NII Guidance and Deposits
Q: Why is NII expected to decline 3%-5% in Q2?
A: NII is projected to decrease due to anticipated lower deposit levels resulting from tax payments and clients moving funds out of deposits. While deposits increased to $124 billion at the end of Q1, they have declined in the first weeks of Q2, and the bank may already be at a peak for the quarter. The Visa proceeds will be parked in cash but will not significantly lift NII in the short run.

Capital Deployment and Share Buybacks
Q: How will you use excess capital and Visa proceeds?
A: With strong capital levels and the receipt of Visa proceeds, which will enhance capital by approximately $700 million, the bank anticipates an upward impact on share repurchases. While being prudent and patient, there is a bias toward increasing share buybacks, aligning with their capital framework.

Expense Management
Q: What is your outlook on expense control?
A: The goal is to keep expense growth at 5% or below for the year. Compensation expense is expected to decrease by 35%-40% sequentially in Q2, while outside services and equipment and software expenses are each expected to increase by 10%-15%. The firm is working hard to find efficiencies and productivity to manage expenses despite market-driven cost increases.

Duration of Securities Portfolio
Q: Will you extend duration in the securities portfolio?
A: The bank is considering modestly extending the duration of its securities portfolio from its current position of less than 1 year, depending on economic conditions. However, deposits have shown shorter duration than anticipated, so they plan to remain shorter relative to historical levels to manage risk.

Deposit Trends and Stability
Q: Do you expect deposit levels to stabilize?
A: Deposit levels have been difficult to predict, but non-interest-bearing deposits have flattened and now represent about 15% of total deposits. While there may be continued pressures due to quantitative tightening and client movements into other products, the expectation is that deposit levels may start to settle around current levels.

Impact of Rate Cuts on NII
Q: How would Fed rate cuts affect NII?
A: The impact of potential Fed rate cuts on NII is difficult to predict due to uncertainties in deposit betas and client behaviors. In previous cycles, deposit betas were very low at the start of rate increases and very high at the end, making future impacts on NII uncertain.

Wealth Management Growth
Q: What is the outlook for wealth management growth?
A: The bank expects continued organic growth in wealth management, particularly in advisory fees and the family office business, which is growing at a higher rate. Strength is also seen in ultra-high-net-worth segments and asset servicing, with growth being relatively broad-based across regions and products.

Securities Repositioning
Q: Will there be further securities repositioning?
A: It is unlikely that further significant repositioning of the securities portfolio will occur. The bank has already addressed low-yielding securities, and additional repositioning would have less impact under the current yield curve and economic environment.

Fee Rate Pressure
Q: What drove fee rate pressure this quarter?
A: Fee rates are influenced by business mix and client activities. Only a portion of the business is tied to asset levels, and variations arise due to shifts in product segments and client behaviors, so focusing solely on fee rates may not accurately reflect performance.

Flow of Client Assets
Q: How are client assets moving between cash and fee-generating products?
A: Cash has been a positive area, with substantial growth not only in deposits but also in the money market mutual fund complex, which is up meaningfully both sequentially and year-over-year. Overall liquidity and cash positions have significantly contributed to the strength of the quarter.