Good day, everyone, and welcome to the Northern Trust Corporation Third Quarter 2016 Earnings Conference Call. Today’s call is being recorded. At this time, I would like to turn the call over to Director of Investor Relations, Mark Bette, for opening remarks and introductions. Please go ahead.

Thank you, Lisa. Good morning, everyone, and welcome to Northern Trust Corporation’s third quarter 2016 earnings conference call. Joining me on our call this morning are Biff Bowman, our Chief Financial Officer; Jane Karpinski, our Controller; and Kelly Moen from our Investor Relations team. For those of you who did not receive our third quarter earnings press release and financial trends report via email this morning, they are both available on our website at northerntrust.com. Also on our website, you will find our quarterly earnings review presentation, which we will use as a guide for today’s call. This October 19 call is being webcast live on northerntrust.com. The only authorized rebroadcast of this call is the replay that will be available on our website through November 16. Northern Trust disclaims any continuing accuracy of the information provided in this call after today. In the current quarter, we elected to early adopt a new accounting standard issued earlier this year that made certain changes for stock-based compensations. One of the most significant changes requires that excess tax benefits and deficiencies be recorded as part of income tax expense rather than as part of additional paid-in capital. This change has been made for all periods in 2016. The impact resulted in a tax benefit of $6.4 million in the third quarter results and a benefit of $12.3 million on a year-to-date basis. Please see page 11 of our earnings release for more information on the impact to our first and second quarter 2016 results. 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 expressed or implied by these statements because the realization of those results is subject to many risks and uncertainties that are difficult to predict. I urge you to read our 2015 Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission for detailed information about factors that could affect actual results. During today’s question-and-answer session, please limit your initial query to one question and one related follow-up. This will allow us to move through the queue and enable as many people as possible the opportunity to ask questions as time permits. Thank you again for joining us today. Let me turn the call over to Biff Bowman.

Good morning, everyone. Let me join Mark in welcoming you to the Northern Trust’s third quarter 2016 earnings conference call. Starting on page 2 of our quarterly earnings review presentation, this morning, we reported third quarter net income of $258 million. Earnings per share were $1.08, and our return on common equity was 11.7%. Our assets under custody increased 13% compared to one year ago and 6% sequentially. Our assets under management were up 7% compared to one year ago and up 4% sequentially. The current quarter results include two items I wanted to highlight. First, the quarter included $5.4 million of impairment charges and loss on sales related to a non-strategic loan and lease portfolio. Second, we had a $3.5 million charge in connection with the settlement of our remaining securities lending litigation. All securities lending litigation stemming from the 2008 financial crisis is now resolved subject to final court approval. I will highlight these items again as we walk through our detailed results. A number of environmental factors impact our businesses as well as our clients. Before going through our results in detail, let me review how some of those factors unfolded during the third quarter. Equity markets performed well in the quarter. In U.S. markets, the S&P 500 ended the quarter up 12.9% year-over-year and up 3.3% sequentially. In international markets, the MSCI EAFE Index was up 1.6% year-over-year and up 5.4% sequentially. Recall that some of our fees are based on lagged market values and second quarter markets were not as strong as the third quarter. In bond markets, the Barclays U.S. Aggregate Index was higher for the year-over-year comparison but lower for the sequential comparison. Currency volatility as measured by the G7 Index was 2.6% higher than the third quarter of last year but 8.4%…

[Operator Instructions]. We’ll take our first question from Ashley Serrao with Credit Suisse.

Hi Ashley.

Hi Biff, how are you?

Good.

I just wanted to dig a little deeper into NIM dynamics. First, I just wanted to confirm if the decline in yields within the Federal Reserve and other Central Bank deposit bucket was due to the Bank of England rate cut? And then just an update on the usage of short-term borrowings and how are you managing the current reinvestment environment with a potential rate hike on the horizon?

Sure. So the first part of your question around the Central Bank deposit yield was largely driven by the Bank of England’s move cutting the rates from 50 to 25 basis points. So you are accurate that that was a primary driver of that decline. As we think about using short-term borrowings that you described, what you would see on our balance sheet in short-term borrowings or funding sources, we can from time to time use Federal Home Loan borrowings. They have an advantage if you will around our liquidity needs. So we use them to manage our balance sheet liquidity from time to time. And they help if you will with LCR compliance and other issues. So that’s how we think about the short-term borrowings that in any given period we can utilize for those types of purposes.

And just a follow-up on the last part, how you’re thinking about the current reinvestment environment with a potential rate hike on horizon?

Yes, as we think about the potential rate rise, as you know our portfolio has typically remained short in duration. We would expect that if a rate rise were to happen in November or more likely December based on market prognostication that we would benefit from that. What is important to remember is how did the markets react in advance of that, how well telegraphed is that rate increase. So if it’s unexpected we would anticipate seeing the benefit to come perhaps in the first quarter or second quarter of next year. If the markets anticipate that, well, then we could see some of that benefit in the fourth quarter. And then the last component that I would highlight here is, it also then matters greatly as to how the deposit pricing reacts to that anticipated rate hike. As you know in the last rate hike, the deposit data remained low. We will wait to observe how it unfolds this time.

Okay. Thanks for taking my questions.

Our next question comes from Alex Blostein with Goldman Sachs.

Hi Alex.

Hi guys, good morning. Thanks, just staying on the NIM and discussion for a second, just a point clarification. If I think last quarter you guys had a fairly elevated amount of premium amortization running through the numbers. It looks like the yields on the guidance didn’t really move so, was this quarter somewhat elevated as well? And again, kind of create a little bit of bigger drag on the NIM or kind of 114 basis points is it fairly decent run rate for us to start thinking about 4Q?

Yes. So, we did see comparable levels of premium amortization in the second and third quarters. In absolute amounts, in both the second and third quarter, our premium amortization was approximately $20 million in both quarters. In 2015, our premium amortization in the third quarter was $14 million. So we did not see the seasonal decline that we had in previous cycles in fact a year before that was $13 million. So we did not see the premium amortization seasonal decline that we typically experienced in the third quarter. Traditionally in the fourth quarter and first quarter, we see our lowest levels of premium amortization. But again, in this third quarter we saw slightly elevated premium amortization and less benefit from the seasonal decline.

Got you, okay. So, all else equal if rates don’t really change we should think about the normal kind of seasonal patterns working for in 1Q?

Yes. All things being equal, right, refinance levels, market dynamics housing markets etcetera. But all things we should see, we typically see seasonal decline in the fourth quarter.

Yes, fair enough. And then my second question was around the balance sheet as well. But think about the longer dynamic you guys have obviously had a little bit of a decline sequentially probably due to the charge. But bigger picture, the bucket has been kind of range bound at these levels for the last couple of quarters after seeing a couple of years a really nice long growth. How should we think about that on the forward basis, part of your capital return plan I think was contemplating the fact that you guys are growing and loan growth could be one of a components of why the capital return dynamic was really lower than we had expected. So, maybe kind of tie it together for us as we think about the loan growth outlook?

Sure, let me - you’re right. Our loan growth year-over-year was 2% but I think we have to decompose that a little bit. First of all, residential real-estate loans declined 12% year-over-year and that’s strategically an initiative that we’ve been on as we look at our wholesale designation and really our up-market practice in our wealth management business. So that’s a conscious decision on residential real-estate. So that has been a drag against that loan growth. The second thing as we look year-over-year as a loan growth, our C&I loans are actually up 6%, commercial real-estate is up 11%. And private client lending is up 17%. So, we actually have seen loan growth in the areas that we’ve targeted and I think it’s important. Sequentially if you look at that, the residential real-estate continued its decline. C&I did decline and I think we’re seeing that across the industry from what I’ve seen in C&I loans. Commercial real-estate was 1% and private client was up 3% sequentially. So we have the right mix of that. As it relates to RWA growth or use of capital and capital returns, what we’re disciplined around is not using our capital to put on whether it’s loans or any other risk-weighted asset growth items that are generating the right level of returns. So we won’t just use it to grow the balance sheet for non-strategic RWA growth. And in this case, as I highlighted for you in the case of residential real-estate for us, the slowing there is something that we’re targeting strategically.

Got you. Great. Thank you very much.

Our next question comes from Ken Usdin with Jefferies.

Hi Ken.

Hi Biff, how are you doing? Biff, this quarter you had really good, just core business growth metrics AUM, AUC, AUA. Of course the market was up and international was up a little bit more. But I was wondering if you could break this out, just an understanding, was there notable good net new business this quarter, was it more about mix and where the dollars came from just thinking about kind of underlying organic growth and wins?

So, when we decompose those growth rates which were strong, approximately 50% was driven by the market levels that you described but 50% was really driven by what I would say positive flows and/or new business. So at the core, we saw good strong new business across the franchise both in wealth, asset management and C&IS. We saw very, very good strong growth. And I would say generally across the globe, so whether it was in Asia Pacific region and Australia or in our European region, where we had substantial new wins or even here in North America in our C&IS business. And in wealth, largely across our geographies, we continue to see I think accelerated success in some of our large market investments like New York City that’s growing double or triple the overall wealth management averages to date. So, I think it was a broad-based set of successes that really drove that and not just a market-driven beat like I said about 50% was from new business and/or flows.

Okay, got it, great. Thanks for that. And separately, can you just talk a little bit about the market sensitive revenues obviously we saw the market environment for FX be, kind of in the summer quarters. Can you for us - help us understand, do you think that was more driven by low volume or low volatility and what about the mix of channel with core custody and the electronic piece that you’ve been building?

Yes, so we’re still heavily linked to both volatility and volume. You’re right, we’ve absolutely tried to invest in our e-platforms for FX trading but we’re still directionally moving in lock-step with both volatility and volume. I would say volatility would be mixed whether year-over-year or sequentially. We had negative sequential volatility, a positive year-over-year. It also matters Ken in whether it’s emerging market currencies or its G7 currencies and the volatility between the two. So, most of our FX though, the vast majority of our FX is really driven by our core custody business. It’s in relation to supporting the asset managers that are supporting our clients or our clients’ needs. There is a proprietary trading element to this. It’s just in support of that. So, it will be and move lock-step with volumes and volatility in general.

Right, okay. Thanks Biff.

Thanks.

Our next question comes from Brian Bedell with Deutsche Bank.

Hi Brian.

Good afternoon, hi, how are you?

Good.

Maybe just to, and if you would just go into the fourth quarter, I think that you mentioned the $7 million increase in comp linked quarter. But if you could just touch on seasonality trends in the fourth quarter typically there is, it’s usually growth in outside services and equipment and software expense, just want to see if that still seems to be the general trend and also the tax rate in the fourth quarter with the accounting change?

Okay. Let me breakout outside services first for you. Real quickly, our outside service category which totaled about $158 million in the third quarter, approximately one third of that is directly related to what I would say are market activities. Its items such as sub-custodian expense, third-party advisor fees, brokerage, clearing expense, etcetera. So it will move as the markets move in that quarter and stay linked to that. About half is what I would say is what we call technical services and it’s generally linked to business activity, it’s things like market data, use of market data, systems and processing, client customization work. But it’s generally linked if you will to the directional revenue of the firm in that. The third part, probably the parts that we’re talking about here is about 20%, that’s the most discretionary that things like consulting spend. We would in the third quarter, we saw meaningful decline in our consulting spend. We’re going to work hard to maintain that discipline in the fourth quarter as well around that component of outside services. And then I think you also had a question on the tax rate as well.

Yes, the equipment and software expenses on that?

The equipment and software, if you look at past and seasonal trends those have a small increase or modest increase typically in the fourth quarter.

Usually that would be with the software amortization continuing trends.

Okay. The tax rate you mentioned?

The tax rate, so that is dependent on a: the amount of equity that would either vest or be exercised and the value of the stock at the point of that exercise that’s how that tax rate works. If the price of the equity size is higher than the point when it was granted it would be a favorable tax benefit and if it’s not then it will - I can’t predict how that will play out in the fourth quarter. But as you know this is a practice that we would have to adapt 11/17 either way.

Right, great. And then, maybe just longer term question on investment in the business and technology. I think you mentioned a little bit about that as well. But as we think about the average asset servicing business and what some of the competitors are doing, stage 3 with Project Beacon and Bank of New York [ph] with digital efforts. How do you feel your asset servicing business is positioned from a technological perspective and is there, if there’s any more investment required in that? And are you able to leverage the Omnium platform across your franchise more practically?

Yes, so we’ve made substantial technological advancements and investments. As our industry and our space in the industry as you described, we really are looking at a series of initiatives to invest in that we think will a: first enhance our clients’ experience in terms of the mobile applications or the interface they may have when they come into the firm, but also drive efficiency inside the firm. And that could be efforts around robotics or other efficiencies inside the firm. One of the advantages we have we believe is that our organic growth strategy over time has allowed us to have largely single platforms for all of the areas we need to process on, and so our ability to deploy capital is pretty efficient. And so we think that our, spend which we do highlight I think total capital and technological expense is about $2.4 billion over a three-year cycle. So, we think that’s enough to keep us competitive and on-peer or above our competition.

Great. That’s helpful. Thanks so much.

Our next question comes from Mike Mayo with CLSA.

Hi, can you discuss Europe a little bit with restructuring of some global banks? Are you seeing market share potential or do you see potential to pursue deals in Europe? Are you looking to add in Europe or are you repositioning in Europe, what’s happening with the European banks and Brexit and everything else?

Good question. We certainly do see a lot of movement in Europe right now, as many of the large globally systemic important banks are revisiting their business models. We’ve had tremendous success in Europe particularly in our GFS business where we’ve grown substantially over the last decade. And we are always open and have understanding of what businesses we’re interested in. As we’ve stated before, our approach to any of those opportunities is always first around the client capability, is second about really filling a geographic gap and then third I think a technological gap. But I think the market right now is experiencing some white water. And we stand ready to have dialogues and those that fit our strategic needs. We’ll certainly have dialogues. If I go on just briefly, with Brexit, a little bit linked to your question but while there is still a great deal of uncertainty on the U.K. exit, we have formulated plans to establish a full subsidiary in the EU. We have meaningful presence in Ireland and Luxemburg and several other locations today. And we will evaluate all those for where the optimal location is for us, we are actively engaging in that planning right now.

So, does Brexit cost you money there or it’s not that big a deal since you’re elsewhere in Europe?

So, we have physical presence in many of those locations and pallet in those locations but I’m sure there would be some element of cost to look at incorporation and all the legal work that we would have to do with that. We think that’s at a very manageable level relative to our overall financial position.

All right. Thank you.

Our next question comes from Glenn Schorr with Evercore.

Hi Glenn.

Hello there. Forgive if this is a little repetitive. But on the decision on taking down the payout ratio, part of it was rating, part of it was to have a better positioning with your capital ratios, and part of it was for the investment and growth, some of the stuff we talked about here. But I’m curious to revisit, where are we going to see the benefits of that decision, will it be as simple as higher capital ratio but should we see higher growth rates relative to peers, I mean, some of this is technology and some of it is actual growth in the business?

Yes, I think that we need to demonstrate that it’s driving higher growth rates than our peers and higher returns on our capital over time because of the businesses we’re choosing to invest in that. And as we’ve said on previous calls, if we don’t see the opportunity for that growth, we have an annual opportunity to revisit our capital distribution strategy. And we do with our board and our regulators, we revisit that. When we did that process three, six months ago, really in the planning phases of that, we had certain growth trajectories build into our planning and modeling. And we continue to execute on those. If those don’t manifest then we will revisit that plan in the 2017 submission cycle. What I said earlier though, I’d reiterate is, there is a discipline about not just using that retained capital if you will to put on any assets or any risk-weighted assets. So any loan or any other risk-weighted asset, it is a disciplined approach for those that we think can generate superior returns over time.

Fair enough. Just one follow-up. Inside Wealth Management, I’m curious you have these differentiated growth rates across the regions and especially in Global Family. I wonder how much of that relates to the money market fee waiver recapture, and how much of that is just pure business mix of the different type of customer?

So, in the global family office, money market fee waivers, is a meaningful portion of that driver. As you might imagine, those are large, very high network families that often look more like an institutional type investor and may have had large cash balances in their portfolio so, fee waivers for them was a meaningful driver. Across the other regions I’d say that’s a better mix of fee waiver benefit and actual new business and flows.

Okay, thanks Biff.

Our next question comes from Geoffrey Elliott with Autonomous Research.

Hi Geoffrey.

Hi, thank you for taking the questions. Could you give us an update on the Department of Labor Fiduciary Rule, as you walk through the detail of that how is its impact shaping up relative to your initial expectations?

Sure. We are continuing if you will to evaluate the impact of the fiduciary rule and we’ve spent a lot of time and energy as you might have suspected in that evaluation and continue together with outside counsel and consulting experts on the DoL fiduciary standards. At this time we expect that any changes to our business model and product offerings will be limited. And the cost associated with the design implementation and ongoing monitoring of compliance will be moderate. We continue to wait for further guidance along with our industry and further clarifications. I think we anticipate perhaps some Q&As and other items to come out to give us further guidance. But at this point in time as I said we think that there will be a moderate impact and limited business model changes, is what we’re anticipating.

Thanks. And then just to check on one of the previous questions that I understood what you were saying correctly. When you answered about dislocation amount European banks and the impact of that, it kind of sounds like that’s an area you’re focusing on when you’re thinking about M&A opportunities. Did I understand that right?

No, I would say that we focus on three areas when we think about where we can grow and in your case you’re asking inorganically. The first is, is it filling a client need or gap is there a product gap. Second is, is there geography or a regional gap in our array of capabilities. And third is, is there a technological or talent gap in those? That’s where we start. I think the question is phrased there is European institutions that are contemplating their own organizational structure. So many of those may have a capability or geography or a technological or talent gap where we have a need. So now that may manifest itself I don’t think there is an extraordinary amount of focus on Europe versus any other region in the world. But right now there is, probably a lot of institutions that are contemplating their own business structures now and we stand ready to look at any opportunities that the first three criteria laid out for you.

Great, thank you.

Our next question comes from Brian Kleinhanzl with KBW.

Hi Brian.

Hi Biff. One quick question on the move in the Pound Sterling this quarter, I mean, does that have a big impact on the revenues overall or could you quantify that for us?

Hi Brian, it’s Mark. When you look at the P&L, it’s important to remember that we do have a natural hedge where we have both revenue and expense in denominated currencies. And then for the extent that there is an exposure we hedge it. As far as the growth rates go, when you look at it on a year-over-year basis, the trust fee impact would probably be the area of revenue impact at the most by about 1 to 1.5 percentage points. And then on the expense side as well, you’re look at about 1% to 1.5% benefit year-over-year on the currencies. And then sequentially there is also some impact there as well in both trust fees and expense where 1% or so lower due to currency exchange rates.

Okay, great. And then I heard you say that you had $3.6 million of expenses related to the Aviate Acquisition. Is that just merge related charges or is that the increase in run rate that you were saying was $3.6 million, sorry for the clarification?

So that was, it’s Mark again, that was a $3.6 million impact in the quarter. What I would say is that that would include the quarter’s expense was $6.6 million last quarter was $3.4 million. So, in the $6.6 million there is a modest amount of still integration expenses but we’re calling that out just for the fact that the second quarter was kind of an abbreviated quarter because the acquisition closed in May.

Okay. And then just last one on the tax rate. Could we at least assume that the tax rate guidance before where I think it was 33% with this new accounting change does it at least go over 33%?

I’m not sure we can provide any guidance on that. It’s depending on again levels of stock that may vest and/or be exercised in the quarter. So, we can’t provide any guidance on that.

Okay, thanks.

Our next question comes from David Long with Raymond James.

Hi David.

Hi guys. Looking at the Wealth Management business, the assets under custody and assets under management both this quarter exceeded the movement in the S&P 500. But if I look back over the last few years, say since year-end 2013, the growth in the assets under custody and assets under management has been about 7.5% and 9% respectively when the S&P has been up about 17%. So, just curious as to how you can explain that difference in the Wealth Management business with the assets under custody and management underperforming the moves in the equity markets?

I could start David if you want just by talking a little bit about the allocation amount and then if Biff has anything to add. Currently with Wealth Management, when we look at AUM, about 47% are on equities as of the end of the quarter, 29% in fixed income and 24% in cash and other. So, certainly how the assets are allocated would be part of what the driver is there.

Okay. Just looking at the equity side of it, the equities were up 7.5% since then versus 17%. I’m just trying to see if there is anything that we should be considering that may not be obvious?

I think just the macro trends and this is a little off the question but just in macro trends, we’ve seen in Wealth Management the migration from active to passive and others have had some imputed impact on the business as well as quite frankly just flows, meaning as people have used their principle to live on other that’s had a drag on our assets under management in particular. The assets under custody in our Wealth business are driven a little bit more by our GFO business, or excuse me, global family office, which where you tend to have larger pools more than the traditional wealth business.

Got it. Thanks.

Thank you.

Our next question comes from Jim Mitchell with Buckingham Research Group.

Hi Jim.

Hi good morning, just - most of my questions has been asked. So maybe just on money market mutual fund reform. Have you seen any change in behavior whether it’s deposit flows or in the money market space in terms of your corporate or retail customers, just trying to get a sense of how that’s going up?

Yes, across the industry really $1 trillion in AUM moved in the government funds. And what we’ve seen in our funds is no different. You’ll be able to see the asset levels in each of our funds, on our funds’ website. But overall we have seen a migration from prime and/or other funds of such ilk into government and/or treasury funds meaningfully. Notably for us is that we didn’t see our total AUM drop in that, just the mix moved dramatically into government related funds. In fact I think we’re actually $15 billion since in cash AUM since 2014, since summer of 2014. So, we’ve seen that asset class grow but the mix is clearly shifted into government. What we didn’t see was any meaningful migration onto the balance sheet. So, we did see that shift from prime and/or other gated or various funds into treasury and government funds but not on to balance sheet.

That’s interesting. That really just stayed within the money market complex, didn’t shift to deposits?

That is what we have seen through the third week in October.

Okay. Great. Thank you.

Yes.

Our next question comes from Marty Mosby with Vining Sparks.

Hi Marty.

Hi. I wanted to ask you a little bit about the premium amortization and since that prepayments kicked up over the last couple of quarters, is that real-time or is there any lag as we expect that from a seasonal standpoint going down but also just from prepayment speeds slowing, I would expect that some of that premium amortization would also be kind of drift lower because of that as well?

So, traditionally that’s what we’ve observed into the fourth quarter. And as you rightfully pointed out there is a series of factors other than just seasonality is it’s generally market conditions, interest rates and a series of other factors. Our normal pattern has been to see that in the fourth quarter come off. The $20 million of premium amortization you saw in the third quarter as I said was elevated over the previous year 2015’s third quarter by about $6 million. So we saw some modest decline in ‘15 from Q2 to Q3, this year we saw basically flat between the two. And in both of those years we saw meaningful declines from Q3 to Q4.

A piece that I was also trying to get at has actually been, initially this year you came in expanding your duration or lengthening duration using what looked to be like a little bit more in the mortgage backed securities. Then you had the premium that then got hit because of the amortization and prepayments. Have you slowed down on your utilization of your balance sheet capacity that put all-in or has this kind of spooked you a little bit at all, I just don’t see the same progress that we saw earlier this year in utilizing that capacity to increase the yield on your securities portfolio?

Yes, so, the mortgage backed that you’re talking about has increased I would say very modestly as a percent as you described it. I would not say it was because of being spooked by premium amortization because as you know that plays itself out over time. So that isn’t the decision criteria. I think the duration decisions we make are just part of our regular asset liability process and our view on future rate movements. So, I wouldn’t say that first of all it hasn’t moved materially in size as a portfolio and secondly it certainly wasn’t because of your word spooked because of the premium amortization.

Yes. Last thing I was going to ask is, part of your capital decision was a fact that competitors were under pressure from regulatory kind of capital requirements or liquidity requirements, which was helping push some incremental deposits and balance sheet your way. Do you still like that as starting to settle as we’re kind of seeing some of the others start to have less pressure as they’ve kind of accomplished a lot of the movement that they needed to, over the last year?

We saw a modest amount of that - to your earlier point, we saw a modest amount of that in the period of time when perhaps the balance sheet shrinkage was at its height. We’ve seen I’d say proportionally a little bit less as you rightfully described as institutions have sort of either right-sized their leverage ratio or right-sized their LCR requirements. I think we would retain and remain committed to the discipline we had in bringing those deposits on in the first place, which is looking at each individual opportunity of any substantial size and determining what the return dynamics are of it. We may be seeing a little bit fewer of those though.

Okay. Thanks.

Our next question comes from Gerard Cassidy with RBC.

Hi Gerard.

Hi Biff. I got a question on your [indiscernible] expense as a percentage of trust and investment fees on your slide 8. Do you guys have any longer term targeted goal of where you think that can get there? And as part of that question, obviously you’ve had success taking in from 120 down to 107 from ‘12 to where we are today. The strategies used to do that, was it permanently cutting expenses rather than seeing revenue growth or was it more revenue growth and how do you see that playing out to get to an ultimate target in the next two or three years?

Yes, we would, we’ve not stated a public target for that ratio other than to say that we continue to try to drive it lower. So we’ve not said anything further other than we’re committed to driving it lower over time. The way we think about it Gerard is that our most reliable income source is our trust investment servicing fees. And if we continue to have that cover more and more of our operating expenses, it allows for some of the other profitability line items like foreign exchange that is net interest income to truly flow straight to the bottom line. In terms of how we get after it, it really is a dual effort. It is both the revenue and the expense line. On the revenue line, we think about that as the organic growth in there is controllable by us. So the ability to win new business, retain clients, is 100% inside of our capabilities and efforts around new product capabilities, services that we can bring to our client base is important. And so we focus on the organic growth on the fee side. On the expense side, we’ve highlighted some of those initiatives to you. Probably most prominent over the last three to five years in driving that ratio has been our ability to locate our people in the right cost type locations. A great example is, in this quarter net, our net headcount grew only in what we deem to be tier-2 and tier-3 locations. There are other initiatives, we’ve talked about procurement, we’ve talked about technology saves where it’s cloud based work or storage based work etcetera. But we really get after then the expense side where we do believe there are still levers inside the expense space that we can continue to pull. A combination of those, we think can continue to drive that ratio lower. It is more difficult as we eliminate some of the lower hanging fruit.

Great. And then, as a follow-up, and obviously we’re all familiar with Governor Tarullo’s speech a couple of weeks back about issuing an MPR on the qualitative part of CECAR for banks under $250 billion in assets not having to go through the qualitative portion. Assuming that sticks and the qualitative portion is removed from your CECAR process, will that change your view on how much capital you will return to shareholders, I recognize you always like to keep very strong capital levels because of your reputation. But would that still influence you guys on thinking a little differently about the return of excess capital?

Well, Gerard, actually we’re what they term 15-18-Bank, we’re not exempt from that language because while our balance sheet is lower than $250 billion another caveat is around more than $10 billion of foreign balance sheet. We do exceed that as you see. So, we are in what they deem the large and complex bank group which is not what Governor Tarullo was discussing in that meeting, so.

True, okay, thank you. I appreciate that.

Still CECAR qualitative and quantitative in our requirements. Thanks.

And that does conclude today’s question-and-answer session. Thank you for your participation. And you may now disconnect.