Good day, everyone, and welcome to the Northern Trust Corporation Third Quarter 2012 Earnings Conference Call. Today's call is being recorded. At this time, I'd like to turn the call over to Director of Investor Relations, Bev Fleming, for opening remarks and introductions. Please go ahead.

Thank you, Tim, and welcome to Northern Trust Corporation's Third Quarter 2012 Earnings Conference Call. Joining me on our call this morning are Mike O'Grady, Northern Trust Chief Financial Officer; Rick Kukla, our Controller; and Allison Quaintance from our Investor Relations team. For those of you who did not receive our third quarter earnings press release or financial trends report via e-mail this morning, they are both available on our website at northerntrust.com. In addition, and also on our website, you will find our quarterly earnings review presentation, which we will use to guide today's conference call. This October 17 call is being webcast live on northerntrust.com. The only authorized rebroadcast of this call is the replay that will be available through November 14. Northern Trust disclaims any continuing accuracy of the information provided in this call after today. Now for our Safe Harbor statement. What we say during today's conference call may include forward-looking statements which are Northern Trust's current estimates and expectations of future events or future results. Actual results, of course, could differ materially from those indicated by these statements because the realization of those results is subject to many risks and uncertainties. I urge you to read our 2011 annual report and our periodic reports to the Securities and Exchange Commission for detailed information about factors that could affect actual results. Thank you, again, for joining us today. Let me turn the call over to Mike O'Grady.

Thanks, Bev. And good morning, everyone, and welcome to Northern Trust Third Quarter 2012 Earnings Conference Call. This morning, we reported third quarter earnings per share of $0.73 and a return on equity of 9.6%. Our results were consistent with last quarter and improved over last year. We continue to see trends similar to previous quarters. A few overview comments. First, the addition of new business is increasing our asset levels and trust fees. Winning mandates and gaining new clients is the primary driver of growth for Northern Trust over time and we continue to be successful at achieving this. Second, the mixed macro environment continues to pose challenging operating conditions. The equity markets rebounded in the third quarter after having declined in the second quarter and are up strongly compared to this time last year. This benefited our client asset levels with assets under custody ending the third quarter at $4.8 trillion, up 4% sequentially and 14% year-over-year; and assets under management ending at $750 billion, up 6% sequentially and 16% year-over-year. Given our trust and investment fees are generally calculated based on a lagged asset value, the weaker market performance in the second quarter generally had a dampening effect on third quarter fees. However, rising markets clearly impact us favorably over time. Foreign exchange volatility and volumes deteriorated even further in the third quarter as evidenced by the significant drop in our foreign exchange trading income, which we'll discuss in more detail later. Interest rates also declined further in the quarter with the European Central bank lowering its rates in July and the Federal Reserve announcing incremental quantitative easing initiatives in September, we saw short-term interest rates decrease in many markets around the world and across most currencies. Low short-term rates pressure our net interest margin and result…

[Operator Instructions] And we'll take our first question from Alex Blostein with Goldman Sachs.

Wanted to -- Mike, wanted to start off, I guess, by focusing on expenses a little bit here. It looks like clearly solid job this quarter with maintaining the dollar amount of expenses at a lower level. How, I guess, sustainable is that? I mean it sounds like there's still a good chunk of expense initiatives that are not in the run rate that we're going to get from you guys next year. So I guess if you look at the next few quarters and thinking about the absolute dollar of expenses weighing in against business initiatives, et cetera, is this a decent run rate, I guess, knowing what has still to, I guess, come through from the expense savings?

Sure. So on expenses, as you point out, Alex, we have been successful in managing our costs as we continue to drive the business. So as I talked about, our trust, investment and other fees up 8% year-over-year and yet our costs have been very much in line with where they were a year ago. And a lot of that is due to Driving Performance and executing on those initiatives. And as I mentioned, we're $100 million into that and that's a mix between revenue and expenses, but we still have a number of initiatives that will bear fruit in 2013 and beyond. So we do expect to see the positive impact of Driving Performance in our expense run rate as we go forward. Having said that, we also expect to continue to grow the business and there are costs that are associated with growing the business. So as the business grows, expense levels will grow. But on a relative basis, our goal certainly is to have them grow at a slower rate than our revenue growth. The other thing I would say as far as run rate, from any quarter-to-quarter comparison, there are various categories that do fluctuate. As I mentioned, outside service is a category that we had an improvement in this quarter and that included sub-custodian expenses. That's a category, for example, which can fluctuate with transaction levels and be seasonal. So it's not something where I would say quarter-to-quarter every line item is going to move exactly the same.

Got you, helpful. And then my second question was on how you guys are thinking about net interest income. And I know there's a few things that tend to move around between excess deposit, et cetera. But I guess, focusing on NII as opposed to the NIM, can you just give us your updated thoughts on when you're thinking potentially either extending duration or reshuffling some of the buckets. You guys do have 30% of your balance sheet basically in cash or with -- sitting with other banks. So when you think about NII and the outlook, knowing what you see with the interest rate backdrop, is there anything you could do or planning on doing, I guess, to protect just the actual NII as opposed to just thinking about the NIM?

So as you know, obviously, the net interest income is a product of the average earning assets and our NIM. And on the average earning asset side, you've seen that our level of assets has been relatively consistent over the last few quarters here. And that is because our balance sheet, as we talk about often, is driven by our clients and the deposits that they place with us and then we then turn around and try to deploy those on the asset side. And we've been in this environment where there just hasn't been much activity one direction or another. And I think that it's difficult at this point to really look out and determine what direction that could go. When you have situations such as the fiscal cliff, you have tag at the end of the year, which may or may not go away. It's difficult to determine whether our clients will place more deposits with us or if they'll look to do other things because they're more comfortable with the environment. So that's the first part of it. Now within that, the mix of earning assets and how we deploy those, certainly to the extent that we can provide credit to our customers, to our clients, that is a priority. It's a priority one because it is clearly a service and product that they value, but also just from an earnings standpoint with the yield on that overall being, in this quarter 2.85%, that's the highest earning category for us out of the 3. The securities portfolio is one where we have tried to maintain the yield on that portfolio through a very difficult and decreasing interest rate environment, and we saw further pressure on that in the quarter. Now we do try to manage it in…

Got it. And then my last question is with respect to new business, clearly solid momentum this quarter. I think in the past you guys talked about the Omnium deal or, I guess, your new rebranded hedge fund solutions service performing a little bit better than you thought. I was wondering if you could give us a little more color on where you're seeing incremental benefits, how big are these fees for you guys nowadays, what that could do to the, I guess, overall fee rate on the whole institutional business and things of that nature.

Sure. So as you pointed out, the Omnium acquisition clearly had strategic value to us and we see that in the new business that we're winning. And it's -- the new business, itself, has been very robust and very diverse. And I say that in the sense of it has been a combination of what I would call midsized wins with midsized hedge funds, but then also we've been very successful with some of the largest hedge funds as well. So the key there has been that our technology solution for clients is one that we feel we clearly have a competitive advantage with in the marketplace. So we expect that to continue. The other aspect of it is that it does allow us to win additional business with some of these hedge fund clients. So given that Northern Trust has a much broader service offering than where Omnium was previously positioned, it's enabled them to expand the breadth of their business as well. So, so far the results have been excellent and I would say that we continue to be very optimistic about the growth there.

And we'll take our next question from Glenn Schorr with Nomura.

First one, I know these numbers jump around a little bit but the non-U.S. interest-bearing deposits both ticked up in size, but also in the average yield paid. Now we're coming off a quarter where it went down. But I'm just curious on what circumstances lead to a pickup in the average fee paid because I just haven't seen that in a while. I'm not used to it.

No need to ask for forgiveness on that. The reason for that is the mix of the currencies that are in there. And a portion of our deposits are from institutions in Australia and are in Australian dollars. So the Australian interest rates, as you know, are much higher than they are in other parts of the world. And so depending on that mix, we will see an impact on our cost of funds. So that's the driver. If you take out the impact of the Aussie dollar on that line on our non-U.S. office interest-bearing deposits, the costs would be flat quarter-over-quarter, which I think is more consistent with what you'd expect.

Perfect. Did you spell out the one and not yet funded number and I missed it? In terms of new business flows have been good, but I'm not sure what's in the run rate versus not yet.

Glenn, that's not a number that we have disclosed.

Okay, Bev. No problem. And then just last one. I think you pointed out all the areas where Northern's making progress, on the capital front, on the asset growth, on the new business front, on the expense initiatives. It all is executing on the plan. I think we're hanging out in that same earnings run rate because of the obvious, on the revenue headwinds. So it feels like we're biding time, but improving the operating leverage potential of the company. So I'm curious on how you think about incremental margins might be on new revenues if and when we ever get past some of these headwinds. So I guess it's a question of incremental margins and margin improvement as revenues pick up.

Yes, maybe one way I can address that because I think you're right on with the way that we are looking to drive the financials for the business, which is control those things that we can control and try to manage the other areas as best we can. And so we have been successful in increasing our pretax margin despite the headwinds that we've talked about. And in trying to think about the type of leverage that might provide us though in a different environment, one of the things that we look at is our expense base relative to our trust, investment and other servicing fees. And if you look at that ratio, just over time we've made consistent improvement in that ratio. So if you look back in 2011, I think it's about 127%. And then consistently through the quarters, I think we went down to 125% in the first quarter, then 118% and then this quarter 115%. So we are consistently being down the costs relative to the major fees in our business. That doesn't mean that we're not looking to also optimize on the other revenues in our business. It just means that we think that we have a greater control over the relationship between those 2.

I appreciate that lens. Finally, the last one is no other way to ask it than just ask it. You got a ton of capital. If you took a very crude view of even if earnings hung out in this area, you can return a whole lot more than you're returning now without denting the industry-leading capital ratios. So just curious, do you feel like you're holding back on areas that you'd like to grow, or am I misreading this, that the capital return potential for Northern is a lot bigger than what's currently happening?

Yes. So on the capital front, you are correct that we feel very good about our capital position. And it certainly is adequate and more than adequate to support all of the capital needs that we have. And I mean that in a sense of all the growth that you're seeing in the business and other growth initiatives that we have. We have adequate capital to fund those. And as far as returning capital to shareholders, it is absolutely a priority for the management team and the board to do that. And as you've seen, we've looked to do an increasing amount of that within the context of the environment we're in and I say that with regard to not just the evolving capital standards, but also the interaction with the regulators and your ability to return capital. So we were able to repurchase $50 million of stock in this quarter. We still have another $140 million from our 2012 capital plan. We're approaching the 2013 capital plan, as I mentioned, in addition to just feeling good about our capital position. We'll get to the end of the year before we submit that, see what the environment looks like and look to put together a plan that we feel addresses both our desires, but also those of shareholders and also meets with what the regulators would expect and one that we believe they would not object to.

And we'll take our next question from Ken Usdin with Jefferies. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: I was wondering if you could just give us a little more color on the PFS business. Obviously, we knew about the pricing lag from last quarter as a drag on revenues. But I was just wondering if you can just talk about client flows and wins given that the overall revenue line was kind of flattish. So can you just walk -- kind of walk us through the net market impact versus what you're seeing and continuing to see on the client side and within the private bank?

Yes. In PFS, Ken, I would say that the market impact in this quarter was relatively neutral. As you know, the global family office part of the business is on a quarter lag and markets were down. The regions are on a monthly lag and that was basically flat to up just a little bit. So overall, not much market impact. We continue to be very successful in winning new business. As you know, the nature of that business is it is more singles and doubles, if you will, so it's a very consistent growth rate and we continued to see that in the third quarter. Having said that, we think that we're also seeing the effects of the uncertain environment on PFS as well as far as prospective clients making decisions. So our pipeline is as strong as ever and we are winning new business, but the rate at which we're converting has slowed down a little bit here or slowed down, I should say, in the third quarter as a result in our view of elections, fiscal cliff, et cetera. So we still feel very good about the longer-term prospects, but it is one that I would say, in this environment, makes it a little more challenging.

And Ken, the only thing that I would add to that to reiterate a point that Mike made during the prepared remarks is that we do have some fees that we earn in our personal business which are not tied to asset levels. And they can be either uneven from quarter-to-quarter, or in some cases seasonal. And the 2 that we highlighted were estate settlement and tax preparation. And those can have an impact on the overall numbers. So I just want to reiterate that as Mike said in the prepared comments. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: Yes, I appreciate that. Great. And then, I just want to actually extend that conversation to the custody side. I know you hit on this a little bit in custody which is also a lag business. But pipelines also seem like they continue to be strong, and I know we talked recently about the elongation there, too. Can you give us a flavor for types of mandates that are in the pipeline, complexity and kind of time to sell, if anything's changed on that front?

Yes. So, as far as the types of wins that we're achieving here, I would say that they really do run across the institutional business. So as I mentioned earlier, we're seeing very nice new business in HFS, in our Hedge Funds Services business. But we're also seeing very nice wins in our more traditional large corporate area as well. And then as far as size, the size also -- very diversified but I would say that we do have certain wins which, given the larger size, have a longer time frame to get implemented. And so, if anything, I don't think it's changed as much on the decision-making time frame as much as we see some extension on the implementation front. So overall, good, very good. But as far as when they actually flow into revenue in certain cases, it's a little bit longer. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: Okay. And my last one is just, I know this gets brought up most quarters, but again just given what we've seen and what you think about volatilities and being low in the foreign exchange business, can you just talk about where FX is from a structural perspective, and if there isn't any change in flow activity that you're seeing better or worse from the custody base?

Yes. So overall, and I think this is consistent with what you can see in the observable markets, clearly, just flows are down in the market, generally speaking. And so our client flows or volumes have been down pretty consistent with that. As far as structural changes, Ken, I mean, what I would say on that front just for us is that we continue to execute foreign exchange for our core custody clients. But we certainly are looking to expand that business to non-custody clients as well, so third-party clients. And on that front, while we've begun to do it, I think that there's still much more opportunity for us. Like most things, we're approaching it in a very methodical way, trying to make sure that it's something that we do that is both -- provides growth to us, but also in a very profitable way and with the right amount of risk. So I would say that's the structural change. That, in addition to just the technological change in the business where certainly more of it is electronic and, likewise on that front, we are adapting our means of execution to match up with what clients prefer to do. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: And does that take an element of investment or is this stuff that's already on the books from the cost perspective?

Yes. It certainly requires investment. But it's investment that is part of, I would say, our normal capital expenditures. It's not something that's going to be incremental to that.

And we'll take our next question from Brian Bedell with ISI Group.

Just to tag onto Ken's question on the FX trading. I guess, going forward, if currency volatilities improve and generally client volumes improve over the next say, I don't know, you're looking out a couple years, would you expect your FX trading to move up in lockstep? Or do you think some of those sort of structural headwinds will potentially overcome that or at least slow down that normal cyclical pickup?

Yes. So to the extent that volumes and volatility improve, we certainly expect that we would see an improvement in our foreign exchange trading income in the same way that we've seen a decline as a result. Having said that, with the structural point that you make there, we look at that as an opportunity so not as a threat per se. So I don't -- whether things move in lockstep or not, hard to say. But it's an important area for us, one that we've been focused on making sure that we are well positioned vis-à-vis the marketplace. And so as the environment changes, we'd like to think that we're at least as well positioned, if not better positioned, as it goes forward.

Okay, great. That's helpful. And then just on the -- just going over the average balance sheet, can you explain what you did in the government-sponsored agency portfolio to get the yield up to 74 basis points from 64 basis points? Was that purely a duration extension strategy or are there other elements of that?

No. As I mentioned in net interest income, we had $5 million in an adjustment for premium amortization in the quarter, and that relates to that particular line. Basically, as you know, within our investment portfolio, we have securities that have either premiums or discounts and those need to be amortized or accreted through net interest income over their estimated lives. And the estimated lives were revised due to our ability to better project out what the lives are on those types of securities so -- securities where you have variable cash flows. And so in doing so, we needed to essentially have a catch-up in the premium amortization that's in there and so it was lower during this time period. It is strictly a timing element. So it doesn't change the ultimate amount that goes through the income statement, and it's a, I would call it small portion of our overall total premium on our securities in the portfolio.

Okay. And then what kind of duration are you -- or maturity profile are you looking for in that segment of the portfolio, the GSA part?

Yes. In that part of the portfolio, that tends to be a little bit shorter than our average duration, where average duration I mentioned we're closer to 1 year right now. So it will be inside of that because a portion of that is for our liquidity profile. And so we want to have a shorter duration on that piece, given those types of securities.

Okay, great. And then just you described the Australian deposit mix shift impacting the non-U.S. office time deposits, how about the asset side of that? Is there a lag impact of that in terms of being able to realize a higher growth yield on that, that would be, I guess, laid off in interest-bearing deposits on the asset side?

There's no lag but there definitely is an effect. So we have both assets and liabilities that are denominated in Australian dollars. And the impact on that you see and, I would say, and somewhat makes it a little more difficult to understand some of the trends you see in the yields and the cost there. If you were to exclude the impact of the Australian dollar, what you would have seen in the quarter is that instead of our yields going down by 3 basis points, they would have gone down by 6 basis points. And that, again, is because Australian dollar rates are higher than rates around the world for the most part. Having said that, on the cost side, instead of the cost going up 6 basis points, they would have been flat. So the spread there would have been 6 instead of 9. So the decrease in Australian dollar spreads essentially accounted for 3 basis points of the decline in our net interest spread overall.

Right. Okay, and there's no way to sort of mitigate that with investing in different types of, I guess, going out investing in securities in that part of the portfolio at all?

Well, the nature of what we're doing there right now is very short-term with regard to the clients. So that portfolio is similar to the rest of the bank placement profile which is about 1 month on average. So at this point, given the size of our Australian dollar portfolio and the need for liquidity, there really isn't much opportunity to significantly extend duration.

Right. Okay, and then just last question, can you talk a little bit about the effort to reprice the core business up? I know it's a multi-year conversation that you have with clients. Maybe just update us on the progress and your ability to reprice the core fees up in lieu of the lower SEC lending and FX that you're getting from those clients.

Sure. So as I did mention, we did see incremental success in the third quarter with C&IS with regard to their Driving Performance initiatives on the revenue side. And it's come through a combination of, as you mentioned, repricing parts of the business, but also through improved cross-sell, so where we have, with the client, determined other opportunities for us which improves the overall client profitability. At this stage, we have gone through over half of all the clients in that business and had discussions with them with regard to the relationship, and where we see opportunities to work with them more and where we see opportunity just for us to "do less" in the sense of not provide certain, whether it's reports or services or whatever it may be that they don't value. So it's really -- it's all about aligning the value propositions we've talked about with them. And so as I mentioned, third quarter, we saw improved revenue as a result of that, and yet we're still in the early stages. As much as I say we've had conversations with over half of the clients on that front, we don't think that we're near halfway through what the revenue upside will be there.

And we'll take our next question from Robert Lee with KBW. Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division: A couple of questions. First one, maybe in terms of new business initiatives, a couple of your competitors have pointed to a collateral management. One's obviously in it, one's talked about building a capability. I mean, do you have any thoughts about that as a potential area for future growth for yourselves? Or any other kind of new businesses you maybe pondering?

Yes. I mean we do some collateral management, although it is not a large business for us, and I would not say this is an area that we would highlight as a strategic initiative to grow. But there are definitely areas that we have targeted. One area which we've talked about within our investments business is the ETFs. And with that, we have taken a very differentiated approach to the marketplace. We're not looking to compete with the more commoditized side of the ETF market but rather developing products that are customized for our client base, and we've seen significant growth in that from a standing start. So that would be an example of a new area or business that we've gotten into. Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division: All right. And maybe going back to thinking about the balance sheet a little bit, I mean, as pointed out earlier, maybe it was Glenn, I forget that, balance sheet has been kind of flattish, more or less, last year or so. And I'm just kind of curious, I mean, some of your peers have seen, I guess, fairly reasonable balance sheet growth and they tend to tie it oftentimes to growth in their underlying custody business just to the extent that they're expanding relationships and taking on new clients. And you guys certainly have had plenty of success in growing that part of your business. So is there something about kind of the mix of the clients you're bringing on that, for whatever reason, you're not seeing as much flow through in terms of deposits from them? Or is it just not a -- any color you could provide on that?

Sure. We definitely see an increase in our balance sheet related to the growth of our business overall. However, it is not going to always be linear because we don't lead with the balance sheet, if you will. And so it has more to do with also what their behavior is or what their needs are. And let me break it down between the personal business and the institutional business. On the personal side, we have seen this increase in deposits, particularly demand deposits, over the last couple years. And then it stabilized. And much of that is more because of our clients' behavior, if you will, which is they were looking for safety. They wanted to have a higher proportion of their assets on the balance sheet in the form of cash. To the extent that, that changes over time and we have seen it change over time a little bit, they tend to then move those assets from our balance sheet into other products or services, often case, it can be some of our funds. So that's how that behavior works. But over time, if you looked at the deposits and the loans related to our personal business, you would see that it's increased over time as the business has grown, and as the fee part of the business has grown as well. On the institutional side, likewise in general, there clearly is the relationship between the growth of the business overall and the deposits. And even in this quarter, you did see a sequential increase in our non-U.S. office deposits. And that does relate to just the underlying growth of the business. But their cash needs and balance sheet needs also fluctuate depending on their own needs and their own perspectives on the marketplace. And I would…

Yes. So as far as the institutional business, again, we have seen nice growth there. And as you pointed out, and I mentioned in my earlier comments, we see nice growth in the index business. And we think that, that's consistent with the broader trends and that the indexing that we're providing is essentially customized indexing, if you will, where we are looking to not just provide a traditional or commoditized index product, but rather something where we create a proprietary index for a client and then provide the indexing for them. So that business has grown nicely, both equity index as well as fixed income index. We've also seen assets grow in the money market funds as well. And again I think that can fluctuate over time and depends on the profile, the investment profile of our clients, but we have seen growth there in the recent quarter.

And we'll take our next question from Howard Chen with Credit Suisse. Howard Chen - Crédit Suisse AG, Research Division: The pace of buyback accelerated to $50 million this quarter. But it still looks like that amount is a lag in the current capital plan. Is that consistent with the way you look at it, Mike? And if so, just what's the constraining factor to maybe not buying back faster right now?

Yes. It's very -- it is higher than we were in previous quarters. So we've seen an increase each quarter. It was $15 million then $35 million and then $50 million and, as you mentioned, we have $140 million remaining. And our capital plan did break out the repurchases into quarters. And I would just say we are executing consistent with our capital plan. Howard Chen - Crédit Suisse AG, Research Division: Okay, great. And then realizing credit quality is fairly de minimis in the context of your entire business. But was just hoping you can provide a bit more detail in the new NPA formation you felt there in the quarter. What's driving that? Is that focused on any specific geographic or customer segment?

Yes. So we did see an increase in our nonperforming assets. And the nature of our portfolio, as you would expect, is relatively granular, given both the size and the nature of the credits. And so what happened in, if you go back to first quarter versus second quarter where there was a decline there, that was a result of a couple large credits that previously were nonperforming and went back to performing or paid off. And in this quarter again it was a handful of credits that went from performing to nonperforming. And these were split between commercial real estate and residential real estate. So when these couple went nonperforming, you're going to see it in our numbers just given both the low number of credits that we have and the size of those credits. And as far as geographically, there's no area of concentration. Our footprint as you know in the U.S. and with our personal business West Coast, the Central region and East. And I would say it was a little bit of each of those that we saw in the quarter. Howard Chen - Crédit Suisse AG, Research Division: And then just a quick numbers one. With respect to the other income bucket, if you strip out this quarter's gain, you noted the higher income related to Employee Benefits held in trust and then some increased credit and leasing related revenues. Can you provide a sense of how significant those were and do those recur?

Yes. So those 3 items that you mentioned account for the vast majority of the remainder. There were a couple, as I mentioned, that category includes a number of items but the Employee Benefit related assets. So those are for nonqualified benefit plans which we hold on our balance sheet. But generally, they offset each other between other operating income and other expense, and it just depends on what happens to the assets in the portfolio during that time period relative to the liability in the plan. But those are generally correlated and so you see it in both line items. And then the higher credit-related fees, mostly in commercial, but that category also includes them in our personal business as well. As far as recurring, nonrecurring, certainly the credit-related service fees, I mean, that's a more recurring fee stream. It's included in that category, but it fluctuates less, whereas the Employee-Benefit related depends more on the market activity, Howard. And so it does tend to go up and go down and you'll see it on the revenue side, it's generally offset in the expense side but it can cause fluctuations in both line items. Howard Chen - Crédit Suisse AG, Research Division: Great. And then just finally for me, as I imagine you're pretty deep in the budgeting process right now. I'm just trying to visualize the ultimate payoff of the Driving Performance program balanced with just ongoing franchise reinvestment over the next few years. So just maybe, as a rough benchmark, if revenues like were just flat from today, I mean, where do your expenses ultimately shake out? And what do expenses do, if maybe revenues are up or down 10% from just current overall levels?

Yes. So you're right. We're in the middle of -- in budgeting, certainly. It's difficult to deal with the hypothetical but let me try to address it this way which is even in a flat revenue environment, we are going to face, like most companies, natural expense headwinds. So there are just certain costs that are going to go up, whether that's because you have incremental depreciation from continued capital investment in your business, whether it's related to inflation for certain costs, whether it's related to transaction volume levels that don't necessarily translate into incremental revenues for you overall because we can have our fees up and our transaction levels up, but we are going to have FX or net income down like we did this quarter. So you still have that. What we're obviously attempting to do is to offset that with Driving Performance which is what you've seen and we've more than offset that. In this year, as I mentioned, we're over $100 million now. We'll see where we end up the fourth quarter but clearly, we will achieve over half of the $250 million we talked about. And then in next year, the incremental amount is going to be less than what we had. And that's just natural with some of this that, of course, we went after the larger dollars first. And so with each year, Howard, it gets more difficult to offset those, I'll call it, natural expense headwinds unless you get some revenue growth. Now the key is to the extent that you do get some revenue growth, that the expenses don't just go up with that at the same rate. But rather that we create some operating leverage with that. And so that is our objective, both with Driving Performance and in general, is to be able to offset this low to no revenue growth environment that we've been in because of the headwinds, but also then create operating leverage for when we think that those revenue headwinds subside.

And we'll take our next question from Mike Mayo with CLSA. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: So it's a pretty tough environment, I can imagine. You said you've had some success on repricing C&IS. But even with that repricing, the way we look at it, total processing fees to assets under custody are at a 7-year low in the third quarter. And you can slice and dice that in a lot of different ways, but it's tough. So one question is how much is structural and how much is cyclical? And I know it's a very difficult question, but you kind of need to have some answer for yourselves to determine how much you really want to cut. Or is my logic wrong here?

Yes. So a couple comments, Mike, which is I would agree that some of it is cyclical and some of it is structural. And as a result, we do not look at it and say, we're just at a time period where the cyclical piece is down, and we don't need to worry about that longer term, we do. Now apportioning the amount that should go to cyclical versus structural is more difficult. Clearly, the headwinds that we faced here with regard to the revenues are with regard to rates and FX. Structurally -- and I think you can also put in there, in general, securities lending. Structurally, I think that there are also aspects that have changed particularly with regard to FX and securities lending. So the expectations that we would have with regard to a client in the level of FX activity, securities lending activity and the profitability from that is reduced on a structural view going forward. We still think that, that is a service that clients are interested in, and that we are well positioned to provide to them, and as we can price very effectively for them and still be very profitable for us. But not necessarily expecting it to go back to the levels that it was before. So as a result, we have to look at how do we rationalize the expense side so that we maintain the level of profitability that we think is appropriate for the business and to have capacity to invest in it longer term. So that's everything where I talked about Driving Performance. Yes, it's to deal with the immediate impact of it. But it's also to have a longer-term approach to the business that is not just focused on the growth, but also focused on productivity. And when you say, "How do you look at that longer term?" I mentioned a little bit earlier in the call where we look at that expense base, not necessarily just to revenues, you have to look at that because that's the way the financial statements work. But also looking at that expense base relative to the fee lines that we think we have greater control in growing over time. And we've been successful over the last several quarters of bringing that ratio down, but we still have further to go with that ratio. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: And then to ask the same question a little bit differently, how much would you attribute to volume which you said was at a 5-year low or maybe more than 5 years? Volatility, which you also said is at a 5-year low and rates?

Yes. I mean, I would -- trying to think how to estimate between the 2 because they hit 2 different lines, if you will. But I would say the more immediate impact here -- we've been able to offset the rate part, Mike, more effectively than we have the reduction in volatility and volumes and FX. So right now the impact has been greater on that line. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: And when you say offset the impact on rate, how so? Because you've waived some service charges and stuff like that.

Yes. So that has been one area that has come down. So in this quarter, for example, it's $17 million. That compares to $29 million a year-ago quarter. So we have in that way that, that's come down. But also I was focused a little more on net interest income where as much as it is down this quarter, we've been able to generally maintain about the same level of net interest income by trying to manage the balance sheet through that. And some of it just -- the balance sheet has increased as a result of more deposits on the balance sheet. But it's also how we manage the securities portfolio as well. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: And then last question. I mean, I guess 2 or 3 people asked this question but your Tier 1 Basel III ratio is 13%, you trade at 1.5x book value and you only bought back 1.1 million shares. Are you not allowed to buy back more? Or it seems to me that you'd want to buy back a whole lot of stock, are you constrained somehow? And if not, why not be more aggressive?

Yes. We are clearly constrained by the capital plan that we submitted at the beginning of this year and was not objected to by the Federal Reserve. So we have to execute according to that. We will submit a new plan at the end of this year for 2013. And as I mentioned earlier in the call, we'll take a lot of things into account. But certainly, some of the comments that you mentioned there are things that we take into account about how we feel about our capital position as well, which is very good.

And we'll take our next question from Luke Montgomery with Sanford Bernstein.

I know you discussed it a lot already, but I did want to try to take one more stab at FX. You came out of the industry litigation looking pretty smart. You appear to have kept your nose clean and as far as we know, you're not named in any lawsuits. But your FX results over the last year have been a lot weaker than your peers. So I'm just wondering, is there something structurally different about your FX business that's driving that result? I know you mentioned plans to grow at third party execution in your earlier comments, but I mean, is that the entire difference between you and peers? Any additional insight there would be really helpful.

Sure. So I would say that we didn't have what I would call a significant negative impact as a result of what's happened in the FX area over the last couple of years. But we haven't been able to, as you put it, take advantage of any dislocation there. Part of that is because our business has been focused on our custody clients. So we largely have been able to maintain those clients, grow clients over time but at the same time, the market has been down. But to the extent that a non-client has been interested in doing their FX elsewhere because we haven't been very active in third-party, we haven't been able to take advantage of that. And instead, where you would see it is a longer-term effect where if a client is upset about a different situation enough that they actually switch their custody business and their asset servicing business, and we win that business, then we would be in a position to do it. So it would have had a lag effect to it. Having said that, as I mentioned, that's one of the reasons why we are doing more in the third-party area and look to do more going forward so that not only we can just compete in that but take advantage of any opportunities that we should have.

Okay, that's very helpful. Second one is can you talk a little bit about where you are in terms of expanding back office support? I know there was some discussion a while back about being at capacity in Bangalore and you had plans to expand into other geographies. And there's been some anecdotal concern that you could use a little more scale just in terms of people or personnel, if you're going to win some of the larger deals particularly in middle office outsourcing. And I think that was also one of the reasons you didn't announce bigger targets on the efficiency program, the fact that you needed to add to back-office. So just where are we on that front?

Yes. So we have a global operating model that we utilize. And as you mentioned, Bangalore is one of the locations there and helps us serve clients in that region, as well as around the world. And we continue to look at how we would expand that. That does involve looking at our capacity levels in Bangalore, but it also looks at other markets where we can expand. We've expanded in Ireland more recently, and we are looking at new locations around the world as well. And the key to it is that we don't want to be overly concentrated in one region, and we want to be in a place where we can not only service clients in a particular geographical region, but that we can also continue to have the most efficient, around-the-clock processing for our clients. So I would say that, that global operating model is one that we feel good about right now, but at the same time, are constantly looking at how we would expand that.

Okay. And last one for me, I tried this question on one of your competitors, but I figured I'd try it with you. Is there any clarity around the potential capital impact under new regulations related to securities lending indemnifications? And could that be a big deal for you? I mean, I know you're an excess capital position but...

Sure, yes. Unfortunately, there is not clarity around that. It is something that we are focused on and others in the industry are focused on in order to get clarity. Depending on the final rule on that, it could definitely have an impact on securities lending. That's one of the categories. There are several others, but it's on our list. It would not change how we feel about our capital adequacy, though.

And that concludes our question-and-answer session. I'll turn it back to our presenters for any closing remarks.

Thank you for joining us today. We look forward to speaking with you in January on our fourth quarter call. Have a nice day.

Great. Thanks.

That concludes today's conference call. We appreciate your participation.