NTRS - Earnings call transcript Q2 2024 | Northern Trust Corporation

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Operator

Good day, and welcome to the Northern Trust Corporation's Second Quarter 2024 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jennifer Childe, Director of Investor Relations. Please go ahead, ma'am.

Jennifer Childe

Thank you, operator, and good morning, everyone. Corporation's XXXX Trust Conference Northern to Second Earnings Quarter Call. Welcome

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

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

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

call Mike O'Grady. the to turn over me Let

Michael O'grady

Jennifer. you, Thank

earnings Let to me XXXX second call. join in you welcoming quarter our

exchange participated quarter, Class common over reflect XX% B year. the multiyear resilient, continued were our to activity in underlying and fees quarter proved the our levels executing levels. us positioning the strong Visa client a X% Visa. levels equity priorities Deposit stake reached long-held a for in results offer, of monetize high. the favorable by In we capital stock solid prior up our and Our progress against strategic markets boosted Trust

our We our XX% be shares a cost a change $XXX still million in of result, charges another nearly monetized. in investments our pretax additional efficiencies discuss intend results items, and efforts make base, and the share to foundation optimize included Visa resiliency million recognized $XXX a of approximately the proceeds reflecting to contribute with and business. the of fund As charitable drive restructuring to our we the use organization. to to gain Jason few effect other Reported in within continued details minutes. will notable also repurchases,

to seeing book Management Institute fee Turning to solid new marketing X,XXX specialists Northern we're the serve hosted trust In business Wealth practitioners performance Secrets Trust and influential interest Enterprising success planning Families of generate Symposium. national trust continuing annual our sources. growth the of generated year-over-year momentum our units. business key referral from We're Attracting as strong. wealth initiatives. X% from our and remains state who attorneys, we May, and other more than industry digital tour,

the celebrated York also office opening of in We our City. New new

in NTAM the also opportunities and index meetings funds although leverage and servicing business expanding wins new Asset solutions asset in quarter, fixed income X quarter, Management between flows have Northern more launched firm. Joint strong equity asset sixth businesses raised NTAM leading quarter assets business positive active liquidity Trust been and adding our delivered consecutive capabilities continued within the the performance to new in otherwise clients entire soft. the private our in our solutions. to flows space generated the income. One our of XXX global second management accelerated quarter, fixed strategy, than XX and to the for and second delivering year-to-date. liquidity We the

margins. were in growth activities attractive new continues and to booked well Transaction business quarter. the healthy. performed be Markets volumes business at XX% Capital were servicing asset Our up

scalable. is discussed, of connectivity. we opportunities is points emphasizing As our multiple new require our with levels that goal sales while incremental generate that approaches of focus to costs, We've business lower shifted to

the Initially continues the to as client, custodian Nest an Northern by among the markets being adding and data NTAM, their our supports and United XX million Nest asset pension second billion. such servicing opportunities. In was XXX members particularly with new Kingdom's expanded for has to realize asset disciplined services as sales AUM clients quarter, us momentum, In We're largest appointed addition provider approximately and Invest, Trust more spite bundled generated on analytics. and on of focused approach, than new In servicing existing capital workplace owners. with the servicing pricing scheme. bidding relationships fewer asset have of asset $XX NTAM

Our the and generate manage year financial half that the factors momentum, owners. architecture that, XX it more open over America, our competitive and with highly key approach I'll wins were quarter. Jason review we've flexibility And the with strategies strong help the second of to market macroeconomic to current environment tailwinds for our year-to-date sophisticated value for achieved the ability new to than asset Jason? North and to the of well We navigate this new good stakeholders. business win. In performance among entered secure our turn positioned

Jason Tyler

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

our earnings This quarter starting $X.XX Let's per X. financial net million, quarter, dive of on results XX.X%. common income the into of we $XXX on Page morning, equity return was and share average second of reported the

pretax million notable related other Visa Our of reported $XXX discuss charges restructuring gain an and million in and more to shortly. detail which net I'll $XXX items, results included

and a equity were year-over-year improvement. year-over-year drove basis. up the custody Our Strong on sequential under a assets under and markets assets administration on and basis up sharply management modestly

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

the noninterest experienced interest FTE We in an income million, a ago. on saw we good of quarter income where year up on X% up sequentially other was FTE periods, prior basis X% year. X% all momentum trading down from sequentially both business, an our client down X% in Net $XXX notables strong volume. and was Excluding over basis another FX and

quality representing nonperforming of remains X basis with very credit and Our charge-offs loans. loans points net strong total no

Turning to asset our servicing results X. Page on

year-over-year, Assets were new under strong custody fees servicing at were $XX.X by and trillion underlying million, with fees clients quarter servicing fund equity up Custody administration markets and $XXX for both business asset asset million. administration end, activities. X% and driven $XXX totaling

up and our strong clients to due Asset funds. institutional year-over-year markets flows within management Assets Investment were trillion. under Servicing favorable liquidity service for into management fees $X.X and $XXX asset million, were X%

our to X. Wealth Moving Management business Page on

other clients fees within management clients for Family million under wealth Office. Assets management our asset up X% markets Global due year-over-year management wealth and investment of and for equity $XXX inflows quarter end. Trust, $XXX at primarily strong billion servicing to were

to sheet. Shifting Turning from X deposits. priced and due of modestly net first increased better sheet up than our interest side quarter, to were thinly costs the Page billion Deposit deposits and or expectations. our of income balance X% handful trends. Average to billion, the the asset large balance $X $XXX a slightly

the due to proceeds earning Visa X% our assets from partial shares. basis, higher deposit sale linked-quarter increased average and levels of a Our primarily on the

our of portfolio total XX% liquidity our of X.X duration equal securities interest earning than total income average strong, with $XXX million, X X.XX%. than was and average. The the of years, net duration Net on be remain deposits year. Our continues highly XX% and assets was our and very balance levels to liquid to sheet is more interest assets less margin

to Turning X. Page

XX% up As expense second as and was year. XX% reported, the noninterest prior in $X.X quarter, to sequentially the compared up billion

Excluding were sequentially. notable expenses in slide, periods, both the items on as in second the quarter flat listed

XX a Visa approaching stake. the back asset pretax an held in X we're position how and value Now at was quarter, $X.X discuss public Visa the the This value went on years on ago. since step the let's approximately is Entering a basis. billion balance sheet we over take

quarter return accelerating this full provides Visa ability shareholders, priorities. With the certain of at conversion value, half capital opportunity following position to while Mike to our the we're second the taking first as shares, highlighted. With strategic more to steps, the liquidate of transaction an in

share increase will our elevated that portion next second and continue several used meaningful the will a began quarter in process quarters. First, the within proceeds over to of be levels the We repurchases. pacing

of Second, some giving. That approximately for in This XX% of is the accounted fully foundation. our after-tax proceeds prefund community contributed to being quarter. second our contribution the

and further generating expense to accelerations and reducing in the update the compensation enables outside our resiliency our resiliencies. Third, us strengthening investments write-downs reducing services a quarters split software on both infrastructure conversion systems, accelerate in of management also includes the with and expense, and next $XX efficiencies. client notable Visa mentioned automating restructuring contribution visible services tech the share you progress. Separately, service refreshing items million migration. These I quarter risk cloud in investments significant and to enhancing to while processes, end-of-life strengthen between outside larger enhance million infrastructure, included the $XXX earlier. associated we force, expenses. spend our accelerating and cyber risk and over severance our charges announced million is reduction our in will incremental and investments various this The our nearly We'll line. levels $XX foundation This and modernization continue enhance defenses modernize experience several platforms, manual This to technology strategic

from the anticipated. prior exclude back up quarter, go than than let's Now the a review expenses year, all items. Compensation which was core less expense versus better X% moderately our and notable little we

bulk within services third-party by headcount software prior the than line. incremental and conjunction XXX spend. Equipment online. to or coming expense anticipated, the As sequentially, reflecting into and reflects of hiring visible consumption software down flat some was essentially Full-time amortization the and spend resiliency X% and from period, increased anticipated with higher the services outside over prior X% XX% consulting projects by in increased the shifted equivalent expense Outside the which sequentially. year modernization resiliency was incremental slightly and modernization relative work better

points improved Excluding fee to on notables, basis sequential basis ratio XXX%. a quarter our expense-to-trust XXX

quarter in growth resiliency not software to a level. we notable between expect in out are expenses material items with million the do third the quarter, upgrades initiatives. $XXX in current expected the and $XXX largely modernization approximately sequential expect adjusted reflecting to As increase We to services to our outside investments elevated third and technology look for X%. Equipment systems from the associated up range be we million, expense

Turning to X. Page

our the and buffer on we capital to minimum at strong and regulatory levels remained capital results, Our above quarter, XXXX stress remain X.X% operate levels will ratios CCAR at the in well Based requirement. our required minimums. regulatory continue the

above basis Visa transaction the approach levels, accretion our in This Tier regulatory common points X the RWA to XX.X%. ratio the buffer reflects and Our basis equity improvement. standardized requirements. increased under a The XXX capital point decrease XXX drove

leverage Our of $XXX ratio the basis our quarter up X Tier We in the from prior on sale pretax from XX securities Visa quarter. At was quarter end, $XXX available-for-sale the unrealized points generated was X%, to expect loss and another dividends of to shares cash million in million. open generate August. And line in early million. $XXX in of stock that, million $XXX returned the proceeds for the repurchases Jessica, questions. common $XXX shareholders $XXX through with common please million quarter We million and

Operator

question with from first Our Stanley. Morgan Instructions] [Operator Graseck Betsy comes

Betsy Graseck

Okay. Yes, question. Two-part sure.

have First gains on broader get that's that point have you're about are third realization next the Visa that I done, Visa piece referencing you coming some X/X there. the remaining Are quarter, the you is shares have. you'll is more just still mentioned the in that talking able this the is to piece there's in still know to referencing? come. what that the access you -- Or in the time still you you embedded

Jason Tyler

Yes, both. it's

close some entire pieces, of split you're selling to actually done. to you're it, left first August. may that but people half for to it enabled that's those that's to at X the half, -- done, is in of monetize pieces to that just referencing, half, -- you if convert One convert in enabled to, this and in point tranche us as pool not but but -- be So first us into X we'll the When still monetize. future, come have yet are still

Betsy Graseck

your that's shares the opened being up only of that. And to Right. not the a Visa side do to function monetize, and that's B It's decision there.

Jason Tyler

a And Yes, is -- along, at all us. not correct. for as Not asset all. this soon said we've and strategic as

shares to more a And monetize us private so likely are and public in so be remaining to enabled at the able waited haven't when we and conversion. in with meaningful to the markets for up wanted do we've no it it discount discount markets. This a pursue path the opened to similar do we'll

Betsy Graseck

a making. for be would on What's time frame, time the just investments? your that. frame multiyear of then helpful And it's think but separate part sense that you're Perfect. is understand Okay. investments a I resiliency point view on the the to your of it'd

Jason Tyler

Sure.

of should One about outside So as get services. accelerated. spending it elevated more in why the for the at think same That's the that as some I we the in spend get work it things increase we'll, should of some that is elevated line time, of on see more now right but at help by continues of about the we few some over overall compensation is project environment and third-party likely And this quarters. Eventually, that's the next the today. will some an view That's up some work X done. current to level it's that executed. where at FTE, how we -- as same initial going That a item pieces. in decline technology project there persistent work. as in of outside are level last there's of in But showing actual time, getting not

Operator

go Jefferies. Ken next We'll Houston to with

Mokshith Chenna Reddy

the just Ken. some forward? rates cadence I to can see about NII on you are assuming the wanted for year. Mokshith on deposit going What that ask of wanted deposit we color rest on It's levels, for where that. Just and just

Jason Tyler

Sure. Yes.

stable balances bigger and engagements So be more well. the they our much point, last are definitely this year, At appears obviously, to worked rates. factor client than were

that positive impact one, and still we us do other reinvestment takes couple see a to and some But that in mind: in keep balances, factors. of be to we for slight estimate decline that the a and there's but seasonal seasonal day tend fact quarter. by could count decline in no in balances share there's of period, third then for have So so puts the then spread, offset to improvement

Mokshith Chenna Reddy

Fantastic. Okay.

and Just -- you servicing. out on assets? flows anything just management, of more there are pipelines on wealth What there whether in the client seeing are terms of how

Jason Tyler

Sure, I'll start, Mike jump in. may and

both fees the I Servicing, Asset business positive. in known longer that took and I finally in on overall, The the impact have the we that quarter, dollars overall activity that is we've referenced amount and got line which another reduced we've net a good in So it for line of quarter business And perspective within this we a dollar new note, long similar with within is exits comes by come But the in should Mike? have from fact client time. -- a on. trust third few is the of the strong million in. sight think impact sight Mike -- the have will our of activity pipeline also place very in one can from quarter. I exit business. big a to we volume that quarter next the The we about we -- briefly, also

Michael O'grady

we've on value the that focused as I really thing our add our only I attractive think proposition. are opportunities most we mentioned, for is, The Yes. would strategy

be opportunities compensated being higher those to for be service disciplined pricing. a believe what around has can So we we clients. for the more where meant level That as

it As in I bidding believe if driven. it's certain cost mentioned, that's going it low something not means on to we be cases,

the opportunities. the I in seeing And overall that winning. and so business business margins reduced far, hasn't the higher would are And momentum and the in what resulting it's really, we're say, that we frankly, for

one a far, I it. approach more going would to it's is well. say, So selective But so

Jason Tyler

on nice names. some well. lot Their that outstanding. the owners business advisory Mike on And do do the may more have -- GFO, regions, soft, business they the so was the new wealth new net with -- well, clients also existing that largest asset connectivity external then And is businesses add the bringing is general, but X initiatives space, inside and One relatively of and headlines from continues then I to And in to will more. then wealth the offer regions. a continues

within doing our different what us utilization. and of business, dynamic the regions I'll an mention in more offset our is for. in and -- both to well. advisory more both are is of we second component product It's clients by that's GFO, base the lower what at what component fee advisory doing the a ebb The -- being closely clients That indication flow, business, positive, in The and the advisory us with that's look but positively and tends of view, utilizing businesses. of the trending

Operator

will [Operator next Instructions] Hawken move to with Brennan We UBS.

Brennan Hawken

you to if what your assets find are And you wealth for this, a in you me advisory client could percentage But accounts? costs on and if deposit specific Curious are know, it apologies accounts? those tell management disclosure the what disclosed I have separately. so of couldn't know,

Jason Tyler

just got much clarify most I last sentence. want to is of it of I How the that. what?

Brennan Hawken

on What the costs those deposit accounts be? would

Jason Tyler

asked I'm I well. not it. hear glad I Got that because did

you're associated in are with in But deposit going that and side haven't the from of that the have in our on wealth the all costs first just accurate. we a general. the almost deposit them, advisory, an come group talked of fees advisory So client on with at from those not is breakdown for is vast in than lower have about deposit regions, costs, versus associated but level, with them. And product the terms our we then that I relationships historically product significantly disclosed majority component, of actually virtually particularly all base The virtually have fees -- think specifically. cost where fee institutional of high

book clients, servicing the but Now relative the of equal more deposit costs the with largest some size that bulk in office priced much business has are clients to asset that side. of [indiscernible] is institutional lower our some GFO to

Brennan Hawken

Okay.

But and to this they this. if advisory during the saw money intend to wirehouses bringing were BofA did aware know that second come Stanley relationships last to -- week, that the second out that of do in you announced their just Wells Morgan X up the quarter, deposit up on equivalent point, -- So the said I and it quarter costs fund they of the are or levels. in at third. yesterday this in had have don't

aligning And the any Given manage on around to intend the direction, in how with providers lawsuit issues? is this plan thoughts you in this to, direction and your sure practice? what legal going are or largest plans of this don't the that or some industry do are if fiduciary you making risk

Michael O'grady

Yes. Mike. Brennan, it's

it's of Within just the our but marketplace products true for business, that well, be within wealth all management it's the all a to of businesses, clear, competitive offer. we of as

And on change if we but anything, your pricing space to service point, that. providers or to to so levels, on your to their the competitors deposit then react point, other have absolutely in frankly,

the And point. so dynamic. first that's It's

being, account it's is that characteristics what equally. may also The deposit as Point Almost holistic different and of would is and I'll different is just the needs we and terms the as for are start say, checking have. entirety savings the result, on we're that different. with simple second a and they a the as not nature created based have the account that I offering every than and say client, a relationship the

in doing actual in say, if you able as to we market, if the to needless are have deposit well. the kind. based But to cost, will, that things going is to be others so different respond on And be

Brennan Hawken

enough. Sure. Fair

Jason Tyler

is within onto have to dynamic the the platform. sweep clients our wealth they money sweep market business, other One our option already

Brennan Hawken

just into deposits? or where within adviser fund the default go the than feature money system could and a team That's the adjust whatever sweep the rather

Michael O'grady

they clear, be to option do. like what has to the the And to would Yes. client select

Brennan Hawken

I a in of little bit there's Well, But dynamic. relationship, an a Right. got different it. advisory

Okay.

on forward. disclosing focus might given consider Just it be the going of these some helpful this, to details

helpful -- you said have appreciate didn't but you Just I know I might be forward. them today, that. going

Michael O'grady

Okay.

Operator

Wells Mike next Mayo go We'll to with Fargo.

Michael Mayo

expense that including might restructuring What that What expect for were severance. sort do charge? the $XXX future part you you what million mentioned that charge, again? the of do drivers OpEx? to is saves you underlying cause of that, And from Jason, for

Jason Tyler

Sure.

the at productivity, we it got some all the we skills? layers in So you've a take determine have the business got of the right lot. to of analyses drivers the Mike. across -- of Do here. really amount right us us that importantly about the down organization. talk should could and geographies? And and And we also, control activities And we've we in the span comes the And we do to we've right people? at the look led have actions we those a continually to heard Are different look conclusion have

with, And from but set example like span so we'll might then obviously, layers, a you leadership different even different eliminations, might also with replace do and skill an a you with or spans eventually, a perspective.

get salaries, obviously half other won't we in grow are in to business. severance these here, investing run these for but that at areas rate. Obviously, we're of get growing areas general, savings wealth in XX%. the in We're the should so of the resiliency, least management of that And impact should that about of we XXX% we see salary line. growing affected in we decline type the but And ongoing salary in company. headcount We're anticipate our to impact

Michael Mayo

Okay.

about the you're hiring reduction half that equal to elsewhere. correct? back in permanent reinvested of severance Is firm some in was that a salary where So the

Jason Tyler

No.

it. clarify me Let

total about would it of the So the severance would salary it. would but to close half line, impacted amount be of the of reinvest amount be we

improvement the should of of an run get salary the these from we And million line. in -- $XX areas about on so neighborhood rate

Michael Mayo

just not it. growth, saying your you're more you're Got picking about And more custody selective, profitable like bidding you're Mike, business. growth. custody for generally, for then in talking the less, committed seems more the Okay. business, and you're productivity you're And you're spots. And it but maybe just being but

describe custody today versus the you in the Northern's positioning past? would how So business

Michael O'grady

Yes.

at to and provide asset a we we asset asset points of high managers. then couple a the the provide services Mike. owners services that speaking, level, to have So One servicing to broadly it, is you within,

of is largely part hybrids of the lot within X as crossover a are those nature within But groups what that space, clients. And well there's big speaking, the the services. we're the kind of of in the there for client, of if of spend, on way Now asset headcount a new owner custody less the of, of point, will, in you they're scalable sense requires addition customize what doing. doing technology to more your we're to adding in and

Now front certain And you've also things That's goes us have with talk an like a where higher asset of providing correspondingly, provide that heard owner office we're a to that differentiated with level solutions. looking about client case fee them. associated then, capability the that. for

I would our we're of that's with but level the stronger us what the that a So source culture and say office the consistent, growth would been front and capabilities asset we're asset of trying to in doing, that there, of how, positioning many more way is a the company. And I is higher with with resource-intensive. them, we service solutions has that say, for manager brand, then say, the clients to approach provide we manager I differentiate our that across like the years, over on would it the services side, last combination

those at of that's we're to there. for So supporting that had the to there business relationships is require selective bringing new that time, where us growth additional pursue a that. And on when provide that you opportunities look over trying employees, we because and meaning say does partners, about an I'd that area it's lot much we've more be headcount the

asset point points. on the one that talk we're me manager heard them, that, you to about it's for Mike, connectivity for So with And thing probably client, also do example, if going that is can only be across if the different a of we of attractive spectrum, looking things of relationship not provides client for. we're that's the level profitability where us. Whereas for that going number to do an type

overall, focus that's the say when at So segments. look the within where business would the but then you is I

Operator

Next, Bank. Brian with Bedell Deutsche

Brian Bedell

you differentiate lot. that Maybe, interest servicing. and downside balance cuts wealth see did view between Jason, it's I a Fed just your franchise and line just the Maybe on could to the your category, across if average one seemed just when on down a on but on net smaller betas asset deposit interest-bearing deposit revenue. sheet, And the the go

[indiscernible] what was driving Just that wondering [indiscernible]. from bps XXX

Jason Tyler

I to get the sure the make what -- on last you were want referencing last... I

Brian Bedell

I if on go that. average I it's the balance sheet, asset side, just noise the the down know think, lot, the banks -- just rates on deposit on what On to or interest-bearing a don't with seems

Jason Tyler

the It FIC That back can we repo. you. to Yes, different be might [ might be. the and come ] banks,

got XXX% think the I in DCB noise betas denominator. on on in reduction, saw small you But just that's mean the I the general, on a the -- reporting we effectively beta that.

And we've are so betas going -- at the these very point, levels, at rates with be this to high.

be change. And rate on we Central both spread to rates. negotiated tend card even And Bank -- rates negotiated that in Bank the both in standard to and so example, a Central the rates came down conjunction the the with

in rates feel zone this And spread shouldn't like, are, we where so the materially. of change again,

Brian Bedell

just deposit between on wealth betas of those in asset the and terms servicing differentiating And business the...

Jason Tyler

institutional again, The business, deposits. very Yes, the -- it's will similar. large, large very sometimes have,

more what a change impact mix rate the we as of an And will banks. than from changes have that central more of should impact think so won't from that -- coming

So we the gave spreads example number in central at deposits banks. come very an very tight even earlier that can small of to on large

that's the really fare question what is doesn't your understanding. Bank spreads. -- will of from correlated which of the actual to not I'm And that so more that But movement, Central tighten

Brian Bedell

just wealth, side [indiscernible]. on the the wealth on [indiscernible] So to

Jason Tyler

move standard higher even with with able rates of percentage is which, on be side we'll conjunction Central this in deposits at Bank elevated again, wealth The movements. a rates, -- to level, are

Brian Bedell

in still full Or you are Okay. And XQ. year? [indiscernible] expenses, then just on [indiscernible] X% the or

can hear Sorry, you me?

Jason Tyler

No, no, no.

real bad. You broke up

Brian Bedell

hear you now? Can me Sorry.

Jason Tyler

That's better.

Brian Bedell

Okay, Expenses year. for my full handset. the

revenue XQ, full So you the targeting I imply, I the in you are the or downtick year a still X% for operating would to for also up Might up? even guess, better know and be interest And XXXX? XQ. hold might revenue expense possible still which targeting growth that positive -- in fee are X% operating to if leverage generate total leverage it continues and possible be on net maybe

Jason Tyler

Yes.

drove, really in year-over-year, is the alone, on million mean of is deciding the expense that X% year-over-year. the to going with which in it over in us $XX at and elevated adds we hard. we're really resiliency year half be market's One, in largely -- quickly to points So drove the beginning and -- And work, because just lift, X first conjunction XXX quarter we $XX another then the in first million year. to layer. And basis accelerate it's that of the I Xs of the factors. the

And hard it to still this so no less, -- year, does long-term year long-term be change target. unlikely it's going and or reason target to there's that for and this X% us our is not but

this a and dynamics is get X operating out ourselves the doing a positive growth of we rate year. One future markets resiliency. leverage lower for result because positioning being expense of another is one higher good we're frankly Just as in the one us on what

likely that we have tell. can is just from puts point, a perspective, quarter, But based markets leverage And would we quarter, second much leverage from higher, at us get third more operating side, fee side, operating total where the leverage fee in in at to revenue higher, and little operating year. to On operating be total this hard the are this we a point, so on half there. fourth -- what harder of where see should a a are good operating position. From fee the leverage leverage in the rates

Operator

Alex Sachs. next Blostein move with to Goldman We'll

Alexander Blostein

sounds you're questions just, the couple I have evaluating, just one, guess, to that. wanted of a the as around competitors So up I I it go. as was wealth And follow the done. dynamics far still, asking what like guess, questions Brennan on earlier,

in ultimately matter industry might it of words, the of potential you So through of from not the same So, force process? this pressures, go you path? decide direction? a and of from the hearing So Are regulators? sort first question. you same to the are choose go any of hearing outside I other just anything of down industry the guys there is the kind time to of competitive risk that's before that that you litigation Or, other ramifications in like force are to could and if kind kind go anything you to guess,

Jason Tyler

talking deposits, on you're specifically Alex? And

Alexander Blostein

Yes.

wealth the deposits relationship advisory where the a has fiduciary. So firm with

Jason Tyler

I Yes. to just be to clarify. wanted clear

market. -- are already together to clients have the select And and determine to a already what space, our that advisers in work at rates the So perspective. we they want sweep from

into And it dynamics sweep our our it's about, our -- base mutual market money client read onto of doesn't so balance platform. they sheet. that not funds the elect can But we've and of reflective to or

Alexander Blostein

industry and the X? saying at X does if is on have Sorry. But, I X at go guys you're but rate the to market you're deposits, goes to mean to market the market, at would guess, you that

Jason Tyler

No, to X now. we're closer

Alexander Blostein

it. Got

And about about you of Okay. the in then XX% was past, X/X talked -- in institutional. terms the think, was sizing, I the I deposit base think the of wealth, other

So base the you wealth, is U.S. delineate deposit what quarter like is? of can that kind the

Jason Tyler

is XX% quarter little Well, ballpark. the less is It's roughly right. to else you what that's bit trying base? What that, the than the but And are -- get? realized deposit a

Alexander Blostein

of that doing Is to a way the is? U.S. piece like there that? Just what's

Jason Tyler

vast The then U.S. of piece? it. might all the non-U.S., And Yes, but business side denominated. that's family virtually U.S. on the deposits are wealth have some office majority that's of the

Alexander Blostein

And my Understood. you. just question Got is follow-up expenses. then around

savings are guys you incremental initiatives. implementing So

of incremental it maybe and year. causing spend this makes that's sense, technology So kind

put proven As you ratio think percent still pretty of term, sticky long at many about now, the kind it's we've of kind and maybe you And to how towards? there? fee given think will long XXX-ish it but to what X years, driving a sort expenses all years, of about or you through get are year take as years but what's you this do talked for be to that takes range, X you and this goalpost

Jason Tyler

Yes, Mike, you do to? want

Michael O'grady

to different growth reasons, on equation. have meaning, little I to how at bit that I haven't then, The you're be not of Alex, growth move on going organic the are higher fee when the part as likewise, bit expense it changed, the where per or just goalposts even saying going lower the time of different far out periods side. for timing, rates and components is know, but can a the markets a that say se, And that little like calculation mean you

target brought investments still we And that Jason you get of a again, we saying, are Would make need of drive that faster? XXX is is goalpost range as as organic But that get the certain the those to things that you've to to you so seen, growth looking our efficiencies like for on forward. Yes. And so then the going absolutely that ratio. go getting we've do the as benefit to that operating think in to result that's XXX. you off order We down. greater balancing it it's to ratio. And that that

processes, our the automating of So the risk parts example, that business to have but across only have do business, of across we're of for control. a manual other and with operations lot also that we not our

as opportunities a but So a number times, of we've also improve the out to, there yes, get of lot resiliency it. of efficiency mentioned

Operator

Juneja Vivek with JPMorgan. to next go We'll

Vivek Juneja

A couple of questions.

and and a charge Just it's compensation you've I up of you're severance line years. that When you sort start over much the charge show gives opportunity. wanted gain severance what have larger guess, do to than Visa in period? expect many we've understand, Mike the the to Jason, taken taking, to that you seen

Jason Tyler

Yes.

of over we actions that been taken. So the at And instituted a the mentioned is of same -- have this more months. XX time many time, lot we that already the program the

-- embedded frame. in it bleed time it get so will over over And that will

Vivek Juneja

that said benefit -- it when -- year? you it's this upfront, right in severance the make over next But when you so Mike, about Should you've especially so, charge months? the right. -- you taken Jason, given okay? under next much Where All unlikely this year. Okay. XX a do likely talk that you more bleeds And X%, the

Jason Tyler

It us over map to we're next resiliency on particularly the spend road we've better of year. does our puts spend spirit several in the doing, some position that a And the is a -- the us it in had with of what accelerate put next years.

So around help productivity that helps. as well. And also, the lot actions taking a we're

it it's like. that no that there's year, well and some -- about nothing from of for that things a us July, we're us shouldn't looks there's we're still and other But point, are so -- we like year have better X% or next what definitely in positioned to now, there's early see feel point, things puts position, we what this next early -- better predictable for it's about. but right we've tells at given talked outlook talk the we And that this it at

Vivek Juneja

Visa, see pardon did we going that hundred again, about we what of it's the I earnings I anything pretax, million? should And missed lot -- there's see a But morning. to because the couple how used know if you've related some, to but on you how over soon? much this that's all of a given Now should buybacks, expect rest, more period and

Jason Tyler

Yes.

So now, race the levels and is no call that. capital it right several puts minds our after-tax for to at buyback, Visa ratios situation it there's the very million half of are capital hundred where look dollars for you do if helpful, our in proceeds our and us available -- particularly

can we over so deliberately. And do can time. do it We it

very a happening We have might environment keep of have to be buyback. on what but elevated requirements we're well capital continue levels from an and also to positioned perspective, a from what's Basel regulatory obviously eye to

Operator

of to next Poonawala go with We'll America. Ebrahim Bank

Ebrahim Poonawala

some make X% your essentially make you still correctly, you was investment price banks, I I'm down the the to to at correctly? I on is the lot. for already And hearing expect you're sweep stock should other saying sure that customers? really just heard decline not repetitive, wanted be of I'm you that Am down if your I any third NII we deposits messaging offset where deposits given these about from sure quarter given sorry, balances relatively Jason, that by being in the NII flat, yields. be just a seeing wanted point, impact one to impacted have

Jason Tyler

Correct. this flat. NII at point We see third quarter

Ebrahim Poonawala

NII their from for rate them be a get September, should And own we the cuts, positive in negative? if or

Jason Tyler

to don't Fed level rates high -- take in less should likely as positive, -- rates spread and absolute to -- on Xs, take XX, the of point being reductions this but see an are have material point U.S. Unlikely as be basis degradation. these just just XX at basis, the getting not at at long levels this we

Ebrahim Poonawala

a if your of few trying all sense you lost helpful the a for mentioned side, clear. what I'm That's else revenue And about fee dollar I as impact. equal think have we quarter. you client, that's revenue, million this, missed get expectations a to think on fee and third you the apologies going just are to

Jason Tyler

mean next it, of of that's terms it's servicing And on think base even fee few a dollars in I provide about quarter, million to few asset $XX within dollars a estimate. over you Nothing reduction a round $XXX a on million. a an number, cumulatively, quarter, million million, quarterly -- if this trust

growth about we an the in net it And much that why an to basis. But activity, impact trying well. activity And It's doing an out. about of and in business more impact more see the called just talking we doesn't is percentage new about have those and in business, important number so general, pipeline in still just the just we're has -- fees and thinking new where context the on out to and so of business start activity the horizon a the it on business of business impact, good, as levels, organic of the that's overall items. of we overall has on but once call what X is amount growth the it

Ebrahim Poonawala

or in it an the for you're 'XX? guiding for Got for quick you probably -- sneak Is sets one The up interpret take this you I might quarter it. takeaway if do relative actions XXXX. took not right And to on way in growth even whatever this, lower my expense better that expenses. can that is follow-up to

Jason Tyler

some year good talked I about markets the what some as we of also the down but came offset next hiring spaces. moved -- we've early. very some we acceleration these of that do feeling of we expenses Yes, about year. X%, the that come and in into But some of again, this an it it's on will that planned, do no put is. the There's believe is we doubt now, it

too have we'll so But some the indication certainly an in trajectory of at right, later operating I'm it expenses. that that. markets your move, detail XXXX, positive in of in impact question now for us give year. But hesitant spirit positions even expense in update the into much this when give the does next we can spending it about an talk better And that leverage mid-July, to the going Again, is year. of point management

Operator

to return Hawken We'll UBS. with Brennan

Brennan Hawken

because specific question advisory priced was at on the to you deposits a they I the deposits. the for a that money all elect have trying wealth funds Alex's square with X%? it understanding are the that I'm Did option currently where could X% wealth commentary. the to just draw to wanted say little unclear follow-up yield just to

Jason Tyler

Sure.

already latter. it's So priced our ability which sweep the complex, fund the have to Xs. is money They in the into

that extent that so deposit our are have -- mechanism And ability elect sweeping. for the extent that they clients when are they -- have the to the to to now the they

Brennan Hawken

it. Got

made legal add this move from most be due my wirehouses, to and move perspective. too, the a my fiduciary at understanding whether a concerns color was of to into available just basically the or to the not just is and paying out just obligation little So further level that option that necessary to funds about money question, they would

seek any it you you make answer, any guys depending on sounds you your to change make stage, competitive So from going forward? said, at may pressures, although plans to have don't like, adjustments as this

Jason Tyler

I think summary. that's a good

Operator

to with return Vivek Juneja we'll JPMorgan. And

Vivek Juneja

spread wanted clarify, to material made, XX you not comment to XX Just rate a basis points have was should cut Jason, which degradations.

have NII are mean asset like do -- those hurt does would your you that would sensitive? be So hurt and if cuts, NIM that rate we

Jason Tyler

to cuts cards our able negotiated rate have that No. the in be pass I'm our should rate we yields as standard rates. to and those form in this at of saying in along deposit we declines lower point, clients

Vivek Juneja

come XX you did cut by basis with What points? Okay. the you that has see deposit rates Have point ECB rate XX through? those cut basis

Jason Tyler

really aligned did deposit reductions see the I that change. earlier, And did specifically comment ECB on we costs in on Yes.

Vivek Juneja

you've passed Okay. XX. That on means full the

Jason Tyler

Yes.

Vivek Juneja

all earnings are makes too with there Sorry, others, I are said, the to many stuff. as overlapping that keep so it hard calls just up today, with and you

Operator

Thank back turn now you. closing to Childe remarks. will conference for And Jennifer any additional or the I

Jennifer Childe

joining thank We'd speaking today, look again we like everyone you soon. with and to to us for forward

Operator

thank does that We earnings conclude gentlemen, for and your Ladies release. participation. today's you. you Thank

may You at disconnect time. this phone your line

Northern Trust (NTRS) 17 Jul 242024 Q2 Earnings call transcript