Good morning, and welcome to the 2020 Second Quarter Earnings Conference Call hosted by BNY Mellon. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session. Please note that this conference call webcast will be recorded and will consist of copyrighted material.

You may not record or rebroadcast these materials without BNY Mellon’s consent. I’ll now turn the call over to Magda Palczynska, BNY Mellon’s Global Head of Investor Relations. Please go ahead..

Good morning. Today, BNY Mellon released its results for the second quarter of 2020. The earnings press release and the financial highlights presentation to accompany this call are both available on our website at bnymellon.com. Todd Gibbons, BNY Mellon’s CEO will lead the call.

Then Mike Santomassimo, our CFO, will take you through our earnings presentation. Following Mike’s prepared remarks, there will be a Q&A session. As a reminder, please limit yourself to two questions. Before we begin, please note that our remarks today may include forward-looking statements.

Actual results may differ materially from those indicated or implied by our forward-looking statements as a result of various factors, including those identified in the cautionary statement in the earnings press release, the financial highlights presentation and in our documents filed with the SEC, all available on our website.

Forward-looking statements made on this call speak only as of today, July 15, 2020 and will not be updated. With that, I will hand over to Todd..

Thank you, Magda, and good morning, everyone. Before diving into the numbers, let me share a few thoughts on how our business has been performing as we’ve adapted to a new normal during the second quarter. Volumes and volatility normalized somewhat across our businesses from the extreme first quarter disruption.

And conversations with clients have shifted from dealing with the crisis to how we can help support their business in this new environment. But much uncertainty remains over the timing and shape of the global economic recovery. In addition, the low interest rate policy is a significant headwind for us that is unlikely to change in the near-term.

Operationally, we continue to navigate the repercussions of the pandemic. Around 95% of our employees continue to work remotely, doing a phenomenal job delivering excellent service to our clients.

Our operating platforms and infrastructures are supporting the current market working model well with record volumes in certain areas, all of which has put us in a good position as we discuss new business opportunities with our clients. Turning to our second quarter financial results.

We reported solid pre-tax income of $1.2 billion and earnings per share of $1.01. As a reminder, we did not buy back shares in the second quarter in line with other big banks. We accreted capital and ended the quarter with a common equity Tier 1 ratio of 12.6%, up around 120 basis points from the last quarter.

Our average balance sheet increased year-over-year to $415 billion, mainly driven by strong deposit inflows and associated growth in the securities portfolio. Revenue was up 2% despite the impact of lower interest rates and related money market fee waivers. All of our Investment Service businesses showed resilient performance.

Asset Servicing, in particular, is showing nice pockets of growth, and our focus on service quality is paying off.

The challenges that asset managers are dealing with are driving more of them to outsource, and our unique capabilities in fund accounting and transfer agencies, as well as investments we’ve made in building out our digital and data capabilities positions us well.

Last month, more than 800 attendees, representing over 160 client firms and 25 consulting firms and vendors that we work closely with participated in our virtual ENGAGE20 event. ENGAGE, which has long been the premier data and technology conference for buy-side investment managers, highlights next-generation cloud-first business applications.

During the event, we announced the launch of our new data and analytics offerings and expanded relationship with Microsoft to provide these solutions on the Microsoft Azure Public Cloud. We are pleased to have clients such as Charles Schwab and Nuveen share case studies on how the businesses will benefit from our newest offerings.

Those include a new cloud-based data vault that supports the rapid onboarding of data, whether public markets data, private proprietary or unstructured data to offer greater flexibility and accelerate client innovation and discovery.

We also released our new ESG application, which supports the creation of investment portfolios customized to individual clients’ environmental, social and governance preferences and provide crowdsourced guidance around the preferred ESG factors and priorities.

And our distribution analytics application, which builds upon our intermediary analytics service, leveraging data from broker dealers and RIAs to predict the drivers of demand for mutual funds and ETFs, so they can identify how to successfully gain market share.

And across all our businesses, there are opportunities to capture greater market share within products, services, target client segments and markets. Much of this is the outcome of consistently investing in technology and talent.

There has been an acceleration this year in the adoption of digital solutions by our clients who continue to review opportunities to automate. The progress we’re making in digitizing our business positions us well on this front, and we’re increasing our investment spend on technology-driven automation initiatives in 2020.

In March through June alone, we migrated over 100 clients to digital solutions and are accelerating our plans to do the same across all of our asset servicing clients. We are now accepting digital signatures on many tax-related forms to support remote processing.

Digitizing these processes will help thousands of clients and reduce the millions of physical documents we deal with each year.

We also developed a new API enabled FX solution jointly with Deutsche Bank that can dramatically improve confirmation times for restricted emerging market currency trades to provide front office users with faster execution and enhanced workflow transparency.

So we’ve accelerated our progress on the digital front, and there are dozens of other examples. I’m proud that we’ve been working with the regulators and the industry to bring our capabilities in supporting the markets. Since the last quarter, we’ve been administering the primary dealer credit facility which facilitate dealers’ inventory financing.

Our Corporate Trust business has also been mandated as the term asset-backed securities loan facility administrator, and we’re also servicing CALF [ph] funds in Asset Servicing. Additionally, we’re playing an important role in the Fed support of liquidity in the municipal markets via the municipal liquidity facility.

This one is a demonstration of the power of our uniquely broad range of solutions. We’re able to bring together the expertise from Asset Servicing, Corporate Trust, Investment Management and Capital Markets to create a complex solution to support the facility.

Looking ahead to the second-half of 2020, we are confident that our business model, expense control and conservative credit risk profile will serve us well. Our efforts with clients are yielding results with higher win ratios, better revenue retention at a good pipeline in Pershing and Asset Servicing, in particular.

We are pleased with the momentum we are seeing across all of our businesses. The low interest rate environment will present a significant challenge, both through net interest revenue and money market fee waivers in Pershing and Investment Management and to a lesser extent, other Investment Services businesses.

But at the same time, we will benefit from increases in transaction volumes, FX volatility, stronger market levels and activity in our clearance and collateral management business. The recent DFAST and CCAR results demonstrate the strength and resilience of our business model.

We had the lowest peak to trough reduction in CET1 capital under the Fed’s model relative to other U.S.-based G-SIB’s at just 20 basis points. Now that’s well below the minimum SCB requirement.

Looking ahead at our capital returns, we expect to maintain our quarterly common stock dividend of $0.31 and we will not buy back shares during the third quarter. We have a very strong capital position and low-risk model that should allow us to reform well under a wide range of scenarios.

We will commence buybacks as soon as possible, depending on the economic and regulatory environment, our outlook for the business and outcome of the resubmitted capital plans based on new scenarios we expect to receive later this year.

In the second quarter, we opportunistically issued $1 billion in preferred stock, and we think this gives us opportunity to restack our capital down the road.

Longer-term, our growth is not dependent on increasing risk-weighted assets, which gives us the ability to return at least 100% of capital to shareholders and we’re confident in our ability to continue returning attractive levels of capital.

And while the outlook for the economy remains uncertain for the foreseeable future, I know that we will continue to navigate this environment well by deepening our client engagement as demand for our service grows, benefiting from improving quality and improving efficiency of our operations.

Last week, we announced that with the upcoming retirement of Mitchell Harris, we’ve elevated Hanneke Smits to CEO of Investment Management effective October 1. Hanneke has been leading Newton Investment Management since 2016 and has spearheaded Newton’s business momentum and client-centric culture.

Under Mitchell’s leadership, we made great progress in building a diversified Investment Management business, and we thank him for that. As we move forward, Hanneke is ideally suited to build on the strong foundation to continue to drive performance and innovation across our investment products.

Catherine Keating will continue in her role as CEO of BNY Mellon Wealth Management, and both Catherine and Hanneke will report directly to me.

Mitchell has cultivated a strong bench of leaders, including Hanneke and Catherine, who will continue to drive the execution of our strategic priorities to deliver leading investment solutions to our clients, underpinned by exceptional investment performance.

Now before I hand it over to Mike, let me address how we’ve been responding to recent events that have drawn attention to the very real racial and societal issues in our communities. Our Board and our Executive Committee are passionate about using our voices and being positive change agents.

As a company, we take great pride in all of our differences and our diversity of experiences and perspectives leads to better business outcome. That starts with the diversity of our Board, which is 30% African/American, 40% minorities and 30% female. We are challenging ourselves to do more.

We’re supporting activities that create sustainable change, including philanthropy targeted at creating opportunity, matching employee donations to nonprofits that support and strengthen the well-being of underrepresented communities, encouraging community volunteerism, doing pro bono legal work to advance minority businesses, raising cultural awareness and strengthening our commitment to attract, develop and retain a diverse workforce.

We are holding more open forums that foster meaningful dialog and that we hope will bring us closer together during these challenging times. We’re learning from each other, building empathy and strengthening inclusive leadership skills that will serve us well and continuing to drive a high-performance culture.

We are expanding support for the well-being and emotional resilience of our people and their families with additional employer services, resources and coaches who have cultural confidence. We know these efforts, like all the other components of our corporate social responsibility strategy, are making us a stronger company.

Last week, we released our 2019 CSR report, which introduces our new strategy pillars with associated goals and key performance indicators for the next five years. They include increasing senior leadership positions held by women and ethnically and racially diverse employees.

While we’re proud that for the sixth consecutive year we’ve been named to the Dow Jones Sustainable World Index, we’re going to continue to challenge ourselves to do more. In the long run, we firmly believe that doing what’s right for the community, our employees and our clients is in the best interest of our shareholders.

With that, I’ll turn it over to Mike..

Thanks, Todd, and good morning, everyone. Let me run through the details of our results for the quarter. And all comparisons will be on a year-over-year basis, unless I specify otherwise. Beginning on Page 3 of the financial highlights document.

In the second quarter of 2020, we reported earnings of $901 million, down 7%, while earnings per share was flat at $1.01. Total revenue was $4 billion, up 2% even as we felt the impact of lower interest rates through money market fee waivers and in our net interest income.

Fee revenue increased 2%, primarily reflecting higher fees in Pershing and Asset Servicing, partially offset by money market fee waivers, lower Investment Management fees and the unfavorable impact of a stronger U.S. dollar. Fee waivers negatively impacted growth by approximately 3%.

Net interest revenue declined 3% year-over-year to $780 million and was down 4% versus the prior quarter. Our provision for credit losses was $143 million in the quarter, and this was primarily driven by ratings downgrades, particularly across our commercial real estate book and the continuation of a challenging macroeconomic outlook.

We had no actual charge-offs during the quarter. Expenses were up approximately 1%, as we continue to balance our ongoing expense discipline with our technology investments and we still expect full-year expenses to be flat to last year. We had a solid return on tangible equity of 19% and maintained a pre-tax margin of over 29%.

Now moving to capital and liquidity on Page 4. Our capital and liquidity ratios remained strong and well above internal targets and regulatory minimums.

In terms of shareholder capital returns, in the second quarter, we suspended share repurchases, along with other financial services for our member banks, and we’ll do so again in the third quarter in line with federal reserve requirements.

We continue to pay our quarterly cash dividend, which totaled $278 million in the second quarter and believe we have ample capacity to continue to pay the dividend in a variety of economic scenarios.

Common equity Tier 1 capital totaled $20 billion at June 30 and our CET1 ratio was 12.6% under the advanced approach and 12.7% under the standardized approach.

Under the new stress capital buffer rules that will become effective October 1, we will need to maintain a CET1 ratio of 8.5%, including a 2.5% stress capital buffer, which is the minimum and a 1.5% G-SIB surcharge.

Now, as we think about our binding capital ratio constraint going forward, Tier 1 leverage can be more binding than CET1 due to the buffers we need to hold for potential growth in deposits, which are more volatile than RWA during times of market volatility, very much like what we’ve seen over the last few quarters.

As always, we will continue to optimize our capital ratios across all the constraints. Our average LCR in the second quarter was 112%. Now turning to Page 5. My comments on interest revenue will highlight the sequential changes. Net interest revenue was $780 million, down 4%.

While client-driven deposit growth drove the increase in our average balance sheet, this benefit was more than offset by a full quarter impact of lower interest rates. Hedging activity added modestly to the linked-quarter comparison, as you can see in the bar chart, and is primarily offset in foreign exchange and other trading fees.

Average deposit balances were up $25 billion versus the first quarter averages and are up $62 billion, or 28% versus last year. This growth is across all of our businesses, some increasing from the monetary reserves in the system, clients like to cash in some internal deposit initiatives that are linked to operational and fee-generating activities.

As we’ve mentioned in the past, we generate and manage significant amounts of cash across our franchise. This is a key client differentiator for us, particularly in volatile markets.

We provide cash management services that have led to good growth in deposits in our balance sheet, growth in money market funds in our open architecture money market investment platform and through drive this cash products. We’ve passed along the Fed rate cuts, as interest-bearing deposit rates declined to minus 3 basis points in the second quarter.

This was the result of a combination of very low rates paid in the U.S., plus negative rates on euro-denominated deposits. As a reminder, approximately 25% of our deposits are non-U.S. dollar.

On average, the securities portfolio increased approximately $19 billion versus the first quarter and around $32 billion from the last year, as we have deployed the growing deposit base.

The net interest margin of 88 basis points was down 13 basis points versus the first quarter, driven by the increase in deposits and lower yielding, low-risk interest-earning assets. We continue to focus on optimizing net interest revenue rather than just net interest margin. Now moving to Page 6, which provides some color on our asset mix.

Our average interest earning assets increased to $358 billion. Approximately 40% of these assets are held in cash or reverse repos, while 43% are in our securities portfolio and 16% in our loan portfolio. In addition to the funded loan shown on the page, we also have unfunded committed lines, the details of which can be found in the 10-Q.

During the quarter, we saw about $1 billion of the $3 billion of borrowings drawn down from revolving credit facilities repaid, and we’re closely monitoring the portfolio, particularly the commercial real estate exposure and other sectors more acutely impacted by the current environment.

The impact of credits, including commercial real estate, are performing well, but may see additional downgrades depending on the shape and speed of the recovery. Turning to the securities portfolio. We have a high-quality liquid portfolio, much of it is in U.S. government agency securities, U.S. treasuries and sovereign debt.

The portfolio increased as we deployed more cash in the securities, including the commercial paper and CDs repurchased from our affiliated and third-party money market funds. The $4 billion of CLOs are highly rated with 99% AAA or AA, 100% of the non-agency CMBS are AAA and have solid subordination.

The rest of the ratings breakdown can be found in the supplement. Page 7 provides an overview on expenses. On a consolidated basis, expenses of $2.7 billion were up around 1%, driven by higher technology expenses and pension costs, offset by lower business development expenses, namely travel and marketing, and the favorable impact of stronger U.S.

dollar. Distribution expenses were only slightly impacted by money market fee waivers in Investment Management, as the bulk of the impact from money market fee waivers in – was in Pershing and from third-party funds. Turning to Page 8. Total Investment Services revenue was up 3%.

Assets under custody and administration increased 5% year-over-year to $37.3 trillion, primarily reflecting higher market values, partially offset by the unfavorable impact of stronger U.S. dollar.

Foreign exchange and other trading revenue in the segment increased 16% year-over-year, driven primarily by higher volatility, as well as organic volume growth and foreign exchange even as industry volumes were down slightly.

Within Asset Servicing, revenue was up 5% to $1.5 billion, primarily reflecting higher FX, higher client volumes across securities lending, liquidity services and transaction volumes, as well as a one-time fee. Securities lending revenues were higher on improved spreads and a strong demand for U.S. government bonds.

In Pershing, revenue was up 1% to $578 million, despite the impact of money market fee waivers, reflecting much higher money market fund balances, which were up 40% and higher transaction volumes, but down from the exceptional volumes we experienced in the first quarter.

The net impact of money market fee waivers, partially offset by higher money market fund balances negatively impacted Pershing’s revenue growth by 3%. Issuer Services revenue decreased 3% to $431 million, reflecting declines in both Corporate Trust and Depository Receipts revenue.

Depository Receipts revenue was primarily impacted by lower corporate action volumes, while in Corporate Trust, new business and deposit growth was offset by lower volumes in some products and interest rates.

Treasury Services revenue was up 7% to $340 million, driven by higher liquidity balances and related fees, offset by lower payment volumes correlated to lower economic activity.

Deposit balances increased year-on-year by 40%, as investments in new capabilities and increased focus on deposit gathering were critical to retaining most of the growth from earlier in the year. Clearance and Collateral Management revenues were up 4% to $295 million from higher clearance volumes, mostly from non-U.S.

clients, as well as fees and deposit balances. Average tri-party collateral management balances were up 4% in the U.S. and 9% outside the U.S. Page 9 summarizes the key drivers that affected the year-over-year revenue comparisons for each of our Investment Services businesses. Now turning to Investment and Wealth Management on Page 10.

Total investment in Wealth Management revenue was down 3%.

Investment Management revenue was roughly flat to $621 million, reflecting the unfavorable change in the mix of assets under management since the second quarter of 2019 and the impact of money market fee waivers, partially offset by equity investment gains net of hedges, including seed capital.

Please note the gains from seed capital include results from unconsolidated and consolidated investment management funds, both of which can be lumpy in any given quarter depending on market conditions. Details can be found in the supplement.

On the consolidated income statement, the gains are either in investment and other income or income from consolidated investment management funds, while the negative impact from their hedging were approximately $30 million as recorded in other trading.

We had inflows of $20 billion in the quarter, reflecting continued cash inflows, as well as long-term flows into index funds and fixed income. Overall, assets under management of just under $2 trillion are up 6% year-over-year, primarily due to higher markets and cash inflows.

Wealth Management revenue was down 9% year-over-year to $265 million, primarily reflecting lower net interest revenue due to lower interest rates and client migration to lower fee fixed income and cash products. Now a few comments about the third quarter.

First, I would caution you as we did last quarter that the environment remains fluid and variables are changing quickly. Looking ahead at net interest revenue, we will have a full quarter of lower rates in the third quarter, especially short-term LIBOR rates, which declined throughout the second quarter.

We have also seen some pickup in prepayments fees in our mortgage-backed securities portfolio, given current and expected refinancing volumes. Significant excess liquidity in the system continues to drive elevated deposit levels versus 2019, but the exit rate from Q2 is just a little lower than the average for the quarter.

And as a result, we currently expect net interest revenue to decline 8% to 11% sequentially. However, based on current market conditions, we would expect net interest revenue to begin to stabilize in the third quarter.

Now on money market fee waivers, the pre-tax impact in the second quarter was $18 million net of distribution expense, with the biggest impact in Pershing.

It’s important to note that the big – that approximately $50 million of this impact has been offset by a substantial increase in money market fund balances, resulting in a net impact of approximately $30 million in the second quarter.

We expect the impact from fee waivers to increase in the third quarter by about $30 million to $45 million net of lower distribution expenses. This additional impact in the third quarter would also be reduced if money market fund balances continue to grow.

A little over half of that impact will be in Pershing, with the rest of the Investment Management and Asset Servicing.

We currently expect that we will incur an incremental $25 million in the fourth quarter and will be at a full run rate impact from fee waivers of about $135 million to $150 million, offset by the incremental money market fund balance growth that we’ve seen in the second quarter for a net impact of about $85 million to $100 million per quarter by year-end.

This quarterly impact could be reduced if money market fund balances continue to grow further. Current equity market levels should be a modest positive if they hold.

We saw transactional activity in FX continue to normalize over the course of the second quarter, assuming this continues it will be modest headwind sequentially, although, we expect the related dues will be higher than in the prior year. If we see some volatility in the equity markets, transactional activity could pick up.

On expenses, we will expect them to be flat versus 2019, excluding notable items. This includes the 50 basis point full year-over-year impact from higher pension expenses.

Credit costs will be highly dependent upon individual credits, the future path of the health crisis and how the economic forecasts change by the time we get to the end of the third quarter.

In terms of our effective tax rate, while it was a little lower this quarter, we expect it to be approximately 20% for the full-year versus prior guidance of 20% to 21%.

With that, operator, can we please open the lines up for questions?.

Thank you. [Operator Instructions] Our first question comes from the line of Betsy Graseck with Morgan Stanley. Please go ahead..

Hi, good morning. Thanks for the time this morning. A couple of questions. One, Todd, you mentioned the virtual presentation that you gave or the virtual conference that you gave.

And I wanted to understand how important that is for generating new client activity? And if you think that, that virtual kind of format and forum can deliver the same kind of client activity growth that you’ve seen in prior years once face-to-face?.

Yes. First of all, in terms of engaging with our clients, it’s been pretty effective. I think, initially, I think, there was a little reticence as we moved into the crisis, but now we basically see this as our BAU.

And so both clients and I think ourselves have gotten quite a bit better at managing the technology to actually communicate and connect and share with what we’re doing.

So this particular conference, where we had about 1,000 clients and vendors come into it was – we also posted on our website a whole series of detailed analysis of some of the new capabilities that are out there and available to them. And the hits against that have been very high. So I think it’s been pretty effective.

We’ve actually seen the pipeline grow. We’ve also seen retention high and actually sales are up in the first-half of the year over where we were last year..

Okay. All right. That’s helpful. Thanks.

And then, Mike, on the guidance, could we just dig in a little bit on the NII commentary that you gave? I think, you said NII down 8% to 11%, maybe just give us some color on the drivers there? And is it – and why do you see it ameliorating as you go into 3Q and 4Q? And if you could give us a sense of the differences in the drivers between deposit growth and yield compression, that would be helpful?.

Yes, sure. Thanks, Betsy. So I think when you look at the third quarter, it’s really all about low rates coming down and getting the full impact of that for the full quarter, that’s really the primary driver.

And there’s a series of actions that, I think, you can see that we’re taking in the results, both in increasing the securities portfolio and optimizing sort of how we’re investing there.

And so I think, as you sort of look out past the third quarter, and you look at all the actions we’re taking, plus you look at where the forward curves are, that gives us some confidence that it begins to stabilize in the third quarter as we look forward.

And obviously, the forward view on deposits will sort of have some impact on that, but the marginal dollar gets a little less impactful with rates where they are, so..

Okay. Thank you..

Thank you. Our next question comes from the line of Glenn Schorr with Evercore ISI. Please go ahead..

Hi, thanks very much. Maybe just a quick follow-up on the rate impact. We used to think an anchor might be the 2015 NIM low, but I guess, I appreciate the long end has come down more than it was then. You mentioned focusing on NII over net interest margin, so I guess, there could be more down there.

So my quickie is, deposits sticking around despite the interest-bearing deposit rate being minus 3 basis points. I’m curious to hear any color on client conversations there.

And if that’s now at its resting point, or is there more room on the negative sides as clients park and have no other alternative?.

Mike, why don’t I start that one and then you can probably give a little bit of color? I think that we’re, again, the mix of deposits makes a big impact, Glenn, on that rate. So there are a fair amount of foreign deposits and European deposits that are actually carrying a negative rate, and we pass that through to the clients. In the U.S.

with the IOER around 10 basis points, that seems to be anchoring somewhat around that rate unless we see changes going on in the money markets, which we haven’t seen a whole lot of noise yet. So I think, most of the downside pass-through has already been made.

I don’t know, Mike, if you have anything to add to that?.

Yes. No, I think that’s right. I mean, I think, the negative is really driven by euros, as Todd said, Glenn. And when you look at the U.S. dollar deposits, it’s a low single-digit sort of interest rate paid now on the book. And so there’s not a lot of room to continue to bring that down..

I appreciate that. One qualifier on the provision. Obviously, we’re riding to a worse economic backdrop, but you also mentioned the impact that downgrades have. So I – my question is, if we move forward and the economic scenarios don’t change, in other words, we feel like we’re kind of where we’re at.

Will further downgrades keep – continue to be the gift that keeps giving on the provision? We’re just trying to dimensionalize how much to bake in if the economic scenarios doesn’t change?.

Yes. I think that’s a….

Okay.

Mike, can you take that?.

Yes. Sure, Todd. So, Glenn, it’s a tough question to ask, right? And so if things don’t get worse from what is being projected now in the scenarios, then you would expect that the issuer downgrades should be somewhat limited from here, but there will be idiosyncratic issues that may change some of that.

So I think, obviously, these – the downgrades and the scenarios are somewhat inter – interrelated as we sort of look at both of them..

Okay. I appreciate that. Thank you, guys..

Thank you. Our next question comes from the line of Ken Usdin with Jefferies. Please go ahead..

Thanks. Good morning. Hey, Mike, just a follow-up on the fee waiver commentary. Just wanted to make sure that we’re talking about it the right way in terms of the total number versus the growth.

So are you saying that you’d expect that growth to continue when you gave us the two sets of numbers, so just the cadence going forward? I guess, maybe if you can just help us understand the net trajectory from here would be the better way, I think, to help us think through that?.

Yes. No, no, sure. I know – and I can appreciate, it’s probably a little complicated. But – so as you sort of look at the net impact of $80 million to $100 million by the time we get to year-end, underpinning that assumes that balances hold to about where they are. So it does not assume that there’s additional growth there.

And so, I think, if we do continue to see growth in the balances, we will see that can offset a bit as we look towards the end of the year..

Okay. So right, that net number, the $80 million to $100 million minus the $50 million from growth that assumes the balances are flat from here. Okay. Geographically, a couple of quick things.

Could you just help us understand the size of the one-time gain in Asset Servicing? And then just can you talk through the just the income statement line Asset Servicing just what’s happening underneath the surface there in terms of core servicing collateral and broker dealer services? Thanks, Mike..

Mike, why don’t you take that one?.

Yes, sure..

Yes..

Yes. So the one-time fee, Ken, is actually in other income, it’s not in the Asset Servicing fee line. It’s not something we have disclosed exactly what it is. It’s not super meaningful, but it does show up in the other income lines. So it does impact your fee – your Asset Servicing fees at all.

As you sort of look at what’s underneath Asset Servicing and the fee line, I think, you’re seeing growth in both the Clearance & Collateral Management business and the Asset Servicing business, as sort of Todd pointed out, the different drivers there that are sort of impacting that line..

Okay. Thank you..

Thank you. Our next question comes from the line of Brian Bedell with Deutsche Bank. Please go ahead..

Great. Thanks. Good morning, folks. Can you just go through one more on the fee waivers? Can we track the level of money market fund balances? I appreciate, obviously, there’s assets funds in Asset Management business, but it’s also a number of third-party funds on the Pershing platform.

So I don’t know if you’ve got that disclosed for the level of those balances, and if it’s something that we can track given the Pershing side, I don’t think we can see?.

Mike, can you take that one?.

Yes, sure. And, Brian, there’s actually a couple of drivers underneath the fund balances. One, we’re obviously seeing in Pershing, that’s not something that we disclose.

And two, we’re also seeing it growth in Asset Servicing as well, where we sweep money into money market funds through our open architecture platforms there [indiscernible] are, but also a bunch of other complexes. Those two numbers are not something that we disclose. So we’ve seen growth across the platform. We’ve seen growth really in all channels..

Right. So you could have an organic growth dynamic in this, that’s different than the money market fund industry at large that could keep that – the fee waivers closer or even less than $85 million to $100 million.

Is that a feasible conclusion?.

Potentially. Yes, potentially..

Okay. And then just – maybe just to talk on the new business and asset servicing. Todd, you mentioned a lot of initiatives, partly from the tech investments on the data bulk and also the distribution analytic system.

Anyway to frame what type of or what level of new business do you think you’re getting from these initiatives in, say, in the next or what you expect in the next six months or so? And any kind of revenue impact or growth impact to asset servicing you think as a result of these initiatives?.

Yes. I think, first of all, some of these are very new and some of the applications that we’ve just put out there, we’ve just gone live in the past month or so..

Okay..

So our estimates is that, we could see some meaningful growth driven by the data and the digital and data analytics that we – that we’re offering that we talked about. So it’s just now gathering momentum. There is a lot of discussions and – but it’s early.

We’ve got a couple of beta clients on it that we described and they actually participated in the ENGAGE Conference, both Charles Schwab and Nuveen.

But I think underlying that, if you look at the – if you look at our pipeline, if you look at the growth rates that we’ve demonstrated, we are seeing a little bit of organic growth for the first time in a while..

Okay. Okay, great. I’ll get back in the queue for another question. Thanks..

Our next question comes from the line of Alex Blostein with Goldman Sachs. Please go ahead..

Great. Thanks. Good morning, everybody. So a couple of quick follow-ups, I guess. First one is around NIR. So you guys talked about optimizing NIR off of sort of 3Q trough levels, which makes sense.

Can you walk us through sort of the opportunities that you see to invest some of the excess cash that kind of compiled in the balance sheet into securities portfolio.

So anything specifically you can point to in terms of how much could ultimately be moved to securities over time and sort of the yields you guys expect to earn on that? And then anything you guys could do on the liability side as well. So deposit costs will be kind of what they are with the market.

But curious, if there’s an opportunity to further restack long-term debt, so you guys do a little bit of that in the quarter?.

Mike?.

Sure. Yes, I’ll just – I’ll try to get all of those pieces, Alex, or remind me if I don’t. So as you sort of – maybe I’ll start with the last one first. So if you look at the liability side, we’re always looking for ways to sort of optimize.

As you said, deposit costs are probably near where they’re going to bottom in the U.S., but on the margin, there may be a little bit here and there with particular clients. On the long-term debt side, we are looking at optimizing that more.

I think, you’ll see us kind of bring that down maybe just a little bit, as we sort of look forward over the next quarter. But I think, obviously, we need to keep enough long-term debt to meet a bunch of different constraints that we’ve got, but we’re – but I do think there’s a little bit of opportunity to optimize that as we look forward.

On the security side, you can see the increases over there sequentially and year-on-year are pretty significant in terms of what we’ve been able to redeploy.

The majority of that has gone into sort of highly liquid assets sort of HQLA as sort of the term goes, right? And I think, you’ll see us continue to put more into HQLA assets, as well as look for opportunities where we can get the right risk profile and the right return for some less liquid assets as we sort of look forward.

And as we sort of get more experience with the deposit base, and we’ve been talking about this now for a couple of quarters. As we sort of see the behavior of the deposits come on to the balance sheet, each month every 30, 60, 90 days, you get a better sense of what the operational nature and the duration of those deposits are going to look like.

And so you can sort of keep – you can keep optimizing how much you’re going to deploy each month and each quarter as you look forward. And so we’re doing that. So we still think there’s some opportunity to continue to deploy more..

Great. That’s helpful. And then my second question is around the expense outlook. I think early in the quarter, you guys spoke at a conference and the outlook for expenses for 2020, I believe it was flat to down, and it sounds like it’s flat now.

So what’s changed or could expenses still decline this year? And maybe just a quick reminder in terms of how much incremental tech spend is running through P&L in 2020, which part of that, I guess, is supposed to phase out into 2021? Thanks..

Okay. Mike, why don’t I start with this and maybe you can add some additional color? I think we’ve guided for a while that we’ll be flat or around flat for the rest of the year. And I’m confident that we’ll do that at least or better.

And as we look out to next year, I think, we’ve got significant opportunities around our efficiency programs, especially in operations. And the increased spend that we’ve made over the past couple of years in tech will begin to abate, as the investments in infrastructure and resiliency will be largely behind us.

So we think we’ve got more that we can do here are looking out over the next year or two.

Mike, you want to give a little more color around the tech spend?.

Yes. Look, I think, as we’ve talked about now in the last couple of years, we’ve – as Todd said, we’ve been making those investments in the operating platforms, as well as other capabilities, like we talked about, but with data and analytics and other new products across the different businesses.

And I think the – while the growth rate has been slowing over the last year, I think, as Todd said, we’ve got much more flexibility to sort of look at that as we sort of exit the year. The only other thing I’d add is, we’re seeing the benefit of the efficiencies come through. We’re spending less in operations this year than we did last year.

We’re going to spend less next year than we did this year. And we feel very confident that we’ve got line of sight to continue to execute on the efficiency agenda, as Todd mentioned..

Great. Thanks..

And I think in 2020, Alex, I’ll add to that, I think, we probably made the biggest spend that we’ve made in tech in increasing efficiencies across the – operating efficiencies across the company..

Great. That makes sense. Thanks, again..

Thank you. Our next question comes from the line of Brennan Hawken with UBS. Please go ahead..

Good morning. Thanks for taking my questions. Well, first, actually, I’d like to just start with the request. The fee waiver dynamic is, there’s a – it seems like there’s a lot of moving parts just something to consider for coming quarters, maybe a little enhanced disclosure or maybe a memo disclosure.

So we could try to consider how to model some of these components, given that there’s balance movement and all this other stuff. I know it’s probably tricky, but it might help. But taking a step back widening back the lens a little, we’re clearly in a rate environment that’s a lot more challenging for your business model.

The idea that monetary policy, low rates as a monetary policy tool, this certainly seems to be now the new normal and it’s not really a temporary thing that we’re all dealing with here.

Are you starting to think about different ways in which you can engage with your customer base different ways in which you can structure your relationships in the deposit dynamics, so you can have more confidence in the duration of the deposits? How are you making adjustments or how are you thinking about making adjustments to sort of the fundamental ways in which you engage with your customers, so you can ensure that you can monetize the components of the – of all these relationships in the most effective way, given low rates are going to be around for probably sometime?.

So, Mike, why don’t I take that, and then I think you can add some color to it? So first of all, Brennan, the comments around the fee waivers, we’ll take that to heart. But I want to make sure something is clear, because there might be a little confusion here.

What we’ve indicated is that, we think that the full impact of interest rates to our net interest income will begin to stabilize in the third quarter. And then – which is basically saying that we’re coming out with approximately that run rate as we go forward. And that’s taking into consideration what we know today with the shape of the yield curve.

So we see some stability here as we reset around the very low interest rate environment as we fully reset around it. That same impact is going to be fully reset through fee waivers by the end of the year. And if you look at the disclosures that Mike had given you, it’s very specific to what that is.

We don’t know what the actual balances are going to be. So if the balances grow, then that impact can be quite a bit less, because there’ll be additional income related to money market balances. So I wanted to make that clear.

In terms of how we’re working with our clients and pricing, whether it’s around – whether it’s directly around deposit activity or Treasury Services, they’re certainly taking the interest rate environment into consideration.

And anytime we put together more of our platform business like an asset servicing, we take that into the pricing discussion, taking whatever market conditions would be a likely implication to our margins and that type of activity. So that – so we’re doing that on a day-to-day basis.

Mike, you have anything to add to that?.

No, I think, that’s right. And we’re continuing to have pretty close dialogue with a lot of the clients that have large or medium-sized sort of balances with us.

And I think in part as you look at a business like Treasury Services, it’s ensuring that we get our fair share of the payments business and the fee revenue that comes along with having these balances.

And so I think, it’s not only about optimizing sort of the reinvestment side of the balance sheet, it’s also about making sure that we’re monetizing the fee relationship with these clients as well. And that’s as much a focus for us and our client and sales folks, as is the balance sheet side of it..

Yes. No, I appreciate that. And that’s all very, very fair. When we think about capital, you flagged the strong showing of Bank of New York through the DFAST process. Can you talk about, like, clearly, you have a low-risk models clearly showcase during the DFAST.

But because you’re categorized as a G-SIB, you are now continue – you’re constrained in the ability to return capital. And so even though you’re pretty far above a lot of your requirements, you cannot manage the capital basis as much as you will.

How are the engage – how’s the engagement with the regulators as far as trying to point that out, are there – is there going to be a staggered start based upon risk – inherent risk in the business model, where the G-SIB’s that are lower-risk should be able to start returning capital sooner? Or is this going to be one of these things that all the G-SIB’s are lumped together? And therefore, firms that have really, really minimal credit risk profiles like BK end up at the same starting line as some of the big investment banks and commercial banks?.

So, Mike, I’ll start with this one, too. So, I mean, as you know, the stress test is a idiosyncratic test for us. And so, as we go through it, we have performed quite well. We have submitted our capital action plans, and we have indicated that we will look – and we performed quite well.

And now, there’s going to be reevaluation using some new scenarios that were sometimes at the end of the third and the beginning of the fourth quarter. And so we’ll go through that process. That being said, we expect to perform quite well, and just given the resiliency, as you pointed out, of our balance sheet and our business model.

But one of the things that comes out of the news stress capital buffer, the SCB model is that, as you get a little more flexibility around buybacks, you don’t have to – you’re not limited on a quarterly basis, you just need to stay within your SCB.

So there could be a timing difference based on whatever regulatory considerations or the environment might look like. But ultimately, as we accrete capital, that just puts us in a stronger position to buy it back when that – when the opportunity arises. So I like where we – I like the way we are accreting capital.

And I think it puts us in a position to buy back a considerable amount of stock as soon as possible..

Thank you. Our next question comes from the line of Mike Carrier with Bank of America. Please go ahead..

Good morning, and thanks for taking the questions. So first, I just want to try to understand the activity that has been COVID impacted and could normalize ahead.

So any color on how much the deposit balance growth has been driven by some of the policy response we could normalize? And then you guys noted if new business wins, and that’s an area that would have expected to be a bit more challenging just in this environment? And so have you seen much impact? And do you see like a pipeline forming up sequentially, start to normalize as we get back?.

So, Mike, can you clarify the first part of that question? I didn’t quite catch it..

Yes, sure. So, the first part was….

[Multiple Speakers].

Yes, sure. The first part was just on the growth and deposit balances. Yes, I know it’s hard to determine exactly what drives some of those balances. But some firms have tried to quantify what’s been kind of impacted by the the coronavirus and some of the policy responses versus what’s more sort of core business operations? So that is the first part.

And then the second part was just on the new business wins, what it expected that to be a little bit more challenging environment. But it seems like you continue to have some wins there.

So just wanted to try to gauge how has that been impacted by this environment in terms of the pipeline?.

Okay.

Mike, you want to take the deposit component of the question?.

Yes. Sure, Mike. So as you sort of look at what’s happened since the middle of March, what you saw was this massive increase. And if you recall what our spot balance was at the end of the first quarter was $337 billion in terms of deposits. And so that, that huge volatile piece of the deposit balance has come off already.

And as you can see where we were for the quarter in the 280s in terms of the average. And so you’ve already seen that sort of massive spike retreat. And so while it’s – in hindsight, you’ll have better view in terms of what’s driven the increase from the February balances of around 230 to where we are today.

But I think it’s hard to ignore that the environment that’s been caused – the economic environment that’s been caused by the pandemic is a big driver of the pace at which those deposits have increased from the February levels. But as we look forward, while we’re in this environment, for sure, and it feels like we’re in this environment for longer.

It’s hard to see given all of the the response, the policy – monetary policy response from the Fed and others that the balances would retreat much more from where they are..

And I can take the second component of your question, Mike, which was around the new business wins. I mean, the clients are still making servicer decisions. And relative to last year, we’ve probably seen we’ve been winning and retaining more deals and higher value deals, which is important. I think, we’ve learned how to work from home.

We’ve ramped out our focus on – we’ve ramped up our focus on client management over that time. And we’re actually seeing an increase in activity with reviews and presentations being done virtually. And we’ve got some nice wins around ETFs around our mid-office space, and we continue to implement at a rapid pace against the mid-office.

We’ve got the TALF servicing-related wins as well. So the pipeline remains strong. I think we’re just – we’re getting used to this as being the current normal..

Got it. Okay. And then, Mike, you said a quick cleanup, there were just a few positive items in the quarter, I think some that investment gains in funds. And then you mentioned that other investment in income that asset servicing fee. Away from that, yes, I’m assuming that most of it was just market-related, just given what we saw in the quarter.

But were there any other factors in today’s line items, I’m assuming we just expect that to normalize lower ahead, but just any color if there were any other nuances there?.

No, I think it’s pretty straightforward on those investment and other income. You can kind of see the breakdown of that in the supplement the thing that’ll be in the other income line that will be volatile, obviously, seed capital and how the market sort of moves within the quarter.

And then the other trading line, you’ll have some impact there as well from the same moves..

Got it. Thanks..

Thank you. Our next question comes from the line of Mike Mayo with Wells Fargos – excuse me, Wells Fargo Securities. Please go ahead..

Hi. I’m just trying to reconcile a couple of thoughts on.

Todd, you had some really positive comments with your introductory remarks, and maybe you can elaborate some on your work with the government and what kind of fees you get from that and how sustainable those fees are? But then, Mike, you certainly commented about the impact of lower interest rates, and you’re certainly not sugarcoating that.

So that’s kind of connect those two different thoughts? And the other two different thoughts I have is, you guys are certainly service more fixed income assets than your peers. So you should be benefiting from that quite a bit. And I’m not sure if that’s showing up as much as you might expect with the increased fixed income activity? Thank you..

Yes. Mike, thanks. So in terms of – there are a number of government programs that we’re participating or that we are supporting or administering, some of them are showing some growth. For example, the PDCF is where we use our tri-party repo system.

So it’s just – it’s reflected in the amount of tri-party repo activity, which we did see go up in the first quarter and sustain itself until a certain extent although it’s starting to come off a little bit in the second and third quarter. But we are seeing good activity on the global side of the tri-party book.

And it’s really going to – it’s going to be a matter of how much those programs are taken off before we see any revenue. I think the more important is the other component of our revenue growth across our Investment Services business.

In terms of the fixed income – excuse me, fixed income activity, where you’re seeing in clearing and collateral management, you are seeing increased clearing volumes on our clearing platform and we are benefiting to a certain extent from that. And I think that was reflected.

If you looked at the Investment Services uptick and the highlights, you could see that. And I think we’ve been very directive where we are with the interest rates. I think the important thing to know is that, we are – we see ourselves reaching the bottom here in a very short period of time..

So when you add it all together, do you think – you said flat expenses for the year, revenues, any guidance for the year for that sort of relative to those expenses?.

Well, I think that the headwinds for revenues, we disclose to you. And that’s all interest rate-related..

Okay.

And so do you think you can get flat operating revenue this year or positive or negative or you just don’t want to make a call on that?.

Right now, I wouldn’t make a call on that just given the uncertainty around some of those elements..

Okay. Lastly, you are – but you are investing in technology, so that – you said that’s elevated this year, and that should fall off some next year.

So that’s your – you’re not going to sacrifice those investments for the long-term?.

That’s correct. That’s correct, Mike. I mean, in fact, the investments we made in operating efficiencies that we’ll see the benefit over the next couple of years is the highest we’ve ever made – will be the highest we’ve ever made in 2020..

Got it. All right. Thanks a lot..

Thank you. [Operator Instructions] We’ll next go to Rob Wildhack with Autonomous Research. Please go ahead..

Good morning, guys.

There has been some headlines with some of your peers are rolling out what seems to be a similar integration to the partnership you’ve struck with Aladdin and BlackRock? Can you talk about what you’re seeing on that front, maybe highlight what you think differentiates your integration there versus some of the other options?.

Mike, you want to do that one? Or you want me to take it? Why don’t you take it, Mike?.

Yes, sure. Rob, the – look, I think, as you would expect, BlackRock works with a whole series of providers, and those providers would use Aladdin in some form or fashion. And I think that’s kind of to be expected and was happening already. I think the good news is, we’re the only provider that has our capabilities embedded inside of Aladdin.

And so the widgets or the capabilities of the functionality that we’ve built are actually accessible through Aladdin, and we’re the only ones that you can do that.

So I think, we’ve got a really strong relationship with BlackRock on the servicing side and the partnership side, and we look forward to continuing to build new capabilities with them that continue to differentiate what our common clients can do versus others, but we do think there’s some differences there..

Got it. Thank you..

Thank you. Our next question comes from the line of Gerard Cassidy with RBC. Go ahead..

Thank you. Good morning, Todd. Good morning, Mike. The question has to do with the credit quality. Clearly, you guys are not a credit-centric bank, like some of the universal banks. But can you give us some color on the provision that you put up? What – you broke out your portfolio.

When is that provision allocated to that portfolio? And is it just general allocations or were there some specific reserves that you put against specific ones?.

Mike, you want to take it?.

Yes, Gerard. So I would say, generally, the build was related to commercial real estate portion of the portfolio. That’s certainly where the biggest piece of it was. It’s not a general sort of allocation. Obviously, it’s a very detailed sort of name by name, and then you apply all the modeling that goes around with it.

But as you sort of look at the bill, the biggest portion of it would be related to the commercial real estate portion..

Very good. And then coming back to the deposit rates, you saw about, I guess, 11% or 12% increase in your foreign office deposits, and the average rage went from the first quarter, repaying 20 basis points, I think, or 29 basis points, down to negative 12 basis points.

What interest rates should we be watching overseas for the negative rates? And you had the growth even though you went to negative rates.

I think deposits essentially inelastic, meaning, is there a point where you would be concerned that people would move money out at the negative rates went too negative?.

Mike, you want to take that? It was 29 to 12, yes..

Yes. And, Gerard, when you look at the disclosure there domestic versus foreign offices, that doesn’t necessarily denote currency denomination, a good chunk of the deposits in the foreign offices are actually U.S. dollar deposits.

And so I think you really sort of need to look at the rate in aggregate when you think about what’s happened over the quarter. I think, when you look at the – and so as you sort of look at that rate coming down, the biggest driver of the rate coming down in the foreign offices is actually us paying lower amounts on U.S.

dollars, not increased negative rates outside the U.S. But obviously, the biggest driver for us other than U.S. dollar is going to be our euro deposits when you think about negative rates and that’s something we’re focused on.

I think, when you think about our deposits inelastic, I think, there’s a portion of the deposits that are very much tied to the underlying operational activity.

And so, I think that there is – we have – we do – when we charge clients for negative rates, there are spreads attached to those negative rates, and we haven’t seen much movement as a result of the pricing and the spreads that we’ve applied to those deposits..

Thank you..

Thank you Our next question comes from the line of Brian Kleinhanzl with KBW. Please go ahead..

Great. Thanks.

Just a real quick question first on that tax rate guide, I mean, you gave it for the full-year this year, but is that also a good number to use on a go-forward basis, the 20%?.

Mike?.

I would probably think 20% to 21% and you sort of look forward based on what we know today. But I think for this year, it’s definitely closer to 20%..

Okay. And then just a quick follow-up on the expenses. I heard the flat expense guide this year, but obviously, there’s a lot of kind of one-timers and unique nature going on, given the current situation.

So is it the right way to think about expenses as we look forward to 2021? And that there should be a natural downward progression to expenses just as these one-timers go away and then the rest of it guys think about expenses is really going to be driven by revenue growth for the next year, so that there is some kind of downward bias on expenses to start with for 2021?.

Well, we – what I had indicated, there are a couple of good things. Number one is, I think, the efficiencies that we’ve invested in will continue to register themselves next year and over the next couple of years, and we’re not slowing down on that.

There’s a lot more automation, a lot of additional things that we can do to make ourselves more efficient and actually improve the client experience at the same time. And on top of that, we have been growing our tech expense quite a bit over the past three years.

A lot of that was infrastructure resiliency, as well as some of the efficiency investments and some of the product capabilities. We think a fair amount of the infrastructure component of that will be behind us, which should give us a bit of a tailwind as we look out over the next couple of years..

Very good. Thanks..

Thank you. Next in queue, we have a follow-up question from Brian Bedell with Deutsche Bank. Please go ahead..

All right, great. Thanks so much for taking my follow-up. Mike, just – maybe just to dive in a little bit more on the balance sheet. Deposit levels, I think, at period-end were up, I think, 305 versus the 283 average.

So maybe just some commentary on whether you think that was the typical quarter-end spike? Or do you think those levels are in the period levels of deposits are sustainable as you see it right now in 3Q? And then just on the securities mix that you talked about moving more short-term shifting the balance sheet composition towards security as you get confidence in those durability of the deposits.

What type of level do you think that mix could go up to you from the 43%, because I guess you could potentially get some NIM expansion after this bottoms in 3Q if you do that?.

Sure. I’ll start with the first one. Brian, I think the – you can’t read much into one day’s worth of deposit balances. And so I would sort of put that in the bucket of a typical quarter-end spot number. And so sometimes, that’ll be higher, sometimes it’ll be lower. And there was one deposit that sort of drove that up a little bit for particular client.

But – so I think the guidance I gave around the current levels are slightly below where the average was, is probably a good way to sort of think about where we are right now.

I think once you sort of think about how much we can deploy into the securities portfolio, I think, that’s something that’s dynamic based on sort of how we feel about the stability and the longevity of those deposits. You’ll see us continue to optimize as we go into the quarter.

It’s not something we’ll give you a specific percentage on, because obviously there are other drivers of that, but we do think there’s continued opportunity there..

Okay, fair enough.

And then just on the deposits and money market fund balances, are you agnostic mostly between that client usage as that cash moves around between third-party money market balances and drive this, of course, as well versus deposits on the balance sheet in those programs? Or I guess, the question there, are you agnostic as to where that lands? Or are you trying to favor one area or over the other in terms of revenue generation capabilities, I guess, on the fee versus the balance sheet side?.

You may take that, Todd?.

Yes, Mike, let me start. The – I think the answer is it depends, Brian. I think, when you think about short-term balances that we know won’t be around for very long. I think, we are relatively agnostic with IOER at 10 basis points of where they go whether it’s in a money market fund or on the balance sheet, I think, we’ll learn about the same.

I think, as you sort of think about operational deposits going, we are – over time, we’ll make more money with them being on the balance sheet..

Okay, great. Thanks very much for taking my follow-up..

I’ll be very specific with clients, but thanks for the question..

Okay. Yes. Okay, thanks for taking the follow-up..

We also do have a follow-up question from Alex Blostein with Goldman Sachs. Please go ahead..

Hey, thanks for the follow-up, guys. Sorry for the mid-tech, but back to this money market fund dynamic real quick.

So, Mike, I think on the last update, you guys had said, you expect the pre-tax impact on a quarterly basis for money market fee waivers to be about $50 million to $75 million and talk about that’d be probably at the higher-end of that range in the second quarter. Now you guys got into $80 million to $100 million by the end of the year.

So I just want to make sure that these two numbers are kind of comparable.

And essentially, we’re just talking about $20 million more and sort of incremental pre-tax income from fee waivers?.

Yes. It’s a good question, Alex. I think, the – when you look at the $50 million to $75 million, at that point, it was unclear what was going to happen with money fund balances. And so I think the $50 million to $75 million was the gross impact.

And as we sort of look at the $85 million to $100 million, that’s the net impact of now is accounting for the fact that we think the balance growth that we saw is going to stick with us for a while.

So if you look at what I gave in my script, I said by the fourth quarter, the gross impact will be $135 million to $150 million, which is a bit – which is equivalent to that $50 million to $75 million, but it’ll be offset by the fact that we think the balances will stick around. So that’s how you get them $75 million to $100 million..

Great. That’s clear. Thanks very much..

Thank you. And it does appear we have no further questions in the queue at this time. I’d like to turn the conference back over to Mr. Todd Gibbons for any additional or closing remarks..

Okay. Thank you, everybody, for your questions. And obviously, you can reach out to Magda, Investor Relations, for any further follow-up. Have a good day..

Thank you. This concludes today’s conference call webcast. A replay of this conference call webcast will be available on the BNY Mellon Investor Relations website at 2:00 P.M. Eastern Standard Time today. Have a good day..