Northern Trust Corporation

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1 P R I N C I P L E S T H A T E N D U R E Service Expertise Integrity Northern Trust Corporation Fourth Quarter 20 Quarterly Earnings Review January 8, Northern Trust Corporation northerntrust.com

2 4 th Quarter 20: Table of Contents. Fourth Quarter 20 Earnings Review 2. Driving Performance Appendix 2 Northern Trust Corporation 4Q20 Earnings Review

3 N O R T H E R N T R U S T Fourth Quarter 20 Earnings Review 3 Northern Trust Corporation 4Q20 Earnings Review

4 4 th Quarter and Full Year 20: Highlights 4 th Quarter 20 net income of $30.2 million, earnings per share of $.53 Operating earnings, which exclude Visa related adjustments, of $.50 per share 4 th Quarter results also included the following items: $6.0 million ($.7 per share) of restructuring, acquisition & integration charges $7.0 million ($.02 per share) benefit related to leasing settlement 20 full year net income of $603.6 million, earnings per share of $2.47 Operating earnings, which exclude Visa related adjustments, of $2.4 per share Full year results also included $9.6 million ($.25 per share) of restructuring, acquisition & integration charges Operating earnings is a non-gaap financial measure. A reconciliation of operating earnings to reported earnings prepared in accordance with U.S. generally accepted accounting principles (GAAP) is included in the Appendix on page 8. 4 Northern Trust Corporation 4Q20 Earnings Review

5 4 th Quarter 20: Results & Key Metrics Operating basis % Change Vs. $ in millions (except EPS and as noted) 4Q 20 4Q 200 3Q 20 Revenue (FTE,2 ) $ % -2% Noninterest Expense % +2% Provision for Credit Losses % -29% Net Income $22.2-5% -28% Earnings per Share $0.50-5% -29% Return on Equity 3 7.2% 9.% 9.5% Assets under Custody (in billions) $4, % +2% Global Custody Assets (in billions) $2, % -% Assets under Management (in billions) $ % +3% Operating basis results, which exclude Visa related adjustments, and revenues stated on an FTE basis are non-gaap financial measures. A reconciliation of these measures to reported results prepared in accordance with U.S. generally accepted accounting principles (GAAP) is included in the Appendix on page 8. 2 Fully taxable equivalent 3 Actual numbers for all periods, not % change. Presented on a reported basis. 5 Northern Trust Corporation 4Q20 Earnings Review

6 C&IS: Trust, Investment & Other Servicing Fees Corporate & Institutional Services % Change Vs. $ in millions 4Q20 4Q200 3Q20 Custody & Fund Administration $ % -% Investment Management % -6% Securities Lending % -7% Other % -% Total C&IS Trust Fees $ % -2% DRIVERS Client assets (in billions): C&IS AUC $3, % +2% Global Custody Assets $2, % -% C&IS AUM $ % +2% Sec. Lending Collateral $94.8-4% -5% Excellent new business results, including solid traction in winning new clients related to recent acquisitions Equity markets mixed in 4Q20 and weak on one quarter-lag basis Fee waivers of $2.3 million continued to negatively impact investment management fees Securities lending continued to be hampered by soft borrower demand 6 Northern Trust Corporation 4Q20 Earnings Review

7 PFS: Trust, Investment & Other Servicing Fees Personal Financial Services % Change Vs. $ in millions 4Q20 4Q200 3Q20 PFS Regions $ % -4% Wealth Management % +% Total PFS Trust Fees $ % -4% DRIVERS Client assets (in billions): PFS AUM $ % +6% Continued strong new business momentum Higher 4Q20 markets not reflective of weaker monthand quarter-lag results Fee waivers of $2.3 million continued to negatively impact PFS fees Wealth Mgt AUM $ % +7% PFS AUC $ % +7% Wealth Mgt AUC $ % +9% 7 Northern Trust Corporation 4Q20 Earnings Review

8 4 th Quarter 20: Revenues % Change Vs. $ in millions 4Q20 4Q200 3Q20 Trust, Investment & Other Servicing Fees $ % -2% Foreign Exchange % -8% Treasury Management Fees 7.0-9% -5% Security Commissions & Trading Income 5.7-9% +3% Other Operating Income % -% Investment Security Gains (Losses), net 0.2 NM NM Total Noninterest Income $ % -4% Noninterest Income represented 7% of total revenues (FTE ) in 4Q20 Low interest rates and lower volatility continued to be headwinds to normalized revenues Balance sheet growth from deposits drove higher Net Interest Income Net Interest Income (FTE ) % +5% Total Revenue (FTE ) $ % -2% NET INTEREST INCOME DRIVERS ($ in billions) Net Interest Margin (FTE),2.28%.30%.25% Average Earning Assets $ % +3% Net interest income, total revenue and net interest margin stated on an FTE basis are non-gaap financial measures. A reconciliation of these measures to reported results prepared in accordance with U.S. GAAP is included in the Appendix on page 8. 2 Actual numbers for all periods, not % change 8 Northern Trust Corporation 4Q20 Earnings Review

9 4 th Quarter 20: Noninterest Expense Operating basis % Change Vs. $ in millions 4Q20 4Q200 3Q20 Compensation $ % +0% Employee Benefits % +4% Outside Services % +0% Equipment & Software % +25% Occupancy % +9% Other Operating Expense % +20% Total Noninterest Expense $ % +2% Provision for Income Taxes $ % -56% Restructuring, acquisition and integration expense of $6 million in 4Q20, impacting all expense line items Noninterest Expense also included $43 million in core expenses associated with two recent acquisitions 4Q20 effective tax rate reflected favorable resolution of several tax matters DRIVERS Full-time equivalent employees 4,053 +0% +% Effective tax rate 2 24.% 26.7% 32.6% Operating basis noninterest expense and provision for income taxes, which exclude the impacts of Visa related adjustments, are non-gaap financial measures. A reconciliation of these measures to reported results prepared in accordance with U.S. GAAP is included in the Appendix on page 8. 2 Actual numbers for all periods, not % change. Presented on a reported basis. 9 Northern Trust Corporation 4Q20 Earnings Review

10 4 th Quarter 20: Loan Portfolio Quality % Change Vs. $ in millions 4Q20 4Q200 3Q20 Nonperforming Loans (NPL) $ % -4% Other Real Estate Owned (OREO) % -30% Total Nonperforming Assets (NPA) $34.9-7% -7% NPAs / Loans and OREO.08% -26 bps -0 bps Net Charge-offs $8.2-59% -37% Loan Loss Provision $2.5-69% -29% Loan and Lease Allowance $ % -% Lower level of nonperforming loans reflected improvements in commercial & institutional, commercial real estate and residential real estate Other real estate owned also declined in the quarter, as did net charge-offs Loan loss provision of $2.5 million was lower both year over year and sequentially As a % Total Loans & Leases.0%.4%.04% Allowance to NPL Coverage.0x.0x.0x Actual numbers for all periods, not % change 0 Northern Trust Corporation 4Q20 Earnings Review

11 Balance Sheet: Consistently Strong and Conservative Securities Eurozone Capital 86% of Northern Trust s total securities portfolio composed of U.S. Treasury, government sponsored agency and triple-a rated securities 90% of Asset-Backed Securities rated triple-a Exposure to subprime Asset- Backed securities relative to the overall portfolio minimal at <% The securities portfolio is in a net unrealized gain position Balance sheet exposures to entities within the Eurozone are almost exclusively in the form of Securities, Interest-bearing Deposits with Banks or Due From accounts with banks Within those balance sheet categories, no exposure to Greece, Ireland, Italy, Portugal or Spain, with the exception of a de minimus amount on deposit with the Irish subsidiary of a UK bank Exposures to banks in other Eurozone countries of $4.9 billion Exposures to banks in other European countries of $6. billion, primarily United Kingdom, Sweden, Switzerland, Norway and Denmark Northern Trust Corporation Tier Capital Ratio 2.5% Total Risk-Based Ratio 4.2% Leverage Ratio 7.3% Tier Common Equity 2.% Paid dividends totaling $273 million in 20 for a dividend payout ratio of 45% Combined with the repurchase of.6 million shares at a cost of $79 million, our total payout ratio in 20 was 58% The ratio of tier common equity to risk-weighted assets is a non-gaap financial measure. A reconciliation of tier common equity to tier capital calculated in accordance with applicable regulatory requirements and GAAP is included in the Appendix on page 9. Northern Trust Corporation 4Q20 Earnings Review

12 N O R T H E R N T R U S T Driving Performance 2 Northern Trust Corporation 4Q20 Earnings Review

13 Driving Performance: Overview Goals Maintain client focus Improve profitability and returns Advance high performing culture Drivers of Improvement Revenue enhancements Process optimization Technology efficiency Corporate-wide initiatives Estimated, Annualized Pre-Tax Impact $250 million by end of Northern Trust Corporation 4Q20 Earnings Review

14 Driving Performance: Drivers of Improvement Percent of 203 Impact Revenue Enhancements Fully align value proposition Unbundle pricing structures Expand share of relationship 30 35% Process Optimization Streamline major business processes Optimize operational footprint Apply best-in-class procurement practices Refine service delivery model 30 40% Technology Efficiency Migrate IT resourcing mix Rationalize overlapping applications Manage internal end-user demand 5 0% Corporate-wide Initiatives Simplify organizational structure Align retirement plans with market Rationalize real estate Consolidate banking charters 20 25% 4 Northern Trust Corporation 4Q20 Earnings Review

15 Driving Performance: Timeline Bottom-up: Business-led identification of productivity initiatives Top-down: Analyze and recalibrate operating processes Implement initiatives in phases Embed productivity in Northern Trust s performance culture 5 Northern Trust Corporation 4Q20 Earnings Review

16 Driving Performance: Financial Impact 20 charges: Fourth quarter 20: $6.0 million Full year 20: $9.6 million Future charges as incurred Estimated, annualized pre-tax impact: $250 million by end of 203 More than 50% realized in 202 Impact of $250 million : Pre-tax margin: Return on equity: 5 6 percentage points 2 percentage points Long-term financial target: Return on equity of 0 5% Pro-forma impact calculated on 20 reported results. 6 Northern Trust Corporation 4Q20 Earnings Review

17 N O R T H E R N T R U S T Appendix 7 Northern Trust Corporation 4Q20 Earnings Review

18 Reconciliation of Non-GAAP Financial Measures The following table provides a reconciliation of operating earnings on a fully taxable equivalent basis, a non-gaap financial presentation which excludes Visa related indemnification benefits and that facilitates the analysis of asset yields, to reported earnings prepared in accordance with GAAP. Management believes the presentation of operating earnings in addition to reported results prepared in accordance with GAAP provides a clearer indication of the results and trends in Northern Trust s core businesses. 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. Management believes that the presentation of fully taxable equivalent net interest income provides a clearer indication of net interest margins for comparative purposes. 4Q 20 4Q 200 3Q 20 Reported Adjustments non-gaap Reported Adjustments non-gaap Reported Adjustments non-gaap Total Noninterest Income Interest Income Interest Expense Net Interest Income Total Revenue Provision for Credit Losses Compensation Employee Benefits Outside Services Equipment and Software Occupancy Visa Indemnification Benefit (3.0) (20.3) Other Operating Expense Total Noninterest Expense Income before Income Taxes 7.4 (3.6), (0.0), Provision for Income Taxes 4.2 (5.0) (7.4) Taxable Equivalent Adjustment Total Taxes , , Net Income $30.2 (8.0) 2 $22.2 $57. (2.9) 2 $44.2 $ $ Earnings Per Share - Basic $0.53 (0.03) 2 $0.50 $0.64 (0.05) 2 $0.59 $ $0.70 Earnings Per Share - Diluted $0.53 (0.03) 2 $0.50 $0.64 (0.05) 2 $0.59 $ $0.70 YTD Earnings Per Share - Diluted $2.47 (0.06) 2 $2.4 Net Interest Margin.24%.28%.24%.30%.2%.25% Taxable equivalent adjustment 2 Operating results exclude Visa related benefits of $3.0 million in 4Q20 ($8.0 million net of tax, or $.03 per share), $23. million in FY20 ($4.4 million net of tax, or $.06 per share), and $20.3 million in 4Q200 ($2.9 million net of tax, or $.05 per share). 8 Northern Trust Corporation 4Q20 Earnings Review

19 Reconciliation of Non-GAAP Financial Measures The following table provides a reconciliation of tier common equity to tier capital calculated in accordance with applicable regulatory requirements and GAAP. Northern Trust is providing the ratio of tier common equity to risk-weighted assets in addition to its capital ratios prepared in accordance with regulatory requirements and GAAP as it is a measure that Northern Trust and investors use to assess capital adequacy. ($ In Millions) December 3, 20 Tier Capital $ 7,04.6 Less: Floating Rate Capital Securities Tier Common Equity $ 6,836.0 Ratios Tier Capital 2.5 % Tier Common Equity 2. % 9 Northern Trust Corporation 4Q20 Earnings Review

20 Detail of Restructuring, Acquisition & Integration Charges The following table provides a breakdown of the expense line items impacted by restructuring, acquisition & integration charges in the fourth quarter and for the full year 20. Q4 Full Year ($ In Millions) Compensation $ 28.6 $ 50.2 Employee Benefits Outside Services Equipment and Software Expense Occupancy Expense Other Operating Expense Total $ 6.0 $ Northern Trust Corporation 4Q20 Earnings Review

21 Forward Looking Statement This presentation may include forward-looking statements such as statements that relate to Northern Trust s financial goals, capital adequacy, dividend policy, expansion and business development plans, risk management policies, anticipated expense levels and projected profit improvements, business prospects and positioning with respect to market, demographic and pricing trends, strategic initiatives, re-engineering and outsourcing activities, new business results and outlook, changes in securities market prices, credit quality including reserve levels, planned capital expenditures and technology spending, anticipated tax benefits and expenses, and the effects of any extraordinary events and various other matters (including developments with respect to litigation, other contingent liabilities and obligations, and regulation involving Northern Trust and changes in accounting policies, standards and interpretations) on Northern Trust s business and results. These statements speak of Northern Trust s plans, goals, targets, strategies, beliefs, and expectations, and refer to estimates or use similar terms. Actual results could differ materially from those indicated by these statements because the realization of those results is subject to many risks and uncertainties. Our 200 annual report and periodic reports to the SEC contain information about specific factors that could cause actual results to differ, and you are urged to read them. Northern Trust disclaims any continuing accuracy of the information provided in this presentation after today. 2 Northern Trust Corporation 4Q20 Earnings Review