富國銀行 (WFC) 2011 Q4 法說會逐字稿

Good morning.

My name is Regina and I will be your conference operator today.

At this time, I would like to welcome everyone to the Wells Fargo fourth-quarter earnings conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions).

Please note that today's call is being recorded.

I would now like to turn the call over to Jim Rowe, Director of Investor Relations.

Mr.

Rowe, you may begin your conference.

Thank you, Regina.

Good morning, everyone.

Thank you for joining our call today during which our Chairman and CEO, John Stumpf and our CFO, Tim Sloan, will review fourth-quarter results and answer your questions.

Before we get started, I would like to remind you that our fourth-quarter earnings release and quarterly supplement are available on our website.

I would also like to caution you that we may make forward-looking statements during today's call that are subject to risks and uncertainties.

Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings, including the Form 8-K filed today containing our earnings release and quarterly supplement.

Information about any non-GAAP financial measures referenced, including a reconciliation of those measures to GAAP measures, can be found in our SEC filings, in the earnings release and in the quarterly supplement available on our website at wellsfargo.com.

I will now turn the call over to our Chairman and CEO, John Stumpf.

Thank you, Jim.

Good morning and happy new year and thanks for joining us today.

A year ago, we were excited about all the opportunities we had ahead of us, even in a challenging economic environment.

And I couldn't be more pleased with all that we accomplished in 2011.

We earned a record $15.9 billion, up 28% from 2010.

We grew deposits by $72 billion, up 9%.

We grew loans by $12 billion and grew our core loan portfolio by $33 billion.

We achieved record retail banking cross-sell of 5.9 products per household.

We improved credit quality with net charge-offs down 36% from a year ago.

We began our expense initiative and remained focused on our target of $11 billion in noninterest expense in the fourth quarter of this year, 2012.

We grew ROA by 24 basis points and increased ROE by 160 basis points.

And we remain committed to helping homeowners stay in their homes with over 720,000 active or completed loan modifications initiated since the beginning of 2009.

We also increased capital levels while providing shareholders with a higher return on their investment by increasing our dividend and repurchasing 86 million shares of common stock.

We also redeemed $9.2 billion of high cost trust preferred securities.

We accomplished all of this while completing the conversion of Wachovia's retail banking stores, the largest conversion in banking history.

Our 6239 retail banking stores are now on a single platform serving customers coast-to-coast.

In most mergers in financial services, customer service typically declines, but our team members remain committed to providing outstanding customer service as reflected in Wells Fargo once again ranking number one in customer satisfaction among large banks based on a national survey.

2011 was a remarkable year, but I am even more excited about the opportunities that lie ahead as we enter 2012 as One Wells Fargo.

We have submitted our Board-approved capital plan to the Fed and we are focused on returning even more capital to our shareholders.

We remain focused on better serving our existing customers and welcoming new customers as we grow marketshare both organically and through acquisitions.

And we remain committed to strengthening the overall economy by lending to our business customers to fund growth and create jobs by helping homeowners stay in their homes through participating in home preservation workshops and loan modifications and by being active volunteers in the communities where we live and where we work.

This vision has guided us for decades.

Meeting our customers' financial needs will continue to drive our growth in the year ahead.

Let me now turn this over to Tim Sloan for more detail on our financial results.

Tim?

Thanks, John and good morning, everyone.

My remarks will follow the presentation included in the first half of the quarterly supplement starting on page 2.

John and I will then take your questions.

As John highlighted, we achieved outstanding results in 2011, including a very strong fourth quarter.

We generated record earnings of $4.1 billion, up 1% from the third quarter and up 20% from a year ago.

Earnings per share were a record $0.73, also up 1% from last quarter and 20% from a year ago.

This is the eighth consecutive quarter of EPS growth.

In fact, by almost any measure, our results in the fourth quarter moved in the right direction, demonstrating the underlying strength of our diversified franchise.

We had linked quarter growth in revenue with growth in both net interest income and noninterest income.

We had higher pre-tax pre-provision profits, loans, deposits and securities available for sale.

We also had strong credit quality and our capital levels continued to grow.

On page 3, we highlight our continued strong diversification, which is a major differentiator for Wells Fargo and is a key driver of our ability to generate growth over time and through various economic cycles and interest rate environments.

Let me start with a few highlights of the drivers behind our balance sheet and income statement growth and I will add more detail later in my remarks.

Starting with the balance sheet, we generated strong loan growth this quarter with loans up $9.5 billion.

Our core loan portfolio, which excludes the planned run-off from the liquidating portfolio, was up $13.7 billion from the third quarter.

We once again purchased securities this quarter with balances up $15.4 billion from the third quarter as we continued to redeploy cash.

We also generated strong deposit growth with balances up $24.6 billion.

Now let's turn to the income statement.

Revenue grew by 5% from the third quarter, driven by strong loan growth and deposit growth, as well as fee growth throughout our diversified businesses.

Expenses increased as expected in the fourth quarter, but we are still targeting $11 billion of noninterest expense in the fourth quarter of 2012.

Let me now cover our results in more detail.

As shown on page 6, period-end loans were up $9.5 billion from the third quarter, our third consecutive quarter of loan growth while we continued to reduce the size of our liquidating portfolio.

Excluding the runoff of $4.2 billion of liquidating loans, our core loans grew by $13.7 billion, including organic loan growth of $6 billion.

Commercial loans grew $5.6 billion driven by portfolio acquisitions, new loans and new customer activity.

Loan growth in the fourth quarter included the purchase of $2.1 billion of US-based commercial real estate loans.

We have purchased several portfolios over the past few quarters, which reflect our ability to capitalize on the opportunities generated in this business environment and provide attractive returns for our shareholders.

While we already have relationships with many of these customers, these portfolio purchases also provide us with new customers that we hope to do more business with in the future.

Consumer loans also grew this quarter, up $3.9 billion from the third quarter, driven by the reconsolidation of $5.6 billion of reverse mortgage loans and was reduced by the run-off of $3.6 billion of liquidating consumer loans.

We had loan growth in our core auto portfolio.

Our credit card portfolio growth reflected strong account growth and seasonality.

We believe we are well-positioned to grow loans organically and through acquisitions and we expect loan growth to continue.

We also continue to generate strong deposit growth with average deposits up $29.5 billion from the third quarter and up $74 billion or 9% from a year ago.

Average core checking and savings deposits grew $30.9 billion, or 4% from the third quarter and were up 12% from a year ago.

Consumer checking accounts were up 3.2% from a year ago.

We achieved this growth while continuing to bring down our deposit costs, which were 22 basis points in the fourth quarter, down 3 basis points from the third quarter and down 9 basis points from a year ago.

We have grown deposits while reducing our deposit costs for five consecutive quarters.

Tax-equivalent net interest income increased $369 million from the third quarter, benefiting from a $24 billion increase in average earning assets and a 5 basis point increase in net interest margin.

Earning asset growth this quarter was broad-based with increases in loans, securities and mortgages held for sale.

We funded the growth in these assets by continuing to successfully attract low-cost deposits and by reducing cash and other short-term investments.

The balance sheet continued to reprice in this low rate environment, but we were able to offset that through pricing discipline, including a 4 basis point decline in interest-bearing deposit costs and reducing long-term debt by $10 billion in the fourth quarter.

Noninterest income increased $627 million from the third quarter, or 7%.

This growth was driven by an increase in mortgage banking revenue of $531 million, up 29% from the third quarter, driven by higher margins and strong originations.

Originations increased $31 billion, or 35% from the third quarter.

The unclosed mortgage pipeline remained very strong at $72 billion at quarter-end.

Trading, debt and equity gains were up $337 million from the third quarter.

Linked quarter growth in trading gains benefited from $275 million of higher deferred compensation plan investment results, which is offset in expense and stronger core customer accommodation trading.

The linked quarter comparison also benefits because you'll recall that the third quarter included a loss from resolving one legacy Wachovia position.

Noninterest income also benefited from a $153 million gain on the sale of H.D.

Vest in the fourth quarter.

Credit card fees were down $333 million from the third quarter, reflecting the first quarter of lower debit interchange fees, which reduced debit card fees by $365 million in the fourth quarter.

Card fees benefited this quarter from strong growth in consumer credit cards with new account growth up 6% from the third quarter and up 90% from the fourth quarter of 2010, driven by very strong growth in the East.

Noninterest expense increased 7% from the third quarter.

We highlighted in the call last quarter that we expected expenses to increase in the fourth quarter.

Let me walk you through the drivers of the increase in slide 11.

Third-quarter expenses included a $210 million benefit due to lower deferred compensation expenses and the fourth quarter had a net deferred compensation expense of $56 million.

These two amounts increased fourth-quarter expenses by $266 million compared to the third quarter.

After adjusting for this amount, the remaining increase in expenses were driven by three primary factors.

First, mortgage and capital markets personnel expense increased approximately $300 million driven by higher revenue in the quarter, which is largely reflected in higher incentive compensation.

Secondly, we had seasonally higher equipment costs and higher foreclosed asset expense.

Combined, these increased expenses by approximately $200 million.

Finally, we had approximately $100 million of higher costs associated with the mortgage servicing regulatory consent order.

We currently expect first-quarter expenses to remain elevated driven by seasonally higher comp and benefit expenses and our final quarter of Wachovia integration expenses, but partially offset by continued gains from our expense initiatives.

In the second quarter of 2012, we expect expenses will decline by $500 million to $700 million from the first quarter driven by the elimination of merger expenses and lower comp and benefit expenses, which, as I just mentioned, will be seasonally higher in the first quarter.

Our expenses in 2012 will reflect the benefit from our expense initiative and we continue to target noninterest expenses declining to $11 billion in the fourth quarter of 2012.

We expect to capture most of the savings through the consolidation of consumer lending businesses, combining staff functions and technology groups, moderation of cyclically high mortgage costs, including loss remediation and simplifying customer interaction to improve service and efficiencies.

Turning briefly to our segment results starting on page 13, Community Banking earned $2.5 billion, up 8% from the third quarter, driven by stronger mortgage banking revenue.

Sales trends remain strong.

Core product sales in the West were $7.6 million, up 9% from the prior year and core product sales in the East continue to grow by double digits.

Retail banking cross-sell continued to grow to a record 5.92 products per household, up from 5.7 a year ago.

And while cross-sell in the East continued to grow to 5.43, there is still plenty of opportunity to further increase cross-sell to the 6.29 products per household in the West.

Wholesale Banking earned $1.6 billion, down $172 million from the third quarter, reflecting lower loan loss reserve release.

Revenue increased 5% from the third quarter as many businesses, including commercial real estate, (inaudible) banking, government banking and international generated strong loan and deposit growth and fixed income, sales and trading and investment banking results benefited from improved market conditions.

Wholesale Banking continued to generate strong broad-based loan growth from both new and existing customers with average loans up $11.4 billion, or 4% from the third quarter.

This growth reflects the purchase of $2.1 billion of US-based commercial real estate loans, as well as growth across all portfolios, including commercial banking, which has grown loans for 17 consecutive months, international, commercial real estate, capital finance, asset-backed finance, government banking and corporate banking.

Average core deposits increased $14 billion from the third quarter, up 7% and are up $38 billion, or 21% from a year ago.

Wholesale Banking businesses continued to increase marketshare, including our investment banking marketshare growing from 4.2% in 2010 to 5.1% in 2011.

Wealth, Brokerage and Retirement earned $325 million, up 12% from the third quarter.

This growth was driven by a 6% increase in revenue.

Revenue benefited from the $153 million gain on the sale of H.D.

Vest and $59 million of deferred compensation from investment gains compared to a $128 million loss in the third quarter.

Excluding these items, revenue was down 5% on lower asset-based fees, Retail Brokerage transaction revenue and securities gains.

Average core deposits increased $3.2 billion, up 2% from the third quarter, reflecting both a flight to quality and our continued success in attracting client assets, including deposits.

Managed account assets were up 7% from the third quarter driven by strong net inflows.

Since managed account asset fees are priced on a quarterly lag, first-quarter revenue will benefit from the improved fourth-quarter markets.

Our continued focus on meeting our customers' financial needs is reflected in achieving a record cross-sell of over 10 products per WBR household.

Our credit quality remained strong in the quarter as shown on page 16.

Net charge-offs were stable from the third quarter and down 51% from the peak in the fourth quarter of 2009.

We remain pleased with how our loan portfolios are performing and we expect them to continue to improve in 2012.

Reflecting our continued improvement in credit quality, we had a $600 million reserve release in the fourth quarter.

Absent a significant deterioration in the economy, we continue to expect future reserve releases in 2012.

Nonperforming assets continued to decline, down $879 million from the third quarter, reflecting a $596 million decline in nonaccrual loans driven by lower commercial real estate nonaccruals and a $283 million decrease in foreclosed assets.

Loans 90 days or more past-due were up modestly $119 million while early-stage retail delinquency balances were stable with rates up modestly on lower loan balances.

On page 18, we highlight what we believe our mortgage servicing portfolio is the best in the industry.

The majority of our $1.8 trillion residential servicing portfolio, or 69%, is serviced through the agencies.

Our private securitizations where we originated the loans are a very low portion of our total portfolio.

Reflecting the quality of our portfolio, our delinquency and foreclosure rate was over 400 basis points lower than the industry average, excluding Wells Fargo, based on the most recent publicly available data.

Our total delinquency and foreclosure rate was 7.96% in the fourth quarter, down from a peak of 8.96% in the fourth quarter of 2009, but up modestly from the third quarter due to seasonality.

Total repurchase demands were stable compared to the third quarter and were down approximately 31% from a year ago.

As shown on page 20, our capital position continued to improve with our Tier 1 common equity ratio increasing to 9.46% and our estimated Tier 1 common equity ratio under current Basel III proposals growing to 7.49%.

We redeemed $5.8 billion of trust preferred securities in the fourth quarter with a weighted average coupon of 8.42%.

We purchased 26.6 million shares in the fourth quarter and an additional estimated 5.6 million shares through a full repurchase transaction that will settle in the first quarter of 2012.

As John mentioned at the beginning of the call, we submitted our capital plan earlier this month and we expect a response no later than March 15.

We have a great story to tell reflecting the performance of our diversified model and the strength of our balance sheet.

We remain focused on returning more capital to our shareholders as we continue to grow our capital levels.

In summary, our strong fourth-quarter and full-year 2011 results reflected the benefit of our diversified model, which provides us with many opportunities for growth.

In the fourth quarter, we grew earnings, revenue, loans, deposits and capital with strong contributions throughout our consumer and commercial businesses.

As we begin the new year, we are encouraged by the signs the US economy is doing better and we believe Wells Fargo is in a unique position to further benefit from the opportunities that drove our record performance in 2011.

I will now open up the call for questions.

(Operator Instructions).

Matt O'Connor, Deutsche Bank.

Good morning.

If I could just focus on the net interest margin percent and net interest income dollars to start, last quarter, the market was disappointed in the NIM percent specifically.

You guys probably had one of the worst NIMs last quarter.

It seems like this quarter, you will probably have one of the best ones.

I appreciate there is a lot of moving pieces, but, as you look forward, maybe you can give some insight on how you think the NIM percent and the net interest income dollars will trend from here and if we can expect similar volatility to what we have seen.

Well, Matt, you focused on the fact that it is difficult to look at the NIM on a quarterly basis and there can be some volatility quarter to quarter.

So I don't want to provide any specific guidance on the NIM, but, as we have said generally, we think that the NIM is trending down a bit given that rates are lower.

However, as you pointed out, our net interest income was up and the reason the net interest income was up was because we were able to grow loans and continued to invest in high quality securities.

And then I guess as a follow-up on that, as I think about the loans that are running off and the loans that you are purchasing, they are starting to converge a little bit in terms of magnitude.

Meaning just the run-off is less of a drag so far.

Going forward, there have obviously been some portfolios in the news, some speculation of you bidding on some, but what do you think the opportunity is for additional loan purchases from here?

And maybe some comment on how those yields compare to what is running off.

Matt, we are kicking lots of tires.

We are in a unique position that we are not capital-constrained.

We can do things that make good sense for us economically for our stockholders.

As you know, and you know Wells Fargo well, we are cautious.

It would have to make a lot of sense for us and if all we get out of this is sore toes, that is fine also because we don't have to do something.

But the deals we have done so far we like a lot.

It brings customers, it brings earning assets and of course, we are not going to do these things unless they are good economically for us.

So that is just one of the opportunities we have going forward.

And I suspect we will see more things and again, if we do some, they will be done the right way.

If we don't do any, that is also fine.

And how do the yields compare?

You show us the run-off portfolio yields, but how about the loans that you are purchasing and might be looking at?

How do those yields compare to what is running off?

These are attractive IRRs.

We wouldn't do them unless that would be the case.

Okay.

All right, thank you very much.

John McDonald, Sanford Bernstein.

Hi, one follow-up on Matt's question on liquidity.

Tim, maybe just a little bit of color on what led you to deploy liquidity this quarter and into what did you deploy that?

And do you still fell like you are sitting on excess liquidity and what will drive the pace at which you further deploy the liquidity you have?

Sure.

Well, as you know, the first call on our liquidity at anytime is going to be for loans.

We had good loan growth this quarter, both organically and through acquisition, which we are excited about.

When you look at our investments in the securities portfolio, they really weren't a whole lot different than what we looked at in the third quarter.

The timing was a little bit different because, if you recall in the third quarter, there was a lot of volatility that occurred in a good portion of the third quarter.

So we invested more or less ratably across the quarter, which is a good thing.

We really didn't change the complexion of the securities portfolio.

We continue to invest in high quality assets across duration.

The duration of the portfolio didn't significantly change.

As to your last question about capacity, one of the great things about the Company is that we are continuing to grow deposits and we feel like we have more than ample liquidity to continue to grow and service our existing customers, maybe look at some acquisitions, as John mentioned and continue to invest in the securities portfolio.

Okay.

And then on expenses, could you talk a little bit more color about the drivers of the decline that you expect in the second quarter?

Specifically, first, the merger integration expenses will stop in the second quarter.

Will those stop for good?

And then also in the personnel decline that you are talking about in the second quarter, is that seasonal or the mortgage banking or is this some of the consolidation of functions that you are doing?

Can you give a little more color there?

Sure.

So if you go back to slide 11, I think that the first part -- I'm sorry -- slide 12 -- the first part of the question relates to the integration.

The integration expenses will be over in the first quarter.

So we won't be talking about them again after the first quarter.

So that is number one.

Number two, the incentive compensation and expenses and employee comp in the first quarter is more seasonal.

It is not necessarily cyclical; it is not necessarily tied to any business.

It is just in the first quarter you tend to have more incentive comp in terms of when you recognize it, as well as the fact that you might recognize payroll taxes at a higher rate in the first quarter.

Okay.

And then if you were going to walk us down from second quarter down to the fourth quarter where you hope to get to $11 billion, the drivers of that would be the other things in this table on page 12?

Correct.

And again, to reiterate, we feel good about being able to see the expenses decline from the first to the second quarter by $500 million to $700 million, which takes us a long way to get to that $11 billion.

Okay.

And the last thing from me is, on share repurchases, the forward contract that you entered for the first quarter of 5.6 million, is that the entirety of what you are approved for this quarter or you have approval to do additional open market purchases in the first quarter beyond that?

I am not going to comment on any specifics of the capital plan from last year, as well as what we submitted for this year.

Okay, okay.

You just said you hope to do more in 2012.

I guess you said that already, Tim?

That's correct.

Yes, more is more, as I said before and our shareholders have been very patient and we will have to just wait until the 15th of March.

Okay.

Thank you.

Erika Penala, Bank of America-Merrill Lynch.

Good morning, everybody.

Could you give us a sense of what you think in terms of mitigating some of the Durbin headwind on what you could accomplish with regards to implementing deposit fees in 2012?

Well, Erika, we have talked a lot about the fact that, in most cases, our customers pay for all the convenience we offer them through more products and services with us.

And that has always been the case around here and in fact, if you look at the hit we took in the fourth quarter now that the debit interchange numbers are all through, it actually was a little less than the 250 after-tax that we had talked about because we are doing more business and we actually have more accounts now.

But we are always looking at ways to tighten our belt, offer more value, look at ways that customers -- how they want to pay us for the services we provide and that is an ongoing process.

Okay.

And I hear the message loud and clear in terms of not answering any questions about what was submitted to the regulators with regards to your capital plan, but I had a timing question.

I am wondering if there are opportunities that are more sizable for M&A that could be coming out of Europe or even the US, does the fact that you are not going to get an answer from the Fed until March 15 deter you from doing anything between now and then.

There was some background noise during the question, so if people would put their phones on mute that would be great while they are not speaking, but anyway.

We have -- as I mentioned, we continue to kick tires.

We are looking at things and we will do that.

We are doing that continuously.

But again, we are cautious.

We don't have to do anything.

If we do something, it will be a bolt-on business or it will be an add to something we are doing right now either in terms of capability or capacity or new customers and that will continue even during this process.

But just to follow up and clarify, the fact that the capital plan is outstanding for approval doesn't impact your ability to make an announcement before March 15 in terms of any M&A?

No, it does not.

Got it.

Okay, thank you.

Paul Miller, FBR Capital Markets.

Thank you very much.

Good morning, guys.

Real quick, it looks like you grew your residential loans by $6 billion looking at the average balance sheet.

If I am incorrect, can you tell me what did you grow it by and if you did, was that change of policy?

It is the first time we have seen some material growth in that residential portfolio.

Paul, we did reconsolidate $5.6 billion of reverse mortgages that we had previously sold based upon some clarifying guidance that the SEC provided to the entire industry.

So that was the primary driver for the growth in the residential loan line this quarter.

The economics stay the same, Paul.

It's more of an accounting --

We earn a servicing fee that loans continue to be insured by the FHA, so it was more of an accounting transaction than anything.

Okay, okay, thanks a lot, guys.

And real quick, on the HAMP program that was announced over the quarter, do you think that is going to be material?

Are you guys at all -- do you think there is still too many roadblocks for that program to have any impact at all on the mortgage market?

Not the HAMP -- HARP, the HARP, the HARP?

Yes, you are talking about HARP 2?

Yes, HARP 2.0.

Yes, there is going to be some customers and we are ramping up.

We are going to be helping them and it is hard to say today how many and so forth, but we are eager to help customers who have 7% and 8% coupons refinance down to 4% notwithstanding their loan-to-value issue, which has been the issue.

But again, it is hard for me to predict how big that will be.

Incidentally, with HARP 1, we have been doing a lot of those.

This kind of takes it above the 125 or whatever the number is.

So we will catch a few in there, but I don't -- this is not going to be a refinance boom equal to 2003 for example.

There has been a lot of refinancing going on, but there are some customers here and we are eager to help them.

Paul, I think the administration set an expectation of about a million mortgages as part of this program and that seems about right to us.

We have seen a lot of turmoil come out of Fannie and Freddie recently, a lot of the political fallout from their high salaries.

You saw Williams just step down.

Are you seeing -- do you think this is a negative for Fannie and Freddie going forward or you don't think it is really -- it's business as usual out there?

Well, I don't know that I would focus on that.

I mean we are focused on helping customers and whatever happens with Fannie and Freddie -- I mean we are getting support and approvals that we need.

Of course, you know there has been a small increase in the [GPs].

That probably affects things more than what is happening at Fannie and Freddie's management level.

Hey, guys, thank you very much.

Have a good one.

Ed Najarian, ISI Group.

Good morning, guys.

Just two quick questions.

Tim, I appreciate no sort of forecast for the net interest margin, but do you mind going over some of the big pieces that you see in terms of your ongoing ability to reduce funding costs like more TruPS redemptions, long-term debt, lower deposit costs?

Can you just sort of remind us how you sort of think about the opportunity remaining?

Sure.

Let's start in reverse order.

I think, first, on lower deposit costs, I mean the team has done a terrific job over the last couple of years of reducing deposit costs and given where rates are today, we think that there is still more room to reduce deposit costs.

Specifically what the number is, I don't know on a quarterly basis, but if you have seen the last couple of quarters, it has been pretty consistent and so we are optimistic that we will continue to make progress even as we grow deposits, which is pretty important.

I think if we were reducing deposit costs and not growing deposits, that would probably not be a good thing.

In terms of the TruPS, we called about 7 -- we have about $7.5 billion that are still outstanding and $2.7 billion have a call date in 2012.

Beyond that, I don't want to provide any specific guidance about the TruPS.

That is part of our capital plan submission, so we will leave it at that.

In terms of long-term debt, we think that we have done a nice job of reducing overall debt.

I think over time -- and our overall debt over the last three years I think is down 53%, which is really good results.

But I think over time you will probably see us be a little bit more active in the market as opposed to continuing to decrease long-term debt.

But I do think given where rates and spreads are that we can reduce our overall debt costs even if we do have to raise some debt in the future.

Okay, thanks.

And is there a portion of noninterest-bearing deposits that we should think about maybe going away in 2012 because of escrow deposits related to the very strong mortgage origination quarter?

Well, escrow deposits were up I think slightly.

Actually I can't recall the specific number off the top of my head, (multiple speakers), but they were up a bit and that is really reflective of what is going on in the mortgage market.

Certainly if the mortgage market continues to be as strong as it is right now, they will be the same.

If the mortgage market comes down a bit, escrows will be down, but those are the only deposits I would look at as being concerned about -- noninterest-bearing deposits being concerned about moving away based upon what is going on in the economy.

Okay, thank you.

And then, finally, sort of mixed trends on the linked quarter credit quality improvement.

We saw delinquencies tick up a bit.

Could you put a little more color around your thoughts?

You mentioned that you thought you expected more reserve release in 2012.

Don't really expect you to quantify that, but maybe that thought in conjunction with sort of the trends we saw in credit metrics this quarter.

A fair question.

Overall, we were very pleased with credit.

We continue to have very strong credit.

Where we are right now is consistent with the expectations that we have been talking about for the last couple of quarters and consistent with what we are seeing at this part of the credit cycle.

NPAs were down almost $900 million on a linked quarter basis.

That was very nice progress.

Charge-offs were stable.

Retail delinquencies, 30 plus delinquencies were normally up in the fourth quarter due to seasonality and they were stable this quarter.

So we are pleased about that.

It is an item that we have all forgotten about, but our PCI loans continue to perform better than what are expectations, now almost $4 billion better than our original projections and that we still have 27.5% coverage in terms of the nonaccretable on the PCI.

So we continue to feel good on credit.

Our expectation is that credit will continue to improve throughout this year.

It is not going to improve at the same -- we don't think it will improve at the same rate as what we saw over the last couple of years, but we will continue to see improvement.

And again, as you mentioned and I reiterated, I think the fact of the matter is that our loan loss reserve releases are likely to continue this year.

Okay, thanks a lot.

That's helpful.

Thanks.

Todd Hagerman, Sterne Agee.

Good morning, everybody.

Just want to follow up on the last question.

Just how should we -- Tim, with your outlook on credit and again, just you look at kind of the stabilizing trends that we've seen the last couple of quarters, if I think about the loan loss release and your expectations, how is the -- how is the housing market kind of factored into the equation and the consumer in particular as you guys look out the next 12 to 18 months?

Well, the housing market clearly is factored into how we think about our loan loss reserve.

And to the extent that the housing market gets better, that is a good thing.

If it gets worse, it is a bad thing.

But the primary driver in terms of consumer delinquencies and losses is jobs.

That is the primary focus from our perspective in terms of the portfolio.

But again, at this point in the cycle where we have had a lot of improvement and the economy is growing, but grown very slowly, it is not a surprise that we've seen a couple of quarters of reduced improvement.

But remember, even in this quarter, even in this quarter, our consumer losses were down, which we were pretty pleased with.

And think of it this way, since 2008, underwriting in some of these portfolios had changed.

So all of a sudden, you have 8 and 9 and 10, 11, that becomes a more substantial part of your portfolio.

And if you look at our delinquencies on residential real estate and you look at how well we are doing in commercial, I couldn't be happier with our progress on credit.

I guess what I am getting at is just in terms of the embedded reserve and granted your coverage ratios are very strong, but I guess what I'm driving at is kind of the embedded or assumptions in terms of home price decline, unemployment, that sort of thing in terms of as you factor into your outlook on credit.

That is all factored in there.

We look at that, we consider that.

We obviously have a -- we stress these portfolios and we look at indicators.

And as Tim mentioned, on the consumer side, where you typically see a seasonal run-up in consumer delinquency, we didn't.

So that bodes well for the future.

Okay.

And then if I could just real quickly switching gears just on the mortgage side, the reps and warranties cost ticked up a little bit in the quarter.

Could you just talk about kind of just again the trends that you are seeing?

Is that something that should be -- is it going to be fairly lumpy?

Is it something specific more with Fannie versus Freddie in the quarter in terms of the earlier stage delinquency buckets, if you will?

Just kind of trying to get a gauge on what your expectations -- what happened in the quarter.

Actually, the fourth-quarter results in terms of the mortgage repurchase reserve were pretty stable.

Total demands outstanding both in terms of the number and the balance were stable in the fourth quarter.

And recall they are down over 30% from the prior year.

The new demands that we saw for the '06 to '08 vintages are still up, as John said.

That was the vintages that are most problematic.

But again, for us, relative to the rest of the industry, it is less of an issue.

But they were up for Fannie.

That has been consistent now for about three quarters.

Freddie was still within our expectations, but, again, it is important to note that our realized losses were $272 million, which were down in the fourth quarter from $384 million in the third quarter.

Great, thanks very much, Tim.

Brian Foran, Nomura.

Hi.

On the FHA insured loans that are 90 days more past-due and still accruing, I recognize the risk really isn't on your balance sheet, but can you just talk about the trends?

They seem to be bouncing around between $14 billion and $15 billion up until the middle of this year.

And then there has been a pretty significant ramp over the past six months.

Is that timing or is that deterioration of FHA loans overall?

And as a follow-up, is there any signs that there could be risk to the banking industry of the FHA potentially putting some of these losses to the banks?

Well, let me jump on the first part of your question, then I will let John answer the last one.

I think that what you are seeing is the fact that we are a very large mortgage lender in this country and that our volumes are up and our marketshare is up.

So it is understandable that because our FHA/VA origination volume has increased since the end of 2008 that there is going to be a natural increase in delinquency.

If you look at the performance of these mortgages relative to what we have seen in history, they are not performing any -- they are actually performing better than what we have seen historically.

It is just that we are a bigger lender.

And as you point out, these continue to be guaranteed by FHA and VA.

John, I don't know if you have any comments about FHA and VA.

Yes, we have not seen any change in how they handle their guarantees and their situations, so I have nothing to report on that.

Fair enough.

And a separate question, I guess ambitions in capital markets and Retail Brokerage and specifically, a lot of things are coming to market as other banks are forced to deleverage and as some of the wholesale business models come under pressure.

How do you think about the trade-off between organic growth in those areas versus any pockets where acquisitions might make more sense?

As I mentioned in either my formal comments or just maybe a few minutes ago, we are kicking tires, we are kicking lots of tires and our use of capital on the acquisition side will be for businesses that are bolt on to existing areas of expertise that we have and you have seen that recently where we did a couple things with Irish assets here in the US.

It will be places where we can either add skill or scale or customers and it will -- and think of things starting with customers.

That is kind of who we are.

So -- and if we do -- like I mentioned, if we do some things, it will be done right, the right price.

It will be compelling for our stockholders.

If we can't find those things, we won't do them.

So it is really that simple.

Great, thank you.

Chris Mutascio, Stifel Nicolaus.

Good morning, John.

Happy new year to you.

Tim, I had a quick question just to follow up on the securities portfolio.

I mean I know you said that you bought throughout the quarter, but there is still a pretty big difference between the end-of-period balances and the average balances for the available-for-sale.

So should I suspect to see the average balances on the available-for-sale to catch up to the end-of-period balances in first quarter?

There is about a $20 billion difference between the two right now.

That may be the case.

Again, I think sometimes when you look at the quarterly numbers, you can get a little bit of distortion.

But I think that it is more likely that they will catch up than not.

Okay.

And similar to that, on the trading side, your trading assets on an end-of-period basis were roughly $77 billion or so and they have been running more in the mid-$50 billions.

Is that $77 billion a decent run rate going forward in 2012 for that line item?

I don't think so.

It is a good question though.

The primary driver for the increase was that we had some conforming mortgage production -- agency conforming mortgage production that we decided to hold over through the end of the year because we thought we could get a better execution in the first part of 2012.

Because the production had already been securitized just by accounting definitions, it had to be classified as a trading asset.

We have now -- it was about $20 billion as you point out.

About $19 billion of that $20 billion has already settled and we will settle the remaining $1 billion sometime this week.

So I would not look at that increase and the $77 billion as the run rate in the future.

But there is no economic gain in first quarter with the $19 billion removal from trading assets?

There was a modest positive impact in the fourth quarter.

There will be a gain in the first quarter, but it is not significant to the Company.

Got you.

All right, thanks very much.

We just thought we could get a better execution.

Mike Mayo, CLSA.

Good morning.

First question on loan utilization in commercial and industrial loans.

Has that picked up or is this really acquisitions and marketshare gain?

It is acquisitions and marketshare gain.

We have seen nothing really -- just very, very modest.

It didn't account for much.

And so this commercial loan growth that we are seeing in the industry, why are we seeing it if there is not that natural demand?

Well, first of all, there are fewer players that are sharing it and we have more people on the street and an offering that includes not only loans, but other things that help customers succeed.

And we are not capital-constrained.

Okay.

(multiple speakers).

And you didn't mention Europe to the extent that there is opportunities there.

You mean like to buy in Europe or to buy European --?

Marketshare gains.

Well, we are -- 98% of our revenues come from the United States, 98% of our people are here.

We are really focused on -- there is so much growth and so much opportunity here, I wouldn't rule out -- I never say never in anything, but I can tell you we are really focused on serving our domestic customers now that we have Wachovia integrated and surely, we help individuals and companies as they do business overseas and vice versa.

But our focus is really -- our primary focus, I should put it that way, is domestic.

So how does the European crisis impact you if at all?

Is it a nonevent or (multiple speakers) impact?

It impacts us as foreign banks, especially European banks, are trying to solve for their capital requirements.

And they are, as you have seen, offering assets and businesses for sale and we have been successful in some of those.

And our direct exposure to the five most challenged countries, the sovereign exposure is next to nil and our overall exposure is also very small, so we don't have a lot of direct exposure to the troubled countries of Europe.

But surely, if Europe challenges worsen and I am not saying I expect that, but if they do worsen, that would have an impact on the overall US economy or could have an impact and then we could get impacted.

But our exposure is quite indirect, if you will.

And then last question, on your expense plan, when you talk about it, you talk about getting rid of your merger expenses and a lower comp and benefits and it doesn't sound so structural.

It sounds kind of cyclical, just the way you talk about it.

I know you've said there is some technology in consumer lending.

Can you just explain in more general terms why do you have these extra expense savings?

I guess you are looking to go from $12.5 billion down to $11 billion by the fourth quarter this year.

Is this all just the cycle or is there something more fundamental happening?

I think there is something more fundamental that is happening.

The progress that we are making is being masked by some of the items that we have been very specific to call out.

But as we mentioned on slide 12, we reorganized and consolidated our consumer lending businesses.

There will be a lot of savings related to that.

We are combining many of our staff functions and technology groups.

And we can do that now that we are almost done with the merger.

We do believe that there are some cyclically high mortgage costs that are going to roll off.

So it is a combination of a lot of different things, but it is a result of a lot of hard work and effort on the part of the team.

Should we characterize this as a second look at expenses now that the merger integration is complete?

Is this a second look at the old Wachovia/First Union merger?

How would you describe it?

I would describe it as being more reflective of what is going on from an economic standpoint, from a regulatory standpoint.

We made a lot of really thoughtful decisions about how we were going to be organized in a different environment in the first quarter of 2009.

And we made a lot of success.

We have had a lot of success in integrating the platform.

As you'll recall, about a year ago, we stepped back and said, well, how do we want the Company to look going forward and we are making some changes reflective of what is going on in the environment right now.

I think it is really important that we continue to improve.

This isn't just about reducing expenses this year and hoping for the best.

It is about a focus on providing more value to our customers.

That is the primary driver of our expense initiatives, how can we drive more value to our customers and be more efficient.

All right, thank you.

Marty Mosby, Guggenheim.

I wanted to ask you a couple questions.

One is on the efficiency ratio, taking your $11 billion, which is very clear and I like the way you're putting that out there, but the business will move up and down.

Hopefully revenues, as we saw this quarter, are starting to see some improvement.

So if you look at the efficiency ratio coming into the year, we were kind of in the mid-60%s, 63% to 64%.

As we got through the third quarter, it improved to 60%.

In the fourth quarter, it ticked up about 1%.

If I take the $11 billion and just kind of put it on the income statement, that actually brings our efficiency ratio down below 55%.

Is that kind of the goal we are looking at?

I'm just trying to equate it so we can move from just the $11 billion into somewhat of an efficiency target as well.

Marty, it's a fair question, but candidly we have not set a specific efficiency goal.

We've set a run rate.

So the efficiency is going to be whatever it is going to be based upon where our revenues are going to be in the fourth quarter.

But clearly, we think that a 60% rate is too high.

And so the seasonality of the revenues this quarter given that mortgage always has a strong fourth quarter doesn't really over -- I just wanted to make sure we weren't overemphasizing that number.

It could get down to 53%.

Something like that would be doable given the assumptions we have.

I don't know if 53% or 54% is doable.

I think historically if you look at the Company, we have been down in that range.

The Company has changed a little bit, but, again, we haven't set a specific efficiency goal target.

We are focused on that $11 billion.

I had one other question that I wanted to kind of see if you could walk through in the sense of the mortgage putbacks.

It is really kind of a three layered question.

I hate to throw this at you, but one is are the primary reasons for the deficiencies, can you kind of highlight why?

We are dealing with agencies, which was a very regulated process, but yet we are still seeing that they can throw back at us these deficient loans or delinquent loans because of paperwork and deficiency in the process.

Have those issues changed at all?

So did you see a year ago different issues than we are seeing today or are they about the same?

And then lastly, what would be your guess in the sense of what percent of the originations we did?

To me, this is the critical assumption would have the deficiencies that are out there.

So if we take a sample of 1000 loans, would we see that the deficiencies have been getting back to us, was it 30%, was it 40% of the loans?

What is kind of the range that you think the loans that were originated would have in the sense of deficiencies?

So a lot of questions there, Marty, which I appreciate.

I'm sorry.

That's okay, that's okay.

I think that -- when you think about kind of the context of the repurchase demands that we are seeing, there isn't anything really new.

I think that what we have seen is a steady review by Freddie Mac and then Fannie Mae during this year kind of accelerated its view, but the issues are really not that different.

And from our perspective, as we look at our portfolio, it has much more to do with vintage than anything.

And we are slowly but surely kind of working our way through the vintages.

The repurchases were pretty flat, our losses were down for the quarter.

In terms of the answer to your bigger question, what I would like to do on that one, Marty, is just punt and have our IR folks get with our mortgage folks and back to you because they are going to provide you with a better answer than I am going to.

And I just think that percentage, if we could look at some sample size, would give us some subset that we are dealing with that kind of puts an upper bound, which, in my mind, we have to be approaching after the agencies have gone through two and three years of looking at this stuff.

Unless they are coming up with new stuff, eventually they are going to run out and it seems like we are, at some point here, going to approach that number.

Yes, I look forward to getting to that point too.

The biggest thing in 2006 to '08 was stated income.

I mean that was -- and of course, that has all changed since 2008.

So we will get back to you on that.

Okay, thank you so much.

Moshe Orenbuch, Credit Suisse.

Great, thanks.

I just wanted to ask about the mortgage bank.

You had obviously great revenue numbers this quarter, particularly on the production side and great production numbers for this quarter.

Usually that tends to follow through into good revenues in Q4.

Can you talk a little bit about the margin on production and anything else that might be impacting the mortgage bank as we look at first quarter?

I think that the margin was up from the third quarter.

It was up to 190 basis points from about 134 in the third quarter.

And that is something that you see typically in periods of increased demand.

And as we mentioned, we have taken share.

So that is good.

I don't know where the margin is going to be in the first quarter.

Clearly 190 is very attractive.

We hope that it continues to be in that range.

It might and might not.

Just a comment about the mortgage business, we like the mortgage business.

We like it -- would people put their phones on mute please?

Thank you.

And we have been taking share in that business.

For two-thirds of Americans, it is the most significant financial asset they will have.

If you are going to be in the consumer business, we believe you have to be good at the mortgage business.

It's a balanced business, so again I can't predict where volumes and originations are going to go, but we believe this is a strong business for our Company and we like it.

Nancy Bush, NAB Research.

Good morning, guys.

A couple questions on the investment bank.

The marketshare gains that you are seeing in the investment bank, could you just -- I mean is that due to any one particular activity or segment?

If you could just give us a little color about that.

No, it's not, Nancy.

I think it is just reflective of the fact that it is a different competitive environment, number one.

Number two, we have many more relationships than we had a few years ago.

And we have got a great team and so they are out providing advice and service to those relationships, but it was really pretty broad-based.

It is not for one specific product or trading activity or industry.

It is really reflective of the fact that -- we think this is a good business for us and we think we can continue to grow it, but we are going to grow it in our way that is very focused on risk and very focused on providing the right product and service to the client.

It is mostly about us doing more with existing customers.

We have already had a relationship.

We have already lent the money.

We've already did something with them and now, because we have 15,000 brokers that are able to help sell a debt issuance or an equity offering and as Tim mentioned, we have great folks who play team ball.

My add-on or my second question would be just an add-on to that.

You guys clearly have benefited in quarters like this quarter from not being identified as a capital market/investment banking company.

And I guess my question would be how big a marketshare do you actually ever want to have or how big do you want the investment bank to be in relation to the rest of the Company to continue that premium I think you're getting for not being identified as an investment bank?

So Nancy, here is how I think about that.

I think -- first of all, we love the capability of our people, but we think of investment banking or capital markets as another product, another area we have in our quiver.

So we sit down with medium-sized companies and large companies.

This is a product and a service that we have that we believe can help them succeed financially.

If they choose us for that, that is terrific.

If they choose us to do their stock transfer business or treasury management instead of that, that is also terrific.

I am not driven by league tables around here.

I am driven by conference room tables.

I want to see us sitting around a table helping customers.

So if we grow because we are helping customers, terrific.

If we don't grow because their business isn't there or we are getting paid a different way, that is also terrific.

And that is where I think we are fundamentally different.

We don't have a standalone head of corporate finance that reports to me that has a league table goal.

I could care less about that.

It is a product that reports into our overall commercial business.

Okay.

John, I'd like --

Very good people.

They do terrific work.

I can't tell you how excited I am about the kind of -- the way they play team ball work around here.

John, I'd like to get your perspective on one other thing as well.

Jamie Dimon said a few days ago that, given the stringency of this stress test, the CCAR, the 13% unemployment, etc., etc., that he expected after you get the results of that and he implied that he does not think there would be capital raising needed on the part of major American banks as a result and he hoped that that would be the definitive word on capital.

Do you expect that -- do you have that same expectation?

Well, I don't know other banks as well as he knows other banks.

I know this Company and we surely believe we are in a good spot.

But I would make a general comment.

What we have been through the last three years in the US, there has been a lot of capital grown organically and just through earnings and a lot of capital was raised.

The industry is far stronger than it has been in the past and it takes strong banks and a strong financial system to support a growing economy.

This country is in a much better position than a lot of our European counterparts because of the strength of the banks.

So I don't know what the stress tests are going to show for each institution.

I don't have a vision of that.

But I know, in our case, I don't worry a lot about our capital to support growth for us.

Okay, thank you.

Betsy Graseck, Morgan Stanley.

Hi, how are you?

I had a couple questions.

One is on the excess liquidity that you have.

Can you just give us what number you calculate that to be?

We don't really calculate an excess liquidity number at the Company.

I think that it ebbs and flows based upon deposit growth and opportunities we see in terms of loan growth and acquisitions and investing the securities portfolio.

So I mean I wish I could give you a specific answer, but that is not the way we think about it.

Okay, so I guess -- the reason I asked that question is I am thinking about your firepower for investing in loans going forward.

Do you feel like that rate of change is decelerating or accelerating?

I think it is about the same.

As we talked about, we got a tremendous amount of deposit growth in the third quarter.

We got a lot of deposit growth in the fourth quarter.

When you think about it, we are up $30 billion in one quarter.

Turn the clock back and how that would feel two or three years ago, but we have got more than enough dry powder to take advantage of the organic growth that we are seeing from our customers, which is strong, as well as look at any acquisitions.

But as John said, we are going to look at a lot of acquisitions.

We may make none of them, we may make a lot, but we feel good about where we are from a liquidity standpoint.

Thanks.

Can you just give us a sense of what your hurdle rates are for the kind of loans you are seeing?

You mentioned earlier in the call that you have been seeing a lot of opportunities.

You are being selective.

Can you just give us a sense as to whether or not your hurdle rates have changed or what they are for the C&I loan book for example?

Well, I would rather not be specific about what are hurdle rates because if we are in a competitive situation then our competitors might know what we are trying to solve for.

But I can tell you, as we looked at the portfolios that we purchased today, those portfolios have been higher quality portfolios and the yields have been consistent with our existing commercial real estate portfolio.

We really don't -- we don't have a specific hurdle rate that we would necessarily apply to every portfolio or every business because the risks in those businesses and portfolios can be different.

You have got to do it kind of deal by deal, opportunity by opportunity just like when you underwrite a new loan that you look at the risk to that existing customer.

And also, Betsy, we bring other things -- we bring -- when we sit down with a potential seller, we also want to get paid for the trust these folks have in us that we will complete the deal and that we have the capacity to complete a deal and that we don't re-trade it.

So these are all -- these all add into the mix and in some cases, we are not even the highest bidder and we get deals.

Sure, okay.

And then lastly on C&I, the average was up nicely around 4.5%, 4.6% Q on Q.

The end-of-period was up a little bit less, just under 2%.

So I guess -- and that is in an environment based on the [H8] data that was showing accelerating C&I EOP into the end of the quarter.

So did you see comps just kind of heating up and you are backing off or opportunity just wasn't as great?

Can you just explain why the EOP is so different?

Yes, I think the important thing is to appreciate that you shouldn't get too focused on what happens quarter to quarter because you can have a lot of activity that happens over a quarter.

I would not be concerned about our ability to grow commercial loans at all.

Was there a reason why you pulled back a little bit relative to what we saw from the H8?

Was it a function of --?

No, no, no, we didn't necessarily pull back.

A lot of it can just be timing.

We have a bunch of loans and transactions you are working on that you think might close toward the end of the year and they don't.

They close in the first part of the next year or the next quarter and there is also some seasonality here also.

So your average growth rates are better for forecasting you think then EOP?

Yes.

Thank you.

Fred Cannon, KBW.

Thanks, good morning.

Most of my questions have been answered, but I just wanted to follow up on the last one about loan growth.

If I look at your end-of-period loans and exclude the $5.6 billion in reclassifications and then the $3.6 billion in purchased Irish bank loans, I have the quarter-on-quarter loan balance as essentially flat, which suggests that your organic growth is essentially offsetting your portfolio, your run-off portfolio decline.

Is that a fair way to think about where you are right now or is that understating what is going on?

I think it understates what is going on.

The important thing from our perspective, Fred, is that we have got the ability to grow loans in various loan types, as well as make acquisitions and depending upon the timing in a quarter or any given quarter, some might be growing faster than others.

And I really think you have got to think about it as a total of all of them.

And I wouldn't look at loan growth that we had from acquisitions as being a bad thing.

That is just part of the opportunities that we have to grow.

And only a couple billion of it showed up in the fourth quarter.

So you can't look at all of the purchase -- some of that was in the third quarter.

So there was actual growth in the fourth quarter.

Okay, great.

Thanks, John.

Just one more, Tim.

Just looking at the yield on the -- you probably already covered this.

The yield on the security portfolio has come down fairly significantly over the last year and even in the quarter on quarter.

Is that just inherent in the flat yield curve environment and just in terms of the opportunities to invest in securities is inherently lower yielding is just what you face right now?

Yes.

Yes, no, I think that is right.

I think the rate of decline has slowed just a little bit, but that is a very fair characterization, which again is why we are focusing on net interest income as opposed to just the yield.

Great.

Thanks very much.

Joe Morford, RBC Capital Markets.

Thanks, good morning, guys.

Just one last follow-up on the drivers to the growth on the C&I side.

Do you have any color on kind of the relative strength for the different segments, be it kind of large corporate or syndicated, middle market, small business and just is there any one area where you're seeing better opportunities to take share?

It is more on the type of business as opposed to the size.

If you look at anybody or any company involved in commodities, they are doing quite well.

Because commodity prices are up, there is lending opportunities there.

Agriculture is pretty good, energy is pretty good.

So if you -- and manufacturing actually is doing quite well.

On the other side, if it is around residential real estate, not so good.

So it depends more on that than on size.

Okay.

And any comments just broadly on how pricing is holding in?

Pricing continues to hold in pretty well during the quarter, Joe.

And think of our pricing -- we price at the relationship level.

So it is not only the price on the loan; it is the price on the treasury business and the 401(k) business and the stock transfer business and a whole bunch of other things.

So we think of it probably a little differently than a lot of other companies.

Okay.

Makes sense.

Thanks so much.

Thank you.

And thank you all for joining us.

Again, we are proud of what our team did in the fourth quarter of 2011 and we are excited about 2012.

Talk to you next quarter.

Ladies and gentlemen, that does conclude today's conference call.

Thank you all for participating and you may now disconnect.