Northern Trust (NTRS) 24 Jul 192019 Q2 Earnings call transcript

Good day. And welcome to the Northern Trust Corporation Second Quarter 2019 Earnings Conference Call. Today's conference is being recorded.

At this time, I would now like to turn the call over to the Director of Investor Relations, Mark Bette, for opening remarks and introductions. Please go ahead, sir.

Paula. you, Thank everyone. Good morning, to conference Northern quarter welcome Corporation Trust earnings call. XXXX And second

on morning and Joining our call our me this Officer; our Relations Allnutt, from Chief are; Lauren our Lernihan Controller; Kelly Investor team. Financial Bowman, Biff

call. call webcast and will rebroadcast press on will The available Web of today. earnings the Web Northern July we northerntrust.com. this on presentation, find of This northerntrust.com. provided that accuracy XXst. our site quarter information at available report after is our on will replay our trends guide Trust in live which release being quarterly continuing second are call financial use only today's disclaims through Our Web site August call authorized is Also be any our earnings the both on site, this conference to XXth you review

current include future call our which are for today's predict. during Now, could conference the Trust's differ and Harbor say because or by that expressed, implied Safe forward-looking results. materially and Actual statements, we subject or future difficult What estimates expectations those many from statements, may uncertainties statements. Northern events are to course results risks of these to those realization of is results of

to other information our about that I reports urge factors and results. you on Commission and Report detailed for read affect filed XXXX Securities Form XX-K Annual Exchange with the could actual

the through query queue opportunity possible please as initial will one limit to session, many us follow-up. question-and-answer permits. your as questions ask people and allow the question today's move time one This During to related enable to as and

for again joining Thank us today. you

Biff call the to Let me Bowman. turn over

everyone. morning, Good

morning, XXXX equity Earnings call. our reported welcoming second return common net join This was second of were on our on X earnings income quarter presentation. $X.XX, per earnings Mark Page me to you our quarterly of XX.X%. share $XXX.X and Let we million. conference review Starting and quarter

and one million compares $X.X charges ago. in million $X.X restructuring within of severance related quarter included expenses. quarter's This million year $XX.X prior to This results and the

results indices to quarter, Before the quarter. a our like would that were XXX our those on performed respectively. X.XX%. during sequential Compared year-over-year X.X% ended of end down X.X%, sequential the business the comparisons period mixed ago. was and with quarter EAFE favorable S&P mixed on our up going of through basis, factors basis. MSCI in EAFE markets favorable lag On on one some prior pricing, year, increasing were some but I on impacting during well based are and the Recall a S&P XXX but Equity fees while the macro year a detail, markets comment the were of the X.X% and to versus basis,

and up and and S&P was On while up wide X.X%. EAFE X.X% basis, and the On up respectively. were XXX quarter the lag a year-over-year basis, sequentially X.X% XXX X.X% a the basis, EAFE down was S&P EAFE X.X% respectively. quarter LIBOR, sequentially a month three-month On respectively. were EAFE one-month XXX S&P on XX.X% were X XXX during quarter was average interest lower On XX declines up by lag sequential seen basis and the basis, and while as X.X%, U.S. flat. a S&P the the year-over-year short-term points in was up rates average

euro ended X%, impact year. dollar therefore favorably sequential and British U.S. the currencies The year-over-year and increased prior euro but while down expenses. the the an revenues impact X%. non-U.S. respectively declines to of impacted compared translation the unfavorable pound the expense, basis, influenced had a to on pound the revenue. the client quarter, X% and U.S. On British certain quarter assets rates The and the down Currency dollar ended and X% versus

X%. was revenue X% million financial of The one the $X.X review a provision quarter. up year year. one ago. quarter Year-over-year, million and income slightly year losses $X.X credit X for in a ago was credit down from Page to income compared net noninterest move and of second last to of Expenses interest flat provision Let's with highlights increased the from current the

income the comparison, prior to increased noninterest X% Net declined revenue with down net income increased XX% In Net X% was up X% flat year-over-year. income compared and Expenses income sequentially. interest the sequential X%. quarter.

from Return XX% XX.X% quarter, down prior one quarter. ago and for on was the from common in equity average XX.X% year the up

sequential and $XX.X custody trillion year increased under ago, on compared administration and one basis. of to X% X% a Assets up were

X% were of and under ago, up Assets up trillion X% custody sequentially. compared year one to $X.X

moves was year-over-year by the new by markets impact and partially driven Both in and unfavorable the currency of rates. the favorable performance exchange business, offset sequential

$X.X offset management partially sequential was on The were by markets by business, under higher and up on X% X% collateral. Assets driven partially basis up increase basis. a end The by securities trillion, reflected year-over-year sequential lending markets, period new offset performance and year-over-year outflows. a lower higher

in at look results X. on Let's greater starting with detail revenue Page the

quarter and and Second and represent to X% equivalent servicing sequentially. was X% up revenue other year flat $X.X compared billion, fees the second up quarter, X% up largest from component $XXX last the taxable in and a our on sequentially. basis revenue million of last fully year were Trust, investment

a sequential trades down swap volatility, down in year-over-year X% foreign-exchange and Foreign Volumes income sequential year-over-year Both function. the but lower driven also were sequential $XX impact. well were quarter, both activity year-over-year as a exchange and in our second the million as treasury by down declines on mix basis, trading XX% favorable and sequentially. had was of lower the

Other X% year valuation and the increase second due primarily implemented XX% in insurance bank-owned current fees. management sequentially. ago noninterest brokerage program was compared quarter, up the quarter, partially adjustment to relating offset by million The year the life to was up swaps visa-related income and treasury a one year-over-year quarter in in and a to to lower $XX income prior

which in more $XXX X% bank-owned by year-over-year program was swap Net later, the driven sequentially. was I performance interest visa-related discuss life lower million quarter, in and sequential X% increasing will insurance but detail the second The income, down expense.

X. and trust fees our of on Page components the investment at look Let's

was fund on component and unfavorable and year-over-year year-over-year by of million and our corporate $XXX basis. X% largest and Custody impact up currency up totaled For second The were in the a markets. and reduced a in C&IS but The both business, up fees, fees currency fees, administration partially X% were million institutional of $XXX offset down services changes performance quarter year-over-year sequential C&IS by the new unfavorable by translation X%. X% rates business, on X% were basis. driven fees sequential translation year-over-year, almost growth and

the On favorable currency and of markets business, new offset by sequential impact basis, unfavorable a partially translation.

X% Both Assets impact for X% sequential unfavorable the C&IS clients moves and under were by primarily rates. trillion partially year-over-year in of sequentially. custody was performance offset and driven $XX.X up business, favorable currency the and administration exchange up markets by new year-over-year quarter, and at

lagged custody the The month management fund the Recall in $XXX values down and our and quarter's in administration lag million quarter impacting were fees. of into that market was second up both Investment C&IS revenue factor markets fees quarter with lag by fees favorable performance decline C&IS year due to to The but prior in presentation, X% a gross year-over-year due primarily markets. year-over-year to markets. change driven favorable sequential was the primarily offset X% sequentially. partially adjustments by

increase year-over-year up and favorable for driven billion, markets up levels. offset X% $XXX year-over-year primarily partially by management X% businesses, securities and markets. clients by C&IS under was sequential growth The by lending Assets sequentially. is were lower collateral favorable new The driven

at lower partially $XXX down billion collateral XX% end second fees and quarter, $XXX was sequential were levels the across volumes. higher decline million as volumes, year-over-year by and lower XX% The up lending decline by lower sequentially. collateral year-over-year X% the driven quarter. as in by $XX spreads. driven lending spreads, averaged was declined offset primarily well Securities year-over-year Securities X% sequentially. down were quarter and The was billion Average

Moving favorable wealth the due up The million X% X% quarter, to to was business. our sequential investment servicing the The year-over-year second to markets. quarter mainly and new and performance in were favorable compared year to sequentially. attributable in Trust, prior primarily were was fees increase $XXX business and other management markets. up

X% at mainly off products, in were cash by change offset and up where markets, sequentially. were outflows. outflows management offering was money driven within funds. client discontinued favorable were On under relating $XXX increase Assets flat deposits primarily market management to The a The end, were in the by suite we year-over-year offset outflows. balance billion for sheet clients partially wealth by part our product and of into year-over-year markets sequential quarter favorable basis,

from $XX averaged Page the versus and down during the X. year-over-year. Earnings X% in the year million one averaged billion one declined billion. year the Noninterest quarter, XX% year to prior X% quarter, the down the was ago up quarter, year. $XX X% from one quarter ago. in $XXX in income Interest $XX billion averaged from $XX were down X% were $XXX Total varying and deposits balances ago. prior assets which year. Loan second billion down were compared to deposits second interest to Moving X% averaged Net bearing deposits, billion

X% income points quarter, net reflects ratess. basis, up sheet X%, On compared The XX and shift was levels interest quarter to earnings average interest the in higher primarily in basis declined year X% interest and short-term ago. on quarter. the was the was the the prior the sequential impact from balance in second net X.XX% improvement of a prior deposit basis as declined The mix year margin sequential interest asset margin a down net

decline non-U.S. These worth leveraging sequential balances one-half we our Client deposits, levels is treasury our deposit were sequential related within It for down the office than X% approximately accounted less in use to a of percent that of basis. on was noting wholesale group. XX% deposit the the of purposes in deposits than more lower quarter. for second which

seen interest the in balance approximately margin treasury profit the The gave what exchange $X basis quarter points, extent by basis, we reflecting foreign trading in short-term earnings. to net million sheet have the offset function this amount the we a several opportunity shift, sequential that foreign quarters. our in slightly swap a mix see with last resulted On of partially primarily interest did activity lower less net for within activity a income. increased not up interest exchange We X

more results. as were line business results quarter's This usual with in

foreign trading offset million, additional saw we quarter, $XX interest net exchange prior the income in in by $XX of million income. comparison, less For

deposits. the quarter, quarter U.S. currency deposits XX% XX% two sheet, Looking at our mix prior prior for of second total from both know we and highlight look I balance periods. at represented the of wanted trends. to the for sequential you to year items down as our This is dollar our in

a we of program billion had life bank-owned quarter, earning implemented non-earning the $X insurance that effect moving during assets. from First, to the

in would the tax resulted million by decline estimated $XX and approximate quarter, other the benefit of million income well interest of one-half annualized income other $X.X interest net approximately by with approximately operating in and million a $X for million estimated to we an increase a On income $X.X an tax place in as was the $XX within basis, and million. program offset as million an decline program net of income, net The in benefit. increase operating $XX expect an within income, benefit

we I as when to under discussed wealth management. Second, management assets referred

see we money change the should had of billion sheet. of increase end other funds. our deposit whereby line in balance This period change deposits market within an and client quarter, sheet our discontinued savings, $X off money in deposits on During into in the we approximately market sweep balance that a you our resulted products,

X. $X sequentially. X% were the higher billion year the and quarter second down were and Turning in Expenses prior to X% Page than

$X.X and current the other quarter included mentioned, charges. previously severance million associated in with As expense

the year prior in $XX.X note purposes, million respectively. prior that comparison $X.X included For charges and quarter and million

benefit out called favorable was year X% point of on charges, X a are ago. one the percentage the current translation just The for under basis. expenses up Excluding from year-over-year impact quarter expenses currency

related categories. by and was quarters, driven higher base in charges drivers due both expenses following withholding and payroll partially higher, items higher the year Employee to pay salaries was cost due growth, Excluding adjustments within the Compensation current expense prior retirement to primarily performance-based to the were benefits equity partially incentives. key slightly and expenses. higher staff by lower long-term lower by offset expense medical offset tax,

were and to slightly service third-party due Other was technical year-over-year by up were offset the and adviser costs expenses higher prior software lower expense up Equipment higher Outside to higher expense. related due and miscellaneous up lower mainly to partially expense, premiums partially lower related software from services spends. operating staff by offset expense, sub-custody spends. FDIC due year

prior including quarters, primarily based long-term related the to the current in view, incentives salaries Compensation the down higher were staff. expense higher with and prior by lower declined, sequentially. expense cash in expenses offset base performance expense incentive expense sequential both Shifting to and quarter's retirement charges $XX reflecting pay expenses expense adjustments associated The partially based equity million due to included incentives, equity eligible accruals. X%

Employee sequentially, and approximately sequentially and costs, services of services declined did party quarter. due services by costs. level Outside credit lower fees expense vendor adviser sub-custody higher increased technical medical benefit expenses. partially the benefits technical in primarily to due higher third lower from offset legal The to onetime during $X million related

by and by staff lower Arizona, Other within sequentially. the X% growth locations. all was and Manila, cost locations, levels higher reductions cost from operating driven year-over-year increased business Staff promotion offset The period, increased staff expense include which Limerick, higher partially attributable expense. Ireland in increases approximately India, X% Tempe prior our primarily and to

have we started initiative, our XXXX. on discussed through previous for which we As calls in spend value

We run million of XXXX. savings our with by realigning realizing expense been in have goal the expense rate $XXX

embed We to sustainable expense continue management a approach.

We expense expect to our these fee growth align to with organic our more closely growth. efforts be slower

in reducing year-over-year Our by savings, the goal. annualized million second expense just to This $XXX under $XX the million approximately an would equate $XXX approximately rate points. growth X.X on against quarter basis reflect results million expense

particularly profitability a in the X, sustainably our our productivity. recent and fee our has equity. drive ultimately, expense growth on progress enhancing The ratio, most business, managing our have of Page of the we important and can to control. This return the organic on improve to reflects key it focused is slide Turning expenses margin progress remain efficiency measure our improve as on We to what years been fees of pre-tax addresses continuing ratio and focus directly we made returns. to expenses and to in

supplementary remain under Tier Turning the became approach. X, strong and of standardized ratio our approach, was the corporation ratios leverage capital X equity with to at advanced common The Page under X.X% Trust our the at ratio XX.X% XX.X% and the exceed Trust minimum requirement. to that applicable start in X.X%, the which the ratio, liquidity of XXX% bank both coverage is was requirement applicable XXXX. X% above With Northern at the respect the of effective Northern

regulators final ratios rules. of calculation As phased-in change could III the Northern our fully final which and implementation from could additional models be there the from enhancements through Trust progresses of to Basal implementation, guidance rule, III the regulatory under the further Basel our

During cost at the we repurchased X.X quarter, than million of shares more common stock a of $XXX million.

Federal our June, the Directors share. capital objection of dividends Board plan per $X.XX in announced we XXXX our we As received no requested In it, increase common Yesterday, Reverse. to of authority repurchase provides quarterly stock. from sequential represents $X.X a increase to formally a dividend capital increase, planned approved flexibility the increase year-over-year XX% XX%. of which the and plan also of common of up our The billion to

performance, general other market conditions, repurchased shares financial plans, share Northern amount to, business will not opportunities and depend investment price. of factors, including timing various limited The including Trust but on and

during equity the XX% impact return macroeconomic and quarter, performed environment, mixed closing, despite generating XX.X%. margin well pretax we increasing of our to the global the average on In common of

continue model earnings. each to business XX% facing of Management balanced generate and our growth C&IS segments of organic Our client our Wealth contributing reporting of approximately with

with resonate are continues businesses. within holistic about our our positioning each We of prospects In to Management, Wealth advice clients. existing excited approach competitive our and

quarter, and deepen C&IS, hirings during to to we across World expertise Bank. announced as continue Capital, success in our growing by our key Magnetar wins asset Anchorage have We continue evidenced the business and servicing In such talent our as Capital with the business.

focused and We client model our support and exceptional strategy focus with clients Our to well. growth. continue our providing our profitable remain flexible improving very services, driving technology, expertise, productivity on operating operational

to participating for Paula, again you line. Trust and I happy Thank answer the would conference in earnings your Mark call. Northern second please questions. quarter open be

will question Hawken Instructions] take with We [Operator Brennan first our UBS. from

line. for So non-U.S. curious the interest-bearing the cost about office thinking about

deposits called deposits, think not should sure we noise there of had But wanted just to confirm line resulting And helpful. You billion flagged whether that which about? for the money in about out that thinking that wholesale through I'm think the in interest-bearing in market flowing or deposit end costs was any was reduction the of we fund the termination from program? you how then $X broadly, the of period, those should your about

On clients we quarters. that We deposits large additional that the color and time-to-time first to from consider the quarter second in foreign on the in individual the the and highlighted, that in deposits amount had two office lower between addition in normal leveraging deposits, really operating the we quarter. flow see they would we've deployed them accumulated that

So identify highlighted that office that in that deposits, by two impacted we in I the really move. clients just case of foreign handful a clients, excluding leveraging movement the were lower can in made really those the

for So the certain of deployment us not in periods, that so periods, uncommon normal flow in other to there. say builds I'd see and then

rates terms think or of individuals a retail we will allows maintain. from be our and the closure, offer product, our space of at has competitive rates at wealth then front. that that, to in rolls finite in for pricing will, the market That those for the the attractive they deposits how our about the did on you us rates should period, In of when we off -- anchor-sweep if that

And Brennan, would just I add.

see of also in you in other what sequentially If and in line, cost, deposits. impact reflective increase set the retail indicated the is this was the increase pricing the but at which market then a lag you look there savings did partly money December,

wasn't So the yet. first in quite fully quarter reflected that

So that's another impact. part sequential of the

want your during XXX%, near a event are would recall. down deposit had we fed that periods Is And betas high? quite be than have betas do still I of say cuts? -- quarter that Biff, higher be flagged much do that in cut the on rate Thanks. still think going that to prior to why expectation intra as presentation expected way that of I they And historical high the a in so expect to then, be that you you you you rate seen

that on it's It's up of and beta say, institutional separate same me would that which pretty is, the the be sheet that still majority high. our our retail balance certainly were institutional view all let up pretty It's betas most be the the deposits, almost our make will the they deposits. favourability on think first as -- high. will betas were recent almost that We way way like, And symmetrical happen betas down. view the

So, perhaps landscape not depends down. way but at a on high competitive the XXX%, that the on

what that's see we So institutionally.

retail really the there. I the think On function it's of space, a landscape competitive

-- up slowly. were they fairly they So moved

benefited we So the moved up of early rate beta and from hikes, then that days overtime. the

think space. much could down I of probably symmetrical to in there you betas landscape. transparent retail understand pricing the need on But also some path to that market in same is competitive and there, remain the see the a more we

end the still on be So I'd I betas down way that pretty in high saying by we fast. would summarize overall guess, believe the I think and pretty

before a closer that, If that you create could closer we a to closer we hikes to get still U.S. but there's get as compression down for and dollars get there. few zero some

to on, we'll moving Glenn go Schorr with Evercore. And

any what on new door? it to comment U.S. quick curious -- fee look particularly caps A in how coming fee I'm And about rate in and very Mark, the play us the you how the to curious can maybe throw year-to-date. fee related breakpoints, assets -- of a custody make it's one fee at role trends? strong in rate for kind just hard there caps. obviously

is that lot goes into There a that.

look specifically business rates at mix fee really quite the can of So of we different. internally, because be don't

with a you So large that the to that's mandate, the mandate be have are assets might where fees larger. could under small where small administration compared custody very a fees

though go the of we before as pin asset look would trends the value when line, hard we've highlighted related. that to something I as XX% there. at not far as about So fees down that say it's are there,

asset than than the that for about what mix say the or where general So, some generically would places not. services and higher a that do get assets, winning like moving same coming hedge places rate, get you in have at areas the custody fees would are it's we're talk out say would less which would that have and assuming what of is you I the we in would usually beta have fee that domestic we instance. does higher fund rate that

part on second the new of Glenn, rates. coming was I would just the question assets board, add fee your

the there value fee in Magnetar mentioned Mark's -- the I is growth lower. where point its pure having of wins be then Anchorage base added the we're is basis think servicing custody I other good wins They're point and a and large, there types might important hedge in there think funds. competitive where landscape, still yield bit we just asset is

mix And mix. So mix, product got we've you've the both globally and to nice in. got really look coming at set a pretty

rates get company it's lower we business, a just coming blend nice margin the in in not So all of rates. on new

such Maybe Management. not you retail in Brennan's follow on and see there I what of Wealth to rate on way the I'm segment think a Trust client betas client up is one I'm Northern the in curious, the I side? of when hear question, It's on sensitivity. segments, side. clear surprised difference down I quick institutional by the high loud to think

because you you think period could slower got And can market, quarter, to beta that than to look I just you expect, than in from data we're period landscape. up catching certain because at some larger of periods what moves the have look would competitive the there market been over is beta time. we a see the than you've longer one much to behind at have a over

still competitive still deposits. high is I for it And network even say will

rates. differential get with their least who cash for of sophisticated portion yields investors got the are to for You've that seeking market market looking balances, are when the business at looking some they're

competitive on And may retail deposits, are be relying remain need not it so as that but to credited. quite remains those It we as competitive.

Carrier with Bank we'll America. go And of to Mike next

that's first rate. targeted year-to-date the with been expense so on this the in growth, the line one better coming Maybe quarter versus in just and organic growth

any Just you given revenue also we mentioned this FX, in and some uncertainty, the of the curious, backdrop whether the but be rate in maybe coming of spend new year, or backdrop? could that lower? the second some of the -- Just expecting half be it's should

So here, we're the not I would say environment its us. on lost operating in

net a that like income So interest difficult are environment more terms the of looks become rates it'll moving. where in

want So to organic continue to in mindful that. we're we drive be that revenue just to focus our facing. We really our of can't franchise. have singularly But we headwinds macro on the

that, I think are So the first that year of to in even to months I that disciplines think than seen and have our They profitability. means vital you've remain. longer term the this six they

more are disciplined seeking around we have expense even in been location Those in all deployment strategies, management for occupancy, capital automation project, projects, on business So are focus. focus. things procurement, about. They return certain it, focused promotion, talked organizational we disciplined driving design,

them. are You've But of seen are the environment the we're we of benefits more our in entering. recognizing as even they that focus focus

of behaviors think disciplines continue this now half second that you And think of as value help of on to the part us future. for the that can in in tell cultural the I part year a and spend, are will we've embedded some that of the execute I we that

the is still clear could we be if rate think is to expense want for of in. governor, growth say there What maintaining we're will what organic I those. strong on is very environment ramp is and important there operating a planned allowable rate. on certainly not we I though And in is expenses, a that, say So, focus cognizant our growth a because are those that

franchise some can organically. it that's is to think needed profitability that So appropriate forward. we But and in spread move we organic grow the expense there enough forward as the move firm long and it, as still of growth. fuel we to our want And proportional with

up And then a NII. just as follow on

cuts. mentioned of down your fed expectations the path then you just, a go if And betas. on we getting So deposit

deposits, Just non-U.S. the a you some expect change side or or anything activity on anything that balance do clear the institutional I'm from you the just duration, positioning on of the anything? sheet, so on And mentioned saw you

of because you you're off on the move you of it like like unchanged, some that mentioned the the having side, come had is the institutional seeing the retail some You And money the that the think jump leveraging. depression about do we sounds but just on. things guys start on on, then you're on When roughly retail to board?

that two you're Let size. I the of little net about first me to that. and color is jump give want then break hear One, outlook of interest an sheet imagine more there. think talking will balance point think And I a on into a from sort off the parts. income, I people would we

swap activity, we which looked some when our the the FX interest was but you out. There favorable If implemented BOLI, our assets impact from at net from income lower earning we QX down. to QX, took and we stripped

netted around. our was those those decline I X%. it you factors know moved sequential out, If but under we reported just X% probably

curve we X% that quarter quarter's we the in in and If reassume would reported look to interest net impact from that and September, interest other we there. July think third at and about see things cuts implied in net decline current of two income would BOLI income. X% And this in includes the rate the

see somewhere X%. around would we X% to So

we say play how series and year, how the fourth to out, play factors. In again quarter slightly there. do a of balance whole mix. lot that's over of relying that our would sheet factors, of betas of time out does down terms on volume And flat the in a this from There's

our QX interest slightly net income down point, at decline our this best and there. modeling in in based the on in best forecast, relatively our QX flat thinking on based current So in to modest and

sheet Mark, terms want you to? the size, of In if balance

about a which point, you're you probably thing sweep end where in different quarter, partially really change is and average deposits wealth thing spike do, in up. at to I the management is best only do product guess the starting we this that I would that your thinking look sheet, quarter. point period if The throughout that the points balance flows happened at as the to because one it have was

line, for for that's might run So closer of far market it be period savings as as that end but and at that money during off jump the determined. quarter, how plan. I would remains balance be that position to But might other the the looking where little sheet to a bit

And Betsy next Morgan go Stanley. Graseck we'll to with

there to Good described, material change got of your in to you all the just that, A your numbers morning. ups were you cuts couple one, really? or if if July, a July. rate in Is follow not rate cuts

Not really.

In very, better get fact, back would a it than and what have might little might very you a points it bit XX modestly XXXs, is But it But to probably better. know we impactful. but get more what very to be basis XX we is. XX that a XX is modestly be to

could for projections say I quarters. roughly probably equal about your over So two

either a us forward, that? And decisioning expect securities might color type What the that as then or we just of the was transactions rate give reason was can more, to you changing some other going BOLI for repositioning environment? in BOLI? be should doing like you what And the behind asset

certain optimization I sheet sheet. benefits or balance the pretty rate environment We the with type us of what current we've BOLI which on made actually As classes the particularly marketplace. we've call unique environment, relatively no that will And yield And and at powerful. and the in you investments, know, declining balance in opportunities asset look certain were program. had embarked a yield our

the income does an quarter. million $XX of efforts. optimization at would take line. benefit in will flow half benefit one at down budget, As always instance, in it pass it annualized some can't NII was the one take for franchise, whether add looking in through of that this our we it of we net or We're sited, its down saw our -- just does And first it. but more I BOLI, you other NII transaction say on income of basis, less this for

have didn't was were did. you guess, you way one to only it you size of just indicated, you it. as the decided I I who how the Was like it kind -- wondering

peers, wonder $X was billion… positioning there relative just why a So or I'm trying vis-à-vis to

factors high go out how capital you There several know with that have. exposure a to But as we we A, have this have carriers of very credit credit percentage we counterparty remember, have a quality is credit size. can to is then regulations to. that, is to that to much There limit that exposure

credit now. portfolio. And And the when so added our billion a group up $X the of is providing all as we together, it sizing to that for put also to input

BOLI should from you're optimized So that you say would -- I on that take the positioning?

we have -- We're looking hit higher of here we we'd But can't in billion today, period think the whether $X some those opportunities. time. I for always go As lower there. we're I here at say future. that's in or

go And to next with we'll Alex Blostein Sachs. Goldman

guidance. I don't appreciated. guys we're was Thanks for and definitely you the typically in think get know cycle, guidance, But NIR into the where explicit given it I

So that. guys you for Question for thanks again. expenses, around

other fee type that. even it growth, NIR of positive align obviously could levels? bring growth that percent, for guys. some So the of to be your anticipate leverage like expense tends organic the dynamic and X-ish to In you emphasis higher given Is of a with we NIR, from outlook? sort tougher the growth light it, words, aiming much organic, business still you've an margin operating backdrop X-ish, been with so call fact there of In or something to fee or down below current historically potentially that

ignore we're out widen backdrop look pressure that put that about. to have may lines, on hard, talking revenue that And think additional leverage said, to expense our on you're at income, I interest at one looking Like the pressure are our we Alex. can't we in. line of important you that we net

naturally happen there. things Some will

it's Certain for think instance, I you. I'll based down, down. going they're net If tell income cash important, incentive plans. goes interest

on us expense the So harder you if that reduction backdrop. our continue leverage and out, I if the some But some we we natural to income, if organic our business the harder some discretionary will, of on to for that's the items lines, described, instance. pressures you in net push have overcome, to will, levers then may widen will in give see interest those of to

swap there $XX trading, that around last question was quarter line. benefit believe I Second million in exchange so foreign

difficult I kind think environment. seeing a an in you've of So sequentially fairly improvement apples-to-apples,

of exchange you the some this gain some kind again I know guys initiatives what in curious market drive a So of to organic foreign focus trading -- and has for been and share.

underneath kind of us So going kind maybe about to for on the of the what's business? of on bit little that part a the forward? surface within think way any And go better

you'd At pretty did core the strip out swap well, the if of actually right. FX the impact core, that. you're So

in client got as there's our factors of saw FX we transactions, One, share more from quarter-over-quarter. so think couple a increase there. based I of we

lower So capture capabilities products we're we share and share percentage a of trade to higher even trade. communicating, in captured of marketing volatility environment of better more the

a saw little our the in and of also from in little client bit base, wider higher know the back client market for has currencies base, we But if emerging in that's our true a from volume some everyone. don't I itself, And also quarter spread.

two, core So good a quarter-over-quarter. FX think, drove the actually performance combination of those I relatively

to Wolfe from next Research, And Chubak. we'll go Steven

And So I securities where the you've Can forward guidance. in a appreciate ask what as layer the reprices given the and I each us books does all book book. follow-up NII the the remind duration we some detailed extensions of you on yield securities just of curve. percentage been of today, the the wanted to overall the just And doing? at quarter? model

have let a is that But been book, added And as the the longer come have right. duration been some creates me years. duration, view the obviously, down and part answer So rates of duration the muted adding you're at of prepayments. somewhat X.X overall faster we second we've has

so duration. the of the And has that impact shortening

down but purchases run the the still our or the in we're end to it. with it closer long curve X, the traditionally rates But lengthening we've probably been in we're where X.X X.X actual the So of duration. we've of terms mutes come of longer than at

how The that's three repricing that's shorter longer. rolling quick, when part would quarter. as a be LIBOR, than repricing or longer can obviously, a about divided between the and over, less book, you the And that. half one the it you as on about would securities and bit then securities a total before other something of the mostly happen of get securities that little where two and think then talked ago you month over portfolio our years you rolls book, far goes, As month book, we've fairly get shorter put LIBOR within the book probably reinvest you is

of more a time. basis that staggered a of on would across So period happen

and growth but curve, can thinking to the for volume And more you some commentary, given about and me you rate of of how with very way that on the big there you on debate overall looking deposit betas down, growth follow-up one be just elevated a pace And much generate are And detail base. just guys organic on growth. How the deposit client that is some think gave offset forward you I should institutional? be within just both and sophisticated about the can of the out deposit retail 'XX. noted helpful headwinds

is headwinds? or growth to out a look rate to you generating NII volume XXXX. those sufficient we path as some believe Just of offset Do there to

portfolio to pricing has us to that If a going try organic our would you're of to to funding I XXXX, business asset about. reliant We instance. it, given for the to don't make want our custody we're our an to we've the more balance growth to out and drive sheet, servicing to that construct to and talking before in we for of But to start talked rate economic sense do loan that good in need on have deposit aggressive big become more growth say, attract growth on type we primarily be could look you the deposits.

think the seen will come most least going at organic of from, fees. come growth to deposit our in in rate that our the So growth is we've just from I

So deposits. if not of the much do with about some and of deposits, all of portion would balance sheet. which that custody not on may we've custody fund comes X to But work, we administration deposits other with talked come it with it, X, come because

the that growth. So, more becomes of the balance think for I benchmark sheet

custody make to be volume, And probably two would if with get it'd your to your but say the system. move, into is, pumped the have we depending point, than difficult that banks up into how that than the get it. you been that's we we -- fed that may project, two What would put like get it quantitative easing. rates type cuts the the I more points. something projection on and of to insurance own looks recipients more I Historically, If we liquidity your on to start of think

growth and or than growth more if this a deposit two see sheet a move could we becomes at rate so cut And one rate faster cycle. balance much

Mitchell on, Buckingham Moving with to we'll Research. go Jim

Hi, just two questions.

and maybe the and actually next noninterest lot your on was talking declines, the think bearing looking couple First, sequential about on A guess have that were guess, one I flat last over one forward. deposits, flat how I highlighting down going next, peers of bearing your organic What's basis. and a been the that about. do of growth that, noninterest you're over you keeping is quarters?

that through again. you walk me Let

about at deposits, about dollar. in And those are in quarter. I in think, had the bearing average those, look billion if So we XX% $XX of noninterest you

management historically they dollar XX% Those a deposits. wealth the and for remained been deposits of sticky have very are time. So sticky long bearing, noninterest have

business. Another They pay et sticky. XX% been cetera. for are our there are two to fees, have balances, treasury management cash Those fairly

talked and of are we bearing the there. being you've with think think those purposes. was perhaps dialogues are we half year, was sought those other in in institutional asset got for yield run-off regular the just there that frequently have part seeking seeking those We say seen most think also noninterest have which and the sought are -- been we've more seen is yield we over -- been the yield certainly that sitting bearing. bearing And believe there already. non-interest to part about piece had pretty liquidity dollar clients. XX% billion but We I there, operational I the core what Many servicing. of So of That noninterest kind billion leaves that We base would remain of $X of have sticky. $X needs of the

bit So the in in we've last seen bearing stability noninterest quarters. a little two more

there. about efforts you Maybe what wealth. maybe just picture, have I that and you that know you to accelerating been Any And on of Thanks. guys boost talking helpful. update be evidence organic us just growth you've had can doing would bigger been on

but to management with very could healthy a you market of to increase that see fee driven of quarter, wealth our continue by again, very by geographies look have had strong want growth organic. some they we And year-over-year, our that -- quarter, reported and markets good at strong some figures, rate driven share. So they where margins

have a We have to physical presence. don't always

there serve talked a generally where certain in wherever. with there. and got past, overhead share have without to Chicago, cities it are of business We presence. are low market we've physical can grown Florida having our to or attractive those or needed the markets or about physical we've very pieces of out New get As York, And

particularly and in a advice, would the our And the Goals at then suite, are environment uncertainty, But of and geopolitical landscape, there a more people markets horizon. favorable. where volatile. you've got solutioning, looking the some people lot particularly I certainties Powered we've interest on holistic bit landscape, with say has an our rate product Certainly, our little resonated resonated seen

as well. so that business think technology And led we organic increased our strong tools in to pretty growth

or to there is new number hard in help picking of can point flows openings, to terms So us? any account you up

in look that. you on We growth disclose own rates the and an the your fee make underlying market business could get mean to probably I growth of rate. at you the don't impacts and that can core assessment

to go with we'll on, Vining Moving Marty Mosby Sparks.

some it? of you're a source this that the of to you United higher low of had And States that strategy redeploy the that get for at the just what's ask were of deleverage out trigger FX translation, wholesale I the it using like able to the funding then the And you outside the some rate. where United you get leverage of out -- it? quarter, a there? as Is were in very that is was why States. take out to deposits about motivation being and Or wanted there looked wanted to leveraging the what particular

getting the funding, of the this it quite has strategy Well, gone to return on with I'll Marty, But about for zero. split question Mark. is, it, frankly, the out wholesale

from were and a the in investment very an no the of was a this So wholesale funding we putting to cost in incremental that return, even low return return, it generating environment.

leveraging So are currency the we some it off. these of think, took pull deposits. euro-dollar on to Marty, And the sheet, decision I the the where balance or sits

we where to it's a went don't So euro-dollar fund know -- Mark I a wholesale deposits deposit… the something a deposit. money or that, wholesale like

So not we're currencies crossing with it.

certainly we'll flow wholesale So then non-U.S. do we're it short office bidding, borrowings. it keeping where other And see do through the bank of loan of line. we you -- it is in the do home U.S. borrowings line or deposits term And and our sprint some

purposes. But it's that as and leveraging the those for well. side asset use U.S. side, dollars a dollars then is on two we on of U.S. the it combination So liability

these why been a And valuable And against the up and then proactive duration perspective What net have the I've we've an as not the extensively protect interest is advocate been cycle? through which of you've is this to expanding stream, income more to end talked in declines. doing our NII protect for gone wouldn't income? defensive as we that fairly of part doing, having -- sense you your

a started to any know take and through don't I done here seems we we over increase. and portfolio, talking X.X in do fairly duration on duration been the for about Marty, again, it have treasuries So at that We a extension the of be that meaningful still generally duration. that. It's duration portfolio perhaps additions. year average. short credit added. executing ago, And that's our for But of about,

can there, And do of look swaps portfolio the have over obviously, that. we some that So that and doing into to hedges been at the things periods. we help other and other are

from for our of at that I and scenes. the on -- year contemplating some rate would been behind we've been outcome ALCO, been executing we've move have a So least a say,

we that. So and continue interest income held our up I well. to Obviously, think it's one at of has the net others look reasonably reasons actually

the protecting curve shape the based versus of a rates is end down the some very imagine decisions some decisions. of have end. now, up where might now short with against there right is the long those yield give you of we in the taken NII the now, of as in some is on And move way curve long-term But those

thanks. So,

we with will Jefferies. on, Usdin go to Moving Ken

first. thing on more one just Biff, NII the

from the right are the X.X I Is from are dollars core going BOLI year. if and about decline flattish? the XQ that to XX basically to saying be the the in and NII the then BOLI, really just Effectively take impact is it? that for that way think So you the

Well, this is Mark.

if benefit be we a but FX FX from swap, you way, was swap. was fact rate that would back because you the which what added in play right. had mean, the environment. had a with that out I basically interest also We we BOLI, of a benefit But the by the you're flat from offset saw

question And then side. my second cost the just on

rate. is end X run for percentage by a it's value the And expected spend rate cost to to point of growth So helper the this been year.

chunk out there? plan have a it right as to we of it's So some Does rate an stay -- into you the about going run expect the or good we do balance, any help. same the points the you at on basis, past But point magnitude look maintain to by Thanks. next think gotten X percentage you've as help are Like so forward? of year. of re-upping ongoing go to thoughts already, it XXXX this

annum is what talked about is right. thinking to X% The your you've that benefit So per seeing. X% we're

In we spend. value of for will re-up terms

to to Let me is that certain beneath certain growth to price we've Then at we've say our financial at need meet investments we've to the base and that we We've that expenses fuel X%. growth make want model coming we fee got us. we that that expenses and X% to an inflationary got got The talked frame we rate. X% we've certain is, organic X% to look set about, talked rate, which that answer it way. expense this

that leverage need productivity to guarantee that to offset you, want work. get equation, we math a make in If I you

expenses you've to in if growth expenses, the X% add that add add you needs, rate, So to got to in X%. you X% grow X% inflationary you investment needed in

inflation. What And that range growth to that X% that get on to year. is in to productivity X% as magnitude in You A X% area is drive need business. code probably is needs thinking we produce something much to the offset X% expense franchise it's than the leverage to every to we're your about, at saying good the be the to annual think basis we we're our it least be higher rate. way into got about an

firm. investment. So you've some that's to and the the at business. to the new least more expense And driving for offset think if way our more you inflation, be profitability your share have have then cost investment drive about, the And for the enough we improvements productivity got to available opportunities we and we

RBC. Gerard to go we'll with Cassidy next And

of I the have China, in can But the curve next the that know the the actually predict really and at rises what to year. due XX the quarters of guys' you accuracy. Biff, modelling first, rates talking end with maybe in -- XXX% trade income? happens can challenging of outlook first end economy affect How -- interest been you you the about three on I we're and going net curve. recognize mean focused on into does is long short What looking with nobody two interest stronger year guys I future on we're all and if the

steepness Gerard, curve how end. is, it's to between that the the on long in think, and the answer of I the depends the short moves probably

long impact steepness the it when if ends the than the if in up moves moves and short we So the curve. parallel, end end where get is it's long stay and a end up short moves different up in the

book move From much have be nearly in going curve. credit the talking end impacted mortgage that's based by of a you're we about the loan of long as the to perspective, type don't

end impactful the us us. space. they investment the curve that offer from matter and less say the opportunities But spread to to curve the with short along does So in the I would of

say that depends how of with I in the would have move rest So the to it end. I on guess long curve the shifts

what second and curve the I always your called so at assuming challenges end from was interest so and you. I that foresee guys are guys steep, some the drops at opportunities end step back but maybe companies bold are out the you thinking, rates because Okay, talked of thank you is have question, was steeper with look overcome the then And the long have when or in What that businesses? the face next that that. guys aside have. in that of some when to you you the look we've XX you What -- about you challenges XX since months you

particularly would I the business. for demand our And side, significant if in compete, look, investment driven for field. say, always a a highly there technologically we servicing asset is technological we on

And the seen a X.X% the are we the would word sure marketplace. we've with I environment have say, the right past, pretty compression a with we competitors. similar to say we while would in Along in in we're I making fee so competitive X% about good to And of investments competitive remain competitive. that type in marketplace, make that pressures technology in talked competitive,

And nature so we competitive the to monitor there. want

to landscape on the competitive we remain to the vigilant So horizon. got

of space, And wealth one think on the it's opportunity. I

the what are. asked challenges you -- what So

us in, we than where pockets market opportunity have it's that, that like certain we those we do we're right where is for markets. we in new I because grow less very would And maybe we are base, think are we under-represented. for established well where share get the I can markets there -- do in client where what where do to, want and to to think

KBW. with Moving to Kleinhanzl on, go we'll Brian

the environment on expenses, Quick over to quarter, of given fees out the trending here, just it it's years. are again that investment it's for challenged came expecting the more But trust to from expenses, and we on lower while? is still it question expect down couple pull your that and trend past flatten lower you back been or this a should

that periods to we question, that in. I say, drive evaluate productivity hope more that over continue So do that want would long to to we

cautious achieved to we've in terms of So that I not be think in have seasonality of What our have business. rate. we nirvana is we

that pressure the instance, a react to XX quarter. market a open, in quarter day obviously, expenses can can't For markets can drive necessarily line. puts next move. And Northern which on And we Trust the our volatile have expenses in do and fee

time, there that longer focus And of But if you periods answer you driving is is I example. over would look the continued an down. on give

If the business of And two lower ratio you mature XXX, these that management between different. quite our instance. does businesses, calculations expense fee they're to do low than for wealth drive the

they're absolutely And periods, firm focused inside continuing improve to the on I say so would is that. still long over answer the measurement

or down You just may on see quarterly moves market seasonality based that up volatility. go and/or

there the quarter, you? a the see banks And on agency or are a impact premium was other portfolio MBS separate for question lag in going on this What the premium of like they amortization are seeing to amortization. a effect drop something is from yields off

you it $XX a being quarter, million in quarter. think inside the in I of about around So that we've was to million to and premium amortization somewhere $XX this range talked

our nature guided we've way we've much that So and amortization portfolio the the the of it was to. and modeled that premium range everything, produced in

conclude everyone like And for their that does today's We'd conference. participation. to thank

disconnect. You may now