Good day, and welcome to the first quarter 2022 Northern Trust earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mark Bette, Director of Investor Relations. Please go ahead, sir. Thank you, Jennifer. Good morning, everyone, and welcome to Northern Trust Corporation's first quarter 2022 earnings conference call. Joining me on our call this morning are Mike O'Grady, our Chairman and CEO, Jason Tyler, our Chief Financial Officer, Lauren Allnutt, our Controller, and Briar Rose from our investor relations team. Our first quarter earnings press release and financial trends report are both available on our website at northerntrust.com. Also on our website, you will find our quarterly earnings review presentation, which we will use to guide today's conference call. This April 26 call is being webcast live on northerntrust.com. The only authorized rebroadcast of this call is the replay that will be made available on our website through May 24. Northern Trust disclaims any continuing accuracy of the information provided in this call after today. Please refer to our safe harbor statement regarding forward-looking statements on page 11 of the accompanying presentation, which will apply to our commentary on this call. During today's question and answer session, please limit your initial query to one question and one related follow-up. This will allow us to move through the queue and enable as many people as possible the opportunity to ask questions as time permits. Thank you again for joining us today. Let me turn the call over to Mike O'Grady. Thank you, Mark. Let me join in welcoming you to our first quarter 2022 earnings call. I hope you and your families are healthy and well. Like so many around the world, we at Northern Trust are deeply concerned by the tragic events unfolding in Ukraine. Our hearts go out to the Ukrainian people. Northern Trust has made contributions to humanitarian relief efforts and has matched contributions from our employees to maximize our impact. While we have minimal direct exposure, the crisis brings unique challenges. The broad use of economic sanctions and market restrictions means that we, along with our peers and counterparties, have been called upon to play a role in implementing the world's response. The crisis has added to the uncertainty in the current environment, including volatile markets, supply chain constraints, and persistently high inflation. While we are navigating this challenging backdrop, our performance in the quarter generated a 9% increase in revenue compared to the prior year and a return on average common equity of 14.2%. Revenue growth reflected organic growth across each of our businesses, as well as the impact of rising interest rates. Compared to the prior year, our results generated approximately 2 points of positive fee operating leverage and 1 point of positive total operating leverage. We continue to have success executing on our growth strategies across each of our businesses while enhancing our foundational strength through advancements in our data and digital efforts. In our wealth management business, we are growing across each of our regions and our Global Family Office business. We continue to see strong levels of engagement and new business with both new and existing clients. Later this week, we will host our second annual virtual wealth planning symposium, which will bring together experts from across the country to share planning strategies and perspectives to support the needs and interests of our clients. The theme of this year's symposium, Wealth Redefined, builds on the Northern Trust Institute's 2022 wealth planning outlook, which examines how shifting values have given investors the resolve to pursue what matters most in our rapidly changing world. Within asset management, we saw strong year-over-year organic growth across key strategic areas of focus, including our FlexShares ETFs, which surpassed $22 billion in assets, up 13% for the quarter. We saw strong growth in funds that traditionally offer inflation protection, including our Global Natural Resources Fund. We've continued to expand our FlexShares ESG and climate funds with the recent announcement of the launch of a fund with exposure to emerging markets. This fund builds on our existing suite of climate ETFs, which currently includes U.S. large-cap equities, developed markets, and two fixed income funds. Our asset servicing business continues to drive organic growth across regions, products, and client segments. Our client focus and flexible global operating model continue to support our strategy and our pipeline remains strong. At the start of this year, we combined our corporate and institutional services team with our global services operational team, creating a single integrated business unit with operational expertise focused on serving the needs and providing solutions for our institutional clients around the world. With this change, our corporate and institutional services reporting segment has been renamed Asset Servicing. We recently released our 2021 philanthropic impact report, which highlights our commitments to our communities through charitable contributions and the many hours of volunteering from our staff. Our employees, the heart of Northern Trust, are extraordinarily talented and caring, and I commend their efforts in serving our clients and our communities. To close, we remain focused on our long-term priorities and investing wisely for future profitable growth to deliver long-term value to our various stakeholders. Now, let me turn the call to Jason to review our financial results in greater detail. Thank you, Mike. Let me join Mark and Mike in welcoming you to our first quarter 2022 earnings call. Let's dive into the financial results of the quarter starting on page 2. This morning, we reported first quarter net income of $389.3 million. Earnings per share were $1.77, and our return on average common equity was 14.2%. Results for the quarter included $18.5 million in reclassification of certain fees that were previously recorded in other operating income, or as a reduction to other operating expense that are now included in trust, investment, and other servicing fees. Of that amount, $6.9 million relates to fees previously recorded in other operating income, with $3.5 million now included in Asset Servicing trust fees within the other category and $3.4 million in Wealth Management trust fees. Additionally, $11.6 million that was previously recorded as a reduction to other operating expense is now included in Asset Servicing investment management fees. Prior period adjustments have not been reclassified, and these reclassifications resulted in no impact to pretax or net income. Let's move to page 3 and review the financial highlights of the quarter. Year-over-year, revenue is up 9% and expenses increased 8%. Net income was up 4%. In the sequential comparison, both revenue and expenses were up 3%, while net income was down 4%. The provision for credit losses was $2 million in the current quarter. Return on average common equity was 14.2% for the quarter, up from 13.7% a year ago and down from 14.5% in the prior quarter. Let's look at the results in greater detail, starting with revenue on page four. Trust, investment, and other servicing fees, representing the largest component of our revenue, totaled $1.2 billion and were up 10% from last year and up 5% sequentially. Foreign exchange trading income was $81 million in the quarter, up 3% year over year and up 5% sequentially. Both the year over year and sequential growth were driven by higher client volumes and market volatility. The remaining components of non-interest income totaled $88 million in the quarter, down 12% from one year ago and down 25% sequentially. Within this, security commissions and trading income was up 4% from the prior year and up 1% sequentially. Other operating income totaled $41 million and was down 25% from one year ago and down 43% sequentially. The decrease compared to the prior year was primarily driven by the previously referenced $6.9 million accounting reclassification. The sequential decrease was primarily due to gains from property sales in the prior quarter, the aforementioned accounting reclassification, and lower distributions from investments in community development projects. Net interest income, which I'll discuss in more detail later, was $388 million and was up 12% from one year ago and up 5% sequentially. Let's look at the components of our trust and investment fees on page five. Our newly named Asset Servicing business fees totaled $662 million and were up 7% year-over-year and up 6% sequentially. Custody and fund administration fees were $453 million and up 2% year-over-year and down 1% sequentially. The year-over-year growth was primarily driven by favorable markets and new business, partially offset by unfavorable currency translation and lower transaction volumes. The sequential decline was driven by lower transaction-based fees and unfavorable currency translation, partially offset by favorable markets and new business. Assets under custody and administration for Asset Servicing clients were $14.5 trillion at quarter end, up 5% year-over-year and down 4% sequentially. The year-over-year growth was primarily driven by favorable markets and new business, partially offset by unfavorable currency translation. The sequential decline was primarily attributable to unfavorable markets and currency translation. Investment management fees and asset servicing of $147 million were up 27% year-over-year and up 30% sequentially. The year-over-year performance was primarily driven by new business, the previously mentioned $11.6 million accounting reclassification, and favorable markets. Sequentially, the increase was primarily due to lower money market mutual fund fee waivers and the accounting reclassification. Fee waivers and asset servicing totaled $28 million in the first quarter compared to $51 million in the prior quarter and $28 million in the prior year quarter. Assets under management for asset servicing clients were $1.1 trillion, flat year-over-year and down 8% sequentially. The sequential decline was driven by market declines and client flows. Securities lending fees were $19 million, up 3% year-over-year and flat sequentially. Average collateral levels were flat year-over-year and down 4% sequentially. Other trust fees were $44 million, up 9% compared to the prior year and 24% sequentially. Both the prior year and sequential increases were due to the previously referenced $3.5 million in accounting reclassification. The sequential performance was also driven by higher seasonal benefit payment services fees. Moving to our wealth management business, trust, investment, and other servicing fees were $506 million and were up 14% compared to the prior year and up 4.4% from the prior quarter. Fee waivers in wealth management totaled $23 million in the quarter compared to $30 million in the prior quarter and $22 million in the prior year quarter. Within the regions, the year-over-year growth was driven by favorable markets and new business. For the sequential performance, the growth within the regions was primarily driven by favorable markets, lower fee waivers, and new business. Within Global Family Office, the year-over-year performance was driven by new business and favorable markets. The sequential increase is mainly related to new business and lower fee waivers. For both the regions and Global Family Office, the previously referenced $3.4 million in accounting reclassification also contributed to the year-over-year and sequential increases. Assets under management for wealth management clients were $396 billion at quarter end, up 11% year-over-year and down 5% on a sequential basis. The year-over-year growth was driven by client flows and favorable markets, while the sequential decline was driven by client flows and lower markets. Moving to page six. Net interest income was $388 million in the quarter and was up 12% from the prior year. Earning assets averaged $150 billion in the quarter, up 7% versus the prior year. Average deposits were $139 billion and were up 10% versus the prior year, while loan balances averaged $40 billion and were up 16% compared to the prior year. The net interest margin was 1.05% in the quarter and increased 5 basis points from a year ago, driven primarily by volumes and mix as well as higher interest rates. On a sequential quarter basis, net interest income grew 5%. Average earning assets grew 1% and average deposits grew 2%, while average loan balances were down 1%. The net interest margin increased six basis points sequentially, driven by primarily higher average interest rates. Turning to page seven. Expenses were $1.2 billion in the first quarter and were 8% higher than the prior year and up 3% from the prior quarter. The current quarter's expenses included the impact of the $11.6 million accounting reclassification, which increased other operating expense. The prior quarter included a $9.5 million charge related to severance and a pension settlement. Excluding these impacts, expenses were up 7% versus the prior year and up 3% sequentially. Excluding severance charges in the prior quarter, compensation expense was up 9% compared to the prior year and was up 12% sequentially. The year-over-year growth was primarily driven by higher incentives and salaries. The sequential increase is primarily due to higher equity-based incentives as well as higher salaries. The current quarter's equity incentives included $49 million in expense associated with retirement-eligible staff, compared to $32 million in the prior year. Employee benefits expense was up 1% compared to the prior year and was flat with the prior quarter, excluding last quarter's $3.4 million pension settlement charge. Outside services expense was $213 million and was up 9% from a year ago and down 5% from the prior quarter. Revenue and business volume expenses accounted for just over one half of the year-over-year growth. The remaining year-over-year growth reflected higher technical services and consulting expenses. The sequential decline was primarily driven by lower technical services, consulting, legal, and third-party advisor cost. Equipment and software expense of $194 million was up 10% from one year ago and down 1% sequentially. The year-over-year growth was primarily driven by higher software support, rental, and amortization costs. Occupancy expense of $51 million was up 1% from a year ago and down 1% sequentially. Other operating expense of $80 million was up 11% from one year ago and up 1% sequentially. The year-over-year increase was driven by the accounting reclassification, partially offset by lower miscellaneous expenses. The sequential performance was impacted by the accounting reclassification, partially offset by lower business promotion expense. Turning to page 8. Our capital ratios remain strong with our common equity tier ratio of 11.4% under the standardized approach, down from the prior quarter's 11.9%. Our Tier 1 leverage ratio was 6.5%, down from 6.9% in the prior quarter. An increase in net unrealized losses on the available-for-sale securities portfolio was a primary factor in this quarter's decline in capital ratios. During the quarter, we purchased 295,000 shares of common stock, totaling $34 million, and we declared cash dividends of $0.70 per share, totaling $147.8 million to common stockholders. The current environment continues to demonstrate the importance of a strong capital base and liquid balance sheet profile to support our clients' needs. We continue to provide our clients with the exceptional service and solution expertise they've come to expect from us. Our focus remains on balancing a variety of factors in the months ahead, with the prospect of continued higher interest rates benefiting our net interest income and inflationary pressures impacting our expense base. As our trust fees are impacted by both quarter lag and month lag markets, the negative markets in the first quarter will be more impactful for us in the second quarter. We continue to be relentlessly focused on strengthening our competitive positioning within each of our businesses, investing in our workforce and technology, all while delivering attractive returns. Thank you again for participating in Northern Trust first quarter earnings conference call today. Mike, Mark, Lauren, and I are happy to answer your questions. Jennifer, will you please open the line? Thank you. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Please limit yourself to one question and one follow-up question. Again, press star one to ask a question. Our first question today comes from Betsy Graseck with Morgan Stanley. Morning, Betsy. Hi, good morning. I guess I wanted to just unpack a little bit the outlook that we should be thinking about with regard to the 2022 expenses. I know that you have talked in the past about, you know, pressures on the business from inflation, et cetera, but, you know, this quarter came in really nicely. You know, it seemed like there was quite a bit of expense management going on. Just wanted to get a sense of how you're thinking through that. Yeah. Yeah, let me start with the biggest volatility maybe. I think we should give some comments on the compensation line, and then if it's helpful to touch on one or two others, I can. The biggest piece of the increase is obviously the retirement eligible equity incentives, which as you know, Betsy, it hits in first quarter. That was just about $30 million last year, but it was around $50 million this year. That increase is driven by higher levels of grants reflecting stronger relative 2021 performance, but also the changes in retirement eligibility of staff actually receiving those grants. That's an important distinction. If you take out that $50 million seasonal increase, that would imply that our comp run rate is flat from fourth quarter, but there are some important puts and takes in there. First, salaries were actually up $5 million-$10 million, and that's combination of some of the strategic hiring and the plan that we described to address the labor environment through some targeted off-cycle base pay adjustments. Secondly, that amount was offset by lower severance currency translation and some other small items that were favorable in this quarter. If you look forward on the comp line, I'll give you three nuggets. One is we know that annual base pay adjustments are gonna be up $20 million. That hits in second quarter instead of a more typical run rate for us, which is about half that level. Two, we're still gonna be doing some projected hiring and some other adjustments, and that could cause an incremental $5 million-$10 million lift next quarter. Then lastly, just a reminder that as pre-tax income changes, our underlying incentive levels are impacted. That's important to keep in mind just because of the potential increase in rates, and that could have a meaningful impact on pre-tax and drive that line. Hopefully that's helpful on the comp line, which I think had the biggest volatility. Got it. Okay. No, that's great. Thank you. Then just follow-up question on how we should be thinking about buybacks for the rest of the year. You know, we've got some market volatility obviously impacting AOCI. Just thinking about whether or not as you, as you're planning through the rest of this year, does AOCI matter? You know, obviously have still a very strong CET1 and TC to TA. So maybe the answer is no. Given the back end rates already Q2 to date, it looks like we're gonna have another slug of this AOCI hit in 2Q. How should we think through those dynamics? Yeah, you're exactly right. Even, you know, we're 25 days or whatever into the quarter, and, you know, we're already close to, you know, we're three hundred and fifty million dollars plus in impact to AOCI for second quarter. You know, we've got to, we obviously have to keep line of sight on that. Now, that said, you're also right. You know, first of all, we absorbed the AOCI hit in first quarter pretty well. CET1 capital, you know, was down just, you know, about 6%. The CET1 ratio stayed, you know, well into the elevens, at 11.4. We absorbed it well. You know that we're gonna keep an eye on what we look like relative to peers in terms of capital and what happens with AOCI. It's a big lever, and the quickest thing we can do to address that is making sure that we're prudent about how we think about buybacks, and that's one of the big pillars we look at as we think about capital actions. Okay, just to make sure, when you said you were $350 million plus, are you saying that if you had to close the books today, your AOCI hit would be $350 million more than it was last quarter? Is that what you mean? Or less than? I'm sorry. Thanks for clarifying. Another $350 million, and it's actually $367 million. Okay. Hit to capital. Just you've seen. Right. You know, obviously, yeah. Incrementally. That's where you would be today. Based on what the yield curve is. That's right. That's what it's based on what the yield curve has done just this, you know, just so far this year. That's actually as of last Friday, for what it's worth. Got it. Okay. Thank you. Sure. Thanks, Betsy. Our next question comes from Alex Blostein with Goldman Sachs. Morning, Alex. Hey, good morning, Jason. Hey, Mike. Hope you guys are well. Obviously, lots of discussions around the trajectory of balance sheets in this rapidly changing market backdrop with interest rates picking up in QT. Relative to last cycle, it looks like Northern's balance sheet has increased materially more than it did in the last cycle. In last cycle, deposits overall have actually hung in relatively well compared to the rest of the industry. Maybe help us think through the latest thinking on both the mix of interest-bearing to non-interest-bearing deposits and kinda how that's gonna evolve to your best kinda crystal ball capabilities. Then ultimately, the overall size of the balance sheet, how you expect that to evolve with QT. Sure. Well, you know, on mix of the deposit and interest-bearing, non-interest-bearing, I think the more important factor there is do we hold on to the operational deposits in the wealth space? That's a big driver of value overall, the way we think about it. So far, we have not seen cash. We haven't seen deposits moving off the balance sheet. However, we have to anticipate that that's gonna come at some point, given, you know, Fed actions and also just a rising yield curve where clients think about what their options are, laddering out, taking some duration. So that's super important for us. We're gonna wanna maintain those high-quality deposits. There's another group that's more on the, you know, the Asset Servicing or institutional side. Even within there's some very high quality core deposits, but some of the more sophisticated clients will move those dollars around. That's just unpredictable. What we have seen so far that has created more movement that's been meaningful is out of the money market funds. Already we've seen, and you can track this on our website and in the industry, you've already seen clients in general in the industry moving out of money funds, and whether they're moving into ultra-short or other little bit longer duration product or whether they're moving into more risk assets is difficult to tell. So that's a little bit on mix. On size, if you go back pre-crisis, the balance sheet, you know, the deposit level was like $80-$85 billion. You look where it is on average now, much higher. You know, I think we have to predict it's gonna come down some, but things are just different at this point, and we anticipate that the balance sheet's gonna hold in at closer to these levels and not give up dramatically what we saw pre-crisis. Got it. That's helpful. I guess following up, along the same lines, you know, kind of reading between the lines, your comments around wanting to hold on to some of these core deposits, any thoughts around deposit betas and maybe how they may be similar or different versus what we saw in the last cycle? Yeah. You know, it for us, it compared to last cycle, when everyone was anticipating a move at a time and no one could really predict, are we gonna end it at 1% or 1.5%? Every move seemed like you wanted to make sure you were handling betas the right way because it might be the last move. In this instance, we know that we're gonna get rates moving a lot. I think that's something to think about differently strategically. We wanna make sure, again, we hold on to deposits with our good clients, particularly knowing that it's gonna take a while before the Fed is done with these actions. You know, already. You saw we had very good results in terms of raising net interest margin, even given the fact that the Fed didn't move until very late in the quarter. That said, our bias is gonna be hold on to client activity and hold on to client assets, particularly given the fact we think it's gonna take a long time before things level out and the yield curve has reflected all the Fed actions that they're contemplating. Great. Thanks. Thanks, Alex. Our next question will come from Ken Usdin with Jefferies. Morning, Ken. Hey, thanks, Jason. Good morning, guys. To follow up on the NII discussion, last quarter, you gave us a rule of thumb on how much each hike would give you, both in terms of a gross basis and then how the deposit costs would act. I was just wondering if you might be able to update us just given that so much has changed, if that's still a net $35 million for each 25. You know, any general thoughts on how you'd expect NII to trajectory from here, given Alex's points and just the magnitude of hikes that are now expected. Thanks. Sure. Well, let me answer your question directly, then I'll give you some broader thoughts that you asked for. First of all, the $35 million, we did say that was the first hike. On a run rate basis, that played through well. The good news is that, you know, even with that contemplated just the short end, the very short end of the curve moving up. The overall yield curve has moved up. It's not as helpful, but you'll get more lift as we get benefit from reinvesting. Let me use that as a transition to your other question, 'cause you're right, NII is certainly on a sharp trajectory. The eventual outcome is likely very dependent on the pace of change and again, what the shape of the yield curve looks like. Instead of giving an overall rule of thumb, let me give you some of the key sensitivities so you can sharpen your estimates as the key factors develop. Three big buckets on earning assets. One, on cash. The key item to remember is only 60% of those assets are in U.S. dollars. Sometimes people forget that, and I think that's important to remember. Two, securities portfolio. A higher percentage are in U.S. dollars, but only 30% resets in 90 days or less. Just over $1 billion of the long-term securities are getting reinvested per quarter. We're currently experiencing about 85 basis points of reinvestment benefit on that reinvestment tranche. That translates to just over $2 million in lift quarterly for the long-term portfolio. Then third, loans. Virtually all of that is USD, and about three-quarters is tied to short-term floating rate indices. I gave you some comments on the liability side, but that breaks down earning assets in the three categories. Hopefully that's helpful in thinking through the math as different things happen across the yield curve. Yeah, very much so. Thank you. Just a follow-up in terms of asset mix and growth, just on the prior questions about capital. You know, the period-end loans and securities were both down. Is that just a function of the deposits or, you know, is the change in capital causing you to change anything in regards to where you wanna see asset growth or securities portfolio duration, et cetera? Yeah, no. Headline is no change in philosophy. The way the balance sheet works from. You know, once the deposits come in and size the balance sheet, the first determination is where do we need to hold cash across different central banks for various activities. Then the second is what is loan demand. The third is, therefore, what do we do with the securities portfolio. The loan demand is what really drives effectively in this environment the size of the securities portfolio. You did see in this quarter what looks like a bigger move between cash and the securities portfolio, but it's not. That's not strategic. Some of the investments we make are more just classified. It's more the classification in that three category bucket between cash and securities, but there's nothing happening strategically there. Okay, thanks a lot. Sure. Our next question comes from Brennan Hawken with UBS. Thank you. Good morning. This is Adam Beatty in for Brennan. Hi. H i, Adam. Just wanted to drill in a little bit, basically following on the discussion that we were just having around central bank deposits and kind of a need, you know, across different geographies to have those in place. You know, kind of what's been driving that, and then what's the outlook, particularly on the non-U.S. front in terms of, you know, potential interest rate increases. Thank you. Sure. It's driven by, well, largely just the activity in predominantly the Asset Servicing business. As we bring in deposits that are non-USD denominated, we need to keep cash and liquidity on hand for matching purposes, and then we might even have agreements with different central banks to make sure that we've got funds on deposit in those institutions. The headline is it's driven vastly by the mix of international business on the Asset Servicing side. Does that change rapidly? Can that, you know, sort of reverse in your experience? No, it doesn't. It doesn't have. Okay. significant changes over time. Yeah. Great. Then if I could, I'd just like to drill into the loans and particularly the yield on the loans. You know, you kind of alluded to the rates, you know, supporting that. I was wondering if there was any change in the mix of the loan book that also contributed to the increased yield. Thank you. Sure. No, nothing to note. I mean, you know, you have seen over time, you know, the, you know, some of the, you know, more of the residential portfolio coming down, but overall mix is relatively stable over time. Nothing that would have a meaningful impact on the net yield of the loan portfolio. Got it. Thank you. Appreciate that. Sure. Our next question comes from Gerard Cassidy with RBC. Morning, Gerard. Hi. Jason, can you give us kind of a rule of thumb? Obviously, your assets under management and custody are skewed to equities. Can you share with us, is it primarily domestic U.S. equities that is comprised in that number? Second, is there any a 10% increase or decrease in equity values leads to an X% or X% decrease or increase in revenues in asset servicing? Sure. Mark, you wanna take this? Hi, Gerard, it's Mark. You know, when you're looking at the investment management fees themselves, it's probably a pretty good balance between both. We look at EAFE local and S&P 500 just as guidelines. EAFE local, just because that removes the currency mix out of it. When we do look at the equity market sensitivity just based on the asset allocation, you know, a little bit more than a third of the Asset Servicing Investment Management fees are equity market sensitive. Those are, you know, those do happen both on a quarter lag as well as a month lag. If you move up to the Asset Servicing custody and fund administration category of fees, you know, we said before, about 40% of those fees are not asset sensitive. They're based on transaction volumes or fixed fees or fund level fees. The remaining 60%, though, there is equity sensitivity there. That too is quarter lag and month lag. If you looked at that line overall, the custody and fund administration line, I think $453 million in fees, about 27% of that would be equity sensitive just based on how the current allocations are. Very good. Thank you for those insights. Just as a follow-up question, obviously with the short-term interest rates moving higher, your money market mutual fund fee waivers will eventually go away. Should they end if the Fed raises rates in May by 50 basis points, will they be eliminated by the end of the second quarter? Or what's the schedule there? Ironically, we should split the waivers into two categories at this point. You know, one is what are waivers that came as a result of interest rates forcing yields below stated fees. That first hike in mid-March eliminated it absolutely eliminated those fees, the waivers. Conversely, the business has decided to keep some waivers in place some fee waivers in place for strategic reasons. That's adding up. They won't do that perpetually, but at least for the time being, they think that that's important strategically. Again, in the spirit of keep client assets and make sure that we're attractive relative to our peers. That currently is on a run rate of $10 million-$15 million a quarter. That will persist, but again, not perpetually. Very good. Thank you. Sure. We'll hear next from Jim Mitchell with Seaport Global. Hi, Jim. Hey, good morning. Hey. Can you just maybe give us a sense of where you are, duration-wise in the securities portfolio as well as the balance sheet overall? Did it change at all? Did you shorten up or just where we are on that front? Sure. Right now we're at, you know, about 2.7. You know, we were, I'd say, at the upper end of a range that we feel comfortable in. If there's any bias, it might be a little bit down. Again, the team looks very opportunistically at what's available in the marketplace and where we see good value. Right now, ticked up to about 2.7, just under that. Overall, the balance sheet is. The overall asset duration is 1.1. Right. Okay, that's helpful. Just maybe a follow-up on the custody and fund administration fees. How much on a quarter-over-quarter basis was the FX impact versus the volume impact? Because you as you noted, you got a little bit of lift from the markets. Just trying to get a sense of those two other impacts and the magnitude. You were looking on a sequential basis? Yeah, sequentially. The currency was, you know, not a lot. It was a drag of, you know, call it, you know, a little under half a point. Right. Right. The transaction activity, that's where there was more of a drag than from the currencies on a sequential basis, Jim. Is that just seasonal or do you think that persists? I mean, obviously, a year ago was pretty active. Yeah. We actually have seen sequentially for a few quarters now, the transaction type of fees kind of declining. It's actually been something that we've seen for the last three quarters, I believe. It's hard to say, you know, if that persists or not. We'll have to see. Certainly there's been some pickup in at least what you would think is market activity in the last month or so. We'll have to see how that plays through. Right. Okay, great. Thanks for taking my questions. Sure. Our next question comes from Mike Mayo with Wells Fargo Securities. Hi, Mike. If you could talk. Hey, good morning. If you could talk more about this internal restructuring that formed the new Asset Servicing segment. I assume that's to increase, you know, wallet share and market share with your institutional clients, if you could verify that. Also just by ZIP code, if you don't have the exact number, what kind of share do you have with these institutional clients now, and this restructuring will kind of get you to what kind of targeted market share or something in the ballpark? Do you have 2% share looking to 4% or 5% going to 10%? Is my premise correct as to why you restructured? Mike, it's Mike. The primary reason for integrating those two parts of our company are to be more aligned with the clients and being able to provide better service for them. We really are trying to integrate everything from you know the front aspect of our business, the client servicing part of it through operations. Just the scale of our Asset Servicing business now is such that it made sense to integrate those parts of the business. That's the overall aspect of it or I should say objective is better client service. I think that there are added benefits to it as well, certainly from an efficiency perspective, being more aligned. To your point, if we are effective in doing that, should it increase our wallet share? You know, absolutely over time. I would think about wallet share, you know, a little bit differently in the sense that that can vary based on the type of client that we have. Just a little bit of context there. If you think about asset owner clients, you know, maybe start with a corporation that has a defined benefit plan and a defined contribution plan. You know, we may be the Asset Servicing provider to one or hopefully both of those. By providing better service, if it's only one, you're absolutely right, the objective is to be able to do for both, and we have examples of that in this, you know, recent quarter. On the asset manager side, there again, it's gonna depend on the asset manager. If you think of the largest asset managers in the marketplace, we are an Asset Servicing provider to them. To your point on wallet share, it may be a minority proportion of their overall business on that front. Given the magnitude of the size of the client, it still can be a very attractive client for us. The reason why that works that way for those largest asset managers is one, just the sheer magnitude of what they're doing and the needs they have. They wanna have diversification of providers. You've certainly seen that in the marketplace. Also, they have many more different fund types. They're in more geographies. You know, they look to have, you know, best in breed, if you will, depending on the fund and the location and other factors. Now that said, as you look at other large asset managers that are not the largest, you know, but say, you know, $50 billion-$100 billion in assets under management, you know, there we're looking to have, you know, I'm gonna call it, you know, 100% market share. But, you know, essentially, we're looking to do everything from them, front office through middle office, you know, and including back office or custody. In those cases, it's critical since we're their operational partner there, that we're able to provide seamless service for them. This integration between the C&IS business group that we had and global services into one unit enables us to do that better. A side benefit, efficiency savings or not? Is it really about the customer and share? Definitely about the customer. First, you know, my belief, Mike, is that we will get efficiencies over time. Just to be clear, when we put these together, and you can see in our, you know, results here, it did not involve a reduction in force or a charge or anything like that. That's because, you know, we're looking at it to make the business stronger and provide better service, not to try to, you know, cut parts of the, you know, the operations out. Thank you. Sure. Our next question comes from Rob Wildhack with Autonomous Research. Good morning, guys. Hey, Rob. Wondering if you could stick with fee revenues a little bit more and just talk about the organic growth trends both in the quarter and as you see them for the rest of the year in Asset Servicing and in Wealth. Sure. Let's start on Asset Servicing. You know, first of all, even though you saw not as strong of a lift relative to prior periods, we did have positive new business in the period. If I kind of do a further double click into what we talked about earlier, new business was slightly positive. I'm just talking sequentially. Market impact was a little bit of a lift. To Mark Bette's point, transaction volumes, just that was a big drag. As we look forward, we do see good unfunded business, and the pipeline there is strong. It's above average for the business. The near term looks positive. Then you look a little bit further out, you know, it's not as clear, but the activity seems fine there as well. If I switch down to wealth management, you'll see that the GFO business really stood out, and, you know, I'll unpack that a little bit if it's helpful. You know, we saw just again, sequentially, a meaningful increase there of about $10 million-$11 million. $5 million of that was from waivers, but another $5 million of that increase came from higher average balances in, particularly in, the money market mutual fund space. The reason that I call out the money market mutual fund space is that's another area where coming in at the end of the year, balances were quite high. Because they're in funds and those are daily charged fees, we got a benefit of those funds sticking around the first couple of months of the quarter. As we look into second quarter, the launch point is a little bit lower. Just $2 million, but it's just something that's noteworthy. Overall, you do see the family office business is doing well, and it's just underlying good client activity. Some of our strongest, largest clients choosing to do more with us. Then if you look at the regions, a similar story overall, just not as large in terms of movements, but positive from a net new business and flows perspective. Waivers helped there a little bit, and markets helped, and then the accounting change shows up a little bit as well. Part of what you're seeing there in the regions not doing well, day count had an impact in the regions of $ a few million, so they had to offset that coming from fourth to first quarter. Again, strong, particularly in the family office business. Okay. Maybe just to follow up on that, you know, I think there's been some commentary and maybe an uptick in competitive intensity in the ultra-high-net-worth space. Maybe you could comment just broadly on the competitive intensity you're seeing in wealth generally, but especially in that ultra-high-net-worth or GFO type segment. Mike, you wanna start? Sure. You're absolutely right. I mean, it's a high level of competition. That's, you know, what we look to differentiate ourselves from. As you heard in some of my opening comments there, you know, we really try to differentiate based on the advice that we provide, the expertise that we have, and then certainly the services and the performance that go around that. Candidly, you know, the numbers are demonstrating that that does make a difference. If I step back a little bit and just look at the environment we've been in for the last couple of years, you know, it's been a strong environment, a healthy environment for wealth creation, and particularly for that segment of the market. It's a time period where you've seen a high level of sales of family businesses, given the demand for that, the high valuations, you know, concerns over changes in tax laws. High level of activity, and then I think we're well-positioned for that. Not only do we have relationships with families over time, but also we have very strong relationships with what we consider centers of influence. Think about attorneys and bankers, investment bankers that work with these families that we've been working with for long periods of time as well. A good portion of our new business comes from those relationships as well. It's been a good environment. We think we provide a differentiated proposition, you know, to those clients and prospects. It's a competitive environment, but one that, again, we think that we stand out favorably. That's really helpful. Thank you both. Sure. Our next question comes from Vivek Juneja with J.P. Morgan. Hi. Thanks for taking my questions. A couple. Firstly, what's your expectation for deposit betas on operational versus non-operational deposits as you look out over the, you know, first 100 basis points and then the next 100 basis points, given that we may have a lot more rate hikes this time? If you can parse that into the operational versus non-operational. I don't know if we'd want to, you know, to try and cut it that finely. You know, as you can imagine, there are some clients where portion of the deposits are, you know, crossover categories. You know, I think for us, it's just looking at what does the market give us. We're not a price maker in the deposit side. This is very much working with clients and thinking about the relationship holistically. There are oftentimes with large holistic relationships where thinking about deposit pricing can be something that's part of the overall narrative and pricing around the relationship. Difficult to make high-level comments about what our expectations are there. Yeah. Okay. Different topic. You gave outlook for comp expenses. Any update on the non-expense lines, Jason? On the non-comp expense lines, do you mean, Vivek? That's right, Jason. Yeah. I can give a couple comments on I think you know the big ones, equipment, software, and outside services. You know, on outside services, you know, that came in lower than it was in fourth quarter. Big drivers there, consulting and legal, but a lot of those consulting costs were lower. You know, some of those matters matured more quickly, but we may still get back to that fourth quarter run rate, but more like the end of the year. It's hard to say at this point, but we have been able to get some of those more consulting-related projects down. Then also technology services costs were down despite the fact that market data costs were up because of good business activity. I think that's notable. on equipment and software. That's relatively flat from fourth quarter. If we look at that sequential period, no significant headlines. It's more driven by the timing of some of our anticipated spending. However, I will say that over the remainder of the year, we can see depreciation coming in, and that's gonna start to hit. We can see that from what's now already in the pipeline, and that could accelerate, and it could be another $5 million a quarter starting in second quarter for the remainder of the year. All right. Thank you. Sure. Our next question comes from Dane Stephan with Evercore ISI. Morning, Dean. Hey, guys. Good morning. This is Dean on for Glenn. I just had a quick question around T+1. You know, it looks like the SEC is looking to implement T+1 by the end of next year. Wondering if we could just get your thoughts on why this move might be harder versus prior settlement reductions. Any estimates around how much time and money it'll cost you guys to get there? Then, I guess, just broadly, the positives and the negatives of shortening the settlement cycle. Thanks. Sure. You know, a relatively technical question there and, you know, we can follow up, I'll say, with the experts on some aspects of it. What I would say is, you know, we've been moving, and I think the industry as well, for some time period to shorter and shorter settlement times. That has actually, I think, been very beneficial to the industry, you know, to our clients. I view this as a continuation of that. Now, where it ultimately ends as far as settlement, you know, don't know exactly. As you know, that it cuts across different markets and different types of securities. From a client service perspective and what we offer, you know, we've tried for some time period to be able to provide real-time information. Even if the settlement may occur at T+1 or T+2, you know, we have the ability to do it on a settlement basis, but then also the ability to do it on a real-time basis in some circumstances, or at least a T+0 basis. That's been the movement for some time period. You're right, it absolutely requires investment in technology, changes in processes and controls to be able to do that. The direction of traffic has been that way for some time period, and we think that will continue. Got it. That's all for me. Thanks. Thanks, Dean. That does conclude our question and answer session and concludes today's call. Thank you for your participation. You may now disconnect.