Andy Clark - Thomas Gibbons - Vice Chairman, Chief Financial Officer and Senior Executive Vice President Brian Shea - Senior Executive Vice President and Chief Executive Officer of Pershing LLC Timothy Keaney - Vice Chairman, Chief Global Client Management Officer, Chief Executive Officer of Asset Servicing, Senior Executive Vice President and Chairman of Europe Operations Robert Kelly - Chairman, Chief Executive Officer, Member of Executive Committee, Chief Executive Officer of The Bank of New York and Chief Executive Officer of Mellon Bank N A

Brian Bedell - ISI Group Inc. J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc. Alexander Blostein - Goldman Sachs Group Inc. Betsy Graseck - Morgan Stanley John Stilmar - SunTrust Robinson Humphrey, Inc. Kenneth Usdin - Jefferies & Company, Inc. Howard Chen - Crédit Suisse AG Gerard Cassidy - RBC Capital Markets, LLC Glenn Schorr - Nomura Securities Co. Ltd. Michael Mayo - Credit Agricole Securities (USA) Inc.

Good morning, ladies and gentlemen, and welcome to the Second Quarter 2011 Earnings Conference Call hosted by BNY Mellon. [Operator Instructions] Please note that this conference call webcast will be recorded and will consist of copyrighted material. You may not record or rebroadcast these materials without BNY Mellon's consent. I'll now turn the call over to Mr. Andy Clark. Mr. Clark, you may begin.

Thanks, Wendy, and welcome, everyone. With us today are Bob Kelly, 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 13 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 19, 2011, and we will not update forward-looking statements. This morning's press release provides the highlights of our results. We also have the Quarterly Earnings Review document available on our website, which provides a quarterly review of the total company and individual businesses. We will be using the Quarterly Earnings Review document to discuss our results. Now I'd like to turn the call over to Bob. Bob?

Thanks, Andy, and good morning, everyone. In Q2, earnings per share were $0.59 or $735 million. That was up 18% versus the first quarter and 9% versus the prior year. First on the revenue front. Both fees and net interest income increased year-over-year, as well as sequentially. And the revenue was up 15% year-over-year, including acquisitions. So excluding acquisitions, which is the way I look at it, revenue growth was about 7% year-over-year. This trend is, frankly, encouraging because if you look back, we had 5% growth Q1 versus Q1 and 3% growth in 2010 versus 2009. Fees were up about 18% or about 8%, excluding acquisitions as we benefited nicely from new business trends and improved market values. And net interest income was actually up from Q1 and last year driven by much higher client deposits reflecting the strong balance sheet. And speaking of the strong balance sheet, we still had a gain had a 0 provision for credit losses during the quarter. In terms of expenses, they're too high. We're up 21% year-over-year or 12% without the acquisitions. If you kind of peel that back a little bit, about 2% or 3% of that growth came from increased regulatory compliance and litigation costs. These, frankly, are the unpleasant realities of a post-crisis environment. So net of these factors, expense growth was in line with our fee revenue growth. However, the bottom line is we're not getting positive operating leverage year-over-year. We need to and we will. We plan to hold an investor conference this fall likely October or November, and we'll provide you with lots of details about our expense reduction initiatives, as well as some thoughts on revenue growth opportunities as well. Investor Relations will get back to you soon with a date. A few thoughts on our 2 major businesses, investment management and investment services. In investment management, the results are strong and there are no acquisitions affecting the numbers. We had 11% revenue growth year-over-year, 8% expense growth. And this generated 300 basis points of positive operating leverage and a 20% growth in pretax earnings. In terms of metrics underneath it, we had AUM growth at 22% year-over-year, which took us to a new high of $1.3 trillion. We are seventh consecutive quarter of positive long-term asset inflows or $32 billion, also a new record. I'd also like to note that in wealth management, we opened an office in Chicago and are currently planning to expand in D.C. and Dallas. In investment services, we had 16% growth in revenue year-over-year as asset servicing benefited from acquisitions, new business and improved market values. Assets under custody were up 21% year-over-year to $226.3 trillion, which is a new record for us. Issuer services had a very nice performance through the Depositary Receipts business. Pershing was up 21% year-over-year helped by some very large new business wins. And it was also good to see sec lending revenue was up 73% year-over-year. So within securities lending, we had 9 new clients and another 26 existing clients either expanded their mandates with us or they expanded their collateral guidelines, which of course, leads to increased activity. In terms of our capital account, we generated more than $800 million worth of new Tier 1 common equity before dividends and share repurchases. As you know, our dividend was raised from $0.09 to $0.13 in the quarter. We also bought back 10 million shares almost, and we generated an additional 45 basis points of Basel III capital. Now we don't know what our final city buffer will be for us, but we hope to know in the coming months. But given our high-quality balance sheet and rapid capital generation, we feel very comfortable that we can continue to repurchase shares and comply with any regulatory capital requirements. So beyond that, there are 2 main issues that currently concern us. First, is Washington's inability to resolve the nation's debt and deficit issues. The debt ceiling must be raised, and it's really just a slide show to the real issue. We must have a real plan to eliminate the deficit, not reduce it, eliminate it. And we need to couple it with a pro-growth agenda to get people back to work over time. We're also keeping a close eye on the situation in Europe and being very cautious. Our exposures in 3 areas: balance sheet, money market funds and securities lending collateral funds. Good news is our primary exposure on balance sheet is deposits with banks. They're only to the largest and healthiest banks and short term in general. In terms of money market funds and securities lending funds, we have greatly increased liquidity and our exposure's also limited to the largest and healthiest banks. It's hard to speculate about what are the ultimate ripple effects should the situation deteriorate further. But we feel good about how we're positioned in this environment. So to summarize, we continue to consistently grow revenue, expenses are running higher than we'd like and we'll manage them lower. Our balance sheet is of the highest quality, we generate a lot of capital every quarter and we expect to continue to return some of that to our shareholders via share repurchases. With that, let me turn it over to Todd to go through the numbers, and then we'll open it up for questions. Todd?

Thanks, Bob. It was a solid quarter overall with good fee growth and a nice pick up in net interest revenue. Earnings for the quarter were $0.59 or up 9% from a year ago. This includes a total of $0.04 per share similar to last quarter of litigation and MI expenses. It also reflects the benefit of approximately $0.06 from loan and securities gains. So the way we look at our core earnings, it nets to about $0.57 for the quarter. As I take you through the numbers, my comments will follow the Quarterly Earnings Review beginning on Page 2. Some highlights on a year-over-year basis. Total revenue was $3.9 billion, up 15%. Our core fees are growing nicely. Investment services fees were up 27%. And as Bob mentioned, that's 9% excluding acquisitions, reflecting net new business, higher Depositary Receipts and higher securities lending revenue. That's partially offset by higher money market fee waivers this quarter as well. Investment management fees were up 14% driven by higher market values and net new business. Net interest revenue was up 1%, largely reflecting growth in client deposits. Noninterest expense increased to 21%. That's 12% excluding acquisitions. That's reflecting the higher litigation and legal expenses. This is the quarter for our annual merit, as well as higher volume-related and business development expenses. Turning to Page 4 where we'll call out some business metrics that will help you understand our underlying performance. You can see that AUM and AUC reached record levels, reflecting new business and higher market values. AUM was up 22% year-over-year to a record level of $1.3 trillion. Second quarter long-term inflows of $32 billion were also a new record. Long-term inflows benefited from strength in fixed income, especially our liability driven investment products, as well as equity index products. Short-term outflows were $1 billion. Assets under custody was up 21% year-over-year to a record level of $26.3 trillion benefiting from the acquisitions, new business and higher market values. The other investment services metrics continue to show positive trends and with one exception, and that is Corporate Trust where the trend's relatively flat given the continued softness in the structuring debt markets. DR programs and net issuances increased, most of the major drivers of our clearing business improved, and the broker dealer collateral management book continues to grow as we gain market share, develop new products and benefit from the need for secure the exposures globally. Turning to Page 6 of the earnings review, which shows fee growth. Asset servicing fees were up 47% year-over-year as we continue to benefit from the acquisitions made last year. X acquisitions, asset servicing fees were up 14%. We also benefited from higher market values, net new business and higher securities lending revenue due to higher loan balances and spreads as Bob had mentioned. Asset servicing fees were up 6% quarter-over-quarter, reflecting seasonally higher securities lending revenue and net new business. Our 2010 acquisitions of GIS and BHF are both performing as planned with solid revenue growth. During the quarter, we won an incremental $196 billion in new Asset Servicing business for a total of $1.5 trillion over the past 12 months, of which $560 billion is yet to be converted. Issuer services fees were up 3% year-over-year and 4% sequentially. That's driven by higher DR revenue from higher corporate actions and service fees. It's partially offset by lower shareowner services and Corporate Trust revenue. Clearing fees were up 19% year-over-year due to growth in client assets. We set a record during the quarter of exceeding $1 trillion in client assets for the first time, and we also benefited from other new business. Now that reflects the positive impacts of the significant new Clearing businesses we were converting over the last couple of quarters and the impact of the GIS acquisition. Sequentially, the growth in assets was offset by lower transaction volumes and the higher money market fee waivers. Investment management had another strong quarter. Higher market values, net new business was partially offset once again by higher money market fee waivers. FX and other trading was up slightly both year-over-year and sequentially. FX revenue totaled $184 million, a decrease of 25% year-over-year, reflecting lower volatility, partially offset by higher volumes. FX revenue was up 6% sequentially, reflecting higher volatility. Other trading revenue was $38 million versus $25 million in the first quarter and that was driven by fixed income trading. Now let me give you some perspective on our FX activity. It is currently 5% of our total revenue. Of that 5%, approximately 40% is done through standing instruction, while the majority, 60%, is negotiated. Of that 40% done under standing instruction, only 15% is related to U.S. public pension funds and that's where the recent publicity has centered. In other words, the recent publicity is related to the FX activity that comprises less than 1/2 of 1% of our total revenues. Investment and other income totaled $145 million, flat from a year ago and up from $81 million in the first quarter. The sequential increase largely reflects gains related to loans held for sale, retained from a previously divested banking subsidiary. During the quarter, we took securities gains of $48 million as we saw an opportunity with the very low dip in interest rates to reduce the risk of our portfolio by selling longer dated U.S. Treasury and agency securities, shortening the duration in these very uncertain times. Turning to Page 8 of the earnings review. NIR was up $9 million versus the year-ago quarter and up $33 million sequentially. Both increases were primarily driven by growth in client deposits. Interest earning assets were up for the quarter and particularly spiked at quarter end, driven by negative repo rates, market uncertainty and the substantial level of liquidity that's still in the system. Revenue was also enhanced by the purchase of high-quality asset-backed securities in the first 2 quarters. Net interest margin was 141 compared with 149 in the prior quarter. The decrease was primarily driven by an increase in deposits. Had we not seen that growth in deposits, we estimate that the net interest margin would have increased slightly, so it would have been probably a little bit above 149, but earnings would have been down probably in the vicinity of about $8 million. Given the volatility we're seeing in our balances, we're really not currently trying to manage to the net interest margin. Frankly, earning 20 to 25 basis points on cash and a 0 risk asset is not bad even if it temporarily hurts the margin. Turning to Page 9 on expenses. Noninterest expense increased 21% year-over-year. That was driven by the impact of the acquisitions, as well as litigation and legal expenses. Excluding the expenses associated with acquisitions, we're up about 12%. On a quarter-over-quarter basis, expenses grew 4%. Both increases reflect the fact that we had the second quarter 2011 merit increase and that becomes effective the first day of the quarter on April 1, as well as higher volume-related business development expense. Other expenses were up $15 million, primarily due to a gain on credit support agreement in the first quarter. On Page 10, you can see that we continue to generate significant capital during the quarter. We generated more than $800 million in new Basel Tier 1 common, most of that through earnings, a little bit through intangible amortization. Net Basel Tier 1 common less dividends and buybacks was up $510 million. Looking at our capital ratio table, you will note that we are now disclosing our pro forma Basel III Tier 1 common ratio, which we estimated was 6.6% at the end of the quarter. I would like to emphasize that we continue to like our capital position. Our Tier 1 common Basel III ratio increased 45 basis points in the second quarter, reflecting the capital generation and slightly lower Basel III risk-weighted assets for the quarter. Looking forward, our earnings net of dividends and buybacks, are generating about 20 to 25 basis points of Tier 1 common per quarter, and the expected quarterly pay down of our sub-investment grade securities should add an additional 10 basis points. So you can expect us to generate somewhere in the 30 to 35 basis points a quarter. On top of that, the anticipated closing of our shareowner services transaction is expected to add approximately 20 more basis points to our Basel III ratio when it's closed. We also like the performance of our sub-investment grade portfolio. However, it is important to note that we could sell this portfolio and add approximately 250 additional basis points to the ratio. It's certainly nice to have this flexibility but our capital position is already so strong that we have no intention of doing something uneconomic. Bottom line, we remain confident in our ability to exceed the Basel III 7% target by year end, if not earlier. Given our current capital position and the strength of our balance sheet, we don't anticipate accelerating our time line to meet the proposed Basel III capital guidelines. As Bob said, we don't know our city buffer will be, but we are confident we can comply while continuing to return capital to our shareholders. On Page 11, you can see that our investments securities portfolio continues to improve and it's actually performing quite well. The value of the portfolio has increased over the first quarter, and the pretax net unrealized gain in our securities portfolio increased by $201 million to $770 million. I might add that pay downs in the sub-investment grade securities were approximately $330 million in the second quarter. Looking at our loan portfolio, you'll see that just as with last quarter, we had no provision for credit losses in the second quarter compared with a charge of $20 million in the second quarter 2010. NPAs declined from $386 million to $351 million, and the total allowance for credit losses decreased $19 million driven by charge-offs. The effective tax rate of 26.9% compares to 29.3% last quarter and 30.2% in the year-ago quarter. The lower tax rate is a little misleading in the second quarter because it was driven primarily by the impact of the consolidated investment funds. On a going forward basis, excluding the impact of investment fund consolidation, we continue to expect the effective operating tax rate to be in a range of 30% to 31%. Looking ahead, while there's a great deal of uncertainty in the markets given the events playing out in Europe and our own unresolved debt issues here in the U.S., we're encouraged by the revenue momentum we've achieved these last few quarters. We had nice fee growth and it felt like we've turned the corner on NII. We continue to work on addressing our expense growth and look forward to sharing more specific plans on our Investor Day in late fall. A few points to factor into your thinking about the coming quarter. Both NIR and fees continue to be impacted by this persistently low interest rate environment but should benefit from our ongoing investment program. We would expect to continue to generate NII at the level we did in the second quarter. Litigation remains a risk. Third quarter earnings have traditionally been impacted by seasonality that's associated with lower levels of capital markets related revenues, particularly securities lending and foreign exchange, so we'd expect to see that. One thing that's a little bit different than the third quarter is we expect the seasonal spike in dividend payments that normally occurs during the fourth quarter, we might actually see some of that in the third quarter, so that's going to be a positive. And we expect the quarterly provision to be in a range of 0 to 15 as we've seen for the last few quarters. And finally, we expect to continue our buyback program. In summary, we had a solid quarter. With that, I'll turn it back to Bob.

Thanks very much, Todd. Why don't we open up for questions?

[Operator Instructions] Our first question today is from Betsy Graseck with Morgan Stanley. Betsy Graseck - Morgan Stanley: I just want to hone in a little bit on the capital ratio discussion that you breezed through earlier on Page 10 and link it with the securities disclosure that you gave on Page 11. Just wanted to make sure I understand how you're thinking about the run off in the non-investment grade securities. From here, is it going to be at the same pace that you had this quarter? And how do you think about how your common Tier 1 under Basel III changes over the course of the next couple of quarters as the non-investment grade pace down?

Sure. Betsy, the securities are running off at about $100 million a month, and there is some accretion so some of the runoff is reduced by the net impact of the accretion. But our best estimate for the next few quarters is we should see about a 10 basis point benefit to our Basel III ratio from that securities runoff. So it's reducing our risk-weighted assets, and it's almost a dollar-per-dollar impact on risk-weighted assets so every $100 million down, it's like having another $100 million of capital. Betsy Graseck - Morgan Stanley: And that rate of change or that pace of change is expected to be consistent or accelerating, decelerating?

It will slightly decelerate over time. Betsy Graseck - Morgan Stanley: Okay. And have you given what the yield is on the securities?

We have not, Betsy. Betsy Graseck - Morgan Stanley: Okay. And so you're saying your Basel III ratio you think it's going to accrete a little bit faster than your Basel I?

Yes, because you don't have the same treatment of those securities, so that's an additional 10 that you just get right there. Betsy Graseck - Morgan Stanley: Sure. And when would you reapply to the regulators for the next round of capital management activity?

We think the way this is developing, it's going to be an annual process. So we'll pretty much just go through our typical budgeting season, have things approved by the Board and submit some kind of a plan with the regulators. We're pretty sure that's how it's going to work.

Our next question is from Alex Blostein with Goldman Sachs. Alexander Blostein - Goldman Sachs Group Inc.: Just hoping to maybe talk a little bit more about expense management. I know it's maybe a little bit premature. But can you give us a sense of what areas you're particularly might be targeting, I guess, in your expense management plans over the next few quarters?

Yes. So Alex, it's Bob. We've been working on this for some time, and of course, we have a lot of expense management stuff flowing through our income statement right now as we continue to reposition ourselves. And there's investment costs involved in getting costs out over time. But the basic categories are moving people to lower-cost locations that are in major cities, real estate and working down the number of locations, the number of buildings that we have, procurements where we're doing a good job. And I wouldn't call us first quartile in our capabilities and frankly, we had too many applications in our company in terms of systems. And we want to cull those fairly materially over the next few years. Alexander Blostein - Goldman Sachs Group Inc.: Got it. So this is over and above from what I guess you guys have been doing already because you have been moving I guess some people to lower-cost locations for quite some time, right?

Yes. And that's been pretty successful, but we're now looking at things that are materially above that run rate. Alexander Blostein - Goldman Sachs Group Inc.: Got it. And then just a couple of nuances in the quarter. Can you give us a sense of what the discount accretion was just in dollar terms for the second quarter, and then maybe a sense of what money market fee waivers were?

Sure. The discount accretion was actually down a little bit in the quarter almost $10 million, so I think it was about $95 million, $96 million. And the money market fee waivers actually picked up during the quarter, probably worth about a $0.01 to our earnings on a sequential basis. So they haven't gone back to the highs that we saw last year but with the very, very low treasury rates, we're getting pretty close to that. Alexander Blostein - Goldman Sachs Group Inc.: Got it. So that was like a $60 million, $65 million number or so?

That's correct.

Our next question is from Glenn Schorr with Nomura. We'll move on to the next question, Howard Chen with Credit Suisse. Howard Chen - Crédit Suisse AG: Bob, for the commentary on peripheral Europe. I realized it's a fluid situation. But just maybe was hoping to get more details on how you're thinking about some of the potential pluses like customer inflows and acquisition environment and how you're weighing that versus some of the minuses things like increased counterparty risk and a tail event within the money market fund business.

Yes, from a business standpoint, I really like our positioning from both an asset management standpoint, as well as in various investment services product standpoint. I think we have really good opportunities to gain market share in Europe over time just because of quality of our products and services that we have. I'm not getting a sense that there's a lot of acquisition opportunities in the near term, but I would think over 2 or 3 years, some of the major banks in Europe have to really think about how they're creating value for shareholders in coming years and over the longer term. And that may or may not, it's just too early to tell, result in other opportunities for us like joint ventures or more outsourcings, longer term partnerships from a middle office and back office standpoint and from the standpoint of providing more asset management products to these firms where perhaps they don't have to manufacture their own products. There's a pretty long list of opportunities here. And so the real question is how quickly and aggressively will European counterparties and banks, generally financial institutions, want to act to refocus their business models and to free up capital. So we'll see. And I worry much less and perhaps the market is from the standpoint of the impact on our balance sheet, as well as our off-balance sheet activities. We've been watching this extraordinarily closely, of course, and we're actually cognizant of what happened several years ago in the markets with market instability. So we've learned from that and we're being pretty proactive. Howard Chen - Crédit Suisse AG: Just following up on that, Bob, just honing in on 2 specific things. On the positive side during the crisis, you saw significant amount of balance sheet growth. What's the pace of that specific to Europe and the events in Europe now? And then on the potential negative side, within asset management, could you just think about is there anything changing with respect to how you're managing the money market fund business and again, a potential tail event there?

Yes, I would say on the latter, we are much, much more liquid than we ever have been in the past. In fact, enormously liquid so that it provides us with maximum flexibility for our clients, as well as from a risk management standpoint, and we've been extraordinarily careful in terms of where our investments are in terms of the countries and in terms of the entities. We only want the biggest, healthiest companies within our fund. So that has been a real-time activity for us as we continue to stay on top of the developments in the market and...

I'll take that, Bob. In terms of the balance sheet growth, it's really hard to attribute it to anything particular, Howard, because you've got a confluence of event. You've had repo rates in the U.S. go negative. So rather than having funds holding negative repo, they're leaving money in their DDA account; 0 was better than negative 8. And so we're seeing a little bit of noise from that. Certainly, some of the disruption in Europe is going to be contributing somewhat to it. And our balance sheet is probably running, our deposit base is probably at $30 billion higher than we would've expected because of the noise around the world right now would be our best guess. There's also an awful lot of excess liquidity in the system, and so we're the beneficiary of that as well.

That is the big difference from a few years ago in that we've all been pretty well trained and hardened to market volatility over the past 3 years, plus we have an enormously liquid financial system around the world. Howard Chen - Crédit Suisse AG: Very helpful. And then separate topic, Todd, on the NIM and net interest revenue outlook, I appreciate what you're saying on the challenging environment over the near term. But just thinking longer term, how are you thinking about the longer term leverage to rising rates in the business model now that things have changed on the NIM and the balance sheet. You have previously framed that as maybe a $500 million revenue opportunity with very high incremental margins, could you just refresh that for us today?

Yes, I would stick with that, Howard. I don't think it's changed much. We might have dipped a couple of quarters ago with the move in the fee waivers started to decline a bit, but with these very, very low treasury rates right now, fee waivers have increased. So the opportunity is probably in the $450 million to $500 million range. Pretax, too, Howard. Howard Chen - Crédit Suisse AG: Right. And then final one for me, again, thanks for the data on the Basel III capital. Just curious any updated thoughts on Basel III liquidity and leverage proposals update similar to what you've done on capital for things like net stable funding ratio?

Yes, it's still a little bit early. I mean, the net stable funding ratio really isn't -- there's nothing out there to really work with the liquidity coverage ratio is one that seems to be gaining some traction in its current form. And just look at the nature of our balance sheet, Howard, you could just see how well we would expect to do on that ratio. We're sitting on massive amounts of cash.

Howard, it's Bob. I'd also mention that we are getting strong impression from the regulators that they're not going to be quick to act on the various liquidity components of Basel III. They want to really study this and understand the system-wide implications of this over time.

Our next question is from Glenn Schorr with Nomura. Glenn Schorr - Nomura Securities Co. Ltd.: Look, a quick one is I think you mentioned or I just didn't write down quick enough. The one but yet not yet converted pipeline in investment servicing.

It was I think about $560 billion, Tom?

$560 billion so that's right. Glenn Schorr - Nomura Securities Co. Ltd.: And you've had a steady flow of new business through thick and thin in these tough markets. Are you seeing any signs of clients looking to outsource more given the market pressures and what that can do for them on the expense side?

Yes, Tim Keaney here. Yes, pipeline is almost double what it was a year ago, and this has been a continuing trend. I think we talked about this last quarter. About 40% of our new business wins year-to-date, and as it turns about, about 40% of our pipeline is outsourcing. And certainly, what we continue to see is as banks, insurance companies and fund managers remain profit challenged, they're turning to outsourcing kind of non-core activities, and we certainly feel that, that plays to one of our strengths.

Maybe Brian Shea can add to that from a Pershing perspective.

Yes, I would say we're seeing similar trends on the Clearing side, as well and an increase in the level of interest by some clearing firms to variablize their cost structure and free up regulatory and investment capital. So our pipeline is also solidly up year-over-year. On the Pershing clearing side, and we're also seeing a doubling in the pipeline of revenue associated with the crossover between Pershing-related activity in the PNC GIS legacy. This is specifically Albridge Solutions and the management investment side. So a good pickup in pipeline activity there as well.

While we're on new business trends, Curtis, why don't you give us your views on the quarter and where you see opportunities?

Yes, we had a good quarter again on the net new business front, and our wins not yet funded have also remained pretty strong. In the quarter, the bulk of our net new business did come in fixed income both active and LBI strategies. On the equity side, net new business did, as Todd mentioned, was more on the index side. I would say our wins not yet funded would follow that trend, active opportunities where we are competing and we have a reasonably strong belief that we're going to be in the hunt. The business mix is a little broader with more clients looking to put money to work in active equity strategies, but I would tell you that our real strength has been on the fixed income side in the second quarter and looking into the third quarter at the moment. Glenn Schorr - Nomura Securities Co. Ltd.: As an aggregate comment, would you agree it looks like all the related fees are growing enough in line with the assets, so pricing is reasonably stable across all the businesses? Is that fair?

Yes. I think the short answer is yes, Glenn. There hasn't been any big change I would say. And again, as we talked about as we price current clients as contracts come up and as we price new business, we take very, very conservative views that clearly incorporate the current economic environment. And we're certainly driving clients to higher fees as a percentage of total revenues. Glenn Schorr - Nomura Securities Co. Ltd.: Great. And then my last question is on BofA had a proposed settlement with its investor base where you guys act as trustee. And I'm just curious to get your thoughts on what that read-through is for you, as well as trustee. In other words, at first when private pullback issue came up, there were some people asking lots of questions about the role of the trustee and where they fit in. It looks to me like the settlement backs up your previous comments, but wanted to see how you feel is your role of trustee and what you thought happens if it doesn't get approved?

Yes, we think that's exactly right, Glenn I think it is consistent with what we've said in the past. We did participate in negotiations in our role as trustee, and we believe the proposed settlement is reasonable and ultimately, in the best interest of the trust. It imposes no financial obligations on us nor are we going to receive any part of the $8.5 billion settlement in our capacity as trustee. We continue to be fully indemnified as trustee for any losses, liability or expenses associated with this, so we think it makes a lot of sense. And we think it's reasonable and we think the courts should approve it.

Our next question is from Ken Usdin with Jefferies. Kenneth Usdin - Jefferies & Company, Inc.: A couple of little clarification things if I might real quick. Todd, you gave it to us kind of in the per share terms at the very beginning, but can you just quantify for us the magnitude of the loan sale gains and also the incremental litigation reserves that you set up?

Between the loan sales and the revaluation and the security sales, it's about $100 million. Kenneth Usdin - Jefferies & Company, Inc.: Okay.

And in terms of litigation and M&I, you can see our M&I expenses directly, but we don't really care to show litigations on a regular basis in that kind of detail and give too much advantage to some of our plaintiffs here. Kenneth Usdin - Jefferies & Company, Inc.: Okay. But on the litigation point though just generally speaking then, I believe this is the first reserve that you've explicitly set up aside from the commentary in the conference call. Can you just walk us through your process and your thinking and how this could evolve over time?

Ken, can you repeat that? I didn't hear exactly what that... Kenneth Usdin - Jefferies & Company, Inc.: Just a broader comment on the litigation reserves, not the ongoing legal expense but just on the specifics of the legal reserve. Just how do you get to the point where you start to set aside the specific reserves and I guess just a general thought on how this litigation is progressing and evolving?

Yes, we follow very much the FASB guidelines. It's based on estimable and probable. So if we feel something that we can estimate what a loss is going to be and it's probable, we will reserve for it. Kenneth Usdin - Jefferies & Company, Inc.: Okay, my second question relates to just, Bob, just coming back to your points on expenses. The laundry list of things that you gave seemed to be very kind of logical progression of cost saves but things that wouldn't necessarily be out of line with normal operations of the business. So just wondering like when you're thinking about going forward and starting to really attack the cost base, is it because there's some really some low hanging fruit or is it anything that you see in terms of the long-term profitability in revenue trends of the business that have just put the company on kind of higher alert that there needs to be a realignment there?

No, I think the fundamental is pretty straightforward, Ken, and that is its operating leverage. And I'm going to get some revenue growth higher than expense growth. So I'm encouraged on the revenue side and expense run rate remains pretty high and as we indicated back in January in the fourth quarter numbers, we are expecting quite a few headwinds this year in terms of higher pension costs, higher health care costs, people are still, of course, getting raises and they should be. We have higher depreciation costs. We have this litigation environment. We have higher compliance and regulatory cost. There's a lot of headwind in our industry right now, but we've got to manage through it. So what I would say is that we're going through all of our programs but more aggressively than we have in the past to create more favorable trends and to moderate these growths in expenses. And that even goes to the level of looking at individual client profitability and making sure that we're doing the right thing not just from a client standpoint but also from a shareholder standpoint.

And, Ken, if I can add a couple of points here. There is some low-lying fruit. I mean, if you think about it, we've gone through a number of acquisitions over the past 3 or 4 years. So when we go back and reflect on our technology infrastructure, there's quite a bit we can attack there. We've got too many desktop configurations just the nature of our business model, and we're going to go after that. We also have some applications dating back to the Mellon Bank of New York merger, which we think we can sunset so, and we've also for the first time are really looking at combining some of our common operations not just within asset servicing, but even across some of our different businesses. And I think that's an advantage that we have that we can leverage. So these are the types of things in addition to the normal course. We do see some proof here that we can go after.

The other thing is we have very good process around this. We've been working on this for some time. We're going to treat it just like a merger integration and we'll have, we'll be very metrics driven, very specific initiative driven with definitive numbers and people signing on the bottom line for what they can get and when.

Our next question is from Mike Mayo with CLSA. Michael Mayo - Credit Agricole Securities (USA) Inc.: Can you just summarize this $30 billion increase in deposits? Is this similar to what we saw during the crisis in the U.S. a couple of years ago? And you're getting a lot of deposits in Europe or what's the geography of this deposit increase?

Yes. I would say it's quite a bit different in its nature. I would say there's a fair amount of it is just this negative interest rate, especially the spike towards the quarter end, Mike. This negative interest rate just created an arbitrage with better and better to leave it in cash with your custodian than to put it out on repo at a negative rate. So that's a significant component of it. I'm sure there's some of it is related to dislocation. But it's got a very different feel to it than it did after the Lehman crisis where it was just an immediate spike in hedge funds and everybody just dumped their money on us. It's not quite like this. This has been a slower build and a build related to not just the risk off trade, but some market disruptions in the treasury market. Michael Mayo - Credit Agricole Securities (USA) Inc.: And so how much of that is from outside the U.S. of the $30 billion?

I don't have that off the top of my head, it feels like it's -- I'd really be speculating. We'll get back to you on that. Michael Mayo - Credit Agricole Securities (USA) Inc.: Okay. And then separately. I know you've touched on this, what is the dollar amount of your money market assets under management that are invested in European bank debt?

Our prime assets, we have roughly $34 billion in our 2a-7 prime funds that are in the eurozone core. We had a view that about less than 20% of all of the eligible European banks actually make it through our credit screen. And so that represents roughly 28% of our total prime 2a-7 assets in our main money market business.

And we've done a pretty good job of selecting the right names, and quite frankly, the stress test that came out last week confirmed exactly that. Michael Mayo - Credit Agricole Securities (USA) Inc.: Okay. I guess you have over $300 billion of money market assets?

We have, again, we have money market assets that would include treasury funds and other offshore funds. I'm giving you the U.S. Prime 2a-7 assets. I certainly can work with you, if you want to talk offline, we can certainly walk through our statistics more broadly. Michael Mayo - Credit Agricole Securities (USA) Inc.: There were big articles just a few weeks ago. Wall Street Journal said money market mayhem and that this is a big risk and I just want you to kind of give us some reassurance that it's not as big a risk as highlighted in this lead editorial in The Wall Street Journal, June 27. And so if you look at the overall complex of money market assets that you have, what would be the total amount that would be invested in European bank debt? And so I guess the reassurance part maybe have a lot invested in that, but you don't have support agreements where you'd have to make up any shortfall.

Well, the thing to remember, Mike, is that these are extremely senior instruments. The tender is extremely short, and these assets are in the biggest, healthiest names in Europe. These are 2 countries or 2 markets that you view or names that you've used being unstable, and we have been very proactive in being extremely liquid in all of these funds as well to provide us with maximum flexibility.

Yes, just so you know in the eurozone there are 124 Tier 1 2a-7 eligible banks. Again, less than 20% of those make it through our credit screen. So where we do have exposures in that segment they are again, as Bob said, to the largest most significant institutions in those countries. Yes, and we have no exposure and haven't had exposure to Greece and Portugal directly and have de minimis exposure to the rest of the more troubled [indiscernible].

So we feel like we're well positioned here. Michael Mayo - Credit Agricole Securities (USA) Inc.: Bob, just a follow-up on the last point. So to the countries that are defined as PIIGS, how much investment do you have in banks in those countries through your money market funds through the overall complex? If you don't have that now, it'd be nice to have.

Yes, we have none in our prime funds and de minimis in our sec lending activities, de minimis meaning less than 1%. And where we have exposure in those countries actually to, we have some Irish mortgage-backed securities. But again, less than 1% of sec lending exposures.

Our next question is from John Stilmar with SunTrust. John Stilmar - SunTrust Robinson Humphrey, Inc.: Most of my questions have already been answered but just a real technical one. Investment and other income, Todd, moved up a little bit. I was wondering if you could kind of drill down and maybe reveal a little bit more of the drivers of what's kind of going on underneath that segment or line item. I think I missed that in your commentary.

Yes, there are a couple of items that are in there, a couple of our joint ventures, our minority ownership interest, for example, are in there. And they're growing pretty well. We have an interest in [indiscernible] Bank, for example. We have an interest in ConvergEx which continues to do pretty well. So that's been a positive. It did run high in the -- are you specifically referring to investment management other income? John Stilmar - SunTrust Robinson Humphrey, Inc.: No, just to other fee and revenue that is consolidated...

That was what I was referring to. I just wanted to make sure I was clear. We have a number of items. We would expect that, John, to typically run in the kind of $80 million range. So it was a little high because of the gains that we had taken on those loans that we talked about during the quarter. John Stilmar - SunTrust Robinson Humphrey, Inc.: Okay, and you had mentioned the ConvergEx and there's some commentary obviously, and headlines of ConvergEx being taken out. Is there any residual positive impact that, that can have at least in the near term. How should we think about that as we start thinking about our earnings estimates going forward?

Yes, we have no comment on any. We've heard rumors of the transaction. I really can't comment on that. But what ConvergEx has done is file for an S1 for an initial public offering where we would monetize some of our interest in the company, and that would be certainly be a positive for our capital position.

Our next question is from Brian Bedell with ISI Group. Brian Bedell - ISI Group Inc.: Just to go back on the expenses, Todd. You talked about obviously the sunsetting system and the consolidation across businesses. Has anything changed from what you said last quarter in terms of sort of a 3- to 4-year overall timeline of integrating those systems or is that advanced?

Yes, we're honing in on this right now. And it's going to actually be a subject of our investor conference in the fall. And we are going to walk you through exactly what the timelines and what our expectations are. And as Bob pointed out, we're going to have commitments around the table here about how we're going to achieve the kind of positive operating leverage that we're looking for. So we'll give you a lot more color, but it's around the same general themes. This concept of reengineering and combining common operations, improving our technology infrastructure; that is some of the lower lying fruit. And looking at our application portfolio and seeing if we can reduce it. Brian Bedell - ISI Group Inc.: Right. So stay tuned for that. And then on the regulatory cost, not the litigation or legal reserves but the actual cost that you would attribute to the regulatory environment. Could you frame out sort of what that is right now and then any kind of expectation how this might abate over the next several quarters? Is it too early to...

Yes. We've kind of poured through our numbers. It's pretty difficult to tell what's ongoing and what's not. But obviously, complying with Basel II, Basel 2.5 and Basel III, there's quite a bit of systems infrastructure associated with that. Over the past couple of years, as you would expect, our FDIC charges have gone up quite dramatically. And then we've invested one of our fastest-growing shared services; is our risk area as we continue to invest in that, and legal costs continue to rise. I don't see the growth rate continuing at the level that we've seen over the past couple of years. FDIC is still high, but it's at least flattened out, for example. I would say that is consistent with some of the other things. So I think the kind of the step up has occurred, and some of it eventually will get a dividend here, but that's probably a year or so away.

Clearly, we've added hundreds of millions of dollars to our cost base over the last 2 or 3 years. Brian Bedell - ISI Group Inc.: That would be nice to be able to adjust that down. But it sounds like you can talk about [indiscernible] maybe a little bit more on Analyst Day.

We will, Brian. Brian Bedell - ISI Group Inc.: Maybe just conceptually on the full prospect of the U.S. debt potentially being downgraded. Obviously, you guys have a major stake in the infrastructure, the country's infrastructure. Maybe you can talk a little bit about sort of what you're thinking for your collateral management businesses and the Corporate Trust business and maybe even the money markets business if U.S. debt is downgraded and maybe contrast the long-term debt being downgraded versus any risk of a short-term debt being downgraded, which doesn't appear to be an issue right now. But if you could just talk about through some...

That's a lot of questions, Brian. Brian Bedell - ISI Group Inc.: Maybe focusing on the collateral management.

Okay. I just want to reinforce that we've got to raise the debt ceiling, and we've got to balance the books, not over 10 years. Over like 3 or 4 years. We've got to get some growth back in this country again. So this is important to the whole nation in the global economy. We should just stop fooling around with it. So we have worked to make sure that our, in fact, our team has been working on this all the way back as early as April of this year. We have been working to make sure that our systems are flexible, and we'll be able to manage whatever happens here. We're obviously coordinating with the treasury and the regulators and also within the industry. I mean, there's still some uncertainty. We don't know how treasuries might trade. We don't know whether the pricing services, how they're going to put value on them. We don't know whether counterparties are going to want treasuries as collateral. I would expect that they would. But we're going through our contingency planning. We're not doing this unilaterally. We're working with industry groups, and obviously, we're talking with the treasury, and we'll do as directed. But we do have the flexibility in our systems to accommodate what we think could happen.

It doesn't require any system changes, and we are very ready for any eventuality, but I don't expect those are necessary. Brian Bedell - ISI Group Inc.: Let's hope for that. And then just a couple of other housekeeping ones. The shareholder services business, when do you expect that to close?

Right now, we would expect in the fourth quarter. Brian Bedell - ISI Group Inc.: 4Q, and then the seasonal spike in dividend payment in the third quarter instead of fourth quarter, that's in the DR business?

Yes, there's a little bit of uncertainty. I wanted to point out. I think we might get a little bit of that in the third quarter, so the third quarter might look a little better than we would have otherwise expected it to be.

Our next question is from Jeff Hopson with Stifel, Nicolaus. J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc.: You talked a little bit about pricing being stable. You also talked about looking at client, individual client profitability. So I guess the question is are you having renegotiations, significant renegotiation conversations with the clients? Any kind of net result of that? And then on expense, in terms of some of the systems work, are we talking about evolutionary or potentially revolutionary changes here? Because you're talking about expense cuts in one respect, but also given that you're having to continue to invest significantly to keep up with -- keep your systems up-to-date and moving forward, how can you reconcile those 2 thoughts?

Well, you want to talk to that for a second, Tim, on profitability.

Yes, Jeff, it's Tim Keaney here. We talked a little bit in the past where kind of if you look at the duration of contracts for public funds it's 3 or 4 years; for corporate-type pension fund clients it's probably 5 years or so. So our clients come up for review regularly. They did last quarter. They did this quarter. We're having very, very open discussions with clients around kind of the new economic reality as it relates to capital markets revenues. And we also have very open discussions with clients about how our costs are escalating around things like helping clients comply with a myriad of increased regulations around the world. And we've been very, very successful retaining clients and very successful at repackaging our relationships with clients so that our fee revenue, which we can count on is the lion's share of our total revenue base. And it's just a new attitude we've taken in dealing with clients in terms of renegotiations and bidding on new business.

One of the things and just on the systems side, what I would say is that we've been historically, we've been pretty decentralized in how we run our operations. As a result, we have a lot of overlapping applications that do very similar things that are almost identical but aren't quite. So we've been bucketing those into various categories, everything from trade entry to reconciliations to you name it. And we're going to get to common platforms by having more centralized utilities and be able to reap the benefits, that ultimately what it will mean is that we can reduce our maintenance and turning on the lights run rate cost, and we can invest a bit of that into new systems activity and product enhancements over time as well. J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc.: Okay. And on the former issue, would you say there's been any change in the client retention rate?

Jeff, it's Tim. No, our new business win rates and our retention rates are very, very solid. They have been since we've been tracking it. One of the things we do look at is giveaway and take away ratios. We continue to win about 3x more than we lose, when we do lose a client, so we continue to be a big net winner.

Our final question is from Gerard Cassidy with RBC Capital Markets. Gerard Cassidy - RBC Capital Markets, LLC: Can you give us some thoughts on Basel II? I think if I recall, you folks were part of the group that's testing Basel II. Is that going to become a reality or are they going to leap right to Basel III from your understanding?

I'll take that one, Gerard. We don't know. But it certainly feels like we'll never see Basel-- I mean, Basel II is kind of the backbone for Basel III. So everything that you do in Basel II, you kind of need for Basel III. But my expectation is we'll go straight to Basel III, but that's just speculation of my part.

What we need is a level playing field with the rest of the world here. We never implemented Basel II. We're all focused on Basel III now. Let's just get it done, and I hope we meet up with the [indiscernible] Oversight Group in Washington. And given the fact that we have way too many regulators, hopefully we can get consensus through the SR group. Gerard Cassidy - RBC Capital Markets, LLC: And then a couple of balance sheet questions. You guys mentioned about the great growth in the noninterest bearing deposits value that you had in the quarter because of some disruptions. If the markets become more normal, would you expect to see that line item come down in the third or fourth quarter?

We certainly hope so. And if you noticed, a lot of that was just left at the central banks. So we would like to see some normalization. There'll be a little giveaway of NII if we do this. We don't really mind having it, Gerard. It's not a terrible ROA. It's not a bad ROE since there is no risk associated with it, but we like everybody else would like to go back to a little more normalized environment. Gerard Cassidy - RBC Capital Markets, LLC: Sure. And then just last question on the liability side of the balance sheet. Can you share with us the borrowings from the FRB related to the asset back conduit. It looks like it was $1.3 billion it looks like versus nothing the prior quarter?

I don't know, Gerard, what you are actually referring to. I don't think we've borrowed anything from the FRB and asset-backed. But we'll follow-up with you on that one.

Okay. Well, thank you, everyone. Have a great day.

Okay. 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.