Northern Trust

Byron Laflin Smith was born on May 9, 1853, in Saugerties, New York, and moved to Chicago with his family as a small child; his father, Solomon Albert Smith, later became president of Chicago’s Merchants’ Savings, Loan and Trust Company. After attending Chicago’s public schools and the Harvard School for Boys, Byron Smith enrolled in what later became the University of Chicago (Class of 1874).⁠[1][1][1][1]

His first bank job was as messenger and clerk at the National Bank of Illinois, chartered in August 1871; in June 1876 he became cashier of the Hide and Leather National Bank. His father died on November 25, 1879; two months later he became a trustee of Merchants’, and a little more than a year after that he became a vice president, serving until 1885. In the meantime, in 1882, he was elected to a three-year term as a governor of the new Chicago Stock Exchange.⁠[1][1][1][1][1]

In 1885 he resigned as vice president of Merchants’ to attend to family business; over the next four years relatives and friends repeatedly sought his advice on estate planning and setting up trusts, and as demand for such services grew among wealthy Chicagoans, he decided to open a new type of bank.⁠[2][2]

On April 5, 1889, the Illinois Supreme Court upheld the Bank Act of 1887, allowing new banks to be organized in the state without a special act of the legislature and with no restrictions on capital or location; Smith and several colleagues had specifically developed the case. That day he told the Chicago Daily Tribune that a million dollars had already been raised, that the new institution would open within a few weeks, and that it would be called The Northern Trust Company.⁠[1][1][1][1][1][1]

The Northern Trust Company opened on August 12, 1889, in one room on the second floor of Chicago’s Rookery Building, where a staff of six opened seven accounts and took in $137,981 in deposits on the first day of business; by the beginning of the new year, deposits exceeded $1.5 million.⁠[1][2][2]

Smith provided 40% of the original $1 million capitalization, and the original 27 shareholders included Marshall Field, Martin A. Ryerson and Philip D. Armour; Smith served as president until 1914. It was the first bank in Chicago to advertise its services, first by direct mail and then in daily newspapers and the city directory.⁠[2][1][2]

One week after the Chicago World’s Fair opened in May 1893, the fair’s official depository, Chemical National Bank of Chicago, failed; the fair’s president, Northern Trust director Harlow N. Higinbotham, turned to Smith. Northern Trust set up branch offices in Jackson Park: the first fair branch opened on June 12, and a second followed two weeks later.⁠[1][1][1][1]

The episode bolstered Northern Trust’s reputation and international recognition; its business continued to grow during the nationwide financial panic of 1893, and by 1895 deposits totaled $10.5 million.⁠[2][2]

In 1894, the year after the fair, Northern Trust opened a Foreign Exchange Department, handling the second-largest volume of letters of credit of any Chicago bank; it declared its first dividend in July 1896, and in 1900 it published a pocket guide to the Paris Exposition for its clients. During the first two decades of the 20th century, it participated in multimillion-dollar loans to the governments of France, Chile, Colombia, Uruguay and the Philippines.⁠[1][2][1][1]

In 1906 Northern Trust completed its own building in the center of Chicago’s financial district, and its banking offices were the first in Chicago equipped with “manufactured air,” an ancestor of modern air conditioning.⁠[2][2]

Since its founding, Northern Trust had made only collateral loans; in 1912 the board approved the purchase of commercial paper. When the Federal Reserve System was created two years later, Northern Trust joined it and began providing unsecured lines of credit to its most reputable customers, and commercial banking soon became one of its most important businesses.⁠[2][2][2]

Byron L. Smith died in March 1914, and his son Solomon A. Smith took over the bank.⁠[2]

After the United States entered the war in 1917, Northern Trust acted as a depository under the Alien Property Custodian Act, holding over $500 million in enemy assets; during and immediately after the war, it sold nearly $30 million in Liberty Bonds and Victory Bonds.⁠[2][2]

Having refused to take part in speculative stock and bond dealings in the 1920s, Northern Trust was able to pay depositors their money whenever they wanted it during the Depression. When banks reopened after Roosevelt closed all U.S. banks in 1933, the people lined up outside Northern Trust were there to deposit money rather than withdraw it, and so much cash came in on the first day that it had to be stacked on the floor.⁠[2][2][2]

It opened more than 10,000 new accounts in the early 1930s, and deposits rose from $56 million in 1929 to over $300 million in 1935; over the same period the number of banks in Cook County fell from 335 to 95, and Northern Trust was one of the few Chicago banks to survive the Depression without any government assistance.⁠[2][2][2]

Near the end of the Depression, Northern Trust began soliciting commercial business in the Midwest, and by 1941 nearly half of its commercial accounts came from outside the Chicago metropolitan area. During World War II it took part in the government’s war bond drives and made loans for war materials production under special government programs, and by 1945 it had doubled in size.⁠[2][2][2]

In the 1950s Northern Trust was at the forefront of electronic data processing, developing numerous automated banking services, including fully automated financial statements for trust clients, the first in the industry.⁠[2]

When Solomon Smith died in 1963, his son Edward Byron Smith took over the bank, whose assets by then exceeded $1 billion.⁠[2]

In 1969 Northern Trust opened its first international office in London, becoming the first Illinois state-chartered bank to open an office outside the United States; the same year it set up a New York subsidiary, the Northern Trust International Banking Corporation, to handle currency transactions for financial institutions abroad.⁠[1][2][2]

In 1971 Northern Trust Corporation was formed as the bank’s holding company. The same year it acquired Security Trust Company of Miami and then established trust operations in Palm Beach, Sarasota and Naples; in 1974 it entered Arizona.⁠[3][2][2]

In the 1970s, deregulation of deposit rates and corporations’ shift to the commercial paper market for funding deprived banks of stable deposits and their best loan assets, and Northern Trust, like many banks, looked for new markets, including lending to less developed countries as “petrodollars” were recycled. When oil prices fell sharply in the early 1980s and several South American nations could not repay their loans, Northern Trust suffered uncharacteristically high losses, then restored its asset quality through loan reserves and write-offs.⁠[2][2][2][2][2][2]

Edward Byron Smith retired in 1979 and was succeeded by E. Norman Staub, followed in turn by Philip W. K. Sweet and Weston Christopherson; David W. Fox, who took over later, was only the seventh chief executive in the bank’s history.⁠[2]

In 1981, after Illinois allowed banks to acquire banks in Cook and the surrounding counties, Northern Trust promptly acquired O’Hare International Bank in Park Ridge, First Security Bank in Oakbrook and First National Bank of Lake Forest. In 1982 it expanded its Florida business from trust operations to a full range of financial services, and in 1986 its Arizona business was likewise expanded to full services.⁠[2][2][2]

In 1988 it created a trust subsidiary with offices in San Francisco, Los Angeles and Santa Barbara; in 1989 it acquired Concorde Bank in Dallas, entering Texas. By 1990 it administered more than $5 billion in trust assets in South Florida alone.⁠[2][2]

William Osborn served as chief executive for 12 years, stepping down in December 2007. He later recalled that the hardest part of his tenure was the first major staff reduction in 2003: the company laid off about 750 people and sold a business with another 750 employees, so about 1,500 people left in all. He also said he had pushed the globalization of Northern Trust, and that by 2009 more than half of its business was outside the United States.⁠[4][4][4]

When Enron went bankrupt in 2001, Northern Trust was trustee of the Enron employees’ 401(k) plan; the plaintiffs alleged that it had failed to adequately diversify the plan’s funds, leaving employees with heavy losses from the bankruptcy. In July 2006, U.S. District Judge Melinda Harmon gave final approval to a $37.5 million settlement between Northern Trust and former Enron employees, under which Northern Trust neither admitted nor denied the allegations.⁠[5][5][5][5][5]

Frederick H. Waddell, who joined the company in 1975, became chief executive in 2008. That fall, Northern Trust received capital through the U.S. Treasury’s Troubled Asset Relief Program (TARP) Capital Purchase Program; the company said it had not sought the investment but had agreed with the government’s goal of having all major U.S. banks participate.⁠[6][7][7]

Northern Trust remained profitable through the financial crisis and recession, earning $794.8 million in 2008, but in December of that year it announced it would cut 4% of its staff, about 450 jobs.⁠[7][7]

Northern Trust had been title sponsor of the PGA Tour’s Northern Trust Open since 2007 under a five-year contract. During the February 2009 tournament at Riviera Country Club in Los Angeles, it hosted dinners and concerts for clients and employees featuring performers such as Sheryl Crow and the band Chicago, which were captured on video by the entertainment website TMZ.⁠[7][7][7][7][8][9]

On February 24, House Financial Services Committee Chairman Barney Frank and 17 other Democrats wrote to President and CEO Frederick H. Waddell, saying the company had staged lavish events while taking more than $1.5 billion in TARP funds, and demanding that it immediately return the equivalent cost to the federal government; Senator John Kerry proposed legislation restricting banks that received bailout funds from hosting or sponsoring conferences and entertainment events.⁠[8][8][8][7]

Company spokesman Douglas Holt responded that the events were part of its global marketing to thank clients and win business and were paid for out of operating cash flow, with no government funds used for operating expenses such as marketing or sponsorships; he also said the company had earned operating net income of $641 million in 2008 and was not a money-losing bank that had turned to the government for help.⁠[7][7][9][9]

In April 2009 Northern Trust issued $836 million in common shares and $500 million in senior notes; on June 9 it received authority to redeem the $1.576 billion in preferred shares issued to the U.S. Treasury, and on June 17 it repaid the investment in full.⁠[10][10][11]

On August 26 it repurchased for $87 million the warrant issued to the Treasury for about 3.8 million shares, bringing its total payments to the Treasury to more than $1.709 billion (including the preferred stock, the warrant and dividends paid), which the company calculated as a 14% annualized return.⁠[12][12][12]

In November 2009, William Osborn ended a 39-year career at Northern Trust, retiring as chairman after 14 years and leaving the board, and CEO Waddell added the role of chairman.⁠[4][4]

In June 2011, the Financial Industry Regulatory Authority (FINRA) fined Northern Trust Securities $600,000. FINRA found that from October 2006 through October 2009 the firm’s exception reporting system failed to capture all collateralized mortgage obligation (CMO) transactions and certain large equity and bond trades, so it did not monitor customer accounts for unsuitable concentrations in CMOs; from January 2007 to June 2008, 43.5% of its business was excluded from review. The firm neither admitted nor denied the charges but consented to FINRA’s findings.⁠[13][13][13][13][13]

A number of participants in Northern Trust’s securities lending program filed individual lawsuits or purported class actions alleging that it had failed to exercise prudence in investing the collateral received from borrowers of securities, causing losses, with claims including breach of fiduciary duty under common law and under the Employee Retirement Income Security Act. In 2013 the company recorded a $19.2 million pre-tax charge to settle certain claims in two of these suits, while other suits remained pending; in April 2014 it disclosed that its securities lending activities were under investigation by the U.S. Securities and Exchange Commission.⁠[6][6][6][6][6]

In 2014 Northern Trust commissioned an official history, Principles That Endure, to mark its 125th anniversary. According to the figures in the book as of December 31, 2013, it had about 15,000 employees in 18 U.S. states and 18 countries, $102.9 billion in banking assets, $5.6 trillion in assets under custody and $884.5 billion in assets under management.⁠[14][1][1]

In January 2015, French prosecutors recommended charges against Northern Trust Fiduciary Services (Guernsey) Limited (NTFS), an indirect subsidiary of Northern Trust, in connection with two trusts for which it served as trustee; in April that year a French investigating magistrate charged NTFS with complicity in estate tax fraud, and a number of other persons and entities were also charged. The company said NTFS had provided no tax advice and was not involved in the challenged estate tax filings.⁠[6][6][3]

In 2017 a French court found that no estate tax fraud had occurred and acquitted NTFS and all other defendants; after prosecutors appealed, an appellate court again acquitted all defendants in June 2018.⁠[3][3]

On October 17, 2017, Waddell informed the board that he would step down as chief executive effective January 1, 2018, while remaining chairman, and the board elected President Michael G. O’Grady to succeed him as CEO. O’Grady joined in 2011 from Bank of America Merrill Lynch’s investment banking group, served as chief financial officer from 2011 to 2014, and has also been chairman since 2019.⁠[15][15][3][3]

On September 30, 2019, the U.S. Commodity Futures Trading Commission (CFTC) filed and settled charges against The Northern Trust Company, a provisionally registered swap dealer. The CFTC found that from 2013 through at least 2018 the bank failed to correctly report hundreds of thousands of swap transactions to a swap data repository because it did not adequately supervise its swap dealer, including by repeatedly hiring compliance staff who lacked the necessary technical expertise; it was ordered to pay a $1 million civil monetary penalty, which the CFTC substantially reduced in recognition of its cooperation and remediation.⁠[16][16][16][16][16][16]

On September 18, 2020, the U.S. Securities and Exchange Commission announced that Northern Trust Hedge Fund Services LLC and Northern Trust Global Fund Services Cayman Limited had settled charges over their role in causing the fraud of L-R Managers and its principal, Donald S. LaGuardia, Jr., against private funds and their investors. The SEC found that while providing fund administration services to the LR Global Frontier Funds from about January 2016 to August 2017, Northern Trust had identified but failed to adequately escalate concerns beforehand, allowed the advisers to withdraw money from the funds without support, and accounted for a related receivable as fund assets, so that capital account balances and returns reported to investors were materially inflated.⁠[17][17][17][17]

Without admitting or denying the findings, the two subsidiaries consented to a cease-and-desist order and agreed to pay a $150,000 civil penalty jointly and severally; Northern Trust Hedge Fund Services also agreed to pay disgorgement of $15,076 and prejudgment interest of $2,553.⁠[17][17]

In January 2021, the Cour de Cassation, France’s highest court, reversed the 2018 appellate ruling and ordered a retrial of the estate tax case at the appellate level; the retrial concluded in October 2023.⁠[3][3]

On March 5, 2024, the French appellate court rendered judgment against all defendants, including NTFS, which was fined €187,500 and, together with others convicted of tax fraud or aiding and abetting tax fraud, held jointly and severally liable for any unpaid estate taxes plus penalties and interest; NTFS appealed the same day.⁠[3][3][3]

In June 2025, Bank of New York Mellon approached Northern Trust about a possible merger, and the two banks’ chief executives had held a discussion the previous week. On June 23, a Northern Trust spokesperson said the company does not comment on market rumors but is “fully committed to remaining independent.”⁠[18][18][18]

As of December 31, 2025, Northern Trust Corporation had consolidated total assets of $177.1 billion and stockholders’ equity of $13.0 billion, with the bank subsidiary holding consolidated assets of $176.4 billion; its Asset Servicing business had $17.4 trillion in assets under custody/administration, $13.6 trillion in assets under custody and $1.3 trillion in assets under management. The company employed about 23,800 full-time equivalent staff and had offices in 24 U.S. states and Washington, D.C., and 22 locations in Canada, Europe, the Middle East and the Asia-Pacific region.⁠[3][3][3][3][3]

On February 4, 2026, the Cour de Cassation affirmed the appellate court’s judgment against all defendants, including NTFS; the amount of the parties’ joint and several liability for unpaid estate taxes plus penalties and interest depends on a final decision in a separate proceeding before the tax courts.⁠[3][3]

In the second quarter of 2026, Northern Trust reported net income of $792.2 million, or $4.23 per diluted share, including a $525.4 million pre-tax gain from its participation in Visa’s second exchange offer; on July 21 the board approved a $0.08 (10%) increase in the quarterly dividend. As of June 30, 2026, it had $20.0 trillion in assets under custody/administration and $2.0 trillion in assets under management.⁠[19][19][19][19][19]

On September 28, 2026, Chief Financial Officer David W. Fox, Jr. informed the company that he plans to retire on or around March 31, 2027, and the company will search for its next chief financial officer.⁠[20][20]

Northern Trust Corporation is a bank holding company that has elected to be a financial holding company, supervised by the Federal Reserve Board, and its principal subsidiary, The Northern Trust Company, is an Illinois banking corporation headquartered in Chicago. The company provides wealth management, asset servicing, asset management and banking to corporations, institutions, families and individuals, and its common stock is listed on Nasdaq under the symbol NTRS.⁠[3][3][3][19]

As of October 2026, Michael G. O’Grady is chairman and chief executive officer. The company describes service, expertise and integrity as its founding principles; as of March 31, 2026, it had $1.8 trillion in assets under management and more than 23,000 employees in more than 20 locations worldwide.⁠[19][21][21][21]

Northern Trust: Official website: https://www.northerntrust.com/ (opens in a new window).⁠[19]