Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Wells Fargo Third Quarter Earnings Conference Call. [Operator Instructions] Please note that today's call is being recorded. I would now like to turn the call over to Jim Rowe.

Thank you, Regina. Good morning, everyone. Thank you for joining our call today, during which our Chairman and CEO, John Stumpf, and our CFO, Tim Sloan will review third quarter results and answer your questions. Before we get started, I would like to remind you that our third quarter earnings release and quarterly supplement are available on our website. I'd also like to caution you that we may make forward-looking statements during today's call that are subject to risks and uncertainties. Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings, including the Form 8-K filed today containing our earnings release and quarterly supplement. Information about any non-GAAP financial measures referenced, including a reconciliation of those measures to GAAP measures, can also be found in our SEC filings, in the earnings release and in the quarterly supplement available on our website at wellsfargo.com. I will now turn the call over to our Chairman and CEO, John Stumpf.

Thanks, Jim. Good morning, and thanks for joining us today. We produced record results in the third quarter despite a choppy economic environment as we continue to execute Wells Fargo's diversified business model which has guided us for decades. Our diversified businesses generated record net income of $4.1 billion in the third quarter, an increase of 21% from a year ago, and a record EPS of $0.72, an increase of 20% from a year ago. Our focus on meeting our customers' financial needs led to robust deposit growth and our strongest quarterly loan growth since our merger with Wachovia almost 3 years ago. We also benefited this quarter from lower expenses and continued improvement in credit quality. As the economic environment and recovery remains uneven, Wells Fargo has not wavered from our commitment to do all we can to help our customers and the overall economy. For example, we remain committed to helping homeowners stay in their homes. Since 2009, we have hosted 40 preservation workshops, opened 27 home preservation centers, initiated over 716,000 active trial or completed mortgage modifications. Within our Pick-a-Pay portfolio alone, we have forgiven over $4 billion of principal since we acquired this portfolio from Wachovia and modified approximately 1/3 of our total Pick-a-Pay loans as we strive to give customers an affordable, sustainable payment. We are also lending, providing companies with funds to invest for growth and job creation. As the #1 small business lender for 9 consecutive years, we are committed to helping small businesses succeed by actively lending. During the first 3 quarters of this year, we made over $10 billion in new loan commitments to our small business customers, an 8% increase from a year ago. We are also the #1 lender to middle-sized companies, and we've grown loans to middle market…

Thanks, John, and good morning, everyone. My remarks, which will take approximately 20 minutes, will follow the presentation included in the first half of the quarterly supplement starting on Page 2. John and I will then take your questions. As John highlighted, we had record earnings of $4.1 billion in the third quarter, up 3% from the second quarter and 21% from a year ago. And we achieved record EPS of $0.72, also up 3% from last quarter and 20% from a year ago. During a continued period of economic volatility, our diversified model has performed for our shareholders, with 4 consecutive quarters of earning asset growth and 7 consecutive quarters of EPS growth. It is important to note that while our total revenue was down $758 million compared with the second quarter, half of this decline was from items that are relatively neutral to the bottom line, lower deferred compensation plan investment results and seasonally lower insurance, which have offsets in expenses, and the rest of the decline is due to lower equity gains. Our pretax pre-provision profit increased slightly in the quarter to $8 billion. Our ROA remained strong at 1.26%, and our ROE was 11.86%, up almost 100 basis points from a year ago. These results generated strong internal capital growth, producing an estimated Tier 1 common equity ratio under current Basel III capital proposals of 7.4%. We remain focused on meeting the required capital levels once Basel III is finalized while returning capital to our shareholders through dividends and share buybacks. On Page 3, we highlight our diversified business model, our results this quarter and the business momentum we see ahead derived from our basic banking strategy and the diversity of our businesses. This is a major differentiator for Wells Fargo. In the third quarter, we…

[Operator Instructions] Our first question comes from the line of John McDonald with Sanford C. Bernstein. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Tim, a question on the net interest income and the margin. So first, I guess, of the 17 basis point drop, you've mentioned 12 of it are due to deposits. What were the other 5? What would you say that was driven by?

You know what, John, it was a mix across a number of factors. None of them really stood out. It was the 5 basis point decline which really wasn't that significant. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Okay. And can you give us any feel for how much benefit you expect to get from the TRUPs retirement?

Well, just at the margin, John, you can take the 845 basis points and subtract it from a marginal cost of forms, which, this quarter, was 25 basis points. And then you can annualize that, so it's pretty significant. It's over $200 million, I think, after tax a year. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Okay. And then in terms of additional TRUPs, could you remind us what you have left and if some of that is still something that you'd consider calling?

Well, John, we've got to move forward with our capital plan for next year, and we've got a plan in terms of calling the TRUPs. But in terms of specifically which TRUPs we'll call and when we're going to call, I prefer not to be specific about that right now. But as we did this quarter, we're going to continue to be as aggressive as we can be in redeeming TRUPs pursuant to their terms as quickly as we can given the cost of those TRUPs and the fact that they're not added at the capital any longer. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Okay. And then just back on the margin and the $42 billion of the deposit inflow and that getting invested into a low-yielding securities, what kind of stuff are you investing this deposit flow into, and where can we look on the balance sheet to see these growing low-yielding asset accounts?

Well, John, I didn't say they were going into low-yielding. I think they're going into securities. First, we want them to go into loans, right? And again, we're very pleased with the loan growth that we had in the second quarter, and we feel poised for continued loan growth in the fourth quarter as it relates to the types of securities. And we go through our standard quarterly process. We look at what we think provides a good risk/return, but it was a mix from shorter-term and high-quality securities all the way to medium-term as well as kind of longer-term securities. So it's a mix. There wasn't anything in particular. It's just across all the categories in the statement.

John, maybe I can just give you my sense. The way I think about NIM is, as Tim mentioned, we don't run the company around the NIM. We never have. We really run it around trying to add long-term shareholder value, and we think we can do that best by serving individuals and companies completely and deeply. And the things that we can manage, like loan growth and deposit growth and more customers and deeper relationships, we're doing those sorts of things. Because it's an unusual rate environment today, some of that, you don't get paid for right away. And we are making investments, and we had the best loan growth we've had in -- frankly, since the merger. And when we look at securities, we look at safety, quality. We look at the duration and all those things. And because of our strong deposit growth, we still are a very liquid company, but we continue to make investments as we see opportunistic opportunities. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Okay. Thanks, John. And one quick follow-up, just on capital return. John, maybe you can comment on this. Do you -- what is your hope in terms of next year's capital return into the buybacks and dividends? Do you hope to do more than you did this year in buybacks and dividends? And do you know the rules yet on that the Fed will hold you to in terms of 2012 capital distributions?

The answer is, I think, yes and no. So let me take the last question first. We don't know what the SIFI reserve or the buffer is going to be. We hope to hear sometime in the fourth quarter. And you're right. We have the annual plan coming up soon, our capital plan that we will discuss with our regulators. And we have stated publicly that -- I've stated publicly, and I think we've also -- you've seen it in Tim's comments and other things that we've written that we want to return more capital to our shareholders. And I don't want to get into specifics because the plan is just being developed now. But I'm confident that given where we are today in the absolute number, we're at 7.4% Tier 1 common, Basel to the third degree. And we're not that -- when you look at the risk profile of the company, it's not on -- we're not global. We don't have a lot of the risks that others do. And on top of that, we're generating just lots of internal capital. So you put all that together, and that's why I just don't worry about that. And I want to get as much back to shareholders as fast as we can. And dividends are an important part of it, let me just say that.

The next question comes from the line of Joe Morford with RBC Capital Markets.

You mentioned, Tim, much of the loan growth came late in the quarter. I was wondering if you could talk about how customer sentiment evolved over the quarter and if you're seeing more confidence there recently. And also, maybe comment on kind of the risk-adjusted return opportunities you're seeing in the CRE area right now and competitive environment as well.

Yes, it seems like a long time ago, but there was a lot of volatility in the third quarter. If you remember, some of the things we watched on television in late July, and then obviously, there was a lot of concern and there still is about what's going on in Europe. I think generally, when you look at our customer base, customer sentiment is good. The economy continues to kind of bump along a little bit, but the customer sentiment is good. And as I said and will reiterate, we feel good about loan growth in the quarter. And I think one of the reasons why we feel good about it is that it's really broad-based. As I mentioned and gave some examples in terms of loan growth both in our commercial or our wholesale and our consumer portfolios. It's 7, 8, 9, 10 businesses that are growing loans across the board. It's not concentrated anywhere. It's not one industry. It's not one geography, so we're feeling good about that. And as it relates to CRE, I think that the fact that we stayed consistent in that business over the cycle, which was very difficult at times for the commercial real estate business, is really paying dividends right now. We're the largest commercial real estate lender in the country. There's lots of opportunities to help our existing customers to refinance their existing loans as they buy new properties. We can provide capital to them. And then also, as the CMBS market continues to mature and refinance, there's opportunities there. So overall, the commercial real estate business and the risk-adjusted returns there are pretty attractive.

And also, Joe, as you noticed or you've probably read that we were able to buy some loans on opportunistic basis from some international competitors that are getting out of the U.S. market.

Yes, that's great and helpful. I guess just one follow-up to John's question. The buyback was a bit less this quarter despite the recent drop in the stock over the period, and I guess any comments on that as part of your overall capital deployment plan.

Yes, Joe, that's a real fair question. I think that when you think about our capital plan, what you got to think about it being a very balanced plan, right? And it's true that we bought back fewer shares of stock in the third quarter than we did in the second, but on the other hand, we also retired some pretty high-cost TRUPs. And to reiterate, we continue or we plan to continue to buy back shares this quarter. Again, we have a very measured and balanced plan that we want to execute to, and we think by doing that, it'll create some dividends as we go into the next capital planning cycle.

Your next question comes from the line of Betsy Graseck with Morgan Stanley.

Just a couple follow-up questions on the NIM and just looking for the average balance you have on your supplement. Looking at things like commercial and industrial loans, which had deals come down pretty significantly, and I just wanted to understand how much of that was driven by just the repricing that you have within the C&I loan book because LIBOR came down, or is that more net new borrowers coming on the balance sheet and you being competitive on pricing?

Yes, I think, Betsy, it wasn't any one specific category, but it's a combination of some one-timers that we had in the second quarter versus the third quarter. It also included some repricing in the existing book and then new loans on, but it wasn't really any one specific item.

And when we think about that loan yield going forward, I mean, a lot of that book is priced off of floating LIBOR, either 1 month, 3 months or what have you. Is it pretty much repriced at this stage, or is there more to do?

Well, there's generally a little bit of a lag so that we've seen LIBOR start to tick up a little bit this month, which should have a bit of a benefit. But there's about a 1-month to 2-month lag on average.

And when you think about the TRUPs that you called in the quarter, in the third quarter, how much of an impact is that going to have on your NIM in fourth quarter?

Off the top of my head, I don't know. Let us get back to you on that, Betsy. I'd be guessing right now, but we'll get back to you.

Okay. And then lastly, on incremental loans that you're interested in buying from folks that are exiting portfolios. I mean, how much risk are you looking to take onto the balance sheet? Are you only going to be playing in the higher investment-grade type of securities or in loans, or are you willing to go into securities or loans that might be a little bit more costly from a capital perspective?

Well, I think it's really going to be a function of, one, what's available; and then two, we've got to -- even though there's a lot of opportunity to buy securities and loans today, we've got to be continued to be really measured and follow the risk discipline that we've had for years. And so a long answer to your question, but the point is I think we're going to buy across the spectrum as long as we're comfortable with the risk-adjusted returns. Sometimes, the pricing is attractive at the high end and sometimes, at the low end. There are a lot of securities and loans that are available today. And I think this is really reflective of what is strong about Wells Fargo, and that is this is the time in the cycle that because we had a risk discipline over the years in place, we've got the opportunity to be a buyer today.

Yes, Betsy, let me add to that, and I appreciate that question because I think you know us well enough. We don't feel any sense of urgency to have to do something that does not make sense here. I mean, we're looking for value, and the ones we bought in this last group happened to be the higher end and the more investment-grade, names that we knew, many customers we already had something out to. But even though revenue was challenged this quarter, I feel and our team feels no sense of improper urgency to do something that does not make sense for this company. We just will not do that.

Would you prioritize growing the common Tier 1 ratio under Basel III or prioritizing earnings?

Well, I don't know that. First of all, I would say that the #1 priority is to develop more long-term, profitable customer relationships. That's what we get up in the morning to do. And the result of that is we make money, and when you make money, you grow your capital. Again, when John asked a question about the Tier 1 common Basel III, we're already at 7.4%. I don't know what the buffer will be. As I said before, the bidding assets are between 1% and 2.5%. We are clearly on the low end or to the left if that makes it less risky. 7.4 is already 40 basis points over the minimum. And our capital generation, we're putting tons of capital on the balance sheet every quarter now, so I think it starts with relationships. From that, over time, you make money, and then you build capital.

Yes, and just to add to that, Betsy, I don't think it's an either/or for us right now. We can do both, right? We can go out, and we can buy assets that are for sale with good, quality customers that we've appropriately underwritten. And we can make money doing that, and we can also grow capital. It's really not an either/or.

Your next question comes from the line of Brian Foran with Nomura.

I guess as we think about mortgage in the fourth quarter, I mean, it would seem like gain on sale is going to be very high, if not actually at record levels, the percentage gain on sale for each loan. And I mean, is there any way to break apart how much of the expansion and gain on sale we've seen in this cycle is cyclical because of low rates, capacity constraints in the industry, et cetera, and how much of it you think is secular given a more consolidated industry mainly of banks and, hopefully, more rational pricing?

Yes, you know what, Brian, I wish I was smart enough to know the answer to that question. I just don't. I mean, I think what we're seeing is a very attractive mortgage market. We worked long and hard to be the largest mortgage originator in the country, and we're well positioned. We've got a great team. We're seeing a lot of good volume, as we mentioned, going into the fourth quarter. But in terms of what percent of the margin is related to the industry and what percent is related to capacity, really, I don't know.

Brian, I would make this comment. Part of the reason that we're able to capture more share today is related to the fact that we don't have a lot of problems in our exiting portfolio. I mean, 400 basis points less in terms of delinquencies and foreclosures, that's a lot. Especially when you service 9 million mortgages or so, that becomes a big, big number. So we've continued to invest in systems and in people and in training and compliance and outreach, and even during the big refi booms, we never lost our interest or hunger in serving the purchase money markets. So what you're saying is right. I mean, they're good margins. We've got a great pipeline, and we're busy.

If I could ask a follow-up, I guess, on the bad side of the mortgage business right now, on Page 28, you show $16.5 billion of FHA-insured guaranteed by the VA delinquent but still accruing loans. I guess just in the spirit of things having put-backs and litigation risks having extended further than most of us thought this cycle, is there anyway contractually that those loans, any part of those loans could become the responsibility of Wells Fargo?

Brian, we have not seen any change in our relationship with the FHA/VA. When a loan goes 90 days delinquent, it's put back on the balance sheet. We work through it. That's what happened this quarter. It happens every quarter. And then once we work through it, they honor their guarantee. We haven't seen any change in that relationship at all.

Your next question comes from the line of Erika Penala with Bank of America Merrill Lynch.

I understand that you don't manage to the margin, but given how the interest rate environment will be seemingly suboptimal for longer, and I understand that you have taken steps to redeploy some of your liquidity already in the third quarter, what would you have to see to be a little bit more aggressive in moving down your cash balances?

Well, Erika, the first thing that -- the first call on liquidity, and I think Tim mentioned this, is to fund loans. And when you think about it, this quarter, we had $13.5 billion of core loan growth. That's a great quarter of loan growth, and that's because we're out serving customers. And I'm not going to predict what's going to happen in the fourth quarter. But our people are busy, and we're serving our retail household and the business households. And we're always looking at the market, and if we can get spreads that we think that are appropriate, recognizing that we're at record low levels. And we're not any better at market timing, so we're careful and cautious as we do that. And if you look at our cash balances, they are pretty much on top of where they were a quarter ago, even though we've made a fair amount of what we think high-quality, shorter-term investments along the way. You recognize one thing that we still don't know yet is the LCR, the liquidity coverage ratio, and that's important also. So we are, in a very balanced way, moving forward here.

And do you have a sense from your conversations with Washington that there is a chance that the LCR in its final interpretation will likely get softened?

I don't -- I'm not in the prediction business, especially when it comes to Washington. But I can tell you this, our team has been very active and responsive to the requests, so we could -- from Washington and other places to help them understand our view and the calibration and what happened during previous times with previous companies and so forth and what happened with deposit runoff and loan line takedowns during times of stress, so we think we have something to offer there.

Okay. And just one last follow-up question. I just wanted to ask one of Betsy's questions another way. I think a lot of investors were concerned about the C&I decline in terms of the yield, and I understand there's a lot of puts and takes in this line item. But if you look at your pipeline of new originations, and you've told us that loan growth prospects are quite strong, and you look at what's set to renew, I guess, should we see or should we expect a similar quarterly decline next quarter aside from the movements in LIBOR?

Yes, we're too early in the quarter to be able to have any specific -- or give you a real specific answer to that question because we're going to have loans that aren't even in the pipeline right now. They're going to close toward the end of the year, so I don't know the answer to your question. The point is, I think from our perspective, is that loan growth is real strong right now.

And think of it this way, Erika. A lot of loan growth we had in the third quarter didn't come until later in the quarter. We have some purchases that we've made that will close in the fourth quarter that have been announced. And a lot of what's happened in mortgage has not yet come through, so think of it in those terms.

Your next question comes from the line of Todd Hagerman with Sterne Agee. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: Tim and John, just going back to the capital question. I understand that, Tim, you mentioned you have a very balanced, very measured approach in terms of your capital plan. But the thing about the 2012 CCAR program and the Fed process, it appears that, number one, the Fed is taking more active role in terms of determining the kind of the various scenarios for the program; and then two, it appears that the Feds are also taking a more conservative view as it relates to their concerns surrounding systemic capital risk. And as I look at your buyback, for example, and I listened to some of your competitors, how do you think about that 2012 program in terms of -- you mentioned the uncertainty in terms of the operating environment. You talked about the TRUPs potential. But how do we think about Wells Fargo being more or less aggressive with the plan going in the 2012 given your capital generation and what appears to be a heightened concern on the part of Fed with capital and buybacks?

Say, Todd, let me just give you a sense before Tim talks about the numbers. The best thing we can do, the most aggressive thing we could do is serve our customers really, really well and produce great results and have a low risk profile for our company and have lots of capital generation internally. We do all those things well. We can achieve the kinds of things our shareholders want, i.e. returning capital to them as quickly as we can. And one of my biases is dividends. I don't know what we can -- well, if you can add something to that, Tim?

Well, I think, Todd, we haven't seen any major change in terms of our relationship with the Fed in terms of how they're looking at this next CCAR process versus a year ago. And again, I would step back and put this into perspective. Think about what our balance sheet, what our earnings, what our capital level was a year ago at this time and then compare them to where we are today. Losses are down. Nonperforming's down. Credit's improved. We're generating a lot more earnings, right? And we have more liquidity, and we have more capital to start with. So we don't go into this next CCAR process being pessimistic at all. We got a great story to tell. We got a great relationship. We're going to make a proposal, and we're looking forward to working with the Fed. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: That's actually very helpful. I appreciate that. And if I could, John, just a follow-up or a question just in terms of the update on the AG settlement with California, in particular opting out, opting in, just your latest thoughts in terms of the settlement process, how that may evolve as you currently see it.

There's nothing there to report. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: Positive, negative?

There's just if -- no, there's nothing new to report.

Your next question comes from the line of Paul Miller with FBR. Paul J. Miller - FBR Capital Markets & Co., Research Division: Listen, just a follow-up on Brian's questions a little bit on the mortgage banking side. The big announcement this quarter, well, we all know it's Bank of America getting out of the correspondent business. And it sure looks like some of these bigger guys are pulling back capacity, especially in the wholesale and correspondent business. Does that give an opportunity for Wells Fargo to expand capacity in that business?

Yes, I think that it's fair to say that we've had a lot of opportunity to grow capacity today across the board not just because of the correspondent business alone, but I think the key is to make sure you do it in a real measured way because there are lots of correspondents that we'd like to do more business with and some we wouldn't. But that's not the primary driver for why our refis are up. Our refis are up because we already have a great servicing customer base.

In fact, Paul, that's one of the things that, I think, is missed a lot. We have like a 25% or 26% share of overall originations. But it's much higher on the refinance because of the fact that our people do such a great job in servicing, we get a disproportionate higher number of people refinancing with us because of our servicing. Paul J. Miller - FBR Capital Markets & Co., Research Division: Okay. And the other issue is, and I hear it a lot from my contacts in the industry, is that -- and you've seen some of the notes I've written where the government is being tougher and tougher accepting mortgages now. Does that give an opportunity for you to start to find some niches on your balance sheet and put some decent loans on your balance sheet that's not necessarily jumbos but just doesn't fit the -- there could be Fannie and Freddie and FHA boxes?

Well, we wouldn't put loans on our balance sheet just because the government didn't like them. We put loans on our balance sheet if they provided a good risk/return. But there's no question in this environment that there's some good risk/return relative to other ways that we can deploy our liquidity, and mortgage is one of them.

That's an opportunity, Paul, clearly. Paul J. Miller - FBR Capital Markets & Co., Research Division: Okay. And one last question. On the jumbo market, you saw that the FHA -- I mean, they're lowering the jumbo spreads a little bit. Are you seeing a pickup in signing of that jumbo product, or is that just really difficult?

It's pretty early yet.

Your next question comes from the line of Marty Mosby with Guggenheim.

I had a question -- actually, 2 questions. One is the deployment of liquidity into loans and securities. So you put about $39 billion into securities and about almost $10 billion into loans. What types of assets are you looking, and what kind of yield characteristics and duration are you trying to peg as you're going through that process?

Yes, on the security side, Marty, it's really across the board. We really look at the risk-adjusted return based upon what's out there today, right? And so a portion went into short-term -- shorter-term, very high-quality investments, and then a portion went into medium-term and some longer-term durations. Obviously, there's more assets out there to buy than there were a few months ago. On the loan side, again, it's across the board. We feel really pleased that we're seeing loan growth in a number of our businesses, and not just 1 or 2. And then as John mentioned, and we gave a couple of examples, we're also able to buy loans in the market today, so it's not one specific area. It's across the board, and I think that just reinforces the value of the diversified model.

And then when you're looking at revenue compression from last quarter, this quarter, you really have -- it looks like almost 3 components. The market sensitive is really going down over $800 million. You can kind of take some of those pluses and minuses, and it looks like that probably netted out to about a $0.02 impact negative from second to third quarter. And then you got mortgage offsetting the decline in what you would see in net interest income. The market-sensitive revenues, how do you look at that? And do you think that some of the uncertainty that we hit in this quarter, you'll begin to see some improvement, or did you see any improvement in that line as we moved through the quarter into the fourth quarter?

Well, Marty, I think you're right. And as we pointed out, there's some puts and takes in the market-sensitive revenue, so the $808 million is not what I would think about as a run rate basis, particularly compared to the second quarter because you also had an outsized gain in the second quarter that we called out then that we didn't have in the third quarter. I don't know what is going to happen in the capital markets in the next few months. They feel like they've settled down today, but you know what, you could have made that same statement in July, and you could have made that same statement in the middle of August. I think the important thing, as it relates to the capital markets, is make sure that you're focused on serving your customers, make sure that you've got good risk discipline in place, so you're not sitting on a bunch of loans that you have to sell or other securities that you have to mark in a significant way. And again, we think that we're pretty good at that. We've got a good team in place. We're being thoughtful about being focused on customers, so we're not overly concerned about our capital markets activity at all.

And lastly, would you say that your guidance on expenses saying that it's going to go up in the fourth quarter is primarily tied to the improvement that you see in your mortgage banking fee income?

Well, there's no question that we're going to have increases in expenses related to bringing on team members to support, underwrite and close the mortgage pipeline that we're seeing. That will be part of it. But also, we're still in the midst of an integration. As John mentioned, we had a milestone this weekend. And so the timing of those expenses happen when they happen. And our guess is there's going to be more of them in the fourth quarter than there were in the third quarter. And then also, there's generally some seasonality in all of our expense line items, so we'll probably get a little bit of a pickup there as we saw in the fourth quarter last year. But again, we want to be really clear that we've made a lot of progress in terms of reducing our expenses this quarter. We continue to believe that we're going to make a lot of progress and reiterate our goal of getting to an $11 billion run rate by the fourth quarter next year.

Your next question comes from the line of Mike Mayo with CLSA. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: I'm looking at your business optimization expenses, down $363 million linked quarter. So what is that since that fueled a lot of the expense improvement?

Yes, so that would've included a number of different items. None of them were candidly very significant, Mike. I mean, it's a bit here, a bit there, and it all totaled up to be the differential that's in the numbers. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: But those are permanent savings?

Well, there's always some timing in your expenses, but I would -- I guess the important thing is that we wanted to call out the fact that we didn't believe that, that $758 million reduction in expenses that we saw from the second quarter to the third quarter was all permanent, right? We called out the $234 million of deferred comp differential, and we've mentioned that integration costs were a little bit low, so I think the permanent reduction is less than that. And again, we think fourth quarter is going to be a little bit higher, but we'll get to the $11 billion number. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: And I guess we're kind of dancing around the question. So do you think revenues will outpace expenses? Linked quarter, it looks like it was a tie, revenues and expenses both down $800 million. So as we look out, which will win, revenues or expenses?

Well, I think over the long term, revenues are going to beat expenses, Mike. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: And by the end of next year, which is the end of your Compass initiatives?

Revenues are going to beat expenses.

In fact, Mike, that's the only way to run a successful company. And they're short term. We can't tell from quarter to quarter, and we wouldn't try to predict that. But when you do the right thing over a long period of time, invest in your people, your distribution, your customers, serve them well, serve them broadly and deeply, revenue wins in that race. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: Okay. And so, yes, the key milestone then for us looking at the company would be the end of next year, we should see revenues surpass expenses if you achieve your target, if I heard that correctly?

Correct. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: Okay. And then completely separate, you mentioned the foreclosure rate. You're doing everything you can to keep homeowners in their houses, but there are some houses that are owned as second properties or speculators or are empty. So my question is, what percent of homes that you foreclose on are not the primary residence of an individual that's living in the home?

I don't know that number, but I can tell you that when we get to our foreclosure, customers, on average, are about 16 months past due and of the primary residence, about 25% have already abandoned the property. But I don't have the second home off the top of my head.

Your next question comes from the line of Ed Najarian with ISI Group.

I have a question on Page 27 of the handout, where -- it's the page where you go through the PCI accretable yield.

Yes.

And you outlined the expected cash flows. It went up this quarter by about $2.5 billion, which drove the total accretable yield number up from $14.9 billion to $16.9 billion.

Right.

And then on a bullet down there, you say most of that came from the Pick-a-Pay portfolio. So I guess I'm just looking for some insight on what drove your expected cash flow on the Pick-a-Pay portfolio up that much during the quarter and then if any meaningful amount of the total accretable yield difference came from somewhere other than the Pick-a-Pay portfolio.

Yes, it's a fair question. I think as you know, we look at this estimate every quarter. And there are lots of different factors that drive their assumptions. There's interest rate assumptions. There's liquidation timing, modification assumptions and their performance. And the performance in the Pick-a-Pay portfolio continues to be very strong. So it wasn't any one of those in particular. It was the combination of all of them. But again, we've had really good experience to date in terms of the performance of that Pick-a-Pay portfolio, but that was the primary driver for the $2.5 billion increase.

Do you expect that number to keep going higher? And could you remind us when we look at that $16.9 billion balance sort of how you think about the weighted average or what is the weighted average duration of that $16.9 billion?

Well, on Page 28 and Page 29, we show the weighted average life on commercial as well as Pick-a-Pay. And I would say that the average is approximately 11 years or 10 to 11 years because the lion's share of that yield is on the Pick-a-Pay side, so it's going to be around for a long period of time.

Okay. And no outlook in terms of where that 16.9 number.

In terms of the number, no. I wouldn't -- I'd be guessing if there was a more specific outlook. I mean, look at -- as I said, we look at the assumptions and the flows kind of each quarter and come up with what we think, say, a reasonable estimate, and that's what we have here.

Okay. Thanks, Tim. And then as a quick follow-up, just looking at your average balance sheet and your mortgage-backed securities yield, that was one of the asset yields that came down a lot during the quarter, down, I think, by 62 basis points linked quarter. And I think I understand that some of that decline was because of an increase in the size of the MBS portfolio and the investment of some of the deposit inflows. But obviously, probably a good chunk of it was from refinancing activity as well. So I guess any insight as to how much more pressure you expect on that yield over the next quarter or 2 from refinancing pressure?

I would -- there's no question that we had some impact on refinancing, but I wouldn't say that's a big driver. And we don't expect that to be a big driver going forward or at least more than what we saw this quarter. The other reason that the yield went down is just in terms of some of the securities that we invested in this quarter.

But generally, we should -- well, I mean, it seems likely that, that number will continue to come down. But any sense of how we should think about that from a pace standpoint in terms of that MBS average yield coming down?

No, I really don't have one for you.

Your next question comes from the line of Chris Kotowski with Oppenheimer & Co. Christoph M. Kotowski - Oppenheimer & Co. Inc., Research Division: Bank of America recently announced the $5 fee, and by my calculations, that would recoup most of the loss from Durbin. And if that's the industry standard or if that's one of the -- what some of the major competitors out there, I guess why are you still more guarded and guiding that you can only recover half? And any idea how long it would take to recover what was lost on the Durbin side?

Chris, the way we think about that is our focus is on building lifelong relationships with our consumers. And we have, as you know, grown checking and savings accounts dollars by $185 billion in 3 years. And they're responding to the value, the convenience and the choice that we're giving our consumers, and there's real value here. I mean, we have the most stores of any bank. We have 12,000 ATMs. We give free online and free bill pay and all these sort of things. So when you talk about how we're going to get paid for that, we're testing things, and we're going to learn. Our customers will help us understand how they want to pay for that value, that choice and that convenience. And we'll learn from those tests, and then we'll do what we think will be appropriate so we continue to grow households. Christoph M. Kotowski - Oppenheimer & Co. Inc., Research Division: Okay. And then the second question I have, it's more of a numbers question, and I'm referring to Page 37 of the press release. And it's just that on a Basel I basis, your risk-weighted assets grew by about $8 billion, but on a Basel III basis, they grew by about $60 billion. And I was wondering, is that a new interpretation of the rules or there are different assets that you put on the balance sheet...

It's an interpretation of the rules, right? And in fairness the rules aren't finalized yet. But we're making our best guess as to what they are, but that's the primary differential. Christoph M. Kotowski - Oppenheimer & Co. Inc., Research Division: And can you flesh that out a little bit? I mean, is it beginning to stabilize in your models, and can you talk at all about what caused the difference there?

I don't know if we can say it's going to stabilize because it's going to be a function of how we're going to grow the company, right? I mean, the easiest way to stabilize would be to shrink, and we don't want to do that. Christoph M. Kotowski - Oppenheimer & Co. Inc., Research Division: Well, I meant under the rules, or what caused the delta here and...

Well, one thing is the OCI effects. Are you talking about the difference between Basel I and Basel III? I mean, that's an influence, and we're refining. Is that your question? Christoph M. Kotowski - Oppenheimer & Co. Inc., Research Division: No, I guess my question was under Basel I, your risk-weighted assets went up by $8 billion. And under Basel III, I'm looking at the prior press release and this press release side-by-side, and your Basel III risk-weighted assets went from $1.1213 billion to $1.272 billion, and it just seemed like a big increase.

Well, again, we had growth in the balance sheet this quarter, right? And then we've got -- as we continue to refine our interpretation of Basel III, we're going to make adjustments. But again, there wasn't anything significant, and we don't really break that out on an asset class-by-asset class basis.

Your next question comes from the line of Nancy Bush with NAB Research LLC.

A couple of questions. There is sort of a shorthand in the market right now with regard to bank stocks that the larger your securities portfolio, the more you're going to get hurt in the present rate environment. You guys have always been very astute securities portfolio managers. Could you just sort of address that?

Well, I appreciate the compliment. First, thank you. What we want to do, Nancy, is look at where we see good risk/return. As we've said for the last year, as soon as rates started to really drop, it would be really easy for us to grow revenue and to grow the net interest margin by just investing in long-dated securities. And then we'd be more at risk for a backup when it comes, and someday, it will come. I think from our perspective, we want to look at good risk/return in terms of what's out there today. There's a lot out there today in terms of securities that we can buy. But we also want to make sure that we're pretty balanced in terms of short-, medium- and long-duration assets. We think we're fairly well positioned today because we have an unrecognized gain on the balance sheet that's still pretty significant. I think it's still over $6 billion. So we think we're in pretty good shape even if we saw a rate backup. But again, in a rate backup, even if it might affect the unrecognized or unrealized gain, it would be very beneficial for the rest of the company. And again, I think that is a testament to the balance model that we have.

Nancy, I must look at -- I agree to everything Tim said, and one of the things that is happening today, we're not getting recognized or paid for the wonderful deposit franchise we have. And there is real value there. Rates won't stay this low forever. They will back up, and you're going to see the real quality of the liability side. And in the interim, things look different in the market today than they looked 9 months ago. Some good and some of it's not good as far as we got QE IIs and twists and this and that, and those things could have -- it surely will have an influence on rates. But over time, rates will rise, and I think we are uniquely well positioned for that time.

Okay. The second question is this. I think the CFPB announced last week that one of their first forays would be an examination of the mortgage servicers to basically make sure you're not doing bad things. And it just seems to me that it's getting a little crowded in the mortgage servicing space right now. Could you guys just sort of summarize for us these various regulatory issues or activities that are sort of swirling around your mortgage servicing portfolio right now? And do you have any idea of how much this is costing you?

Yes, you're correct, Nancy, that there's a lot of regulatory oversight in the mortgage servicing business today, whether you're talking about the CFPB upcoming activities or any of the other regulators. And we feel like we're implementing -- we began to implement changes last year. We've continued to implement more changes pursuant to the consent order, though the cost of those changes are included in all of our numbers right now.

Nancy, think of it this way. A lot has changed in the mortgage business. It's really starting in 2008. There is no -- this low-doc and liar loans and stated income is all history. So if you look at the originations starting in -- it's really 2006 and 2008 vintages that we're working through. But 2008 from then on, it's really a different ballgame, first of all. Secondly, on the foreclosure side, as Tim mentioned, we have made changes. You're right. There are a lot of people and regulators and so forth that are swirling around. But in our case, most of our production is done by our people on the direct side, and we've been around this thing for a long time. And I'm confident that we've got the right people leading that organization. And you never know where all these things turn out, but it's a very different environment today vis-à-vis 5 or 6 years ago. Even we didn't participate in some of the most egregious things, we held our discipline really well during that time, not perfect but pretty darn well. I can't predict what's going to happen next, but it's a very different business.

And just one final issue for you, John. I'm sure you're very well aware every day of Occupy Wall Street and Occupy Montgomery Street and all the other occupies that seem to be going on. You did a good summary at the beginning of the call, the stuff that Wells Fargo does, I think, that perhaps is not recognized: the charitable contributions, the level of employment, et cetera, et cetera. What do you and/or your banking industry peers need to do to make it known that the banking industry is not some big evil behemoth to out to crush the middle class?

Well, that is a good question. First of all, I understand some of the angst and the anger. This downturn has been too long. Unemployment is too high, and people are hurting. We get that. We have 265,000 people, which most of them are in the U.S. We live and work in these communities. We're committed to lead more, hire more, lend more, be part of the solution. And I don't think you do that through an advertising program. You do that knee to knee, street corner by street corner, community by community, and that's what we're committed to do.

So no, you don't see anything coming out of the industry that's sort of an answer to some of the stuff that's being put out there by the administration and others at this point?

I think we're all in this thing together, and I think we're all trying to respond in the most appropriate way of serving our communities, serving each other, helping to get the economy going. And again, I think this is very much about getting it done as opposed to some program of some type.

Your final question comes from the line of Chris Mutascio with Stifel, Nicolaus. Christopher M. Mutascio - Stifel, Nicolaus & Co., Inc., Research Division: Tim, I got 2 reconciliation questions. Forget about the margin for a second. If I just look at net interest income dollars, your average earning assets were $26 billion in the quarter. Your deposit growth was slightly accretive to net interest income, and the accretable yield contribution wasn't materially different than what it was in the second quarter, and yet your net interest income dollars were down about $140 million sequentially. What drove the dollars being down?

Well, it was a function of one-timers that we had in the second quarter. It was a function of some security and loan runoff, and it was a function of repricing, but it was kind of all those together in terms of the decline. Christopher M. Mutascio - Stifel, Nicolaus & Co., Inc., Research Division: Now it seems like if 12 of the 17 basis points of margin compression was deposit-related, but the deposit was actually accretive to net interest income dollars, it seems like the difference, the 5 basis points of compression would be more than offset by almost, what, $30 billion of average earning asset growth in the quarter. I'm just kind of -- I didn't see how the dollars came down as much as I had -- the dollars came down more than I would have anticipated given the growth in the balance sheet. The second thing on a reconciliation, when I look at the one line item on the income statement, the net gains from trading activities, now I know you went through some of those numbers, but that was a loss of $442 million. And if I back out, I think the 3 items you mentioned, the $234 million from deferred compensation investment income, the $106 million and the net loss between the 2 legacy Wachovia positions and $108 million in the weak markets, if I net those out, that line would have been 0. In the past 4, 5 quarters, it's been running about $500 million or so. So what's the difference netting -- even netting out those 3 items, what's the difference in that category this quarter versus what we've seen in the past 3 or 4 quarters?

Are you talking about the debt or equity or just the debt that... Christopher M. Mutascio - Stifel, Nicolaus & Co., Inc., Research Division: This is net gains and losses from trading activities, which was negative $442 million a quarter. In the last 4 quarters, it's been roughly about $500 million positive.

Yes, so within that number would've been the outsized equity gains that we had in the second quarter. And that's the primary driver in terms of the differential because remember, the equity gains that we had in the second quarter of about $725 million and this quarter... Christopher M. Mutascio - Stifel, Nicolaus & Co., Inc., Research Division: No, that's in a different line item. On your income statement, your net gains on investment...

I thought you were talking about the trading asset, not decline. Christopher M. Mutascio - Stifel, Nicolaus & Co., Inc., Research Division: Well, this is just Page 19 of your release this morning. There's 2 different line items. There's net gains on trading activities. There's also net gain on equity investments. I think the net gain on the equity investments includes that onetime gain last quarter, but if you're looking at net gains on trading activities and I back out those onetime items, if you will, that would've been 0 versus, again, about a $500 million run rate the past 4 quarters. I don't think that includes the equity investment gains.

I thought you were talking about a different line item. I'm sorry. So if you look at the -- you're talking about the 854, right? That differential from the 415 to 441? Christopher M. Mutascio - Stifel, Nicolaus & Co., Inc., Research Division: Yes.

Right, so you would have had the gross effect of one of the legacy Wachovia positions that we're, of course, reaching a resolution on. So that was about 370, 380, and you would have had the 234 in terms of the deferred comp. And the rest of it was just a function of what was going on in the market and nothing specific. Christopher M. Mutascio - Stifel, Nicolaus & Co., Inc., Research Division: Okay. So there's no one line item in there that wasn't more negative than the 3 items that you mentioned in your statements?

No, we would have called it out if that was the case.

Thank you very much. We appreciate everybody's time, and we will do this next quarter. Thank you very much.

This does conclude today's conference call. Thank you, all, for participating, and you may now disconnect.