Good morning, everyone. I'm Gerry Benson with Fidelity, and I have the pleasure of introducing U.S. Bancorp. U.S. Bancorp is a financial services company with international operations, and it's the parent company of U.S. Bank. It is headquartered in Minneapolis and the fifth-largest commercial bank in the United States, with $703 billion of assets at September 30th. Presenting today for U.S. Bancorp is John Stern, the Senior Executive Vice President and Chief Financial Officer. John has been with the organization since 2000, and prior to becoming head of finance in 2023, he held various leadership positions within the company, including President for the Global Corporate Trust and Custody Business, as well as Corporate Treasurer. Joining John today is Stephen Philipson, Vice Chair and Head of Wealth, Corporate, Commercial, and Institutional Banking, or WCIB.
Prior to becoming head of WCIB in 2024, he led the Global Markets and Specialized Finance Group within WCIB. He has more than 25 years of financials experience, including roles at Morgan Stanley in capital markets and fixed income trading, as well as Director of the Financial Institutions Syndicate at Wachovia. Please join me in welcoming John and Stephen.
Thank you. Good morning, everyone, and great to be with you here all this morning. Gerry, thank you so much for the introduction and having us here at this conference. It's great to see everyone out in the crowd. I'll just comment, obviously, on our disclaimer page in terms of forward-looking statements. You can see that for yourself. U.S. Bank is a $700 billion company. We have 14 million consumer clients. We have nearly $1 trillion that go through our payment rails on an annual basis, and we have about $13 trillion in assets under custody and administration, all powered by the three key business lines that you see on this page in terms of the consumer, in terms of payments, and WCIB.
You can see the map in terms of where our branches are and client centers are across the country. We certainly are focused on our key strategies. Gunjan has laid this out, and so for several quarters in a row, we've been very focused on key execution in terms of our businesses. We'll be diving into one of our businesses here later this morning, but we are very much focused on organic growth from a revenue side perspective, expense management that goes along with that, and as well as the payments transformation. Obviously, you can see that has translated into strong financial results. We've been very proud of the results that we have provided this year, and our goal here is obviously we are right in the range of where we need to be from a medium-term target perspective.
Our goal is to obviously be consistent about it as well as improve upon our metrics, and that is something that we certainly want to see going forward. I am going to comment on two of these metrics just before I jump off this page. The first is on the fee revenue growth side. You see that we had targeted mid-single-digit growth, and clearly, we are well beyond that. Part of that, of course, that 14.9%, about half of that, of course, is the BTIG acquisition, which we are very pleased about and we will talk more about this morning. Certainly, we just closed. This is our first full quarter with BTIG fully integrated into the bank. The second is on the capital ratio that you see here. We are a little underneath where we want to be in terms from a fully loaded CAT II perspective.
As you know, we paused on share repurchases this previous quarter just because of unique circumstances in terms of heavy RWA growth we had at the Amazon card book that closed our small business credit card portfolio closed in August, as well as just higher interest rates had been a consideration. Since interest rates have come down and have more or less stabilized at this level, it gives us confidence that we will be able to start up our share repurchases in a prompt fashion. If I go onto the next page, you will see that we have a very diverse set of businesses, and we have this fee complex that is unique to us and very strong in terms of fee generation relative to the size of revenues that we have. We have about 44% of our revenues come from the different fee categories.
Clearly, you can see the different four categories. I will not read all those to you. I am sure you are very familiar with it. Today, though, we are going to focus on capital market side of the equation, where we have had tremendous growth. This is a business that we have grown organically for the last 15 to 20 years within our culture. It has been a very nice trajectory in terms of how we have grown and how we have gone to market. Of course, it has accelerated over the last couple of years in terms of growth with new products, as well as the integration of BTIG. With that, I am going to hand it over to Stephen Philipson, who is going to share a little bit more about our capital markets journey. Stephen?
Thanks, John. I thought I would start by just taking us back through the history of our platform and how we got into this business. We first got into the capital markets business in its current form back during the financial crisis. We were building out a national corporate bank and saw the opportunity to build out these businesses alongside that. We started with a very simple approach. It was focused on loan syndications and investment-grade bonds, where we were entering credit facilities of large corporate clients, moving up in those credit facilities, proving out our capabilities on the bond side, and as we became a lead lender, getting to that lead line on bond deals. We then added on interest rate derivatives and foreign exchange, a focus on that as a natural addition. You are leading the capital markets activity.
You've built credibility, so you can lead the hedging activity as well. That was a nice steady growth trajectory for us. Then over the past five or six years, we focused a lot more on product expansion. We saw opportunities where clients were using certain products, certain capital markets products already. We saw if we could add the right talent to build out those capabilities, our clients would give us our fair share of those products. So, we expanded into things like asset-backed securities, commodities, brokered CDs, and that's provided a really nice growth trajectory the last few years, and we have continued opportunities to expand in that product set. The one area that we knew we could not fill organically was equities and investment banking. So, with the acquisition of BTIG, we filled the last significant gap we had in the product set.
Now we have meaningful scale with a $2.5 billion a year fee business. I'd also note, fixed income is about $1.6 billion in fees. It also provides some nice tailwinds for net interest income growth with the build-out that we've had the last few years in areas like subscription finance and structured credit and asset-based lending. So, it is a real fulsome product set. In terms of how we've grown, a big focus has been on growing market share, getting our fair share of the wallet out in the marketplace. As you'll see on the left side, we started that by getting into large corporate credit facilities, going from participant to lead, and quadrupling our share in the loan syndications market in terms of our lead managed market share.
We found when we did that, when we got to that lead credit position, the resulting outcome would be we'd generate three to four times the capital markets revenue that we did when we were a participant. You see that in the middle graph there, and just one example of that in the investment-grade bond market, where we went from basically nonexistent share to 2.5% lead managed market share and growing in 2025. Then BTIG has taken a very similar approach in growing market share. You can see on the right-hand side of the page, they went from in 2015, when they first started leading equity capital markets transactions, 41st in the league tables to 15th last year, and 1.8% lead managed market share. What's notable about their market share growth is they've done that without balance sheet. They've done that through hustle, through relationships, and intellectual capital.
We're really excited. When you take the U.S. Bank balance sheet, the lending commitments that we have out, plugging in this capability provides a great opportunity for continued market share growth in the equity side of the business. So, in terms of where we're going, just sharing a slide that Gunjan talked to in earnings, we want to take these businesses from having capital markets fees comprise 8% of the bank's overall earnings to over 10%, and we've got a very clear path to doing that. One is continuing the core growth that has been part of both these businesses historically. The other is deepening the client bases, introducing BTIG's products into the legacy U.S. Bank client ecosystem and introducing U.S. Bank's products into the BTIG client base.
The last path is just continuing to expand our capabilities, something that we've done at both firms for many years, and following that same formula of seeking out the products our clients are using, bringing in the talent, adding the capability, and taking our share. In terms of deepening the shared client base, we see huge opportunities here, and since closing on June 1st, have seen a continued uptick in activity. On the BTIG side, they're accessing the 47,000 U.S. Bank institutional clients and introducing the capabilities that they have. We're getting calls every day from clients who want to put us on their share buyback programs, their equity raises, are looking to tap into BTIG's research and capital introductions, and it's having a meaningful lift.
In fact, since we closed on June 1st, three of BTIG's biggest revenue days in their history have occurred since we closed the transaction on June 1st. It just speaks to the momentum that we're seeing from tapping into the shared client base. We're also seeing the activity on the other side, where BTIG clients are looking to access our fixed income capabilities. As you can see on the bottom of the page, there's meaningful activity going in both directions. Over 220 referrals into BTIG from the U.S. Bank team and over 130 referrals from the BTIG team into the U.S. Bank capabilities. This is generating real revenue, and it's generating real pipeline. What you don't see on this page, what doesn't come through in the numbers, is the way that we're elevating our relationships.
When you have a fixed income business, when you're providing credit and fixed income products with a client, you're typically talking to the finance staff. It's typically the CFO, the treasurer, the assistant treasurer. CEOs care about their share price. They care about strategic activity. Now that we have these capabilities and we can advise them on the equity part of their capital structure, we can advise them on strategic activity, we're getting a whole new level of access and elevating the dialogue with our existing clients. The other area that I wanted to mention, even though we're talking about capital markets today, the other big opportunity that we're seeing from the BTIG acquisition is in our other WCIB businesses, like investment services and wealth.
We're seeing a lot of opportunities with our fund administration clients, where we're able to refer them to BTIG for trading execution, for outsourced trading derivatives. Similarly, BTIG is referring a lot of opportunities over to the U.S. Bank side of the house in these businesses. In fund administration, we're getting introductions that we didn't have access to before, multi-billion dollar fund complexes that BTIG does lots of execution and trading for, and they're referring us over to talk about fund administration and fund custody. Those are long sales cycles, but they're going to produce some nice tailwinds for some time to come in these businesses. We're even seeing very near-term impacts.
A good example of that is in asset management, where for our First American Funds, BTIG has introduced, unlocked some new avenues of distribution, and we've actually seen $1 billion in inflows into our $200 billion First American Funds complex sourced from BTIG. Lots of lift across these businesses. In terms of the deepening on the capital market side, we talk about it high level. I thought it might be helpful to provide a few real client examples that we've seen over the last several months. The first one is a media client, a client in the media sector, rather. This is a legacy client of BTIG's. BTIG has advised them for many years in equities on investment banking. It's about a $4 million a year revenue client for BTIG.
Recently, they were doing an acquisition, and BTIG referred them over to the fixed income team at U.S. Bank to advise on the acquisition financing. Not only were we invited into the credit facility at the lead line, along with a couple of GSIBs who'd been advising them on the M&A side, we actually ended up left lead on the acquisition financing because they liked the value-added advice that the U.S. Bank team had provided. Beyond that acquisition financing, we're in dialogue with them around derivatives, foreign exchange. We're getting a $50 million deposit and adding some treasury management services. This is going to go from a client that was a $4 million a year client for BTIG to one that's going to add an incremental $12 million in revenue for the bank going forward this year.
The next example is what I'd call the low-hanging fruit. This is the type of opportunity we knew was out there, and we knew was going to be there when we plugged in this capability. This is an example of a tech company that was a legacy U.S. Bank client. We provided credit. We were in their debt capital markets activity. We were their trustee. But when they would access the equity capital markets, we didn't have the opportunity to work with them. They didn't want to use a firm that wasn't in-house. As soon as we closed the acquisition, we got the BTIG team in front of them, and we were elevated to a book runner on their equity capital markets activity, a lead dealer in some other equity activity that they're active in.
We went from a very lucrative relationship that was generating $9 million a year to two to three times that going forward with these equity capabilities in-house. Again, this was the low-hanging fruit. We already have an example of a client where we already have the credit out to them. It was just a matter of adding this capability to make sure that we were getting and accessing that part of their wallet, that share of their wallet that we didn't have access to before having the capability. The last example I'd share is one of a shared relationship. This is a client, a private capital client, that was both a client of U.S. Bank and a client of BTIG pre-acquisition. On the U.S. Bank side, we had what I would call a participant-level relationship.
We were in some of their credit facilities, had some investment services business, and a little bit of deposits, but weren't really seeing a lot of their deal flow and not in the strategic dialogue. BTIG, however, had a CEO-level relationship. As soon as we closed, we started getting the incoming calls from them. I've gotten invited into four transactions since close on the fixed income side of the house, some lead managed opportunities. We're now talking to them about deposits and payments capabilities at the portfolio companies. This went from collectively, we were generating $4 million a year, and within a couple of months, we've already doubled that revenue stream. This is again, something that we're seeing a lot of in terms of that access in the C-suite that we didn't have prior to having the BTIG team on board.
The other area beyond deepening where we see a lot of opportunities is the product expansion, continuing to add capabilities. This is something that we have done at both firms throughout our histories in these platforms. Again, we talk to our clients. They talk about the products that we're not in, where they'd like to see us get involved. We look at where we can add the talent, and if we add the capabilities, can we get our rightful share? On the right-hand side of the page, you see a number of products that are on our roadmap. Some of these have already launched, some of these are in process, some of these a little bit down the road. These are areas where we see opportunities. Our clients want us to provide these services, and we think we can get our rightful share.
One example of that is on the left-hand side of the page in the macro business. The macro business, interest rate derivatives, foreign exchange, repo. Historically, at U.S. Bank, we've only served our corporate and commercial clients in these businesses. We have a lot of institutional clients between our institutional client group, between our investment services platform, and now several thousand more institutional clients with the BTIG team, as well as global distribution with BTIG. We see an opportunity to serve our institutional clients in this business, and we've been adding talent, and we're going to be adding more capabilities. This business, there's a $40 billion wallet in this business. Today, we have 1% share.
We're highly confident with adding these capabilities and the talent with the customer base, the client base already in-house, that we can easily double our market share in this business in the years to come. These bubbles on the right represent many opportunities like that, where we're highly confident, based on having done it for the last 15-20 years in both businesses, that we can add the talent, add the capabilities, and get our rightful share. Just to close, in both businesses, we've got a great track record of being able to build the capabilities and drive the revenue in these capital markets businesses. By adding BTIG and executing on the product roadmap, both at BTIG and legacy U.S. Bank on the fixed income side, we think we have scale and a lot of runway for growth.
When you look at the equity, fixed income, and investment banking fee pools, today we have a little over 1.5% of the U.S. fee pool. U.S. Bank is 3% of the U.S. banking deposit system, so there is no reason why we cannot be north of 3% in these businesses, particularly when you consider that not many banks have the scale and product depth that we have, and capabilities in these businesses. We are very excited to grow them, we are very excited to demonstrate that growth, and we feel we have a lot of runway ahead of us in these businesses. Thank you.
Great. Thanks, Stephen. Maybe we can start off, I will ask a few questions and then I will open up to the audience, but maybe you had a great slide back there on client deepening opportunities with a number of different opportunities. Maybe we could start off on talking about which business segments are seeing the strongest early momentum in terms of referrals and mandates.
Yeah. So, where we are seeing the strongest early momentum is definitely the plain vanilla equity issuances, share buybacks, ATM programs, sort of that vanilla equity capital markets capabilities where so many of our clients were using those, and they were just waiting for us to have the capabilities in-house to be able to add that. That is where we are seeing that big lift. That is where you are seeing those record revenue days at BTIG. We are also seeing a lot, though, really good activity, as I mentioned, on the investment services side. That is a longer sales cycle. A fund does not just change their fund administrator or custody provider overnight. But once you lock in that business, it becomes a nice annuity stream.
So, I think we will see more of a lift over time in those businesses, but incredible dialogue and unlocking a lot of interesting opportunities there.
Okay. With all these opportunities, you have different sides of the house collaborating. There was a 10-year relationship prior to the acquisition, so maybe we can talk about how you are training, educating, incentivizing the bankers to offer the full suite of products and cross-sell.
Yeah. That 10-year relationship was very helpful. The one item that has not even been close to being a challenge has been culture. The two firms just knew each other so well, so that has been very helpful. The way we have gone about the training is we have a global learning team at U.S. Bank that created training modules on every product on the U.S. Bank side, on the BTIG side, and both sides really starting from pre-close, started going through those trainings to understand the capabilities on both sides of the house, and there has just been incredible excitement. It helps that there was really no overlap between these two firms. Our relationship managers and the institutional client group and commercial real estate at U.S.
Bank have been so excited to be able to introduce these new learn about the new capabilities and introduce them to their clients. The BTIG team has been incredibly excited. We have got investment bankers trying to push corporate trust and deposits, which says something to their culture, that they have been very excited to embrace the whole product ecosystem at U.S. Bank. The incentive structure is one in which it is the same incentive structure BTIG had and was able to attract talent, but there is certainly qualitative considerations when a banker not only has brought in a bunch of M&A deals and equity deals, but is also driving deposit flow to U.S. Bank. That is a consideration in the compensation process.
Good. So, a good corporate citizen is rewarded.
Yeah, absolutely.
Explicitly. Okay. You also had a great slide on the new product capabilities with a number of opportunities. Maybe you can just highlight the one or two where you see the most potential there.
Yeah. The macro opportunity on the fixed income side is very meaningful, and we're so excited about it because the clients are there. We have the capabilities. We just focus them on a different side of the house in terms of the clients. So very excited about that opportunity, and BTIG just unlocks so much potential there with the added institutional clients that have come into the bank, as well as their global distribution. So, that is definitely one of the most exciting opportunities we have. I would say on the BTIG side, it's probably equity swaps, which is going to take a little bit of time to build.
We're a swap dealer in the fixed income market and are very familiar with running and the risk management and technology and process around a swap business, but we need to build it out on the equity side, and we're excited for the opportunity when you think about areas like leveraged ETFs. So in our fund services business, we're the number one fund administrator in the ETF space. BTIG is also very active on the execution side with these ETFs. The one product we can't offer them yet is that swap capability. So, we're excited to be able to do that in the years to come.
With the swap opportunity as well as others, have you already started the investment? John, I don't know if you want to weigh in too, is just like-
Yeah
Is there an incremental expense uplift here?
Yeah. This is an initiative that we have in the bank that's no different than other businesses that we want to make sure we're investing in. Clearly, we've been focused on operating leverage and making sure that we're very much committed to positive operating leverage. As the revenues have come, we've been able to increase our expense as well to invest in these businesses, and this is just an example of that. When we think about it's not just the product set. You have to think about the complex and the support around it. So, risk management, making sure you have the right talent that is watching these sorts of activities, as well as the systems and technology that's in place. Obviously, the people that Stephen's talked about is super critical in terms of the culture that we build, how we build this out.
All that is really important, and it's in the context of how do you embed that expense within our run rate that we have. So, there's nothing here that's different or unique than what we've communicated already in terms of our commitment to positive operating leverage.
Yeah, I just add in the markets businesses, we've made some meaningful investments in recent years. We put in a whole new operating and trading platform in our foreign exchange business. We built out a commodity platform and did that all within the corporate CapEx run rate.
Mm-hmm. Gerry, we've seen our expenses. We've been managing quite intentionally in terms of making sure we have efficiencies across all the other businesses so that we can make room for all these other investments. As you've probably seen in our financials, we have pretty tremendous growth in marketing and technology, and that's really where we spent a lot of our excess dollars, is building up businesses like the capital market space.
Okay. Thank you. How do you think about bolt-on acquisitions to just accelerate the whole product development?
Well, I'll talk about it.
Yeah.
I mean, in the markets businesses, this was the most significant gap. This was where our focus was in terms of bolt-on acquisitions. But, we certainly, we look at bolt-on acquisitions across products and in other areas of the business as well. We did PFM a few years ago in the asset management business, and continue to look and will always open opportunities across the broader businesses. But for the markets businesses, this was the significant gap that we couldn't fill organically.
Okay.
We're good operators on bolt-on acquisitions. We know how to close them. We know how to integrate them very well. We look at it really as an extension of organic growth in a lot of cases. Capital markets, the investment services is where we look, but we can look in other pockets where we have these opportunities. We're not shy about that sort of thing.
Okay. Let me ask one more, and then I'll open it up. And this would be to you primarily, John.
Sure.
Just kind of thinking about the incremental balance sheet that you think you need to deploy to support these clients and how you're thinking about that.
Sure. Yeah. I think the beauty of this is that, as Stephen mentioned, there's a lot of clients we already extend credit to, and so, we don't necessarily need to extend our balance sheet any further than what it is already. We think that there's a lot of room for us to grow without materially growing the balance sheet. Our view is that we'll grow our assets in the areas that we've been talking about, which is commercial loans, commercial real estate, and credit cards. I don't see this strategy as really outpacing anything there, and that's just going to be something that we'll move forward in terms of our journey of how we grow. But at this point, we have a lot of room and opportunity within our own confines of our current balance sheet.
Okay, great. Thank you. Why don't we open it up? Vivek?
Thanks. Stephen, a couple of questions for you. What percentage of BTIG's business is from APAC? Because I know they had quite a substantial They had quite a presence there. And what have you seen in terms of the revenue growth there this year? Because there's been so much activity in APAC.
Yeah, it's-
What are you planning in terms of linking that with the rest of the franchise?
Yeah, it's about roughly 5% of the revenues. The total global, outside of the U.S. in general, is about 10% of the revenues. We're going to continue to It's not where our growth is necessarily focused. There's such a huge opportunity in the U.S., but that's a huge important part of having distribution and having a platform in this business. What we like about it is, one, it has seen nice growth. 5% is probably up from a couple percent just a few years ago. But it's also having that distribution and that market intel that allows us to be a better trading counterparty, but we're also going to leverage it for areas like fixed income, where we'll be able to plug in that distribution, which has been a gap for us historically.
Is the plan for you to be able to take USB legacy business and sort of grow that internationally also?
Leverage what BTIG already has on the ground. We see similar opportunities in Europe. We have a big investment services business, a big payments business in Europe. We've recently added in the institutional client group a lending team in Europe to support clients over there. Again, being able to plug in BTIG's ECM team and their broader European platform as we grow those businesses is creating opportunities. We're seeing investment services with ETFs taking off in Europe. We're able to plug that together with our investment services team and their execution team and see opportunities more broadly just as our natural business growth in those other businesses continues to take place.
Manan?
Hi, Manan Gosalia, Morgan Stanley. Stephen, given the great examples you gave in terms of how you can get multiples of your current revenue per client, I guess, can you talk about how you measure the total wallet size, how you measure penetration per client, and if there are any numbers you can give around what the aggregate opportunity is for USB?
Yeah, I mean, the total addressable market just in the U.S., it's about $150 billion wallet across the products that we're in. So the way I look at it is we're about, it's a $2.5 billion business, so we're about 1.6% of that total addressable wallet. So, we feel we should be at least double that. When you look at, as I shared the slide, BTIG having 1.8% lead managed market share, we have 2.5% on the investment grade bond side. Those are just two products, but those should both be north of 3%. And there are areas like macro where we're only 1% today. We should be longer term, north of 3%. So, we see that as the near-term target that we want to be overall in these businesses and think it's very achievable.
Brent.
Hi, Brent Erensel. This revenue synergy is very impressive, but are you guys operating now as a Category II bank, and do you have any aspirations to become a GSIB?
We're right on the cusp of Category II. As you know, it takes $700 billion of assets over a four-quarter period. We're very close to that. We'll either likely trip that in the first quarter, which means we'll effectively be a CAT II bank in that third quarter, likely given the current rule set. And that's how we intend to operate and have been operating. Any thoughts on GSIB and things like that is way premature at this point. We're focused on our organic growth opportunities that we have with all the different businesses, and we think there's a tremendous amount of runway for us to achieve in that space.
Mike.
Well, congratulations. 23 years ago, you spun off Piper, and now today, you have the same percentage of capital market revenues again. I guess, what's changed in 24 years that gives you confidence? Then I have a follow-up.
A few things have changed. One, we're a much larger institution than we were 23 years ago. 23 years ago, we didn't have these big institutional businesses, the scale. We weren't the number one in the corporate trust business. We didn't have the scale we have in our fund services business. We didn't have a national corporate bank, so we didn't have these large corporate relationships that we had. The level of sophistication of the institution has increased meaningfully in 23 years. The level of sophistication of our client base has increased meaningfully, and the talent has increased meaningfully. I mean, we built out this organically grown capital markets business over the last 17 years, proving that the institution has evolved and we can compete in these businesses.
The other piece that's different than 23 years ago, because of that level of sophistication in the institution, the cultural integration has been seamless. Because we had worked with BTIG for close to a dozen years, the teams had worked together. The cultural integration has just been unbelievable in terms of both sides supporting each other, not running into any sort of clashes of personalities, and you're seeing that in the results.
Can I just double-click on that? The cultural aspect is super important here. To Stephen's credit, building out the capital market space and the culture and confines of the U.S. Bank culture has been tremendously impressive, and we've been able to grow the talent, the risk management, the infrastructure all around that. That was very different than the Piper Jaffray days where that was a much different institution. Then the cultural aspects that you just mentioned in terms of BTIG working together for that dozen, 12 years before full integration. That has been a very key and intentional piece of the success that we've had here.
Fix my numbers, but I think you're number seven in investment-grade loans, but only like number 14 or 15 in investment-grade bonds and equities. It seems like, your clients, they like to You date your clients, you date your clients, you date your clients, but when it comes time to go to the prom, they go with somebody else for the high-margin stuff. How are you going to get your clients to go to the prom with you?
Well, there's not necessarily that direct of a correlation between the investment-grade syndications table and the debt capital markets league table. When you think about the investment-grade bond market, there's a ton of self-issuance, right? A big percentage of the issuance are banks issuing their own bonds, so you're not going to necessarily compete to lead BofA and Wells Fargo's bond deals, so-
The gist of my question is, you've already been extending a lot of capital, as you just said. These are existing clients. You've extended them a lot of capital for many years. You're just not getting the high-margin business. How are you going to win against the large investment banks that have been moving down market and your other competitors?
Yeah, so we feel good about our ability to compete and win against larger banks. I mean, we've been doing that in the bond business. Capital markets activity, it's going back to the coming out of the financial crisis. Clients don't do their activity, they don't have one dealer, they don't even have two dealers. It's more of a democratized market where they like to have a large syndicate of dealers, whether it's leading a bond deal, leading an equity transaction, or executing a swap or FX. They deal with multiple counterparties, and the way we've been able to compete is bringing in talent that's proven from the street, building deeper relationships. Also, we're big enough to compete.
We have the balance sheet that we can compete, but we're small enough that it's still relationship-driven and clients don't feel like they're on an assembly line from an execution standpoint. That's really differentiated ourselves in these businesses, and it's where we've been able to win share, where we've been able to compete with larger banks, is from that model, being scrappy, bringing the focus, and treating them with a level of sort of white-glove service they don't necessarily get at bigger banks.
Scott.
John, was hoping you could touch on capital management for just a quick second. You mentioned at the beginning, hopefully restart the repurchase in fairly short order. I guess my question is, you've been sort of marching toward this destination that might be changing, so sort of fluidity around what the destination is. I guess you just have to manage based on the rules as they are today, but maybe if you could just speak to the crosscurrents and how you think about the-
Sure
different ones in there, please.
This is a pretty significant quarter in terms of timing of rules, so we're obviously paying close attention to that. The Basel III Endgame is clearly a piece of that. Potential of tailoring is another component. We are not planning on those things hitting. If they do, that's fantastic, but we're managing as if it's the current rules of the road. Our view is, let's grow our capital in a way in which we can glide into that, our target of where we want to be, and we generate enough capital over these several quarters where we feel we can achieve that. My comment in terms of being prompt, in terms of returning to that repurchase was just based on where interest rates are and that sort of thing. That's kind of how we're thinking about it.
Ultimately, where we want to get to is once we complete and get to our target, we're at a space where we're able to return 70%-75% of our total capital in the form of dividends and share repurchases, and that's our ultimate goal is to get into that run rate. We have some work to do, but we have some great businesses that are generating capital on a quarter-by-quarter basis, and we plan to continue to execute upon that.
Thanks.
I'm going to leverage off of, jump back in here and leverage off Mike's comment. I mean, you did a good job articulating the differentiating factor from a competitor perspective against large broker-dealers. I'm curious, what is the value proposition when you're out hiring, and how competitive a market is it?
Yeah, so we've been able to attract really good talent, both on the legacy fixed income side and at BTIG. The value proposition is, there aren't a lot of banks this size with this much sort of blank canvas in terms of being able to build a business. Talent has been very attracted to that, being able to come in and build out a product and truly have this entrepreneurial approach. There's not a lot of opportunities in the marketplace where you have access to an institution of our size, scale, and the ability to build something and really build products from the ground up. So we've had a great experience, and when you look at the talent that we've hired over the last few years, I mean, it's from across the spectrum in terms of the largest and most sophisticated banks and broker-dealers.
How has the retention with the BTIG bankers been?
It's been fantastic. We've had near zero regrettable attrition since we announced the transaction.
Okay. I'm going to try to sneak in one more just to see if we I'm just curious if we could provide a quick update on fourth quarter, how it's going for legacy USB FICC, as well as BTIG.
Yeah, so we're on track. October was a good month in the fixed income business. The rally in rates led to some sizable derivatives activity as well as some bond activity, and commodities has remained very strong. On the equity side and investment banking side in BTIG, also a solid One month doesn't make a quarter, but we've had a good quarter on both sides of the business.
All right, excellent. Please join me in thanking John and Stephen. Thank you.