Total Assets Under Management (AUM) increased by 7% year-over-year to $1,607.8 billion as of March 31, 2025, primarily due to favorable markets. Assets Under Custody/Administration (AUC/A) also grew by 3% year-over-year to $16,924.0 billion.

Wealth Management Trust, Investment and Other Servicing Fees increased by 8% year-over-year to $541.9 million, driven by asset inflows and favorable markets. This compares favorably to the 5% growth in Asset Servicing Trust, Investment and Other Servicing Fees to $671.9 million.

Net inflows into Assets Under Management were $11.6 billion in Q1 2025, consistent with $11.7 billion in the prior-year quarter. This indicates continued, albeit stable, client asset accumulation despite market performance fluctuations.

Total Noninterest Expense increased by 4% year-over-year to $1,417.6 million in Q1 2025. This was primarily driven by higher Equipment and Software expense (up 11% due to software amortization and support) and Outside Services expense (up 7% due to consulting services), partially offset by a decrease in Other Operating Expense.

Effective January 2025, certain operations support activities were moved out of Asset Servicing and Wealth Management segments to form the Enterprise Chief Operating Office. This organizational change aims to provide centralized operational support and improve efficiency.

The effective tax rate decreased to 24.8% in Q1 2025 from 26.1% in Q1 2024. This improvement was primarily due to higher tax benefits associated with share-based compensation and a lower state effective tax rate, reflecting efficient tax management.

The Provision for Credit Losses shifted to a charge of $1.0 million in Q1 2025, compared to a negative provision of $8.5 million in Q1 2024. This increase was primarily driven by an increase in the collective reserve due to increased projected macroeconomic uncertainty, partially offset by improvements in the Commercial Real Estate (CRE) portfolio.

Nonaccrual assets increased by 31% to $73.1 million as of March 31, 2025, from $56.0 million at December 31, 2024. This rise was primarily attributed to downgrades of certain Residential Real Estate and Commercial and Institutional loans, indicating a potential deterioration in credit quality for specific loan classes.

The company's Market Value of Equity (MVE) sensitivity analysis indicates that a 100 basis point increase in interest rates would result in an estimated decrease of $414 million in MVE as of March 31, 2025. This highlights a negative sensitivity to rising rate environments, which could impact regulatory capital ratios.

Trust, Investment and Other Servicing Fees, a primary revenue driver, increased by 6% year-over-year to $1,213.8 million, primarily due to favorable market conditions. This suggests the company is effectively leveraging positive industry trends to grow its core fee-based businesses.

Asset Servicing and Wealth Management segments both reported year-over-year increases in Trust, Investment and Other Servicing Fees (5% and 8% respectively). This indicates continued client engagement and asset retention in a competitive landscape, allowing Northern Trust to benefit from overall market appreciation.

Northern Trust utilizes a diverse mix of funding sources, with average Interest-Bearing Deposits increasing 4% to $99.0 billion in Q1 2025. This diversified funding base, including higher deposits and lower funding costs, enhances financial stability and competitive advantage in managing interest rate fluctuations.

Equipment and Software expense rose 11% to $280.9 million, driven by higher software amortization and support. Outside Services expense increased 7% to $245.2 million due to increased consulting services. These investments suggest a focus on enhancing technological capabilities and external expertise.

Other Operating Expense decreased by 16% to $84.0 million in Q1 2025, primarily due to a $12.5 million lower FDIC special assessment (recorded in prior year) and lower supplemental compensation plan expense. This reduction partially mitigated the overall increase in noninterest expenses.

The formation of the Enterprise Chief Operating Office in January 2025, which centralizes operational support activities previously within Asset Servicing and Wealth Management, aims to improve operational efficiency and streamline support functions across the organization.

Equipment and Software expense increased by 11% year-over-year to $280.9 million in Q1 2025, primarily due to higher software amortization and increased software support and rental expense. This indicates ongoing investment in technological infrastructure and capabilities.

The net book value of capitalized software increased to $2,317.1 million as of March 31, 2025, from $2,155.1 million as of December 31, 2024. This growth reflects the company's ongoing internal-use software development projects aimed at new or enhanced functionalities.

Upon adoption of ASU 2023-08 regarding crypto assets on January 1, 2025, Northern Trust reported no impact on its consolidated balance sheets or statements of income. This is because the company does not hold crypto assets, indicating a conservative approach to emerging digital asset classes.

Northern Trust repurchased 2,616,238 shares of common stock at a total cost of $287.2 million in Q1 2025, significantly higher than 1,647,526 shares at $132.0 million in Q1 2024. This accelerated repurchase activity, with an average price of $109.79 per share, reflects management's confidence in the company's valuation and future cash flows.

The Common Equity Tier 1 Capital ratio (Standardized Approach) improved to 12.9% at March 31, 2025, from 11.4% a year prior, well above the 4.5% minimum. All other capital ratios (Tier 1, Total Capital, Leverage) also remained strong and increased year-over-year, indicating a very healthy capital position.

Cash Dividends Declared Per Common Share remained stable at $0.75 in Q1 2025, consistent with Q1 2024. This indicates a commitment to returning capital to shareholders through consistent dividend payments.

Northern Trust continues to fulfill its obligations under the CRA by making qualified investments that support institutions and programs benefiting low-to-moderate income communities. These investments are primarily in legal entities structured as Variable Interest Entities (VIEs).

Northern Trust maintains a high-quality debt securities portfolio, with 96% of the Held-to-Maturity (HTM) portfolio rated A or higher as of March 31, 2025. This focus on high credit quality assets contributes to financial stability, which is a foundational aspect of responsible business practices.

Northern Trust does not hold crypto assets, as confirmed by the adoption of ASU 2023-08, which had no impact on its financial statements. This position avoids the volatility and regulatory uncertainties currently associated with direct crypto investments, aligning with a conservative risk management approach.

Major equity market indices, such as the S&P 500, showed significant year-over-year growth (18% daily average, 7% period-end) as of March 31, 2025. This positive market performance directly contributed to the 7% increase in Assets Under Management and the 3% increase in Assets Under Custody/Administration.

Net Interest Margin (FTE Adjusted) increased to 1.69% in Q1 2025 from 1.61% in Q1 2024. This improvement was primarily driven by higher average deposits and lower funding costs, indicating effective management of interest rate dynamics in the prevailing market environment.

Management's forward-looking statements highlight ongoing geopolitical risks, including military conflicts (Ukraine/Russian Federation, Middle East) and tensions (U.S. and China), as factors that could impact financial results. This indicates a recognition of broader global instability affecting the operating environment.