Rerisking and Reengagement
Howard Chen – Credit Suisse: Mike, as you look across your C&IS and PFS client base how would you broadly characterize the level of rerisking and reengagement that you saw in these set of results and then subsequently since then?
Michael G. O’Grady – EVP and CFO: Howard I would say particularly focused on the personal side that we did begin to see activity of rerisking that we have been talking about in previous quarters and previous calls. I think it’s a result of a number of things, but one is certainly that looking at cash and high quality fixed income is really an insurance policy, but it’s becoming a more and more expensive insurance policy and that for investors to really achieve any type real return they understand they have to take on greater risk. So we did see I would say the beginnings of that I think that’s supported by if you look at some of the asset flows that we had in the quarter and for example within PFS the equities category for us was up 13% so up stronger. If you looked at the flows behind that you would see that equities we had positive inflows and on the money market side we had outflows. So I think that we are beginning to see it although I would say it’s still in a stage where it’s somewhat fragile in our view, and while we’ve had a nice run, when you have days like yesterday, it’s certainly going to have an impact on the psyche of the investor.
Howard Chen – Credit Suisse: Thanks and my follow-up, now that the (capital) process has been renewed for this year, I was hoping you could just talk about how you arrived at the capital plan and the dividend boost and the $400 million buyback that your regulator had no objection to?
Michael G. O’Grady – EVP and CFO: Sure. Well, as we’ve said before, we’re very comfortable with our capital adequacy and our objective of course is always to have sufficient capital and to have the appropriate and robust processes in place so that we can weather through whatever conditions may be in front of us. So with that in mind, as you see from the results of the capital plan, our objective was to increase the amount of capital that we return to shareholders. So doing that, both through increasing our dividend somewhat and then also significantly increasing the amount that we could do through share repurchase. So, I would say overall, try to balance all those objective to get to that position and I would also just say, Howard, with regard to capital, as I’ve said before, it’s a situation that continues to evolve. The final rules for Basel III are expected to be coming out in the near future here, that’s something that certainly we’ll have to digest and you have other aspects of regulation that are still in flux. So, we take all that into account as we look to continue to improve our processes around capital.
Gerard Cassidy – RBC Capital Markets: Can you give us more color on the deposit output? You mentioned it was due to the expiration of TAG program was that large corporations or countries, who were the customers that took the deposits out?
Michael G. O’Grady – EVP and CFO: Sure. So, our demand deposits were down $4.4 billion on average for the period and most of that was in our C&IS business. So, about 3.5 of the total was from your institutional clients and it’s a mix of clients, but it is definitely clients that had placed the deposits with us as a result of the TAG program, and so with that expiring, they look to move those to other alternatives. What we saw in the institutional side there is that a decent portion of it, about $1.5 billion really just flowed into our money market funds. So, they decided to switch from having deposit to putting it in for example, one of our government funds. Then the remainder for the institutional clients really split between either just purchasing government securities outright or in some cases just diversifying amongst other larger banks. So, we still have what I would consider significant deposits from them, but they’ve reduced the amount and placed deposits at other banks. On the personal side, we saw about $1 billion decline in the demand deposits during the month – during the quarter, and I would say that’s mostly just a shift into either interest-bearing deposits and you saw that in the change in the average balances, and then also as we’ve talked about I think some of that also is reflected in the re-risking.
Gerard Cassidy – RBC Capital Markets: The second question was, your return on equity targets of 10% to 15%, in this low interest rate environment, and obviously you are working very hard to manage your operating expenses which showed up again in this quarter, is it – and your ROE came in less than 10% in the quarter and the last two years it’s been less than 10% as well. Is it possible to get to a 10% to 11% ROE if this rate environment remains this way through 15 and as Fed has pointed out that’s what they plan…
Michael G. O’Grady – EVP and CFO: As we’ve said the 10% to 15% is definitely a long term financial target and so it’s intended to be across different macro environments it is clearly difficult to do in this low interest rate environment as is being demonstrated through our results and I would say results overall. What we are focused on is as we talked about trying to grow the parts of the business that we can you’ve seen that in the stronger growth in our trust fees which the largest component is so we look to grow that. We look to control the expenses that improves profitability in and off itself to get there. Net interest income was a drag in this period and I think we have also foreign exchange trading income which has also been a drag in other time periods. So if both of those remain constant do I think we could get there, we could. But it’s going to be difficult and it’s going to take longer to get there without some improvement in the macro environment. I would just emphasize it’s a longer term target we still think it’s the right target to have and even in this environment we are working towards it, it’s just the significant challenge of the operating conditions particularly low interest rates continue to persist.
Gerard Cassidy – RBC Capital Markets: Then lastly on the buyback with the $400 million being approved last year you pretty much completed but you expected in terms of your approval from CCAR last year completed that buyback. Should we count on all $400 million being done over the next four quarters or what event could happen where you choose not to execute on the buyback completely
Michael G. O’Grady – EVP and CFO: Sure. Well, with the capital plan, what we’re looking to do is to provide an outlook for our regulators as to what our expectations would be and what we would like to be able to execute. But your point doesn’t necessarily mean that we need to execute on those or have to. There are number of things that could happen that would change that, some of them very opportunistic. If there are other opportunities for us to deploy our capital, that certainly is something that we would take into account on whether we end up executing the full authority, I will say, and then also the operating conditions. I mean, when we put the plan in, it’s with our best view on what those operating conditions are. All else equal, then, yes, we’d look to move forward with executing on those, but the operating conditions obviously can change. We also – we do look at the relative alternatives that we have and how we can deploy the capital. And my point being, we do look at that the value of the stock, and when we think it’s the best alternative to repurchase and the best time to do that relative to other things that are going on. So, our plan is to move forward with that as you mentioned, just as we did last year, but certainly things can come up along the way that could change that.
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