State Street Corporation (STT) Q3 2015 Earnings Report, Transcript and Summary

Good morning, and welcome to State Street Corporation's Third Quarter of 2015 Earnings Conference Call and Webcast. Today's discussion is being broadcast live on State Street's website at www.statestreet.com/stockholder. This conference call is also being recorded for replay. State Street's conference call is copyrighted and all rights are reserved. This call may not be recorded for rebroadcast or distribution in whole or in part without the express written authorization from State Street Corporation. The only authorized broadcast of this call will be housed on the State Street's website. Now, I would like to introduce Anthony Ostler, Senior Vice President of Investor Relations at State Street. Anthony G. Ostler - SVP & Global Head-Global Investor Relations: Thanks, Stephanie. Good morning, and thank you all for joining us. On our call today are Chairman and CEO, Jay Hooley, who will speak first. Then Mike Bell, our CFO, will take you through our third quarter 2015 earnings slide presentation, which is available for download in the Investor Relations section of our website, www.statestreet.com. Afterwards, we'll be happy to take questions. During the Q&A, please limit your questions to two questions and then requeue. Before we get started, I would like to remind you that today's presentation will include operating basis and other measures presented on a non-GAAP basis. Reconciliations of these non-GAAP measures to the most directly comparable GAAP or regulatory measure are available in the appendix to our 3Q 2015 slide presentation. In addition, today's presentation will contain forward-looking statements. Actual results may differ materially from those statements due to a variety of important factors, such as those factors referenced in our discussion today in our 3Q 2015 slide presentation under the heading, Forward-Looking Statements, and in our SEC filings, including the risk factors section of our 2014 Form 10-K. Our forward-looking statements speak only as of today and we disclaim any obligation to update them even if our views change. For those of you planning ahead, please note that we expect to release our earnings in the fourth Wednesday of the month, following each quarter-end, starting in 2016. This is a change from the current practice of the fourth Friday of the month, following each quarter-end. This is due to how the calendar works in 2016 and 2017. As a result, we currently expect to release our 4Q 2015 results on Wednesday, January 27, 2016. Additionally, please save the date for our 2016 Investor Day, which is currently scheduled for Wednesday, February 24, at the Mandarin Hotel in New York City. Now, let me turn it over to Jay. Joseph L. Hooley - Chairman & Chief Executive Officer: Good morning, everyone. Our performance in the third quarter was impacted by the sharp decline in global equity markets, including a more pronounced decline in emerging markets. While I'm not pleased with the negative effect on our earnings during the quarter, I do believe that over the long-term our relatively higher exposure to global equities in emerging markets will benefit us. In light of the continued challenging environment, we are accelerating our multiyear plan to further digitize our operating environment and create cost efficiencies. The plan follows on our successful Business Operations and Information Technology Transformation Program. We are targeting savings that are in the range of approximately $500 million when fully implemented over a four- to five-year timeframe, which is similar to the duration of our recently completed Business Operations and Information Technology Transformation Program. Mike will provide additional details on our plan in his comments. As many aspects of the new regulatory landscape are taking shape, we're moving aggressively to position ourselves to comply. An example of this during the quarter was the significant progress we made in decreasing excess deposits on our balance sheet. Despite the market environment during the third quarter, we were able to advance our core business, growing operating basis fee revenue by 4% and 1%, compared to the nine months and quarter ending September 30, 2014, respectively and adding $141 billion of new servicing commitments during the third quarter. We continue to emphasize returning capital to our shareholders. During the third quarter of 2015, we purchased approximately $350 million of our common stock and at quarter-end had approximately $1.1 billion remaining on our March 2015 common stock purchase program, authorizing the share of up to $1.8 billion of our common stock through June 30, 2016. Now, I'd like to provide a brief overview of economic and market developments and how our business is affected. Concerns about global growth became more acute in the third quarter of 2015 with declines in emerging market growth rates, notably China, further degradation in commodity prices, and even the previously solid economic performance in the U.S. showing signs of hesitation. Equity markets became more correlated as a result. Gyrations in Chinese equity markets, which had been ignored earlier in the year, began to impact markets more broadly. Global equity markets posted their worst quarter since the third quarter of 2011, which was exacerbated by double-digit depreciation in many emerging market currencies, reflecting investment outflows from those markets. A modicum of calm has recently returned in October following the Federal Reserve's September decision to not raise interest rates amid weaker global conditions and accompanying financial stress. With the risk of deflation returning, investors now question whether U.S. monetary policy tightening will begin at all this year. Together these events and trends impact our business in several meaningful ways. First, the lower equity markets have caused our assets under custody and administration and assets under management to decrease. This decline in assets combined with the associated risk-off sentiment has resulted in lower fee revenue. Second, the low interest rate environment continues to negatively impact our net interest revenue and net interest margin. This is in part driven by our higher-yielding portfolio investments maturing or experiencing prepayments. And then those funds being reinvested in lower-yielding investments. Now, I'd like to discuss our Asset Servicing and Asset Management business. We added $141 billion of new servicing commitments during the quarter across all sectors and geographies. New assets to be serviced that remain to be installed in future periods totaled $195 billion at September 30. And we continue to see deep and diverse pipelines. Our Asset Management business experienced net outflows of $29 billion during the third quarter of 2015, driven primarily by net outflows of $42 billion from institutional mandates, partially offset by $10 billion of inflows to ETFs. The significant drivers of passive equity outflows include rebalancing and cash needs of some of our clients due to lower commodity prices, which is a continuation of a trend that we saw in the second quarter, as well as an expected redemption from one large client. The SPDR DoubleLine Total Return Tactical ETF, which is an active equity income ETF launched in partnership with DoubleLine, has gained further momentum. It has attracted $1.2 billion in net flows post-launch and now ranks as the most successful ETF launched in the U.S. this year. Additionally during the third quarter, we launched another 13 new ETFs, bringing our year-to-date new launches to 22. Now, I'd like to turn the call over to Mike, who'll review our financial performance for the third quarter, and then we will open the call to all of your questions. Mike? Michael W. Bell - Chief Financial Officer & Executive Vice President: Thank you, Jay, and good morning, everyone. Before I begin my review of our operating basis results, I will comment on significant items, which affected our third quarter 2015 GAAP basis results as highlighted on slide four. First, we recorded an after-tax charge of $47 million related to severance for targeted staff reductions. This measure was taken to better calibrate the company's expenses to the current environment and will involve a gross and net worldwide reduction of approximately 600 and 200 positions respectively. We expect these staff reductions to be completed by the end of 2016 with projected expense savings of $50 million with approximately 75% of the savings to positively impact 2016 results. Second, we recorded an after-tax gain of $49 million from the sale of commercial real estate acquired as a result of the Lehman Brothers bankruptcy. And lastly, we recorded a tax benefit of $59 million related to a reduction of an Italian deferred tax liability as a consequence of our European legal entity restructuring activities. Now, I'll refer to slide seven for a discussion of our operating basis results for 3Q 2015 and for the nine months ended September 30, 2015, which I'll refer to as year-to-date. The 3Q 2015 results primarily reflect the challenges from the declining global equity markets and persistently low market interest rates, as well as the seasonal decline in securities finance in comparison to the second quarter. 3Q 2015 EPS of $1.16 decreased from 2Q 2015 and from the year-ago quarter. Year-to-date EPS decreased slightly compared to the same period a year ago. Importantly, compared to the year-ago period, year-to-date total fee revenue increased 3.7%. 3Q 2015 total fee revenue increased 1% from the third quarter of 2014 and decreased 3% from 2Q 2015, primarily reflecting the adverse market conditions. Compared to the year-ago period, year-to-date fee revenue was negatively impacted by $212 million from the stronger U.S. dollar, largely offset by a similar benefit in total expenses. Regarding capital, in 3Q 2015, we declared a common stock dividend of $0.34 a share and purchased approximately $350 million of our common stock. Lastly, we're pleased that we made progress on a key priority to reduce the level of deposits on our balance sheet. So moving to slide eight, year-to-date fee revenue increased 3.7%, while expenses increased 2.8% versus a year ago. On a constant-currency basis, year-to-date fee revenue increased 7.2%. Turning to slide 10, I'll discuss additional details of our operating basis revenue for 3Q 2015. Servicing fees were down from 3Q 2014, primarily due to the impact of the stronger U.S. dollar and lower international equity markets, partially offset by net new business and higher transaction volumes. While the EAFE equity index was down approximately 7%, our 3Q 2015 servicing fees were particularly impacted by the 15% sequential decline in emerging-market average daily levels. We estimate that approximately 10% of our servicing fees are tied to emerging markets. 3Q 2015 management fees decreased relative to a year ago, primarily due to the impact of the stronger U.S. dollar, lower performance fees and lower international equity markets. Total trading services revenue in 3Q 2015 increased from 3Q 2014 due to the higher foreign exchange trading revenue, reflecting higher volatility in volumes. And compared to 2Q 2015, trading services revenue increased due to higher direct foreign exchange trading revenue. Securities finance revenue increased from 3Q 2014, primarily due to new business in enhanced custody, and was lower than 2Q 2015 reflecting seasonality. Processing fees and other revenue increased from the year-ago period and sequentially, primarily due to the impact of certain valuation adjustments and higher revenue from bank-owned life insurance. Moving now to slide 11, as you can see, our operating basis net interest revenue continued to be pressured due to the prolonged low interest rate environment and our success in the third quarter in reducing client deposits. The decline in deposits during the third quarter largely occurred towards the end of the quarter, thus explaining the smaller decline in the average deposit balances quarter-over-quarter versus the period end balances quarter-over-quarter. Now, let's turn to slide 12 to review third quarter 2015 operating basis expenses. Total operating basis expenses decreased slightly from 2Q 2015. Other expenses included a recovery from certain Lehman Brothers claims, which was largely offset by a single securities processing loss of $38 million, which resulted in total securities processing costs for 3Q 2015 of $41 million. This loss was a specific event, and we've evaluated its nature and are implementing control enhancements to mitigate recurrence. Compared to the third quarter of 2014, compensation and benefits expenses increased, reflecting increased costs for new hires to support new business and regulatory initiatives, partially offset by the benefit of the stronger U.S. dollar and lower incentive compensation expense. Information systems and communications expenses increased over both periods, reflecting increased cost to support new business and additional data center capacity. Other expenses increased from the year-ago quarter, primarily due to higher professional services fees, including costs to support regulatory initiatives, as well as higher securities processing costs, partially offset by the third quarter 2015 Lehman recovery and lower charitable contributions. Turning to slide 13. We note that we continue to reposition our balance sheet. The size of the average investment portfolio decreased by approximately $9 billion from June 30 of 2015. The majority of the decrease was related to the sale of lower-yielding MBS and ABS, partially offset by the increase in U.S. treasuries. Now, I'll turn to slide 14 to review our capital position. As you can see, our capital ratios remained strong, which has enabled us to accomplish a key priority of returning capital to shareholders through dividends and common stock purchases. At September 30, our common equity Tier 1 ratio under the Basel III fully phased-in standardized approach increased from June 30, principally due to lower credit risk. The fully phased-in holding company supplementary leverage ratio increased to 5.4% on a fully phased-in basis, principally due to our success in reducing client deposits. Now, I'll address a question that's likely on investors' and analysts' minds, and that's to provide an update on our efforts to reduce client deposits including the total reduction level that we're targeting. Throughout third quarter 2015, we engaged in productive discussions with clients regarding the implications for our balance sheet associated with excess deposits. While overall deposits declined approximately $44 billion during the quarter, some of that reflected a lower deposit spike at the third quarter end. Importantly, excluding the deposit spikes at quarter-end, we estimate that our balances were $30 billion to $35 billion lower at the end of the third quarter relative to the second quarter, and we view this deposit reduction effort as successful. Nevertheless, it's also important to recognize that the external environment can impact deposit levels in the future. And our average fourth quarter balance sheet will be the starting point for our 2016 CCAR submission. In addition, as interest rates increase, we also expect to see further declines in client deposits. Turning to slide 15, I'll update you on where we stand regarding our financial outlook for 2015. Primarily due to the third quarter 2015 steep decline in equity markets, particularly in emerging markets, we likely will fall below the previously communicated 4% to 7% growth of operating basis fees in 2015. The continued strength of the U.S. dollar has contributed to downward pressure on fee revenue growth as well. Given the weakness in fee revenue, it will be more challenging for us to grow 2015 operating basis total fee revenue at least 200 basis points above the 2015 growth of operating basis expenses. While this quarter's severance action will have an immaterial impact on operating basis expenses within 4Q 2015, overall we do expect that 4Q 2015 operating basis expenses will be lower than 3Q 2015 levels. For full-year 2015 operating basis net interest revenue, we currently expect to be near the lower end of our previously communicated range of $2.16 billion to $2.22 billion. Our expectation to be near the lower end of the range primarily reflects both the successful effort in reducing excess deposits and continued low market interest rates. Now, I'd like to add some additional detail to Jay's comments on the next stage of our transformation program to digitize our enterprise. To be clear, our objectives are twofold. First, we intend to make further significant reductions in our cost structure. And second, we plan to digitize our interfaces with our clients in order to deliver more value. We've decided to accelerate the next stage of this work through the execution of a formal multiyear plan along the lines of the recently completed and successful Business Operations and Information Technology Transformation Program. While we are still finalizing the details of this second phase of work, we anticipate targeting at least $500 million of annual expense savings when fully implemented. Importantly, the program will likely involve restructuring costs and investments to fully implement the plan and capture the savings, just as the business ops and information technology transformation program did. The specific timeframe and other parameters are still under development and we look forward to providing a further update on our 4Q 2015 earnings call and review of the detail at our Investor Day on February 24, 2016. And with that, I'll turn it back to Jay. Joseph L. Hooley - Chairman & Chief Executive Officer: Thanks, Mike. And, Stephanie, we are now available to open the line to questions.

Thank you. Your first question is from the line of Luke Montgomery with Bernstein Research. Luke Montgomery - Sanford C. Bernstein & Co. LLC: Hey. Good morning. I think last quarter you gave or – are you declined to give a target on the amount of excess deposits you hope to shed, but you did say you had a range in mind. Was the decline within that range? And what does that indicate about your potential need for incremental preferred issuance? And then I think you said deposits declined $35 billion adjusted for the lower quarter end spike, so where do excess deposits stand now? Michael W. Bell - Chief Financial Officer & Executive Vice President: Sure. Luke, it's Mike. First of all, one clarification before answering your specific question and that is that we estimate that the deposits if you exclude the quarter end spike were actually down $30 billion to $35 billion. So something in that range of $30 billion to $35 billion rather than explicitly $35 billion. But to answer the main part of your question, first, specifically, yes we're pleased with the progress that we made. We did in fact hit the objective that we had for full year 2015 as of the point in time into the quarter – third quarter 2015. Now, I would point out in reference to your pref question, the main priority we're focused on here is positioning for the next CCAR. So the 2016 CCAR will likely be our near-term binding constraint and will likely be the most important factor in terms of pref issuance in the near-term. And if you recall our CCAR results from the last go-round, the Tier 1 leverage was our binding constraint and it's likely to be our binding constraint again. So as you can imagine, very helpful to reduce deposits by $30 billion to $35 billion in terms of meeting the near term Tier 1 leverage target. So in terms of your specific question on the prefs, I do expect that in first quarter of 2016, we'll look at a number of different factors. We'll look at the parameters of the CCAR test. We'll look at the balance sheet for the average fourth quarter 2015 because remember it's not the September 30 balance sheet. It's the average balance sheet over fourth quarter 2015 that's going to be so important in terms of the next CCAR. So, again, maintaining the lower level through fourth quarter is a high priority. But basically, we'll look at all of those things in 2016 and then make some decisions on any pref issuance plans for 2016. Luke Montgomery - Sanford C. Bernstein & Co. LLC: Okay. Joseph L. Hooley - Chairman & Chief Executive Officer: And, Luke, let me just if I can since I know excess deposits such – is a meaningful question and issue in your minds. Let me just open that, widen that question a little bit. We've been on at least a year journey with our customers. And I think what's transpired through that is that, one, we've developed a very accurate sense of what's operational and what's excess. We define who the outliers are, we've engaged in conversation around those discussions. We have helped customers facilitate transition to money funds out of treasury products. And we've used fees in order to encourage the right behavior. And so regardless of whether we're at where we want to be in the fourth quarter, what's to me more important is that the dialogue is clear and open and we found a lever that is in charging fees on excess deposits, which I believe will allow us to control excess deposits and manage the size of our balance sheet more proactively going forward. Luke Montgomery - Sanford C. Bernstein & Co. LLC: Okay. Thanks. And then you provided, I think, a very detailed model-friendly plan with the first phase of the business transformation initiative. I think you said that's forthcoming, but at this point, are you prepared to speak to any detail? What is multiyear plan mean? Will the savings be frontend or backend loaded? Do you anticipate a bottom-line impact? Or is this just offsetting the growth rate of expenses? Joseph L. Hooley - Chairman & Chief Executive Officer: Let me start that, Luke, and Mike can weigh in. As you recall, the business ops and IT transformation program we set milestones and timelines to demonstrate to you that we were getting the saves that we anticipated getting, and we would anticipate a similar kind of layout going forward. We don't have – we have that detail internally but we haven't translated it into something that we can clearly articulate to you. But let me just again wind that one back because, I think, it will be the source of probably a series of questions during this morning's call. Business Operations and IT Transformation largely created standardization, centralization and we took advantage of lower labor costs. If you look at business ops and IT transformation, I equate it to 70% of the benefit was gained from, I would say, process improvement and labor cost arbitrage, 30% technology. Now that we've taken that first step, what we announced today is something that we have been planning, but the new news is that we've accelerated given the difficult environment. And largely it involves digitizing that interface for the customers, so everything comes into us electronically. And then from an end-to-end basis, as information flows into us on the front end, it flows all the way through our systems without human intervention, and then out the other side for data analytics purposes. So in this next phase, I think the mix is more like 70% or 80% technology-enabled automation, and 20% or 30% process and/or labor arbitrage. So I think – I'll hand it over to Mike in a minute, but we will, beginning fourth-quarter call and then more extensively at the February 24 Investor Meeting, walk you through the plans, the details, the milestones and what you should look to us for on a periodic basis for updates. Mike, do you want to add anything to that? Michael W. Bell - Chief Financial Officer & Executive Vice President: Yeah, it was a complete answer, Jay. The only piece, Luke, I would add is we are working through the details here, so this would be the pacing details. This would be the details around the required investments and likely charges. I know that several of you are going to be interested in what does this mean for full-year 2016? So it's really – that level of detail is what I'd, as Jay said, we're working through those specifics right now in the format that I know you're interested in. So that's the piece that'll be forthcoming at fourth quarter and also at the February Investor Day. Luke Montgomery - Sanford C. Bernstein & Co. LLC: Okay. Thank you very much.

Your next question is from the line of Glenn Schorr with Evercore ISI.

Hi, there. I guess just a follow-up to that is the markets can move up and down and as we've seen already in October, markets are up 8% to10%. So curious on a sidebar, how much do you think of the weakness in third quarter you might already have recouped some of that benefit in October if markets stayed here? And then the second part of it is much more important is similar to Luke's, how much of it falls to the bottom line. Should we be, is an easier question or harder question to ask you, where should margins be for your business? In other words, down to 28.9% is below where you've been historically with these various cost programs, ops and IT and now this one. Is there a goal to be riding at a certain level? Like how are you going to measure profitability for yourselves in the next couple of years? Michael W. Bell - Chief Financial Officer & Executive Vice President: Sure, Glenn. It's Mike. Good morning. First on your first question on the markets, it's certainly a positive that markets have rebounded month-to-date here in October. I would point out just for completeness that emerging markets now are pretty close on a month-to-date basis back to the third quarter average. They had really dipped in late September, and what's particularly important to us is the average over the whole quarter. So I would – I'd hesitate to try to claim any kind of victory based on the first three weeks of October, and obviously we've got another couple months to go. But I would agree with you that it's certainly been helpful to see the equity market positive news on the first three weeks of the month. Jay, do you want to talk about the? Joseph L. Hooley - Chairman & Chief Executive Officer: Yeah, let me attempt to take that one on, Glenn. The digitization plan which we're announcing today of approximately $500 million in savings over a four year to five year period should obviously help our ongoing goal of annual operating leverage. And all else equal, will improve the margin. If everything else was held steady, the margin would improve. We all know that markets are markets and rates are rates and we don't always control that, so in addition to demonstrating for you that this change will improve the margin, the other thing that we look at, probably more importantly internally, is we look at unit costs. When you apply technology to a manual process, we've got excruciating detail around the unit cost of all of the activities that we conduct and when you apply technology and reduce labor, couple things happen. One, you improve quality of the customers, you reduce risk, the operating risk that we talk about today. If you're automating, you're not going to have that kind of stuff. And importantly to all of us here, it reduced costs. So for me, it's looking at the unit costs and making sure that we're reducing those unit costs steadily over time. But again, everything else held constant, the margin should improve.

Understood. And it is a small thing, but is the $50 million in annualized savings from the head count actions you took part of the $500 million, or is that a separate? Joseph L. Hooley - Chairman & Chief Executive Officer: That is separate. That is explicit to this quarters actions we took. The $500 million is incremental to the $50 million.

Got it. Okay. Thank you very much. Joseph L. Hooley - Chairman & Chief Executive Officer: Thanks.

Your next question is from the line of Ken Usdin with Jefferies.

Hi, thanks. Good morning. First question, Mike, for you on the NII front. So on an ex-rates basis, if we're at the kind of low end of the $2.16 billion, we're exiting the year just above maybe $510 million on NII in that circumstance. I think – I guess if you could just help us understand as you look ahead on an ex-rates basis when would you anticipate NII starting to stabilize out? I know the NIM will be a function as we saw this quarter of the excess deposit flows here and there, but when you're thinking about net interest revenue dollars, how do you start to think about seeing that through on an ex-rates basis? Michael W. Bell - Chief Financial Officer & Executive Vice President: Sure, Ken. Good morning. First of all, it's largely dependent, Ken, as you can imagine, on what happens in terms of market interest rates, which will be tied very closely to what the Fed does in the near-term in terms of potentially increasing the administered rate. To focus on two different scenarios, if you'll recall at our Investor Day, we had said, look, if you exclude the excess deposits and assume that the Fed funds rate would ultimately get back to 2% and the U.S. Treasury at 10 years would get back to 3.5%, we would expect that the NIM, again, importantly, excluding the excess deposits, would be in the range of 150 basis points to 160 basis points approximately four years after the Fed stopped increasing those rates. Now again, there's a lot of assumptions in there, and all things equal, of course. But that gives you a sense that it could take a while, but it could be a meaningful increase because that 150 basis points to 160 basis points would compare to something in the low 120s basis points today on that same basis. So again, a fair amount of upside that would way more than offset the loss of the NIR from the excess deposits. Conversely, that low 120s basis points could fall to something like 95 basis points to 100 basis points, if you recall at the Investor Day presentation, if interest rates stayed static. So again, unfortunately, a fair amount of downside if rates stay exactly where they are. So it is a relatively unpredictable period, Ken, so I think it would be fair to say in net, it's too early to give you a specific thoughts around calendar year 2016, but in net, there could be continued grind if we don't get help on market interest rates, but we could get help over time if we could get some help there.

Okay. One follow-up on expenses. You're asked about this a lot, just underlying regulatory cost inflation, which has been a big burden of this year. Again, aside from the program, the $50 million to $500 million, what's your line of sight to at least seeing kind of the core rate of growth of expenses starting to slow, or are we still on the upward escalation part of that part of the spend? Michael W. Bell - Chief Financial Officer & Executive Vice President: Sure, Ken. The way I think about it is in really a couple of different pieces. First of all, I would remind you that we're in a service business, so as we add additional net new business, as we have for 2015, I would expect that we'd have to add expenses to service that revenue. But obviously, we expect to get positive operating leverage on that additional revenue. So net-net, the revenue more than pays for the additional expenses. You're absolutely right, the burden that we have faced here in 2015 and also in 2014 was related to the regulatory and related priorities, and that expense came both in terms of adding full-time staff but also outside consultants. As we've talked to you about before, we do anticipate in Q4 and also in 2016 making more progress on replacing those outside consultants, which are very expensive, with additional full-time staff. And just as we've gotten better in terms of process improvement on these priorities, I think we get more efficient and smarter at how we're spending the money. So again, that's been upward pressure in 2014 and 2015. I think we'll be more productive in 2016. I still would anticipate, I wouldn't put a number on it at this point, that 2016 regulatory expenses would be higher than where they ended up for 2015 just based on the overall environment and the higher regulatory expectations worldwide. But I don't think we'll see the magnitude of increase and certainly we're working through the budgeting process to try to limit that year-over-year increase to something less than what it's been here in 2015. And then the only last comment I'd make and then see if Jay, wants to add anything is around we will continue to make additional efficiencies. We've made progress on that in 2015. The severance charge that we're announcing today is obviously, another near-term step, and then as we've laid out today, the significant focus on this multiyear plan to get the next tranche of the transformation savings. Joseph L. Hooley - Chairman & Chief Executive Officer: No, I don't have anything to add, Ken.

Okay. Thanks, Mike. Thanks, Jay.

Your next question is from Betsy Graseck with Morgan Stanley. Elizabeth Lynn Graseck - Morgan Stanley & Co. LLC: Hi. Good morning. Michael W. Bell - Chief Financial Officer & Executive Vice President: Morning. Elizabeth Lynn Graseck - Morgan Stanley & Co. LLC: I just wanted to dig in a little bit to the deposit strategy and I think it's great that you were able to bring the deposits down. I just wondered, you mentioned client conversations. We've seen the front end of the curve in the auctions and treasuries, go for zero rates. So I'm guessing that's part of the strategy to increase, move deposits or excess cash out maybe to the treasury market. But I'm just wondering what other kinds of discussions or conversations you're having? And how much did the pricing change that you discussed last call impact your success? And do you see pricing continuing from here to have a positive impact on your balances? Joseph L. Hooley - Chairman & Chief Executive Officer: Yeah. Let me take that one up, Betsy. As I referenced before, this is, I think, probably the most important thing we did was had an extended conversation with customers making sure they understood through our eyes what was excess and what was more burdensome from the capital return standpoint. Once we got there, the customers, they get it. They understand the capital pressure. So it was really then more a matter of what's the execution plan. We had some vehicles within State Street that we're able to utilize to offload or relieve some of those excess deposits. They also chose to use other vehicles. I think the pricing, which I would say in Europe ratchet up three or four times and the U.S. less so, was us feeling our way to determine at what level of cost to the customer for excess deposits, it created the right behavior. So the most important thing was transparency and openness of discussion, facilitating and helping them with alternative strategies for excess deposits, and then reinforcing that with the pricing mechanism, which I think ultimately that combination of things leaves us in a place where our customers appreciate and understand what we're going through and are trying to help us solve the overall issue. And leaves us with, I think, a mechanism in place, i.e. pricing, that should allow us to, within reason, manage the size of our balance sheet. Elizabeth Lynn Graseck - Morgan Stanley & Co. LLC: And do you feel like this is the beginning and there's a lot more to go? Or that you worked really hard, obviously, on this for a while, so you've optimized as much as you think you can optimize with your clients at this stage? Joseph L. Hooley - Chairman & Chief Executive Officer: I think I would say that, importantly, what we've done is establish some, I'll use the word control or some ability to influence those deposits. And as Mike mentioned, we set our target, which we achieved that target. I think going forward, the size of the deposit base and the burden on the balance sheet will be dictated by CCAR or other internal processes, our view of rates. So we think we're in a pretty good place right now not only from a standpoint of where deposits are but reiterating the importance of how we got there. Elizabeth Lynn Graseck - Morgan Stanley & Co. LLC: Right. So you're not really looking for that much more shrinkage from here? Joseph L. Hooley - Chairman & Chief Executive Officer: Not at this point. Elizabeth Lynn Graseck - Morgan Stanley & Co. LLC: Right. Okay. Thank you.

Your next question is from the line of Mike Mayo with CLSA.

All right. Good morning. Joseph L. Hooley - Chairman & Chief Executive Officer: Morning.

So I just want to summarize what I think I heard. You're missing your targets for operating leverage and fee growth for 2015. There's a lot of reasons: lower rates, lower markets, lower dollar, lower EM, and higher regulatory costs. And part of the solution is to accelerate the plan to digitalize the operation. So if my understanding is correct, why a total of perhaps five years from now to get the benefits from the plan? I understand you won't tell us all the details until January, but we're talking I guess, the end of 2020 for some of these benefits. And can you reassure us that you guys have a sense of urgency after having less than ideal operating leverage this year? Joseph L. Hooley - Chairman & Chief Executive Officer: Let me start that, Mike, and then Mike can jump in if he chooses. I'd separate those two comments. I mean they're broadly related, but we set out a 4% to 7% revenue growth rate and 200 basis points at the beginning of the year, conditioned upon a certain set of market and rate environment. And as Mike reported, we haven't thrown in the towel on the 200 basis points. I guess that's important to say that we have probably a realistic view of the fourth quarter from a market standpoint. And we believe it's going to be pretty challenging to get to the bottom end of that 4% to 7% growth range. But we are turning over every rock in the fourth quarter to attempt to hit that 200 basis points. We're just saying it looks like a stretch as I sit here today. Related but separately, you know as well as anybody the business ops and IT journey that we went on, and I think you have an appreciation of the foundation that set for us. Digitization is the next logical step in that journey. And we had the digitization plan, but in light of the continued downward pressure on the environment, I've decided that we're going to accelerate that forward, we're going to put more emphasis, more resources on it and get to that $500 million quicker than we would have had we not. When 70% of the improvement is technology-driven, there is some gate for how quickly you can go but what we're saying is we are going to make it the highest priority in the organization to accelerate that plan. And we think that it will have the attended benefits of cost, which we're all interested in. But it's also going to accelerate our ability to deliver data analytics products to our customers as we streamline the internal data flow within the organization, reduce risk, and reduce operating loss. I think what we're saying is tough third quarter based on the environment, haven't given up on our goals for 2015, but given our overall outlook for the environment, we're moving forward a plan that we had in place anyway to accelerate our ability to reduce costs. Mike, do you want to add anything? Michael W. Bell - Chief Financial Officer & Executive Vice President: Yeah, Mike, I would just add that, remember, this is built off of the backbone of the IT and ops transformation program, which I think everybody would view as being very successful. That also was a multiyear plan but the fact that we were able to meet the interim as well as the full program objectives there, gives us a lot of confidence that we can do the same for this next tranche.

And then just one short follow-up. On page three of your slide, it says long-term shareholder value and it gives long-term goals, certainly not for this environment. Might you have to reconsider those long-term goals at some point? Michael W. Bell - Chief Financial Officer & Executive Vice President: Yeah, Mike, I would say that we'll certainly each year continue to look at the long-term expectations that we have for this business. For now, certainly – and we went through this, if you recall, at our last Investor Day, we do believe that those goals are achievable as long as in particular that we get some help in terms of a return to more normal interest rates and the other items that we talked about at – backing those goals back in February.

All right. Thank you.

Your next question is from the line of Jim Mitchell with Buckingham Research.

Hey. Good morning. Just maybe a quick question on the SLR. As you pointed out, a lot of the deposit declines came at the end of the quarter. So as we look to 4Q, since the SLR denominator is based on an average, if I do the math right, based on your indications, does that add – should we expect that that adds, all else being equal, around it seems like maybe 40 basis points to the SLR next quarter? Michael W. Bell - Chief Financial Officer & Executive Vice President: Yeah, Jim, it's Mike. Yeah, certainly your arithmetic is in the ballpark. I would remind you that the – that implies that we continue in terms of those, the lower levels of deposit through the entirety of the average of fourth quarter, and also that nothing else materially changes. But again, subject to those caveats, your arithmetic is on the money. We'll get the benefit of the drop in the deposits in September, we'll get the full benefit of that in Q4 as long as it's maintained.

Okay. So when we think about the conversation around preferred, you're reticent to kind of say that it's off the table, it's just because you don't know how it progresses from here. If we see another spike in the balance sheet, that might be a different discussion, but given that you could be getting much closer to 6%, it seems like there's a clear guide path to above 6% over the next couple of years. Is that a fair comment? Michael W. Bell - Chief Financial Officer & Executive Vice President: Jim, yeah, I'd split it up into two pieces. First, your comments are fair as it relates to the SLR, and in fact, we've said all along that we are confident that we're going to be in compliance with SLR, which doesn't kick in until 1/1/2018, and that we'll be on a glide path to get there. So, yes, I continue to feel positive about our longer-term compliance with SLR. I would reinforce, though, Jim, what I said earlier, and that is near-term, the most important binding constraint is not the SLR, it's the upcoming CCAR test, and specifically based on our experience last year, it's the Tier 1 leverage calculation in the upcoming CCAR that's likely to be our near-term binding constraint. And I'm sure, that's going to be impacted by our Q4 balance sheet, but it's also going to be impacted by the parameters of the CCAR test. We don't know what those are yet, obviously, and we'll have to investigate those parameters and put it through our own capital management modeling. So there are just a lot of other things that – beyond the longer-term SLR compliance that could go into a decision in 2016 around prefs, and I just, I – not knowing those parameters, I can't say definitively, but obviously we plan to give an update here in – at the beginning of 2016.

Okay. That's helpful. Thanks.

Your next question is from the line of Brian Bedell with Deutsche Bank.

Hi. Good morning, folks. Joseph L. Hooley - Chairman & Chief Executive Officer: Morning.

Jay, just to take a step back on the business ops transformation program and your digitization program, just big picture, I guess, moving from the former program where you certainly had a technological lead versus your peers, and then to this program, is this something that in your mind was an evolution that you thought would have to happen even several years back, or is it more in a response to an increasingly competitive environment? Of course, BNY advanced their technological move a couple of years back, post the integration of Mellon, and just trying to get a sense of the competitive environment that's causing this versus how you feel about your leadership position? Joseph L. Hooley - Chairman & Chief Executive Officer: Yeah, let me give that a shot, Brian. The – I think it represents the inevitable endgame for this business, which is increasingly what we do even though we value some of the operational activities and pricing that we do at the end of the day. The value that the customer sees is the information and analytics that gets derived from all of the data and accounting that we do internally here. And that is impeded today for everybody by multiple systems, breaks, handoffs, reconciliations which causes an inherent delay in the information which lessens its usability. So not far into the future, I think we end up being the organization that delivers upstream analytics to portfolio managers, to risk managers, to compliance managers that provide that real-time insight into the information we hold on behalf of our customers. So that's where the puck's going. I think everybody is grappling with this in different ways. We have the good fortune, you could say good fortune or good management, to begin with common systems. And so the common systems that we had going into the business opts and IT transformation program allowed us to look at the common processes, which are many, go through a lean or Six Sigma type analysis, optimize those processes, form centers of excellence, leverage places like Poland, China, India for a low-cost location. And that's where we are today. So we run common systems. We've got common processes. The next leg of that is to automate from an end to end basis when a trade comes into the organization, all the way through and out the back end. How that marries up with where the puck's going is that if you can do that, then that information becomes real-time – all the processing that goes on and the information we deliver back up to front offices of our customers – is much more valuable than it is today. And if you were to visit with any asset owner, any asset manager, and ask them what's on their top three list of challenges today, it's aggregating data on a real-time basis for insights, for portfolio management, risk management, and compliance. And we aim to be the organization to get there. And you can't get there unless you take these steps that I just outlined. And I would say from a standpoint of where we are from a leadership standpoint, common systems, common processes, leveraging emerging markets all over the world. And the next big step is to digitize end-to-end those activities. I think we're out in front of everybody with regard to that. And I think we've got the right vision and view. And this is just saying we're going to further accelerate the execution to make sure that we deliver on an organization that's better situated for where the future opportunities are, and an organization that will continue to be a cost leader from a standpoint of those core activities that we conduct.

Okay. That's great color. Thanks very much for that. And then, Mike, just some couple of clarifications. Just your comments around the 120 basis point NIM, excluding excess deposits. What type of an environment do you need to get to that? And if you could just comment again. I think I may have missed this. The actual excess deposit level you have now, now that you've got $30 billion to $35 billion off. And then on regulatory expenses, you mentioned the pace slowing in 2016 versus 2015 you think. What was the increase in regulatory costs in 2015 so far versus 2014? Thanks. Michael W. Bell - Chief Financial Officer & Executive Vice President: Sure, Brian. It's Mike. First of all, related to the net interest margin, the low 120s basis points, Brian, that I was mentioning in answer to the earlier question is approximately where we are right now. So we reported an overall NIM of 95 basis points. If we strip out the excess deposits and some other near-term items on the balance sheets like higher CD levels and look at, instead, the net interest margin on what we believe to be the long-term balance sheet, which includes the operational deposits and, again, more normal levels, we basically calculate a NIM today in the low 120s basis points. And as I was answering earlier, I think, to Ken's question, that could grind down further by, say, another 25 basis points or so. Or it could increase further or another 30 basis points, 35 basis points or so, depending upon where market interest rates go over the next few years. So your second question was around the excess deposits. On our historical method for calculating excess deposits, which we've given you now for the last couple of years. We estimate that our average excess deposits dropped for average Q3 versus Q2 by approximately $16 billion. So a drop from $62 billion on average at Q2 to $46 billion on average for Q3. But much like what Jim Mitchell was asking about, we would expect if the deposit level simply stay where they are today, that would drop further in Q4 because we will pick up in Q4 the full average. Now I cannot emphasize enough, Brian, that that does assume that there is no significant change in the external environment, and we are very sensitive to the fact, for example, that the last time there was a debt crisis we saw a huge inflow of deposits. So there is certainly other factors out in the environment that could change that. But basically, if nothing else changed in the quarter relative to where things are today, we would see another similar type of drop in the excess deposits in Q4. And then your last question around the regulatory expenses. We declined giving a specific number, Brian, because I just think there is so much art rather than science that goes into estimating all in regulatory expenses. Obviously we track very closely very specific regulatory initiatives like CCAR compliance, but we know that there's upward pressure throughout the organization in terms of first line of defense, second line of defense, corporate audit et cetera, that are – at least largely a function of the higher regulatory expectations worldwide. So I'd prefer not to give a specific number there.

Okay. Good. That's great color. Thanks so much.

Your next question is from the line of Alex Blostein with Goldman Sachs. Alexander V. Blostein - Goldman Sachs & Co.: Hi. Good morning, everybody. Joseph L. Hooley - Chairman & Chief Executive Officer: Morning. Alexander V. Blostein - Goldman Sachs & Co.: So another one on the expense program I guess. May be taken another way, but I guess the challenge that a lot of investors have with a lot of these cost initiatives is that when you look at a point-to-point from the time you guys have announced the original program, call it 2010 through the end of last year at least, you know, expenses are up 20%. Granted, the revenues grew as well, but I think it will help us understand what is the embedded core expense growth in your view that is reasonable for you to have in today's current regulatory environment in order to achieve your organic growth goals. Is it 3%, is it 5%, just to kind of get us somewhere, you know, help us better assess how much of an ultimate bottom-line impact we could have from this program? Thanks. Joseph L. Hooley - Chairman & Chief Executive Officer: Yeah. Let me start that, Alex. This is Jay. Reflecting on your math from where we ended up the last program, I think the winds we've been sailing into have largely been regulatory expenditures and the grinding down of interest rates, which have affected net interest revenue I think. I don't have the math in front of me. And I think if you took those away, then you know – so we would – you know you can take your own view on where we are on the rate cycle. As Mike indicated, we think we are at least bending the curve on the regulatory cost growth going forward. And if you isolated those two things, it's the operating leverage thing again, and the service business, you are always doing new things for customers, some of that requires expense to do that. But I would point to operating leverage and/or, if you are able to hold those other variables constant, margin improvement. But, Mike, what would you...? Michael W. Bell - Chief Financial Officer & Executive Vice President: Yeah, I would add, Alex, that first of all Jay is right. If you adjust for the higher regulatory expenses and the lower net interest revenue from the grind in interest rates we have in fact expanded margins along the lines of, actually a little more than the $625 million that we reported as IT and ops transformation. So the only piece I would add to Jay's answer is that I think importantly, Alex, is the relationship between the fee revenue and the expenses. So, and we've talked about this before. In an environment where fees are growing at 5% say, and again, there's some help from markets in there, there's some help from flows in there, there's some help from market-driven revenues like FX trading revenues. Then we do in fact expect to have that outpace our expenses in a normal period of time. Obviously, that is measured over a longer period of time than just one quarter in any given quarter. For example, Q3 was a good example of that where there is a sharp contraction in markets, particularly like we saw in emerging market equity levels then that relationship won't always hold. But again given the success also we had with the first IT and ops transformation program, I would hope that we built credibility with you in terms of our ability to translate these kinds of programs into our overall margins all things equal. Alexander V. Blostein - Goldman Sachs & Co.: Got it. So just to paraphrase, more normal environment the operating leverage on the core business ex-rates. We should still think about in that 200 basis point spread and then layer on the savings on top of that? Joseph L. Hooley - Chairman & Chief Executive Officer: Yeah, I wouldn't quite jump to the 200 basis points because again, I think that was a 2015 objective. Which did include by the way some productivity benefits, which have helped us offset some of the upward pressure on regulatory expenses. Alexander V. Blostein - Goldman Sachs & Co.: Got you. Okay. And then, Jay, just a question for you on the excess deposits again. You alluded to some levers outside of just price increases. Any way to specify, I guess, what those were and the magnitude of the benefit that you guys got from those additional levers when it comes to the $30 billion, $35 billion number? Joseph L. Hooley - Chairman & Chief Executive Officer: Yeah, Alex, I would say that, I mean, if you would call them levers it's probably three things. Its full transparency with customers with specificity around our objective, which translating into from a customer standpoint, they don't always know what excess is. So by putting some point targets that we're trying to solve for is point one. Point two is, second set of levers is what buckets do they have or we have to shed some of these deposits. So some of those are our buckets whether it's money funds, some of those are their buckets whether moving into treasuries or other vehicles. And then the third part of the package is making sure that there's a fee incentive, which reinforces the right behavior that was not dropped on someone, but was introduced in a very measured way over time. So that the customer has the ability to help us manage our collective issue and I say that's the story. And I think going out at the way we went at it, I think was the right way to go at it. And it's more likely to create a more sustained outcome. Alexander V. Blostein - Goldman Sachs & Co.: Understood. Thanks so much for taking the questions.

Your next question is from the line of Adam Beatty with Bank of America Merrill Lynch.

Good morning. Thanks for taking my questions. I appreciate the detail on emerging markets exposure and the asset servicing business. Another area of the market that had challenges has been energy and commodities. So I just want to get your thoughts, maybe not specific figures around areas of the business where there's asset servicing or asset management that might be exposed to energy and commodities. And whether that's had an impact so far? Thanks. Joseph L. Hooley - Chairman & Chief Executive Officer: Yeah, I guess the only thing that I can think of, Adam, maybe by the nature of my hesitation here is it's not much. But I think about commodities and in particular, oil and some sovereign well funds that have downward pressure based on a $45 to $50 a barrel oil pricing and the need to continually fund ongoing operations. That's probably the place that it binds mostly. And I would say it's a discrete set of customers and important, but I'd say in the overall scheme of things, our exposure to commodity prices directly is not that material.

Thank you, Jay. These days not much a pretty good answer there. Turning to asset management and the growth of that business, you've introduced a lot of new ETF products. Just wanted to get a sense of which market segments and channels you're targeting to gain share. And maybe an update on the overall strategic plan with Ron O'Hanley at SSGA? Thanks. Joseph L. Hooley - Chairman & Chief Executive Officer: Sure. Let me start with ETFs and then I'll broaden it out. Our ETF strategy is, you know, we've come from a place where most of our – originally our business was more institutionally oriented and we're moving to a more retail oriented business, which requires that you hire wholesalers in those country and intermediaries in Europe in order to distribute that product. And we've made pretty big investments over the last 18 months to 24 months to increase our distribution salesforce in the U.S. And we're doing something similar in Europe. So the strategy is multifold. One, it's to – in addition to the institutional world orient towards the retail world, and with that, bulk up our distribution. And that distribution would be to financial planners, advisors, broker-dealers, private banks. And then the other leg of the strategy is really around on the product side. So you noted in the beginning of your comment that we've introduced quite a few products. The orientation of the new products that we're bringing to market have the characteristic of less pure beta, more involved strategies and therefore higher fees. So the one that I spiked out in my comments was the product we did with DoubleLine. We have several other products, one with Blackstone, bank loan fund. So we're orienting towards maybe more sophisticated and higher-yielding products. And the last point I would make is we have been open and continue to be open to package somebody else's investment expertise in our ETF structuring here and distributed through the distribution force that I just mentioned. I guess if I broaden the question out, the other main emphasis of the SSGA's strategy that I would put a bright light on is the whole solutions world, which for us 401(k) has been a big area of success over the last couple of years. Ron has a big history on that. And even more broadly just Packaging Solutions for not only institutional, but the retail world, And we think with our combination of beta in many flavors, ETF's vehicles, that we're well positioned to succeed in both the ETF and the solutions world.

That's great detail. Much appreciated.

Your next question is from the line of Ashley Serrao with Credit Suisse. Ashley Neil Serrao - Credit Suisse Securities (USA) LLC (Broker): Good morning. Jay, I just wanted to shift the conversation to your third pillar of your long-term plan. How will you be investing for growth during this program? Are you able to size the data and analytics opportunity you noted today? And are there any other revenue opportunities that could emerge from 2016 digitization plan? Joseph L. Hooley - Chairman & Chief Executive Officer: Yeah. I appreciate the question. Broadly, we have been – even though we don't talk about it a lot on these calls. We haven't lost our way with regard to continuing to invest in things that will be the future growth drivers of the business. The one I like to point to, enhanced custody. Four years or five years ago, a vision that took a couple of years for it to incubate. And now, as you know, it's driving most of the growth in our securities lending business. That's one example. There are several examples around. But if I go to the third pillar of the strategy, the data and analytics business, which we launched I think two years ago now. There are several strategies that we're focused on there. At the core, it's this data aggregation piece. So if we're dealing with an asset manager or an asset owner, the ability to aggregate up data not only our own data but data from other sources through a data warehouse, cleanse it, make sure that it's available real-time, is the foundational stage of that business. And then on the back of that, risk tools. We recently introduced a stress testing tool for fund products where it's really a big data application where we see subscription and redemption history. We know the characteristics of the underlying funds. We can predict or allow a customer to predict how much liquidity is required given the likelihood of redemptions. Interestingly, the SEC and increasingly the other regulators are leaning into the asset management industry to get more sophisticated about liquidity stress testing and fund products. So that converges nicely with that. That's just one example Ashley, but it's clear as day to me that the future is going to be defined by who wins that space, who can digitize their data and who can develop those analytic products that are the value-add to customers in addition to all the custody and operational activities that we conduct. Ashley Neil Serrao - Credit Suisse Securities (USA) LLC (Broker): Okay. Thanks for the color there. And then, Mike, as you intensify efforts to reduce these deposits, apart from NII, should we be thinking about any other revenue impact as clients adjust? And then also, how are you addressing the $20 billion or so nonoperational hedge fund deposits? Michael W. Bell - Chief Financial Officer & Executive Vice President: Sure, Ashley. First, on the revenue side, at this point, and I acknowledge that things can change in the future, at this point, I don't expect other second order impact from the deposit actions other than the lost NIR on the excess deposits themselves. So at this point, again, we're not expecting, for example, to lose client relationships over this. Although, again, it's something we're very sensitive to and that's why we've taken the measured approach that we have. And as it relates to the hedge fund and private equity deposits, as we've talked about before, while historically, a chunk of those have – we've considered to be operational deposits because they are in fact a part of the normal operations and part of the custody relationship. And we do believe to be sticky, they don't count under the LCR rules as being operational deposits. So a portion of those we've seen decline, so a portion of the excess deposits for those clients are included in the deposit reduction that I've mentioned. But as you would expect, a portion have remained sticky, and we do expect that they will remain sticky going forward. And we'll continue to look at the all-in economics of those relationships, but expect them to be sticky. Ashley Neil Serrao - Credit Suisse Securities (USA) LLC (Broker): Okay. I guess final question: does this in any way change your view of alternative asset servicing and attractiveness of that business? Michael W. Bell - Chief Financial Officer & Executive Vice President: No, it does not. But we view that as a very attractive segment. Ashley Neil Serrao - Credit Suisse Securities (USA) LLC (Broker): Okay. Thanks for taking my questions.

Your next question is from the line of Vivek Juneja with JPMorgan.

Jay and Mike, I just want to follow up on Alex's question, so the whole thought process of can we see this benefit come to the bottom line. You talked about the fact that – Alex mentioned the revenue is up as much as expense is up, and you talked about the fact that you were hurt by NIM, but rates are coming down, which is fair. But on the other hand, Jay, you also have a huge benefit from equity markets. I mean, if you look from 2010 onwards, your S&P 500 went from 1,250 to, even just go to the end of second quarter, over 2,000. Your NASDAQ almost doubled from 2,500-plus. So if we don't have that kind of huge market tailwind, should we still like – should we be able to expect to see this? And on the expense side, while you – obviously, regulatory expenses were a surprise. There is businesses – investment costs that have to go in too. So could you add some more color to that? Michael W. Bell - Chief Financial Officer & Executive Vice President: Vivek, it's Mike. First of all, you're asking the kinds of levels of detail that we intend to cover as part of our Investor Day presentation, and I suspect we'll give some overview on the Q4 call. So I just think it's better laying out the entire plan to then talk about some of the specifics around things like equity market help or the market interest rate environment. I think that's better handled over the course of a multi-hour Investor Day than on this call.

Okay. And Jay, how much of this digitization – since you're doing – this is coming over five years. How much of this is more what I would think of as business as usual because the world is changing, we're going to more passive assets, more ETFs from active, and so this is just needed given that you've got obviously, lower fees coming on the other side, as opposed to just given that it's such a long timeframe? How much of that is more that – whatever's coming anyway that you had to... Joseph L. Hooley - Chairman & Chief Executive Officer: Yeah, I – in some respects, Vivek, it doesn't matter the asset type, the asset class, the geography. To me, it's really reflective of this pretty cumbersome western world financial landscape that we've created. What we're talking about enhances the value of a passive fund, an alternative fund, a private equity fund. If we can move things through here without human touch it benefits everybody. To the point of – this is where the world is going. Not just financial services. Everybody's looking to digitize their environment and it's hard to do. And I think that – I think we have a huge benefit and that we're a large global company, but we've laid the foundation long ago, common systems, common processes to get there first and this, today's announcement is really a reflection of needing to pull it in so that we can get there first because of the, somewhat, the environment which puts pressure on cost. So I think it has the intended benefit of cost saves at the same time, it accelerates our product strategy and should make us more valuable counterparty to our customers.

Thank you.

Your final question is from the line of Geoffrey Elliott with Autonomous Research.

Hi. It's Geoff Elliott from Autonomous Research. Thank you for taking the question. The singular event that you talked about driving up processing expenses, what was that? Michael W. Bell - Chief Financial Officer & Executive Vice President: I'd rather not go into a huge amount of detail, but it's fair to say that we did have a processing error related to a significant once in many, many years, maybe a decades kind of class action situation. And so as a result, of course, we reimbursed the funds that were impacted so that it was our loss, not theirs. Joseph L. Hooley - Chairman & Chief Executive Officer: And, Geoffrey, I'd just say that the losses or gains get extreme scrutiny around here, not just to – there are two things to figure out what happened but also to make sure that it can happen again. And so we take great pride in our record of low operating losses. So when an event like this happens, we turned the place upside down to make sure that everybody understands what happened and why it won't happen again.

And then on the $500 million, I know you're still kind of working through the fine detail, but can you just explain how you get to that number? Is it a bottom-up exercise? Is it a top-down exercise? Just to kind of get some comfort around the ability to deliver on that without giving us all of the information you're going to work through at the Investor Day. Joseph L. Hooley - Chairman & Chief Executive Officer: Sure. Geoffrey, this is Jay and Mike can add to this. It is very much a bottoms-up exercise. We have hundreds of people and hundreds of work streams that are looking at – I'll take the simple one, when an electronic trade comes in, that end-to-end process how many breaks are there in it, what technology needs to be applied, what process needs to change in order to affect what outcome. We have measured the breaks, the outcomes, the cost saves, the people, the systems, so it's in a lot of detail. And very much bottoms-up. You can't just dictate top-down a number and expect that people are going to figure it out. So we've spent the better part of a year in doing the analysis that leads to today's announcement. Mike, you want to add anything? Michael W. Bell - Chief Financial Officer & Executive Vice President: Yeah, Geoff, what I would add is that remember this does build off the backbone of the IT and ops transformation program. So one of the infrastructures that was created as part of that is as we move to, for example centers of excellence and as we did the detailed process improvement at work from that program. As Jay indicated, we got very specific, very granular on our unit cost for providing different services along the chain. And as Jay indicated, the $500 million stems from a review of those different links in the chain, if you will, and how much we expect to save through critically applying additional technology to those various links. Again, the piece that is specifically we're going to focus on over the next three months will be the pacing and sequencing. So again, I know several of you are interested in, well what does that mean for 2016? And that is work that we need to do some additional vetting around. And then there will also be some additional investment cost, restructuring programs et cetera that we've got some additional detail to build up as well.

Great. Thank you very much. Joseph L. Hooley - Chairman & Chief Executive Officer: Thank you.

That does conclude the Q&A session for today's conference. I will turn the call back over to Jay for any further statements or closing remarks. Joseph L. Hooley - Chairman & Chief Executive Officer: Yeah, thanks, Stephanie. I'd want to thank, everybody, for their questions and attention today, and we look forward to speaking with you after the fourth quarter. Thanks.

Thank you. This concludes State Street Corporation's Third Quarter 2015 Earnings Conference Call and Webcast. You may now disconnect.