Hello, and welcome to Citi's First Quarter 2012 Earnings Review with Chief Executive Officer, Vikram Pandit; and Chief Financial Officer, John Gerspach. Today's call will be hosted by John Andrews, Head of Citi Investor Relations. [Operator Instructions] Also, as a reminder, this conference is being recorded today. If you have any objection, please disconnect at this time. Mr. Andrews, you may begin.

Thank you, operator. Good morning, everybody, and thank you for joining us this morning. As usual, on our call today, our CEO, Vikram Pandit, will speak first. Then, John Gerspach, our CFO, will take you through the earnings presentation in some detail, which is available for download on our website, citigroup.com. Afterwards, we will be happy to take your questions. Before we get started, I would like to remind you that today's presentation may contain forward-looking statements, which are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results and capital and other financial condition may differ materially from those statements due to a variety of factors, including the precautionary statements referenced in our discussion today and those included in our SEC filings and including, without limitation, the Risk Factors section of our 2011 Form 10-K. With that said, let me turn it over to Vikram.

John, thank you, and good morning, everybody. Thanks for joining us today. As you know, earlier today, we reported net income of $2.9 billion for the first quarter of 2012. x CVA and excluding the net gain from minority stakes, we earned $3.4 billion in net income or $1.11 per share. This is a significant increase both from the first and fourth quarters of 2011. While our business has operated in an improved environment, we also saw the benefit of our investments. We generated revenue growth and had positive operating leverage across all 3 of Citi's core businesses, that is, Global Consumer Banking, Securities and Banking and Transaction Services. Key drivers, such as loans in Citicorp, grew by 12% from the prior year, while we deepened client relationships and improved market share in several businesses. Global Consumer Banking generated $10 billion in revenues in the quarter, up 5% from the previous year. Securities and Banking revenues rebounded, driven by particularly strong performances in Fixed Income. In Transaction Services, revenues were a record $2.7 billion, reflecting strong growth, particularly in trade finance, where our unique global footprint gives us a meaningful competitive edge. Overall, net income x CVA for our institutional businesses increased 12% compared to first quarter of 2011 and was 4.5x larger when compared to the fourth quarter of 2011. We reduced our legacy assets in Citi Holdings by 7% during the quarter, and Citi Holdings assets are now at $209 billion or just 11% of our total assets. While the operating environment improved in the first quarter, there is still much macro uncertainty, and we'll continue to manage our risk carefully. Let me now turn to capital and liquidity. First, let me share with you some numbers since we further added to our capital base during the first…

Okay, thank you, Vikram, and good morning, everyone. Before I go into more detail on the quarter, I'd like to highlight a few significant items affecting our results. First, on the revenue slide -- on the revenue side, CVA and DVA were negative $1.3 billion in the first quarter as Citi's credit spreads tightened. We also benefited from a pretax gain of nearly $500 million related to minority investments. On the expense side, legal and related expenses remained elevated at over $500 million. However, repositioning charges declined to $66 million from over $400 million in the prior quarter. Now on Slide 4, we show first quarter results. Citigroup reported net income of $2.9 billion or $0.95 per diluted share. Excluding CVA/DVA and the minority investment gain, earnings were $3.4 billion or $1.11 per diluted share. Revenues of $19.4 billion were down 2% versus the prior year on a reported basis. However, excluding CVA/DVA and the minority investment gain, revenues were up 1% from last year as revenue growth in Citicorp outpaced the decline in Citi Holdings. Expenses of $12.3 billion were roughly flat year-over-year on a reported basis. Excluding the impact of foreign exchange translation and the significant expense items I just mentioned, operating expenses were up less than 1%. Incremental investment spending was more than offset by efficiency savings. Credit costs of $3 billion were down 5% versus last year. Net credit losses of $4 billion were down 37% year-over-year, including incremental charge-offs of approximately $370 million in the first quarter related to previously deferred principal balances on modified mortgages, which I'll discuss later. Excluding these incremental charge-offs, NCLs would have been down 43% from last year. Virtually all of the incremental $370 million of charge-offs was offset by a reserve release specific to the deferred principal amounts, and…

[Operator Instructions] Your first question comes from the line of Glenn Schorr of Nomura.

Curious in the whole CCAR process. I'm curious what you've learned now that you've gotten some qualitative impact detail back from the Fed and what you learned on the international loss rates, how the Fed feels about them and if you've made any -- have any thoughts on the way you manage the business differently going forward as a result of the CCAR process.

Yes, let me address that, Glenn. First, the one comment I'd make is if you take a look at CCAR and the stress test and kind of understanding, as you know well, stress tests are tail-risk events and tail-risk events implicitly tell you what kind of capital you should have against businesses. If you think about it that way, the weightings coming out of the CCAR process are very different than the weightings that come out of the Basel III risk-weighted asset process. That's a significant learning for all of us in the industry. Another way of saying that is risk-weighted assets in Basel III overweight risk in trading businesses, while the CCAR is much more in line with what true risk might be. And on the consumer side, the CCAR weightings are higher than the risk weightings on the Basel III process. So for all of us, obviously, the questions are around, well, how do you dovetail the 2? And we've always been of the point of view at Citi that our capital charges should be higher our risk capital or risk-weighted assets. And frankly, risk capital's shape, not the magnitude, but the shape of risk capital is much more in line with where the CCAR comes out than where the Basel III numbers are. And I think that's probably the single biggest determinant of where you'd want to put capital to some extent. Although it's early, I can also tell you, you can't necessarily take one year CCAR as given because as we've all learned, these stress tests can keep changing. Scenarios will change, but it is an indication that when you think about capital allocation in your businesses, you need to think about not only Basel, but risk capital, CCAR being one of the measures. That's the big picture kind of issue. On the narrower issues, Glenn, we continue to talk to the Fed, and we're going to continue to do that. We stand by our numbers, our stress test numbers, and we stand by our submission, and there's a lot more we need to do to get closer to understanding exactly how the next part of the process is going to work. And stay tuned, we'll have more to say later.

Okay. On Holdings, so many moving parts this quarter with partner cards moving out and all the things that you noted on your prepared remarks. But long story short, revenues are shrinking faster than expenses, and we're still at about $1 billion a quarter of run rate loss. Is there anything besides just the mortgage world getting better that can improve that loss rate over the next couple of quarters?

Glenn, as we said in the prepared remarks, a lot of the interest-earning assets now from the Special Asset Pool have shrunk. So what we're left with in the Special Asset Pool now would be much more episodic revenue events, private equity marks up or down. And so I'm not quite sure that you're going to see a great relation between -- a tie-in between revenues and expenses. As we've been saying, we think that expenses should come down in Holdings as the assets come down. And if you adjust for -- as we gave you last quarter, if you take a look at what we've done on a year-over-year basis and you take a look at trailing 12 months, we've taken assets down somewhere around 29%, almost 30%. And adjusted operating expenses, removing litigation reserves and the whatnot, are down roughly 22% over the same time frame. So again, we're bringing expenses down roughly in connection with the asset reduction.

Okay, cool. Last one. If you look at your expense slide and you took that core operating costs running a little bit below $47 billion run rate, that's -- if I remember the math correctly, that's below the range of the 2 to 3 -- $2.5 billion to $3 billion below last year's operating run rate. Is there anything in particular that's running better? Because this was the -- first quarter's typically a pretty good investment bank quarter, so if anything, the thought was maybe first quarter's going to be on the high side of expenses, but it wasn't. Not complaining, it's a good thing, but just curious.

As we said going into the year, we felt that we could bring the reported numbers for this year down $2.5 billion to $3 billion. We still think that we're on track for that. We talked to you in the past about our ongoing program to generate efficiency savings of between 3% and 5% on our businesses last year. For the full year, we ran $1.9 billion. You see that we already generated $600 million of savings in the first quarter. So we think that we've got good expense discipline in place, and at this point in time, we're going to stay with our full year view.

Your next question comes from the line of John McDonald of Sanford Bernstein. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: One follow-up to Glenn's question on Holdings, John. I guess, you still -- in terms of your guidance, you still expect over the life of Holdings for the existing reserves and PPNR to be sufficient to absorb the losses, something you said before.

Yes, John, absolutely. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Okay, so you're losing $1 billion a quarter now, but that comes down as the charge-offs come down and I guess...

Let me be specific because the guidance that we've given in the past and the guidance that I'll reiterate is that for the Local Consumer Lending, the combination of the PPNR, plus the existing reserves, will more than offset the lifetime NCL that we have. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Okay. Over the life of all of that, all of your assets?

Correct. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: And on the mortgage, additional charge-offs that you had this quarter in Holdings, in LCL, is there a onetime catch-up component to that on these TDRs? Or is that something that episodically will come up again as you go through these restructurings?

Well, this is, if you want to call it a catch-up, it's really an advance of where we see -- what we see happening under the national mortgage settlement, where we will be generating a certain amount of principal forgiveness in response to our commitments under the national mortgage settlements. And so when we looked, there's deferred principal on some of our modified loans that will be forgiven as we get into this process. And so what you can expect, as most institutions get into the national mortgage settlement, should be an increase in both net credit losses, as well as reserve releases in their mortgage business. And what you see in our results today is basically the first installment of what you could expect to see on our part. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Okay. And that you said that, that was P&L neutral, but the provisions still went up in Holdings. Is that just that you had less reserve release elsewhere in Holdings?

Yes, that's exactly right, John. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Okay. Another question on Holdings, just in terms of the Smith Barney Morgan Stanley joint venture. Just curious why does it not show up on your income statement as making money, even though it makes money for Morgan Stanley and it's a business that, obviously, we'd expect is profitable. Is there some accounting going on there, I guess?

Yes, that's exactly right. There's accounting that goes on there. When we account for it, it's not just the equity pickup that we have. We also reflect the funding costs that we have on the investment itself. There's some intangibles that we created in connection with the sale that we continue to amortize. So our reported numbers off the Morgan Stanley Smith Barney joint venture are more than just the reported results of the entity itself. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Okay. And given the drag on Basel III capital that presents, is there any reason why you wouldn't be open to selling the entire stake if Morgan Stanley was? Does that just come down to price?

Well, we have our investment in Morgan Stanley's -- in the joint venture, in Holdings, so by definition, we're looking to exit that business. It's not part of our core operations going forward. Having said that, the capital numbers we're at and the progress we're making in the business also suggest that there is not a need to do that either, which is important to appreciate and understand. We've got plenty of time. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Right. Like you mentioned you'd be above 8% even including it by the end of this year.

That's right. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Okay, and then just on the DTA itself, John, can you update us where that was at quarter end and whether you consumed anything this quarter in terms of DTA and just as you look out, what your expectations are, maybe to capture some DTA in 2012?

John, actually the DTA for this quarter actually went up by about $400 million, and that reflects 2 specific headwinds that we had in the quarter. Number one, there is a component of the DTA that is expressed in foreign currency, and the FX impact on that particular asset caused a $200 million increase in that portion of the DTA. Secondly, virtually all of the CVA and DVA losses are incurred either in North America or in vehicles that consolidate into the North America consolidated tax return. And therefore, with those CVA losses, we actually generated an additional $500 million of DTA, so that's 2 items that add up to a $700 million headwind on DVA -- on DTA in the quarter. Absent those 2 items, we would have consumed about $300 million worth of DTA. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Okay. Any outlook in terms of this year, in terms of what you'd like to do aspirationally in terms of digesting some of that?

Well, we don't anticipate consuming a lot of DTA this year. That is not something that is with our plan this year, but that is going to be highly dependent upon the profitability of our North America businesses and our ability to continue to wind down Holdings. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Okay. And that's the long-term driver just getting more profitable in the U.S. and having that Holdings loss go down?

That's correct.

Your next question comes from the line of Guy Moszkowski of Bank of America Merrill Lynch.

I wanted to start off with just a question on North America Consumer Banking. Clearly, a real positive that you were able to generate the positive operating leverage there in the quarter well ahead of when you were talking about doing it. But of course, there were some things that might not be completely sustainable there, and I was wondering if you could give us a sense of the order of magnitude of the improvement in the mortgage revenues because of the gains on sale.

Yes, we had roughly close to $500 million worth of gains on sale in mortgages this quarter. So again, that certainly added to the revenue stream in that business.

And could you talk little bit about the dynamic in the market that -- besides the increase, obviously, in just in demand, but what was driving the spreads there and how sustainable might that trend be?

Well, the spreads did increase this quarter. Most of that, for our purposes, we've shifted our production to be much more based on our branches. So we use our branches now much more as a source of those mortgages, and we tend to get better production statistics out of mortgages originated in the branches than we do from third party.

So it sounds like what you're trying to say is, that some of that spread improvement is presumably sustainable because of mixed shift in how you actually originate the mortgages.

Well, as we shift the production to retail branches, some of the spread improvement should be sustainable. But I think anything to do with mortgages right now is one of these things that you have to take a look at with a certain amount of caution.

Yes, that's fair. All right, moving on to your ratings. Obviously, Moody's has talked about proposed changes to its rating methodology, and there's the potential for a downgrade to as low as Baa at the holding company level, and I just wanted to know what are you doing to mitigate some of the potential impacts from that happening, specifically with respect to your OTC derivatives business.

Guy, that's a good topic. But I think it's important to remember that the Moody's review is -- it's really an industry-wide re-weighting. It's not just focused on Citi, and it's an industry-wide re-rating globally at this point in time. As we take a look at it, we've got, as we mentioned in our prepared comments, incredibly strong capital and robust liquidity. And as we think about it, as our investors and our counterparties, it's -- people are less and less solely relying on ratings of a single agency in making their decisions. Some might note changes in ratings from Moody's, but at this point in time, we don't think that the impact on us would be material. We think that we have prepared our business for whatever impact could be out there.

And if I can just follow up on that thinking specifically about impact on derivatives businesses. To what extent do you think you can mitigate whatever impact there might be on that part of your business by novating [ph] derivative trades to the bank from the broker? Is there any reason that we would think that actions like that might be precluded in any way?

When you get into those types of movements, they generate their own complexities, and so that's not something that we're looking at right now.

Got it. Okay, final question that I have for you is just with respect to reps and warranties. You obviously showed some numbers in the appendix, I guess, to your slides about how those evolved during the quarter. And clearly, on the private label side, those are up. And I was wondering if you could talk a little bit about that. And also, should we relate that increase in some of those demands essentially to the litigation reserve build that I think we can detect in the Corporate and Other segment?

Yes, I wouldn't do any great linkage as far as trying to link reserve builds in one area to reserve builds in another, but that's up to you. Regarding -- from the mortgage -- from the reps and warranties slide that we've got back in the back of the earnings deck, as we've said, most of our experience to date has been in receiving rep and warranty claims from the GSEs, Fannie and Freddie, and we've built up a pretty good reserve on that. We continue to believe that the private label securitizations, different from the whole loan sales that we've done with the GSEs, those private label securitizations will largely be settled through litigation. But as we get claims -- specific rep and warranty claims in, we will take a look at them and then add to our reserves on an episodic basis.

Your next question comes from the line of Brennan Hawken of UBS.

So first question is the $0.8 billion in nonaccrual -- second liens that you moved into nonaccrual this quarter, was your existing reserves fully reflected that move? And was that just for the regulatory shift?

Yes. It's actually -- we shifted about $840 million or thereabouts of junior lien -- high-risk seconds, junior liens into the nonaccrual status in response to some regulatory guidance that the entire industry got. And all of that was already reflected in our reserves.

Terrific. And then, moving on to MSSB, thanks for the disclosure on that 120 bps for MSSB and Akbank. What I was curious about was if as we think about the sale from MSSB, and obviously, timing is a big question mark and price. But if all of MSSB is sold, would that be completely dollar for dollar, net of any gains or losses that all accrete to capital, that full amount that you carry via the JV?

The simple answer to your question is yes.

Okay, great. And then, how would we think about the sale -- corresponding sale of deposits to MS? What are the prices generally that are tied to brokered deposits and brokerage accounts? And how much of that is a gain?

I don't want to go into any specifics of what might be. As we get into it and we have something to announce on any of these transactions, we'll let you know.

Okay. Is it right, though, to think that maybe those sales or deposits could be a somewhat meaningful portion or unlikely to be so?

Those deposits would be part of the business. They're part of the original agreement that we made, and we'll have more to say about the joint venture if and when there's anything to say about any potential sale.

Okay. Last one for me. There were some reports -- some press reports that some banks were considering securitizing trade finance receivables. Is that something that Citi had looked at? And if so, could you sort of walk us through maybe how the economics -- how that would change the economics of that business for you?

Well, we like that business. Again, as we look at our balance sheet, we have got -- as Vikram said in his remarks -- 26% of the balance sheet right now tied up in cash and liquid securities. We have over $200 billion of cash. So we still have capacity to grow loans on our books. Having said that, any time you have asset concentrations, you're always looking at ways of reducing those or potentially reducing those concentrations. And so that could be a potential use of something like a securitization. But it's not something that we really need to engage in at this point in time.

But that's not where we are today either, on the concentration point. Don't forget these are very short-term assets, I mean. So on the securitization basis, it creates a lot of other complications. The best use for some of the deposit and cash we have on hand is these trade finance receivables.

Okay, okay. And actually, I'm sorry, I have one more quick one here. You had indicated that the $3.7 billion expense base in Securities and Banking reflects efficiency saves. So is it a good idea for us to assume that, that's a decent run rate now going forward?

I don't want to get into specific forecasting of individual business run rates. We'll stay with the guidance that, overall this year, you should expect the full firm expense base to reflect $2.5 billion to $3 billion lower than 2011.

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

Quick question on the deposits. You guys were up, on a period-end basis anyway, $40 billion, a lot of that internationally and in the institutional side. I would have thought you would have seen outflows after the big flight to safety trade in the fourth quarter. So what's driving that? Was there anything episodic about the end of the quarter? Or was that just good sort of new business wins?

No, most of it was -- I'd say it's continuing of existing business. We did change our deposit pricing slightly at the end of the quarter, particularly to deal with competitive pressures in Asia. But that would be the only place where we modestly changed deposit pricing, and we still think that we are well below where the industry is. So this is just good customer activity that we have at this point in time. What we're focused on is continuing to improve the mix of our deposits. And when you take a look at that $900 billion of deposits, about 70% of that would be core operating accounts. So we feel pretty good about the deposit mix.

Okay, fair enough. And maybe if we look at fixed income, we didn't really talk about that, but you guys were up 20% almost year-over-year. Sounded like JPMorgan was down modestly. Is that simply a function of your mix being more leveraged to macro strategies like rates in FX? Or do you think there was some market share pickup from European banks pulling back? And how do we think about it in the context of Moody's shot across the bow, if you guys are still doing quite a bit of business in the derivatives space? It seems like it hasn't really affected your ability to grab share.

No. Derivatives are not a large part of our business. To the extent that we're involved in derivatives, it's particularly flow product, as opposed to having an out-weighted segment on OTC or structured derivatives. That's not a big part of our business. So we just -- our franchise performed very well this quarter, and we're very happy with it.

Was it more a function of positioning? Or do you think there was some share gains?

I can't comment on share gain at this point in time after one quarter.

Okay, fair enough. And one last question on the expense side. You guys are targeting $2.5 billion to $3 billion. I just want to make sure I understand what the base is. Are we excluding the legal costs in the first quarter to look at the run rate? Or is that inclusive of that higher legal cost in the first quarter in terms of the $2.5 billion to $3 billion?

What we've said is that excluding unanticipated large items. There's nothing necessarily in the first quarter that I would put into that category at this point in time.

Your next question comes from the line of Matt O'Connor of Deutsche Bank.

Thanks for the commentary on Basel III, and I think you were helpful in giving us some of the deductions from the capital point of view. But any commentary on the increase in RWAs, as well as how you think you can mitigate that over the next couple of years, to be helpful?

What we had said, I believe, is that our target for the end of this year would be to be at a Basel III RWA multiplier of like 1.35x Basel I risk-weighted assets. And we're already operating slightly below that, so we think we've made some good progress already on the mitigations, although we still think that there's room for further mitigations as we go along.

And how well -- as you look out more than just the near term, how much can you bring them in line with Basel III, do you think -- or sorry, Basel III and Basel I [indiscernible], like how much can they converge?

Well, the good thing is, from our consumer and our Transaction Services businesses, and I think we mentioned this in the past, we can -- we think that given the structure of our business, we can bring those amounts pretty much into parity. I'm not going to tell you we can do it exactly dollar for dollar, but the multiplier would be in the point 0 something range. So we feel pretty good about the assets in consumer and Transaction Services, and so the area of focus becomes Securities and Banking. And again, when you take a look at our construct of our Securities and Banking business, we think that, that fits well into a Basel III environment also. So previously, we would have said that the Citicorp businesses in total would have had a Basel III multiplier of 1.2. So in other words, of that 1.35x that I had given you for the full firm, about 1.2x would be for Citicorp. And looking at our business today, we're already slightly below that again for the Citicorp segment.

Your next question comes from the line of Moshe Orenbuch of Crédit Suisse. Moshe Orenbuch - Crédit Suisse AG, Research Division: A couple of things. First, your comment about -- and it was earlier question about the mortgage sales kind of driving or smaller gains on sale driving a lack of positive operating leverage perhaps, what was the -- kind of where did you start the first quarter versus where you started the second quarter in terms of your pipeline on that? I mean, does it -- do you have a smaller amount available for sale for the second quarter?

No, no, no, Moshe, let me just try to be -- I want to make sure that we're going back to the same starting point. And what I mentioned is that we had $500 million or thereabouts of gain on sale in the first quarter. And what I further said was that we're just not ready yet to declare that we're going to have sustainable positive operating leverage in North America for the balance of the year until we get to the end of the year, as we had previously stated. Most of that is because in the first quarter, we also benefited from the lack of a litigation reserve that we had taken in the first quarter of last year. So if I pull that litigation reserve out, we actually had expense growth in North America year-over-year, as you would expect, since we are still in the process of investing in that business. Moshe Orenbuch - Crédit Suisse AG, Research Division: Got it. So it's more -- it's just a normal investment in the business as opposed to...

Yes, yes. You shouldn't read into that anything, that we suddenly see our mortgage origination pipeline or mortgage modification pipeline or mortgage refinance pipeline suddenly drying up. Moshe Orenbuch - Crédit Suisse AG, Research Division: Got it. And just on Holdings and the expense change. I mean, I understand the 1 or 2 things that you highlighted. It still seems like a very large drop. And how sustainable is that because obviously, that would, at this level, would be much more favorable?

Well, don't forget, if you're looking at sequentially, that drop sequentially would include the fact that in the fourth quarter we had some rather sizable litigation reserves taken in Holdings, and we didn't repeat that at the same level in the first quarter of this year. Moshe Orenbuch - Crédit Suisse AG, Research Division: And that was in the neighborhood of what, a couple of hundred million dollars?

Yes, I don't have the exact amount in front of me, Moshe, but...

And your next question comes from the line of Gerard Cassidy of RBC Capital Markets.

Can you guys give us some color -- you've done a good job with the net interest margin over the last 12 months, can you give us some color on how you see it shaping up for this year?

I'm sorry, Gerard, but you broke up just a little bit. I want to make sure we got the right question.

Sure. On the net interest margin, you guys have done a good job keeping it around that 2.88 to 2.90. Can you give us some color on where you see it going as we move forward?

Yes, when you take a look at our net interest margin, we had, I think, previously said that we had thought that the net interest margin might decline this quarter. And there's a couple of things that are working through the numbers, one of which is, from quarter-to-quarter, we did rebuild our trading book, and we get lower yields on the trading book. That actually cost us about 4 basis points on NIM against what we would have thought would have been a 6-basis-point-or-more decline. But at the same point in time, we've benefited from lower funding costs of about 2 basis points. And then, we also had a reserve release in our Japan Citi finance business that benefited us for about 2 basis points. So basically, you had a 4 basis point decline on the rebuild of the trading book and then 2 basis point good guys. So we basically held NIM at 2.90. I still think that in the second quarter, as we get a little bit more of a build in the trading book, and what I'm assuming is going to be an absence now of the good guys as far as the Japan reserve release, what you're likely to see is a slight decline in NIM in the second quarter, and NIM could decline in the second quarter to perhaps 2.85 thereabouts. And after that, what we would expect is that NIM should either be stable or perhaps grow slightly from there on out.

Another question. You guys gave us good disclosure on the GIIPS exposure that you have. And if I read the numbers correctly from the fourth quarter, it looks like your unfunded commitments, which is on Slide 33, came in at $8.1 billion this quarter, and your corporate's unfunded was $7.5 billion. Last quarter, I think it was $6.7 billion. Can you share with us -- I assume those are multinational companies, good credits. Are you taking market share? How are you winning that new business?

I wouldn't say that we're taking market share. What we're trying to do is support our customers in those countries, and that's something that we've said all along as we approached our exposure to the GIIPS. We're much more focused on direct exposure to sovereigns and FIs. We intend to be there for our customers.

Sure. And then, finally, coming back to the CCAR process, you guys mentioned that by mid-June, you'll resubmit, and then the Fed has 75 days to respond. If you resubmit before mid-June, let's say, it's end of May, early June, will the Fed still have 75 days from mid-June? Or can we hear something earlier from the Fed?

No, they have 75 days. And I want you also to know that this is going to be based off of March end numbers and we've got -- from what we understand, we've got to go through another full stress test in our resubmission. So this is the time frame. I think, it's a realistic time frame for everybody to be aware of.

Okay. And I think you also mentioned you guys will decide whether you want to do it versus just waiting until next year. Will you all disclose to us that, yes, you have resubmitted it? Or how will we find out about that?

We'll have our quarterly calls. We'll let you know next quarter.

Your next question comes from the line of Vivek Juneja of JPMorgan. Vivek Juneja - JP Morgan Chase & Co, Research Division: A couple of questions. One is on this whole CCAR thing. Vikram, you just said you'll be resubmitting it based off of March numbers. Do you know if the assumptions that the Fed had used, would those change at all?

Well, that's exactly, Vivek, what we're waiting for. Those are exactly the conversations we're having. And as I said, we are likely to get more information from them between now and the end of the month, so it's still early in the process. And I wish I could share more with you, but that's kind of where we are. Vivek Juneja - JP Morgan Chase & Co, Research Division: Okay. A couple of other quick ones, probably for John. John, the mortgage gain on sale, just to go back to that, which you had about $500-ish million this quarter. Your originations went down about 35% linked quarter, yet your gains went up quite a bit. Was any of that coming from MSR hedge gains that went up?

No, no, no. When you take a look at the gains that we get, gains get booked when we lock in rates, so that timing isn't always associated with how we report the origination results. Vivek Juneja - JP Morgan Chase & Co, Research Division: Okay, got it. Next one, LCL expenses, you were down to a little under $1 billion, a pretty sharp reduction. Should we assume sustainability at these levels? Or is there anything at all that's nonrecurring in that?

No, I don't believe there's anything nonrecurring in the first quarter expense level. As I mentioned to another questioner, the sequential drop, though, has to do, at least a certain amount, with the lack of litigation reserves that we had taken in the fourth quarter. Vivek Juneja - JP Morgan Chase & Co, Research Division: Right, right. I guess I'm just assuming you won't have to keep taking litigation reserves every quarter, but I guess we'll have to wait for that.

Exactly.

Your next question comes from the line of Matt Burnell of Wells Fargo Securities.

A couple of quick questions. One, just, first of all, John, in terms of the recent data we've heard coming out of Asia and China, specifically in terms of the potential slowing of growth there, has that presented you any concerns about some of your expectations for revenue and revenue or loan growth coming out of your Asian platform?

Well, let me answer that this way. One is that when you look at these economies, there is still substantial amount of growth. Even if the growth possibilities could be a little bit less than what they might have been, these are significant growing -- significantly growing countries. They're also countries that don't have the same consumer market penetration and consumer loan penetration as we do in the U.S., so there is a secular aspect to this as well. And then the kind of clientele we serve is a clientele that is well inside that growth -- that secular growth aspect as well. And so a lot of what we're seeing is really driven by what's happening in the markets. For example, in the investment sales area, Europe has an impact on whether or not you see the right kind of robust investment sales. On the other hand, on the loan growth side, we still continue to see from the kind of people, kind of customers that we have as clients, a good amount of loan demand.

Okay. And then just, John, a quick one on the home equity reclassification. It appears that just given the numbers in the supplement that most of that, about 2/3 of that, was in Holdings. Is that correct?

Actually the entirety of the 840 that we moved in on accrual was all in Holdings.

Your next question comes from the line of Todd Hagerman of Sterne Agee. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: John, just a couple of quick ones. Not to beat to death the expense question, but it just was interesting or I found it curious that really across the board your numbers were quite a bit lower than what we've seen or did see in 2011, whether it's the legal, the cost saves or the incremental investment spend. So with your outlook for the year, I mean, how should we think about just the trend? It seems to me that given the numbers this quarter, it's more of kind of back-end loaded, if you will.

I think you would say it's slightly back-end loaded in order to get there. And if you go back to what we had said going into the year, we had said that the heaviest amount of incremental investment spending was behind us, and so that is clearly the case. But what continues is our continued refocus on driving those efficiency saves out of each of the businesses. So we will get somewhere between 3% and 5% efficiency saves out of each of the businesses. So that level of roughly $600 million or so of efficiency saves that we produced in the first quarter should be sustainable throughout the year, and what you should see as the year progresses would be less growth in the investment build. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: Okay. Because, again, I mean it dropped off to $600 million this quarter. I think last quarter it was nearly $2 billion. And just the delta...

No, no, no. The $1.9 billion that we had, that was for all of last year. That was the reengineering saves, the efficiency saves for all of last year. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: Okay. And do I read anything into the fact that you dropped the word episodic on the legal side?

No, don't. You shouldn't read anything into that at all.

Ultimately, all legal is episodic.

Yes, I'm sorry, I didn't go back and see what we had called it in the last time. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: I just thought perhaps there was a couple of some of those miscellaneous items that were now behind you.

No. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: Okay, and then just quickly on the -- between LCL and the Special Asset Pool, I think you mentioned like on some of the -- it was the private equity or whatnot just in terms of the marks, could you just remind us what the marks were this quarter, and whether it was in the Special Asset Pool or LCL, how that compared to last quarter?

Any private equity mark that we take will be in the Special Asset Pool because that's where we have the private equity investments. You can see that actually, you can see the private equity investments on one of the schedules that we've got at the back of the earnings deck. It's somewhere on Page 43, 44, somewhere in there. And -- but I'm not going to comment on any specific marks that we've taken.

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

A couple of quickies. One on the liquidity, you indicated huge amount of liquidity 26% or so of assets. Could you just give us a sense as to how much you could drive that down if you had all the lending -- high-quality lending that you could do out there?

Well, I would say that on a normalized basis, if and when we ever get to a normalized environment, you'd probably have -- that 26% would be something in the high teens, probably -- certainly no more than 20%. So that gives you a range right there.

Sure. And that is, in part, going to be a function of the LCL book coming down as well because I'm assuming you're having to hold liquidity against that portfolio. Is that right or no?

Well, we hold liquidity against our entire -- the entirety of our book.

Sure, I'm just -- okay. Then on LCL, are you in process of considering the buy-to-rent program that many others are -- in other words, pooling together some of the properties that you have for sale to private equity or alternatively renting some of the homes that you have right now as per the recent Fed rulings that allowed banks to do that?

Well, I don't see us becoming landlords, Betsy. But at the same point in time, you know that the sales of mortgages has been a particular focus of ours. And so you can assume that we will continue to explore various means of taking those mortgages off our books. And if we can find people who would like to buy those mortgages and think that they've got other ways of utilizing the properties, we'll be happy to have those conversations.

And then, lastly, there was an article on the FT today about counterparty exposures, and I think we all know there was some regulation that was put out a while back on how much exposure anybody could have to counterparties and for the larger institutions cap out at 10% of capital. So a suggestion out there today that many of the big 5 are above this 10% limit. Just wondering if that makes sense to you, if there's anything that you're doing to try to either limit that exposure or work with regulators to understand what the impact could be on the industry.

Much more the latter. I mean, let's remember, it's not regulation, it's a proposed rule. So it is not regulation as yet, and so as any proposed rule, the proposed rule comes out and then there is a period where both we and various industry associations comment on it and engage in meaningful dialogue with the regulators so that they -- so we can just make sure that they fully understand some of the impacts of what they're proposing.

Your next question comes from the line of David Konrad of KBW. David J. Konrad - Keefe, Bruyette, & Woods, Inc., Research Division: I just had a follow-up question on FICC given its strength this quarter. I know it's too soon given not everyone's reported results to figure out market share, but can you give us any color on client flow versus marks in the inventory or how -- the bottom line strength for the quarter?

Yes, I'd say that the FICC performance that we had in the first quarter had very good -- had good client flow. Importantly, volumes overall in FICC were probably up on the order of 10%, so we did see incremental volumes in the market, good 2-way flow from clients, so it was a good quarter from a client point of view, not heavily marked by -- or not heavily weighted towards recovery marks in any way. It was good solid performance by the guys in the business.

Your next question comes from the line of Mike Mayo of CLSA. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: On Slide 3, where you have the significant P&L items and you have the expense items related to legal and repositioning, would that be recorded in Corporate/Other?

Not necessarily. We -- most of what we've booked this quarter from a legal and related would be in Corp/Other, but it's not exclusively. It's probably heavily weighted towards Corp/Other, and then the remainder would be in Holdings. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: And the repositioning charges last quarter, was that in Corporate/Other?

No. The repositioning charges would be in the businesses that are actually engaged in the repositioning, so every one of those repositioning charges would be in a business. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: Okay. So maybe take half of the decline from the fourth quarter to the first quarter in legal, and so maybe it's about $150 million in Corporate/Other?

No. I was giving you an answer, Michael, on the $545 million itself. Of that $545 million, most of that is in Corp/Other. Last quarter, most of the charge would have been in Holdings as opposed to in Corp/Other. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: Okay. What I'm getting to is Slide 16, the Corporate/Other. And you had almost $800 million of expenses, and that was up quite a bit from the fourth quarter.

Exactly. That's because, this quarter, we would have had -- as I said, the bulk of almost $400 million of that $545 million would be in Corp/Other. Whereas last quarter, I can't tell you off the top of my head how much of the $832 million would have been in Corp/Other, but it would have been a very small amount. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: What I'm eventually trying to get to is if you spread the Corporate/Other revenues and expenses over the 3 key areas of Citicorp: Global Consumer, Securities and Banking and Transaction Services, how would the operating metrics look if you were to do that?

It would still look very strong for the quarter. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: One last, the ROA as reported in your supplement for Citicorp is 1.25%. And I think if you overlay Corporate/Other to the ROA that you report there, then the ROA goes down to 93 basis points.

And I think that if you further adjust that for both the asset sales and the CVA/DVA, you come up with a number of like 1.07%. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: Okay. And then, when you look at that 1.07% versus your target of 1.25% to 1.5%, what areas are underperforming relative to where you eventually want to get?

I think one of the single largest contributing factors is still the low interest rate environment. When we set the target of 1.25% to 1.50%, I mean let's be fair, we actually had an upper limit on it. We were anticipating an environment where interest rates would be close to 0. So the biggest piece of work that we have yet to do is to get back to a more normal interest rate environment. I think you'll also see the share of our consumer business as a percentage of overall Citicorp, plus Corp/Other, both revenue and net income grow from here out. Then, the consumer businesses, in total, produce much higher ROA type of numbers. So it's not necessarily, at this point in time, that things are underperforming. It's a matter of we need to get some more growth in consumer, which, again, we've laid out as what we're trying to do. And secondly, we need to get back to a more normal interest rate environment. Michael Mayo - Credit Agricole Securities (USA) Inc., Research Division: And then last unrelated, with the EMEA loans are up a little bit, the way I'm looking at it from the fourth quarter, does that make sense to be expanding those loans? And are you simply being opportunistic because others are retreating? Or what's happening there?

Michael, I got to tell you, I just -- I don't have an EMEA loan story in my head right now. Maybe if you give John or Susan a call in Investor Relations, they can impact. But don't forget, when we talk about EMEA, EMEA is a much larger region than just western Europe. It includes the Middle East and Africa, as well as eastern Europe. So I'm sure that the growth is probably in those areas. But I just don't have that on the top of my head.

Your next question is a follow-up from the line of Moshe Orenbuch of Crédit Suisse. Moshe Orenbuch - Crédit Suisse AG, Research Division: You had mentioned just, and this was news to me, that you were going to resubmit the stress test on March numbers. Aren't your Basel capital numbers kind of up 40 basis points? So I mean, wouldn't that in and of itself just kind of, with the same assumptions both on stresses and on capital, kind of put you 40 basis points higher? Or is there something I'm missing?

Actually, it's 60 basis points. That's the starting point on that. But that's the math. We understand that. Having said that, Moshe, what I said was, there's a possibility we -- and quite a significant possibility, we actually may have to run a real new stress test, and we don't know the scenarios either. And so it's going to be very hard to look at this on a apples-to-apples basis, and frankly I just don't have that information right now to go through it.

There are no further questions at this time.

Great, thank you. This is John Andrews again. We'd like to thank you for listening today. The call will be available on replay later today on our website. And if you have any follow-up questions, please contact the Investor Relations Department here. Thank you.

Thank you, again, for participating in today's conference call. You may now disconnect.