Northern Trust (NTRS) 16 Apr 242024 Q1 Earnings call transcript

Good day, and welcome to the Northern Trust Corporation First Quarter 2021 Earnings Conference Call.

As a reminder, today's call is being. At this time, I'd like to turn the call over to Director of Investor Relations, Ms. Jennifer Childe. Please go ahead.

], morning, Maddy [ you, and everyone. good Thank First Earnings Conference to Northern XXXX Corporation's Trust Welcome Call. Quarter

Officer; Tyler, me Joining on Chief and Jason our from our our is our Investor Financial Grace our Relations Higgins morning Michael call O'Grady, and Chairman John Controller; Landers, team. this CEO;

use find replay release Please which financial at forward-looking our on statements authorized May northerntrust.com. report presentation, quarter guide to our provided safe earnings the call the our both presentation, information which regarding are will Trust to refer will on review quarterly harbor first will this apply call. This on statement of accuracy rebroadcast available live website Our XX. this call and after call available the conference to of is earnings in through of company we Also being will website, press our this is only trends call. commentary on today. April be on website today's disclaims that you our on The made northerntrust.com. XX Northern any XX Page our continuing webcast

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

Let me turn the to call O’Grady. over Michael

you, Thank Jennifer.

first welcoming our good We're you quarter in for to join to start earnings me year. XXXX a Let off the call.

in prior markets. healthy Wealth due advisory optimizing generated relative strengthening flows favorable against our both and growth year increased to strength growth, client underlying and of markets making solid reflect to our growth the progress both quarter fees the to priorities continue and momentum organic we're period resiliency. businesses. Within driving productivity for in in results Our see product and fees saw solid We prior strategic equity level the Management, we across and

particularly enterprising well of quarter, have adding attractive flow. to performed new of high-profile The events Office Family client and engagement significant generated in created proven it first and families nationwide several Global lead of Our source secrets launch be an relationships. the book, client the our around

attractive new quarter. first solid business generated the growth at Servicing margins in Asset

solutions in the As Trust is quarter. appointed business a management were to costs. There notable potential, Northern suite This mandates management. greater to to we've in goal rapidly U.K.-based a firm, a incremental discussed, is of that wins our scalable. new of assets servicing under of lower that generate provide proportion levels means require new billion $XX was approximately full growing wealth asset true supporting several

and and approach, asset joint with existing Ireland. into most to sole new open secure increasingly coordination, capabilities enabling award Management's we're factors asset billion consultative management. relationship derivatives tight bringing solutions within how builds Our seeing shows servicing The solutions win an firm. More also us to opportunities expand this an other are we're key leading helping evident our strategy U.K. were Sanlam our market us. Northern more core is then asset relationships both servicing in encouraging entire the domiciled funds the of and leading between the products. meetings The teams is products progress manner asset work in Investments and and Sanlam integrated business wins. management clients whose solutions of Trust becoming appointed architecture success win. We $X This businesses delivering asset firm making clients servicing to provider and By new for trading upon client. ancillary One capital our from in we're were as for and expertise Asset the

within increased with and advisers product wealth recently internal also markets. to positive business. This macroeconomic market roadshow alternatives. In institutional and meeting towards Overall, turn quarter to our positioned wealth which Jason? strong over the with market wealth performance. first the with has income the continued and Asset momentum a uncertainty. And Management And over clients. new proprietary generate offshore clients our are fund clients management launched tailwinds clients positive team and for wealth Japanese quarter, fifth strong coordinates ongoing and it in flows geared market and into in provided the visibility lead Asset money laddered and time. to that, bolstered to flows financial and several entered from business increased should Jason and TAM's second products with we consecutive closing, generated for navigate Management the that liquidity quarter new XX fixed national momentum Asset I'll leadership well muni the performance, active Management review to completed also

Jennifer Thank you, quarter first me our call. to XXXX Mike, welcoming and you Mike let join and in earnings

morning, we million. reported $XXX $X.XX of Just of average share net Page quarter on equity diving financial starting into return Earnings X.X%. the first This was the results of and X. our income on quarter per common

-- included quarter. is addition slide, to related fourth FDIC the sale noted a a a $XX.X the special we of repositioning completed to As million $XX in in million loss results securities the reports in our assessment of portfolio the January. recognized our included million reported also the $XXX They which on we on

were Our sharply the client assets of under assets both favorable flows, drove both with basis. periods. markets, up administration equity and and coupled management improvement in under and most a year-over-year custody Strong on sequential

year-over-year were billion, last Excluding a year. all over sequential X% investment the fees notable and a other periods, X% prior sequentially increase on X% totaled X% $X.X and Expenses on was increase up up and items Trust, to a basis servicing quarter revenue in up sequential a X% compared X% and basis. year.

the FTE other we in periods, client income. Net saw year. very a XX% interest both experienced trading Overall, basis in down businesses, We quality income and an volume markets referral recognized and particularly an securities credit income was unusually underwriting FTE trading, where commission FX strong. and the levels. ago. our notables Excluding on over X% up XX% million, strong was good bond remains year up $XXX fees sequentially were on all strong, up noninterest prior basis X% within momentum also sequentially capital from

allowance $X.X for basis due impact large as a loans declined $XX to levels million and losses nonperforming Our of points. a million a release to largely X reflecting at since The remained $XX reserve XXXX. loan. percentage a the loan during Nonperforming credit lowest million quarter, stable loans million, of total $XX level of decreased from X%, charge-off the the commercial

asset our X. Page servicing to on results Turning

clients quarter at custody end. Assets trillion under were asset and administration servicing $XX.X for

Custody were $XXX were X% from seasonally business strong activities. up to $XXX $X reflecting sequentially fees due million. and for markets and payment Other fund fees other year-end servicing underlying equity year-over-year Asset higher fees fees activities. million up new administration totaled services and million, impact the benefit

management servicing management clients million, trillion. Investment fees strong and $X.X a X% up were within under were sequentially. for Servicing Assets asset $XXX Asset XX% year-over-year

Wealth our business Page to on X. Moving Management

X% sequentially. GFO strong, wealth management other were up million and within $XXX management and XX% management under X% year-over-year servicing $XXX business up and for fees clients Assets investment Trust, and is billion. Growth X% our wealth particularly our clients sequentially. year-over-year for were

trends. to X income sheet Moving Page net our and interest balance and

average Average to billion our a in X% billion, linked-quarter to meaningfully $XXX income XX% levels. of of $XX net up and balance the billion late quarter balance reduced lower $X by sheet. primarily our in to net This year borrowings. $XXX ending were interest X%. fourth We an quarter experienced to leverage deposit relative in total from with sheet up the significant fourth to quarter a deposits XX% deposits due X% due or better average the interest X% borrowings to translated basis, a prior It nearly billion. balance the the and and side higher short-term by surge the increased of Despite than million $XXX Our compared were or on expectations. asset margin X.XX%. Shifting capacity we declined stronger-than-expected borrowings to

our and relative XX%. nearly completed and balances sheet Following just average or is billion, the $XX in duration to repositionings cash November sequentially down increase now on in by Average X%, year. below and January the $XX increased securities sales The portfolio our years. loan related balance billion to X.X portfolio both securities prior of our the were deposits,

reflecting loan again at dynamics. end-of-period were balances elevated billion, timing market $XX Our

the Our of less not loans on net the the have returned year. first a The since X than impact material to at quarter to be approximately end did billion. or quarters. heightened duration total $XX in continues income activity either balance sheet second have interest

Our average deposits average. our and assets strong, levels on XX% earning liquidity with comprising liquid total XX% highly assets nearly of of remain very

largely behavior. is income continue by Our will deposit to driven client highly net to deposit sensitive levels interest and be

NII. sequential variability some and X% a rate we stable pricing expect X% volume, pressure environment, in currently to a incremental minimal deposit Assuming in decline

to X. Page Turning

up reported, to $X.X noninterest and the billion in year. were X% sequentially As expenses as X% quarter, compared the first prior down

Excluding as up notable points basis the both in year-over-year quarter up fee the sequentially items in operating slide, leverage were Expenses to on X% XXX listed year-over-year, first in the of X% translates periods, and trust quarter.

sequentially equipment expenses, advisory are XXX expense exclude other as trust third-party and underlying associated higher time sensitive new points current tech year mostly were on approximately year-over-year, fees, notable however, spend equivalent count impact Compensation to added expense related as fee in within Full which $XX million which to in The due with to essentially was of areas elevated prior such flat or million Non-compensation equity ratio, head outside movements up and year-over-year, payments up little expense year market costs expense plans, few within versus the and over consulting income our down into is increased supplemental X% up the XXX software fixed put hit X% highlights, depreciation items. amortization and prior and growth. a projects seasonal increase and a incentive was reflected services. Market also data, sequentially. growth X% and Our up $XX all and expense over pension sequential from just the incentives continue equity profitability. to service to which XX% year. remained XXX%. I'll and basis at our be

Finally, reflecting the rationalize occupancy footprint. actions favorability we to last line, took in our experienced we year

expenditures. will seasonal the year's include the but also expense will third quarters. $XX reflects million largest touch second, Compensation resiliency a As second aggregate, much see of million no related incentives $XX ongoing in employee sequential as in services, businesses. a we out over of could growth we from adjustments outside to on costs modest cybersecurity our in, from reflecting quarter, All I'll into the count $XX the million. Within associated base categories. should translate the decrease look $XX fourth sequential last to as million and million head to including and longer impact pay lift, spread QX, growth this with $XX It other the contain equity technology, expense to underlying

some and expect roughly also from to fees. flat there's expect sequential amortization. step equipment year. expect $XX incur the a we We see in and increase, market-related first of Sequentially, see impact the software, in to also we half million various which to timing-related depreciation lagged so impact the up the but same quarter, incremental growth $XX was the don't million is second to half Within

and capital Our and strong our minimums. at quarter, continue ratios operate in levels above to we remained required levels regulatory regulatory well the

quarter. cash in we was buffer a Tier with offset a Matti, with Overall, reflects shareholders repurchases million. the $XXX down on leverage please was end, XX.X% securities risk-weighted in in million capital returned modest of basis common XXX the our million. And through was $XXX the flat basis common our XX increase equity dividends prior that, for standardized pretax X.X%, the accretion Tier quarter levels. line common X asset questions. as points available-for-sale loss quarter ratio approach from point of Our regulatory At million $XXX requirements. This X ratio $XXX prior open quarter unrealized at above to under stock the

Instructions]. [Operator

We will Alex Blostein take our first with Sachs. Goldman question from

to to second X% with X% guidance for wanted NII the So quarter. maybe down start I

the biggest assumptions your deposits. like there Sounds around is driver

going do kind of parked I'm be in over saw course you assume perhaps sense you the then upside where benefits curious guys is So that what stand within cash? -- maybe today, source just on Visa of give guessing any temporarily that proceeds the quarter? a from deposits of guide, at least us was that the to And of the

Yes.

That and through back go management. both what in I'll One, dynamics chunky very case of and increases. that saw levels, to improvement just -- clients really asset lead there. have the wealth couple the base going large we level definitely servicing end. end there's in first the a billion that that deposit quarter So, at And it $XXX can of but nicely, nice significant increased of quarter to that some overall was sometimes and across and was we place have always happened

seen So late -- come that couple had of the at in in but wasn't the deposits the of said, we of that the It and first end the weeks the really the have very driver we of quarter happened the down, run-up quarter. average. quarter. And

in So the good. quarter first was general of end

so out we into As quarter, the we dynamic to quarter, we and as go which, deposits come to the where the factors. down. things look one remember tax got ended second payments have of of starts away tax That's frankly, in that of we've like for buildup was the April made that part payments. get that

you at lift then asked in quarter. the peak point, this at even quarter. And that the from Visa for could we so significant about be no And a

a at going in ideas they the it difficult would has in NII like right, what job clients has more just a been very lift. the this has short not income know you there. short be really been got to run. on perspective got statement parked not us run. And But we driving -- deposits and this and predict. want the that. capital to more We're did You're in than predict just levels. lot that in deposit it's but it's general, to to to good feel did we very be But We've impact of from been is short most least remember, a area sure it. on leverage do make with work a the we significant of The hard to cash in parked the run, And

NII Yes, follow-up got with as guess we'll I you. related to makes that, the questions. all sense. so a stick I

of generally $XX-ish highlighted, the over higher sheet balances and backdrop that are cash time? a pickup so side you at point uncertain elevated given for do on balance the the feel comfortable rates in guys asset thinking pretty expect sequentially. meaningful into billion Should You remain you extending guys saw cash to How especially securities? you as fairly we that of sort redeploying longer? about Or the what perhaps

another which on was is very a the We feeds It's more now. balance Yes. feeds into dynamic big duration first felt your like question, the securities to your question, actually. That of We strategic. that And duration balance was NIM. that giving right also of that, part the importantly, little the curve why -- bit. Usually, you that the into sheet right little the brought was this thing portfolio. sheet. repositioning That's short up we that point, would a extend the But end at environment, the But be rate a curve did helpful. take bit bit a might to in little rate up giving of a we on might means do. opportunity

the now. to at done of point And right of chunky very the strategic of the deposits. nature the now view curve. an -- And more then But let what of come you lot because to a want of anticipation was to the in stay curve to the of just And short very part on yield part intending just economy some part but is there. roll the of where been And so and take step see elevated yield obviously, we're it of our we've cash neutral has opportunity repositioning we that we you're right a -- shorter our that as are and maturities out. depending might of

We Poonawala. will Ebrahim question our next take from

is you equipment comp moving want we sure expenses. software sequentially. heard maybe XX% to up on make right, and to quarter-over-quarter. I about XX% to services expense I then XX% XX% you And counted I So think down just guess both and

That's right.

expenses terms flat year's expenses So I some around XQ? focus talked is, does expense give the previously imply of guess relatively just last in us X.X%. the about flexing that the growth in visibility below And bringing you've lower, question

targets fee expense of the Just that's being around a terms give hitting done trust the of work to of your some confidence those sense of us ratio? asset in level

Yes.

all push are to that get constantly even expenses opening to get the tech all we confirm to We're inside migration focus first enormous services we down, the to or you're we've where elevation push of and want trying year. even down. got little other we're hard. And continuing goal productivity be and and where numbers better. right to expenses that that. had the the sure in bit that year, expenses consulting, to still secondly, to or it's still give X% company. And the make and there we've of strategic is we early But things goal. items. the in got a time, we're we And some those of efficiencies that in very the we're services find So where and find we're in a them like there We're get through for for opportunities at to But are to items. sense where reasons, gave first of line working on cloud we've that bigger seen above outside below, finding numbers those And the and all, areas quarter pushing but early hard got X% still same some areas the continuing

just And guess I it. to... one follow-up Got

quarter sorry an much had impact also think year, should think in interrupt. just think how we markets our appreciate the as on people I thing, of Yes, One the first to about expenses. I lift the

the earlier quickly on on. supplemental And plan significant so subcustody impact to an our plans has benefit But supplemental there's expense referenced anywhere advisory market even offsetting third-party about revenues. impact on you no There's things increase data from profitability. impact it in like for that something think to market's expenses. But benefit and to when fees

So an we markets a has got -- little lift but And bit. impact. to put in aside that definitely the

work lot little in done XX% a the we've and into this mind a something but as quarter first over of the plays that on all the year-over-year, well. we that's just expenses S&P of up quarter masked XX% so gone keep XX% That And bit, a in sequential to basis. being last as year, the it through period should we've

behavior, follow-up. a or handicap things us X That's versus today but X one I to sort Have give of it's gotten very quick just And ago? deposit pricing better just appreciate helpful. competitively? months hard stabilized, that of sense

Pricing Yes. a the biggest specifically see points and in -- pricing quarter anticipated the was came we [indiscernible] in did anticipated. one up that that couple basis of in in and deposits. to opposite direction. We were actually go of NIM had We than through we better the benefits had

we've work price saying deposits, high-quality on maker broken so did, in think not lot price been or the we're that And a I helped. but bringing a it with and clients a communicating taker this, we a of record

pricing And has it now. third so less it in on in particular, appears experiencing significantly were that, right abated dynamic quarter, that pressure we very that pressure things that

from will Usdin with our next Ken take Jefferies. We question

is could management This just growth. just your [indiscernible] on and behalf your of wealth about Ken, pipeline talk you servicing

Just some would on fantastic. that be more color

Sure.

management. start off with Sure. I'll wealth

expect in and we that So the forward. see first organic we continue nice to we go as did growth quarter,

wealth a some equation. asset As advisory quarters of where related of subside saw the I through management been commentary gone specific a more And fee in and headwind we've was that product first in in the it continue quarter. level mentioned number of in fees the the categories, have see side the we on of to to just there, also, the

that the Europe has would heard America, a growth X in are in you I family asset worth, higher seeing broad-based, on. been also office we're those primarily owners in relatively say And the but certainly with strength to we segments seeing So our net as which first in that asset a also expect growing focused the servicing, be well. quarter, strength North rate going ultra-high in business forward. And also at positive

area solutions, positive. then a, is a been for the we're with them relationships of, And seeing new broaden area from has I'll core increasingly servicing and we're say, that capital say, out as an where outside generate markets seeing with being increasingly trading asset an area that integrated I'll there. utilized it us So to

that the So as business I organic of in well. the feel about good breadth growth

Got it.

and Just client and another of between just flow that where question assets stands? on generating cash fee

Yes.

and obviously large. in in not highly year-over-year. overall, just positive important also complex fund that It's it's our very to money profitable. us. which market the So been a deposits, complex, cash up is has the mutual sequentially story, is And but meaningfully

invest So the sophisticated a time, it with but same a having see at concentration. good fund yield the of to with most there significant benefits not opportunity as clients being good in our collective

broader of model in but overall the so financial And strength liquidity into very the played and business, in investment the quarter. cash significantly the has management also the

will from with our Graseck next take question Stanley. Morgan We Betsy

when on how capital. that leaning realize So more the capital right buybacks capital I understand just start levels given you that and guess And capital time your X And One that is wanted excess accretion I to to questions. have. in to one is the rich. you capital think business model is of about

little And the that quarter. that artificially We at argue were a the the strong. are dynamics and you're low right CETX, that's the now talked -- where are loans fact elevated at now. that about levels of right of So because even with the end capital we operational I'd [indiscernible] right the

mentioned so million back coming pulling the expect got Plus, to loan -- still of par, we result levels. $XXX which in returning a plus as RWA plus And good got and earlier we're level. operating is normal we volumes, already basis down on we've an at more Visa, a we've AOCI,

strong, And right where and these at -- also good capital make but levels. to able we are at develop we absolute, looking to also levels that we relative. to that always not are peers like you're And it's strong sure so still those and say just are having note our all when good. They're returns

even can imagine capital an do result of have but likely coming to trajectory anticipation like that all other It's being will higher it it, an repurchase. capital we're that of obviously impact you levels framework into going with equal. online, on and away, all upward going upward have in things and something with goes said, right our Now it as share not enormous of a particularly the to lift, Visa

separate then on short securities us -- in just And have give think Great. opportunities Okay. could mentioned some you book, given question I you maybe typically a that duration as the at to the to And book about and about a context very, that, some duration. the extend very color earlier you just in point? how you're thinking fact

So what when of duration, in is long you are you longer about say thinking terms long. how

relative. good a everything focus and It's is

on in it it's we X least year, to years gives than of range. the had under banking lesson of duration the couple and couple years the note portfolio. in X deposits now everybody sense you gotten -- But to being So markets a securities think I that ago also shorter year out about important the have should from at meaningfully over over anybody take last we've a last anticipated. a seen some what

the see on predictable, us shorter in going off makes did. like right a general to that as opportunities? of led we than bit the over been before was go to do yield then and last deposits work the be repositioning to at we're year be we're We to confidence to gives part we've seem And to it And reason that's going curve it we the short that more us what so that we sense out. And indicate curve now. And investment opportunity be more history the the particularly we that and quite felt have short an does been but was to bias, that of it end relative that to be little better to test, it have and shorter. leveling

not shape it it's but any right nicely rates, bit gives of in so dramatic, up yield but step-out NII. us be way short-term significant short-term declines from given the little going And now, the in to curve protects a is the

will next question Hawken with We take from UBS. our Brennan

were EOP the of seemed million have front, We noninterest an average versus to basis you commented that than had million bearing. balances saw saw deposit you we like average. $XXX on [ about, some how above deposits declined, couple Got a you follow-ups. $XXX on One in of but previously more it Jason, the stability ] that range talked commenting the

on predict. So balance where sheet when that go an basis, the to hardest average it now forward were is part of relatively level about appreciate we hit think a average this should I have an you we on the things where comparing said we basis? the be stable to

asking So I recognize I'm a question. challenging

Yes.

made I financial I right think I relative been the said to our predict. overall that $XXX were -- you're really That's It's -- hard. comments out the results the to point to million.

of that of minute And buying of that fact duration, well the months X talking a as pick couple out a an up, clients seen, But also it's even market We or redeploying were into doing just maybe have first one moving or to is can not and XX we securities of funds impact. be about cash thinking taking money dynamic do that types of maybe question obviously, the of about X dynamic into payments balances treasuries has up quarter. if come what tax exactly naturally the Betsy's years different this days. with down. in We of may weeks have ago

think estimate could what meaningfully in happen. to the those scenarios prepared we're those quarter. we on we just want give downside of you that as we're but we sure And the And trying about make guys have a the deposits. that's having reasonable deposits that upside inside all of a so our down downward for to feel. average that all And impact -- expectation dynamics

And Brennan, it's Mike.

on obviously you then at easing, deposits levels starting the impact meaningful add level, quantitative And a prepandemic very with then those look a deposit to tightening. at up. macro back quantitative had Just saw just and going if very we reverse

bringing when central And of and the we're, balance quantitative down this to will above now, the the tightening of their broader well I a and just of normalization levels. easing stop depend new on say, impact Fed reach right deposit other we'll think then banks pre-pandemic would the of And macro level sheet. of so I And some size levels. decide

So we to be somewhere this neighborhood. tightening, end that would closer in settle the to the extent out quantitative start the of expectation that to we're

We Brian with Bedell next take Deutsche from Bank. will our question

NII. I ask my If on can question first

So might talk just just couple is stages XQ. so lift everything. think versus XQ half these can predict to looking it's of of a about work of I at there's deposits everything XQ and if and the more and a of how course, difficult But its with second you deployment, way,

was I pretty do it see the [ which then revenue think in timing you a you interest start actually for the to of Maybe 'XX minimal you And really strong positive talk the might guess, ] have I just year. about scenario guide. in net the 'XX that? XQ given growth said versus

Sure.

benefit some capital you're not from have lift to right, as into So correlating some getting doesn't We'll is portion bleed timing liquidity. obviously, the And in done NII, back But there timing Visa, to to much will just second be if that of biggest lift. you're it. I be right. quarter, the over more on its able that what's third just but you're on we're because come the here will it it But quarter. our of just get much on of a and it impact Visa,

get most $XXX IOER that happen no the then or and don't the in. with cost, dollars component IRB, it's of you million impact. about beyond not an dramatic coming would putting at think you lift dramatic at what billion simplest or a $X.X at a deposit but of Fed those so If

a little is being that ensuring able a help to bit strategic deploy real on we it. us to longer and ways the think return that and good about so get term And

trying of next keep we're that come, also to half there's another different of So half year again, a still this of hopefully, may talking open. -- But pads further. lot some this year. that the position and about to is bleed we're and

the the then given growth 'XX, [indiscernible]. And possibility for on in NII

Yes.

things go. of We're lift to and it's to It's elements. predict I still in and from you -- components some with coming the getting that in think started in early where year so maturities predict other it. different

have, there that so that but tailwinds are far And difficult to predict very out. it's some we

gave, on million quarter, the And $XX drop to like [indiscernible] you just was not obviously, the that expenses, me including things. there categories expense $XX that in [indiscernible] guidance maybe looks that other the million just numbers second biggest gave, to then you

kind in I if getting some you're harder And on have half if typically accurate. looks versus this -- we But forward, getting that's leverage NII, actually you obviously of putting on of know is inclusive together maybe revenue. expense the to less second then fees. actually backdrop, see positive NII all I a we that quarter if second the half, that and should so pulled confirm that's of targeting good you positive your on seasonal leverage lift? And potentially second see we Just on the seasonal comments working operating guess operating maybe be that on in based lift if of of some expenses build can the then total

Yes.

to the going second and that. of I'm third parts So hit

on You when repeat going part through first. it. of ask broke I it you I'm up to go to the

definitely on. a that that On the year. half of to we services trajectory It's in both be can equipment Not not saying we're and absolutely the seeing step-up this And those all. be not they're that's in is flat, types but -- second will productivity find of not lift be a hard second a step-up. and very half outside going and second software, in increases lot working to big at right. the inside quarter expenses, big

work there. And about I unpredictable, mean the still perspective less and NII it's a to so to then on. focus we we operating leverage, management expenses. think a correlated that's as from be is fee what lot And done

the so is focus leverage. And real on operating fee

what but comment leverage, lack on operating volatility the question. missed tell -- me so being And the operating getting we of of on. bringing business and the your think that Mike and -- the I relative expenses about we're good what on how more we that first we're overall to what financial and fee controllability -- leverage bringing that's of NII. But talked model on improves ensuring in about wouldn't scalable me part has that tell our chances disciplined about given

guidance gave technical just was a the you It for XQ. on

the million to out talked you to $XX -- XQ, ranges I on that different and want was just X sure versus I confirm think least about $XX it million categories like that that expenses at down there. implies put was that just you I the make want to accurate.

Yes.

Let talked we me really -- quickly. I can chunks go that the through about

to each to $XX be and software million. would equipment, outside implication million and services down would that the million up $XX So compensation $XX be million. $XX

David Autonomous take from with will next the Smith We question Research.

the give artificial bit real-world the sensitivity a putting dynamics volume now the sheet you Fed impact of sheet of cuts, guest and pricing about has, nature right everyone speaking versus somewhat your for asset disclosures Just can fewer balance setting XX-K incremental both NII more positioning, more balance together? aside us best

supplemental XXX, -- have thinking are right It's Yes. to the points sensitivities if -- XXX to and stressed, basis you're about assuming -- disclosures those But you're point to up it. more the more. more

it's more rate then actually -- they just likely or to to on to XX XX see a more If following can of or in And difficult to And be market banks on it's which assuming basis to are single saying what decline. hold you're others happens deposits double you difficult thinking scenarios what's see and the to you margin. about tell. and We're trying point could to that want there. hold going there cuts

high, it for the then the up, of very betas a were very, in at And on increasing of XXX%. was were the way over some instances, exercise not And very the at so the beginning increase. us. The cycle, betas even low linear end the

most for predict the We likely impact on difficult the no couple just down. even is it's to internally so now. right And first of way these debate what science. cuts There's

follow-up. Do we you another And Or then see later year. NII with other one Okay. could one the in this think done at repositions securities you're point?

lot remember, of very from benefit low-yielding see some to in treatment there's another able did, And we reinvest take negative of a capital had the a that securities we'll and the real those one. We of a lot cash Unlikely being what securities. got RWA perspective as and well where time the the incrementally from we be we've investment perspective impact. also that at that's an have a wanted a we has component perspective. and from where to point yield of capital repositioning done an the in lessened perspective, improvement felt strategic that each from trade it, curve

given And so state curve feel environment. yield that's but the and is about much just it less economic the the of how current we likely,

investment us can versus help to Visa you anything lastly, opportunities? for proceeds the And about using organic inorganic think do

obviously -- hard make looking at levels. attractive really ways to anywhere grow internally to we're It's can capital we investing we're Yes. sure at

the we framework have Our and same existing return putting targets that And we types is capital to our capital our as comes in. and before. existing capital on short type thing do with are with been to extent, is grow this in we're of place of XX%, That best not XX% clients. said, can businesses the

afford like And but so are do, capital it's there things could we it not a we couldn't perspective. from

can done. And not things a we list we now laundry get there's of this like say go so it's can

all biased time, repurchase. prudent things not be framework, this point and a equal, so the to And share would hesitate little other patient, going at indicate heavier bit at we're on reflect capital which but to our same

Wolfe We from Research. will next question take Steven with Chubak our

-- Steven morning. it's this for actually Sharon [ in ] is This Long filling

seem about is pressures continued total. the think a related quick Do this you of follow-up and even cetera? quarter stabilized noninterest-bearing QT, a good deposits. kind Just et see trough level to to have on XX% like They if this deposit of now are you that

-- flattened increase the the we out deposits. that of Yes, terms definitely they despite in fact it's percentage overall in had an even decline

I as well And in of relative the the rest but flattened we well base, period. what to expected have seem noninterest-bearing out. much didn't definitely performed the have so to would deposits performed and grow as

predicting a movement point. this significant at So down not

Great. Okay. AUM growth. a and then And on follow-up just AUC

expansion, saw healthy businesses but on across of about you what can drove rates maybe talk your pressure the You some this fee quarter?

we mix contracts in The and a a that assets our that asset to of for the the business And office servicing have wealth or custody a shift. Areas on roughly transaction then are that under relative volumes. then there's levels asset I management, similar. assets our management fee even lot asset to have is focus levels, whether apply get it's then like because there's the overall in family yield we portion to components And very half of lower regions example. -- are going to significant I other assets to always under to on on is when caution tied only think, it rates, business,

the the And the et we're quarter those a so more products office, do analysis and what's mix on year what's changes we're as at of with business. unpacking family the looking different within the in looking We're of we actually as -- lot our clients, or not don't granularly at happening happening happening rate the indicators what's and regions in biggest cetera.

for back questions. We like do remarks. not over Jennifer call Childe any to the closing I further turn have to would

Thanks, joining speaking future. the forward in again for you We everyone, look operator, today. and us thanks, to with

you Thank call. This for concludes participation. today's your

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