Valerie Haertel - Global Head, IR Charles Scharf - Chief Executive Officer Todd Gibbons - Chief Financial Officer.

Alex Blostein - Goldman Sachs Glenn Schorr - Evercore Brian Bedell - Deutsche Bank Betsy Graseck - Morgan Stanley Ken Usdin - Jefferies Michael Carrier - Bank of America Mike Mayo - Wells Fargo Securities Geoff Elliott - Autonomous Research Gerard Cassidy - RBC Brian Kleinhanzl - KBW.

Good morning, ladies and gentlemen, and welcome to the Third Quarter 2017 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. Good morning, and welcome to the BNY Mellon third quarter 2017 earnings conference call. With us today are Charlie Scharf, our CEO; and Todd Gibbons, our CFO, as well as members of our executive leadership team.

Our third quarter earnings materials include a financial highlights presentation that will be referred to in the discussion of our results, and can be found on the Investor Relations section of our website. Before Charlie and Todd discuss our results, 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 our 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 in our documents filed with the SEC available on the website, bnymellon.com.

Forward-looking statements made on this call speak only as of today, October 19, 2017. We will not update forward-looking statements. Now I would like to turn the call over to Charlie..

Thank you so much, and good morning and thank you all for joining us. I would like to cover a series of items before I turn it over to Todd, and then we will open it up for questions. I'm going to be making some brief remarks about the quarter.

I'm going to talk about the transition, share some views on our businesses, our challenges and our opportunities. Let me start with the third quarter performance versus the prior year. Revenue grew 2%. Expenses were flat year-over-year and were flat from last quarter. EPS grew 4%.

Looking at revenue in more detail, fees grew 1%, but DRs decreased by $54 million, which reduced growth by 2%. FX and other trading revenues were down $10 million. The remainder of investment services grew 5% and investment management fees grew 5%.

Todd will discuss this in more detail but we saw some reasonable growth in some areas that are core to our franchise. This includes asset servicing, clearing fees, asset management and performance fees and treasury services fees. Net interest grew 8%. On a segment basis, investment services grew revenue 2%.

Again DRs reduced this growth rate by about 2% and FX and other trading revenues reduced this by 1%. Investment management grew revenue at 4%. When we look at pre-tax, investment services pre-tax grew 4% and investment management pre-tax grew 17%.

We also continued to strengthen our capital position which Todd will cover, and I will discuss my thoughts in more detail, but while the quarter showed consistent performance and some of our core businesses showed reasonable growth, we believe we can continue to build our franchise and ultimately increase our rate of revenue and EPS growth.

Now a few comments about the transition. First I want to take a few minutes and thank Gerald. He has been a terrific partner through the transition and I am grateful to have access to his advice and counsel. I also want to recognize the progress he has made and the foundation he has created during his tenure as CEO.

When I talk about the opportunities that we have for the future we all know they are possible because of what he has accomplished here. Also a few words about the [indiscernible] of our employees here at The Bank of New York Mellon. While Gerald provided the necessary leadership, the results have been driven by a large group of employees here.

The effort has been tremendous; changing the profit profile of the company at the same time as dealing with all of the post-crisis requirements is an extraordinary achievement. We are a much stronger company today and our future is bright because of what you have all accomplished. So thank you. Having said that we are at the beginning of a new journey.

We are proud of our progress, but we are not necessarily satisfied with our performance. We want to continue to build stronger underlying margins, which we might or might not use to reinvest in the business and we seek higher levels of growth, and we will continue to be focused on keeping a strong capital base and high returns.

For me personally it has been a busy three months. I have spent most of my time listening and learning. I have seen 42 of our top 50 clients around the world. I have met with many of our regulators globally, and I have had extensive internal discussions focusing on both our business and our people.

Todd and I have conducted systematic business reviews to review our business strategies, performance, competitive environment, strengths and opportunities. I have also done my best to meet with as many people as possible in both small and larger groups.

People have been generous with their time and patience, and I have found my discussions invaluable thus far. Now let me make some observations about our company. There are many things which excite me about this company, which I have seen. First, there are so many pieces of our culture which anyone would envy. We love working for this company.

We love serving our clients. We take a long-term view of those relationships. We are extremely objective about our own performance, and the genuinely enjoy working as a team. In addition to these strong elements of our culture we play an important role in the global financial system.

We have got deep relationships with our clients, which have been built over decades. We talk about their needs before our needs. So many people here have great subject matter expertise as well, and we understand the importance of technology to our future. But I also see meaningful opportunities for us to improve our business going forward.

With all the progress that we have made in generating strong results, I still believe we can improve our performance by changing how we manage the company. We are not demanding enough of each other and this can stand in the way of disciplined management, which can drive us to stronger results.

We do strive to be a high-performing company, and that requires crisper processes, streamlined decision-making, a clear sense of responsibility and most importantly we are beginning to drive a meaningfully different sense of urgency and clear accountability.

Ultimately I firmly believe this will drive better execution, better decision-making and ultimately better results. As we think about our future there is nothing more important than ensuring we have got the best operating environment and core technology platform to build from.

It is important that everyone understands that this is a multi-year effort that has been in place. We have made significant improvements in improving our core platforms, but this is a journey and significant continued investment is necessary.

With Bridget Engle joining us, we now have a new set of eyes to look at the priorities and we have a clear agenda here. We spend over $2 billion today a year on technology, and we will continue to devote an outsized amount of our resources here. We have eliminated redundant platforms over the past several years, but still have more work to do.

The continued platform integration is critical. Our operating environment is still too complex. As we continue to invest, we will ultimately become more efficient but more importantly we will have a better platform to serve our clients, and our investments in technology go beyond core platform improvement. You have heard us talk about NEXEN.

NEXEN is not one system or one platform, but a discrete set of activities, which are important for our ability to deliver our company as a platform. It includes the following. We are simplifying the ways clients access our technology by providing a common integrated portal rather than siloed solutions.

Our APIs will allow clients a simplified and more streamlined way to access our capabilities. Our efforts to more holistically manage our data across the enterprise will continue to create meaningful ways for us to provide differentiated insights and capabilities for our clients.

And this year we launched our third generation container-based private cloud. Our private cloud platform hosts a growing portion of our non-mainframe applications and has significantly improved software delivery times from months to hours. Here too we are committed to this journey and as we sharpen our focus on our priorities and our implementation.

And while we made great progress reducing our expense base we are not done. We need to continue to drive efficiency throughout the company. This includes developing a multiyear plan to automate much of the manual work that exists today.

I have talked about the strong client orientation that exists inside the company, but here I think we do have substantial opportunity to take the strong piece of our culture a step forward. Our client focus by itself doesn't ensure that we consistently deliver great solutions to our clients.

We become too product centric in some cases and at times have not worked as well across our organization. Simply said, we see a significant opportunity to do a better job delivering all of BNY Mellon to our clients in a clear and coordinated way.

We are now engaged in sessions where we develop detailed client plans looking across the company at our current business relationships, their wallet, our competitive position, our solutions, where they are taking their company and put these all together to develop a coordinated plan to serve each client.

These sessions will drive management strategies for our clients, but also will drive us to create new solutions based on a deeper understanding of where we can help our clients grow. These tools then form the basis for a process to manage our business with clients truly at the center of our thoughts and activities.

Now let me make a few specific comments about our businesses. First of all we like the businesses that we are in. Like most businesses, some have more challenges and some have more opportunities. Let me start by talking about our investment services businesses and I will start specifically with our asset servicing and clearing businesses.

Our positions are strong. These are core services for our clients, where we have true global scale. We have high quality businesses, which are real competitive differentiators for us. The business environment is competitive for sure.

And our growth has been impacted in some of these businesses by conversions and related issues over the past few years, but our asset servicing revenues grew 4% this quarter and our clearing revenues grew 10%. We believe that we still have an opportunity to improve our performance.

Pershing is a great brand; has created a great place for itself in the market and it is very well run. Our government clearance business is also one of our great strengths and should continue to be an asset for us going forward. And we are in a unique position in that we connect the buy-side and the sell-side here.

Our technology has been a differentiator and we continue to have opportunities to do even more with both the technology and the data we have. And remember these businesses are very often the anchors in our client relationship and we see opportunities to create even more leverage going forward.

Our corporate trust business is a meaningful part of the company. Our results have been disappointing over the last few years as we have not committed the required resources, but we did see mid-single-digit revenue growth this quarter.

We now have a new leadership team in place and are focused on regaining our position as the high quality growing trustee. In our treasury services businesses, we are a top tier US dollar clearer, US treasury management solutions provider and the payment services provider to the rest of the BNY Mellon enterprise.

We see steady growth here, low double double-digit revenue growth this quarter and it is driven by service quality and GDP growth. It also produces healthy margins and high quality LCR friendly deposit balances. In our DR business, we have significant share and are winning our fair share of new programs.

Pricing has become more competitive but we remain disciplined on that, and also on structure and terms. Growth here is dependent upon emerging market equity issuances and episodic corporate actions and other issuance and cancellation activity. Let me make some comments about our markets business.

Our markets business is a very important part of our offering. Our goal here is to capture flows generated from the strong relationships elsewhere in the company. We have always been highly focused on core FX and other low-risk products and will continue to do so.

We have some of the best securities lending and collateral management capabilities in the world, important differentiators where we believe we can provide more liquidity, lower funding cost and lower capital requirements for our clients. This business benefits hugely from our scale, but also from our use of data and technology.

Now let me move on to our investment management business. As you know, we have multiple brands and investment strategies and their pluses and minuses to the structure. There can be different points of view on the value of multiple brands, but some of our brands are clear differentiators for us.

But the way we run the core of our business is actually not different from many other active managers out there. We have highly focused investment teams.

They have their own clear and unique investment processes, and they have got the drive, the focus and the incentive system based on their own performance to deliver the strongest results that they can. Where we have fallen short historically is that we have not achieved the benefits of common platforms.

Mitchell is very focused on doing this where it makes sense, and you are seeing it in our results with significant margin expansion and profit growth. And I do believe that there are real benefits to asset management, investment services and markets all being part of Bank of New York Mellon.

Distributors of asset management products are some of our biggest clients. And as I visited many of our boutique CEOs, they have told me of the value they are beginning to see as we create access they would not be able to achieve on their own. Again we have deep global relationships. Our Pershing platform is another important partner of the business.

And lastly asset management is an important component of one of our best and least well-understood assets, which is our [precision] servicing and managing cash. Along with markets and investment services we have a fairly unique set of capabilities, which give us a unique set of offerings for both broker-dealers and asset owners.

Having said this, our asset management and asset servicing flows today are clearly suffering from not having scale in ETFs. This is a topic for another day. For now our focus is creating value by continuing to improve the profit profile of our business by leveraging BNY Mellon and common platforms.

These are just a few thoughts based on what I have seen and learnt over the past three months. We are currently deep into our planning process and we are using the process to dig deep into our businesses and develop a clear plan, which is both operational, financial but also strategic for the next several years.

We plan on providing a detailed review of our findings and plans at an investor day, which we are now planning to hold on March 8. With that, let me turn it over to Todd..

Thanks, Charlie and good morning everyone. I will review the details of our third-quarter financial results on a year-over-year basis, unless I note otherwise. In the quarter, global equity [markets] resulted in record AUCA and AUM for us. The revenue increased 2%, investment management fees were up 5%, investment services 1%.

As Charlie noted, our investment services revenue performance was impacted by a 34% decline in DR revenue and that also impacted our FX trading revenue on a year-over-year basis. We experienced a little bit lower volatility in our FX results on a year-over-year basis.

As you can see in the report it is down about 20% volatility, and that is where the market averages were, and somewhat offset by higher average trading volume.

And IR increased as we recognized a full quarter benefit from the June rate increase, and did experience a modest decline in deposits and lower loan volume as we reduced some of our lower yielding loans.

Finally, from a currency translation perspective the fluctuations had an essentially neutral impact on revenues as well as on our expenses and the net income for the company on a total company basis. But it did have a slightly higher impact on revenues and expenses sequentially. Charlie walked you through the highlights of the quarter.

So I will move ahead to Slide 8 to discuss our consolidated fee and other revenue. Asset servicing fees were up 4% year-over-year and 2% sequentially.

The year-over-year change reflects higher equity market values and net new business, including growth in collateral management and that was partially offset by the impact of downsizing the UK transfer agency business. The sequential increase was driven by currency and higher equity market values.

Clearing service fees increased 10% year-over-year and that is primarily reflecting higher money market fees and growth in our long-term mutual fund assets. On a sequential basis, clearing fees declined and that is driven by lower volumes that we saw in the third quarter.

Issuer service fees declined 15% year-over-year and that is reflecting the lower depositary receipt fees and we experienced fewer corporate actions, some lost business due to pricing and structure and also had lower program shares outstanding. In net aggregate, those items reduced the fees relative to last year by over $50 million.

On a sequential basis, issuer service fees were up 20% and that is primarily due to seasonality in DRs as well as higher corporate trust revenue. Treasury service fees increased 3% year-over-year and 1% sequentially and that is reflecting the higher payment volumes that was partially offset by compensating balance credits that we provide to clients.

So if you adjust for those credits, the fee revenue growth would have been an additional 3% higher or 6% in total. On a sequential basis revenue would have been an additional 1% to 2% greater. Investment management and performance fees increased 5% year-over-year and 3% sequentially.

Unlike most quarters, the net impact from higher currency translation on investment management and performance fees was less than 1% this quarter. This quarter as part of our ongoing portfolio rationalization we announced the sale of our real estate focused investment boutique called CenterSquare.

We expect the transaction to close in the fourth quarter or perhaps early next year, and that sale will have no material impact on our overall financial results.

Also as a result of the improvements made over the last year to the cost structure of the business, our adjusted pretax operating margin for investment management continued to improve to 35%. This is an increase of 265 basis points year-over-year.

Foreign exchange and other trading revenue on a consolidated basis decreased 5% year-over-year and increased 5% sequentially. FX revenue was 158 million. That is 10% lower year-over-year and it is 5% higher sequentially. The year-over-year decrease was driven by lower volatility as well as lower DR related FX activity.

And that is partially offset by higher volumes. The sequential increase reflects those higher volumes as well. Investment and other income declined to $63 million from $92 million in the year ago quarter and $122 million in the prior quarter.

The year-over-year decrease primarily reflects lower other income driven by the impact of our investments in renewable energy as well as low received capital gains.

The sequential decline reflects lease-related gains recorded in the second quarter, which did not recur in the third quarter as well as lower income as well as lower income from corporate bank owned life insurance. Slide nine shows the drivers of our investment management business which explain underlying performance.

We achieved record assets under management of 1.8 trillion. It's up 6% year-over-year and it reflects higher market values as well as net inflows and the favorable impact of a weaker dollar and that's principally against the pound.

In terms of investment performance against the backdrop of a relatively strong quarter for global markets our active strategies performed pretty well with 75% and 74% of assets above the three and five year benchmarks. We also experienced net inflows interactively managed strategies.

We had long-term active inflows of 3 billion that was driven by continued demand for our fixed income, multi-asset and alternative strategies. These inflows were offset by outflows in active equities and LDI strategy which actually totaled $4 million.

We saw inflows of 4 billion to fixed income, inflows of 3 billion to multi-asset and alternative investment strategies and those are key areas that we are looking to grow that have benefited from strong demand.

This quarter active equity outflows of 2 billion was about the lowest we have seen over the last few years and it was held in part by a strong equity market as well as improved investment performance and pricing. LDI outflows of 2 billion up were driven by one significant LDI client that shows to take the business in-house.

Additionally we had $3 billion amount in outflows from low fee index products and that's again driven by a few large clients. Similar to last quarter weeks we experienced cash inflows of 10 billion this quarter. U.S.

money market funds the largest segment of our cash business have not grown 19% year-to-date and that compares favorably to the industry trend of 1% organic growth this year. Our ability to maintain good performance in core money market funds and grow our customer base through synergies with investment services has been key to out-performance year.

This is a business where we have scale. We have got a strong reputation and we demonstrated good performance and where we continue to see growth opportunity as the sector solidifies around firms that are sharing these trends.

Our wealth management business continued positive trends with wealth management fees up 4% year-over-year and up 2% sequentially. Higher net new business from U.S. expansion initiative and continued loan growth which was 9% higher year-over-year helped to drive performance.

That was offset by reduction in deposit that was primarily driven by a single client. Turning to our investment services metrics on slide 10, we achieved record AUC/A of 32.2 trillion this quarter that's up 6% year-over-year and 4% sequentially reflecting the stronger market values.

We estimate total new assets under custody and administration business winds were about 166 billion in the third quarter looking at other key investment services metrics you will see average deposit declined 10% year-over-year and 1% sequentially and that reflects the impact of the June rate increase.

Average loan balances declined 14% year-over-year and 7% sequentially. Lastly average tri-party people balances grew 15% year-over-year and 1% sequentially as volume increased with the additional business we are on boarding.

Turning to net interest revenue on slide 11, you will see that on fully tax equivalent basis NIR of 851 million was up 8% versus year ago quarter and up 2% versus the second quarter; both increases primarily reflect higher interest rates and is partially offset by lower average deposit and loans.

The sequential increase also reflects an additional interest earning day in the quarter. We experienced some moderate deposit runoff and interest-bearing and non-interest-bearing deposits. Average non-interest-bearing deposits declined 14% year-over-year and 5% sequentially and interest bearing declined 8% year-over-year but were flat sequentially.

This was about in line with expectations following the June rate increase and deposits toward the end of the quarter were above the quarterly average. Turning to slide 12, you'll see that the adjusted non-interesting expense was up slightly year-over-year and flat sequentially.

The year-over-year increase primarily reflect higher software and professionally and legal and other purchase services and that was partially offset by lower litigation expense and bank assessment charges.

Sequentially higher staff expense was offset by lower other professional legal and other purchase services and lower business develop expenses as well as lower bank assessment charges.

The increase in staff expenses was driven by higher incentives and that's just reflecting the strong performance as well as by the annual employee merit increase that comes takes place in July.

The decrease in professional and legal and other purchase services was driven by lower consulting fees related to our resolution planning which we submitted at the end of the second quarter.

Turning to capital on slide 13, our fully phased-in supplemental leverage ratio increased to 6.1% and that now meets the upcoming 2018 regulatory requirements plus a reasonable buffer. We also remain in full compliance with U.S. liquidity coverage ratio requirements our LCR was 119% in the third quarter.

All of our ratios are at or above our internal targets reflecting our continued capital generation and given for prospects for the relief of the SLR we no longer see a need to issue preferred equity. And now that we are at our targets it positions us well to increase buybacks in future years.

A few additional notes about the quarter on page 9 of our press release we share our investments securities portfolio highlights at the quarter end our unrealized pretax gain or portfolio was 257 million that compares to 151 in the last quarter and that's primarily driven by a slight decrease in long-term interest rates.

And our effective tax rate was 25.4%. Turning now to tax reform we currently support comprehensive tax reform as an important step both to achieve economic growth targets as well as to improve the competitiveness of U.S. businesses. We’re encouraged by recent progress of the big six to define key parameters of tax reform.

But because of the details reformer still remain unknown and uncertain it is difficult to estimate our effective tax rate post reform however, based on the available information that we have as we currently understand it, we would expect our effective tax rate to approximate the U.S. statutory tax rate post reform.

Otherwise we expect that our effective tax rate may rise approximately 100 basis points in 2018 given our expected revenue growth as well as the mix of earnings we project for next year. Before turning to Q&A, I would like to provide you with some color on how you’re thinking about the next quarter and the full year to assist you with our modeling.

First earnings are typically impacted by our seasonal decline in DL revenue with a limited offset and expenses, we estimate that the decline from the third quarter to be approximately $80 million. We expect performance fees and our investment management business in the fourth quarter to be similar to that as the fourth quarter of 2016.

Full year NIR is still expected to be at the high end of the 6% range that we had given you previously. Investment and other income for the fourth quarter and beyond is expected to be in the $40 million to $60 million range reflecting a lower leasing gains as well as the impact of our investments and renewable energy.

We expect total adjusted expenses for the full year to be in-line with our prior guidance by approximately 1% higher than last year, as I know last quarter there is – it could be impacted by improved revenue performance, higher stock price as well as the continuing weakness in the U.S. dollar.

Our 2017 effective tax rate is still expected to be in the range of 25% to 26% and finally we expect to generate positive operating leverage for the full year. With that let me hand over to the operator to take your questions..

Hi good morning. Just a quick question for you on the funding cost side, you walked through some of the specifics on deposits which was really, really helpful. I guess the question would be, you seem like you said that non-interest bearing deposits ticked down this quarter which is what you said, was in-line with expectations.

So if we see December hike that mean we should count on a bit more run-off on the non-interest bearing side and maybe even on the interest bearing side as well?.

Brennan, it’s Todd, good morning. Couple of comments there, number one just as a reminder on a year-over-year basis, last year is when we took the proactive actions around the deposits and we took them down about $20 billion to $25 billion of net fee, interest bearing as well as the non-interest bearing.

As far as the quarter itself we saw a little dip in the non-interest bearing most of that took place in the month when there is relatively slow behavior and some of that recovered towards the end of the quarter.

Our expectations is that we would continue to see moderate run-off in non-interest bearing especially if we see further rate increases and just to give you a sense of it, we went back and we looked historically.

Non-interest bearing have averaged historically and much higher tax and much higher interest rate environments around 30% in our total deposits and are around 33 now. So if it retraces historical behaviors that seem to make sense to us. We could expect modest further decline..

That’s great, and that’s very helpful historical context thanks for that Todd. And then, on the interest bearing side it looks like beta has increased probably about what most would have expected.

What do you see in the marketplace, what are your expectations for betas if we do end up getting another rate hike, how is the competition for deposits out there in the market? Thanks a lot?.

Well, the betas did tick up a little bit and we had pretty much forecasted that on the interest bearing side as well and we would expect with each future rate increase that you will see an increase in the betas.

I don’t think competition has really changed too much but our expectation and what we forecasted as we gave you guidance around the net interest income for the full year is that we will see if there is another move, we will see more or higher beta with that move..

Okay, great. Thanks for all the color..

Thanks..

Our next question comes from the line of Alex Blostein with Goldman Sachs..

Great. Hi, good morning everybody. So Charlie, maybe I’ll try this one and thanks for all the color and initial thoughts around the business. But BK is obviously a bit different and unique versus your peers just given kind of the diversity of the business.

So taking a step as you look across everything that the firm does, what businesses do you think and deliver the most needle moving kind of organic growth going forward relative to exertion time in the past and understand it’s too early, but given your name a lot of things – get a sense of kind of where they come out, anything?.

I don’t think I’m just saying much more at this point then I said in the prepared remarks, I think if there were things that we were doing which we were particularly concerned about or didn't think had same kind of profile that we would want going forward at this point I think we would have said something about it.

And so, as I said in the remarks we are spending a fair amount of time going to our planning process. The assumption is that we should – that we are in a position to grow the businesses that we have today.

What those look like relatively to each other honestly I think that's something which we will look forward to sharing more about when we get together for our Investor Day..

Got it. Fair enough. And just the follow-up for Todd there has been some consolidation in the book at your space some firms going self-clearing recently maybe there will be more but help us understand I guess kind of how that impacts the clearing revenues for you guys and kind of any more explicit guidance would be helpful there..

Sure. I think that's probably better for Brian Shea to take..

Sure. Happy to take it. I think the headwind in the broker-dealer market in general is that there has been consolidation in the broker dealer market and pressure on the broker dealer revenue and business model as a result of the DOL fiduciary standard. We actually there maybe some firms going self-clearing but we actually see the opposite.

We see more firms actually considering lowering the structural cost, lowering the capital investor and actually outsourcing their clearing.

We actually converted a pretty meaningful side self-clearing firm, platform in the third quarter and we have a pipeline of few others that we are in discussions with which I can't tell for sure how it will turn out but it shows a higher level of interest in self-clearing actually lowering and verbalizing their cost.

So the market overall is convincing. But we are actually holding our own and gaining share and growing into a little bit smaller market.

The other big dynamic which is accelerated by DOL but it's a long term secular trend is that there has been a shift from the traditional brokerage model to an advisory model and we are growing our RIA custody business pretty significantly as it had double-digit growth and continues to have double-digit growth on a consistent basis.

So we are seeing more of the growth in adviser model that's offsetting some of the pressure in the broker-dealer model..

Got it. Thank you both..

Thanks Alex..

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

Hi, thanks. Question on issuer services. So down 15% you mentioned three things in the text of pure corporate actions, loss to business and the ERP, so the part we totally get the corporate actions we get.

I wonder if you could explain a little bit on the loss business and just maybe bigger picture think about the linkage or should there be a linkage to big banks who had head great debt underwriting quarters and years past that would be great for banking yard as a service, Scharf us you can help us package there?.

So Glenn just for clarity the issuer service line actually contains two of our businesses; one is the depository receipt business and the other is the corporate trust business. So as we noted DR was down 34% that's the entire in fact it's more than the entire decline in that line. The corporate trust business actual saw an uptake in revenues.

And I will let Brian get some of the – if there is any detail he want to add to that Brian..

No I think you have most of it. I think the single biggest driver of the decline in DR was fewer corporate actions which are episodic and spiky and they always have been.

The loss clients were probably the second largest factor and they were really two large clients one really pricing and the other pricing is sort of a model driven and we have been trying really hard to maintain our pricing discipline deliver a solid margins in that business so that's reality so that’s going to be in our run rate for little while longer but and the other stuff was really more lower shares outstanding and slightly lower transaction volumes which is more secular we think than secular but you know it all depends on the market forces.

But in terms of new business in DRs the issuance market is a little bit better than it was last year and although it's not softy and we are still gaining and wining more than our fair share while maintaining our pricing discipline so we are still the market leader I signing the new clients opportunities when they come to the market.

And we are encouraged as Todd said by the corporate trust fee turnaround we had fee growth and corporate trust sequentially end year-over-year and so that's a good sign in terms of the longer term picture for issuer services..

I appreciate that one.

Little quick follow-up in investment management, apologizes if I missed it but average deposit is down call it 20% quarter-on-quarter “year-on-year”?.

Yes Glenn there is one large client attributed to almost all of that move in the quarter. It was not unexpected for us, it was the repatriated funds for their own reasons. So we don't necessarily see that as a trend, I mean there is a trend that it's declining a little bit but not to that extent..

Got it, okay. Thank you..

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

Thanks very much. Good morning folks. Charlie also thanks very much for the run through of the businesses that was really helpful.

Maybe just your view on you mentioned little bit, maybe your view on that platform obviously back in your – sort of needed differentiated move in that effort versus some peers and obviously, we all have been moving towards digitized platform but maybe just your perspective on how you see that differentiated versus peers whether do you think that was the sort of the right architecture or you want to change anything in that architecture in a major way or just more like leveraging the power of that platform to grow revenues?.

Yes, I guess first time you start just by broadening the topic a little bit which is just because I have spent a bunch of time going to the historical context not just of NEXEN but our entire technology investment. And I just think it's, I have mentioned this in my remarks we spend over $2 billion on technology.

If you look at the resources that Bank of New York Mellon has dedicated to technology both core infrastructure as well as the different technologies that we are looking at towards the future that's been aided by the in-sourcing of a tremendous numbers of people meeting thousands of people over the past three or four years.

Our net resources are up in the technology space and those resources are in multiple locations across the world with different sets of talents focusing on a whole range of things. So the focus on technology has been it's been deep and it's been broad at the company.

So I hope what you took away from my remarks is that the focus that we all continue to have is to focus on both pieces and to continue to dedicate this outside the demand of our resources to the technology space.

Specifically for the things that we described as NEXEN again in my prepared remarks I did go through the specific pieces, because I obviously just struggled talking very generically about NEXEN in its entirety.

It’s important is when you look at the individual pieces absolutely those are things that we are doing which will help us do a better job not just providing service for clients but it will enable us to move much more quickly in the marketplace, allow them to access additional capabilities that we are developing or third parties are developing in a way which it looks across the company at a common architectural solution.

So it's kind of hard to look at that and say that that's anything other than something that makes sense.

The work that we are continuing to do is the work that's been ongoing which is to consistently to build [indiscernible] and ask the question are we putting all the resources in the right place, are we prioritizing things and that's ongoing work that we will do.

So again I put this in the category of directionally absolutely supportive of everything that's been done, absolutely we believe that technology has to be a differentiator as time goes forward and we will talk more about it again when we get together in March..

Great. That's great color and then maybe just on your comments on improving operating performance. Banking has already been in the last three years scenario, the best achiever in terms of improving that performance from legacy banking [indiscernible] peers it's certainly an expense reduction.

I guess I always have thought about how much there to go and I know Todd you have been fairly bullish on continued opportunity given that we had a lot of low hang fruit already so maybe you can talk about Charlie, you mentioned some more platform consolidation maybe you can talk about which platform and then continue the automation maybe just a little bit more color on your comments about investing you may or may not invest in more growth opportunities?.

No I didn't question whether we are going to invest in growth opportunities. What my remarks meant to say is as we find more efficiencies in the company the question is whether we will take those additional efficiencies and invest them or not. So we are investing a tremendous amount in the business today. That's going to continue.

What I was trying to point out there was as we figure out how to become more efficient overtime that creates additional capacity for us. So that just want to make sure we are clear about that.

Listen I think when you look at the results that we have delivered over how much you have, I look back I guess going back to 2013 I don't know if it goes to back prior to that but the expense control that's taken place within the company is extraordinary in an environment where we are spending substantially more in technology, substantially more on regulatory requirements and kind of reasoning up the investments that have to take place to build the business.

And so that's a lot of money that gets spent on those things and so yeah there has been a tremendous effort to reduce the things that don't make as much sense to free up capacity to spend money on those things.

Having said that I think that I put it to maybe two different categories, number one is there is always more efficiencies that we had in any company even the most efficient companies lock in the next day and say okay how are we going to get more efficient at what we do separately from volumes growing and additional money to invest.

So I think that's just even if were the best in class at everything that we did we would say that's what we would come in and strive as we go through our planning process and forecasting process to push ourselves.

I did go through some specifics in my remarks which would suggest that I do think that there are still a series of things that will allow us to create more efficiencies that will then create decision point for us about whether to invest in additional things or to do some other things with that and it relates to just basic locking and tackling of reducing some of the process and bureaucracy and the layers that exist within companies like these and the more you do the more exposure you get to the next level of things.

So I think it's a very natural progression from what's been done but you also mentioned something which really should be much more substantial which will take which is a multi-year project which is to figure out how we take – I want to say we have a tremendous amount of manual processes around the company.

We have 52 or some odd thousands people I think we all believe that given the tools that are available today we can create more automation which will not just reduce the expense base that we can then figure out what to do with it but it will also improves the quality of our results.

So part of the effort that we have got going on and we are going deep on is what does that multi-year effort look like what does it take for us to get from here to there over what period of time.

It's not a one quarter one year exercise but it's something that we want to build into the long term plans and we know the opportunities are there, we just don't know the specifics yet..

Very good. That's fantastic. Thank you..

Our next question comes from the line of Betsy Graseck with Morgan Stanley..

So I wanted to just dig in on two things, one Charlie you came from Visa global payments consumer but also have some corporate elements to it. You are here at BNY Mellon which has a part of the business is global payments, institutional investor, corporate governance.

What are some of the similarities there that may have interested you in this and what are some of the opportunities on the payment side that you can speak to?.

Sure.

So let's just start with the basics first which is when you look at our client base across the globe, huge part of the client base are common clients that someone like these would have so just as I walk in the door in terms of understanding who your client base is how they think about things, what the priorities are and just who the individuals are there is a high degree of commonality there.

When we look at the opportunities that we have here we see a tremendous amount of flows both on the security side as well as on the cash side.

Figuring out how you can do that as efficiently as you can and then continue to add value added services around it with both additional capabilities but also capabilities focused on data and analytics it's exactly the way these are things about its business.

These honestly has a leg up because there is step ahead in terms of automation because that's just the way the business was originally built so we have got a lot of work to do here to put us in the position to be able to not just get those efficiencies but to create everything on a common platform in a way where it’s digital where you can do something with it.

So the things that we can do with that are very, very interesting and in here too there is a lot that we are starting to do with it whether it's in our collateral management business where we are using the information that we have to do a better job for clients they get elsewhere because of the things that we see in the marketplace and the work that we can do to help them reduce their funding cost and reduce their capital requirements but just the opportunities to think more broadly about it is pretty extensive.

And payments honestly, I have actually spent less time on our payment franchise here than I have on our asset servicing businesses or corporate trust businesses, the market business etc. etc. So not, I just, I choose to defer that a little bit until the next quarter that's okay..

I get that. And just the follow-up is on how you think about the competition that you face from new entrants perspective in particular I am sure, the block chain to be -- alive and well and lots proof of concepts but no golden ticket yet.

That said there is several POCs that are getting a lot of attention like the ASX platform done in Australia so wondered what your thoughts are on block chain as a threat versus block chain as a solution for that you could leverage?.

Yes, I think my point of view is the same as the company here has had which is block chain is very real. But like any new technology it has to solve a problem in order for it to make a meaningful difference.

When I was at Visa people used to talk about all of those things that are going to do something to change the payment experience at the point of sale and there is all this talk about mobile and all these other things and everyone sits and wonders why mobile phones haven't dominated the payment space in the developed part of the world and the reality is because what exist today works.

Same thing relative to the network infrastructure versus the block chain structure, it's effectively real time. There is real global inter-connectivity with the high degree of transparency where it's required so not that it won't have impact overtime but that's not where those solutions should initially go.

There are other places where your processes they are highly inefficient or and there is very little lack of transparency or there is resiliency issues that these things can solve.

So as we think about our business we do have a fair amount of work going on inside the company that focus on block chain specifically we actually have a solution built, which I am sure Brian and Todd talk about in more detail in our government security clearance business where we are really using it as we have built it as a treasury back up so that we would both understand the technology but also potentially be in the position to expose it to the fed as well as our clients at a point in time that we are comfortable with it but the idea is that distributor ledger would be available with all the relevant information for the relevant counter parties if we had issues elsewhere.

So I think just on something like that though in order for us to actually move it from treasury into some kind of production environment forget about all the testing and all the things that you need to do to be comfortable to platform just have to believe that it's a better solution than what you have today and not just better for us but better for client.

So as we look across the business that's the way we are thinking about it and our view is as I said it's real but all these solutions as you do as you know do need trusted counter parties that is what we do for living in addition to providing the technology that we provide and the only thing I would emphasis is that when you think about what we do in all of our businesses each little service we provide is not something that standalone which is very easily disaggregated.

When we provide core custody with clients that gives us the opportunity to do a series of things which we call part of assets servicing but there are series of other services that we provide there.

When you have the securities it puts you in a position to talk about collateral and cash and all those things and so the ability to show up as a firm with the reputation and the relationships like us and provide those solutions not that we have heading the sand, but those are – those integrated relationships mean a lot and again what we do is generally – it is mission critical for our clients.

So it's not a light thing for them not just to switch between material providers but to think about going to something by a much smaller third-party who they don't really know stand behind us..

Okay now that's helpful color. Just last quick question on the expense ratio side. You are indicating lots of opportunity to improve efficiencies. Do you feel like the current pace that BK has been able to generate sustainable or you need to invest a little bit up front to get a much larger expense reduction in the future.

What's your sense and cadence there?.

Again, I think we will stay away from any kind of forecasting and stuff like that until we finish going through the detailed plans and that's obviously something we will talk about..

Alright great. Hey thanks so much Charlie..

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

Thanks good morning.

Can I ask about the asset servicing business, it's nice to see the year-over-year growth rate up to 4% obviously helped by the newest 6% growth in the AAC and A but I am just wondering can you break up the components a little bit and just talk about how core servicing is growing versus collateral versus the broker-dealer and help us understand kind of those how three parts are trajecting underneath?.

Yes it's Brian, happy to take it. I mean I think it's a combination of all those factors, we are getting some growth from the collateral management for sure.

We are getting some core underline growth, we are getting some lists from the market and all those things are contributing to few revenue growth and we are also still pruning some businesses which is pushing revenue out where we don't think it's appropriate for example we are working through the final stages of the UK retail TA re-positioning which is otherwise lowering the few revenue growth but improving the operating margins and profitability..

This is Charlie, the other thing I want to add is in my remarks I did talk – I did break out that our asset servicing revenues meaning our assets servicing revenue in the business grew 4% X clear which is 10%..

I am talking about specifically the investor services. So when we go forward then to your point Brian about the bar – as the UK transfer agency is that that effect now past and can you also remind us when the J.P. Morgan brokerage revenue start – clearing revenue start to come in to that line..

Yes. So, the UK retail transfer is the process it is almost completed by the end of the year.

It's actually completed and then the revenue run rate will stabilize and of course we are still committed to the institutional and global TA business in UK and Europe and so that a growing opportunity for us and we are actually getting new clients in that sense.

From a broker-dealer clearing perspective we are – we have invested heavily in the tripartite report reform and technology and again we've re-platform our entire client base to a new state-of-the-art broker-dealer clearing platform and that positioned us well to bring on new clients. So we have begun the transitions of the former J.P.

Morgan government clearing and tripartite reform clients. We have started with the smaller clients but we have already converted about seven of those clients so far this year and we have more to review this year and we will be completing those conversions throughout the course of 2018.

In addition we've on-boarded some new entrance from the marketplace and we continue to add new clients. So we see the broker-dealer clearing and domestic and global collateral services business as a core growth driver over the next couple of years. .

Okay, got it.

And then just one quick one Todd you mentioned no need to do the preferred given the potential for SLR reform just wondering does that also mean that you won't do the contingent share repurchase at least in this C-cars you did mention obviously the ability to go do more in future C-cars but can you just kind of level set some what you are thinking about that and the potential for the reform?.

Yes Ken I can – that is exactly the point. So that authorization was contingent on additional issuance. We didn't think it would make sense for us to issue and then actually not need that form of tier 1 capital a year from now. And just put us in a better position to do just pure buybacks next year and beyond. So that's our thinking there..

Thanks a lot. .

Our next question comes from the line of Michael Carrier with Bank of America..

Thanks guys. Hey Todd just one on the balance sheet and capital, bit of growth on this quarter, heading on the non-interest-bearing side deposits were relatively steady. So just wanted to get a sense you guys are active on a buyback side capital ratios are fine.

Just in terms of the balance sheet when you are seeing client demand it seems on the deposit side we could continue to see that roll off.

But any demand out there that we could actually see the balance sheet grow or should we expect it to be in this range?.

Yes I think it's kind of into -- it's all into, about a normalized range and we would see it grow as we see the businesses grow but probably in line and maybe a little less than in line with fee revenue growth, just for the balance sheet side itself.

And one of the other things that we did is we did reduce some of our loan outstanding, some of those loans that were a little less productive than we wanted to and we actually will use that portion of the balance sheet to try to generate some more productive loan.

So we do have a little bit of a – we certainly have room for growth and if the growth doesn't come we are going to have excess capital..

Okay, thanks and then a quick follow-up on [indiscernible] just wanted to get a sense on again the impact from asset management but then I guess probably more importantly just given that a lot of your clients are going to through that process are you seeing one much push back from like pricing and concessions has their businesses under more pressure I mean and then two, any services that you guys can offer to either help you manage some of these regulatory changes for the clients?.

So Mike you are asking from a servicing perspective, so I think Brian would probably be best to handle it..

Sure. We have a whole cross enterprise team including investment services, investment management working on not only helping ourselves comply, but helping our clients comply with it too.

I think depending on the asset manager there is no question that -- puts pressure not only the cost to compliance but some pressure on the business model in terms of the elimination of soft dollar commission-based research. So with that depending on the fund company that has more or less impact on their margins.

I think, so that does put some pressure on the core fees and core cost structure for asset managers. I wouldn't say that we - there is always some pressure on the core and what we are trying to do is extend the solutions of creating the source of new revenue.

A great example would be we have a growing pipeline of middle office solution clients and that's because asset managers is increasing lower their structural cost whereby is a cost structure and focus more of the time in energy and the investment process and to Charlie's point about NEXEN, the ability to have a platform that can easily integrate third-party solutions which help asset managers and other clients reduce the amount of time and energy investment they make on vendor management, data integration, vendor integration is also helpful in terms of helping them lower their structural cost and in connection with [MISIT] and other pressures that are secular trends in the asset manager model, that's what I would say and if [indiscernible] wants to add..

Yes, for just our own asset management perspective well we clearly have to absorb research costs and that's a headwind we actually see it as an opportunity since we all are under the largest global financial institutions both from an asset management and servicing perspective it gives us an opportunity to do more proprietary research rather than rely on the street.

So I see it actually as positive. It's the transaction side that I think, Brian is also referring to which is an issues. We have to have more transparency and I think that's an opportunity on the servicing side..

Okay. Thanks a lot..

Our next question comes from the line of Mike Mayo with Wells Fargo Securities..

Hi, I thoroughly heard your comments saying that you would like to have the company accelerate revenue growth and I guess it's a lot tougher than these are, maybe, the revenue opportunities overall more specifically any thoughts on change in the mix from the servicing fixed income assets since BNY Mellon has higher percentage of fixed income firstly.

Second would be acquisition in on US?.

Let me do the value, piece of the question.

So on the first piece I mean the profile of the Visa businesses is it's versus what we do is it's different right I mean VISA is business where there is this continued secular movement from physical cash to electronic payments so you come in the morning and you got that to give you a tailwind as well as changes in GDP and many of you have got the question of what you doing to take your fair share not just from the other big competitors but all -- from all the other payment mechanisms that exist out here.

In our business you know we don't have that material secular shift.

We do partake in the change in GDP and change in market level across most of our businesses but ultimately you know the real differentiator has to be are you going to be continue to provide increasing value to your clients and so that's the focus here, that was the focus there just come in and sit in which is kind of watch the cash register ring it's coming everyday and ask the question of how can you do more that's better, and you know the differences are in terms of growth rates just are what they are.

You know I did say in my remarks I think you know there is a -- let me start with we do have areas that have in I am not sure the right word is I use the word reasonable you can call it good, we don't call it great but it's not bad just in terms the revenue growth that we are seeing. Part of it's the market, part of it's the things that we are doing.

I don't think I've been, put DR's aside for second because again I think that is there are material changes and things that drive that business better somewhere out of our control as you see into this quarter.

Know the other businesses we believe there are things that we can continue to do to increase the rate of revenue growth but you know as well as I that you know not just this is a big company and it takes time to move a big company but the things that we do generally have longer lead times on it. They are longer at discussions. They can be RFPs.

They can be things that you work on for a year or two or three or more. So again I think when we spend more time together in March I think it's time for layout where we see those opportunities and how they can look somewhat different than they've looked in the past but again I want to emphasize that we are not exactly starting from scratch here.

We are starting from a fair amount of momentum.

M&A I think first of all our, we come in every day and ask the question how do we grow this business and invest in what we do and so to the extent that there are things that add value to the core of the franchise those are things that we've always looked at, we will always continue to look at and right now that's the focus that we continue to have.

And US, non-US the majority of the businesses US have spent a little time in Europe, I’m going back, she is going back tonight and then through the Middle East and you know we have - I think we continue to have as big as an opportunity there as we have in any part of the world. We have got core global capabilities that are as good as anyone.

We are very focused on using our structure that we are lucky enough to have were we have a meaningful presence in the UK and a meaningful presence on the continent to do the best job that we can and feeling as local as we possibly can and so as we look forward hopefully that will be something which we will talk more about.

Did I answer everything Mike?.

Yes. That was good..

And next question comes from the line of Geoff Elliott with Autonomous Research..

Hello good morning. Thank you for taking the question.

You touched on ETF as a shortcoming and I guess you said how you address that as a topic for another day but could you elaborate a little bit on how the -- from lack of a big ETF platform is kind of holding you back, where has that been a disadvantage for the business, which businesses in particular?.

Yes. So I guess let me just start and then Mitchell and Brian and Todd can pipe in. I mean I think at the point of the comment that I made was, just the fact of life which is we do not have a sizable ETF business.

My comment was specifically around the flows that people see not around the proper profile of our business necessarily or anything else like that.

So just when you look at our flows versus others you're not going to see the same kind of low growth that we see elsewhere and we do have the same issue in the asset servicing side where you know our competitor has a much more sizable business themselves but some other business that they have out there as well.

So that is a fact of life that we have to deal with on the asset management side it's frankly I think it's more complex issue than it is on the asset servicing side because on the asset servicing side it's not as if we are not in the business.

It's not as if we don't have to continue to build capabilities over period of time and that's kind of on us to do it. The asset management question is much more broader strategic question which is -- but so what.

It's okay we are where we are we do remind everyone I think [indiscernible] in general not ETS but in passes but the question is what does that ultimately mean for your business, what's the future of the actives versus passives and we have a point of you on here that we had on that, that's also something I think we should talk in more detail about in March.

Anything you guys want to -.

No I think you covered it really well.

The Vanguard Blackrock own that business so it's not like anybody else is getting into it in reality but we do service ETF's both on even from an asset management we supply some of the intellectual content to some of the ETF providers and in addition to that we are in smart beta, we are in indexing, we are in the other elements of assets that are also growing and that's what we will continue to do..

And I will just add that while the ETF market is concentrated in a few top providers which drive most of the flow there are more providers coming in.

They are not massive yet but we are focused on servicing them and we're trying to deliver enterprise solutions so it combines ETS servicing, the authorized participant services which we provide from markets. We have the purging no transaction fee ETF platform that's a differentiator in terms of asset guys.

So we have a more sort of holistic solution strategy that we hope will create some momentum in the marketplace and then lastly I would say that will the ETF business in the U.S.

is pretty well developed, in Europe and in Asia there's really good development opportunities over time and I think we are positioning ourselves to capture more of that going forward..

Great, thank you..

Our next question comes from the line of Gerard Cassidy with RBC..

Thank you. Good morning.

Todd you touched on the SLR issue not issuing the [indiscernible] because the changes that could be coming in and the benefits that Bank of New York would seek aside from better positioning you for maybe stock repurchase if the SLR calculations are changed are there any other strategies you would use to lower the SLR ratio whether that's a re-levering and the balance sheet whether the types of assets or something else?.

Yes. If you look at our capital ratios and what our internal targets are and why they are internal targets are established to make sure they're adequate both for BAU and also through stress testing. They are pretty well-balanced.

So anything that we would grow would have to - we would be happy to grow it if it will achieve our targeted returns on capital. Otherwise the best use of that capital if we can't achieve the targeted returns is to do buybacks or paid it out it in the form of dividends.

So that's the discipline that we've applied and right my point here is that we are pretty balanced. There is no one ratio I mean the SLR would give us a little bit of relief in kind of BAU but there is no one real ratio that is becoming a major constraint, I kind of like how balanced we are across the capital stack..

Very good and then a follow-up question on the [indiscernible] issue that will be coming to head here in January maybe this is for Mitchell, you talked about how you could build out your internal research proprietary research and reduce the cost of the research that you pay for from the street.

I know technically the SEC rules don't allow us in the U.S. to sell research like it was going to be the case in Europe.

Can you clear with us Mitchell any strategies you can implement out to get the leverage to lower your research costs from the US-based providers of US research?.

Well, I think there is a couple I mean we are multi-boutique model but the more we coordinate some of our trading activities we could clearly drive down our costs of research.

Secondly it's kind of an intriguing one to me because we are kind of lazy we take a lot of research from a lot of brokers sometimes up to 50 different ones and do we really need it where we are talking soft dollars because they were free.

It's creating a just a much stronger discipline and as such a large asset manager with so much data available to us we really should be doing around.

So in many respects I don't see it being a significant cost, but I genuinely believe it's an opportunity that data we have in this organization is unbelievable and we don't leverage it where we use the street instead. So I think it inverts things in actually a positive way for large asset managers.

I think it's and that's the other thing smaller asset managers are going to pay the price. The large ones, the big ones have an opportunity here. So it again I think is going to concentrate opportunity in the top few asset managers..

Appreciate the color. Thank you..

[Operator Instruction] We will take our final question from the line of Brian Kleinhanzl with KBW..

Great, good morning.

First question was on investment management you called out there outflows in the LDR businesses quarter but I think it was also in the fourth quarter that there was LDR outflows and there was a laid out so it's in-housing of the LDR is that an ongoing risk is it an increasing risk as rates are increasing?.

No, we don't see it as a – it's Mitchell, we don't see it as risk. When you look at the average of outflows in the LDI business we do have one or two or maybe three extremely large LDI clients that actually naturally should take it in-house. They are just incredibly dominated. You are talking over 5 billion in assets.

So it's not a trend that you're seeing it at all. If you look at our average w are averaging about 9 billion a quarter in positive flows that slightly better than 2016. It's better than 15 and then it’s better than 14. So the trend has been actually quite consistent at 7-8-9 billion for the last few three years. We don't see that trend changing.

We see – we still see significant opportunity..

And I should just point out that the kind of state the obvious which is the types of accounts that Michelle's referring to, whether big enough to take it in-house. The fee profile is very different than –.

It's extremely low..

It's extremely low..

Okay.

Great and then the second one is on the margin I mean this quarter, you had liability sensitive and you had three rating increases since the end of 16, we get the margins relatively flat I mean do you have – get that the margin expanding again from here either or on the liability side?.

Yes. I am talking about the net interest margin. It has expanded a few basis points so over the course of the year we would expect it to continue to improve modestly. So the answer is yes..

Okay. Thanks..

I think that ends the session for today. If you have any questions please feel free to call me. (212) 635-8529. Thanks very much. .

And if there are any additional questions or comments you may contact Ms. Valerie Haertel at (212) 635-8529. Thank you. Ladies and gentlemen that concludes today's conference call webcast. Thank you again for participating..