Welcome to the U.S. Bancorp's Fourth Quarter 2012 Earnings Conference Call. Following a review of the results by Richard Davis, Chairman, President and Chief Executive Officer; and Andy Cecere, U.S. Bancorp's Vice Chairman and Chief Financial Officer, there will be a formal question-and-answer session. [Operator Instructions] This call will be recorded and available for replay beginning today at approximately noon, Eastern standard time, through Wednesday, January 23 at 12:00 midnight Eastern standard time. I will now turn the conference call over to Judy Murphy, Director of Investor Relations for U.S. Bancorp.

Thank you, Christie, and good morning to everyone who has joined our call. Richard Davis, Andy Cecere and Bill Parker are here with me today to review U.S. Bancorp's fourth quarter and full year 2012 results and to answer your questions. Richard and Andy will be referencing a slide presentation during their prepared remarks. A copy of the slide presentation, as well as our earnings release and supplemental analyst schedules, are available on our website at usbank.com. I would like to remind you that any forward-looking statements made during today's call are subject to risk and uncertainty. Factors that could materially change our current forward-looking assumptions are described on Page 2 of today's presentation, in our press release and in our form 10-K and subsequent reports on file with the SEC. I will now turn the call over to Richard.

Thank you, Judy, and good morning, everyone. 2012 was a great year for our company, and I'm very proud to share our fourth quarter and full year results with you this morning. I'd like to begin with a few full year highlights on Page 3 of the presentation. U.S. Bancorp reported record net income of $5.6 billion, or $2.84 per diluted common share, for the year 2012. We achieved record total net revenue of $20.3 billion, which was higher than the previous year by 6.2%, driven by growth in both net interest income and fee revenue. We achieved industry-leading profitability, with a return on average assets of 1.65% and a return on average common equity of 16.2%, an efficiency ratio of 51.5%, and we realized positive operating leverage year-over-year. Average loans grew by 6.9% over 2011, and we experienced strong year-over-year average deposit growth of 10.6%. Credit quality continued to improve, with a decline in net charge-offs of 26.2% and an 18.9% decrease in nonperforming assets, excluding covered assets. Our capital position ended the year stronger, with a Tier 1 common equity ratio of 9%, and we were able to return $3.4 billion of our 2012 earnings to shareholders in the form of dividends and buybacks. Now turning to Slide 4 and our fourth quarter highlights. U.S. Bancorp reported net income of $1.4 billion for the fourth quarter of 2012, or $0.72 per diluted common share. Included in the current quarter was an $80 million expense accrual for the recently announced mortgage foreclosure settlement, which reduced EPS by $0.03. Recall that the fourth quarter of 2011 included 2 notable items that increased EPS by $0.05. Total net revenue of $5.1 billion was slightly higher than the same quarter of last year. Excluding the prior year merchant settlement gain, however, total…

Thanks, Richard. Slide 9 gives you a view of our fourth quarter 2012 results versus comparable time periods. Our diluted EPS of $0.72 was 4.3% higher than the fourth quarter of 2011 and 2.7% lower than the prior quarter. Slide 10 details notable items that impacted earnings in the fourth quarters of 2012 and 2011. As previously mentioned, the current quarter included an $80 million foreclosure-related settlement expense accrual that reduced EPS by $0.03. In the fourth quarter of last year, noninterest income included a $263 million litigation settlement gain related to the termination of a merchant processing referral agreement. We also booked $130 million expense accrual related to other mortgage servicing and foreclosure-related matters. On a net basis, these 2 items increased EPS by $0.05 in the fourth quarter of 2011. The key drivers of the company's fourth quarter earnings are summarized on Slide 11. The $70 million, or 5.2%, increase in net income year-over-year was a result of a slightly higher net revenue, slightly lower expense and a decrease in the provision for credit losses. Excluding the net after-tax impacts of the notable items detailed on Slide 10, net income year-over-year was higher by approximately 17%. Net interest income increased year-over-year by $110 million, or 4.1%. The favorable variance was largely driven by the $17.1 billion increase in average earning assets, in addition to strong growth in low-cost deposits and reduced rates on wholesale funding. The 5.8% growth in average earning assets included planned increases in the securities portfolio, as well as growth in average total loans and loans held for sale. As expected, the net interest margin of 3.55% was 5 basis points lower than the same quarter of last year, primarily due to the increase in lower-yielding investment securities, partially offset by growth in low-cost deposits,…

Thanks, Andy. 2012 was a record-setting year for U.S. Bank. We achieved record earnings and record total net revenue, resulting in industry-leading performance metrics. And further, we continue to invest in our businesses and strategically acquired new partners. We added more customers and grew market share. We maintained strong and growing capital and liquidity positions. And we returned $3.4 billion of the company's earnings to our shareholders, and next year, we expect to return more. In 2013, we will celebrate the 150th anniversary of U.S. Bank. Since our charter was signed in 1863, we have managed through the times of prosperity and adversity. We've grown by investing in our business through acquisition. We have learned from and capitalized on the lessons of our past and become what we are today, a company with a well-diversified business model and a prudent risk management, a company with the ability to produce consistent, predictable and repeatable results. We're focused on the future and continuing to build momentum into 2013 for the benefit of our customers, our employees, our communities and our shareholders. That concludes our formal remarks. Andy, Bill and I would now be happy to answer questions from the audience.

[Operator Instructions] Your first question comes from the line of Jon Arfstrom with RBC Capital.

Question for you on loan growth. Good average loan growth, but it looks like the period-end loans are maybe even a little bit higher, a little bit better. And curious if there's anything notable about the growth and if you've noticed any change in sentiment of the borrowers, maybe positive or negative, early on in the year.

Yes. John, this is Richard. There's -- it's pretty much the same story. I think the fiscal cliff uncertainty caused the very last couple of weeks to be a bit muted. But if you take quarter 4 and look into quarter 1, I think at the end of the day, you're going to see a pretty sustainable range of that 4% to 6% annualized. We came in at the high end of that range in quarter 4. I think we're on track for the high end of that for quarter 1, but I wouldn't jump outside of that range based on what I'm seeing. I don't think that people care as much about the debt ceiling and the debate that will occur later in the quarter as they do about the bottom line to their paychecks, as they did about the fiscal cliff. But I do think it's still a fairly uncertain environment, and people at the first of the year aren't jumping on anything new.

Okay. And then, you touched on it but maybe if you can provide us a little more color on how you're thinking about capital allocation on 2013. You talked about returning more money to shareholders, but just kind of walk us through your thought process.

Yes, John. This is Andy. We -- our goal has always been a 60% to 80% return, the combination of dividends and buybacks. We were within that range in 2012. We would expect and we plan to be within that range in 2013. That's how we submitted the CCAR. And as discussed, we'll hear back somewhere towards the end of March regarding the results.

Okay. And Richard, you said more, I believe was the phrase in your...

I did so, yes. We're in the lower end of that 60% to 80% range. It's our goal to get -- move further into that range. I doubt that we'll get to 80%, and part of the reason for that is we're still investing in the company. You guys are allowing us to do that, and I think we're getting good returns for those investments. But the CCAR results will be known in a couple of months, and we've put in a request that we think is very fair and reasonable and will help us move that deeper into the 60% to 80% range.

Your next question comes from the line of Paul Miller with FBR Capital Markets. Paul J. Miller - FBR Capital Markets & Co., Research Division: On your mortgage production side, can you -- do you break out what you do for retail versus wholesale?

We don't break that out. But let me give you a couple of facts, Paul, just to maybe round out some of the story. Right around 69% of our production was refinance activity, and gain on sale margins that you see are down a bit. But I think an important fact, too, is the application because we booked the majority of our revenue at app. And our net apps or our gross apps, both of them, were down about 6.7%. Now some of that can be attributable to -- attributed to the seasonality factor that occurs in the fourth quarter, particularly around the holiday season. We still expect the first half of the year to be relatively strong from a mortgage perspective, but the fourth quarter was down a bit principally due to seasonality. Paul J. Miller - FBR Capital Markets & Co., Research Division: And then, when you're saying gain on sale margins is down slightly, was it mainly -- was that also due to seasonality? Or is that more of a -- did you do more wholesale versus retail in the quarter?

Probably a combination of a little bit of both. And if I do my gain on sale from a perspective of apps, it was down maybe 10 or 15 basis points. Paul J. Miller - FBR Capital Markets & Co., Research Division: Okay, okay. And then, on your loan growth, are you seeing any -- I mean, I know -- Wells Fargo talked about seeing a lot of C&I and whatnot in the late part of the -- in December as people try to get some things done before the fiscal cliff. Do you -- did you see the same thing? Or could you add some color around that?

We -- not really. I wouldn't have brought it up. I knew you'd ask. And the M&A activity was higher at year's end for all the reasons that people were trying to time and sequence their activities before a fiscal cliff possibility, but not notable. To us, it was not a real impact. As I said, everything kind of slowed down at the very end of the year. That happens anyway, but to a more of a screeching halt just because people were waiting to see what happened, and there's a bit of that recovery in the first few weeks, as John's question might have belied. But if you take the 2 quarters in total, I don't think you'll see any distinction about that fiscal cliff when it's all said and done. And for us, the -- I'd like to give you color on loan differences by geography or loan type or customer, and it really isn't much different than the last couple of quarters we've had in 2012. So for us, it's a lot more of the same. I guess, the recession was -- ended 14 quarters ago, as I'm told. It probably doesn't feel like it to all of us, but whatever recovery we've been under continues to be slow and methodical, and we're feeling the exact same thing. Just a little bit better every month, every quarter, but it's so small you have to go back and add it together just to notice it. So we're seeing that same phenomenon. Not much to report.

Your next question comes from the line of John McDonald with Sanford Bernstein. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Andy, what are some of the puts and takes for the net interest margin looking forward? And what's your best guess on the near-term outlook for the NIM?

Yes, John. So we talked about the fact that we expected the fourth quarter to be down 4% to 6%, it was down 4%. I would expect a similar decline in the first quarter, perhaps a little bit more because the first quarter is seasonally lower with regard to loan fees, both on the wholesale as well as retail side. So down similar level, perhaps a bit more because of loan fees. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Okay. And if rates stay low, the longer they stay low, does the reinvestment rate pain begin to ease eventually? And when does that happen if rates stay where they are today?

Yes, it does, John. So the reinvestment risk right now is that $2 billion to $2.5 billion that runs off every month, putting -- and I'm putting it back on in a conservative fashion. The differential in spreads or rate is about 70 to 75 basis points. Because the duration is not that long, as I move into the end of this year and into '14, that starts to compress because what I'm -- what's coming off now is at a lower rate. So that will dissipate over time. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Okay. And with the loan growth dynamics that Richard talked about, do you still hope to grow net interest income this year?

That is our goal.

Yes. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Okay. And then on credit, Richard, I expect -- you still expect charge-offs to move lower, but it sounds like maybe at a slower pace. And then, just what was the outlook on reserve releases?

The answer is yes and slightly a little bit more, but we're coming to an end on reserve releases. So we're at 85 basis points for the portfolio, and we've always said, especially with our credit card business, we should be at about 1%. So we're going to move below that 85 probably into the high-70s. Reserve releases come down to 0 over the course of the next few quarters because it should. And our reserve coverage is sufficient. Both -- it has always been and will be, I think, well within the range of what some of the regulators have been seeking because we don't want to under-reserve or prepare for over this cycle. Our credit portfolio has been really, really predictable, and if you just draw a straight line, you can just keep drawing it with the sloping, settling curve on charge-offs and a continued kind of transition to lower nonperformance for a little bit longer. Bill, do you want to add any color to that?

Yes. No, the -- I mean, we're getting at the bottom for some of the gross charge-off rates if you look at credit cards, autos, even some of the commercial. And some of the commercial real estate categories are pretty strong now. So on the wholesale side, some of the impact will be really on the recovery levels that we see, which can -- those are more difficult to project. So we might see a little bit up and down based on recovery levels. But overall, it's just still working out some of the residual residential mortgage and home equity, which will still take another year or 2. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: And regarding the new FASB proposals suggesting a life of loan expected loss approach, do we have to start thinking -- or do you have to start thinking ahead to that now or is it too early yet?

Well, we're certainly going to comment on it now. There's a comment due from the industry, and we'll comment on it between now and April. Probably the biggest area of impact, which is still the most uncertain, is credit cards. Credit cards take big reserves, and it's just not clear what life of loan means on an open line of credit like that, so a lot more work to be done. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: And it's not affecting your reservant behavior right now?

No.

No, no. John E. McDonald - Sanford C. Bernstein & Co., LLC., Research Division: Okay, great. Last thing for me. Does -- the foreclosure settlement cost, Andy, that $50 million a quarter, will that pretty much end in the first quarter and you'll be done with that right away?

Yes. Well, we experienced about $50 million in quarters 3 and 4. We may have a little bit of a tail on that in the first quarter, $5 million to $10 million, but then it will go away.

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

My first question was just a follow-up to John's. In terms of the foreclosure review expense of $50 million, is that directly going to impact the bottom line so we shouldn't expect the bank to reinvest it back into the franchise?

Yes. The answer -- it's Richard. The answer is yes. That is the cost that we had primarily to third-party overseers. The entire mortgage servicing business has gotten more expensive because of the new rules, some of which will get finalized in a week or 2 from the CFPB. But under the consent order, the rules have been very stringent, and so we have many, many more employees in run rate cost to managing the servicing portfolio than we used to. Those do not change. For the $50 million that Andy cited, we're primarily the third-party overseers, and that does end. And yes, we can reinvest that back in the company.

So we shouldn't necessarily just lop off $50 million from the second quarter run rate expense?

You could, that's a --I'm saying but there are other costs that we're not talking about, which are still burdened in there on a comparative period from prior period. It's a lot more expenses around the mortgaging servicing business than it used to be. We're up to it. We're making enough to offset it. But I didn't want you to think that $50 million was all of the -- was the incremental cost of doing this business, because it's gotten a lot more expensive over the last couple of years.

I see. And just my second question is on capital return. Your message on capital return is always dead consistent. If we're just sort of looking at what could be different from this year versus last in the process of the CCAR, what was interesting to me and some investors is in the adverse-case scenario is the Fed is now requiring to stress test against rate shocks, which clearly impacts the securities portfolio. I guess, as you went through the process, I understand the color you may give us may be limited, but does the adverse-case scenario even matter, as you thought about your application for this year? And is the message from the Fed, as they think about accelerating capital return from the banks, as credit risk diminishes, do we have to start thinking about AOCI risk on a go-forward basis?

So Erika, certainly, the adverse case matters. But in our case, anyway, the severely adverse case was more of the binding constraint from the perspective of capital return. So -- and that was the harsher economic downturn, the lower GDP, the higher unemployment. That was a more material factor principally related to credit costs for our numbers. And with regard to OCI, as we've talked about, we are keeping our own cushion of 50 basis points over and above what we project to be our CP buffer of 50, so we get to the 8%. And that's to accommodate the fluctuations of volatility that occurs with OCI, and that's why we keep that cushion.

Your next question comes from the line of Kenneth Usdin with Jefferies. Ian Foley - Jefferies & Company, Inc., Research Division: It's actually Ian Foley for Ken. Just wanted to ask a couple of questions on the mortgage business. Specifically, if volume does start to fade next year, when we look at expenses, how much is fixed versus variable and how quickly can you kind of bring those expenses down if you do see a falloff?

Ian, I would say that the variable expense component of the mortgage business, depending upon the type of production and where it's originated from, would be anywhere between 25% and 40%.

We've been very careful not to build a church for Easter Sunday. I mean, we're not -- we're able to accommodate all of our volume today, but we've got a pretty good variable capability of reducing quickly, adding quickly. And as you look at the future, while it may be higher refis today, we're building this bank to handle new purchases and then be a market leader in that area, which is why we're spending so much care on high quality today because that will affect the reputation we have for the clients that we'll use as the new purchase money when rates start to go up and we start replacing the refi activity. So we're going to overperform the service quality. We're going to have more than enough people in all the places today, but we can adjust very, very quickly. It's one of our best talents around here, and you can well bet that we won't be caught with overhang if there's a change somewhere along the way. Ian Foley - Jefferies & Company, Inc., Research Division: Okay. And my second question is more involved than the servicing side. And I think with the refis, people often overlook just kind of what it means for the MSR and revaluation. I was just hoping you guys could comment on kind of how the hedging strategy has changed and if refi rates do decline, what that could mean for just the servicing income stream in general.

We're fairly -- our mortgage team is very good at the hedging process here. Our net hedge results this quarter was about a $29 million gain versus about $9 million last quarter and about the same level, $30 million, a year ago. So we are very conservative in our approach, and we do try to take into account -- we do take into account all the factors that you described.

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

Richard, could you just comment on the QM, what your general impressions were of the QM and whether you think there's going to be an impact to the QM on other retail lending?

So my impressions are actually very positive. I thought they did a nice job of, what I'll call, soft landing, again, to what otherwise was a risk of really muting a slow but assured recovery. Not only is the 43% debt-to-income a fair assumption and a fair starting point, but the very, very slow transition they're going to have with the Freddie/Fannie rule standards and being able to imply those for quite some time, it's -- I'd like to say it's not a non-issue, but it's not a huge issue. And I think they gave us a lot of time to manage that, never mind we have the whole rest of 2013 to get it right. So I think for the industry, it's something more like 5% to 10% impact. We would be in that same range. And I believe that as we look over the course of time, if I look at it in the cold light part of day, if some of those rules had been around for the industry, particularly the sub-prime and non-bank providers, we actually would have had a better outcome and less of a problem. So I actually think they were quite good. What it means for the rest of the other loans, I don't think it has an infectious impact yet. I only say that because I haven't heard that as one of the next steps. I think there's plenty of other things to work on with the CFPB, particularly non-banks and other activities related to deposit gathering and service charges and things. But, Nancy, I think undoubtedly it will start to take on non-mortgage activity, things that are asset-based but are not necessarily in the same category of the higher risks of bringing down the world. So probably over the next few years, we'll see some -- the same attributes. But I don't think that they are at all immediate, and I don't think when they do come they'll be that bad.

Question for you, Andy, or maybe for both of you. There was an article in The Wall Street Journal a couple of days ago about the fact that the banks are not making public their Basel leverage ratios. Could you just comment on that? And they inferred or implied that there was risk weighting asset kind of trickery going on. Could you just give me your commentary on that?

Sure. In our case, Nancy, our risk-weighted asset number to total GAAP assets is about 88%. So we don't have a big difference. The differentials for a bank like us and our business model is just not that material. And if you think about our leverage ratio on a -- it's not significant. In fact, it's higher on a Tier 1 number versus our Tier 1 common number, so it isn't a material impact for our company.

Your next question comes from the line of Greg Ketron with UBS.

I have a bigger-picture question. If you look at revenue growth in 2012 compared to 2011, you guys put up some very nice revenue growth in light of the environment. And as you look into 2013 with maybe slower loan growth, maybe the risk of the mortgage weakens in the second half of this year, which remains to be seen, and you think about revenue growth in 2013, how do you think about that? What are the areas that you think you can achieve it? Do you expect it to actually slow compared to 2012?

Yes. I'll go first. We do expect it to slow compared to 2012 because we're prudent and careful, and I tell you that because I also promised you positive operating leverage for 2013, so that just means we're going to be watching our expenses. And, Greg, if you follow the story for the last 5 or 6 years, you and your peers have allowed us to be pretty aggressive in spending and catching up on our CapEx. Some of our acquisitions and some of our just investments in the company have been pretty high, and yet we've continued to keep our expense relationship to revenue quite good. That's what we're going to continue to do. But we're on the tail end of that area of investing so extensively, and so the good news is this is a good year for us to keep our expenses more run-rate-related, more in check from not having to play any kind of catch-up. And it's going to be perfect because revenue is expected to grow a little bit less than last year, still positive. They'll both grow. Revenue will grow, expenses will grow by less. We'll grow the balance sheet. We'll have positive operating leverage; we'll make good net income. But each will be muted from the year before. And if, by any chance, things start to get better and the world warms up and we can benefit from that, then the expenses are easily adjusted and we can be more aggressive in some of our investments inside the company, more organic. So we've got a pretty good ability to move those levers quickly, but I want to make it easier to turn clearly. We will grow revenue, but we will just grow it at a pace that's commensurate with the kind of expenses that are needed to keep that in positive operations.

And I would also -- I would comment that we have a couple of businesses that are at the early stages of the growth curve: our commercial products group, our high-grade bond business, municipal underwriting, our wealth management area, all areas that I think will grow in an accelerated fashion in 2013.

Great. And I guess, along those lines, maybe things that we're not seeing that's coming through revenue growth. Do you feel like the U.S. Bancorp business model has even more leverage when we see the business conditions improve and we actually could see even more positive operating leverage generated as a result of that?

We do, yes. Greg, we do. In fact, one of my favorite lines around here is we might be doing really well in tough times but we're building the bank to be great in great times. That's a real important distinction because we're able to handle the kind of muted environment. But when things get good and they get good fast, when that happens, we want to be out in front. The highest debt rating in the business, the reputation we've been able to create over our service quality and some of these new businesses that have kind of rounded out the rest of the capabilities for this company are serving us really well right now. But those are the things that were really meant, I think, the kind of profitability we want in good times. So I'm quite optimistic about it. We used to call it a window of opportunity, where our high position compared to our peers, the high quality of the company, the balance sheet was serving us benefits. That window has been opened longer than I thought it would, and it's getting wider as time passes. And I might close with our staff is better now at leveraging our strength. They're more proud of the company. They're more assured that the company is distinctively performing better in most categories, and they take that story to the customer. And they do a better job of developing better relationships and getting more business. So I'm quite robust in my comments about what this will do for us when times start to get better. We just need to get over the transom of the industry until the economy warms up again.

Your next question comes from the line of Todd Hagerman with Stern Agee. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: A couple of questions. Just, Andy, going back to your comments in terms of reps and warranties, the repurchase requests remaining relatively stable. Just curious, with the settlement now and basically capturing all the vintages and the improved dialogue with the GSEs, is there a sense that -- I guess, what I'm saying or suggesting is on a go-forward basis, the requests are more in line with the production? Or alternatively, why wouldn't we necessarily see more of a decline in terms of those requests relative to these settlements and the dialogue?

Yes. I think it's just a timing factor, Todd. So I don't expect a blip like we saw this last quarter, like we saw last year. As the vintages increase, I do not expect that, and it will work down over time. But in the short term, I think it'll just be relative relatively stable because it takes a fair bit of time for the requests to work their way through the process. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: Okay. And then just in terms -- like your provision have kind of varied over the course of the year. Can you give us a sense of kind of where you find that kind of settling out relative to that request outlook?

Yes. The provision blipped a couple of quarters, and the principal reason for that blip was the increase in the time frame that the GSEs were looking at. So, for example, you saw a $16 million increase this quarter. That was entirely due to that increase in vintage, the '05 and '04. So again, absent that, which I do not expect any more changes going forward, I would expect that to moderate and go downward. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: Okay. And then just finally, on the mortgage side, one of the things that's been a focal point -- everyone's kind of -- has a good outlook in terms of at least the first half of '13. But I'm curious, specifically for U.S. Bancorp, what is being done kind of on the front end as the companies look to ramp up the production side relative to that refi, that, at some point, is going to tail off. Your servicing income continues to grow fairly steadily, but I'm just curious kind of what you're doing to prevent a more -- a significant decline in mortgage revenues on a go-forward basis, particularly as refis slow.

Well, this is Richard. We continue to add people, so we're actually flying into the face of the wind here by continuing to believe that until the refi business is assuredly slowing, which we thought 2 years ago, we thought a year ago and I actually don't think even this year will slow. But if it did, we can handle it, for the earlier question. But we're also actually putting more into it. So until it isn't strong, we're going to be stronger. So we're putting more and more into that business, Todd, and building kind of market share value. And as I mentioned, we're also probably putting a little bit more in even than some of our peers, because we want our service quality to be tough quality. We want people to want to do business with us because they'll come back again in the future when they're looking for purchase, as opposed to a refi. We want to be a market share leader in both circumstances. And I'll tell you what you already know, but unless the refis have just absolutely hit some saturation, which they haven't so far and nobody has ever figured out how many times people can refinance a house. They seem to be able to do that endlessly. But when that happens, it's going to be probably as a result of rates starting to trip up. And when rates start to move up, there are other things in the company's balance sheet and income statement that actually will offset the loss of what would be mortgage momentum and then will turn it into a different spread on a different, more purchase-related portfolio, and we'll be getting benefits somewhere else. So it may not be an exact moment in time, but we actually see that to be a pretty good transition when that happens. But more importantly, we're adding more and more to our business and growing it right now while refis are strong and then able to turn that in a heartbeat if and when that moment comes that you've talked about.

Your next question comes from the line of Moshe Orenbuch with Crédit Suisse. Moshe Orenbuch - Crédit Suisse AG, Research Division: Given what your comments about kind of revenue growth and operating efficiency and kind of slightly positioning the company for a better environment, can you talk a little bit about what areas you'd likely want to reinvest the most to drive more growth? I mean, where do you think you can be the most kind of competitive?

So Andy teased it out a minute ago when we mentioned that we've got some business lines that are still in kind of their teenage years, our capital markets, some of our wholesale lines of business, wealth management for sure. And those investment curves are behind us, Moshe, but the benefits are still ahead of us. And in fact, in a couple of cases, they've been actually net negative to bottom line in this course of getting them to where they are now. So we've got some natural intracompany opportunities that will mature in another year. It gives them the chance, no matter what the environment is, to get better and stronger. The second thing is we're continuing to build into our technology, in our infrastructure, the mobile banking and mobile payments capability, which you know is -- everybody has a little of that, but that's one of our sweet spots. If you think about U.S. Bank a couple of years ago, you liked us for a lot of reasons, not the least of which is you like our payments business. But you should expect us now is to make that payments business more than corporate, more than government, more than merchant and more now mobile payments for all consumers. And by the recent acquisition of FSV, the prepayment company, and some of the other activities we've been doing in payments, you should expect a lot more from us there, a real leadership position. That investment curve is probably in its middle stages but already parts of it are going to start driving some benefits. And those are fee-based opportunities that don't exist today, that we haven't yet been able to bring to the income statement. So I'm quite optimistic about our own intracompany maturity and the things that we've invested in that will start coming to bear. And that's why I said we'll do well even in tough times. When times get really good, all that stuff got kind of a trebling effect, and it's all very positive. Moshe Orenbuch - Crédit Suisse AG, Research Division: Just one other quick follow-up, and that is on a somewhat related topic. In the past, you've talked originally thinking to try to recapture the lost revenue from Durbin by pricing up your checking account product, then wanting to be more competitive. How do you see that kind of shaking out from a competitive standpoint, the core retail banking offering product in your markets?

Yes. So we did 2 things there. We promised you that we would still get to that 50% recovery. But we told you we're not quite there, and we're not there yet. Two things have happened because we've given ourselves more time. One is we're just growing a lot more net customers. You guys don't suffer through us talking about net customers and going through that because it's a real hard number to measure and everybody can say it. So I just don't waste our time on that. But the fact is, is that our numbers would belie, in hindsight, that we are growing the company. We don't have a free checking product, which is a good thing because we do have customers now that are here on purpose. They don't have second and tertiary accounts that really don't make any money. We've established a relationship on a package basis, where we can add attributes and/or upsell them into something more reasonable, but for which they know they're buying and for which they have value for. And on top of that, we've taken the same time on consumers, and we've gotten really good at Small Business. Rick Hartnack is the Head of Consumer Banking, who's retiring next month. He actually succeeded me in running Consumer Banking and Small Business. The thing he did that I didn't do when I ran it was he took Small Business and put it on the map for our company, and we are now a very capable and an industry-leading small business provider, both checking accounts and loans and lines. And Moshe, that has been a huge benefit, kind of under the watermark. You can't see it under the surface, but it's a huge driver for the company. It is driving a big part of the closures, some of that fee business is, that we lost to Durbin or some of the CARD Act and things like that because now we just have more of those customers. And they're buying stuff, paying for it, they're aware of it and they want it. So I'm pretty excited about what that cause does to do, which was get good at more things for more people. But we're still not quite where we needed to be to recover all that fee. We'll have to do it again over the course of time. And I think mobile payment is going to -- to tie in my last question -- is going to be one of the things that will help us to derive a new revenue stream that doesn't exist today.

Our final question comes from the line of Kevin Barker with Compass Point. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: How much of your residential originations were HARP in the fourth quarter?

It was about 11% again. It's been pretty stable. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: Okay. And would you expect an increase in volume due to the changes in reps and warrants provision rules that were implemented by the FHFA on January 1?

Essentially, no. I mean...

We're not a big HARP company, and so those are small nuances for us, Kevin. But our company, based on the way we originated in the first place, we just don't have a lot of our volume attributed to that. So when you saw last year a lot of the volume in refis was HARP-related, it was a good question to ask was when does that start to slow. For us, it won't matter in the first place. It was never a big part, and those new reps and warranties and things coming out are very de minimis for us, and they're not going to change our forecast. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: Okay. You mentioned a major increase in the servicing costs due to deregulation. Are there anything you could do or are there any mitigating factors that you can implement in order to lower those servicing costs on a go-forward basis?

Yes. There's -- the answer is of course. And that comes in the form of getting better at it, centralizing more of it, automating more of it. But a fair amount of it is a derivative of what started out as the settlement discussion with the big 5 mortgage services, which we weren't a part of, then the consent order. And now what we're waiting for is what will be the final servicing rules that the CFPB owes everybody by January 21. Whatever those will be, I suspect they won't be any more onerous than the consent orders provided, which requires us to do very, very high-bar servicing. So, for instance as an example, the thing called single point of contact, if you were customer in a modified situation, we have to assign you a person. You get Andy Cecere. But if Andy Cecere weren't available at any time for you, then you have to know that Richard Davis will be there for you. And Andy and Richard always have to be there, 1 of the 2 of them, and if perchance they're not, then we have to make sure that Bill is there and that you know Bill is taking over. And it's very, very tedious, right? So I suspect that might be an overreaction to a consent order process to make sure that we all get something right that wasn't at the level they wanted it. So that's the kind of cost we're bearing today that weren't around a couple of years ago. And is it worth it? It's a better servicing model, I'm sure. But I think the new rules will give us kind of a steady answer. So 90 days from now on this call, ask me again and we'll tell you, looking back, what the final rules look like. I suspect they'll be more expensive than they were before rules. I suspect for our company they might actually be less than they are today because we're trying to overperform in the consent order to make sure we can get out of it. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: So if you were to estimate the additional cost of to service a mortgage as it compares to what it was 2 years ago, would you say it's approximately double what it was? Or do you....

No. It's probably 25% to 50% higher. So if we're double, we're out of the business because there's not much margin. But it's a new run rate that we've had in the company now for 6 quarters. So for us, it would only be upside if it were to be lesser than it is today. And if it were the same, then we're already bearing that burden, and we can manage to it because the overall business is worthwhile. But it's -- I don't expect it to get worse. So the good news for us is I think we're at a high watermark, and we look forward to, I think, some sustainable new results. And that's why it will go back to consolidating and automating and getting the rules set. Once we know it's permanent, then we can lock down a final protocol.

And it's the back-end costs that have gotten more expensive. And as the housing market improves, we see fewer and fewer people with underwater mortgages. So over time, the volumes will go down over the next 2 to 3 years. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: But overall, you would expect core servicing expenses to be roughly -- would you say 25% to 30% higher than that what they were on a normalized basis when delinquency levels were much lower?

Kevin, I won't give that number. I'll tell you it's not 0, and it's not 100%. I don't know what it is. We really actually don't think of it that way because we don't think we're in a permanent circumstance. So we're -- I can answer that question in 90 days when we figure out and look back on the new servicing rules. It'll be higher than it used to be. But it won't be inordinately too high and won't want to stay in the business.

That does conclude our question-and-answer session for today. I'll hand the presentation back over to management for any further comments or closing remarks.

I just want to thank you all for giving us the support you've given us last year. Much as I wish we had some huge banner headlines to give you, I'm kind of glad we don't. I also appreciate the fact that we try to tell you what we know when we know things. Even -- when we have an opportunity for a public disclosure, we'll tell you what we see. We'll continue to refresh that in March when we get another chance to be in a public setting. And we just -- we value transparency and consistency and predictability, and we're going to continue to deliver that to you. So thank you for a good year.

Great. Thanks, everyone, for listening to our results. And if you do have any follow-up questions, please feel free to call myself or Sean O'Connor in Investor Relations. So thanks, and have a good day.

This does conclude today's conference call. You may now disconnect.