Beth E. Mooney - Chairman of The Board, Chief Executive Officer, President, Member of Executive Council, Chairman of Executive Committee and Chairman of Enterprise Risk Management Committee Donald R. Kimble - Chief Financial Officer and Member of Executive Council Christopher Marrott Gorman - Vice Chairman of Keybank National Association and President of Key Corporate Bank William L. Hartmann - Chief Risk Officer, Senior Executive Vice President, Member of Enterprise Risk Management Committee and Member Executive Council

Robert Placet - Deutsche Bank AG, Research Division Erika Najarian - BofA Merrill Lynch, Research Division Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division Gerard S. Cassidy - RBC Capital Markets, LLC, Research Division Jennifer H. Demba - SunTrust Robinson Humphrey, Inc., Research Division Bob Ramsey - FBR Capital Markets & Co., Research Division Kenneth M. Usdin - Jefferies LLC, Research Division Keith Murray - ISI Group Inc., Research Division Sameer Gokhale - Janney Montgomery Scott LLC, Research Division Michael Mayo - CLSA Limited, Research Division Nancy A. Bush - NAB Research, LLC, Research Division Christopher M. Mutascio - Keefe, Bruyette, & Woods, Inc., Research Division Stephen Scinicariello - UBS Investment Bank, Research Division

Good morning, and welcome to KeyCorp's First Quarter 2014 Earnings Conference Call. This call is being recorded. At this time, I'd like to turn the conference over to Beth Mooney, Chairman and CEO. Please go ahead, ma'am.

Thank you, operator. Good morning, and welcome to the KeyCorp's first quarter 2014 earnings conference call. Joining me for today's presentation is Don Kimble, our Chief Financial Officer. And available for the Q&A portion of the call are Chris Gorman, President of our Corporate Bank; and Bill Hartman, our Chief Risk officer. Slide 2 is our statement on forward-looking disclosure and non-GAAP financial measures. It covers our presentation materials and comments, as well as the question-and-answer segment of our call today. Turning now to Slide 3. This was a good quarter for Key with solid financial results. We delivered on our commitments to generate positive operating leverage, to maintain strong risk management practices and to remain disciplined in the way we manage capital. Our positive operating leverage from the prior year reflects the work we have done to improve efficiency with initiatives targeted for both revenue and expense, and this becomes even more critical given the slow recovery and revenue headwinds that continue to impact our industry. Key's revenue in the first quarter was relatively stable with the prior year and down modestly from the prior quarter, reflecting normal seasonal trends and lower activity level. Revenue benefited from solid loan growth, which continued to outpace the industry. Loan growth was driven by our commercial, financial and agricultural loans, which were up $1.2 billion or 5% on annualized from the prior quarter. We have been pleased with the quality of our new loan originations, but we continue to see loan yields reflecting the competitive pricing environment. Noninterest income, benefited from areas where we have been investing, including credit card and payments and commercial mortgage servicing. We have also made significant progress on expenses, which were down $19 million or 3% from the prior year end -- prior year quarter and down…

Thanks, Beth. Slide 6 provides highlights from the company's first quarter 2014 results. This morning, we reported net income from continuing operations of $0.26 per common share for the first quarter. This compared to $0.26 for the fourth quarter of last year and $0.21 from the prior first quarter. I'll cover many of these results in my remarks, so let's now turn to Slide 7. Loan growth has remained a positive story for Key, reflecting our distinctive business model and more target approach, growth has, again, exceeded industry averages. Average total loans for the first quarter were up $1.1 billion or an annualized 9% compared to fourth quarter of 2013, and up $2.1 billion or 4% compared to a year ago quarter. Our growth was driven primarily by commercial, financial and agricultural loans across Key's business lending segments. Average commercial, financial and agricultural loans were up $1.2 billion or 5% on annualized and from the fourth quarter of 2013, and up $2.0 billion or 9% compared to the prior year. Period-end loans grew by 2% from the prior quarter. And in the first quarter, total commitments were up, and we saw a slight uptick in utilization rates. Our outlook for loan growth in 2014 remains consistent with our prior guidance of mid single-digit full year growth driven by CF&A. A change in the pace of the economic recovery could impact client demand and loan growth relative to our current expectations. Continuing to Slide 8. On the liability side of the balance sheet, average deposits were up $2.7 billion from 1 year ago and down $2.1 billion from the fourth quarter. Deposit growth of $2.7 billion from prior year was largely driven by higher balances from Commercial and Public clients, as well as increases related to the commercial mortgage servicing acquisition.…

[Operator Instructions] We have a question from the line of Matt O'Connor from Deutsche Bank.

This Rob Placet for Matt's team. First question, as it relates to your net interest income guidance, I take it to imply that there should be growth off the 1Q level, I guess -- versus the 1Q level, how should we think about net interest income and also the net interest margin?

Great. As far as our guidance, you're right. It would have to include increases from the first quarter. First quarter is low seasonally because of the day count and that cost us about $8 million linked quarter from the previous fourth quarter results, and so we would see a pickup there. We do expect strong loan growth to continue. We've talked about mid single-digit kind of growth going forward. And our guidance would assume with that loan growth and with the same levels of liquidity going forward, that margin would be relatively stable for the rest of the year. So those are all critical parts of the assumptions in order to get the guidance we're providing.

Okay, great. And then second question, similar question for fee income. The guidance implies some growth off the 1Q level. So I guess, what are your thoughts on which categories will drive growth through the rest of the year?

Again, we would expect to see seasonal changes for a lot of the areas including the stronger activity levels. The first quarter activity levels were down in many critical areas, including service charge income and credit card and debit card activities. So we would expect to see some pickup there. But we're also seeing some very strong pipelines in our investment banking and debt placement fees. Chris, would you want to add any color to that.

Sure, Don. This is Chris. So we feel pretty good about our backlogs in investment banking and debt placement fees. The other thing that's interesting about our backlogs is it's more heavily skewed right now to M&A. And with M&A, there tends to be a multiplier effect because often, we're involved in other activities in addition to just providing advisory. So we look for that number to continue to have some forward momentum. The other area that we're very optimistic about and it's very early days, is our payments, our enterprise commercial payments. We launched both our purchase card and our prepaid card just in the first quarter of this year. And with respect to our purchase card, we are ahead of our targets in terms of client capture. And with respect to prepaid, we've been pleasantly surprised at the amount of activity out there for significant pieces of business. Now I would warn you that those significant pieces of business are complex, they take a long time, there's a long sales cycle. But we feel good about both the backlog with respect to investment banking and debt placement fees, and our backlog with respect to enterprise commercial payments.

Next question comes from the line of Erika Najarian from Bank of America.

My first question is a follow-up to a comment that you made, Don, during the prepared remarks. You mentioned that if rates moved up as implied by the forward curve, then the efficiency ratio could be below 60% to 65%. And I just wanted to make sure I understood that correctly. So if we saw a steepening in the yield curve but the short end is still anchored at where it is, that's enough to break the 60% level?

Erika, the forward curve through 2016, which shows some movement up of the lower end of the curve as well. And so that was the baseline for that assumption, that actually our net interest income would increase between a flat rate environment, and the forward curve by about $200 million in 2016 from that type of difference in the rate environment. And that would reduce our efficiency ratio by about 3 percentage points.

Got it. And just on the guidance to -- on NII flat to 2013. Does that include any movements to continue to build liquidity with regard to the LCR? And I guess a better question to ask is where are you on the LCR, and how should we think about earning asset growth as it relates to the loan growth guidance that you gave?

Great question. And as far as our LCR that we have already started to take some actions, as you might imagine, given our size of our investment portfolio, that we have a very strong liquidity position. But we have been shifting that a little bit more to Ginnie Mae Security. So as of the end of the first quarter, we had 27% of our portfolio in Ginnie Mae's and that was up significantly from where it has been historically. Through the end of the year, we would see continued payments coming off the investment portfolio being reinvested in Ginnie Mae's, and we should have a little more than 1/3 of our total portfolio in that Level 1 type of liquidity asset by the end of the year. If we hit that and also if we see some changes as it relates to the municipal deposit rules that are currently in the current draft, we should be in good shape for the LCR and should not have to change our overall balance sheet.

Next question is from the line of Steven Alexopoulos from JPMorgan. Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division: On the expense guidance line, which was 12, at the low end of the expense savings range of 4% to 6%, then the high end of the operating investment range are just 3% to 5%. Expense levels really wouldn't improve. I'm just curious, is there at least a minimum level of expense reduction you're committed to for 2014?

Well, what we are committed to is driving positive operating leverage. And with this current environment we have for lower revenue growth, and we're pulling a little harder on the expense side. So I don't know if there is any absolute minimum or maximum there. But I think that the path that we showed in the first quarter is probably consistent with what we'll have to focus on throughout the rest of the year, unless we see things change dramatically. Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division: Okay. And maybe just a follow-up, Comerica also had good commercial loan growth in the first quarter. But for them, it was primarily shared national credits. Could you break out for us how much NIX contributed to 1Q loan growth?

So Steve, it's Chris. Let me kind of start by kind of giving a broad overview. Of all the capital we raised, only 15% actually goes on our balance sheet. And of the deals that we're involved with, in 70% of the instances, we're the lead. I don't have the exact number in front of me, but I think you should assume whether it's leverage, NIX deals or anything else, that the 70% percentage would hold.

And with that, Steve, I would just underscore that, I think, it is important to note we have talked in the past that we do clients, we are the originator, they are our relationships. And we do not have a desk that buys paper or participates unless it is a relationship of ours.

Next question comes from the line of Gerard Cassidy from RBC.

Beth, you've done a very good job since you've come on board in meeting your targets for a success, especially in the expense side. And the question is your target for the cash efficiency ratio of 60% to 65%, we just heard Don say that in a rising rate environment, you could get down closer to 60%. But when you look at some of your competitors, whether it's BB&T or PNC, these companies are all getting into the 50s. There are some that are already there, like U.S. Bancorp and M&T. Do you -- is there a possibility or probability that you're going to take a look at this ratio and actually lower target as we go forward? Or is it just your infrastructure keeps it, so you can't really get below 60%?

Gerard, thank you. That is a good question and let me compare and contrast what I think is some of important differences. As we closed out last year of 2013, the average efficiency ratio for our peer group was 65%. So some piece of what Key has successfully done is close the gap to the peer group through the successful completion of our Fit for Growth initiative. So as we start this year, we are now in line with competitors. And in that average, obviously, there are different business models. And I think that's something that's worthy of just a little discussion because some of the competitors there that you would outline have larger payments in credit card businesses or potentially some high-yielding consumer businesses. Our strategy as we have outlined it, is to be largely a commercial bank with distinctive corporate bank capabilities. And as you've watched our growth, it's been a commercial lending, investment banking and debt placement fees. Those are a different business mix in this different business model. They carry a higher efficiency rate. And if you look at our loan mix, again, heavily skewed towards commercial lending, which is highly variable, again, that would have a different revenue component than high-yielding consumer asset. So some piece of as you look across a peer group, I think you have to look at business model, business mix and where the growth is and what the company strategy is. So I think it's important that we did close the GAAP to our peers, our Fit for Growth and the efforts we've undertaken. I think it's important to note, we say it is a journey and we are committed to further progress within our range. And whether, let's just say, that anything we can do to accelerate or enhance our performance, we will do. And then I think it is inherent that a 65% average for the industry, this revenue environment of low interest rate is clearly pressuring the efficiency and productivity of our industry in general. So I would tell you that I think I'm pleased with our progress, but never satisfied. And that we will continue to show progress in the range and interest rates of a modest amount, as Don outlined in his answer, will give us the benefit to get into the '50s.

Speaking of peer groups, you guys are a leader when it comes to credit. Obviously, credit improvement has been very, very good and then your capital levels are very strong. As you identified, you're at the -- one of the top of the list in returning capital to shareholders. The question is, you have so much excess capital, maybe it's debatable on how much, but I think most people would suggest you have excess capital. When do you think you'll be comfortable going to the Fed during the CCAR process asking for more than 100% of earnings to give back to shareholders so that the capital ratios don't continue to grow? Granted, I know the primary goal is to grow the balance sheet, but it -- the growth isn't fast enough yet for the industry. So when do you think -- or what do you need to see that you're comfortable saying, "Okay, we can go for over 100%?"

Gerard, this is Beth, again. One of the things I think is important that we had built a consistent track record with our shareholders about how they can, within the CCAR process, which as you know governs capital that Key has been a consistent as well as a peer leading returner of capital. We have always talked about our capital levels as a strength over time because how we invest, how we return and how we deploy that capital will be important to shareholder-value creation. So we are the highest of our -- in our ability to return capital for the second year in a row with increase in share repurchases and common dividends. But it is, ultimately, a regulatory-driven process. So at the end of the day, we will continue to be thoughtful about how we approach that. And if you gauge us against our bank peers, I think we fared well in this year's process, and it is important to us that we continue to give that track record and consistency of capital management as part of our business plan.

Next question comes from Jennifer Demba from SunTrust Robinson Humphrey.

Just wondering if you could give us some more details about the composition of your C&I growth this quarter is very strong, and how much of it may have been participation versus indication?

Jennifer, it's Chris. Let me first start by saying, it was broad-based. So really, we have sort of 3 legs to the stool. One is our KeyBanc Capital Markets platform that goes to market based on industry verticals. And some of the industry verticals where we had a lot of growth there would be areas like industrial, areas like energy. We also had nice growth in our real estate business, and our real estate business is really focused on 2 principal areas. One are what we call owners of real estate, which is principally multifamily and also mid-cap reach, both public and private. We had nice growth there. And then our leasing business, which is really a kind of a specialty business in that they focus a lot on technology, a lot on medical equipment. They, too, had nice growth. So again, we've got -- we have these niches where we're very focused, very thoughtful about how we're going to the market, and we enjoyed broad-based growth. With respect to what is purchased paper, what were the lead on, one of the things we really like about our model is -- and I -- as I just mentioned, we lead 70% of the deals that we're involved with. So in those instances, we are syndicating those deals. We are a net seller of those. And of course, our broad model, only 15% of what we raise actually goes on the balance sheet. So these are -- it's a very focused area in terms of figuring out where we can be relevant. Just as an aside, we had our strategic drill down with our real estate team just 48 hours ago. And in our strategic drill downs, the teams come in and the RMs walk through each of their top 5 prospects. And what we're finding is in spite of the fact that there's competition out there, because of our differentiated model in real estate and in our other areas, we're able to continue to capture clients. And in the first quarter, we captured 119 new clients. So that's really how the model is built. It continues to work. We also got a little bit of a benefit. I think Don mentioned that we had a slight uptick, company-wide, in utilization. In the corporate bank, I would say the utilization uptick was even a little bit more than slight. And the other thing we're benefiting from is just we're constantly reallocating capital, and that's a process that began, really, in 2010. But as we sit here in 2014, we have a lot fewer relationships that we're actually exiting. So if you look at the confluence of all those things, that's a pretty good foundation for C&I growth.

And Jennifer, this is Beth. I would just add another thing that, I think, is interesting as I look at it across the company, that a lot of the growth is concentrated as you go up in size of the company. And as you see the upper end of the middle market perform, they are more likely to be incurring leverage to acquire companies, because we see a trend towards people looking more to growth through strategic acquisition than organic investment. We've seen some sign of borrowings to do share repurchase, that companies think their own currency is a good investment. And at the smaller end of the market, while we see growth, it is not as strong as it is among our upper-end mill market and corporate clients.

That's exactly right, Beth. And the other thing we're seeing is you wouldn't expect this, but there is -- the competition is more intense with the smaller companies. So what we're doing is, really, focusing, throughout Key, on some of the larger ones.

Next question is from Bob Ramsey, FBR Capital Markets. Bob Ramsey - FBR Capital Markets & Co., Research Division: I was just curious. I know you all said that your net interest income guidance incorporates a relatively stable margin from where we are today. And of course, this quarter, without the benefit of the mix shift out of shorter-term liquid assets and the loans, your margin would have contracted, I don't know, 6 or 7 basis points. I'm just curious, what gives you confidence that it will be stable from here, particularly as you do shift a little bit into LCR assets through the year?

Good question. And the couple of things that happened this past quarter that we wouldn't expect to have continued drag going forward: one, is that we had an adjustment to offset some of that liquidity because of the issuance of our long-term debt, and it's added about $1 billion on an average basis from the fourth quarter to the first quarter, and that reflected the issuances we did, including parent company, to position us for our CCAR plans; second was that in the first quarter, our loan fees were a lot lower than what we would've expected, that -- and it was a little over $5 million weaker than first quarter of last year. And that had additional pressure on the margin and we would expect that while there still may be some challenge there, we wouldn't see the incremental drop-off there that we did this past quarter.

And Bob, the one thing I would add that we always watch, because I think we saw an example of it in the fourth quarter, is levels of liquidity that cannot necessarily be anticipated, is what I'd call always the wildcard of pressure. And in the fourth quarter, it was specifically some of the flows from our commercial mortgage servicing business, which has been a nice source of income for us, as well as stable deposits. But as some of those CMBS portfolios unwind at different times, you can get liquidity flows that could pressure margins. So liquidity is always something that's hard to predict that we will always identify if that's an issue in any quarter.

Our next question is from Ken Usdin from Jefferies.

We saw some pretty big swings, obviously related to escrow accounts. Just how should we think about that going forward? And was there some seasonality in there? Or how should we sort of think about those balances going forward?

So Ken, it's Chris. That was actually part of the BofA portfolio that we purchased and we completely anticipated that. And what happened is there were some planned payoffs and when they're of large CMBS loans, and what happens is the escrow flows through, both principal and a bunch of other payments. So there were about $18 billion that flowed through in and out in a short period of time in the fourth quarter. That will -- it probably will not be to that extent going forward, but it is a lumpy business and you will have flows, escrow flows through it. As we think about that business, we think about the stable servicing business, having about doubled from pre BofA portfolio acquisition it used to run about $7 million per quarter. Now we think it will run about $15 million per quarter. But there will be, from time to time, large escrow swings. By the way, the core deposit base actually increased both in the quarter and year-over-year.

[Operator Instructions] And our next question comes from line of Keith Murray from ISI.

Speaking about your ROA target, the 1% to 1.25%, you're kind of in the middle of that range now, only about 12 bps from the high end. We think about the efficiency improvements you have out there, the loan growth outlook. I know credit, obviously, is performing better than normal. But do you think, at a certain point in time, the franchise might be able to do above that 1.25%? And is that a target you might want to revisit?

That will be a target we, hopefully, will be revisiting at some point in time. But to your point that with the efficiency improvements, with expansion of the margin as rates would go up, that, we think, there would be opportunity to reassess. But I think you hit on the right variables now, which is that us offsetting some of those headwinds, really, is coming from our credit cost being so low that with provision expense of $6 million and charge up to $20 million, well, we'd like to say that's our new normal. I don't think that's something that we can count on a long term.

Fair enough. And then just curious on the tax rate. It came up a little bit this quarter. What should we think about this in going forward?

It did, and we have stated that we think our tax rate will be between the 26% and 28%. And we were toward the higher end of that this past quarter.

So that range still holds. Okay.

Yes, please.

And then just finally, Beth, you've talked about improving asset productivity. People in our types of seats, we don't get to see all the internal things. What type of metrics should we be looking at over time? Should we look at things like PPNR per employee? Just give some guidance on what you think is something to note.

Keith, I'll take some thoughts on that, and then I will ask Don if he has any additional comments. One is, obviously, a high-lying metric that you should watch is the level of growth, because one of the things we've talked about in terms of asset efficiency is the mix between loans and investments on our balance sheet in becoming a more productive balance sheet. And then as we look at it, it should be against our targeted client segments, which we've identified: our strength in commercial lending; corporate banking; as well as we have now entered some consumer products with the successful conversion of credit card, although that also, really, is an attractive fee income base for us with the transactional capabilities in there. And then we are looking at new clients, as well as expanded clients, and making sure that as we do lend into these clients that we are getting good cross-sell and appropriate returns. And Don, what else would you add to that?

I think you've hit on an important point for us, and that's something that we need to see how we can address to provide a little bit more of a foreshadowing of those improvements in productivity that, I think -- when you mentioned PPNR to headcount and also revenue to headcount, I think those would be good variables. But it's something that we should look internally to see if there's other ways or measures that we can provide that will at least provide a little bit more insight.

Next question is from the line of Sameer Gokhale from Janney Capital.

I had a couple of questions here. The first one was just looking at your noninterest income, the chart on Page 10, with cards and payments, that at -- of about looks like 9% of the mix. And I think you had mentioned, you have some new management to run the business and to kind of grow it. So could you give me a sense for how much you expect that piece to increase as a percentage of the overall pie, say, over the next 12 to 24 months? It's relatively small now, but certainly, payment seems to be a big focus of interest -- area of interest. So just curious if you could give me a sense for the growth expectations as a mix percentage relative to the overall noninterest income.

Yes, that -- there's really 3 components that are included in that line item: one is debit card revenues, second is credit card fee revenues and third is more commercial payments revenues. And we are investing in each of those 3 areas and we would expect that growth to outpace the rest of the bank and expect that to be an area of outperformance for us. But keep in mind that these are not programs that we're designing to be national in footprint, especially for the credit card and ATM. It really is -- our debit card, it's more based to serve our retail customer base, and we feel there's a great opportunity to increase the penetration there, but not something that we're going to -- becoming a national player.

Understood. That's helpful. And then also, I think in the commentary, there was some reference to some complexity associated with the prepaid cards. I'm not sure I understood what that was referencing, if you wouldn't mind clarifying that?

Sure, this is Chris. I just mentioned that the large prepaid opportunities are complex transactions. Sometimes they're with the issuers or government entities, and I mentioned that there's a long lead time.

I see, okay. And then just on a different note, I know you've talked a lot about expenses. One of the things I was curious about, I mean, you clearly laid out your expectations for charge-offs in your guidance. And I was curious about how we should think about the interplay between higher charge-offs or if you will, normalized charge-offs relative to workout-related costs. From an expense standpoint, it seems like the 2 are related, and if charge-offs normalize, then you should see an increase in those type of loan workout costs. How should we think about that? Or do you feel that incrementally as you get -- even if you get to that 40-basis-points number, there's not much of an incremental lift in those types of expenses?

Yes, this is Bill Hartmann. I think, if you take a look at what is actually driving the level of net charge-offs that we have right now, and Don alluded to this when he discussed the level of recoveries and the gross charge-off level, we have benefited from some strong recoveries in the latest quarter. As the -- as those recoveries abate, the cost of actually running your workout organization declines, and we've had a fairly dramatic decline in the cost of our workout organization. So we think that by normalizing, it actually is a reduction in recoveries, as well as continued improvement in the gross charge-off levels.

So another way of thinking about it is you don't expect any upward pressure from recovery-related expense -- workout-related cost going forward?

No. In fact, probably the opposite continues.

Our next question comes from the line of Mike Mayo from CLSA.

My question relates to Slide 13, and I'll ask my question by way of an analogy. If I played golf yesterday and shot 89 and I got a new driver, a new lessons and a new caddie, and then I promised to break 90 in 3 years, you would say that I'm sandbagging a little bit. And so what I see here is you guys shot 64.9% in the first quarter with your efficiency ratio. You're committed to growing revenues faster than expenses. And by 2017, you say you'll shoot under 65%. So is this target rigorous enough? And I wouldn't know -- I have a separate peer group here, we all have our peer groups, but I have peers at 60%. And I'd also point out, as you know I pointed out before, 2 decades ago -- and it's the 2-decade anniversary of KeyCorp as of March 1, the efficiency ratio was 58%. So Beth, under your -- as you as -- at the head, efficiencies improved, caps return improved, the share price has improved. You've outperformed peer, but it just seems like looking out over the next 2 to 3 years, this efficiency target doesn't go far enough.

Well, Mike, I appreciate it and we will take our golf lessons and invest in new golf clubs and wait for the weather to warm up, one thing that hasn't come up in our call. I would tell you that it is important that we felt it was a good thing for us to do to be responsive to the question to what sorts of things move us within the range. And at this point in time, we are not moving the range from 60% to 65% but we are showing the path to our ability to reduce within the range. It is also important to note that the business growth is net of investment because I think it is important, as you list the things that we have accomplished, it is because we are also investing in our franchise, that it's important that we grow this business in smart and appropriate ways. And then as I look at our revenue mix, we are -- about 60% of our income does come from our loan book, which is a highly variable loan book, not high-yielding consumer assets, as I mentioned earlier on Gerard's question. So some piece of it is embedded in our revenue component, that we will drive growth through our business activity. Interest rates will benefit our particular mix of business when the short end gets a little relief. And it is on us. And part of the reason we identified Fit for Growth to know that near term, in a pressured revenue environment, we must continue to work the expense side of the equation to create that progress without a benefit from interest rate. So what we're trying to show is we are committed to a path to the low end of the range without any external help from the environment, and we will consistently improve. And as I said earlier, we will be disciplined but constructively impatient as well.

The one thing I'd add there, Mike, as well is that, as Beth highlighted, it's taken us down to the lower end of 60% range, with interest rates we'll be in the 50s. Keep in mind, too, that back in 1994, Key had a margin of over 4%, and we're right at 3% now. And that won't improve without interest rates going up. And so that does impact that efficiency ratio as well, in addition to the additional -- the costs we're incurring associated with regulatory burdens today compared to 1994.

Well, just a follow-up, as you say some of that margin might not come back since you're more commercial-oriented today, I guess what I'm looking for is some recognition that the efficiency is somehow related to structural issues, especially after 2 decades. I mean, it would be nice to see ROE or at least ROA by state. Maybe we have ROA by state somewhere and I couldn't find it, or maybe you could disclose that. It just seems to me, out of all your states, there might be a few that you could consider for divesting. Any thought process about more structural changes at KeyCorp?

Mike, this is Beth. Some piece of the discussion around our geographic footprint is against the broader business model where we are really also focused heavily on our commercial clients and the ability to integrate our corporate bank. So while our geographic presence and physical branches are across the states, in every market we also have additional business banking, commercial, private banking and corporate banking opportunities. So the mix of our revenue is very fulsome in our various geographies. And in a digital image-enabled world, the cost of maintaining a branch network is not a driver of our structural inefficiency. So I think, as I look at, the priorities I would set against our geographies is to drive more revenue from those physical presence, and they are profitable.

Our next question comes from the line of Nancy Bush, NAB Research, LLC.

I'm going to ask the opposite question from Mike. You've certainly done a great deal with the company, Beth. I think we're happy to see that loan growth is finally starting to ramp up. As one questioner said, you've got plenty of capital. So my question would be, do you finally have the leeway to grow in some of these markets where you don't have as much market share as you would like? And my add-on question will be, if so, what would those markets be?

Nancy, I think that's a great question because some piece of how we are looking at the future is the interplay of digital and mobile and how that will affect both the consumer business, but our relative positioning within markets. And I think some piece of what might be the paradigm going forward is that I don't think any of us, as you listen to myself and to my peers, who will tell you that we don't believe that market presence and branches are still a core and important part of our value proposition in how we go to market across our various geographies. But potentially, density is less important. Because as you think about it, there is a transformational change. So as part of what we are doing within our strategies is upping our investments in mobile, digital and mobile and digital advertising as well so that as we connect those experiences between the branch, online, mobile, digital that we have a value proposition that we think will also enhance our market growth over and above just investing in more physical stores. So I think that's an exciting opportunity, and that some of the old paradigms are shifting. And then I think the emphasis that we have placed on commercial, our middle market and business continuum of companies with sales of $25 million to $1.5 billion, those squarely sit in our geographies. And as we acquire and expand those relationships, we get private banking opportunities, we get incremental growth. So I think we are growing our markets with our go-to-market business model.

Our next question comes from the line of Chris Mutascio from KBW. Christopher M. Mutascio - Keefe, Bruyette, & Woods, Inc., Research Division: A lot of my primary questions have been asked, but Don, the net charge-off ratio guidance, I mean, it's -- of below 0 -- of 40 basis points to 60 basis points, I mean, you're so far below that right now, it's not even funny. So just kind of wondering if I could get your thoughts on the relationship between the provision expense and the net charge-off ratio as you see over the next several quarters?

Our guidance assumes that the charge-offs will equal provision. So that's our expectation going into it, but it will be adjusted based on changes in overall credit quality and outlook for losses inherent in the portfolio. Christopher M. Mutascio - Keefe, Bruyette, & Woods, Inc., Research Division: But your provision expense was lower than the charge-offs this quarter, right? So is that something...

That's correct. You're right. It was. It was $14 million lower this quarter. You're right. Christopher M. Mutascio - Keefe, Bruyette, & Woods, Inc., Research Division: And so going forward, it will start to match?

That will be our expectation, yes.

And our last question comes from Steve Scinicariello from UBS.

Just wanted to follow up on something that I think is an important distinction that you're making between productivity improvement and efficiency improvement. I just wanted to kind of get a little color about that. Some of the things that you're doing to kind of drive productivity improvement, because a lot of times when you say efficiency, people just assume cost-cutting. But clearly, that with the progress that you guys are making, it's both revenue- and expense-driven. So just curious, just to hear a little bit more of the success that you're having, improving productivity, how you're doing it. And specifically, how are you improving, like the cross-sell in the corporate bank, which seems to be a real big driver of this?

Great. I'll go ahead and take a first crack at that and then I'll turn it over to Chris as far as the corporate bank. But as far as productivity, if Dennis Devine were here and answering this question as it's related to retail, he'd talk about the process that we put in place over a year ago as far as enhancing our overall sales management process in the retail channel. And we would acknowledge that our sales per person in that branch have been lower than where our peers have been. And we're taking steps to manage it with the expectations laid out on a weekly basis and measured on a daily basis to see how we can change that. And so we're seeing significant improvements in our productivity in our branches. And it's not about any type of rocket science. It's making sure we have very clear expectations and holding people accountable to those expectations. And we're seeing that progress. And so that's one area of productivity. Chris, you want to talk about the corporate bank?

Sure, I'll be happy to, Don. So there's a few things we're focused on with respect to productivity. The first that we talk about a lot are new clients and expanded relationships, because we think we have a platform that we can leverage but we need to continue to add new clients and expand the relationships that we have, and we have very specific targets around those. We also spend a lot of time talking about the revenue per person. For example, right now on a trailing basis, the revenue per person in the corporate bank is $830,000. We've set some very specific goals around those as well. The other thing that we're thinking about in terms of productivity is to leverage some of the investments that we've already made. We talked earlier today about commercial payments. We really need to leverage that. Healthcare. With -- throughout Key, we have about a $7 billion health care portfolio and we have a company-wide effort to be very focused facilities-based health care on how we can deliver the whole platform. And then we've invested a lot of time. Beth alluded to the coordination and the collaboration between the corporate bank and the community bank, which is very important in how we can be distinctive going to market. So we spend a lot of time looking at that. And then the last 2 pieces are things we've talked about before in terms of generating productivity. One is strategic just kind of tuck-in type acquisitions. And I think the BofA third-party commercial loan servicing portfolio would be a great example of that. And lastly, and most importantly, is -- and it's one of the things that has an impact when you start comparing our efficiency ratio, is continuing to invest in people. Because we think our platform is under leveraged, we're out there hiring people that have -- they're senior people that have existing relationships. And there, admittedly, is a bit of a lag as you bring senior bankers onto the platform. But we've proven to ourselves that they can be extremely productive. So those are really the 4 prongs of the growth strategy.

And there are no questions in queue. I'll now turn it back over to Beth Mooney for final comments.

Thank you, operator. And again, we thank you for taking time from your schedule to participate in our call today. If you have any follow-up questions, you can direct them to our Investors Relation team between Vern Patterson and Kelly Dillon at (216) 689-4221. Thank you, and that concludes our remarks for the day.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation, and for using AT&T Executive Teleconference. You may now disconnect.