Brennan Hawken

O'Grady laid out a prioritized list: portfolio repositioning, RWA deployment, potential inorganic use, and buybacks, confirming the order was significant.

Fox explained a handful of very large clients did strategic repositioning, driving $9B in average deposit increase. Not core operational deposits and not there for long, but NTRS wants to accommodate. Expects to keep $4-5B of the $9B increase going forward.

O'Grady explained family office liquidity is actively managed across deposits, money market funds, and short-term treasuries, so deposit levels are less indicative of organic growth. Family Office Solutions leverages GFO capabilities for families without their own office; started in Central region, now rolling out to other regions.

Fox attributed NIB growth to seasonality plus cash hoarding during 43-day government shutdown. Q4 NII is not a jumping-off point; Q1 will be lower. Wholesale funding rolloff enabled deposit cost reductions with more tools available.

O'Grady cited early days of financial results from company-wide execution, with confidence to raise medium-term targets over a three-to-five-year timeframe. Pointed to positive operating leverage already demonstrated.

O'Grady confirmed focus on profitability over gross top-line growth in AS. Three levers: new business at accretive margins, improving or transitioning existing underperformers, and operational efficiency through client-centric capability model under COO.

O'Grady acknowledged persistent fee pressure in asset management but nothing notable this quarter. On servicing side, no reduction in fee levels, and pricing discipline is prioritized to ensure accretive margins on new business.

O'Grady gave a thorough response: Board takes fiduciary duties seriously, performance divides into pre-investment period (32% margins, double-digit EPS growth) and investment period that has lagged, with One Northern Trust strategy producing proof points 1.5 years in.

O'Grady explained their approach is to deliver within a range before setting higher targets, emphasizing that ROE alone isn't the goal, shareholders want both growth and returns, which is why organic growth is equally important to the strategy.

Fox expressed strong conviction in the 5% target after four months in role, removing ambiguity from his earlier December conference comments.

O'Grady defended the 10-15% ROE range as covering different market and capital environments, while emphasizing the balance between growth and returns.

Coleman said 30% is the current full-year estimate, helped by mix toward financing, while the market for talent remains competitive.

Coleman confirmed some deleveraging with about 3% sequential financing growth but did not split balances from pricing.

Coleman reframed the question around asset class diversification rather than giving a specific percentage, noting the book spans residential, mortgages, consumer, private credit, and PE assets.

Solomon acknowledged sponsor activity was slower than expected but emphasized the business is now big, broad, and diversified enough that weak sponsors didn't materially affect overall performance.

Solomon said Apple savings has no transition agreement yet and will continue. Platform Solutions expected small pretax loss for the year, immaterial to GS.

Solomon said Q4 distorted by Apple Card accounting and comp accrual timing. Full year shows clear operating leverage: revs +9%, pretax +19%, EPS +27%.

Coleman confirmed shift from Q4-only to spread throughout year. Transaction-based expenses remain biggest non-comp driver, correlated with activity.

Coleman said scaling and fundraising drives management fee growth with improving marginal margin. HPI wind-down frees some capital but margin improvement is primary.

Coleman confirmed they grew wealth lending by $5 billion on the year but remain very low relative to peers with multiyear growth plan.

Coleman outlined dual strategy: driving operating leverage while funding investment in engineering and technology through efficiency gains.

Dukes said the roughly 6 basis point net revenue yield and 6 basis point margin contribution match prior guidance after custodial, licensing and marketing costs.

Dukes confirmed the 22.0 exit rate and attributed compression to late-quarter market and flow strength in lower-fee QQQ, QQQM and RSP.

Andrew outlined four priorities: personalization (ETFs, SMAs, models), income demand across geographies, non-U.S. growth in Asia and EMEA (now 33-40% of AUM), and private markets into wealth management and defined contribution globally.

Andrew confirmed securities lending eligibility but characterized the opportunity as not huge given position concentration. Not seen as a major revenue driver.

Allison expects comp ratio to return within 38-42% range at the high end (around 40-41%), down from 42.7% in 2025, with QQQ revenue stabilization helping. Continued selective investment hiring enabled by QQQ revenue addition.

Allison explained QQQ adds stabilization to net revenue yield at 6 bps. Key modeling change: third-party fees as percentage of management fees moving from 13-14% to 22-23% range due to QQQ licensing and custodial fees.

Allison confirmed all three proxy proposals are progressing consistently with no divergence.

Allison confirmed proxy solicitation costs are fund marketing expenses, does not foresee them becoming Invesco operating expenses, especially if meeting proceeds on December 5 as scheduled.

Allison confirmed 1% expense growth vs $3.03B 2024 base, clarified $22M organizational charge was 2023, and noted implementation costs continue through 2026.

Andrew noted early positive experience with first wave but too early for full assessment. Emphasized singular platform will drive efficiency and operating leverage.

Paul clarified no change in meaning and explained the delay is sector-specific (AI concerns hitting tech deals); addressed directly.

Shoukry explained negative operating leverage as mix shift: independent channel payouts higher than employee because independents cover own overhead, real estate, health insurance. Recruiting skewed toward independent side over last year. Additionally, tiered payout systems mean higher production pushes advisers up the payout grid.

Shoukry declined to comment on specific competitor M&A, noting friendly competitors doing good jobs retaining advisers. Emphasized broad-based strength across wires, regionals, and other independents. Largest addressable market across all affiliation options with decades of experience in each.

Shoukry pointed to prior quarter's $500M+ Capital Markets revenue and ~17.5% pretax margin showing significant operating leverage. Expressed disappointment if Capital Markets doesn't improve meaningfully above $380M level for the rest of the year.

Shoukry confirmed lower rates driving more SBL demand as floating-rate loans become more attractive. Momentum and growth continuing into FY2026 start. See significant tailwinds for continued SBL balance growth.

Shoukry deferred FY2026 non-comp guidance to next earnings call. Budget process ongoing. Growth-correlated items like FDIC insurance and sub-advisory fees will naturally rise. Pointed to 20%+ margin target as the guidepost.

Reilly noted C&I new origination still muted with extremely tight spreads. Won't force growth below risk-adjusted return thresholds. Hopes for volume and spread normalization in 2025.

Reilly confirmed deposit beta ~35% on sweep balances, ~100% on ESP. Expects similar deposit beta dynamics on the way down as on the way up.

Reilly confirmed general sponsor reengagement across sectors. New mandates and engagement discussions beyond existing inventory. Backlog looks good for near term.

Shoukry confirmed ESP is roughly 100% deposit beta. Noted roughly half of total balances are higher-rate, higher-beta products providing protection to downside rates.

Dermot said pricing pressure has eased versus 2-3 years ago as a lower cost to serve and differentiated service let BNY hold pricing better.

Robin attributed rising comp per employee to deliberate workforce repositioning and more dynamic talent, funded by better overall workforce management.

CFO noted Q1 was volume-driven from clients rehedging and rebalancing amid macro uncertainty. Reaffirmed mid-single-digit net new asset growth commitment. Archer integration into Wealth Solutions expected to drive more capabilities.

CFO attributed elevated deposits to macro uncertainty driving higher client liquidity. More non-interest-bearing than anticipated. Euro/sterling only ~25% of portfolio; betas peaked at 80% on way up, expected symmetric going down.

CFO expects higher organic growth in 2026 from commercial model flywheel and new Chief Product and Innovation Officer. CEO pushed back on over-earning framing, noting uncertainty in composition between NII and fees but confidence in total revenue guide.

CFO attributed DARTs softness to seasonal Q3 after elevated Q2 Liberation Day activity. Over 50 Wove clients signed, deconversion now behind them, and net new asset growth expected to reaccelerate.

CFO noted no step-function change in securities lending specifically. CEO reframed the opportunity as broader capital markets activity driving corporate trust, depository receipts, and debt capital markets more than lending alone.

CFO reiterated mid-single-digit NNA growth target across RIAs, broker-dealers, and banks, citing 36 Wove clients and 41 signed contracts as evidence of momentum.

CFO attributed NII confidence to proactive balance sheet management across CIO, GLS, and treasury functions, with NIBs expected in $44-46B range for full year.

Galik reported strong early interest, with clients connecting chatbots before any public announcement, and outlined the human-in-the-loop approach.

Paul declined to provide the currency-level breakdown, only explaining why they differentiate USD vs non-USD in their disclosures.

Paul confirmed rough symmetry, noting minor asymmetry only when crossing from positive to negative rate territory in certain non-USD currencies.

Paul explained the repricing lag: segregated cash assets retain slightly higher rates due to residual duration, while customer credit balance interest resets immediately to lower overnight rates, creating a temporary favorable spread.

Paul outlined the OCC process: pre-filing discussions, official application filed, now awaiting approval. The rationale is that a National Trust Charter Bank enables mutual fund and ETF custody that broker-dealer regulations currently prohibit, with operational target by year-end.

Paul explained securities lending specials tend to correlate with IPO and M&A activity, emphasizing IBKR has built systems to optimize when hard-to-borrow opportunities arise, but cautioned it is not cyclically predictable.

Milan acknowledged the theoretical case that AI tools should lead to faster research and trading decisions, but admitted IBKR has no visibility into whether AI is actually driving current volume increases. Thomas quipped he did not recall making the original prediction.

Milan attributed growth to risk-on client positioning and expects balances to be maintained or grow slightly, correlated with stock market direction.

Milan acknowledged most FAs don't use margin but prop traders and sophisticated individuals continue deploying leverage aggressively.