v3.25.2
Fair Value Measurements
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Fair Value Hierarchy. The following describes the hierarchy of valuation inputs (Levels 1, 2, and 3) used to measure fair value and the primary valuation methodologies used by Northern Trust for financial instruments measured at fair value on a recurring basis. Observable inputs reflect market data obtained from sources independent of the reporting entity; unobservable inputs reflect the entity’s own assumptions about how market participants would value an asset or liability based on the best information available. GAAP requires an entity measuring fair value to maximize the use of observable inputs and minimize the use of unobservable inputs and establishes a fair value hierarchy of inputs. Financial instruments are categorized within the hierarchy based on the lowest level input that is significant to their valuation. No transfers into or out of Level 3 occurred during the six months ended June 30, 2025 or the year ended December 31, 2024.
Level 1 — Quoted, active market prices for identical assets or liabilities.
Northern Trust’s Level 1 assets are comprised primarily of AFS investments in U.S. Treasury securities.
Level 2 — Observable inputs other than Level 1 prices, such as quoted active market prices for similar assets or liabilities, quoted prices for identical or similar assets in inactive markets, and model-derived valuations in which all significant inputs are observable in active markets.
Northern Trust’s Level 2 assets include AFS debt securities, the fair values of which are determined predominantly by external pricing vendors. Prices received from vendors are compared to other vendor and third-party prices. If a security price obtained from a pricing vendor is determined to exceed predetermined tolerance levels that are assigned based on an asset type’s characteristics, the exception is researched and, if the price is not able to be validated, an alternate pricing vendor is utilized, consistent with Northern Trust’s pricing source hierarchy. As of June 30, 2025, Northern Trust’s AFS debt securities portfolio included 963 Level 2 debt securities with an aggregate market value of $24.0 billion, all valued by external pricing vendors. As of December 31, 2024, Northern Trust’s AFS debt securities portfolio included 940 Level 2 debt securities with an aggregate market value of $21.6 billion, all valued by external pricing vendors.
Level 2 assets and liabilities also include derivative contracts which are valued internally using widely accepted income-based models that incorporate inputs readily observable in actively quoted markets and reflect the contractual terms of the contracts. Observable inputs include foreign exchange rates and interest rates for foreign exchange contracts; interest rates for interest rate swap contracts and forward contracts; and interest rates and volatility inputs for interest rate option contracts. Northern Trust evaluates the impact of counterparty credit risk and its own credit risk on the valuation of its derivative instruments. Factors considered include the likelihood of default by Northern Trust and its counterparties, the remaining maturities of the instruments, net exposures after giving effect to master netting arrangements or similar agreements, available collateral, and other credit enhancements in determining the appropriate fair value of derivative instruments. The resulting valuation adjustments have not been considered material.
Visa Class C common shares are also categorized as Level 2 assets and are valued using quoted active market prices for similar securities (Visa Class A common shares). See “Visa Class B Common Shares and Makewhole Agreement” under Note 20—Commitments and Contingent Liabilities for further information.
Level 3 — Valuation techniques in which one or more significant inputs are unobservable in the marketplace.
Northern Trust’s Level 3 liabilities consist of swaps that Northern Trust entered into with the purchaser of 1.1 million and 1.0 million shares of Visa Class B common shares previously held by Northern Trust and sold in June 2016 and 2015, respectively. Pursuant to the swaps, Northern Trust retains the risks associated with the ultimate conversion of the Visa Class B common shares into Visa Class A common shares, such that the counterparty will be compensated for any dilutive adjustments to the conversion ratio and Northern Trust will be compensated for any anti-dilutive adjustments to the ratio. The swaps also require periodic payments from Northern Trust to the counterparty calculated by reference to the market price of Visa Class A common shares and a fixed rate of interest. The fair value of the swaps is determined using a discounted cash flow methodology. The significant unobservable inputs used in the fair value measurement are Northern Trust’s own assumptions about estimated changes in the conversion rate of the Visa Class B common shares into Visa Class A common shares, the date on which such conversion is expected to occur and the estimated appreciation of the Visa Class A common share price. See “Visa Class B Common Shares and Makewhole Agreement” under Note 20—Commitments and Contingent Liabilities for further information.
Northern Trust believes its valuation methods for its assets and liabilities carried at fair value are appropriate; however, the use of different methodologies or assumptions, particularly as applied to Level 3 assets and liabilities, could have a material effect on the computation of their estimated fair values.
The following table presents the fair values of Northern Trust’s Level 3 liabilities as of June 30, 2025 and December 31, 2024, as well as the valuation techniques, significant unobservable inputs, and quantitative information used to develop significant unobservable inputs for such liabilities as of such dates.
TABLE 33: LEVEL 3 SIGNIFICANT UNOBSERVABLE INPUTS
JUNE 30, 2025
FINANCIAL INSTRUMENTFAIR VALUEVALUATION TECHNIQUEUNOBSERVABLE INPUTSINPUT VALUES
WEIGHTED-AVERAGE INPUT VALUES(1)
Swaps Related to Sale of Certain Visa Class B Common Shares$22.8 millionDiscounted Cash FlowConversion Rate1.53x1.53x
Visa Class A Appreciation8.61%8.61%
Expected Duration4-26.5 months17.5 months
(1) Weighted average of expected duration based on scenario probability.
DECEMBER 31, 2024
FINANCIAL INSTRUMENTFAIR VALUEVALUATION TECHNIQUEUNOBSERVABLE INPUTSINPUT VALUES
WEIGHTED-AVERAGE INPUT VALUES(1)
Swaps Related to Sale of Certain Visa Class B Common Shares$27.2 millionDiscounted Cash FlowConversion Rate1.54x1.54x
Visa Class A Appreciation8.66%8.66%
Expected Duration10-32.5 months23.5 months
(1) Weighted average of expected duration based on scenario probability.
The following table presents assets and liabilities measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024, segregated by fair value hierarchy level.
TABLE 34: RECURRING BASIS HIERARCHY LEVELING
JUNE 30, 2025
(In Millions)LEVEL 1LEVEL 2LEVEL 3NETTINGASSETS/LIABILITIES AT FAIR VALUE
Debt Securities
Available for Sale
U.S. Government$8,286.0 $— $— $— $8,286.0 
Obligations of States and Political Subdivisions— 306.8 — — 306.8 
Government Sponsored Agency— 15,838.9 — — 15,838.9 
Non-U.S. Government— 313.2 — — 313.2 
Corporate Debt— 93.4 — — 93.4 
Covered Bonds— 235.5 — — 235.5 
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds— 4,970.9 — — 4,970.9 
Other Asset-Backed— 1,687.9 — — 1,687.9 
Commercial Mortgage-Backed— 517.8 — — 517.8 
Total Available for Sale Debt Securities8,286.0 23,964.4 — — 32,250.4 
Other Assets
Equity Securities(1)
85.0 21.7 — — 106.7 
Derivative Assets
Foreign Exchange Contracts— 3,697.1 — (3,074.7)622.4 
Interest Rate Contracts— 369.4 — (100.8)268.6 
Total Derivative Assets— 4,066.5 — (3,175.5)891.0 
Other Liabilities
Derivative Liabilities
Foreign Exchange Contracts— 4,112.3 — (2,353.8)1,758.5 
Interest Rate Contracts— 402.6 — (5.4)397.2 
Other Financial Derivatives(2)
— — 22.8 (21.5)1.3 
Total Derivative Liabilities$— $4,514.9 $22.8 $(2,380.7)$2,157.0 
Note: Northern Trust has elected to net derivative assets and liabilities when legally enforceable master netting arrangements or similar agreements exist between Northern Trust and the counterparty. As of June 30, 2025, derivative assets and liabilities shown above also include reductions of $1.6 billion and $820.0 million, respectively, as a result of cash collateral received from and deposited with derivative counterparties.
(1) Equity securities consists of a money market investment and Visa Class C common shares with a fair value of $85.0 million and $21.7 million, respectively, as of June 30, 2025.
(2) Other Financial Derivatives consists of swaps related to the sale of certain Visa Class B common shares.
DECEMBER 31, 2024
(In Millions)LEVEL 1LEVEL 2LEVEL 3NETTINGASSETS/LIABILITIES AT FAIR VALUE
Debt Securities
Available for Sale
U.S. Government$7,367.5 $— $— $— $7,367.5 
Obligations of States and Political Subdivisions— 297.6 — — 297.6 
Government Sponsored Agency— 13,288.9 — — 13,288.9 
Non-U.S. Government— 296.8 — — 296.8 
Corporate Debt— 163.8 — — 163.8 
Covered Bonds— 230.9 — — 230.9 
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds— 4,583.1 — — 4,583.1 
Other Asset-Backed— 2,182.7 — — 2,182.7 
Commercial Mortgage-Backed— 590.2 — — 590.2 
Total Available for Sale Debt Securities7,367.5 21,634.0 — — 29,001.5 
Other Assets
Equity Securities(1)
85.026.3 — — 111.3
Derivative Assets
Foreign Exchange Contracts— 4,997.3 — (1,745.2)3,252.1 
Interest Rate Contracts— 361.2 — (165.2)196.0 
Total Derivative Assets— 5,358.5 — (1,910.4)3,448.1 
Other Liabilities
Derivative Liabilities
Foreign Exchange Contracts— 4,709.8 — (4,197.3)512.5 
Interest Rate Contracts— 421.4 — (2.3)419.1 
Other Financial Derivatives(2)
— — 27.2 — 27.2 
Total Derivative Liabilities$— $5,131.2 $27.2 $(4,199.6)$958.8 
Note: Northern Trust has elected to net derivative assets and liabilities when legally enforceable master netting arrangements or similar agreements exist between Northern Trust and the counterparty. As of December 31, 2024, derivative assets and liabilities shown above also include reductions of $368.2 million and $2.7 billion, respectively, as a result of cash collateral received from and deposited with derivative counterparties.
(1) Equity securities consists of a money market investment and Visa Class C common shares with a fair value of $85.0 million and $26.3 million, respectively, as of December 31, 2024.
(2) Other Financial Derivatives consists of swaps related to the sale of certain Visa Class B common shares.
The following table presents the changes in Level 3 liabilities for the three and six months ended June 30, 2025 and 2024.
TABLE 35: CHANGES IN LEVEL 3 LIABILITIES
(In Millions)SWAPS RELATED TO SALE OF CERTAIN VISA CLASS B COMMON SHARES
THREE MONTHS ENDED JUNE 30,20252024
Fair Value at April 1
$29.5 $21.1 
Total (Gains) Losses:
Included in Earnings(1)
(0.2)15.4 
Purchases, Issues, Sales, and Settlements
Settlements(6.5)(5.9)
Fair Value at June 30
$22.8 $30.6 
(1) (Gains) losses are recorded in Other Operating Income on the consolidated statements of income.
(In Millions)SWAPS RELATED TO SALE OF CERTAIN VISA CLASS B COMMON SHARES
SIX MONTHS ENDED JUNE 30, 202520252024
Fair Value at January 1$27.2 $25.4 
Total (Gains) Losses:
Included in Earnings(1)
5.4 16.6 
Purchases, Issues, Sales, and Settlements
Settlements(9.8)(11.4)
Fair Value at June 30
$22.8 $30.6 
(1) (Gains) losses are recorded in Other Operating Income on the consolidated statements of income.
Carrying values of assets and liabilities that are not measured at fair value on a recurring basis may be adjusted to fair value in periods subsequent to their initial recognition, for example, to record an impairment of an asset. GAAP requires entities to separately disclose these subsequent fair value measurements and to classify them under the fair value hierarchy.
There were no assets measured at fair value on a nonrecurring basis during the six months ended June 30, 2025. Assets measured at fair value on a nonrecurring basis during the year ended December 31, 2024, which were categorized as Level 3 under the fair value hierarchy, were comprised of nonaccrual loans whose values were based on real estate and other available collateral.
Fair values of real estate loan collateral were estimated using a market approach typically supported by third-party valuations and property-specific fees and taxes. As of December 31, 2024, the fair values of real estate loan collateral were subject to adjustments to reflect management’s judgment as to realizable value and consisted of a discount factor of 20.0% with a weighted average based on fair values of 20.0%. Other loan collateral, which typically consists of accounts receivable, inventory and equipment, is valued using a market approach adjusted for asset-specific characteristics and in limited instances third-party valuations are used. OREO assets are carried at the lower of cost or fair value less estimated costs to sell, with fair value typically based on third-party appraisals. There was no outstanding OREO as of June 30, 2025 and December 31, 2024.
There were no Level 3 assets adjusted to fair value on a nonrecurring basis during the six months ended June 30, 2025. The following table presents the fair values of Northern Trust’s Level 3 assets that were adjusted to fair value on a nonrecurring basis during the year ended December 31, 2024, as well as the valuation technique, significant unobservable inputs and quantitative information used to develop the significant unobservable inputs for such assets as of such dates.
TABLE 36: LEVEL 3 NONRECURRING BASIS SIGNIFICANT UNOBSERVABLE INPUTS
DECEMBER 31, 2024
FINANCIAL INSTRUMENT
FAIR VALUE(1)
VALUATION TECHNIQUEUNOBSERVABLE INPUTSINPUT VALUESWEIGHTED-AVERAGE INPUT VALUES
Loans19.1 millionMarket Approach
Discount factor applied to real estate collateral-dependent loans to reflect realizable value
20.0%20.0%
(1) Includes real estate collateral-dependent loans and other collateral-dependent loans.
The following tables present the carrying value and estimated fair value, including the fair value hierarchy level, of Northern Trust’s financial instruments that are not measured at fair value on the consolidated balance sheets as of June 30, 2025 and December 31, 2024. The following tables exclude those items measured at fair value on a recurring basis.
TABLE 37: FAIR VALUE OF FINANCIAL INSTRUMENTS
JUNE 30, 2025
  ESTIMATED FAIR VALUE
(In Millions)BOOK VALUETOTAL ESTIMATED FAIR VALUELEVEL 1LEVEL 2LEVEL 3
FINANCIAL ASSETS
Cash and Due from Banks$6,423.4 $6,423.4 $6,423.4 $— $— 
Federal Reserve and Other Central Bank Deposits52,266.0 52,266.0 — 52,266.0 — 
Interest-Bearing Deposits with Banks2,412.1 2,412.1 — 2,412.1 — 
Federal Funds Sold and Securities Purchased under Agreements to Resell921.9 921.9 — 921.9 — 
Debt Securities - Held to Maturity21,400.8 20,141.0 — 20,141.0 — 
Loans
Held for Investment43,139.8 42,890.0 — — 42,890.0 
Held for Sale3.1 3.1 — 3.1 — 
Other Assets1,484.9 1,477.5 92.2 1,385.3 — 
FINANCIAL LIABILITIES
Deposits137,053.7 135,592.6 — 135,592.6 — 
Federal Funds Purchased2,388.5 2,388.5 — 2,388.5 — 
Securities Sold Under Agreements to Repurchase841.4 841.4 — 841.4 — 
Other Borrowings6,532.9 6,556.0 — 6,556.0 — 
Senior Notes2,835.2 2,872.6 — 2,872.6 — 
Long-Term Debt4,089.8 4,183.0 — 4,183.0 — 
Unfunded Commitments193.2 193.2 — 193.2 — 
Other Liabilities52.2 52.2 — — 52.2 
    
DECEMBER 31, 2024
  ESTIMATED FAIR VALUE
(In Millions)BOOK VALUETOTAL ESTIMATED FAIR VALUELEVEL 1LEVEL 2LEVEL 3
FINANCIAL ASSETS
Cash and Due from Banks$4,677.2 $4,677.2 $4,677.2 $— $— 
Federal Reserve and Other Central Bank Deposits38,775.4 38,775.4 38,775.4 — 
Interest-Bearing Deposits with Banks1,944.7 1,944.7 1,944.7 — 
Federal Funds Sold and Securities Purchased under Agreements to Resell451.0 451.0 451.0 — 
Debt Securities - Held to Maturity22,296.7 20,654.5 20,654.5 — 
Loans
Held for Investment43,222.5 42,803.2 — 42,803.2 
Other Assets1,506.4 1,499.2 83.3 1,415.9 — 
FINANCIAL LIABILITIES
Deposits122,482.7 122,536.5 — 122,536.5 — 
Federal Funds Purchased2,159.5 2,159.5 — 2,159.5 — 
Securities Sold Under Agreements to Repurchase462.0 462.0 — 462.0 — 
Other Borrowings6,521.0 6,545.3 — 6,545.3 — 
Senior Notes2,769.7 2,800.3 — 2,800.3 — 
Long-Term Debt4,081.3 4,164.4 — 4,164.4 — 
Unfunded Commitments227.1 227.1 — 227.1 — 
Other Liabilities50.6 50.6 — — 50.6