Beth E. Mooney - Chairman, Chief Executive Officer, President, Member of Executive Council, Chairman of Executive Committee and Member of ERM Committee Jeffrey B. Weeden - Chief Financial Officer, Senior Executive Vice President and Member of Executive Council Christopher Marrott Gorman - President of Key Corporate Bank and Vice Chairman of Keybank National Association William R. Koehler - President of Key Community Bank William L. Hartmann - Chief Risk Officer, Senior Executive Vice President and Member Executive Council

Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division Stephen Scinicariello - UBS Investment Bank, Research Division Marty Mosby - Guggenheim Securities, LLC, Research Division Leanne Erika Penala - BofA Merrill Lynch, Research Division Michael Mayo - CLSA Asia-Pacific Markets, Research Division Matthew D. O'Connor - Deutsche Bank AG, Research Division Craig Siegenthaler - Crédit Suisse AG, Research Division Bryan Batory - Jefferies & Company, Inc., Research Division Gerard S. Cassidy - RBC Capital Markets, LLC, Research Division Michael Turner - Compass Point Research & Trading, LLC, Research Division Andrew Marquardt - Evercore Partners Inc., Research Division

Good morning, and welcome to KeyCorp's Third Quarter 2012 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Chairman and Chief Executive Officer, Ms. Beth Mooney. Please go ahead.

Thank you, operator. Good morning, and welcome to KeyCorp's Third Quarter 2012 Earnings Conference Call. Joining me for today's presentation is Jeff Weeden, our Chief Financial Officer, and available for the Q&A portion of the call are the leaders at Key Corporate Bank and Key Community Bank: Chris Gorman and Bill Koehler. And also joining us for the Q&A discussion are our Treasurer, Joe Vayda; and our Chief Risk Officer, Bill Hartmann. Slide 2 is our forward-looking disclosure statement. It covers our presentation materials and comments, as well as the question-and-answer segment of our call today. Slide 3 provides some highlights on our third quarter. Our results underscore the company's sustained drive to increase revenue, reduce cost and grow the franchise. We recorded net income from continuing operations attributable to common shareholders of $214 million or $0.23 per common share this morning. Revenue for the quarter benefited from a 6% improvement in net interest income, driven by 17 basis point increase in the net interest margin and continued loan growth. C&I loans rose for the sixth consecutive quarter, and we surpassed our commitment to lend $5 billion to small businesses with up to $20 million in revenue, 2 years ahead of schedule in this quarter. Home equity loans reached their highest level in recent years, in part due to our successful borrowing campaign we have launched. On the cost side, we are on pace to reach our targeted annual expense reductions of $150 million to $200 million by December 2013. These efficiency initiatives will lower Key's cost structure to align with the current operating environment and should improve the company's competitive position in its markets. During the quarter, we took steps to enhance our franchise, our product offerings and our profitability. We re-entered the credit card business by acquiring a…

Thank you, Beth. Slide 6 provides a summary of the company's third quarter 2012 results from continuing operations. As we reported this morning, the company earned a net profit from continuing operations of $0.23 per common share for the third quarter compared to $0.23 for the second quarter of this year and $0.24 for the third quarter of 2011. There were a number of moving parts this quarter that Beth touched on in her remarks that impacted our results. First, we completed the acquisition of the branches in Western New York. Second, we redeemed $707 million of trust preferred securities. Third, we reacquired our Key-branded credit card portfolio. Fourth, we terminated 2 additional leverage leases. And fifth, we implemented new regulatory guidance on how we were handling certain credits involved in Chapter 7 bankruptcies. I'll cover how these events impacted our results in more detail in the following slides. Turning to Slide 7. Average total loans for the third quarter were up $1,249,000,000 or 2.5% unannualized compared to the second quarter of this year. Included in this amount was the impact of the loans acquired with the Western New York branches of $223 million and our Key-branded credit card portfolio of $473 million. In addition to the acquired loans, we also continued to experience growth in our C&I and home equity loans. Our period-ending loan balances were higher than average loan balances by $724 million, which should bode well for growth in our fourth quarter average total loan balances. And our exit portfolio declined $375 million during the third quarter. The reduction in the exit portfolio was both from normal amortization and the early termination of leverage leases. On a period-end basis, our exit portfolios from continuing operations represented less than 6% of total loans at September 30, 2012. Continuing…

[Operator Instructions] And we will take our first question from Steven Alexopoulos with JPMorgan. Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division: I wanted to start -- this morning, Huntington, in their earnings release, they said they saw a broad-based change in customer sentiment late in the quarter, talking about uncertainty over the economy, issues like the fiscal cliff. Are you guys seeing this shift in your customers as well? And do you expect this to impact growth over the near-term?

Sure, Steve. It's Chris Gorman here. We are. I was just out with our leasing folks, which I think is a pretty good forward look, and clearly, we have seen a slowdown in terms of, for example, equipment purchases. I think the fiscal cliff, the election, I think all these things play into it, but right now, we have -- backlogs are strong, but I do think there is a fair amount of hesitancy out there in the marketplace in the business community.

And I -- this is Bill Koehler, sorry, Steve. I would agree that as we look at middle market and even in our business banking, smaller businesses, we would see the same amount of cautiousness, I guess, as we go forward. Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division: Okay, that's helpful. Just a follow-up. Following the news of QE3, and we’re seeing MBS yields come down, we're seeing quite a few banks get even more aggressive on deposit repricing. We're seeing money market products that we thought where floors go even further. As you guys look at your deposit repricing strategy, are you putting even more aggressive reductions in there, right, particularly as all these high-cost CDs roll off?

Steve, this is Bill again. We have not been any more aggressive. We believe our relationship strategy helps us attract good customers at deposit levels, at pricing levels that make sense, and we have maintained a very consistent pricing strategy in the market.

And we'll take our next question from Steve Scinicariello with UBS.

A couple quick ones for you. Just as you guys look to continue to improve the payments platform, I know you brought in the Key-branded customers, the $725 million of receivables. I'm just kind of curious, what kind of revenue opportunities do you see and potential for growth in that portfolio that you might have going forward, if you could give some color on that?

This is Bill again. Thanks for the question. We feel very good about our credit card acquisition because it broadens our product offering in a way that is very consistent with the way clients are choosing to behave in the market, and we can also fold it into our relationship awards platform. So whereas prior to the acquisition, we had a debit card strategy and that was impacted by Durbin, here, we can offer a more -- a broader product offering that give our clients more choices, and early days, everything is moving according to plan.

And Steve, I would just add that, as Jeff mentioned in his comments, that it did create a more favorable asset mix on our balance sheet, as well as strong economics from the use of those credit cards. This was part of our Durbin mitigation strategy. And when you couple that with the realignment and the more efficient platforms we have done underneath on the cost structure, this is a big step forward for us as we replace some of the impacts of the governmental price controls.

Definitely, and so we should expect that and those balances to keep growing as we look ahead then, right?

We're early days -- this is Bill again, early days. We are pleased with the results we are seeing.

Okay. Good. And then just my last question, just in terms of some of the franchise improvement and optimization that you guys referenced in the beginning of the call, I’m just kind of curious in terms of the timing of maybe some of the pruning of some areas or, like you said, consolidating or optimizing some of these things. What's kind of the pace that we should expect as we look ahead?

Steve, this is Beth. We will keep you updated as we go through. We did indicate that we have made progress on what we had targeted of $30 million to $50 million of our total goal this year, and I think we announced that we have closed 16 branches in the third quarter, and we have another 3 scheduled for closure in the fourth quarter. We have consolidated some of our back rooms. We have worked to reduce our staffing levels, and we've continued to look at our procurement and vendor relationship. So as we go into the end of the year, we feel good about the $30 million to $50 million that will be coming through in our 2013 run rate and have plans and implementation strategies in line of sight to be $150 million to $200 million by the end of 2013.

Steve, this is Jeff Weeden. Just to give you a little bit more in terms of some proof points on it also. If you remember, last quarter, we talked about some of the things that we had entered into and specifically in our Real Estate Capital line of business. You can see that starting to really show up if you look at the line of business reporting, and it's on Page 28 of the earnings release this morning. You'll see that FTE count is down in that particular area, and deposits are up. So we said it was a combination of what we were also going to be able to do on the cost side, but also looking at what we had to do on the revenue side. So it's a combination. When we talk about it, it's just not about costs. It's also about revenue enhancements and improvement and improving the overall profitability. So the numbers are coming through in various lines of business, and we're making reinvestments also just as we talked about in card or the branches in Western New York.

And we'll take our next question from Marty Mosby with Guggenheim.

Beth, I wanted to ask. You had mentioned that one of the most strategic kind of paths, which given the excess capital that you have, is the deployment of your -- of that excess capital. Can you give us some prioritization in the sense of how you really want to take that capital and put it to work? And also give us kind of a third dimension of time and a sense of how fast do you want to get it back and/or will you hold some back for some strategic use down the road?

Marty, thank you. We have talked about our capital priorities and said that, obviously, our level of capital, we believe, is a competitive strength in the coming years. And as we've talked about our priorities, clearly, our first 2 priorities -- our first priority is to support our own organic growth of our business model, and you have heard in this quarter, we utilized some of our capital for the purpose of branch acquisition and the credit card portfolio. From there, we prioritized dividends, and second, from there, would be the repurchase of our shares underneath the CCAR process at these attractive rates that our stock is trading in the market. And as you correctly pointed out that, fourth, you would always retain some level of capital to create flexibility for strategic opportunities to enhance the franchise and grow the business over time.

And just one more question about this credit card acquisition. We're seeing this happen more often within the kind of superregional bank group, where, in the past, we had so much loan growth. We were crowding out some of our assets. Now that we have all the deposit funding, we're kind of looking back and pulling some of those assets back on the balance sheet. But if you also look at in a sense of the debit card pressure that we have for the regulatory change and then on the flip side, you have the HELOC product that's under so much capital pressure. Do those things just kind of push us right back into this credit card business? And then lastly, how about the operations of bringing the portfolio back on the balance sheet? Is there any challenges there?

Marty, I'll take a first pass at that, and then I'll let Bill or Jeff add if they have some additional thoughts. But in terms of bringing the credit card balances back on, one of the big drivers, I think, for all the regional banks has also been the ability in the cost infrastructure to actually service those cards is dramatically different than it was 10 years ago when many of us exited the business. And it fits more fully with relationship strategies versus the days when it was more of a mono-line product. So we see it as attractive client relationship, honing that client experience, as well as attractive client economics. So we view it as a good augment to our payment platform, as well as our client experience, and have plenty of room within our balance sheet for good relationship loans to include equity and card. I don't think we have any further comments.

And we'll go next to Erika Penala with Bank of America Merrill Lynch.

My first question, I just wanted to make sure I understood your guidance correctly for expenses. If we run rate the $734 million that we saw this quarter, I get $2.9 billion, and then I take off the one -- the midpoint of your guidance, and I get to 2.76 run rate for next year. Can you -- is that, a, the right way to think it? And b, could you keep it that flat and to that level? In other words, is the expense program or the expense savings that you mentioned net of any sort of core investments that you'll make into next year?

So this is Jeff Weeden. We're going to continue to make investments, and I think we talked about that earlier, and I made that in my prepared remarks too, is that we will continue in this path, down this path. There's a lot of things that we have to -- all of us do in the banking industry to meet all the due updated regulatory requirements. And as we're going through and improving the overall efficiency and effectiveness, we're continuing also to invest in our businesses, and so I think you're seeing top line revenue growth also is what we're driving for. So we're targeting a 65 -- a 60% to 65% efficiency ratio. That's one of our targeted items. Now to get there, we have to have expense reduction and also revenue growth. And one of the things that we are keenly focused on is reducing costs where we can reduce costs. So we haven't given a specific target for the absolute run rate of expenses for 2013 at this particular juncture. What we have talked about is reducing our costs from where we were. You have to add in, which is why we tried to show some of the waterfall effect here when we talk about it, add in what we're making reinvestments on and what those reinvestments are for going forward.

Erika, Jeff referenced the waterfall, and that is on Page 10 of our slide deck, and I think it will help you understand some of the dynamics of the $734 million for this quarter.

Okay, yes, and on just -- on the -- I appreciate the guidance that you gave for the fourth quarter on the margin. Looking at the average the balance sheet, I appreciate the commentary on deposit costs, but it still looks like there could be some wood to chop on the wholesale funding side. I guess, could you give us a sense of what the opportunities could be in terms of either the maturities of debt or maybe calling some debt to help support the margin into 2013?

Okay, so this is Jeff Weeden. What we have provided guidance on again was for the fourth quarter. We'll update our guidance for 2013. We continue to have maturities of CDs. Here, we talked about the $540 million in the fourth quarter. We'll have additional maturities in 2013, but they go down dramatically. So while we've been running close to the -- we had $1 billion in the third quarter. We’ve had $500 million here in the fourth quarter. They start to drop into the $200 million to $250 million per quarter going forward. So the entire 2013 time period, basically, the higher-costing CDs are about $1 billion left [ph]. I think when we look at our debt, we have additional debt maturities next year, but they're not that significant at this particular point in time. And in 2013, we have $750 million that matures in the May time period next year. So there's not a lot of additional debt maturities, and I think the other thing that we're constantly looking at is what do we need to have for a level of debt that's outstanding also to support just long-term liquidity of the balance sheet. So these are all the different things that we're looking at. We'll provide additional guidance as we get into next year. We think we're well-positioned at this point in time. The credit card portfolio is only on for a partial quarter at the -- in the third quarter. We'll have the full quarter benefit of it. You'll see that in the average balances for what we talked about. I think it's about $773 million over the average -- or the ending balances. If you look at the average balances, they were basically in that $470 million range, so significantly different. We'll get about $300 million pickup there in terms of balances at a much higher yield.

And we'll go next to Mike Mayo with CLSA.

The card acquisition and branch acquisition that must have added to expenses in excess of the one-time charge, what was that number?

Okay. So what we have on an ongoing basis, if you -- on Slide 10 in our deck, we tried to point this out. So the $16 million that we incurred in the branch acquisition, Mike, of that, we had $8 million of one-time expense, and we also had $2 million of amortization of the core deposit intangible that was embedded in that. So about $6 million were the ongoing costs. If you look at the card portfolio...

Before you leave the branches, so another -- just the cost of running branches goes up $6 million due to the acquisition?

Cost of -- roughly, yes.

In other words, other than the one-time, the permanent step-up in expenses due to the branch acquisition would be $6 million?

Approximately, yes. And then if you look at the card portfolio, we have the ongoing costs associated with the processing of the cards, and we also have embedded in that are the purchased credit card receivable amortization. In the third quarter, that number was $6 million, and it will increase in the fourth quarter as we have an entire quarter. So it will go up approximately $2 million. So on a quarterly basis, the $6 million will go to approximately $8 million going forward, and then we have just our normal processing costs that go along with that particular card portfolio in addition to other services.

So all I'm trying to get to is if you hadn't done these acquisitions, how much would your expenses have gone up?

If we hadn't done these acquisitions, compared to the prior quarter, expenses would have been down.

Down how much?

Approximately $6 million.

Okay. So core expenses then are down $6 million, and doing the same logic, if you hadn't done either of these acquisitions, what would have happened to the margin?

Well, it’s very dynamic, Mike. I think as you look at it, we use the deposit funding here to really offset the maturities that we had in terms of the $707 million worth of trust preferreds. We also had additional debt maturities of about $650 million during the third quarter that were outside of the calls, and then on top of that, the investments of -- in terms of the card portfolio. So it was really used to help fund that particular investment, along with just lower levels of investment securities. So the balance sheet changed on the asset side, as well as the liability side.

However you want to look at it, but the margin was up 17 basis points. If you hadn't done these deals, in your estimate, it would have been up 10, 5, flat, down?

Well, our -- in our analysis that we talked about, it probably would have been up about 10 basis points without the -- without it...

And the loan -- okay, and the loan growth, what would loan growth have been without these acquisitions?

Loan growth, we still would have had very strong loan growth on the C&I book, and so we've really given the breakout of the overall loan growth without it. I think we were up about 1.1%, excluding the acquisitions, but that's because a lot of this -- that's on an average balance basis, Mike.

Right, okay. And NII, if you hadn't done the deals?

Net interest income, if we hadn't done the deals, I guess, I don't have that number right off the top of my head, Mike. We'll have to do the math on that.

Okay. That's -- my big question is, I recall -- or maybe if you can just talk about the history of KeyCorp in the credit card business because you have to appreciate over the last 2 decades, KeyCorp has expanded its product line many times only to contract. I recall, 1997, KeyCorp sold off some credit cards, and what I just don't understand is how KeyCorp has the capabilities and the portfolio to compete with the likes of a J.P. Morgan, American Express and Capital One and others that have made huge investments in brand, loyalty and partnership. So KeyCorp getting back in the credit card business, I'm sorry, it's a little bit déjà vu, and I'm just wondering if that makes sense. Clearly, you've thought about this long and hard, and what can you say to reassure those of us who've been around for a while and seen a few of these cycles?

Mike, this is Beth. I'll go ahead and take that. I do think the credit card industry and the ability for regional banks to compete in the credit cards space as a relationship product is very different than it was 10 years ago. I made reference to that in an earlier answer that I provided. We look at to this as an augment to our relationship strategy. This product offering will be embedded in our relationship rewards, which is our primary account offering right now for our mass affluent client base, and the underlying cost structure, as Jeff said, we can outsource the processing of that. So it's a volume variable expense for us so that we have created a nice profitable spread by reentering. So this is not a business line that we intend to re-embark as a growth strategy for client acquisition or a lead product. We see it as a complement to our existing portfolios. Many other regional banks have also gone back into this, and we can own and control the client experiences. We've offered cards but through a white label relationship. So this client base also has, as we -- on August 1, when we announced this transaction, had substantial deposits and investments with us and loans. So this is a well-seasoned and mature set of clients that we acquired.

And then last follow-up. I ran over to our credit card analyst, and I said what you were doing. And he said that the key to the credit card business today is what makes them sticky -- the most sticky is the rewards that you offer as opposed to the issuer, as opposed to being KeyCorp, the offer you present to them. So how is your credit card offer going to be strong enough to be sticky so that the other credit card players with enormous scale don't pull them away?

I'm going to let Bill Koehler augment that. But as I said, we are embedding this into our Relationship Rewards program that we have with our client base. We have already got a very strong relationship rewards. And a year ago, when Durbin was enacted, one of the things Key did that was differentiating in the market space was we reaffirmed and relaunched our rewards, and this was a product gap. And, we, obviously, as we looked at our Durbin mitigation strategies, reacquiring that card portfolio, putting it in our existing relationship reward product to make it more robust, get the attractive client economics, the attractive usage economics, as well as being able to process it on a variable cost basis, was a significant part of our strategy to mitigate Durbin.

[Operator Instructions] We'll go next to Matt O'Connor with Deutsche Bank.

The C&I growth was quite strong this quarter, and frankly, we're seeing slowdowns for most other banks, and I'm just wondering what is driving that. You mentioned some of your real estate lines of business within the broader C&I bucket, but maybe a little more detail in terms of what's driving that. Is it chunky? Is it broad-based? And then I think you had said the pipeline at the end of the quarter looked pretty good. So a little more flavor, going forward, as well, please?

Well, Matt, it's Chris. I think what's driving it is our strategy enables us to really take share. For example, in the corporate bank, in terms of new clients of this year, we have 450 new clients that have generated around $63 million or so of revenue. And so while there are some challenges in the marketplace, and I think there's a lot of concerns out there, we do see ourselves continuing to take share. The other thing that I would remind you of, of course, is that our business model -- 54% of our revenues are noninterest income. So that gives us, we think, a lever that's a little differentiated from some of our competitors as well.

And I would add -- Matt, this is Bill. I would add on the smaller end, what we've seen throughout the year is a general trend of smaller companies getting stronger and having an opportunity to strengthen their balance sheet, strengthen their business, and although it's smaller dollars in terms of its impact on the whole, we have seen our loan volumes in business banking migrate up and our pipelines remain consistent as a result.

And Matt, this is Bill Hartmann, just maybe to add a little bit to what Chris and Bill have said. We've actually seen pretty good growth across the geographies and across our major segments of business. This is the result of a lot of effort that went into identifying who the customers were that we wanted to do business with and then decking bankers against those clients and understanding what our appetite for risk was and then just going out and executing. So it's a concerted strategy against the defined customer base.

And was there anything in particular that happened this quarter where, again, it just seems like you had an acceleration of growth versus deceleration for others? And sometimes, these initiatives and efforts take a while to bear fruit, but they just kind of all come together at once? Or there's always some puts and takes, and this quarter, it kind of all went in the same direction?

So, Matt, it’s Chris again. There's always -- it's always a little bit lumpy. Here, in the corporate bank, we, on a quarter-over-quarter basis, we were up about 1.9%. That would compare to, say, 11% over the last year. So there was really nothing particular in this quarter that was any huge piece of business. But what we do see is, Bill Hartmann mentioned, the notion of being very targeted in certain industries and knowing exactly who we want to do business with. We've been at this pretty hard for a couple of years now, and we are getting our shots with our targeted customers, and so that's really what’s driving it.

And Matt, as we looked at the quarter, one of the things we did say in our second quarter call is that we went into the third quarter with solid and strong pipelines, and some piece of what we talked about was what was going to be the pull-through rate because it really was based in client and business sentiment. And so to your question, is this episodic or is it the trend, I think it was the pull-through of a strong pipeline into the second quarter, broad-based, geographically from a client base and reflects our targeted relationship strategy. And as we said, we are taking share. There is a lot of new client acquisition that is, on average, better credit quality and has more revenue associated with it in many ways than our average loans in our current book.

And we'll go next to Craig Siegenthaler with Crédit Suisse. Craig Siegenthaler - Crédit Suisse AG, Research Division: Can you provide us some perspective on capital deployment here? Just looking how high your capital levels are versus peers and regulatory ratios, and that's not really that new. But I'm wondering if you can provide us any perspective on how capital deployment could potentially change into next year or in the future, given -- kind of given your conversations with regulators?

Craig, this is Beth. As you know, we are at the front end of the 2013 CCAR process and really have not yet received the guidance from the Federal Reserve on scenarios they want to use. And so, we, like the other banks, who can comment on any near-term capital actions, it will be subject to our CCAR submission this year. And clearly, we enter that with a strong level of capital, and we're pleased this year that we were able to pass through a dividend increase, as well as a share repurchase program for this year. Craig Siegenthaler - Crédit Suisse AG, Research Division: Okay. And then maybe turning over to reserve balances, on a dollar basis, it looks like they've stopped falling here. Your loan growth is positive. That's one driver. I'm wondering if there's any regulatory pressure on the other side. How should we think about reserve-to-loan ratios because it's still the -- on that base, it still declined by a little bit, but should we expect it to decline further, potentially under 15?

Well, I think what we have to look at is -- this is Jeff Weeden. Each and every quarter, Bill Hartmann's area and the risk management area go through and build up the overarching reserves. So it's going to be -- it's going to depend upon the credit migration and overall quality, the size of the portfolio, and it has to be built up in that particular regard. So we said earlier this year that we expected to see charge-offs continue to come down. Now in the third quarter here, we had the regulatory adjustment that took place that it was an industry-wide event. That added to our provision and charge-offs about $45 million in the third quarter. We don't expect that to continue into the fourth quarter. So our long-term target of 40 to 50 basis points remains intact, and we said that provision expense would migrate towards our long-term targeted rate of net charge-offs. So in terms of reserve, I can't tell you, it may come down a little bit, may go up a little bit. It's going to depend upon how we build it up each and every quarter.

This is a Bill Hartmann. Just -- there's obviously been some press out there about, specifically, I think, the OCC, who has been talking about the level of reserves. If you read what they're really saying is they want to make sure that firms are diligent in the way that they document the level of reserves, and so we obviously have talked with them about the level of our reserves, and we're comfortable that we're showing the right level of reserves. Craig Siegenthaler - Crédit Suisse AG, Research Division: At this point, do you think reserves are more relevant relative to NPAs or forward charge-off expectations?

It's probably more indicative of forward charge-off expectations. And of course, you always have to have a degree of what might be the embedded losses in the loss confirmation period for the credits that you have on your books today.

If you look in some of the material in the appendix of the slides, there's a credit quality trends on Slide 19, and that gives you an indication of where things have been going.

And we'll go next to Ken Usdin with Jefferies. Bryan Batory - Jefferies & Company, Inc., Research Division: This is actually Bryan Batory from Ken's team. My question is on the CRE loan portfolio. So that's flattened out this quarter, actually showed a little bit of growth quarter-over-quarter. Could you just comment on some of the trends you're seeing there? And should this -- would you expect this to be the bottom for that portfolio, and we could actually see some growth going forward?

Sure, Bryan, it's Chris Gorman. There's a couple things going on in that portfolio. First of all, we talked earlier today about de-risking and making sure we're doing business with the people that we want to do business with, and there is still some planned and thoughtful run-off in that portfolio. The other thing that's been going on, Bryan, is our mortgage banking business had been quite robust, and obviously, that cannibalizes that portfolio to some degree. Having said all of that, we do think it's a bottomed out, and we do think it will grow modestly from here. Bryan Batory - Jefferies & Company, Inc., Research Division: Okay, and then, Jeff, typically, you give a pre-provision net revenue outlook on where you think you could run near-term. Last quarter, it was $290 million to $330 million. What would your near-term outlook be as we go forward?

Yes, Bryan, we're really not changing our near-term outlook at this particular point in time. We're still going through, and I think in terms of where that would be, it might be, again, $300 million to $330 million in that particular range.

And we'll go next to Gerard Cassidy with RBC.

Beth, in regards to your comments about the credit card portfolio, is there any way -- or can you point us to a metric that we outsiders can look at to determine the success that you're having with that portfolio or contributing to a higher ROE for this organization?

Gerard, I think the way we will realize the benefit of the credit card portfolio that will translate into, obviously, our returns is the revenue we receive from the balances, our ability to extend that into our existing client base with our Relationship Rewards, the transactional fees that we receive on the interchange, as our clients use those, coupled with a very, like I said, variable cost base and a well-performing credit profile, given that it is a well-seasoned portfolio. So it will be generally accretive to our revenue growth, as well as help us with client acquisition and broader client experience. So we see it as a positive to the performance as you look at how we are deploying our balance sheet and building revenue.

Gerard, this is Jeff. Near-term, of course, we have the amortization of the purchase credit card receivables that's going to be going through. So that runs through basically on a sum-of-the-months’ or sum-of-the-years’ digits basis. So it's much more front-end loaded. We have some of the accrete-able income that's coming in. It was about $5 million in the third quarter. It will be slightly less than that in the fourth quarter, and that part of it burns down relatively quickly. The amortization will continue on. So from a net P&L, in the very first year or so that we have of this, it’s not what I would call accretive to the overall bottom line because of that. It's really the long-term view that we have of the portfolio, and we've done all of our returns based on that.

And I would -- the other thing I would say, this is a Bill, Gerard, accretive to the client experience, that is the important thing to take away here.

As outsiders, because we hear this -- to the comments made earlier for the folks who have been following KeyCorp for a long time, we've heard strategies like this from other banks or could you guys -- some of our big banks have, obviously, the big credit card businesses, and they break it out separately, so you can really look at how successful they are. Any chance that you guys would break the credit card business out separately? Or is that just going to be engrained into the different banking lines, and we won't to be able to see it?

Gerard, this is Jeff. It's going to be embedded into the various banking lines. What we're talking about, starting off here, is a portfolio of about $0.75 billion. We will grow that portfolio over time, but that is probably not a "significant standalone line of business" for us. We also have our enterprise commercial payments, and that was part of our announcement too in July. So we talked about what we're doing on the merchant side of the business, and these are in -- and across the entire payment stream. So we are investing in payments within our company. But as far as breaking this one specific area out, that's probably not going to happen. We do break out on the margin analysis. You'll be able to see that. We'll break out additional line items, going forward, with respect to the fee revenue that comes from it, and so you could construct some type of a P&L from probably our publicly available disclosures on it.

And have you guys given us -- and I apologize if you already did it on the call, what the targets are for the size of this portfolio in 12 months and 24 months out?

No, we have not.

Okay. And then, finally, on the capital side of the balance sheet, you guys have a very strong Tier 1 common ratio, obviously, under Basel III. Assuming that the regulations, when they -- we get the final numbers in the spring of next year, hopefully, that 7% Tier 1 common ratio is the number everybody has to manage to, plus a SIFI buffer, and if we assume for a moment your SIFI buffer will be 50 basis points on top of that. So I'm assuming you're going to be required to carry 7.5% Tier 1 common, and you're obviously well above that. What level are you comfortable with in carrying if those are the rules, 7.5% is your bogey? And then second, how -- once you give us that number of your comfort level, how quickly would you move to bring that number down to that comfort level?

Gerard, I think, in terms of overall capital levels, it's something that we have discussions with our board on, as to what that level ultimately will end up being until we see the final rules, and the NPR is just out at this point in time. It's still in the comment period. I know it's supposed to end here, I think, next week. So we'll see where we ultimately end up with. Clearly, we have more Tier 1 common than we believe that is necessary and that we would like to deploy that. However, it's a deployment that takes place between the board, management and the regulators as to how that will be ultimately repatriated into the future or utilized.

And we'll take our next question from Mike Turner with Compass Point. Michael Turner - Compass Point Research & Trading, LLC, Research Division: On your about $17 billion securities portfolio, what's sort of the plan for that? It seems to be continuing to run off. I know a lot of the proceeds are being used to repay TruPS and CDs. And then also what are the reinvestment rates? And what's the -- remind me what the duration on that is.

Okay. Well, this is Jeff Weeden. The portfolio at the end of the quarter was actually between the available-for-sale and the held-to-maturity portfolios were down to about $16.1 billion. And so we're getting close to kind of the floor level of maintaining a portfolio of right around that particular size just for overall liquidity management, as we've talked about pledging, et cetera, what we will use that portfolio for. In terms of the duration, it's around, I believe, 2.1, 2.2 years at this particular point in time. We've provided a disclosure for it. I guess I could go directly to that particular slide, which is Slide 15. 2.3 years is the average life. And in terms of what reinvestment rates are and what rates are going off at. So the overall yield on the portfolio, combined, is about 2.78%. I think if you look at what comes off currently, it's fair to say it's coming off at around 3%, and new reinvestment yields at this particular point in time on the product that we structure in the marketplace is about 1.4% to 1.5%. Michael Turner - Compass Point Research & Trading, LLC, Research Division: Okay, thanks. And then just to follow up on expenses. Of the $30 million to $50 million you expect to realize at the end of this year, how much have you already booked through the third quarter?

We haven't disclosed how much we have booked already through the third quarter. I think though if you look some of the things that we have changed in terms of our shifting our FTE count around. So we've actually taken FTEs out of certain areas of the company. We've consolidated some of our operations. You can see that if you look at some of the specific line of business information I was pointing to on Page 28 of the press release. Those items have already taken place, and we've continued to work on overall occupancy costs, and we are continuing to invest, though, too in occupancy. And if you look at the third quarter, we added the 37 branches in Western New York. Those costs are on, yet occupancy cost remains relatively stable for us. So we're taking costs out. We're making reinvestments. It's a dynamic process that we're going through. We'll provide additional information as we get into the fourth quarter earnings call.

And we'll take our last question from Andrew Marquardt with Evercore Partners.

Just a couple of clarification questions. In terms of asset quality and credit costs, could you just clarify, this quarter, you had $109 million of provision, but that sounds like it included the $45 million from the change in regulatory reporting requirements, and then also some reserve build from the card and branch acquisitions of $32 million. So if we adjust for those, I mean, should we think the kind of a more normal kind of core run rate on provision being in the mid-to-low 30s? Am I thinking about that right?

In terms of basis points or in terms of dollars?

Dollars.

Dollars, so if you were to look at the third quarter, that's how you would have looked at the third quarter. It would've been in kind of that low-to-mid $30 million range. That's correct. And longer-term, we've said that it'll migrate closer in terms of basis points now in terms of -- to the 40 to 50 basis point range of charge-offs, which is where we're headed.

Okay. So coming -- but the base should be kind of -- we’re in that kind of mid-to-low 30s, and maybe migrating a little bit higher on a provision ratio basis. Is that fair?

That's where we were for the third quarter. Again, we don't provide that specific type of a guidance with respect to the level of provision because it becomes more problematic as you just look at the overall credit quality trends, which are continuing to show improvement, and again, I don't want to get in front of ourselves until we actually close the fourth quarter on out...

And Slide 11, I think, gives some good color and context on that, Andrew.

Thanks, Beth. And then just lastly, on the margin and also, obviously, the other drivers on pre-pre because the margin, obviously, is going to hold up for another quarter or so. But then it becomes maybe tougher in terms of less levers, in terms of liability, as you've noted next year. But is it possible, given the other initiatives, to improve your pre-pre from the kind of low-300s this quarter next year, just given still all the headwinds that you and everyone are facing?

So we provided guidance for the fourth quarter at this particular point in time. We'll update that guidance as we get into the January time period when we do our fourth quarter earnings call. I think it's fair to say that we have -- in heading into the fourth quarter, we feel very good about the direction of the overall margin. So in that 3 -- the low 330 area. I think as you look further on out and we start talking about all of 2013, '14, if the rate environment stays exactly where it is today, assets are going to be pressured. Liabilities will continue to reprice, but there's less levers that we're talking about there. So I think in terms of longer-term, the margins for the industry and for us will be pressured as we go further out the spectrum.

And then on pre-pre, you had said 300 to 330 was your goal. Can you remind us what the time frame is for that?

That's what we're operating in today. I mean, we are above that for the third quarter, but we had the trust preferred gains out there.

That was for the fourth quarter.

And there are no other questions at this time. I'd like to turn the conference back to our speakers for any closing remarks.

Thank you, operator. And again, we thank you for taking time from your schedule to participate in our call today, and if you have any follow-on questions, you can direct them to our Investor Relations team, Vern Patterson or Kelly Lammers, and their number is (216) 689-3133. And that will conclude our remarks for today. Thank you.

Thank you, everyone. That does conclude today's conference. We thank you for your participation.