Good day, and welcome to the Northern Trust Corporation Third Quarter 2023 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jennifer Childe, Director of Investor Relations. Please go ahead, ma'am. Thank you, Melissa, and good morning, everyone, and welcome to Northern Trust Corporation's Third Quarter 2023 Earnings Conference Call. Joining me on our call this morning is Mike O'Grady, our Chairman and CEO, Jason Tyler, our Chief Financial Officer, Lauren Allnutt, our Controller, and Grace Higgins from our Investor Relations team. Our third 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 October eighteenth 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 November eighteenth. 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 12 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, Jennifer. Let me join in welcoming you to our third quarter 2023 earnings call. Our results for the third quarter reflect solid execution against the challenging phase of this interest rate cycle, particularly as rates appear close to be peaking. Third quarter deposit levels were generally in line with seasonal expectations, but funding costs were significantly higher, putting pressure on net interest income. We're focusing primarily on those areas of the business that are most under our control, namely, trust fees and expenses. In those two areas, we're pleased with our performance. Trust fee revenue was up both sequentially and year-over-year. Expenses were well controlled, and we improved our capital position. Our wealth management business grew trust fees on both a sequential and year-over-year basis. We saw ongoing strength in the higher wealth tiers and within our global family office segment, where momentum outside the U.S. continues to be brisk. Families with large and complex trust structures continued to be an area where we excel. Activity with business owners also remains robust. Helping them optimize their complex personal affairs while they attend to growing their businesses is a consistent theme. We're also seeing early success with various new marketing approaches and referral sources. In particular, during the third quarter, we had healthy new business generation with clients with assets over $50 million. In asset management, we saw positive flows into our institutional money market platform for the third consecutive quarter. Relative to benchmarks, our tax-advantaged equity product performance remained strong within the quarter, cementing its 1-, 3-, and 5-year track record of outperformance. Importantly, two recent large asset servicing wins contain asset management mandates for index fixed income and outsourced investment solutions, reinforcing our combined strength as one Northern. Within asset servicing, we had good momentum in core custody and fund administration, and our pipeline remains solidly within historical levels. Our Front Office Solutions is resonating particularly well across regions and different client types. One notable first Front Office Solutions win in the third quarter was the $32 billion Abu Dhabi Pension Fund. Our ability to provide a comprehensive view across public and private assets was cited as a key differentiator. Importantly, we were also selected to provide global custody, liquidity management, performance and risk analytics, and portfolio optimization. We also had good success in the U.S. asset owner space, where we continued to take share. In closing, we enter the fourth quarter on solid footing. Our balance sheet continues to be very strong, with ample capital and liquidity, and our credit quality remains excellent. New business momentum is healthy, and our pipeline is robust. Expense growth has declined each quarter this year, and I'm confident it will continue to build on this discipline. We're well positioned to navigate the current uncertain environment, including the proposed regulatory changes related to capital and long-term debt, and generate value for our stakeholders. I'll now turn the call over to Jason. Thank you, Mike, and let me join Jennifer and Mike in welcoming you to our third quarter 2023 earnings call. Let's dive into the financial results of the quarter, starting on page 4. This morning, we reported third quarter net income of $328 million, earnings per share of $1.49, and our return on average common equity was 11.6%. Our assets under custody administration and assets under management were down modestly on a sequential basis, but up sharply on a year-over-year basis. Unfavorable markets and currency movements more than offset positive asset inflows relative to the prior period. Year-over-year levels benefited from favorable markets, currency improvements, and asset inflows. On a year-over-year basis, currency movements had an approximate 90 basis point favorable impact on revenue growth, largely within our asset servicing division, and a 100 basis point unfavorable impact on expenses. On a sequential basis, currency impacts were immaterial. Excluding notable items in all periods, revenue is down 2% on both a sequential quarter and year-over-year basis. Expenses were up 1% sequentially and up 5% over the prior year. This reflects an expense-to-trust fee ratio of 115%, down from 116% in the second quarter, but higher than the 112% we posted in the third quarter of last year. Pre-tax income was up 1% sequentially, but down 20% over the prior year. Trust, investment, and other servicing fees, representing the largest component of our revenue, totaled $1.1 billion, a 1% sequential increase and a 3% increase compared to last year. All other non-interest income was up 6% sequentially, but down 3% over the prior year. Net interest income on an FTE basis was $469 million, down 10% sequentially and down 11% from a year ago. Our provision for credit losses was $14 million in the third quarter. Overall, our credit quality remains very strong. We had small net recoveries for the quarter, and there was a modest increase in non-performing loans. Turning to our asset servicing results on page 5. Assets under custody and administration for asset servicing clients were $13.2 trillion at quarter end, down 2% sequentially, but up 10% year-over-year. Asset servicing fees totaled $626 million. Custody and fund administration fees, the largest component of fees in the business, were $428 million. Sequential performance reflects favorable markets and new business activity, offset by weaker transaction volume. The year-over-year strength was due to solid new business activity and favorable market and currency impacts that were partially offset by lower transaction volume. Assets under management for asset servicing clients were $963 billion, down 3% sequentially, but up 10% year-over-year. Similarly, because a significant portion of our fees are billed on a lagged basis, the sequential decline in AUM will impact our fourth quarter trust fees. Investment management fees within asset servicing were $137 million. Moving to our wealth management business on page six. Assets under management for our wealth management clients were $370 billion. Trust, administration, and other servicing fees for wealth management clients were $486 million. Our average balance sheet decreased 4% on a linked-quarter basis, primarily due to lower client deposits. Client liquidity was essentially flat during the third quarter. Average deposits were $102 billion, down $4 billion or 4% sequentially, in line with our expectations for this seasonally weaker quarter. The decline was seen largely in the interest-bearing channel as clients continued to reallocate cash positions. Non-interest-bearing deposits remained stable, down less than $1 billion sequentially, and the mix held steady at 17%. At quarter end, operational deposits remained at approximately two-thirds of institutional deposits, and institutional deposits comprised 75%-80% of the total mix. Shifting to the asset side of the balance sheet, the duration of the securities portfolio reduced slightly to 1.9 years. The total balance sheet duration continues to be less than a year. Loan balances averaged $42 billion and were flat sequentially. Our loan portfolio is well-diversified across geographies, operating segments, and loan types. Approximately 70% of the loan portfolio is floating, and the overall duration is below 1 year. Our liquidity remains strong. Cash held at the Fed and other central banks was down, reflecting the absorption of the deposit decreases, but highly liquid assets comprise more than 55% of our deposits and nearly 50% of total earning assets. Net interest income on an FTE basis was $469 million for the quarter, down 10% sequentially and down 11% from the prior year. NII reflected the impact of several dynamics. We saw some continued client migration into higher-yielding cash alternatives, but the pace moderated as we expected. Deposit cost increases were a slightly bigger factor, with funding costs up 46 basis points over the second quarter. Due to the competitive environment, we repriced a small number of meaningful products to ensure we're protecting deposit volumes. We're not price leaders, but we're vigorously defending our deposits with an eye toward playing the long game. We expect to benefit from this strategy when rates decline. Client engagement also led to a combination of specific repricing on existing accounts and a shift to higher-paying term deposits. There's no question that clients want to remain on our balance sheet, but sensing that the rate cycle is close to peaking, they've begun to stretch for duration. Our NII in the fourth quarter will continue to be driven by client behavior, which has been less predictable given the speed and extent of this cycle's rate hikes. Our average client deposits thus far in the quarter are $100 billion. Modest outflows are expected to continue, due in part to client efforts to optimize returns and to some known outflows related to M&A activity and other corporate needs. Pricing should remain under pressure with further NIM compression possible. We currently expect fourth quarter NII to be in the range of $430 million to $440 million. Factors that could swing the outcome include the pace of further deposit outflows, the level of price pressure, the extent to which we see, we continue to see deposit mix shift, and the offsetting impact from the repricing of the securities portfolio. As we look out to 2024, there are a wide range of scenarios under which net interest income could trend. Deposit pricing pressure, our securities maturity schedule, investment outlook, and other factors provide upside that's not reflected in the current quarter. Turning to page 8. As reported, non-interest expenses were $1.3 billion in the third quarter, down 4% sequentially, but up 4% as compared to the prior year. Excluding unusual items in both periods, including those noted on the slide, expenses in the third quarter were up 1% sequentially and up over 5% year-over-year. I'll hit on just a few highlights. Excluding unusual items, compensation expense was down 2% sequentially. This reflected reductions in incentive compensation and headcount actions taken year to date. The increase over the last year reflects 2023 base pay adjustments. Excluding unusual items in all periods, non-compensation expense was up 3% sequentially. Our expense to trust fee ratio improved 100 basis points sequentially to 115%, but remains higher than our targeted range of 105%-110%. As a reminder, we began the year expecting to take at least 200 basis points off of our 2022 adjusted expense growth rate of 9%. Our first quarter adjusted results were meaningfully better, up 5.8% year over year. Our second quarter adjusted results were even better, up 5.3% year over year. Our third quarter results were in the same range, despite unfavorable currency impacts. For the fourth quarter, we expect continued improvement. Compensation expense is expected to be up $5 million. Benefits expense should be our normal fourth quarter lift of $3 million to $5 million. Outside services likely to be up approximately $10 million. Equipment and software should be up approximately $10 million relative to adjusted third quarter levels. Occupancy is expected to increase $a few million above adjusted third quarter levels. Other operating expense has many components, including market-driven categories that are not predictable, but it has tended to increase in the fourth quarter. All in, this should put our full year adjusted expense growth rate at approximately 5%, or roughly 400 basis points lower than 2022 levels. Our financial model is based upon mid-single digit trust fee growth from a combination of organic growth and market appreciation. Against this backdrop, we hope to generate 100-200 basis points in trust fee operating leverage in normal macro environments. Our capital levels and ratios remain strong in the quarter. We continue to operate at levels well above our required regulatory minimum. Our Common Equity Tier 1 ratio under the standardized approach was up slightly from the prior quarter to 11.4%, as capital accretion more than offset the unfavorable impact from higher rates on our securities portfolio. This reflects a 440 basis point buffer above our regulatory requirements. Our Tier 1 leverage ratio was 7.9%, up 50 basis points from the prior quarter. At quarter end, our AOCI was -$1.4 billion, a slight improvement over second quarter levels. We returned $159 million to common shareholders through cash dividends of $158 million and common stock repurchases of $1 million. We slowed our buyback activity in order to reserve for the anticipated FDIC special assessment. We're well positioned to meet the proposed regulatory requirements that Mike referenced without significant changes to our operating model. With that, Melissa, please open the line for questions. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal. We can go with our first question from Glenn Schorr with Evercore. Morning, Glenn. Wow! Sounds like the price is right. I like it. Okay, so I appreciate the range of outcomes for NII next year that you can't control, so we'll leave that aside for a sec. But you mentioned your expense to trust fee ratio, your target, and what you can do in terms of operating leverage in a better environment or a normal environment. I'm curious, just what's the overall approach toward to expenses as you enter budget season next year? Within that mindset of what your goals are? And how do you approach it with that much uncertainty around things that you can't control? Yeah. Well, you as we enter, this is the time of year where we're thinking, trying to get a sense of where the launch points will be. And, you know, I walked through a little bit of a financial model for you guys to think about, that if we're over time, we'll get lift from the equity markets, and we should also have low to mid-single-digit organic growth. If we can get 100-200 basis points in fee operating leverage, that sets us up really well based on where our pre-tax margin is for good EPS growth over time. And so that's the goal that we it's one of the metrics that we look at really closely. And we're still in an inflationary environment where it's harder to get that operating leverage if you're just looking at fees, because the expenses are elevated and you don't get the benefit from higher rates on the trust fee line. But you can tell that we've spent an incredible amount of effort this year working the year-over-year expense growth rates down. And you go back to 2022 and printing at 9% growth. Coming into this year, we knew we had to do better than that, and we've been grinding that down each quarter, quarter after quarter. We first tackled it with working hard on labor, and you can see, you know, that's the biggest cost that we have, so we have to get that right. Headcount's down. And then another key element is technology. That shows up in equipment, software, and outside services. That's still elevated above the rest of the company in terms of growth rate, but we've had a lot of accomplishments there too, and expecting to have that growth rate be lower next year than it has historically. And so we think we can have another year next year that's similar to what we did in this year, which is to continue to work that year-over-year growth rate down. Exactly what I was looking for. Thank you. You have tons of capital, and you generate plenty also. But I'm curious, some of the big banks have articulated what they thought, as is, the RWA impact or all-in impact might be. I'm curious, at your first glance, what type of impact are we talking? I know it does. You mentioned it doesn't disrupt your model, and I agree. I'm just curious if you can help us box it in, in terms of all three impact, if, as is. Thanks. Sure. Yeah, I'm going to give you a wide range. It is like 5%-15% in RWA, and that'll, that's going to be impacted by a few different things. But one of the benefits that we have is the diversification of the business model. And so we've got. Obviously, the custody business comes with a lot of operational risk. That's really the most significant driver, but we'll actually get some benefit from an RWA perspective in some of the loan treatments, just given the nature of our underlying loans. And then there are some other dynamics that we have that should help on RWA as well on a relative basis. But it's a, we're thinking about at this point, it could be anywhere from 5%-15%. But as we mentioned earlier, feel really comfortable and see where our CET1 levels are and see where our liquidity is. And so we'll keep an eye on where our peers are. We'll keep an eye on what the business is doing, but we've got flexibility in other ways to manage that dynamic as well. That's great. Thanks for all that. Appreciate it. Sure. Thanks, Glenn. We can take our next question from Michael Brown with KBW. Hi, Mike. Hi, good morning, everyone. So, I guess I wanted to start on the custody and fund admin fees. They were essentially flat quarter-over-quarter, I guess a little bit softer than we expected. What were some of the key drivers that played out this quarter? And as you noted, the lower market levels present a bit of a headwind here for the fourth quarter, but you did talk about some positive dynamics on the new business front. So what are the puts and takes that we should think about here for the fourth quarter and then heading into next year? Sure. So, you know, first of all, you know, if you just look at the custody and fund admin line and split it, we talked about the fact that currency on a sequential basis was effectively a push year-over-year. It helped more than that, you know, roughly in the neighborhood of 1.5%-2%. But if we just go back and look sequentially at how the quarter looked, the net new business was in custody and fund admin fees was a positive. It was low single digits, very low single digits, but positive. And then transaction volumes continue to be light. And we're starting to talk about that dynamic as something that might be more long-term, just as our clients move more toward indexing as opposed to active management. There's less trading activity, there's less reporting, there's less transitions. And so we're continuing to see a lower level of a transaction-related activity, but the overall business is strong. Again, net positive from an overall net new business perspective, and the pipeline, as Mike mentioned, looks strong. Okay. And then if you just change gears to the deposit side, it sounds like the pressure there still remains. Could you just maybe unpack some of those underlying dynamics by client type and maybe just touch on where the pressure is perhaps the greatest and maybe where there's a bit less of a challenge and, you know, are you seeing some elements of the deposit base that are seeing stabilization here or is it really kind of across the board? You know, definitely feel it's stabilized in a lot of ways. It's hard to predict where it's going to go because obviously it's been a volatile cycle, and clients are clearly trying to figure out what to do from here. There's a lot of clients that are terming out their deposits. We saw in the wealth side, just to get at your question of how it's separating by channel, the wealth side, we saw a significant increase in term deposits. So clients are saying this is an opportunity to move out of checking and into CDs. And a part of that is the nature of our clients, where they have large amounts of deposits, and so they can take a component of their deposits and think about that more strategically and less about the need to maintain that liquidity just for day-to-day payments. In the institutional, but you know, interestingly, on the wealth side, deposits are actually up. If you look 6/30 to 9/30, they're up somewhat, and so it gives us an indication that the pricing actions we took were worked really well. Clients they continue to see the strength of the balance sheet. They like to deposit on Northern Trust's balance sheet, so that increase was meaningful. On the institutional side, that's what drove the period-to-period and most of the average decline, and that comes to a lot of clients as moving to different types of either longer duration or higher yielding liquidity types. Overall, liquidity across the company was flat across the channels cumulatively. So, you know, clients clearly are just saying, Northern's the right place to be. They're moving from one to one overall liquidity mechanism to another. As we look out, I think it's interesting to see that the balances thus far in the quarter have held in just over $100 billion. And frankly, that's higher, and it's still early in the quarter, but that's higher than what we would have anticipated at this point. And the 4.30 to 4.40, just to give some context there, that assumes that net interest margin would be relatively flat, up a couple to a few basis points. But deposits would have to come down and average in the $93 billion-$95 billion for us to get down to that 4.30 to 4.40. At this point, thus far, again, it's very, we're 2 weeks into a 13-week quarter, the deposit levels are holding in higher than that. Okay, great. Thank you for all the color, Jason. Sure. Our next question will come from Alex Blostein with Goldman Sachs. Morning, Alex. Hey, Jason. Good morning. Hey, Mike, as well. So just Hi. Another one around deposits. You guys seem to have been a bit surprised, I guess, by this latest move in terms of kind of the catch-up that you played there. You articulated at the conference in September and obviously today. Do you feel like you caught up to where institutional pricing is, or do you still think there's maybe incremental migration or, you know, kind of the need to increase price more? And then again, on the institutional side of things, is there a particular client base or channel internationally that is driving this pickup, or is that fairly broad-based? Because your competitor set there is fairly limited, right? I mean, we know there's three or four, and at the end of the day, that's who you compete with on the custody side. I'm just kind of curious where we are in that, in that process. It seems like we caught up, and, you know, we made, you know, if we get to why we thought we were going to be down about 5% in NII, we ended up down 10%. We saw that mid-quarter and hit right on the number. So what happened in the, you know, in call it the August time frame, we clearly saw that our, that in general, the market was taking deposit pricing up, and we reacted to that. We're not, again, we're not price makers, we're price takers, and so we reacted to that, and it seemed, and it seems to very much have leveled out the deposit activity. And that's why you see things very, you know, kind of flattish in, and then also into this quarter, stabilizing at levels we thought would be even higher. And so I think the big takeaway is it seems like the pricing is where it needs to be for clients to level things out. And the pricing actions that we took were in pretty small number, but of big accounts. And you asked about kind of geography. The bigger actions we took were in the U.S. custody book on the institutional side of the business, and then in wealth, it was in MMDA. And so we took a targeted approach to increase those pricings, and early reactions look like we got it. We hit the mark well. Got it. All right, thanks. Shifting gears a little bit, you know, pretty constructive comments from you guys on the new business. We've heard that for the last couple of quarters. As you know, converting net to fees is always a little hard, and it's a bit opaque. So any way you can frame maybe the fee backlog, and as we sort of work that through into revenues over the next call at 12 months, do you feel like you have enough scale in the business to onboard, especially some of these larger mandates, without a material pickup in expenses? So in other words, you know, to Glenn's point, it sounds like you guys are aiming for, I don't know, 3%-4% expense growth in 2024. Is that doable with potentially more net new business? It is, and you know, we didn't give a number on the expense growth, just that we wanna do better than what we did this year. And so with that backdrop, the growth in the asset servicing business, in particular, has come with expenses. It's a less scalable business relative to wealth, which is obviously highly, highly scalable. That said, we're focused, as you can tell from what we've done this year, not just on top line growth, but on managing the type of business that comes in. And so that's why headcount was such an incredible focus for us this year, the compensation line, an incredible focus. And so as we look at what business to bring on board, there's gonna be a very strong scrutiny on looking at what expenses come along with it. The business is committed to do that. They're leading that effort, saying that they're gonna be very diligent about identifying what business to bring on. Yeah, and Alex, I would just add to what Jason's saying there, is that that's why we're driving so hard on productivity as well, is because we have to have the capacity to invest in the foundation of the business and what we're building out, the investments we need to make. But then also to your point, if you're gonna bring on new business, that has resources, you have to be able to offset a portion of that as well. Got it. Okay, that all makes sense. Sorry, I didn't mean to put words in your mouth on the three to four. It just sounds like, you know, less than 5. So maybe, maybe wishful thinking. Okay. All right, I appreciate it. A good test. Thanks. Our next question comes from Brennan Hawken with UBS. Morning, Brennan. Morning. Yeah, good morning, Jason. How are you doing? Would love to unpack a little bit, because it sounds like you walked through some of the underlying assumptions behind the $430-$440 expectation for 4Q. It sounded like you were saying that it, you know, predicated a deposit base of $93-$95 and NIM flat. Did I interpret that correctly, and does that suggest that you're sort of, you know, girding for further deposit declines even though they've been stable quarter to date? Just to, just to tweak the words, I mentioned that implies NIM would be up a few basis points, but the deposit levels you mentioned are accurate. And so coming into last quarter, we, you know, came into it thinking we were gonna be down 5%. The, the market ended up being more competitive. And again, we've got to, we've got to react to what the market's doing. We don't set it. And so coming into this quarter, we just—we did prepare for a further decline in deposits, and that could easily still happen. So not walking that back, we're just saying that early stages of the quarter are indicating the deposit levels are higher than that. And we've also got, you know, even as we look out to next year, you know, I we don't think about this $430-$440 as the run rate of NII. There's reasons for us to believe that NII is gonna go up from there, and just that you look at the runoff in the securities portfolio, and we're still trading securities that are yielding 2% and reinvesting it at 5%, and securities yielding in the 2s and reinvesting it above that, and so without taking more risk or duration. And so there are things that we can continue to do. We've also had the balance sheet positioned very defensively. We saw the decline in deposits that was happening, and frankly, the stress in the banking industry in the spring and in the summer, and we positioned very defensively. We wanted to, we have the ability to do that based on the strength of the balance sheet. We can stay short, we cannot stretch for NII. But as we feel more confident about the stability of deposits, the stability of the industry, we can use non-HQLA capacity. And so there's multiple levers we have to work on NII for it. So although we're trying to give you as much color as we can about fourth quarter, the interpretation shouldn't be that that's necessarily something that you should annualize thinking about 2024. Okay. All that's fair. I guess the 2024 will depend on the competition for deposits, so we'll see how that goes. So one follow-up here. You guys made a reference, and I apologize if you said it in the prepared remarks. There are a couple overlapping calls here this morning. You laid out a Visa gain in the press release, but I didn't hear it quantified in the commentary. Is it possible to quantify that impact? Yeah, it's up $10-$15 million, relative to second quarter. Second quarter is a slight loss. This was a slight gain. And that just a little bit of color, that relates to a derivative that we have associated with part of our Visa position. And as our view of the length of that swap extends or reduces, that has an impact to the mark-to-market. And as there was news that was put out this quarter of Visa saying that they have a shareholder proposal to release half the shares, it reduces the amount of time in that swap, and so therefore, it changed the mark from what it otherwise would be. Great. Thanks for that color. Sure. And our next question comes from Ryan Kenny with Morgan Stanley. Hi, good morning. Just in thinking through the puts and takes to NII, you mentioned taking securities yielding two and reinvesting at five. Can you just update us on how much AFS and HTM roll-off you're expecting per quarter going forward? And as those securities mature, are you mostly reinvesting that all into cash? I wanna, I wanna make sure I got the question fully. Can you repeat it for me? You just came through a little soft. I want to make sure I got it. Yeah. So as you're reinvesting securities at from two into five, could you let us know just how much AFS and HTM roll-off you're expecting per quarter? And are you reinvesting that all into cash? Sure. A lot of the reinvestment recently has been in, has been in cash, and, but again, as I mentioned just a few minutes ago, that's not necessarily where, where we'll be reinvesting it before. And as we look at the, at the schedule, it probably averages the runoff averages about 2%, particularly. Let's just take the US dollar-denominated amounts, and then overall, there's about close to a little over $1 billion a quarter across all the currencies that's maturing, that's reinvesting. Thanks. Moving on Sure. to our next question from Brian Bedell with Deutsche Bank. Great, thank Hi. Thanks. Good morning. Hey, good morning, folks. Thanks for taking my question. Just one clarification on the other investment income that was the $68 million this quarter versus $55 million in the second quarter. Should we take that $55 million and think of that as a more normalized run rate, given the noise on the Visa swap gain? Yeah, I think the Visa is gonna. At some point in time, I think the noise in that line item will just go away. And, you know, there's, Visa did announce that they did make this announcement, and so that should have an impact on the swap at some point. And so I think it shouldn't be. Again, it has tended to be a negative. That negative will go away, and so the prior run rates are probably too low, and the current run rate might be too high. The best way to think about it. Okay. Okay, fair enough on that. And then just on the NII guide, just to clarify also, the $430-$440, is that FTE? And then. Well, let me just ask that first. That's FTE, correct? Yes. Okay. Okay, great. And then just, as we move into 2024, some of the elements, obviously a lot of wide ranges of what can potentially happen. But, but on, on the competition front, sounded like that was fairly episodic this third quarter. It got resolved, and, and just sort of, I guess, you know, your, your view on whether you think that you might reemerge. Of course, it's always tough to predict, but just in terms of the fact that you're able to defend it with higher rates, but keep those deposits, you know, would that seemingly be a disincentive for, you know, for other providers to try to grab those deposits and not actually get them? And then, you know, what would you think of, maybe this is tough to answer, too, but, you know, what, what level of deposits is at risk of that, competition within, you know, within the custody and the wealth business? In the institutional business, let's start there, a lot of those deposits are there for clients to be processing payments. And they not only have the end-of-day deposit needs, but intraday needs, as they have, they can have intraday overdrafts, and so they've got to think about their liquidity, not just end of day, but intraday. And we process a tremendous amount of payments across the system. And so that's why we always are talking about not just the traditional operational component, but the amount of dollars and velocity that we have in the asset servicing business, which is very high. The amounts that are more sensitive to rates tend to be very large clients that are making a decision on where to park large amounts of dollars, and those tend to be negotiated. And that's kind of the top end, but that's also where there's lighter spread. In the wealth side of the business, clients are making decisions more from a product perspective, and they're moving between term Treasuries, money market funds, and traditional checking accounts. And we've seen increases in all non-checking account areas over this cycle, and we've seen CDs go from less than $1 billion to close to $4 billion. And that obviously has a really big impact when you think that that's coming from a traditional checking account into a market rate CD. There's hundreds of basis points of difference. And so if y ou know, it gives you a little bit of a sense of on the wealth side, if we've talked about, about 75% of the deposits overall that we have are in wealth.... and or, I'm sorry, are in institutional and 25% in wealth. And so, and then you see the type of movement that can happen if we're talking about $2 billion, $3 billion, $4 billion of movement of that, of that $20-$30 billion base, it's pretty meaningful. But it's the good news, it's, it is, it has stayed with us, and we've, we've done a good job of holding onto the deposits. Again, it's been deposits up this past quarter and overall client liquidity for the business flat from one quarter to another. Yeah. Yeah, that, that's great color. Thank you very much. Sure. Our next question will come from Mike Mayo with Wells Fargo. Hi. Hi. Yeah, I'm a little confused on the NII guidance. So, you're looking to be down 6%-8% in the fourth quarter to $430-$440, and, but you said don't take that as a run rate. And so, you know, what kind of run rate do you think you'll have? Because I guess you're guiding down NII 20% year-over-year in the fourth quarter. So how much of that do you think you get back as you take those 2% securities and invest them in 5% and take all your other actions? And do you think the fourth quarter will be the low point, or the NII inflection comes later? Or just a little bit more color on that, if you could. Yeah, sure. No, fourth quarter could definitely be a low point, and particularly thinking about some of the things that we mentioned. But just taking the securities run off alone, the math gets to you get to over, you know, call it a $10, $12, $13 million lift per quarter, coming just from just the securities maturing and reinvesting again in similar duration, similar credit profile. And that's without us taking these other actions. And just as our clients are thinking about, where are we in the yield in the overall rate cycle, we think about that as well. And we've again we've had the balance sheet positioned in a pretty defensive manner, and it just this provides us an opportunity to start thinking about what do we do differently. But just the maturity schedule alone has kind of a, call it, a $50 million annualized lift to it, and that's just one of the levers that we have that we'll be working from. In light of just more headwinds, though, than you had expected, I know you said no more expense plans, but a nd you have kind of bent the cost curve, which is the expression, I guess, of the year. Any thoughts about tightening up expenses even more than you've already done? Yeah, the productivity office, and we launched just in this year from kind of a standing start, and we're going to get over $100 million within this a $100 million of savings in this year. Most of those are on a recurring basis. And so you see a lot of that reflected in the actions we took from a compensation perspective, but negotiations with consulting firms, how we're looking at demand for technology consumption, how we're managing real estate. And so we've pulled a lot of levers there, and we couldn't have a higher sense of urgency on what we're thinking about from a productivity perspective. But we should be getting above 2% a year in help from productivity. And we're not going to stop uncovering opportunities and having difficult conversations about what we can stop doing or how we can be thinking about things differently. Yeah. Mike, Mike, definitely, continued focus on productivity, as Jason is saying, so just want to emphasize that point. There are still plenty of opportunities to, you know, functionalize, automate, centralize, you know, a number of different, I'll call it, more fundamental structural things that we're doing already, but just have longer, you know, longer time frames to implement them in order to get those savings longer term. And a lot around technology that enables that. So it absolutely has been a focus but will continue to be a focus, particularly as the environment is so uncertain, and not necessarily knowing, you know, what the direction of whether it's rates or markets are going to be. All right. Thank you. Sure. Our next question will come from Gerard Cassidy with RBC. Hey, Gerard. Hi, Jason. How are you? Very well. Can you guys can we take a step back? We're obviously all in the weeds on the quarter-to-quarter stuff for all of the banks, understandably so. But when you step back, if we're now after, what is it, since the financial crisis, let's call it 14 years of an incredibly low interest rate environment with a little blip up in 2018, of course. But if we're now in a new environment for the next three to five years, where the short end of the curve stays above 3% or 4%, maybe even 5% for n obody knows for sure. How does that maybe alter the way you guys have been running the business for the last 10 years in a 0% rate environment to one now that is going to be 300-400 basis points higher at the front end of the curve? Or does it alter the way you run the business? Yeah. Gerard, it's Mike. I appreciate the question, and the answer is yes. It does alter the way that we have to look at the business. And just starting with some of your comments there, just around, you know, low interest rate environment, higher interest rate environment, you know, what aspects of that are cyclical versus maybe permanent changes. Jason mentioned some of the shifts in the way institutional investors invest and the implications on transaction volumes that may come with that. And as a result, beyond, you know, looking at the productivity of the business, which I think we've emphasized here, we also have to look at the pricing side of the business to ensure that we are being, you know, appropriately compensated for all the high value-added services that we're providing, I'll say, to all our clients, because it really isn't specific to, you know, just institutional clients or, or wealth clients. But, you know, if there was an expectation that you were managing a certain level of deposits as a part of an overall relationship, you know, that was a part of, you know, the, the value you were receiving for all the services you're providing. If that's going to be different, you know, for some time period, then you have to be compensated in, in different ways. Now you know our model well enough to know, you know, it's not a consumer product or something where, you know, you change the pricing, you know, daily or even monthly. So it's something that you have to work through, the you know, longer term way that your services are priced, and that the way relationships work. I mean, we're always looking to, you know, retain relationships, but also very focused on expanding them. And the more we can do with the clients, you know, the better the overall economics. So my point, which I think you're onto it, is we, you know, we do and have been looking at this holistically, both on the revenue side and on the expense side, so that we can, you know, continue to look at meeting the financial targets that we have. Very good. Thank you, Mike. And then as a follow-up, Jason, you were talking about, you know, obviously, you're approaching your budgeting season, and I'm not asking you to obviously tell us what's going on yet. But, can you frame out for us a year ago, this time, when you were doing the budgeting for 2023, and you've, as you pointed out, you guys have made progress in reducing expense rate of growth. But can you frame out for us the outside factors that you were dealing with last year at this time, whether it was wage inflation or just inflation in general versus today? Is it a little easier today or no, just as tough, the outside factors haven't really changed, and it's going to be, you know, a tough environment to put together a budget? Last year, we were in a heavy inflationary environment that was hitting us in not just our, you know, labor costs, but also we were defending from others trying to, you know, take our talent a lot, was one of the talking points that we had at the time. You know, that had implications, and we were just spending time on that as well. And then we were seeing inflation come in technology costs in a lot of different ways. So every budget year is really difficult. I have to say that the macro headwinds last year, I feel were heavier than they are this year. Very good. Thank you. Thanks, Gerard. It appears there are no further questions at this time. Ms. Childe, at this time, I will turn the conference back to you for any additional or closing remarks. Thanks, Melissa. We'd like to thank everyone for joining us today, and we look forward to speaking with you again soon. This concludes today's call. Thank you for your participation. You may now disconnect.