which depend upon internal credit ratings. These loss factors primarily include management’s judgment concerning the effect of the business cycle on the creditworthiness of Northern Trust’s borrowers as well as historical charge-off experience.

Unallocated Inherent Reserve. Management determines the unallocated portion of the inherent reserve based on factors that cannot be associated with a specific credit or loan category. These factors include management’s subjective evaluation of local and national economic and business conditions, portfolio concentration and changes in the character and size of the loan portfolio. The unallocated portion of the inherent reserve reflects management’s attempt to ensure that the overall reserve appropriately reflects a margin for the imprecision necessarily inherent in estimates of expected credit losses.

7.      Net Income Per Common Share Computations – The computation of net income per common share is presented in the following table.

	Third Quarter						Nine Months
	Ended September 30						Ended September 30
($ In Millions Except Per Share Information)			2000			1999			2000			1999
Basic Net Income Per Common Share
Net Income		$	123.3		$	104.2		$	359.6		$	299.0
Less: Dividends on Preferred Stock			(1.5	)		(1.3	)		(4.2	)		(3.5	)
Net Income Applicable to Common Stock		$	121.8		$	102.9		$	355.4		$	295.5
Average Number of Common Shares Outstanding			220,749,384			221,752,584			220,985,573			221,782,016
Basic Net Income Per Common Share		$	.55		$	.46		$	1.61		$	1.33
Diluted Net Income Per Common Share
Net Income Applicable to Common Stock		$	121.8		$	102.9		$	355.4		$	295.5
Average Number of Common Shares Outstanding			220,749,384			221,752,584			220,985,573			221,782,016
Plus Dilutive Potential Common Shares:
Stock Options			7,638,346			5,566,322			7,098,795			6,072,278
Performance Shares			1,744,403			1,471,048			1,643,477			1,417,464
Other Stock Awards			804,805			747,798			785,318			719,550
Average Common and Potential Common Shares			230,936,938			229,537,752			230,513,163			229,991,308
Diluted Net Income Per Common Share		$	.53		$	.45		$	1.54		$	1.29

8.      Accounting Standards Pronouncements – In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 133 establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded on the balance sheet as either an asset or liability measured at its fair value. SFAS No. 133 requires that changes in the derivative’s fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative’s gains and losses to offset related results on the hedged item in the income statement, and requires that a company formally document, designate, and assess the effectiveness of transactions that receive hedge accounting.

The effective date for adopting the new accounting requirements is January 1, 2001 for calendar year entities. Although early adoption is permitted, Northern Trust plans to adopt the new statement on January 1, 2001.

In June 2000, the FASB issued SFAS No. 138, which amended SFAS No. 133 by addressing a limited number of issues that have caused implementation difficulties. The accounting requirements of SFAS 133 are complex and the Financial Accounting Standards Board continues to receive and respond to interpretation requests. Pending conclusions to interpretation requests may have an impact on Northern Trust’s current and future hedge strategies. Based on the accounting guidance available at the end of the third quarter and Northern Trust’s reduced use of derivative instruments for hedging purposes, it is anticipated that the adoption of these statements will not have a material impact on the earnings and financial position of Northern Trust.

In addition, Northern Trust has concluded that certain hedge strategies used to manage fixed interest rate risk in its loan portfolio are not likely to qualify for the special accounting treatment contemplated by SFAS No. 133. Accordingly, management is implementing alternative strategies for managing interest rate risk such as the termination and run-off of swap contracts used to hedge fixed rate loans and increased utilization of longer-term fixed rate liabilities. Management expects to continue to reduce the reliance on interest rate swaps over the remainder of the year. Based on 1999 swap volumes, current estimates indicate that a reduction in the use of interest rate swaps to manage interest rate risk could reduce net interest income by up to $750,000 on an annualized basis.

In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, which was subsequently amended by Bulletins No. 101A and No. 101B. This bulletin provides the staff's views in applying generally accepted accounting principles to selected revenue recognition issues, and must be implemented no later than the fourth quarter of fiscal years beginning after December 15, 1999. Northern Trust adheres to accounting principles generally accepted in the United States that currently apply to revenue recognition, and is in the process of reviewing the views expressed in this Staff Accounting Bulletin. Adoption of this Bulletin is not expected to have a material impact to Northern Trust's results of operations.

In September 2000, the FASB issued SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities”. SFAS No. 140 replaces SFAS No. 125, the previous standard of the same title. It revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures, but it retains most of the accounting requirements of SFAS No. 125. The accounting requirements of the Statement are effective for transactions occurring after March 31, 2001 and the disclosure requirements of the Statement are effective for fiscal years ending after December 15, 2000. Northern Trust will adopt the accounting and disclosure requirements on their respective effective dates. It is not anticipated that the adoption of SFAS No. 140 will have a material effect on Northern Trust’s results of operations.

9.      Business Segments

The tables on page 18, reflecting the earnings contribution of Northern Trust’s business segments for the third quarter and nine months ended September 30, 2000, are incorporated by reference.

Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS

THIRD QUARTER EARNINGS HIGHLIGHTS

Net income increased 18% to a record $123.3 million from the $104.2 million earned in the third quarter of last year. Net income per common share on a diluted basis also increased 18% to $.53 for the third quarter, up from $.45 earned a year ago. This earnings performance produced an annualized return on average common equity (ROE) of 22.12% versus 20.85% reported last year, and an annualized return on average assets (ROA) of 1.42% versus 1.33% in 1999. Trust fee growth of 26%, complemented by a 13% increase in net interest income and strong foreign exchange trading profits, combined to produce a 23% increase in total revenues to $549.0 million (stated on a fully taxable equivalent basis).

The 18% earnings per share growth was nearly double Northern Trust’s minimum goal of 10%, and the ROE exceeded 20% for the fourteenth consecutive quarter. The productivity ratio of 159% was slightly below the corporate goal of 160%.

Noninterest Income

Noninterest income increased 28% and totaled $391.9 million for the quarter, accounting for 71% of total taxable equivalent revenue. Trust fees of $304.7 million increased 26% or $62.3 million over the like period of 1999 and represented 78% of noninterest income and 55% of total taxable equivalent revenue. Strong new business and higher market values of trust assets administered drove this trust fee growth. Trust fees in the quarter attributable to current year acquisitions totaled $2.4 million. Trust assets under administration have grown 22% to $1.7 trillion since September 30, 1999. Trust assets under the management of Northern Trust grew at an even greater rate, increasing 29% from the prior year, and totaled $338.3 billion at September 30, 2000. At December 31, 1999, trust assets under administration totaled $1.54 trillion with $299.1 billion under management.

Trust fees are based on the market value of assets managed and administered, the volume of transactions, securities lending volume and spreads, and fees for other services rendered. Asset-based trust fees are typically determined on a sliding scale so that as the value of a client portfolio grows in size, Northern Trust receives a smaller percentage of the increasing value as trust fee income. In addition, certain accounts may be on a fixed annual fee. Therefore, market value or other changes in a portfolio’s size do not typically have a proportionate impact on the level of trust fees. In addition, Corporate and Institutional Services (C&IS) trust relationships are increasingly priced to reflect earnings from activities such as custody-related deposits and foreign exchange trading which are not included in trust fees.

Trust fees from Personal Financial Services (PFS) increased 31% from the prior year level of $121.0 million and totaled $158.7 million for the third quarter. This performance reflects continued strong new business throughout Northern Trust’s national PFS network and equity markets that were higher than those of a year ago. All states in the PFS network recorded increases in trust fees of more than 24%, with Illinois, Arizona and Texas each increasing more than 30%. The Wealth Management Group also had excellent performance, with trust fees increasing 30%, and now administers $60.6 billion for significant family asset pools worldwide, up 39% from last year. Total personal trust assets under administration increased $39.5 billion from the prior year and $19.2 billion since December 31, 1999, and totaled $171.2 billion at September 30, 2000. Of the personal trust assets under administration, $100.1 billion is managed by Northern Trust compared to $81.4 billion one year ago and $91.6 billion at December 31, 1999. Net recurring PFS new business sold through September 30, 2000 and expected to transition throughout the year was approximately $66 million in annualized trust fees, up 38% from the same period last year.

Northern Trust continued its PFS expansion with the opening of a full service office in Milwaukee, Wisconsin, the first such office in the Wisconsin market. Northern Trust now has Personal Financial Services offices in 81 locations in twelve states, up from 62 offices in just five states at the end of 1997.

Trust fees from Corporate & Institutional Services (C&IS) in the quarter increased 20% and totaled $146.0 million compared to $121.4 million in the year-ago quarter, principally reflecting strong new business. C&IS trust fees are derived from a full range of custody, investment and advisory services rendered to retirement and other asset pools of corporate and institutional clients worldwide, and all of these services contributed to the third quarter fee growth. Fees from asset management increased 16% to $46.0 million, which included $3.4 million of performance-based fees compared to $1.3 million recorded in the third quarter last year. These additional fees are largely offset by increased performance-based incentive payments to the sub-advisors of these funds, which are reflected in higher other operating expenses for the quarter. Securities lending fees increased 33% to $27.2 million from the year-ago quarter while custody fees increased 20% to $49.4 million. The growth in securities lending fees was primarily due to higher lending volumes and spreads earned on the investment of collateral. The increase in custody fees was largely driven by new global custody business. Strong new business results increased fees generated by Northern Trust Retirement Consulting, L.L.C., to $14.5 million, up 19% from last year’s third quarter. C&IS trust fees were down $7.0 million from the second quarter. The sequential quarter decline reflects a $6.2 million decrease in securities lending fees and a $1.3 million reduction in performance-based investment management fees. The particularly strong second quarter securities lending results reflected the seasonal demand for certain international equity securities, which pay dividends annually during the second quarter.

Net recurring new business sold in C&IS through September 30, 2000 and expected to transition during the year was approximately $60 million in annualized trust fees, compared to $73 million during the same period last year. The prior year new business results included record second quarter sales as clients accelerated transitions in order to avoid Year 2000 operational concerns. In addition, last year’s figures included non-

recurring new business whereas current year sales reflect only recurring types of new business.

Total C&IS trust assets under administration increased to $1.52 trillion at September 30, 2000, up 21% from September 30, 1999 and 9% from December 31, 1999. Of the C&IS trust assets under administration, $238.2 billion is managed by Northern Trust, up 31% from September 30, 1999 and 15% from December 31, 1999. Trust assets under administration included approximately $381 billion of global custody assets.

Foreign exchange trading profits were $37.6 million for the quarter, up 51% or $12.6 million from the third quarter of 1999 and compared to $42.1 million in the second quarter of 2000. The current year quarter benefited from market volatility in the major currencies, particularly the continued volatility in the euro, as well as growth in global assets under custody, and a higher level of client transaction volume. In addition, clients continued to increase their use of Northern Trust FX Passport^sm for foreign exchange transactions. This browser-based application developed with Reuters enables clients to enter into foreign exchange transactions with Northern Trust via the Internet and is a key element of Northern Trust’s Passport^sm product suite.

Total treasury management revenues, which include both fees and the computed value of compensating deposit balances, totaled $27.1 million, up 10% from last year’s third quarter. The growth was split fairly evenly between paper- and electronic-based products. The fee portion of these revenues accrued in the quarter was $18.1 million, up 14% from $15.8 million in the comparable quarter last year.

Security commissions and trading income increased 18% to $8.0 million from last year, reflecting a higher volume of transactions at Northern Trust Securities, Inc. Other operating income was $23.5 million for the third quarter compared with $16.3 million in the same period of last year. The current quarter included $2.5 million of nonrecurring income compared to $3.9 million in last year’s third quarter. The change in other operating income reflects higher trust deposit-related revenues, loan service fees, and other items.

Net Interest Income

Net interest income for the quarter totaled a record $142.8 million, 11% higher than the $128.3 million reported in the third quarter of 1999. Net interest income is defined as the total of interest income and amortized fees on earning assets, less interest expense on deposits and borrowed funds, adjusted for the impact of off-balance sheet hedging activity. When net interest income is adjusted to a fully taxable equivalent (FTE) basis, yields on taxable, nontaxable and partially taxable assets are comparable, although the adjustment to a FTE basis has no impact on net income. Net interest income on a FTE basis for the quarter was a record $157.1 million, up 13% from the $138.9 million reported in 1999. The increase in net interest income reflects 11% growth in average earning asset levels and a 20% increase in noninterest-related funding sources, primarily demand deposits and equity. The net interest margin improved slightly to 1.99% versus 1.95% reported in the year-ago quarter, due primarily to the increased level of noninterest-related funding.

Earning assets for the third quarter averaged $31.4 billion, up 11% from the $28.2 billion average for the same quarter of 1999. The $3.2 billion growth in average earning assets was comprised of a $2.2 billion or 15% increase in loans and leases and a 22% or $1.9 billion increase in securities, partially offset by a $937 million decrease in money market assets.

The loan growth was concentrated predominantly in the domestic portfolio, which increased $2.1 billion to average $16.1 billion, while international loans increased by $134 million to $695 million from a year ago. Reflecting strong growth in lending to Wealth Management and private banking clients, personal loans increased from $1.4 billion on average in last year’s third quarter to $2.0 billion for the current quarter. Residential mortgage loans, which represent 39% of the total average loan portfolio, increased $445 million or 7% to average $6.6 billion for the quarter. Commercial and industrial loans increased 9% on average compared to last year’s third quarter, and totaled $5.0 billion at September 30, 2000.

Funding for the growth in earning assets came from several sources. Total interest-bearing deposits averaged $16.3 billion, up 13% or $1.8 billion from the third quarter of 1999. This growth was concentrated primarily in foreign office time deposits, up $866 million as a result of increased global custody activity, non-personal time deposits, up $631 million, and savings, money market deposits and savings certificates, up $337 million. Other interest-related funds averaged $10.3 billion, up $563 million or 6% compared to a year ago, due predominantly to higher levels of treasury, tax and loan balances and borrowings from the Federal Home Loan Bank. Partially offsetting these increases were lower levels of federal funds purchased and securities sold under agreements to repurchase. The balances within these classifications vary based on funding requirements and strategies, interest rate levels, growth in lower cost deposit sources, and the availability of collateral to secure these borrowings. Noninterest-related funds increased 20% to average $4.8 billion due to growth in common stockholders’ equity resulting from retained earnings and to higher levels of demand deposits.

Provision for Credit Losses

The provision for credit losses was $5.0 million in the third quarter compared to $.5 million for the same quarter last year and $10.0 million in this year’s second quarter. For a discussion of the provision and reserve for credit losses, refer to the Asset Quality section beginning on page 21.

Noninterest Expenses

Noninterest expenses totaled $344.9 million for the quarter, an increase of 25% or $68.8 million from the $276.1 million in the year-ago quarter. Approximately 55% of the increase in noninterest expenses related to compensation and employee benefits and was primarily attributable to staff growth, merit increases and performance-based incentives. The balance of the expense growth reflects increased costs associated with technology investments (including e-commerce initiatives), business promotion, co-administration services provided to Northern Trust's two mutual fund families, PFS office expansion, and operating costs relating to the significant growth in transaction volumes.

Noninterest expenses resulting from the two second quarter 2000 acquisitions totaled $5.6 million in the current quarter.

Compensation and employee benefits, which represent approximately 60% of total noninterest expenses, increased to $207.3 million from $169.4 million in the year-ago quarter. Higher performance-based compensation accounted for nearly one-half of the increase in compensation, principally due to increased costs for incentive plans as a result of strong new business, excellent investment management performance and record net income. In addition, accounting for certain stock-related compensation plans requires that the quarterly expense be based on the market price of the Corporation’s stock at the end of each quarter. The increase in operating expenses for these plans as a result of adjusting for the record 37% increase in market value of Northern Trust stock from June 30 to September 30 was approximately $8.0 million and reduced earnings per share by approximately $.02 per common share. The increase in total noninterest expenses without the effect of this stock price increase would have been 22% rather than 25%. Staff levels increased from one year ago to support growth initiatives and strong new business in both PFS and C&IS. Staff on a full-time equivalent basis at September 30, 2000 totaled 9,299, up 11% from 8,360 at September 30, 1999.

Net occupancy expense totaled $21.8 million, up 14% from $19.0 million in the third quarter of 1999, due primarily to the opening of additional PFS offices over the past twelve months and additional space leased to support business growth. In addition, Northern Trust completed the $23.5 million acquisition of a building and adjacent land located across the street from the Chicago operations center in January. Prior to the purchase date, Northern Trust leased approximately 130,000 square feet of this 340,000 square foot building. The principal components of the increase in occupancy expense were higher net rental and maintenance costs, building depreciation and amortization expense of leasehold improvements.

Equipment expense, comprised of depreciation, rental and maintenance costs, totaled $18.1 million, up 13% from the $16.0 million reported in the third quarter of 1999. The increases were primarily in depreciation of computer hardware, machinery and office furniture, and higher maintenance costs for computers and equipment.

Other operating expenses in the quarter totaled $97.7 million compared to $71.7 million last year. Higher other operating expenses in 2000 reflect continued investment in technology, costs of providing co-administration services to Northern Trust's two mutual fund families, increased payments to investment fund sub-advisors due to growth and performance, and expansion of the PFS office network. Higher operating expenses also reflect other costs to support business growth and charges associated with processing errors incurred in servicing and managing financial assets and performing banking activities. The categories most affected by the factors noted above were business development, purchased professional services, software amortization, and other expenses. The table on the following page shows the components of other operating expenses.

Other Operating Expenses	Third Quarter Ended September 30
(In Millions)	2000		1999
Business Development	$	12.1		$	9.3
Purchased Professional Services		36.3			27.4
Telecommunications		4.6			4.7
Postage and Supplies		7.4			6.5
Software Amortization		15.4			12.2
Goodwill and Other Intangibles Amortization		4.1			3.5
Other Expenses		17.8			8.1
Total Other Operating Expenses	$	97.7		$	71.7

Provision for Income Taxes

The provision for income taxes was $61.5 million for the third quarter compared with $53.9 million in the year-ago quarter. The higher tax provision in 2000 resulted primarily from the growth in taxable earnings for federal income tax purposes. The effective tax rate for the third quarter was 33.3% compared to 34.1% for the third quarter of 1999.

BUSINESS SEGMENTS

The following table reflects the earnings contribution and average assets of Northern Trust’s business segments for the third quarter ended September 30, 2000 and 1999.

Third Quarter	Corporate and Institutional Services						Personal Financial Services						Treasury and Other						Total Consolidated
($ In Millions)	2000			1999			2000			1999			2000				1999		2000				1999
Noninterest Income
Trust Fees	$	146.0		$	121.4		$	158.7		$	121.0		$	—		$	—		$	304.7		$	242.4
Other		66.5			47.2			18.4			16.9			2.3			(.1	)		87.2			64.0
Net Interest Income after
Provision for Credit Losses*		49.5			41.0			99.9			94.3			2.7			3.1			152.1			138.4
Noninterest Expenses		157.1			134.7			168.0			134.6			19.8			6.8			344.9			276.1
Income before Income Taxes*		104.9			74.9			109.0			97.6			(14.8	)		(3.8	)		199.1			168.7
Provision for Income Taxes*		40.8			28.9			42.3			37.2			(7.3	)		(1.6	)		75.8			64.5
Net Income	$	64.1		$	46.0		$	66.7		$	60.4		$	(7.5	)	$	(2.2	)	$	123.3		$	104.2
Percentage Net Income        Contribution		52	%		44	%		54	%		58	%		(6	)%		(2	)%		100	%		100	%
Average Assets	$	16,391.9		$	13,501.7		$	13,700.8		$	11,911.4		$	4,382.5		$	5,681.7		$	34,475.2		$	31,094.8

*Stated on a fully taxable equivalent basis (FTE). Total includes FTE adjustments of $14.3 million for 2000 and $10.6 million for 1999.

  Note: Certain reclassifications have been made to 1999 financial information to conform to the current year presentation.

  The following table reflects the earnings contribution and average assets of Northern Trust’s business segments for the nine months ended September 30, 2000 and 1999.

Nine Months	Corporate and Institutional Services						Personal Financial Services						Treasury and Other						Total Consolidated
($ In Millions)	2000			1999			2000			1999			2000			1999			2000			1999
Noninterest Income
Trust Fees	$	439.5		$	353.1		$	456.8		$	350.0		$	—		$	—		$	896.3		$	703.1
Other		195.8			146.5			51.6			44.5			3.5			.7			250.9			191.7
Net Interest Income after
Provision for Credit Losses*		137.7			118.7			296.5			276.2			8.8			8.3			443.0			403.2
Noninterest Expenses		466.7			391.3			481.1			395.7			61.4			27.2			1,009.2			814.2
Income before Income Taxes*		306.3			227.0			323.8			275.0			(49.1	)		(18.2	)		581.0			483.8
Provision for Income Taxes*		118.8			88.5			125.8			107.7			(23.2	)		(11.4	)		221.4			184.8
Net Income	$	187.5		$	138.5		$	198.0		$	167.3		$	(25.9	)	$	(6.8	)	$	359.6		$	299.0
Percentage Net Income    Contribution		52	%		46	%		55	%		56	%		(7	)%		(2	)%		100	%		100	%
Average Assets	$16,264.8			$12,673.8			$13,204.6			$11,640.2			$3,889.1			$	5,558.7		$33,358.5			$	29,872.7

*Stated on a fully taxable equivalent basis (FTE). Total includes FTE adjustments of $39.0 million for 2000 and $28.7 million for 1999.

  Note: Certain reclassifications have been made to 1999 financial information to conform to the current year presentation.

Corporate and Institutional Services

C&IS net income for the quarter totaled $64.1 million, a 39% increase from the third quarter of 1999. Noninterest income increased 26% to $212.5 million in the third quarter of 2000 from $168.6 million in last year’s third quarter. Trust fees, reflecting strong new business growth, increased 20% to $146.0 million in the current quarter compared to $121.4 million in the year-ago quarter. Other income was $66.5 million, up 41% from $47.2 million in last year’s third quarter. Approximately two-thirds of the increase in other operating income was due to foreign exchange trading profits, which were up 51% to $37.4 million. The remainder of the increase in other income was due primarily to higher treasury management fees, trust deposit-related and loan service fees.

Net interest income after the provision for credit losses, stated on a FTE basis, increased 21% to $49.5 million in the current quarter, from $41.0 million in last year’s third quarter. Contributing to the improvement was a 20% increase in average earning assets combined with a 23% increase in noninterest-related funds. The net interest margin declined from 1.44% last year to 1.42% in the current quarter.

Noninterest expenses were up 17% to $157.1 million in the current quarter due primarily to staff growth, performance-based compensation, business promotion and higher expense allocations for product and operations support.

Personal Financial Services

PFS net income for the quarter increased 10% from a year ago to $66.7 million. Noninterest income increased 28% to $177.1 million in the current quarter from $137.9 million in last year’s third quarter. The increase was due primarily to a 31% increase in trust fees, which totaled $158.7 million in the current quarter, resulting from strong new business growth and from equity markets that were higher than those of a year ago. Other income increased 9% from $16.9 million in last year’s third quarter to $18.4 million in the current quarter, due to a 17% increase in security commissions at Northern Trust Securities, Inc. and higher loan-related, treasury management and letter of credit fees. The current quarter included $2.5 million of nonrecurring income compared to $3.9 million in last year’s third quarter.

Net interest income after the provision for credit losses, stated on a FTE basis, increased 6% to $99.9 million in the current quarter. The increase was due primarily to a $1.4 billion or 13% increase in average loan volume, offset in part by a $1.2 million increase in the provision for credit losses and a reduction in the net interest margin from 3.31% last year to 3.08% in 2000.

Noninterest expenses increased 25% to $168.0 million in the current quarter from $134.6 million in last year’s third quarter. Approximately $12.9 million of the total increase related to salaries, incentives and employee benefits, driven by staff growth and performance-based compensation plans. An additional $13.0 million of the overall increase resulted from higher expense allocations for product and operations support. In addition, occupancy costs were $.9 million or 13% higher as a result of both the opening of new PFS offices and the expansion of existing locations, while other operating expenses increased due to charges associated with processing errors incurred in servicing and managing financial assets and performing banking activities.

Treasury and Other

The Treasury Department is responsible for managing The Northern Trust Company’s (Bank) wholesale funding, capital position and interest rate risk, as well as the portfolio of interest rate risk management instruments. It is also responsible for the investment portfolios of the Corporation and the Bank. “Other” corporate income and noninterest expenses represent items that are not allocated to the business units and generally represent certain nonrecurring items and certain executive level compensation. Net interest income for the third quarter was down slightly from a year ago resulting primarily from the impact of rising interest rates in 2000. Noninterest expenses totaled $19.8 million for the quarter compared with $6.8 million in last year’s third quarter. The increase in noninterest expenses for certain stock-related compensation plans, as a result of adjusting for the record 37% increase in market value of Northern Trust stock from June 30 to September 30, was approximately $8.0 million. Also contributing to the increase were accruals for incentives that will be paid out earlier than anticipated due to the early retirement of certain Bank officers.

NINE MONTH EARNINGS HIGHLIGHTS

Net income per common share increased 19% to $1.54 for the nine-month period ended September 30, 2000, up from $1.29 last year. Net income increased 20% to $359.6 million from $299.0 million in the year-ago period. The ROE increased to 22.21% from 20.71% last year, while the ROA improved to 1.44% from 1.34% in the same period last year. The productivity ratio was 159% for the current year versus 160% for 1999.

Total revenues, stated on a FTE basis, increased 23% from 1999 levels. Trust fees totaled $896.3 million, up 27% from $703.1 million last year. Foreign exchange trading profits totaled $113.7 million, up 43% from last year’s performance. Treasury management revenues from both fees and the computed value of compensating deposit balances increased 8% to $79.9 million. The fee portion of these revenues accrued in the period totaled $53.4 million, up 4% from 1999 levels. Security commissions and trading income totaled $25.9 million, up 18% from $22.0 million reported last year. Other operating income totaled $57.9 million in the period compared with $38.8 million in 1999. The increase from the prior year was due primarily to higher loan, letter of credit and trust deposit-related fees.

Net interest income, stated on a FTE basis, totaled $462.0 million, up 13% from $409.2 million reported last year. The $19.0 million provision for credit losses was $13.0 million higher than the $6.0 million required in the first nine months of 1999. Net loan charge-offs on an annualized basis, as a percentage of average loans were .10% for the nine-month period. Noninterest expenses were up 24% and totaled $1.0 billion compared to $814.2 million a year ago.

BALANCE SHEET

Total assets at September 30, 2000 were $34.8 billion and averaged $34.5 billion for the third quarter, up 11% from last year's average of $31.1 billion. Due to continued strong credit demand, loans and leases grew to $17.7 billion at Sept 30, 2000, and averaged $16.8 billion for the quarter. This compares with $15.0 billion in total loans and leases at September 30, 1999 and $14.6 billion on average for the third quarter of last year. Securities totaled $10.0 billion at September 30, 2000 and averaged $10.8 billion for the third quarter, compared to $9.5 billion at September 30, 1999 and $8.9 billion on average in the third quarter of 1999. The increase was primarily in short-term federal agency securities. Money market assets totaled $3.3 billion at September 30, 2000 and averaged $3.7 billion in the third quarter.

Driven by continued strong earnings growth, offset in part by stock repurchases under Northern Trust’s ongoing stock buyback program, common stockholders' equity increased to $2.24 billion at September 30, 2000 and averaged $2.19 billion for the quarter, up 12% from the $1.96 billion average in last year’s third quarter. Total stockholders' equity averaged $2.31 billion compared with $2.08 billion in the third quarter of 1999.

During the quarter, the Corporation acquired a total of 876,201 shares at a cost of $70.7 million. An additional 7.4 million shares may be purchased after September 30, 2000 under the current stock buyback program.

Northern Trust's risk-based capital ratios remained strong at 9.4% for tier 1 capital and 12.5% for total capital at September 30, 2000. These ratios are well above the minimum regulatory requirements of 4% for tier 1 and 8% for total risk-based capital ratios. The leverage ratio (tier 1 capital to third quarter average assets) of 6.9% at September 30, 2000, also exceeded the minimum regulatory requirement of 3%. The Bank's risk-based capital ratios at September 30, 2000 were 8.4% for tier 1 capital, 11.5% for total capital and 6.2% for the leverage ratio. Each of Northern Trust’s other subsidiary banks had a ratio of 10.0% or higher for tier 1 capital, 11.0% for total risk-based capital, and 6.5% for the leverage ratio.

ASSET QUALITY

Nonperforming assets consist of nonaccrual loans and other real estate owned (OREO). Nonperforming assets at September 30, 2000 totaled $78.8 million, compared with $55.4 million at June 30, 2000 and $60.6 million at December 31, 1999. Domestic nonaccrual loans and leases, consisting primarily of commercial loans, totaled $76.8 million, or .46% of total domestic loans and leases at September 30, 2000. At June 30, 2000 and December 31, 1999, domestic nonaccrual loans and leases totaled $54.4 million and $59.3 million, respectively. The increase from June 30 essentially reflects the impact of one commercial loan to a company that filed for Chapter 11 reorganization in early October.

The following table presents the outstanding amounts of nonaccrual loans and OREO. Also shown are loans that have interest or principal payments that are delinquent 90 days or more and are still accruing interest. The balance in this category at any quarter-end can fluctuate widely based on the timing of cash collections, renegotiations and renewals.

(In Millions)	September 30, 2000		June 30, 2000		December 31, 1999		September 30, 1999
Nonaccrual Loans
Domestic
Residential Real Estate	$	3.7	$	4.8	$	6.4	$	5.3
Commercial		70.6		47.1		50.3		21.2
Commercial Real Estate		2.0		2.0		1.9		1.7
Personal		.5		.5		.7		.7
Total Domestic		76.8		54.4		59.3		28.9
International		—		—		—		—
Total Nonaccrual Loans		76.8		54.4		59.3		28.9
Other Real Estate Owned		2.0		1.0		1.3		1.4
Total Nonperforming Assets	$	78.8	$	55.4	$	60.6	$	30.3
Total 90 Day Past Due Loans (still accruing)	$	31.8	$	25.5	$	15.4	$	21.9

Provision and Reserve for Credit Losses

The provision for credit losses is the charge against current earnings that is determined by management, through a disciplined credit review process, as the amount needed to maintain a reserve that is sufficient to absorb credit losses inherent in Northern Trust’s loan and lease portfolios and other credit undertakings. The reserve provides for probable losses that have been identified with specific borrower relationships (specific loss component) and for probable losses that are believed to be inherent in the loan and lease portfolios and other credit undertakings but that have not yet been specifically identified (inherent loss component).

Note 6 to the Consolidated Financial Statements includes a table that analyzes the reserve for credit losses for the nine months ended September 30, 2000 and identifies the charge-offs, recoveries and the provision for credit losses during the respective periods. The table on the following page shows (i) the specific reserve, (ii) the allocated portion of the inherent reserve and its components by loan category and (iii) the unallocated portion of the inherent reserve at September 30, 2000, June 30, 2000, December 31, 1999, and September 30, 1999.

ALLOCATION OF THE RESERVE FOR CREDIT LOSSES
	September 30, 2000				June 30, 2000				December 31, 1999					September 30, 1999
($ in millions)	Reserve Amount		Percent of Loans to Total Loans		Reserve Amount		Percent of Loans to Total Loans			Reserve Amount		Percent of Loans to Total Loans		Reserve Amount		Percent of Loans to Total Loans
Specific Reserves	$	18.4	—	%	$	18.6	—	%		$	15.0	—	%	$	9.9	—	%
Inherent Reserves
Residential Real Estate		8.7	37			10.1	38				11.5	41			12.5	41
Commercial		80.5	29			79.8	31				73.2	31			67.2	31
Commercial Real Estate		13.4	5			12.8	5				12.2	5			11.7	5
Personal		4.1	13			3.4	11				3.3	11			3.4	10
Other		—	6			—	6				—	4			—	5
Lease Financing		2.9	5			2.9	4				2.9	4			2.9	4
International		3.1	5			4.2	5				3.5	4			3.6	4
Unallocated		26.9	—			27.5	—				29.3	—			33.7	—
Total Inherent Reserve	$	139.6	100	%	$	140.7	100	%		$	135.9	100	%	$	135.0	100	%
Total Reserve	$	158.0	100	%	$	159.3	100	%		$	150.9	100	%	$	144.9	100	%

Specific Reserve. At September 30, 2000, the specific component of the reserve stood at $18.4 million, compared to $18.6 million at June 30, 2000. The modest reduction in the specific component of the reserve during the quarter reflects management's opinion that there has been little change in the loss estimated on the loans classified as impaired.

Allocated Inherent Reserve. The allocated inherent portion of the reserve declined from June 30, 2000 by a net $500,000 during the third quarter to $112.7 million at September 30, 2000. The change in this component of the reserve primarily reflects the net impact of two factors. First, the credit ratings on several commercial loans were lowered during the quarter. Management does not believe that the credit rating adjustments for these loans represent a significant change in the overall quality of the loan portfolio. Second, during the quarter, management completed its periodic review of all loss factors utilized in estimating the inherent loss in the portfolio. As a result of this review, the loss factors for certain credit rating categories for commercial credits were reduced. The loss factor adjustments reflected management’s assessment of the credit risk inherent for these categories and historical loss experience.

Unallocated Inherent Reserve. The unallocated portion of the inherent reserve is based on management’s review of overall factors affecting the determination of probable losses inherent in the portfolio, which are not necessarily captured by the application of historical loss ratios. This portion of the reserve analysis involves the exercise of judgment and reflects considerations such as management’s view that the reserve should have a margin that recognizes the imprecision inherent in the process of estimating expected credit losses. The unallocated inherent portion of the reserve was $26.9 million, a decrease of $600,000 from June 30, 2000, reflecting management’s judgement that there has been little change in the factors affecting this component of the reserve.

Other Factors. During the quarter ended September 30, 2000, there were no significant changes in concentration of credits that impacted asset quality at the time reserve determinations were made for the quarter. At the time reserve determinations were made, the total amount of the two highest risk loan groupings, those rated “7” and “8” (based on Northern Trust’s internal rating scale, which closely parallels that of the banking regulators), was $160 million compared to $81 million at June 30, 2000, primarily reflecting rating changes on certain loans. After the increase, these loans represent .9% of outstanding loans.

Total Reserve. Management’s evaluation of the factors above resulted in a total reserve for credit losses of $158.0 million at September 30, 2000 compared to $159.3 million at June 30, 2000. The reserve as a percentage of total loans declined to .89% at September 30, 2000 from .92% at June 30, 2000.

Provision. The provision for credit losses of $5.0 million for the third quarter of 2000 compares to $.5 million in the prior year quarter. The provision for credit losses was affected by the factors described above and the rapid deterioration of one commercial loan which resulted in a charge-off of $5.9 million.

MARKET RISK MANAGEMENT

As described in the 1999 Annual Report to Shareholders, Northern Trust manages its interest rate risk through measurement techniques which include simulation of earnings, simulation of the economic value of equity, and gap analysis. Also, as part of its risk management activities, it regularly measures the risk of loss associated with foreign currency positions using a value at risk model.

Based on this continuing evaluation process, Northern Trust’s interest rate risk position and the value at risk associated with the foreign exchange trading portfolio have not changed significantly since December 31, 1999.

FORWARD-LOOKING INFORMATION

This report contains statements that may be considered forward-looking, such as the discussion of Northern Trust’s financial goals, expansion and business development plans, business prospects and positioning with respect to market and pricing trends, new business results and outlook, credit quality, planned capital expenditures and technology spending, and the effect of various matters (including changes in accounting standards and interpretations) on Northern Trust’s business. These statements speak of Northern Trust’s plans, goals, beliefs or expectations, refer to estimates or use similar terms. Actual results could differ materially from the results indicated by these statements because the realization of those results is subject to many uncertainties including:

The future health of the U.S. and international economies and other economic factors that affect wealth creation, investment and savings patterns, and Northern Trust’s interest rate risk exposure and credit risk.

Changes in U.S. and worldwide securities markets, with respect to the market values of financial assets, the stability of particular securities markets and the level of volatility in certain markets such as foreign exchange.

Changes in the level of cross-border investing by clients resulting from changing economic factors, political conditions or currency markets

Regulatory developments and changes in accounting requirements or interpretations in the U.S. and other countries where Northern Trust has significant business.

Changes in the nature of Northern Trust’s competition resulting from industry consolidation, enactment of the Gramm-Leach-Bliley Act of 1999, and other regulatory developments or other factors, as well as actions taken by particular competitors.

Northern Trust’s success in continuing to generate new business in its existing markets, as well as its success in identifying and penetrating targeted markets, through acquisition or otherwise, and generating a profit in those markets in a reasonable time.

Northern Trust's ability to continue to generate superior investment results for clients and continue to develop its array of investment products, internally or through acquisition, in a manner that meets clients' needs.

Northern Trust's success in further developing and implementing initiatives that integrate the Internet into methods of product distribution, new business development and client service.

Northern Trust’s ability to continue to fund and accomplish technological innovation, improve processes and controls and attract and retain capable staff in order to deal with technology challenges and increasing volume and complexity in many of its businesses.

Northern Trust’s success in integrating recent and future acquisitions and using the acquired businesses to execute its business strategy.

The ability of each of Northern Trust’s principal businesses to maintain a product mix that achieves satisfactory margins.

Changes in tax laws or other legislation that could affect Northern Trust’s personal and institutional asset administration businesses.

Some of these uncertainties that may affect future results are discussed in more detail in the section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” captioned “Risk Management” in the 1999 Annual Report to Stockholders (pp. 35-44) and in the sections of “Item 1 – Business” of the 1999 Annual Report on Form 10-K captioned “Government Policies”, “ Competition” and “Regulation and Supervision” (pp. 6-12). All forward-looking statements included in this report are based upon information presently available, and Northern Trust assumes no obligation to update any forward-looking statement.

The following schedule should be read in conjunction with the Net Interest Income section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

CONSOLIDATED AVERAGE STATEMENT OF CONDITION
WITH ANALYSIS OF NET INTEREST INCOME

	Third Quarter
(Interest and rate on a taxable equivalent basis)	2000								1999
($ in Millions)	Interest		Volume			Rate				Interest	Volume			Rate
Average Earning Assets
Money Market Assets
Federal Funds Sold and Resell Agreements	$	7.9	$	476.9			6.63	%	$	11.7	$	895.4		5.18	%
Time Deposits with Banks		46.8		3,220.8			5.77			40.3		3,727.9		4.29
Other Interest-Bearing		.4		14.6			9.67			.3		26.1		4.13
Total Money Market Assets		55.1		3,712.3			5.90			52.3		4,649.4		4.46
Securities
U.S. Government		3.7		234.0			6.32			3.5		271.6		5.16
Obligations of States and Political Subdivisions		9.5		473.5			8.06			10.3		489.9		8.36
Federal Agency		167.5		9,680.7			6.89			105.5		7,804.8		5.36
Other		8.6		441.6			7.72			5.6		331.0		6.75
Trading Account		.3		12.0			7.81			.2		10.2		6.51
Total Securities		189.6		10,841.8			6.96			125.1		8,907.5		5.57
Loans and Leases		300.9		16,825.3			7.12			237.5		14,620.5		6.45
Total Earning Assets	$	545.6		31,379.4			6.92	%	$	414.9		28,177.4		5.84	%
Reserve for Credit Losses		—		(158.6	)		—			—		(148.4	)	—
Cash and Due from Banks		—		1,257.8			—			—		1,386.6		—
Other Assets		—		1,996.6			—			—		1,679.2		—
Total Assets		—		$34,475.2			—			—	$	31,094.8		—
Average Source of Funds
Deposits
Savings and Money Market	$	53.7	$	5,099.4			4.19	%	$	39.7	$	4,877.0		3.23	%
Savings Certificates		34.4		2,266.7			6.03			28.6		2,152.4		5.28
Other Time		19.0		1,197.3			6.33			7.1		566.5		4.92
Foreign Offices Time		110.7		7,715.3			5.71			72.1		6,848.9		4.18
Total Deposits		217.8		16,278.7			5.32			147.5		14,444.8		4.05
Federal Funds Purchased		42.0		2,534.1			6.59			43.0		3,327.9		5.12
Securities Sold Under Agreements to Repurchase		22.6		1,392.3			6.46			33.9		2,655.4		5.07
Commercial Paper		2.3		136.1			6.66			1.8		138.8		5.17
Other Borrowings		79.1		4,820.5			6.53			28.7		2,235.8		5.09
Senior Notes		8.6		500.0			6.86			6.5		498.4		5.27
Long-Term Debt		11.2		638.3			7.03			10.5		602.3		6.96
Debt - Floating Rate Capital Securities		4.9		267.6			7.23			4.1		267.5		5.90
Total Interest-Related Funds		388.5		26,567.6			5.82			276.0		24,170.9		4.53
Interest Rate Spread		—		—			1.10	%		—		—		1.31	%
Noninterest-Related Funds		—		4,388.0			—			—		3,971.7		—
Other Liabilities		—		1,209.0			—			—		873.4		—
Stockholders’ Equity		—		2,310.6			—			—		2,078.8		—
Total Liabilities and Stockholders’ Equity		—	$	34,475.2			—			—	$	31,094.8		—
Net Interest Income/Margin	$	157.1		—			1.99	%	$	138.9		—		1.95	%

ANALYSIS OF NET INTEREST INCOME CHANGES

DUE TO VOLUME AND RATE

	Third Quarter 2000/99							Nine Months 2000/99
	Change Due To							Change Due To
(In Millions)	Volume		Rate			Total		Volume		Rate			Total
Earning Assets	$	59.0	$	71.7		$	130.7	$	164.1	$	168.7		$	332.8
Interest-Related Funds		36.6		75.9			112.5		99.4		180.6			280.0
Net Interest Income	$	22.4	$	(4.2	)	$	18.2	$	64.7	$	(11.9	)	$	52.8

							NORTHERN TRUST CORPORATION
Nine Months
2000							1999
Interest		Volume			Rate		Interest		Volume			Rate
$	32.6	$	701.4		6.21	%	$	37.2	$	1,000.7		4.97	%
	138.8		3,471.5		5.34			114.0		3,370.8		4.52
	1.9		33.4		7.42			2.0		56.2		4.79
	173.3		4,206.3		5.50			153.2		4,427.7		4.63
	10.7		239.7		5.96			12.0		296.7		5.40
	29.4		480.7		8.17			30.3		501.2		8.07
	419.5		8,534.3		6.57			274.0		7,070.4		5.18
	23.8		415.7		7.64			14.9		300.9		6.63
	.7		12.0		7.66			.6		12.3		6.80
	484.1		9,682.4		6.68			331.8		8,181.5		5.42
	848.6		16,261.3		6.97			688.2		14,325.6		6.42
$	1,506.0	$	30,150.0		6.67	%	$	1,173.2	$	26,934.8		5.82	%
	—		(155.7	)	—			—		(148.7	)	—
	—		1,402.6		—			—		1,371.2		—
	—		1,961.6		—			—		1,715.4		—
	—	$	33,358.5		—			—	$	29,872.7		—
$	149.4	$	5,170.9		3.86	%	$	111.4	$	4,754.8		3.13	%
	97.3		2,245.6		5.79			86.3		2,167.4		5.33
	47.5		1,042.6		6.09			22.5		614.4		4.89
	312.4		7,841.6		5.32			196.4		6,233.9		4.21
	606.6		16,300.7		4.97			416.6		13,770.5		4.04
	107.4		2,302.5		6.23			123.1		3,365.9		4.89
	62.5		1,370.9		6.09			81.0		2,230.8		4.86
	6.5		137.1		6.33			5.2		139.0		5.00
	187.2		3,988.6		6.27			76.5		2,099.9		4.87
	25.8		504.0		6.81			23.5		627.7		5.00
	33.8		640.5		7.03			26.4		506.9		6.95
	14.2		267.6		7.02			11.7		267.5		5.75
	1,044.0		25,511.9		5.47			764.0		23,008.2		4.44
	—		—		1.20	%		—		—		1.38	%
	—		4,473.7		—			—		3,985.9		—
	—		1,115.8		—			—		850.6		—
	—		2,257.1		—			—		2,028.0		—
	—	$	33,358.5		—			—	$	29,872.7		—
$	462.0		—		2.05	%	$	409.2		—		2.03	%

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

The information called for by this item is incorporated herein by reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Market Risk Management” on page 24 of this document.

PART II – OTHER INFORMATION

Item 6.		Exhibits and Reports on Form 8-K
	(a)	Exhibits
		(4)	Instruments Defining Rights of Security Holders:
			(i)	Form of The Northern Trust Company’s Global Senior Bank Note (Floating Rate).
			(ii)	Form of The Northern Trust Company’s Global Subordinated Bank Note (Floating Rate).
		(10)	Material Contracts:
			(i)	Amendment effective July 1, 2000 to the Northern Trust Employee Stock Ownership Plan Extending Participation in the Plan to Certain Employees.
			(ii)	Eleventh Amendment dated August 1, 2000 to Lease dated August 27, 1985 between American National Bank & Trust Company of Chicago as Trustee under Trust Agreement dated April 5, 1990 and known as Trust No. 110513-07 (Landlord) and The Northern Trust Company (Tenant), as amended.
			(iii)	Twelfth Amendment dated August 28, 2000 to Lease dated August 27, 1985 between American National Bank & Trust Company of Chicago as Trustee under Trust Agreement dated April 5, 1990 and known as Trust No. 110513-07 (Landlord) and The Northern Trust Company (Tenant), as amended.
	(b)	Reports on Form 8-K
		In a report on Form 8-K filed July 17, 2000, Northern Trust Corporation incorporated in Item 5 its July 17, 2000 press release, reporting on its earnings for the second quarter of 2000. The press release, with summary financial information, was filed pursuant to Item 7.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		NORTHERN TRUST CORPORATION
				(Registrant)
Date:	November 9, 2000	By:	/s/ Perry R. Pero      Perry R. Pero      Vice Chairman      and Chief Financial Officer
Date:	November 9, 2000	By:	/s/ Harry W. Short      Harry W. Short      Executive Vice President and Controller     (Chief Accounting Officer)

EXHIBIT INDEX

The following exhibits have been filed herewith:

Exhibit Number		Description
	(4)	Instruments Defining Rights of Security Holders:
		(i)	Form of The Northern Trust Company’s Global Senior Bank Note (Floating Rate).
		(ii)	Form of The Northern Trust Company’s Global Subordinated Bank Note (Floating Rate).
	(10)	Material Contracts:
		(i)	Amendment effective July 1, 2000 to the Northern Trust Employee Stock Ownership Plan Extending Participation in the Plan to Certain Employees.
		(ii)	Eleventh Amendment dated August 1, 2000 to Lease dated August 27, 1985 between American National Bank & Trust Company of Chicago as Trustee under Trust Agreement dated April 5, 1990 and known as Trust No. 110513-07 (Landlord) and The Northern Trust Company (Tenant), as amended.
		(iii)	Twelfth Amendment dated August 28, 2000 to Lease dated August 27, 1985 between American National Bank & Trust Company of Chicago as Trustee under Trust Agreement dated April 5, 1990 and known as Trust No. 110513-07 (Landlord) and The Northern Trust Company (Tenant), as amended.

EX-4.(I)

                                                                    EXHIBIT 4(i)

                                                                        Rev.9/00

     UNLESS THIS SENIOR NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE BANK OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SENIOR NOTE
ISSUED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR, OR IN LIEU OF, THIS
SENIOR NOTE IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     IF THIS SENIOR NOTE IS ISSUED WITH "ORIGINAL ISSUE DISCOUNT" FOR PURPOSES
OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THE FOLLOWING
SHALL BE COMPLETED: THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR PURPOSES OF
APPLYING SECTIONS 1272, 1273 AND 1275 OF THE UNITED STATES INTERNAL REVENUE CODE
OF 1986, AS AMENDED, TO THIS SENIOR NOTE.  THE ISSUE DATE OF THIS SENIOR NOTE IS
_____________.  THE ISSUE PRICE OF THIS SENIOR NOTE IS _____% OF ITS PRINCIPAL
AMOUNT.  THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THIS SENIOR NOTE IS $_________
PER $1,000 OF THE INITIAL PRINCIPAL AMOUNT, THE YIELD TO MATURITY IS ____%, AND
THE AMOUNT OF THE ORIGINAL ISSUE DISCOUNT ALLOCABLE TO THE INITIAL SHORT ACCRUAL
PERIOD, IF ANY, IS $_____ PER $1,000 OF THE INITIAL PRINCIPAL AMOUNT, DETERMINED
ON THE BASIS OF THE EXACT METHOD.


No. SEN FLR-______________                                            REGISTERED
CUSIP NO.: _______________


                          THE NORTHERN TRUST COMPANY

                            GLOBAL SENIOR BANK NOTE
                                (Floating Rate)

ORIGINAL ISSUE DATE:                             PRINCIPAL AMOUNT:

INITIAL BASE RATE:  ______%                      MATURITY DATE:

INTEREST RATE BASIS:                             INDEX MATURITY:


SPREAD AND/OR SPREAD MULTIPLIER:                 REGULAR RECORD DATES (If other
                                                 than the 15th day prior to each
                                                 Interest Payment Date):

MAXIMUM INTEREST RATE:                           MINIMUM INTEREST RATE:

INTEREST PAYMENT DATES:                          INTEREST PAYMENT PERIOD:

INTEREST RESET DATES:                            INTEREST RESET PERIOD:

INITIAL REDEMPTION DATE:                         ANNUAL REDEMPTION PERCENTAGE
                                                 REDUCTION:

INITIAL REDEMPTION PERCENTAGE:                   HOLDER'S OPTIONAL REPAYMENT
                                                 DATE:

ORIGINAL ISSUE DISCOUNT NOTE:                    OID AMOUNT:

Yes:  ______   No: _____

OTHER PROVISIONS:                                CALCULATION AGENT:

                                                 DEFAULT RATE:  ____ %

                                                 ALTERNATE RATE EVENT SPREAD:

     The Northern Trust Company, an Illinois banking corporation (the "Bank"),
for value received, hereby promises to pay to Cede & Co., or registered assigns,
the principal amount specified on the face hereof in United States Dollars on
the Maturity Date specified above and to pay interest thereon from the Original
Issue Date specified above or from the most recent interest payment date (or, if
the Interest Reset Period specified above is daily or weekly, from, and
including, the day following the most recent Regular Record Date) to which
interest on this Senior Note (or any predecessor Senior Note) has been paid or
made available for payment (each, an "Interest Payment Date"), on the Interest
Payment Dates specified above and at maturity or upon earlier redemption or
repayment, if applicable, commencing on the first Interest Payment Date next
succeeding the Original Issue Date (or, if the Original Issue Date is between a
Regular Record Date and the Interest Payment Date immediately following such
Regular Record Date, on the second Interest Payment Date following the Original
Issue Date), at a rate per annum equal to the Initial Base Rate specified above,
as adjusted by the addition or subtraction of the Spread, if any, specified
above and/or by the


multiplication by the Spread Multiplier, if any specified above, until the first
Interest Reset Date following the Original Issue Date and, on and after such
Interest Reset Date, at the rate determined in accordance with the provisions
set forth herein, until the principal hereof is paid or made available for
payment, and (to the extent that the payment of such interest shall be legally
enforceable) at the last rate in effect prior to any payment default (or the
Default Rate per annum specified above, if such Default Rate is specified above)
on any overdue principal and premium, if any, and on any overdue installment of
interest. The interest so payable, and punctually paid or made available for
payment, on any Interest Payment Date will be paid to the person in whose name
this Senior Note (or any predecessor Senior Note) is registered at the close of
business on the Regular Record Date for such interest, which shall be the 15th
calendar day (whether or not a Business Day (as defined below)) before such
Interest Payment Date (unless otherwise specified on the face hereof); provided,
however, that interest payable at maturity or upon earlier redemption or
repayment, if applicable, will be payable to the person to whom principal shall
be payable.

     Payment of principal of, and premium, if any, and interest on, this Senior
Note will be made in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
The Bank will at all times appoint and maintain a paying agent (the "Paying
Agent") authorized by the Bank to pay the principal of, and premium, if any, and
interest on, this Senior Note on behalf of the Bank and having an office or
agency (the "Paying Agent Office") in The City of New York or the City of
Chicago, Illinois (the "Place of Payment"), where this Senior Note may be
presented or surrendered for payment and where notices, designations or requests
in respect of payments with respect to this Senior Note may be served.  The Bank
has initially appointed itself as such Paying Agent, with the Paying Agent
Office currently located at 50 South LaSalle Street (Level BB-A), Chicago,
Illinois 60675, Attention: Securities Services.

     THIS SENIOR NOTE IS A DIRECT, UNCONDITIONAL, UNSECURED AND UNSUBORDINATED
GENERAL OBLIGATION OF THE BANK AND DOES NOT EVIDENCE A DEPOSIT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.  THIS
SENIOR NOTE RANKS PARI PASSU WITH ALL OTHER UNSECURED AND UNSUBORDINATED

                                      -3-


OBLIGATIONS OF THE BANK, EXCEPT DEPOSITS AND OTHER OBLIGATIONS THAT ARE SUBJECT
TO A PRIORITY OR PREFERENCE.  UNDER APPLICABLE LAW, CLAIMS OF CERTAIN CREDITORS,
INCLUDING HOLDERS OF DEPOSITS IN THE BANK, WOULD BE ENTITLED TO PRIORITY OVER
CLAIMS OF UNSECURED GENERAL CREDITORS OF THE BANK, INCLUDING THE HOLDER OF THIS
SENIOR NOTE, IN THE EVENT OF A LIQUIDATION OR OTHER RESOLUTION OF THE BANK.

     Payment of the principal of, and premium, if any, and interest on, this
Senior Note due at maturity or upon earlier redemption or repayment, if
applicable, will be made in immediately available funds upon presentation and
surrender of this Senior Note to the Paying Agent at the Paying Agent Office in
the Place of Payment; provided that this Senior Note is presented to the Paying
Agent in time for the Paying Agent to make such payment in accordance with its
normal procedures.  Payments of interest on this Senior Note (other than at
maturity or upon earlier redemption or repayment) will be made by wire transfer
to such account as has been appropriately designated to the Paying Agent by the
person entitled to such payments.

     This Senior Note is one of a duly authorized issue of Senior Bank Notes due
from 30 days to fifteen years from date of issue of the Bank (herein called the
"Senior Notes").

     Unless otherwise indicated on the face hereof, if the rate of interest on
this Senior Note resets daily, weekly or monthly the Interest Payment Date for
this Senior Note will be the third Wednesday of each month or the third
Wednesday of March, June, September and December of each year; if the rate of
interest on this Senior Note resets quarterly, the Interest Payment Date for
this Senior Note will be the third Wednesday of March, June, September and
December of each year; if the rate of interest on this Senior Note resets semi-
annually, the Interest Payment Date for this Senior Note will be the third
Wednesday of each of two months of each year specified on the face hereof that
are six months apart; and if the rate of interest on this Senior Note resets
annually, the Interest Payment Date for this Senior Note will be the third
Wednesday of the month specified on the face hereof.  If any Interest Payment
Date (unless it is also the Maturity Date) for this Senior Note falls on a day
that is not a Business Day, such Interest Payment Date will be postponed to the
next succeeding Business Day; provided, however, that if the

                                      -4-


Interest Rate Basis specified on the face hereof is LIBOR and such next
succeeding Business Day is in the next succeeding calendar month, such Interest
Payment Date (unless it is also the Maturity Date) will be the immediately
preceding Business Day. If any Maturity Date or date of earlier redemption or
repayment of this Senior Note falls on a day that is not a Business Day, the
related payment of interest shall be made on the next succeeding Business Day
with the same force and effect as if made on the date such payment were due, and
no interest shall accrue on the amount so payable for the period from and after
such Maturity Date or date of earlier redemption or repayment. "Business Day"
means any day other than a Saturday, Sunday or a day on which banking
institutions in The City of New York or the City of Chicago, Illinois generally
are authorized or obligated by law or executive order to close, and with respect
to Senior Notes with respect to which the Interest Rate Basis specified on the
face hereof is LIBOR, any day on which dealings in U.S. dollars are transacted
in the London interbank market (a "London Business Day").

     This Senior Note will not be subject to any sinking fund.  If so provided
on the face of this Senior Note, this Senior Note may be redeemed by the Bank on
and after the Initial Redemption Date, if any, specified on the face hereof.  If
no Initial Redemption Date is specified on the face hereof, this Senior Note may
not be redeemed prior to the Maturity Date.  On and after the Initial Redemption
Date, if any, this Senior Note may be redeemed at any time either in whole or in
part from time to time in increments of $1,000 (provided that any remaining
principal amount hereof shall be at least $250,000) at the option of the Bank at
the applicable Redemption Price (as defined below), together with accrued and
unpaid interest hereon at the applicable rate borne by this Senior Note to the
date of redemption (each such date, a "Redemption Date"), on written notice
given not more than 60 nor less than 30 calendar days prior to the Redemption
Date by the Bank to the registered holder hereof.  Whenever less than all the
Senior Notes at any time outstanding are to be redeemed, the terms of the Senior
Notes to be so redeemed shall be selected by the Bank.  If less than all the
Senior Notes with identical terms at any time outstanding are to be redeemed,
the Senior Notes to be so redeemed shall be selected by the Paying Agent by lot
or in any usual manner approved by it.  In the event of redemption of this
Senior Note

                                      -5-


in part only, a new Senior Note for the unredeemed portion hereof shall be
issued in the name of the holder hereof upon the surrender hereof.

     The "Redemption Price" shall initially be the Initial Redemption Percentage
specified on the face hereof of the principal amount of this Senior Note to be
redeemed and shall decline at each anniversary of the Initial Redemption Date
specified on the face hereof by the Annual Redemption Percentage Reduction, if
any, specified on the face hereof, of the principal amount to be redeemed until
the Redemption Price is 100% of such principal amount.

     This Senior Note may be subject to repayment at the option of the holder
hereof in accordance with the terms hereof on the Holder's Optional Repayment
Date(s), if any, specified on the face hereof.  If no Holder's Optional
Repayment Date is specified on the face hereof, this Senior Note will not be so
repayable at the option of the holder hereof prior to maturity.  On any Holder's
Optional Repayment Date, this Senior Note will be repayable in whole or in part
in increments of $1,000 (provided that any remaining principal amount hereof
will be at least $250,000) at the option of the holder hereof at a repayment
price equal to 100% of the principal amount to be repaid, together with accrued
and unpaid interest hereon payable to the date of repayment.  For this Senior
Note to be repaid in whole or in part at the option of the holder hereof on a
Holder's Optional Repayment Date, this Senior Note must be given, with the form
entitled "Option to Elect Repayment" below duly completed, to the Paying Agent
at its offices located at 50 South LaSalle Street (Level BB-A), Chicago,
Illinois  60675,  Attention:  Securities Services, or at such address which the
Bank shall from time to time notify the holders of the Senior Notes, not more
than 60 nor less than 30 days prior to such Holder's Optional Repayment Date.
Exercise of such repayment option by the holder hereof shall be irrevocable.

     The rate of interest on this Senior Note will be reset daily, weekly,
monthly, quarterly, semi-annually or annually (each such period, an "Interest
Reset Period" for this Senior Note, and the first calendar day of an Interest
Reset Period, an "Interest Reset Date"), as specified on the face hereof.
Unless otherwise indicated on the face hereof, if this Senior Note

                                      -6-


resets daily, the Interest Reset Date will be each Business Day; if this Senior
Note resets weekly and the Interest Rate Basis is not the Treasury Rate, the
Interest Reset Date will be the Wednesday of each week; if this Senior Note
resets weekly and the Interest Rate Basis is the Treasury Rate, the Interest
Reset Date will be the Tuesday of each week (except as provided below); if this
Senior Note resets monthly, the Interest Reset Date will be the third Wednesday
of each month; if this Senior Note resets quarterly, the Interest Reset Date
will be the third Wednesday of March, June, September and December; if this
Senior Note resets semi-annually, the Interest Reset Date will be the third
Wednesday of each of two months of each year that are six months apart, as
specified on the face hereof; and if this Senior Note resets annually, the
Interest Reset Date will be the third Wednesday of one month of each year, as
specified on the face hereof; provided, however, that the base rate in effect
from the Original Issue Date to the first Interest Reset Date will be the
Initial Base Rate specified on the face hereof. If any Interest Reset Date with
respect to this Senior Note would otherwise be a day that is not a Business Day,
such Interest Reset Date will be the next succeeding Business Day, except that
in the case that the Interest Rate Basis specified on the face hereof is LIBOR,
if such Business Day is in the next succeeding calendar month, such Interest
Reset Date will be the immediately preceding Business Day.

     All calculations relating to this Senior Note will be made by the
"Calculation Agent."  The Bank will serve as Calculation Agent for this Senior
Note as of its Original Issue Date, unless otherwise specified on the face
hereof.  The Bank may appoint a different institution to serve as Calculation
Agent from time to time after the Original Issue Date of this Senior Note
without the consent of the holder and without notice.

     The Calculation Agent will determine the interest rate that takes effect on
an Interest Reset Date by reference to the Interest Determination Date.  Unless
otherwise specified on the face hereof, (i) if the Interest Rate Basis is not
LIBOR or the Treasury Rate, the Interest Determination Date will be the second
Business Day before the Interest Reset Date; (ii) if the Interest Rate Basis is
LIBOR, the Interest Determination Date will be the second London Business Day
(as defined below) preceding the Interest Reset Date; and (iii) if the Interest
Rate Basis is the

                                      -7-


Treasury Rate, the Interest Determination Date will be the day of the week in
which the Interest Reset Date falls on which treasury bills -- i.e., direct
obligations of the U.S. government -- would normally be auctioned. Treasury
bills are usually sold at auction on the Monday of each week, unless that day is
a legal holiday, in which case the auction is usually held on the following
Tuesday but may be held on the preceding Friday. If as the result of a legal
holiday an auction is held on the preceding Friday, that Friday will be the
Treasury Interest Determination Date relating to the Interest Reset Date
occurring in the next succeeding week. If the auction is held on a day that
would otherwise be an Interest Reset Date, then the Interest Reset Date will
instead be the first Business Day following the auction date.

     Unless the Interest Rate is LIBOR, the Calculation Agent will calculate the
interest rate that takes effect on a particular Interest Reset Date no later
than the corresponding Interest Calculation Date.  The Interest Calculation Date
will be the earlier of (i) the tenth calendar day after the Interest
Determination Date or, if that tenth calendar day is not a Business Day, the
next succeeding Business Day, and (ii) the Business Day immediately preceding
the Interest Payment Date or the Maturity Date on which the next payment of
interest will be due.  The Calculation Agent need not wait until the relevant
Interest Calculation Date to determine the interest rate if the rate information
it needs to make the determination is available from the relevant sources
sooner.

     For each Interest Reset Period, the Calculation Agent will calculate the
amount of accrued interest by multiplying the face amount of this Senior Note by
an accrued interest factor for the Interest Reset Period.  This factor will
equal the sum of the interest factors calculated for each day during the
Interest Reset Period.  The interest factor for each day will be expressed as a
decimal and will be calculated by dividing the interest rate (also expressed as
a decimal) applicable to that day (i) by 360, if the Interest Rate Basis is the
Commercial Paper Rate, the Prime Rate, LIBOR, the CD Rate or the Federal Funds
Rate, or (ii) by the actual number of days in the year, if the Interest Rate
Basis is the Treasury Rate or the CMT Rate.

                                      -8-


     Upon the request of the holder of this Senior Note, the Calculation Agent
will provide such holder with the interest rate then in effect for this Senior
Note and, if determined, the interest rate that will become effective on the
next Interest Reset Date.  The Calculation Agent's determination of any interest
rate, and its calculation of the amount of interest for any Interest Reset
Period, will be final and binding in the absence of manifest error.

     All percentages resulting from any calculation relating to this Senior Note
will be rounded upward or downward, as appropriate, to the next higher or lower
one hundred-thousandth of a percentage point.  For example, 9.876541% (or
 .09876541) would be rounded down to 9.87654% (or .0987654) and 9.876545% (or
 .09876545) would be rounded up to 9.87655% (or .0987655).  All amounts used in
or resulting from any calculation relating to this Senior Note will be rounded
upward or downward, as appropriate, to the nearest cent, with one-half cent or
more being rounded upward.

     In determining the Base Rate that applies this Senior Note during a
particular Interest Reset Period, the Calculation Agent may obtain rate quotes
from various banks or dealers active in the relevant market, as described in the
following subsections.  Those reference banks and dealers may include the
Calculation Agent itself, including the Bank, and its affiliates.

     Except as otherwise provided herein, the rate of interest on this Senior
Note for each Interest Reset Date will be the rate determined in accordance with
the provisions set forth under the applicable heading below corresponding to the
Interest Rate Basis specified on the face hereof.  Notwithstanding the
foregoing, the interest rate hereon shall not be greater than the Maximum
Interest Rate, if any, specified on the face hereof and shall not be lower than
the Minimum Interest Rate, if any, specified on the face hereof.  In addition,
the interest rate hereon will in no event be greater than the maximum rate
permitted by Illinois law, as the same may be modified by United States law of
general application.

     Commercial Paper Rate.  If the Interest Rate Basis of this Senior Note is
     ---------------------
the Commercial Paper Rate, this Senior Note will bear interest at a Base Rate
equal to the Commercial Paper Rate,

                                      -9-


as adjusted by the Spread or Spread Multiplier, if any, specified on the face
hereof.

     The Commercial Paper Rate will be the Money Market Yield (as defined below)
of the rate, for the relevant Interest Determination Date, for commercial paper
having the Index Maturity (as defined below) specified on the face of this
Senior Note, as published in H.15(519) (as defined below) under the heading
"Commercial Paper -- Nonfinancial."  If the Commercial Paper Rate cannot be
determined as described above, the following procedures will apply:

          (i)   If the rate described above does not appear in H.15(519) at 3:00
     P.M., New York City time, on the relevant Interest Calculation Date (unless
     the calculation is made earlier and the rate is available from that source
     at that time), then the Commercial Paper Rate will be the rate, for the
     relevant Interest Determination Date, for commercial paper having the Index
     Maturity specified on the face of this Senior Note, as published in H.15
     Daily Update (as defined below) or another recognized electronic source
     used for displaying that rate, under the heading "Commercial Paper --
     Nonfinancial."

          (ii)  If the rate described above does not appear in H.15(519), H.15
     Daily Update or another recognized electronic source at 3:00 P.M., New York
     City time, on the relevant Interest Calculation Date (unless the
     calculation is made earlier and the rate is available from one of those
     sources at that time), the Commercial Paper Rate will be the Money Market
     Yield of the arithmetic mean of the offered rates, as of 11:00 A.M., New
     York City time, on the relevant Interest Determination Date, by three
     leading U.S. dollar commercial paper dealers in New York City selected by
     the Calculation Agent for U.S. dollar commercial paper that has the
     relevant Index Maturity and is placed for an industrial issuer whose bond
     rating is "AA", or the equivalent, from a nationally recognized rating
     agency.

          (iii) If fewer than three dealers selected by the Calculation Agent
     are quoting as described above, the Commercial Paper Rate for the new
     Interest Reset Period will be the rate in effect for the prior Interest
     Reset Period.

                                     -10-


     LIBOR.  If the Interest Rate Basis of this Senior Note is LIBOR, this
     -----
Senior Note will bear interest at a Base Rate equal to LIBOR, as adjusted by the
Spread or Spread Multiplier, if any, specified on the face hereof.  LIBOR will
be the London interbank offered rate for deposits of U.S. dollars.  LIBOR will
be either (a) the offered rate appearing on the Telerate LIBOR Page (as defined
below) or (b) the arithmetic mean of the offered rates appearing on the Reuters
screen LIBOR Page (as defined below), unless that page by its terms cites only
one rate, in which case that rate; in either case, as of 11:00 A.M., London
time, on the relevant LIBOR Interest Determination Date, for deposits of U.S.
dollars having the relevant Index Maturity beginning on the relevant Interest
Reset Date.  If no reference page is specified on the face of this Senior Note,
the Telerate LIBOR Page will apply.  If LIBOR cannot be determined in this
manner, the following procedures will apply:

          (i)    If the Telerate LIBOR Page applies and the rate described above
     does not appear on that page, or if the Reuters Screen LIBOR Page applies
     and fewer than two of the rates described above appear on that page or no
     rate appears on any page on which only one rate normally appears, then
     LIBOR will be determined on the basis of the rates, at approximately 11:00
     A.M., London time, on the relevant LIBOR Interest Determination Date, at
     which deposits of U.S. dollars having the relevant Index Maturity,
     beginning on the relevant Interest Reset Date and in a Representative
     Amount (as defined below) are offered to prime banks in the London
     interbank market by four major banks in that market selected by the
     Calculation Agent.  The Calculation Agent will request the principal London
     office of each of these banks to provide a quotation of its rate.  If at
     least two quotations are provided, LIBOR for the relevant LIBOR Interest
     Determination Date will be the arithmetic mean of the quotations.

          (ii)   If fewer than two quotations are provided as described above,
     LIBOR for the relevant LIBOR Interest Determination Date will be the
     arithmetic mean of the rates for loans of U.S. dollars having the relevant
     Index Maturity, beginning on the relevant Interest Reset Date and in a
     Representative Amount to leading European banks quoted,

                                      -11-


     at approximately 11:00 A.M., New York City time, on that LIBOR Interest
     Determination Date, by three major banks in New York City selected by the
     Calculation Agent.

          (iii)  If fewer than three banks selected by the Calculation Agent are
     quoting as described above, LIBOR for the new Interest Reset Period will be
     the rate in effect for the prior Interest Reset Period.

     Treasury Rate.  If the Interest Rate Basis of this Senior Note is the
     -------------
Treasury Rate, this Senior Note will bear interest at a Base Rate equal to the
Treasury Rate, as adjusted by the Spread or Spread Multiplier, if any, specified
on the face hereof.

     The Treasury Rate will be the rate for the auction, on the relevant
Treasury Interest Determination Date, of treasury bills having the Index
Maturity specified in the on the face of this Senior Note, as that rate appears
on Telerate Page (as defined below) 56 or 57 under the heading "Investment
Rate."  If the Treasury Rate cannot be determined in this manner, the following
procedures will apply:

          (i)    If the rate described above does not appear on either page at
     3:00 P.M., New York City time, on the relevant Interest Calculation Date
     (unless the calculation is made earlier and the rate is available from that
     source at that time), the Treasury Rate will be the Bond Equivalent Yield
     (as defined below) of the rate, for the relevant Interest Determination
     Date, for the type of treasury bill described above, as published in H.15
     Daily Update or another recognized electronic source used for displaying
     that rate, under the heading "U.S. Government Securities/Treasury
     Bills/Auction High."

          (ii)   If the rate described in the prior paragraph does not appear in
     H.15 Daily Update or another recognized electronic source at 3:00 P.M., New
     York City time, on the relevant Interest Calculation Date (unless the
     calculation is made earlier and the rate is available from one of those
     sources at that time), the Treasury Rate will be the Bond Equivalent Yield
     of the auction rate, for the relevant Treasury Interest Determination Date
     and for treasury bills

                                      -12-


     of the kind described above, as announced by the U.S. Department of the
     Treasury.

          (iii)  If the auction rate described in the prior paragraph is not so
     announced by 3:00 P.M., New York City time, on the relevant Interest
     Calculation Date, or if no such auction is held for the relevant week, then
     the Treasury Rate will be the Bond Equivalent Yield of the rate, for the
     relevant Treasury Interest Determination Date and for treasury bills having
     a remaining maturity closest to the specified Index Maturity, as published
     in H.15(519) under the heading "U.S. Government Securities/Treasury
     Bills/Secondary Market."

          (iv)   If the rate described in the prior paragraph does not appear in
     H.15(519) at 3:00 P.M., New York City time, on the relevant Interest
     Calculation Date (unless the calculation is made earlier and the rate is
     available from one of those sources at that time), then the Treasury Rate
     will be the rate, for the relevant Treasury Interest Determination Date and
     for treasury bills having a remaining maturity closest to the specified
     Index Maturity, as published in H.15 Daily Update or another recognized
     electronic source used for displaying that rate, under the heading "U.S.
     Government Securities/Treasury Bills/Secondary Market."

          (v)    If the rate described in the prior paragraph does not appear in
     H.15 Daily Update or another recognized electronic source at 3:00 P.M., New
     York City time, on the relevant Interest Calculation Date (unless the
     calculation is made earlier and the rate is available from one of those
     sources at that time), the Treasury Rate will be the Bond Equivalent Yield
     of the arithmetic mean of the secondary market bid rates as of
     approximately 3:30 P.M., New York City time, on the relevant Treasury
     Interest Determination Date, of three primary U.S. government securities
     dealers in New York City selected by the Calculation Agent for the issue of
     treasury bills with a remaining maturity closest to the specified Index
     Maturity.

          (vi)   If fewer than three dealers selected by the Calculation Agent
     are quoting as described in the prior

                                      -13-


     paragraph, the Treasury Rate in effect for the new Interest Reset Period
     will be the rate in effect for the prior Interest Reset Period.

     CMT Rate.  If the Interest Rate Basis of this Senior Note is the CMT Rate,
     --------
this Senior Note will bear interest at a Base Rate equal to the CMT Rate, as
adjusted by the Spread or Spread Multiplier, if any, specified on the face
hereof.

     The CMT Rate will be the rate displayed on the Designated CMT Telerate Page
(as defined below) under the heading ". . . Treasury Constant Maturities . . .
Federal Reserve Board Release H.15 . . . Mondays Approximately 3:45 P.M.," under
the column for the Designated CMT Index Maturity (as defined below), as follows:
(a) if the Designated CMT Telerate Page is Telerate Page 7051, the rate for the
relevant Interest Determination Date, or (b) if the Designated CMT Telerate Page
is Telerate Page 7052, the weekly or monthly average, as specified on the face
of this Senior Note, for the week that ends immediately before the week in which
the relevant Interest Determination Date falls, or for the month that ends
immediately before the month in which the relevant Interest Determination Date
falls, as applicable.  If the CMT Rate cannot be determined in this manner, the
following procedures will apply:

          (i)    If the applicable rate described above is not displayed on the
     relevant Designated CMT Telerate Page at 3:00 P.M., New York City time, on
     the relevant Interest Calculation Date (unless the calculation is made
     earlier and the rate is available from that source at that time), then the
     CMT Rate will be the applicable treasury constant maturity rate described
     above--that is, for the Designated CMT Index Maturity and for either the
     relevant Interest Determination Date or the weekly or monthly average, as
     applicable--as published in H.15(519).

          (ii)   If the applicable rate described above does not appear in
     H.15(519) at 3:00 P.M., New York City time, on the relevant Interest
     Calculation Date (unless the calculation is made earlier and the rate is
     available from one of those sources at that time), then the CMT Rate will
     be the treasury constant maturity rate, or other U.S. treasury rate, for
     the Designated CMT Index Maturity and with reference to the relevant
     Interest Determination Date, that

                                      -14-


     (a) is published by the Board of Governors of the Federal Reserve System,
     or the U.S. Department of the Treasury, and (b) is determined by the
     Calculation Agent to be comparable to the applicable rate formerly
     displayed on the Designated CMT Telerate Page and published in H.15(519).

          (iii)    If the rate described in the prior paragraph does not appear
     at 3:00 P.M., New York City time, on the relevant Interest Calculation Date
     (unless the calculation is made earlier and the rate is available from one
     of those sources at that time), then the CMT Rate will be the yield to
     maturity of the arithmetic mean of the offered rates, as of approximately
     3:30 P.M., New York City time, on the relevant Interest Determination Date,
     of three primary U.S. government securities dealers in New York City
     selected by the Calculation Agent for the most recently issued treasury
     notes having an original maturity of approximately the Designated CMT Index
     Maturity and a remaining term to maturity of not less than the Designated
     CMT Index Maturity minus one year, and in a Representative Amount. In
     selecting these offered rates, the Calculation Agent will request
     quotations from five of these primary dealers and will disregard the
     highest quotation--or, if there is equality, one of the highest--and the
     lowest quotation--or, if there is equality, one of the lowest. Treasury
     notes are direct, non-callable, fixed rate obligations of the U.S.
     government.

          (iv)    If the Calculation Agent is unable to obtain three quotations
     of the kind described in the prior paragraph, the CMT rate will be the
     yield to maturity of the arithmetic mean of the offered rates, as of
     approximately 3:30 P.M., New York City time, on the relevant Interest
     Determination Date, of three primary U.S. government securities dealers in
     New York City selected by the Calculation Agent for treasury notes with an
     original maturity longer than the Designated CMT Index Maturity, with a
     remaining term to maturity closest to the Designated CMT Index Maturity and
     in a Representative Amount. In selecting these offered rates, the
     Calculation Agent will request quotations from five of these primary
     dealers and will disregard the highest quotation--or, if there is equality,
     one of the highest--and the lowest quotation--or, if there is equality, one
     of

                                      -15-


     the lowest. If two treasury notes with an original maturity longer than the
     Designated CMT Index Maturity have remaining terms to maturity that are
     equally close to the Designated CMT Index Maturity, the Calculation Agent
     will obtain quotations for the treasury note with the shorter remaining
     term to maturity.

          (v)    If fewer than five but more than two of these primary dealers
     are quoting as described in the prior paragraph, then the CMT Rate for the
     relevant Interest Determination Date will be based on the arithmetic mean
     of the offered rates so obtained, and neither the highest nor the lowest of
     those quotations will be disregarded.

          (vi)   If two or fewer primary dealers selected by the Calculation
     Agent are quoting as described above, the CMT Rate in effect for the new
     Interest Reset Period will be the rate in effect for the prior Interest
     Reset Period.

     CD Rate.  If the Interest Rate Basis of this Senior Note is the CD Rate,
     -------
this Senior Note will bear interest at a Base Rate equal to the CD Rate, as
adjusted by the Spread or Spread Multiplier, if any, specified on the face
hereof.

     The CD Rate will be the rate, on the relevant Interest Determination Date,
for negotiable U.S. dollar certificates of deposit having the Index Maturity
specified on the face of this Senior Note, as published in H.15(519) under the
heading "CDs (Secondary Market)."  If the CD Rate cannot be determined in this
manner, the following procedures will apply:

          (i)    If the rate described above does not appear in H.15(519) at
     3:00 P.M., New York City time, on the relevant Interest Calculation Date
     (unless the calculation is made earlier and the rate is available from that
     source at that time), then the CD Rate will be the rate, for the relevant
     Interest Determination Date, described above as published in H.15 Daily
     Update or another recognized electronic source used for displaying that
     rate, under the heading "CDs (Secondary Market)."

          (ii)   If the rate described above does not appear in H.15(519), H.15
     Daily Update or another recognized

                                      -16-


     electronic source at 3:00 P.M., New York City time, on the relevant
     Interest Calculation Date (unless the calculation is made earlier and the
     rate is available from one of those sources at that time), the CD Rate will
     be the arithmetic mean of the rates offered as of 10:00 A.M., New York City
     time, on the relevant Interest Determination Date, by three leading nonbank
     dealers in negotiable U.S. dollar certificates of deposit in New York City,
     as selected by the Calculation Agent for negotiable U.S. dollar
     certificates of deposit of major U.S. money center banks with a remaining
     maturity closest to the specified Index Maturity, and in a Representative
     Amount.

          (iii)  If fewer than three dealers selected by the Calculation Agent
     are quoting as described above, the CD Rate in effect for the new Interest
     Reset Period will be the rate in effect for the prior Interest Reset
     Period.

     Federal Funds Rate.  If the Interest Rate Basis of this Senior Note is the
     ------------------
Federal Funds Rate, this Senior Note will bear interest at a Base Rate equal to
the Federal Funds Rate, as adjusted by the Spread or Spread Multiplier, if any,
specified on the face hereof.

     The Federal Funds Rate will be the rate for U.S. dollar federal funds on
the relevant Interest Determination Date, as published in H.15(519) under the
heading "Federal Funds (Effective)," as that rate is displayed on Telerate Page
120.  If the Federal Funds Rate cannot be determined in this manner, the
following procedures will apply:

          (i)    If the rate described above is not displayed on Telerate Page
     120 at 3:00 P.M., New York City time, on the relevant Interest Calculation
     Date (unless the calculation is made earlier and the rate is available from
     that source at that time), then the Federal Funds Rate, for the relevant
     Interest Determination Date, will be the rate described above as published
     in H.15 Daily Update or another recognized electronic source used for
     displaying that rate, under the heading "Federal Funds (Effective)."

          (ii)   If the rate described above is not displayed on Telerate Page
     120 and does not appear in H.15 Daily Update

                                      -17-


     or another recognized electronic source at 3:00 P.M., New York City time,
     on the relevant Interest Calculation Date (unless the calculation is made
     earlier and the rate is available from one of those sources at that time),
     the Federal Funds Rate will be the arithmetic mean of the rates for the
     last transaction in overnight, U.S. dollar federal funds arranged, before
     9:00 A.M., New York City time, on the relevant Interest Determination Date,
     by three leading brokers of U.S. dollar federal funds transactions in New
     York City selected by the Calculation Agent.

          (iii)  If fewer than three brokers selected by the Calculation Agent
     are quoting as described above, the Federal Funds Rate in effect for the
     new Interest Reset Period will be the rate in effect for the prior Interest
     Reset Period.

     Prime Rate.  If the Interest Rate Basis of this Senior Note is the Prime
     ----------
Rate, this Senior Note will bear interest at a Base Rate equal to the Prime
Rate, as adjusted by the Spread or Spread Multiplier, if any, specified on the
face hereof.

     The Prime Rate will be the rate, for the relevant Interest Determination
Date, published in H.15(519) under the heading "Bank Prime Loan."  If the Prime
Rate cannot be determined as described above, the following procedures will
apply.

          (i)    If the rate described above does not appear in H.15(519) at
     3:00 P.M., New York City time, on the relevant Interest Calculation Date
     (unless the calculation is made earlier and the rate is available from that
     source at that time), then the Prime Rate will be the rate, for the
     relevant Interest Determination Date, as published in H.15 Daily Update or
     another recognized electronic source used for the purpose of displaying
     that rate, under the heading "Bank Prime Loan."

          (ii)   If the rate described above does not appear in H.15(519), H.15
     Daily Update
     or another recognized electronic source at 3:00 P.M., New York City time,
     on the relevant Interest Calculation Date (unless the calculation is made
     earlier and the rate is available from one of those sources at that time),
     then the Prime Rate will be the

                                      -18-


     arithmetic mean of the rates of interest publicly announced by each bank
     appearing on the Reuters Screen US PRIME 1 Page (as defined below) as that
     bank's prime rate or base lending rate, as of 11:00 A.M., New York City
     time, on the relevant Interest Determination Date.

          (iii)  If fewer than four of these rates appear on the Reuters Screen
     US PRIME 1 Page, the Prime Rate will be the arithmetic mean of the prime
     rates or base lending rates, as of the close of business on the relevant
     Interest Determination Date, of three major banks in New York City selected
     by the Calculation Agent.  For this purpose, the Calculation Agent will use
     rates quoted on the basis of the actual number of days in the year divided
     by a 360-day year.

          (iv)   If fewer than three banks selected by the Calculation Agent are
     quoting as described above, the Prime Rate for the new Interest Reset
     Period will be the rate in effect for the prior Interest Reset Period.

     Definitions of Terms Used in Interest Rate Bases.  The terms listed below
     ------------------------------------------------
are defined as follows:

     "Bond Equivalent Yield" means a yield expressed as a percentage and
calculated in accordance with the following formula:
               D x N       x 100
          ---------------
           360 - (D x M)

where (i) "D" means the annual rate for treasury bills quoted on a bank discount
basis and expressed as a decimal, (ii) "N" means the number of days in the year,
365 or 366, as the case may be, and (iii) "M" means the actual number of days in
the applicable Interest Reset Period.

     "Business Day" means, for purposes of calculating interest on this Senior
Note, a day that is a Monday, Tuesday, Wednesday, Thursday or Friday that is not
a day on which banking institutions in New York City generally are authorized or
obligated by law, regulation or executive order to close and, if the Interest
Rate Basis specified on the face hereof is LIBOR, is also a London Business Day.

                                      -19-


     "Designated CMT Index Maturity" means the Index Maturity for a Note having
as its Interest Rate Basis the CMT Rate and will be the original period to
maturity of a U.S. treasury security--either 1, 2, 3, 5, 7, 10, 20 or 30
years--specified in the applicable pricing supplement. If no such original
maturity period is so specified, the Designated CMT Index Maturity will be 2
years.

     "Designated CMT Telerate Page" means the Telerate Page specified on the
face of this Senior Note (if the Interest Rate Basis is the CMT Rate) that
displays treasury constant maturities as reported in H.15(519).  If no Telerate
Page is so specified, then the applicable page will be Telerate Page 7052.  If
Telerate Page 7052 applies but this Senior Note does not specify whether the
weekly or monthly average applies, the weekly average will apply.

     "H.15(519)" means the weekly statistical release entitled "Statistical
Release H.15 (519)," or any successor publication, published by the Board of
Governors of the Federal Reserve System.

     "H.15 Daily Update" means the daily update of H.15(519) available through
the world wide web site of the Board of Governors of the Federal Reserve System,
at http://www.bog.frb.fed.us/releases/h15/update or any successor site or
publication.

     "Index Maturity" means the period to maturity of the instrument or
obligation on which the interest rate formula is based, as specified on the face
of this Senior Note.

     "London Business Day" means any day on which dealings in U.S. dollars are
transacted in the London interbank market.

     "Money Market Yield" means a yield expressed as a percentage and calculated
in accordance with the following formula:

              D x 360     x 100
          ---------------
           360 - (D x M)

where (a) "D" means the annual rate for commercial paper quoted on a bank
discount basis and expressed as a decimal, and (b) "M"

                                      -20-


means the actual number of days in the relevant Interest Reset Period.

     "Representative Amount" means an amount that, in the Calculation Agent's
judgment, is representative of a single transaction in the relevant market at
the relevant time.

     "Reuters Screen LIBOR Page" means the display on the Reuters Monitor Money
Rates Service, or any successor service, on the page designated as "LIBO" or any
replacement page or pages on which London interbank rates of major banks for
U.S. dollars are displayed.

     "Reuters Screen US PRIME 1 Page" means the display on the "US PRIME 1" page
on the Reuters Monitor Money Rates Service, or any successor service, or any
replacement page or pages on that service, for the purpose of displaying prime
rates or base lending rates of major U.S. banks.

     "Telerate LIBOR Page" means Telerate Page 3750 or any replacement page or
pages on which London interbank rates of major banks for U.S. dollars are
displayed.

     "Telerate Page" means the display on Bridge Telerate, Inc., or any
successor service, on the page or pages specified in a Senior Note, or any
replacement page or pages on that service.

     References to particular headings on pages designated by the following
terms include any successor or replacement heading or headings as determined by
the Calculation Agent: CMT Telerate Page, H.15(519), H.15 Daily Update, Reuters
Screen LIBOR Page, Reuters Screen US PRIME 1 Page, Telerate LIBOR Page or
Telerate Page.

     If this Senior Note is an Original Issue Discount Note and if an Event of
Default with respect to the Senior Notes shall have occurred and be continuing,
the Default Amount (as defined hereafter) of this Senior Note may be declared
due and payable in the manner and with the effect provided herein.  The "Default
Amount" shall be equal to the adjusted issue price as of the first day of the
accrual period as determined under Treasury Regulation Section 1.1275-1(b) (or
successor regulation) under the United States Internal Revenue Code of 1986, as
amended, in

                                      -21-


which the date of acceleration occurs increased by the daily portion of the
original issue discount for each day in such accrual period ending on the date
of acceleration, as determined under Treasury Regulation Section 1.1275-1(b) (or
successor regulation) under the United States Internal Revenue Code of 1986, as
amended. Upon payment of (i) the amount of principal or premium, if any, so
declared due and payable and (ii) interest on any overdue principal and overdue
interest or premium, if any (in each case to the extent that the payment of such
interest shall be legally enforceable), all of the Bank's obligations in respect
of the payment of the principal of, and interest or premium, if any, on, this
Senior Note shall terminate.

     In case any Senior Note shall at any time become mutilated, destroyed, lost
or stolen and such Senior Note or evidence satisfactory to the Bank of the loss,
theft or destruction thereof (together with indemnity satisfactory to the Bank
and such other documents or proof as may be required in the premises) shall be
delivered to the Bank, a new Senior Note of like tenor will be issued by the
Bank in exchange for the Senior Note so mutilated, or in lieu of the Senior Note
so destroyed or lost or stolen.  All expenses and reasonable charges associated
with procuring the indemnity referred to above and with the preparation,
authentication and delivery of a new Senior Note shall be borne by the holder of
the Senior Note so mutilated, destroyed, lost or stolen.  If any Senior Note
which has matured or is about to mature shall become mutilated, destroyed, lost
or stolen, the Bank may, instead of issuing a substitute Senior Note, pay or
authorize the payment of the same (without surrender thereof except in the case
of a mutilated Senior Note) upon compliance by the holder thereof with the
provisions of this paragraph.

     No recourse shall be had for the payment of the principal of, premium, if
any, or interest on, this Senior Note, for any claim based hereon, or otherwise
in respect hereof, against any shareholder, employee, officer or director, as
such, past, present or future, of the Bank or of any successor corporation,
either directly or through the Bank or any successor corporation, whether by
virtue of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the

                                      -22-


consideration for the issue hereof, expressly waived and released.

     The occurrence of any of the following events shall constitute an "Event of
Default" with respect to this Senior Note: (i) default in the payment of any
interest with respect to this Senior Note when due, which continues for 30 days;
(ii) default in the payment of any principal of, or premium, if any, on, this
Senior Note when due; (iii) the entry by a court having jurisdiction in the
premises of (a) a decree or order for relief in respect of the Bank in an
involuntary case or proceeding under any applicable United States federal or
state bankruptcy, insolvency, reorganization or other similar law or (b) a
decree or order appointing a conservator, receiver, liquidator, assignee,
trustee, sequestrator or any other similar official of the Bank, or of
substantially all of the property of the Bank, or ordering the winding up or
liquidation of the affairs of the Bank, and the continuance of any such decree
or order for relief or any such other decree or order unstayed and in effect for
a period of 60 consecutive days; or (iv) the commencement by the Bank of a
voluntary case or proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated as bankrupt or insolvent, or the consent by the
Bank to the entry of a decree or order for relief in an involuntary case or
proceeding under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding, or the filing by the Bank of a
petition or answer or consent seeking reorganization or relief under any
applicable United States federal or state law, or the consent by the Bank to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Bank or of substantially all of the property of the Bank, or the
making by the Bank of an assignment for the benefit of creditors, or the taking
of corporate action by the Bank in furtherance of any such action.  If an Event
of Default shall occur and be continuing, the holder of this Senior Note may
declare the principal amount of, and accrued interest and premium, if any, on,
this Senior Note due and payable immediately by written notice to the Bank.
Upon such declaration and notice, such principal amount, accrued interest and
premium, if any,

                                      -23-


shall become due and payable seven calendar days after such notice. Any Event of
Default with respect to this Senior Note may be waived by the holder hereof.

     No provision of this Senior Note shall alter or impair the obligation of
the Bank, which is absolute and unconditional, to pay the principal, and
premium, if any, and interest on, this Senior Note in U.S. dollars at the times,
places and rate herein prescribed.

     The Bank shall cause to be kept at the corporate trust office of the Senior
Note Registrar designated below a register (the register maintained in such
corporate trust office or any other office or agency of the Bank in the Place of
Payment herein referred to as the "Senior Note Register") in which, subject to
such reasonable regulations as it may prescribe, the Bank shall provide for the
registration of the Senior Notes and of transfers of the Senior Notes.  The Bank
is hereby initially appointed "Senior Note Registrar" for the purposes of
registering the Senior Notes and transfers of the Senior Notes as herein
provided.

     The transfer of this Senior Note is registrable in the Senior Note
Register, upon surrender of this Senior Note for registration of transfer at the
office or agency of the Bank in the Place of Payment, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the Bank
and the Paying Agent duly executed by, the holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Senior Notes of like tenor,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.  Notwithstanding the
foregoing, the Bank shall not be required to register the transfer of any Senior
Note that has been called for redemption during a period beginning at the
opening of business fifteen calendar days before the date of mailing of a notice
of such redemption and ending at the close of business on the date of such
mailing.

     No service charge shall be made for any such registration of transfer or
exchange, but the Bank may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith.

                                      -24-


     The Senior Notes are issuable only in registered form without coupons in
minimum denominations of $250,000 and any integral multiple of $1,000 in excess
thereof.  Each owner of a beneficial interest in this Senior Note is required to
hold a beneficial interest in $250,000 principal amount or any integral multiple
of $1,000 in excess thereof of this Senior Note at all times.

     Prior to due presentment of this Senior Note for registration of transfer,
the Bank, the Paying Agent or any agent of the Bank or the Paying Agent may
treat the person in whose name this Senior Note is registered as the owner
hereof for all purposes, whether or not this Senior Note be overdue, and neither
the Bank, the Paying Agent nor any such agent shall be affected by notice to the
contrary.

     All notices to the Bank under this Senior Note shall be in writing and
addressed to the Bank at 50 South LaSalle Street, Chicago, Illinois 60675, or to
such other address of the Bank as the Bank may notify the holders of the Senior
Notes.

     This Senior Note shall be governed by, and construed in accordance with,
the laws of the State of Illinois.

     IN WITNESS WHEREOF, the Bank has caused this instrument to be duly
executed.

                                                  THE NORTHERN TRUST COMPANY



                                                  By:___________________________
                                                     Authorized Signatory

                                      -25-


                                 ABBREVIATIONS

          The following abbreviations, when used in the inscription on the face
of the within Senior Note, shall be construed as though they were written out in
full according to applicable laws or regulations.

          TEN COM - as tenants in common

          TEN ENT - as tenants by the entireties

          JT TEN  - as joint tenants with right of survivorship and not as
                    tenants in common

UNIF GIFT MIN ACT - ____________     Custodian     ____________
                       (Cust)                        (Minor)

                       under Uniform Gifts to Minors Act


                       _________________________________
                                    (State)

                   Additional abbreviations may also be used
                         though not in the above list.

                                      -26-


                                 ASSIGNMENT

          FOR VALVE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________

PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

                        ------------------------------
                        ------------------------------

______________________________

______________________________
(Please print or typewrite name and address,
including postal zip code, of assignee)

______________________________

the within Senior Note and all rights thereunder, and hereby irrevocably
constitutes and appoints ___

______________________________

______________________________
to transfer said Senior Note on the books of the Bank, with full power of
substitution in the premises.

Dated:________________________

                                             ___________________________________
                                             NOTICE: The signature to this
                                             assignment must correspond with the
                                             name as written upon the face of
                                             the within Senior Note in every
                                             particular, without alteration or
                                             enlargement or any change
                                             whatsoever.

                                      -27-


                           OPTION TO ELECT REPAYMENT

     The undersigned hereby irrevocably request(s) and instruct(s) the Bank to
repay this Senior Note (or portion hereof specified below) pursuant to its terms
and at a price equal to 100% of the principal amount hereof to be repaid,
together with accrued and unpaid interest hereon, payable to the date of
repayment, to the undersigned, at ______________________________________________
________________________________________________________________________________
(Please print or typewrite name and address of the undersigned)

     For this Senior Note to be repaid, the undersigned must give to the Paying
Agent at its offices located at 50 South LaSalle Street (Level BB-A), Chicago,
Illinois 60675, Attention: Securities Services, or at such other place or places
of which the Bank shall from time to time notify the holders of the Senior
Notes, not more than 60 days nor less than 30 days prior to the date of
repayment, this Senior Note with this "Option to Elect Repayment" form duly
completed.

     If less than the entire principal amount of this Senior Note is to be
repaid, specify the portion hereof (which shall be increments of $1,000) which
the holder elects to have repaid and specify the denomination or denominations
(which shall be $250,000 or an integral multiple of $1,000 in excess thereof) of
the Senior Notes to be issued to the holder for the portion of this Senior Note
not being repaid (in the absence of any such specification, one such Senior Note
will be issued for the portion not being repaid):


$_______________

Dated:__________

                                             ___________________________________
                                             NOTICE: The signature on this
                                             "Option to Elect Repayment" form
                                             must correspond with the name as
                                             written upon the face of the within
                                             Senior Note in every particular,
                                             without alteration or enlargement
                                             or any change whatsoever.

                                      -28-

EX-4.(II)

                                                                  EXHIBIT 4 (ii)


                                                                       Rev. 9/00

     UNLESS THIS SUBORDINATED NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE
BANK OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
SUBORDINATED NOTE ISSUED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR,
OR IN LIEU OF, THIS SUBORDINATED NOTE IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     IF THIS SUBORDINATED NOTE IS ISSUED WITH "ORIGINAL ISSUE DISCOUNT" FOR
PURPOSES OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THE
FOLLOWING SHALL BE COMPLETED: THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR
PURPOSES OF APPLYING SECTIONS 1272, 1273 AND 1275 OF THE UNITED STATES INTERNAL
REVENUE CODE OF 1986, AS AMENDED, TO THIS SUBORDINATED NOTE.  THE ISSUE DATE OF
THIS SUBORDINATED NOTE IS _____________.  THE ISSUE PRICE OF THIS SUBORDINATED
NOTE IS _____% OF ITS PRINCIPAL AMOUNT.  THE AMOUNT OF ORIGINAL ISSUE DISCOUNT
ON THIS SUBORDINATED NOTE IS $_________ PER $1,000 OF THE INITIAL PRINCIPAL
AMOUNT, THE YIELD TO MATURITY IS ____%, AND THE AMOUNT OF THE ORIGINAL ISSUE
DISCOUNT ALLOCABLE TO THE INITIAL SHORT ACCRUAL PERIOD, IF ANY, IS $_____ PER
$1,000 OF THE INITIAL PRINCIPAL AMOUNT, DETERMINED ON THE BASIS OF THE EXACT
METHOD.


No. SUB FLR-______________                                            REGISTERED
CUSIP NO.: _______________


                          THE NORTHERN TRUST COMPANY

                         GLOBAL SUBORDINATED BANK NOTE
                                (Floating Rate)


ORIGINAL ISSUE DATE:                             PRINCIPAL AMOUNT:

INITIAL BASE RATE:  ______%                      MATURITY DATE:

INTEREST RATE BASIS:                             INDEX MATURITY:


SPREAD AND/OR SPREAD MULTIPLIER:                 REGULAR RECORD DATES (If other
                                                 than the 15th day prior to each
                                                 Interest Payment Date):

MAXIMUM INTEREST RATE:                           MINIMUM INTEREST RATE:

INTEREST PAYMENT DATES:                          INTEREST PAYMENT PERIOD:

INTEREST RESET DATES:                            INTEREST RESET PERIOD:

INITIAL REDEMPTION DATE:                         ANNUAL REDEMPTION PERCENTAGE
                                                 REDUCTION:

INITIAL REDEMPTION PERCENTAGE:

ORIGINAL ISSUE DISCOUNT NOTE:                    OID AMOUNT:

Yes:  ______   No: _____

OTHER PROVISIONS:                                CALCULATION AGENT:


                                                 ALTERNATE RATE EVENT SPREAD:


     The Northern Trust Company, an Illinois banking corporation (the "Bank"),
for value received, hereby promises to pay to Cede & Co., or registered assigns,
the principal amount specified on the face hereof in United States Dollars on
the Maturity Date specified above and to pay interest thereon from the Original
Issue Date specified above or from the most recent interest payment date (or, if
the Interest Reset Period specified above is daily or weekly, from, and
including, the day following the most recent Regular Record Date) to which
interest on this Subordinated Note (or any predecessor Subordinated Note) has
been paid or made available for payment (each, an A"Interest Payment Date"), on
the Interest Payment Dates specified above and at maturity or upon earlier
redemption, if applicable, commencing on the first Interest Payment Date next
succeeding the Original Issue Date (or, if the Original Issue Date is between a
Regular Record Date and the Interest Payment Date immediately following such
Regular Record Date, on the second Interest Payment Date following the Original
Issue Date), at a rate per annum equal to the Initial Base Rate specified above,
as adjusted by the addition or subtraction of the Spread, if any, specified
above and/or by the multiplication by the Spread Multiplier, if any,


specified above, until the first Interest Reset Date following the Original
Issue Date and, on and after such Interest Reset Date, at the rate determined in
accordance with the provisions set forth herein, until the principal hereof is
paid or made available for payment, and (to the extent that the payment of such
interest shall be legally enforceable) at the last rate in effect prior to any
payment default on any overdue principal and premium, if any, and on any overdue
installment of interest. The interest so payable, and punctually paid or made
available for payment, on any Interest Payment Date will be paid to the person
in whose name this Subordinated Note (or any predecessor Subordinated Note) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the 15th calendar day (whether or not a Business Day
(as defined below)) before such Interest Payment Date (unless otherwise
specified on the face hereof); provided, however, that interest payable at
maturity or upon earlier redemption, if applicable, will be payable to the
person to whom principal shall be payable.

     Payment of principal of, and premium, if any, and interest on, this
Subordinated Note will be made in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.  The Bank will at all times appoint and maintain a paying agent
(the "Paying Agent") authorized by the Bank to pay the principal of, and
premium, if any, and interest on, this Subordinated Note on behalf of the Bank
and having an office or agency (the "Paying Agent Office") in The City of New
York or the City of Chicago, Illinois (the "Place of Payment"), where this
Subordinated Note may be presented or surrendered for payment and where notices,
designations or requests in respect of payments with respect to this
Subordinated Note may be served.  The Bank has initially appointed itself as
such Paying Agent, with the Paying Agent Office currently located at 50 South
LaSalle Street (Level BB-A), Chicago, Illinois 60675, Attention: Securities
Services.

     THIS SUBORDINATED NOTE IS A DIRECT, UNCONDITIONAL AND UNSECURED GENERAL
OBLIGATION OF THE BANK, DOES NOT EVIDENCE A DEPOSIT AND IS NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. THIS
SUBORDINATED NOTE IS SUBORDINATE TO THE CLAIMS OF DEPOSITORS AND GENERAL
CREDITORS OF THE BANK.

                                      -3-


     Payment of the principal of, and premium, if any, and interest on, this
Subordinated Note due at maturity or upon earlier redemption, if applicable,
will be made in immediately available funds upon presentation and surrender of
this Subordinated Note to the Paying Agent at the Paying Agent Office in the
Place of Payment; provided that this Subordinated Note is presented to the
Paying Agent in time for the Paying Agent to make such payment in accordance
with its normal procedures.  Payments of interest on this Subordinated Note
(other than at maturity or upon earlier redemption) will be made by wire
transfer to such account as has been appropriately designated to the Paying
Agent by the person entitled to such payments.

     This Subordinated Note is one of a duly authorized issue of Subordinated
Bank Notes due from five to fifteen years from date of issue of the Bank (herein
called the "Subordinated Notes").

     Unless otherwise indicated on the face hereof, if the rate of interest on
this Subordinated Note resets daily, weekly or monthly, the Interest Payment
Date for this Subordinated Note will be the third Wednesday of each month or the
third Wednesday of March, June, September and December of each year; if the rate
of interest on this Subordinated Note resets quarterly, the Interest Payment
Date for this Subordinated Note will be the third Wednesday of March, June,
September and December of each year; if the rate of interest on this
Subordinated Note resets semi-annually, the Interest Payment Date for this
Subordinated Note will be the third Wednesday of each of two months of each year
specified on the face hereof that are six months apart; and if the rate of
interest on this Subordinated Note resets annually, the Interest Payment Date
for this Subordinated Note will be the third Wednesday of the month specified on
the face hereof.  If any Interest Payment Date (unless it is also the Maturity
Date) for this Subordinated Note falls on a day that is not a Business Day, such
Interest Payment Date will be postponed to the next succeeding Business Day;
provided, however, that, if the Interest Rate Basis specified on the face hereof
is LIBOR and such next succeeding Business Day is in the next succeeding
calendar month, such Interest Payment Date (unless it is also the Maturity Date)
will be the immediately preceding Business Day.  If any Maturity Date or date of
earlier redemption or repayment of this Subordinated Note falls on a day that is
not a Business Day, the related payment of interest shall be made on the next

                                      -4-


succeeding Business Day with the same force and effect as if made on the date
such payment were due, and no interest shall accrue on the amount so payable for
the period from and after such Maturity Date or date of earlier redemption or
repayment.  "Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions in The City of New York or the City of Chicago,
Illinois generally are authorized or obligated by law or executive order to
close, and with respect to Subordinated Notes with respect to which the Interest
Rate Basis specified on the face hereof is LIBOR, any day on which dealings in
U.S. dollars are transacted in the London interbank market (a "London Business
Day").

     The indebtedness of the Bank evidenced by this Subordinated Note, including
principal and interest, is unsecured and subordinate and junior in right of
payment to the Bank's obligations to its depositors, its obligations under
bankers' acceptances and letters of credit, and its obligations to its other
creditors (including any obligations to any Federal Reserve Bank and the Federal
Deposit Insurance Corporation), whether now outstanding or hereafter incurred,
other than any obligations which rank on a parity with, or junior to, the
Subordinated Notes.  In the event of any insolvency proceeding, receivership,
conservatorship, reorganization, readjustment of debt, marshalling of assets and
liabilities or similar proceedings or any liquidation or winding-up of the Bank,
whether voluntary or involuntary, all such obligations (except obligations which
rank on a parity with, or junior to, the Subordinated Notes) shall be entitled
to be paid in full before any payment shall be made on account of the principal
of, or interest on, the Subordinated Notes.  In the event of any such
proceeding, after payment in full of all sums owing with respect to such prior
obligations, the holders of the Subordinated Notes, together with the holders of
any obligations of the Bank ranking on a parity with the Subordinated Notes,
shall be entitled to be paid, from the remaining assets of the Bank, the unpaid
principal of, and the unpaid interest on, the Subordinated Notes or such other
obligations before any payment or other distribution, whether in cash, property,
or otherwise, shall be made on account of any capital stock or any obligations
of the Bank ranking junior to the Subordinated Notes.

                                      -5-


     The Subordinated Notes shall rank on a parity with the $100,000,000
aggregate principal amount of 6.5% Subordinated Notes due 2003 issued by the
Bank in 1993, the $100,000,000 aggregate principal amount of 6.70% Subordinated
Notes due 2005 issued by the Bank in 1995, the $100,000,000 aggregate principal
amount of 7.30% Subordinated Notes due 2006 issued by the Bank in 1996, the
$100,000,000 aggregate principal amount of 6.25% Subordinated Notes due 2008
issued by the Bank in 1998, the $200,000,000 aggregate principal amount of 7.10%
Subordinated Notes due 2009 issued by the Bank in 1999 and such other
obligations which may be issued by the Bank which are specifically designated as
ranking on a parity with the Subordinated Notes by express provision in the
instruments creating or evidencing such obligations.

     This Subordinated Note will not be subject to any sinking fund.  If so
provided on the face of this Subordinated Note and subject to the approval of
the Federal Reserve Bank of Chicago, this Subordinated Note may be redeemed by
the Bank on and after the Initial Redemption Date, if any, specified on the face
hereof.  If no Initial Redemption Date is specified on the face hereof, this
Subordinated Note may not be redeemed prior to the Maturity Date.  On and after
the Initial Redemption Date, if any, and subject to the approval of the Federal
Reserve Bank of Chicago, this Subordinated Note may be redeemed at any time
either in whole or in part from time to time in increments of $1,000 (provided
that any remaining principal amount hereof shall be at least $250,000) at the
option of the Bank at the applicable Redemption Price (as defined below),
together with accrued and unpaid interest hereon at the applicable rate borne by
this Subordinated Note to the date of redemption (each such date, a "Redemption
Date"), on written notice given not more than 60 nor less than 30 calendar days
prior to the Redemption Date by the Bank to the registered holder hereof.
Whenever less than all the Subordinated Notes at any time outstanding are to be
redeemed, the terms of the Subordinated Notes to be so redeemed shall be
selected by the Bank. If less than all the Subordinated Notes with identical
terms at any time outstanding are to be redeemed, the Subordinated Notes to be
so redeemed shall be selected by the Paying Agent by lot or in any usual manner
approved by it.  In the event of redemption of this Subordinated Note in part
only, a new Subordinated Note for the unredeemed portion hereof shall be

                                      -6-


issued in the name of the holder hereof upon the surrender hereof.

     The "Redemption Price" shall initially be the Initial Redemption Percentage
specified on the face hereof of the principal amount of this Subordinated Note
to be redeemed and shall decline at each anniversary of the Initial Redemption
Date specified on the face hereof by the Annual Redemption Percentage Reduction,
if any, specified on the face hereof, of the principal amount to be redeemed
until the Redemption Price is 100% of such principal amount.

     This Subordinated Note will not be repayable at the option of the holder
hereof prior to maturity.

     The rate of interest on this Subordinated Note will be reset daily, weekly,
monthly, quarterly, semi-annually or annually (each such period, an "Interest
Reset Period" for this Subordinated Note, and the first calendar day of an
Interest Reset Period, an "Interest Reset Date"), as specified on the face
hereof.  Unless otherwise indicated on the face hereof, if this Subordinated
Note resets daily, the Interest Reset Date will be each Business Day; if this
Subordinated Note resets weekly and the Interest Rate Basis is not the Treasury
Rate, the Interest Reset Date will be the Wednesday of each week; if this
Subordinated Note resets weekly and the Interest Rate Basis is the Treasury
Rate, the Interest Reset Date will be the Tuesday of each week (except as
provided below); if this Subordinated Note resets monthly, the Interest Reset
Date will be the third Wednesday of each month; if this Subordinated Note resets
quarterly, the Interest Reset Date will be the third Wednesday of March, June,
September and December; if this Subordinated Note resets semi-annually, the
Interest Reset Date will be the third Wednesday of each of two months of each
year which are six months apart, as specified on the face hereof; and if this
Subordinated Note resets annually, the Interest Reset Date will be the third
Wednesday of one month of each year, as specified on the face hereof; provided,
however, that the base rate in effect from the Original Issue Date to the first
Interest Reset Date will be the Initial Base Rate specified on the face hereof.
If any Interest Reset Date with respect to this Subordinated Note would
otherwise be a day that is not a Business Day, such Interest Reset Date will be
the next succeeding Business Day, except that in the case that the Interest Rate
Basis specified on the face hereof is

                                      -7-


LIBOR, if such Business Day is in the next succeeding calendar month, such
Interest Reset Date will be the immediately preceding Business Day.

     All calculations relating to this Subordinated Note will be made by the
"Calculation Agent."  The Bank will serve as Calculation Agent for this
Subordinated Note as of its Original Issue Date, unless otherwise specified on
the face hereof.  The Bank may appoint a different institution to serve as
Calculation Agent from time to time after the Original Issue Date of this
Subordinated Note without the consent of the holder and without notice.

     The Calculation Agent will determine the interest rate that takes effect on
an Interest Reset Date by reference to the Interest Determination Date.  Unless
otherwise specified on the face hereof, (i) if the Interest Rate Basis is not
LIBOR or the Treasury Rate, the Interest Determination Date will be the second
Business Day before the Interest Reset Date; (ii) if the Interest Rate Basis is
LIBOR, the Interest Determination Date will be the second London Business Day
(as defined below) preceding the Interest Reset Date; and (iii) if the Interest
Rate Basis is the Treasury Rate, the Interest Determination Date will be the day
of the week in which the Interest Reset Date falls on which treasury
bills--i.e., direct obligations of the U.S. government--would normally be
auctioned. Treasury bills are usually sold at auction on the Monday of each
week, unless that day is a legal holiday, in which case the auction is usually
held on the following Tuesday but may be held on the preceding Friday. If as the
result of a legal holiday an auction is held on the preceding Friday, that
Friday will be the Treasury Interest Determination Date relating to the Interest
Reset Date occurring in the next succeeding week. If the auction is held on a
day that would otherwise be an Interest Reset Date, then the Interest Reset Date
will instead be the first Business Day following the auction date.

     Unless the Interest Rate is LIBOR, the Calculation Agent will calculate the
interest rate that takes effect on a particular Interest Reset Date no later
than the corresponding Interest Calculation Date.  The Interest Calculation Date
will be the earlier of (i) the tenth calendar day after the Interest
Determination Date or, if that tenth calendar day is not a

                                      -8-


Business Day, the next succeeding Business Day, and (ii) the Business Day
immediately preceding the Interest Payment Date or the Maturity Date on which
the next payment of interest will be due. The Calculation Agent need not wait
until the relevant Interest Calculation Date to determine the interest rate if
the rate information it needs to make the determination is available from the
relevant sources sooner.

     For each Interest Reset Period, the Calculation Agent will calculate the
amount of accrued interest by multiplying the face amount of this Subordinated
Note by an accrued interest factor for the Interest Reset Period.  This factor
will equal the sum of the interest factors calculated for each day during the
Interest Reset Period.  The interest factor for each day will be expressed as a
decimal and will be calculated by dividing the interest rate (also expressed as
a decimal) applicable to that day (i) by 360, if the Interest Rate Basis is the
Commercial Paper Rate, the Prime Rate, LIBOR, the CD Rate or the Federal Funds
Rate, or (ii) by the actual number of days in the year, if the Interest Rate
Basis is the Treasury Rate or the CMT Rate.

     Upon the request of the holder of this Subordinated Note, the Calculation
Agent will provide such holder with the interest rate then in effect for this
Subordinated Note and, if determined, the interest rate that will become
effective on the next Interest Reset Date.  The Calculation Agent's
determination of any interest rate, and its calculation of the amount of
interest for any Interest Reset Period, will be final and binding in the absence
of manifest error.

     All percentages resulting from any calculation relating to this
Subordinated Note will be rounded upward or downward, as appropriate, to the
next higher or lower one hundred-thousandth of a percentage point.  For example,
9.876541% (or .09876541) would be rounded down to 9.87654% (or .0987654) and
9.876545% (or .09876545) would be rounded up to 9.87655% (or .0987655).  All
amounts used in or resulting from any calculation relating to this Subordinated
Note will be rounded upward or downward, as appropriate, to the nearest cent,
with one-half cent or more being rounded upward.

     In determining the Base Rate that applies this Subordinated Note during a
particular Interest Reset Period, the Calculation

                                      -9-


Agent may obtain rate quotes from various banks or dealers active in the
relevant market, as described in the following subsections. Those reference
banks and dealers may include the Calculation Agent itself, including the Bank,
and its affiliates.

     Except as otherwise provided herein, the rate of interest on this
Subordinated Note for each Interest Reset Date will be the rate determined in
accordance with the provisions set forth under the applicable heading below
corresponding to the Interest Rate Basis specified on the face hereof.
Notwithstanding the foregoing, the interest rate hereon shall not be greater
than the Maximum Interest Rate, if any, specified on the face hereof and shall
not be lower than the Minimum Interest Rate, if any, specified on the face
hereof.  In addition, the interest rate hereon will in no event be greater than
the maximum rate permitted by Illinois law, as the same may be modified by
United States law of general application.

     Commercial Paper Rate.  If the Interest Rate Basis of this Subordinated
     ---------------------
Note is the Commercial Paper Rate, this Subordinated Note will bear interest at
a Base Rate equal to the Commercial Paper Rate, as adjusted by the Spread or
Spread Multiplier, if any, specified on the face hereof.

     The Commercial Paper Rate will be the Money Market Yield (as defined below)
of the rate, for the relevant Interest Determination Date, for commercial paper
having the Index Maturity (as defined below) specified on the face of this
Subordinated Note, as published in H.15(519) (as defined below) under the
heading "Commercial Paper--Nonfinancial." If the Commercial Paper Rate cannot be
determined as described above, the following procedures will apply:

          (i) If the rate described above does not appear in H.15(519) at 3:00
     P.M., New York City time, on the relevant Interest Calculation Date (unless
     the calculation is made earlier and the rate is available from that source
     at that time), then the Commercial Paper Rate will be the rate, for the
     relevant Interest Determination Date, for commercial paper having the Index
     Maturity specified on the face of this Subordinated Note, as published in
     H.15 Daily Update (as defined below) or another recognized electronic
     source used for displaying that rate, under the heading "Commercial
     Paper--Nonfinancial."

                                     -10-


          (ii)   If the rate described above does not appear in H.15(519), H.15
     Daily Update or another recognized electronic source at 3:00 P.M., New York
     City time, on the relevant Interest Calculation Date (unless the
     calculation is made earlier and the rate is available from one of those
     sources at that time), the Commercial Paper Rate will be the Money Market
     Yield of the arithmetic mean of the offered rates, as of 11:00 A.M., New
     York City time, on the relevant Interest Determination Date, by three
     leading U.S. dollar commercial paper dealers in New York City selected by
     the Calculation Agent for U.S. dollar commercial paper that has the
     relevant Index Maturity and is placed for an industrial issuer whose bond
     rating is "AA", or the equivalent, from a nationally recognized rating
     agency.

          (iii)  If fewer than three dealers selected by the Calculation Agent
     are quoting as described above, the Commercial Paper Rate for the new
     Interest Reset Period will be the rate in effect for the prior Interest
     Reset Period.

     LIBOR.   If the Interest Rate Basis of this Subordinated Note is LIBOR,
     -----
this Subordinated Note will bear interest at a Base Rate equal to LIBOR, as
adjusted by the Spread or Spread Multiplier, if any, specified on the face
hereof. LIBOR will be the London interbank offered rate for deposits of U.S.
dollars. LIBOR will be either (a) the offered rate appearing on the Telerate
LIBOR Page (as defined below) or (b) the arithmetic mean of the offered rates
appearing on the Reuters screen LIBOR Page (as defined below), unless that page
by its terms cites only one rate, in which case that rate; in either case, as of
11:00 A.M., London time, on the relevant LIBOR Interest Determination Date, for
deposits of U.S. dollars having the relevant Index Maturity beginning on the
relevant Interest Reset Date. If no reference page is specified on the face of
this Subordinated Note, the Telerate LIBOR Page will apply. If LIBOR cannot be
determined in this manner, the following procedures will apply:

          (i) If the Telerate LIBOR Page applies and the rate described above
     does not appear on that page, or if the Reuters Screen LIBOR Page applies
     and fewer than two of the rates described above appear on that page or no
     rate appears on any page on which only one rate normally appears, then

                                      -11-


     LIBOR will be determined on the basis of the rates, at approximately 11:00
     A.M., London time, on the relevant LIBOR Interest Determination Date, at
     which deposits of U.S. dollars having the relevant Index Maturity,
     beginning on the relevant Interest Reset Date and in a Representative
     Amount (as defined below) are offered to prime banks in the London
     interbank market by four major banks in that market selected by the
     Calculation Agent.  The Calculation Agent will request the principal London
     office of each of these banks to provide a quotation of its rate.  If at
     least two quotations are provided, LIBOR for the relevant LIBOR Interest
     Determination Date will be the arithmetic mean of the quotations.

          (ii) If fewer than two quotations are provided as described above,
     LIBOR for the relevant LIBOR Interest Determination Date will be the
     arithmetic mean of the rates for loans of U.S. dollars having the relevant
     Index Maturity, beginning on the relevant Interest Reset Date and in a
     Representative Amount to leading European banks quoted, at approximately
     11:00 A.M., New York City time, on that LIBOR Interest Determination Date,
     by three major banks in New York City selected by the Calculation Agent.

          (iii)  If fewer than three banks selected by the Calculation Agent are
     quoting as described above, LIBOR for the new Interest Reset Period will be
     the rate in effect for the prior Interest Reset Period.

     Treasury Rate.  If the Interest Rate Basis of this Subordinated Note is the
     -------------
Treasury Rate, this Subordinated Note will bear interest at a Base Rate equal to
the Treasury Rate, as adjusted by the Spread or Spread Multiplier, if any,
specified on the face hereof.

     The Treasury Rate will be the rate for the auction, on the relevant
Treasury Interest Determination Date, of treasury bills having the Index
Maturity specified in the on the face of this Subordinated Note, as that rate
appears on Telerate Page (as defined below) 56 or 57 under the heading
"Investment Rate."  If the Treasury Rate cannot be determined in this manner,
the following procedures will apply:

                                      -12-


          (i)    If the rate described above does not appear on either page at
     3:00 P.M., New York City time, on the relevant Interest Calculation Date
     (unless the calculation is made earlier and the rate is available from that
     source at that time), the Treasury Rate will be the Bond Equivalent Yield
     (as defined below) of the rate, for the relevant Interest Determination
     Date, for the type of treasury bill described above, as published in H.15
     Daily Update or another recognized electronic source used for displaying
     that rate, under the heading "U.S. Government Securities/Treasury
     Bills/Auction High."

          (ii)   If the rate described in the prior paragraph does not appear in
     H.15 Daily Update or another recognized electronic source at 3:00 P.M., New
     York City time, on the relevant Interest Calculation Date (unless the
     calculation is made earlier and the rate is available from one of those
     sources at that time), the Treasury Rate will be the Bond Equivalent Yield
     of the auction rate, for the relevant Treasury Interest Determination Date
     and for treasury bills of the kind described above, as announced by the
     U.S. Department of the Treasury.

          (iii)  If the auction rate described in the prior paragraph is not so
     announced by 3:00 P.M., New York City time, on the relevant Interest
     Calculation Date, or if no such auction is held for the relevant week, then
     the Treasury Rate will be the Bond Equivalent Yield of the rate, for the
     relevant Treasury Interest Determination Date and for treasury bills having
     a remaining maturity closest to the specified Index Maturity, as published
     in H.15(519) under the heading "U.S. Government Securities/Treasury
     Bills/Secondary Market."

          (iv)   If the rate described in the prior paragraph does not appear in
     H.15(519) at 3:00 P.M., New York City time, on the relevant Interest
     Calculation Date (unless the calculation is made earlier and the rate is
     available from one of those sources at that time), then the Treasury Rate
     will be the rate, for the relevant Treasury Interest Determination Date and
     for treasury bills having a remaining maturity closest to the specified
     Index Maturity, as published in H.15 Daily Update or another recognized
     electronic source used for displaying that rate, under the

                                      -13-


     heading "U.S. Government Securities/Treasury Bills/Secondary Market."

          (v)    If the rate described in the prior paragraph does not appear in
     H.15 Daily Update or another recognized electronic source at 3:00 P.M., New
     York City time, on the relevant Interest Calculation Date (unless the
     calculation is made earlier and the rate is available from one of those
     sources at that time), the Treasury Rate will be the Bond Equivalent Yield
     of the arithmetic mean of the secondary market bid rates as of
     approximately 3:30 P.M., New York City time, on the relevant Treasury
     Interest Determination Date, of three primary U.S. government securities
     dealers in New York City selected by the Calculation Agent for the issue of
     treasury bills with a remaining maturity closest to the specified Index
     Maturity.

          (vi)   If fewer than three dealers selected by the Calculation Agent
     are quoting as described in the prior paragraph, the Treasury Rate in
     effect for the new Interest Reset Period will be the rate in effect for the
     prior Interest Reset Period.

     CMT Rate.  If the Interest Rate Basis of this Subordinated Note is the CMT
     --------
Rate, this Subordinated Note will bear interest at a Base Rate equal to the CMT
Rate, as adjusted by the Spread or Spread Multiplier, if any, specified on the
face hereof.

     The CMT Rate will be the rate displayed on the Designated CMT Telerate Page
(as defined below) under the heading ". . . Treasury Constant Maturities . . .
Federal Reserve Board Release H.15 . . . Mondays Approximately 3:45 P.M.," under
the column for the Designated CMT Index Maturity (as defined below), as follows:
(a) if the Designated CMT Telerate Page is Telerate Page 7051, the rate for the
relevant Interest Determination Date, or (b) if the Designated CMT Telerate Page
is Telerate Page 7052, the weekly or monthly average, as specified on the face
of this Subordinated Note, for the week that ends immediately before the week in
which the relevant Interest Determination Date falls, or for the month that ends
immediately before the month in which the relevant Interest Determination Date
falls, as applicable.  If the CMT Rate cannot be determined in this manner, the
following procedures will apply:

                                      -14-


          (i)    If the applicable rate described above is not displayed on the
     relevant Designated CMT Telerate Page at 3:00 P.M., New York City time, on
     the relevant Interest Calculation Date (unless the calculation is made
     earlier and the rate is available from that source at that time), then the
     CMT Rate will be the applicable treasury constant maturity rate described
     above--that is, for the Designated CMT Index Maturity and for either the
     relevant Interest Determination Date or the weekly or monthly average, as
     applicable--as published in H.15(519).

          (ii)   If the applicable rate described above does not appear in
     H.15(519) at 3:00 P.M., New York City time, on the relevant Interest
     Calculation Date (unless the calculation is made earlier and the rate is
     available from one of those sources at that time), then the CMT Rate will
     be the treasury constant maturity rate, or other U.S. treasury rate, for
     the Designated CMT Index Maturity and with reference to the relevant
     Interest Determination Date, that (a) is published by the Board of
     Governors of the Federal Reserve System, or the U.S. Department of the
     Treasury, and (b) is determined by the Calculation Agent to be comparable
     to the applicable rate formerly displayed on the Designated CMT Telerate
     Page and published in H.15(519).

          (iii)  If the rate described in the prior paragraph does not appear at
     3:00 P.M., New York City time, on the relevant Interest Calculation Date
     (unless the calculation is made earlier and the rate is available from one
     of those sources at that time), then the CMT Rate will be the yield to
     maturity of the arithmetic mean of the offered rates, as of approximately
     3:30 P.M., New York City time, on the relevant Interest Determination Date,
     of three primary U.S. government securities dealers in New York City
     selected by the Calculation Agent for the most recently issued treasury
     notes having an original maturity of approximately the Designated CMT Index
     Maturity and a remaining term to maturity of not less than the Designated
     CMT Index Maturity minus one year, and in a Representative Amount.  In
     selecting these offered rates, the Calculation Agent will request
     quotations from five of these primary dealers and will disregard the
     highest quotation--or, if there is equality, one of the highest--and the
     lowest quotation--

                                      -15-


     or, if there is equality, one of the lowest. Treasury notes are direct,
     non-callable, fixed rate obligations of the U.S. government.

          (iv)   If the Calculation Agent is unable to obtain three quotations
     of the kind described in the prior paragraph, the CMT rate will be the
     yield to maturity of the arithmetic mean of the offered rates, as of
     approximately 3:30 P.M., New York City time, on the relevant Interest
     Determination Date, of three primary U.S. government securities dealers in
     New York City selected by the Calculation Agent for treasury notes with an
     original maturity longer than the Designated CMT Index Maturity, with a
     remaining term to maturity closest to the Designated CMT Index Maturity and
     in a Representative Amount. In selecting these offered rates, the
     Calculation Agent will request quotations from five of these primary
     dealers and will disregard the highest quotation--or, if there is equality,
     one of the highest--and the lowest quotation--or, if there is equality, one
     of the lowest. If two treasury notes with an original maturity longer than
     the Designated CMT Index Maturity have remaining terms to maturity that are
     equally close to the Designated CMT Index Maturity, the Calculation Agent
     will obtain quotations for the treasury note with the shorter remaining
     term to maturity.

          (v)    If fewer than five but more than two of these primary dealers
     are quoting as described in the prior paragraph, then the CMT Rate for the
     relevant Interest Determination Date will be based on the arithmetic mean
     of the offered rates so obtained, and neither the highest nor the lowest of
     those quotations will be disregarded.

          (vi)   If two or fewer primary dealers selected by the Calculation
     Agent are quoting as described above, the CMT Rate in effect for the new
     Interest Reset Period will be the rate in effect for the prior Interest
     Reset Period.

     CD Rate.  If the Interest Rate Basis of this Subordinated Note is the CD
     -------
Rate, this Subordinated Note will bear interest at a Base Rate equal to the CD
Rate, as adjusted by the Spread or Spread Multiplier, if any, specified on the
face hereof.

                                      -16-


     The CD Rate will be the rate, on the relevant Interest Determination Date,
for negotiable U.S. dollar certificates of deposit having the Index Maturity
specified on the face of this Subordinated Note, as published in H.15(519) under
the heading "CDs (Secondary Market)."  If the CD Rate cannot be determined in
this manner, the following procedures will apply:

          (i)    If the rate described above does not appear in H.15(519) at
     3:00 P.M., New York City time, on the relevant Interest Calculation Date
     (unless the calculation is made earlier and the rate is available from that
     source at that time), then the CD Rate will be the rate, for the relevant
     Interest Determination Date, described above as published in H.15 Daily
     Update or another recognized electronic source used for displaying that
     rate, under the heading "CDs (Secondary Market)."

          (ii)   If the rate described above does not appear in H.15(519), H.15
     Daily Update or another recognized electronic source at 3:00 P.M., New York
     City time, on the relevant Interest Calculation Date (unless the
     calculation is made earlier and the rate is available from one of those
     sources at that time), the CD Rate will be the arithmetic mean of the rates
     offered as of 10:00 A.M., New York City time, on the relevant Interest
     Determination Date, by three leading nonbank dealers in negotiable U.S.
     dollar certificates of deposit in New York City, as selected by the
     Calculation Agent for negotiable U.S. dollar certificates of deposit of
     major U.S. money center banks with a remaining maturity closest to the
     specified Index Maturity, and in a Representative Amount.

          (iii)  If fewer than three dealers selected by the Calculation Agent
     are quoting as described above, the CD Rate in effect for the new Interest
     Reset Period will be the rate in effect for the prior Interest Reset
     Period.

     Federal Funds Rate.  If the Interest Rate Basis of this Subordinated Note
     ------------------
is the Federal Funds Rate, this Subordinated Note will bear interest at a Base
Rate equal to the Federal Funds Rate, as adjusted by the Spread or Spread
Multiplier, if any, specified on the face hereof.

                                      -17-


     The Federal Funds Rate will be the rate for U.S. dollar federal funds on
the relevant Interest Determination Date, as published in H.15(519) under the
heading "Federal Funds (Effective)," as that rate is displayed on Telerate Page
120.  If the Federal Funds Rate cannot be determined in this manner, the
following procedures will apply:

          (i)    If the rate described above is not displayed on Telerate Page
     120 at 3:00 P.M., New York City time, on the relevant Interest Calculation
     Date (unless the calculation is made earlier and the rate is available from
     that source at that time), then the Federal Funds Rate, for the relevant
     Interest Determination Date, will be the rate described above as published
     in H.15 Daily Update or another recognized electronic source used for
     displaying that rate, under the heading "Federal Funds (Effective)."

          (ii)   If the rate described above is not displayed on Telerate Page
     120 and does not appear in H.15 Daily Update or another recognized
     electronic source at 3:00 P.M., New York City time, on the relevant
     Interest Calculation Date (unless the calculation is made earlier and the
     rate is available from one of those sources at that time), the Federal
     Funds Rate will be the arithmetic mean of the rates for the last
     transaction in overnight, U.S. dollar federal funds arranged, before 9:00
     A.M., New York City time, on the relevant Interest Determination Date, by
     three leading brokers of U.S. dollar federal funds transactions in New York
     City selected by the Calculation Agent.

          (iii)  If fewer than three brokers selected by the Calculation Agent
     are quoting as described above, the Federal Funds Rate in effect for the
     new Interest Reset Period will be the rate in effect for the prior Interest
     Reset Period.

     Prime Rate. If the Interest Rate Basis of this Subordinated Note is the
     ----------
Prime Rate, this Subordinated Note will bear interest at a Base Rate equal to
the Prime Rate, as adjusted by the Spread or Spread Multiplier, if any,
specified on the face hereof.

     The Prime Rate will be the rate, for the relevant Interest Determination
Date, published in H.15(519) under the heading

                                      -18-


"Bank Prime Loan."  If the Prime Rate cannot be determined as described above,
the following procedures will apply.

          (i)    If the rate described above does not appear in H.15(519) at
     3:00 P.M., New York City time, on the relevant Interest Calculation Date
     (unless the calculation is made earlier and the rate is available from that
     source at that time), then the Prime Rate will be the rate, for the
     relevant Interest Determination Date, as published in H.15 Daily Update or
     another recognized electronic source used for the purpose of displaying
     that rate, under the heading "Bank Prime Loan."

          (ii)   If the rate described above does not appear in H.15(519), H.15
     Daily Update or another recognized electronic source at 3:00 P.M., New York
     City time, on the relevant Interest Calculation Date (unless the
     calculation is made earlier and the rate is available from one of those
     sources at that time), then the Prime Rate will be the arithmetic mean of
     the rates of interest publicly announced by each bank appearing on the
     Reuters Screen US PRIME 1 Page (as defined below) as that bank's prime rate
     or base lending rate, as of 11:00 A.M., New York City time, on the relevant
     Interest Determination Date.

          (iii)  If fewer than four of these rates appear on the Reuters Screen
     US PRIME 1 Page, the Prime Rate will be the arithmetic mean of the prime
     rates or base lending rates, as of the close of business on the relevant
     Interest Determination Date, of three major banks in New York City selected
     by the Calculation Agent.  For this purpose, the Calculation Agent will use
     rates quoted on the basis of the actual number of days in the year divided
     by a 360-day year.

          (iv)   If fewer than three banks selected by the Calculation Agent are
     quoting as described above, the Prime Rate for the new Interest Reset
     Period will be the rate in effect for the prior Interest Reset Period.

     Definitions of Terms Used in Interest Rate Bases.  The terms listed below
     ------------------------------------------------
are defined as follows:

                                      -19-


     "Bond Equivalent Yield" means a yield expressed as a percentage and
calculated in accordance with the following formula:
                  D x N       x 100
             ---------------
              360 - (D x M)

where (i) "D" means the annual rate for treasury bills quoted on a bank discount
basis and expressed as a decimal, (ii) "N" means the number of days in the year,
365 or 366, as the case may be, and (iii) "M" means the actual number of days in
the applicable Interest Reset Period.

     "Business Day" means, for purposes of calculating interest on this
Subordinated Note, a day that is a Monday, Tuesday, Wednesday, Thursday or
Friday that is not a day on which banking institutions in New York City
generally are authorized or obligated by law, regulation or executive order to
close and, if the Interest Rate Basis specified on the face hereof is LIBOR, is
also a London Business Day.

     "Designated CMT Index Maturity" means the Index Maturity for a Note having
as its Interest Rate Basis the CMT Rate and will be the original period to
maturity of a U.S. treasury security--either 1, 2, 3, 5, 7, 10, 20 or 30
years--specified in the applicable pricing supplement. If no such original
maturity period is so specified, the Designated CMT Index Maturity will be 2
years.

     "Designated CMT Telerate Page" means the Telerate Page specified on the
face of this Subordinated Note (if the Interest Rate Basis is the CMT Rate) that
displays treasury constant maturities as reported in H.15(519).  If no Telerate
Page is so specified, then the applicable page will be Telerate Page 7052.  If
Telerate Page 7052 applies but this Subordinated Note does not specify whether
the weekly or monthly average applies, the weekly average will apply.

     "H.15(519)" means the weekly statistical release entitled "Statistical
Release H.15 (519)," or any successor publication, published by the Board of
Governors of the Federal Reserve System.

                                      -20-


     "H.15 Daily Update" means the daily update of H.15(519) available through
the world wide web site of the Board of Governors of the Federal Reserve System,
at http://www.bog.frb.fed.us/releases/h15/update or any successor site or
publication.

     "Index Maturity" means the period to maturity of the instrument or
obligation on which the interest rate formula is based, as specified on the face
of this Subordinated Note.

     "London Business Day" means any day on which dealings in U.S. dollars are
transacted in the London interbank market.

     "Money Market Yield" means a yield expressed as a percentage and calculated
in accordance with the following formula:

                  D x 360     x 100
             ---------------
              360 - (D x M)

where (a) "D" means the annual rate for commercial paper quoted on a bank
discount basis and expressed as a decimal, and (b) "M" means the actual number
of days in the relevant Interest Reset Period.

     "Representative Amount" means an amount that, in the Calculation Agent's
judgment, is representative of a single transaction in the relevant market at
the relevant time.

     "Reuters Screen LIBOR Page" means the display on the Reuters Monitor Money
Rates Service, or any successor service, on the page designated as "LIBO" or any
replacement page or pages on which London interbank rates of major banks for
U.S. dollars are displayed.

     "Reuters Screen US PRIME 1 Page" means the display on the "US PRIME 1" page
on the Reuters Monitor Money Rates Service, or any successor service, or any
replacement page or pages on that service, for the purpose of displaying prime
rates or base lending rates of major U.S. banks.

                                      -21-


     "Telerate LIBOR Page" means Telerate Page 3750 or any replacement page or
pages on which London interbank rates of major banks for U.S. dollars are
displayed.

     "Telerate Page" means the display on Bridge Telerate, Inc., or any
successor service, on the page or pages specified in a Subordinated Note, or any
replacement page or pages on that service.

     References to particular headings on pages designated by the following
terms include any successor or replacement heading or headings as determined by
the Calculation Agent: CMT Telerate Page, H.15(519), H.15 Daily Update, Reuters
Screen LIBOR Page, Reuters Screen US PRIME 1 Page, Telerate LIBOR Page or
Telerate Page.

     If this Subordinated Note is an Original Issue Discount Note and if an
Event of Default with respect to this Subordinated Note shall have occurred and
be continuing, the Default Amount (as defined hereafter) of this Subordinated
Note may be declared due and payable in the manner and with the effect provided
herein.  The "Default Amount" shall be equal to the adjusted issue price as of
the first day of the accrual period as determined under Treasury Regulation
Section 1.1275-1(b) (or successor regulation) under the United States Internal
Revenue Code of 1986, as amended, in which the date of acceleration occurs
increased by the daily portion of the original issue discount for each day in
such accrual period ending on the date of acceleration, as determined under
Treasury Regulation Section 1.1275-1(b) (or successor regulation) under the
United States Internal Revenue Code of 1986, as amended.  Upon payment of (i)
the amount of principal or premium, if any, so declared due and payable and (ii)
interest on any overdue principal and overdue interest or premium, if any (in
each case to the extent that the payment of such interest shall be legally
enforceable), all of the Bank's obligations in respect of the payment of the
principal of, and interest or premium, if any, on, this Subordinated Note shall
terminate.

     In case any Subordinated Note shall at any time become mutilated,
destroyed, lost or stolen and such Subordinated Note or evidence satisfactory to
the Bank of the loss, theft or destruction thereof (together with indemnity
satisfactory to the

                                      -22-


Bank and such other documents or proof as may be required in the premises) shall
be delivered to the Bank, a new Subordinated Note of like tenor will be issued
by the Bank in exchange for the Subordinated Note so mutilated, or in lieu of
the Subordinated Note so destroyed or lost or stolen. All expenses and
reasonable charges associated with procuring the indemnity referred to above and
with the preparation, authentication and delivery of a new Subordinated Note
shall be borne by the holder of the Subordinated Note so mutilated, destroyed,
lost or stolen. If any Subordinated Note which has matured or is about to mature
shall become mutilated, destroyed, lost or stolen, the Bank may, instead of
issuing a substitute Subordinated Note, pay or authorize the payment of the same
(without surrender thereof except in the case of a mutilated Subordinated Note)
upon compliance by the holder thereof with the provisions of this paragraph.

     No recourse shall be had for the payment of the principal of, premium, if
any, or interest on, this Subordinated Note, for any claim based hereon, or
otherwise in respect hereof, against any shareholder, employee, officer or
director, as such, past, present or future, of the Bank or of any successor
corporation, either directly or through the Bank or any successor corporation,
whether by virtue of any constitution, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.

     An "Event of Default" with respect to this Subordinated Note will occur if
the Bank shall consent to, or a court or other governmental agency shall enter a
decree or order for, the appointment of a receiver or other similar official in
any liquidation, insolvency or similar proceeding with respect to the Bank or
all or substantially all of its property and, in the case of a decree or order,
such decree or order shall have remained in force for a period of 60 days.  If
an Event of Default shall occur and be continuing, the holder of this
Subordinated Note may declare the principal amount of, and accrued interest and
premium, if any, on, this Subordinated Note due and payable immediately by
written notice to the Bank.  Upon such declaration and notice, such principal
amount, accrued interest and premium, if any, shall become due and payable seven
calendar days after

                                      -23-


such notice. Any Event of Default with respect to this Subordinated Note may be
waived by the holder hereof. No payment may be made on this Subordinated Note in
the event of acceleration resulting from an Event of Default without the prior
written consent of the Federal Reserve Bank of Chicago. There is no right of
acceleration in the case of a default in the payment of principal of, or
interest on, this Subordinated Note or in the performance of any other
obligation of the Bank under this Subordinated Note or under any other security
issued by the Bank.

     No provision of this Subordinated Note shall alter or impair the obligation
of the Bank, which is absolute and unconditional, to pay the principal, and
premium, if any, and interest on, this Subordinated Note in U.S. dollars at the
times, places and rate herein prescribed.

     The Bank shall cause to be kept at the corporate trust office of the
Subordinated Note Registrar designated below a register (the register maintained
in such corporate trust office or any other office or agency of the Bank in the
Place of Payment herein referred to as the "Subordinated Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Bank
shall provide for the registration of the Subordinated Notes and of transfers of
the Subordinated Notes.  The Bank is hereby initially appointed "Subordinated
Note Registrar" for the purposes of registering the Subordinated Notes and
transfers of the Subordinated Notes as herein provided.

     The transfer of this Subordinated Note is registrable in the Subordinated
Note Register, upon surrender of this Subordinated Note for registration of
transfer at the office or agency of the Bank in the Place of Payment, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Bank and the Paying Agent duly executed by, the holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
Subordinated Notes of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.  Notwithstanding the foregoing, the Bank shall not be required to
register the transfer of any Subordinated Note that has been called for
redemption during a period beginning at the opening of business fifteen calendar
days before the day of mailing of a notice of

                                      -24-


such redemption and ending at the close of business on the day of such mailing.

     No service charge shall be made for any such registration of transfer or
exchange, but the Bank may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith.

     The Subordinated Notes are issuable only in registered form without coupons
in minimum denominations of $250,000 and any integral multiple of $1,000 in
excess thereof.  Each owner of a beneficial interest in this Subordinated Note
is required to hold a beneficial interest in $250,000 principal amount or any
integral multiple of $1,000 in excess thereof of this Subordinated Note at all
times.

     Prior to due presentment of this Subordinated Note for registration of
transfer, the Bank, the Paying Agent or any agent of the Bank or the Paying
Agent may treat the person in whose name this Subordinated Note is registered as
the owner hereof for all purposes, whether or not this Subordinated Note be
overdue, and neither the Bank, the Paying Agent nor any such agent shall be
affected by notice to the contrary.

     All notices to the Bank under this Subordinated Note shall be in writing
and addressed to the Bank at 50 South LaSalle Street, Chicago, Illinois 60675,
or to such other address of the Bank as the Bank may notify the holders of the
Subordinated Notes.

     This Subordinated Note shall be governed by, and construed in accordance
with, the laws of the State of Illinois.

     IN WITNESS WHEREOF, the Bank has caused this instrument to be duly
executed.


                                              THE NORTHERN TRUST COMPANY



                                              By:______________________________
                                                  Authorized Signatory

                                      -25-


                                 ABBREVIATIONS


          The following abbreviations, when used in the inscription on the face
of the within Subordinated Note, shall be construed as though they were written
out in full according to applicable laws or regulations.

          TEN COM - as tenants in common

          TEN ENT - as tenants by the entireties

          JT TEN  - as joint tenants with right of survivorship and not
                             as tenants in common

UNIF GIFT MIN ACT -   ____________   Custodian    ____________
                         (Cust)                      (Minor)
                       under Uniform Gifts to Minors Act



                       _________________________________
                                    (State)

                   Additional abbreviations may also be used
                         though not in the above list.

                                     -26-


                                  ASSIGNMENT


          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________

PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

                         ____________________________

                         ____________________________


_______________________________

_______________________________
(Please print or typewrite name and address,
including postal zip code, of assignee)

_______________________________

the within Subordinated Note and all rights thereunder, and
hereby irrevocably constitutes and appoints_

_______________________________

_______________________________

to transfer said Subordinated Note on the books of the Bank, with full power of
substitution in the premises.

Dated:_________________________

                                ________________________________________________
                                NOTICE: The signature to this assignment must
                                correspond with the name as written upon the
                                face of the within Subordinated Note in every
                                particular, without alteration or enlargement or
                                any change whatsoever.

                                     -27-

EX-10.(I)

                                                                   Exhibit 10(i)

                            AMENDMENT NUMBER TWELVE
                                      TO
                                NORTHERN TRUST
                         EMPLOYEE STOCK OWNERSHIP PLAN


WHEREAS, The Northern Trust Company (the "Company") maintains the Northern Trust
Employee Stock Ownership Plan, as amended and restated effective January 1, 1989
(the "Plan");

WHEREAS, amendment of the Plan is deemed desirable;

NOW, THEREFORE, by virtue and in exercise of the amending power reserved to the
Company under Section 13.1 of the Plan, and pursuant to the authority delegated
to the undersigned officer by resolutions of the Board of Directors dated May
16, 2000, the Plan is hereby amended as follows:

Effective July 1, 2000, Schedule A is amended to add "Carl Domino Associates
L.P. Assets Acquired:  5/1/00 Joined TNT Plans 7/1/00" to the Affiliate Name
Column and "DOH w/Domino" to the ESOP Earliest Vesting Date Column.

IN WITNESS WHEREOF, the Company has caused this amendment to be executed on its
behalf by the undersigned officer this tenth day of July, 2000.


/s/ Martin J. Joyce, Jr.
- ----------------------------------------
Martin J. Joyce, Jr.
Senior Vice President

EX-10.(II)

                                                                  Exhibit 10(ii)

                          ELEVENTH AMENDMENT TO LEASE
                          ---------------------------

     This Eleventh Amendment to Lease (this "Amendment") is made as of August 1,
2000 by and between LaSalle Bank, N.A., as successor trustee to American
National Bank and Trust Company of Chicago, as Trustee under Trust Agreement
dated April 5, 1990 and known as Trust No. 110513-07 ("Landlord"), and The
Northern Trust Company, an Illinois banking corporation.

                                    Recitals
                                    --------

     A.  American National Bank and Trust Company of Chicago, as Trustee under
Trust No. 65287 ("Prior Landlord") and Tenant entered into that certain Lease
dated August 27, 1985 (the "Original Lease") as amended by that certain First
Amendment to Agreement of Lease dated August 15, 1986 (the "First Amendment"),
that certain Second Amendment to Agreement of Lease dated August 6, 1987 (the
"Second Amendment"), and that certain Third Amendment to Agreement of Lease
dated May 20, 1988 (the "Third Amendment").

     B.  The Original Lease, as amended by the First Amendment, Second Amendment
and Third Amendment, was assigned by Prior Landlord to Landlord by an assignment
dated April 6, 1990.

     C.  Landlord and Tenant further amended the Original Lease by that certain
Fourth Amendment to Agreement of Lease dated May 1, 1990, that certain Fifth
Amendment to Agreement of Lease dated January 12, 1995, that certain Sixth
Amendment to Agreement of Lease dated November 30, 1995 and, certain Seventh
Amendment dated February 24, 1998, that certain Eighth Amendment to Lease dated
January 31, 2000, that certain Ninth Amendment to Lease dated January 31, 2000
(the "Ninth Amendment") and that certain Tenth Amendment to Lease dated February
1, 2000.  The Original Lease, as amended by all of the aforedescribed
amendments, is hereinafter referred to as the "Lease."  All capitalized terms
used in this Amendment and not otherwise defined shall have the meanings
ascribed to them in the Lease.

     D.  Pursuant to the Ninth Amendment, Tenant leases from Landlord
approximately 20,866 rentable square feet on the 36/th/ floor of the building
located at 181 West Madison Street, Chicago, Illinois (the "36/th/ Floor
Space"), for a term (the "36/th/ Floor Space Term") ending on December 31, 2000.

     E.  Landlord and Tenant have agreed to extend the 36/th/ Floor Space Term
and wish to confirm their agreements regarding such extension in this Amendment.

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant agree as
follows:

     1.  36/th/ Floor Space Term Extension.  The 36/th/ Floor Space Term is
         ---------------------------------
hereby extended to at least January 31, 2001 and, thereafter, on a month-to-
month basis, subject to the


parties' rights hereinafter described. Commencing February 1, 2001, either party
shall have the right to terminate the Lease, as to the 36/th/ Floor Space only,
effective as of the last day of a given month, by written notice given to the
other party no later than the first (1/st/) day of said month. If such notice is
not given by the first (1/st/) day of a month, then the 36/th/ Floor Space Term
shall be extended at least until the last day of such month on the same terms as
are set forth in the Ninth Amendment. If such notice is given, the Lease shall
terminate, as to the 36/th/ Floor Space, as of the last day of the relevant
month, Tenant shall surrender the 36/th/ Floor Space in accordance with the
terms of the Lease regarding surrender of space, and neither party shall have
any further liability with respect to the 36/th/ Floor Space, except for
liabilities arising prior to such termination date.

     2.  Brokers.  Tenant represents that, except for Douglas Elliman-Beitler
         -------
and Staubach Midwest, LLC, it has not dealt with any real estate brokers in
connection with this Eleventh Amendment.  Notwithstanding the foregoing, no
party is entitled to a commission or fee with respect to the extension of the
36/th/ Floor Space Term or the negotiation of this Eleventh Amendment.  Tenant
hereby agrees to indemnify, defend, and hold Landlord harmless from and against
any and all claims of Staubach Midwest, LLC, or any other party claiming to have
represented Tenant, for broker commission or fees in connection with this
Eleventh Amendment.

     Landlord represents that, except for Douglas Elliman-Beitler and Staubach
Midwest, LLC, it has not deal with any real estate brokers in connection with
this Eleventh Amendment.  Notwithstanding the foregoing, no party is entitled to
a commission or fee with respect to the extension of the 36/th/ Floor Space Term
or the negotiation of this Eleventh Amendment.  Landlord hereby agrees to
indemnify, defend, and hold Tenant harmless from and against any and all claims
of Douglas Elliman-Beitler, or any other party claiming to have represented
Landlord, for broker commissions or fees in connection with this Eleventh
Amendment.

     3.  Merger.  All negotiations, considerations, representations and
         ------
understandings between Landlord and Tenant relating to this Eleventh Amendment
are incorporated herein and may be modified or altered only by agreement, in
writing, between Landlord and Tenant.  No modification, termination, or
surrender of the Lease, as modified by this Eleventh Amendment, or surrender of
the Premises (including the 36/th/ Floor Space) or any part thereof or of any
interest therein by Tenant shall be valid or effective unless agreed to and
accepted, in writing, by Landlord an no act by any representative or agent of
Landlord other than delivery of such a written agreement and acceptance by
Landlord shall constitute agreement to and acceptance thereof.  Any prior
negotiations or intentions of the parties relating to this Ninth Amendment,
whether oral or evidenced by written documentation dated prior to the date of
this Ninth Amendment, are null and void, unless specifically incorporated herein
by reference.

     4.  Exoneration Clause.  This Eleventh Amendment is executed by the
         ------------------
undersigned, LaSalle Bank, N.A., as successor trustee to American National Bank
and Trust Company of Chicago, not personally, but as Trustee in the exercise of
the power and authority conferred upon and vested in it as such Trustee and
under the express direction of the beneficiaries of the said Trust.  It is
expressly understood and agreed that all of the warranties, indemnities,
representations, covenants, undertaking sand agreements herein made on the part
of the Trustee are undertaken by it solely in its capacity as Trustee and not
personally.  No personal liability or


personal responsibility is assumed by or shall at any time be asserted or
enforceable against the Trustee on account of any warranty, indemnity,
representation, covenant, undertaking or agreement of the Trustee in this
instrument.

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first above written.


LANDLORD:                      LASALLE BANK, N.A., as Successor Trustee to
                               American National Bank and Trust Company of
                               Chicago, not individually, but solely as Trustee
                               under Trust Agreement dated April 5, 1990 and
                               known as Trust No. 110513-07


                               By:   /s/ David Rosenfeld
                                  ------------------------------------------
                               Title:  Assistant Vice President


                               Attest:  Attestation not required by LaSalle
                                       -------------------------------------
                                        National Association Bylaws
                                       -------------------------------------
                                        Secretary
                                       -------------------------------------

TENANT:                       THE NORTHERN TRUST COMPANY



                              By:  /s/ Wayne LaChance
                                 -------------------------------------------

                              Title:  Vice President
                                    ----------------------------------------

EX-10.(III)

                                                                 Exhibit 10(iii)
                           TWELFTH AMENDMENT TO LEASE
                           --------------------------

     This Twelfth Amendment to Lease (this "Amendment") is made as of August 28,
2000 by and between LaSalle Bank, N.A., as successor trustee to American
National Bank and Trust Company of Chicago, as Trustee under Trust Agreement
dated April 5, 1990 and known as Trust No. 110513-07 ("Landlord"), and The
Northern Trust Company, an Illinois banking corporation.

                                    Recitals
                                    --------

     A.  American National Bank and Trust Company of Chicago, as Trustee under
Trust No. 65287 ("Prior Landlord") and Tenant entered into that certain Lease
dated August 27, 1985 (the "Original Lease") as amended by that certain First
Amendment to Agreement of Lease dated August 15, 1986 (the "First Amendment"),
that certain Second Amendment to Agreement of Lease dated August 6, 1987 (the
"Second Amendment"), and that certain Third Amendment to Agreement of Lease
dated May 20, 1988 (the "Third Amendment").

     B.  The Original Lease, as amended by the First Amendment, Second Amendment
and Third Amendment, was assigned by Prior Landlord to Landlord by an assignment
dated April 6, 1990.

     C.  Landlord and Tenant further amended the Original Lease by that certain
Fourth Amendment to Agreement of Lease dated May 1, 1990, that certain Fifth
Amendment to Agreement of Lease dated January 12, 1995, that certain Sixth
Amendment to Agreement of Lease dated November 30, 1995 and that certain Seventh
Amendment dated February 24, 1998, (the "Seventh Amendment"), that certain
Eighth Amendment to Lease dated January 31, 2000, that certain Ninth Amendment
to Lease dated January 31, 2000, that certain Tenth Amendment to Lease dated
February 1, 2000 and that certain Eleventh Amendment to Lease dated August 1,
2000.  The Original Lease, as amended by all of the aforedescribed amendments,
is hereinafter referred to as the "Lease."  All capitalized terms used in this
Amendment and not otherwise defined shall have the meanings ascribed to them in
the Lease.

     D. Pursuant to the Lease, Tenant now leases from Landlord approximately
283,358 rentable square feet, (subject to the terms of the Tenth Amendment and
the Eleventh Amendment), in the building located at 181 West Madison Street,
Chicago, Illinois.

     E.  Landlord and Tenant have agreed to expand the Premises and wish to
confirm their agreements regarding such expansion in this Amendment.

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant agree as
follows:

     1.  23rd Floor Expansion Space.  Effective as of the December 1, 2000 (the
"23rd Floor Expansion Space Commencement Date") and continuing until March 31,
2005 (such date, the "23rd Floor Expansion Space Expiration Date") (such period,
the "23rd Floor Expansion Space


Term"), the Premises shall be expanded to include that certain space on the 23rd
floor of the Building, containing approximately 21,804 rentable square feet and
depicted on Exhibit A attached hereto and incorporated herein by this reference
(the "23rd Floor Expansion Space"). As of the 23rd Floor Expansion Space
Commencement Date, the Premises shall be deemed to contain, in the aggregate,
approximately 305,162 rentable square feet. From and after the date on which
Tenant executes and delivers this Amendment, Tenant shall have the right to
enter the 23rd Floor Expansion Space to make inspections and measurements of the
space. Notwithstanding anything to the contrary contained herein, but subject to
the conditions and requirements set forth in Paragraph 4 below, Tenant shall
have the right to enter the Premises and to begin to improve the 23rd Floor
Expansion Space for Tenant's purposes from and after the date on which this
Amendment is fully executed, in which event all of the provisions of the
Original Lease applicable to occupancy of premises shall apply and be in full
force and effect as to the 23rd Floor Expansion Space, other than, the
obligation to pay Rent, which shall commence on the 23rd Floor Expansion Space
Commencement Date. Notwithstanding the foregoing and the requirements set forth
in Paragraph 4 below, Tenant shall have the right to perform the demolition
portion of its tenant improvements to the 23rd Floor Expansion Space upon
Landlord's approval of Tenant's demolition plans and contractors performing such
work, which approval shall not be unreasonably withheld and which shall be given
(or denied, with specific reasons therefor) within three (3) business days of
Tenant's submission of such information to Landlord.

     2.  23rd Floor Expansion Space Base Rent.  Tenant shall pay Base Rent in
consideration for the leasing of the 23rd Floor Expansion Space for the 23rd
Floor Expansion Space Term, for the first sixteen (16) months of such term
(December 1, 2000 through March 31, 2002), at the annual rate of $21.75 per
square foot, or an Annual Base Rent of $474,237.00, in equal Monthly Base Rent
installments of $39, 519.75.  On April 1, 2002, and thereafter, on each April 1
throughout the 23rd Floor Expansion Space Term, such Base Rent shall increase by
three percent (3.0%) over the Base Rent in effect immediately prior to such
adjustment date.  Base Rent shall be paid promptly on the first day of each and
every calendar month during the 23rd Floor Expansion Space Term.

     3.  Rent Adjustments - Operating Expenses.  During the 23rd Floor Expansion
Space Term and with respect to the 23rd Floor Expansion Space, Tenant shall pay
Tenant's Proportionate Share of Operating Expenses and Operating Expense
Deposits as described in Paragraph 5 of the Original Lease.  Tenant's
Proportionate Share as to the 23rd Floor Expansion Space shall be 2.3737%.  No
Rent Adjustment (as described in Paragraph 5.B) shall be payable with respect to
the leasing of the 23rd Floor Expansion Space.

     4.  Condition of Space and Tenant Improvements.  Tenant agrees to accept
the 23rd  Floor Expansion Space in its "as is" condition as of the date of this
Amendment and agrees that Landlord has made no promise, representation or
agreement regarding any improvements, alterations or renovations of the 23rd
Floor Expansion Space, except that Landlord represents and warrants that, as of
the date of this Amendment, the current electrical service for the 23rd floor
includes a 600 amp main electrical switch.  Tenant shall be permitted to
construct leasehold improvements to such space, and Landlord will contribute an
allowance to the cost thereof, in accordance with the following provisions:


          (a) Tenant shall, at Tenant's sole cost and expense (subject to the
     Allowance, as defined below), cause to be prepared and submitted to the
     Landlord for Landlord's prior approval, at such time as Tenant desires,
     plans and specifications (the "Tenant's Plans"), including, but not limited
     to, all space plans, working drawings, mechanical and engineering drawings
     disclosing all construction to be performed to build out the 23rd Floor
     Expansion Space. Landlord agrees to review and either approve or disapprove
     (and noting with such disapproval the specific items not approved) Tenant's
     Plans within five (5) business days of Landlord's receipt of a complete set
     of Tenant's Plans. In the event Tenant's Plans are disapproved, Tenant
     shall revise and resubmit Tenant's Plans expeditiously and Landlord shall
     review the same and notify the Tenant of its approval or disapproval within
     three (3) business days thereafter in the same manner as required for the
     initial submittal. Landlord's approval shall not be unseasonably withheld
     or delayed. Landlord's authorized representative ("Landlord's
     Representative") for the purpose of Tenant's deliveries or to
     communications to Landlord shall be the Building General Manager, at the
     management office located in the Building. Tenant shall not commence any
     work in the 23rd Floor Expansion Space until Tenant's Plans have been
     approved.

          (b) Tenant is hereby granted the right to utilize contractors of
     Tenant's own choice to build out the 23rd Floor Expansion Space, subject to
     Landlord's approval as to the qualifications of such contractor which shall
     not be unreasonably withheld. Landlord hereby approves Valenti, Turner
     Construction or Alter Construction. The contractor chosen by Tenant is
     hereinafter referred to as "Tenant's Contractor". All installations,
     alterations and additions shall be constructed in a good and workmanlike
     manner and only new and good grades of material shall be used. Such work
     performed by Tenant's Contractor shall comply with the Americans With
     Disabilities Act, and with all insurance requirements and all other
     ordinances and regulations of the City of Chicago or any department or
     agency thereof and with the requirements of all statutes and regulations of
     the State of Illinois or any department or agency thereof. Tenant shall
     permit Landlord's Representative (and an architect or engineer designated
     by Landlord) to observe all construction operations within the 23rd Floor
     Expansion Space performed by Tenant's Contractor, provided that no
     supervision fee shall be charged by Landlord. Such observation by persons
     on behalf of Landlord shall be solely and only for the benefit of Landlord.
     Tenant shall pay to the Landlord the cost of any materials purchased from
     Landlord at Landlord's actual invoice cost for said items. Tenant shall not
     be charged for hoisting. No silence or statement by any person acting on
     behalf of Landlord shall be deemed or construed as an assumption by said
     persons or Landlord of any responsibility for or in relation to the
     construction of the 23rd Floor Expansion Space or any guarantee that the
     work completed within the 23rd Floor Expansion Space complies with legal
     requirements, complies with Tenant's Plans, or is suitable or acceptable to
     the Tenant for Tenant's intended business purposes. Tenant shall furnish to
     Landlord, prior to commencement of any work in the 23rd Floor Expansion
     Space, building permits (or such other documentation as is required by the
     City of Chicago to commence such work) and certificates of appropriate
     insurance. Upon completion of any installations, alterations or additions,
     Tenant shall furnish Landlord with building permits (to the extent not
     previously required and furnished), and with contractor's affidavits and
     full and final waivers of lien covering all labor and material expended and
     used in constructing the 23rd


     Floor Expansion Space. Tenant shall hold Landlord harmless and indemnify
     Landlord from all claims and costs, damages, liens and expenses which may
     arise out of or are connected in any way with said construction by Tenant's
     Contractor.

          (c) The cost of all work (the "Work") necessary to build out all of
     the 23rd Floor Expansion Space (including, but not limited to, all labor,
     material, permits and working drawings and design costs) shall, subject to
     the Allowance granted herein, be the responsibility of Tenant.  Landlord
     agrees to contribute an allowance of up to One Hundred Sixty-Six Thousand
     Eight Hundred and 60/100 Dollars ($166,800.60) (the "Allowance") toward the
     cost of the Work.  The Allowance shall be paid in one lump sum payment by
     Landlord to Tenant within ten (10) business days following Tenant's
     submission to Landlord of a contract or contracts evidencing that the cost
     of the Work equals or exceeds the amount of the Allowance.  As the Work
     progresses, Tenant shall require and collect, and submit copies to Landlord
     of, general contractor's statements, architect certificates (as to
     substantial completion of the stages of the Work as payments are being made
     therefor) and partial and final lien waivers, as the case may be, covering
     all Work (including design costs) for which the Allowance is being used to
     pay costs thereof.  Tenant shall be responsible for collecting and
     submitting to Landlord the final lien waivers from all contractors,
     subcontractors and materialmen involved in the Work.  If any mechanic lien
     is filed with respect to the Work, Tenant shall cause such lien to be
     discharged and removed from public record within thirty (30) days after
     such filing, or insure or bond over such lien to Landlord's reasonable
     satisfaction within such thirty (30) day period, failing which Landlord may
     take whatever steps are reasonably necessary to do so, at Tenant's sole
     cost and expense.

          (d) The 23rd Floor Expansion Space shall, upon expiration of the 23rd
     Floor Expansion Space Term, be left by Tenant in its then "as is"
     condition, broom clean and, notwithstanding anything to the contrary
     contained in the Lease, Landlord shall have no right to require Tenant to
     remove any of the improvements made to the 23rd Floor Expansion Space.

     5.  Brokers.  Tenant represents that, except for Douglas Elliman-Beitler
and Staubach Midwest, LLC, it has not dealt with any real estate brokers in
connection with this Twelfth Amendment and, to its knowledge, no broker other
than Douglas Elliman-Beitler and Staubach Midwest, LLC, initiated or
participated in the negotiation of this Twelfth Amendment, submitted or showed
the 23rd Floor Expansion Space or any other space in the Building to Tenant.
Notwithstanding the foregoing, no party is entitled to any commission or fee in
connection with the leasing of the 23rd Floor Expansion Space or the negotiation
of this Twelfth Amendment.  Tenant hereby agrees to indemnify, defend, and hold
Landlord harmless from and against any and all claims of any other party for
broker commission or fees in connection with this Twelfth Amendment who claim to
have dealt with the Tenant.

     Landlord represents that, except for Douglas Elliman-Beitler and Staubach
Midwest, LLC, it has not deal with any real estate brokers in connection with
this Twelfth Amendment and, to its knowledge, no broker other than Douglas
Elliman-Beitler and Staubach Midwest, LLC, initiated or participated in the
negotiation of this Twelfth Amendment, submitted or


showed the 23rd Floor Expansion Space or any other space in the Building, on
behalf of Landlord, to Tenant. Notwithstanding the foregoing, no party is
entitled to any commission or fee in connection with the leasing of the 23rd
Floor Expansion Space or the negotiation of this Twelfth Amendment. Landlord
hereby agrees to indemnify, defend, and hold Tenant harmless from and against
any and all claims of Douglas Elliman-Beitler and Staubach Midwest, LLC and any
other party for broker commissions or fees in connection with this Twelfth
Amendment who claim to have dealt with the Landlord.

     6.  Merger.  All negotiations, considerations, representations and
understandings between Landlord and Tenant relating to this Twelfth Amendment
are incorporated herein and may be modified or altered only by agreement, in
writing, between Landlord and Tenant.  No modification, termination, or
surrender of the Lease, as modified by this Twelfth Amendment, or surrender of
the Premises (including the 23rd Floor Expansion Space) or any part thereof or
of any interest therein by Tenant shall be valid or effective unless agreed to
and accepted, in writing, by Landlord an no act by any representative or agent
of Landlord other than delivery of such a written agreement and acceptance by
Landlord shall constitute agreement to and acceptance thereof.  Any prior
negotiations or intentions of the parties relating to this Twelfth Amendment,
whether oral or evidenced by written documentation dated prior to the date of
this Twelfth Amendment, are null and void, unless specifically incorporated
herein by reference.

     7.  Exoneration Clause.  This Twelfth Amendment is executed by the
undersigned, LaSalle Bank, N.A., as successor trustee to American National Bank
and Trust Company of Chicago, not personally, but as Trustee in the exercise of
the power and authority conferred upon and vested in it as such Trustee and
under the express direction of the beneficiaries of the said Trust.  It is
expressly understood and agreed that all of the warranties, indemnities,
representations, covenants, undertaking sand agreements herein made on the part
of the Trustee are undertaken by it solely in its capacity as Trustee and not
personally.  No personal liability or personal responsibility is assumed by or
shall at any time be asserted or enforceable against the Trustee on account of
any warranty, indemnity, representation, covenant, undertaking or agreement of
the Trustee in this instrument.


     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first above written.

LANDLORD:                      LASALLE BANK, N.A., as Successor Trustee to
                               American National Bank and Trust Company of
                               Chicago, not individually, but solely as Trustee
                               under Trust Agreement dated April 5, 1990 and
                               known as Trust No. 110513-07


                               By:  /s/ David Rosenfeld
                                  ---------------------
                               Title: Assistant Vice President
                                     -------------------------


                               Attest: Attestation not required by LaSalle
                               Bank National Association Bylaws
                                                 ______________ Secretary

TENANT:                        THE NORTHERN TRUST COMPANY



                               By:  /s/ Wayne LaChance
                                  --------------------
                               Title: Vice President
                                     ---------------


                                   EXHIBIT A
                                   ---------

                           23RD FLOOR EXPANSION SPACE
                           --------------------------



             (Diagram of 23rd Floor Expansion Space - 21,804 RSF)

EX-27

 


<ARTICLE> 9
<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-2000
<PERIOD-START>                             JAN-01-2000
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