Good morning, ladies and gentlemen, and welcome to the Fourth Quarter 2017 Earnings Conference Call hosted by BNY Mellon. [Operator Instructions]. 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.

Good morning, and welcome to the BNY Mellon Fourth Quarter and Full Year 2017 Earnings Conference Call. With us today are Charlie Scharf, our CEO; Mike Santomassimo, our CFO; and members of our executive leadership team. Our fourth 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 Mike 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 our website. Forward-looking statements made on this call speak only as of today, January 18, 2018. We will not update forward-looking statements. Now I would like to turn the call over to Charlie.

Thank you, Valerie. Good morning, everyone, and thank you for joining us. Let me cover a few items before turning it over to Mike, and then we will open it up for questions. As you can see, the quarter was impacted by two significant events, first, the new U.S. tax legislation added $0.41 per share this quarter; and second, a series of actions we took reduced earnings by $0.24 in the quarter. I'll talk more about this in a second. If you look beyond those items, our underlying results benefited from the strong equity markets, and we continued to show modest underlying growth in revenues and reasonable profit growth across the firm. I'll let Mike walk you through the detailed financial impact of the tax legislation and our other actions when he takes you through the financials, but I do want to make a few comments, first, regarding the new tax legislation. In addition to the favorable impact this quarter, we expect to see our effective tax rate go from approximately 25% to approximately 21% in 2018. We expect to reinvest the vast majority of the tax benefit in to our employees and our businesses in 2018. I will discuss this more later. In addition, we're hopeful that the increased competitiveness of corporations due to the lower effective tax rates and related investments those companies are making will result in a continued strong business environment both in the U.S. and outside of the U.S., which should prove beneficial to us. I've already mentioned the $246 million or $0.24 in significant items impacting our net income. The biggest piece of this was severance, which is part of a broad-based effort to improve the efficiency and effectiveness across the company. This includes the 2 significant actions we took since we last spoke,…

Thank you, Charlie. Good morning, everyone. Before I begin my prepared remarks, I would like to congratulate Todd Gibbons on his new role as CEO of Clearing, Markets and Client Management and thank him for all his hard work and accomplishments as CFO. I can attest that Todd is an aspiring leader, and I think all of us here at BNY Mellon agree the Clearing, Markets and Global Client Management business is in very capable hands. Turning to the quarter. It was a busy quarter on many fronts. In mid-December, we were pleased to receive a positive response to our Title I resolution plan submission from the FDIC and the Fed. The regulators acknowledged the important steps we have taken to enhance the firm's resolvability and facilitate our orderly resolution in bankruptcy. The agencies found no deficiencies or shortcomings in BNY Mellon's 2017 plan, which validates the enormous efforts we have made to enhance our resolvability. As we move forward, we will continue to maintain our focus on resolvability and resiliency. During the quarter, the macro environment continued to improve, and as expected, the Federal Reserve increased interest rates by 25 basis points, which slightly improved our fourth quarter net interest revenue. Additionally, the strong global equity market performance helped to drive a record quarter for AUC/A and AUM. Also, as you are aware, the tax legislation was passed in late December. The bill is complex and will take some time to fully implement. The amounts reflected in the earnings release represent our best estimates of the impact from the legislation to date. With that, let me run through the details of our fourth quarter results. All comparisons will be on a year-over-year basis unless I note otherwise. Consistent with previous quarters, the impact from foreign currency translation had an…

Thanks, Mike. As we look forward to 2018, we think about our performance in 3 distinct pieces, first, any additional charges resulting from the review underway that I've spoken about; second, the impact of tax reform and the effect of investments we will make in our employees and businesses a result of the tax reform; and third, the core underlying franchise performance excluding these 2 items. While we aren't giving forecast or guidance, I thought it would be helpful to put some specificity around our thoughts for 2018 by talking about these items individually. First, regarding additional charges, as we finish our review of the businesses, we would expect to have additional charges during 2018. These can include severance, real estate, the impact of programs to bring more automation to our activities and other items. As of today, our expectation is that it would be something similar to the charges we reported in the fourth quarter, but this, of course, could change. Second, regarding the impact of tax reform, we are anticipating that the impact of the lower tax rate would be almost entirely offset by the actions we will take to reinvest this benefit in our employees and our businesses. I believe we've been prudent in how we've thought about our excess capital generation. We believe that the first call should be on building the appropriate capital base for the company; second should be on organically investing inside the company when those investments meet the appropriate hurdles; thirdly, acquisitions if they meet the same criteria; and lastly, return to shareholders through dividends and buybacks. We think we have done this and have returned in excess of $9.8 billion to our shareholders over the last 3 years. We still intend to return substantial capital to our shareholders this year, subject…

Operator?

[Operator Instructions]. Our first question comes from the line of Brennan Hawken with UBS.

Just a quick one here on comments initially on the tax benefit. I believe you said that your intention is to spend the 2018 benefit on investments and sharing with employees. So just wanted to tease out, does that mean that, once we get through the next 12 months, that there will be less pressure on investment and, therefore, more benefit from taxes? And then on top of that, maybe the payout rate begins to kick in from those investments and we should see improved returns. Is that the right way to think about this? Or am I reading too much into your comments, Charlie?

Thanks, Brennan, for the question. I guess the way I would say it is the way we're thinking about it is -- I mean, this is -- it's clearly a step up in the level of technology spend that we have going on at the company. So when we get to 2019, we certainly wouldn't expect to see anything like this. We would expect to see just however we would normally manage our expenses, which hopefully would be very prudently, but nothing like this. I think relative to the benefits that we would get, I think, listen, there are obviously a couple of different reasons why we spend money in the world of technology. We do want to make sure that we've got the right kind of infrastructure, right risk resiliency, but, certainly, to build products and to create an environment here where we can continue to gain more efficiencies. So we'll try and spend more time on this on March 8 when we have more time together. But certainly, we do hope that post 2018, we would be able to start seeing some kind of benefits, whether it's on the revenue side or the expense side, because of the amount of money that we're investing. But at this point, hard to put a number on it.

Sure. That's fair. And not trying to front run your big day here in March, just was curious about that, whether or not that distinction was an important one, which sounds like it was. And then my follow-up, can you expand on the kind of competition for talent that you're seeing, which is compelling you to share the benefit with employees? And when you use that term sharing the benefit with employees, maybe can you expand on that a little bit? Are we talking about increases in bonus and incentive comp? Are we talking about base salary increases, which prove more durable? Just if you could frame that a little bit, that would be really helpful.

Sure. Listen, I would put a lot less -- I mean, relative to the amount of money that we're spending and the emphasis on this comment, I'd put a lot less on that, quite frankly, than on the technology piece. We do think that we should look at what's fair and right amongst our employees given the changes that were made and, certainly, what some of the goals of it are. Moving minimum wage to $15, I mean, I'd love to sit here and tell you that we're leading this country to some place where it isn't but that's not the case. It's just others have done it. We're -- we'll do what it feels like the right thing to do. And so it feels like sharing that portion with our employees is the right thing to do relative to the tax law change. Again, in the big scheme of things relative to the impact of this, it's a small number, and there are other things that we're thinking of. But I would also put them in the context of thinking of other things relative to all of our compensation plan and all of our benefits that we have here. And so I wouldn't expect anything else that we would do from your standpoint to be material. But it might -- hopefully, if we do things, it'll be things that our employees here appreciate.

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

Just a little follow-up on the spending commentary and without running the risk of front running March 8. Could you talk at a high level of the money that you have earmarked? Is it technology and investments for expanding and improving your current mix of businesses? You mentioned things like alternatives and passive strategies earlier in asset management, but what I'm trying to get at is how much is current line of businesses. And is there anything in there for what we would just call white space businesses that BK is not in today?

I want to say almost all of it, if not all of it, is for the existing businesses that we have here as opposed to businesses that we're not in. But I would think about it in several different categories. I think about it in terms of infrastructure, I think about in terms of cyber and I think about in terms of just technology development work to expand the product set that we have here or to electronify things that are done manually, and that can be both in operations functions or in businesses where we create electronic products. The focus that we have is on continuing to build the quality of the businesses that we have and build adjacencies where we have, and that's where the money is intended to go.

I think we've seen a lot of operating leverage and operating efficiency improvement over time. And a lot of these investments that companies in the industry have made, I think the big challenge has been getting discrete pricing on something new. It's a business where clients just take, take, take, and thank you very much. Within these investments, are there things that you think in the future you'll be able to price explicitly for?

Well, you said a couple of different things in there, and so I'll make just a couple of comments, which is, first of all, as we look at our performance in terms of where we're going in 2018 -- I want to make sure that at least there's some degree of clarity on this comment, which is we still expect to see operating leverage improvements next year even with this additional technology spend. Now obviously, it will be less than it otherwise would have been because it's a meaningful number. But when we think about the dynamics of our business and what we're shooting for, that's not something that we're just putting on hold and saying we'll revisit that in 2019. That is very much still part of our core thinking. And quite frankly, as we see the revenue environment pan out through 2018, we still have levers to pull. So when we talk about the way we're thinking about spending, you and I both know that you don't make these commitments on, what is today, January 18 and put yourself in a position not to be able to do something about it. So that's something which is still very much part of the psyche of the way we think about the company. And I know you've asked something else beyond that but...

No, no, I definitely hear you loud and clear. Revenue should outgrow expenses, and that'll be good for margins. The tagalong question was, of the things that you're investing in, do you believe some of them will get explicit pricing as opposed to the bundled relationship that you have with these complex clients?

Yes. I'll deal with 30,000 feet. And then maybe -- Mike and Todd are here and may want to chime in a little bit. I think -- listen, I think it's a little bit of both. I mean, I think, when we think about expanding the product set that we have, whether it's improving or building adjacencies, sometimes the things that you do support the price you have in the marketplace and make you competitive when you're sitting in front of a client. Other times, they insert you into a market that you're not necessarily in. And still, there are third times when there are things that you can charge for because clients directly see the benefit of something and are willing to pay for it, and we've got examples of each. And Mike and Todd, you guys might want to talk about it a little bit.

Yes. Glenn, it's Mike. And while it's still pretty small in the scheme of the overall revenue base, we are seeing examples in some of the products, like collateral management, where we have been investing in more sort of innovative adjacent products to help clients optimize their collateral across the globe, and we have been able to expressly charge for that product. So I think, as Charlie said, I think it would be a mix where part of it is making sure we stay competitive to keep growing and service the clients we've got and then part of it will be things that we can expressly charge for. And we're seeing some real examples of that now. Anything to add, Todd?

Yes. I'd add a couple of things. I think it's actually pretty exciting, some of the opportunities we're seeing. Mike alluded to one in collateral management. We're also building out in our tri-party operations an automated rules engine so that the buy side or the sell side for that matter could more easily change margins on collateral, and therefore, we think that will enable them to do more with us. So I think it'll help the growth and not necessarily change the pricing. We're also looking into making things smoother and connecting our multiple -- our domestic and our global collaterals so clients can easily and seamlessly move collateral around the globe. That would be a unique capability that we can offer, and we think that should build greater adoption. We're investing in things like enhanced FX trading platforms. We should -- we're already seeing some benefits of improved volumes there. We're investing in real-time payments. There's quite a few choices that we have. I think the challenge is we got to pick the right ones.

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

Just another follow-up around the spending and kind of, Charlie, to your commentary around low to mid-single-digit EPS growth. And I guess the 2 questions are, a, in terms of expense flexibility, if the environment gets a little bit tougher -- obviously, we've enjoyed really nice equity market backdrop last year and continuing this year, but if things were to get a little bit tougher, how should we think about the ability to scale back on some of the initiatives or cut back on kind of the core expense base to still deliver positive operating leverage next year? That's part one. And then part two, I guess, with EPS growth commentary, this is more clarification, should we be thinking about 2017 really kind of as the core number ex all the charges, as the base to layer on sort of the low to mid-single digit -- sorry, low to mid -- double-digit EPS growth?

So a couple of things. So on the first piece, as I said a little bit earlier, I mean, there is -- we don't, as I -- we don't make budget decisions, planning decisions and then tell everyone just, "You're done and go off and do it, and we'll see you next December when we're planning 2019." We have a high degree of flexibility with a significant portion, certainly, of our technology spend. I personally would like to do as much as we possibly can. If we didn't want to do it, we wouldn't be doing it, meaning we're not just sitting here saying, "Okay, there's this big tax benefit coming through so let's go figure out how we can go spend it." In some respects, they're related; in some respects, they're totally independent, right, which is we've been -- you all know we've been going through this review thinking very much about what we think we need to do for the future, and we came to the determination that we think we can intelligently spend this amount of money. But as I said, there are -- it's not one big spend. There are hundreds of discrete things that are embedded in there that we could decide to delay or go forward with in the time frame that we're planning for. So -- and then relative to the rest of the expense base, as I said in the comments, I think we're going to continue to be very, very prudent about watching everything else that we spend. And if pushed, there's probably more that we could do there as well, but that's something that we really need to think through. So as I said earlier, I think this business, run properly, creates operating leverage. That's something that we continue to…

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

Maybe just to circle back on the expense growth just to make sure I understand this. So just looking at sort of the tax benefit, I guess it would imply, when you do the math here, a little over $250 million of additional reinvestment spend. And if we think about how that -- so I guess, first of all, is that around what you're thinking? And then would that imply more like mid-single-digit expense growth from your core 2017 base? Or are the efficiency gains that you've achieved through your 4Q '17 actions of reducing the layers of management, improving the asset management with the consolidation and other things, creating more like a low single-digit type of core expense growth in 2018 like you've been sort of -- you've been running at?

Yes. So a little bit definitional here. I mean, meaning year-over-year, we might have had some technology increase anyway. But the way we think about it is, again, you can think -- the minimum wage increase is not a big number in the context of this. Your calculation on going from 25% to 21% is a little less than $250 million or so. And so that's a good way to think about it in terms of range, the way we're thinking about the increase in technology spend. And away from that, we would assume that there is very, very little other expense growth as of now.

Okay, that's helpful. And just to clarify, the additional spend is -- does not include severance that you talked about for 2018, and you framed that well. The additional tech spend is outside of that -- or of the additional spend, reinvestment is outside of the severance charges for 2018. Is that correct?

Yes.

Yes, okay. Great. And then just, I guess, longer -- maybe bigger picture, as you invest in the business -- and I know we'll get a lot more clarity on Investor Day, but how are you thinking about this in terms of positioning versus your trust bank peers? Obviously, they're going through spend programs. Do you think this will sort of ignite additional spending at your peers so that you will sort of be in line? Or do you see yourself actually improving your capabilities versus peers and potentially grabbing market share over time?

Yes. Listen, I have no way of knowing what peers will do and what they're currently doing other than what we all read about. I would say and I think this is a -- as we've been thinking about Investor Day, one of the things that we hope to spend a fair amount of time on is to talk about the uniqueness of the Bank of New York Mellon franchise. And the -- meaning, we're not just -- I mean the word trust bank, it's like the word boutique. It's just they're kind of funny words given the size and the scope and the breadth of what we do. We do some things that some of our competitors do, and we do it well and they do it well. But we also have some things that are very unique to what we are and to the kind of conversation that we can have when we sit across the table from clients. And so one of the things which is high in our list to talk through in detail on March 8 is exactly how we think we're differentiated versus the other people that you often think of as our competitors. So more to come on that.

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

It makes a ton of sense to reinvest in technology, so I applaud what you're doing on that. Question on the capital return piece of this. I'm wondering if you're thinking about keeping the dividend payout ratio in line with what your earnings trajectory is likely to be. Or would you be keeping -- would you be looking to keep more to the divi where it is today and reinvest that as well?

Betsy, it's Mike. Obviously, as you know, we need to work through the whole CCAR process to sort of get that all approved and worked through. I think the only thing I would say is there's no need to sort of stay within sort of 100% payout as we look forward that we're aware of. And so I think we're sort of thinking through that now as we go through the CCAR process.

So let me just make sure -- I've tried to cover this in my remarks a little bit, which is we've given a tremendous amount back through dividends and buybacks. And so as we think about what the future looks like, that hasn't changed. And so relative to the core incremental capital generation here, we would assume that through dividends and buybacks, you would continue to see the same types of trends that you've seen in the past, subject to CCAR. So that hopefully does mean increasing dividends and whatever the difference is in terms of buybacks. So when we talk about the increment -- the capital needed for the incremental spend, the way we're thinking about it now, this is it.

Okay. You're talking about the tax, the benefit of the tax, using that. That's what you need for the incremental spend. You don't have to touch the capital return piece.

Correct, correct.

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

Just some clarifications. What is your annual technology budget?

I think, Mike, this is Mike. What we said last quarter was we spend a little over $2 billion a year on technology. So that's the disclosure we've given.

And so you'll be spending an extra $250 million this year in terms of reinvesting the tax benefits. So should we think of that as 10% of...

Fairly close, I guess. Yes.

Okay. I guess the $250 million would be more of the investment spend. Or how should we think of that?

Sorry, say it again, Mike.

How should we think of the $250 million extra technology investment relative to that $2 billion base? Because it might not be apples to apples in that comparison.

Well, I think, I mean, I think, of the $2 billion, that includes all the centralized spend plus our estimate of all kind of decentralized spend that takes place in -- within the company. And so I mean, I would expect -- the way we'd think about is that it's a little less than $250 million, but that would be additions to the infrastructure spend, the cyber spend and the core development spend that we have at the company. So I'm not sure if I'm answering your question, so tell me if I'm not.

No, it sounds like you're investing in a wide range of areas, as you said. You said 100 discrete projects. So that's helpful. Mike, main question is just the combination of the three largest asset managers. I think you said Mellon Capital, Standish and Boston Company. So I'm not sure we've heard much about that. What will be the name of the new combined entity? And what's the structure of the new entity? Anything else you can elaborate on?

So Mitchell's here. Why don't...

Mike, in terms of the name, we'll make that decision toward the end of the year after the consolidation is completed. In terms of what we're doing, I mean, we're clearly consolidating the trading activities, the back office and -- all the various back-office activities. So that's operational, technology, support functions in compliance and HR and finance. All of those activities are being combined into one. The firm has some great products across its platform. Mellon Cap is distinguished through a lot of its passive activities. You have The Boston Company in equities. And they complement each other. The thing we are probably under-invested in has been in the multi-asset where clients are going. This gives us a much easier platform to develop more multi-asset and solution type products. So the end game would be that we would keep the best of breed in equity fixed income and passive and develop the multi-asset capabilities along with that.

And the only thing that I would add, Mike, is just a couple of things, which is, first of all, on brand. You might sit here and say, "Well, why haven't you chosen a brand?" We've got -- if you look across the company here, we've got lots of things going on with brands, and so the work to consolidate these 3 entities does take quite a bit of time. And so what we've said is let's try and be really smart, do some real work to try and figure out what makes the most sense for the long term for the brand as opposed to just pick something which feels good in the moment. And my own comment just on this, because Mitchell was obviously well underway with this before I got here, is it just -- I mean this makes all the sense in the world. We have 3 entities that are relatively subscale who we think we can drive significant benefits by creating more scale both internally in terms of the things that we spoke about, the efficiencies in the back office and the trading operations and things like that, but also how we present ourselves to clients in the consulting community. So we do have a year of consolidation work to do, which is never easy in these businesses. But for the long term, just -- to me, it makes all the sense in the world.

Our next question comes from the line of Vivek Juneja with JPMorgan.

Just a couple of more clarifications. On this tech spend that you all talked about, somewhere in the $200 million to $250 million extra in 2018, is that the amount that will be the annual amortization of the tech spend so that will continue at that rate? Or is it just all being expensed in '18 and we are done with that? Can you give a little more clarity on how to think about it? Because your software and equipment line jumped up quite a bit this quarter, and Mike, is that the new run rate?

Go ahead, Mike.

I'll start with the last piece, Vivek. The software and equipment line jumped up as a result of the charges we took, with an asset impairment there. So don't think of the fourth quarter number as the new run rate for that line.

But on the technology...

So how much was it -- go ahead, Charlie, sorry.

No, go ahead.

How much -- I'm sorry, what...

Mike, my question was, of that $297 million, how much is asset impairment just so we can think about more correctly looking forward?

Yes. I mean, we haven't disclosed the exact number, Vivek. But it'll be a little bit higher -- as we go into Q1, it should be -- it'll be a little bit higher than what we saw in Q3.

Okay. Sorry, Charlie.

And on the first part of your question, again, we would -- the $250 million, that is -- assume that's P&L and assume that's, at this point, a way to think of ongoing P&L as well.

Okay, very helpful. Shifting gears slightly. Issuer services, that line was down $90 million this quarter, linked quarter, a little bit more than is expected. Even the uptick in Q3 was less than -- are you continuing to lose share? Any more color on that business? What's your plan for that business, Charlie, as you're looking at all of this?

Vivek, I'll start. It's Mike. I think the linked -- the primary driver of the linked-quarter decline, as you probably know, is the seasonality that we see in the third quarter. I think the volumes that we saw in sort of the core issuance, cancellation, cross-border settlement area was a little bit lower than we expected, and that really drove the further decline.

Okay. And so given that, what's your thinking on the business just given that you're losing share? Is that just price competition still continuing? Or maybe, Charlie, from your perspective, as you're relooking at all of this, what's your thinking at the moment?

Yes. Again, so issuer services is two different businesses.

Yes. And I guess I should clarify, DR really.

Yes. Listen, these guys know it better than I. We're spending -- I'm spending more time on it. When we were sitting here last quarter, there were some very, very large specific transactions that we did not win that we were all very knowledgeable about and, quite frankly, we're fine not winning, either because of price or because of terms. As we sit and look at the business levels this quarter, it doesn't look like we've lost anything significant. It looks like we maintained share in the business. It was a question of business activity. Hopefully that helps.

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

Charlie, you talked a little bit about CCAR and how you guys are planning on still returning a lot and that 100% shouldn't be limitation. But in your prepared remarks, you categorized acquisitions ahead of returning dividends and share -- and buybacks, and I just want to make sure that you -- how you're talking about that. Is that in an increment perspective or just in terms of the prioritization of M&A versus incremental buybacks? Just how you're thinking about the push and pull there.

Listen, that's a great question, and I probably wasn't as clear as I could have or should have been. When we think about how we invest inside the company and how we invest outside of the company and just -- I've been critical of things here and I've been supportive of things. I would say we have a very strong analytical framework for how we think about how and where we're investing. And when -- so when I talked about -- I forgot a word I used. I used the word -- when we look at the different criteria that we look at for these things and I talked about hurdles, I mean, we're clearly making a decision whether we're investing inside the company, whether investing on acquisition or we're buying our stock back. Those are all investment decisions, and we look at what all of those things return on behalf of the shareholder over the long term. And so the way I laid it out, we would -- we're here to build the company for the future. We think there's tremendous opportunity so we would love to spend -- to build if it has the right returns, but those returns have to be better than returning it to you and what you could do with that. So returning to shareholders is part of the criteria that we will continue to use to evaluate that option versus doing other things with the capital.

Okay, got it. And if I could ask then a second question on just organic wins and losses. And kind of I'll just put it in one question but there's two pieces. One is just can you characterize the $575 billion of core asset servicing wins and where they're coming from? And then in clearing, can you talk about that termination fee and either -- help us size it and what the go-forward effect is of losing that client or clients?

Sure, Ken. This is Todd. I'll take that. We had 3 very significant wins in the quarter, some of the big players. So we do feel some -- now it's particularly in asset servicing. So we see some pretty good momentum there and some continued pipeline, but I think it was a little bit episodic. And your second question was around the termination fees in the clearing business, and that did have a positive impact. Probably it was about 4% of the year-over-year growth. And we've probably called this out in the past. But I looked over the last 10 years. Over the last 10 years, we only have -- of our 10 largest customers, only 2 of them are with us 10 years ago. So there's constant change in here, as you would expect, with consolidations and other things. And during the quarter, we also won some very nice business in the clearing business, so I'm still feeling pretty good about it.

The sizable wins, they are episodic in nature. And so as we look at what was won in the asset servicing business, these are things that people are working on here for a long time, hopefully get implemented within 2018 and we can do the work on the things that go beyond that. In clearing, I think we've talked about this. We have -- we've won and lost from some of the consolidation that's taken place in the industry over the past bunch of years. There were couple that we have lost. But we feel very good about what, I would say, as we get towards the end of 2018, 2019 looks like based upon other wins that we've had and how long it takes to implement some of these things.

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

I just want to do -- get some clarification around your positive operating leverage comments for 2018. I mean, you said that was post -- or includes the tech investment spend, but are you including all targets in that? Because I mean the way we're looking at it, expense base could be going up by 5%, if you include those additional charges, including the reinvestment of the taxes. So are you saying that expenses may be going up by 5% and you're still expecting positive operating leverage?

I'm excluding the significant charges that we had in 2017 and whatever we could have in 2018 when I say that.

And that excludes the reinvestment or just the additional charges?

That includes the full incremental technology spend and what we expect the growth to be in the rest of our expense base.

Okay. And then you said you want to increase the market share in the Corporate Trust business. Can you just give us a sense of how you're viewing or what -- how you look at where the market share is today? Where was it previously? And where do you think it can go to?

Yes. I mean, Brian, as you can imagine, like getting exact numbers on market share -- this is Mike, by the way. Getting exact numbers on market share and some of the subcomponents on -- in Corporate Trust is pretty difficult. But when you look at the structured product market like CLOs, we saw a big decline in market share over the last 3, 4, maybe 5 years, probably down 30% or 40% over that time period. And so we're very focused on making the investments we need to sort of regain some of that share in some of those particular products. Having said that, there are parts of the Corporate Trust business where our market share has been stable or growing over that time period as well. So this is really a focused effort on some particular product sets in that business.

So just on that for a second -- and Todd's sitting here. Todd has been very, very direct about what we've done and not done in Corporate Trust in our conversations over the past bunch of years. And I think we have a -- Corporate Trust is an important and a strong part of our business. We went through a process here several years ago where we thought about whether it belonged here or not. We -- after going through a process and thinking it through, the conclusion was made that it does belong here, it's an important part of the future, and we suffered from that. We suffered from that in the marketplace. And even internally -- again, this is -- Todd, I'm echoing what you've said, is, we moved very, very quickly to reestablish ourselves in the business and we lost salespeople. We didn't necessarily invest in all the places we should have, and that's what resulted in the decrease in share. When we sit here today, when we think about some of the things that we've got to do, we've got new leadership in there, Frank La Salla, who is laser-focused on doing the things that are necessary, which include hiring back salespeople, building out the appropriate product structure and ensuring that we do everything we can to our -- with our Corporate Trust business to leverage all the relationships that we have with those people that make the decisions on who the trustee is going to be. So it's very much part of the investments that we're making and what we've talked to you about, and it's very much part of the talk track we have with Todd's GCM organization.

Our next question comes from the line of Mike Carrier with Bank of America Merrill Lynch.

This is actually Sean Kelman [ph] on for Mike. How should we think about the impact of the renewable energy credits going forward now that tax reform is completed?

Todd, you want to handle that?

Yes. So right now, we will still get the benefit of those renewable credits. So if you think through our tax rate, we effectively expect to be at the statutory rate of 21%. But remember, we're paying still the state and local taxes as well, so it would have been higher if it wasn't for the benefit of things like the renewables. We do invest in the bank on life insurance, and we also have some tax exempts on -- in there as well. So the combination is what's holding it down. So there was a little bit of restructuring in the value of those, which run through the asset investment and other income, and so the negative drag on investment and other income is going to be slightly less than it otherwise would have been. But the net benefit is still there's still credits, and we still are going to get the benefit of those credits.

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

When you're thinking about these tech investments, what sort of back is acceptable? How far out are you willing to look?

What sort of what, I'm sorry?

Payback.

So you make an investment upfront, and then it generates revenues in future years. I'm just trying to understand, do you expect to get a positive earn-back over a certain number of years on these?

Yes. Listen, I mean, there's no easy answer to the question. It depends on the type of investment that we're making. I mean, we are increasing our cyber spend in these numbers by over 50%. Honestly, we don't spend a lot of time talking about the payback in those terms. We talk about what we can do to strengthen the walls around the company and the monitoring and protection process inside the company. We're spending a tremendous amount more on infrastructure, a great deal of which provides us with a platform to create more efficiencies and to create a different kind of product set than we have today. And so when it comes to an infrastructure spend, very, very hard to put specifics around that. When it comes to product development spend, there are 2. I think it becomes -- it's very different in terms of what we're willing to accept in terms of payback relative to the strategic nature of what the investment is. Maybe we'll think a little bit about whether we could put a little bit more clarity around that when we get to March 8 for you.

And then just a quick follow-up to clarify. On the low to mid-double-digit EPS growth, is -- you're talking about the base for that being the $3.72 GAAP full year 2017 EPS? Or is it something else? I'm just getting a bit confused on all the discussions about charges and what's in and what's out.

Yes. We said before, think about it as the GAAP number adjusted for the fourth quarter impact of tax and the other significant items that we disclosed.

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

This is Steven Duong in for Gerard. Just two questions. First, on the regulatory front. With regulation continuing to loosen up, what regulation are you guys most focused on for regulators to review? And then on the second question, just more on the HR front. How competitive is it in attracting tech talent? And is there a region or area that you guys are focused on in attracting those talents?

Sure. Listen, I think, on the first, I think if you went around and asked people in this room, you might get nuanced answers. My point of view is really focused on CCAR. CCAR is a -- it's a huge effort inside the company. I'm sure you've heard this. It is not particularly transparent. And there is -- and it's obviously just extraordinarily important relative to its outcomes for how we run the business and what we do with capital, which is, obviously, a hugely important responsibility you have as a management team. So I think as we think about what could get done, I think there has just been very positive commentary about taking -- keeping the good pieces of CCAR and continuing to focus on how it can be made into a better tool both for regulators, for the beneficiaries, ultimately who's -- our customers and their customers and for us as well. The second question was?

Tech talent.

Technology...

Yes. Listen, I think, one of the things that we -- one of the benefits I think that we have when it comes to technology is we're not dedicated in any one specific part of the country or part of the world. We have technology resources in Pittsburgh, in New York, in India, in different parts of Europe. And I think the -- I had to say this. It's -- I don't feel like the war on talent in technology is something, at this point, which is holding us back. I think it's there. I think it's real. But I think the more interesting things that we do as a company and the more people in that space understand how what they're doing impacts what we can do as a company, we become an even more important place to work. When you look at our turnover, not excessively high in any way, shape or form, so I feel okay about where we are there.

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

Just one other clarification. I guess, if you could just talk very briefly about your market assumptions for your low to mid-double-digit EPS growth in 2018 just in general, if it's improving -- continued rise in equity markets and the amount of Fed hikes that are factored into, say, the future's curve, and then whether -- on a GAAP basis, so from that $3.72 basis, including the charges that you talked about for 2018, which sounds like about $0.25, whether you'd still have GAAP EPS growth in 2018.

Yes. So on the first point, just a point of clarification. We're not assuming is using your estimates for revenue growth, when you look at the analyst estimates for revenue growth. We haven't told you what we think revenue growth will exactly be or what our embedded assumptions are within that. But I would say just, if you were to characterize it, it's a continuing relatively strong business environment for the places where we operate, not worse, not substantially better from today, but looking very much like where we are. That's the way we're just internally thinking about it. The second...

And then just on the GAAP EPS for 2018.

Sorry, Brian, you were breaking up there. What was the second part of your question?

Just on a GAAP basis, yes. The second part was with $3.72 of GAAP EPS in 2017, it sounds like there'll be another $0.25 of charges based on how you outlined the charges for 2018. So would we still have -- on a GAAP basis, do we still have positive EPS growth in 2018? Just to tie that with the adjusted EPS growth.

Brian, the way I would look at that is -- what Charlie explained is it's not $3.72 because that includes both the tax benefit as well as the significant charges that we called out. So if you take that combination, that's, I believe, about $0.17. That's what you have to start with for those numbers to play themselves out. You'll be able to work through all that information. We don't need to triangulate it with more.

Okay. Thank you, everyone. Appreciate you joining the call today. If you have any questions, please feel free to call Investor Relations. Thank you so much.

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