NORTHERN TRUST CORP (NTRS) FY 2024 MD&A

ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is management’s discussion and analysis of the financial condition and results of operations (MD&A) of Northern Trust Corporation (Corporation) for the year ended December 31, 2024. The following should be read in conjunction with the consolidated financial statements and related footnotes included in this report. Investors also should read the section titled “Forward-Looking Statements.”

BUSINESS OVERVIEW

The Corporation is a leading provider of wealth management, asset servicing, asset management and banking solutions to corporations, institutions, families and individuals. The Corporation focuses on managing and servicing client assets through its two client-focused reporting segments: Asset Servicing and Wealth Management. Asset management and related services are provided to Asset Servicing and Wealth Management clients primarily by the Asset Management business.

The Corporation conducts business through various U.S. and non-U.S. subsidiaries, including The Northern Trust Company (the Bank). The Corporation was formed as a holding company for the Bank in 1971. The Corporation has a global presence with offices in 24 U.S. states and Washington, D.C., and across 22 locations in Canada, Europe, the Middle East and the Asia-Pacific region. Except where the context requires otherwise, the terms “Northern Trust,” “we,” “us,” “our,” “its,” or similar terms refers to the Corporation and its subsidiaries on a consolidated basis.

FINANCIAL OVERVIEW

TABLE 3: FINANCIAL HIGHLIGHTS

(1) Percentage calculations are based on actual balances rather than the rounded amounts presented in the table above.

N/M - Not meaningful

38 2024 ANNUAL REPORT | NORTHERN TRUST CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CONSOLIDATED RESULTS OF OPERATIONS

The following information summarizes our consolidated results of operations for 2024 compared to 2023. For a discussion related to the consolidated results of operations for 2023 compared to 2022, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2023 (2023 Form 10-K), which was filed with the United States Securities and Exchange Commission on February 27, 2024.

Revenue

Northern Trust generates the majority of its revenue from Noninterest Income that primarily consists of Trust, Investment and Other Servicing Fees. Net Interest Income comprises the remainder of revenue and consists of Interest Income generated by earning assets, net of Interest Expense on deposits and borrowed funds.

Revenue in 2024 of $8.3 billion increased $1.5 billion, or 22%, from $6.8 billion in 2023, primarily driven by higher Other Operating Income, Trust, Investment and Other Servicing Fees, and Net Interest Income. Noninterest Income represented 74% and 71% of total revenue in 2024 and 2023, respectively, and totaled $6.1 billion in 2024, which increased $1.3 billion, or 28%, from $4.8 billion in 2023.

Noninterest Income in 2024 increased primarily due to higher Other Operating Income as well as Trust, Investment and Other Servicing Fees. Other Operating Income of $1.2 billion in 2024 increased $928.7 million from $228.7 million in the prior year, primarily driven by a $896.7 million gain related to Northern Trust’s participation in an exchange offer related to shares of a class of Visa, Inc. common stock and a $68.1 million gain on the sale of an equity investment, partially offset by mark-to-market activity on existing swap agreements related to shares of a class of Visa, Inc. common stock, including a $12.8 million expense related to litigation escrow funding, as well as losses recognized as a result of a securities repositioning related to the supplemental pension plan and impairment charges taken on certain investments. Please refer to Note 24, “Commitments and Contingent Liabilities” included under Item 8, “Financial Statements and Supplementary Data,” for additional details related to the exchange offer. Trust, Investment and Other Servicing Fees of $4.7 billion in 2024 increased $366.0 million, or 8%, from $4.4 billion in 2023, primarily due to favorable markets and net new business. Investment Security Gains (Losses), net reflects $189.3 million of losses in 2024 as compared to $169.5 million of losses in 2023, both due to repositionings of the available for sale debt securities portfolio in each year.

Net Interest Income on a fully taxable equivalent (FTE) basis in 2024 of $2.2 billion increased $169.4 million, or 8%, from $2.0 billion in 2023, primarily due to higher deposits and higher average interest rates, partially offset by an unfavorable balance sheet mix. The net interest margin on an FTE basis increased to 1.64% in 2024 from 1.56% in 2023, primarily due to higher average interest rates and a favorable funding mix shift. Average earning assets increased $3.6 billion, or 3%, from $130.8 billion in 2023 to $134.4 billion in 2024, primarily due to higher client deposits, partially offset by lower borrowing activity, the net of which resulted in higher funding of earning assets.

Additional information regarding Northern Trust’s revenue by type is provided in the following table.

TABLE 4: REVENUE

(1) Net Interest Income stated on a GAAP basis. Net Interest Income on an FTE basis includes FTE adjustments of $31.8 million, $57.5 million, and $45.6 million for 2024, 2023, and 2022, respectively. A reconciliation of total consolidated revenue, Net Interest Income and net interest margin on a GAAP basis to revenue, Net Interest Income and net interest margin on an FTE basis, respectively, (each of which is a non-GAAP financial measure) is provided in “Supplemental Information—Reconciliation to Fully Taxable Equivalent” within this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Trust, Investment and Other Servicing Fees

Trust, Investment and Other Servicing Fees are based primarily on the market value of assets held in custody, managed or serviced; the volume of transactions; number of accounts; securities lending volume and spreads; and fees for other services rendered. Certain market value calculations on which fees are based are performed on a monthly or quarterly basis in arrears.

The components of Trust, Investment and Other Servicing Fees are provided in the following table.

TABLE 5: TRUST, INVESTMENT AND OTHER SERVICING FEES

Asset Servicing

Asset Servicing Trust, Investment and Other Servicing Fees are primarily attributable to services related to custody, fund administration, investment management, and securities lending. Custody and Fund Administration fees, are driven primarily by values of client AUC/A, transaction volumes and the number of accounts. The asset values used to calculate these fees vary depending on the individual fee arrangements negotiated with each client. Custody fees related to asset values are client specific and are priced based on month-end market values, quarter-end market values, or the average of month-end market values for the quarter. The fund administration fees that are asset-value-related are priced using month-end, quarter-end, or average daily balances. Investment Management fees are based generally on market values of client AUM management throughout the period. Typically, the asset values used to calculate fee revenue are based on a one-month or one-quarter lag.

Securities Lending revenue is affected by market values; the demand for securities to be lent, which drives volumes; and the interest rate spread earned on the investment of cash deposited by investment firms as collateral for securities they have borrowed. The Other fee category in Asset Servicing includes products such as investment risk and analytical services, benefit payments, and other services. Revenue from these products is based generally on the volume of services provided or a fixed fee.

Custody and Fund Administration fees increased in 2024 from 2023 primarily due to favorable markets and net new business. Investment Management fees increased in 2024 from 2023 primarily due to favorable markets and net new business. Securities Lending decreased in 2024 from 2023 primarily due to lower spreads. Other fees increased from the prior-year, primarily due to new business.

The following tables provide a breakdown of the Asset Servicing assets under custody and assets under management.

TABLE 6: ASSET SERVICING ASSETS UNDER CUSTODY

40 2024 ANNUAL REPORT | NORTHERN TRUST CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

TABLE 7: ASSET SERVICING ASSETS UNDER MANAGEMENT

Cash and other assets deposited by investment firms as collateral for securities borrowed from custody clients are managed by Northern Trust and are included in assets under custody and assets under management. This securities lending collateral totaled $176.2 billion and $167.4 billion at December 31, 2024 and 2023, respectively.

Wealth Management

Wealth Management fee income is calculated primarily based on market values and is impacted by both one-month and one-quarter lagged asset values. Fee income in the regions increased in 2024 from 2023 primarily due to favorable markets. Global Family Office fee income increased in 2024 from 2023 primarily due to favorable markets and asset inflows.

The following tables provide a summary of Wealth Management assets under custody and assets under management.

TABLE 8: WEALTH MANAGEMENT ASSETS UNDER CUSTODY

TABLE 9: WEALTH MANAGEMENT ASSETS UNDER MANAGEMENT

The Wealth Management regions shown are comprised of the following: Central includes Illinois, Michigan, Minnesota, Missouri, Ohio and Wisconsin; East includes Connecticut, Delaware, Florida, Georgia, Massachusetts, New York, Pennsylvania, and Washington, D.C.; West includes Arizona, California, Colorado, Nevada, Texas, and Washington. Global Family Office provides customized services, including but not limited to investment consulting, global custody, fiduciary, private banking, family office consulting, and technology solutions, to meet the complex financial and reporting needs of ultra-high-net-worth individuals and family offices across the globe.

Market Indices

The following tables present selected market indices and the percentage changes year-over-year to provide context regarding equity and fixed income market impacts on the Corporation’s results.

TABLE 10: EQUITY MARKET INDICES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

TABLE 11: FIXED INCOME MARKET INDICES

Client Assets

Northern Trust, in the normal course of business, holds assets under custody/administration and management in a fiduciary or agency capacity for its clients. In accordance with GAAP, these assets are not assets of Northern Trust and are not included in its consolidated balance sheets. AUC/A and AUM are a driver of our Trust, Investment and Other Servicing Fees. For the purposes of disclosing AUC/A, to the extent that both custody and administration services are provided, the value of the assets is included only once in this amount.

At December 31, 2024, AUC/A increased from December 31, 2023, primarily reflecting favorable markets and asset inflows, partially offset by unfavorable currency translation.

The following table presents AUC/A by reporting segment.

TABLE 12: ASSETS UNDER CUSTODY/ADMINISTRATION BY REPORTING SEGMENT

The following table presents assets under custody, a component of AUC/A, by reporting segment.

TABLE 13: ASSETS UNDER CUSTODY BY REPORTING SEGMENT

Consolidated assets under custody increased from the prior year, primarily reflecting favorable markets and asset inflows, partially offset by unfavorable currency translation.

The following table presents the investment allocation of Northern Trust’s custodied assets by reporting segment.

TABLE 14: ALLOCATION OF ASSETS UNDER CUSTODY

42 2024 ANNUAL REPORT | NORTHERN TRUST CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table presents Northern Trust’s assets under custody by investment type.

TABLE 15: ASSETS UNDER CUSTODY BY INVESTMENT TYPE

The following table presents Northern Trust’s AUM by reporting segment.

TABLE 16: ASSETS UNDER MANAGEMENT BY REPORTING SEGMENT

AUM at the end of 2024 increased from 2023. The increase primarily reflected favorable markets and net asset inflows.

The following table presents the investment allocation of Northern Trust’s AUM by reporting segment.

TABLE 17: ASSETS UNDER MANAGEMENT BY INVESTMENT TYPE

Other Noninterest Income

The components of Other Noninterest Income, and a discussion of significant changes during 2024 and 2023, are provided below.

TABLE 18: OTHER NONINTEREST INCOME

Foreign Exchange Trading Income

Northern Trust provides foreign exchange services in the normal course of business as an integral part of its custody services. Active management of currency positions, within conservative limits, also contributes to foreign exchange trading income. Foreign Exchange Trading Income in 2024 increased from 2023, primarily driven by higher trading volumes.

Security Commissions and Trading Income

Security Commissions and Trading Income, generated primarily from securities brokerage services provided by Northern Trust Securities, Inc., in 2024 increased from 2023, primarily driven by an increase in equity commissions from higher equity trading volumes.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Other Operating Income

Other Operating Income in 2024 increased from 2023 primarily driven by a $896.7 million gain related to Northern Trust’s participation in an exchange offer related to shares of a class of Visa, Inc. common stock and a $68.1 million gain on the sale of an equity investment, partially offset by mark-to-market activity on existing swap agreements related to shares of a class of Visa, Inc. common stock, including a $12.8 million expense related to litigation escrow funding, as well as losses recognized as a result of a securities repositioning related to the supplemental pension plan and impairment charges taken on certain investments. Please refer to Note 18, “Other Operating Income” and Note 24, “Commitments and Contingent Liabilities” included under Item 8, “Financial Statements and Supplementary Data,” for additional details related to Other Operating Income and Visa, respectively.

Investment Security Gains (Losses), Net

Investment Security Gains (Losses), net reflects a $189.3 million loss on the sale of available for sale debt securities in the current period arising from a repositioning of the portfolio. In the prior year, there was $169.5 million of losses on sales of available for sale debt securities also arising from repositionings of the portfolio.

Net Interest Income

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 interest-related hedging activity. Earning assets—including Federal Funds Sold, Securities Purchased under Agreements to Resell, Interest-Bearing Due from and Deposits with Banks, Federal Reserve and Other Central Bank Deposits, Securities, Loans and Leases, and Other Interest-Earning Assets—are financed by a large base of interest-bearing liabilities that include client deposits, short-term borrowings, Senior Notes and Long-Term Debt. Short-term borrowings include Federal Funds Purchased, Securities Sold Under Agreements to Repurchase, and Other Borrowings. Earning assets also are funded by noninterest-bearing funds, which include demand deposits and Stockholders’ Equity. Net Interest Income is subject to variations in the level and mix of earning assets and interest-bearing funds and their relative sensitivity to interest rates. In addition, the levels of nonaccruing assets and client compensating deposit balances used to pay for services impact Net Interest Income.

Net interest margin is the difference between what we earn on our assets and what we pay for deposits and other sources of funding. The direction and level of interest rates are important factors in our earnings. Net interest margin is calculated by dividing annualized Net Interest Income by average interest-earning assets.

Net Interest Income stated on an FTE basis is a non-GAAP financial measure that facilitates the analysis of asset yields. Management believes an FTE presentation provides a clearer indication of net interest margins for comparative purposes. When adjusted to an FTE basis, yields on taxable, nontaxable, and partially taxable assets are comparable; however, the adjustment to an FTE basis has no impact on Net Income. A reconciliation of Net Interest Income on a GAAP basis to Net Interest Income on an FTE basis is provided in “Supplemental Information—Reconciliation to Fully Taxable Equivalent” within this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section.

44 2024 ANNUAL REPORT | NORTHERN TRUST CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following tables present an analysis of average daily balances and interest rates affecting Net Interest Income and an analysis of Net Interest Income changes.

TABLE 19: AVERAGE CONSOLIDATED BALANCE SHEETS WITH ANALYSIS OF NET INTEREST INCOME (INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)(1)

(1) Northern Trust’s non-U.S. activities are primarily related to its asset servicing, asset management, foreign exchange, cash management, and commercial banking businesses. The operations of Northern Trust are managed on a reporting segment basis and include components of both U.S and non-U.S. source income and assets. Non-U.S. source income and assets are not separately identified in Northern Trust’s internal management reporting system. However, Northern Trust is required to disclose non-U.S. activities based on the domicile of the customer. Due to the complex and integrated nature of Northern Trust’s activities, it is difficult to segregate with precision revenues, expenses and assets between U.S. and non-U.S.-domiciled customers. On the basis of averages, the percentage of total assets attributable to foreign activities was 16%, 18%, and 19% as of December 31, 2024, 2023 and 2022, respectively. On the basis of averages, the percentage of total liabilities attributable to foreign activities was 54%, 55%, and 58% as of December 31, 2024, 2023 and 2022, respectively. For additional information, refer to the Geographic Area Information section of Note 31, “Reporting Segments and Related Information,” provided in Item 8, “Financial Statements and Supplementary Data.”

(2) Interest-Bearing Due from and Deposits with Banks includes the interest-bearing component of Cash and Due from Banks and Interest-Bearing Deposits with Banks as presented on the consolidated balance sheets.

(3) Includes the impact of balance sheet netting under master netting arrangements of approximately $62.4 billion and $29.1 billion in 2024 and 2023, respectively. Excluding the impact of netting, the average interest rate on Securities Purchased under Agreements to Resell would be approximately 5.29% and 5.27% in 2024 and 2023, respectively. Excluding the impact of netting, the average interest rate on Securities Sold under Agreements to Repurchase would be approximately 5.21% and 5.22% in 2024 and 2023, respectively. Northern Trust nets securities sold under repurchase agreements against those purchased under resale agreements when there is a legally enforceable master netting arrangement.

(4) Average balances include nonaccrual loans.

(5) Other Interest-Earning Assets include certain community development investments, collateral deposits with certain securities depositories and clearing houses, Federal Home Loan Bank and Federal Reserve stock, and money market investments which are classified in Other Assets on the consolidated balance sheets.

(6) Cash and Due from Banks and Other Central Bank Deposits includes the noninterest-bearing component of Federal Reserve and Other Central Bank Deposits on the consolidated balance sheets.

(7) Other Borrowings primarily includes advances from the Federal Home Loan Bank of Chicago.

(8) Rate calculations are based on actual balances rather than the rounded amounts presented in the table above.

(9)A reconciliation of Net Interest Income on a GAAP basis to Net Interest Income on an FTE basis is provided in “Supplemental Information—Reconciliation to Fully Taxable Equivalent” within this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

TABLE 20: ANALYSIS OF NET INTEREST INCOME CHANGES DUE TO VOLUME AND RATE(1)

(1) Changes not due solely to average balance changes or rate changes are allocated proportionately to average balance and rate based on their relative absolute magnitudes.

(2) Changes due to average balance and average rate include the impact of balance sheet netting as noted in Table 20: Average Consolidated Balance Sheets with Analysis of Net Interest Income. Excluding the impact of netting, the 2024 vs. 2023 change in Securities Purchased under Agreements to Resell attributed to the average balance and the average rate would be $1.8 billion and $4.1 million respectively. The 2023 vs. 2022 change attributed to the average balance and the average rate would be $1.2 billion and $294.9 million respectively. Excluding the impact of netting, the 2024 vs. 2023 change in Securities Sold under Agreements to Repurchase attributed to the average balance and the average rate would be $1.7 billion and $(3.7) million respectively. The 2023 vs. 2022 change attributed to the average balance and the average rate would be $1.2 billion and $246.6 million respectively.

Notes:    Net Interest Income (FTE), a non-GAAP financial measure, includes adjustments to a fully taxable equivalent basis for Loans and Leases, Securities and Other Interest-Earning Assets. The adjustments are based on a federal income tax rate of 21.0%, where the rate is adjusted for applicable state income taxes, net of related federal tax benefit. Total taxable equivalent interest adjustments amounted to $31.8 million in 2024, $57.5 million in 2023 and $45.6 million in 2022. A reconciliation of Net Interest Income and net interest margin on a GAAP basis to Net Interest Income and net interest margin on an FTE basis (each of which is a non-GAAP financial measure) is provided in “Supplemental Information—Reconciliation to Fully Taxable Equivalent” within this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section. Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.

Interest revenue on cash collateral positions is reported above within Interest-Bearing Due from and Deposits with Banks, within Loans and Leases, and within Other Interest-Earning Assets. Interest expense on cash collateral positions is reported above within Non-U.S. Offices Interest-Bearing Deposits. Related cash collateral received from and deposited with derivative counterparties is recorded net of the associated derivative contract in Other Assets and Other Liabilities, respectively.

Net Interest Income in 2024 increased from 2023. Net Interest Income, stated on an FTE basis, increased from 2023, due to a higher net interest margin and higher levels of average earning assets. Average earning assets in 2024 increased from 2023, primarily due to higher client deposits, partially offset by lower borrowing activity, the net of which resulted in higher funding of earning assets.

The net interest margin in 2024 increased from 2023. The net interest margin on an FTE basis in 2024 increased from 2023, primarily due to higher average interest rates and a favorable funding mix shift.

46 2024 ANNUAL REPORT | NORTHERN TRUST CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Federal Reserve and Other Central Bank Deposits averaged $35.2 billion in 2024, which increased $4.0 billion, or 13%, from $31.2 billion in 2023, due to deposit inflows. Interest-Bearing Due From and Deposits with Banks averaged $4.8 billion in 2024 and $4.3 billion in 2023. Average Securities were $50.1 billion and increased $0.2 billion, or 0%, from $49.9 billion in 2023. Average taxable Securities were $43.9 billion in 2024 and $46.8 billion in 2023. Average nontaxable Securities, which represent securities that are primarily exempt from U.S. federal and state income taxes, were $6.2 billion in 2024 and $3.1 billion in 2023.

Loans averaged $40.9 billion in 2024, which decreased $1.2 billion, or 3%, from $42.2 billion in 2023, primarily reflecting lower levels of commercial and institutional and non-U.S. loans, partially offset by higher levels of commercial real estate and private client loans. Commercial and institutional loans averaged $11.1 billion in 2024 and decreased $1.3 billion, or 11%, from $12.4 billion for 2023. Non-U.S. loans averaged $3.0 billion in 2024 and decreased $360.9 million, or 11%, from $3.4 billion for 2023. Residential real estate loans averaged $6.4 billion in both 2024 and 2023. Commercial real estate loans averaged $5.3 billion in 2024 and increased $316.8 million, or 6%, from $5.0 billion for 2023. Private client loans averaged $14.2 billion in 2024 and increased $171.0 million, or 1%, from $14.0 billion for 2023.

Average Other Interest-Earning Assets include certain community development investments, collateral deposits with certain securities depositories and clearing houses, Federal Home Loan Bank stock, money market investments, and Federal Reserve stock of $854.8 million, $1,369.3 million, $335.1 million, $92.3 million, and $70.0 million, respectively, which are recorded in Other Assets on the consolidated balance sheets.

Northern Trust utilizes a diverse mix of funding sources. Average Interest-Bearing Deposits increased $8.4 billion, or 10%, to $95.9 billion in 2024 from $87.5 billion in 2023. Interest expense for Interest-Bearing Deposits in the current year was driven by higher interest rates and higher balances. Average Non-U.S. Offices Interest-Bearing Deposits comprised 67% and 69% of total average Interest-Bearing Deposits for the years ended December 31, 2024 and 2023, respectively. Average Total Interest-Bearing Liabilities increased $4.2 billion, or 4%, to $112.9 billion in 2024 from $108.7 billion in 2023. The balances within short-term borrowing classifications vary based on funding requirements and strategies, interest rate levels, changes in the volume of lower-cost deposit sources, and the availability of collateral to secure these borrowings. Average net noninterest-bearing funds decreased $0.6 billion, or 3%, to $21.5 billion in 2024 from $22.1 billion in 2023, primarily resulting from lower levels of Demand and Other Noninterest-Bearing Deposits. Average Demand and Other Noninterest-Bearing Deposits decreased $1.0 billion, or 5%, to $16.8 billion in 2024 from $17.7 billion in 2023. The average rate on total source of funds was 5.65% in 2024 and 4.07% in 2023.

Stockholders’ Equity

Stockholders’ Equity averaged $12.3 billion in 2024, compared with $11.5 billion in 2023. The increase in average Stockholders’ Equity of $803.0 million, or 7%, was primarily due to higher Retained Earnings. During the year ended December 31, 2024, the Corporation maintained its quarterly common stock dividend at $0.75 per share. During the year ended December 31, 2024, the Corporation, through common stock dividends and repurchases of 10,489,770 shares of common stock, returned $1.5 billion in capital to common stockholders. During the year ended December 31, 2023, the Corporation, through common stock dividends and repurchases of 4,384,678 shares of common stock, returned $977.7 million in capital to common stockholders.

The Corporation’s current stock repurchase authorization to repurchase up to 25.0 million shares was approved by the Board of Directors in October 2021. Shares are repurchased by the Corporation to, among other things, manage the Corporation’s capital levels. Repurchased shares are used for general purposes, including the issuance of shares under stock option and other equity incentive plans. The repurchase authorization approved by the Board of Directors has no expiration date, thus the Corporation retains the ability to resume repurchases thereunder when circumstances warrant and applicable regulations permit. Please refer to Note 13, “Stockholders’ Equity,” provided in Item 8, “Financial Statements and Supplementary Data.”

Provision for Credit Losses

There was a negative Provision for Credit Losses of $3.0 million in 2024, as compared to a Provision for Credit Losses of $24.5 million in 2023. The negative provision during 2024 resulted from decreases in both individual and collective reserves. The decrease in individual reserves was driven by one Commercial loan charge-off. The decrease in collective reserves was primarily in held to maturity securities driven by methodology changes and improvements in portfolio quality partially offset by an increase in the Commercial Real Estate (CRE) portfolio, driven by deterioration in portfolio quality. The prior-year provision primarily reflected an increase in the reserve evaluated on a collective basis within the CRE portfolio, driven by an increase in the size and duration of the portfolio, weaker economic projections for the industry, methodology updates, and credit quality deterioration on a small number of loans.

Net charge-offs in 2024 totaled $11.3 million resulting from $15.5 million of charge-offs and $4.2 million of recoveries, compared to net charge-offs of $5.0 million in 2023 resulting from $8.7 million of charge-offs and $3.7 million of recoveries. For additional discussion of the Allowance for Credit Losses, refer to the “Asset Quality” section.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Noninterest Expense

Noninterest Expense for 2024 increased from 2023, primarily reflecting increased Compensation, Equipment and Software, and Outside Services expense, partially offset by lower Other Operating Expense.

The components of Noninterest Expense and a discussion of significant changes during 2024 and 2023 are provided below.

TABLE 21: NONINTEREST EXPENSE

Compensation

Compensation expense, the largest component of Noninterest Expense, increased in 2024 from 2023, primarily due to higher severance-related charges and an increase to base pay adjustments. Severance-related charges were $81.8 million in 2024 as compared to $36.7 million in 2023. Full-time equivalent employees totaled approximately 23,300 at December 31, 2024, up 1% from approximately 23,100 at December 31, 2023.

Outside Services

Outside Services expense in 2024 increased from 2023, primarily reflecting higher consulting services and higher technical services.

Equipment and Software

Equipment and Software expense in 2024 increased from 2023, primarily due to higher software amortization and higher software support and rental expense.

Occupancy

Occupancy expense in 2024 decreased from 2023, primarily due to charges related to early lease exists recorded during the prior-year period.

Other Operating Expense

Other Operating Expense in 2024 decreased from 2023 primarily due to an $84.6 million FDIC special assessment and a $25.6 million charge related to the write-off of an investment in a client capability, both recorded in the prior year, partially offset by a $70.0 million charitable contribution, a $10.6 million legal settlement, and $14.7 million of additional expense related to the FDIC special assessment, recorded in the current year. Please refer to Note 24, “Commitments and Contingent Liabilities” included under Item 8, “Financial Statements and Supplementary Data,” for additional details related to the FDIC special assessment.

Please refer to Note 19, “Other Operating Expense” included under Item 8, “Financial Statements and Supplementary Data,” for additional details related to other operating expenses.

Provision for Income Taxes

The 2024 Provision for Income Taxes was $628.4 million, representing an effective rate of 23.6%. This compares with a Provision for Income Taxes of $357.5 million and an effective rate of 24.4% in 2023.

See Note 20, “Income Taxes,” provided in Item 8, “Financial Statements and Supplementary Data,” for more information on income taxes.

48 2024 ANNUAL REPORT | NORTHERN TRUST CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

REPORTING SEGMENTS AND RELATED

INFORMATION

The following information summarizes our consolidated results of operations by reporting segment for 2024 compared to 2023. For a discussion related to the consolidated results of operations by reporting segment for 2023 compared to 2022, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 2023 Form 10-K, which was filed with the SEC on February 27, 2024.

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

Reporting segment financial information, presented on an internal management-reporting basis, is determined by accounting systems used to allocate revenue and expense to each segment, and incorporates processes for allocating assets, liabilities, equity and the applicable interest income and expense utilizing a funds transfer pricing (FTP) methodology. Under the methodology, assets and liabilities receive a funding charge or credit that considers interest rate risk, liquidity risk, and other product characteristics on an instrument level. Additionally, segment information is presented on an FTE basis as management believes an FTE presentation provides a clearer indication of net interest income. The adjustment to an FTE basis has no impact on Net Income.

Equity is allocated to the reporting segments based on a variety of factors including, but not limited to, risk, regulatory considerations, and internal metrics. Allocations of equity and certain corporate expense may not be representative of levels that would be required if the segments were independent entities. The accounting policies used for management reporting are consistent with those described in Note 1, “Summary of Significant Accounting Policies.” Transfers of income and expense items are recorded at cost; there is no consolidated profit or loss on sales or transfers between reporting segments. Northern Trust’s presentations are not necessarily consistent with similar information for other financial institutions.

Revenues, expenses and average assets are allocated to Asset Servicing and Wealth Management, with the exception of non-recurring activities such as certain corporate transactions and costs incurred associated with acquisitions, divestitures, litigation, restructuring, and tax adjustments not directly attributable to a specific reporting segment, which are reported within the Other segment.

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

Effective January 2024, Northern Trust implemented certain enhancements to its FTP methodology, impacting the allocation of Net Interest Income to the Asset Servicing and Wealth Management segments. As a result, the approximate impact on the Asset Servicing and Wealth Management segments was a $132.0 million decrease and a $132.0 million increase in Net Interest Income, respectively, for the year ended December 31, 2024. Prior-year segment results have not been revised to reflect this methodology change.

The following tables reflect the earnings contribution and certain average balances of Northern Trust’s reporting segments for the years ended December 31, 2024, 2023, and 2022.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

TABLE 22: RESULTS OF REPORTING SEGMENTS

(1) Financial measures stated on an FTE basis.

(2) Other Segment Items include Occupancy, Equipment & Software and Other Operating Expense.

(1) Other Segment Items include Occupancy, Equipment & Software and Other Operating Expense.

50 2024 ANNUAL REPORT | NORTHERN TRUST CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Segment results are stated on an FTE basis which has no impact on Net Income. Net Interest Income on an FTE basis includes FTE adjustments of $31.8 million, $57.5 million, and $45.6 million for 2024, 2023, and 2022, respectively. A reconciliation of total consolidated revenue, Net Interest Income and net interest margin on a GAAP basis to revenue, Net Interest Income and net interest margin on an FTE basis, respectively, (each of which is a non-GAAP financial measure) is provided in “Supplemental Information—Reconciliation to Fully Taxable Equivalent” within this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section.

Asset Servicing

Asset Servicing is a leading global provider of asset servicing and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds, and other institutional investors around the globe. Asset servicing and related services encompass a full range of capabilities including but not limited to: custody; fund administration; investment operations outsourcing; investment management; investment risk and analytical services; employee benefit services; securities lending; foreign exchange; treasury management; brokerage services; transition management services; banking; and cash management. Client relationships are managed through the Bank and the Bank’s and the Corporation’s other subsidiaries, including support from locations in North America, Europe, the Middle East, and the Asia-Pacific region.

Asset Servicing Trust, Investment and Other Servicing Fees

For an explanation of Asset Servicing Trust, Investment, and Other Servicing Fees, please see the “Trust, Investment, and Other Servicing Fees” section within the Consolidated Results of Operations section.

Asset Servicing Foreign Exchange Trading Income

Foreign Exchange Trading Income for 2024 increased from 2023, primarily driven by higher client volumes.

Asset Servicing Provision for Credit Losses

There was a negative Provision for Credit Losses of $4.6 million for 2024 compared to a Provision for Credit Losses of $0.5 million for 2023. The 2024 negative Provision for Credit Losses was primarily in the Commercial and Institutional (C&I) portfolio, driven by an improvement in credit quality. The Provision for Credit Losses during 2023 primarily reflected a deterioration in credit quality on a small number of loans at the time, offset by a better overall macroeconomic outlook.

Asset Servicing Noninterest Expense

Asset Servicing Noninterest Expense, which includes the direct expense of the reporting segment, indirect expense allocations for product and operating support, and indirect expense allocations for certain corporate support services, increased in 2024 from 2023. The increase primarily reflects higher expense allocations and an increase in Compensation expense due to higher severance related charges.

Wealth Management

Wealth Management focuses on high-net-worth individuals and families, business owners, executives, professionals, retirees, and established privately-held businesses in its target markets. In supporting these targeted segments, Wealth Management provides trust, investment management, custody, and philanthropic services; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services; and private and business banking. Wealth Management also includes Global Family Office, which provides customized services, including but not limited to: investment management; global custody; fiduciary; and private banking; family office consulting, and technology solutions, to meet the complex financial and reporting needs of ultra-high-net-worth individuals and family offices across the globe. Wealth Management is one of the largest providers of advisory services in the United States with AUC/A, assets under custody, and AUM of $1.1 trillion, $1.1 trillion, and $450.7 billion, respectively, at December 31, 2024. Wealth Management services are delivered by multidisciplinary teams through a network of offices in 19 U.S. states and Washington, D.C., as well as offices in London, Guernsey, Singapore and Abu Dhabi.

Wealth Management Trust, Investment and Other Servicing Fees

For an explanation of Wealth Management Trust, Investment, and Other Servicing Fees, please see the “Trust, Investment, and Other Servicing Fees” section within the Consolidated Results of Operations section.

Wealth Management Other Noninterest Income

Other Noninterest Income for 2024 decreased from 2023, primarily due to lower credit-related fees and swap fees; partially offset by an increase in core brokerage related fees.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Wealth Management Net Interest Income

Net Interest Income on an FTE basis for 2024 increased from 2023, primarily due to the change in reporting segment allocation methodology beginning in 2024 noted above and higher deposit balances. Net interest margin on an FTE basis increased to 2.63% for 2024 from 2.20% in 2023.

Wealth Management Provision for Credit Losses

There was a Provision for Credit Losses of $8.8 million for 2024 compared to a Provision for Credit Losses of $24.0 million in 2023. The Provision for Credit Losses during 2024 was primarily due to an increase in the collective reserve, primarily in the C&I portfolio, driven by a small number of downgrades and increased duration, and the CRE portfolio, driven by exposure and portfolio quality; partially offset by a decrease in individual reserves, driven by a Commercial loan charge-off. The Provision for Credit Losses during 2023 reflected an increase in the reserve evaluated on a collective basis relating to the CRE portfolio, driven by an increase in exposure and duration of the portfolio, weaker economic projections for the industry, methodology updates, and portfolio quality at the time.

Wealth Management Noninterest Expense

Wealth Management Noninterest Expense, which includes the direct expense of the reporting segment, indirect expense allocations for product and operating support, and indirect expense allocations for certain corporate support services, increased in 2024 from 2023. The increase primarily reflects higher expense allocations and Compensation expense due to headcount and base pay adjustments.

Other

Other includes expenses for Asset Management, corporate and support functions not directly incurred by, but ultimately allocated back to, our two client-focused reporting segments. Income and expenses associated with non-recurring activities such as certain costs associated with acquisitions, divestitures, litigation, restructuring, and tax adjustments are retained within Other. Other also includes the FTE adjustments of $31.8 million, $57.5 million, and $45.6 million for 2024, 2023, and 2022, respectively, in order to reconcile the segment results that are reported on an internal management-reporting basis into consolidated results.

Other—Noninterest Income (Loss)

Noninterest Income (Loss) in 2024 primarily reflected the gain related to the net impact from the Visa-related transactions and the gain related to the sale of an equity investment, partially offset by the loss on sale of available for sale debt securities arising from a repositioning of the portfolio in the first quarter of 2024. In the prior year, there was $169.5 million of losses on sales of available for sale debt securities recognized in Investment Security Gains (Losses), net, in conjunction with repositionings of the portfolio.

Other—Noninterest Expense

Noninterest Expense in 2024 included a $70.0 million charitable contribution to the Northern Trust Foundation, a $14.7 million expense related to the FDIC special assessment, a $10.6 million legal settlement, and non-allocated occupancy expense primarily arising from early lease exits.

Asset Management

Asset Management, through the Corporation’s various subsidiaries, supports the Asset Servicing and Wealth Management reporting segments by providing a broad range of asset management and related services and other products to clients around the world. Investment solutions are delivered through separately managed accounts, bank common and collective funds, registered investment companies, exchange traded funds, non-U.S. collective investment funds, and unregistered private investment funds. Asset Management’s capabilities include active and passive equity; active and passive fixed income; cash management; multi-asset and alternative asset classes (such as private equity and hedge funds of funds); and multi-manager advisory services and products. Asset Management’s activities also include overlay services and other risk management services. Asset Management operates internationally through subsidiaries and distribution arrangements and its revenue and expense are allocated fully to Asset Servicing and Wealth Management.

52 2024 ANNUAL REPORT | NORTHERN TRUST CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

At December 31, 2024, Northern Trust managed $1.6 trillion in assets for personal and institutional clients, including $1.2 trillion for Asset Servicing clients and $450.7 billion for Wealth Management clients. The following table presents consolidated AUM as of December 31, 2024, 2023 and 2022 by investment type.

TABLE 23: CONSOLIDATED ASSETS UNDER MANAGEMENT BY INVESTMENT TYPE

AUM increased at year-end 2024 from year-end 2023. The increase primarily reflected favorable markets and net asset inflows. The following table presents activity in consolidated AUM by product during the years ended December 31, 2024, 2023 and 2022.

TABLE 24: ACTIVITY IN CONSOLIDATED ASSETS UNDER MANAGEMENT BY PRODUCT

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CONSOLIDATED BALANCE SHEET REVIEW

The following tables summarize selected consolidated balance sheet information.

TABLE 25: SELECT CONSOLIDATED BALANCE SHEET INFORMATION

(1)    Interest-Bearing Due from and Deposits with Banks includes the interest-bearing component of Cash and Due from Banks and Interest-Bearing Deposits with Banks as presented on the consolidated balance sheets.

(2)    Other Interest-Earning Assets includes certain community development investments, collateral deposits with certain securities depositories and clearing houses, Federal Home Loan Bank and Federal Reserve stock, and money market investments which are classified in Other Assets on the consolidated balance sheets.

(3) Other Borrowings primarily includes advances from the Federal Home Loan Bank of Chicago.

TABLE 26: SELECT AVERAGE CONSOLIDATED BALANCE SHEET INFORMATION

(1)    Interest-Bearing Due from and Deposits with Banks includes the interest-bearing component of Cash and Due from Banks and Interest-Bearing Deposits with Banks as presented on the consolidated balance sheets.

(2)    Other Interest-Earning Assets includes certain community development investments, collateral deposits with certain securities depositories and clearing houses, Federal Home Loan Bank and Federal Reserve stock, and money market investments which are classified in Other Assets on the consolidated balance sheets.

(3) Other Borrowings primarily includes advances from the Federal Home Loan Bank of Chicago.

Average balances are considered to be a better measure of balance sheet trends, as period-end balances can be impacted by the timing of deposit and withdrawal activity involving large client balances. Average earning assets increased from the prior year primarily due to higher client deposits, partially offset by lower borrowing activity, the net of which resulted in higher funding of earning assets.

54 2024 ANNUAL REPORT | NORTHERN TRUST CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Stockholders’ Equity. The increase in average Stockholders’ Equity was primarily due to higher Retained Earnings.

During the year ended December 31, 2024, the Corporation declared cash dividends totaling $608.4 million to common stockholders and repurchased 10,489,770 shares of common stock, including 424,806 shares withheld to satisfy tax withholding obligations related to share-based compensation, at a total cost of $937.8 million ($89.41 average price per share). During the year ended December 31, 2024, the Corporation declared cash dividends totaling $41.8 million to preferred stockholders.

During the year ended December 31, 2023, the Corporation declared cash dividends totaling $630.2 million to common stockholders and repurchased 4,384,678 shares of common stock, including 378,130 shares withheld to satisfy tax withholding obligations related to share-based compensation, at a total cost of $347.5 million ($79.26 average price per share). During the year ended December 31, 2023, the Corporation declared cash dividends totaling $41.8 million to preferred stockholders.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Asset Quality

Securities Portfolio

The following table presents the remaining maturity and average yield of Northern Trust's held to maturity (HTM) debt securities and available for sale (AFS) debt securities by security type as of December 31, 2024. Depending on market conditions, Northern Trust continuously seeks to optimize its securities portfolio, including through purchases and sales of AFS debt securities from time to time.

TABLE 27: REMAINING MATURITY AND AVERAGE YIELD OF HELD TO MATURITY AND AVAILABLE FOR SALE DEBT SECURITIES

Note: Yield is calculated on amortized cost and presented on a taxable equivalent basis giving effect to the applicable federal and state tax rates.

56 2024 ANNUAL REPORT | NORTHERN TRUST CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Northern Trust maintains a high quality debt securities portfolio. The following tables provide the book value of debt securities by credit rating using ratings from Moody’s, S&P Global or Fitch Ratings. Book value is fair value for AFS debt securities and amortized cost for HTM debt securities. Debt securities not explicitly rated were grouped where possible under the credit rating of the issuer of the security.

TABLE 28: BOOK VALUE OF DEBT SECURITIES BY CREDIT RATING

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As of both December 31, 2024 and December 31, 2023, HTM debt securities not rated by Moody’s, S&P Global or Fitch Ratings primarily consisted of certificates of deposit with a remaining life of less than six months, as well as investments purchased by Northern Trust to fulfill its obligations under the Community Reinvestment Act (CRA). Northern Trust fulfills its obligations under the CRA by making qualified investments for purposes of supporting institutions and programs that benefit low-to-moderate income communities within Northern Trust’s market area.

For additional information relating to the securities portfolio, refer to Note 4, “Securities,” provided in Item 8, “Financial Statements and Supplementary Data.”

58 2024 ANNUAL REPORT | NORTHERN TRUST CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Loans

For additional information relating to the loan portfolio, refer to Note 5, “Loans,” and Note 7, “Concentrations of Credit Risk” provided in Item 8, “Financial Statements and Supplementary Data.”

The following table presents the remaining maturity of loans by segment and class as of December 31, 2024.

TABLE 29: REMAINING MATURITY OF LOANS

Note: Non-U.S. and Other U.S. loans primarily include short duration exposures related to custodied client investments.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

TABLE 30: INTEREST RATE SENSITIVITY OF LOANS