Northern Trust Corporation (NTRS) Earnings Call Transcript & Summary

Okay. Perfect. We'll get going with our next session. I would like to welcome Northern Trust's CEO, Mike O'Grady. Jason Tyler, the company's CFO, unfortunately, couldn't be here with us today. He has COVID, and we've joked around a little bit, but he actually checked that he had COVID and decided not to make the trip, which is -- thank you for that, I guess. But look, Northern Trust is one of the leading global asset servicing and wealth management firms in the world with over $11 trillion in assets under custody, $1.3 trillion in assets under management. 2023, as many of us know, was quite a turbulent year for the system, especially when it comes to deposit trends. But we're starting to see moderating pressures given what the rate markets have done. And for Northern in particular, the fee businesses are also starting to benefit perhaps a little bit more from stronger markets. And I know you guys also made quite a number of changes on expense trajectory as well recently as well. So hopefully setting up the firm for a stronger 2024. So looking forward to talking to you about that, and welcome, as always. Good to see you.

Great. Great to see you, Alex. Thanks.

Look, why don't we start with asset servicing, obviously a big business for you guys, seeing some improvement recently. Part of it is of course the markets, but the way you described new business pipeline is, sort of solidly within historical levels, is the way you sort of talked about the asset servicing piece. Let's unpack that a little more. What does that mean? How do you think about organic growth for '24 in this business?

Sure. So when we say organic growth, we're looking to take into account the part of the business that's not impacted by markets. So take markets out of it. The biggest driver is definitely new business that we win. And that's where I would say we've been pretty consistent in bringing in new business, new opportunities for us. That said, we look at it on a net basis. right? And so yes, if you're going to lose clients that would come out of that, but also the distributive impacts on your clients. So if AUM changes for them, that's going to change our fees. So we net that out. That aspect of it, that's been more of a drag on the organic growth rate than a decline in that gross new business that's come in, right? Part of it is, just, like broader environment, is there's been kind of less money in motion. This affects all of our businesses. With rates where they are on the short end, it's easier for investors to just kind of sit on the sidelines and get paid to wait, as they say. That has an impact on our business in a number of ways. One of them is just the fact that we have a lot of asset manager clients. They're launching fewer new funds during this time period, so you have that drag, there's less transaction volume. So even though sometimes we get paid on asset levels, we also get paid on transactions. So that part of it has been down a little bit as well, that's where more of the drag has been. So going forward, again, as you've talked about, this has been a little bit more of a kind of sequential game, if you will. And so we've been seeing the momentum get more favorable as we go forward. So we expect to continue to have healthy organic growth, new business growth, and we're expecting or hoping that those drags are less than what they've been.

I got you. So some of the attrition on the client side -- not that you're experiencing, but what the client's experiencing -- could get a little better and that will help the net numbers as you look out into '24?

[ The client's clients]. Yes.

I got you. Let's talk about the wealth business. So fees are trending flattish, I think, year-over-year, maybe down a little bit. The market is obviously moving around a little bit still. But clearly, markets play a role here, but maybe help us unpack some of the pressure points that you're seeing in the business that maybe led to some of a slower organic growth year than we've seen in the past and also where you guys are seeing opportunities and, similar to the servicing business, early thoughts for '24?

Yes. So once again, I think if you impact it a little bit, it's easier to understand, which is that the new business part of it, again, for the advisory aspect of what we do, if you look at the advisory fee part of it, we've continued to grow that in a very steady way, okay? But the other aspect of the fees in Wealth Management relate to the product side of it and the Asset Management side. And that's where we've seen the decrease. Some of it is just, I would call it, like the flows that we've seen more broadly in the market, just meaning money market funds went up, if you go back a few years ago, right? And then with QT, they've come down. Now this year, they've come back up a little bit as they've shifted off of the balance sheet. So you have some of that that goes through. And then also, this is an area where we're very focused on the Asset Management side as well as the Wealth Management side to make sure that the pricing on those asset management products is competitive. And so we'll take pricing action. And so some of that -- we count that as, again, a net against the organic growth, where we repriced some of the funds going back about a year or so ago, and you're seeing a bit of a drag from that side of it as well. So once again, going forward, there's a lot of emphasis and focus for us on growing the Wealth Management business and at a higher rate, and it needs to be a combination of both the advisory side, but also the product side of it.

On the product side, the pricing adjustments that you've made, is that fully in the run rate? Do you feel like you're rightsized -- or like right priced, rather, for the opportunity set? Or are there additional tweaks in pricing that we could still see that could suppress some of the revenue dynamics there?

Yes. So I would say they're fully in the rate for the actions that we've taken, okay? But just in the asset management industry, there's always going to be fee pressure, and I would say particularly some of the areas that we're in with those clients, so in the index, et cetera. We're constantly looking at the pricing to make sure that, again, that those are competitively priced. So I would never say we'll never have any more fee compression in asset management.

Yes. Let's zoom out a little bit. I mean you talked about asset management in the context of the wealth business. But obviously, you guys have a big asset management business institutionally as well. Spend a couple of minutes on kind of how are clients utilizing Northern Trust asset management capabilities? Any strategies or trends you'd highlight there, I guess, in particular that you're excited about? And then more importantly, how do you think about the wallet share in the sort of that addressable market for your in-house asset management business?

So a lot in there, but appropriately so because there's a lot of focus on our Asset Management business. About 9 months ago, we brought in Daniel Gamba, who previously was at a competitor. And he's been a real change agent for the business, which has been great. And you talk about the different aspects of it, that's what he is addressing with this strategy. And so it starts with having the core capabilities to be able to provide both institutional solutions, but also a really focused tailored effort towards our Wealth Management business, okay? And if you look at it, the first aspect of it is just we have the core product. So money market funds and index funds. And once again, you've seen flows moving pretty materially over the last few years, up and down in those core products, right? And so money market funds up this year but our index funds down, from a flow perspective, largely because of, I'll call it, client decisions on that front, in the sense of reallocation and what they're doing. And then to your point on the Wealth Management side, there have been certain areas that have grown very nicely for us. So if you think about 50 South in alternatives, that's grown at a high growth rate for us over the last 3 years, particularly with the Wealth Management client base where, not surprisingly, a lot of our clients want and need larger allocations to alternatives. For the right part of our client base, that's an excellent solution for them. Think about tax-advantaged equities. So again, it's an index product, if you will, but it's done in an efficient way. Likewise, that's grown at a higher growth rate. And we see an opportunity to expand that even more with our Wealth Management client base. And even some of our fixed income solutions, if you will, and products. As much as we've done a lot with the Wealth Management business there, we think there's much more we can do to provide different types of solutions that are tailored for that particular client base. So a lot of what Daniel is doing is making sure all the foundational elements are very strong, but then also just making sure those partnerships that you talked about with the asset servicing business and the wealth management business are as strong as possible.

Is there a lot of build involved in that? Do you guys feel like you have enough product capabilities to deliver that? I know you mentioned alts. Obviously, a lot of folks in this room look at alternative asset managers as well. There's a lot of momentum in that part of the market branching out into the wealth channel, It's easier to do it, in a way, with higher net worth, which is your customer base. Any thoughts about providing more alt capabilities internally?

Yes. So we provide the alternative to the wealth clients in a couple of different ways. One is, as I talked about, 50 South. So that would be fund to funds, and that's very appropriate for a certain part of it. But then also on the wealth platform, we do have external alternative managers that we offer to the wealth clients. So that's the other aspect. And then to your other aspect of that question, Alex, is there are more opportunities to fill out what NTAM, what Northern Trust Asset Management, is doing. Step 1, for Daniel has been like focus on the product set, if you will, the capability set that we have. But then absolutely, as you look down the line, many opportunities.

I got you. Okay. I'm going to ask you to put on your CFO hat for a second.

Okay. I don't know if it's still fits.

Which is where we met at this conference [ so many ] years ago. So let's talk a little bit about expenses. Look, in light of a top revenue backdrop, you've taken steps to slow down expense growth, as we've seen this year. I think you're aiming for about a 5% year-over-year growth in 2023 with goals to further drive that decline in 2024. And again, long term, you suggested that expense growth should be 100 to 200 basis points lower than your sort of normalized mid-single-digit organic fee growth. So -- I'm assuming I summarized that correctly, right? So let's unpack that a little bit, right? So that basically implies over time, like, a low single-digit growth in Northern expense base. You guys have not really been able to deliver that consistently over the years. That -- there are years when you did it, and then there's next year, it kind of goes back up. What's changed? And what's your confidence level to actually sustainably deliver this below mid-single-digit growth in expenses over time?

Yes. So as you said in there, Alex, the objective has always been on operating leverage. So operating leverage and specifically fee operating leverage. And if you even peel it back, you look at it on an organic basis. And the point of that is, even if you told me, for example, like, okay, you're able to achieve low single-digits expense growth rate, okay? But if the revenue growth rate is even below that, that's not a great combination either. So it's about how do you get in the right place. And the reason why that's so relevant is the different businesses have different incremental expense profiles, right? And what I mean by that is in the wealth management business, and certainly asset management as well, as you grow, it does require more resources, but there's more operating leverage in there. They're more scalable, if you will. The asset servicing business, just the nature of the business is that as you grow, it requires more resources, right? So the first part, as we look at the company and the mix of business, is saying look to focus more on the wealth management, the asset management part of the business. And part of that does mean making sure you're controlled, if you will, in the amount of asset servicing new business that you're driving, okay? And to your point, a lot of what we've done historically is grow that business, right, and try to have the expenses come within that so that you're getting the leverage. What's, I would say, different here now is this idea of optimizing the mix of that new business, which is to say, we have a certain amount of resources or expense growth, okay, how much revenue growth, fee growth can we get with that, if that makes sense. So flipping it -- and you said, "Well, how do you know how do you get there or what do you do?" It's a lot of the new type of business that you take on within asset servicing. So some of the services are just more scalable than other services. And it's not to say we're not going to do any particular type. It's just the mix overall. So on the one end of the spectrum, providing custody for a pension plan is a relatively scalable activity for us. So you can kind of take that on. On some of the others that are more complex where it's investment operations outsourcing, it's just more resource-intensive. It doesn't mean it's not a good business to be in, et cetera, but there's only so much of that you can do at a point in time. And that's where we're saying we're only going to do so much of those more resource-intensive type new assignments, so that we can make sure that we control the resources better.

How do you balance that, I guess? So is the answer organic growth, organic fee growth is just a little slower in the future than what we've seen in the past.

It may put pressure on it, and if it does put pressure on the growth, to your point, on the organic growth side, particularly for asset servicing, but then knock on to the company, if that's what -- we'll take that to have more control over the expenses,, to your point. And I'll say, like, that's what we're trying to drive is being different. And again, to the extent you can, I'll say, make it all work, you still get the combination. It's just you have more assurance that you're going to get there based on the way you went about it.

I got it. I got it. Is there room to then also go back and optimize a lot of the new business that you brought in on the Servicing side, to say look, you brought in middle-market outsourcing, and that came with a lot of expenses, but if you go back and try to optimize that as well. So there's a back book operating level [indiscernible]?

Absolutely. Yes, absolutely. And I would say, in general, we're always doing it, but also specifically, we're always doing it. Meaning I can tell you that the list of the 10 large newer clients that we have that -- brought them on the resource intensive, where are we? To make sure that we're getting not the only the efficiencies, but the profitability on those relationships.

I got you. I got you. Okay. Zooming in a little bit. We're kind of coming up towards the end of the year. Any updates on expenses broadly for Q4? Or any fee updates that you might have? We'll talk about NII a little bit later on, but anything you'd like to highlight on kind of how the quarter is shaping up?

I would just say, from a -- I'll call it, fee perspective -- it's a little bit revenue, just generally speaking, too -- the environment is less activity, as I kind of mentioned earlier, right? So when there's less money in motion, it's just a little bit more of a challenging environment than when it's a very robust money in motion type environment. So back on -- there are knock-on effects that we see as a result of that. Some of it you'll see in fees where your transaction volumes are going to be lower than they've been, okay? Some of it will be in capital markets, where when -- we've seen already so far this year, for example, that foreign exchange has been lower than what it has been historically for us. And even in the quarter, I think so far, we're somewhere below -- or close to $30 million in FX, that's a lower run rate for us than what we've had. And so it's just a kind of a muted environment, but I'm not changing any view on the fee front. I'm just saying that's the broad kind of context environment. And on the expenses, nothing in particular, it's all aligned with the comments that I made there and what you said as well.

Got it. Okay. Perfect. All right. Let's talk about NII. So prior guide, you guys called for I think $430 million to $440 million of NII, down 8 -- 6% to 8% from Q3 on the back of deposit outflows, and I think you assumed low to mid-90s. I think Jason talked about that on the last call and some incremental deposit pricing pressure. So let's kind of re-underwrite it again, where do you guys stand?

Yes. So for the quarter, what I would say and what we're seeing trending, is NII will be kind of roughly flat with the third quarter, okay? So actual [indiscernible], and to your point, when you peel that back, there's a couple of main reasons for it. The first is back to the deposit levels. We've seen deposit levels in a range of kind of $95 billion to $100 billion during the quarter so far. Again, I can't predict what will happen through the end of the year here, of course. But a little bit of your -- some of your opening comments just about the environment, and that's the level that we've seen so far this quarter, which is a positive, without a doubt. And then second, I would say, as far as -- you talked about just pricing. Pretty similar to what we expected on that front. There's still deposit pricing pressure, which puts pressure on spreads. And then the other factor is, in early November we did reposition another portion of the securities portfolio. As a result of that, we will have a realized loss, a little less than $200 million in the quarter, but it does increase the net interest income that started in this quarter. But going forward, that will be an impact I'd say, of say, $10 million or so. just for the fourth quarter. So that's kind of how you get to the roughly flat view on NII.

I got you. So the $10 million benefit for the quarter, that's the partial impact, so presumably 15-ish run rate basis on...

Yes. And it all depends on -- so -- sold a portion of the portfolio, largely have invested that very short term, right? And so overnight, where rates are overnight. Yes, to the extent those change over time, that affects what that benefit would be. But right now with where we are, that's about right.

Got you. And then can you help size how much did you guys -- how much do you guys reposition and like what did you take it out of? I know you said you put in just short duration securities, makes sense given where the yields are. So just a little more granularity around this?

Just a little more for you would be, I would say, 2 portions of what we did. One portion was around -- all in the available-for-sale portfolio, first of all. The majority of it based on securities that are kind of 2 to 3 years weighted average maturity and lower yielding. And those were also HQLA, okay, high-quality liquid assets. And then the other portion, not as large, with some non-HQLA, and they were higher yielding, but give us a benefit on the liquidity front. So the repositioning really did a couple of things for us in the sense of giving us more liquidity, but also giving us the higher net interest income by reinvesting right now at over 5%.

Got it. And just the size of that, how much you guys repositioned?

It's going to be approximately $3 billion total of the securities portfolio.

Got it. Okay. Helpful. Is there room to do more? Or do you guys think [ you've kind of optimized ].....

We are always looking at the securities portfolio. And so to the extent that there are more opportunities like that, yes, we would look at doing them.

Got it.

But at this point, it's always going to be a combination of where the rate environment is and is that opportunity still attractive. Clearly, we look to go after the most attractive portions of the portfolio first. So your opportunities diminish over time. And we run a relatively short duration book to start with. So there's just not that much there in total. But I am saying we're always looking at whether there are opportunities to do there.

It would only be really in the securities portfolio to an extent that there's duration, which you don't have a ton of it.

Correct, and available for sale, right? Which is about half of our security.

That's right. That's right. Well, let's take this discussion a little bit further and talk about 2024. And there's clearly lots of uncertainties with respect to the trajectory of interest rates. And I'm not going to ask you to kind of pinpoint where the Fed fund rate is going to end up next year. But let's talk about kind of what's within your control and what you sort of know. So I guess on the last call, Jason suggested that Q4 NII, it's probably going to have some upside as you look out next year, just from repricing of your securities dynamic. And I think you said like it will add something like $50 million to NII over the course of the year. Does that $50 million still hold? Or do you think you just kind of pulled some of that forward with the actions you [indiscernible]?

I was going to say some of that is pulling it forward. So instead of waiting until they matured, sell now. We do realize the loss that comes with that, but you're able to immediately reinvest and capture that spread.

Yes. That makes sense. Okay. And then on deposits, and again, I appreciate that it's tough to make a guess, but I'll ask you to make your best guess on the trajectory of your deposit base based on what you know, based on the conversation you're hearing from clients, based on the fact that it feels like rates at least have peaked, but who knows whether or not they're going to go down next year. But let's talk a little bit about how your best, I guess, crystal ball guess on the trajectory for deposits for next year?

Yes. So to your point, the environment this year is meaningfully different than where we were a year ago, particularly with the expectation of what's going to happen with rates and when will the Fed stop increasing and now at least general consensus, not -- the reason why that is important is because a lot of the activity -- whether they ultimately do or not as we sit here today, if the expectations [indiscernible], that changes the behavior. And so some of the behaviors that we saw before of people repositioning cash, if you will, they're not doing that as much because they don't have the expectation that rates are going to continue to go up, okay? So that's one. Two is, we've seen deposits come down pretty meaningfully from the peak. Now what drove the peak. A lot that drove the peak was QE going up. And now it's QT, both in the sense of, well, before you get to the [ Q part ], just a tightening, so rates, but also actual quantitative tightening. So the Fed has taken out, call it, $1 trillion, but they're going to continue to do that, right? So there is pressure from that, okay? But then the third piece which I think is important is just looking at the nature of the deposits that are on our balance sheet, right? And a lot of these that we talked about are operational deposits. And so a lot of what's effectively, I'll call it, burned off, if you will, those are more -- I'm going to call them the excess deposits that our clients have that they can do other things with, right? And so if you just look at the proportion of the existing base now, it's more operational in nature of what they need to do. And so yes, it will depend on their activities and what they do, et cetera. But I would say we feel very good about that deposit base at this point being very solid relative to the activities of the client base, both from an institutional perspective and also from a wealth perspective.

I got you. And on deposit pricing, that's also been a headwind later in the year and you guys have to play a little bit of a catch-up. Do you feel like you've fully caught up? I mean you see what competitive rates are, you hear complaints -- or no complaints from clients at this point. So should we think about you being fully there on pricing? And as a bit of a follow-up to that, I would love to get your thoughts on if we do get rate cuts next year, given how high deposit betas were towards the end of the cycle, is it reasonable to assume you'll be able to pass down almost 100% of the first couple of cuts down to the customer?

Yes. So as far as the pressure, we have, again, pretty sophisticated clients, so they're always going to look at it. But to your point, I think we've dealt with a lot of those discussions, negotiations on that, but we'll see what happens on that. On your point about to the extent there are rate cuts, we'll have to look at the competitive environment for sure. But yes, I think your general presumption is correct, Alex, that you would expect, the way we've gone up, to the extent rates come down, yes, we would bring down rates, as we would say, symmetrically.

Got it. Okay. Last one on NII and then we'll move on to other topics. But I do want to zone in on asset strategy. You talked about one of the potential questions that I had here about securities disruption, so you already kind of gave us that answer. But as you think about the trajectory of interest rates and the appetite to actually go in the opposite direction and try to lock in some duration -- I know you said you left most things in floating short-term securities with this repositioning, but as you think about what's maturing and what's in floating today, what's the appetite to start kind of nimbling it, extend in duration and locking in a higher rate?

Yes. So this is when it would be -- would have been good for Jason to be here because I would say, Jason, what do you think? But certainly, this is something that we talk about all the time, obviously, but then also why we have a lot of expertise and governance around that, not only in treasury but also with our asset liability management committee. And so that is clearly the way not only they're going to have to think, Alex, but like they're already trying to think about it. We look at managing the balance sheet for the clients and making sure that we have sufficient liquidity when you look at what happened in the banking industry earlier this year, that's when you say we're glad that that's our priority and how we think about it as opposed to necessarily saying, how do you capture the last spread dollar on that? So my point is like that's where it starts. And then yes, they're looking to do things to make sure that we're positioned appropriately. But they take into account a lot of factors, as you can imagine, and a lot of different interest rate scenarios. Because as much as we may think that we have an idea of where rates are going, right, I don't think anybody necessarily predicted 500 in 1 year and down to 0. So you have to have a certain amount of modesty about like, okay, today is the day we're going to turn this thing out. It's just not the way we operate.

Yes. No, look, that makes perfect sense. Okay. Let's talk about capital a little bit. Look, Northern Trust has always had a significant amount of capital. I know that's one of your core pillars. I know you guys always are more capitalized than you need to be and you look at your closest peers even though you're not a G-SIB bank, just like your State Street and DK brethren, but you operate like such and then some. But excess capital continues to build, so what would it take for you guys to, I guess, get more aggressive with share repurchases?

It would be having more capital. So you did a great job, by the way, Alex, of discussing the way we think about capital. But that is the case. And that has put us in really good stead. It really has, with our clients as a part of the system, et cetera. And so in that sense, we don't want to give that up, both the reality of it, but also, I'll call it the perception. And we've seen and when you have turbulence, perception matters as well. And so we want our clients to think that we're that safe port in a storm and we've been able to be that for them. And yes, there are limits to it, though, right? So we're not looking to say build beyond those ranges that we've been in. And you have the uncertainty of the capital proposals as well, right, that we just have to take into account. And I don't have a view of where those are going to go or they're not going to go. But that level of uncertainty you just have to bake into your thinking. So that said, we feel like we're in a good place to the extent we do have more capital because you're generating more earnings or anything along those lines. Then you look at how are you going to deploy that capital. And are you in a position either to do it in the business, which we've done at times, right, to grow the balance sheet. And other times, we look to buy back more stock, right? And all throughout this, obviously, the dividend being another important component.

Do you feel like you're there? Like meaning more on top of more or...?

No, we feel like we're in the right place. Yes. Yes. So we are not looking and saying like, okay, we need more from where we are. We're saying we feel very good with where we are right now. So not looking to necessarily build in advance of anything.

Okay. Got you. Kind of follow-up to that, I did want to hit on Visa. It's an interesting nuance in the business model for you guys. You have a significant amount of embedded gains related to that position. There's a mechanism to potentially monetize that. How do you think about that? Should investors assume that you guys will do that, and that's another source of potential share repurchases? Or how would you think about using the proceeds? And I guess what will be the rationale not to do it if there's one?

Yes. So. You mentioned that, I'll call it, it's an interesting nuance on the operating model, I think, of our business. But the only thing I would say there, it's not. And what I mean by that is we don't view that as a strategic asset for us. We ended up with these shares for a number of different reasons. But -- and so it's a valuable asset without a doubt, but not something that is strategic or a business asset for us. It's, I'll say, largely been illiquid, okay? We've had the opportunity to monetize some of it along the way, but at this point, as we have in our disclosures, about 4 million shares of the Class B Visa shares. In September, Visa did put out in a proxy that they plan to do an exchange offer. So it would present the opportunity, not just for us but for other Visa B holders, to be able to participate in the exchange offer, which you'd have to actually pull it out and read it. It's relatively complex. But the short answer is, to the extent that it does get approved by their shareholders, which would be necessary, you'd have the opportunity initially to exchange, basically so you end up with half of the Visa B shares and half of A class of shares that you could then sell within a certain time period, essentially 90 days as it's proposed. So we're obviously following it very closely. To the extent it presents the opportunity to monetize those shares, we would look to do that. And then to your point, right now it's essentially recorded at 0 on our balance sheet. It's not in our capital, if you will. So it would have a financial impact to us. And then you are right, then we would look at what does it do for the balance sheet overall, what does it do for capital. And to the extent that it does provide additional capital and some liquidity aspect to it, how do we want to look at deploying that.

Got it. Great. Well, speaking of stock, there's been some insider buying from you guys as well, including from you. And frankly, it's been kind of rare, like Northern Trust insiders don't tend to buy tremendous amount of stock. So what's different? What prompted maybe this action and what's the market missing that you're excited about?

Yes. So I would say -- and I won't speak for the others, they were kind of independent decisions, if you will. And really, it wasn't much more, Alex, than, from a personal investment perspective, thinking about where the stock was trading at the time and saying, my view of the intrinsic value of the company and of the stock relative to where it was trading. And it just seemed like it's meaningfully different, significantly different, in my view. The strategy, I'll say publicly, is no different than it is privately. And I will say it's just a high level of confidence that we're going to execute on that. And the markets, they're cyclical, particularly with financial stocks and all of that, that in my view it was a compelling thing to do at that time.

Great. All right. We got about 2 minutes left. So if anybody has questions, just raise your hand, and we'll get the mic to come around. All right. Maybe I'll ask one more,

You have one over there.

Sure. Go ahead.

I think your CFO had sort of suggested that there was the possibility to grow NII next year off of sort of 4Q by, I think, asset repricing and some other factors. Is that still in play here now that you've done this securities restructuring and giving us a higher sort of run rate to run rate off of?

Yes. So some of it, we've moved forward. So you're still capturing it. We just captured some of it in the fourth quarter as well. But we still have a portion of the securities portfolio that when they mature -- when the securities mature, they're at much lower yields than the existing yield curve. And so some of that pick up, without a doubt, from just reinvestment, just works its way through the portfolio with maturities.

Great. Well, I think we're at time. Thank you very much. Appreciate you being here. You did a great job of wearing the CFO hat as well by the way. So thank you for that.

Yes. Thanks a lot, Alex. Appreciate it.