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STT State Street

Participants
Ilene Fiszel Bieler IR
Ronald P. O’Hanley Chairman, President, and CEO
Eric W. Aboaf EVP and CFO
Glenn Schorr Evercore ISI
Alexander Blostein Goldman Sachs
Brennan Hawken UBS Securities
Kenneth Usdin Jefferies
Elizabeth Graseck Morgan Stanley
Brian Bedell Deutsche Bank
Michael Carrier Bank of America
Steven Chubak Wolfe Research
Jeffrey Harte Piper Sandler
Vivek Juneja J.P. Morgan Securities
Michael Mayo Wells Fargo Securities
Gerard Cassidy RBC Capital Markets
Brian Kleinhanzl Keefe, Bruyette & Woods
Call transcript
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Operator

Good morning and welcome to State Street Corporation’s Third Quarter 2020 Earnings Conference Call and Webcast. Today’s discussion is being broadcast live on State Street’s website at investors.statestreet.com. This conference call is also being recorded for replay. State Street’s conference call is copyrighted and all rights are reserved. This call may not be recorded for rebroadcast or distribution in whole or in any part without the expressed written authorization from State Street Corporation. of website. will broadcast the housed authorized Street State only this be call on The

would to I Investor Now, like Relations Head Bieler, at of Global State Street. introduce Ilene Fiszel

Ilene Fiszel Bieler

us. our for thank XXXX presentation, all of CEO, and Relations earnings investors.statestreet.com. O’Hanley, first. will slide our speak download which we Investor will Eric will call section our take morning Good you Ron for joining through in today, Afterwards, On the you website, happy our Aboaf, CFO available take to Then is our third quarter be questions.

please to During limit the re-queue. then questions Q&A, yourself two and

items started, Before GAAP. non-GAAP these to on get to today’s basis available Reconciliations presentation the to include measures comparable presentation. GAAP appendix the most I are we our more remind measure a you slide adjusts that or from would like in or regulatory that of presented results excludes directly will or one

may contain such In from as addition, factors filings, XX-K. discussion will referenced due presentation those important factors those today today’s Actual factors forward-looking risk our our in in differ a of including SEC in statements Form our materially to variety and results the statements.

speak any even statements of forward-looking we update views if change. as disclaim Our and obligation today our only them to

to Now, let over me turn Ron. it

Ronald P. O’Hanley

morning Earlier Thank you, third results. today, year-to-date and Ilene financial quarter everyone. good we released and our

put first proud how clients in saying worldwide of to extraordinary shareholders our continue am for times. by I start me Let deliver our these strong our members who and results team

by services primarily differentiated continue State the Alpha and operating is enabled owners to in data pivot the becoming Page fund that leading our to from platform. Street further outsource and environment, world's services servicer of current strategic our challenges an Despite the vision to of enterprise being remains provider and capital. X, the Turning our being managers of clear provider, a we insight the investment

business the opportunities, drive implementation developing of improvements. and forging our new to productivity strategy, ahead We with are continuing

optimization; growth navigate client productivity operating environment, two, innovating; our we delivering improving system we deeper through improved each the one, moving I efficiencies these and and our a priorities; financial As provide members. short for engagement; of are our team will supporting through driving performance on results. on successfully COVID-XX you areas and and planning update three, to against four, the ahead four product before

clients of everything effectively our we This the First, strong most of as that result clients new continue efficiently capabilities to points proof market install board are operational in at and operational center have new of assets see of even to we on excellence. year a do. able and we the our are proven our we and environments volatile

installed XXX the sales also example, strong amounted as by billion expanding approximately quarter the accomplished this which For demonstrated to this and we servicing quarter, was billion. driving investment of while of This level new XXX assets. successfully wins investment pipeline servicing

a challenges, in was large CRD office with Also, to manager in a Our of wins. our Middle back growing Saudi not Arabia pre-existing the and support with we platform despite these European note, opportunities approximately relationship. client of third asset front included one front markets expand opening the East. was growth critical new to a to in continued the Alpha to custody core office in wins these middle drove back a Of that mandate

continue pipeline at we new a maintain business strong and win CRD. Lastly, to

more both significant doubled disruption. quarter-over-quarter. this new is quarter year-over-year institutional than we and market investor For The experiencing bookings

employ pressures models. data increased to better outcomes drive effectively facing clients to and achieve investment operating efficiencies within Our are their

their needs strategic help pivot. and to own with We ourselves strategically are client's positioning meet our them

our are of comprehensive elements State Clients franchise. continue servicing the to critical are driving innovation and revenue for to capabilities. turn across differentiation product how Street Second, we and growth differentiated

the product where record Insight's expand NAV segment new level EMEA. new SimCorp the our to assets our launched capabilities by will our insurance At in reached our recently us architecture platform clients hedge and income trillion we Global fixed a expand interoperability for Advisors product management fund recently offerings announced with as our under enable our of open quarter, partnering of to of with Elsewhere, this our clients. range including service partnership such expanding we for continued X.X ETFs. providers attract and example, For other

innovation, strengthen we as of and challenging period. our highly efficiencies model so total and markets through we XXXX CRD IT from Third, well investments far even margin employees. excluding items needs, efficiencies platform. gain growth of ongoing date XXXX financial Last, Street year-to-date cost expansion productivity The during as efficiencies as and our model optimization just the this measures. continue throughout our productivity we optimization expense further automation the we benefits other improvements focused in first including Companywide and to savings to remain of and on our gain our notable our technology months are driving supported nine base, efforts have the and to crisis, both enabling our client support achieved in operations, and as State this Alpha business operating X% has efficiency investments of

to important capital success. our human Our is critically

time, of enabling that We set our At time functions and locations better most operate in pandemic workplace brought effectively the fuller are and world for critical the safely apart attributes office but remains that from cultural have fostering us have our post most part reopened We back critical across believe we same the that to planning home. workforce of office work of the future. innovation, productivity, are our more success.

with in focus companies. on stewardship you Global leader and portfolio diversity good long been Advisors has efforts a As governance its and many know, its of

review specific actions and team we have our on improving We XX to of are to including racial a at for critically number and I also addressing This we inclusion is which the website. injustice same are within important our executing, injustices, and in leadership actions reducing by committed advocating our aimed social taking and organization the industry. to our own encourage you concrete these diversity

performance quarter X, Turning Slide present to highlights. financial we our year-to-date and third

see implement will we productivity, our are as bearing to actions fruit. that and improve these continue our strategy You

First, prior looking year quarter impact of decreased largely rate on relative revenue NII results. the X%, the our interest total our period, third headwinds at by to driven results

However, as fee revenue increased reignite X%, the demonstrating we we well revenue to as CRD. contribution are work from the progress growth year-over-year making fee as

of life of again pleased our Turning continue now year-to-date both will report third us and we Productivity management I to am expenses positive we culture X% items. productivity established. by of notable ago by to items, notable we and that relative continued strong year to period. have margin is this a leverage, EPS our percentage pretax X have driven and excluding on improvements, a points the as of excluding basis here growth On build result quarter and expense percentage reduced points, to generated expenses for of improved operating have management way X.X successfully a XX% year-to-date we

achieved in low particularly a I have improved interest environment, operating rate very results the challenging We these that just environment mentioned.

with continued strong our excess capital our we in business position model are and reflective Lastly, balance requirements. sheet levels of capital well operate regulatory our to and of

with range outcomes quarter, in of conclude, and unique our in of current operating we navigating the Federal capital the latest levels line Reserve and capital To given market stress strong of environment, a the fourth model, return As the we well. are conditions. we Federal the actions despite business instructions full await Reserve test considering are challenges it

operating and and take quarter improving improve with let business third are more you our financial and developing to quarter strategy, differentiated through model, the are thereby am this front I performance our in State detail. improvements. year-to-date new we to me how implementing to continuing opportunities, measurable pleased We progress our to it that, making turn back driving demonstrate productivity Eric alpha over in performance. Street's And that

Eric W. Aboaf

XQ everyone. To start Ron results my I'll Thank begin X. XXXX our you, morning and review Slide on of good

you see quarter both good the in during As management we third fees. left growth and on top servicing recorded can panel, the

expenses continues Our X% with too expense ex-notables. to bear X% year-on-year discipline fruit and total down

notable have you called noteworthy within hand shortly. more On more some see for will detail can items, this only, and two including NII also Separately of the a the discuss of slide, quarter. impacts comparison in purposes legal I small which we right side release out the

outflows. by year-on-year levels, business Slide to as and to ETF the new increased by year-on-year increased was ago change market net year-on-year to primarily period X% The X, X.X of coupled and by trillion. installation's. business. period, equity institutional was $XX.X period increased some end inflows X% Relative levels, market new XX% higher net also end higher the to offset a X% driven and and period end record. AUC/A trillion, AUC/A record net AUM quarter-on-quarter increase levels Turning net a result also year market with inflows, driven to higher a client quarter-on-quarter Quarter-on-quarter

on perform inflows inflows increased half due with billion outflows the by strongly, X Our risk Quarter-on-quarter, in taking very cash sentiment. XX and to SPDR AUM Gold a generating continued ETF during period partially net year-to-date. net offset this reversed higher a market of mainly recent in billion record levels, end as quarter strong to the first year

fees average activity, Slide new including market the the quarter effects higher increased up levels of only partially pricing offset also were to levels, amounts by partially elevated continue client fees higher of Servicing offset FX activity. including increased business average to which moderate. to client by FX by quarter, market normalization third servicing sequential X% net X% previously X, driven relative second Turning year-on-year and reflecting of headwinds

our close throughout on successfully to and strong to As a have commitment deals capabilities, client and result of board we clients this continued pandemic. new our operational business

summarize bottom we slide, left of the the statistics. On the

growth back was may right The saw In bottom result a percentage stabilize X% intervened sales also another now over We model closely worth our out declined recall our pricing elevated X% XX quickly across clients, servicing now and to We we governance, to probably begin to as a top year-on-year next the offering, points drive by actions rolling couple leveraging pricing launching regionally to to is Alpha teams clients. summarize the phase XXXX new clients, extend country which XXX to to this develop model pressure servicing you as taking clients. enhanced which top think working of further pipeline. is more year-over-year moderating. ignite in fee panel, our fee On we're coverage segment growth. of only year-to-date. up with is are instilling another coverage fees, fees not revenues, result that the but saw servicing time we The and servicing front we both our and XX client growth our to focused further

and X% more other let and well the fee by average cash Advisors increased outflows. lines X revenue driven market Global ETF with discuss fees net inflows important as year-on-year year-on-year quarter-on-quarter, me third with partially Slide to management levels higher Turning Beginning in offset by a X% quarter largely institutional performance detail. as

we've booked are For business lines. which management a SPDR agent total segment we view management increased our ETF, included and GAAP and earn quarter-on-quarter in investment in the as for segment fees we quarter. X% a of also margin revenues segment year-on-year do reached includes complete addendum, Gold the our revenues a other marketing in which fee as X% All investment this XX% page

previously third XXXX. waivers full million quarter within million likely the money for $XX year to distribution the anticipate be $XX complete, expense that of market will the net impact With we range of fee announced

quarter-on-quarter year-on-year, quarter affecting X% down X% XX% client was of Turning Securities driven Securities mainly the the quarter up FX year-on-year, finance lower reinvestment were services, to decreased lower primarily but XX% quarter-on-quarter, were proceed. we revenue second agency result industry. balances revenue finance down trading yields. as a lower by third those and bump as yields results saw

as processing Finally, turn fees market lower driven third I'll related by as largely year-on-year, software were adjustments. next XX% CRD, but well quarter and quarter-on-quarter, which XX% increased to

Moving to view a we business growth. Slide and of performance X, show revenue CRD’s

revenues. accounting have the growth standards can illustrates inherent and enabled demonstrates XXX revenue the consistent on and CRD the slide software you software pattern in separated streams service and professional As of the for services we lumpy a importantly, it revenue as on revenues see, predictable more The premise premise, in services, revenues. professional into more recognition categories; three

As several asset implementation premise revenue standalone XXX a was reminder, and on renewals. primarily quarter a by wealth of million second large large -- CRD manager driven

a normalized quarter CRD was more standalone revenue XX This million.

SaaS a as you and XX% total over horizon, fee growth XX% up time are can see that revenue as broader and the revenue, Looking strong, well respectively. professional

to expect As full business the double-digits. be to we in revenue in continue now are invest momentum we CRD year expand seeing standalone and the platform, growth we CRD in and good the low

quarter and to XX, quarter-on-quarter. declined year-on-year Turning NII Slide third XX% XX%

down impact XX% true ups, and was of NII and year-on-year Excluding quarter-on-quarter. episodic XX% the

approximately of year related effectiveness. to hedge episodic period reminder, market swap and XX mark-to-market included the a the benefits ago As related million FX

$XX of investment by portfolio the core investment the partially rates, and true-up impact to quarter lower million $X from balances. by quarter’s of from items the and AFS net second which as approximately related primarily market MMLF was of change securities revenues. portfolio, expansion driven offset two the This in Relative to the the interest million true off OCI NII up NII decline included the loan a was roll recognized rates, to transfers of about this driven in expense the by these additional of negative market balances, of of was Year-on-year billion primarily partially quarter's to impact lower prior impact offset HTM. we XX the a by larger period worth NII

right period balance that our trends. expansion to at currently the the slide, actually We Fed's increase of around may the average end average of hand operate expect given of side supply. and money On show we the deposits so continued XXX sheet billion of

to items this of year-on-year, trends including visible. again view this in excluding base XXXX result X% FX. ex-notable a are expense XX effect down that provided impact to the a environment. position up in we've the Slide portfolio were the the consciously expenses quarters X% us of underlying the quarter-on-quarter, expand a the investment XQ rate notable to coming but On readily quarter continue so but of As mitigate low puts the

lumpy ex-notables period, to progress. gross On making points. transaction offset expenses ago comp system processing, reduce continue to four management lines, relative year are a in across solid three and model points, relative cost Information and total focus and about in growth optimization year are we driving improvements to approximately we concentrate and technology to expenses period. continue basis the on good occupancy productivity reinvestment environment, remain we year-to-date a reduce we five ago and is As of down we the expenses other the costs making challenging GAAP benefits, on but are natural operating our progress by X% which by improving demonstrating percentage partially X as of

of to investment we we Moving work, the MMLF show to growth to more our and deposits XXX The increased investment put Slide panel portfolio. even the in as thoughtfully evolution to XX, Securities as left run portfolio billion anticipated. client continued off as

see HQLA evolution right the will leverage that matured, of of continued we MMLF duration and to almost dated at high You average show CETX a period to the In as years X panel, extended portfolio and three ratios. short percentage end. the of Tier assets, securities maintain our the we

elevated we continue operating challenging can navigate strong capital with see you As to this and environment levels.

our modestly partially by quarter XX to ratio to offset Federal retained of the of basis on increased leverage only CETX banks solid by and assets. the restrictions in earnings higher average Tier assets. fourth. X XX by standardized our and ratio share points basis by we cannot improved common by risk driven the higher any X.X% made large imposed with was Reserve, result XX.X%, quarter-on-quarter third As end point do retained weighted in no a repurchases lower as the quarter earnings Consistent

range strong our of quarters we and capital upcoming are and regulatory the a including elevated As we confident share in allowed. Ron of and position will consider conditions repurchases noted, resumption market full on in capital actions,

summary XX, we've performance. again our year-to-date and of Slide XXXX a to XQ Turning provided

the but low well rate obvious evidence we interest of and fee financial headwinds year-to-date our growth, shareholder third as show environment. our are focus elevated our our results Street's Our while as on to clear successfully how regulatory all quarter above temporarily well and not create capital executing strategy our holding performance State the only third reigniting reflect on from Both also the requirements. stabilizing quarter improve value results

rest of the of I've our pandemic under outlook discussed a to set throughout outlook, Turning the the certain year assumptions.

thinking, of the three caveat to let the us with you environment the could our continue change. year me with share with current continue but Now quarters could -- macroeconomic that behind

long We expect year banks at stay at will keep rates short and current end. rates end will central through spot global current rates levels

with equity to that previous levels. for be XXXX current expect We for guide. approximately are from to up X% be up average flat will remainder our to assume the With of of up global also servicing expected which backdrop, levels year will we X.X% now market full full XXXX that revenue year, both X% fee approximately that fees be

expect end impact line full our long to year Regarding XX% rates previous approximately still be lower with in NII given we the continued of guidance. NII down

to Turning on find therefore operational still items have year-on-year, outcomes expect remain transformed successfully to economic our continue see On driving the conditions efficiencies. to full to focused year reduce call to provision base be with at low our a credit to to we be rate sustainable Ron. and we expect as XX% that taxes continue end our expenses ways range the back X% to for on losses, and In expenses, and expenses. laser to tax hand for range. the the changes. And of full will XX% we regards let notable improvements continue me that, evolving based we We of quality credit productivity expense down any excluding year

Ronald P. O’Hanley

Thank open up Operator, you, it let's questions. to Eric.

Operator

[Operator you. Thank Instructions].

line Your from of Glenn Evercore first from the question Schorr ISI. comes

is line open. Your

Ronald P. O’Hanley

Glenn. Hi

Glenn Schorr

there. Hello you. thank Hi,

a on see do we that good know what can direction? to to time, get very that the looks So gross the and it durable good know a is the gone doing, of committee on get pricing confidence moderation is, just that, it's clients have new the meaning book how have be love the enough the feeling this I to next much then I that it, the the we trend and clients, the through you stick just over too, -- pricing to net the that up basis I but in The that comment positive last couple also overall keep year is on all but quarters XXX follow -- see right I'd questions I I it's that conversation. on basis. has consistent question in and get how of your can good business don't growth, confidence in to good if next your is you you how of Thanks. just going I know can

Eric W. Aboaf

Thanks Glenn, is Eric. it

on me Let can pricing the and and pipeline we cover topics start momentum. then broader of

I and pricing, we took for to management practical a a have here on senior we real one difference a the turning right, in actions conversation continue and feel made centralizing internally pricing literally way. into that think very process

always And that because had so that industry this back pricing the there's markets, play we while you there's a balance always and some with see has in always out clock our our fees due compression, so you appreciation turn historically to clients. natural literally, right,

in to to This expand be largely that our want We year. we to is that history down X% governance, to team the have heightened and we to more would per be view thought expect education obviously we year and saw our that is clients. set that that perspective know was a both honest, of And last You and that of the X% it'll which at think due X.X% repeat. it around something range for the that we year. to I of down updated actions, was X% X% be year, not or headwind

we've which a of becomes tend offering our office, front to can think more and accrued connects area. we and trustee actions the tend know, benefits the tell. I the be bigger we only we I at do what let there and be we as and we're keep I that will think the intensity we support us better offering, here, is think to will the our hard in part that will, they that going longer, at Charles value this feature have that's you this what of middle level. But proposition continuation to think other of contracts back River, provide operating me lean into you, but I pricing that. some they to not the confident be tend Those kind time where But is offer. gotten least next tell think to to integrated, continue stickier and happens If to to accounting

Glenn Schorr

Ron so a couldn't me options I range of new the for on is cool, capital net which mentioned on. full Maybe of you lot consider get Okay, last you capital is to you business options one return the cool. got considering that's

observation You to room just the history in there's particularly have huge management curious had the going asset State on a a if I'm that take of good or side. player? participate, on already in not long for your not you're Thanks. what's industry consolidation on and Street

Ronald P. O’Hanley

There's asset I a your Yeah, to as mean, an not a managers. amount of consolidation heightened dimensions, observation about it just asset accurate. as is think We two manager, from but going on. servicer also

of at we looking add looking and determine investment what we're kind to some will investment a But that we we and them something it's like services extent at it our how two businesses, carefully. to also. we and in which tuck to have. optimize to through we consider best We're the management could So trying always that

Glenn Schorr

for that. all thanks Okay,

Ronald P. O’Hanley

Thanks.

Operator

from comes Alex question from Goldman Blostein the next Your Sachs. of line

open. is line Your

Alexander Blostein

Great, the thanks morning, question. everybody. for Good

Morgan Ron, maybe How there's think Stanley in around So point there from service pickup about on last of with global obviously provider could you building could industry sort that be you of sweet and past. be as in them do hand, a in events a just the the see perspective? kind given others. are a one that been of with could giants, that in kind I the asset [ph] M&A speculations how large management described guys spot net a positive, Obviously, on you

a could larger maybe come perhaps pricing platform. the pressure, but benefits more given volume, So under of kind of

and for management positive Morgan the specifically you that side consolidation we in [ph] in with that, do or State So for about net Street negative or I then revenue see to how to space Stanley, events either? yourself, risk don't provide you it from know services asset is see to we extent opportunities what any a respect more a net think guys

Ronald P. O’Hanley

this client of not I'm them, to the on on I'm any Yes, to to But we help a -- so -- we're going of quickly table different but we platform or often situations, some not positives. public back models, negatives, there's the with we're aggregate going spot our impact certainly have of The but fact of schedule. on these it's so a beginning, obviously now are comment there thereafter. going that way we that, managers, ability comment from some there's involved are situations front in we operating both that not on in positives serve terms the asset the ended or specific also to because at be we us, fair if client the consolidated number knowledge fee right to but that negatives most the our Alpha of would lost there's brought The Alex. in if of table often a up at

stimulate you might we this as all if go upgrade. you're that through the thing to all other through The we believe can a platform go going well is integration, with

done. because is oftentimes to for back so going looked have to with the do in And some synergies get to front we and you're spur if even going the and more are a true you or being that operations this the actually operation to back promised activity overhaul take kind the have actually that opportunity office ways think of synergies and to implementation

So and positives positives more but we for think time, negatives, us. over probably

Alexander Blostein

around the Eric follow question for Great, And thanks. up NII.

a $XXX to for XX% you XXXX? into with basis, think more importantly, developing then talking quarter that reported in down QX about double broadly about just get do full how checking I for which that of million guys the clarify NII so prior, to that? does line And think implies for sort year true-up just that So on include NII about the this million in $XX the and you're

Eric W. Aboaf

XX%. Eric. it's did basis Alex, it the we on a Yeah, do reported that

what I So the for think we're of estimate area. at quarter in right your is fourth looking

then environment this finding decline that I in I this to fell we're talk way sharply We've at of and a the next the about that quarter-on-quarter-on-quarter. year. describe think is year this been and pace that this starting or NII of maybe the is decline little really clearly interesting to describe bit what first slow point we're

so, this in quarter, adjusted there down results true-up come our And the you XX% sequentially. for if will saw back necessary

you the If up open to much first NII XX%. how down was just actually was it second down and say, quarter quarter, lens

XQ at XX% So we to started XQ.

percentage are year and on at you from to This many like if quarter XX% others, XQ. X points point XQ. we of looking down kind math at XQ And the a you've take underlying full maybe basis your from to to XQ we're our done guidance down around X

effect on side, that the coming through see the the and whether which by slows through, that's really asset consistently offset of pattern can the of I then expand kind which an repo up what So average And said it's end to program. basis. was we're that some our period doing billion the slowing portfolio billion actually time actions grind you It's investment quarter. the X loans, for of up in over of on sponsored expansion portfolio, X

the are those puts takes. the So, and

and of stabilization As pace percentage view so we next from year see XQ early. some continues little XQ points or at then slow is that probably XQ level. couple a a looking to we that at we're at look that into But, reduction it's and our

I the grind or the I down then at the think offset really XQ now seen And intervene so from think that and slow decline. point, you've and in we XQ us We'll stabilization see portfolio. can

Alexander Blostein

Very well, thanks very much.

Operator

comes from UBS. the question Hawken Your Brennan next line from of

open. is line Your

Brennan Hawken

Good morning, thanks taking my for questions.

assuming on rates laid utilize underlying rates to XQ points holding spot importance for bit The then they that same Just the are making the you are just that spot follow have just assumptions up us mortgage given out levels, we little -- actually, can portfolio, couple what initially you level calibrate or you keeping assumptions does are of moving those there, forward? percentage what's wanted that that embedded so and securities you of are Eric. on basically from unchanged prepayment a what your backed use steady, also

Eric W. Aboaf

Yeah because working and important, Brennan for assumptions thanks for right. for looking towards We're the each looking an driving -- this very those question, inflection here. are of

So a inversion now looking more we're between had we current think first which at become on treasuries, repo rates, short an Remember, and normalized. rates, have which normalized. is I little

stays point beneficial. that slightly that's way. long-end XX a XX that continues, range, over to basis that they've last We're so. been bit the So good hoping or week the in bouncing And rates

So assumption. the that's broad

as assumption think, of MBS and that expect you second more on and then some quarter speeds, quarter, of about the are assuming and prepayments a into quarter amount level third fourth burnout elevated are we prepayment we first do at going I pre-amortization, quarter think forward.

so And that's we that get have think three driven our on assumption can a models look at be obviously own is -- then given and underlying we assessment a it'll that the that. four it And the our dependent pieces But be We assumption. by providers will is well. fair the and control. models as an finally from to performance

book. us seen you've expand know loan You our

clients which book, is our XX% loan for is about quality Our year-on-year. exceedingly up high

you it of a drive it quarter, see lean this year-on-year. the You or of can makes this the loan And sense put a the lets we you for gave And, have kind difference, over investment I is work, here so investment XX% of about that couple to and the see our portfolio sponsored whether repo difference [Audio and be even and up a is also real book could deposits our us more those it's stabilization. portfolio of course view Gap] our in quarters.

Brennan Hawken

to mix the Thank for color, based you in That's equity purely then of Excellent. in And some all the calculates asset rate that servicing the market the sort has mandates just way great. past, not compress to because [ph] gears that you your shifting of levels. and sometimes fee the servicing Street on are contracts some your resulted -- revenue, of Eric. new We And business all installations. referenced the also of rally. servicing saw the repeatedly

so of not captured much us the a you not rally of naturally help is up the new the the servicing how would could it much of maybe from be how lags bit little was dynamics? unpack going as might lag, of much AUC/A market fee as partially And revenue from on yet where and to only installations due contract come has which those much some the business be how

Eric W. Aboaf

from Yeah, really but there's and of What's little -- tailwind a Equity always and of different the couple globe, equity business timing average right. really kind timing, across is that markets are for a bit let's rounding. the let a Brennan the me the here markets important clearly our of right. equity take is markets that's angles, average

But are XX% So up back, year-over-year. smidge are the markets EMEA XX%, year-on-year. emerging a down actually the markets if S&P step you is up, international

always which talked those so up So not is beneficial. it's we've up the XX, up of that year-to-date equity We've equity up income at and matters X. average up matters, mix only X. EOP then average matters. markets fees about X%, but Fixed XX, on the fees around And markets the markets got

and been a take of turn those the to always of portfolio. asking and or some year. and we've question on charge net point client fee some more basis are are on and the that I have outpacing been and Over And it's earlier then we that. the about a bit able business wins positive tailwind that point, headwind. above activities that folks think that are year-to-date some fees through get of quarterly and are a And got coming a half little also offsetting so new we've coming in came or a of basis through we'll always that maybe business you do a this have more are our the to of And flows whether so,

were good up markets well, with I of right. So as there's general that'll on third quarter equity help in year-on-year markets remember, at level, fourth mix the XXXX this compares a stay to But us equity basis. think if a quarter

driven have partly this on overall a that'll year activities comparison as well us of then going to lot the there so new which because to fees there, we XQ tailwind markets the our there's And a advantage from a bit also servicing fee and for take but XQ to good business why XQ. guide of help But a also ability is gave basis pricing, XQ I a growth, a that's year-on-year, to around for in drive up X% of sequential by of and indication flows think equity manage seeing. globe. then we're the Anyway, some on we're tougher that

Brennan Hawken

business of and with just a just I color billing just is -- appreciate confirm, and Eric, lag lag that's there beta? all wanted a Appreciate the the the coming new there dynamics versus sometimes on that, so in market that, that what AUC/A the to on some but is great

Eric W. Aboaf

the the a consistent There quarter. bit averages but of relatively is were lag and the think for I EOP a

so end pretty large but be lag of this the There quarter, a of and adjustment the consistent. And will little fourth bit at expecting period quarter average not a the was because we're the into point.

just it'll I through play think more naturally.

Brennan Hawken

Okay, thanks for clarifying that.

Operator

comes question Jefferies. Usdin Ken next line from Your of from

open. is line Your

Kenneth Usdin

to good guys. morning have I want return X% back Eric, the minimum. you an CETX question, just Hi, come to capital

actual you are Just wondering that back just your get return what back buyback a test XQ, normal is set you us to stress getting done, what guys level and like XXX% do able limiting think go over excesses to and just when do you limitation do can plan? more back see how if of the through buybacks, you ahead SUB to have now the you capital about as the totally we us ratio capital into and again

Eric W. Aboaf

that act capitalized capital way my one of how been and headroom. I word remarks forced we're use it's that's through. Ken significant defer we upon are. working obviously prepared anticipating at, any to been eager important to got running purposely strongly tell in gotten a those given I we've elevated We've right. we're In an the to we've you, just decisions. Yeah, what But it's topic because

of there's a question. think parts to couple the I

ratios, first think capital of I is constraint, it our binding terms in So, now CETX.

we've So, not more advantage Tier capital. X of the a is core leverage you've binding seen risk point, And really the weighted as reduced assets divided ratio any that of us this by some constraint. equity, At of take common that There's preferred on XX%. there's we ratio, CETX I little we'd our about to of then should reason like mean you as down. XX%. stack we think And above reason run get should above book. run very that little

working quarters. And more. appropriate a over of got so there's last lot least the X.X We're not at couple through we've because of what's data if

needs back billion of half there in So just go to solid there's factor earnings but to shareholders and and above the we shareholders that quarter. capital to over go we want to would a what that from each back create

to the show is went see any as well. the of and with hands. start than obviously also like think SEB to that more after and bit start environment. of our that in that We the I our got And we that new we're and that market want the for We're need careful quarter pace a the this do our and market can to accelerate based what on need But to do earn return very putting all we as think is too. pace so we'll the we'll to I guys Fed and we CCAR if return view think capital in comfortable It needs then restart be did into kind each you shareholders we think I guidance of paced. we'd participants what And and dependent be little do the results so, Fed through careful we test. bankers, And we all. that return assumptions, to we of back industry quarter first

Kenneth Usdin

think be follow-up color, know take And expenses we'll to that annually. year. to down about outlook I this hear thanks. been talking you've now more when good a should you that the on get for able great your question, Great, while to formal expense just And for you the company

a did still job very about You at being year, good X%. this down

still and the in a start ability that being continue do you to looking expense to Thanks. calibration of terms but base? just just headwind NII are the net how about think to you With down fees better, the where

Eric W. Aboaf

annual that give I then and appreciate our your Ken letting now January answer we'll as Yeah us in say guidance. you and

expanded costs last that you, you I able tell I interest up do row. environment. down that think one downs. in for the operate two of to have partly year. that all been of that acquisition that for year not now only years the management think, And lot here rates doing the kind volatility in clear and clear, down the in in and our I direction think of the you've of We being is effectively has is this I expenses confidence that's mind, adjust that of did just what we're the really I think right our if And market a seen travel. new this way momentum because two that reaffirmed frame seen should team, And we've organically kind I've downs CRD, management we us a of in and team again we've the direction been is we through but from

productivity right. fees all and to noted. hundreds finding But do forth got we're of revenue expenses while growth working across as items, and hundreds senior we've so line the and the that on of people, folks So driving ways you

us think person comp X% one measurement our of tools per broad kind benefit we can in currency seen we costs productivity on I are we years that's our is reduce think more down are businesses, with And and a of occupancy more a so tell you've why for of something we've and we're a way transformation of is out operations And many them for the down swing, four or pretty more and and driving notion actually down. pandemic, our the items line opportunities. outcomes every our down we the And opportunity result saw of four manual those year-on-year. across find continue expense in You ways year-over-year as And five corporate touches. adding more and were area find are has clear incisive our if functions that Even those think quarter-on-quarter in that I to costs there. automate well. you based of I to of deep actions. of technology been And you adjust even broadly

Kenneth Usdin

Eric. Great, thanks,

Operator

from Stanley. comes Morgan line question the Betsy next Your from Graseck of

open. is line Your

Elizabeth Graseck

Hi, good morning.

Ronald P. O’Hanley

Morning, Betsy.

Elizabeth Graseck

opportunity recently, just press how be announcement been from servicing market EPS. I to in understand wins Thanks. the wanted that's wins there's of the a on think kind releases several we as semi-transparent and what going fully to to it and to you've takes loaded the there expecting they in should rates frame fee announcing how just little time plant? been wanted about you I come be take bit in on that for And impacting and

Ronald P. O’Hanley

I also said, the have have are multiple you'll four this experience five that of we're out, find what's of others, first. many basically think I them. and virtually and to that these is those Most looking sure that of five manager come in underway are Betsy firms. work not a and so come looking but that firms servicing that funds, about lot think Yeah, gone out management firms have what There's actually total I'm And and firms them thinking as much every the asset active it's at the many there's say fair I of have many is. launched at

firms So case many a revenue and in the that [ph] new think that I to potential will be growth us. opportunity for an this extent as view opportunity

different to it. whether was we put it's too game this some it's of early if needed doing felt will it been ways changer, we've like effect servicing a We have while. but perspective of of But to ways enough and We're or all we from it. now in certainly most a against ways are for something servicing with the I that that the familiar on a innovation not important servicing the and this a think doing not tell all innovation be

market at market We have we've small share on growing. it great got is this a point, but -- and

Elizabeth Graseck

it that's traditional with just question like the from impact has priced? made to announcement is sure to products growing just you a loan the it, or how And how plant, not something is thinking two is quarter long then how going up it sense? it's take or which And loading is like rate an just fee the I'm product then it about it rate, the itself, other be rates it's than fee associated overall of does lower the into with not, fee or type -- three

Ronald P. O’Hanley

rate Yeah, off say growing times would the it's rate very higher they're volumes but a of the but so I And so volume. -- is I mean, fee low far are base.

the on should actually Not felt right the something worked ignore. we'd whether So we we'll rulemaking into or to wasn't changer view step too that around a being not know. beginning, spent just develops. it see game this will I tell like it's some the it it We was just was us. it of time early from be think -- should with our SEC. again, for We evasive, we something because But just where on it really and we we don't

Elizabeth Graseck

high a as since coming been it the these made would relatively has be to and investment Okay, on platform? your margin wins

Ronald P. O’Hanley

to grow. any the certainly Yes, different existing margin, which I to funds extent models. all we understand Yeah, of high the the mean

it we So I takes our us understand to them, what it for -- mean now. install

like not it's lot So new costs. incremental a of

Elizabeth Graseck

Okay, appreciate that. I thank you.

Operator

Deutsche go ahead. Bank. Bedell of question And our Please Brian comes next of the line from

open. Your is line

Brian Bedell

Great, morning, thanks. Good folks.

question, before low I correct? rate the XXXX that ask the Eric mentioned, at the do to XX% number Just clarification one for I tax that XX% end, should this be you have

Eric W. Aboaf

coming in the we've And reaffirmed to XX% end that the low at correct, that's guidance. Yeah, XX% was that range. of we're

Brian Bedell

the number. guidance the or That

double-digit guidance XXX good. million low for question for CRD, a on revenue the Okay, to then XXXX first is little XQ. comprise And over

double you're from for or thinking that that we accelerating same you in given momentum early rate as maybe an correctly? digit the about then potentially see CRD the platform, wins growth new in XXXX that terms make move what lower? into I the of Alpha look around guess and seeing that the to you're And wanted of Just sure low even thinking core on XXXX that or

Eric W. Aboaf

still of the is that quite with want growth you Yeah the assessment forth. we've pleased doing Brian, I ahead to and We're XXXX. got to here. myself pipeline seen so I get tell out growth for on CRD don’t we're that

adds top of line And think, renewals we months second up offering sense that our the had the that some upside with convert in year. with we're business a software I a to of you for bought looking a that the of Street backing revenue. some nudged and quarter State year we were and we of of impressive saw kind at that X%, X% And market this into wins a of to Last year some in couple has that some to ownership. the to the back. year wealth relative ability was where space the you some, significant know kind major double-digits first You growth give on our effect low

to lap year. ourselves we'll next Now, have

quarter. that's So hard obviously part quarter to by going quarter the be by

we're performance real double-digit do. we're expanding doing all the expect to sales two we're the We're us implementation just engineers. the the force, things pleased base, years technical But so acquisition. an think we're expanding with And expanding you'd into the I trajectory and a revenue

is that buy CRD that's it River, offering us we discussions that and so with shaping CRD but office just our seen premier gives the think in space, up with think the line Alpha I that part of strong property the basis. right. business expand Charles and really front on well. that it's itself, and offering is our under us ownership And effect and you've client broader confidence and only did as to partnerships, and I very win top not back a on our accounting and custody nicely middle

Ronald P. O’Hanley

last you and we've for to that kinds what talking October of want was to River. we talking River, broader the because pipeline we that front been I all when made, but closed a back Charles acquired -- about to underscore XXXX started offerings. Charles right also developing just how We Brian, Eric that in just point for from not of we it

in this that this related. third note year a of wins of those quarter, wins our Alpha business You'll new were

large it And it's said develop, that out that CRD we but asset and platform, office our CRD we were existing only wins. but we I means Alpha drive seeing wins not that And custody of back just form starting we're that. see relationship that off not we back the the drive would of we So before. no existing the we to we're getting a had office. remember, was what with that that the middle noted platform wins as that manager CRD said driving win some that European we of of and one saw potentially Alpha office

office, -- services. the So we'll zero middle we've gone to front CRD, go having and from

I that's will a of pivot itself platform So you how in as both to should think CRD about this provider, enterprise being and of software an outsourcer. but alpha as part also and

Brian Bedell

that's able launch have some might then talk Difficulty] offerings you analytic ESG strong Ron, related are the growth very servicing that side, data And just side, are what on and then maybe obviously what great you more seen the Yeah, extent can and space guys you your integrate and ESG [Technical maybe for if initiatives. product, to the on maybe especially within your about on obviously AUM, have ETF and plan focused services also color. analytics client? be we to products BlackRock sustainably you data to

Ronald P. O’Hanley

been of has Most how mean, we I much SSGA the well addition do, think all new to of work in outlined visible much in stewardship Yeah, to terms you've ESG -- in the of measurement, us investment the etcetera. about and on overall for and there's more it date it. analysis, and activity into managers and that they product ESG overall integrating is drawing What's framework construction their that product more are the though now as board. that's these needs risk driving exciting if new portfolio data for more been

help So working a series products we've support that we're that. will that got now on of

So we're on about important thinking even to in that's across put terms us. firm it the our we on a go how this. stay something We're It's this together actually united and front. very -- tuned of on out resources

more in So few the next you'll of quarters. this see

Brian Bedell

Okay color. it Great. is Thank you. great That's

Operator

of Bank question Carrier next America. comes of Your Mike from from line the

open. is line Your

Michael Carrier

XXX the is Good that clients it you difference this mentioned any the question, XX a thanks was one working there group on, taking and create versus different the on reviewing prior outcome? quick just could morning for and a

Ronald P. O’Hanley

additional oriented think year. is and of think took and top this way with sales that's about No, and the And rolled we folks sophisticated engaged we structure that's on it, orientation, really kind XX I about the kind of end out I coverage has sophistication kind bear a a created for building a action whole leverage effect clients. fee -- what's starting organization what a our deep least seeing of Mike, rest over more that at that of the that our you points And XXXX orientation, with of base, it bring a and at tell the relationship, what above that client to group of to growth actually we're is several to right. for and the

And we've we're the then decided client take created learnings. we so is we top the track differential saying, what the the that as rest and and further of base do revenue XX, of growth back, we below amounts wow, has right, step sub track segment we given track to we it, that

five. cost services. or in one or organization want these three, they accounting, of or and in with trillion coverage pound of they're dissimilar to maybe custody, are But, a There with $X But two as next office, may because four the the our Now, billion of that their clients clients or you a scale, servicing them the advantage next office productivity billion tend clients client coverage there's areas XXX can take large, They be sized investment different take middle don't not opposed think are loading are just or be organization. you to the clients to our about XXX instead $XXX pound kind clients. clients. to trillion $XX front from for largest if is base, a

they're a orchestrated then unleash help lift there, And another think a can which growth revenue we overall and of that I top has the in really similar that's franchise in lot for And growth coverage that ability then more the ways. seen already intense to in several of points XX. way organization, the of a so revenue the think why we've

Michael Carrier

Got it. lot. Alright, thanks a

Operator

the Research. from Wolfe comes Chubak line question from of next Your Steven

open. Your line is

Steven Chubak

morning. good Hi,

little with the question the just bit So wanted increased duration now there on a and a be activity. given portfolio, about it a to development X.X Eric securities accelerating sits sequentially, prepayment surprising at years start the will of

investors you know are outcome And could contemplated the but not we see some some various inflationary you're speculating maybe wave risk, some not launched. steepening is or programs could to steepening? just we in some that of XXX if the admittedly of of all, do I and in and Now blue in capital could NII and are how handicapping the curve a duration just event frame guide, XX sensitivity for see extension speak and you AUC/A the ways

Eric W. Aboaf

range on. XXX historically what duration. seen much run year of We've in both and uprate are that put careful your drivers are we the is of. you've scenarios, XX, us X I we Steve Yeah, Those Eric. all it's quite X.X considered be, kind how duration the point at balancing XXX, model XXX, To do -- the exactly to of think, maturity the this and balancing out we've

So more I of to prepayments. some little think a shortening we're added MBS within on came We that the band. that offset

So also XX to we see and us we and up but run duration that year on four XX year five-year didn't take long did or that consciously, bonds.

So it's I think calibrated.

One of insulates very it quite are to government six-year billion, not we maturity careful. though, And tools is the XX also little And be to also maturity. that some this we right of we and that's XX put It's with it's middle designation in we're curve. five This the purposeful which to is think HTM in of for government on seen a because play we accounting you've the hold think very, we to a we curve, pristine. us of part use hold on we'd But, the maturity, lot longer. And put the where securities use the guaranteed and maturity, only consciously. average what really what here, we to But to got paper do about like where OCI health paper, pressure. from is paper. because billion we

then OCI my portfolio we there's earlier why need some because balance designation. just that, couldn't we keep us inordinately a And, capital solid how need of of kind HTM remarks, carefulness the we manage return to large through comfortable we we we ways to that's so the for uprate volatility, reasonable of of a a think give accounting shareholders. a of volatility some the and want that mix of amount have in but levels, don't I one and some on that in I We design but scenarios, feel to back. always the accounting. And capital, that's is a think duration that's then lets And in lot described that buffer the can given to to capital

Steven Chubak

this management ask you And does that did scale Hey, more latest to the follow-up, the organic how look profitability, side, this management and compete a segment that into on asset wanted consolidation wave active thinking specifically, as that how are of on platform, for the a And guess significant well strategy. given may subdued of Eric. adequacy thanks lagged capital and with pre-tax just an color, strategy? just just especially how now effectively you reposition cushion the The more my the the peers. just see to more as quarter segment cited, arc growth I about margin you lift some fit of nice maybe investment profitability traditional to as for in just has consistently

Ronald P. O’Hanley

it not working is position it's getting particularly right. These platform narrow in or area that's assets terrific franchise. and top very exactly it big if Ron. the mind more we're the the a so some are three and just to that more also quite that It's a hard challenges, But there. much got like the Yeah, franchise, four that a ETF questions an through it's has are bigger fairly seeing you're product are where perspective. its And We'd it, actively. on you're our and from

and beta really beta, active operates and at and it So quad like the beta the relatively is alternative. things small

then And perspective, the institutional about distribution have we distribution. product is our it's So and inorganic. from thinking both only it perspective, distribution from a a obviously organic

about finish we're So, upcoming evaluating. of it's through our that the some actively conferences we work. something this we'll probably more at as But considering talk and

Steven Chubak

to forward look so Thanks more much, about Great, hearing it. Ron.

Operator

next Sandler. comes Harte Jeff question the of Your line from Piper from

Your line open. is

Jeffrey Harte

advantageous the as talk to up I'm the from with delever year-over-year, low through is I you of NIM deposits angle it lot, I Can of Street pricing can as turn time it. At and and you're capital having assuming these deposits. a economically seeing you to just kind thinking say, return away, State balance sheet to ever in remember And kind holding morning. it lets more good Hi, deposits balance of of some the stuff capital has of buy about back? the from deposits kind with XX% become point value bunch about the events, Fed swollen sheet, of a guess shareholders,

Eric W. Aboaf

to think Jeff it is the Eric. we have right Those navigate that -- as are I all questions through. we that bankers

in for to the particularly years Two, is expanded of year that needed carefully expand client open that we're Tier more binding effectively way view this balance rational And for which or common us. deposits. push a it we we're really position us kind around CCAR the this -- did of think something What's then of do. leverage sheet, us to FCB. the do the what and business to of around under around and an not probably we weighted was a to that in and position to now and constraint equity which away larger, ratio, have three, took deposits, while supplementary effectively for right position pleasing those was shift, a changed a of actually four spot a changed what's in position. in ratios the And that ratios, rules leverage, very in does last investment larger think And where important that it's has that actions any because such sheet. no it's adjusted wasn't probably matter, the Tier one leverage I over that us were though balance and we is the portfolio. that on didn't risk clients. in shifted. in as longer bank the I for is kind where us ago, we us put remember way is that's were put became both the XX% they it's longer And in I X that a But constraining is really asset our it X, XXXX

clients, to well. us You've you've us more lend this do continue seen that seen and to do our as year, that

way as that's the supports honest, system portfolio, and to the and expand be so clients as and to which returns that'll supports I right we financial lend the our earnings And we're in path it the investment come actually taking, back shareholders. think our

Ronald P. O’Hanley

would the complexity Jeff, activities. are deposits, of associated create custody most to which our that add many extent we clients we what is I push these of that these because operational we to for to our them get with away, deposits

And Eric separate did some XXXX, creating if complexity. you're operational those, noted hard back start we So mostly deposits XXXX, that of did too. those this be that year some when get us it for to in you we would to and

fact complexity and you our the for when, retain something our lack clients operational creates that rates, these might But do of or believe forever, willing even constraint, are that given and the see that do. to given that steepening approach. going -- like to be in increase given you a if of to the be curve useless it you'd optionality in be and fact it if So, we

Eric W. Aboaf

zero basis basis those at or Not the income XX Yeah, actually much current are one of deposits point as those approach because drives spread many point. priced effectively as on of and And there but to could expand some we be income shareholders. remunerating that be time, will of to line normalization that's honest, see rates, we'd over the to again. like, our

Jeffrey Harte

of soon whole to quick pre-COVID pressure as kind seen far versus a with as a everything we're just industry trend maybe you work and home of of but the and kind pricing because expect probably to any now year see do and you just ago? tell, picture or at up. kind environment do impact servicing Okay, have you or bigger see follow things facing even of changing kind consolidation in the versus It's the too of of

Ronald P. O’Hanley

I'm really to a I models. anything before, look operating and They that's those funds ability instances had put owners perspective. at trend on most roughly spotlight XXXX home asset visible example plan managers, from even the clients, operating had technology this investment taking at I asset of had that thinking think model. where sovereign point employees hard this of their XX was us working of have were the mean, are the a more has an we from wealth to we owner had if them is sponsors

look be based at models, to broad beneficial a us. there's operating think will which we So

ourselves believe you as You is need there can as grow know, and are operating them, back do still the be doing we much the these what models outsourcers that enterprise to What for office. we're and to that ultimately, going we taking that's as as on investment function to markets of as middle be it to positioning overhauled, we long front, will there. continue want for be strategically

Jeffrey Harte

you. thank Okay,

Operator

Your from from Vivek Morgan. line the next question of Juneja J.P. comes

open. is line Your

Vivek Juneja

Hi Eric and folks. you Ron, of for couple questions

where the [ph] dilution? accretion you've on growth achieved stand you've you you synergies run can give Can the you revenue as internal an good with Firstly, an that a you on give update had mentioned. update and on

Eric W. Aboaf

to run continue lines. we fact those along in Yeah, well

positive in by had have second effectively come would we have the end on said the the that turn think We synergies given accretion the I of that point, gotten to and year. side. both expense the that revenue

think in faster expense actually little than a came expected. synergies I the

came at as some of expenses in the been our lighter of in activity We historically little come in moved which the synergies stronger. from fee that sales quite the the have came State franchise in compression around a sold because of activities nicely. a synergies base, into Street have we've have come They've CRD from And the we little sponsored repo some that bit. I good But think some and had always company. a activity rates. the revenue

other significant the when activity. very of wealth of saw the and You some

where really think I our with So we pleased and we're has are hit milestones.

Vivek Juneja

on you a Eric, diminished. what that? you. further that, The have you shrinking one, couple last business, color for it's see you are spreads, it quarters Thanks quite of the of know, The Do repo spreads stabilizing, different shrunk any it couple on in shrinking, you've been a seeing or is reverse bit.

Eric W. Aboaf

the it something It that. know, billion, it repo XX assets, sponsor is that north XX small, to billion got billion, of business done. got of You we've started XXX

focused biggest are and rates. been seen front very suddenly We bills really had asset the spiky. more saw the back We've I during it's part kind to movements or of we're the balances the who now paper. early because in $XX T $XX right. now kind back managers attractive in T out tend down. We're at the billion sponsored those rates, rates to that And of spring one-month of in on Sometimes end think, normalization driver one-month billion. repo months has that were XXX overnight summer, range. billion through some, And, of and bills in we come Repo positions create changes

growth pushing on. and I that upside is into bit NII we're some our notwithstanding We central could back be a That a what I from that's some X here opportunity cash the of line the that comes think two. basis and And last but that of there. kind banks, month to our think of we're flood XX or And that's part. we're being forecast some -- see think us amount a area of they're gives the through we've seen over that to towards. factored the working of points

Vivek Juneja

for that, if what may more, most that and of at sneak in Eric, the Thanks securities done? recent you I one you've are purchases types

Eric W. Aboaf

on you think portfolio. investment Vivek, mean the I

Vivek Juneja

Yes, investments portfolio, gears shifted on you. I

Sorry.

Eric W. Aboaf

program I'm questions client sheet good okay the balance on ones. sheet with the balance off sponsor or questions. investment both portfolio They're

to On do the continued couple we've is things. a investment portfolio itself what we've of done

portfolios rotated mortgage securities MBS have our say, up types I'd expanded X gently MBS of would in But that we we've to securities. this in the first, the and of billion here think, at are space. billion I the backed so up X we be of billion X end quarter,

CMOs, opposed is continued commercial current just specified take what trying in little You'll that paper part a not filings see And in and we're expanded also the coupon. premium eventually the to of to up guaranteed cleaner we the to because MBS, at some as pools hunt put on risk. doing we've regulatory government in duration all more

the areas a some rotations the expansion. of of the supplemented of And there. we've some have some around triple-A an So then with then expansion been in been that bit sovereigns agencies that's of also and international little area foreign

Vivek Juneja

you. thank Greg,

Operator

Wells comes of line next from Fargo Your from Mike Mayo Securities. the question

Your line open. is

Michael Mayo

one were seems easy is one question, that Hi, period loans first, But right, a different? is kind I so of why what question. end tougher to little up, that, guess of be

Eric W. Aboaf

up client loans real were this was reduction XX% had period net indicative like Mike, more be factors, managers. about is there particular continued be end But to a slightly in we part they our amount in period we're growth think up by loans were important to that were basis. offsetting we end an continues of overdraft in slightly, of lending clients. capital just the I or year-over-year. co-financing to offset the that And for balances some of of was total up one two number up up on growth the but and the our lending our had environment in given We X%

Michael Mayo

costs year? have should how in said and XXXX, you next about Okay, cutting think anything we costs about

Eric W. Aboaf

guess I question. you to continue easy ask the

we for approach in costs for So year, given that drive to to environment down the And And outright X% were adjusted that's X%. given Mike, we've the do we continue guidance that we we've down. reduce But the year, been appropriate. year, next clear we'll economic like this acquisition think not we last costs January.

this to do new we some saw year, as and need especially So our our But in those reinvest plans that next we're cost through also year. and wins we to Because of we're is business in you for to implement drive continue of add the going business what savings. what have are working and gross that. what's to to is need do we the magnitude

some features, and then be product, we next But not expand funding. we forth into to Some invest resources. of particular, that to only that platform. year. to to in continue expect takes platform some to And continue the down take to but costs going want so of back this net-net, year, front is also which and And

Ronald P. O’Hanley

thing. the processes, very we've Mike, clear grab hanging what things a -- been I have low that this one you and done kind on is around driven they're mean, of that not productivity our automating is processes, would program a been sure, that fruit, at add reduction to that etcetera. some to ongoing there, transform improvement to tactical we're it, there's of sustained that of Much we've is -- manual of is I we and you it that. business. by realize of much But if

implementing -- about I So expect this this this you to and an mean, on ongoing be should us thinking is basis.

Michael Mayo

like a I question. phrase Jeopardy it that's maybe my question, to harder which OK, is a good segue will

improving you're I'm productivity, doing So what you're think, wrong, the answer, me is I correct automation. if and efficiency, is

the start You're under why revenue but And you're XX% total as the the and addressable guess why custody more and next with business is is are the really to question volume not year-over-year don't servicing pricing now fees pressure? the question up because the what your Ron said top were and You just keeping easing. extending in streams market were it up you revenues only the words, the see X%, XXX. and have part in focus, XX said on up other seeing these I expanding and to was the streams, you I the is, alternative with you therefore assets I guess at of go

that on to the some seeing it said final released Thanks. at in been but, has results are business You coming not margin, higher we're us? a

Ronald P. O’Hanley

business me being the own a that with the or here, an I also let operating doing, from work Mike, the companies being to just it. XX being new has fund what us. management sponsors addressable our plan that's done market, good the job traditional their available that meaning was I of fund custodian And mean, it's about no doing a a add challenges, we And Why years its the funds about that's think incremental compression, was to outsourcer an enterprise it XX, mean, on of also actual model. revenue to we're servicer just -- it. are price moving to it, and ago, that that secret isn't which stream fourth services not back expanding role just at although Go I element would all basically typical series is start created. traditional

new at countries. jurisdictions, Somebody they'd funds domestic new and move into might They would into asset have a like line other move classes.

distribution interested if seeing are in funds. saying, anyway. the more of as it's And -- anything you're one, number as down platforms two, estimates Now, go don't we many funds we're want

this trends So our strategic here. pivot just these is are that underlying

we're for we've pipeline we front even way this started kind as you're beginning and it now the that Alpha expanded to seeing that of revenue a Now, realized talking about be also of to while this the about to in talking takes wins. at XXXX back said, to you

you the should be as things the going in back talked overhauling start be on just wins, to in using, And past way showing management way about to be actual they going so because XXXX going we what things the these data, is we to up way with they work, invest, some actually it XXXX in see to tools expect they working the of employ Alpha they company will longer, earlier, to future are they're using. the and that actual that the I take early said quarters that the you're tools the not

the terms So I hope doing here. that's what of we're in why

Michael Mayo

so outsourcer, enterprise it that and outsourcing firms point to a for few years -- ago, to going? I my like Analyst, where to the when transfer you where revenues enough And because direction that what would firm the you're that’s our FinTech do enterprise what then percentage do was that's the hope get to, I custodian last at today, going besides of or coverage just an follow-up,

Michael Mayo

about conferences of strategy talk the into we get that it's a about and talk little upcoming mean, to I that. maybe some more, and our early will we'll

and to here. about a about percentage and it you're accurate a with do. should that We technology strategy. in also higher think But this content expect what really And your I haven't of is technology you I point much the we points software see your thought agree a be And higher driven that. would very

Michael Mayo

you. Thank

Ronald P. O’Hanley

Thanks, Mike.

Operator

question next the RBC. line from Your comes of Cassidy Gerard from

Your open. line is

Gerard Cassidy

you. morning, constrained CETX share badly ratio, us Good mentioned you it. Ron, with Eric, you the you Eric. Thank good morning about are in can

at even bring you You XX, do it's simultaneously, about thoughts low preferred you could XX.X%, how think stock comfortably high said that what's obviously too more in and down that redeeming above your XXXX XXXX? to too high then or

Eric W. Aboaf

this Maybe see and there. tackle round we kind there's the Yeah, really CCAR think to early reverse order next just in if to see little because Gerard, it's Eric. anything question through happens those preferred what not it's want to different a with intermediate tasks or of, of

we're an it. keeping we Perhaps couple. if we called to can. more the be that we've So, like We a do happy eye already on certainly fact

mind more some give one and is thought. certainly that think I we'll So always that in

CETX that's let's at to can. subject the capital work we here. through maturity we do for will fine. the much we're assume is to -- capital need We'll as of confidence where we're to that SCB given how obviously work how we limitations we help stay volatility well, of X% available on broader And to is have and can out that's that should Fed it indications. doing clearly requirement a doing get need But run the much sale. we we that above think as much bridge to we're back the lot maybe OCI. shareholders and just And that do in we, shows capital you X% kind the to working soon versus in The have topic put that for the SCB, ratios too clearly have I of frame

honest of denominator in right So have to weighted a in influence just little bit the we you book. risk expansion FX have and you RWAs to volatility, in RWA we asset ability get some get the then that be because of volatility, amount some

-- it that bankers basis So, it XXX as of to points want XXX to at need is you probably. least is volatility run conservatively. cushion We

kind I've that XX% I business. are No, think think said. high XX% really in too what of one of about because range want below, we we're those is wrestling volatility of seriously areas there of our kind through to is the is crossing you is in some

be in fine somewhere math capital a return somewhere we're to if running, I really But that where XX.X% tune a our that. XX% return, range, so to that to of get down is there's And to on substantial a to like somewhere shareholders. XX% at and that doing that to you for real And in do XX.X% you little because view the to the XX% we'd range amount XX% a run. we're release from work there's a to based way, got sizable we're running think

Gerard Cassidy

Absolutely, that positive. very would be

the guys should bit investment time. out also you way interest you you line certainly do for for, in could up, risk period is they situation side really so or the forward keep how this of mark-to-market a nobody's out into months XX indicators for What focused so do call environment I offside on, unexpectedly one Moving Clearly, we're from portfolio. rate of make was or that going back go and rates for securities you eye at and the up, to investment to an securities stay that the or on get now? brings of rates XXXX. change which, curious got risk there can that a manage a your rate low look to it go I really to X something three if so But planning end, you caught on boat, would on keep portfolio securities you for little curve guys all XXXX surprisingly where the doesn't just should two and an an situation at long be name of rate extended eye environment change the speak, started don't everybody's think that

Eric W. Aboaf

of there number we manage for we concerning part are what outcomes, of a right. the indicators do think downsides, but the I Gerard is

So what paper in is, thing rates. Same want we in with XX-year and you and portfolio move the are paper barbell to XX careful XX-year a don't big one-month paper. you paper get because three-month The between year hurts.

operate And the to a position just circumspect. where we're quite we series we'll it's limits be and not careful So your quite of we the an have average on about to careful across point and but that run curve duration curve. at, we

So management of and outright that's one, will kind of there's process we an that sort operate. places

we'll planning, of it's clear quite front Fed rates. about been another doing the They've there's inherent I've indicators, of. to that's battery indicator you're do their you a curve actually is say, all terms monetary around whether been that the theoretical and Fed's a of for we'll to about XX structure all policy kind battery you're solid clear about and of indications. they're ones. quite know long, they've tests, conscious marketplaces. stress we're amount is of plus clear years that. got running seeing then not thing then rates I I markets think of we've the and reliability ascribe and because lifting the end you've market how of in policy And about substitute what indications fair history. what a a in indications, think And And, And in then quite volatility clearly the steepening, there's to and the market no The those tests general some do always been good set of don't of the inflation the then about worried of the tests, got a got very targets curve,

So something is the think anyway, we're very careful line. bottom it's I on,

Gerard Cassidy

appreciate you, time. Thank the

Operator

next Brian Your line comes question of the Kleinhanzl from KBW. from

open. Your is line

Brian Kleinhanzl

from mean down the couple and is forward said first Mine first second question, thanks. just past of points percentage I quarter, quarter. Great, the quick and a couple so you clarification you there? when talking the a kind second NII quarter, stabilized on real the go quarter down you were then But of a of in the did fourth then couple in Eric, quarter percentage percentage another about Thanks. of down think a question, points points

Eric W. Aboaf

the good Good, quarter. from hard just a the are a Brian. of one the said think question we've first think headwinds it's through couple the really know there's think today what what or call given But down of and always half. I of trough. think XQ other. those market we small we indicators at It's we we sometime And one in shared, it's in first We working tailwinds the quarter two an quarters. it's inflection second point the -- points to to think assumptions or either step percentage you're kind and down, the because and we

Brian Kleinhanzl

Okay, thanks.

Operator

was over will turn Ron Thank O’Hanley. you. to our I That it now last question.

Ronald P. O’Hanley

Well, thanks on joining the for call to you all us.