Good day, and welcome to the Northern Trust Corporation's Q3 2024 earnings conference call. As a reminder, today's conference is being recorded. At this time, I'd like to turn the call over to Ms. Jennifer Childe, Director of Investor Relations. Please go ahead, ma'am. Thank you, operator. Good morning, everyone, and welcome to Northern Trust Corporation's Q3 2024 earnings conference call. Joining me on our call this morning is Mike O'Grady, our Chairman and CEO; Jason Tyler, our new President of Wealth Management and former Chief Financial Officer; Dave Fox, our new Chief Financial Officer; John Landers, our Controller; and Grace Higgins from our Investor Relations team. Our Q3 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 23 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 23. 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 Q3 2024 earnings call. As Jennifer mentioned, Dave Fox became our CFO on October first, when Jason became President of our Wealth Management business. Jason will review our financial performance for the Q3 in a few minutes, and he and I will take your questions. Dave will take Jason's place on our Q4 earnings call, and many of you will have the opportunity to meet Dave in the coming weeks. We're grateful to Jason for his considerable contributions over the past five years as CFO, including successfully managing our balance sheet through a number of challenging events, including the COVID pandemic and the collapse of several financial institutions last year. I'm confident that Jason has the right skills, understanding of the business, and vision to lead wealth management into its next chapter of growth. I also want to welcome Dave to the CFO chair. Dave has a long track record of success in leading businesses and driving financial performance. Most recently, Dave ran our global family office business. Under his 10-year, GFO trust fees grew at a compound annual rate of 10%. Dave also served as Head of Asset Servicing for the Americas. Dave is a highly respected leader whose deep industry knowledge and strong financial acumen make him the right choice to serve as Northern's next CFO. Turning to our Q3 performance, our results benefited from strong market performance, but also reflect continued positive momentum across our businesses. Relative to the prior year, trust fees were up 8%, net interest income grew 21%, and excluding notables, earnings per share grew 36%. Importantly, we generated positive trust fee and total operating leverage, while continuing to make significant investments in our business and infrastructure. We also returned $453 million to shareholders. Within wealth management, we generated strong year-over-year trust fee growth of 9% and reached record AUM levels. Our new business momentum improved, reflecting the maturation of a number of initiatives started over the past 12 to 18 months. Global Family Office performed particularly well, generating mid-single-digit organic growth both in the Q3 and year to date. International relationships, which have been an area of focus in recent years, drove a healthy portion of this growth, including a marquee win sourced through collaboration with asset servicing, demonstrating the power of our One Northern Trust strategy. Asset Management generated positive liquidity flows for the seventh consecutive quarter and positive flows in tax-advantaged equity, active fixed income, and alternatives. This translated into healthy organic AUM growth despite continued pressure on index products. Continued strong investment performance is supporting our organic growth, with active fixed income outperforming benchmarks over one, three, and five-year time frames. NTAM's performance is also attributable to leveraging our One Northern Trust strategy to deliver clients the solutions and capabilities of the entire firm. Year to date, NTAM has launched thirteen new products, including a Treasury-only money market fund that has generated nearly two billion in flows in less than six months, largely from GFO clients. Our asset servicing business performed well in the quarter. Transaction volumes were healthy, capital markets activities were up double digits for the Q2, and new business growth continues to be booked at attractive margins. As we discussed, our goal is to generate new business that is scalable. We've shifted our focus to opportunities that require lower levels of incremental costs and to cross-selling products and services to existing clients. As an example, this week we announced an expansion of our relationship with Artemis, a leading U.K.-based asset manager with more than thirty-three billion in AUM, wherein all trading activity for Artemis's equity funds and all OTC and exchange-traded derivatives will be outsourced to Northern. We will now support the complete life cycle of these investments, from execution to custody, including fund administration, depository, global custody, and transfer agency services for its U.K. and Luxembourg-domiciled funds.... While it will take time to realize the full benefits of the pivot in our strategy, it should lead to more profitable growth as our business mix shifts. During the Q3, we proudly celebrated our company's 135th anniversary. The core principles of service, expertise, and integrity, upon which our company was founded, still guide us today. As we look forward, we're taking steps to strengthen the foundation, position the firm for higher underlying growth, and enhance our operational efficiency, all while continuing to invest to meet the evolving needs of our clients and to create value for all our stakeholders for years to come. And with that, I'll turn it over to Jason to review our financial performance for the quarter. Jason? Thank you, Mike, and let me join Jennifer and Mike in welcoming you to our Q3 2024 earnings call. Let's dive into the financial results of the quarter, starting on page four. This morning, we reported Q3 net income of $465 million, earnings per share of $2.22, and our return on average common equity was 15.4%. Our reported results included a $68 million pre-tax gain on an equity investment and a $13 million escrow payment associated with our existing Visa swap agreements. Together, these two notable items boosted other operating income by $55 million pre-tax and $43 million after tax. Trust, investment, and other servicing fees totaled $1.2 billion, a 3% sequential increase and an 8% increase compared to last year. Net interest income on an FTE basis was a record $569 million, up 7% sequentially and up 21% from a year ago. Our assets under custody and administration were up 5% sequentially and 23% as compared to the prior year. Our assets under management were up 6% sequentially and 22% year-over-year. Overall, our credit quality remains very strong. Excluding notable items in all periods, other non-interest income was down 5% sequentially and down 3% over the prior year. Revenue was up 3% sequentially and up 10% on a year-over-year basis. Expenses were up slightly less than 1% sequentially and up 6% over the prior year, and earnings per share grew 36%. Turning to our asset servicing results on page five. Assets under custody and administration for asset servicing clients were $16.3 trillion at quarter end, reflecting a 23% year-over-year increase. Asset servicing fees totaled $667 million. Custody and fund administration fees were $453 million, up 6% year-over-year, reflecting the impact from strong underlying equity markets and a weaker U.S. dollar. Both comparisons were dampened by the client exits we discussed last quarter, which are now fully reflected in our run rate. Assets under management for asset servicing clients were $1.2 trillion, up 22% over the prior year. Investment management fees within asset servicing were $153 million, up a strong 11% year-over-year due to favorable markets and, to a lesser extent, new business activities. Moving to our wealth management business on page six. Assets under management for our wealth management clients were $444 billion at quarter end, up 20% year-over-year. Trust, investment, and other servicing fees for wealth management clients were $530 million, up 9% year-over-year, due primarily to strong equity markets. Moving to page seven and our balance sheet and net interest income trends. Our average earning assets were flat on a linked-quarter basis as a decrease in loans was offset by an increase in securities. Our average liquidity levels remained strong, with highly liquid assets comprising 62% of our deposits and more than 50% of total earning assets on average. The duration of our securities portfolio is 1.6 years, and the total balance sheet duration continues to be less than one year. Net Interest Income was $569 million, and our Net Interest Margin was 1.68%. The strength was attributable to several factors. First, deposits came in modestly better than our expectations. Average deposits were $113 billion, down less than 1% from Q2 levels, and non-interest-bearing deposits remained stable at 15% of the mix. Second, deposit pricing improved. We had several large client deposits with very thin spreads roll off, and they were replaced by a similar level of more attractively priced deposits. And as expected, we realized a very strong deposit beta on institutional accounts relative to the recent rate cuts. And third, given especially conducive market conditions, we saw higher than average quarterly contributions from transactional and other items. In the aggregate, these items elevated Q3 NII by approximately $10-$15 million. Turning to page eight. As reported, non-interest expense was approximately $1.4 billion in the Q3, down 11% sequentially and up 6% as compared to the prior year. Excluding notable items in both previous periods, as listed on the slide, expenses in the Q3 were up approximately 1% sequentially and 6% year-over-year.... Now, let's go back and review our core expenses from the quarter, which exclude all notable items. Compensation expense was up 5% over the prior year, reflecting the impact of this year's base pay adjustments, modest levels of hiring associated with our modernization initiative and underlying growth in the business, and unfavorable currency movements. Compensation expense was flat sequentially. Outside services expense increased 12% relative to the prior year period, largely due to incremental modernization and resiliency spend. It was also flat sequentially. Equipment and software expense increased 14% year-over-year, mostly related to higher depreciation and amortization expense. Sequentially, it was up 4%. Excluding notables, we generated over 100 basis points of trust fee operating leverage, over 100 and fifty basis points of overall operating leverage, and our expense-to-trust fee ratio improved by 200 basis points on a linked quarter basis. As we look out to the Q4, we expect our total operating expenses to be up approximately 2% relative to the Q3. Turning to page nine. Our capital levels and regulatory ratios remained strong in the quarter, and we continue to operate at levels well above our required regulatory minimum. Our Common Equity Tier 1 ratio under the standardized approach remained flat at 12.6%, as capital accretion was offset by a slight increase in RWA levels. Our Tier 1 leverage ratio was 8.1%, up 10 basis points from the prior quarter. At quarter end, our unrealized pre-tax loss on available-for-sale securities was $603 million. We returned $453 million to common shareholders in the quarter through cash dividends of $152 million and common stock repurchases of $301 million. Now, before starting the Q&A portion of the call, on a personal note, I want to offer a quick thank you. It has been a joy and an honor to serve as CFO for Northern for the last five years. It's been a pleasure to work with the analyst community and the world-class investors we have as shareholders. I wish Dave Fox the very best as he takes on the new role. I worked closely with Dave since he joined Northern twelve years ago. He's a strategic, forward-thinking executive, and he's going to play a critical role in driving impactful change within the company and ensuring that it's positioned for long-term success, and with that, 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, that is star one to ask a question. We will pause for just a moment to allow everyone an opportunity to signal for questions. We will take our first question from Steven Chubak with Wolfe Research. Hi, good morning. This is Sharon, actually filling in for Steven this morning. Jason, earlier this year, you had talked about the asset sensitivity across the different categories on the balance sheet. So you know, cash, 100% sensitive to short rates, loans, and securities, about a third floating. Can you give us a quick update on the floating rate mix, just given that you've done a couple of securities repositioning actions since the last time we updated? I'm sorry, I didn't catch that. Can you... I just want to make sure I answer your question really precisely. Can you do it again, a little louder? Yeah, sure. Sorry. So earlier this year, you had talked about the asset sensitivity across the different balance sheet categories. Cash, 100% sensitive to short rates and loans as well, and securities book about a third floating. Just given some of the securities repositioning actions you've taken since that update, can you give us, like, a quick mark to market on the floating rate mix? Yeah. Floating is about 50% at this point. Okay, great. And then, as we look at our expense forecast beyond 2024, can you just frame how much of this year's expense growth was inflated by investments in resiliency, when those investments should be completed, and whether we should expect those investment dollars to fall to the bottom line or get redeployed elsewhere in the franchise? Yeah. So, just to clarify, you're asking about the expense investments in modernization and resiliency- Mm-hmm. -and how that's going to trend over time? Yep. So, yep. So we do expect that that will continue for the next at least two, three quarters, but at some point, likely late next year, we'll start to see it decline. We don't have any plans to, you know, dollar for dollar or thematically redeploy that somewhere else. This is more of a distinct effort to try and address our desires to improve modernization and some other technology and automation efforts in the business. Okay, great. Thank you very much. Sure. We will take our next question from Ebrahim Poonawala with Bank of America. Good morning. Morning, Ebrahim. How are you? Great. Good, and, congrats, Jason and David, on your new roles. Just maybe following up on expense and more broadly, going back to the leadership changes that were announced back in September. Maybe Mike, Jason, give us a perspective of. I think I hear frustration from investors from time to time around just the focus on operational efficiency kind of not translating into bottom-line results. What should we read into these changes, realignment as something a little bit out of the ordinary in terms of what it means for operational efficiency going forward? Would love any perspective there, and how we should think about incremental expense spend. I heard what you responded, Jason, but I'm just wondering, is all of this baked into the expense base as we come out of the Q4? Or will there be more additional expenses and investments tied to resiliency? Thank you. Sure, Ebrahim, it's Mike. I'll start off. So I would say, you know, we believe in structure following strategy. And so the organizational changes that we announced in September reflect the strategy, excuse me, that we've put in place going back over a year ago. And we've tried to keep very straightforward, which is focused on strengthening the foundation, optimizing our growth, and driving productivity. And we already mentioned the changes with Jason and Dave, but importantly, one of the other big changes was creating the role of a COO, Chief Operating Officer, which Pete Cherecwich will be the COO or is the COO of the company. And with Pete's decades of experience in managing both complex client relationships but also global operations, he's really well positioned to drive operational excellence, resiliency, and also scalable growth. So to your point, we are very much trying to align the organization in such a way that we can get greater scale and operating efficiencies and resiliency out of the company on that front. Teresa Parker took over the role of President of Asset Servicing for Pete to work through that organizational transition to ensure that we do it in a way that we continue to be client-focused and differentiate ourselves in that way. And likewise, Steve Fradkin is a Vice Chair, and importantly, is focused on the One Northern Trust strategy and operationalizing all the things that we do on that front. So feel very good about the organizational changes to help us drive the strategy. Got it. And I guess, what, if I may follow up on just the NII question, Jason, for you. It was a positive surprise this quarter when we look at that $569 million in NII this quarter. If we get some gradual rate cuts, given the positioning of the balance sheet, if the deposit backdrop is stabilizing, should we expect NII continues to grow from the Q3 levels? There's some good news in the NII results for sure. And even though it looks like deposits were just flat, underneath that, we had meaningful exits of some very thin, large deposits. And we knew that coming into the quarter that those were going to leave. That's part of the reason we anticipated deposits being down. But we were pleasantly surprised by the fact that in other areas of the organization, that level of deposit was replaced with much, much more attractively priced deposits. You add on to that, we didn't see the typical seasonal decline that we go through in August in particular. And so it's not just the deposit levels holding in, but the underlying nature of the deposits and where they are now is much better. That said, if you look into Q4, we're anticipating rate cuts. And as much as we feel good about the strength of the book, the deposit book right now, it's hard to offset the deposits fully, and so an increase from here would have to call it unlikely. It's possible, but that's why we think, you know, in general, we're looking at a 550-560 level for Q4 in NII, which is still good, still very strong, but would be slightly down. Good. Thank you. Thank you, everyone. We will take our next question from Alex Blostein with Goldman Sachs. Hey, Alex. Thanks. Hey, good morning, everybody, and congrats to the whole team on various moves. Just to level set the NII discussion just one more time. So Jason, sounds like Q3 had $10-$15 million of sort of elevated transactional activity. Do you expect that to basically fall off in Q4, and that's what's partially driving the kind of the sequential decline, and maybe expand on kind of what those were? And on deposits, this is the right jumping-off point to use as far as cost of deposits go, right? And then, you know, obviously, deposit betas are likely to be fairly high from there, but I'm just kind of trying to level set on the go forward, potentially beyond the Q4 guidance that you highlighted. Sure. So let me try and go in reverse order. Our deposits on the launch point feel like this is a good level. Then if I come back to the Q3 items, there's the core, just asset and liability pricing, but there's also another element of, you get FX swap activity, FHLB dividends, premium amortization, like FTE adjustments, repo activity, you know, leverage, and there's a whole basket of other things. It doesn't add up to a lot, but and there's usually puts and takes in that. ... most of those went in our direction this quarter, and so that's that $10-$ 15 million elevation. But the way you ask the question is thoughtful because we actually don't expect all those to just go away into the next quarter. It's just part of it is the environment, the way it is right now, with the way rates are. It gives us more of an opportunity to do more FX swaps and to have other activity that adds to NII. And so we don't expect it to fully to that lift to fully come down. It was more of an explanation of why we saw the elevation going from second to Q3. And so that $550-$560, largely, is a reflection of some of those items going to more normalized levels, but also impact of rate actions with different central banks that are going to have a drag on the $569. Got it. All right, thank you for clarifying that. And then a question on expenses for you guys, just with respect to maybe longer-term expense growth algorithm. And Mike, I heard your answer to the previous questions around the organizational changes that you guys have made, which are obviously substantial and hopefully can, you know, further align the growth in the business with the expense structure. But I guess in the past, you talked about maybe this five-ish% bogey for expense growth over time, hoping to be below that. This year is obviously shaking out to be north of 6%, and there's some market-related items and stronger revenues to come along with that, so it's good news. But maybe help us sort of summarize, given these changes, where you expect the firm's kind of longer-term expense growth to be over the next kind of couple of years? So Alex, we're continuing to be focused on driving positive fee operating leverage and positive operating leverage. You know, with the level of our expense-to-trust fee ratio, at this point for this quarter, you know, year to date, it's still above our target range of 105-110. So we want to continue to grind that down into that target range. And likewise, from a margin perspective, pre-tax margin, I want to be in the low thirties as a target area as well. So that's the first driving goal. And then to accomplish that, you know, we've had strong revenues this year, which has enabled us to achieve the leverage that we have. That said, you know, can't always count on the strength in the markets and a rate environment that may drive that. So we need to bring the absolute expense growth rate down further. And so that will be the objective as we go into 2025 is to achieve that operating leverage and also increase the probability of hitting it by driving down on our expense growth rate below the level that it's been. Got it. That's helpful. Thank you, guys. Sure. We will take our next question from Betsy Graseck with Morgan Stanley. Morning, Betsy. Hey, good morning. Hi, good morning. How are you doing? Good. How are you? How are you? Okay, so a couple of questions here. One on Mike, you mentioned the deepening of relationships as a key focus for growth going forward. Could you help us understand how that pivot is affected? Is that different from what you've been doing before? Is it more, you know, just to key off the last conversation, is it more resources to hire or is it more products to deliver? And then, how should we be thinking about where in the organization you have the most opportunity? Is this asset servicing, asset management? Is it investment management? Is it the wealth platform? Help us understand how you're thinking about where the pockets of opportunity are richest for those deepening of relationships? Sure. So, Betsy, to your point, that is our One Northern Trust strategy, which is to ensure that all the businesses and all the groups within the company are working together to produce the best outcomes for our clients, and likewise for other stakeholders, and from a client perspective, you know, it is a combination of a number of things. So first, it is the businesses working more closely, you know, right, right from the beginning, if you will. So, going to market and opportunities. So for example, with asset servicing and asset management, you know, providing an overall solution for clients as opposed to necessarily starting with one and then trying to, cross-sell, if you will, the second opportunity on that front. You know, as far as where the opportunities are, definitely between asset servicing and asset management, but I would also highlight with wealth management as well. A lot of work has been done to ensure that the linkages between those two businesses are very strong, and that we are thinking about the needs of our wealth management clients as we produce new investment management products. As I mentioned, we launched a number of new funds this year that were really off of the back of research that was done for some of the needs of our specific client base. We'll continue to do that in order to provide the right solutions for them. Also, as far as the types of capabilities that we have to deliver, to your point, it is new products or new services. So I mentioned the Artemis example. That's just, you know, the latest, a client where we're providing a new capability to them of outsourced trading, or what we call Integrated Trading Solutions, which we launched a number of years ago, and we've built that business up and, you know, taken this to a level where that capability works for clients of size like Artemis. So a lot of opportunity on that front as well. And so as you can see - Oh, go ahead. No, you finish up. Sorry. Nope. Go, go ahead, Betsy. So, thanks very much for those examples. That was very useful. I just wonder holistically then, as we're thinking about, not just the expense line, but just the overall impact on profitability. When you think about what you're looking to accomplish and the opportunities you see in this pivot, how do you think that's going to translate into, you know, return on tangible or return on common equity? Yeah. So there's no question that to the extent we already have the client relationship, that the incremental services that we provide to them are more scalable for us. And so that's where it translates into more profitability overall. The second thing I would mention, Betsy, on that front is, in thinking about the type of business that we're pursuing the most. As we say, we want more scalable growth on that front. And what we really mean on that front is focusing on new opportunities that require less in the way of new resources. So, to the extent that we can win the business that is again more scalable for us, you know, areas where we've had a lot of success, for example, this year with asset owners in America, but also in Europe, where we're providing, you know, custody, you know, to them in a way that the incremental resources required, you know, both in people, but also in technology, are less than if we are, you know, adding other services or to other segments that would require that. That translates into a higher level of profitability overall. So that's the objective on that front. Okay, thanks so much. Really appreciate it. Sure. We will take our next question from Mike Mayo with Wells Fargo. Morning, Mike, how are you? Hi. Good. What I see, you know, a 135 years, best-in-class private banking relationships, you know, all the, the One Northern Trust initiative and everything else happening. And then I see a stock price that has lost its premium versus its trust bank peers, and even trades three PE points below Morgan Stanley or something. So I'm just wondering, you know, how much. And maybe this is an opportunity, and if it is, you know, let us know why. But, you know, how much of this is business mix? How much of this is the environment? And how much of this is execution? And I hear what you have to say. You know, strategy drives structure, drives execution, should drive results, and I guess that would drive the stock price. But I'm just trying to wonder, you know, how or why the same cast of characters can generate better organic growth in their new roles. And when I saw the press release come out with, you know, the CFO and COO and head of wealth, and head of asset servicing, and head of family office, all changing at the same time, it. I just haven't seen something like that, or I don't recall something like that. So Mike, you have a big perspective on that. So if you give that perspective on why you think this will change things? Thanks. Sure. So Mike, it's a combination of both putting people into the new roles where we can leverage their experience, but also, we've brought in talent from the outside. So, you know, just over about a year, year ago, year and a half ago, we brought in Daniel Gamba to run asset management. And so, you know, we wanna have both the benefit of people who really understand everything you talked about as far as Northern Trust and how we're client-focused, but also, you know, new blood and new ideas from the outside. And we'll continue to do that as we go forward. You know, also to drive it, you know, it does come back to execution. I mean, it's to where we're focused, and so that's what we're trying to drive. That's where we spend our time on that front, and that will then ultimately drive not only the earnings but also the multiple, for the stock. You know, I think that another big part of this is, you know, the strategy around where that growth comes from. So that's why when we talk about, you know, the One Northern Trust aspect of it and the type of growth, you know, that also affects the stability and growth rate of the earnings as well. So it's not just the earnings themselves, but it's the quality, as you know. So that's what it's all directed at, to ultimately, you know, create value through the earnings and the multiple, to drive the stock price. And then maybe just to add one follow-up. So the incremental extra that we might be able to expect by that fresh perspective by the managers bringing in their new roles, maybe, you know, Dave, as it relates to the CFO function, I know Jason is right next to you, but incrementally, what would you like to emphasize a little bit more? Maybe it's already started. And Jason, what would you like to emphasize a little bit more in wealth, to take it to the next level? Thanks. Yep. So what I would emphasize with those two, and then I do think it's a good opportunity for Jason just to give his initial thoughts here. But it is around the more scalable parts of our company overall. So not just products or service, but company, and that is our wealth management business and our asset management business. So we are trying to grow those businesses organically faster than we have in the past. And so that's the tilt or the push, Mike, on that front. And I think with Dave, you and others will quickly get comfortable with his deep understanding of the business, his strategic approach to it, and also understanding of value creation.... But Jason, do you want to talk just a little bit about just some of your initial views? Yeah, sure, Mike. So, you know, I obviously, you know, I've already been on the road a lot, and I know the business reasonably well, and spent time just in the last few weeks, LA, New York, Texas. I'm going to a really good client event tonight in San Francisco. And but I do think there's opportunity for us to do more. And a framework to think about, Mike, is one way you can think about the business, or the markets that we're in, the segments that we're in, which gets to, you know, where do we have specialization that we can deepen and hope to leverage more, and then different solutions for our clients. And, you know, you know really well, we have a phenomenal client base and great talent across the organization. And so I think it's very clear that there is more that we can do, and using that framework is a way that I think we can talk about it in the future, where we're putting the initiatives in each of those different dimensions to try to grow the business faster. All right. Thank you. We will take our next question from Brennan Hawken with UBS. Morning, Brennan. How are you? I'm good. I'm good. Thanks for taking my question. So I actually wanted to circle back on expenses and totally appreciate, you know, the commitment that was made to operating leverage and driving down expenses to, you know, to fees. But you know, based on the Q4 guide, I think my quick math suggested that we're gonna be north of 6% on expense growth in 2024. And Jason, as your sort of last act as at least CFO in name, right? Right before the press release went out, you had said that you made another commitment to keep 2025 sub 5%. And so, you know, Dave is an internal candidate, so does that 2025 commitment hold with a new CFO? You know, how should we think about it? How... Like, importantly, I understand operating leverage matters and whatnot, but you know, expense growth has really been an issue. It's gotten more elevated here recently, in recent years, compounded a bit with inflation, but it's not a new issue for Northern. You know, how is it that you guys can get this under control to a point where you can have a more steady cadence of operating leverage without having the bar quite high? Yeah. So, Brennan, part of it is the organizational change. So just fundamentally, that will involve centralizing a number of operations that are now more distributed. And so it's more than just, I'll say, you know, committing to it, it's actually making changes to do that. The other part of it is you have to make the investments, you know, where they're required and when they're required. That's part of managing this for the long term. And in the environment that we've been in as far as just the, I'll call it, the level of volatility and risk that's in the broader environment, we felt that making these investments in the foundation is the right thing to do longer term. Now, that does require, you know, or create some level of variability in what those are. But when we think about what we're doing on the technology front, for example, you know, the modernization that Jason has mentioned, where it's, you know, quickly trying to move off of end-of-life platforms, transitioning to the cloud, which definitely requires investment to do. Increasing the automation of the changes we make within technology, ensuring we have redundancy to the extent that there are incidents, doing more, you know, testing, of all of those platforms to ensure that we have the stability on that front. Making sure that when we are working with third-party providers, that we understand their resiliency as well. So there's a number of things that we've done and are doing to kind of harden and solidify that core because we think that's a good investment for us, not just from a, I'll say, risk and resiliency perspective, but also from a client experience perspective and also from an efficiency perspective. So that's why we've tried to be very clear on what we're doing and why we're doing it, and why we think ultimately, not only is that good for the clients, but it's good for shareholders as well. It's gonna drive, you know, high quality growth as we go forward, and that's the plan. Okay. I look forward to getting some meat on those bones in the coming quarter, so that's great. If I could transition it to the balance sheet, it looks like loans pulled back a decent amount this quarter. I don't think you touched on it. You know, what caused that? And how should we be thinking about loan growth or the outlook for any growth or further decline in balances from here? Sure. I've noted before, the loans and deposits can be very spiky, and the headline is, there's nothing strategic or creating of a trend that we see in what we experienced in the quarter. Then in terms of growth going forward, we've had initiatives in the past to specifically grow the loan book. We don't have that initiative right now. We're not trying to shrink it either, and so you should think about growth in the loan book coming alongside growth in the overall client franchise. A lot of our lending, ironically, it's the deposits are more on the institutional side, the lending is more on the wealth side of the business, and so the correlation will be more tied to growth in the wealth business. Thanks for that. Sure. We will take our next question from Glenn Schorr with Evercore. Good morning. Hi, thanks. How are you? Good morning. Maybe another question on the wealth side. Like, we always want to grow wealth. It's a great business, and you're great at it. You talked about the concept. Maybe drill down a little bit more and because I think you've been making some investments in people, products, and new geographies. Maybe talk a little bit about that, and include maybe a comment about the Hamilton Lane collaboration that you mentioned, that you had a press release on yesterday. Thanks so much. Yeah. So I'll start. So I think that what you should see is us investing even more aggressively at the upper end. You know, we do really well at the high end of the market, and you see it very clearly in what Dave's been able to do with the GFO business, 'cause that's the, on average, those are our largest clients, and that's been growing faster than the rest of wealth. If you were to look beneath that, you'd be able to see that even within the regions, we're doing better at the higher end. That's where our franchise and that's where our value proposition holds well, and we feel great about that. We can invest even more heavily there in revenue-generating and client-generating professionals, and in the talent that supports those clients from an experience perspective. So a lot of RIAs brag about having one or maybe two ACTEC fellows, and those are the most respected people in trust and estate planning. Northern has 15 or 20, and so when clients are trying to go deeper in their estate work, more complicated planning, we've got the professionals to do that, and that's part of the reason why, just in that area, we do well, but also the same thing in investment advising and in banking, and so the more we invest at the upper end of the market, that's where we feel we're going to have a better return. We announced an ultra-high net... a distinct ultra-high net worth group just this past quarter, and we're dedicating professionals to just that area, where they're going to be dealing with clients at the very upper end of wealth advisory, and working closely with the family office business to bring those capabilities into the more traditional wealth space for us. And so there's a lot of things we're excited about, that we feel we're planting seeds for growth. And then I also look at just the talent we're able to bring on board. Really exciting hires across the franchise that we think are going to be helpful to growing the business, growing the client franchise. Glenn, on Hamilton Lane, that is a partnership that we're excited about, which is with our asset servicing business, to provide even better data and analytics on the private investments of our large institutional clients. As you know, as their asset allocators, portfolios have moved more and more to private markets and alternatives, the capabilities required to due diligence them, analyze them, has gone up. We've had our offering, Front Office Solutions, which looks across the entire portfolio, that we've been very successful with. This is, you know, an addition to that that will provide even better, as I said, data analytics to it. Very positive and promising. All right. Thanks so much for all that. Sure. We will take our next question from Gerard Cassidy with RBC. Hey, Gerard, how are you? Good. How are you? Congratulations, Jason. Mike, you touched on Northern One a number of times in your prepared remarks, as well as your answers to questions. As outsiders, investors, how should we measure the success of what you're trying to achieve? Your peers are using similar types of programs as well, or strategies. I was wondering if you could somehow point us to some metrics that we can review regularly just to measure your success in pursuing this strategy. ... Sure, Gerard. So, to your point, using one is not unique. The fact that it's One Northern Trust is what is unique about it, because it's our business that we're focused on with it. And it's something that, Gerard, is really important, I'll say, within the company, but also in the marketplace. Within the company, we want to make sure that we're breaking down silos and that everybody across the company, regardless of what business or group you're in, are working together in order to get the right outcomes. And that can be certainly, as we've talked about on the client front, but it can also be in ensuring that we're getting the right efficiencies across the businesses. So that cuts across that way. And then, as I mentioned, certainly, going to market and with the client, we're stronger as Northern Trust than we are as any one of our businesses alone. So that's what's behind it. To your point on measuring it, you know, the way that we're doing it is, you know, we start with the specific objectives of what we're trying to do. So thinking about specifically, I mentioned, okay, how many times did we, you know, go to market with a new opportunity where it involved, you know, two or all three of our businesses to do that? That's something that we can measure. Granted, it's an internal measurement, you know, or metric, but it has to start there if it's going to flow through to, you know, the KPIs that, that the key performance indicators that we're then looking at, which really, then it's going to be in our organic growth rate. And so that's what we're trying to drive, is a higher organic growth rate. And so to do that, we need to see, you know, that collaboration between the businesses. That then flows into, you know, our financial performance overall, when you add into it, you know, the markets and the impact from that. So, you know, ultimately, you're going to see it in the financial performance, and we can provide, I'll say, some KPIs as we go forward here. That's part of what I mentioned with Steve Fradkin, who, as you know, has worked across all of these businesses in one way or another over his career, and that's why we're looking to not just say One Northern Trust, but actually ensure that we're doing it by operationalizing a lot of those activities. Very good. I apologize for screwing up the name Northern One. I meant One Northern Trust, but thank you. Jason, coming back, I know you touched on the net interest income expectations for the Q4. And with the balance sheet duration, I think you said the entire balance sheet's about a year, and securities portfolio is a little longer than that. If the forward curve is correct, and we do see a Fed funds rate by the end of next year in that 3.5% range, let's call it, and the long end of the curve stays anchored above 4%, we get a positive slope in the curve. So what... I'm not asking for a guidance number on 25 NII, but generally, is that a favorable net, net interest income environment for you folks, or can you share some color there? For various reasons, we came shorter on the securities portfolio, and so the rest of the balance sheet is pretty stable. The cash is what it is, and the loan book, we haven't done anything to strategically change the duration of that effectively. The duration of the balance sheet and NII moves largely with what we do with the securities portfolio. We did come shorter. That played out well for us. We did it for a variety of reasons. One was a view of the yield curve, and again, that played out well for us. At this point, if we look at what the yield curve is telling us, it's obviously going to be more of a headwind going into next year. So especially if we see five, six, seven rate cuts, there's, you know, we're not going to change our risk tolerances, our philosophy, our approach on how we manage the balance sheet, so that's going to be a headwind. That said, there are some offsets to it that are occurring just in how we normally manage the portfolio. For example, one, we are feeling better about the stability of the deposit level, and so that gives us the ability to consider using more non-HQLA. Second, if we did see a rise effectively in the base of the deposit book, and so we think deposit levels are positive, and then there's still a slight benefit into next year from the reinvestment of securities that are maturing. Not as much as what we'd have seen before, but there is some. So those are just some of the puts and takes. You're right, it's too early for us to give a guidance, but I did want to make sure that people realize all the different factors that are playing into it. There are some puts as well as the takes. Very good. Is it fair to say that I think you'll point it out to us in your Q when you give us the interest sensitivity table, that you guys are asset sensitive presently at the end of the Q3? Is that a fair statement? Yeah, and thanks for clarifying that. I should have mentioned that in my summary of where we are, Gerard. So there is slight asset sensitivity at this point, just largely coming from the actions we've taken in the balance sheet over the last couple of years. Appreciate it. Thank you so much. You bet. We will take our next question from Brian Bedell with Deutsche Bank. Great. Thanks, good morning. Thanks, good morning, and congrats to you and everyone else on the organizational changes. Maybe a question for you, Jason, and Mike could chime in, too, maybe. But just going back to the organic growth comments, and I appreciate all of the comments you've discussed in Q&A. But in the wealth segment, you know, first and foremost, I think we're focusing on our organic revenue growth as opposed to asset growth. So I just want to confirm that. And do you see more of that organic growth coming internally? So from, let's say, selling more, or, you know, providing more Northern Trust investment managed product, you, you know, say, doing more lending potentially within the wealth segment, other things that you can do internally as opposed to, getting new customers. So, would we see more of the organic growth, revenue growth coming from that? And if you could just think about maybe just what type of target organic growth rate are you looking for in wealth over time? Yep. So let me start with the end. We have talked about somewhere around a 3% level of organic growth for the business overall. We've historically said that we'd like to see that we should expect a higher amount coming from asset servicing and a little bit lower amount from wealth. I think we should try to be more have more of an expectation that that's balanced. And so I think in the medium term, a 2.5%-3% number for wealth is reasonable. If we start to break it down with where that's coming from, it's got to be a combination of both new clients and doing more with existing clients. But I... Within the existing client base, there's a lot of different categories that people should think about, and I want to try and focus on a couple to give a sense of where we're focusing, because it's less for us about thinking about more product utilization. We've talked about that, but it's not something that we would aggressively target. And even more lending, if that comes organically within our philosophy and risk tolerances, great, but not an area where we see we're gonna be pushing the envelope and changing our risk tolerances. And so it's more thinking about our wallet share with clients, thinking about different solutions we can do with them. And also, at the upper end of the market, to the extent that our overall client base shifts that way, those clients are still in a mode of, they still gain wealth, and so their growth becomes our growth. And our view is that that's organic as well, if they're creating more flows into our business, not just their market growth, which we don't think of as organic, but their new flows coming into the company. Then you couple that with what we should be able to do from a new client perspective, and that's how we're thinking about getting to that organic growth target level. That's super helpful. And then maybe just a couple of cleanup questions. Just one on loan pricing. It looks like the yields went up. Is that a factor of the lag? I think you've got about, correct me if I'm wrong, but I think three-quarters of the book prices within three months, that's variable rate, and then there's a portion that prices over longer time periods. So just maybe if you can talk about the pricing relative to rates in that book. And then just one on expenses. And thanks for all the commentary on expenses. It's great. Just one question there would be that expense growth, which looks like 6% this year, you're targeting to bring that down. If you have a really strong revenue year and you're generating operating, you know, positive operating leverage on total revenue and your expense-to-fee is moving towards your goal, you know, is it possible that you'd still have expense growth that could be, you know, 6% or higher in that scenario? First, on the lags, you got them right, in terms of the month lag. But just keep in mind, there's a small portion in both business that is daily as well. It's tied more to the extent that clients have more mutual funds. But that's a very small dynamic. But you're right in general on the month lag. And then on the expense growth, and Mike likely want to comment on it here. One of the things we talked about last year was that we want to try to decouple the concept of if we have a strong revenue growth, that should lead to a higher expense growth. Now, some of that is inevitable, because if we're growing the business, there are some expenses that are going to come along with it. We've talked about the impact of markets on expenses, but in general, we shouldn't. We're trying to get away from that dynamic of projecting higher revenue growth and therefore tolerating higher expense growth. It has to be more of an absolute. And so that's why next year we came into this year with good confidence about being able to do 5% or less. Coming in next year, confidence level is even higher. Agreed. Again, same framework that we've talked about, Brian. Yep, yep. And thank you for that. Just on the pricing, I was talking about the loans, the variable rate loans on that, not the market, so is it three-quarters of the book, I think, of the loans were variable rate and reset- Yeah. within three months and a quarter Yep. Reset later. So, the lag is what drove the yield up this quarter? That's... No, it was overdrafts were a little bit higher. Okay. That's what drove. Thanks. I really appreciate you clarifying that. But, and it is about, it's like 70%-80% that's floating in the loan book. Got it. Thank you so much. Yep. Thank you. We will take our next question from Jim Mitchell with Seaport Global. Hey, good morning. Morning, Jason. Yeah, good morning. Just maybe on the capital return, you guys have been stepping up the buybacks. Capital ratios are pretty flat, and as you pointed out, still well above the minimum. So is this something we should expect this level for, you know, the intermediate term, as profitability improves and, you know, rates are pretty stable, so OCI looks good. Do you can you keep this level up, or is this sort of a high watermark on the buyback side? It's not, you know, it's maybe neither. So it is elevated, but it should stay it could stay elevated for a while. If I walk through the pieces, if you think about, you know, we have about a third of net income going to dividends at this point. We talk about it being 30%-50% over time, and it's right at about a third right now. If you take out the or even actually including the equity investment and the Visa dynamic. But us being at 12.5% or 12.6%, that's the upper end of where we have been in CET1, and we've been at that level before, and so we're comfortable at that level, but it's the upper end. But Visa, you know, monetizing that obviously put a lot of liquidity available for share repurchase, and so we are deploying that over time, and we could continue to do that and still be at approximately this 12.5% level. Maybe it comes down a little bit. The reason we tolerate that is we know at this point we still have other Visa tranches coming over the next year or two, and so- Right. It'll be another roughly equivalent benefit, and so would be okay for us to see the CET1 come down from this 12.6% a little bit. But we're thinking about it, working through it, and not trying to be overly aggressive at any point in time, trying to take more of a thoughtful, you know, thoughtful approach over several quarters, not trying to do anything too aggressively. Right. Great. And then when you think about the monetization of the second half of the Visa shares, that's obviously a tailwind. Do you contemplate maybe longer term, intermediate term of a lower than 12.5% CET1, given the excess you have? Can you take it to 12 or lower? I should... If we're talking that far in the future, I should let Mike or... Yeah. As Jason saying, 12.6% is a very strong level of capital, and that's fine given the, you know, say, the broader environment, and yet at the same time, yeah, absolutely, are comfortable at lower levels as well. So we feel very good about the capital position and the higher level of repurchases that we had in this quarter and as we move into next year. Okay, great. Thanks for taking my questions. Sure. Thanks, John. We will take our next question from Vivek Juneja with JPMorgan. Hi. Thanks. Morning. A couple of questions. Firstly, Mike, Jason, you all mentioned, you know, the incremental spending for resilience, modernization, et cetera. That's what's driven your expense growth to the 6% level. How much has that added? Would you say it's a couple hundred basis points to the growth rate this year? And if that goes away in three quarters, what would that does that bring you down to, since you won't need to spend that 4% or below in the second half of next year? Any more clarification on that? Any more color on that? Yeah. So, Vivek, I think it's difficult to, I'll say, do an attribution on the 6% and then, you know, project that all going forward. I do think that one indication of the growth in the areas that I talked about there, you see it in the higher growth rate that we have in equipment and in services. So, that's where you'll see most of that technology spend come through. But it's not, you know, it's that doesn't make up 6%, if you will. As Jason has broken it down before, you know, there are other components that drive overall, including the fact that, you know, we are levered to the market, both on the revenue side and on the expense side. So that's an aspect of what drove that, the rate to 6% this year. As we go forward, as we've talked about, Vivek, certainly looking to bring that down. You know, but we'll make the investments we need in technology and just more broadly, to be able to, to accomplish what we want to overall. Yeah. Separate question for you, Mike. You know, there was a question earlier about the organizational changes. Why not use this opportunity where you're making such a lot of changes at one shot to bring in some more talent from the outside? Yeah. Over time, Vivek, we will continue to do a combination of both. And so there are a number of roles, you know, some of which we talked about here, but other roles which we will go to market and bring in external talent. For some time period, you know, that has been the strategy on management. I mean, as you know, as much as you might say, you know, a Jason or a Dave or myself have been at Northern for some time period, but we'd actually been at other places longer than we've been at Northern. So it's a mix between, you know, promoting talent within, because we think we have strong talent that we develop and having a strong talent development, you know, program, if you will, is a big part of what we want to do, and at the same time bringing in talent from the outside. So, there will be plenty of opportunities to be able to do that. Thank you. Sure. We will take our next question from Mike Mayo with Wells Fargo. Hi, thanks for my follow-up. Yeah, so did I hear you right? You said you're targeting organic growth in wealth of 2.5%-3%. How does that compare to the last few years? And when you benchmark that versus peers, you know, how does that stack up? You know, when you see growth in the alt space, private equity, some other brokers, it just seems like it's more than that, and maybe it's just the sandbox where you compete. Thanks. Sure. So, you know, a couple of things. One, it's. That would be higher than what it's been over the last couple of years. It's been lower than that over the last couple of years. Before that, we had been within that target range. And so we've done it before, and that's why we feel confident we can do it, we can do it again. And then from comparative purposes, you know, there are some firms that are doing better than that and some that are doing worse. We want to be, we want to be a winner. We want to be at the top end of that range. And I also think it's very hard to compare. Some firms include banking, some firms don't. Some firms include their product fees, some firms don't, and our model also is from a profitability perspective, because of our financial model, that we can do better from an earnings perspective, if relative to our peers, if we do the same amount of growth. That's our profitability and the incremental profitability of our wealth business is very strong. That's why, that's part of the reason it's such a good business. The clients are embedded and they're institutionalized, and it makes it so that our growth leads to better economics for shareholders, and so we feel really good about that target and what it would mean for shareholders. Thank you. Thank you. We do not have any further questions. I would like to turn the call back to Jennifer Childe for closing remarks. Thanks for your participation on today's call. We look forward to speaking with you again in the near future. This concludes today's call. Thank you for your participation. You may now disconnect.