Valerie Haertel - Investor Relations Gerald Hassell - Chairman and CEO Todd Gibbons - Chief Financial Officer Curtis Arledge - CEO, BNY Mellon Markets Group Brian Shea - CEO, Investment Services.

Ashley Serrao - Credit Suisse Luke Montgomery - Bernstein Research Brennan Hawken - UBS Alex Blostein - Goldman Sachs Betsy Graseck - Morgan Stanley Ken Usdin - Jefferies Mike Mayo - CLSA Brian Bedell - Deutsche Bank Glenn Schorr - Evercore ISI Jim Mitchell - Buckingham Research Adam Beatty - Bank of America Merrill Lynch Geoffrey Elliott - Autonomous Research.

Good morning, ladies and gentlemen. And welcome to the First Quarter 2015 Earnings Conference Call hosted by BNY Mellon. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference call and webcast will be recorded, and will consist of copyrighted material.

You may not record or rebroadcast these materials without BNY Mellon's consent. I will now turn the call over to Ms. Valerie Haertel. Ms. Haertel, you may begin..

Thank you, Wendy. Good morning. And welcome everyone to the BNY Mellon first quarter 2015 earnings conference call. With us today are Gerald Hassell, our Chairman and CEO; Todd Gibbons, our CFO; as well as our executive management team.

Our first quarter earnings materials include a financial highlights presentation that will be referred to in a discussion of our results and can be found in the Investor Relations section of our website. Before Gerald and Todd begin, let me take a moment to remind you that our remarks today may include forward-looking statements.

Actual results may differ materially from those indicated or implied by the forward-looking statements as a result of various factors.

These factors include those identified in the cautionary statement in the earnings press release, the financial highlights presentation and those identified in the documents filed with the SEC that are available on our website bnymellon.com.

Forward-looking statements on this call speak only as of today, April 22, 2015, and we will not update forward-looking statements. Now I would like to turn the call over to Gerald Hassell.

Gerald?.

Thanks, Valerie, and welcome everyone, and thanks for joining us this morning. As you can see, we are achieving the results consistent with the goals that we shared on Investor Day. For the first quarter, earnings per share were $0.67, which was up 18% year-over-year.

Now focusing on our year-over-year comparisons on an adjusted basis, total revenue was up 4%, total expenses were down 2%, so we generated more than 500 basis points of positive operating leverage. Now the stronger U.S. dollar reduced both our revenue and expenses, but had a limited effect on net income, and Todd will cover that more in a moment.

Our return on tangible common equity in the quarter was 20%. Now we also returned significant value to our shareholder in the form of dividends and share repurchases during the quarter. Simply put, we are executing against our strategic priorities and it’s showing up in our numbers.

Let me remind you of what those priorities are and how we are doing against them. Now our first priority is driving revenue growth. During the quarter, revenue in Investment Services benefited from continued growth in both clearing and Global Collateral Services.

As we have been saying, we are investing in both of these areas to deliver enhanced capabilities to our clients. Across Investment Services and in Asset Servicing in particular, we have been quite targeted about the business we are taking on, we are just going aftermarket shares.

We are focusing on deepening our client relationships, delivering the highest value to our clients and growing profitably, and I think our results are showing just that. And you also recall that late last year we created the Markets Group to bring together existing capabilities from a number of different areas.

We have been repositioning the business by exiting various activities that no longer fit our strategy, while investing in foreign, securities lending, collateral management solutions for our clients. Now these initiatives are already improving our performance and reducing our costs.

Now for example, our enhanced electronic foreign exchange platforms are capturing more client driven volumes and when volatility increases as we saw in the first quarter, we clearly benefit.

But the Markets Group had stronger foreign exchange results, stronger collateral management and securities financing activity, while simultaneously existing derivatives divisions and reducing the capital and costs associated with it. Good overall results that helped improve the company’s operating margin.

Turning to Investment Management, to further diversify our assets under management, we are building out our retail distribution capabilities, and investing and expanding our Wealth Management platform.

The inflows from these retail distribution initiatives are in fact improving, but not yet at the point of being able to offset the active institutional equity outflows that we and the entire industry have been experiencing. Now after quarter end we reached an agreement to sell our Meriten boutique, which is our German based boutique.

This is part of our business portfolio review process to identify opportunities to better redevelop our capital. The sale will allow us to focus on those boutiques with global scale that most benefit from being part of BNY Mellon and where we see the greatest growth opportunities.

And we expect the sale will close at the end of the second quarter and our Investment Management operating margin should improve with this divestiture. On the Investment performance front, during the quarter we strengthen our capabilities and they were recognized through two rankings.

In the first quarter as a testament with continued growth and success, the Dreyfus/Standish Global Fixed Income Fund hit the number 1 ranking in the World Bond category for long-term investors and has been consistently a top performer.

Our Wealth Management business was named the 2015 top National Private Asset Manager and top Private Bank Offering for Family Offices by the Family Wealth Report.

Now our second priority is executing on our business improvement processes, where we have been taking actions from top to bottom, transforming our company through our continues improvement process, it is reducing structural costs and risks, and improving client productivity and service quality. Now let me share some examples.

We are simplifying and automating our global processes. We are continuing to optimize and streamline our technology infrastructure, particularly in Asset Servicing, leveraging a common architecture to reduce our costs and increase agility, so we are delivering new solutions to our clients even faster.

We mentioned last week that we are succeeding and reducing our annual infrastructure spending and that share on trend continued in the first quarter. Now we are also shrinking our real estate portfolio in consolidating locations.

Now we have been able to accelerate some of our efforts, which allowed us to come in better than expected in our net occupancy expense line. Now also as part of our business improvement process, we are improving our return on technology investment.

Today, we have best-of-breed applications in most of our important business activities, such as tri-party, clearing, payments, settlements and collateral management. Our technology is well-regarded by industry professionals and we are particularly proud for our most recent acknowledge.

Now one of which was the Anita Borg Institute recently named us as a top company for women technologists for achieving the highest overall score for all companies evaluated. Now this recognition helps us attract and retain top talent in the industry. Our third priority centers on being a strong, safe, trusted counterparty.

The results of the 2015 CCAR demonstrated that under severally adverse scenario, our projected minimum Tier 1 common ratio and our common equity Tier 1 ratio under stress were the most resilient among all the 14 advanced approached bank holding companies.

So we are well-positioned for all stress scenarios and feel confident that we can continue to execute on our capital plans going forward. Now we also fully recognize the importance of our organization to the financial marketplace and that our reputation is in assets that we must uphold everyday.

To further protect and enhance our safety and soundness, we are investing and focusing on compliance risk management and control functions. We have recently resolved some very important issues on that front and the actions we have taken will significantly reduce the probability of future issues.

Our fourth priority involves generating excess capital and deploying our capital effectively. So during the quarter we repurchased 10.3 million shares for $400 million. And our capital plan calls for the repurchase of up to $3.1 billion of common stock over five-quarter period. And finally, our fifth priority is to attract and retain top talent.

We have been executing against an integrated talent management strategy across the entire company and have been focused on developing talent from within, as well as infusing expertise with key strategic hires in areas where we benefit from new prospectus and capabilities.

We recently promoted several individuals identified through our talent management process. The greater responsibility, including our newly formed BNY Mellon Technology Solutions Group, Global Fund Accounting, Middle Office Solutions and our European bank.

Additionally, we added key external talents, including our new Chief Auditor and a new Board member was our fourth new director in less than year. Fresh perspectives, ideas and the right team composition make us stronger.

So, in summary, we are executing against our priorities and firmly believer we are on track to achieve the earnings, expense and operating leverage goals we outlined for you on Investor Day. So, with that, let me turn it over to Todd..

Thanks, Gerald, and good morning, everyone. My commentary will follow the financial highlights document and start with page six that details our non-GAAP operating results for the quarter. As Gerald noted, EPS was $0.67, that’s up 18% versus the year ago.

Revenue in the first quarter was up approximately 4% year-over-year and 3% sequentially, reflecting growth across all of our key businesses. We’ve particularly strengthened asset servicing, clearing services and foreign exchange.

Expenses were down 2% year-over-year and 1% sequentially as the business improvement process is helping to increase efficiency and reduce our cost. Our ability to drive revenue growth and control expenses resulted in a little more than 500 basis points of positive operating leverage year-over-year.

Now, let me point out that we’ve estimated that the stronger U.S. dollar reduced our revenue by approximately 200 basis points and reduced our expenses by approximately 300 basis points and had a slightly negative impact on total net income.

Business most impacted was Investment Management while currency had lesser impact on our investment services businesses net results. We’ve added new foreign exchange metrics on page six of the new release that’s kind of help you capture the impact of the two currencies.

If you look at that, you will see that the pound was down approximately 9% year-over-year and euro was down 18%. So I’ll discuss briefly the estimated impact to each of our business unit as I cover the segment results. Income before taxes was up 16% year-over-year and 11% sequentially.

On a year-over-year basis, our pre-tax margin increased approximately 300 basis points to 30%, that’s up from 27% in the first quarter of 2014. Return on tangible common equity was 20%. Page seven shows the drivers of our Investment Management business that help explain our underlying performance.

We had 7% year-over-year AUM growth and $17 billion of new net inflows during the quarter. You’ll also note that we experienced net outflows in equities in the quarter while our LDI business continued its rapid growth.

Our Wealth Management business also is performing well benefiting from our investments and promoting our brand in the expansion of our sales for us. Average loans and deposits continue to trend up. Turning to page eight, you can see our financial results for Investment Management.

As I previously noted, Investment Management was most impacted by currency translation since we have a large number of our boutiques outside of U.S. and results in about 42% of our revenue actually being non-U.S. First quarter Investment Management performance fees were $850 million.

Investment Management fees were up 1% year-over-year or 7% on constant currency basis, reflecting the higher equity market values, the impact of the Cutwater acquisition and strategic initiatives. We had a performance fees of $15 million that compares to $20 million in the year ago quarter.

Other revenue was $47 million in the first quarter, up from $16 million in the first quarter of last year and $7 million in the fourth quarter. Both increases primarily reflect higher seed capital gains. The sequential increase also reflects reduced losses on hedging activities within one of the boutiques.

Net interest revenue increased 6% year-over-year and 7% sequentially reflecting the higher loan and deposit levels mostly at the private bank. Revenue growth on a year-over-year basis was up 4% in Investment Management but adjusted for the currency translation we estimated, it would have been up about 9%. Earnings were also negatively impacted.

Income before taxes excluding amortization and tangible assets was up 6% year-over-year and 7% sequentially.

Turning to our Investment Services metrics on page nine, you can see that assets under custody and administration at quarter end were $28.5 trillion, that’s up 2% year-over-year and that’s really driven by higher market values, net new business and partially offset by the stronger U.S. dollar.

Linked quarter AUC/A was flat, adjusted for currency effects, year-over-year growth would have been roughly 5%. The market value of securities on loan at period end showed strong growth on a year-over-year basis.

Securities on loan were up 10%, they are now at $291 billion and that’s due to the expansion of the receipt of securities’ potential collateral as well as the impact of new clients joining our lending program and existing clients increasing their lending activity. Our average loans and deposits were both up significantly here as well.

The key broker-dealer metric of tri-party repo balances grew 9%, all of our clearing metrics recorded pretty good gains with DARTS volumes and average long-term mutual fund assets, each showing double-digit growth.

Moving onto Depository Receipt metric, we’ve had a focus on exiting some low activity programs, the ones that are at the low end of our client base as well as programs that do not meet our profitability criteria.

This continued with the routine closure of programs due to corporate actions has resulted in a net decline in the number of sponsored DR programs in the portfolio. On page 10, you can see detailed segment reporting for Investment Services. The key variances are reflected in fee and other revenue on our consolidated results on page 11.

So let’s move to that page. We will see that asset seed servicing fees were up 3% year-over-year and 2% sequentially. The year-over-year increase primarily reflects net new business largely driven by global collateral services and securities lending as well as the increase in market values.

The sequential increase primarily reflects higher client expense reimbursements and higher securities lending revenue and global collateral services fees, both increases were partially offset by the stronger dollar. Clearing fees were up 6% year-over-year and down 1% sequentially.

The increase from the first quarter ‘14 was primarily driven by higher mutual fund and asset based fees and higher clearance revenue driven by higher DARTS volume. The sequential decrease primarily reflects fewer trading days in the first quarter. Issuer service fees were up 1% year-over-year and 20% sequentially.

Both increases reflect higher corporate actions in DRs. Additionally, Corporate Trust fees seem to stabilize. Treasury services fees were up 1% year-over-year and down 6% sequentially. The sequential decrease primarily reflects seasonally lower payment volumes.

FX and other trading revenue on a consolidated basis was up 68% year-over-year, that’s up 52% sequentially. For this line item, you can also refer to the table at the top of page eight in the news release. See the details I’m discussing.

FX revenue of $217 million was up 67% year-over-year, that’s 32% sequentially, reflecting higher volumes and volatility as well as DR related activity. Other trading revenue was $12 million. That compares with revenue of $6 million in the year ago quarter and the loss of $14 million in the fourth quarter.

Both increases reflect higher fixed income trading revenues. The sequential increase also reflects reduced losses from the hedging activity by one of our investment boutiques. Investment and other income were $63 million, with $39 million lower year-over-year and that was driven by lower leasing gains.

One final impact on the currency impact on our Investment Services business while less impact than we see at Investment Management. We estimate that both revenues and expenses would have been up roughly 2% on a constant currency basis, would have been up by an additional 2% on a constant currency basis. Pre-tax income was not meaningfully impacted.

Turning to net interest revenue on page 12 of the financial highlights, you will see that NIR on a fully tax equivalent basis was unchanged versus the year ago quarter and up 2% from the fourth quarter. Year-over-year the increase in deposits drove growth in our securities portfolio and offset the impact of lower yields.

The sequential improvement reflects the benefit of putting more cash to work as you can see in loans and securities which also increased our margin for the first time in years. The net interest margin for the quarter was 97 basis points, 8 lower than the year ago and 6 from the sequential quarter.

On page 13, you will see that non-interest expense decreased by 2% year-over-year and 1% sequentially. The year-over-year decrease reflects lower expenses in all categories except the sub-custodian expense which is volume related and other expense.

And I should point out that other expense include the impact of the new European Union Single Resolution Fund as we’re accruing our estimated annual contribution requirement. The lower expenses primarily reflect the favorable impact of the stronger dollar and we’re seeing the impact of our business improvement process here as well.

Our total staff expense decreased 2% year-over-year. As you might have seen in our annual report, we elected to freeze the defined benefit plan and we replace it with a defined contribution plan. In the first quarter, we recognized that’s $30 million benefit related to the curtailment of the defined benefit plan.

For the full year, we expect to have a positive benefit to the DD plan itself, resulting in a $10 million net credit that include the curtailment gain we just received. In addition, we expect to have about $12 million of additional expense in the back half of the year for the participants that were formally in the defined benefit plan.

As a result, you can see that you can expect benefits to increase about $30 million in the second quarter. Our headcount was 900 lower year-over-year. There was a sequential increase of 200.

That reflects the onboarding of employees related to the January Cutwater acquisition, the liftout of the Deutsche Bank private equity and real estate administration business and new hires to support several largest client onboarding initiatives.

The decrease in total staff expense was partially offset by higher incentives, reflecting better performance as well as a lower adjustment related to the finalization of the annual incentive awards and the impact of long-term stock award vesting for retirement eligible employees. Both of these last two items typically occur in the first quarter.

As a reminder, the first quarter usually has a spike related to long-term awards and we will expect incentives to decline in the second quarter by somewhere in the vicinity of $65 million based on performance.

On our last earnings call, I told you that occupancy costs should rise related to the sale of One Wall Street as we move into our new facility, which will result in double rent in 2015.

This increase was not reflected in the first quarter because it was offset by the outsourcing of maintenance costs, a stronger dollar and the subletting of some vacant space. For the full year, we still expect occupancy costs to increase as we previously indicated, as we take further actions in our real estate portfolio. Turning to capital on page 14.

With respect to our capital ratios this quarter, the fully phased-in common equity Tier I ratio under the Advanced Approach declined from 9.8% to 9.1% and that was driven by an increase in risk-weighted assets primarily related to operational risk.

Now as we’ve highlighted in previous periods, our operational rigorous model was impacted by external losses incurred by other financial institutions. This quarter, one notable external loss in the payments space go through our model and added approximately $11 billion of risk-weighted assets and therefore negatively impacted our ratio.

I might want to add -- I want to add here and let you know that in the second quarter, we expect to have a benefit to our risk-weighted assets, as we believe we will be deconsolidating many of our Investment Management funds, as we intend to be an early adopter of the reason we issued consolidated accounting standard.

So we effectively expect to reverse the impact of what we saw in the first quarter. Our estimated supplemental leverage ratio increased to 4.5%, as we generated capital and reduced the average balance sheet size slightly.

Our estimated LCR is already over 100% and compliant with the fully phased-in requirements, which is 80% and will step up to over 100% over the next couple of years. Now, a few final notes about the quarter.

As you will see in our release, our effective tax rate was 24.5% but that includes 2% benefit related to income versus variable interest entities, which if you included in line -- excuse me, if you included that in our numbers, our tax rate would be in line with the guidance of about 26%. So, I think that’s the appropriate way to look at it.

I will also point out that we’ve increased our tax-advantaged investments, including energy credits, which are now having the effect of reducing our tax rate but also reducing our pre-tax income and therefore our operating margin.

So if we were to gross up the revenue from the tax credits and report the impact on the tax equivalent basis, our pre-tax income would have been higher by about $64 million and our operating margin would have increased by approximately 120 basis points.

We have elected to disclose this impact on footnote on page 25 of our news release rather than included in our financials. But we think it’s important as we make these investments and you see a reduction in some of the pre-tax. Also in the earnings release on page 11 on some investment securities portfolio highlights.

You will see that the net unrealized gain in our portfolio was $1.7 billion at quarter end, that’s up from $1.3 billion at the end of December. During the quarter, we transferred $11.6 billion of available-for-sale securities to held-to-maturity securities and we also purchased additional held-to-maturity securities during the quarter.

Our strategy is designed to reduce the volatility of our capital account from interest rate fluctuations. Now, I’d like to discuss a few points to factor into your thinking about the second quarter and the years we look ahead.

Net interest revenue was expected to be slightly higher in the second quarter as compared to the first quarter of ’15, as we benefit from the change in the asset mix and day count. We would expect incentives to decline in the second quarter from the first quarter as we did last year.

We expect Investment Management continue to be impacted by the strength of the U.S. dollar due to its non-U.S. presence while the impact in the overall company is expected to be nominal.

The effective tax rate is expected to be in a range of 25% to 26%, and we anticipate proceeding with our capital plans subject to market conditions and the other factors.

To summarize, we are achieving results, consistent with the goals we shared on our Investor Day, executing against our strategic priorities and on track to continue to hit our Investor Day targets. With that, let me hand it back to Gerald..

Thanks, Todd. And Wendy, I think we can open it up for questions..

Thank you. [Operator Instructions] Our first question comes from Ashley Serrao with Credit Suisse..

Good morning..

Good morning, Ashley..

Gerald, a two-part question on headcount. One, I was hoping you could help me just reconcile your commentary from the shareholder meeting where you noted that the company look good on a revenue per employee metric, but then at the same time you reduced headcount by over a 1,000 positions over the course of last year.

And two, as we think about the potential, if we do leverage technology across the franchise, why shouldn’t decline in headcount continue?.

Well, as you know last year, we took an increasingly aggressive action on the headcount side and were able to get some structural changes to our headcounts. We saw actually a continued positive trend in the first quarter of this year, except for the fact we’ve acquired a couple pieces of business.

And we’ve been building out some capabilities for some new clients in certain key areas. Clearly, our goal as part of our business improvement process is to drive down the labor component of our company and use technology as the strategic asset.

So, one of our goals is to get to revenue per employee up, the employee expense down and use technology as a strategic asset to get there. So clearly part of our plan is to reduce that employee headcount per revenue..

Great. And my follow-up is for Todd. On the balance sheet and reinvestment of cash, how much more run rate you have there and then can you give us a sense of the duration and reinvestment yields here? Thank you..

Sure, Ashley. Why don’t we start with duration? So what we’ve effectively done is we’ve got about half of the duration of the portfolio or we call, half of the sensitivities of portfolio in held-to-maturity about half in the available-for-sale accounts. And the duration of the total portfolio is probably around 2.5.

So we softened the volatility, dampen the volatility pretty substantially to our OCI for movements in interest rates. We still are structured to see a pretty significant benefit from a rise in interest rates. So if we wanted to in our net interest income, as well as in fee waivers and other parts of our portfolio.

So if we wanted to, we could probably continue to increase the portfolio a bit. LCR is not necessarily a limiting factor here because we can increase the duration of our HQLA assets, which is effectively what we’ve done here. So, I would say there is a little bit of room there actually but not a lot..

All right. Thanks for taking my questions and congrats on the strong quarter..

Thank you..

Thank you. The next question is from Luke Montgomery with Bernstein Research..

Morning, guys. Just another stab at the headcount question. Investor claiming that your firm has too many employees relative to comparable peers and the difference isn’t explained by business mix.

I think though, if you adjust for the sale gains you had last year, it looks like the comp to revenue ratio has been tracking just a couple percentage points higher than your closest peers. So maybe there is a little work to do there.

You’ve acknowledged the plan but I think the sensible question is whether there are underlying explanations like lower cost, offshore support or outsourcing by others that you don’t do, maybe labor intensity of the businesses you had that they don’t. So, I just want to give you an opportunity to speak to that..

Sure, Luke. Thanks. There is a couple of things that you should factor into your thinking on a comparable basis. One, we’ve been in-sourcing our application developers where others have been either outsourcing it or moderating it. They were actually getting more capacity or less dollars in our technology application volume, sourcing those capabilities.

And we’ve laid out some of those numbers for you last week and in prior weeks. The second issue is we do internally transfer agency businesses, both in the U.S. and in Europe whereas our principal competitor actually does it through a joint venture or outsources it.

Transfer agency services are very labor intensive and therefore, if you were to combined the outsourcing or joint venture arrangement with a competitor you’d probably find a larger headcount on a percentage basis than we may experience.

Last but not least, we do have things like corporate trust and clearing services, treasury services that some of our competitors do not have. They do have a labor component associated with it. But they are also good operating margin businesses. So, I think that’s where the comparable basis starts to bring in a question that headcount versus revenues.

That’s why we are focused on a revenue per employee. And I think we compare very favorably to other institutions. Our goal is still to improve in that category and our goal is to still improve the operating leverage of our company. That’s what we laid out in Investor Day, that’s what we are committed to delivering..

Great. Thanks for that.

And then as a follow-up, I wonder if you might take a stab at breaking out employees by business or maybe consider adding some disclosures to that and in the future?.

Okay. We will give it some thought. Thanks..

Okay. All right. Thank you very much..

Thank you. The next question is from Brennan Hawken with UBS..

Good morning. Quick question on FX, pretty solid this quarter, nice bounce back from last quarter.

Was DR switching to a tailwind here this quarter or was that neutral? And did some of the adjustments that you made to that business that you referenced in your prepared remarks make -- help to make that -- help to impact that revenue line here this quarter?.

Yes, Todd..

Yes. You had a couple of questions there, Brennan. In terms of DRs, DRs were a little stronger in the first quarter and some of that was timing from things that we’ve seen in the fourth quarter. So we did get a benefit of that, and there is some FX related to corporate actions in DRs. And so we dig at a pickup there.

And then some of the FX was substantial increases in volumes, which is somewhat market related as well as just trying to capture on the systems more of the volumes. And then the remainder of the pickup was market driven with some of the events in the Swiss and the higher volatility that we saw in the first quarter..

Okay. Thanks for that.

And then I know you referenced that you expect the asset management margins to improve on the German divestiture, but is it possible to quantify the impact to the margins there?.

Yes.

Curtis, do you want to?.

Yes. The marine business was not a huge contributor to our overall pretax and was a large contributor to both revenues and expenses.

But the strategy around our divestiture being that we really do have strong fixed income capabilities in Europe and other boutiques and the business didn’t drive a significant amount of pretax such that it made sense to continue to have as much of an offering in Germany as we had there.

So it’s not going to be a dramatic impact on margins, but absolutely positive..

Okay. Thanks very much..

Thank you..

Thank you. The next question is from Alex Blostein with Goldman Sachs..

Great. Good morning, everyone..

Hi, Al..

Todd, question for you on the balance sheet, actually couple of questions there. So your comment earlier around putting some of the excess cash to work, I was wondering if you guys could quantify that. We obviously see the mix of the balance sheet kind of moving out of the cash and cash sitting at the fed and to securities portfolio.

How much I guess of the actual deposits you guys could consider moving over time? And should we I guess take that maybe the sign of confidence that you guys are starting to see some of that nonoperational cash becoming operational year-over-year, and that’s why you’re doing that?.

Yes. I think, A, there is greater clarity or there is perfect clarity now around the -- I shouldn’t call perfect. There is better clarity around the LCR, Alex, which gives us some confidence. And now the HCM account would be traded under the LCR. So we have put prudency limits around how far we would go with that.

So if you can see in the quarter I think cash declined by about the size of the increase in the securities portfolio. We do have a very stable core deposit base well in excess of the amount of cash that we -- or securities that we have in the high quality liquid assets in HTM account. There is probably a little bit more room for that.

I think most of what you will see us do now is work on both the assets in the non-HQLA to see if we can bump up the yields a little bit in the assets in the HQLA with the same push. But we are kind of sticking -- we are at 97 basis points in NIM. Our guidance is 95 to 102 rate environment that we try to stick with that out.

So I think that’s probably the best estimate of where we are going to be there..

Got you. And then a follow-up on just the overall size of the balance sheet, so this is the first decline in average earning assets of the size we see from you guys in a while.

I was just curious I guess where is the decline in deposits coming from, what kind of decline base is that, where is it going, just to get some better sense of the moving pieces there?.

It is not. As you look at into the details out, you will see it’s not in our deposit base and deposit base is about flat to up slightly, where you see it is in other borrowed funds. And occasionally, we do put securities out in repo and we will take advantage of some interest earning opportunities.

There were less of them, so we bought down the balance sheet by $10 billion. That was self-induced by our treasury team..

Got you. Great. Thanks so much..

Thank you. The next question is from Betsy Graseck with Morgan Stanley..

Hi, good morning..

Good morning, Betsy..

A couple of questions.

One on just an SLR, you made a little bit of progress this quarter, just wanted to understand how much of the benefit the deconsolidation of those investments you mentioned earlier were going to have, if you could refresh our memory on that, as well as opportunity to improve maybe sooner rather than later with pref issuance?.

In terms of the deconsolidation, we think it’s probably in the ballpark of about 2% of the assets. So if it’s 2%, we’ve got a 4.5% ratio, you can kind of do the arithmetic about 9 or 10 more basis points there, Betsy. It’s not a huge mover, but every little bit helps and there is -- obviously there is no cost to doing that.

As we disclosed in our CCAR, we are giving some consideration to doing a preferred and preferred could be an additional, it’s a cheaper source of capital obviously than common. And it maybe something that we could do on our path to compliance if we felt it was appropriate based on what we see happening to deposit base.

The deposit base is relatively stable. It might be up a little bit what was since the end of quantitative easing. But I think there is going to be some shifting around and the future of the deposit base is going to be a function of how the fed actually conducts its monetary policy..

Great. Okay. And then just separately on clearing, we heard from JP that things get tougher there is possibility they might fade the clearing business.

I mean, how do you think about that, how do you think about the future of clearing? Is there any efforts to potentially put clearing into a shared entity -- industry shared entity?.

I will take part of it, and then I will turn it over to Brian Shea. So Betsy, as you know, we have sort of two forms of clearing businesses. One is the institutional side, who brought the dealer clearance business where we have a very significant market share.

It’s always been a basis for some of our tri-party collateral management capabilities that’s allowed us to build our collateral management and enhance in on a global basis. So it’s been a core business for us and to differentiate it for us in the marketplace.

As you may know, the Federal Reserve is our client in that space is well on the reverse repo program. So we see it as an important activity. We are mindful of the fact that central clearing houses and other market participants want to utilize some of those activities, but today it’s a good earner for us.

We are investing in it and it’s allowing us to bring to market new capabilities.

And our other clearing business which is really a financial advisory solutions platform, i.e., Pershing, now we see that as a credibly strategic asset for the company growing very, very nicely, wealth managers, private banks, advisories around the world want to utilize that platform to serve the end investor.

That’s a strategic growth asset of our company.

And Brian, you may want to add some to it?.

I think you’ve done a terrific job..

Okay. Thanks..

Thank you. The next question is from Ken Usdin with Jefferies..

Thanks. Good morning, guys. I was wondering if you could talk about, we’ve gotten to the point there it seems like we may have seen that turn in professional, legal and other services, you guys are taking care of a bunch of the litigation.

And I am just wondering if you can give us a line of sight there, that’s been the second biggest category, that’s been a pressure on earnings for quite a while.

Are we at an inflection point there? Are you at the point where you can at least feel confident that we’ve kind of peaked there or starting to turn down?.

Yes. I think Ken there are couple of items there. I mean, we -- a lot of our purchase services are things like data sources and information that we used to our business. Our procurement activities are actually helping us drive some of those services. We think actually it’s a little bit more room there.

In terms of the management consulting and some of the consulting expenses that we’re incurring related to some of our major platform initiatives, those will probably be running at the rate that we’re seeing now or in the ballpark, there was quite a spike in the fourth quarter.

We wouldn’t expect that to recur, but they could be in the same level that they are at today. Legal is a little bit early to call. It should be a piece driven with our settlement, so we might see some benefit out of that through some of our litigation defenses which also fall on that line.

So I think in the short term, I look for it to stay down at this level that we saw come from -- down from in the fourth quarter. There might be some room going out, but I am not going to -- at this point I don’t think I really give guidance to a big number yet..

Okay.

And my second question maybe one for Curtis just on the -- in the investment management business, Todd hearing your points on the effect of FX, but the growth rates even adjusted for the three individual investment management lines are somewhat subdued, meaning implies that the fee capture rates look like they are still under some pressure with your mixing still into LDI and out of act of equity.

Just wondering if you can kind of shed some additional light on just continued optimization there and what should we expect thus far is the outlook for fee capture..

Yes. So fee capture when you blend assets, we have fees that are very different in each asset class. And so what we have seen is the fee capture declines really have been result of the success of our rapidly LDI business. So LDI, again the U.S. LDI and European, UK specifically LDI businesses are somewhat different.

The biggest part of our LDI business is in the U.K. and Europe through Insight and they have continued to garner assets as pension plans are derisking. The business -- that business is actually quite active business as you’re trying not just to manage against an interest rate liability but also an inflation liability.

They earn both base fees and performance fees. So when they perform well, their fee realization is actually meaningfully higher. But again, what’s happening on the total fee capture is that the declines -- we cover this at Investor Day you may remember Ken that it really had a lot to do with the fact our LDI business is growing so rapidly.

But again, it’s not a passive business, it’s very much an active business, and much of our performance fees over the past many quarters have been from our LDI business..

Okay. Thank you, guys..

Thanks, Ken..

Thank you. The next question is from Mike Mayo with CLSA..

Hi. I have one question with three parts. At the annual meeting, new director Ed Garden said that Bank of New York is focused on being best-in-class in everything we do.

So first, are you benchmarking versus best-in-class? Second, what is the best-in-class number for ROTCE and the margins for investment management and investment services? And third, when you look at best-in-class, wouldn’t it be more appropriate instead of looking at revenue per employee to look at net income per employee and on that measure it seems like you rank below peer? Thanks..

Thanks, Mike. We certainly aspire to be best-in-class in everything we do. And to be recognized as the industry leader in the areas we operate in. We do metric ourselves against the variety of different institutions and a variety of different metrics to try to achieve those goals. We challenge our teams across the company to aspire to those metrics.

For the public consumption we give you broad metrics. It’s tough to give you every single metric that we operate in the company within. And so things like fee to expense ratio across investment services, you see continuous improvement there.

The revenue per employee is admittedly a broad metric but it’s an indicative metric of one other things we’re trying to work towards. We look at client survey and client satisfaction surveys. We measure those that we shared with you at the shareholder meeting last week are extremely high scores.

We want to get to 100%, I’m not sure we will ever get there, but those are some of the things we’re trying to work towards, things like straight through processing rates, accuracy rates are all things that we measure in investment services.

Investment management side, we look at the investment performance of the boutiques and the asset classes versus their fee realization. So we have a lot of metrics across the company where we’re aspiring to be the best to everything we do.

Will we always get there? It will be a challenge to get there in every single category, but that’s certainly our aspiration..

All right. One follow-up then because last week you did mention the revenue per employee and after getting back to my desk, I’m looking at net income per employee. It didn’t look quite as good or like underperform peer.

So why is revenue per employee the right metric to look at instead of net income per employee? And also, when you sell your German boutique, will that help that metric? And can you elaborate on that sale because that seems new?.

Okay. Mike, whether it’s revenue per employee or net income per employee, I think they are a metric.

But I think the metric ultimately that you need to follow is what is happening to our operating margin and how are we performing, because if we in-source or outsource, whichever way you go is there is good reason for one company do one way versus another doing it another way. Ultimately, it’s got to drop to the bottomline.

And I think what you’ve seen in our performance this quarter a 300 basis point increase in our operating margin is pretty substantial. And we continue to focus on driving the margin. We think the strategies ultimately will pay off.

We think the in-sourcing of our application developers not only do we have the intellectual property close to our clients, which can make us the best-in-class in terms of providing technology solutions, we also have it at a lower cost because we own it. And that’s being reflecting in our technology costs, which are declining.

So I think that that’s how ultimately you have to measure us, because it’s just too hard to tell exactly what’s going on with headcount and how people compute it and whether they’ve got contractor in versus full time employees and so forth. In terms of Meriten, I’ll turn it over to Curtis..

Yes. Thanks. One thing I would want to make sure that we highlighted that we in addition to selling Meriten, we also acquired Cutwater. There is actually a net reduction in staff as a result of that, but it’s not going to meaningfully change any of the metrics that you’re looking at, Mike. So that really was a strategic repositioning of our portfolio.

Again, we had more fixed income capability in Europe than we felt like we needed. And we also want to grow Insight’s terrific LDI capabilities in the U.S. So partnering them with an excellent firm at Cutwater really was we thought fantastic move. So I just want to make sure we capture both of those..

And I think, Meriten is part in by itself, it’s not going to move the needle a lot. But as we pour over the portfolio, as we change our derivatives businesses we streamlined our capital markets activities as we exited the futures clearing margin, as we exited two corporate trusts activities in Japan and Mexico, now throw Meriten into that.

As we continue to pore over what makes sense in aggregate, they’re starting to move the needle..

All right. Thank you..

Thank you. The next question is from Brian Bedell with Deutsche Bank..

Hi. Good morning, folks..

Hi..

Maybe just following along that path on the actual cost saves from strategic actions.

And maybe if you can just update us on the aggregate level of cost saves on a year-over-year basis that you expect from consolidating some of the back-office platforms in asset servicing like moving to the one platform in custody?.

Yes. So Brian, this is Brian Shea. We continue to drive forward with our business improvement process, which is transforming for success. And as Gerald mentioned earlier, we’re going across the board. So from a business excellence perspective, can’t just talk about the business portfolio review actions, Meriten was the latest in a series.

We continue to drive more leverage across the franchise in terms of enterprise team work. We’re executing on a global location strategy to reposition people to lower cost locations.

Lets talk about the in-sourcing of technology development, which not only improves our speeds to market and intellectual capital leverage, but it also reduces our costs and reduces our dependency on contractors and consultants.

We are moving forward with the platform consolidations in the latest quarter or in the last month we completed the final stage of our corporate trust replatforming to a new -- to our target platform and that will enable us to retire another large historical legacy platform of the company. So there’s a lots going on.

But the key message I’d say is one, we gave you a target at Investor Day. We’re going to meet that target and we’re on track to meet that target. And the work that we’re doing is not one-time cost driven, it’s sustainable continuous improvement and so we believe we can continue to drive improvement in this process so over the long-term..

And Brian, I would just add that, we’ve learned the lesson of announcing a big program and then delivering on the program and unless it shows up in the operating margin and the operating leverage, it doesn’t count and it’s showing up in the operating leverage and the operating margins.

So our margin went up by 300 basis points in the first quarter of last year. Our fee-to-expense ratio has improved in Investment Services and we produced over 500 basis points of operating leverage. Those are the facts..

And I would add to that Brian, all the actions that we’re taking to streamline the organization and transformation that, Brian, just talked about make us a little simpler, a little less risky, but there are also continue to be significant regulatory requirements for us, the resolution planning, meeting some of the data requirements that are substantial.

So the regulators continue to increase the bar and we need to be prepared to be able to fund those investments and some of this will drop to the bottomline and some of it will enable us to fund the increasing demands from the regulators..

Great. Right. So that remains the wildcard on the regulatory front from the expense perspective its sounds like..

Yes..

And then just to follow up, this might be too early to try to figure, but you talked a little bit about the NEXEN platform at the shareholder meeting.

Maybe if you could -- is there a way to quantify the competitive advantage if you think you will be able to get from that from new product rollout, some of the internal sourcing that you just mentioned, say over a two or three-year period from a revenue perspective?.

Yeah.

I would -- I don’t want to give you a specific revenue target, but I can say that, we’re committed to be the investment industry technology leader, partly in-sourcing strategy that we mentioned is not just around being more cost effective, its about transferring domain business knowledge into the technology development team in a way they create the competitive advantage.

NEXEN will be a visible manifestation of that to our clients. It’s a sort of the next-generation technology platform that’s going to allow us to connect the various applications across the various businesses and deliver more seamless and state-of-the-art intuitive platform to BNY Mellon’s clients.

It’s going to be -- it is based on the secure cloud-based -- private cloud-based platform, which accelerates our speed to market for new capabilities and actually reduces our cost of infrastructure.

It has an EPI marketplace essentially allowing seamless integration with our clients in much so will be an easier firm to do business with and integrate with from a technology perspective. It will be completely mobile in a way that we deliver. So any mobile device anywhere, anytime people will be able to connect through NEXEN.

It has the equivalent of an app store, which means that we are going to be able to easily integrate third-party providers of choice into the platform.

So that we reduce our clients’ vendor management and integration costs, and ultimately, it will be the delivery vehicle for our big data solutions, which we are already developing delivering to clients in the area of liquidity management, collateral management, but will allow us to deliver insights to our clients.

So we’ll -- we are rolling this out internally in the beginning this quarter and we’ll start rolling out to customers in the second half of the year for selected businesses and over the course of 2016 we will rollout more broadly to the broader client base.

Hope that helps?.

Yeah. That’s pretty color. Thank you..

Thanks Brian..

Thank you. The next question is from Glenn Schorr with Evercore ISI..

Hi. Thanks very much..

Hi, Glenn..

A quick question in money market land, I'm curious if you feel like you have the product offering set where you wanted to be as we transition next year and what kind of sensitivities you think you are looking at in terms of client bounce migration, prime funds, the treasury funds and what kind of fee give up and fee waiver give up that might be -- may -- that we are thinking gets recaptured that might not be based on how clients migrate?.

Hey, Glenn. This is Curtis. Let me give you the view from the Investor Management perspective and then maybe, Todd or Brian, talk about it on the other side.

So, first of all, you are seeing people reposition their money market offerings, as we get closer to next year’s floating rate NAV for institutional prime funds and we’ve actually been spending a lot of time on that as well.

And so not ready to announce anything just yet, but I think, it's fair to say, that the industry will position itself for, what we do believe will be a shift in asset, there are a lot of people who currently -- institutional clients that use fixed NAV prime funds that will not be able to have them be in floating in status.

So we know assets are likely to move. We continuously survey our clients and not just across investment management but the whole company. We are obviously a very large player here. And we do believe that -- between the third and 50% of the clients will shift to treasury funds.

And so to answer your questions about what that means from a fee waiver perspective, I actually has -- it’s very significant where interest rates are when that occurs fee waivers are more challenging in treasury funds. And so, if in October of 2016 interest rates haven’t moved, there will be a negative impact from fee waivers from that activity.

One of the other thing, it is somewhat offsetting that though and you’ve seen some banks begin SLR is having an impact changing their views on deposits and so we have absolutely seen hedge funds and other clients who would have left the deposits on bank balance sheets move those two money market funds.

And so we are actually in the first quarter across our platform and within investment management, we saw balances remained relatively stable, the seasonality would have suggested that they would have been down somewhat. So there is a growth in money market funds occurring as a result of regulation, so there are some countervailing at play here..

Yeah. So, I think, going for the company as a whole that if interest rates were to stay at zero and you did see a movement for prime, again let’s talk with, what Curtis just indicated is the movement you are seeing into treasury funds not necessarily coming from prime right now, it’s coming from bank deposits.

But if in the event as we -- as we move forward money market would fund reform, we would expect prime to go to more toward treasury. And that -- if interest rates stayed at zero that would be a negative for us because there is lower yield in treasury and therefore they are going to be a modest increase in fee waivers as a result of that.

If interest rates normalize than the recovery track of fee waivers would be as we’ve described..

Got it. Okay. I appreciate it. And then just one little catch up on occupancy cost. You mentioned that we couldn't see the double occupancy cost in first quarter.

I just want to make sure they were there but they were offsetting items because I would just want to make sure we are modeling second, third and fourth quarter correctly for the...?.

I’d love to -- let me clarify that and make it absolutely clear. So yes, we do -- we are paying the double rent. We had a little benefit from currency translation. We also had a little benefit from our outsourcing of maintenance which falls through that occupancy expense line.

And in addition, some of the costs associated with the move have not been reflected in that line. So I think the best guidance I could give we had indicated that we thought the line would be up about $30 million for the full year, it’s probably best to think of it at about that amount..

Okay. I appreciate it. Thank you..

Thank you. The next question is from Jim Mitchell with Buckingham Research..

Yeah. Good morning. Maybe just a quick follow-up on the deposit discussion, obviously given leverage constraints across the industry it’s sort of a difficult problem for everybody.

How do we think about it long-term up -- is it more that hey we can’t really tell our clients what to do because we don't want to lose relationships and push deposits down like a JPMorgan and longer term the economics with higher rates you kind of get to a crossover point where you actually earn your cost of capital on those deposits? Is that sort of the strategy that -- or is there something more proactive you can do to push down leverage and move into money markets.

So just wondering if there's any kind of constraints on money markets for a lot of corporate treasures if they have a risk of being locked up for 30 days and things like that?.

Well why don’t I start and I’ll turn it over to Todd. Well, it’s a very dynamic situation. Supplemental leverage phases in and we work our way towards it. Obviously the level of the balance sheet becomes increasingly more important. We’d like to earn some money on those deposits in the short run. We are watching our deposit base and our client activity.

We clearly want to try to drive the deposit base towards operational deposits which are having more favorable treatment. We are educating all of our teams around the company around client activity and whether it's operational deposits or not and therefore the value associated with that.

That helps us engage with our clients better and really drive better outcomes for our clients and ourselves. So it’s a very dynamic situation. We are very engaged with our clients on it where we think it’s appropriate as we’ve done in Europe where we are charging for deposits we are but we are modeling this and watching it very carefully..

Yeah. Jim, I would just add to that, that it’s hard to predict how deposits are going to move until you are clear about what the Fed monetary policy is going to be. So if they are drained in a traditional way which would be through reverse repo then we would think deposits would be -- would run off and it would be price based.

Another alternative is literally just to price them. So there are going to be non-operational deposits which mean they aren’t very attractive under the LCR. And I think banks will be not willing to pay a lot for them especially if they are somewhat constrained by the SLR ratio.

In the event, net interest rates rise and those deposits want to stick with institutions that are very strong institutions, there will be a cross over at 60 or 70 basis points that looks pretty attractive as a return on capital even just leaving it at the Fed.

So there might be a point where you probably race in for further capital just to keep the balance sheet -- keep them on the balance sheet to make it very -- actually a zero risk return but a decent return on regulatory capital..

Okay. Thanks for that. That's very helpful. And then may be a quickie on the net share count. I think you -- last year's buyback, I think net of employee stock issue was about, I guess, at 35%, 40% dilution.

Is that the way to think about it going forward or should we think about the employee issuance is more of a fixed cost and as the buyback increases the net share count reduction improves?.

It’s relatively stable. So you’ll see a little bit of a higher one as the buyback increases but not a lot. So you should still I think, think in the same terms that you just mentioned that there will be share issuance with the employees..

Okay. Great. Thanks a lot..

That’s kind of a ballpark. Okay..

Thank you. The next question is from Adam Beatty with Bank of America Merrill Lynch..

Thank you and good morning. A couple of questions on Investment Management, specifically on the multi-affiliate model. I appreciate your comments so far on Meriten and Cutwater and Insight.

Just more broadly across the affiliate portfolio, is there additional streamlining that you're thinking about? Are there capabilities that you're looking to add or maybe some affiliates that are subscale? Just more broadly how are you thinking about the affiliate portfolio? Thanks..

Yes. So one of the things that we announce recently was the formation of a actually a new investment boutique from start with the state of Texas as a cornerstone investor.

We actually launched a firm called Amherst Capital and it’s designed in many ways to benefit from a lot of regulatory change that we are talking about where banks are having to hold more capital, much of the changes in real estate finance have been impacted by that.

And so that boutique will actually manage funds in real estate finance as result of this change. And so that’s an example of the kind of thing where we are continuously looking for places, where we believe our clients can earn some very attractive returns, relative to their liabilities and also to their needs.

And so we -- one way that we manage our portfolio was by starting new things, launching new things. And it was a great thing to have a very well-known, sizable institutional client launch that with us.

On the other hand, the Meriten sale very much was looking at our portfolio and seeing the great growth that we’ve seen from other investment firms in our mix and so both, Insight, Standish, Alcentra, Newton even had some very good European fixed income capabilities.

So when we feel like our capabilities get to the point that there is more attractive owner of the firm, we have sold it.

And in the past, we closed firms that become subscale and didn’t deliver the investment performance, we’re always looking to find those investment capabilities that we think are excellent that fit, meets that we think our clients have and that are in line with market trends such as I described around the Amherst. It is a continuous process.

I will tell you that we are not traders of our investment boutiques. I want to make sure that we don’t send that message because the truth of the matter is we are trying to have investment lineup that satisfies the complete solutions for our vast global client base.

And again, the Meriten enterprise by itself is not our core strategy of ours to sell firms but really just made more sense to do something different. The Cutwater acquisition again expanding pension derisking capabilities into the U.S. is a major market trend and that’s why we made that acquisition..

Makes sense. Thank you for the color.

And then just turning to the equity capability, which stands out a little bit from an otherwise strong franchise on those terms are there product gaps that maybe you're looking to fill? Is it a question of current products maybe being out-of-favor or mainly a performance issue? I know you've done some work on distribution and how is that coming to fruition?.

Yes. Thanks for that question. It’s a good one. Again, most of the assets under management that we have are with institutional clients who are very disciplined around rebalancing. And so as equity markets have performed well, the client base that we have is very thoughtful about managing their overall asset allocation.

And so rebalancing has absolutely been a big part of the trend we’ve seen not just this quarter but in previous quarter. If we look across the industry and some of what we see in retirement channels and in retail channels that have been -- there has been less volatility.

There are actually inflows into some equity products and a lot of the investment we’ve been making in our wealth management business and in our U.S. retail intermediary business have been around being able to capture those flows. And just year-over-year, I can tell U.S. retail across all products had a very nice uptick, about 60% increase in sales.

And our wealth management business is also showing some very nice growth. In active equity, we’ve seen some impact at the institutional level where clients have moved from active to passive. I’d tell you that about a third of what we’ve seen in our business in this quarter was a move from active to passive. So that’s a dynamic at play as well..

That’s very helpful. Thank you for taking my questions..

Thank you. Our final question today is from Geoffrey Elliott with Autonomous Research..

Good morning. Thank you for taking the question. At the Investor Day you talked about 11% to 12% range for the Basel III Tier 1 common ratio. Clearly even with the reversal of the operational risk here you're going to be a bit below that.

Are you still thinking about that 11% to 12% range as the right number or do you think it’s kind of shifted down?.

No, Geoff. I think, as I mentioned in my prepared remarks, the impact of the increase in the operational risk capital will be offset by the deconsolidation of certain assets, as we believe we are going to be an early adopter of the consolidation standards.

So that will bring us back closer to the 10% range and then there will be some natural accretion of capital, as we both increase our SLR requirements. And we like to be about it. I think being optimal is being about 2x.

So if we have 5.5% of the SLR based capital, leverage capital that would probably put us in about at 11% or so for a common equity Tier 1. So, I’d still keep it pretty close to the range of 11% to 12%..

And then just a quick question on the numbers. There was a big increase in non-controlling interest to $90 million and there was also a big step up in the income from consolidated investment management funds.

It sounded like you were saying there was some sort of hedging effect that drove that, but I just wanted to make sure I understood what was going on..

Yeah. This refers back to the consolidation of the variable interest entities that we are just talking about in the balance sheet. So effectively what happens when we have a small interest in our fund, we have to consolidate the entire fund. And as we consolidate that, we recognized the revenue not only from our own small interest but of our clients.

And then we take that revenue -- so in the first quarter, it did very well. So it went up substantially and our clients saw much more in the form of revenue that we typically see. And if we go through the balance sheet, you’ll see there is deduction on an after-tax basis of that minority interest.

And so what it looks like is we have a large pre-tax income and therefore have a very low tax rates and that’s not our income, doesn’t get included in the tax rate but in effect it’s best just to take the way we report our numbers on an adjusted basis. That’s why we didn’t say our revenue grew 6%, which is what the GAAP number was.

It actually grew 4% because we took the client revenue out of the revenue line. As we adopt the new standard, we’ll get a lot less noise from that because it will eliminate most of what you see coming through there..

Great. Thank you very much..

Okay. Thank you very much, everyone. And we really appreciated you dialing in. If you have further questions, please give Valerie Haertel a call and we look forward to catching up with you soon..

Thank you. If there are any additional questions or comments, you may contact Ms. Valerie Haertel at 212-635-8529. Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating..