Noninterest income represented 74% of total revenue in 2024, compared to 71% in 2023, highlighting the company's strategic focus on wealth management and asset servicing, which generate recurring fee revenues.

The Corporation continues to optimize its geographic footprint, establishing operations in lower-cost locations and outsourcing to third-party vendors. This exposes the company to risks associated with maintaining service quality, control, and effective management within these operations.

The company is investing in innovation and technology, including AI solutions, to process transactional activity more efficiently and mitigate risk. This suggests a commitment to staying competitive and improving operational efficiency.

Noninterest expense increased by 7% YoY, indicating challenges in controlling costs despite revenue growth. This increase was primarily driven by higher compensation, equipment and software, and outside services expenses.

New leaders were appointed from the internal talent pool and recruited externally to bring in new skills and expertise. This is intended to align with the company's strategy and position it for future success.

The company's well-being programs support employees and help maintain an inclusive and resilient environment. Through these programs, the company enhances employee engagement, reduces workforce risks, and builds an adaptive, high-performing culture.

The company is subject to many types of operational risks that could affect earnings negatively. These risks can be exacerbated by the trend toward hybrid and remote working arrangements in recent years.

Breaches of security measures, including cyber-attacks, could expose the company to theft, loss, or unauthorized disclosure of sensitive information, potentially leading to liability claims and reputational harm.

The company is subject to extensive and evolving government regulation and supervision that impacts operations. Changes to laws, regulations, and policies may heighten challenges and make compliance more difficult and costly.

Northern Trust faces intense competition in all aspects and areas of its business. Competition comes from both regulated and unregulated financial services organizations, whose products and services span the local, national, and global markets in which Northern Trust conducts operations.

Northern Trust's business strategy is to provide exceptional quality financial services to targeted market segments in which it believes it has a competitive advantage to offer clients a unique value proposition. As part of this strategy, Northern Trust seeks to differentiate itself from its competitors with premier, holistic solutions and exceptional experiences tailored to meet clients' needs.

In addition, Northern Trust emphasizes the development and growth of recurring and scalable sources of fee-based income and continual productivity improvements. Northern Trust also seeks to maintain its foundational strength with a strong, conservative balance sheet and a globally respected brand.

Failure to control costs and expenses adequately could affect earnings negatively. Increased expenses have affected—and a failure to control costs and expenses in the future, whether as a result of inflation or otherwise, could affect earnings negatively.

We regularly assess and monitor operational risk in our businesses. Despite our efforts to assess and monitor operational risk, our risk management program may not be effective in all cases.

Our dependence on technology, and the need to update frequently our technology infrastructure, exposes us to risks that also can result in losses.

We need to invest in innovation constantly, and the inability or failure to do so may affect our businesses and earnings negatively.

Northern Trust uses a variety of machine learning and artificial intelligence (“AI”) solutions to process transactional activity more efficiently and to mitigate risk. These uses currently include, among others, digitizing documents, detecting anomalous, fraudulent transactions and training services teams on operational processes.

Regulation of AI is rapidly evolving in the U.S. and worldwide as legislators and regulators are increasingly focused on these powerful emerging technologies. The technologies underlying AI and its uses are subject to a variety of laws and regulations, including intellectual property, privacy, data protection, cybersecurity, consumer protection, competition, and equal opportunity laws, and are expected to be subject to increased regulation and new laws or new applications of existing laws and regulations.

The Corporation's capital distributions are subject to the Federal Reserve Board's capital plan rules, which require the Corporation to submit annual capital plans to the Federal Reserve Board for review.

The major components of that oversight are the Federal Reserve Board's Comprehensive Capital Analysis and Review (CCAR) and Dodd-Frank Act Stress Tests (DFAST). These requirements involve both company-run and supervisory-run testing of capital under various scenarios, including baseline and severely adverse scenarios provided by the appropriate banking regulator.

Our ability to return capital to stockholders is subject to the discretion of our Board of Directors and may be limited by U.S. banking laws and regulations, applicable provisions of Delaware law, or our failure to pay full and timely dividends on our preferred stock and the terms of our outstanding debt.

Northern Trust has certain processes and controls in place designed to mitigate the risks associated with the use of AI solutions, including monitoring the development and applicability of such evolving laws and regulations, and will take steps designed to comply with laws and regulations applicable to Northern Trust's use of AI.

The Corporation maintains a regulatory change framework designed to monitor and respond to regulatory change, including with respect to data privacy and security, and has adopted and disseminated privacy policies and communicates required information relating to financial privacy and data security in accordance with applicable law.

Embedded in our culture are five behaviors to help us deliver on our strategic objectives: relentlessly client-centric, constantly managing risk, respectfully candid, intentionally inclusive, and always accountable.

Changes in the monetary, trade and other policies of various regulatory authorities, central banks, governments and international agencies may reduce our earnings and affect our growth prospects negatively.

Risks and concerns about the financial stability of various regions or countries across the globe could have a detrimental impact on economic and market conditions in these or other markets across the world.

While regulatory standards remain largely aligned following the UK's withdrawal from the EU, commonly referred to as “Brexit,” it is possible that future divergence may occur between the UK and EU; therefore, the final impact remains uncertain.