Good day, everyone, and welcome to the Northern Trust Corporation Second Quarter 2011 Earnings Conference Call. As a reminder, today's call is being recorded. At this time, I'd like to turn the call over to the Director of Investor Relations, Bev Fleming, for opening remarks and introductions. Please go ahead, ma'am.

Thank you, Kevin. Welcome to Northern Trust Corporation's Second Quarter 2011 Earnings Conference Call. Joining me on our call this morning are Bill Morrison, Northern Trust's Chief Financial Officer; Aileen Blake, our Controller; and Allison Quaintance from our Investor Relations team. For those of you who did not receive our second quarter earnings press release or financial trends report via e-mail this morning, they are both available on our website at northerntrust.com. In addition, this July 20 call is being webcast live on northerntrust.com. The only authorized rebroadcast of this call is the replay that will be available through August 17. Northern Trust disclaims any continuing accuracy of the information provided in this call after today. Now for our Safe Harbor statement. What we say during today's conference call may include forward-looking statements, which are Northern Trust's current estimates and expectations of future events or future results. Actual results, of course, could differ materially from those indicated by these statements because the realization of those results is subject to many risks and uncertainties. I urge you to read our 2010 annual report and our periodic reports to the Securities and Exchange Commission for detailed information about factors that could affect actual results. Thank you again for joining us today. Let me turn the call over to Bill Morrison.

Thank you, Bev, and good morning, everybody. It's my pleasure to speak with you today about Northern Trust's second quarter earnings. Earlier this morning, Northern Trust announced second quarter net income of $152 million and earnings per share of $0.62. Our results this quarter included $22.6 million or $0.08 per share in expenses associated with restructuring, acquisition and integration activities. Specifically these expenses relate to integration activities in connection with our June 1 acquisition of the fund administration business of the Bank of Ireland, as well as related restructuring activities in our Global Fund Services business in Ireland and in the United Kingdom, and the expenses related to the pending acquisition of Omnium, the hedge fund administration business of Citadel, which we expect will close in the third quarter. Adjusting for the restructuring acquisition and integration expenses incurred in the second quarter, earnings would have been approximately $0.70 per share. This compares with operating earnings per share of $0.78 in the year earlier quarter and $0.59 in the first quarter of 2011. Recall that our results last year and last quarter each included an expense credit related to the 2008 IPO of Visa, which impacted all Visa member banks. We presented operating results in those prior periods, which excluded Visa-related items. Our results this quarter were not impacted by any Visa-related items. As is customary in our earnings conference call, I want to briefly discuss how the macroeconomic environment, specifically interest rates and equity markets, impacted our results. Low short-term interest rates, coupled with narrow spreads at the short end of the yield curve, continue to negatively impact net interest income, some investment management fees and securities lending revenues. Overnight interest rates in the United States averaged only 9 basis points in the second quarter, down from an already low…

[Operator Instructions] We'll go first to Howard Chen with Crédit Suisse. Howard Chen - Crédit Suisse AG: Bill, on the headcount increase outside that 60% related to acquisitions, where are you hiring across the franchise? And how do you think about incremental hiring needs in the context of some of the productivity and expense management initiatives that you and Rick have been alluding to?

Well, remember, and as I said in the comments, a little more than 300 of the people we added in the quarter came from the Bank of Ireland acquisition and we're restructuring that organization, as we've said. If you step back and look at where the majority of the hiring has been in the quarter, most of it continues to be in the Asia Pacific region. Although I would say that in the quarter, our PFS business did fulfill some of their commitments against strategic hiring. And when you see the segment and the regional hiring statistics, you'll see some growth in the U.S. in PFS. To your question around our thoughts and initiatives around productivity, we have disclosed previously that we're working to slow the rate of growth in expenses. And in a business like ours, that requires a reduction in the rate of growth of compensation. And while we don't have specific targets today, know that we have put in place steps in the second quarter that will slow the rate of growth for the remainder of the year. And at the same time, we have started a series of, I guess I'd call them, exploratory initiatives to see if we can restructure or reposition our businesses to work in a more productive way, both from a revenue and from an expense point of view, going forward. It's been early in our journey down that road, so we don't have targets or specific initiatives. But as we said during the second quarter, we have started specific reviews and will develop specific targets as we go forward to the balance of the year. Howard Chen - Crédit Suisse AG: Looking forward to hearing more about that. Switching gears, Bill. Last quarter, you mentioned the impact of hedging practices partially dampening C&IS fee realization. Just curious, what was the impact of that this quarter and what should we all be watching to try to figure that out going forward?

Howard, this is Bev. That really wasn't the impact this quarter that it was last quarter. On a sequential quarter basis, we had spot rates and hedge rates basically moving in the same direction, and you'll recall, last quarter, that was not the case. So it really wasn't the impact this quarter that we had spoken with you about in the first quarter. Howard Chen - Crédit Suisse AG: Okay. And then finally, Bill, you mentioned capital management. Could you just give an update on if you have approval from the Fed on your capital plan that you submitted? And given we now have a little bit more clarity on Basel III from a capital perspective, now how are you thinking about finding that balance of being conservative and returning capital with your 12.5 percent-ish Basel III Tier 1?

Yes. Howard, as you know, we did file a plan in the first quarter of this year. We were not part of the 19 bank SCAT group. We were probably the 20th bank. So the process that we followed was a bit different. But directionally, it was the same. And so we filed a plan in late February. It's been reviewed by the Fed and we've been told they have no objections to our plan. As you have seen and everybody else who's in your business on the call has seen, there has been some new regulatory proposal floated in terms of who would have to file detailed capital plans on a going forward basis. And basically, as proposed that all banks with assets over $50 billion beginning early in 2012 would have to file capital plans on basically the same basis. So the quick answer to your question is that our plans for the initial 2-year capital plan we filed in the first quarter were not objected to by the Fed. But more recently, they have suggested that we'll all have to file annual plans. So effectively, I think what we've got is an approval of the first year of our 2-year capital plan. Howard Chen - Crédit Suisse AG: Okay. And then just when you think about that capital plan in the context of having a 12.5% Basel III Tier 1, a much higher Basel I Tier 1 common, how are you thinking about the right number to kind of both achieve conservatism and actively return capital?

Yes. It's very hard to pin down a number on this. As you know, we and most of the other banks you're covering are still going through the Basel II parallel run, still validating our risk management, our risk weighted asset driving systems. We get a little bit of clarity around what the Basel III minimum levels will be for well-capitalized banks, including the SIFI adjustments. But in my opinion, we still got some time to go and I would just say that, when we do get clarity around what those SIFI surcharges will be, we will probably maintain our historical approach of keeping a margin over what that minimum is described to be for a well-capitalized bank. So too early to tell, I'm sorry to say.

We'll go next to John Stilmar with SunTrust.

The first one has to do with just wondering, we can obviously look to last quarter's Q4 exposure with regards to Europe. Was wondering if you might be able to provide us with an update of the exposures that you might have in either some of your sec lending funds or throughout kind of the franchise. I was wondering if you could give us an update on that as Europe has had some changes in the past quarter.

Yes, sure. We'd be happy to. First, just a general commentary that our credit policy people have been working on Eurozone exposures, both on our client accounts and on our balance sheet for now almost 2 years. So this is not a new initiative of Northern Trust. Over the past couple of years, we've been reducing exposure that existed in the more challenged Eurozone countries and the banking entities in those countries. And we have been moving to the strongest counterparties that we can identify in the strongest countries. So generally speaking, our exposure to the Eurozone is lower. It's concentrated in stronger providers, and it's generally out of what you would consider to be the troubled countries directly. At the same time, we've also shortened our tenure on both sides, meaning in the client funds and also on our balance sheet to what I think you would consider to be quite short tenures. To be specific, and on our own balance sheet, we have total European bank money market exposures of a little north of $10 billion and about $5.5 billion of that exposure runs to both sovereign and direct bank exposures to countries such as France, Spain, a relatively small amount in Italy, Germany and a quite small amount in Belgium. Again, those are the money market placements that you see on the asset side of our balance sheet. Obviously, we also have some smaller FX-related and other counterparty exposures, but the bigger dollars are in the money market placements. On the cash investment fund side of the house, and I'd ask you to think when I speak about cash investment funds that I'm talking about the combination of our money market funds, our collective and common funds, our securities lending pools, including in money market funds are 2a-7 funds. So aggregately, I'm talking about cash funds, client money, up about $190 billion. Again, we've been working through the same type of exposure reduction initiatives in this area that I talked about on the balance sheet, it's been going on for quite some time. Nonetheless, at June 30, that $190 billion collection of cash funds held about 30% of its assets in European bank exposure. Again, we've got fund limits for banks and we have no more than 2% to any one bank and any one fund. Our maximum maturity for issuers in these markets is about -- is 30 days. And if you break it down further and look at exposures to issuers from France, Spain, Germany and Belgium, we total about 8% of, again, back to that $190 billion in cash investment funds. So I hope that provide some clarity to you.

And John, just if I could add one point to be clear and to make sure that this is incorporated into the transcript. Within our cash investment funds, the client funds that Bill just went through, we have no direct sovereign or bank exposure to Greece, Portugal, Italy or Ireland. And then likewise, on our balance sheet, so the money market assets Bill was talking about at the beginning, we have no direct sovereign exposure on our balance sheet related to Greece, Portugal, Italy or Spain. We have no direct bank exposure on our balance sheet to Greece or Portugal and a de minimis amount to the Irish subsidiary of a non-Irish bank.

Perfect. While we're talking about the balance sheet, my second question is, one, can you characterize, obviously, liquidity as we've seen -- liquidity has increased across many of the other custody banks, which is not surprising, given the environment that we're in. Can you characterize for me at least the types of surges that you're seeing in liquidity? We can obviously look at your balance sheet, but I guess it's -- does this feel like 2008 or 2009, again, and what are the types of things that you're seeing and hearing from both geographically and the types of instruments or the type of customers that are increasing the amount of deposits with you guys?

No, it doesn't feel like 2008. I think it's quite different. But having said that, there is a ton of liquidity out there and you all have seen from the other banks who have reported already that there was a particular surge in liquidity around quarter end. And so if you look at our end-of-period balance sheet, you'll see it's a bit bigger than the prior quarter and you'll see the average levels of earning assets and I commented on this earlier, are about $8 billion higher on average. I would say, about half of that is client-driven deposits, most of it coming from our non-U.S. clients. However, we continue to have growth in our personal deposits in the United States as well. And the other half is short-term leverage that we've created ourselves as funding costs are exceedingly low and we've been placing that money with the Fed and in other very short, very liquid categories on the asset side of the balance sheet.

I guess just with that I had a quick question, what is the logic behind with all the liquidity coming in, increasing the amount of short-term borrowings, is it just a way that taking advantage of even more liquidity to leverage your competencies on the balance sheet? Or why would you want to -- what's the strategy behind some of the near-term liquidity increase that's discretionary on your part?

Well, it's pretty simple. We don't have much loan demand. In fact, loan demand is quite flat. We don't see significant long-term opportunity in the investment securities category, and we see a short-term opportunity to borrow money at 5 basis points and lay it off overnight at 25. It's clearly not a very deep and long-term strategy, but it is an overnight opportunity and we've taken advantage of it as and when we can. We've got plenty of capital to do it. We don't have any restraints really to doing a little more of that on a short-term basis.

We'll go next to Nancy Bush with NAB Research.

Just a question for you about preferences in PFS. In this last go around after the crisis, I think you alluded to the fact that your PFS customers were reluctant to go back into equities, they've shown a market preference for fixed income and other investment vehicles. Are you seeing a return to this sort of historical pattern where when markets go up, people get more amenable to equities or are we still equity adverse out there?

Not this time, Nancy, and I'm a little surprise that we haven't seen that kind of reaction. But if you look quarter-to-quarter for the past few quarters, there is a slight increase in the allocation of personal clients’ investment programs to equity, but it's all market-driven. So notwithstanding the fact that we're encouraging a bit more risk and have been for basically the last 1.5 year or more, clients are more slow on the uptake.

Should that change, Bill, would that make a market difference in profitably in PFS?

Small difference, not really significant. It depends on where they go. If they go to alternative products, it might be a bit better for us, but an equity product is much better than cash, obviously. But we've got pretty balanced fee arrangements on most of our client accounts. So we wouldn't have a huge pickup, Nancy.

We'll go next to Brian Bedell with ISI Group.

Just a few questions. On the custody line, I guess more broadly on revenues in general. What -- can you tell us what the contribution for Bank of Ireland Security Services is on revenue and expenses in the quarter?

Generally, the revenue -- remember, it was only one month, we closed on June 1. So revenue was in the $5.5 million range and expenses were just a bit less than that. So the BoISS acquisition was not a big driver on our revenue or our margin for the quarter.

Okay. And the $5.5 million, is that mostly in the custody services fee line?

Yes.

Okay. And then just also, I guess, in terms of expenses going forward, I mean, you're still in the formative stages, I guess, of thinking about some cost control in the second half. Are acquisitions a considerable part of that plan in terms of synergies that you might be getting from this and potentially Omnium?

No, I wouldn't say so. Although, obviously, we have taken some steps where we can in the BoISS acquisition. Omnium is a little bit of a different situation since it's a brand-new capability for us. The Ireland acquisition, as you know, was a common business acquisition in a common community, so there were overlaps, not so in Omnium. It's hard to project what future acquisitions will look like and what those opportunities will be. I would say that while we look at the opportunities and the acquisitions that we've done and will do, we'll be looking more closely at our existing businesses.

Okay. That's helpful. And just one quick one on the tax rate as well. You're getting some benefits from the -- I think you said last quarter on the Illinois side, can you just refresh us what that benefit will be and I think it was 2012 that surged?

Well, actually, we took a provision in the first quarter. I believe, it was $3.4 million to get a head start on the deferred tax account impact on the Illinois state income tax increase. And we said that, while we took $3.4 million in the first quarter, the subsequent quarter impacts of that would be about $1 million. And then -- and that's what's happened. And then this quarter, we reduced a state income tax reserve of about $2.5 million, but that's really about all that's in the tax line this quarter.

Right, so the normalized tax rate is about 33% going forward?

For now, if everything stays the same as the second quarter in terms of revenue contribution from overseas and domestic sources.

Right, right on this portfolio. Okay. And then just if you can talk a little bit about maybe your credit outlook with obviously provisions coming down quite nicely. Are you seeing broad improvement in credit trends within the CRE book, or is that something that's still -- something you're concerned about?

We've seen measurable improvement and we've talked about this in prior quarters in our commercial and industrial book and in our clients within that book specifically. And we've also seen a pickup in demand for credit from that group. So I'd kind of take the commercial and industrial group and some of the private client loan groups which are largely secured by marketable securities and say that in the C&I group, it's dramatically improved, and the marketable securities secured stuff has always been strong. But demand in both categories is improving, those 2 groups look good. The offset to that is the commercial real estate outstandings and the residential real estate loan outstandings which in some regions are getting a little better, but I think in both categories remain challenging. So I think the good news is that about half of the portfolio has improved pretty significantly. The other half of the portfolio is unchanged with some challenges. I'll go a step further and say, those comments notwithstanding, you saw the activity in our other real estate owned areas this quarter. And effectively, on a gross basis, we sold half of the other real estate owned portfolio in the second quarter. And what we're seeing is, people who have been on the sidelines for quite some time in terms of buying principally more expensive homes have stepped in and exhibited an attitude, if not now, when and taken down 5 or 6 of our largest ORE holdings. So there seems to be an attitude change in many of our markets about the willingness to buy and hold real estate which is encouraging. But I would leave you and other listeners on the call, who with the impression that, yes, asset quality expressed in terms of charge-offs and provision expenses quite a bit lower this quarter, and we feel that certain components of our loan portfolio have improved dramatically. There still is risk out there and Northern Trust makes relatively large loans taken as a percentage of our total nonperforming assets. So I'm always a little uncomfortable with forecasting, particularly the very low levels that we see this quarter because 1 or 2 loans can dramatically improve or dramatically change the level of nonperformers in the accompany.

Right. So it could still be a little bit lumpy?

Yes, it could be lumpy, right.

Looks great. And then while we're talking about the loans, are you seeing better demand on the private banking side and small business side?

A little bit, I think most of the increase in demand has been in the large corporate side, middle market corporation side. I think you're hearing that from other companies as well. We've had a very significant generation of loan commitments. But we still have, I think, at the end of the quarter, 26% utilization rate on our commitments in our corporate group. So we're still at historical lows of client stepping in and drawing down on their approved facilities.

Right, okay. And then just very last question on foreign exchange trading, that was down a little bit at quarter. I know the volatility was a little weaker. Any change in how you're managing that business, maybe shortening positions for the principal part of it at all, or do you just not see as much seasonal uptick in that?

No, I don't think so. Obviously, the quarter was a little weaker than we had thought. When we've looked at it, we see that volatility is very mixed or was very mixed. The euro was a bit volatile, but some of the other key currencies that our clients maintain positions in were not so volatile. So no, I don't see any significant change. We will be looking at the business closely though.

Looking at the business closely in terms of what actually?

Just trying to understand a little better what happened in the quarter.

We'll go next to Alex Blostein with Goldman Sachs.

So question just on expenses, maybe one more time. So if we kind of strip out the one-offs this quarter, it looks like we were at 600 and call it $83 million dollars [$683 million]. So from here on, should we think about that as more in-line growth with revenue, slower growth in revenues, stable, what's maybe more direct outlook there for expenses?

Well, in comments that Rick Waddell has made publicly, we've talked about trying to get back to neutral or positive operating leverage in the foreseeable future. We look at adjusted expenses in the quarter at about the same number you do, that $683 million, which is up about 2%. When we look at the individual adjusted categories, there's some categories that are high and that we're going to go back and are going back and taking a closer look at. It's hard to say what kind of expense growth rate to look for over the next couple of quarters, except to say that we're working hard to keep them constrained.

Got you. And then, maybe on the balance sheet, so I think, most of us probably understand the dynamics fairly well as far as the mix shift, but if you just kind of look out maybe again for the next few quarters and assume that rates are not going up and you guys obviously have a view on what your investment risk looks like. Can you give us a sense if this is the trough for net interest margin or there might be some risk for further compression, again assuming the mix shift doesn't really change from here? And then, as a follow-up to that, what's your sort of updated view maybe on extended duration, given that I think of futures curves now implies rates going out maybe back half of 2012 and that's a maybe, I guess?

Yes, and our forecast is a little later than that. So we're doing things as and when we can to try to hedge a little bit against that. And as you recall, we extended duration in our securities portfolio at the end of the -- at the end of 2010, beginning of 2011, and we took another shot at that toward the end of the second quarter of this year. And so effectively, we have extended our duration to about 2 years and extended our repricing frequency to about 8 months. So in both duration-extension programs that we put in place, we use the highest quality securities. So there's no credit diminution, no reaching for yield through credit diminution at all. So we think that will help with declines from here in our net interest margin, but there are some rates out there that right now are exceedingly low, even by the standards that we've seen for the last 2 years. And I would say that if the environment stays exactly like it is today out into the future, we won't be able to prohibit some slight margin deterioration.

Understood. And then maybe shifting gears a little bit on the business and looking at assets under management, I guess, for this quarter. It looked like you guys had pretty nice growth in equity assets, despite markets troughs are being pretty choppy. So obviously, it suggests flows were pretty strong and I'm just curious to hear is that really just investors kind of putting more money into equity index product that are using that as little bit of a placeholder as something we've heard from few other managers in trust banks over the last few days? Or do you think this is more of a sticky money just new business activity and the view maybe on RFPs, in general, for the institutional money out there?

Are you asking about the institutional business, specifically?

Correct. Yes, because, I mean, it looks like the retail was up a little bit, but I don't think there's a ton on re-risking into equities out there but the institutional AUM in equities was up quite nicely.

Yes, I think it's a combination of things. One is what you just suggested, but there's 2 other things that work here and that is that in 2 of the last 3 quarters we've had the strongest new business as we measure on record in our institutional business. And obviously, that includes investment management business and so there's some flow on to the fee line as a result of that. And secondly, as we've discussed before, we're in the process in our institutional business of going on a client-by-client basis and reviewing pricing today vis-à-vis the bundled pricing program we may have put in for those clients in prior periods. And one of the ways that we can improve that other than just raising the fees on a per item or on a transaction basis is to cross-sell better, and we've had good experience in going to those clients and cross-selling investment management business. So I'd say in the institutional side, it's the sum of those 3 initiatives working together. Bev, would you add anything to that?

Yes, the only thing that I would add, Alex, to give you a few statistics. We did end the quarter with global index AUM at just shy of $296 billion, that was up almost $7 billion sequentially. And as you're well aware, we didn't get a lot of support from the markets, the equity markets to support that $7 billion increase. So most of that was flows and a lot of those flows were from non-U.S. clients.

We'll go next to Glenn Schorr with Nomura.

I wonder if we could talk quickly just about the outside services expense line. If you look at those multi-year progressions, it's gone up and you definitely gotten a little more acquisitive lately. In your prepared remarks you mentioned higher acquisition and integration cost as these businesses get integrated the question is, is should we expect to see a near-term falloff or is there integration behind the scenes post-closing that would make that drag on a little longer?

Well, there are a couple of components to that category. One of which would be the acquisition-related expenses that you just described and the other would be all of the regulatory-driven consulting expense that we've taken on. I would say that consulting and related expenses, assuming that we don't do anymore acquisitions here in the next couple of quarters, would decline. The regulatory component of that, though, I don't think is quite to the level that we can expect declines. Coming soon, I hope, but I wouldn't forecast it for the current quarter.

Any way to parse out, how big of a contributor the acquisition piece is because big difference if have 135 a quarter versus 100?

Well, of the $22.6 million in acquisition, restructuring and integration charges that we took in the quarter, we said that $18.4 million of that was in compensation expense and a large amount of the incremental -- the remainder would have been in outside services. Not all of it, but a lot of it.

Also, remember that we've got our sub-advisor fees in there for our manager of managers business and those have been going up pretty significantly as the market has gone up here over the last year or so. And we get those -- we don't get some of that back, but that's part of the problem as well.

Understood. Don't get too excited is the message.

Yes.

Okay. And then could you remind us on the RMBS portfolio that you took the OTTI hit, could you refresh my memory on size, anything about geography and quality statistics and average mark?

Well, I'll give that a shot. If you look at our entire non-agency RMBS portfolio, it totals $238 million after these charges. Back to the beginning of OTTI for us, we have charged 17 different securities, a total of $115 million in OTTI. So the majority of those are either subordinated liens or they're subprime. And there are 1 or 2 in there that are -- that we have classified as senior, but they have big positions and are substantially all option ARM credits, some of them in tough markets. So it's been an asset class that hasn't been all that great for us, obviously, but the good news is, it's relatively small, 29 total securities with a current amortized cost of $238 million.

Okay, got it. And then maybe my last one, I heard your comments loud and clear on improving credit, following NPAs, but the lumping nature of it. I've asked this before and I know the answer, but coverage ratio now below 1x. Is that where -- you'll run around that 1x, no need to build cushion beyond of reserved NPA of 1x?

I think under -- in the circumstances that existed at the end of the quarter, we're comfortable with that coverage ratio of being less than 1. Of course, we look at -- and I participate in this personally, we look at all of our large nonperforming assets and consider the improvement or deterioration in those assets individually and collectively each quarter. At the end of this quarter, obviously, we felt a little better about that portfolio. And so we're comfortable with the coverage that you were referring to being less than 1. I think generally, again, depending on where you are in the cycle, for a bank with a credit risk that this bank has, you should be right around 1.

We'll go next to Ken Usdin with Jefferies. Kenneth Usdin - Jefferies & Company, Inc.: Can you -- custody, the custody revenue line really had a great breakout quarter, even excluding the Bank of Ireland. I was just wondering, can you give us a little more color on -- was this a big conversion quarter or was this a highly transactional quarter to start?

It's a combination of both. I mean, we did bring on quite a number of new clients during the quarter, and I would tell you that there are a few IOO implementations in the quarter. Unfortunately, we don't have permission to name those clients, but there are several -- our IOO business is building and is projected to build as we go forward here, but this is not just an IOO story. We've had strong wins in the custody business, in the other parts of our GFS business. So it's an across-the-board success story in this quarter. Kenneth Usdin - Jefferies & Company, Inc.: And you touched on before, Bill, about the strength in net new and investment management. I was just wondering if you can run us across the businesses in terms of the magnitude of net new business across the company?

I really don't know how to do that, except to reiterate what I said before and that is that, on the personal side of the business, the best 6-month period we've ever had -- and again, remember, when we talk about new business, we're talking about net new business, which is the annualized fee of a piece of new business against which we deduct lost business, the annualized fee lost in the same period. So in our personal business, we're referring to recurring fees. We don't charge specifically for fiduciary services and our state settlement and related fees are not recurring, they are nonrecurring, so they're not included. So substantially, all of that net new revenue is a function of new AUM on the personal side of the business. And then on the -- and I would tell you that our new business on the personal side is strong in every region throughout the United States, including the wealth management business. And so that's largely asset under management fulfillment or add-on of AUM, except for the wealth management business, which, of course, is largely AUC driven. On the institutional side of the business, the contribution is much more varied because we've got all the GFS business, including the IOO business there. But again, 2 out of 3 quarters, that being the fourth and the second. On the same basis of definition on new business, 2 of the best 3 quarters we've ever had. So it's very strong, very well distributed across the 2 businesses. In the PFS side, largely driven by clients giving us more money to manage AUM. On the institutional side, a blend of recurring revenues throughout the custody side, the investment side and the GFS side. Kenneth Usdin - Jefferies & Company, Inc.: Okay. And then, is it possible for you to size for us the general magnitude of the Omnium business that's going to come onboard? Revenues or profitability or however you might be able to box it for us.

Well, we -- go ahead, Bev.

Yes. When we announced the Omnium acquisition in May, we disclosed that it would be bringing us approximately $70 billion in AUA. And we disclosed the initial purchase price of $100 million, but we didn't provide any other disclosures, financial disclosures beyond that.

Remember that, that business has a considerably sized earn-out opportunity that runs with it. And to be honest, it's going to be as successful as our ability to sell to new clients. So just from a stand-alone point of view, I wouldn't think that the business would generate much. It's all a function of how well we do with that technology and how effectively we sell it to hedge funds and then how well we cross-sell that hedge fund business. Kenneth Usdin - Jefferies & Company, Inc.: Right. So you get the platform and now you'd execute against it?

We get the platform with, as Bev said, about $70 billion of existing administration, but the real measure of success in the business is how we do from there. Kenneth Usdin - Jefferies & Company, Inc.: Okay. And my last just clarification question is, can you break out for us how much of the one-time charges were related to the restructuring and pending expense initiatives versus the Bank of Ireland merger integration cost?

I would say that just round numbers, about 85% of it was related to our GFS business in Ireland and nearby countries, which is largely the Bank of Ireland. And then the rest of it is nonrecurring expenses taken in the quarter for the Omnium transaction.

And we'll take our next question from Mike Mayo with CLSA. Michael Mayo - Credit Agricole Securities (USA) Inc.: My question is on the restructuring. First, as it relates to the client-by-client pricing review, at least before this quarter, the revenues on assets under custody were pretty low, the way at least we look at it given the low rate environment and it just -- you can either get more other activities with the clients or you can charge more for the core custody services. Might you start charging more for this core custody services -- I know I asked you guys at your conferences in the past couple of years and everybody says they're going to do it and they're doing it, but we haven't seen it in the results. I'm not sure of the part of kind of getting there.

Yes. I take your point. As we've said before, I don't -- if Steve Fradkin were here, I think he'd say it this way that this is a one at a time business in terms of getting out there, meeting with the clients, discussing perhaps what used to be a bundled pricing solution and trying to get back to where we think our margins should be on a client-by-client basis, either through charging for things that we didn't charge for before and effectively unbundling the relationships or cross-selling and I mentioned this earlier, in response to somebody else's question. We've done a pretty good job of cross-selling other services to just as an example, pure custody clients. So Mike while we all wish -- we, at Northern Trust, probably at the top of the line, that this pacing was going more quickly, I can tell you that it is going and we have anecdotal evidence of a number of client relationships and there seem to be more and more of those as we go where we're improving our pricing. But it is a one by one, one at a time success measurement process. It's slow. Michael Mayo - Credit Agricole Securities (USA) Inc.: And then a follow-up, is this restructuring a cultural change? I mean, this is the first time Northern's named a CFO from outside the company, at least for the last 25 years. And I might even guess since 1889, but I wasn't able to check that. So you announced a restructuring charge this quarter and at the same time, you announced someone from the outside coming in as the new CFO in a few months. So is it a cultural change? And then also, why now did you choose to do this?

Well, I'll just say that the 2 are totally and completely unrelated. I mean, the restructuring charge, Mike, has to do with what I said earlier and that is that we bought a business in a market where we already had a similar business, the 2 businesses of common size, round numbers, 500 people each, a touch less than that. We do the same things. We do the same things in an office that's set apart geographically by a very small distance. So obviously, there are a lot of opportunities for expense synergies and also revenue synergies, but that's not what you're interested in. So I would tell you that if we didn't -- if we hadn't done the BoISS acquisition, we probably wouldn't have taken this charge at this time. And then on the other subject, again, it is totally unrelated to the restructuring charge. Not really a cultural difference and if you go back far enough, and I think you remember these days when we last had a COO and a CEO and that was Barry Hastings and Bill Osborn, and Mike, you recall that. There are some reasons that we think that the responsibilities of the CEO should be divided a bit and some of those responsibilities handed to a Chief Operating Officer, so that the CEO can spend more time on strategic issues and... Michael Mayo - Credit Agricole Securities (USA) Inc.: Well, that's clear. It's more of the CFO having been hired from outside. It's not unique in the industry, I just see it as a little more unique for the Northern.

No, it is different, I would agree. But keep in mind, we're looking at building the stable of up and coming executives within the company. We've got a few people at senior levels in the company who in the next 4 or 5 years will probably be retired. We're trying to build our bench strength. We've hired a number of people from the outside and this just happens to be one of them. So I would encourage you not to think of this as a cultural change. I don't think of it that way at all. Michael Mayo - Credit Agricole Securities (USA) Inc.: It might help having a fresh look from the outside at a time when you're trying to reengineer the revenues and expenses. Is that fair to say?

Yes, it is. But that's not the reason that we made this change. Michael Mayo - Credit Agricole Securities (USA) Inc.: Okay. And lastly, what's the name of the expense program? Do you have a title to it?

We haven't titled it yet. Aileen Blake who's here with us and Rick and I and others are working on that as we speak. Michael Mayo - Credit Agricole Securities (USA) Inc.: And will there be a day when you announce to all of us what your plans are with targets?

Yes, there will and it will probably be not this quarter, probably before the end of the year.

And that will conclude our question-and-answer session. I'd now like to turn the call back over Bev and Bill for any additional or closing remarks.

Just thanks to everybody. We'll talk to you again at the end of our third quarter, when we will update our performance, and that's scheduled for October 19. We'll see many of you before then. Thanks so much for your time today.

And again, that does conclude today's call. We do appreciate everyone's participation.