Andy Clark Gerald L. Hassell - Chairman, Chief Executive Officer, Member of Executive Committee and President of the Mellon Bank NA Thomas P. Gibbons - Vice Chairman and Chief Financial Officer Timothy F. Keaney - Vice Chairman and Chief Executive Officer of Investment Services Curtis Y. Arledge - Chief Executive Officer

Betsy Graseck - Morgan Stanley, Research Division Alexander Blostein - Goldman Sachs Group Inc., Research Division Josh Levin - Citigroup Inc, Research Division Luke Montgomery - Sanford C. Bernstein & Co., LLC., Research Division Howard Chen - Crédit Suisse AG, Research Division Kenneth M. Usdin - Jefferies & Company, Inc., Research Division Cynthia Mayer - BofA Merrill Lynch, Research Division Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division Gerard S. Cassidy - RBC Capital Markets, LLC, Research Division Brian Bedell - ISI Group Inc., Research Division James F. Mitchell - The Buckingham Research Group Incorporated

Good morning, ladies and gentlemen, and welcome to the Second Quarter 2013 Earnings Conference Call hosted by BNY Mellon. [Operator Instructions] Please note that this conference call webcast will be recorded and will consist of copyrighted materials. You may not record or rebroadcast these materials without BNY Mellon's consent. I will now turn the call over to Mr. Andy Clark. Mr. Clark, you may begin.

Thanks, Wendy, and welcome, everyone. With us today are Gerald Hassell, our Chairman and CEO; Todd Gibbons, our CFO, as well as several members of our executive management team. Before we begin, let me remind you that our remarks today may include forward-looking statements. Actual results may differ materially from those indicated or implied by the forward-looking statements as a result of various factors. These factors include those identified in the cautionary statement on Page 15 of the press release and those identified in our documents filed with the SEC that are available on our website, bnymellon.com. Forward-looking statements in this call speak only as of today, July 17, 2013, and we will not update forward-looking statements. Our press release and earnings review are available on our website, and we will be using the earnings review to discuss our results. Now I'd like to turn the call over to Gerald. Gerald? Gerald L. Hassell: Thanks, Andy, and good morning, everybody, and welcome. As you saw from the release, for the second quarter, we reported earnings of $0.71 per share. This included an after-tax gain of $0.09 per share related to an equity investment. Now looking at how our business model performed, we believe we earned about $0.58, $0.59 per share on a core basis. And Todd will take you through the numbers in just a moment on how we get there. Clearly, the headline for the quarter was strong revenue growth across all of our businesses without exception. Total revenues reached a record $4 billion for the quarter. After excluding the impact of the investment gain, revenues were up 6%. It's a clear sign of how our business model benefited from better market conditions during the quarter. But more importantly, it's a sign of our success in collaborating across our businesses to deliver solutions our clients need. Turning to Investment Management. It continued to have strong revenue growth again in the quarter. This quarter, Investment Management benefited from the 15th consecutive quarter of long-term inflows and improved equity value. We had net long-term flows of $21 billion with particular strength in the liability-driven investment area, certain equity and fixed income funds. Our success in attracting new assets helped drive a 10% increase in assets under management year-over-year to a record $1.43 trillion. In Investment Services, fees also showed nice improvement across the board driven by growth in asset servicing, issuer services and clearing services fees. We also had a strong quarter for foreign exchange revenues, which benefited from improved market conditions as volatility and volumes increased. In terms of our FX business, we're seeing some growth in our traditional products as well as our new product offerings. We're also beginning to see the early benefits of our FX technology enhancements, and we expect those enhancements to drive further growth. Now that's a theme running throughout all of our businesses. We're making targeted investments to enhance our product capabilities, and it's starting to pay off. A good example is in global collateral services. Our investment in creating an end-to-end solution for our clients' growing collateral needs is starting to show up in our revenue numbers. Optimization and segregation balances have grown nicely. We were also awarded a U.S. patent for a key process enabling the secure management of collateral. It's a demonstration of our innovation and market-leading practices in this area, and it positions us well as new collateral regulations continue to kick in. Within Investment Management, we made progress on a number of fronts. In the Asia Pacific region, we've been granted a license to establish a separately managed account business out of Hong Kong, and that's leveraging the partnership between Investment Management and Pershing. And we're already in the process of closing our first SMA client win. We're also investing in expanding a greater share of the U.S. retail market, where we just launched our first close-end fund in a number of years which has already attracted nearly 300 million of assets under management. Now last quarter, I mentioned how we began expanding our wealth management franchise. During the second quarter, we officially kicked off the next phase of our multiyear growth strategy. We're proceeding with plans to increase our sales force by 50%, add private bankers, portfolio managers and wealth strategists, as well as additional sales support staff. The new hires will strengthen the sales teams in our current locations and establish offices in key wealth management markets. It's early days, but again, it's strong commitment to driving organic growth. Meanwhile, wealth management is also focused on better leveraging the rest of our firm. For example, we recently started making private banking loans available to Pershing customers, and we're already seeing a nice level of receptivity. Now we're also investing in our brand to help raise awareness that we have a more complete investment solution. The message of our branding campaign is beginning to resonate as clients and prospects are recognizing that we are the only financial services firm that can provide solutions across the entire life cycle of a financial asset, and it's our sole focus as a firm. We're working across the firm, whether it's wealth management partnering with Pershing or asset management partnering with Pershing or asset servicing, with everyone's focus on anticipating and satisfying clients' needs in thoughtful, creative ways that competitors can't match. That's the power of our brand and the power of our firm. The bottom line is, we're making significant highly targeted investments in our businesses, which come with some expenses, but they're critical to driving future revenue and profitability. It's an investment in growth. Now a good way to sum up our quarter is this: We're pleased to see nice revenue growth across all of our businesses; We remain highly focused on driving organic growth, controlling expenses, returning capital to shareholders and growing shareholder value. With that, let me turn it over to Todd to take you through the numbers and, importantly, talk a little bit about how we're thinking about the leverage ratio under the new guidelines. So Todd? Thomas P. Gibbons: Thanks, Gerald, and good morning, everyone. My comments will follow the quarterly earnings review, and we'll start on Page 2. As Gerald noted, EPS was $0.71, that includes roughly $0.09 related to a gain on our equity investment on ConvergEx. It also includes the benefit of approximately $0.03 related to the accrual that we took in the first quarter related to administrative errors, and there was also a loan loss provision credit in the quarter. So that nets to core earnings of about $0.58 to $0.59. Looking at the numbers on a year-over-year basis, total revenue was a record $4 billion, that's up 11% or 6% on a non-GAAP basis. Our investment services businesses, asset servicing, issuer, clearing and Treasury services, each showed nice growth. Investment management and performance fees continued their upward momentum. FX and other trading was up sharply. NIR benefited a bit due to higher rates. Expenses were down 7% and up 6% if you exclude amortization of intangibles, M&I, litigation and restructuring charges. So that 6% increase was primarily reflecting higher staff cost, which is related to improved performance and some meaningful branding initiatives. Our return on tangible common equity was a healthy 25%. Turning to Page 4, where we call out some business metrics that will help you understand the underlying performance. You can see that AUM of $1.43 trillion was up 10% year-over-year. That resulted from net new business and higher market values. During the quarter, we had net long-term inflows of $21 billion, that was driven by strength in the liability-driven investments. We did see some strength in equity as well and some fixed income funds. Short-term outflows were about $1 billion. Sequentially, AUM was flat as net new business was offset by lower fixed income market values during the quarter. Assets under custody and administration were up 4% year-over-year to $26.2 trillion, and that primarily reflected the impact of higher markets and net new business. Linked quarter, AUC/A was down $100 billion as the impact of higher equity values was more than offset by lower fixed income values and also the impact of a stronger dollar. Many of our key metrics showed good growth on a year-over-year basis. Most clearing metrics were up. DARTS volume and average long-term mutual fund assets were, again, up quite significantly. Average loans and deposits in wealth management and investment services continue to grow. And average tri-party repo balances were up. The market value of securities on loan was down as a decline in short interest continue to negatively impact demand. And the number of sponsored DR programs declined as we've exited less profitable programs, but we did see a nice increase in global IPO activity. Looking at fees on Page 6. Asset servicing fees were up 4% year-over-year and 2% sequentially. The year-over-year increase primarily reflects organic growth and higher market values, partially offset by lower securities lending revenue. The sequential increase primarily resulted from seasonably -- seasonally higher securities lending revenue, increased core asset servicing fees, all of which reflected organic growth. We had an estimated $201 billion in new AUC/A wins for an estimated total of $1.1 trillion in AUC/A wins over the last 12 months. Issuer services fees were up 7% year-over-year and 24% sequentially. Both increases primarily resulted from higher corporate actions and there were also expense reimbursements related to technology expenditures. Clearing fees were up 4% year-over-year and 6% sequentially. Both increases were driven by higher mutual fund fees and clearance revenue. The latter reflecting the strong increase in DARTS, partially offset by higher money market fee waivers. Investment management and performance fees were up 6% year-over-year and 3% sequentially. The year-over-year and sequential increase was primarily driven by higher equity market values and net new business and was partially offset by the stronger U.S. dollar and, once again, higher money market fee waivers. And FX and other trading revenue was up 15% year-over-year and 29% sequentially. If you look of the underlying components, FX revenue was $179 million, that's up 14% year-over-year, 20% sequentially, as we benefited from higher volatility and increased volumes. The improvement was largely driven by the market, but there are early signs that growth initiatives are yielding some benefits. Other trading revenue was $28 million compared with $23 million in the third quarter a year ago and $12 million in the prior quarter. Investment and other income totaled $269 million in the quarter compared with $48 million in the year-ago quarter and $72 million in the prior quarter. Both increases reflected a gain related to ConvergEx' recent divestiture of its technology business. Turning to Page 8 of the earnings review, you'll see that NIR was up $23 million versus the year-ago quarter and $38 million sequentially. Both increases were primarily driven by a change in the mix of earning assets, lower funding costs, higher rates and higher average interest-earning assets. And the higher interest-earning assets are driven by the higher deposit levels. The net interest margin was 1.15% compared with 1.25% in the year-ago quarter and 1.11% in the prior quarter. The year-over-year increase primarily reflects higher average interest earning assets, lower yields, partially offset by a change in the mix. Turning to Page 9, total noninterest expenses, that's x amortization of intangible assets, M&I, litigation and restructuring charges, they were up 6% year-over-year and flat sequentially. The increase in staff expense year-over-year and sequentially was primarily driven by improved performance with the year-over-year increase also impacted by higher pension costs. The growth in software and equipment expenses versus both periods was primarily related to reimbursable customer technology expenditures. Now the reimbursement for these expenses is actually included in our fee revenue. The growth in business development costs versus both periods was primarily driven by higher corporate branding investments and a number of client conferences. Lower other expense primarily resulted from a decrease in the reserve that we took last quarter that I mentioned earlier. In terms of any future liability related to this issue, the timing still remains uncertain. However, we have lowered the reasonably possible loss estimate. Currently, we're estimating a reasonably possible loss of up to $100 million, and that compares to our previous estimate of $175 million, and that is after the reduction in the reserve. Turning to Page 10, you can see that our operational excellence initiatives remain on course to exceed the original target established in 2011. Our efforts during the quarter resulted in $150 million in quarterly growth run rate savings as the $13 million in incremental growth savings came with about $11 million of program costs. In terms of the savings this year, we continue our migration to global delivery centers and we realized the benefits from reengineering activities related to our boutique restructurings and real estate footprint consolidation efforts. We also generated some savings as our investment services group continue to optimize their organizational structure. As you can see on Page 11, we generated $892 million in gross Basel Tier 1 common during the quarter. As you're thinking about our Basel III Tier 1 common ratios, our estimate of June 30 is based on preliminary interpretation of and expectations regarding the fed rules that were released earlier this month. At June 30, 2013, our estimated Basel III Tier 1 common equity ratio, and this is under the standardized approach, was 9.3% compared to 9.4% at the end of March, and that also reflects the impact of the rate rise in the portfolio. As regards to the supplementary leverage ratio, we feel it's early to provide a firm estimate of the ratio because the final definition, mostly related to the denominator, is very uncertain at this point. But before I provide our estimate, let me give you some color on the rules. The agency has released a final rule that included a leverage ratio and then issued a draft or comment that increased the requirements for large banks and raised some important questions on how it should ultimately be calculated. Around the same time, the Basel Committee on Banking Supervision released a consultative paper comment with a very different approach primarily to the denominator. So at this time, it's impossible to know exactly where we're going to ultimately be. That being said, however, as for the July 2 rule, we estimate our supplementary leverage ratio would be in the low-4s. We also believe that there are good arguments that central bank cash and certain government guaranteed debt should not be included, and that would have a major impact on us. Just to give you a little background there, we have more than $200 billion of cash and government guaranteed debt on the balance sheet of $360 billion. So as we get more certainty, we will update you where we think we stand. However, we think it will be helpful for you to know that there are a lot of levers we can pull if necessary. So I'm going to walk you through a few of them now. There are a number of actions on the liability side where we could reduce certain deposits and payables, and we'd expect to be able to do that with only a modest impact to our clients and our earnings. We could also work to de-consolidate certain asset management funds. As monetary policy normalizes, now remember this is a 5-year implementation period, we expect our balance sheet, which is already bloated due to this rate environment, to normalize. So there's no need for us now to urgently pull the liability levers. Some of it should happen naturally over the time period anyway. We also have significant room to reduce unfunded commitments, again, with limited impact to clients and earnings. We could also issue other forms of Tier 1 if needed, such as preferred stock, which is significantly less expensive than common. Given our credit ratings, we were able to issue noncumulative perpetual preferreds this quarter at 4.5%, and that is a record-low coupon. And we did that to replace some of the trust preferreds that we redeemed in the quarter. We also generated a lot of capital. Let me illustrate it. Currently, our first call consensus for 2013, net income was approximately $2.6 billion. In addition to net income, we have over $200 million in after-tax intangible amortization that runs through the P&L on an annual basis, but it comes back into the capital account. So assuming our current dividend payout and CCAR buyback plan, this scenario would result in capital retention of approximately $800 million. So that includes the $1.35 billion of approved buybacks. Finally, our business can grow without significantly growing risk-weighted assets, that doesn't impact the leverage ratio but it does the Basel III Tier 1 common. So let me sum this up. There may or may not be some impact based on the final rule. And if there is, we have many levers to pull and a lot of time available to us before we consider interrupting our planned capital actions. Now Page 12 details the composition of our investment securities portfolio. You can see that at quarter end, we had a net unrealized gain in this portfolio of $656 million. The decrease from $2.2 billion at the end of the quarter was primarily driven by an increase in market rates. In order to mitigate some of the impact to capital due to changes in rates, we've increased the percentage of assets and to help the maturity portfolio over the past year. Looking at our loan book on Page 13, you can see that the provision for credit losses was a credit of $19 million, which is identical to the year-ago quarter. The credit was driven by the continued improvement in the credit quality of the loan portfolio. The effective tax rate during the quarter was 27%. That primarily reflects the impact of the ConvergEx gain as well as the termination of investments in certain tax credits. A few points to factor in as you're thinking about the current quarter. Now traditionally, third quarter earnings have been impacted by a slowdown in transaction volumes and capital markets-related revenues, particularly foreign exchange and securities lending, which is also have been offset by the seasonal increase that we've traditionally see in DRs. NII should be equal or slightly better than the second quarter as we benefit from higher interest rates, and we would expect lower securities gains in this environment. The quarterly provision should be around 0. Our merit increase was effective as of July 1. We expect the tax rate to come in the range of about 26%. In terms of any future liability related of the administrative area, we really don't know where the timing is going to be on that and ultimately where that will land. And finally, we plan to continue to repurchase shares during the quarter based on market conditions. So all in all, we had a strong quarter across all of our businesses. With that, let me hand it back to Gerald. Gerald L. Hassell: Great. Thanks, Todd. And Wendy, I think we can now open it up for questions.

[Operator Instructions] The first question today is from Betsy Graseck with Morgan Stanley. Betsy Graseck - Morgan Stanley, Research Division: A couple of questions. One, on, Todd, what you were going through with regard to actions that you could take to manage the denominator. I was intrigued by your comments on your view that you could lower the deposits without impacting business, lower your commitments without impacting your business. Could you give a little more color on how you're thinking about doing that? Thomas P. Gibbons: Sure. Well, some of it's going to happen naturally if we go back to the normal rate environment, and we'd expect that to take place, Betsy, over the next 5 years. But if we had to take more direct actions, we have, for example, encouraged some deposits to come on rather than be out in money market funds, so we could redirect some of that activity, for example, to reduce the deposit base. Betsy Graseck - Morgan Stanley, Research Division: And do you think that you can raise awareness with your customers as to the potential impact if this rule was kind of required by the market to get there sooner rather than end of 2018 as it's currently described? In other words, are you going to have any help on the comment letter process from the client base? Thomas P. Gibbons: Well, I really haven't -- I don't know, Gerald, whether you -- whether we're going to reach out to clients. Gerald L. Hassell: Yes, I think the client impact, Betsy, which I think relates to your unfunded commitment issue, is I think many of the institutions are going to look at unfunded commitments in terms of their capital treatment or their leverage treatment. And so perversely, it may cause the industry to lower some of those commitments or let them fall off because they don't pay a whole lot, and they have high capital traction particularly in the leverage ratio. So some clients may want to weigh into the -- as already said, they may see some negative impact on availability of credit as a result. We have not anticipated that in our discussions with the supervisors. Our -- the most -- the main points that we're going to talk to the supervisors and -- through the comment period is the treatment of cash at central banks. It's kind of perverse to think that we have to hold capital against cash that we hold at central banks. So the bulk of our discussion or comments are going to be in that category, which is a meaningful impact to us as it relates to the leverage ratio.

The next question is from Alex Blostein with Goldman Sachs. Alexander Blostein - Goldman Sachs Group Inc., Research Division: I just want to dissect the NII picture a little bit. I guess looking out for the next couple of quarters, a, wanted to see if you guys got any benefits from lower premium amortization this quarter, and if you didn't, how we should think about on a go forward basis, and maybe some sensitivity around that. Thomas P. Gibbons: Yes, Alex, we did get a modest benefit in this quarter, and we'll expect it to pick up a little bit going forward as the number of the securities extended and therefore, we amortized the purchase premium over a longer time period. It was a little bit of the reason for the benefit, for the increase in the second quarter, and we'd expect that to continue unless or until rates were to come down. Alexander Blostein - Goldman Sachs Group Inc., Research Division: Okay, but no way to size it. Because I think you guys, last quarter was a fairly sizable number, I think, 1 40. Any sense on where that stood, I guess, this quarter? Thomas P. Gibbons: Yes, I know what the number is, Alex. But it's a little bit misleading for me just to give you the number. The actual number is larger but it's because of the mix of assets. So the way to think about it, as the existing assets, if they got extended, the amortization of that premium is going to be extended, net-net benefit was about $5 million or so for the quarter. And we would think it would be more than that in the future quarters. Alexander Blostein - Goldman Sachs Group Inc., Research Division: Got it. That's helpful. And then second question on issuer services, I guess, a, I wanted to clarify the expense reimbursement comment. I'm not sure if we're able to size that, and how we should think about that, one-time in nature or maybe a more recurring event? And then just maybe the broader backdrop of higher interest rates on the issuer services business because it does look like the debt issuance activity around the world is likely to slow. Gerald L. Hassell: Why don't I take the first part of that question, I can turn it over to Tim for the second part. As -- and now I forget what the first part of the question was?

It was about the reimbursement [ph]. Gerald L. Hassell: Oh, the reimbursement, I'm sorry. The reimbursement was about half of the increase in the issuer -- in the corporate trust component of the issuer services lines, Alex. And that's kind of an episodic, I think, for us. From time to time, we see it. So we agreed to take on whatever expenses are to meet the clients' needs, and then that gets paid through to us on the revenue side. So you see it, typically, matches up. It doesn't always match up in the same quarter. But typically it matches up in the same quarter. We called it out this quarter because it was uniquely large and we wouldn't expect it to be that large every single quarter. As regard to the impact of higher rates and issuance, Tim or maybe even Curtis could add to that. Timothy F. Keaney: Yes, maybe I'll look at the new business pipeline. We've been encouraged, I think, particularly in the U.S., CLOs remain pretty strong. We've seen very good growth particularly this quarter outside the U.S., and the pipeline is surprisingly strong in corporate trust. Although as we've said before, I'd certainly characterize new business that's coming in being priced a little bit lower and thinner than what we see rolling off. And I know you didn't ask but I'd also say the pipeline in the DR business has picked up nicely. So I'm encouraged by the outlook on the issuer services side. Curtis, I don't know if you have a point of view on interest rates. Curtis Y. Arledge: Yes, our pipeline going into the third quarter is as attractive as it's been in a very long time. I would tell you that we actually had a pretty decent pipeline in the second quarter that we're working through. And I think in mid-June when the said tapering dynamics played a role and people were thinking about where the rule might be going next, we did see people hesitate a little bit. But it does seem like the pipeline discussions we're having with clients are pretty promising. I will tell you that I think the other dynamic that's happening is that, as you know, we have a very large LDI business. And with higher rates, we actually have seen many people who were thinking about LDI being more interested in actually coming into it. So I know everybody wants a pretty great rotation, but I would actually tell you that there are absolutely flows both ways from clients as rates have risen.

The next question is from Josh Levin with Citi. Josh Levin - Citigroup Inc, Research Division: Todd, you lifted some leverage you could pull to help mitigate the impact of the supplementary leverage ratio. Could you sort of quantify what those levers in aggregate could be worth? Thomas P. Gibbons: It could be pretty meaningful, Alex -- I mean Josh. So I think we could get there depending on which ones we pull. I think what we're trying to indicate, if the rule is as it's currently stated, we can get comfortably in place over a reasonable time period of a couple of years well ahead of when the final ruling, without doing anything too dramatic. Josh Levin - Citigroup Inc, Research Division: Okay. And on asset sensitivity, could you walk us through how we should be thinking about your sensitivity in different parts of the yield curve and the shape of the yield curve? What really matters most for you? Thomas P. Gibbons: In terms of NIR, the biggest benefit we get is on the short end of the curve. So we get a little bit from the extension of the -- on the longer end of the curve from the extension of the unamortized premium. But the short end is where we get the biggest buck, and that would kick in -- the lending portfolio would kick in against a lot of our free deposits since most of our assets are shorter duration and a lot of it is in the form of cash, as we had just pointed out. And we'd also get a pick up from the longer part of the curve on our pension expense. So 100 basis point increase in rates is worth probably about $60 million a year in our pension expense. And if you put the combination of higher rates and good equity performance, then we could finally see some relief in pension expense starting next year. Also, as it pulls in the probability of an earlier Fed move, there's going to be some value reflected probably in the LIBOR curve, which helps a number of our businesses, including sec lending.

The next question is from Luke Montgomery with Sanford Bernstein. Luke Montgomery - Sanford C. Bernstein & Co., LLC., Research Division: Yes, so last quarter, you noted that you rarely lose a lot of business in the servicing business. But a back of the envelope analysis, using your quarterly disclosures on gross wins suggest that net new business is roughly flat over the last 3 years, if I back off market appreciation and deals. So I'm not sure what we might be missing in the calculations. I just thought if maybe you would comment on what you believe the organic trends would look like in the business and perhaps offer a little perspective on why you and your competitors are now a little more transparent around those trends? Gerald L. Hassell: Tim, do you want to take that one? Timothy F. Keaney: Yes, I would say we track a lot of things. I'd say we've been a net winner. We track net wins versus net losses. I think one good point for our industry is we see a lot more clients outsourcing, about 1/3 of our pipeline in new business, is new business for our industry versus takeaways from the competition. I am encouraged if you put securities lending aside in our core asset servicing business, you'd see our fee is growing at 6% versus AUC growing at 4%. It's always good for us. If you look at a new client versus organic growth, new clients bring, generally, more expense with it. So I think it's actually a good sign that we see net new and organic tilting towards organic because it has less expense with it. And I think we're also seeing our investments in particularly collateral services, which Gerald outlined, is a big driver of our new business pipeline. So the things we look at, net new, are we winning more than we lose? Yes, we are. Win rate of 52%. But I'm encouraged by the organic flows and people coming back into the market. Thomas P. Gibbons: And Luke, we don't provide a waterfall around our custody business. But we do -- it is more concentrated in fixed income. So it did benefit from some of the upside but certainly less than the equity markets have. So it's hard to decipher that just from looking at what you're -- just from estimating as I think you've done it. Luke Montgomery - Sanford C. Bernstein & Co., LLC., Research Division: Okay. All right. That's helpful. And then, I was hoping you might update us regarding the comments you made last quarter about the potential to announce some incremental spending to reduce the complexity of your technology infrastructure. And really just broadly, give us your latest thoughts on where you stand on the ongoing asset servicing technology race? Gerald L. Hassell: Yes, sure. The -- it's Gerald here. It's basically included in the operational excellence initiatives, in the table, we've already outlined for you that we are continuing to produce quarterly. We are making further progress, as you can imagine, as part of our annual strategic planning process and getting ready for the budget cycle coming up in the end of the year. We are targeting further investments in simplifying the operating platform that will yield longer-term expense benefits. We're not ready to publish those numbers for you yet but it is part of our psyche to go after that even more aggressively than we have in the past.

The next question is from Howard Chen with Credit Suisse. Howard Chen - Crédit Suisse AG, Research Division: Gerald, you highlighted the record revenues this quarter, we can certainly feel that as we review these results. But just for the unique gains you spoke to, it doesn't appear like operating margins are expanding as you progress through operational excellence. So when you weigh some of these targeted investments you're speaking about, how important is it for you and the management team to balance that with just achieving more positive operating leverage? Gerald L. Hassell: Sure. It's a great question because we are in fact using some of those operational excellence savings and reinvesting in the businesses that aren't yielding necessarily bottom line income right now. But we are convinced, and we're seeing it empirically in ourselves, that the investments are starting to pay off. I cited some of the APAC platform, the Asia Pacific platform, of using the Pershing technology to introduce a separately managed account offering in the Asia Pacific region. We've gotten approval for it. We have our first client for it. We have several other clients lined up for it. And so we've been bearing all of that expense, of both the technology and enhanced distribution and sales capabilities in the investment management area. All that expense is being borne in our P&L today, and we think it's going to yield revenues and earnings in the future. So we are trying to do that delicate balance of reinvesting some of those savings in our future growth and delivering some profitability to the shareholders. We think we've gotten a pretty good balance here so far, but it's something we talk about everyday. Thomas P. Gibbons: But, Howard, when we budgeted for this year, we recognized if we made these -- if we continue to invest in these initiatives, it was going to have a negative impact on our operating leverage over the course of the year. It just has to. And we decided that it was worth it. Howard Chen - Crédit Suisse AG, Research Division: Right, understood. It makes sense. And then, Todd, just a follow-up for you. Thanks for all the thoughts on the leverage ratio. Appreciate a lot of this is not finalized. But I was just hoping you could just distill this conversation down to 2 main points for us. One, what do you see is the ultimate impact on how you all do business and from profitability as you pull these levers, if you have to? And two, do you think this will change the amount of capital you're returning to shareholders? Thomas P. Gibbons: Well, that's why I kind of walked you through the numbers and that -- in the numbers that I walked you through in terms of the capital generation and the return don't even take into consideration any growth we might expect over the next couple of years. So before I go on speculate on something like that, Howard, I need to have a little more clarity around exactly what the rule is going to be. In the meantime, just like we did with the Tier 1 common, we're not going to take any knee-jerk reaction and change anything until we get a good sense of where the rules are. The other thing is we haven't been managing to it. So if you think about it, back when we -- when the Basel III Tier 1 common rule was introduced and we first disclosed, we've reduced our risk-weighted assets by 25% under that rule, under the advanced approach. We haven't had any impact on our business by reducing that 25%. It's just making -- it's just optimizing and being more efficient, and we haven't even begun that process around the supplemental leverage ratio or the new Basel III rule. So I'd like to be able to take some time, first of all, to understand what the rule is and to pour over the data before I answer that question. Gerald L. Hassell: Yes, let me just add if I could, as a reminder, we do have a very different business model than everybody else where the supplemental rule is being applied. We are a very, very highly-liquid organization, which as Todd pointed out, we have almost $200 billion of either cash or a very, very high-grade government and agencies securities on our balance sheet. And so yes, our leverage ratio by absolute levels is relatively low, but it's relatively low because we have a highly -- and we have a very different business model that's highly liquid and very low risk weighted assets. We have to rethink some of the levers that Todd just described on deposits, unfunded commitments, the treatment of certain types of assets, et cetera. We think we have those capabilities within our tool set to be able to manage to the new requirements over the course of time that it's been laid out. So I do want to stress that we do think we have many tools available to us long before we consider interrupting our planned capital returns.

The next question is from Ken Usdin with Jefferies. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: I wanted to ask you about the servicing business, a little bit of a follow-on to Luke's question. Obviously, you guys have a bigger mix of fixed income assets and we saw that you still had really nice wins, $200 billion again. So can you guys help us understand the growth trajectory of the core servicing ex securities lending from here? And within that, just how do we understand the effects of the fixed income market selloff on revenues within that part of the custody business? Gerald L. Hassell: Tim, that's all yours. Timothy F. Keaney: Yes, maybe we start at investment services first. Todd mentioned the broad-based growth we're seeing in fees, where we're really pleased that, that's really across the board. Clearing has been leading the way. We're seeing some interesting drivers there. We're seeing a small and mid-sized brokers get out of self-clearing. We're seeing private banks looking to us for unique product set. You're seeing core issuer services, net wins and organic growth. We're seeing good uptick in our issuer business. So broad-based, one point is, we're delighted that the core business is growing, and we're seeing the new business convert. Todd mentioned, we are highly geared towards fixed income. So we continue to be aggressive on the equity mix. We didn't mention that we have about $350 million left to convert, which is about twice what we did this quarter. So it is a little harder. We're seeing less gearing to AUC in core asset servicing also, because outsourcing our collateral and our transfer agency and subtransfer agency businesses are playing an increasingly important role in the portfolio. But as I step back and look across all of that, we like the fact that the core businesses are growing, pipeline is incredibly strong, our win rate is high and the new things that we've been investing in are pulling through. And over that -- over the cycle, that portfolio should perform very, very strongly. Gerald L. Hassell: Yes, and, Ken, maybe just to add, we do have a diverse set of businesses within Investment Services, which is a plus. And we're trying to rely less on fixed income securities as the driver for our businesses. And so as Tim pointed out, Pershing is a very good example where it's a terrific platform that serves the end investor, the end individual investors. The individual investor moves more into equities and more into other instruments, that's a plus for us. We see the DR business being more equity driven. A lot of our asset servicing wins have been more equity-based or more fee-based, not tied to assets under custody. So we are further diversifying our revenue streams and being less tied to fixed income securities. And that's a conscious effort on our part. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: Okay. I understood. And then my second question is just related to operational excellence. The program has continued to have a nice quarterly benefit where you're taking out more cost each quarter and you're already at a $600 million run rate on an annualized basis, well above where you're originally targeting for this year and even closing in on the total program cost. Just wondering, first of all, just should we continue to see every quarter that there's still incremental costs coming out. And then secondly, what's -- it looks like you're going to be well ahead of that original goal. Can any chance you can size for us how far ahead you might end up being at the end of the program relative to initial guidelines? Thomas P. Gibbons: Sure, Ken. The -- we are a bit ahead. I mean, part of the reason was we took some more aggressive actions in the fourth quarter last year related to our real estate footprint, and we will start to reap the benefits of those. It does tend to be lumpy, so that there are actions that we're taking in a particular quarter that may pay off. So you may see a couple of quarters where it could actually be flat. And in fact, we would have thought that might have been the case, but we were able to do some more in the fourth quarter of last year. Hopefully, we're going to beat it, so we put out a target that we thought we can meet. We intend to meet it or beat it. But as Gerald said, we're also investing in our businesses elsewhere, and we've used some of that benefit frankly to drive -- try to drive the future revenue opportunities.

The next question is from Cynthia Mayer with Bank of America Merrill Lynch. Cynthia Mayer - BofA Merrill Lynch, Research Division: Maybe just a follow-up on the liabilities-driven investment. If the rise in rates spurs a lot of clients to do LDI, does that lead to sort of a one-time spike of inflows followed by a lull? And could some of those clients take those assets in-house over time instead of using outside managers? Curtis Y. Arledge: So there's definitely been a trend towards LDI. The biggest part of our LDI business today is in the U.K. and one of our initiatives has actually been to expand. We have U.S. businesses as well, but we really are growing pretty rapidly in the U.S. and in other developed parts of the world, where our pension funds have not been as aggressive in using LDI strategies. So that definitely is a trend. And at some point when LDI is fully on play with clients who wanted to go that direction, I think you will see it leveling off. I will tell you that some clients have looked at moving it internally and in some cases have done that. I think managing their liability, liabilities across the world of different complexity. In the U.K., they have an inflation component that is sometimes complex to manage against and they work with us to do that. And I think clients make different decisions on whether to do it in-house or not. But so far, I would tell you that the trend has been more to work with investment management firms and we've been a real beneficiary of that. The firms that we -- our investment firms that provide LDI services, one of the great things that they do is they really do understand client liabilities. And those liabilities can be very defined as in the case of a pension fund or they may need a tremendous amount of analysis in the case of even individuals, high net worth clients in a broader range of institutions. And so a lot of the intellectual capital and modeling tools around the liability side, I think, can be applied much more broadly to the full universe of investing clients. I think it's part of what you see spawning the broader solutions movement that's happened in the investment management landscape. And we think we're extremely well positioned to be a leader in the solution space helping clients understand their liabilities and how to invest against those liabilities. So LDI is absolutely a very large trend, we expect to continue for a while and we think that we are also well positioned to evolve it as the market evolves. But that -- I really do believe that's years away. Cynthia Mayer - BofA Merrill Lynch, Research Division: Okay. And then also I'm just wondering if you could give a little color on money market fee waivers, your outlook there. And more generally, just impact of the very, very low repo rate than short-term rates that you're seeing. Curtis Y. Arledge: I'll give an investment management answer. This is Curtis Arledge again. I'll give an investment management answer and maybe Todd or Tim, if you guys want to talk more broadly. We absolutely had seen an increase in fee waivers in this quarter versus a year ago. Some of that actually is we have been working to -- the rules have been proposed by the SEC, we see clients starting to think about what their longer-term plan will be, and we have absolutely seen, I think, we're better positioned. We think that we're going to be one of winners in the new money market world. Institutional prime funds, we think, are going to end up taking less risk. The yields will be different -- will be less different, less varied across providers. And we're -- we think we're very well prepared to benefit from an environment where clients are more focused on sponsor that they work with. Being the safest bank in the United States, doing really well, all the stress tests and whatnot is definitely on our client's radar screen. We've seen where we work with other parts of investment services and increasing usage of us in our money market funds by clients that are coming to us either from asset servicing or from Pershing or other parts of our company. So part of the reason we have increased fee waivers is absolutely because rates -- part of it is also because we think our business is actually doing well. So there's a revenue offset to much of the fee waiver business. We've done a lot of analysis of our client base. We've looked pretty closely at options that may play out when reform actually is put into place. There essentially are 4 paths that we think make up the bulk of where clients will go in the money market world with institutional prime assets. For those that absolutely have to have constant NAV, many of them will choose going through treasury and government funds. Again, we will lose revenue on that institutional prime side, but pick up some share of that revenue in our treasury and government funds. Some subsegment of our client base have said that they will accept floating rate. It's not a large portion of it, but some will. Others will stay with the constant NAV with liquidity gates if both of those end up being -- going forward as proposed. And then finally, there will be some that exit that need to move to deposits or to other types of stable investments. When we look across the whole thing, we think it's going to have an impact but not an incredibly large impact. Some of that driven by the fact that we've already seen a diminution in our profitability from the low-interest rate environment. So again, if rates normalize, we actually think a lot of assets will come back to the money market space. We think we'll see meaningful growth there potentially. And it may not be what it would have been without reform, but we again think we're well positioned. Maybe the last thing I'd say, this whole leverage ratio discussion, to the extent that if cash and high-quality assets, treasuries and agencies are not excluded from the calculation and banks broadly end up owning fewer of them, you would think that, that would shrink the demand side of the equation and actually push short-term yields up, which would shrink our fee waivers. So there are some positive offsets to some of these leverage ratio discussions in our earnings profile. Thomas P. Gibbons: And Cynthia, for the rest of the company, in fact, fee waivers are about consistent with the size of our businesses, about 25% to 30% of the impact is felt by the Investment Management side and the remainder by the Investment Services side. It's largely driven by very short-term rates and the best correlation is just to the fed funds effected, which inched it down a basis point or so in the quarter and it continues to trade at about that level. So we've indicated in the past that it's about $0.05 or $0.06 right now a quarter with where these -- where the fee waivers are running for the entire company in terms of the pretax income impact.

The next question is from Mike Mayo with CLSA. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: Is there a little shift in terms of your emphasis on wealth management? It seems like you're talking about it more forcefully at the start of this call? Gerald L. Hassell: Mike, wealth management has always been a business we love. And I've personally been a strong proponent of our wealth management business. I wish it was a larger percentage of our company, and we're just making good investments in people and in some of the infrastructure to make a more competitive and more markets across the countries. So it's a good business, it's a very sound business for us, it's a steady grower, it's got good margins, it has all the right attributes and utilizes our investment management capabilities. So we think it's got all the right attributes for further investment. So it's just one of the examples of many examples, where we're investing in our businesses for long-term growth. Thomas P. Gibbons: I think I'd add to that, Mike, these investments, of all the things that we do, the ones that have the greatest probability of actually meeting our expectations will be this type of an investment. But the challenge is it's a long payback period. So you invest and you see it 2, 3, 4 years out. But we think it's -- we just need to continue because there's real value there to building this organically. It would be great if there was something that was a perfect fit, but if there's not, we're going to have to do it organically. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: Okay. And then my second question, I know I asked it last earnings call, but each time I go down to the court house for the Bank of New York hearing with the $8.5 billion settlement with Bank of America, I hear some lawyers -- I'll paraphrase, I think they say that Bank of New York rubber-stamped the $8.5 million mortgage put-back agreement. And I know you can't comment on the particulars of the case, but I just happen to be down there. It was, I guess, yesterday was the internal counsel and last time I was there, it was the external counsel for Bank of New York. And my question is, if the judge refuses to accept the $8.5 billion settlement, what would be the implications for Bank of New York? And my thought process, which I invite you to correct is that you only get a few basis points to act as custodian for a lot of these fees. You don't incorporate the possibility that you'd have to expand a whole lot of effort for the sort of problem asset resolution. And so if they deny this settlement, does that imply that you have a much higher level of duty to the certificate holders that you act as trustee for? Gerald L. Hassell: Mike, we think we've managed this process and our role as trustee in these securities quite well. It's going through the typical court process. You're going to hear lawyers from all sides argue their case. We think we've handled our duties properly, and that's all I can say. Thomas P. Gibbons: I'll just add one thing to that cost question, Mike. The agreements that govern the trust provided by BNY Mellon's trustee, we're indemnified for any losses, liability or expenses. So if there are higher expenses, we should indemnify them. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: What I'm kind of getting to, I mean, the price competition among the processing banks has been tough for the last many years. If you look at processing fees that's under custody, it's still very low. Each of the big players have talked about being more selective in how they price things. Are you seeing any change in the pricing when you act as custodian? Gerald L. Hassell: Mike, for the very large clients, the largest investment managers or sovereign wealth funds around the world, continue to remain very price competitive and we try to win on service capability, value-added capability rather than win on the pure commoditized settlement of it. And that's why the diversified business model we have and the different solutions sets we have to offer, we think has put us in a competitive -- positive competitive position. The pure custody business is very commoditized. I will grant it. And that's why some of the operational excellence and some of the expense initiatives we have in place to constantly improve our operating platforms so that we can, in fact, maintain our operating margins as part of the nature of the business. Overall, the company's operating margins are quite healthy and we showed strong revenue growth, we improved our operating margins, and we're investing in our businesses for the future. So we like these businesses. There are elements of it that are clearly commodity driven.

Our next question is from Gerard Cassidy with RBC. Gerard S. Cassidy - RBC Capital Markets, LLC, Research Division: Todd, I know you had given us some color on the supplemental leverage ratio. And I think many of us on this call would agree you guys are clearly different than our largest banks. If you're successful in convincing the regulators to allow you to deduct the cash and the government-guaranteed securities on your balance sheet, just that portion of it, would that put you over the 5% number do you think on the leverage ratio? Thomas P. Gibbons: Gerard, I could barely hear you, unfortunately. I'm not sure what's wrong with the communications, but... Gerard S. Cassidy - RBC Capital Markets, LLC, Research Division: I'll try again, maybe this is a little better. You gave us some color on the leverage ratio and clearly, you guys are different than the biggest banks. If you're successful in convincing the regulators that deducting cash in the guaranteed-government securities that you own and others would do the same from the denominator. Would that put you over the 5% by just doing that alone? Thomas P. Gibbons: Well, if you deducted cash -- the way to look at it is we've got about a $360 billion balance sheet. And if you deducted cash and government-guaranteed securities that's $200 billion. So, yes, that throws us way over. Gerald L. Hassell: The answer is yes. Thomas P. Gibbons: Under the way -- and I always want to phrase it under the way they're currently proposing that it'd be calculated. Gerard S. Cassidy - RBC Capital Markets, LLC, Research Division: Okay. And speaking on the leverage ratio, your -- do you have an estimate for what the lead bank ratio is, which is going to be 6% for everybody? Thomas P. Gibbons: It's about -- it's close to where we were at the holding company. Gerard S. Cassidy - RBC Capital Markets, LLC, Research Division: Okay. And then, Gerald, finally, coming back to the wealth management business, what kind of projections do you guys see in terms of future revenue growth from this initiative now to grow this business pretty dramatically as you pointed out. I think you said 50% types of increases in staff and people. What do you think you could -- 2 or 3 years down the road, relative to where you are today, how much higher could the revenue be? Gerald L. Hassell: Yes, I don't want to give guidance and speculation, but we wouldn't be making the investment if we didn't think we could meaningfully increase the rate of growth in the wealth management business. We've -- as Todd said, it's pretty predictable when we make these kinds of investments, how the growth rate actually increases. You're starting to see some of it in things like loans and deposits, which is the easiest thing to point to, where we've had meaningful growth already. We had almost 20% increase on both of those categories year-over-year. So it's starting to show up in the numbers already.

The next question is from Brian Bedell with ISI Group. Brian Bedell - ISI Group Inc., Research Division: Gerald, I think you mentioned in your earlier comments on the collateral management initiative beginning to show up in revenue. Maybe if you and/or Tim could talk about the progress there that you're seeing so far. If you can quantify the revenue in the asset servicing number and then where you think maybe a type of range we can think about that in 2014. I think you had previously said that was more of a 2014 type of build. It looks like you're seeing some early returns there. Gerald L. Hassell: Right. As I said in my opening comments, we're seeing it in the optimization and segregation balances, and then it's starting to show up in some of the fees. We're not breaking it out yet. It's basically included in the overall investment services fees. But one of the reasons for the year-over-year growth is then related to that. We're also seeing it in some of our secured loan category, which is part of the optimization. And so that's one of the reasons why our net interest income and our secured loans are up. But Tim, maybe you want to add some comment. Timothy F. Keaney: Yes, Brian, thanks for the question. I mean, I still go back to Dodd-Frank, it's still about only 1/3 written EMIR, the European cousin to Dodd-Frank about the same. These regulations continue to be phased-in. The buy side's claiming a more important role because they have to comply with these regulations as well, so we're doing a lot of education of the clients. I mean Gerald nailed it between secured term, loan financing, the number of accounts we're segregating. The amount of collateral we're reinvesting through our portal, all the vital signs there are very healthy. About 1/3 of our asset servicing pipelines being driven by overall activity in collateral. But I think the 2 areas -- and so I think those services will continue to grow as clients are forced to put more the derivatives volumes through CCPs and collateralize them. So that will happen steadily over time. And then the 2 services that are going to become increasingly more important to clients probably in mid-'14 and later is segregating all of their collateral positions around the world and then providing optimization services on top of that, and we charge for both of those things. So I don't know if that characterization is helpful, but those are the areas that we've been reinvesting in our technology capabilities. Brian Bedell - ISI Group Inc., Research Division: That's helpful. Do you feel you're most of the way through that in technology investment, you mentioned that the patent that you ordered? Or is there still a significant amount of buildout to capture those revenues out in '14 and '15? Timothy F. Keaney: Yes, I would say the majority of it is behind us, Brian. We're testing aggregation now with a couple of clients. Yes, so I would say most of that investment is behind us. It's now more the ground assault marketing effort in getting out and talking mostly to the buy side. Brian Bedell - ISI Group Inc., Research Division: Okay, great. And just one more for Todd. On the unrealized securities losses, the change in the first to second quarter. Todd, how do you think about that on the go-forward basis in terms of capital management in context of your comments on the Basel III leverage ratio and your mitigation strategies? Or is it -- if we get a back up on the yield curve substantially faster over the next several quarters, would you move more securities to help the maturity, or are there other mitigation strategies to that in terms of your capital planning? Thomas P. Gibbons: Yes, we certainly take it into consideration. We model the sensitivity to it and we've become a bit more defensive in both what we're buying and which account that we're placing it. So that we could -- as we get closer to the ultimate days that the Fed actually does something, it will be less impactful. But securities are still a big part of our balance sheet. So as a percentage basis, it is something for us to keep an eye on. Brian Bedell - ISI Group Inc., Research Division: Right. And would you shorten duration then as a potential mitigation strategy? Thomas P. Gibbons: Certainly shorten the duration that would be exposed to the capital.

Our final question today is from Jim Mitchell with Buckingham Research. James F. Mitchell - The Buckingham Research Group Incorporated: I just want to follow up on the net interest margin. You guys were up 4 basis points sequentially. You said it didn't really benefit too much from premium amortization this quarter. You talked about an earnings mix shift. But in the previous question, you're talking about potentially being more defensive if you need to be in shortening durations. So how do we kind of put all that together? What drove the NIM performance sequentially? Was it taking a little bit more duration or -- how do we think about that in the quarter and then going forward? Thomas P. Gibbons: There are 2 drivers. One is actually cost of funds decline. So if you look at our interest earning deposits, they declined from -- 1 basis point. Now 1 basis point doesn't sound like a lot, but $140 billion and actually -- it actually adds up, so we went from 8 to 7 basis points. The other thing is we did -- we called our trust preferreds, which fell through the deadline, those were relatively expensive. So we got a nice kicker from a reduced cost of funds and the -- then the other driver is mix. So we did see an increase in our loan portfolio. We'd like it to be a little bit bigger, but we did see an increase in the loan portfolio. We saw a modest increase. Actually the securities portfolio from period to period was about flat. It was bigger on average. But from period to period, it was about flat. So we saw a decline on the available for sale and an increase, Jim, in the health of maturity as we use that a little more aggressively. So we think that as -- and then we saw a little bit of a benefit from the fact that the unamortized premium is going to slow down. So that helped us a few million dollars, or $5 million or $6 million as well. So you take that into consideration on a go forward, we're going to pick up the benefit from the -- the benefit from the unamortized premium and will be more than offset from allowing the duration to shorten a bit. James F. Mitchell - The Buckingham Research Group Incorporated: Okay. So you'd expect sort of that core NIM to stabilize, but potentially getting more benefit from premium amortization? Thomas P. Gibbons: Yes, I think, that's the way to look at it. We think we can hang in here without doing a lot to the portfolio. Gerald L. Hassell: Well, thank you very much, everybody for dialing in. We really appreciate it. And if you have any other comments or questions, please reach out to Andy Clark and the rest of our IR team. Thank you very much all.

If there are any additional questions or comments, you may contact Mr. Andy Clark at (212) 635-1803. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating.