Question-and-Answer Session
Operator
Thank you. (Operator instructions) And our first question comes from the line of Richard Repetto with Sandler O'Neill. Please proceed.
Richard Repetto – Sandler O'Neill
Yes. Good morning, Phil, and good morning, Kevin.
Phil Pendergraft
Good morning, Rich.
Kevin McAleer
Good morning, sir.
Richard Repetto – Sandler O'Neill
Congratulations. Excellent quarter here.
Phil Pendergraft
Thank you.
Richard Repetto – Sandler O'Neill
I guess my question is trying to get – you surprised everybody with the net interest. And I’m just trying to see whether that’s as a result of seven new clients you got in the first quarter, or was it the 11 in the second quarter? I’m just trying to see how much in a flat interest rate environment you could expect it to grow late in Q3.
Phil Pendergraft
So Rich, it’s sort of broken down into two pieces. The absolute dollar gain is the result of the growth and balances. We have a 17% growth and balances quarter-over-quarter. The relatively flat spread is as a result of changes in mix, some of which is associated with those new balances, and some of which is associated with growth in our stock lending business and growths in segregated funds, and in deposited mix shift within our existing customers. Does that make sense?
Richard Repetto – Sandler O'Neill
Yes. Well I guess the question is, you offset what should have been or what you guided to a $6 million and $6.5 million decline in net interest from the sensitivity. Next quarter, if all other things have been – be in this thing, if rates stayed the same, would you expect net interest to be flat? Do we still get the impact of new clients bringing in new balances?
Phil Pendergraft
Yes. So Rich, I believe that based upon where we are today again and based upon the mix and makeup of our balances, we actually do not expect – we expect a pretty stable spread this quarter, in the third quarter. And so, growth in net interest revenues will come primarily from growth in balances, either from existing customers or new customers. And so would certainly expect them to grow because we have a very strong pipeline.
Richard Repetto – Sandler O'Neill
Got you. Okay. And then you mentioned the wind on Nexa, $4 million, I heard – I thought you said that $4 million in licensing revenue over the next four to five quarters. I’m just trying to see what is there – what type of expenses are tied to that?
- To read the full transcript on Seeking Alpha, click here »
