Operator: Good morning, and welcome to the KeyCorp's Second Quarter 2013 Earnings Conference Call. This call is being recorded.
At this time, I would like to turn the call over to Ms. Beth Mooney, Chairman and CEO. Please go ahead, ma'am.
Beth E. Mooney - Chairman and CEO: Thank you, Operator. Good morning, and welcome to KeyCorp's second quarter 2013 earnings conference call. Joining me for today's presentation is Don Kimble, our Chief Financial Officer; and available for the Q&A portion of the call, are the leaders of Key Corporate Bank and Key Community Bank, Chris Gorman and Bill Koehler; also joining us for the Q&A discussion are our Chief Risk Officer, Bill Hartmann; and our Treasurer, (Joe Vayda).
Slide 2 is our statement on forward-looking disclosure and non-GAAP financial measures. It covers our presentation materials and comments, as well as the question-and-answer segment of our call.
Turning now to Slide 3, our results in the second quarter reflect the clear progress we have made in implementing our growth initiatives, improving our cost structure and executing on our capital priorities. Year-over-year, revenue grew for the fifth consecutive quarter with current period results benefiting from our branch and credit card portfolio acquisitions, loan growth and lower funding costs.
Revenue trends compared to the first quarter were relatively stable with flat loan balances, with stronger fee income from commercial clients who are taking advantage of favorable capital market conditions and because of our distinctive model, we were able to capture the economics from these transactions, while doing what was right for our clients.
During the second quarter, we also continued to invest to drive future revenue growth. We acquired a commercial servicing portfolio and added to our special servicing business. This allows us to leverage our existing platform and meaningfully changes the competitive profile of our commercial loan servicing business, positioning us as the third largest servicer of commercial and multifamily loans and the fifth largest special servicer of CMBS in the United States. The first phase of the transaction closed as expected at the end of June.
We've also continued to invest in our online and mobile offering. In the second quarter, we launched new remote deposit capabilities for both our commercial and consumer clients, which add value and convenience consistent with changing client preferences. Reducing our cost structure and improving efficiency also remain among our top priorities. From the launch of our expense initiative, one year ago, we have achieved annual run rate savings of $171 million, a substantial portion of the $200 million target we committee to reach by December of this year.
Importantly, reaching our target will be a significant milestone, but not an endpoint. We are already identifying new opportunity to both grow revenue and reduce and variabalize our expenses. As we previously communicated, we expected this quarter to be the high point in terms of charges associated with our efficiency plans. Consistent with our guidance, we incurred charges of $37 million, with a large portion related to the realignment of our Community Bank and the consolidation of 33 branches. In the second half of the year, we have another 14 branches identified for closure, which will bring our total to approximately 7% of our total branch network.