Stephen D. Steinour - Chairman of the Board, Chief Executive Officer, President, Member of Executive Committee, Chairman of The Huntington National Bank, Chief Executive Officer of The Huntington National Bank and President of The Huntington National Bank Donald R. Kimble - Chief Financial Officer, Senior Executive Vice President and Treasurer Daniel J. Neumeyer - Chief Credit Officer and Senior Executive Vice President Jay Gould - Senior Vice President and Director of Investor Relations

Craig Siegenthaler - Crédit Suisse AG, Research Division David J. Long - Raymond James & Associates, Inc., Research Division Ken A. Zerbe - Morgan Stanley, Research Division Anthony R. Davis - Stifel, Nicolaus & Co., Inc., Research Division Leanne Erika Penala - BofA Merrill Lynch, Research Division Andrew Marquardt - Evercore Partners Inc., Research Division Erika Penala - Merrill Lynch Paul J. Miller - FBR Capital Markets & Co., Research Division Kenneth M. Usdin - Jefferies & Company, Inc., Research Division Brian Foran - Nomura Securities Co. Ltd., Research Division

Good morning. My name is Steve, and I will be a conference operator today. At this time, I would like to welcome everyone to the Huntington Bancshares Third Quarter Earnings Conference Call. [Operator Instructions] Thank you. Jay Gould, you may begin your conference.

Thank you, Steve, and welcome. I'm Jay Gould, Director of Investor Relations for Huntington. Copies of the slides that we will be reviewing can be found on our website, huntington.com. This call is being recorded and will be available as a rebroadcast starting about 1 hour from the close. Please call the Investor Relations department at (614)480-5676 for more information on how to access these recordings or playback or should you have difficulty getting the slides. Slides 2 through 4 note several aspects of the basis of today's presentation. I encourage you to read these, but let me point out one key disclosure. The presentation contains both GAAP and non-GAAP financial measures where we believe it is helpful to understanding Huntington's results of operations or our financial position. Where the non-GAAP financial measures are used, the comparable GAAP financial measure as well as a reconciliation to the comparable GAAP financial measure can be found in the slide presentation in its appendix in the earnings press release and the quarterly financial review and the quarterly performance discussion or in the related Form 8-K filed today, all of which can be found on our website. Now turning to Slide 5. Today's discussion, including the Q&A period may contain forward-looking statements. Such statements are based on information and assumptions available at this time, and are subject to changes and risks and uncertainties, which may cause actual results to differ materially. We assume no obligation to update such statements. For a complete discussion of risks and uncertainties, please refer to this slide and material filed with the SEC, including our most recent forms 10-K, 10-Q and 8-K. Now turning to today's presentation. As noted on Slide 6, participating today are Steve Steinour, Chairman, President and Chief Executive Officer; Don Kimble, Senior Executive Vice President and Chief Financial Officer; Dan Neumeyer, Senior Executive Vice President and Chief Credit Officer; also present is Nick Stanutz, Senior Executive Vice President and Head of Automobile, Finance and Commercial Real Estate. Let's get started by turning to Slide 7. Steve?

Welcome. I'll begin with the review of our third quarter performance highlights. After my overview time, we'll follow with this recap of our financial performance. Dan will provide an update on CRE. I'll then return with an update on our Fair Play and OCR, what we refer to as our Optimal Customer Relationship strategy and close with a discussion of our expectations for the next few quarters. So turning to Slide 8, we reported net income of $143.4 million or $0.16 a share, essentially flat with the second quarter. Nevertheless, third-quarter results represented good progress against our strategic plan designed to improve long-term profitability and shareholder returns despite significant headwinds from the operating and interest rate environment. We're clearly focused on the long-term and the level of returns we generate for the ROAs of the company. This quarter's ROA was 1.05%. We were still able to bring a solid 13% return on tangible common equity even as we took several steps to continue to reduce risk in both the liquidity during the quarter marked by political and economic uncertainty. Our $240.7 million in pretax, pre-provision income was in line with last quarter, and Don will provide additional details in a few minutes. Fully taxable equivalent revenue increased $5.8 million or 1%. It's reflected a $3 million or 1% increase in net interest income. We saw several -- we saw average total loans growing at 8% annualized rate with C&I and indirect automobile loans with strong annualized growth rates of 9% and 17%, respectively. Demand deposits grew a very strong 28% annualized rate. Consumer non-interest-bearing DDA has increased to the 21% annualized rates which was last seen, in large part, the success of Asterisk-Free Checking. Commercial DDA inflows where particularly strong and above normal growth levels and therefore, not likely to…

Thanks, Steve. Turning to Slide 11. It provides a summary of our quarterly earnings trends. Mainly the performance metrics will be discussed later in the presentation. Let's turn to Slide 12, and it shows that our net income for the third quarter was $143.4 million or $0.16 per share. The $12.6 million decrease in the pretax income reflected the impacts of the $10.7 million to increase our noninterest expense, and the $7.8 million increase in provision expense, which were partially offset by a $3.1 million increase in net interest income and $2.8 million increase in noninterest income. I'll detail exchanges in subsequent slides. On Slide 13, we show the trends in our revenues and our pretax, preprovision on the left hand side of the slide. The third quarter showed a slight decline in pretax, preprovision, most of which can be attributed to $11 million linked quarter increase in expenses, as well, detailed here, much of this increase was related to conversion cost of our debit card products and higher personnel costs driven by higher salary, severance and healthcare costs. Slide 14, reflects the trends on our net interest income and margin. During the third quarter, our fully-taxable equivalent net interest income increased by $3 million reflecting a benefit of a $0.8 million increase in our average earning asset base, partially offset by the negative impact with 6 basis point decrease in net interest margin, the 3.34%. The 6 basis point decline in net interest margin reflected the impact of 4 primary factors. First with the 9 basis point reduction related to the impact of the extended low rate environment on loan yields. In the quarterly financial review, we have provided the impact of swap on our commercial loan yields. This summary shows our total commercial loan yield declined by 4…

Thanks, Don. Slide 22, provides an overview of our credit quality trends. The third quarter continued to show improvement in our credit quality metrics despite continued economic challenges. Normally, the net charge-off ratio fell from 1.01% annualized second quarter to 0.92% in the third quarter. This is the lowest level of charge-off since the third quarter of 2008. Well, both commercial and consumer loans contributed to this linked quarter improvement. While we expect continued improvement at our charge-off trends, the pace of the improvement will remain more modest given weak economic growth, relatively high unemployment and still unstable home values. Loans 90-plus days past due, delinquent and still accruing were basically flat quarter-over-quarter, up 1 basis point. We continue to have no commercial delinquencies in the 90-day-plus category. The nonaccrual loans, nonperforming assets and Criticized asset ratios all showed continued improvement in the quarter, although the improvement brought somewhat by an uptick in common loan inflows. The allowance for loan loss and allowance for credit loss to loan ratios fell modestly to 2.61% and 2.71%, respectively. Nonetheless, coverage ratios increased due to lower nonaccrual loans and nonperforming assets. Slide 23 shows trends in our nonaccrual loans and nonperforming assets. The chart on the left demonstrates the continued reduction in the level of both nonaccrual loans and nonperforming assets. Nonaccrual loans fell 8% in the quarter. With regard to nonaccrual inflows depicted on the right-hand chart, we once again saw a reduction in new inflows in the quarter after experiencing increased inflow in the second quarter. And as I mentioned in last quarter's discussion, we did not believe at that time that the second quarter inflow was the beginning of a trend rather simply, more indicative of the uneven nature of the commercial portfolio when individual credits can account for fairly…

So as I mentioned in my opening comments, our Fair Play banking philosophy, Optimal Customer Relationship or OCR strategy has been resonating strongly in the market and driving accelerated new customer growth. Along with those new customers, we continue to benefit from higher retention rates as current customers feel an even stronger level of loyalty to Huntington. And as a result, related revenue is increasing. This slide recaps trends in consumer checking account households. On Slide 29, first quarter 2011 growth was running at a 9.1% annualized rate. By the second quarter, year-to-date annualized growth increased to 9.8% and now for the first 9 months, this has increased even further to an annualized 10.8%. Throughout this period, several competitors announced they were adding fees or reducing product features to try to offset the lost revenue. Customers are clearly reacting positively to our strategy. Now in addition we're selling more to all of our consumer households. For the third quarter, 72.8% of consumer checking account households use over 4 products or services, up from 71.3% in the second quarter and significantly higher than the 68.5% just a year ago. We hear competitors are saying we're attracting low profitability consumers. And some of you who have told us, our competitors have even said they're glad to lose these customers. And we hope they continue to believe that. All we can say is that our related revenue is increasing with third quarter related revenue 5% higher than a year ago, and on an absolute basis above pre Reg E amendment levels. In a low interest rate environment, the earnings potential from a consumer demand deposit is less than in higher-rate environment. Perhaps that accounts for some of our competitors remarks. While we also note that loyalty matters. Loyalty matters. When rates rise and…

[Operator Instructions] And your first question comes from the line of Tony Davis with Stifel Nicolaus. Anthony R. Davis - Stifel, Nicolaus & Co., Inc., Research Division: I just wondered, following the expansion during the New England, here and Wisconsin and Minnesota, how much broader of footprint do you envision for the auto business? Number 1. Number 2, our acquisition such as TCF, Gateway One deal are realistic growth option for you?

We're essentially defined now in terms of our automobile geography could add a state or 2, but won't be a broad-based. And while we admire a lot of what TCF does and has done, we don't have plans to follow their expansion to national indirect lender. Anthony R. Davis - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And one quick follow up, last quarter, it was so early, I guess, you really couldn't give us much color on how it was rolling out. But I wonder if you could talk a little bit more, Steve, about Asterisk-Free, how it has progressed relative to expectations and what you're seeing out there, I guess, in terms of competitor response today?

Well, Asterisk-Free is part of our Fair Play philosophy and when we announced it about a year ago, Fair Play and that we were going to -- with 24-Hour Grace, and certain other fee give-ups in addition to Reg E, take a fee set back. And that we shared with the investment community just the fee give-ups and 24-Hour Grace would cost us $30 million. We're very pleased and we're well ahead of schedule to be back essentially flat year-over-year in the same timeframe. And Asterisk-Free, as you heard from those statistics from seeing the pages, it's accelerating our household growth. It's early as we said and as you acknowledged, but we like what we see so far in the mix. And we're continuing to get good cross-sell penetration in addition to the mix. But it's early, Tony, and so we're not sharing a lot more. We're not prepared to share a lot more until we have a better view of a sustainable run rate so we don't create a misperception.

Your next question comes from the line of Ken Zerbe with Morgan Stanley.

With the resumption of your auto securitizations program, what does that imply about how aggressive you might be with writing new originations on the Auto side? I mean, should we think about this is as maybe a step down from super prime to prime, and securitized more of the prime stuff. And also at the end of the day, what I'm trying to figure out is how often would we start seeing these about $50 million gains from the securitizations?

Ken, I'll do the credit in the first case. Don, why don't you talk about timing of the securitization, if you would, and Nick, kindly as well. But Ken, we don't anticipate changing our lending policy at all. And at this point, and there are no discussions to do so in the future. So we would expect to continue to generate super prime and we look at it weekly as we've shared with you in the past, and Nick and Tim, of course, are on it every day, all day.

Good. As far as the timing and the frequency of the securitization is that I would say that as a general expectation, we're probably looking at a couple of years. And some years, even some of you might have fewer, and the size of securitization is probably will be fairly similar to what we just did, but I wouldn't say that's an absolute guidance. But that's generally be met based on growth and balance sheet capacity and other funding considerations.

Ken, we articulated the concentration limit for Auto. I think there's a little concern with just how much as a percentage of portfolio and the rate of growth as well, so -- and we shared internally, that 20% limit for total loans. And as we were requesting the $16 million, we had a further expansion on the horizon. We want to get ahead of it this quarter.

And Ken, I would just add one comment, and that is we have a reputation that we have worked very hard to build in the marketplace. The dealers are very connected for a variety of reasons, and we want to stay very focused on what we are known to do and do really well. And that's where we want to continue to play in that space.

Okay. Now it makes sense. And then just so -- one other question I had, on the MSR loss in the quarter, I may have missed this, but were you making any directional bets one way or the other? I think I heard a comment that you were not hedged on some pieces of it, but I wasn't sure if that's related to the MSR. Basically, I'm just wondering why you took more loss than, I guess, some of your peers.

Ken, good question, but we essentially have been including new mortgage loan originations on a lower cost for market basis over the last 2 years. And for that portion of the portfolio, we believe that interest rates over the long haul would increase from where they were before. And as a result of the amortization associated with that asset, we really didn't need to hedge it. And we monitored it but we didn't hedge it. And -- well, that we mark-to-market on that low common book really hit for the first time this past quarter and cost us $11 million of write-downs. So if you just look at the fair value portion of the MSR, we actual have a slight gain of about $2 million, which is consistent with what we've seen in previous quarters for that activity, but really it was a reflection of the low end rates coming down 90 basis points in early part of the quarter, as Steve referenced. But we had another 30 basis point drop in the last 2 weeks in the quarter, which costs $7 million of that impairment. And so it was more market-driven, onetime-related. We have taken a position to do a partial hedge of that asset going forward but it's a reflection of the strategy we've played up until now.

So Ken, we originally moved to low comp because we thought it was more a conservative basis for covering the MSR. And we -- while we had it partially -- the low comp portion partially hedged was inadequate given the magnitude of the moves. As Don referenced, it's now more substantially hedged at this point going forward. But if you look at a 2-year continuum, we're way ahead having left it unhedged, but we're kicking ourselves, a bit, for missing this last couple of weeks in particular and the impact of it.

Your next question comes from the line of Kenneth Usdin with Jefferies. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: You guys have always done a very good job of continuing to focus on the long term in terms of investing in the footprint and continue -- in franchise, and you continue to put that forth. But I'm just wondering with acknowledging that the revenue environment is harder and the fourth quarter pressures and just the low rate environment, what else can you do in terms of that efficiency initiatives? Can you help to size it for us? Because it seems like the expense trajectory has continued to move up, and then notably, this quarter even on the comp line and the flat revenue quarter. So I'm just wondering, like, how do you -- how are you figuring through that balance and what structural things can you do to more than offset some of those investments that you're continuing to make?

Great question, Ken. And as far as the expenses, I just want to highlight a few things. There really are some unusual items in the quarter that drove that $11 million increase. We've talked about roughly a $6 million increase in outside processing and other services. A good portion of that relates to the conversion costs associated with our debit card efforts that we have going on. You've mentioned the increase in personnel cost of about $8 million linked quarter. We had $2 million increase in healthcare benefits, primarily related to 3 specific claims that were a large dollar amount that were outside the normal cost. We had $2 million of severance cost this quarter. And we had a host of other items of about $1 million each that I wouldn't suggest are quarterly occurring but they just ended up getting this past quarter. As far as the severance cost, it really was related to some continuous improvement efforts we have in place. We haven't targeted or size a specific initiative as to what we want to do as far as bringing down some of the expenses, but then, we do want to be able to focus on continuous improvement making sure that we're able to support investing in other initiatives where appropriate, but also keeping in mind that the impact of the economy over the next several quarters and the need to make sure that we're managing our expense base prudently and trying to keep that down. And as a result of the onetime items I talked about, our guidance was for expenses to be lower. But just as we referenced with the conversion costs, we expect those costs to continue into the fourth quarter, but we'll see benefits in future quarters from the impact of that conversion.

Ken, we're very focused around the efficiency ratio and the expense level, and will be as we go forward. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: Okay, got it. My second question, just in regard to the comment that we see in the press release about next year's margin potentially going below the low end of the 3.30% to 3.70%. I'm just wondering is that commentary more on a 2012 full year basis or about just "where it could get to in -- by the end of the year" type of comment. I'm just wondering. Just trying to understand the magnitude of compression that you think you might see as we look ahead to the next year or so.

It's first to point out that we do expect to see increases in net interest income even though the margin could show pressure. But the guidance as far as it could drop modestly or slightly below that long end of the guidance of the long-term -- into the guidance of 3.30%, more is a reflection of the fact that we're at a 3.34% for the current quarter. We think there will be continued pressure just because we don't want to extend the duration of our investment portfolio in this low rate environment and we want to make sure that we're managing that risk position appropriately.

Your next question comes from the line of Erika Penala with Bank of America.

Steve, I know you alluded to this a bit on the call but we're quite aware of what the national banks are doing with regards to checking fees. But I guess, give us a sense on what your regional competitors are doing and whether or not they are being thrown for a loop by the Fair Play banking strategy?

Erika, it's hard to project what they're doing. We've got a rearview mirror focus but I would say there's generally an effort to try to make up some of Reg E and Durbin. And you'd have to look at that bank by bank to see how they're doing it, and some of it is obvious and some it sort of -- what I call junk fees that are just getting added in like an ATM lookup -- balance lookup fee, things like that, none of which we're doing. And all of which sort of worked for us in this Fair Play philosophy much like that more commonly known, Bags Fly Free thing from Southwest, has resonated. And we expect that will continue and our growth in terms of competition, we believe it has some runway, undefined to have some runway yet. And we intend to be driving aggressively and try to foreshadow that in terms of the expectations of households and business unit growth in the near term.

And my follow-up question is around capital distribution. Do you get a sense that being part of the CCAR might limit your flexibility despite your strong lower Tier 1 common ratios with regards to near-term distribution?

I think the regulatory environment and the Fed in particular, will look at the city bags as a class going forward. And being the midget in the room, it will still put us in the room. So we have -- we're going to go through the CCAR process, first time, which we outlined in the release. And unknown, prospective that they're going to conjecture on our part to take some kind of extended view comment right now, but our capital plan will be holistic in terms of uses of capital and we're trying to be efficient in our use as you saw at the auto securitization and our outlook for continued securitizations.

And have you disclosed, over the long term, where you'd like your total payout ratios to be taking into account those potential dividend increases and reinstatement of a buyback?

We haven't disclosed that and it gets -- we have an organic growth dynamic, Erika, that we're also conscious of it. And at the moment, in some respects that, it appears to be accelerating, and we clearly want to continue that and fuel it. And then separately, from time to time, it could be an acquisition here and then -- so the standard uses of capital, we're working through all that, we'll work that through with the Fed and seek out process.

Your next question comes from the line of Craig Siegenthaler with Crédit Suisse. Craig Siegenthaler - Crédit Suisse AG, Research Division: Just looking at Slide 27, if you look at 30- to 89-day delinquencies x the guaranteed Ginnie Maes, delinquencies look to be basing and increasing. Then if I turn the slide over and look at even commercial Criticized loans inflows, they also kind of peaked up in the quarter. I know you gave a little bit of color on here but is your outlook for additional improvement in early stage credit quality, unique here is the next few quarters? And is this kind of in your terms, a seasonal hick up? I just kind of want to hear your outlook and some of these earlier signs?

Yes, I think on the consumer side, I do think that as I've mentioned with this, you take the securitization out and we basically have flat and Reg E was down a little bit, home equity was up a little bit, so I don't -- we're not troubled at this point but this is a trend. We think that there'll be modest, continued improvement there. Similarly on the commercial side in terms of new inflows, obviously, I can't argue with the numbers. Inflows were up. However, there were a few events in the quarter that boost that number up higher than what we think is just normal downgrade activity and therefore, we're watching it closely, but feel that -- don't feel that, that is necessarily the beginning of a trend either. So we're on top of it. We feel pretty good about where we stand today and again on the commercial side, as I mentioned, we think there's negligible loss content in the new inflows. Craig Siegenthaler - Crédit Suisse AG, Research Division: Okay and then just a follow up, on the $1 billion auto securitization, I was wondering if you give us a few details on the structure. So I was kind of looking for what was the aggregate size of the equity tranche or the residual and then how much did you retain? And then also, under what circumstances would Huntington be able to consolidate some of the more senior tranches back on its balance sheet?

Great question. As far as securitization and whether the $1 billion, the residual interest, represented about $28 million of $1 billion. It was solid proof that we retained 0 of the securitization. Now we do have a mere pool of assets, which represents 5% of that balance that we do keep on our balance sheet. And it's more a response to be expected regulatory guidance as far as how to keep a similar retained interest but do not have any expectations at this point in time that, that would come back on the balance sheet. But we do have the opportunity once it narrows, I believe, to less than 5% of the outstanding balance as -- we might have an opportunity to repurchase, but that'll be a probably a minimis cleanup type of transaction.

Your next question comes from the line of Brian Foran with Nomura.

Actually, I want to follow up to what you just said. So as -- if going forward, let's say, there was a big drop in the Manheim in one quarter that affected auto valuations. With the $15.5 million gain ever be subject to a true up our is it just once you booked the $15.5 million, it's booked and there's no risk of a true up going forward?

There is no risk there as far as that true up. We do have a servicing asset on our balance sheet but it's slight and we'll continue to value that over time but there is no risk to recapture that $15 million.

And then I missed the beginning of the call, so if you already went over this, just stop me. But in the mortgage business, on origination and gain on sale, most of the banks seem to be down 20% on origination and almost flat on gain on sale margin, maybe, down a little bit year-over-year. Whereas -- as your business has shrunk more than that, is that -- was that a conscious decision or did you pull back from some geography or I guess why origination is down so much and gain on sale down further still?

On a year-over-year basis, we did have a much stronger origination volumes in the third and fourth quarter of last year that the 3 quarters this year are all fairly consistent. As far as originations ranked from $916 million in the second quarter, then $953 million in the third quarter. We did not change originations or locations or any other sources to the extent that our book today is primarily retail source. From our MROs, and it doesn't have anything in the way of our third-party sources that started the originations stream.

Do that -- I mean, I guess does that imply that going forward, when refi goes up and down, we should expect your originations to not move as much? Or I guess, I'm not clear why originations will only be up whatever, it was 5% quarter-over-quarter when a lot of the other banks saw much bigger increases on a linked-quarter basis from the refi boom?

I'd say we're trying to maintain or manage our pricing there to -- that delivered the bottom line for us, but we probably will see a little less volatility than many of our peers from that perspective. Let's say, application volumes are up significantly and so we should see some higher origination volumes sort of fourth quarter based on that pipeline, but probably not as volatile as many of the peers might show.

Your next question comes from the line of Paul Miller of FBR. Paul J. Miller - FBR Capital Markets & Co., Research Division: Yes, I also missed the beginning of the call, on your loan growth, can you talk about what industry -- if you already addressed this, I apologize guys. But on your loan growth, I know you're mainly -- Ohio or Michigan, what state is doing better versus the other? We hear Michigan is doing a lot better, and I think a lot of people expect it. And then what industry seems to be doing very well up in that area?

This is Dan. I think the -- industry-wide, the new originations, really, are coming -- they're very much in line with what our typical portfolio distribution is. Manufacturing has served us very well. You're right. In Michigan, the auto suppliers have -- they're now healthy. We've had the fallout of the weak players and the survivors are quite strong, and so we've been very interested in that market. But if you look at the new originations compared to our overall portfolio, you would see very consistent numbers, and that would be whether you're looking at business banking, middle market or a large corporate, you would not see a big change. Now we are targeting certain business lines. Obviously, our large corporate has gotten up to speed over the last year. More activity in ABL, equipment finance and so forth, but we have good organic growth coming out of the middle market both in all our regions but I would say, Ohio and Michigan particularly. Paul J. Miller - FBR Capital Markets & Co., Research Division: And then on the acquisition front, I believe that -- a couple of questions on, would you extend your footprint on the Auto. Is there any other areas you'll be -- you expand your footprint in? You've some other companies getting equipment leasing or other asset type classes. Is there any plans to expand in those areas?

We have -- we made investments in late '09 and '10 in equipment finance and in large corporate. We're generally set at this point. Paul J. Miller - FBR Capital Markets & Co., Research Division: What about -- you said -- and then on the M&A front, you haven't really -- a lot of people predicted a lot more M&A than we're seeing out there, and I think it's because the bid/ask prices are so wide apart. Are you getting any inquiries from small local guys that maybe want to get out of the business because of overregulation or is it still pretty quiet out there?

We are getting inquiries. They don't quite phrase it that way but there may be a little bit of fatigue and angst about combination of reinvest challenge concentration risk issues, regulatory activity, including pending Dodd-Frank impacts. But it's -- there is a -- I would say that generally still a bid/ask call. And yes, we grow every quarter now what we used to grow a year in terms of consumer checking households. In 2010, we have 30,000 household growths, we're doing that in a quarter. And so we're going to keep driving the machine organically and hopefully, aggressively. And if something comes along that makes sense or right price, we'd look hard at it but it would have to be on our terms.

Your next question comes from the line of David Long with Raymond James. David J. Long - Raymond James & Associates, Inc., Research Division: Looking at the third quarter, you had almost $2 billion of core CDs mature, and I was curious as to when in the quarter most of those may have matured, and then where did they go, what type of yields would they have been reinvested in?

Great question, David. We did have about $2 billion maturity, and the average rate on that maturity was 2.63%. It's interesting each of the month throughout the third quarter that average rate for that maturity bucket increased to where in the third quarter -- third month of the quarter September, it was over 3% kind of rate for that. So we really haven't seen a lot of benefit from that repricing in the third quarter that we will see in the fourth quarter. The average go-to rate for our CD originations was under 70 basis points. I think it was around a 165-basis-point range and tended to have around a 2-year average duration to it.

As you look at the -- as you look forward, David, at sort of our cost of funds and compare us to other regionals, we have some pricing opportunity in the portfolio and some of that'll come through a change in mix and some of it is probably of an opportunity within the class. David J. Long - Raymond James & Associates, Inc., Research Division: Right, so you had mentioned a formal initiative to lower the cost of funds and the impact would be more visible in the fourth quarter. On the initiative, is that separate from the CDs maturing? And then what may have been the impact in the third quarter versus what we can see in the fourth quarter?

I would say it's part of it. I'd say that later in the third quarter, we would implement it a little bit more later in some of the pricing strategy and so our go-to rates or our time deposits are lower now today than what they were throughout most of the third quarter. We've also had some similar efforts on the money market, deposit pricing. And toward the end of the quarter, we also started to see a lot more benefit from some of the commercial relationships bringing in some additional balances to their existing relationships, which help to drive the cost down. So I think it will be a part of the overall effort.

Your last question comes from the line of Andrew Marquardt from Evercore Partners.

Can you just help me understand on the credit quality, NPAs and net charge-offs should continue to decline, but how should we think about provisions, should that match charge-offs from here on or should we continue to see reserve release?

I think we've pretty much if you look at our level of provision, that's pretty much at a kind of core level, what we would expect to see on an ongoing basis. It may move quarter-over-quarter a little bit, but I think we're generally in the range. And I guess that there might be a little bit of movement but that's based on quarterly developments. But...

But does that imply, actually maybe, if charge-offs can see the decline that reserves would actually build from here?

Well, I think right now we have very strong coverage levels and the portfolio is improving. So I wouldn't necessarily see a build, no. But we have a lot of -- when we have periods of a lot of volatility like the third quarter, we talked -- I mentioned briefly, concerns with Europe, concerns with change in confidence as a consequence of the debt issues in Washington that we're going to be prudent. We're going to be conservative with our views on risk.

Got it. That's helpful.

Thanks Andrew.

And then lastly, pretax, pre-provision earnings, any sense of how that should trend from here. It came in a little bit lower than what you were looking for obviously. Last quarter, should it hold at kind of the $240 million level or should it kind of continue to drift down because of the Durbin and other things near term?

I would say that it's a little lower than what we probably would have thought coming into the quarter but it's more reflective of some of the costs that we have talked, whether it's a conversion cost or some of the other items that caused that to be slightly lower than expectation. As far as the impact, what we talked about, our guidance shows that we do expect the Durbin impact to have about a $16 million reduction to fee income that we think offsetting that will be continued modest improvement in net interest income. We think we'll see continued improvement in other fee categories like deposit service charges were up $4.5 million this past quarter. And we think the expense levels absent the conversion type of cost will return to more normal levels. So we think that those efforts will offset the impact of Durbin.

So this is probably a good run rate for now until kind of the macro improves, is that fair?

I'd say, generally that's in line with expectations, but just because of the challenge that you talked about whether the macro economic outlook or interest rate environment overall.

Okay. This is Jay Gould. I want to thank you all for participating in the call today. If you have further questions, feel free to call me as you always do. We will see you next quarter. Thank you.

This concludes today's conference call. You may now disconnect.