Good morning and welcome to the 2022 First Quarter Earnings Conference Call hosted by BNY Mellon. Please note that this conference call and webcast will be recorded and will consist of copyrighted material. You may not record or rebroadcast these materials without BNY Mellon’s consent. I will now hand the call over to Marius Merz, BNY Mellon Head of Investor Relations. Please go ahead, sir.

Thank you, operator. Good morning, everyone and welcome to our first quarter 2022 earnings call. Today, we will reference our financial highlights presentation, which can be found on the Investor Relations page of our website at bnymellon.com. I am joined by Todd Gibbons, our Chief Executive Officer; Robin Vince, President and CEO Elect; and Emily Portney, our Chief Financial Officer. Todd will provide introductory remarks and then Emily will take you through the earnings presentation. Following their remarks, there will be a Q&A session. Before we begin, please note that our remarks include forward-looking statements and non-GAAP measures. Information about these statements and non-GAAP measures are available in the earnings press release, financial supplements and financial highlights presentation, all available on the Investor Relations page of our website. Forward-looking statements made on this call speak only as of today, April 18, 2022 and will not be updated. With that, I will turn it over to Todd.

Thank you, Marius and thank you everyone for joining us this morning. Referring to Slide 2 of our financial highlights presentation, we continue to see healthy underlying momentum across most of our businesses and reported revenue of $3.9 billion, which was roughly flat year-over-year and it was up 2% if you exclude the impact of government sanctions and the additional actions that were taken related to Russia. Now we are in an increasingly uncertain environment, including the war in Ukraine, volatile markets and persistently higher inflation, which will require more meaningful monetary policy adjustments. It is in times like these that our strong, lower risk balance sheet and the resiliency of our business model, differentiates us. In the face of the tragic events occurring in Ukraine, we ceased new banking business in Russia and suspended investment management purchases of Russian securities. Since the beginning of the war, we stepped up our humanitarian efforts as well as the support for our employees and the members of our community who have been impacted. And we continue working for our multinational clients that depend on our custody and recordkeeping services to manage their exposures. The expenses of $3 billion were up 5.5% as we continue to invest in further growth and efficiency initiatives. And we reported EPS of $0.86 and that included an $0.08 impact related to Russia. We continued to generate a significant amount of capital and returned close to 60% of earnings to our shareholders, primarily through common dividends. Throughout the quarter, we took actions in the investment securities portfolio to temper the immediate impact to capital from higher interest rates. And we expect higher rates to be both a positive for fees and net interest revenue going forward. Emily will discuss the details for the quarter shortly, but let me…

Thank you, Todd. And I will add my congratulations to you on your retirement and I want to thank you for your leadership and mentoring over the years. So, good morning, everyone. As I walk you through the details of results for the quarter, all comparisons will be on a year-over-year basis unless I specify otherwise. Starting on Page 3, total revenue was flat and included an approximately $90 million reduction related to Russia, a notable item this quarter. Fee revenue was down 3% or flat excluding the impact related to Russia. The benefit of higher market values as well as continued momentum across many of our businesses was offset by the impact of lost business in Pershing and Corporate Trust in the prior year, lower FX revenue of elevated levels in the first quarter of last year and the unfavorable impact of a stronger U.S. dollar. While not on the page, firm-wide AUCA of $45.5 trillion increased by 9%, of which 8% is growth from new and existing clients and 1% is driven by the impact of higher market values, net of currency headwinds. AUM of $2.3 trillion increased by 2% year-over-year, reflecting cumulative net inflows and higher market values, partially offset by the unfavorable impact of the stronger U.S. dollar. Money market fee waivers, net of distribution and servicing expense were $199 million in the quarter, an improvement of $44 million compared to the prior quarter. This reflects the benefit of higher average short-term interest rates partially offset by higher money market fund balances. Once again, our growth in money market fund balances meaningfully outpaced the industry. Together, the impact of lower waivers and higher balances drove a sequential increase in pre-tax income of close to $60 million. On a year-over-year basis, fee waivers had a de minimis…

Thank you. We will now take our first question from Brennan Hawken from UBS. Please go ahead.

Good morning. Thank you for taking my questions. First, Todd, congrats on your pending retirement and Robin, congrats on the new role. I look forward to working closer with you. Before a question though for Robin, I’d love to drill down a little bit MOI what you talked about. More tactically around the actions you’ve taken with the balance sheet to reduce the AOCI sensitivity. Could you maybe expand on that a bit and touch on some of the specific actions in greater detail and what impact we could expect on the outlook for NIR and how that might inform your updated expectation?

So Brennan, good morning. I just taking a quick step back, I do want to do a shout-out to our CIO because I think that really did – do a great job in terms of both optimizing NIR but also protecting against AOCI volatility during the quarter. As I mentioned in my prepared remarks and I’ll give a bit more color, we shortened the duration of the AFS portion of the portfolio. It’s now a little over 1.5 years, down from more than 2 years at the end of last quarter. We’ve transferred longer-dated securities to HTM. You’ll notice that HTM now as a proportion of the securities portfolio is about 40%. That’s up from about 36% at the end of last year. We’ve also reduced convexity and credit risk in the portfolio. And so all of these things, I mean, we did – obviously, there was a reduction in AOCI of $1.5 billion during the quarter, but it would have been larger had we not taken these actions. And as you rightfully point out, these actions have also made us a lot less sensitive to rising rates going forward. And as I also, I think, mentioned, we’ve reduced – just to put a finer point on it. We’ve reduced DV01 in the AFS portfolio in excess of 25% just through the actions that we carried out this quarter. So as you can tell, we’ve been managing the portfolio very actively, we’ll continue to monitor it and be very nimble.

Great. Thanks for that, Emily. Robin, maybe one for you. Stepping back and widening out here. Understand that you’ve just been named to the job. But you’re not new to Bank of New York, for sure. So at this point, can you provide any details or plans about your goals or targets? Or maybe at least like a road map for when we could expect to hear more from you about your goals and your plans?

Sure. Good morning, Brennan, and I appreciate the comment and the question. So you’re right. I’m not completely new to the firm, which is certainly an advantage for me in coming in and taking on the role. But I will say that I’m being very diligent, as Todd referred to earlier on in his comments about the transition. And so we’re working very closely together. And I don’t want to be complacent about the fact that there’s a great opportunity for a CEO-Elect to have the opportunity to come in and to really benefit from a transition. Having said all of that, when I joined the firm, I was really struck by the breadth of the franchise. I mean, 93% of the world’s top investment managers or clients of ours are as are 97% of the world’s top 100 banks. And that breadth, coupled with the depth of the franchise, that real client trust that we’ve talked about before is a super powerful foundation. And so job number one for me is to really build on that. And that’s been an investment that Todd has been very focused on during his time as CEO. Now what I also would reflect on is some of the things that I’ve been focused on in the Market and Wealth Services businesses. And the first of those is innovation. You’ve seen that we’ve launched Pershing X. We’ve been very focused on real-time payments in the treasury services space. And that concept of really driving innovation across the enterprise is another important pillar of how I think about the firm and the opportunity that’s ahead of us. Another thing that we’ve been doing in that segment, which I’m very excited about across the company is really deepening the wallet, connecting the dots across the firm, helping clients that are existing clients of the firm to do more with us. And that whole ethos of on BNY Mellon, I think is a real important and deep vein for us to continue to mine. And then the last point that I have mentioned is operating leverage and focus on margins. In that segment, we had a 41% margin in the first quarter and having run operational businesses in the past. I’m very focused on operating leverage, and that will continue to be a focus of mine along with these other pillars. So that’s how I’m thinking about the world. But I’d just remind you that I’m still in the transition and enjoying working with Todd, and we’re really focused on making this a smooth and effective handover.

Alright. Thanks for that color, Rob.

Thanks, Brennan.

Thanks, Brennan.

Next question, operator.

We will now take our next question from Mike Mayo from Wells Fargo. Please go ahead.

Hi, well, I was going to ask you, Robin, I asked that at the shareholder meeting, but maybe just a little bit more about your background. I just say that when Northern changed their CEO, they said the old CEO is more about marketing and I’m more about numbers. When State Street changed, their CEO, they said, well, the new CEO was more about understanding asset management and their clients. Anything else – since we don’t know you as well as Todd, who’s been there for in his fourth decade, anything else about your background that you could share that could give investors confidence as you are about to enter the CEO role in several months.

Sure, Mike. Well, I’m all about being a great all-around CEO. But to answer the sort of question a bit more directly in terms of my background, I feel like I’ve been prepared for this role over the course of my career. I started off in the markets business, and I ran the money markets business at my prior organization, which was a great opportunity to really get into the markets, capital markets, interest rates and really the client franchise. And of course, a lot of those same clients are clients of ours and so that was a great formative start for me. I ran operations at my prior firm. I was a treasurer. I was the Chief Risk Officer. I was the CEO of the International Bank. I operated internationally. And so when I put all of that together, I think it really gives me the opportunity having touched a lot of different aspects of our franchise and our activities to really bring all of that to bear in the role going forward. And I’m very excited about that. And as I joined the firm, I commented before, I’ve been struck by a few things, including the depth and breadth of the franchise, but also the culture of the firm. And I think that there’s a lot of opportunity for us, and I’m excited to have at it.

And so to summarize, you kind of want to have like one BNY Mellon and improve the wallet share. And hopefully, I’m not sure if you guys can give us now. I don’t think so, Todd. There is not too many firms that do it. But what’s your market share by large client, where was it a few years ago? And where do you hope it to be? Do you have any metrics around that or do you think we can get that in the future?

Yes. We haven’t disclosed that publicly, but what I would say is we have grown with our clients, and we have continued to increase market share with our largest clients over the past couple of years especially in our servicing business – our Asset Servicing business. And I think some of the stats that we even did disclose this morning that Emily mentioned. We retained 90 – actually, I mentioned that. We retained 97% of all of the business that we re-bid on, which is an enormously high number. And we’ve got some capabilities, I mean, the investments that we’ve made in service quality. And some of that is in some of the technology that we’ve got around that, keeping us much closer to our clients, much better informed, much more responsive. The investments that we’ve made in our data management and data analytics, we have where I think we are the leader, not only in the servicing capabilities, but also the fact that we can – we’ve got the ability to bundle all of the back-office service is not just custody and accounting administration. But TA as well as a differentiator. So I think we are seeing increased market share. I haven’t disclosed it specifically against the major clients. But I think the fact that we are with just about every one of the major clients reflects that.

Alright. Thank you.

Thanks Mike.

We will now take our next question from Ken Usdin from Jefferies. Please go ahead.

Thanks. Good morning, everyone. Emily, I wanted to ask you a little bit on net interest income and some of the changes that you’re referencing. So I guess to start, can you help us understand your point about historical reference of deposits versus QT or rates environment. We saw the positives come down this quarter. Can you tell us what you’re expecting to see out of the balance sheet going forward?

Sure. So when it comes to deposits and runoff, what I’d first say is that we’re just using the forward curve. So assume that it’s just as baked into the forward curve, Fed funds is about 2.5% by the end of the year. Also, we’re just assuming that betas largely retraced what we’ve seen in the last cycle. It means that we will get to the end state faster, but they’re going to largely retrace it’s correlated to rates and largely are chased what we’ve already seen. So with all that said, we would expect deposit probably run off maybe about 10% over the course of this year. And that’s from where we are in the average of the first quarter. We’ve already seen them come down a bit from the fourth quarter. And just as a reminder, our deposit base is largely institutional NIBs. Part of the growth you’ve seen has been in NIBs and so we expect that to kind of normalize to over time. And the other thing I would mention is that as we see deposit runoff, we also could see a migration to money market funds. And if that does indeed happen, then obviously, that could be a nice tailwind for us as well.

Okay, got it. And then in terms of the shortening up of the duration, can you tell us how I don’t know if you can size the magnitude of how much that might have changed your current views of full year NII up 13% versus what it might have been otherwise? And how you’re now redirecting incremental cash flows into the portfolio versus what you might have done otherwise, if rates haven’t gone up this quickly?

Yes. We are – we’ve obviously shortened duration across the portfolio. We’ve swapped fixed floating. And considering just the uncertain environment, we’re also continuing to be cautious and nimble.

Okay. And then you mentioned the more cautious on buybacks in the near-term and maybe returning 75% this year. How will you evaluate that? Obviously, we can do math on what it means for this year. But in terms of how much could the swings in AOCI continue to impact even being able to do 75%. Thanks, Emily.

Sure. So as I mentioned in my prepared remarks, we still intend to return 100% of our earnings to our shareholders over time, and that’s, of course, across dividends and buybacks. We’ve been cautious, and I think it’s been appropriate to be somewhat defensive in this environment with the uncertainty and, of course, the reduction in AOCI. But given the assumptions in our forecast, we feel pretty confident that we would expect to return at least 75% of our earnings to our shareholders over this year. And the nice thing about SCB and the SCB framework is that we can be nimble, we can be flexible. And ultimately, depending upon the runoff we see we might be able to do more.

We will now take our next question from Steven Chubak from Wolfe Research. Please go ahead.

Hi, good morning. I wanted to ask a follow-up on the NII guidance. I appreciate the color Emily on the deposit balance trajectory based on what we experienced last cycle. I was hoping you could just speak to the deposit beta assumptions underpinning the guidance for the full year? And also how much of a helper was premium on this quarter? And how much of a benefit do you expect to realize over the course of the remainder of this year?

So from a beta perspective, as I said before, we just expect betas to largely retrace what we’ve seen historically. It does mean you’ll get to the end state faster. In the first rate rise, it’s generally and what we’ve experienced is very much as we’ve been expecting in line with expectations, kind of betas of 35% to 40%. By the time we kind of get towards year-end and we have many more rate hikes, that will be probably closer to – betas would be closer to 70% plus, which is kind of where we ended in the last rate cycle. In terms of – what was your last – sorry, I missed the question.

Sorry. The premium

Yes. It was helpful this quarter. I don’t have it right off hand. But it was obviously – definitely helpful this quarter, but – and we just expect it with rates rising as we go forward, it will continue to be a bit helpful, but frankly, at a more modest level.

Understood. And maybe just switching over to the fee side, you spoke to fee revenue up 4% to 5%. I believe Emily, and I am sorry if I missed this, you alluded to organic growth of 1% plus being the underlying assumption. I know you had been running at 2% plus of late. And wanted to get a sense is that organic growth guide more reflection of conservatism, challenging macro or just what you are actually seeing in the backlog of new mandates?

It’s definitely not so much on – at all on the mandate side. We still – fundamentally, our businesses are in really good health. The growth is really just considering the more challenging environment that we are in. And specifically, when you look at market levels or client activity across some businesses have slowed down, you are seeing or we are expecting a bit more risk-off behavior. And so the particular businesses, which are probably most – which are going to be most impacted, we think, are investment management, corporate trust, depository receipts to a lot lesser extent, asset servicing. And so that’s what’s all baked into the 1%-plus guide. But the fundamentals are very good and we feel pretty good about that considering the challenging environment.

I couldn’t agree more. And just one follow-up, tick-tack modeling question. Just on the asset servicing line. I believe in the slides you flagged a gain on strategic equity investment. I was hoping that you could size that for us.

We don’t disclose that in – we only disclose that concrete item.

I would just add to that, Emily. So, if you look at our investment and other income, it was about in line with the guidance that we had given. On the asset servicing, we do have some investments that we have said and some fintechs that we work very closely with strategically and they have performed pretty well. But as you might imagine, in this down cycle in the first quarter, we got hit pretty hard in our seed capital and some of our other things. So, net-net, they basically offset each other.

Got it. Okay. Thank you for taking my questions.

We will now take our next question from Alex Blostein from Goldman Sachs. Please go ahead.

Hi, good morning everybody. Thanks for taking the questions and congrats again to both Todd and Robin here. So, my first question is around the kind of connectivity between organic growth and operating leverage in the business. So, organic growth sounds like 1%-ish this year. Fees were flattish year-over-year. Expenses, up 5%, right? So, I understand that there is obviously investments that you guys are making in the business. But when you think about this on a 18 months to 24 months out, should we expect BK to get to a point where fee growth is more in line with expense growth. I think this kind of dovetails maybe some of Robin’s comments earlier around his focus on operating leverage.

So, what I would say is, look, we are very focused on driving positive operating leverage. And I just would remind you that overall, for – if you look at total revenues, we will be – our plan is to deliver positive operating leverage this year. And frankly, that’s with the impact of the Russian notable items. So, I think that’s pretty good. In terms of fee – when we think about just fee revenue versus expenses, what I would say is that when you look at our – the guide that we gave for the rest of the year, it does – our expense guide does include slightly more inflationary pressures as well as the investments, of course, that we have talked about extensively that we think are very compelling and some will pay off sooner and some will pay off a bit over the course of the next couple of years. And as we talked about, it’s way too early to kind of talk about like what it’s going to look like in, say, 24 months, 36 months out. But we have said that, ultimately, over time, we would expect expense growth, the rate of growth to moderate.

Alright. We will stay tuned for that. My second question around maybe the Issuer Services business and really DR specifically. I think in the earlier release when you guys announced the Russia loss this quarter, there is a comment there around just a more subdued level of revenue growth. I think there is an ongoing effect from the Russia exit business as well. Can you just level set us what the DR business does in revenues now per year kind of net of these changes on a run rate basis? And then ultimately, how should we think about any other sort of geopolitical risk within that business? I don’t know to what extent China is part of that revenue stream? Thanks.

Emily, do you want me to take it or you want it?

Sure. Go ahead.

So, I think there is a couple of questions there. So, Russia was – it was a material component of the total DR revenue. And the indication that we gave is there was a contra hit on kind of prepaid expenses there. So, that got reversed in the first quarter, and that was the most of the $88 million that we were talking about. And on a go-forward basis, we would expect probably something like $20 million – probably $15 million a quarter specifically from DRs. There are – I mean, China is an important market to us, too. So, we saw what we have seen, Alex, is a little bit of fewer transactions. Fewer new issuance in China a little bit down, and that’s reflected in those numbers. We don’t break out the entire DR revenue line. It’s a small – a modest percentage of the total Issuer Services. But it is impactful and it did, as you can see, it hit the bottom line in the first quarter.

Got it. Great. Thanks very much.

We will now take our next question from Glenn Schorr from Evercore. Please go ahead. Glenn, please ensure the mute function is switched off to allow your signal to reach our equipment.

Glenn you are on mute, if you are still there. So, operator maybe we should go to another question…

We will now take our next question from Betsy Graseck from Morgan Stanley. Please go ahead.

Hi. This is Ryan Kenny on behalf of Betsy. Good morning.

Good morning Ryan.

Just a question on the Pershing X initiative that was announced a few months ago. Wondering if you could dig in more on what specific areas you are looking to grow in and help us size the investment dollars, timing and the ROI of the investments here. And any expected impact on margins? Thanks.

Sure, Ryan. So, look, it’s an investment that we are excited about. As we step back from our Pershing business, where as you know, we are a real market leader in that business. We touch about 15% of RIA accounts in the U.S. We touch a little over 30% of all RIAs with $1 billion or more in AUM. One of the things that we have heard from our clients is that the world is getting increasingly complex for them as they think about how to really pull all of the capabilities that they need to run their businesses together. And as we have really listened to our customers on that point, we decided that there was a great opportunity for us to help solve some of those problems. And so collecting the various different capabilities focusing on the data and the smooth movement of data across those various capabilities we saw that as an opportunity to really deliver something new and incremental to our customer base. And we have tried to speed our way, along that we hired, as you know, Ainslie Simmonds to run that for us. She has recently completed the rounding out of her top leadership team. We tried to speed our way to market with the acquisition of a direct indexing capability in the fourth quarter, Optimal Asset Management. That was an example of a bolt-on capability that we think can just help us to accelerate. But as we have disclosed before, we are not expecting this to drop much to the bottom line over the course of the next couple of years. This is an investment in positioning Pershing and the aggregate wealth management platform services platform for the future. And so this is an investment in the medium to long-term, we think it’s important our customers very much want it, and we are excited for it.

Thanks.

We will now take our next question from Brian Bedell from Deutsche Bank. Please go ahead.

Hello. Hi, can you hear me?

Hi Brian.

Great. Well, first of all, congrats again, Todd and Robin. And Robin looking forward to working with you. The first question is just on the short-term second quarter outlook. I know Emily, you gave the outlook for the full year. Maybe just to focus a little bit on the pace coming into the second quarter on the recruitment of fee waivers, and any commentary on the sort of near-term trajectory of NIR for the second quarter?

Yes. We really decided a few more of a full year guide for the second quarter. But I mean to size what you are thinking about, I think specifically on waivers, we do see the Fed raise rates by 50 basis in May as I think we are all kind of expecting. Obviously, that will be a nice uptick in terms of recouping waivers and it’s to the tune of, call it, like $100 million or so is what I – is how I would estimate it.

Okay. And then to focus a little bit longer term on the organic revenue growth outlook, the 1% plus. Just I guess if we do get a better – let’s say, if we get a risk on backdrop in the second half as opposed to the current sort of view of a challenging market backdrop, how might that influence that organic revenue growth outlook? Is that enough to put you back in that 2% area, or do you really – there is a lot of things you are working on to really build that organically. And if you could just remind us the sensitivity of fee revenue to equity markets, global equity markets improvement? And then just lastly, whether you would be considering any type of major acquisitions to accelerate revenue growth, or really, it’s just going to be a focus on organic?

So, I will take a couple of parts to that, and Todd or Robin might want to chime in about the inorganic opportunities. But in terms of organic growth, I mean just remember, when we define organic growth, we are normalizing for market appreciation or depreciation, but it is fair that risk-on or risk-off behavior associated with that could also impact organic growth. And so what I would say is, it’s hard, we don’t really say like what’s the sensitivity. But yes, there certainly could be more upside if you see more risk on behavior and ultimately, that means more trading, more transaction volume, etcetera. So, that is upside. So, it’s certainly not out of the realm of possibility that it could be higher. In terms of – what was your second…

The equity – the fee revenue sensitivity to – so like every 10% increase in equity margin.

Sure. Yes. We have disclosed this. I think you can find in the K. So basically, any like a 5% move in equity markets is kind of happening gradually throughout the year is about an additional $75 million in revenue.

Yes. Great. And then…

Todd, do you want me to take inorganic or you want to?

Yes, why don’t you go ahead and take it. Before you do Emily, I will just add. So Brian, just that 5% was – that was not an average at $75 million. That means if it goes up on average over the course of the year, at above $75 million…

Yes. That makes sense. Thank you.

Okay, you want to follow-up on organic, Emily?

Sure. I mean on inorganic, what I would say and Todd and I have been very consistent on this, is that we are – of course, we always are evaluating inorganic opportunities. But at the same time, the bar is really, really high. And it’s not high just from a return perspective, it’s also very high from an execution risk perspective. So, we have been doing several deals, but they have been mostly kind of digestible bolt-on things that are adding capabilities or markets or clients. And we will continue to look out for those.

Okay. Thank you very much.

We will now take our next question from Michael Brown from KBW. Please go ahead.

Hi, good morning.

Good morning Mike.

Good morning. I just wanted to ask about – start with the average loans were up 3% sequentially and 18% year-over-year. So, I just wanted to ask a little bit about where you are seeing the strongest demand? And what are your expectations moving forward and the ability to meet that demand given the expected trajectory of the deposit balances from here?

So actually, we have been – we are very proactively growing the loan portfolio. So yes, as you mentioned, it’s up 3% on average and 18% year-on-year. We will continue – it’s our expectation to continue to grow that over the course of this year. And where we are seeing it is really on a couple of different areas. So, capital call facilities, certainly, trade finance, likewise, margin loans, CCLs and mortgages and well, so let pretty much across the board. And that’s – we want to be there and leverage our balance sheet for our clients when it make sense.

Okay. Thank you very much. And then just thinking about the capital ratios today and your comment on returning 75% of net income, any thoughts on the trajectory in terms of the quarterly pace, just given that the leverage is at 5.3% or ended the quarter at 5.3%. It seems like the buybacks may need to be a bit more back half weighted as the capital ratios kind of accrete higher from here? Is that a fair expectation?

I am not going to really comment on kind of how it’s going to be paced throughout the year. I think you can kind of look at all of our ratios and make your own assumptions. But – and the thing I would just remind everyone again is that the SCB framework is really allows us to be very nimble and very flexible.

Okay. Great. Thank you for taking my questions.

Thanks Mike.

We will now take our final question from Gerard Cassidy from RBC. Please go ahead.

Thank you. Good morning everyone. Emily, can you share with us – and if it’s not available, maybe you could answer it in a different way. But in your quarterly and 10-Ks, you and your peers always give us a 100 basis point parallel shift and the curve leads to an x percent increase or decrease in interest revenue. How does that – how do you stand today at the end of the first quarter versus the end of the fourth quarter? Do you have that number? And if you don’t – will it be lower by 30% or 40% compared to the fourth quarter?

It’s – we don’t – we will obviously be updating that when we release the Q. What I would say is we are much more sensitive, of course, to short-term rates and long-term rates. That continues, of course, to be the case. And you will see more of that when we actually release the Q.

Okay. Very good. And then following up on the Tier 1 leverage ratio, I think last quarter, you mentioned that you guys trying to manage to 5.5%. Obviously, you are slightly below that today. Where do you think – how low can it go from where we are today, or just your views on how you are managing that number?

So, in terms of Tier 1 leverage, we have always said that given the extraordinary circumstances we are in and all of the excess liquidity in the system that we would be – it makes perfect sense to dip into our buffer to a degree, which is what we have done. We would expect, of course as we start to see some probably deposit runoffs that will take a lot of pressure off Tier 1 leverage. And what I would also just flag is that by the end of the year, it’s not – it’s likely – actually not out of the normal possibility, but frankly, probably likely that our binding constraint will become CET1 versus Tier 1 leverage. And frankly, I think if you are toggling between Tier 1 and turn leverage in CET1, that actually is very good. It means you are managing your balance sheet optimally.

Great. And then just quickly, on the HTM, I think you said you lifted your HTM portfolio of 40% of total securities. Is there a limit on how high you would take that, too?

There isn’t a limit per se, but we obviously do that very with our partners in risk, and we are always making sure that whatever we move there is high-quality liquid assets that generally speaking, you can repo it. Repo those assets, etcetera. So, I wouldn’t expect it to increase a lot more from here.

Okay. Thank you.

Gerard, it’s Todd. I will follow-up. I just want to add to – I mean, Emily made, I think all the right points around the capital ratios and the Tier 1 leverage. But remember, we are probably too precise when we give you a number of something like 550. If you remember, that’s a 150 basis point bunker to what the requirement is. And the reason it’s there is because we recognize that you could have a spike in the balance sheet and for us, it’s not a risk spike. It’s because deposits have increased, and we have certainly seen that through the quantitative easing over the past couple of years or you could have a sell-off and some impact in the OCI. That’s exactly why the buffer is there. So, eating into the buffer in this type of situation is exactly what we would expect. And it’s not really particularly constraining to us. as we still have that 130 basis points to Emily’s point and in our modeling, if things run the way we would expect them off of the forward curve those deposits are going to come down 10% or so, and that’s going to free up quite a bit of Tier 1 leverage. And basically – and we are estimating that we are going to get pretty close to common equity in Tier 1, which is a great place to be. And it also means common equity is a little easier to manage because that’s a risk-based asset ratio where we can manage. It’s not just what comes on to the balance sheet. So, I want to make that clear. Probably in the future, we should give you guidelines that are more ranges, and we can kind of calculate where we are in that range.

Very good, Todd. And great run time with Bank of New York, and good luck with you next endeavor. Thank you.

Appreciate it, Gerard. Thank you. So, it is top of the hour. Operator, do we have any other questions?

There are no further questions in the queue, sir.

Okay. Thanks everybody. Thank you for joining us today. Look forward to following up. I guess you can call Marius if you have any follow-up questions. Be well.

Thank you. This does conclude today’s conference and webcast. A replay of this conference call and webcast will be available on the BNY Mellon Investor Relations website at 2:00 p.m. Eastern Standard Time today. Have a great day. Thank you.