Northern Trust Corporation (NTRS) Earnings Call Transcript & Summary

This is Jason Goldberg, again, I cover the U.S. large-cap bank stocks here at Barclays, and this is our 19th Annual Global Financial Services Conference. Next up with us, very pleased to have Northern Trust. From the company we have Jason Tyler, their Chief Financial Officer; and Steve Fradkin, who's President of Wealth Management, which is over 40% of the company's revenues and a really well-positioned business. Thank you for joining us, guys.

Thanks, Jason. Congratulations on a good conference.

Thank you. Thank you. I guess when we think about the current backdrop, obviously, strong equity markets, generally speaking, and increased activity levels have certainly aided many of the businesses. In addition, Northern continues to make strategic investments, which have been successful. I guess just looking out, maybe just talk to what you see as the biggest growth opportunities in each business? Obviously, Steve, if you can talk on wealth management? And Jason, maybe you fill in on asset servicing and investment management?

Jason, do you want me to start?

Yes.

So look, strong equity markets mean more millionaires and more multimillionaires. So the equity market growth is good for us. But beyond the obvious of more potential clients in our profile. It also means more complexity, more opportunity, more planning techniques. And so it's not just the market gets bigger. It's the need of the clients gets more robust. And so their need for wealth transfer planning, for philanthropy, for business advisory services for all the things that we do, grows. So the other thing I'd say is that the growth in equity markets creates a spur of action. IPOs, private equity, specs. And so this all combines, and we're seeing it across the 3 regions of Wealth Management. We organize Westland East and then in our Global Family Office business. Good market growth is good for our Wealth Management business. Jason?

Thanks, Steve. I think it's similar in the institutional business, then that business has also had -- experienced good growth on both segments within that group. And so they separate things largely by asset owner and asset manager and both of those segments have done well. The asset owner segment has grown. That's more of a less secular growth, for sure, but it's actually had double-digit growth on a year-to-date year-over-year basis. And the asset manager segment has been even higher than that high teens growth rate. And so and that's helped by markets, but the organic growth has been good there as well. And then we can talk about our asset management business as well, and that's been strong. We've seen good growth in assets, particularly in the ESG segment, assets they are up from $100 billion to over $150 billion now. And they've also seen good growth overall since in the health crisis and in the money market mutual fund space as well. And that's come with fee waivers, but the base of business there has clearly grown well. And so across the enterprise, and we're seeing good growth.

That's helpful, I think, overview to begin. And just a reminder for those listening on the top right-hand corner of your screen, you'll see several buttons. One of them is Ask A Question. Feel free to send in questions. We've been able to get to a lot of them throughout the morning. And also, there's a button called survey, some of you have been shy, but feel click on that and answer our automated response -- our automated response questions, and we'll be examining those results tonight. Jason, I want to certainly come into a lot of the financials, but I got Steve here. So I'm going to spend a moment on wealth management, just given it is such a good business for Northern. And maybe, Steve, if you can update us on just kind of your strategy around the wealth management business and just how you're kind of leveraging technology and digital and just how that business is evolving?

Yes. Thanks, Jason. Great question. Look, our focus on -- from the technology perspective relative to wealth management is about digitally enabling the human experience. It's not digital or human, it's digitally enabling and integrating that experience. In the industry, both financial services and otherwise, you hear a lot about transformation. We don't really use that word. We use metamorphosis. And the distinction is transformation is about going from something you aren't to something new and different. We don't see that. We've got a digital platform. We're evolving with the changing needs of our clients. I would say the big things that I think of when I think about digital metamorphosis within our wealth management business is we've really reframed the way we think about digital to client journeys versus Northern Trust products. Clients don't think in terms of treasury management or banking or trust. They have a need. They want to move money. They don't care what system it is. And a lot of our past development was feature functionality will make this thing better. We've totally reframed the way we think about it to make our platform sort of ubiquitous and more think about how do clients want to engage, how do we make that easier, less friction filled. And so this notion of journeys is really important. The second thing would be we're thinking about data as an asset, not an outcome. Data in the old paradigm was you buy and sell, and we have to account for it. It's just like something we have that we can tell you, your holdings and your valuation. But that data enables us to provide better advice. We can use algorithms to predict what you're going to need tomorrow based on who you are and the profile you have with us. And then the third thing I'd say, Jason, is we're taking more of a, I'll call it, a venture approach to our development. Instead of these long term, we have an initiative and in year 5 will deliver much shorter sprints, it's working or it's not working. We have to change. We have to stop. And so it's really a totally different way about thinking about technology. Today, we have 19 journeys on our docket that we're working on to make experiences better for our clients. So it's exciting. It's different, and it's both.

There are a lot of companies at the conference today and yesterday and just bit tomorrow, that talk about wanting to be bigger in wealth management. It's obviously still a very fragmented market, but more players, both banks and nonbanks increasing their efforts in our emphasis here. I guess, first of all, have you seen any kind of changes in the competitive landscape. And I know you try to differentiate yourselves through things like the Northern Trust Institute and goals-based investing. And is there any talk to how that maybe differentiates to you and is that resonating with clients?

Yes, sure. Well, look, it's a very competitive market. Everyone is in it, big, small, local, national, global. There's always been a lot of competition in the wealth business which is a little different for our institutional business where you have a narrower group of competitors. So we're used to that. That said, all business is local, who we compete with in Denver is different than Seattle is different than Tampa. But still our big competitor is ourselves. We want to make sure we execute because we know when we execute well, we're going to win well more often than not. And what I mean by that, Jason, is, yes, there are many, many wealth management firms, but there are not that many who are uniquely qualified to serve the most affluent people in this country. And the reason I say that is if you define wealth management as asset management, 60-40, 40-60, there's thousands of people who could -- people and firms that can offer that. But if you define wealth management as helping families optimize their wealth, not just their investment returns, but their net after-tax returns, get it to the next generation, educate the family members, help them with their business, help them with their stock options, help them with their philanthropy, the number of providers narrows dramatically in our mind. And so is it competitive? Absolutely. Are we afraid of going up against anyone? Absolutely not. Our key is making sure we execute as well as we're capable of doing. And so far, I would say, candidly, I think we're doing a pretty good job of that. So very competitive. But I think we stake out a very unique place. We serve 30% of the Forbes 400 Wealth East Americans. And so we have a repository of experience and knowledge that others just don't have, and that's a real competitive advantage for us.

Another trend we've seen is some of the firms that have historically only focused on kind of ultra high net worth, kind of moving down market, obviously, leveraging digital capabilities to do so. Do you have a kind of strategy for that segment? Or how do you think about that?

Yes. I mean down market is all relative. And I think people conflate robo advising with down market. We have order of magnitude, 50,000 clients that are millionaires, multimillionaires lower end of the market. That's not retail, that's not a brand on every quarter. That's just millionaires, but they're not $20 million $50 million, $100 million. So we're already well in that business, and it's a very important market for us and one that we serve well. I think when we think about down market, perhaps the way you're describing it, Jason, it's not so much about someone with $250,000, nothing against $250,000, that's just not our principal focus, it's more that segment below 40, self-made not liquid. They may be on paper multimillionaires, but they can't qualify for their first mortgage. And so it's not that we're just looking for anyone with money, and we're looking for people who fit our profile and are likely to grow into what we do. And so we are running experiments around the country with a subset of prospective clients who are wealthy on paper but not liquid and how can we serve them today better so that we can be there for them as their liquidity evolves over time. So I wouldn't say we're going down market in a mass retail way. I'd say we're going down in a selective way for those individuals and families who will, no doubt, fit our profile over time. And that's exciting for us.

That makes sense. And I guess another opportunity is this whole generational wealth transfer that we keep on hearing about. Just what are you doing around that? And just how can you help gauge how much of your new client wins mandates come from traditional long-standing relation -- long-established family offices and foundations versus kind of newly created wealth and technology? And just how are you tapping into the new wealth creation channel? Maybe those are 2 separate questions.

Well, on intergenerational wealth transfer. There's been a lot written about the biggest wave of intergenerational wealth transfer ever, and that's true. But one should also remember a lot of times when you talk about intergenerational wealth transfer and you don't think that much about it, you sort of think it's going to go to these young kids, from adult to kid. But if you think about life expectancy in the United States, the life expectancy is in the 80s. And arguably, affluent people outlive the rest of us because they have better health care and so forth. So if you're 80 or 85, when you pass away, it's pretty likely that your kids are 50-something, not 20 something. And so the first thing about intergenerational wealth transfer is, you don't necessarily have to think, well, you're serving an 80-year-old today, and it's going to be a 20-year-old tomorrow. That's the grandkid. But there's going to be a stop in between for much of this money.. So we want to make sure that we're not just thinking about 80-year-old mega millionaire to robo advice. There's a 50-year-old who plans to be around for a while and is catching this first. So is there intergenerational wealth transfer? Yes. Have we seen that for our 133 years of experience? Yes. Is this transfer different? Yes. It's different in size, but it's the same thing. We have to adapt both to the 50-year-old who catches it and the 50-year-old kids who may be 20, and they'll catch some of it. We're doing a lot on the family education and governance side to help with that. I think as to your question about where is wealth coming from, I'd say there's not a lot new here. We have old multigenerational wealth. We have new Silicon Valley regs to Rich's wealth overnight. It's across the spectrum. I see every week what we're -- what's in our pipeline, and it's extraordinary. And it's very diversified, selling a spice company, a tech entrepreneur, an athlete, a public official, it's all over the map. So I don't know, Jason, that I could give you how much is new, new wealth versus older wealth. But most of what we're seeing is entrepreneurial wealth. It's less multi-generational than outsiders would think. It's often someone started a business and it was just a little business until it wasn't. And the environment got bigger and better. And you've never heard of the company. You don't know the product, but they're selling it for $1 billion. That's very common. America is a great place.

Sounds good. I appreciate that, Steve. Maybe Jason, maybe shifting gears to you. And maybe just start with kind of maybe current deposit trends. Our inflows finally slowing or you're beginning to see clients drawing down and deploying funds? And if not now, when would you expect to see that?

It's hard -- it's been hard to predict. We -- the increase in deposit has been unbelievable. And most of this, by the way, you mentioned the fact that Steve's business represents 40% -- roughly 40% of the revenue of the company, but it's more than 50% of the pretax profit, and it's a good chunk of the deposits and probably 85% of the loans. And so a lot of the balance sheet activity that's come a lot of the growth is related to the dynamics that Steve's talking about. On the deposit side, it's more -- a lot of that comes internationally as a lot of the international clients prefer using single counterparty risk and go to balance sheet as opposed to funds. And so that's a sophisticated client group and the balances have gone up there. We were at $85 billion pre-health crisis where we've been at $120 million, $130 million. The first couple of months of this quarter, Jason, have been pretty flat relative to where we were at the end of the -- what we saw in last quarter. It's hard to tell going forward where that's going to go. I think is right now, clients are seeing an amazingly flat yield curve. And so with their cash allocation, they don't think they're going to do they don't see much point in spending a lot of time or taking additional risk. And so I don't think it's actually as much when will rates -- when will the share of the curve rises. It's when will we get steepness in the rate curve so that clients are paid to move away from cash. That will create some movement. The other dynamic, though, is that equity markets have done well. And there's a portion of the deposit volumes that we have that are just related to asset allocation and the fact that clients have 20%, 30%, 40% more than they did before, and they want higher cash allocations as well. And so that component of it, as long as equity markets maintain good levels, I think it's going to be more stable, and the treasury team and our asset management experts, I know feel the same way.

And I guess, so against that backdrop, how do you expect, I guess, do you expect the size of the balance sheet to start shrinking as the Fed rolls back QE, there's been kind of talk of tapering later this year? And just how sticky are these pandemic-driven deposit inflows?

Yes. Yes. I -- first of all, our balance sheet can be -- the deposits we get, it can be spiky, and we'll have clients that will say we want to put $1 billion or $2 billion or $3 billion on. And I remind people, it's the same thing on the lending side. Steve's got incredibly high-quality clients, incredibly high-quality borrowers and sometimes they would rather borrow a lot of money from our Wealth Management business as opposed to liquidating a high-quality asset with a low cost basis. And so a lot of this is going to be spiky. But in general, I think when we start to see tapering when we start to see some steepness in the yield curve, I mean you'd have to expect that some of that would come down. And it plays into some other dynamics that might be interesting for people, too, Jason, because part of the growth that we've -- part of even our capital activity ties to this concept of what do we think is going to happen with the size of the balance sheet. And it's less around deposits and more that construct and what are we doing with those deposits? Are we keeping them very short? Or are we investing in securities? Or do we see loan demand? That's driving capital activities as well. So I think your questions are spot on. It's important dynamics that we're going to be thinking about. But hard to predict. The good news is we've maintained really strong balance sheet. And I think now we've played through a lot of the repricing of the securities portfolio. Still some of that is coming -- is getting repriced on a quarterly basis, but we're in a narrower band for sure.

So deposits flat for to date, just maybe, I guess, any updated thoughts on how net interest income trends during the quarter progressing? I think on the call, you talked about you might not be at the bottom yet, but it would likely be within a fairly slight tight range going forward, how you're thinking about that?

Yes. It's playing out that way is that the range is tightening at this point, at least through the first couple of quarters. And so we haven't seen much movement. The deposit levels have hung in well. And the one dynamic that has been a pleasant surprise, and Steve could comment on it as well, that even though the balance sheet size has been about the same, loan demand has been -- has actually -- has been strong. We haven't seen that come back down yet. Again, it's spiky. And so we can't claim that this is a new normal level. But Steve's business has worked very deliberately on communicating with clients that we're not a reluctant lender. The balance sheet is there for them if they need that liquidity. And that's driven pretty good loan balances. They've hung in better than what I would have anticipated. Usually, we'll see loans come down intra-quarter. And we haven't seen that type of reduction at least so far into -- at least so far into the quarter.

Got it. And then during the second quarter earnings call, you also mentioned your fee waivers run rate to come down slightly to peak and was at about, I think, $70 million quarterly run rate at the time. Just any updates there? I know kind of 1 month LIBOR was kind of running in 8 to 9 or 9 to 10 basis point range kind of posted mid-June Fed actions last few weeks have been closer to 8 basis points. Just what are you thinking here?

Yes. I mean people will listen to what you just said and say what's the difference between 8 and 9. It's a lot on a $275 million or $300 billion portfolio, a basis point is -- it's going to drive a lot. It's going to give $30 million annualized. And so you're going to -- you'll see at least so far into the quarter right now, at least, as we look today, the run rate is a little higher than 70%, about 75% is what we're at right now. That's a mix of a bunch of different factors, Jason. Largely as a result of what you just mentioned, which is that rates have actually compressed a little bit. And but also, obviously, volumes can drive that and where we are in investing in the portfolio, whether the teams are stepping out or moving in a little bit some mix between the portfolios. But the headline is waiver is up a little bit, about $5 million on a quarterly run rate basis from where we landed the quarter.

And then just maybe remind us obviously, this is more of a temporary phenomenon, but how much the short rates need to move up before you kind of recapture that 75%?

Yes. The good news is that they don't have to move up a lot. And part of that is a lot of our a lot of our -- the bulk of our money market mutual fund business is very institutional in nature. And so we're not trying to get yields back up to cover a 40 or 50 basis point fee. Most of the portfolio is priced at 15 to 20 basis points. And so even 1 hike from the Fed, should drive rates to where we can get the -- the vast majority of that back within several weeks, but that would put us back to eliminating the waivers mostly. Again, the whole portfolio isn't just invested overnight, it's invested out. And so the rest of the yield curve matters a little bit as well. But ultimately, 1 hike would certainly get us at least most, if not all, of the waivers back.

Got you. All right. And then, I guess, at the beginning of the year, you talked about some actions to come up with an annual net savings of about $50 million. On the second quarter call, you indicated that a lot of those savings have been realized. But I guess beyond that are kind of any more expense levers? And if so, under what conditions we consider letting those expense savings fall to the bottom line?

Well, some will definitely -- some have and will definitely fall and that the program that we talked about in January is coming through well. It's been executed extremely well. And you know the culture of Northern Trust from covering it for so long, Jason. We don't do that a lot, and it's -- but we felt it was prudent and appropriate to do it. And so we've been executing through that well. If we think about the overall, just the expense landscape. At this point, even though we've generated good savings there, we also know that we've got inflation and other components of the business, and we've talked about wanting to make investments. Steve talked through the investment he's making in wealth management around digital. And then there are other areas as well. We know everyone is investing in to deepen and thicken our defenses around cyber issues. And so we certainly are doing more of that as every firm is relative to what we would have expected this time last year. And so some of those savings will be eaten up, we'll find efficiencies elsewhere. But the good news is that, that program has gone well and has definitely helped profitability.

And I guess just got a couple of questions from the audience. Just any comments about the near-term expense outlook, last quarter, you had some elevated lines. This quarter, you tend to have the Northern Trust open. Anything else you'd like to highlight?

Yes. So it was bittersweet. It was the last year. We did 14 years. Steve probably did 14 programs of getting around the course for that without hurting anybody. And it was a really great investment for us. But as all things do, it had run its course for us, and it was very bittersweet because we got good value out of that over the years. And we'll certainly figure out what's next for us. And -- but that was a big investment and sad to see that go away. That said, as we think about some of the other line items, we did have -- we obviously saw 2 big line items, equipment, software and outside services were the ones that you and I and others, Jason, have been talking about and looking at and seen some elevation. Nothing different than what I mentioned on the call in July from that perspective. In general, we'll see some volatility there. That's where this technology investment that I talked about will be reflected on the income statement, but nothing materially different than what we talked about on the call.

Got it. And then I guess just in the environment. Like, certainly some uncertainties and headwinds on NII. The markets were good this year. We don't know what they're going to do next year. Just how do you approach kind of the 2022 budgeting process?

And maybe the best way to think about it is we tend to bucket things in 4 categories, and we're starting to talk about that now. It's that time of year. One is inflation. And where we're seeing that. And in some ways, we're seeing that in different areas, but we've been able to be disciplined about managing that in a good way, nothing there that we see is dramatically different than what we've seen historically. And secondly, efficiencies. And the program that we talked about 5 minutes ago is an example of us trying to develop efficiencies in the expense base. And so it's harder if we go after a big program like that in 2021, it's going to be harder to do something of that magnitude in 2022. So the efficiency component is going to be tougher to be at that level. The third category we think about is around investments. And there, I put this digital and cyber-related defenses in that category, and that's higher than what we've looked at historically, but those are ones we are not going to go short on. And those are 2 examples. What we're doing in digital, particularly in the wealth management business, and making sure that we live up to our brand of making sure we're strong in data privacy and we're strong in protecting client data. We're not going to go cheap in those 2 categories. And so those -- that investment, that third category might be higher than normal. And then the fourth is what is the business driving in terms of growth that needs expenses to come along with it. And that's always TBD, but the pipeline right now looks good from a -- at least on the institutional side, that's where the longer pipeline -- you have longer visibility. Steve's are a little bit shorter in nature. So hard to predict what 2022 would look like there. So that's how we cut it in those 4 categories. Inflation is, I'd say, a little bit better than normal. Efficiency for 2022 might be tougher. Investments might be tougher. And then growth, that's not bad to see that as a high number, but I'd say split between institutional and then very much be determined and well.

Makes sense. And then going to push you a bit on capital, and I know you went through this on the second quarter call, but your capital ratios are certainly above peers. One can contain your risk maybe a level or two, lower risk balance sheet, very conservative culture. One of the few banks not to increase their dividend. Second quarter was certainly light on buyback relative to peers and relative to what you could do. It almost feels like you're working capital for something. I don't know, maybe just kind of talk me through, why do you need so much capital on the balance sheet? And if you don't, thoughts around maybe stepping up shareholder distribution?

Yes. So -- and I know this has been a question people. So don't feel shy about pushing on it. We can -- I'm happy to give as much transparency as I can particularly, since we're in this open format. And by the way, I just want to remind everyone, Steve Fradkin, who's the Chief Financial Officer of Northern Trust for a long time as well. And so if there's extra anything, conservatism included, then we can have him comment as well. But the way we think about the balance sheet is that, it has to be there for clients and it is part of how we go to market. And if you're talking to a large sovereign wealth fund and they're talking about putting $1 billion on the balance sheet, that's not FDIC insured. They treat that like their lending to their financial institution, and they are, that's effectively what it is. And so if we're not as big as, and we're not, as our peers, we have to go to them and show and be able to evidence quantitatively that deposit is high quality. And part of the -- so we go to market talking about our balance sheet as a source of differentiation. And it's the same thing in wealth management. We've talked to our -- and Steve will tell you, we go to our clients and we talk to them about the strength of our institution and the fact that we're not toeing the line on what capital requirements we have. Now if you want to understand just as I walked through expenses, and I gave you a sense of that's exactly how we walk through our expense process, I'll walk you through how we think about capital as well. The first is you got to take care of the dividend. And for us, we've been in this range of 30% to 50% for a long time. You say we only bank not to really increase dividends, but we've had a very stable dividend over time as well. And that's something we have to appreciate. We appreciate that as a management team. We don't want to see volatility there. And so we think about that 30% to 50% range. And if you're going to bring it up, make sure it's at a time when you think you can maintain it at that level and where you've gotten to a point where the dividend is more at the lower end of that range. Our second quarter was at 40%. It was right in the middle of the target. And I think other institutions increasing their dividends, it reflects more where they were in a more volatile history and not badly, but they just had more movement up and down in their dividend payout ratio, we don't have it. And so it's been very consistent. The second thing we do after we say is the dividend taken care of is we think about what's happening in the base of business in RWA effectively to make sure that we've got enough left between buybacks and capital retention to make sure we can keep our capital levels where we want. Now you're right, we're fine with -- we obviously are always talking to our board about our capital policy. From a regulatory perspective, there's no issues there. And so what we're thinking about is what are our absolute levels of capital and what are our relative levels of capital. And we've tried to work -- it's really CET1 and Tier 1 leverage are the 2 that we're going to look at consistently and say where are we on an absolute and relative levels. And we've had RWA growth. the loan growth that we talked about that's helped NII that has come from the wealth management business, that causes a significant lift in RWA requirements for us to maintain the same roughly -- rough CET1 and Tier 1 leverage ratios. And so we've maintained capital in order to do that. Really, that gets more to CET1, not Tier 1 leverage. And so do we -- I will say we don't see as much growth going forward in RWA as we could see coming over the last couple of quarters. And so that means there's all other things equal, there's probably more room left for us to maintain those same capital levels while still maintaining the same dividend levels that we've had before. And then once we take care of the dividend, and we think we've retained enough capital to cover RWA growth. then you say how much is left for share repurchase. And if as long as the stock is in a reasonable level and there's nothing else we're trying to do, then that's how we think about what's left to repurchase stock. And if you think about it from that framework, and you walk through the last few quarters, assuming that we could kind of see the RWA growth coming, then our capital actions have been very -- have actually been very predictable. And the one thing I'm kind of putting out there is that we don't see -- the natural question, I think, would be, do you still see that same growth in RWA coming? And at this point, we don't. It could still come at the last week of the quarter, Steve could have 5 clients that need to come in saying that they want to borrow $500 million against $8 billion in assets, and we would do it. But -- and that would drive our capital actions, and we would be thrilled to do that. But at this point, we don't see that same RWA growth coming.

Jason, Tyler, can I just add 2 comments to this. at the risk of jumping back to a different era. One would be, and Jason Goldberg, you will probably remember this. Back in '07, we had the same thing. You guys are too capital, you're too much capital, too conservative. And the problem is we never know what's coming around the corner. That's not to justify our current levels of capital. But you do have to remember that the economy swings, and it rarely does so in a slow gradient. Things are fine and then they're not fine. And you have to be -- when you're part of a 130-year-old plus company, you got to be ready for all weathers. The other point that I would just add that I think is worth thinking about is we still have a lot -- and now I'll put on the operator business at, we still have a lot of confidence in our businesses. Our institutional business, very strong growth rates, very competitive relative to peers. Our wealth business, this is a crown gem. And from a business operator standpoint, we want optionality to do other things, acquisitions included over time. So there's no signal in that. I, don't want to get our CFO in trouble, but we're still -- we're not milking these businesses. We're building these businesses. And we've done a good job of doing that organically, but we also like the optionality that a stronger balance sheet gives us to do what we want to do when we want to do it. So just a line level addition there.

We've got a couple of minutes left, but you baited me, Steve, and I'm going to take it. Acquisitions. I guess maybe, Steve, you could talk to on the wealth management side. You've historically been organic growth company, but maybe inorganic opportunities, whether it's product or services or distribution? And then Jason, maybe you could take the C&IS side. Obviously, one of your peer banks did a relatively sizable acquisition in that space. do you want to talk about that, why you maybe didn't do it or maybe tried to do it? There's also sort of speculation out there, but maybe that's a good place to end it.

Yes. Jason, do you want to go first, do you want me?

I'm going to go first because it's going to be pretty short. 2 things. One, we've done a decent amount on the asset servicing side of the business. And so if a great opportunity comes up at a fair price, we're all in. It would have to be really compelling given the activity we've had on the institutional side. And then just for official commentary, I won't comment on our activity level in the BBH acquisition. But I think a lot of people just asked about scale, and I feel like the business did really well in -- through the health crisis at exhibiting that it's got the scale it needs to maintain an at or above industry margin. So we feel good. Steve, to you on wealth.

And then maybe just to pick up to the broader question on wealth. As you know, Jason, we've historically as a company and within our wealth business, thought about acquisitions, mostly in terms of geography or capability. We've acquired going into Florida. We acquired going into Texas. We acquired going into California. We acquired a goals-driven methodology, but we haven't generally thought about just getting more clients and more assets. I would say today, we're more open to that. And the reason is we feel like we are scaled. We feel like we have a breadth of capability across the spectrum. If you're affluent and you have needs, whether those are trust, banking, investment, et cetera, we're there. And so we are open to, and I don't want to be dramatic that you've known me a long time, I wouldn't consider myself overly dramatic, but I would say we are open to finding opportunities that fit us with the right clientele, with the right investment approach, with the right culture, if we can find the right fit, we're absolutely open for that. And that's why I go back to that capital conversation. From my point of view, I like having the flexibility to do more if we can find the right fits within our Wealth Management business.

No, it makes sense. Jason, Steve, thank you so much for your time today and I look forward to speaking again soon.

Thanks.

Congratulations on a great conference, really happy for you.

Much appreciated.