NORTHERN TRUST : REPORTS FIRST QUARTERNET INCOME OF $214.7 MILLION, EARNINGS PER DILUTED COMMON SHARE OF $0.96 - Form 8-K

NORTHERN TRUST CORPORATION REPORTS FIRST QUARTER
NET INCOME OF $214.7 MILLION, EARNINGS PER DILUTED COMMON SHARE OF $0.96

CHICAGO, APRIL 16, 2024 - Northern Trust Corporation today reported first quarter net income per diluted common share of $0.96, compared to $0.52 in the fourth quarter of 2023 and $1.51 in the first quarter of 2023. Net income was $214.7 million, compared to $113.1 million in the prior quarter and $334.6 million in the prior-year quarter.

First quarter 2024 results included the following:

•$189.4 million pre-tax loss on available for sale debt securities sold in conjunction with a repositioning of the portfolio, recognized in Investment Security Gains (Losses), net (after-tax $141.5 million).

•$12.5 million pre-tax increase to Federal Deposit Insurance Corporation (FDIC) special assessment, recognized in Other Operating Expense (after-tax $9.3 million).

N/M - Not meaningful

(*) Net interest income and total revenue presented on a fully taxable equivalent (FTE) basis are non-generally accepted accounting principles (non-GAAP) financial measures. Refer to the Reconciliation to Fully Taxable Equivalent section for further detail.

(1) Assets Under Custody are a component of Assets Under Custody/Administration.

(*)Client assets for the current quarter are considered preliminary until the Form 10-Q is filed with the Securities and Exchange Commission.

Asset Servicing and Wealth Management trust, investment and other servicing fees are impacted by both one-month and one-quarter lagged asset values.

Total Asset Servicing trust, investment and other servicing fees increased sequentially and increased from the prior-year quarter.

▪Custody and fund administration fees increased sequentially primarily due to favorable markets. Custody and fund administration fees increased from the prior-year quarter primarily due to favorable markets and new business.

▪Investment management fees increased sequentially and from the prior-year quarter primarily due to favorable markets.

▪Other trust, investment and other servicing fees increased sequentially primarily due to higher fees associated with seasonal benefit payment services.

Total Wealth Management trust, investment and other servicing fees increased sequentially and increased from the prior-year quarter.

•Fees in the regions increased sequentially and from the prior-year quarter primarily due to favorable markets.

•Fees in GFO increased sequentially and from the prior-year quarter primarily due to favorable markets and asset inflows.

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N/M - Not meaningful

Foreign exchange trading income increased sequentially and from the prior-year quarter primarily driven by higher client volumes.

Other operating income increased compared to the prior-year quarter primarily driven by higher income associated with a market value increase in supplemental compensation plans and lower expense associated with existing swap agreements related to Visa Inc. Class B common shares .

Investment Security Gains (Losses), net reflects the $189.4 million available for sale debt security loss as compared to the $176.4 million available for sale debt security loss in the prior quarter and $6.9 million gain on the sale of available for sale debt securities in the prior-year quarter, each arising from a repositioning of the portfolio.

(*) Interest income, net interest income and net interest margin presented on an FTE basis are non-GAAP financial measures. Refer to the Reconciliation to Fully Taxable Equivalent section for further detail.

bps - basis points

Net interest income on an FTE basis increased sequentially primarily due to an increase in deposits and higher average interest rates. Net interest incomeon an FTE basis decreased compared to the prior-year quarter primarily due to higher funding costs.

The net interest margin on an FTE basis increased sequentially primarily due to higher interest rates. The net interest margin on an FTE basis decreased from the prior-year quarter primarily due to higher funding costs.

Average earning assets increased sequentially primarily due to higher client deposits, partially offset by decreased borrowing activity. Average earning assets decreased compared to the prior-year quarter primarily due to lower borrowing activity.

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N/M - Not meaningful

Q1 2024

The reserve release in the current quarter resulted from decreases in both individual and collective reserves. The decrease in individual reserves was driven by one Commercial and Institutional (C&I) loan that was subsequently charged-off. The decrease in collective reserve was primarily in the C&I portfolio, driven by improvement in the quality of the portfolio, and in the Commercial Real Estate (CRE) portfolio, driven by improved macroeconomic factors. The reserve evaluated on a collective basis relates to pooled financial assets sharing similar risk characteristics.

Q4 2023

The provision in the prior quarter was primarily due to an increase in the reserve evaluated on a collective basis and an increase in the reserve evaluated on an individual basis driven by a very small number of borrowers. The increase in the collective basis reserve was driven by methodology updates.

Q1 2023

The provision in the prior-year quarter was primarily due to an increase in the reserve evaluated on a collective basis, driven by growth in the size and duration of the commercial real estate portfolio, primarily in multi-family properties, partially offset by improvement in credit quality for the commercial and institutional segment.

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Compensation expense increased sequentially primarily due to higher seasonal incentives. Compensation expenseincreased compared to the prior-year quarter primarily due to higher salary expenses and higher incentives.

Outside services expense decreased sequentially primarily due to lower technical services costs and legal services. Outside services expense increased from the prior-year quarter primarily due to higher technical services and consulting fees, partially offset by lower subcustodian expense.

Equipment and software expense increased from the prior-year quarterprimarily due to higher software amortization, partially offset by lower equipment depreciation.

Occupancy expense decreased sequentially primarily due to lower rent expense. Occupancy expense decreased compared to the prior-year quarter primarily due to a $9.8 million charge related to early lease exits recorded in the prior-year quarter.

Other operating expense decreased sequentially primarily due to the FDIC special assessment of $12.5 million in the current quarter as compared to $84.6 million in the prior quarter and the impact of reclassifying certain investment amortization to the Provision for Income Taxes from Other Operating Expense in accordance with a new accounting standard. Other operating expense increased from the prior-year quarter primarily due to the $12.5 million FDIC special assessment in the current quarter, partially offset by the impact of reclassifying certain investment amortization to the Provision for Income Taxes from Other Operating Expense in accordance with a new accounting standard.

bps - basis points

The effective tax rate increased sequentially primarily due to lower net tax benefits from tax-credit investments, including the impact of reclassifying certain investment amortization to the Provision for Income Taxes from Other Operating Expense in accordance with a new accounting standard, partially offset by a lower state income tax provision. Theincrease from the prior-year quarter was primarily due a higher net tax impact from international operations and lower net tax benefits from tax-credit investments, including the impact of reclassifying certain investment amortization to the Provision for Income Taxes from Other Operating Expense in accordance with a new accounting standard.

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The Corporation returned approximately $285.4 million to common shareholders in the current quarter through dividends and the repurchase of shares. During the current quarter, the Corporation declared cash dividends totaling $153.4 million to common stockholders. The Corporation repurchased 1,647,526 shares of common stock, including 373,623 withheld to satisfy tax withholding obligations related to share-based compensation, at a total cost of $132.0 million ($80.11 average price per share).

The Corporation also declared cash dividends totaling $16.2 million to preferred stockholders during the current quarter.

The capital ratios of Northern Trust Corporation and its principal subsidiary, The Northern Trust Company, remained strong at March 31, 2024, exceeding the minimum requirements for classification as "well-capitalized" under applicable U.S. regulatory requirements.

The table below provides capital ratios, as well as the required minimum capital ratios, for Northern Trust Corporation and The Northern Trust Company determined by Basel III phased-in requirements.

(*) Capital ratios for the current quarter are considered preliminary until the Form 10-Q is filed with the Securities and Exchange Commission.

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The following table presents a reconciliation of interest income, net interest income, net interest margin, and total revenue prepared in accordance with GAAP to such measures on an FTE non-GAAP basis. Management believes this presentation facilitates the analysis of asset yields and provides a clearer indication of these financial measures 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.

(1)Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.

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This release may include statements which constitute "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified typically by words or phrases such as "believe," "expect," "anticipate," "intend," "estimate," "project," "likely," "plan," "goal," "target," "strategy," and similar expressions or future or conditional verbs such as "may," "will," "should," "would," and "could." Forward-looking statements include statements, other than those related to historical facts, that relate to Northern Trust's financial results and outlook, capital adequacy, dividend policy and share repurchase program, accounting estimates and assumptions, credit quality including allowance levels, future pension plan contributions, effective tax rate, anticipated expense levels, contingent liabilities, acquisitions, strategies, market and industry trends, and expectations regarding the impact of accounting pronouncements and legislation. These statements are based on Northern Trust's current beliefs and expectations of future events or future results, and involve risks and uncertainties that are difficult to predict and subject to change. These statements are also based on assumptions about many important factors, including the factors discussed in Northern Trust's most recent annual report on Form 10-K and other filings with the U.S. Securities and Exchange Commission, all of which are available on Northern Trust's website. We caution you not to place undue reliance on any forward-looking statement as actual results may differ materially from those expressed or implied by forward-looking statements. Northern Trust assumes no obligation to update its forward-looking statements.

WEBCAST OF FIRST QUARTER EARNINGS CONFERENCE CALL

Northern Trust's first quarter earnings conference call will be webcast on April 16, 2024.

The live call will be conducted at 8:00 a.m. CT and is accessible on Northern Trust's website at:

A recording of the live call will be available on Northern Trust's website following the live event, for approximately four weeks. Participants will need Windows Media or Adobe Flash software. This earnings release can also be accessed at Northern Trust's website.

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust 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. As of March 31, 2024, Northern Trust had assets under custody/administration of US$16.5 trillion, and assets under management of US$1.5 trillion. For more than 130 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit us on northerntrust.com. Follow us on X (formerly Twitter) @NorthernTrust or Northern Trust Corporation on LinkedIn.

Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at https://www.northerntrust.com/terms-and-conditions.

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(1) Percentage calculations are based on actual balances rather than the rounded amounts presented in the Supplemental Consolidated Financial Information.

N/M - Not meaningful

EOP - End of period

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(1) Percentage calculations are based on actual balances rather than the rounded amounts presented in the Supplemental Consolidated Financial Information.

(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 in our periodic filings with the SEC.

(3) 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 in our periodic filings with the SEC.

(4) Cash and Due from Banks and Other Central Bank Deposits includes the noninterest-bearing component of Federal Reserve and Other Central Bank Deposits as presented on the consolidated balance sheets in our periodic filings with the SEC.

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

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(1) Percentage calculations are based on actual balances rather than the rounded amounts presented in the Supplemental Consolidated Financial Information.

(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 in our periodic filings with the SEC.

(3) 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 in our periodic filings with the SEC.

(4) Cash and Due from Banks and Other Central Bank Deposits includes the noninterest-bearing component of Federal Reserve and Other Central Bank Deposits as presented on the consolidated balance sheets in our periodic filings with the SEC.

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

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(*) Net interest margin presented on an FTE basis is a non-GAAP financial measure. Refer to the Reconciliation to Fully Taxable Equivalent section for further detail.

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