Northern Trust Corporation (NTRS) Earnings Call Transcript & Summary

Good. Great. So we're going to move forward here with our next session. I would like to welcome management from Northern Trust. With us today are Michael O'Grady, Chairman, President and CEO; and Jason Tyler, Northern Trust CFO. Northern Trust, as many of you know, is one of the leading global asset servicing and wealth management businesses with $10 trillion in assets under custody and over $1 trillion in assets under management. The firm has been a big beneficiary of rising interest rates, with total revenues and pretax income still up on the year, despite what's been obviously a much more challenging backdrop for fees. With rates likely peaking in '23, we look forward to getting an update from Mike and Jason on how they're positioning the business for the next leg of growth and your broader perspective on the environment. So thank you both for being here. Always love to have you here. Great.

Well, thanks for having us.

And congratulations on the conference. I hear you're back up to pre-COVID levels. It's been busy and tomorrow is another 1 more day, but so far so good. Look, so why don't we start with a question around Asset Servicing. Clearly, a tough year for the markets, as I mentioned. Maybe spend a minute on how have current market conditions impacted organic growth in Asset Servicing? I know in the last call you talked about the backlog of clients that's yet to be onboarded, has expanded pretty meaningfully. So maybe provide some context on both timing and magnitude of these wins and what that could ultimately mean for revenues as we look out into next year?

So the Asset Servicing business for us, as you know, has grown sequentially over kind of longer periods of time, and that kind of sequential quarterly growth kind of peaked out in the first quarter and has been down in the last 2 quarters, and much of that because of the environment, as you mentioned. So lower equity markets, lower fixed income markets, currency translation also cutting against that. That said, over time, what drives the organic -- what drives the fee growth there is the organic growth. And that's primarily doing more with our existing clients, but then also winning new clients, bringing on new clients to serve them. The third component of that organic growth, though, which I -- is probably less known and we talk about less, is this -- what I would call the success of our clients. So it's the actual flows into whether it's an asset owner, but more specifically into the asset manager clients. And so that what we call distributed growth, very helpful over time, but also can ebb and flow. And more recently here with the difficult market conditions, we've seen more of a net outflow for some of our client funds there, and that's been another, I would call it, headwind to the growth on that front. As you mentioned, the pipeline right now is very healthy, and I would say it's well diversified if you look at it as far as between client types, asset owners, asset managers, the regions and also the services. More specifically, as far as asset owners, strong growth with pension plans in the U.S. and also in APAC, more specifically in Australia, and then with asset managers, some large wins also in the U.S., but also in Europe and in APAC. So very well spread out. And similarly, I would say, from a timing perspective, going to be spread out largely through the year. So we've seen some of that business come in, in the fourth quarter since we last talked it on the conference call. That will continue into 2023 as well.

Got it. Any way to help frame just the magnitude of that? I mean, I think in the past, we talked about servicing -- or Asset Servicing organic growth being somewhere in the mid-single-digit range. Is the pipeline supportive of that kind of growth or --?

Yes. I would say that our pipeline is consistent with the historical growth rates. And as we've seen, again, it ebbs and flows because of the transitions and the sizes of the wins and things like that. But as far as that -- that's -- when we talk about the size of the pipeline, you're right, that is at a higher end of our historical levels in a dollar amount.

Got it. And the third element that you mentioned around the framework around organic growth, I guess around success of your clients and the ins and outs. Again, not surprisingly, we've seen a lot of outlooks from a variety of asset management businesses over the course of the year. Any particular group that tends to impact that more for you guys? For instance, like U.S. active equities have been in outflow forever. Fixed income, a bit new this year. Is that what -- sort of tip of the scale on organic growth being slower from that client flows perspective?

Yes. I would say that we have a strong position with asset managers in the U.K., and then those funds domiciled in Ireland in Luxembourg. Many of those funds are also focused on emerging markets. And so that was a more challenging area. So it wasn't any one particular type, to your point, but there were certain areas that had more outflows than they would normally have. And the other aspect of that, Alex, is it's not only just flows in and out of existing funds, but also new fund launches, and that was down -- or has been down in the year as well.

Got it. Great. All right. Let's stick with the institutional business, but I was hoping we could spend a couple of minutes on the investment management side of the ledger. We've seen, on the positive money market fee waivers come back, and that's been really helpful to revenues. But when you sort of double-click underneath that, the outflows have accelerated, particularly from the money market fund business, the cash management business. That's -- in a way is maybe a little counterintuitive because we've seen deposits leaving the banking system. A lot of that sorting goes to money market pumps. So I don't [ thought ] you guys would be a beneficiary of that. So what went on? And what are you guys working on to sort of change that?

So the place I would start is a little bit higher level in the sense of, one of the important things we do for our clients, whether it's the institutional clients or wealth management clients, is help them manage their liquidity. And that can come in the form of the money market funds, but also in the form of the deposits. And so often, we look at those 2 things together. And if you look over a longer time period, it generally grows with the business, and you put those 2 balances together. So if you look at a time period, for example, the 10 years leading up to 2019, we saw a compound annual growth rate of about 5%. So kind of again, growing with your client base there, but then from '19 to '21, we saw that combined balance go up about 40%. And it was about the same deposits and money market. That's an unusually high level of growth in there. Some of that is just the environment that we were in. Its quantitative easing that happened in that time period. And also, we did, in the funds, take share during that time period. Some of that's just the clients that we have that we're supporting, and also for some of the funds that are more rate sensitive. The yields that we had were attractive. We've some -- seen some of that come back on both fronts, both the deposits, but even more so with the money market funds. And I would say, once again, that's the activity of our clients, whether they're changing asset allocation or having different needs, but then also clients that are more rate sensitive, moving to funds with higher yields. And so to your point, what do you do about that? One is continue to make sure you're offering the different alternatives to the clients, and also looking certainly to position the funds for attractive yields.

Got it. So your point is that, think of deposit flows and money market flows on the institutional side almost in a similar bucket as people kind of manage their liquidity, as opposed to shifting from one to another and you being able to capture some of that just in a different type of model?

Correct. Client preference in many cases for a deposit versus somebody upfront.

Got it. Okay. Let's spend a little bit of time on the non-U.S. business and the EMEA business. You alluded to that a little bit in your comments with respect to the Asset Servicing business. But Northern has a meaningful footprint in EMEA markets, as we know, particularly on the services side, much more challenging macro [ backship ] there, especially U.K., Europe, obviously, everything that sort of happened in yield markets over the course of the last several months? So help us maybe, A, frame the exposure that you have to those markets, but also with respect to product and client types. And then when it comes to the U.K. market specifically, are we through most of those risks and how they sort of play through the P&L or is there still some overhang that we could continue to feel?

Sure. So to start where you did with the question, we do have a very strong business in Europe, in EMEA. It represents anywhere in the neighborhood of about 40% of our Asset Servicing business. It's well diversified in the sense of, again, asset owners, asset managers, and yet it's focused on particular sectors where we have a stronger position. So some of those sectors would be for pension plans in the U.K., in the Nordics and other parts of Europe where we'll have a strong position, but importantly, not trying to be in every market within Europe. And then on the asset manager side, with asset managers, and we tend to often focus on what we would consider kind of the mid-sized asset managers. But particularly in the U.K., but then also, as I mentioned, in Ireland and Luxembourg, the funds that are domiciled there. So strong positions there. To your point, there are a number of factors and risks within the European markets right now. Certainly, everyone is familiar with just what I call the macro risk that they're facing as far as inflation being greater over there, energy, et cetera. That's going to have an impact on that client base overall. There's also been much more market volatility there. You mentioned the gilt situation there where there was significant increase in gilt yields, but related to that is the value of the gilts going down, and gilts are one of the, if not the most common form of collateral that's used in that marketplace. And when the price goes down, where that's being used as collateral, we saw significant volatility in just volumes related to that, which presented, I would say, operational challenges for the entire marketplace and all the parties involved there. And so that's something that we're certainly mindful of as we look at it. And then also, I would say there's consolidation happening in that marketplace. That can be asset owners. So looking at pension plans that are combining in order to get the benefit of scale, but then also asset managers, and that can be a risk to us where we're providing for one, but it's also an opportunity to the extent that we're successful in winning the business of the combined entity. And I would also say, even though some of these pressures present challenges for the clients, if you will. It also causes them to look at their businesses and determine certain aspects that they can outsource. And so that certainly plays to us, particularly with the asset managers, where -- whether it's middle office. But also more recently, they are on the trading side, where it doesn't make as much sense for them to have that type of activity in-house and instead outsource it. So I'd say plenty of risk, but also a lot of opportunity in that marketplace for us, given our position.

Yes. As you think about the outsourcing trend from the asset owner side of the ledger, if we see more asset owners outsourcing to other asset managers, does that tend to be a positive or negative for you guys? Does the asset manager retain some of the services that you guys provide to the asset owner, or that becomes a complete new RFP process and you kind of have to go through within that business?

Yes. Generally speaking, you're going to have to win the business again. And to your point, that's what you're trying to do, is, I'll say, follow the dollars, if you will. We've seen them shift different directions over time. When they bring it in-house, they often don't have the capabilities that they -- to manage that at the time, and that presents definitely an opportunity for us. So when we look at certain things like front office solutions, that's creating greater capability for them -- for that asset owner to act as an asset manager of their own funds.

Got it. Okay. You mentioned trading outsourcing. That was actually 1 of my questions as well. So maybe we can hit on that now. Definitely nice traction in that business over the last couple years. I think it would be helpful if you could frame the addressable market here? What do you ultimately want to be in that business? What kind of other capital market solutions might come out of that? So help us frame that? It's not a huge part of the business, but it's been growing pretty nicely. So it will be helpful to get more color on that.

Yes, and it is an opportunity that we see as a longer-term opportunity as well. So normally, when you think about, say, framing an opportunity, people think about, well, what's the size of the market and you kind of work your way down here. But you might expect -- first, we come at it a little bit differently, which is, first, starting with the clients, and then thinking about it from a service perspective as opposed to something that's going to be more transactional. So that's how we're going to differentiate because, when you start by saying, anybody capital markets, they might not say, well, Northern Trust in the capital markets relative to some of the other players. But for these clients, we're looking at what their needs are, and then say, how can we help them with those needs. And then also, importantly, saying, how can we put it into more of a service context, which fits with what -- our model and the way we deal with clients and approach clients. And so more specifically to that, we talked about trading. Their trading is something where, instead of having the internal trading desk, they outsource that to us. We then are able to provide the benefits to them of an institutional platform and scale that we have, because we're doing that for entire client base. So that would be one. Two is around what we would consider securities finance, so large asset owner clients, particularly some of the biggest. They have significant balance sheet, significant liquidity to the extent that they can optimize that balance sheet through different types of securities finance transactions, if you will, that we manage for them. They're able to add an incremental amount of [ outflow ], if you will, to their portfolio. And then the third which is something that we and our competitors have done for a very long time, but it's transitioned as to how we do that over time, is foreign exchange. So that did in the past tend to be more of a transaction business, but it's converted more -- is converting more to a service where a lot of that FX is executed through algos, or you have currency overlay that is just executed, again, automatically by us as a service for the client. And any type of operational aspect for foreign exchange that maybe they had done internally, and so we do that on an outsourced basis for them. So we're trying to think about capital markets as a service business as opposed to a transactional business. And the dynamic there, as you know, fits with our financial model as well, which tends to be a higher level of fees that are associated with services and greater recurring nature.

Got it. Okay. All right. Let's switch gears a little bit. We talked a lot about it in the institutional business, but I obviously want to hit on the wealth management side of the ledger as well. Again, a large business, an important business for you guys. So maybe the opportunity set you see there in current market conditions? Obviously, the 60-40 portfolio had a very challenging time, and the liquidity events, I think, for a lot of high net worth clients in this market have gotten much worse. So help us understand how that plays into the organic growth for Northern Trust?

So 2021, to your point, was a very robust year for new business -- in the Wealth Management business. And a lot of that -- simplistically, there was more money in motion, as we would say. But that's families that are monetizing businesses, refinancing real estate investments, just all types of opportunities for them to generate wealth, which then needs to be managed. And also, often, they have different needs because of greater wealth. And as we know, up the spectrum, we believe that we can differentiate ourselves in meeting those needs. So robust in 2021. Those conditions have changed this year in 2022. And I would say, as a result, when the pricing changes, you've had much less activity. And you've seen that not only with, I'll say, our client base, but the other side of that with private equity firms and others that were doing the acquiring on that front. So it has slowed down the new business in wealth. So we're still developing the relationships and cultivating the prospects in that business, because it does happen over time. And so still very optimistic, if you will, in the future for it. It's just coming off of a high base in 2021.

Got it. Is it fair to say that if we overshot and we were kind of like above the baseline last year, we're likely to be below the baseline over the next year [ couple of months ] [indiscernible]?

Yes. This year started strongly, too, and now it's definitely coming off of a high, so that -- there's a little bit of a dip in that.

Got it. Okay. All right. Let's pivot a little bit. Jason, let's bring you in to this conversation. And being one of the last presentations of the day, I know that there's probably not a whole lot that you were able to share in your meetings over the course of the day.

Like 50 people that I couldn't answer questions for, Alex.

So apologies for totally using your time until now, but, no -- but curious if you can provide us, obviously, with any of the typical updates? It's pretty late in the quarter. So whether it's NII, fees, expenses, whatever you are willing and able to share?

Not a lot, frankly, would be the headline on fees. You and Mike just talked about the fact there are headwinds there in different components of the business. You talked about it on the institutional side. Those exist on the wealth side, too. Just jumped out as I was listening. And so to just make sure to keep that in mind as we think about the impact of markets and flows on the wealth business. And then, as we think about expenses, a couple of items of note. One, equipment software is trending a little bit higher -- a few million dollars higher in terms of expense than we anticipated, and we talked about in -- on the October call. And then, we tripped into pension settlement accounting in 2022. Once we get there, we're going to continue on that throughout the course of the year. So we'll have another charge in fourth quarter, magnitude of $5 million to $10 million, not large, but that will be on the books as well. We know that given the fact that once you trip into that settlement accounting, you're there for the remainder of the year. Those are the big ones.

Anything on NII or relative to what you guys sort of talked about in the earnings call?

Yes, well, we can -- and happy to talk more about that, but no update in terms of volume levels from what we talked about on the call.

Okay. So I guess -- maybe, I guess, just a reminder in terms of NII and the balance sheet, I think let's kind of break it down in a couple of pieces. So on the last call, you talked about the prior peak -- the prior NIM in the last cycle was around 160 basis points. And again, on the back of higher absolute rates in this cycle, you've kind of suggested, look, it is not crazy to think about that NIM exceeding that. Again, I know a lot goes into NIM. There's the balance sheet, means the deposit balances and deposit betas. So maybe your latest thoughts around where NIM could peak in this cycle for Northern? And as part of that, maybe you can hit on deposit betas as well. I think you talked about 80% deposit beta is what you were seeing for Q4. And on the forward, is that still the expectation?

Yes. So it's -- those beta numbers are absolutely consistent with what we're seeing in the quarter. And as we think about what's going to happen with NII generally and NIM, there still isn't a reason for us to see at this point in the rate hiking cycle, that [ 1.60% ] to be a top, to be a threshold. So we feel comfortable that if the dynamics we continue to see, obviously, the Fed continuing to raise rates. And importantly, even absent that, we're still experiencing about $1.5 billion a quarter that's repricing, that's coming from the old yield curve, that we're able to replace. And so that in and of itself is providing a lift to where we were. And so we still see the ability to push through that $1.6 billion. There was no magic to that level. And we think, if those dynamics continue to play through, we'll get above that. And I think, even the currency is something -- it's another dimension that people can forget about, but in -- we focus so much on the Fed, but there are other currencies at play here that we should remember, that have a dynamic and an influence on what NII and what NIM look like as well.

Yes, it's fair enough. On the balance sheet side and just the deposit level, is obviously another important topic for the whole space. We've kind of heard it over the course of the day today, but obviously, not a new topic for you guys, or the trust banks broadly. But Northern has seen about a 15% decline in deposits, I think, so far this year, with an unfavorable mix between noninterest bearing to interest-bearing as we've seen. Should -- I guess, one, take your comments of volumes being consistent, is that deposit levels in Q4 so far similar to where they were on average in Q3?

In October, we came into fourth quarter having averaged about $118 million and we talked about $110 million to $115 million range that was expected for fourth quarter, and no update to that range. So we still see that as a reasonable expectation point. And in general, still seeing those betas play through very well. And I think it's also helped us to try and help people give more influence in how they're thinking about the outcomes. The institutional side has very high betas. And so a lot of those negotiations with institutional clients will be based on Fed funds. And so the beta will be 100%, and that's offset by the wealth which is a lower percentage of the overall deposit base that's less than 50%. And so obviously, the beta is there on the wealth side, have to be well under that 80% -- well, even under 60% to get to that 80% average. And all that seems to be playing through consistently with what our anticipation has been.

Got it. That's great. So no update in -- kind of in that $110 million to $115 million range is actually pretty encouraging, I guess, given that deposits continue to lead the system, as you look forward, and not to say that you guys have a crystal ball and any other stuff. But as a framework is how to think about potential remaining risk of deposit outflows, not there in any particular quarter, but through the cycle, how would you think of that? And should we think about the mix of interest-bearing to noninterest being in that 20-ish percent range or something structural change [ has been ]…

No -- thanks for coming back to that because I forgot it. We've largely seen that dynamic play out. And so there may be clients that continue to look and say, actually, we're going to change investment guidelines and move from noninterest-bearing to interest-bearing, but we've largely seen that thing play out, and believe that it's -- that the mix that we had at the end of the quarter, largely stabilized. Again, we can have -- and I always remind people that it's so chunky sometimes, we can have large sovereign wealth funds or very large asset owners or large asset managers have significant deposits that they bring on or off the balance sheet. And so -- and that can be billions of dollars. And so those things can -- in the short run, you might look at it and say, well, that's a trend. And in our minds, we're saying that's a small number of extremely large clients that have that have moved. And so those -- it's going to happen episodically, but don't necessarily represent a trend. What we're seeing in that noninterest-bearing to interest-bearing largely has flattened out at this point.

Yes. It's encouraging, and -- look -- and hopefully to your point, we sort of stabilized on the overall size of the deposit base, because, again, a lot has left?

Right.

So another question around the balance sheet. Again, a little bit more of a kind of a structural or framework related question. But if the Fed -- if the curve is right and all the forecast are right, that the Fed will peak at some point of time next year and potentially start to see interest rate declines, how are you thinking about optimizing the opportunities set for the balance sheet? Because it feels like it could be a fairly kind of slow-moving trend, you can kind of see it. Is there anything that you can do proactively to either put on fixed or floating swaps on some of the loans or extend duration in parts of the security, crystallize some of the losses today and pick up extra yield? Is that part of the thinking at all into 2023 or just kind of status quo on the mix?

No, you can imagine -- our treasury group is playing with a lot of different scenarios to say what can we do to maximize different scenarios. And I think a lot of people think, well, why not just crystallize the losses re-investiture. If you're going to sell a security and reinvest it in the same duration in credit quality, it doesn't really -- it doesn't do anything in terms of net present value. And so we would have to have a view that the yield curve was going to change in some ways, or that we wanted to take a different approach, maybe from a credit perspective. There have to be a catalyst for us to say, let's restructure. And it's not to say that we won't do that, but -- and so that's why we keep everything on the table. We keep talking about what our views are. But at this point, we have not gotten to the stage of saying, we've got a view that we'd like to execute and it requires us to do a restructuring on the balance sheet. I think the last one is, the front end of the yield curve matters a lot. And so right now, as we've had securities mature, we've just left the -- we've left -- we stayed very short and just let that sit in Central Bank deposits largely. And so as we think about expectations for the yield curve, we'll think about that. But at the same time, we're always trying to match the duration and stay on -- with the assets and liabilities. And so as much as everybody always asked about what's the duration of the securities portfolio, we're also looking at what the duration is of the liabilities of the deposits. And so the institutional deposits, if they come in and that becomes a higher percentage of the mix, it's going to lead us to likely stay shorter in terms of how we reinvest that. If the wealth deposits -- if operational deposits are driving more of an increase in mix within the balance sheet, within the deposit base, that in and of itself would cause us to extend and think about not just potentially credit, but also more likely duration risk because the duration of those liabilities is longer.

Got it. Okay. Let's stay on the P&L for a couple of more minutes, and it's probably for both Mike and Jason. But thinking through expenses, you guys gave us a couple of data points for the fourth quarter. But when you take a step back, Northern's overall expenses are tracking up high single-digits or so probably for this year. It's well above what your direct peers are growing on an expense basis. And typically, you have organic growth to kind of come along with that. But this has been a much more difficult environment for fees, as we obviously all know and talked about. Is there appetite and room to do anything more substantive on expenses like we've seen in prior years? Call it a program or not, but a dollar amount that would take down expenses more structurally lower in the next 12 to 18 months?

So why don't I start off and then Jason can add. But first, I would say, we're looking at our efficiencies, as you know, all the time. But it does -- the level of focus on that and the need for it does change based on the environment. And when you have an environment like the one that we've just talked about with these headwinds, where things are out of your control more, you want to focus on those things where you have more control, and that's around the expenses. So without a doubt, earlier this year, when we could see this greater level of headwinds, if you will, we started to tighten up in a number of areas. And then I would say that, as we go forward here, really trying to look, I'll say, on a sequential basis, how do we tighten up in a number of different areas. We're fighting against the same dynamics that others are as far as inflation. I would say that we're in different businesses then -- when we talk about some of our peers. And the competitive pressures for talent are different there, and we've stepped up to meet those challenges on the comp front. But I would say this is a time period where focus on productivity and efficiency is critical, and that's where our heads are.

Got it. I guess along the same lines, and you and I spoke about this topic forever, if you like, but this concept of operating leverage, right? And you know we're talking about it.

I would say literally, it was 11 years ago, sitting back here.

That's pretty true. Yes. So as I think about the way you talked about operating leverage this year, it was much more from a pre-tax margin perspective, right? Because you're clearly getting a big windfall on NII, and let us not lose out of the fact that, look, revenue is still tracking higher this year, pre-tax income still tracking higher this year, which is great news. In an environment like this where fees are so pressured, is that where you're sort of managing the business too, or getting back to this kind of low expense to fee ratio of like in the low 100-ish, I think kind of what we talked about in the past, is still like a realistic outcome to think about over the next, I don't know, couple of years?

Yes, so again, I'll start and Jason, you add on. But we definitely are looking at both, right, which is, you definitely would need the pre-tax margin to be at a certain level -- to have a level of profitability and returns, okay. Based on the dynamics with NII and how that can affect the margin, there's, I would say, less controlled that if that's the only one you're looking at. The concern is, over time, you can lose the focus on the level of efficiency that you need to have. That's why we focus over time on also expenses to trust fees. And when we have a situation or an environment we're in right now where, with the fees being pressured by the environment and expenses going up with inflation, we've seen that go up. That's why -- that's the signal, Alex, where it's saying need to focus, need to bring that down. So we don't look at it and say, well, as long as we're getting, I'll say, a 30% pre-tax margin. It doesn't matter what the -- it does matter. And so we want to grind that back down into the range that we've been. And to your point, how long that takes? A lot of factors. It's more about how do you just keep grinding it down until you're in that range.

Got it. All right. Let's spend a minute on capital, and then maybe we'll take a question from the audience. But look, share repurchase have been fairly minimal this year on the back of AOCI hits to capital ratios, as we've seen from a handful of other banks as well. I guess, how should, we think about capital levels where you can get more comfortable resuming more meaningful share repurchases? And as we think about potential tailwinds to capital now with the pullback in the 10-year and the 5-year, the curve obviously has come in. I think you had about $1.5 billion to $2 billion of cumulative AOCI loss sitting in the balance sheet. How quickly could that -- does that accrue back? How should we think about that capital or back?

Well, in general, the way we're thinking -- a couple of thoughts on capital. One, we've given this framework historically is what is the -- what are the key dimensions. And for us, we look at things on a relative basis, but that's not to say we just look at a single measure on a relative basis. And it's not to say that we look at things on a -- every single day on a single dimension. And so we're looking at -- we always talk about CET1. We talk about it on a standardized basis because that's our most constrained factor historically. We also look at it on an advanced basis. We also look at Tier 1 leverage. And so you put all those together and then get a sense of where are you relative to the industry, relative to peers. And then a second component is where do you look relative to where you've operated historically in terms of capital levels. And then we're always looking at the capital we have above regulatory thresholds and also the engagement we have with our Board. We never want to be dismissive of that. We want to make sure we're reflecting what those conversations look like. If you look at that together, nothing today has anything other than a positive green light saying capital levels are strong, they're good. And so that means we can continue to operate the way we have historically, which is thinking about dividends in a 30% to 50% range. And then, if anything, you'd say, relative to historical levels, we would -- we'd say we haven't been -- we're not at that median level, but in general, capital levels are good, and they're -- and strong. And so as we think about share repurchase, it's something we'll think about in conjunction within that -- those dimensions, but certainly feel good about where we are from a capital perspective. The accretion of AOCI, most of the securities that we would put in held to maturity are going to be the ones that are longer dated. Those are the ones that we're going to have that are more -- that provide more protection from risk, from an interest rate perspective. And so it's going to take -- as much as people would say, well, within the next couple of years, you'll have those agreements. It's going to take time for that tail to come to fruition. But even over the next 18, 24 months, we get significant material accretion back of that AOCI.

Got it. Great. I know we're out of time, but we started a minute late, so we can probably take 1 question if there's any in the room. All right -- or we will just wrap it up here. Great. Well, thank you very much. Thank you for being here.

Thank you.

Always a pleasure.