Anthony Ostler - SVP, Investor Relations Jay Hooley - Chairman and CEO Mike Bell - CFO.

Brian Bedell - Deutsche Bank Glenn Schorr - Evercore Ken Usdin - Jefferies Luke Montgomery - Bernstein Mike Mayo - CLSA Adam Beatty - Bank of America Brennan Hawken - UBS Jim Mitchell - Buckingham Research Geoffrey Elliott - Autonomous Research Gerard Cassidy - RBC Capital Markets Brian Kleinhanzl - KBW Marty Mosby - Vining Sparks.

Good morning, and welcome to State Street Corporation's Fourth Quarter of 2015 Earnings Conference Call and Webcast. Today's discussion is being broadcast live on State Street's website at www.statestreet.com/stockholder. This conference call is also being recorded for replay. State Street's conference call is copyrighted and all rights are reserved.

This call may not be recorded for rebroadcast or distribution in whole or in part without the express written authorization from State Street Corporation. The only authorized broadcast of this call will be housed on the State Street's website. Now, I would like to introduce Anthony Ostler, Senior Vice President of Investor Relations at State Street..

Thank you, Crystal. Good morning and thank you all for joining us. On our call today are our Chairman and CEO, Jay Hooley, who will speak first. Then Mike Bell, our CFO, will take you through our fourth quarter 2015 earnings slide presentation, which is available for download in the Investor Relations section of our website, www.statestreet.com.

Afterwards, we'll be happy to take questions. During the Q&A, please limit your questions to two questions and then re-queue. Before we get started, I would like to remind you that today's presentation will include operating basis and other measures presented on a non-GAAP basis.

Reconciliations of these non-GAAP measures to the most directly comparable GAAP or regulatory measures are available in the appendix to our fourth quarter 2015 slide presentation. In addition, today's presentation will contain forward-looking statements.

Actual results may differ materially from those statements due to a variety of important factors, such as those factors referenced in our discussion today in our 4Q 2015 slide presentation under the heading, forward-looking statements, and in our SEC filings, including the risk factors section of our 2014 Form 10-K.

Our forward-looking statements speak only as of today and we disclaim any obligation to update them even if our views change. We're looking forward to our 2016 Investor Day, which will be held on Wednesday, February 24th at the Mandarin Hotel in New York City. This new team is the way ahead transforming State Street to extend our leadership position.

Please contact with Liz Bremer at IR at statestreet.com for more information or to register. Now, let me turn it over to Jay..

Thanks, Anthony. Good morning, everyone. Our performance in the fourth quarter reflects the continued challenges presented throughout 2015 including the challenging global equity markets particularly in emerging markets, persistent low interest rates, strengthening U.S. dollar and heightened regulatory expectations.

We were successful at managing expenses in the quarter in light of the pressure on revenues. In addition, we grew fee revenue in 2015 and achieved strong new business results as evidenced by new asset servicing commitments of $300 billion this quarter and approximately $800 billion for the full year.

The challenging conditions notwithstanding, overall I'm disappointed with our full year 2015 performance and how we performed against the various goals we set. We generated 2% operating basis fee revenue growth compared to 2014, which was short of our goal of 4% to 7%. On a constant currency basis our operating base fee revenue was 5.3%.

We also fell short of our objective of generating at least 200 basis points of positive fee operating leverage compared to 2014 as we posted a 79 basis point difference in growth. In addition to the challenging revenue environment we experienced regulatory compliance costs and operating losses at a higher level than expected.

Actual net interest revenue was in line with our outlook, which reflected the continued low interest rate environment and our balance sheet optimization actions.

Our efforts to optimize our balance have resulted in lower excess deposits and stronger capital ratios compared to the levels at the end of 2014, position us well for our long-term capital plan. Lastly, returning capital to our shareholders remains a top priority.

We increased our quarterly common share dividend to $0.34 per share in the second quarter of 2015, an annualized increase of 14% from 2014 and bought back $1.52 billion in common shares in 2015.

As you may have already noted the fourth quarter's results also include a number of items and legal settlements, which we have worked hard to address and put behind us so that we can turn our complete focus on growing our business and improving our operations. Mike Bell will discuss how these items impacted our financial statements.

Now I would like to discuss our asset servicing and asset management businesses. We added $300 billion of new servicing commitments during the quarter across all sectors and geographies.

The difficult global market environment in 2015 put significant pressure on our clients, creating a positive environment for cross-selling and clients consolidating their service business with fewer providers.

Our asset management business experienced net outflows of $19 billion during the fourth quarter of 2015, driven primarily by new outflows of $19 billion from institutional passive mandates and $10 billion in net outflows from cash mandates primarily from securities lending cash collaterals, partially offset by $11 billion of inflows through ETFs.

Institutional net outflows were primarily driven by client asset allocation shifts and an expected redemption of one large sub-advisory client that is in-sourcing the business.

Redemptions by this client are expected to continue through the remainder of 2016 and assets under management associated with this client was approximately $35 billion at the end of 2015. The low headline net outflows were negative, annualized revenue impact on flows was positive $10 million due to a favorable underlying business mix.

During the fourth quarter of 2015 we had approximately $11 billion of positive net flows into our ETFs, including approximately $4.5 billion of inflows for SPY our S&P 500 ETF. We continue to invest in our ETFs with a further 13 new launches in the fourth quarter bringing total 2015 launches to 35.

Significant fourth quarter launches included three smart beta ETFs and a natural resources ETF, that immediately ranked in the top 10 launches in the U.S. in 2015. In addition, the SPDR DoubleLine Total Return Tactical ETF was the top product launched in the U.S. in 2015 with $1.8 billion inflows.

Overall, our SPDR ETF business had five of the top 10 new product launched in the U.S. with combined assets gathered across all new launches of $4.3 billion. Going into 2016, we continue to focus on what we can control and to do our best to address those elements we cannot control.

As we know, the start of year in global markets has not been good, but regardless of the implications to revenues it is our objective to strive to generate positive fee operating leverage.

We started the year with new assets to be serviced that remain to be installed in future periods of $378 billion at December 31st, and we continue to see deep and diverse pipelines, which should help our fee revenues.

Our overall strategy is well positioned against global markets, which we believe over the long-term will deliver accelerated growth opportunities. Knowing we are off to a difficult start in 2016 we're focused on identifying leverage to improve our performance in 2016 and help us outperform in the current macro-environment.

This includes a focus on managing expenses that is in addition to our multiyear transformation program and targeted staff reductions that we discussed on the Q3 '15 earnings call, which is called State Street Beacon.

We currently expect State Street Beacon to generate approximately $550 million in the annualized pretax net run rate expense savings by the end of 2020 with approximately $75 million of that run rate savings being achieved in 2016.

State Street Beacon leverages the foundation built by our business operations and technology transformation program that was completed in 2014. The program will leverage your cloud infrastructure to drive next generation platforms in order to improve scale and flexibility.

Digitization of services and solutions will enable automated access across and improve interfaces with our clients. We expect the end result of the program to produce a lower cost client centric integrated operating model delivering timely information to our global exchange platforms.

Not only will we continue our firm-wide focus on expenses, but we are also looking for more ways to accelerate revenue growth through cross-selling and product innovation. I am encouraged by some of the developments we've already seen through our digitization work particularly the data solutions we can offer our customers.

Now I'll turn the call over to Mike, who will review our financial performance for the fourth quarter and then we will be available to take your call -- take your questions.

Mike?.

Thank you, Jay, and good morning, everyone. Before I begin my review of our operating basis results, I'll comment on two significant items that affected our 4Q '15 GAAP basis results as highlighted on Slide 5.

First, we recorded a 4Q '15 charge of approximately $17 million and a liability of approximately $240 million related to the matter in which we invoiced certain expenses to asset servicing clients primarily in the U.S. during an 18 year period. The current period charge reflects an accrual for interest that we intend to pay to the impacted clients.

$223 million of the liability or $145 million after tax relates to periods prior to the 2015 fiscal year and appears in the beginning routine earnings balance of our statement of shareholders' equity as of December 31, 2014.

Please note all prior period financial information within this Slide deck and within our earnings release and addendum have been revised to reflect the impact of the reimbursement on each prior period presented.

In addition, we recorded an $82 million pretax gain or $49 million after tax related to the final payoff of a commercial real estate loan acquired as a result of the Lehman Brothers bankruptcy. Now please turn to Slide 9 in the slide presentation for a summary of our operating basis results for 4Q '15 and for full year of 2015.

Both 4Q '15 and 2015 full year results reflect the headwinds from challenging global equity market conditions, low interest rates, a stronger U.S. dollar and heightened regulatory expenses.

Full year 2015 EPS decreased 3% from 2014 reflecting lower NIR and higher expenses particularly due to the heightened regulatory expectations, partially offset by fee growth and the continued execution of our common stock purchase program. Our pretax operating margin of 29.1% and ROE of 10.7% decreased relative to 2014.

Compared to full year 2014, full year 2015 fee revenue was negatively impacted by the stronger U.S. dollar largely offset by a similar benefit in total expenses. On a constant currency basis fees grew by 5.3% versus full year 2014. Turning to 4Q '15 EPS of $1.21 decreased from $1.36 in the year ago quarter and increased from $1.15 in 3Q '15.

Our capital ratios improved sequentially and from year-end 2014 reflecting management actions to reduce risk weighted assets and to also reduce the level of excess deposits on our balance sheet. As we’ve discussed we are particularly pleased with our progress on this priority over the second half of 2015.

Additionally, we declared a common stock dividend of $0.34 per share and purchased approximately $350 million of our common stock. Turning to Slide 12, I'll discuss additional details of our operating basis revenue from 4Q '15. Servicing fees decreased primarily due to the impact of the stronger U.S.

dollar and lower international equity markets partially offset by net new business. The decrease in international equity markets particularly in emerging markets continues to negatively impact servicing fees.

Compared to the year ago quarter, average daily values for the Morgan Stanley Emerging Market Index decreased 16%, while the EFA equity index was down approximately 4%. We estimate that approximately 10% of our servicing fees are tied to emerging markets.

4Q '15 management fees decreased relative to a year ago primarily due to the impact of the stronger U.S. dollar, net outflows, and lower international equity markets. Foreign exchange revenue decreased due to the lower volatility in volumes.

Securities finance revenue increased from 4Q '14 primarily due to new business and enhanced custody and was higher than 3Q '15 primarily reflecting higher spreads. The increase in processing fees and other revenue from 4Q '14 and 3Q '15 reflects higher revenue associated with tax advantaged investments.

It's also important to note that this line item, which has a number of elements within it, did experience volatility from quarter-to-quarter was higher in 4Q '15 than normal. In addition, the 4Q '15 revenue also benefited from tax advantage investment seasonality, so we expect to find that to be a little bit lower in 1Q '16.

Moving to Slide 13, you can see that our operating basis net interest revenue continued to be pressured by the prolonged low interest rate environment.

The decrease in 4Q '15 average earning assets and corresponding increase in the net interest margin reflects the efforts to reduce client deposits that largely occurred towards the end of the third quarter. Now let's turn to Slide 14 to review 4Q '15 operating basis expenses.

Importantly, total operating basis expenses decreased 3% compared to both 3Q '15 and the year ago quarter, primarily reflecting lower incentive compensation and other expenses.

Other expenses included a $12 million settlement with the SEC related to the previously disclosed allegations of improper conduct in the solicitation of asset servicing business. Now turning to Slide 16 to review our capital position.

As you can see our capital ratios remained strong, which has enabled us to accomplish a key priority of returning capital to shareholders through dividends and common stock purchases.

Importantly at December 31st our common equity Tier 1 ratio under both the Basel III fully phased-in advanced and standardized approach increased from September 30th principally due to lower risk-weighted assets.

The December 31st fully phased-in supplementary leverage ratio at the bank also increased to 5.7% on a fully phased-in basis principally due to the full quarter effect of our proactive efforts to reduce client deposits in September. Moving to Slide 17, let me review the financial details of the State Street Beacon program.

We expect to achieve annual pretax net run rate expense savings of approximately $550 million by the end of 2020. In 2016, we expect to achieve $75 million in annual pretax net run rate expense savings, which includes the savings associated with the reduction in force that we announced in 3Q '15.

In 2017, we expect to achieve an additional pretax net run rate expense savings of at least a $125 million. Included in the targeted $550 million in annual pretax net run rate expense savings are ongoing investments to support the program.

Importantly, we expect State Street Beacon to improve our operating basis pretax profit margin to at least 31% by 2018 and to 33% by the end of 2020 all else equal.

To accomplish our savings targets, we expect to incur restructuring charges of approximately $300 million to $400 million from 2016 through 2020 and we look forward to providing a further update at our Investor Day on February 24th. Now let's move onto Slide 18 and 19 for a review for our 2016 financial outlook.

During 2016, we remain focused on our key priorities of returning capital to shareholders, prudently managing expenses and investing in the business to provide solutions to our clients. Although we anticipate that the environment will continue to be challenging in 2016, managing expenses is a high priority.

It is our objective to generate positive fee operating leverage relative to 2015. Now please be aware that the year-to-date weakness in the equity markets will adversely affect total revenue. As a reminder a 10% decline in global equity markets is expected to result in approximately 2% of downward pressure on our total revenue.

While upward pressure on regulatory and compliance cost is expected to continue in 2016, we expect the growth rate of regulatory and compliance expenses to be lower than 2015. We also expect expense growth to be affected by new business as well as continued investments.

Also it's important to highlight that as in prior years the first quarter 2016 compensation and employee benefits expense will be seasonally higher due to the effect of the accounting treatment of equity compensation for retirement eligible employees as well as for payroll taxes and associated benefits.

We expect the incremental amount attributed to equity compensation for retirement eligible employees and payroll taxes in the first quarter of 2016 to be in a range of approximately $130 million to $140 million. As you can see, we developed two scenarios for 2016 net interest revenue.

The first scenario assumes market interest rates remain static at current levels. Under this scenario, we expect full-year 2016 NIR to be in the range of approximately $2.025 billion to $2.125 billion. The second scenario assumes administered rates in the U.S. increase 25 basis points in both March and June and in the U.K.

rates increase 25 basis points in both May and August. Under this scenario, we expect full-year 2016 NIR to be in the range of approximately $2.1 billion to $2.2 billion. Additionally, we expect the (2006) (sic) (2016) operating basis tax rate to be in a range of 30% to 32%.

Turning to the last slide, I would emphasize that returning capital to shareholders through share repurchase and dividends remains a high priority. Our 2016 capital plan remains subject to the results of the 2016 CCAR process including a review by the Federal Reserve Board.

Now before I turn the call over to Jay, I would like to inform all of you that David Gutschenritter, the Company Treasurer has informed me of his intention to retire after 11 years with State Street. Dave has been an incredible positive force in his role as Treasurer.

As the industry evolved and the regulatory environment became more complex, Dave brought the talent, processes and leadership needed to assure our continued success. We will miss him tremendously. Dave has agreed to stay on in an advisory capacity through July 30th to ensure orderly transition of his responsibilities.

And as part of our succession plan, the Board of Directors has elected Tracy Atkinson to Treasurer affective February 1st. In addition to a number of other leadership roles in finance, Tracy has had oversight for Global Treasury for the past five years, so we expect her transition to the Treasurer role to be smooth.

Dave has had close relationships with many of you over the last several years and for those of you attending our Investor Day next month, they will have the opportunity to wish him well. Now, I'm going to turn the call back over to Jay..

Thanks, Mike. Crystal, we are all set to open the call to questions..

[Operator Instructions] And your first question comes from the line of Brian Bedell with Deutsche Bank..

Maybe Mike and Jay if you can talk a little bit about the market assumptions that you have underlying the assumption of generating stronger fee growth in 2016 versus the operating expenses? And then maybe if you could just give a little bit more color on what you’re thinking about for operating expenses on an absolute basis in '16 versus '15? Thanks..

I am sorry Brian, can you just repeat the end of that second part of your question?.

So on the expense side, if you can give us a little bit more color on how you’re thinking about the absolute level of expenses of operating expenses in 2016 versus '15?.

Okay. So, that’s helpful Brian. I’ll handle both of those. First, in terms of your question on the market assumptions, candidly Brian, given all the uncertainty in the market environment, I am really reluctant to give you at this point a concrete forecast and that’s why we didn’t include that in the prepared remarks and in the slide presentation.

I am sure it's not lost on you that the equity markets thus far in January for example are down high single digits and the emerging markets even worse. And particularly with our mix of business that would be a serious headwind.

So instead we’re really focused on achieving overall fee operating leverage in 2016 and we recognize that that would be more challenging if in fact equity markets remain uncooperative for the rest of the year. But we’re focused on as Jay said what we can control. We feel good about the Beacon savings that we’ll get in 2016.

We recognize that there is some upward pressure on the regulatory expenses but we think that will be at a lower rate than what it's been in the last -- in 2015. And so we’re really looking at managing really every expense dollar.

And that really relates to your second question, which is, in terms of our overall expense growth plan, it will be largely dependant upon fee revenue. We intend to manage expenses at a lower rate than what our fees grow.

And again it will be more challenging if the environment is difficult but that’s our plan and that’s why we’re looking at every area of expenses, we’re looking at management layers, we’re looking at procurement, we’re looking at outside consultants, we’re looking at real estate, we’re looking at low return businesses.

I mean really we’re looking at the entire spectrum with a goal of getting to that positive fee operating leverage for full year 2016..

And maybe just talk about the Beacon program a little bit more. Maybe just start with the trajectory at the $75 million and the actual -- the addition of the incremental $125 million in 2017.

So from a timing perspective during the year, how should we be thinking of that that layering in the quarters?.

Let me start and I’ll let Mike answer the financial question. But let me just -- I think this will help you understand the pacing. If we go back to five, six years ago, we began with the IT and ops transformation emphasis on transformation.

It was really to take our common systems, standardized processes, establish centers of excellence and we also introduced a public cloud and began to rewrite some of those core systems underlying those applications.

Beacon takes it to the next step and I can’t emphasize enough that you can’t take the second step unless you have successfully taken the first step. The second step is to -- I’d say wired together all of these different systems which in most financial institutions are not wired together on a real time basis.

So, in the future state of Beacon I’ll use a simple example. In our fund accounting area, we would expect that an electronic trade invoice coming in from a customer would electronically in real time basis hit the security system, the cash system, the accounting system and update the pricing on a real time basis.

So if you let your mind wander in a future state that means our whole environment becomes real time and you could dynamically price funds during the day. That will have the attendant benefits of obviously cost efficiency as you replace human intervention and disparate systems with fully integrated systems.

It will also reduce errors and risk but probably most importantly and I keep covering this ground because I am not sure everybody fully appreciates the value of real time information upstream for our customers form office for purposes of risk management, investment management, et cetera. So, that’s the journey.

Now let me come back to a little bit more narrowly on your question. This next stage of transformation heavily involves technology development and integration.

And so there is a little bit of [comp] timing that we were doing in 2015, which will continue in 2016 in building the systems and the integration models, which means that the trajectory of cost saves will start out slowly and build over time.

So out of the $550 million you can take the $75 million in '16, the $125 million in '17 that will just continue to build. I will say that the trajectory into a year would probably have a similar path.

But Mike, I don’t know if you want to add any color to that?.

Sure, Brian, the additional color that I would give you is it's important to note that the $75 million is intended to be a net number in terms of our operating expense impact in full year 2016 compared to operating expenses in full year 2015.

So the bottom line is gross savings will be higher than $75 million, but there will be some net spending which in particular is very helpful to position us to get some additional savings in 2017 and 2018, which is even higher than what we'll deliver in 2016.

So the spending I would expect to hit to impact Q1, and I agree with Jay, the savings in 2016 will mainly begin in Q2 and ramp throughout the year. So I expect a little bit of a bubble in Q1 and then net savings beginning in Q2 and accelerating through the remainder of the year..

The next question comes from the line of Glenn Schorr with Evercore..

I just wanted to clarify one thing on that expense comment, the $75 million in 2016, I think is not on top of the $50 million that you've mentioned at the time of the headcount reduction, correct? And that you said your intention is to be a net number '16 versus '15 full year?.

Yes, both of those comments are correct, Glenn..

Okay, awesome. Curious I am talking about the investment portfolio, it was what you called ongoing repositioning of the investment portfolio.

If you look at your appendix slide, it's now 64% fixed grade, so I am curious on what's driving that change and is it the duration extension on the government side and does that mean that -- what does that mean for your rate sensitivity?.

Sure, Glenn. So first of all in terms of the repositioning of the investment portfolio, you are correct that we have skinnied down in particular the floating rate assets that are -- had been denominated in U.S. dollars.

And the reason for that is the same thing that we've talked about on earlier calls in 2015 and that is, those are primarily asset backed securities and they are relatively low spread assets compared to for example U.S. treasuries. They also don't get counted as favorably as U.S.

treasuries do and they're treated relatively harshly in CCAR because if you recall at the last financial crises, spreads blew out for those assets and therefore the mark-to-market under the CCAR stress test is particularly unfavorable. So the U.S.

dollar based floating rate securities in particular are -- I would characterize it is as the least attractive of the portfolio assets that we're on the books say a year ago. So that's been the major driver of wanting to move away from those assets.

And in terms of your question on the rate sensitivity, again we look at the interest rates sensitivity through several different lenses and I feel very comfortable there has been no change in our philosophy. We continue to invest through the cycle.

Again, we're working to optimize against a number of different regulatory expectations and constraints, but I would characterize it as no material change in our thinking around interest rate sensitivity..

Okay. Just one little follow-up on that, when you look at your margin targets, I think they included 100 basis points of hikes through the end of '17, so I am just going to guess and say 50-50 in '16 and '17.

Is the math on the impact of the margin, if rates don't change, the same as the math that you gave us on a static and higher rates scenario? I mean, we talk about the same numbers I could just back into that and see that the impact on margin targets if rates don’t change?.

Yes, Glenn, I think that's fair. We are going to provide an update at the February Investor Day around the longer term NIM ranges including static, including ideally getting to something like a 3/5 long-term interest rate structure.

I think the main pivotal point Glenn though is that I want to make this morning is that we do expect that the Beacon savings will fall to our bottom lines. We expect that the Beacon savings will be additive to profit margins. So when we say all else equal, we know that there will be other things going on in the world that are impacting margins.

I think that you've mentioned NIR. NIR obviously can be separately highlighted and analyzed. But the bottom line, most pivotal comments that we're making is, we do expect the Beacon savings to be additive..

Your next question comes from the line of Ken Usdin with Jefferies..

Mike, you had good improvement on the Tier 1 leverage ratio which is your limiting ratio as we get into CCAR '16. And obviously with the challenges on the environment translating to challenges for your earnings run rate. I am just wondering, plus the restructuring charges still are coming in and affecting net income.

Can you remind us again when you think about CCAR going forward how do you think about your payout ratio? Do you think about it on a net income number or do you think about it on an operating number? And how do these change in the environment if at all change your desire to get through the rest of the buyback to the extent you had recently got an approval and change your thinking at all for going forward?.

Sure Ken, I appreciate the question. First, let me just comment on your first piece, because I think it was a very important point and that is, as you can imagine for CCAR, reducing our excess deposits by approximately $36 billion over the second half of 2015 is particularly helpful for us going into CCAR.

And obviously we don’t have the CCAR instructions yet, the specifics around the stress test. But any way you slice it, we’re really pleased with the progress that we made and we feel good about the position we’ll be in for the next CCAR, particularly relative to what we would have been in if we hadn’t reduced the deposits.

On your specific question around the income, both income majors are very relevant. The net income major is relevant and also the operating income is relevant. First the operating income really represents Ken our best estimate of what our run rate earnings are.

So, if you think about what the next three or four years are going to be, the operating income is what we think of as the starting point ideally to grow then over the next several years. So I think that’s a very important data point for the upcoming CCAR.

Having said that, net income obviously impacts capital, and so left to only that one issue, the restructuring charges or the FX settlement charges that we took in the first and second quarter of 2015 or even this out of pocket issue, all of that decreased capital essentially dollar for dollar, which is why it's very important for us to be managing capital as aggressively as we can.

Because at the end of the day what we believe to be our binding constraint is actually our overall capital ratios and in particular the next CCAR test will show what does that capital position look like under the stress test.

So that’s maybe a longer winded answer than you may have been looking for, but the bottom line is both of those income numbers matter, because the operating income will be more predictive or we expect to be more predictive of what our future income will be.

But the net income impacts the capital position that we’re sitting here with today dollar for dollar..

Thanks Mike. And if I can just then follow up just on the balance sheet, you said $36 billion reduction second half.

So can you just -- what was the excess deposits at the end of the year and would you continue to expect additional roll down of those going forward or have you worked it to the point where it's now more manageable? And perhaps you won’t need -- I guess the question is do you have any incremental need left after all this reduction for any preferreds?.

So, Ken first to answer your factual question, we estimate that under our historical methodology our excess deposits averaged approximately $26 billion in Q4.

Now as we’ve talked about before, that’s the historical definition under the LCR rules, some of what we’ve thought of as operational deposits no longer account so at some point we’re going to flip over to a definition of non-operational deposits that for example would include deposits we have with hedge funds and private equity relationships.

And even though those are normal operations with our custody relationships there, for LCR purposes they are accounted as non-operational. But to answer your question factually $26 billion versus our average at Q2 was $62 billion, so a $36 billion reduction there.

On your question on the -- are we going to push harder and what about the issue around prefs. First of all, Ken the short answer would be that we’re really pleased with what we’ve accomplished. And this has not been a trivial exercise. This is an issue that’s a sensitive one for a number of our clients.

And so the fact that we feel good that we got to a win-win with our clients after all these discussions, we think that got us to a real good point. So I would say at this point we don’t feel compelled to drive more off of the balance sheet relative to where they were for example in Q4. But it is something that we’re going to monitor carefully.

It is something that’s subject to market conditions. The situation in Europe for example is just not helpful at all. I mean with the ECB cutting to minus 30, talking about possibly cutting further, credit spreads have come in dramatically in Europe because of their quantity of easing.

So, for all those reasons, I think we have to continue to monitor this but at this point I feel good about where we are. Now your question on prefs is one of those I can’t yet answer fully, because we don’t have the CCAR stress test.

I mean obviously we’re in a much better position but until we see the dynamics around that stress test and go through that modeling over the next 60 days. I am just not in a position to give you an estimate at this point..

Your next question comes from the line of Luke Montgomery with Bernstein..

I just wanted to take another quick stab at Brian's question on the 2016 outlook, maybe you've answered it but it wasn't clear to me.

When you establish the positive fee operating leverage goal, did you factor in the decline you had in the markets year-to-date or are you assuming year end market levels?.

Luke, it's Mike. We certainly factored in what we know about markets as of today, and I think deep down we feel like there's more opportunity for improvement over the course of the year, but I think the most important thing is that we are focused Luke on controlling expenses. The item that we can -- that's within -- best within our control.

And we do expect, again barring a catastrophe in terms of further deterioration in markets to be able to get to that net all-in positive fee operating leverage for the full year.

Now again it is something that -- because it is subject to market conditions, it's probably something that we want to update you on at the Investor Day in February, at each subsequent quarter our focus and Luke I guarantee the management team is really galvanized around this.

Collectively our focus is to generate positive fee operating leverage for the full year..

Okay thanks. And then just a follow-up on the balance side.

I know it depends on client behavior, but apart from that are you assuming any growth from the current earning assets of $200 billion in your guidance for 2016?.

Luke we anticipate a small decline in the average earning assets over the course of the full year but I think the more important point is the point that you've just made, which is, in large part it will be a function of market interest rates and just overall market conditions.

But our feeling is that if the Fed funds rate increases by an additional 50 basis points, if Bank of England increases by an additional 50 basis points, that a good chunk of those excess deposits that are remaining will naturally come off the balance sheet and we do expect growth in our core business.

So we would expect some growth in the operational deposits from growth in our core business. But I would say net-net I would expect that the average earning assets to be modestly less by year end 2016.

Now importantly if there is a crisis again God forbid, all bets are off, I mean we're on a safe haven in terms of crisis so hopefully that's not going to happen, but that would be another wildcard..

Our next question comes from the line of Mike Mayo with CLSA..

Hi, I wanted to understand your guidance a little bit more. So your target had been to grow fee revenues to expenses by 200 basis points, last year it came in at 79 basis point and now your target is simply I guess 1 basis point, right, just 1 positive operating leverage.

So on the one hand you were disappointed that you didn't meet the target last year, on the other hand the new target is basically just positive operating leverage.

So I just want to reconcile those thoughts of being disappointed but then again lowering the target quite a bit and I think I've heard the reason the lower stock market, lower rates in Europe, currencies and regulatory costs, but rather hear you validate that or you elaborate on it?.

Sure, Mike, it's Mike. I'll start and if Jay wants to add. I mean importantly Mike we want to get every dollar of positive fee operating leverage that we can in 2016 and we're committed as we talked about to aggressively managing expenses to work towards achieving that goal. But it's the point that you've made.

I mean with equity markets off almost 10% and we're not even through January yet, it just seemed to us to be irresponsible to put a specific number out there even in light of how confident we feel in Beacon.

So again as I said to a couple of the earlier questions, I mean sure this is something that we'll talk about through the course of the year, but it's not a question of lowering our expectations. It's being cognizant of the environment and focusing aggressively on what we can control..

And as far as the actual expense guidance with project Beacon, last year, your core expenses were $7.520 billion and so for this year should we simply subtract $75 million, since that's the net number or that doesn’t reflect the additional expense pressures?.

Well, it doesn't reflect for example expenses that I would expect to bring on to service the new business that we're winning out in the markets. So that's why I wouldn't stay away from just a raw expense number and it's going to largely depend upon our fee revenue growth.

Since we're in the service business, we tend to need to bring on servicing capabilities to service new revenue. As I mentioned earlier as well the regulatory related expenses will likely increase, we don't think it will increase as much as they did in 2015.

But that's why really Mike we're focused on fee operating leverage, positive fee operating leverage as being the overall goal, recognizing that the equity markets in January really make that a challenging objective..

And then lastly, the way you look at it, what was your pretax margin for 2015 especially since you’re looking to take that quite a bit higher?.

29.1%..

Your next question comes from the line of Adam Beatty with Bank of America..

I wanted to ask about the NIR guidance and in particular you’ve been asked about some assumptions. You’ve noted in your presentation the impact of foreign exchange on NIR.

So I was just wondering, what is kind of your base case for the NIR scenarios was in terms of currency flat from here or something different from that? And then maybe how sensitive that number would be to currency?.

So in terms of the NIR ranges that we provided, it essentially assumes today’s foreign exchange currency rates. Now again we recognize that that's a wildcard and as an example if we look at full year 2015 versus full year 2014, we estimate that NIR was negatively impacted by $54 million as a result of the stronger U.S. dollar over the course of 2015.

So, obviously I don’t expect that the U.S. dollar will strengthen further, at least at that kind of magnitude that we saw in 2015 but that would give you at least a sense of the magnitude if we had a repeat of that level of strengthening, that’s the ballpark that we can see as a additional headwind in NIR.

Obviously if the euro turns around and it got stronger in particular that would be helpful..

So the portfolio hasn’t been repositioned such that the currency effect will be drastically different?.

That’s correct..

And then turning to the new business wins in asset servicing, you mentioned the positive mix shift in asset management despite the negative flows over the positive revenue impact.

So I was just wondering about asset servicing and the new wins, how that mix is shaping up? And also in terms of implementation, how soon you would expect the current backlog to be installed? Thanks..

Sure Adam let me take that. So I mentioned $300 billion-ish of new commitments on the asset servicing side, a little bit unusual, that was [tilted] to the U.S. with $250 billion of the $300 billion being U.S. and then I think you had $35 billion and $15 billion in EMEA and Asia Pacific.

So to me it's a little bit indicative of some of the pressure that the asset management industry is under, now that it's not global but it's probably a little bit more acute in the U.S. And so the opportunity to do more deeper level of outsourcing as well as consolidate more activities with State Street is probably the underlying theme there.

You also asked about the backlog, which again is a little bit higher at $380 billion and I think that’s probably historically been in the $200 billion to $300 billion range. It’s elevated because there is some bigger chunkier deals that had a little longer implementation time line. Those should layer in the first couple of quarters of 2016.

Additionally, I would say from an outlook pipeline standpoint actually quite good with some different color from the U.S. to the Europe to Asia. Asia continues to be moving in a pretty positive line. Europe is again dominated by the offshore markets which is where the asset is coming from. And I’d say the U.S.

it's a combination of hedge and as I mentioned earlier the traditional loan-only managers, who are really grappling with fee pressure and flows and [where] an opportunity for them to streamline their operations and get more efficient..

That’s great color.

Am I right in assuming the asset management outsourcing is relatively high fee versus the current mix or not so much?.

Asset management outsourcing broadly would be very consistent with the existing business from a fee and margin standpoint if I heard your question right..

Yes, I think you did. Thank you, Jay, appreciate it..

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

Just a quick follow-up first on the Beacon question and the $75 million. Sorry to come back to it. I just want to make sure I understand. You expected it to be in number but you also talked about growing regulatory expenses albeit at a selling rate.

So does that $75 million net reflect what your expectations on the regulatory front or is that regulatory headwind albeit at a declining rate a separate issue and if so can you help us frame the regulatory headwind by letting us know how much -- what the growth rate was full year '15 versus '14?.

Sure. Brennan this is Mike. First it's the latter.

The regulatory expenses -- regulatory related expenses we look at them as a separate category from Beacon, so I do expect that some piece, although certainly not all of it or anything, but some piece of the Beacon savings would be offset by the additional growth in regulatory related expenses that we expect for 2016.

And as we have talked about in the past Brennan I am really reluctant to try to give a very specific number on regulatory related expenses. I just think that at this point it's truly embedded in the enterprise.

I mean we're all spending more time and attention on regulatory related issues and I just think that I mean it would take this sort of massive time and motion kind of study to give you a number that would accurately portray it.

I mean it's fair to say there is significant upward pressure although as I said it's certainly fair to say that we still expect the bulk of the $75 million of the Beacon savings to drop to the bottom line. Again all the things equal the conversations that we had earlier..

Sure and I get that it's a tough one to try to frame and then we're in unchartered waters, just figured I'd give it a shot. Second question is on the asset management business. So just curious if you could help us think about the ETF flows.

You had a good December which certainly helped out on the quarter, but seems like outflows were a little bit of a struggle on the ETF front for the SPDR's platform in 2015.

So obviously you guys are working to try to launch new products as an offset there, but can you give us maybe broadly and strategically whether or not you think that's sufficient? Is it all just Vanguard and Price competition and given how the legacy or the previous SPDR's platform was positioned, you're more subject to that type of competition which is why you're going in the new direction? And how should we think about seasonal outflows which is it the other side of just the seasonal inflows in December, any color you could give us on that front just to help us model for this quarter would be great? Thanks a lot..

Great Brian, I am happy to pick that one up. Let me give you some numbers and then maybe I'll get to some more of your qualitative questions as to where we're on a journey to make ETF more important business for us.

If I look at full year 2015, our net outflows were approximately $23 billion, our net outflows of the SPY which is the S&P 500 was outflows of $31 billion. So if you take the influence of the S&P 500 out of the mix, we would net up [$80 billion] and we would net up $11 billion in the fourth quarter.

So there is a -- if you look at trends and you normalize for the S&P 500 which is a very large fund with fairly low fees that move a lot because people use it for liquidity purposes all over the globe. Right in that we have -- we've been on a two year journey to invest in our ETF platform in really two directions.

One is that, initially our ETF orientation was more to the institutional market. We've ramped up considerably our intermediary sales force over the last couple of years. And the other place that we focused is on product.

And our focus on product which really gets at maybe the heart of one of your questions has been away from the more commoditized type product and more towards the higher revenue yielding products. And so you saw some evidence in my quote, in 2015, we had five of the top U.S.

new products in the marketplace and in fact we had 37% of the flows into new U.S. ETFs came to SSGA in 2015. So to me very good evidence that our strategy of not only building up our distribution sales force but reorienting our product towards the higher yielding products.

I also referenced the smart beta theme which you tend to read about a lot, lately we think that's a big deal which is to take ETFs and bundle them in an asset allocation model and package them and sell them through largely intermediary market.

We introduced three new smart beta ETFs to our model portfolios, there's another name given to that in the fourth quarter. And then the final point I would make, next to final point is that, we continue to be the only of the large players that are willing to open our platform to outside strategies.

So the most recent would be the DoubleLine Fund which generated -- which is the largest new fund launch in the U.S. in 2015 at $1.8 billion.

So I think we're doing all the things, we're executing on all the things that we set out to execute, and I think we're in a good track to make ETF not only a growth engine within SSGA but a bigger product overall State Street. So we are pleased with the progress..

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

One quick follow-up on expenses, just so I fully understand what you're saying.

If fee revenue is flat or down, can you have expenses down or is there a presumption of fee income growth despite the equity market decline so far?.

Jim, it's Mike. First of all obviously given the uncertainty around the environment it's difficult to answer your question definitively with full confidence. But I stand by what we talked about earlier, which is we do expect to manage expenses at a lower rate above growth in the revenue.

At this point, I do expect that as long as markets reasonably cooperated we would still end up with full year net fee revenue growth. But again as we talked about earlier, it's something that we’ll probably need to continue to update you on over the course of the year.

But our expectation is to manage expenses aggressively and to manage those to a lower growth rate than the fee revenue..

And just maybe on your NIR guidance with two rate hikes, the low end is actually lower than the high end of your additional rate hikes. It seems pretty modest impact from two rate hikes despite the 10-Q disclosure.

So is that a change in deposit outflow assumptions or is it just timing in terms of the remaining six months of the year versus the full 12 months and beyond? How should we think about your NIR leverage given your 10-Q disclosures which are much more significant?.

Sure Jim. First of all, the 10-Q disclosures importantly, number one, assume no client behavior change. And we do anticipate with a couple of more hikes for excess deposits in particular to come off the balance sheet. Second, importantly the 10-Q disclosures are for a consistent interest rate change globally.

And I would tell you that that is in my view highly unlikely to be the case in Europe. The ECB now has cut rates to minus 30, there is talk about cutting that further. As I mentioned earlier the credit spread compression that we’ve seen in Europe because of their quantitative easing program has been significant.

So I mean just to give you perhaps a number to help with the modeling, we estimate that on an all in basis this year versus full year 2015 that the euro NIR is expected to decline by approximately $40 million year-over-year and that’s assuming the interest rates in Europe where they sit today, just not factor in fully additional deterioration.

So, it is the case that we would expect things to be stronger in the U.S. but that’s a headwind. And again relative to full year 2015, the decline in the excess deposits would also be a headwind to NIR; on the other hand, obviously still very positive versus having the issue of the prefs to pay for those..

And then last question from me, about securities lending, you saw short term spreads widen quite a bit in the fourth quarter that seems to be continuing so far.

Was most that impact already felt in 4Q or should we see some further benefits to wider spreads if they stay where they are in 1Q on the sec lending side?.

Jim it's obviously a little bit early to give you definitive guidance on sec lending for the first half of the year. I would say that we feel very positive about the uptick in sec lending. In Q4 specifically we saw an increase in the average assets on loan, both fully enhanced custody business as well as the Agency business.

We saw higher spreads particularly on U.S. equities and believe that the demand for short interest and in particular for specials in Q4 helped significantly. I wouldn’t at this point -- I mean I see nothing to believe that that is going to come down. On the other hand, I wouldn’t try to project additional growth since Q4 was as strong as it was..

Your next question comes from the line of Geoffrey Elliott with Autonomous Research..

Thank you for taking the question. I’ve got a question on the senior secured bank loan book.

Do you know where that would be if you look to sit on a mark to market basis rather than an accrual accounts end basis?.

Sure Geoff it's Mike. I don’t have the very specific number off the top of my head, because we have been tight in terms of our credit underwriting and also have been investing in the upper end of the credit scale for those leverage loans, it would be closer to par than the overall market.

It’s at a slight discount but I want to say round numbers about $0.98 on the $1..

And what’s the energy component within that portfolio?.

It's relatively small. It's approximately $55 million of the $3.3 billion in the overall portfolio..

Your next question comes from the line of Gerard Cassidy with RBC Capital Markets..

Jay can you share with us, you mentioned about the new program Beacon as a step two and you needed to take step one of course to get to step two.

Is there going to be a step three, is this an involving process? I know this goes up to 2020, which is a ways away, but when you look out longer term is this just an ongoing fact of this business that you've got constantly have these big programs?.

I would say largely, Gerard, I would view this being a two stage event. Stage one complete, stage two just commenced. There will always be opportunities to apply technology to this business both to generate revenue opportunities and expense saves. But in my vision there's Beacon.

Since we have gone through the staging of standardization, centers of excellence, rewriting a lot of the applications, I think once we wired them together and for me the Holy Grail is to create an environment within State Street that's all real-time.

And if it's all real-time, you have minimal human intervention, you have all the attendant benefits of it and in my mind as we get out to 2020 we should largely be there. Not that there won't be -- I'd say if there was a stage three it would be more revenue oriented.

Once we can create a real-time infrastructure, we have the opportunity to build systems and build capabilities to generate global exchange type opportunities is probably where the next big move is.

But again it's not cost oriented it's more how you take the data on analytics that are created in this Beacon environment and create information based services to our customers that would be obviously chargeable..

Now is the technology that you're anticipating to get this going, is it all available now or are you anticipating there will be even more advances in technology three years from now that will make deposits even better for the customers?.

That's a great question and I would say we have a plan with a lot of detail around it, but I would fully expect that as we get out in years that technology advances will cause us to make adjustments to the plan. And I'll just give you an example Gerard that hopefully will resonate.

When we went into the ITOT as we call it, we were very determined that we wanted to create a cloud environment and we're also very convinced that the only cloud environment that was appropriate would be a private cloud that we would own and operate and control it. I think today it's quite a bit different.

We would envision that some of that the test modules that we would build, we might run around a public could. That as long as you encrypt the data you are as safe running it out in the public cloud as you're in a private cloud.

And I'd say, if you talk to people that are deeply involved in this world, you would find that to be a fairly meaningful shift in philosophy. So within our Beacon plans some of that is bled-in, but I think for us to imagine what the technology enablements will be five years out is pretty tough to do.

I think though it's back to a point that I made and you reinforced which is, unfortunately you can't leap frog. So you have to modify along the way and we think we've got a plan that not only enables us to get to that future real state, but it will also allow us to take advantage of advances in technology as they unfold over the next five years..

Great and then as a second question, coming to you again Jay, you've mentioned that the assets under management this year, a large client was going to take out $35 billion I think you said.

Couple of questions, one, why is the client leaving? And two, $35 billion is that a real big customer, medium-sized customer, small customer, how would you characterize that type of client?.

Sure, so I would say it's a customer where we have a long-term multidimensional relationship, this is just one component of it. I would characterize it as a smallest kind of customer and I say that because it's all passive assets.

So it' a little bit my SPDR S&P 500 example where the headline number is big but the revenues associated with it are not all that, not significant.

The other point I would make Gerard is that, well not a trend, it's not exceptional that somebody would say, I want to run my passive assets myself and this particular customer was a bank decided that as opposed to outsourcing that to us they would in-source it to themselves..

Your next question comes from the line of Brian Kleinhanzl with KBW..

Hi, just a quick question. On the expense billing program, are the costs associated with that billing error I guess it is? You said you had a $223 million pretax liability associated with that.

I was just curious as to why that didn't hit the P&L and is that excluded from your operating guidance when it is expected at P&L, I guess sometime this year?.

Brian, it's Mike. First this does relate to overbilling that we have had historically, in fact it goes back to the late 1990s.

So as a result rather than charging the Q4 2015 P&L with that amount we have revised the other financial statements that we provided this quarter to basically make an adjustment to the most recent P&L periods and also to the retained earnings account for year-end '14.

So this is reflected in that retained earnings statement, so it's already negatively impacted our capital, that piece for the liabilities that I talked about in the prepared remarks, that is behind us at this point.

Now, obviously, as you can imagine, other things can develop, but at this point, that’s already reflected in the balance sheet and in prior earnings periods..

And then just on the operating leverage guidance, so if we’re assuming taking your 10% decline in equity markets, there is 2% decline in revenues, just kind of putting that through the year-to-date numbers, I mean a 7% decline in the equity market thus far equates about 1.4% of decline in the revenues.

So given that the $75 million reduction in expenses that you’re expecting to hit is just about 1% of your operating expenses, where also that $75 million of expenses come from to get you to positive operating leverage assuming no further change in equity markets to year end?.

Importantly Brian we’re looking number one, at expenses across the board. So I do expect that we’ll find additional expense opportunities beyond what is part of project Beacon. Second, you’re assuming that there is no other fee revenue growth over the course of 2016 in your comments.

And I would anticipate that between net new business and potential growth in for example global markets revenue that we would still be able to get there. But again it's something that’s an evolving situation since the market environment is as challenging as it is..

Your next question comes from the line of Marty Mosby with Vining Sparks..

I wanted to focus on the net interest income, which if you look at the last year, you were down 13%, if you adjust for currencies down 11%. That’s really the major source of underperformance relative to the other trust banks that were both up around 8%.

So, their ability to add duration on their side, or benefit from rather upticks you get in that fund rate is kind of swamping what you’re having to deal with.

Catalysts that you see balancing restructuring or maybe more focus in Europe, how do those catalysts begin to wane and when do you get back on track to be in line with the other peers?.

So Marty it's Mike. First, I am really reluctant to try to give you specific comparisons to our various benchmark competitors. Our business mix is very different. As you correctly pointed out we’ve tended to have more impact from changes in Europe than our competitors over the long-term. I think that served us well.

But in the near-term that’s a pressure point. We have different portfolios. We have different mixes of business that those portfolios back. So again I would hesitate to try to give you a very specific comparison because I don’t know specifically how they’re managing their balance sheet.

What I can tell you is how we’re managing our balance sheet and in terms of the catalyst, as we talked about, we do expect that the recent increase in the Fed funds rate to be particularly helpful. That for example, even though it's just for the U.S.

dollars, it does mean that the floating rate assets that we have that are dollar denominated have been resetting over the course of the last three months and that’s been helpful in terms of the near-term NIR outlook. If we do get additional Fed fund increases, again we expect that to do a couple of things for us.

Number one, we do expect that to be accretive to NIR, because while we will share in all likelihood some of that with clients, we do typically share a percentage for example of the Overnight Index and would retain a portion of that for ourselves.

And then just longer term it's helpful to have these increases in interest rates, because Marty, one of the big things that weighed on us in 2015 is the grind in the fixed rate portion of the portfolio.

About two-thirds of the portfolio is fixed rate and that’s been rolling over, the yield on the maturing assets has been quite a bit higher in ballpark like 75 basis points higher than the fixed rate yield of new purchases.

So if interest rates particularly in that call it three year, five year, 10 year kind of zone, would increase consistently where the Fed fund rate may increase that would be helpful in terms of reducing that grind. And then maybe lastly, you mentioned it and I am just repeating it.

If conditions got better in Europe either in terms of getting the ECB rate back closer to positive territory and ideally some credit spread widening that would be very helpful as well..

And just another question, if you look at the emphasis you had on trying to push some of the marginal deposits out of the balance sheet, have you seen any implication to customer relationships because of that? Fee income seems to be doing relatively well, market share holding in there.

But just was interested that efforts you're doing to try to overcome your emphasis on that side..

Yes, Marty, let me take that, this is Jay. I would say broadly no. I think that -- what I think we did well is we got way out in front of this.

So that was really the beginning of 2015 where we began to have a series of conversations with our customers and there was a shorter percentage of customers who are holding the lion's share of the excess deposits which made it helpful.

But we worked with customers over the course of six months to make sure, one, they understood the issue and our pressure point, and two, begin the layer in a set of fees to hold excess deposits on our balance sheet.

And so we gave customers enough lead time in order to manage the situation or pay the freight to hold excess deposits on our balance sheet. So I think the nature of the way we went about it and also I think the other thing that's probably safe to say is that, we are probably out front on this. I think everybody else is catching up.

So I think this conversation about excess deposits is not unique to State Street anymore, but I think we executed the plan pretty well..

Your next question comes from the line of Brian Bedell with Deutsche Bank..

Just a clarification Mike on the timing of the run rate for expenses the $75 million and the $125 million for 2016 and 2017 respectively, is that a 4Q '16 and 4Q '17 annualized run rate or rather a full year which should imply higher 4Q run rate?.

Brian, this is a full year comparison, so the $75 million is full year '16 versus full year '15 and importantly is a net number to operating expenses. So for example we're going to have some IT spending and just overall programs spending in Q1 and that will continue throughout the year.

The $75 million is the gross savings minus the investment spending that I just mentioned. Importantly, it doesn't include any potential restructuring charges.

I would suspect that a portion of that $300 million to $400 million of overall expected restructuring charges over the period 2016 to 2020 some of that may impact 2016, that would not be included in the $75 million..

Right, okay, so then just to imply that as you work through the quarters and we get to the fourth quarter the run rates will be higher than the full year run rate moving into next years?.

Yes, that's likely fair. I think the only reason I hesitate a little bit is that the investment spending, particularly the IT spending is somewhat of a fluid situation. So again we will be focused on the net. But I think your modeling assumption is a fair one..

Okay great. Just lastly one the FX trading, I know the direct sales component of the FX declined much more than the indirect.

I guess Jay, is there anything FX product with that other aside from the lower market volatility and would you expect that given what we know about FX volatility in client volumes, do you expect that to rebound in 1Q on that part of it?.

I would say, Brian, it's feels to me more episodic than anything that is a trend line and I think that our volumes were pretty much in line with what we saw in the industry, volatility hung in as now I would view it more of an episodic..

At this time, there are no further questions in queue..

Thank you for your time and attention this morning and look forward to hopefully seeing all of you in New York on February 24th. Thank you..

This concludes today's conference call. You may now disconnect..