Northern Trust Corporation (NTRS), the 9th largest manager of money market mutual funds with $212.6 billion, released its Q4 2021 Earnings last week, and also discussed money market fund fee waivers. CEO Michael O'Grady comments, "Within Asset Management, we continued to see strong organic growth across key strategic areas of focus, highlighted by our money funds surpassing $330 billion in AUM during the quarter, our FlexShares ETFs reaching $20 billion in assets and ESG strategies growing to more than $165 billion in assets. During the year, we also benefited from growth in our multi-manager strategies and our outsourced Chief Investment Officer services." He explains, "Investment management fees in C&IS of $113 million were down 9% year-over-year and were flat sequentially. The year-over-year performance was driven by higher money market fund fee waivers, partially offset by new business and favorable markets.... Fee waivers in C&IS totaled $50.9 million in the fourth quarter compared to $49.9 million in the prior quarter and $11.4 million in the prior year quarter. Fee waivers in Wealth Management totaled $30.2 million in the current quarter compared to $26.7 million in the prior quarter and $12.2 million in the prior year quarter. Within the regions, the year-over-year growth was driven by favorable markets and new business, partially offset by higher fee waivers.... Within Global Family Office, the year-over-year performance was driven by favorable markets and new business being more than offset by higher fee waivers. The sequential decline was mainly related to higher fee waivers." Northern says, "Net interest income was $371 million in the quarter and was up 7% from the prior year. Earning assets averaged $149 billion in the quarter, up 13% versus the prior year. Average deposits were $136 billion and were up 18% versus the prior year, while loan balances averaged $40 billion and were up 20% compared to the prior year. On a sequential quarter basis, net interest income grew 4%. Average earning assets grew 3% and average deposits grew 5%, while average loan balances were up 4%. The net interest margin increased 1 basis point sequentially. Trust, investment and other servicing fees grew 9% in 2021. The growth during the year was primarily driven by new business and favorable markets, partially offset by the impact of money market fee waivers. Net interest income declined 4%. Average earning assets during the year increased by 16%, while the net interest margin declined 20 basis points, driven by lower average interest rates." During the Q&A, CFO Jason Tyler responds, "Now that the first [Fed] lift, it also gets to waivers.... And we've talked about the fact that our money market mutual fund family is -- it's priced much more institutionally, so it only takes one lift to work fully through.... `As you know, this past quarter, we waived $80 million and run rate on that is lower now." Tyler adds, "We were at something like $215 billion in AUM pre-crisis and then we ended 2020 at $272 billion. We ended 2021 at $333 billion. And I can tell you, as we sit day before yesterday, we're at $324 billion [in MMFs]. So it came down a little, but we have gained market share by any measure that we look at. And that's not ... accidental. We did a lot of things related to cutoff times and the investment performance has been exceptional in those funds. So we think we've earned higher market share there. And I think it's tough to tell. There's not just what happens as clients unwind, but there's also the prospect of regulation in the 2a-7 fund industry. And as you know, in Europe, there's much more of a demand for large institutional clients to use balance sheet as opposed to funds. And we'll see what happens here if there's a shift. And it's one of the reasons why we've done other things to try to launch new products to help our clients on liquidity to be able to provide other services and to be a third-party repo provider and to launch new funds that are more appealing with better cutoff times. So we'll see what comes there. But the best defense we can have in the short run is having a good liquid balance sheet and have availability to bring on deposits if our clients want to, which is one of the reasons we always leave room to try and to bring more on to the balance sheet. That's why our leverage ratios have tended to be strong."

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