Robert Wildhack: Good morning, guys. One more question on expenses. I’m curious how you would approach a hypothetical year where revenue growth comes in a lot better than expected and what that might mean for expense growth? I guess the core question is, what takes precedent, your expense to fee ratio or the absolute level of expense growth this year?
Jason Tyler: I’ll start. Mike may want to add to it. Historically, we’d say, well, we want to grow, but we have talked about ensuring that we were committed to more than absolute number in terms of the expenses and we’ve also committed to more scalable growth. And so we’re already having conversations internally about ensuring that we’re highly disciplined on bringing on business that is scalable. And so, I think that is a change relative to how we’ve thought about it before where there was more of a desire to bring on business, always at attractive margin, but our commitment to scalable growth is going to be, is higher at this point. And that means that the expenses shouldn’t be as volatile with anticipation or even line of sight on new business coming on that brings with it high degree of expense.
Michael O’Grady: So I agree with Jason said. Just to add to your point, we’re outside of our range on expense to trust fee ratio. So we’re trying to drive that into the range. And so, as Jason is indicating, we’re leaning towards trying to get into that range sooner rather than later.
Robert Wildhack: Okay, thanks. And then on NII, I would just love to get your thoughts on the sensitivity there as it relates to different scenarios from the Fed. What’s the impact of, say, one or two Fed cuts this year as opposed to, say, six Fed cuts?
Jason Tyler: Yes, those are the scenarios we’re looking at, but I come back to this theme, it’s just going to depend on how well we’re able to hang on to spread. And there’s just been highly variable, and I think our ability to predict it just over the last couple quarters has been really hard. But I feel I feel really good about the volume that stayed in place. And so I think our approach has worked, but it makes — it’s going to make it less predictable. It’s the opposite of what we just talked about on the expense side, ironically, where we’re saying, we want to be more predictable in the expenses to try and get that expense to trustee ratio where we want it to be. On the deposit side, there’s more flexibility and more willingness to follow where the market goes to make sure we’re holding onto client assets.
Operator: We’ll go next to Mike Mayo with Wells Fargo.
Michael O’Grady: Good morning, Mike.
Unidentified Analyst: Hey, good morning. This is [Rob Ruschow] (ph) for Mike. Just wanted to follow up on the custody commentary a little bit more. As we calculated your fees that’s under custody were down about 5% year-over-year. You mentioned client outflow. So, how much of that is kind of risk off versus actual pricing pressure. What is — what was the new business this year and what’s the outlook for pricing pressure versus new business as we look into 2024?
Michael O’Grady: Yes, I’ll start and then Jason, you can fill it out. But first of all, I just think you need to take into account that we are compensated sometimes on the asset level sometimes on the transaction levels and transaction volumes were lower during the year, so that drove some of the weakness in the custody fees there. From a pricing perspective I would say nothing in particular as far as the competitive environment that is driving custody pricing to much lower levels if you will, I would say, it’s relatively stable on the pricing front there.
Jason Tyler: And as I look at just the underlying details of how we did, I think you’re leaning more toward the asset servicing business. The net new business for the year was positive. And I’m just thinking year-over-year for the quarter. And asset servicing hit its mark on net new business. The issue with the company is some of the other things happening as we get into transactions and then what we referenced earlier in our clients going through their asset levels declining. But much less of a repricing story relative to prior years and the business is winning. If we just look at their win rate in the market, it is strong. So a lot of this year the impact came from these other dynamics of lower transaction volumes and same number of clients, but less assets.
Unidentified Analyst: Okay, thanks. And if I could follow up on wealth, I guess, can you talk about the competitive dynamic there, and especially in global family office, you saw a little bit of deceleration in the growth rate. Any changes or any areas that you’re looking to grow, either inside the US or out?
Michael O’Grady: You’re right to call it, GFO had a lower — much lower growth rate than it has over the last couple of years. It’s been — the last couple of years have been excellent for that business. And this year was weaker, but we always talk about the fact that is the spikiest business that we have. Very small number of client activity can lead to meaningful change and it’s also one of the businesses where what happens underneath from an investment management perspective can have a meaningful impact on how the business is doing. But we’ve actually invested heavily in that business. They’ve got a lot of accomplishments in technology and some of the things that they have done with their wealth passport, their overall technology platform, we feel is industry leading.
It is industry leading just the way that they are now interacting with clients from that platform perspective, what clients are able to do with multiple accounts and reporting and client asset movement, all coming in — a lot of — and it’s all cloud enabled, is what we’ve done recently. And so, this highly — at the market leading from our view in terms of what we’re doing. And we’re continuing to invest in that business from a technology perspective. So there’s more coming, which makes us feel very optimistic about what that business is going to do over the next couple of years.
Operator: This does conclude the question-and-answer portion of today’s call. I would like to turn the call back over to Jennifer Childe for any closing comments.
Jennifer Childe: Thanks, Ruth. And thanks, everyone for joining us today. We look forward to speaking with you again soon.
Operator: This does conclude today’s conference call. Thank you for your participation. You may now disconnect.
