The company faces market risk from interest rate and foreign exchange fluctuations. Credit risk is present in loans, lending commitments, and securities. Potential losses from litigation and regulatory actions, including substantial or indeterminate damages, are a concern. Liquidity risk exists due to funding mismatches, market constraints, and potential deposit outflows. Changes in economic conditions and client activity can affect liquidity and capital ratios. Credit ratings of the company and its subsidiaries are subject to change, potentially increasing funding costs.
Financial Upside
Fee revenue is expected to increase due to higher market values, new business, and foreign exchange activity. Improved investment securities yields and balance sheet growth are expected to boost net interest income. The acquisition of Archer Holdco, LLC, is expected to enhance managed account solutions. Increased cash dividends and share repurchases are positive developments for shareholders. Higher assets under custody and/or administration (AUC/A) and assets under management (AUM) are also positive indicators.
