Northern Trust (NTRS) 23 Oct 192019 Q3 Earnings call transcript

Good day everyone and welcome to the Northern Trust Corporation, Third Quarter 2019 Earnings Conference Call. Today's conference is being recorded.

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

Hanna. you, Thank and XXXX everyone Northern Corporation’s Trust Good conference welcome call. quarter earnings third morning to

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

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

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

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

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

you for us Thank again joining today.

Bowman. the call turn me over to Biff Let

morning Good everyone.

Mark call. you XXXX earnings join quarter third to me our welcoming conference in Let

equity $XXX.X of on common earnings this earnings our million, XX.X%. net our per of income morning we Starting return presentation, were on share reported was and third quarter $X.XX two review page quarterly

taxes higher periods, payable of the than tax the corporation's of For on higher reflecting non-U.S. quarter XX.X% income rate primarily was branches. U.S. prior our effective the

of our current this Our is rate quarters. that expectation core ongoing rate is for indicative future quarter's tax

possible is rate issued. if IRS from the favorably corporation’s it when Although guidance impact that effective the clarifying tax and could

Before through impacting during year-over-year Equity the but during a some the business comment detail, on markets our I going results were factors mixed would our performed to quarter. macros basis. like well in quarter, on

some Compared quarter up while favorable increasing the on of to indices with those XXX XXX X.X%. the lag EAFE period a favorable sequential based one comparisons EAFE S&P mix basis, were and the versus and MSCI X.X% of year was prior the our X.X% Recall year, that ago. fees respectively. basis, sequential pricing, the ended S&P are were On end down markets and X.X%, on a the

quarter respectively. the X.X% down EAFE basis, the X.X%. up and percent. eight-tenths were lag was up quarter year-over-year was On down of a the X.X% respectively. sequentially On up a and lag X.X%, the XXX basis, On EAFE were S&P S&P S&P X.X% month sequentially EAFE up S&P XXX while On a a and X.X% was while a X.X%, and year-over-year XXX basis, basis, lag EAFE was

lower LIBOR, three-month points U.S. average up basis the on XX average XX during short-term interest were sequential one-month declines rates reflected the respectively. in and as and in quarter

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

and from to year-over-year. of income credit up $X up quarter net credit page $X year. the in interest million quarter. X% million was year ago of X% third the compared The of current to was a Year-over-year X%. Net losses with a X% from income highlights revenue financial increased provision credit one of last for year three ago. and move income Expenses non-interest increased Let's one review the X%

the sequential non-interest increased interest revenue X% In with declined compared Expenses comparison, the income increased quarter. X% up flat. Net income income X% net and to sequentially. prior X%

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

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

performance the were under partially the of exchange compared moves and driven X% Assets ago, of rates. X% and markets, impact by to sequential was new custody trillion business by unfavorable year in year-over-year Both up $X.X favorable up sequentially. currency one and offset

trillion, X% were X% year-over-year translation. up new and a The sequential a higher under management markets offset on reflected on up and partially performance basis year-over-year $X.X Assets by currency business, unfavorable basis.

the greater in with at look Let's on results detail page starting revenue four.

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

decline trading exchange income lower foreign function. activity down was swap in primarily sequentially. and third Foreign quarter, Treasury X% $XX XX% The was down the exchange related in million year-over-year our year-over-year to

year. up the higher up XX% income and was bank-owned life ago quarter, a third The one sequentially. investment compared was the the $X.X implemented XX% year insurance related to and revenue program in non-interest income million by driven Other year, to prior brokerage recorded million relating year-over-year $XX an in prior in increase impairment

the Net X% will was quarter, revenue. sequential more in discuss program, brokerage was strong well income interest bank-owned as insurance $XXX detail was The impact flat by related driven the in it later as full year-over-year life third which and sequentially. I million performance quarter’s increasing

our at look investment trust of page on Let's fees and five. components the

up X% on sequential corporate services million in fees X% and basis. For were a quarter the year-over-year, institutional and and our business, $XXX totaled third up

fees performance X.X%. X% Custody over up million on just growth year-over-year administration of X% and changes The fees, translation $XXX rates and fund fees C&IS of largest impact a year-over-year component in by currency the and reduced C&IS were up year-over-year was offset The translation. impacts unfavorable partially new the of basis by unfavorable by offset business, partially of sequential favorable the impact business new On markets translation. basis. driven were a currency currency by sequential and primarily

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

lag custody and fund lagged and the impacting Both fees. favorable markets X% C&IS million and C&IS business Recall into fees sequential values up Investment second markets quarter's year-over-year were up $XXX our year-over-year lag and the factor the both that quarter month performances driven new X% fees administration in were sequentially. and in market management by with quarter of

.

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

quarter Securities Securities sequential increased $XXX quarter. billion X% and year-over-year primarily and year-over-year sequentially. lending collateral end The down XX% at and were down the in billion sequentially. third lending were lower year-over-year and was were X% up driven fees across the $XXX collateral Average $XX spreads. averaged declines quarter, million by X% levels

compared Moving X% third to our the to wealth quarter, up quarter up fees other year management investment in million servicing and and X% and were the business, trust, were sequentially. $XXX prior

drive a quarter business at a end, fees favorable on were were and of year-over-year new The Assets sequential year-over-year up AUM billion markets. for under both and X% sequential management combination basis. and $XXX both performances and by

income down bearing to Moving million quarter, interest to the were up assets deposits in X% from averaged X% deposits billion. from billion year. the prior Total in ago $XXX the was declined Earning Interest X% year. page one the third six, $XX quarter, down X% $XX year net and averaged billion versus prior year-over-year. $XXX

year to net down margin X.XX% averaged was points averaged XX ago. from Loan the and quarter, year basis year XX% a which from X% The deposits one in one in bearing the during interest and billion quarter quarter $XX was down up were balances third billion the compared were ago. ago. Non-interest $XX

X% was flat. Average from flat. basis, a declined deposit assets and a balance The net interest the mix swap exchange improvement shift, a compared quarter. earning foreign down basis, impact rates lower sequential margin in the short-term slightly levels of On sheet net one sequential the margin of the sequential reflects on higher On interest a versus were the to impact prior year ago. year interest and basis interest primarily prior net remained income the volume quarter

deposits at of our up balance third prior U.S. in Looking quarter represented from the of quarter. and versus the mix for ago flat total This currency is deposits. sheet, XX% XX% one our the year dollar

Turning moves favorable on X expenses almost than quarter and translation $X to percentage X% a year third of the basis. year-over-year the page higher currency billion expense and impact both seven, were sequentially. benefited in and by The were prior point

ago. growth and relating the compensation On was Compensation sequential growth compared up basis by of was expense to by The impact translation. X%. staff and totaled partially to year-over-year currency one base favorable adjustments, million salaries up primarily year $XXX higher X% driven offset a pay was

to year-over-year attrition, be X% and cost increased to Arizona. The majority and sequentially. include continues attributable levels Tempe, staff increases Manila, staff which lower growth of India, Staff Limerick, Ireland and X%

growth benefit withholding one sequential was withholding payroll offset down year-over-year primarily The due lower partially up was to by was of costs, was $XX higher medical X% costs, costs. and ago million medical by sequentially. primarily while driven Employee the year higher expense decline in from X%

as was higher a sub-custody consulting expense. included basis. offset sequential driven vendor credit legal increase by were technical by up legal quarter, in higher a lower lower by sequential year-over-year The partially which primarily higher million to prior the well growth was and had party $X both of sub-custody expense, $XXX offset technical X%, costs consulting services as services Outside expense. on and The expense, adviser, services, third year-over-year due million partially

one expense in software the costs was and sequentially, and year. software and higher up X% year-over-year was from $XXX by growth higher driven maintenance up amortization costs offset depreciation higher The ago support disposition year and partially and and prior sequential the year-over-year both X% costs. was Equipment of was by million growth

The of with Tournament year year quarter. from driven $XX expense lower the associated during FDIC ago premiums. was the operating relating promotional one The primarily sequentially. Trust Golf spend, by million held primarily ago Northern to down was was X% business XX% was and Other up which increase decline higher sequential a from

expense calls, realigning the XXXX. run rate XXXX, we base started on we initiative we previous been goal our As in discussed with $XXX through of have realizing which expense for by spend savings have million value our

We continue expense to embed approach. management sustainable a

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

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

was capital our of ratio X.X% was Turning approach which strong equity at the nine, corporation approach. standardized minimum the ratio X% of leverage the Tier to requirement. The remain our XX.X% advanced page X.X%, under at X under and the and XX.X% supplementary ratios bank both common the exceeded with

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

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

the ratio of increased dividend to quarterly actions represented XXX% two for a combined quarter. share. approximately also payout per We $X.XX These our

In the closing, well Northern third performed quarter. Trust in

total both rate and fees and growth and to investment for leverage. revenue total expense operating growth Trust servicing year-over-year fee and generated compared our X% X% Our other positive

a XX.X%. produced of margin and of a results on average equity XX.X% Our pre-tax common return

organic exceptional we our continues with clients Our profitable balanced remain on growth model generate providing productivity focused and driving our services, and growth. improving to business

a offer note, personal want a you. On I to just quick thank

of CFO you. announced, from be and recently the with retire one working role I my as As Northern on I've enjoyed my each effective as February CFO will X, stepping from years Trust January XX. down five-plus and

Jason be of is role. Jason the am takes he role year. Wealth I become who as first the very will this he in on Tyler new successful CFO currently of the very CFO Business Management best wish will as I our of confident and that the

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

you. thank Evercore. Instructions] take we’ll Glenn question Schorr [Operator sir, Yes from now with a And

Hey, margin. a if don't conversation good to know This net look to thanks interest is very and throw A on up I even it much. question I way at it, so want in this you. to comes

versus versus peers, near relative peers. highest you lows to your prior If is cycle zero were you look NIM when at you rates

a evaluate you but if whatever. things do think towards think Do don't is your think been you in think it what okay has even just we're – durations (b) explains are and way an longer on I would to Now I’m even used better? what going It's the to you that rates, that changed sustain zero that to. have that? so, able than curious to little that to you mix zero rates, just

NIM question? your our is peers, than that's That other higher

rates other lows. it that. words, out a lot basis XX the bottomed of like range you’re cycle In in to closer prior zero, XX, everybody above like were Versus points where are now. Others when

of our greater probably Our mix and sheet. our clients mix business believe of deposits balance is balance difference a I probably there. of up the and the our that's wealth sheet retail (NYSE:A) proportion make our the

us, all peers, slightly but size – a between the at portfolio those versus combined, a all those. the because foreign are flat our been the produce not I deposits loan as I look of for and deposits feel of margin think office U.S. and on mix to net then to absolutely know different and and got look we same interest it's and relative You've

that in itself to lends would probably mix that. a I say it’s of the difference So that sheet the balance

side, we bit we the bigger little help and Because but of on of have institutional I may call likely competitive, costs deposit the lows. the of would I the mute side would a business nature, think wealth so that pricing a similar the piece is have what

And just maybe follow-up. a

But next just in around of on today As how puts expected what would help being deposit you as you knowing us the with given way lot look and we forward, beyond what's know forwards year there's on and and know not those betas XXX% everybody do takes close you terms and as be a of all about to as they think hoped rates, puts takes the NIM. down.

have Yeah, to little sheet our the I understand balance think apart bit you a to probably beta. pull

and of you look beta that. So would suite low-ish. be at on our promotional deposit quite we retail the But our anchor beta, instance low some, of for on the if the so beta the discontinuation side we had pricing had look would

in extrapolate look dollars, actually dollars, at of the much If deposits are down the office then of office look well, if remember, you high. was that but how and was half the move at the beta about deposits foreign foreign quite and you

on way, rising. we say would with the were was relatively I what saw beta we symmetrical rates the have where as we

work a So deposit. what general themselves others call end symmetrical actually fourth you down high quarter see the I the of quarter institutional little beta and the along that, at It’s rate. anticipate that fairly if I we the it's in had coming dollar more and third I would through but think in quarter, we wealth would of things that the look on based for beta cloudier the think space some in promotional because to that at of a this was

much so Thanks Biff. Awesome!

Thanks.

question a Bank. take from now Brian from Bedell Deutsche We’ll

Brian. Hi

congrats have less think the resiliency on Obviously the of we the about The thought. how thought should Hey the of that about sheet? asset know about than and sort the yields be down best to Biff, side quarter? Can and on and of into the would and we question the than talk you that NIM net maybe is interest seem fourth income. better luck. drivers the of term So side going short short was talk balance on you we the

that hope that your your Can up. us. I or breaking you up if you phone broke there, was phone was okay, hear I couldn't us tell

me now? Talk] Can [Cross Yeah. you better hear

I sorry can, yes, about that.

hear my Did question? you

about, You was you I it everybody? know think wanted to term. the around Can it for short repeat

thought, quarter, sure, to go I balance talk Yeah basically. in a we term cut? less on the an to asset had have coming Fed side the resiliency some than on yields wondered we short a up short you the know relative is you October the there if then seem side of And fourth just that sheet, so term rates assuming obviously down catch about could in

were if the so still general sequential of the a are And rates factors resiliency, ago that's would Yeah, rates have a up, to there higher you they of probably how you a the resiliency it. year one and remember look yield. in if there's then than lapping our hold at on that the think ago, in or asset you today that in about think they part where are a year so that series I period

just can across short extended pretty have we've see instruments those you has and strategies a portfolio of help duration our the portfolio. helped of and which cross of variety the mix that of well we some that mitigate held some and portfolio, that mitigate we up some the then yields. end of investment currency the across impact have I and One is, think term Currency the the other in yield things

shorter at own in from held have bank up. projections, lastly LIBOR was duration, of actually than as all of money we though more then rates funds quarter, We add would from our even where perhaps little got And point, had projections, so bit didn't securities have it as it compress a our spread the the sort we thought and I’d much is, between this market do compressed those better, we in we type Fed own forecasted.

think asked, In terms you had you for we storing of I fourth just the the quarter, fourth up quarter. are this know

beneficial would quick come, think is but quarter X% it the Right puts you quarter income we thought there of and this we we cut in. we and give lot down X% move to I interest now – on perhaps Federal a our as net a that might takes think suggest obviously that be fourth in would would one assume be the fourth if we from month, Reserve yet sequentially. to the approximately if

being the of had the $XXX while So think still and X% that of yields this into be of the or balance sequentially. we're you going give asset in and the quarter to is and million there, X% cut fact on one still terms lot to in clear in off on there a not, obviously it’s hike but assumptions sensitivity we is quarter sheet December whether the we is a much obviously other in October. see we relatively we’ll pressure that, impact months to its size and of get factors two as in more an that forecast it modest the we There update underlying assumes in and

is And Mark. Brian, this

the of Bank currency like the it for of add banks, third to Central bearing U.S. more deposits, really so kind short mix money the call When let’s the interest within market the term, the would is one of you it end be balance actually let’s interest a bearing the with call total. looking category that, sheet on Just Deposits, deposits that at comment. are short real

of when U.S. lower of very those sheet much the looking for short drag line balance have rates as end the will the at you're items. So not a

diversification way on an Right, to the you. definitely said going just program, $XX effort. helps right, through Great your you’ve the past ongoing the the geographic be another most I expenses, this know and so then is in of million.

and think was then comment going but you open X% are related the growth, I higher forward third we where to Northern in and to your organic achieve expense revenue, want expense were versus all growth, revenue quarter, sequentially and the on expenses So quarter. due up you at know in to is growth just are on position trying still that X% the you pace that just that organic revenue than maybe a the if Trust

expenses, your growth our rate organic take rate our should, the if so sequential a but Yeah, We of you in to question tends half organic rate provide event. little sort less expense The are the having seasonal the the firm thinking. basis governor about as you is the so over about growth the half of produce last in one-time part that, out, on growth that. growth will the drives stay Trust of Northern the and to still because of maybe than about of half can that, a of vicinity of of rate that

to and question organic important growth firm organic rate organic with think better those and our to much around good internal generally firm growth the that But rate in get we aligned line. in was expense goal an probably continues we've we're very job in strive seeing. that more and target the to a the in rate be the the expense done getting your expense I line that growth in of organic Again, rates line growth with

are we quick to of organic the do in saves to that we as trying our base organic growth least or get as If organic try neutrality see to slow, can leverage. and increase to expense leverage we organic we achieve at pace then

generally competitors Lastly the you side organically see the versus I strong a growth it's numbers the quarter. growth about and and the Again, good is we trends we’ve talked or at on and asked outstripping ranges you that markets from fee saw our ranges and I of is know kind that rate we you business, the think in think talked lot new in organic the about near and driven. so our of about the pretty good

correct? in pace that is about terms organic of growth that's mid-single And digit

talked we’ve range. think four about five I to

exactly. Yeah

that’s range. in think we years years five to in have that’s what we that, explained we where low past to that we’ve are digit to circle I time, tracking. three, that it's and have we've the ranges, want that, tried you call It's to mid-single its Over you

your you out get currency and could there think and own back I analytics. market probably out in

Yes, Thank much. very perfect! you

with We’ll Usdin take our next Jefferies. question from Ken

Ken. Hi

lot Biff. and amount the Can understand of thanks what ask best clean luck and couple visa us memorization a I a both Can if help the there sequentially? up in that in was, just Hey, expense premium BOLI the ones? and of NII fees, you increase was any change Thanks.

I so It write probably make too. million, sure produced down quarter we rate approximately to Yeah, impact percent. BOLI interest in of million has then other get third about income helps The benefit but net two-tenths a the all tax $X and a it to those got or by the income, those. it in tax by reduced $X

was another a $X.X prior are had on picked we that you operating about call looking And half of other side we up on it income reflected quarter about at it NII sequentially. the in drag million so the million sequentially, if and $X.X Ken,

So you BOLI, wanted Ken?

any if visa in premium there the and Am. Yeah, change was

sequentially the of mark year. On time then little a was was by ownership a from that the slightly million and you $X comparable. basis conversion visa that to It on can a was think we time Those that know lower move visa, was factors. driven just interest evaluate actually visa up on are the maturity Yes, basis factors year-over-year the under mark on litigation I was sequential pretty stock this our the to and time and or a… – price, in it so the visa for the

us million million quarter number, but a was quarter. flat. million $X $X sequentially $X million yeah, in $X $X the million Sequential increase a was million. year-over-year million was so a total but $X increase. for quarter, this and roughly and It was $X It last its in the

Understood! just ahead, yeah, just Thank ahead. and last… good go you, then Talk] [Cross

Yeah, so XX. with for to of amortization guys range you we've us, given a the XX premium

structural Mae, the Fannie prepay by have exposures minimize Freddie to of Mac, balances large it series that of larger loan Jenny Mae concentration Our has for that help variability. have a exposures portfolio, to a security and attributes

you securities maybe you've hold see in movement. nature of the much portfolios maybe might as portfolio. other seen as don't we the greater across we where So It's our see instruments just

is to little we but range that been bit. can it widen I think that continually market between on in – we We might hasn't back, it range then trade of closer X NII. terms and generally see see and still So our this impact impact maybe it a a move XX in

So hopefully that explains it.

with that portfolio we some you know the keeping tended portfolio of have the but in generally you band in the have the that of you I is intuitively would to. line amortization up some see to pick be of that, nature and may we've features thought what that in guided still a guys

Got it, alright. Thanks for all that Biff.

Yeah.

with We’ll take Goldman Alex our Blostein question from next Sachs.

Hi Alex.

real NIR, QX? sheet stays I others look on update you quick the words, guys guidance, of thanks guess idea? flattish. kind the Congrats and contemplate Mark! for sheet hey retirement So in the the sort size of the the A that Is of for at your well. on there. like as Biff, I balance if what do Hey balance there

the LIBOR really if flattish It last if look NIM sequentially, the we bulk looks then is contraction you widen. forecast, of couple effect to And of decline the actually quarters. and kind the in by for look it at sort so driven the on far of quarter the at of spread was

dynamic the could actually this capped Is it crazy little to you looks sort and of a [ph] because than that points. wider NIM LIBOR spread it between on be think better positive bit of of Thanks. basis a like guys XX about what spread? Now are contemplating

is that talked forecast. about. than say we've Alex The would that could would it I our widen what Yeah, spread so that just an about out wider you indicators be made assumption

to our So what NIM. the is of indicating, size your point, to of about to if that what are markets what little if to and spread your that balance a lead the we'll and it that the assessment described, right probably would generally is higher compare we about which closer out holds you to that comment forecast true, sheet turns be

of So December There there upside are conference you the lot in Goldman into of Sachs could variability? at but there we’ll an quarter. could, be why we‘ll awful that's sight give the where guidance lot a greater line variables, have

sort of then and there all picture, little know makes of you to XXX as the to of the organic beyond mid-single align growth. sort follow-up close kind about as savings this bit again can of additional growth pull we the are range on you around that you as in are fence try end help us beyond make my maybe fee And sort levers year, to the areas with this, kind you guess that bigger to a I program, can guys expenses of remains Totally, of expense digit that that XXXX low coming but think of sense. ring you sure

programs I call discipline Yeah, at four we we’ve there’s and a it it's here there as it of looking categories: are really important and of I’ll underway expenses talked. and embedding think We certainly are at when our look

needed. some amount One type is, growth just certain about, expense need growth the talked we revenue that organic of of of a support is so to we’ve

comes about. factored our that got got in. we business inflations So in that We've

business that. generally growth you inflation You when on the you than up, and can that rate to that got that and put for will We that organic factor amount to add our grow up of I fees. see adds we've all needed that to your then we greater tell own add investment,

make to business us driving productivity some into model are to inflation, to so least that of level, planning back be at on and has there be to equal expense baked to any there we leverage – that work. that our organic will probably drive productivity has So

So that of business. for XXX or whether driver level expense call it our spend in where we value there’s

in sub that's procurement expenses there work of our a from your still into that – tie lots To question, are or quarter expense of sub-custody quarter, trajectory lower I in is and and perspective. base opportunities there instance we've the absolutely, the procurement are of say there's buckets in done cited some expense changed still custody we answer some areas around good the that and would the meaningfully for the

have we help doing group drive many the and we right but projects finance type in our help investments in are now, thing as one those expenses robotics capital size, automation modest to of that still and still drive we're speak it's down. think We business into our that available and

to I there's in think I the outlined you. model opportunity drive productivity necessary for the that's that So

Thanks great! it, Got again.

We’ll now with Michael take a Carrier question of from America. Bank

Good morning taking the and questions. thanks for

so, year are rate trends. you factors that but partly bit the I has growth For in you could demand growth organic know think other then interest that maybe the been deposit you realize weaker you driving backdrop, know a earning the client? or you what potentially and know versus know by you last do know any asset shift

flattened the I or decline, even probably you in absolutely a out, pull growth businesses right has again your think but I Well, have to maybe think deposit our here slight a gone little apart bit.

billion, look, initiatives of that – quarter, go brought $X most higher we sweep $X side, is on deposits. visible the little probably over On a did grown actually discontinuation side. if our to little sheet that's the somewhere that, $X.X we that back the the anchor slightly you but than initiative balance actually have part first over so is the some seen It’s billion, product around has of a billion wealth probably the or the of

side, of as foreign in in the before strategies, particularly maybe We've see the type there, reasonably normal variability a people On particularly you'll the investment shift currency, business. I institutional office seen these of cycles shift as think market. see course can deposits they volatile we

the So seen we deposits that. some of office that where foreign out seen particularly we’ve institution the itself deposits, in in have playing

even so that pretty don't grow get our will rate. is from clearly a pricing feedback our item fast related have generally and pricing at feedback our not and pretty We that We it's organic time it clients, pricing with market. growth where over a issue it's not related

of you've not any related the I say because deposits of those some for were what would that So what other, say reasons. is I seen excess will you've I what or think – things rate sitting here the there's were seen is rundown –

fed’s the see of further to That's will don't lower, this or out a we it's likely way that as same to trajectory? as moves, time the and growth. some happened would quantitative actions through, trust if would if what's could the continue what historically the but general early, be easing more that are balance be know sheet your part play historically. easing be rule, that I is question speculation, to tend of lower banks of recipients the get, aggressively second The rates taking change but now the I they suggest balances.

outsized an rate could So drive say growth. growth versus that organic at

now, been at to average And Mark, quarter the are decline group, that’s of add three that short fourth you're other When U.S. on trends, clear thing. bit I could leveraging activity little looking isn't that then later, where say at actually externally, we more do look if were the half from of our a of quarters one some as than and Mike doing one term we office, treasury the compared borrowings. in the it so to deposit looking thing year of has at you non deposits last some if

you show up will actually line, that trade borrowing it spread you that of shows short been pulled activity. can the so deposits that go his when get some kind That a back on get term out the the we mix also not up there of in know and narrowed on we've wholesale but of bit, and quite has the on

that average activity. three non look office at last leveraging I So U.S. decline the been a like said, of than more has when lower half you little deposits, quarters over

of And you've areas stronger, in in more I I think Okay, volatility sense. came revenues that it that a quarter, then the some there's makes also realize small but offering. in security just of been the investing the follow-up; commission

on know drove color quarter? the any increase just So you what this

Yeah, that's a question. good

in we’ve we clients meaningfully credit relationships it's it's that so what take it activity; our around and administrator made the with a some of up here as prime grown we we've was up that line of also fees the would know others or a of on functionality where you So that may it – solution seen made our as that has up of for number about can really instance certain we clients trading say of relationships is talked Oak fund who Ridge have integrated trade business, effectively grow The meaningfully. of… brokerage of I get growth, is have made driver and and we that

So rate swaps. yeah, interest

Interest rate swaps, me. excuse

of saw also those. three all Which

Interest you, but in one activity generally more the Thank think those some are the had in probably and say rate two rate the swaps rate growth to there market. for of a by in those not episodic are movements second. that is business of triggered I nature. the I three the brokerage Interest saw, all would that we client quarter, growth, of third swaps, saw of just

it the sequentially noted one-third, look interest brokerage certainly that in referral Yeah, release we for when more fees, probably it's the we are one-third those one-third, at of and two activity, rate and episodic. last and swaps

more we transition prior. that a quarter through have versus comparable this fairly Sometimes that that’s comes revenue episodic little bit although too, was

Okay, thanks a lot.

Morgan Our next Betsy Stanley. question with Graseck comes from

Betsy. Hi

really enjoyed to Biff, I our morning. good going miss over the I'm years. you. Hi, conversations

conference. the in sit I’ll

great. That will be

and Okay, all well the thanks so much years. the insights over time for

of clean strategy So bit and a couple of little of little a up questions. a bit other questions,

expect down a the as statement? where move that's cleanup we a I'm that to you almost accurate down. on with of nicely, long lockstep we’re and coming an you questions, So swapped. Is seeing so rate result that that the term know assuming here the funds cost debt Is continue know should to all cuts

It is yes. swapped,

on to the been growing recently some then temporary I and going mean it's the sheet, just doing fed open balance obviously market promos. Okay, the operations

you QE. from Have heard any month I so. You know seen it's or about a about the I you this? benefit said mean been

that size flows I point. this would say not; we have not at from seen any extraordinary

to pretty have say in It's sight say any line still be that’s intuition. couple would but a my of we’ve now early hopefully see no, a months impact. pretty we better seen would I’d right and that, to of I So will early not

for improve lastly, we you're a talked – the and as understand a but more to variety were private bit your rationale equity wanted little of as processes, technology bit chain broad-ridge. growing in just I about own rapidly. to Okay, investing well because question, the of some areas in a transferring how they block to more different strategic then platform little technologies know you

know how drive. your you strategic, focus enhancing is You and know that

that, Yeah, through they Broadridge just, than distribution with opportunities I at were that the moved think through pipe say I felt were in time their that better ours. if the we and point growth opportunities can

have and us ability product But our a commercialized the that deliver I but we that's have think more Mark assertively grow know we to we decided that one own it capability have think it’s think that I anything everything. best we through helped that Broadridge for you and what was we inside can base client do that's best on. us beneficial the the was commercial group, really color, decision else? for and

is enabling though chain But this? accurate you your intact, focus if you your or clients using for that it still technology block utilizing on is either even or transferred

Yeah, for sure.

user their you’re a right. platform, Because of

structure to and that using in where all we clear private field commercialization and to But related of of ownership it through be be in would enhanced there want was fit sure, that than would by using and I just for product one a much we but it that Yeah the better that that field. be clearing broader application clients. capabilities us, variety it applications sort owned just thought are one in perhaps as equity type vehicle, a of for directly was other

you. Thank

Thanks.

We’ll now Brennan UBS. from Hawken take a question with

Hi Brennan.

in future. morning, on to you'll you and sure Good congrats tickets and get best. golf Northern Open the the your improve the Biff the will wish retirement, I’m game

a got lot to Brennan. it's improve of Yeah, room

Tell me it. about

on be in it. that, there, also and back different in color so one, components. like late all impact probably cut a circling just curve, the look thanks for curve NII, will wouldn’t when Curious so of XQ. I the appreciate a we on on quarter, December it couple the about the a really So forward forward suggests big know that I looks Number have at

a little one beyond getting because impact, and But should we on front. an increasing be you lower on on beta bit side assumptions count a the have that forward impact are that such next or impact, less the deposit going cost around would further comparable will room an therefore your cuts

there could great. you Just any color would additional give be

peel Okay, little apart to try that so a I'll bit.

it So that it want impact, a quarter would to earlier fourth to range have the right that, I that's start zero earlier, that wouldn't but and on we cut cut because anticipate know actual you itself and works. depends clear impact. nominal why gave December pricing how have you're on the than be

just how as there the in said, being out think we beta XXXX, that. relatively are impacts we're the is, that's think the this symmetrical, I and apart. point, they many But you about at give not it talked are will being to think think and as to of we we I XXXX to so terms going that In guidance variables is pull

were pretty If and the you high dollar look again they high up, were that's were at they the pretty way where they now. on betas, institutional

or from know know if think would that's to something I the I back up. model three all way pull way the hits, we some just would bit. know saw on would of start looks sort symmetry we with a be or have I but relatively down, where don't speculation. I what it don't sort two that they point hikes. of so symmetrical they probably would little one that of think I symmetry

betas then would steadily Okay therefore of betas that, in increase ramp so would starting mirror in so guys to and high like we way and just you and are you see clarify, up the on the the decrease. saw so

that. think we quite were for you symmetry remember hikes, Brennan I starts through steepen, if so Yeah, the the right, several then if go all low around back, the and to betas curve

down. perhaps come period to start high some then So quite are the and betas for

symmetrical three would they on hikes want I just that one cut me, – down. look float that cuts way cut, but two away to the hike that, it’s up, don't or don’t away, flow to is or away, be don't way know I a two speculating, that then one excuse I the I and is think do

That’s got the commentary. is next it. excess logical. My Okay, reserves question clear and totally on

especially Northern really curious, some getting Bank larger the system. didn't seemed reserves drained versus like Trust competitors when it the were from get hurt, Just of

relative would why benefit to know as curious why of happen, kind to expansion you larger some competitors? I'm you the your of would with an Thanks. think So reservists, the especially of inverse would

assets closer as this down provider I think gets are you zero, your closer will $XX I general financially of because as what closer cash we very liquid under a strong is pull to balances rule, to that question because and say provider. trillion different know may home somewhat we natural administration, as custody I for of want our servicing in and the a back rates think an a – asset rates but be the

so The options. say some I'm all that or clients natural and tide just floating that. of investment of benefit in series and fund boats you’ve coming it, with of large there's So got kid things, others different through who hedge like now a

things have think happened gates is reforms. another and and has like time government market of been addressed things what different those in reform in I market money money place, were Brennan this funds things I say some will that and is

They So and fund. to that paid more through have not past, roughly those can sheet a get may go balance on they paid were zero or bounces consider in have roughly than the any a on get sit institution ability cycles they bank fund, have zero well. a that gone financial rates so

how out low on to have how get. we’ll depends So plays and see areas that

would of were, It we we see gets close rates or the after something one where think before have would impact. that right the I more two to have crisis. lower to be kind to back than get cuts that

the color the on golf course. and for Thanks Biff luck good

Thank you.

Brian Kleinhanzl with a question now KBW. from take We’ll

Hi Brian.

still. the comp quick question expense. afternoon morning on or good A good Hi,

staffing was up X% So up you quarter-on-quarter. said was it and

this past of well uptick be If XQ see the would XQ reason year? think Is the expense. same that back to an look to you as in you couple there years, case any will comp

how incentive be quarter So, I’d have by goes. been some point that’s there mean the – pretax there might that I some may to look A in fourth driven is see. income verbal. to compensation have

eligible different quarter, years this had definitely years that’s prior sequentially comp and we thing year I the I – the one prior last is as about far that As we’ve than is think have had retirement third have the equity first in quarter that in was second did off this the million that year, We the expense $XX all quarter. that quarter. fell not in that of was

So XXXX. what a third have would second XXXX been different to picture in year it than this and is

in about I million million thing that was million as in of did would that you $X last mention about charges of $X charges, we was know other The quarter we compensation, it $X compensation outside had only services. say well, of of

We this quarter well. as did have charges

charges, what when charges in comparable because business prior quarter, would from another and a those at as compensation, we Now we those with out, calling part. are usual quarter we've you gotten I had in but that's the environment look the this more actually we so to we're think away pretty say

a them rise we’ll did decline charges because business said, to off, just the charge out, we as they usual we have expecting is some level until if to So quarter. up I more like but But going point were this in of like again activity. – were if at feel you they a it's higher certainly call

be wins from doing any quarter, appreciated? gravitated new Okay way that and greatly type color business any there then on pipeline, to in what color just a I know you C&IS away the question. kind of any of Thanks. were past, the uninstalled In would kind give but separate of is

see continue that. in right. We new and quarter. installed that provide I we say, to from the away gravitated Yeah, wins don't strong we would business you're

but strong win. continue Australia seen a real and We strong we’ve very solid in to really globe, substantial a market, particularly the Asian particular pipeline in across in see interest and the

Bank – a so the that was was published we’ve quarter. a press did we issued think press win release win, profile a that as in I World in high release very

and continue look we the and So, fee from were growth strong we where in an quarter. standpoint as said, to at we us as more pleased trajectory really the across we with story a organic it for line have growth, we were

Alright. Thanks and best of luck Biff!

with Jim Buckingham from comes Research. Mitchell question next Your

Jim Hi

betas Good Hey, there's that of NII thinking follow-up it just and pretty been morning. to maybe high one kind me on Europe. last through, in just seems

further are view kind cuts Europe there or are there, if that – you actually is it is get sensitive neutral? on liability your just of in So

any out, kind about some kind rates, of think looking and even been? I you of to further the balance when then about offset in And you do Do have talked extending of sheet that. asset sort given your how ability haven’t has and yield side like lower offsets duration further things

Yeah, so in you're Europe right.

euro factor the catching were from that slightly been high both high you of there. particular euro that than move than competitive higher and beta the up the which beta move, as was moved that perhaps can better beta with have rate was high move we relatively market obviously be will and in a a the the that On very if slightly actually and the ahead market attractive betas in that or could landscape the or some that of bit little you could being we that rate even our

there, think our understand client So important and that’s I a to driver then it's base.

I’d that call some and rates, standard have specialized that rates are are on, more We clients are custom it on some rates.

Some moved with of Central rates, sort ECB. immediately IOER, them of Bank

XXX% So they with with a right move those. almost will rally beta

decline from In terms of we one, sheet, in have balance very be run closer X.X, typically of the things of what an about light the you index which we we think a duration a have portfolio know some perspective, years as rates. to could in out the short to duration continued X.X portfolio of you the duration know moved duration but we done

in asset that some to soften that moved portfolio out And duration you and help yield the that issues with we so of help have about. deal talked

to do that there from else in about is anything duration more offset room of to – pressure? you do rates. out mix that That can your U.S. flip to into for you is And what help you or see Europe do think cash how your some whether

and risk So the call, the but credit balance longer answer typically a think really ALCO through out taking month, We co-committee the through duration But of to for we evaluate way every room treasuries, sheet we're is the still any the decision do. is duration regularly, duration take our duration. That that makes that that's that first but that not out. dated our capacity benefit is is the so of there extend I use of we still that that our there of yes. get committee there to in take part to the we and

the dollars have frankly into swap the to quite cost know get you know currencies made generally many on have tried cases and swapping of yield me, in enhancement, excuse that that we support that an largely of terms in always currency and rates the balance or and have doing our we the have sheet. in In trade, the make to currency, you in – unattractive whatever invest of clients

So they've [inaudible] opportunities invested euros, rates right in can the balance they'd group. make in there are off a the being But laid action the could sterling, but that do occasionally or balances euros now swap, etcetera. that euros, neutral Yeah. swap

Great, thanks!

to move Mike We’ll Securities. Wells with now Fargo Mayo

Hi.

spending savings, so for you and think therefore need that growth, I heard XX% organic revenues, is got find initiatives that spend productivity should that. So you're per value inflation I outpace done to technology

peak? know how want were terms at in a of data savings, that category in example, under Where what could way centers you of number So do productivity dates? have you that the go potential maybe they servers. do technology or measure have? of you many Where of For to

where You especially would like stages. to to go? the driven savings could late spend that to cloud, together enable the are percent have in, for more what now are you know ahead, see just you where productivity value you the But you're you a going know, are cloud, that generally what in moving technology

There's Mike. question that a to lot

absolutely so described all things there. have you you're ongoing to in an the So have process at we right, look

maintenance the talked used. For and services do we for where like with opportunities We that instance have lower about centers. instance data at someone another main at cost. technologically else we we’ve a manage number of here, outsource to frame our looked that things that There’s

board is engaged We call, strategically that others. the are this for the to at and firm. the our something technology but going strategy Not our on is actively looking that's with group cloud and very with comment board

be be it's technology, So our largest of because it's to of part driver going of productivity. spend. our the to in the has primary space the It

consolidating datacenters, that's of a So you don't etcetera. we’ve cloud is running obvious the get you I as good will but duplicative if about, we not I kind solutions, mean of Mike, job I savings know based say the pretty systems. many to talked done Mike

services. I think do applications running we’ve our multiple looked similar across and organization we and were where to consolidated

although job the inside pretty at a know you looking reduce consolidating of I and we're think apps still that, of that done the I firm we've good we number to if that maximize that. and have trying will

can effort So have the single spend that that how we productivity. we understanding around right drive probably is and largest now through technology

useful Well, around that helps get that. you contacts

thinking or of on one using that number number numbers. you Just are provider, and to least at of data a time maintenance mainframe one those? more you I’m have party, like data saying apps of mean but you what centers when you the do, many specific not a you have datacenter move of provider, the that a third

We’ve frame, provider instead staff own it advantages. our of did staff do for and we had the maintenance. for that. that for and because who who instance that up of better are done had that can cost own other for items but own a others on to do also staff us, provide provide – having and firms can main that staff, that pick hardware our the mainframe that's productivity we have used if There a that there's who the that So we upgrades our maintenance

what means. I describe So would that, that's is how that

Okay. Alright, thanks a lot.

Autonomous question with a Research. from Rob Wildhack take now We’ll

Hey Rob.

of positive leverage organic on decouple there, alignment remind One would growth little level guys. you commentary start of a really expenses the can revenue appreciate us to on and where the but to and the show and growth morning start operating two on Good those can growth more more organic up?

Could ask that I one you I more time, sure to follow make want that?

expense not think see level talking where, I'm growth you're wondering the revenue line some organic growth about growth might stay can and I given leverage. expense and need you and closely aligning as growth operating in so really if there's to Yeah, a revenue of

don't I in in it be, a general point that two okay. know would our different. but where businesses little Yeah be could exactly bit

that's growth. every for depends If to it's needed; it point leverage, of traditional expense So base expense, accounting, probably it's more, in go Right of a bit there’s organic more our it. administration, a that expense highly custody servicing needs business required less asset fund I’d if say to which line. it now expense fund it generate with on level needs has instance, is of there business larger for little that most a

highly space, wealth the In pretty there. leveraged

that could grow be So the expense growth of required to point there different. organic

get growth? continued that's I what you're asking, is could So we if think

a growth there's where that know organic stops don't I revenue expense continues. point the ever the and

out and some has competitors. versus wealth that industry certain we’ve their Particularly of a that through see that, great needed of there's and to of more had line leverage than those that lines. success widen I their think are their there that a you had others get but rate is businesses can lines piece in gap able in that always that's that growth strong

That’s you. helpful. Thank

Thanks

there no questions. appears it are And further

you all would So to thank we participation. your for like

disconnect. now may You

Thanks everyone.