With First Republic losses in rearview, Pershing nets inflow of $3B

More than two years after the regional banking crisis that shuttered First Republic, one of the industry's largest custodians has completed the deconversion of its assets.

BNY Pershing had sustained an outflow of net new assets amounting to an 82% drop from the prior year in 2023, when JPMorgan Chase acquired most of First Republic's remaining assets. Those losses spilled over into 2024 and this year as well. 

They partially offset an in-flow into Pershing in the third quarter, but Chief Financial Officer Dermot McDonogh said in a call with analysts after the firm disclosed its third-quarter results that the First Republic deconversion is now, finally, in the rearview mirror.

To see the main takeaways for financial advisors from the third quarter of 2025 for Pershing and BNY's Investment and Wealth Management segment, scroll down the page. Also, find analysis of the firm's first-quarter results and second-quarter earnings. And to read FP sister publication American Banker's coverage of BNY's overall earnings, click here.

Deeper relationship with TIAA

Financial advisors with TIAA Wealth Management and clients of TIAA's brokerage, registered investment advisory and bank custody businesses will be using Pershing's Wove technology platform to streamline disparate accounts into one unified digital home under an agreement the parties unveiled earlier this week. TIAA, which had $1.4 trillion in assets under management at the end of the second quarter, chose Pershing's technology for its advisor and client desktops under a plan to bulk up its wealth arm alongside its giant retirement plan business.

"We are making a significant, long-term investment in the way we equip our advisors and serve our clients," David Nason, the CEO of TIAA Wealth, said in a statement. "By harnessing technology to deliver deeper insights and more meaningful conversations, we are ensuring clients receive personalized advice and confidence at every stage of their financial journey."

Pershing assets under custody or administration

Pershing's assets under custody or administration climbed 11% year over year to $3 trillion in the third quarter, thanks to asset appreciation and an inflow of $3 billion in net new assets. In the same period a year ago, the company sustained an outflow of $22 billion from the deconversion of First Republic following its takeover by JPMorgan. In addition, Pershing's average active clearing accounts increased 4% to 8.4 million.

Wealth management client assets

Client holdings at BNY's wealth management unit expanded 5% year over year to $348 billion in the third quarter. Market appreciation offset a net outflow in new assets for the division.

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Pershing revenue

Higher net interest income, rising asset values and client transactions pushed up Pershing's revenue from the same time a year ago. The topline surged 12% to $729 million.

BNY doesn't break out Pershing's profit figures, but the unit of the megabank that includes its clearing and custody firm generated pretax income of $875 million on $1.77 billion of revenue for a margin of 50%. Its profit soared by 24% year over year, revenue rose by 14% and the margin was 4 percentage points higher.

Investment and Wealth Management profit

An outflow in net new assets and client rebates tied to interest rates shrank the Investment and Wealth Management unit's revenue, but the impact of asset appreciation on the one hand and a less valuable dollar on the other surpassed that dent to the topline to drive higher profits.

The unit generated pretax income of $184 million on revenue of $824 million for a margin of 22%. Revenue decreased 3% year over year, profit enlarged 5% and margin ticked upward by 1 percentage point.

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Remark

Two years after its launch, Pershing's Wove technology has attracted more than 50 wealth management firms to use the software, McDonogh said in response to an analyst's question about the TIAA announcement. Citing the reference in BNY CEO Robin Vince's prepared remarks to Pershing's prior relationship with TIAA spanning two decades, McDonogh said that the Wove agreement had come after "a lot of discussion" with a "very important client," according to a transcript by investing website Seeking Alpha. So BNY and Pershing are "happy to be able to serve them in a new and differentiated way," he added.

"When we take a step back and we think about Pershing, it's a $3 trillion AUM business within the wealth tech sector space, and you see new entrants into it, and we like competition," McDonogh said. "The fact that new entrants are coming in kind of allows us to show what we have to offer clients. So we're excited about the business. We're excited about the growth potential. And, now, with the deconversion behind us, we expect growth in net new assets to reaccelerate for the balance of the year."