$NTRS Northern Trust Q2 2025 Earnings Conference Call

Ladies and gentlemen, good day and welcome to the Northern Trust Corporation second quarter 2025 earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jennifer Child, director of investor relations. Please go ahead, ma'am.

Thank you, operator. Good morning, everyone, and welcome to Northern Trust Corporation's second quarter 2025 earnings conference call. Joining me on our call this morning is Michael Grady, our chairman and CEO, Dave Fox, our chief financial officer, John Landers, our controller, and Trace Stegman from our investor relations team. Our second quarter earnings press release and financial trends report are both available on our website at northerntrust.com. Also on our website, you'll find our quarterly earnings review presentation, which we will use to guide today's conference call. This July 23rd call is being webcast live on northerntrust.com. The only authorized rebroadcast of this call is the replay that will be made available on our website through August 23rd. Northern Trust disclaims any continuing accuracy of the information provided in this call after today. Please refer to our safe harbor statement regarding the forward-looking statements in the back of the accompanying presentation which will apply to our commentary on this call. During today's question and answer session, please limit your initial query to one question and one related follow-up. This will allow us to move through the queue and enable as many people as possible the opportunity to ask questions as time permits. Thank you again for joining us today. Let me turn the call over to Mike O'Grady.

Thank you, Jennifer. Let me join in welcoming you to our second quarter 2025 earnings call. We reported another quarter of improving results reflecting a consistent execution of our one northern trust strategy which we introduced at the beginning of 2024. We delivered our fourth consecutive quarter of generating positive organic growth and operating leverage. Revenue grew 8% and earnings per share increased 20% excluding notables in the prior year period. And we returned more than 100% of our earnings to our shareholders through dividends and record share repurchases. As we pass the midpoint in the year, I'd like to share our progress on our multi-year transformational strategy, which is producing clear proof points that it's gaining traction. Turning to slide two, our One Northern Trust strategy is centered on our mission to be our client's most trusted financial partner and commitment to leverage the full breadth of the firm's capabilities to deliver seamless, high impact solutions. We deliver a holistic client experience through the collaboration of our three businesses to serve the full spectrum of individual and institutional clients. A great example in the second quarter is our work with Timeline, one of the UK's fastest growing discretionary fund managers. As Timeline evolved its business model to launch a proprietary fund to funds range, Northern Trust asset management and asset servicing partnered to deliver a fully integrated solution. Together, we provided investment management, fund infrastructure, and operational support, enabling timeline to scale its offering with speed and confidence. This win reflects how Northern Trust brings together capabilities across the firm to support the growth of high potential clients in dynamic markets. Turning to slide three. While we continue to deliver exceptional outcomes for clients, we're equally focused on delivering long-term value for all of our stakeholders. Our one northern trust strategy is anchored in three pillars. Optimizing growth, driving productivity, and strengthening resiliency, and managing risk. These overlapping pillars operate as a flywheel. Each one amplifying the others. Our organic growth is gaining momentum, fueled by numerous strategic initiatives launched over the past 12 to 18 months that are now delivering results and are well positioned to drive greater performance in the months and years ahead. In parallel, we're driving meaningful gains in productivity across the organization through a client-centric, capability-driven operating model. We're aligning resources more effectively to deliver value where it matters most. We're also accelerating the deployment of AI tools to streamline processes, reduce manual effort, enhance decision-making, and manage risk. Together, these efforts are bending the cost curve and freeing up resources to enable reinvestment in growth and innovation, all while delivering higher margins and a better experience for our clients and employees. Finally, the investments we've been making in resiliency are paying off through an enhanced control environment. Over the past year, we've added new roles across our three lines of defense and built greater stability, security, and scalability into our technology infrastructure. These capabilities are increasingly embedded into how we operate, influencing decision-making and enabling us to manage risk proactively and stay ahead of a rapidly evolving industry. Turning to slide four. As we execute on our One Northern Trust strategy, we're advancing several enterprise growth initiatives that are aligned with both evolving client needs and represent opportunities where we have differentiated capabilities across our businesses. One of these is clearly alternatives, which I'll spotlight today. The rapid expansion of global private markets is undeniable and projected to continue at twice the pace of public markets over the next decade with total assets expected to exceed 60 trillion. Our integrated model and expanding capabilities position us well to capitalize on this growth and deliver long-term value for clients and shareholders. We're leveraging this vast opportunity in several ways. First, 50 South Capital, the alternatives investment platform within our asset management business, which specializes in funds, primarily targeting emerging managers, is having a record fundraising year. They recently closed their largest secondaries fund with investors across wealth, family offices, intermediaries, and institutions. Second, in wealth management, we continue to build out our platform for third-party funds. Several year-to-date raises have already exceeded initial targets, underscoring the strength of our offerings and the trust clients place in our platform. We're also unlocking incremental value for clients through collaboration with 50 South Capital's research team, which has cultivated relationships with over 270 managers to offer access to highly curated, hard-to-reach alternative investment funds. As a result, our fund launch pipeline has tripled compared to prior years, reflecting strong client demand. Third, for clients with significant alternatives portfolios, we also offer our alternatives advisory services which provide consulting and customized solutions. Assets under advisement are up 66% year-over-year, reflecting demand from both institutional and wealth clients for differentiated high conviction strategies. Recent examples such as a $1.25 billion private credit mandate for a multinational corporate pension and one for a family office from the Middle East highlight our ability to deliver bespoke solutions at scale. And fourth, in asset servicing, we continue to expand our leadership position, in particular in the semi-liquid fund market, where we now support six of the 12 long-term asset funds in the UK with seven more in the pipeline. We also support five European long-term investment funds. We're building real momentum and alternatives, and we're only just beginning to unlock the full potential. In parallel with these firmwide priorities, each of our businesses is executing targeted growth strategies that reflect their unique client bases and market opportunities. Turning to slide five. Starting with wealth management. Our wealth management business continues to deliver on its unique value proposition and is making solid progress on the three core strategic priorities I outlined at the beginning of the year. First, our global family office franchise is a powerful example of our strategy in action by integrating asset servicing's industry-leading custody platform and technology capabilities, wealth management's deep fiduciary and banking expertise, and asset management's innovative investment solutions. GFO delivers a seamless end-to-end platform tailored to the world's most sophisticated family offices. GFO continues to deliver strong organic growth with revenue growing 8% in the first half of 2025, including international revenue growing at over 20% and now accounting for nearly 15% of total GFO revenue. With the launch of Family Office Solutions earlier this year, we're building on the proven success of our GFO playbook to bring a new offering to ultra-high net worth clients that do not have a dedicated family office structure, but can benefit from institutional-grade capabilities and the personalized service Northern Trust delivers. The new offering leverages the same elite capability as a GFO, combined with a dedicated family office solutions relationship advisor, serving as a single point of contact to coordinate the client's entire financial life. In just the first two quarters, this new approach has achieved a higher than 75% win rate with a deep pipeline heading into the second half of the year. We're also making deliberate changes and investments to increase our market share in key geographic markets. We recently reorganized our core wealth management business from three to four regions and appointed new leadership in both the west and northeast, bringing in experienced executives with strong market connectivity and a clear mandate to accelerate growth. We're also actively investing in revenue generating talent across these regions to strengthen client coverage and drive new business. Turning to slide six, Northern Trust Asset Management continues to execute successfully against its strategic priorities. In addition to scaling our alternatives platform through both 50 South Capital and our alternatives advisory capability, we're expanding into other key growth areas, particularly custom SMAs. As a leader in direct indexing and tax advantaged equity strategies, we continue to build on strong inflows into our strategies by investing in technology and advisor tools to scale personalization, extend internationally, and deepen penetration across institutional and wealth channels. Another example of our success is a recent $1 billion equity mandate with the public investment fund in Saudi Arabia, one of the largest sovereign wealth funds in the world. We expect this mandate to expand to additional quant strategies, demonstrating our ability to serve the world's most sophisticated sovereign clients. In ETFs, we're enhancing our platform with the planned upcoming launch of 11 new fixed income strategies in the third quarter. These products are designed to meet growing demand for efficient, transparent, and scalable exposures and will complement our existing index and liquidity offerings. Turning to slide seven. Our asset servicing business is executing on a disciplined strategy centered on scalability and client centricity to drive profitable growth. We serve a focused set of client segments where we have deep expertise and a differentiated value proposition. One that continues to drive strong win rates and high levels of client satisfaction and retention. I already mentioned our strong position with alternative investment managers where our assets under administration are now approaching $1 trillion, underscoring the strength of our platform and the trust placed in us by leading institutional clients. We also have good momentum in the asset owner segment, one of our highest margin businesses, which now comprises 50% of our segment level revenue. Our success is driven in part by our upmarket strategy to serve larger, more complex institutions with tailored solutions and global reach. Recent wins include the $89 billion University of Texas and Texas A&M investment management company, a $55 billion Canadian foundation, a top 20 US pension plan, Telra, one of Australia's most significant superannuation funds, and a large sovereign wealth fund, our first front office solutions client in Saudi Arabia, where our technology was cited as a key differentiator. Our capital markets business continues to perform well. In the first half of the year, revenue was up 15%, including more than 30% growth in both outsource trading and currency management. These results reflect the strength of our capital efficient model and our ability to deliver scalable high-value solutions to institutional clients. This disciplined approach is delivering tangible results. Organic growth is accelerating with new business tracking well and at above average profitability and overall margins improving significantly. Turning to slide eight, we've demonstrated our ability to bend the cost curve and remain firmly committed to continuing to do so while making necessary investments in critical infrastructure and growth initiatives. Through the first half of the year, expense growth was 4.8% and we're on track to achieve our full-year goal of below 5%. Our progress is underpinned by a series of structural and operational advancements. We're modernizing our operating model and increasingly leveraging AI such as GitHub copilot and document digitization to enhance employee productivity and increase automation across the enterprise. For example, thoughtful reorganization of our global operations under our chief operating officer is unlocking efficiencies while preserving our world-class service. Headcount within asset servicing and operations has declined for nine consecutive quarters and is down 7% from its peak. Importantly, these gains are accruing to margin and we've strengthened our governance and controls to ensure they are sustainable. We've also implemented centralized oversight of multi-year technology programs and introduced new tools to monitor hiring activity and workforce composition in real time. These measures give us confidence in our ability to continue driving productivity and margin expansion while maintaining the flexibility to reinvest in areas that support growth. And that reinvestment is underway focused on three levers: talent, product expertise, and technology. On the talent front, we're hiring revenue generating professionals across wealth and asset management. From a product standpoint, we're ensuring we have the expertise to create innovative solutions and support the growth across the businesses which I described earlier. And on the technology side, we're investing in capabilities that enhance the client experience and support scalable growth. These investments are enabling us to deliver more personalized, efficient, and high impact solutions. Together, these efforts reflect our disciplined approach to cost management and our commitment to sustainable margin expansion while continuing to invest in the capabilities that will drive long-term value for clients and shareholders alike. Turning to slide nine. Our financial model is designed to deliver an attractive combination of growth and returns and we're making tangible progress against these targets. Organic growth is steadily improving and should accelerate as our initiatives further develop and expand. We have a clear and credible pathway to generate higher margins. And at the core is our rock-solid balance sheet which provides flexibility for our clients and meaningful capital return optionality for our shareholders. Continued successful execution should translate into double-digit annual earnings per share growth, substantial capital return including meaningful share repurchases and higher ROEs. Given our recent momentum and confidence in our trajectory, we're changing our ROE target from 10 to 15% to 13 to 15%. Turning to slide 10. To close, I want to reaffirm our commitment to remain independent. Contrary to recent speculation, during my tenure as CEO, we have never entertained discussions regarding the sale of the company with any financial institution, nor do we intend to. The board and management team remain confident that Northern Trust is well positioned to continue driving long-term growth and value creation as evidenced by our visibly improved performance and momentum in our One Northern Trust strategy. Our 135-year track record of stewardship of multi-generational personal and institutional wealth, unwavering fiduciary commitment, ingrained culture of integrity and long-term perspective, instill confidence in our clients that we will be here for them, not just today, but for generations to come. And with that, I'll turn it over to Dave to review our second quarter results. Dave.

And ladies and gentlemen, if you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. A voice prompt on the phone line will indicate when your line is open. And again, that is star one to ask a question. We'll pause for just a moment to allow everyone the opportunity to signal for a question. And our first question comes from Glenn Shore with Evercore. Your line is open.

Hi, thanks and thanks for that definitive Declaration of Independence. Put that to bed. I'm curious on these there's multiple initiatives across alternatives and the 11 new fixed income ETFs that you have scheduled for the second half. And I guess I'd love any numbers that you could throw at it because you talked about the progress, but whether it be AUM, capital raising, AU revenue, anything. But I'm also very interested in how much you define that as push, meaning you rolling out products and pushing them across the platform and playing a little catch-up versus pull where you're seeing whether it be client or advisor demand from these products and you're developing as a response to that. I appreciate it. Thanks.

Sure. Thanks, Glenn. So on the alternatives front, as you heard, a lot of effort on that front and overall I would definitely characterize it as pull. I say that because of just the changes in the marketplace that you're well aware of towards more private markets versus public markets and we need to make sure for our clients that we're providing the right alternatives for them. So that's the overriding factor that's driving it. On the other side of it, we have to push internally to make sure that we have those alternatives for them. And that's why across the front you see everything from 50 South through the advisory through our third party platform. We're trying to do it in a number of different ways. So it's not just one thing, pushing hard. To try to size it for you a little bit, I would say in the first half we raised across all of those about $2.5 billion. That does not include the advisory which was another approximately a billion dollars on that front. When you think about just at a high level what the opportunity is, if you just look at our wealth franchise and our wealth client base, our clients are below 5% when it comes to allocation to private markets. And so there's still plenty of room in their portfolios to get closer to what we would even see as the appropriate allocation. And that's going to depend on the client segment. At the upper tiers, family offices can have as high as 40 plus percent allocation to alternatives and then as you work your way through the tiers you would be closer to maybe 10% or 15%. That's still a lot of room for them to grow through that pull of what they want in their portfolios.

Thanks. Maybe anything on what's driving the 11 fixed income ETFs? You talked about efficient, scalable exposures. I'm just curious what that might encompass that you didn't already have in the portfolio. Thank you.

Sure. So on the ETFs that we're rolling out, I would say at this point our ETF complex has mostly index and other certain exposures, whereas there's less on the fixed income front, particularly the type of fixed income characteristics that our client base is looking for. So this is another example of how asset management and the wealth management business work together to develop specific products that fit the needs of our client base. I won't go into all the detail because we're going to be rolling that out very shortly. But think about the needs across municipal securities, think about the need for fixed income ladders, all trying to put that in a very efficient vehicle for them to be able to invest in.

Thanks for all that. Appreciate it.

Sure.

And our next question comes from Betsy Grace with Morgan Stanley. Your line is open.

Hi, good morning.

Good morning.

I wanted to just dig in a little bit on the decision to tighten up the range for ROE. I think it's from 10 to 15 to 13 to 15. And within that, understand where the line of sight is that you have on the expense ratio with the operating leverage that you're delivering. Where do you anticipate you can take this expense ratio to as you move forward over the next several years in the medium term?

Sure. So if we go back in time a little bit when we first set the range at 10 to 15%, our ROE was below 10%. So a lot of the objective at that point was to get into the range which we did some time ago and then frankly we've just continued to move up in that range and at times have been at the top end and even a little bit over. It definitely depends on our organic performance and execution but also it's influenced by market conditions and so that's why we over time maintained it at 10 to 15%. It took into account different interest rate cycles and significant changes in the equity markets and so we felt like that was the right broad range. Well, we've been producing returns now at that upper half for some time period and with the momentum that we have here in the strategy, we think that's going to continue to be the case. I would also say that over time there's been less clarity or certainty around the regulatory capital framework and so it was also taking into account that there could be higher capital requirements. As much as we can't predict where that goes and for how long, at this point we believe there's a very constructive framework around capital and so we just have greater comfort that the capital requirements are in the range that we're in right now. And so as long as we continue to execute under somewhat normal level of market conditions, we think that range of 13 to 15% is appropriate.

Okay. Thank you.

Sure.

Our next question comes from Ibraham Punala from Bank of America. Your line is open.

Hey, good morning.

Morning.

So I guess maybe Mike, thanks for going through that in your prepared remarks in terms of strategy update etc. I guess as we think about independence or some version of mergers, is there any scenario in which you think M&A would make sense from a shareholder return perspective or do you think the uniqueness of the Northern franchise, the scale in the custody business, all of that kind of make M&A unattractive strategically? How should we think about it outside looking in as shareholders?

Sure. So, as you've heard from my comment, we are completely focused on executing on our strategy. And we believe that that strategy of independence is what will produce the best returns for our shareholders ultimately. And the reason why that is is a little bit to your point, we believe that that provides a unique value proposition for our clients. And frankly through this, the last several weeks we've heard from a lot of our clients who've made it clear that they have lots of alternatives for various providers or financial partners that they could have across, and this is across families through very large institutions who have said we chose Northern Trust because it's a different value proposition. It's one where you are focused on trying to provide a higher level of client service where you do have very targeted expertise in just certain segments of the market where you compete. And so we believe that that differentiated value proposition is the one that's going to create the most value. Now over time, as you know, we have done acquisitions that enable us to either enter another market or to bolster our capabilities in a particular market and we'll continue to look at those over time if they make sense. We're an organic growth company so it's not by any means that that's the primary driver, but if at times there's something that would be attractive for us on the inorganic front to do to improve that value proposition, we would consider doing it obviously with very high standards.

Got it. And I guess maybe just sticking with capital deployment, is there a certain valuation price to earnings or price to tangible book multiple where buybacks begin to look less attractive? Thank you.

Sure. I'm going to let Dave take that.

Got it. Thank you.

Sure.

And we'll take our next question from Mike Mayo with Wells Fargo. Your line is open.

Hey, I'm going to continue the line of discussion. There's been so much press and it must be disruptive to your clients and employees and perhaps annoying but it still comes up among investors. I hear you commitment to independence, 135 years, be around for generations to come, and you mentioned the short-term four quarters of growth and operating leverage, medium-term higher ROE targets, long-term One Northern Trust. So I hear you loud and clear and Mike you're aboard Northern Trust certainly you know about deal-making. But it doesn't stop others from saying maybe want to buy you. You've been in that state for the last I'd say three decades so that's also nothing new. Having said that, under what circumstance would you consider ridding the custody business because you talked about scalability, the first word when you gave the update there, and perhaps that could use more scale. Or the way I think of it, I think of the crown jewel as the private bank and the asset management and the asset servicing you're trying to

Yeah. And I would only add to that that when you look at the asset owner segment within asset servicing, it already chins the bar in terms of our margins where we're trying to go. And so as that business gets bigger and the asset management side of the equation gets smaller, you're going to see the margins drift up as well. So that particular segment we've identified is already there.

Got it. Thank you. Thank you. And we'll take our next question from Alex Bluffstein with Goldman Sachs. Your line is open.

Hi, good morning everybody. Thank you for the question. Appreciate all the extra segment disclosure on the margins, profitability, and obviously the targets as well. That's all very helpful. I wanted to ask you guys around the timing to achieve some of these. So you had the 30% plus pre-tax margin as a target out there for a little while. It's helpful to understand the pieces a little bit, but as you think about how long it will take you guys to get there and ultimately what interest environment does that contemplate? Because obviously there's a lot of profitability related to NII and you're talking about profitability of the firm as a whole. So curious kind of how that plays into the rubric.

Gotcha. Thanks, Mike. That's helpful. And just to follow up on NII, heard the guidance for the full year obviously implies something in the maybe 570 range per quarter from here on. As you look at the balance sheet, I think I heard you say a little bit less than one year duration overall. With rate cuts, kind of how are you thinking about the trajectory from NII off of that jumping off point, and are there any things you could do today to mitigate the effects of potentially lower interest rates in the US?

Great. Thank you. And up next is Ken Yusden with Autonomous Research. Your line is open.

Hi, good morning. Dave, I was just going to ask you to follow up on your comments about the asset servicing fees. You mentioned that the transaction activity was really strong. I'm sure part of that's just the core business, but was part of that just in relation to the April dislocation? And I guess kind of how would you help us understand the push and pull between organic growth and markets help that you already have baked in for the third quarter versus some of the stuff that might have been above trend just given the environment. Thanks.

And will those be out? What do you know when those will be lapped? Are they lapped in the third quarter or after the third?

Go ahead.

No. So I mean basically the quarter was client neutral. I mean when you think about it, so from that perspective, and you know keep in mind when you look at the asset servicing business, it's on a quarter lag basis, right? So you've got to take that into consideration as well. That also affected the wealth business. Wealth is on a monthly basis, and Q1, if you look at the S&P was down 5%, NASDAQ down 10-12%. So take all that into consideration as you're taking a look at those absolute levels.

Yeah. And follow up just on the wealth side. I like the layout that you gave that Mike gave in the prepared remarks and the slides. Any change in just the organic growth rate in wealth? I know you have a lot of these initiatives going forward, but when do you think we'll start to see a definitive, observable change in the organic growth rate there?

Great. Thanks a lot, Mike.

And up next is David Smith with Truist. Your line is open.

Thank you. Good morning. Any color on what's driving the strength in deposits this quarter?

Got it. So it's normalizing beyond typical seasonality so far in the third quarter.

I think you said that flows in asset servicing were relatively neutral in the second quarter. Any detail you can offer on segments where you're seeing stronger growth versus where there's more opportunity for catch-up?

Yeah. I'd also add that AUM flows, which obviously impact both businesses, were positive and liquidity was a real standout. And that is biased towards the institutional business, but 8 billion in the second quarter, 19 billion year to date on the liquidity side, which represents our 10th consecutive quarter of positive liquidity flows. And that's obviously great for our business.

Thank you. And our next question comes from Brian Bedell with Joint Bank. Your line is open.

Oh, great. Thanks. Good morning, folks. Thanks for taking my question. I appreciate all the extra color in the slides and your commentary today on the businesses. It's really great. Two questions. So maybe the first one, they're both going to focus on wealth management. The first one, going back to the efficiency initiatives within wealth management, particularly on the digital side and AI and automating some more of the services. Can you comment about how that's enhancing the ability for client delivery and relationship management? Just thinking about some of your differentiating aspects as a wealth manager. Obviously, the personal relationship side is a huge one. Is there any risk of getting too automated? Or rather do you see it as really just enhancing and actually strengthening the relationship? And then in that vein, you've always gone sort of up market for the really the last couple decades in terms of the services. Any interest in moving a little bit down market within the wealth spectrum to potentially improve that organic growth rate?

That's great color. And then on alternatives, you mentioned I think a 5% or less than 5% penetration across the franchise, but GFO obviously much more institutional base. Can you strip out the allocation between those two segments? And I guess what I'm getting at is excluding GFO, what do you really see as the current penetration and therefore the runway? And do you currently have all the right products available? And what I'm really getting at is the access to the largest even publicly traded alternative managers or private market managers that have democratized product in the channel. Do your clients have full access to those yet?

Yeah, I would just add to that particularly on a GFO front. I mean access to top managers is not a problem. We have the client base that all the top managers want. I think we are extremely discerning and have a very high bar in terms of what makes it onto our platform, and if it fits our client base accordingly. The other thing I would say is we're doing a lot more on the alternatives advisory front. A lot of our clients that got very heavy into alts have not seen a lot of realizations in the recent past and have come to us with a bent towards what do I have and what should I do with this existing portfolio. And so we've been restructuring a lot of that stuff for them, giving them advice on that to make sure they've got the right mix within their portfolio. So it's not just selling our own product, it's also taking a look at what they've done and giving advice on all of it.

That's super great color. Thank you so much.

And up next, Gerard Cassidy with RBC. Your line is open.

Hi, good morning. This is Thomas Ley standing in for Gerard. Just given all the recent headlines, can you give us your latest thoughts on stable coins and how broader adoption could impact both your businesses and then deposit levels?

Thank you. That's helpful. And then just quick follow-up. So it appears expected regulatory relief for the industry will have a pretty big impact on at least the money center banks. We saw the recent stress test results and the resulting SCBs coming out of that. Can you just share your thoughts on the potential benefits for Northern Trust more specifically from expected relief?

Yep. Sorry about that. So it appears the expected regulatory relief for the banking industry will have a pretty big impact on at least the money center banks. We saw the recent stress test results and the resulting SCBs. Can you just share your thoughts on the potential benefits more specifically for Northern from expected relief?

Okay, great. Thank you for taking my question.

And our next question comes from Vbec Junija from JP Morgan.

Thank you. My question a follow-up on some of the questions that have come up on the call today. I hear you want to increase your operating margin on the custody of the servicing business to the high 20s. Why is that good enough? I mean given your mix, you've got hedge funds that's an attractive margin business as your peers have talked about. Your peers are well above that today, above your high 20s. So why would you not consider something much more value additive more quickly rather than over a multi-year period and think about alternatives like getting rid, spinning off, or merging the custody part? If the wealth management is where your unique service ability is, why not split the two? Why is that not a consideration?

And the high 20s. Mike, no. Go ahead.

Okay. And Dave, let me thank you. Join the chorus of applauding you on the increased disclosures. It's taken us several years to get there, but thank you for doing that.

And our next question comes from Brennan Hawin with Bank of Montreal. Your line is open.

Morning. Thanks for taking my question. I recognize you've gotten a lot of questions on this, and I also appreciate that it's disruptive. I really do. But some of your shareholders have asked me to ask a fiduciary obligation question here. Mike, I'd like to explore your conviction that remaining an independent company is in the shareholders' best interest. A couple sub points. You said in your prepared marks that you're well positioned to continue to create value, but when I pull up the comp function for Northern on Bloomberg, it just shows the past 5 years the stock has lagged all of the relevant benchmarks and the close peers. I appreciate that some of your customers want you to be independent, but the company isn't structured as a mutual. So it's owned by the shareholders, not the customers. So why be so categorically closed off to exploring those options when the independent path has resulted in the stock lagging?

Right. Okay, Mike, thank you for the clear and thoughtful answer to what can be a very charged question. So I appreciate that. And for the first time in I don't know how long, my follow-up actually is related. So great to see the ROE target come up. But if you guys are moving all in and staying independent, totally committed, why not re-underwrite some of these targets? You said you've been at the upper end of the new range, but you also said that recent performance has sort of lagged. So why not up the ante and make the ROE target range in its entirety, not just the lower end, but the upper end too, move higher and really press for some value creation?

That's great. Thanks so much, Mike.

And there are no further questions in Q&A at this time. I will now turn the conference back to Jennifer Child for closing remarks.

Thank you operator and thanks everyone for joining us today. We look forward to speaking with you again in the future.

Thank you ladies and gentlemen. This concludes our call for today. You may now disconnect and thank you for participating.