Good morning. My name is Keith, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter and Year-End 2017 Earnings Call for The Bank of N.T. Butterfield & Son Limited. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Noah Fields, Butterfield's Head of Investor Relations.

Good morning everyone, and thank you for joining us today as we review Butterfield's fourth quarter and year-end 2017 financial results. On the call, I am joined by Butterfield Chairman and Chief Executive Officer, Michael Collins; Chief Financial Officer, Michael Schrum; Chief Operating Officer, Dan Frumkin. Following their prepared remarks we will open the call up for a question-and-answer session. This morning, we issued a news release announcing our fourth quarter and year-end 2017 results. The press release, along with a slide presentation that we will refer to during our remarks on the call, is available on the Investor Relations section of our Web site. Before I turn the call over to Michael Collins, I would like to remind everyone that today's discussion will refer to certain non-GAAP measures, which we believe are important in evaluating the company's performance. For reconciliation of these measures to U.S. GAAP, please refer to the earnings press release. Today's call may also contain certain forward-looking statements, which are subject to risks and uncertainties. Please refer to the forward-looking statement disclosure contained in our SEC filings for a full discussion of the company's risks factors. I will now turn the call over to Michael Collins.

Thank you, Noah. And thanks to everybody for joining the call today. 2017 was a very successful year for Butterfield as we continue to build out our highly profitable banking franchise across a growing global footprint, which includes Bermuda and Cayman, where we offer leading retail banking, trust, and asset management services, the Bahamas, Switzerland, and Guernsey, where we focus on wealth management and trust, and the U.K., where we offer lending services to high net worth clients. When we closed the acquisition of Deutsche Bank's Global Trust Solutions business, that was announced in October, we will have a foothold for expansion in Asia with a trust office in Singapore. As previously noted, we expect the deal to close in the first-half of 2018. Turning now to slide four, 2017 was a record year of profit for Butterfield, both on a net income and core net income basis, which increased 32% and 15% respectively. Core return on average tangible common equity was 22.4%, a 200 basis point improvement over 2016. I am very pleased that the Board of Directors recognized the improved earnings run rate of our business, and has increased the quarterly common share dividend by 19% to $0.38 per share. In addition, the Board also approved a share repurchase program for up to one million shares, which will be implemented as a tool to help us manage our capital. Our solid 2017 results were driven by an improving rate environment, low-cost deposits, and robust capital efficiency earnings. Results were strong across all revenue lines and jurisdictions. We continue our efforts to manage expenses and expect to see the core efficiency ratio improve as we complete the final stages of closing large projects, such as the Halifax service center build-out and Sarbanes Oxley compliance. Further to the Global Trust Solutions acquisition, we announced in October, this morning we announced that we are acquiring Deutsche Bank's banking businesses in Cayman, Guernsey, and Jersey. These businesses provide services to financial intermediaries, and corporate and private clients, and are very similar to our existing banking operations. This acquisition strengthens our positions in Cayman and Guernsey, and includes operations in Jersey, which is the largest of the Channel Islands. We expect this transaction to increase our deposit base by about 20% once completed before the end of the year. Due to the terms of the transactions we are not able to disclose financial details, but believe this will be another successful acquisition. We continue to believe there is significant M&A opportunities as a consolidator of bank-owned wealth management businesses that are in line with our long-term growth strategy. I'll now turn the call over to Michael Schrum to provide commentary on the fourth quarter financial results.

Thank you, Michael, and good morning everyone. I'll now cover the fourth quarter performance in some further detail. Starting on slide six, we present our summary income statement and net interest income. Fourth quarter core net income was $42.2 million, corresponding to $0.76 earnings per share and a core return on average tangible common equity of 22.3%. Both net interest income and noninterest income noted increases this quarter. In the fourth quarter, net interest income increased $9.3 million, to $76.1 million compared to the fourth quarter of 2016. We continue to see expansion of net interest margin to 2.87%, an increase of six basis points compared to the last quarter due to continued re-pricing of the loan portfolio and increased yields. Interest earning assets averaged $10.5 billion, with a yield of 3.03% as we benefited from yield improvements across all asset classes. Turning now to slide seven, Butterfield capital and growing fee-revenue-generated businesses continued a strong fourth quarter totaling $42 million, an increase of 11% compared to the prior quarter. Non-interest income increased with banking and foreign exchange revenues leading the favorable movement compared to the third quarter of 2017 due to the success of a year-end promotion for card users, increased FX volumes and higher commissions. Butterfield's fee income ratio continues to lead the peer group, helping us achieve top tier returns on equity. Slide eight provides detail regarding Butterfield's core non-interest expenses of $78.9 million. Our expenses were significantly elevated in the quarter as we completed multiple accelerated programs such as Sarbanes Oxley and other compliance related projects. We also incurred some office setup costs in Singapore ahead of the GTS acquisition. Additionally, we increased the year-end's performance-related compensation accruals in the fourth quarter to align with the 2017 employee bonus accruals to the record financial performance for…

Thank you, Michael. We continue to manage the balance sheet to optimize efficiency and profitability, while emphasizing strong risk management. Slide 10 provides a summary of the bank's balance sheet at the end of the year. We ended the year with total assets of $10.8 billion, an uptick of 1.9% from the end of the third quarter. We have been maintaining a highly liquid position with 49% of total assets comprised of cash and equivalents, short-term investments, and investment assets. Our liquidity allows us to strategically invest in higher yielding securities as the rate environment improves. Average deposit balances, of $9.5 billion, increased from $9.4 billion last quarter. As we have commented previously, we tend to see variation from quarter to quarter in our deposit base as our larger trust clients manage their commercial interests. Turning to slide 11, looking now at asset quality. Our loan portfolio was $3.8 billion at the end of the fourth quarter, comprised primarily of residential mortgages, and to a lesser extent commercial real estate loans. As we have previously discussed, these commercial real estate loans are predominantly indirect reinsurance exposure in Bermuda. Loan balances increased by approximately $100 million from the prior quarter due primarily to a new loan to the government of Bermuda as well as continued growth of our U.K. residential mortgage portfolio. Group non-accrual loans totaled $43.9 million at December 31, 2017, compared to $48.7 million at the end of the previous quarter. The net charge off ratio was 12 basis points for the quarter. Our $4.7 billion investment portfolio increased by $93 million or 2% as we see yields move. As the yields on the long end of the curve increase, and hopefully we see some steepening, our prudence over the last couple of quarters puts us in a very good position. Again, highly rated securities continue to represent the majority of our investment portfolio with AAA rated securities totaling 93% at investments at year-end. Turning to slide 12, you will see that Butterfield continues to be more interest rate sensitive than our U.S. peers. I will now turn the call back over to Michael Collins for closing remarks.

Thank you, Dan. Before we conclude, I would like to comment on our current view of the potential effects of U.S. tax reform on Butterfield. Based on commentary from various sources such as reinsurers, captive insurers, rating agencies, the Bermuda government and others, we do not anticipate any meaningful impact to the jurisdictions in which we operate. We view any impact as marginal, and do not expect significant changes to the reinsurance or captive insurance markets in Bermuda or the hedge fund industry in Cayman as a result of the U.S. tax reform. With strong earnings in 2017 and an excellent finish to the year and the fourth quarter, I remain optimistic that we are well positioned to benefit from rising rates, improving expense efficiency, growing non-interest earnings, and a focused M&A strategy. Our strong results in recent transactions with Deutsche Bank should provide the market with a proof of concept that we can deliver and execute on stated goals. And finally, we are very thankful to all of our staff across the group who dedicate themselves to delivering market leading products and services to our very valued customers. Butterfield's record results and success finding high quality earnings-accretive acquisition targets in the trust sector serve as continued validation of our specialized banking model focused on creating value for shareholders. With that, we'd be happy to take your questions. Operator?

Yes, thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question comes from Alex Twerdahl with Sandler O'Neill.

Hey, good morning guys.

Good morning, Alex.

First off, I know you cant disclose the terms of the deal that you announced this morning, but is there anything else you can give us in terms of is it a similar deal to the HSBC transaction from 2015 in terms of coming with deposits, fee income, anything else you can kind of give us to help with the modeling?

Thanks, Alex. Hi, it's Michael Collins. I think it is fair to say that on the deposit side it has some similarities to the HSBC transaction. Dan Frumkin really drove the acquisition, so I'll pass it over to him and let him give you a little more detail.

Alex, good morning. How are you? So, listen, let me walk you through. I'm happy to disclose in response to a question a bit more detail that should allow hopefully everybody to model it. So as Michael said in his notes, it's about 20% of existing deposits. For ease, let's just call that $2 billion worth of deposits. I think that makes the math easier. You need to remember we are a multi-currency balance sheet. And this is a multi-currency acquisition as well. So, of the $2 billion, $1 billion, about half of it, will be U.S. dollars, and then 25% will be pounds, and 25% will euros. So if we just -- and the business has very little lending and the cost of deposits are really minimal. So if we go through the earnings, if you assume that we'll take the U.S. dollars and put half in cash half in investments, which I think is a pretty conservative assumption, and again this is at it beds in over time and when it's stabilized. So this is probably late-'18, early '19 by the time we get to that point. Cash, we're earning about 86 basis points on cash at the moment, $500 million. That's a little over $4 million worth of earnings. In investments, I think our investment yield, as we published, is 227 basis points, that times $500,000 is a little over $11 million. So, those two things added together gets you almost $16 million of income. On the pounds, we expect to use about 300 million of the 0.5 billion we will get in pounds to fund our U.K. lending proposition. So, this gives us more scope to increase lending in the U.K. and naturally funded through these deposits. So that earns about 3% gross yield on those…

Perfect. Yes, that was very helpful. Thank you for that all.

I try to be.

Could you just put that in the release?

Actually, we really are thinking about putting it.

And then, my other question is just in terms of how you plan to invest the cash you have on hand right now, we have obviously seen a pretty good run off in the tenure up to 2090 is something you have been sort of holding off on investing for a long time throughout 2017. Should we expect there is going to be some accelerated investing of cash in the first quarter of 2018? Or, can you just give us an update on sort of the strategy for how you are going to ladder in the existing cash on the balance sheet in securities now?

Yes, -- no, Alex, thanks. It's Michael Schrum. Great question, I think the strategy is still the same. But the new 2050 is probably 2090, so I would say you are absolutely spot on. We should see some acceleration in that. Don't forget we have quite a bit of run off on the existing book as well. So, that would just be re-ladder out. And finally we are at our stated target in terms of cash in short term investments right now. But, we could probably -- will be looking again at that to try and make sure that we are optimizing that as much as possible as well. But absolutely right in what you are saying. It will be acceleration.

Great. Thanks for taking my questions.

Thanks.

Thank you. And the next question comes from Michael Perito with KBW.

Hey, good morning guys.

Hey, Mike.

Good morning, Mike.

Couple of questions from me, I guess just a follow-up on the last question on the margin. I think with the tenure where it is, you had a hike in December, maybe just a more broad question. I mean I think earlier in the year, you guys had said to kind of get to a 3+% margin you need a little bit more movement on the short end tenure. That's working in your favor a bit more. I mean do you think the environment at this point is getting closer to that being a realistic expectation at some point maybe in the middle or back half of next year?

Yes. I think on the margin side obviously you saw some expansion. This quarter as you know on the loan side, we still have a quarter to go from the September rise that's going to kind of come through that 90-day lag. We are at 287 right now. I can see a path there this year for sure. Some of it depends a little bit on what happens in the U.K. obviously -- if Bank of England sort of starts coming off at 50, which is some noise about now. And then obviously also depends on the short end how moves we get as you know this year. But certainly would be a realistic modeling assumption I think.

Okay. And I wondered if we could just spend a minute on the expense side of things. Maybe -- you guys kind of verbally mentioned some things whether they are non-recurring or onetime in nature, but can you maybe just give us some dollar amount of some of the larger items that were accelerated and pulled in the Q4? And maybe some -- give some thoughts on how you guys maintained the efficiency ratio outlook? It sounds like it is about 50%. But, I mean is that maybe including a bit higher revenues and a higher expense run rate now than kind of high 60 million? Are we in the low 70 million type of run rate now I guess excluding all the M&A stuff at this point?

Yes -- sorry, it's Michael Schrum again. Thanks, Mike. And obviously as you correctly said we continue to reiterate the cost income ratio guidance in the near term. And you are right. The fourth quarter was noisy and elevated for a couple of reasons. We started to see that plan outperformance with the 20% ROE margin expansion, net income sort of accelerating in Q3 and Q4. This is our first year as a public company. And we sort of had a comp consultant look at all of the way we compensate for financial performance et cetera in this sort of second quarter, third quarter and decided to kind of realign the employee bonus pools in Q4 to sort of more closely align to a pay-for-performance philosophy. That was one of the observations there. Obviously record financial performance for the full year 17, so that created probably -- and you can see that in the pack as well, $4.5 million delta in Q4. Some of that we will certainly look at earlier in '18. That's fair to say. And that cycle just kind of needs to be embedded in, and all of that is really related to the past performance of the company. And secondly, we had a significant professional services fee in the first year of our SOX compliance with an increased burn rate in the fourth quarter as we kind of sprinted to the finish of the full year one accelerated implementation. I think we discussed that previously and was really a consequence of transitioning from being an emergent growth company to a large accelerated filer which brought that time horizon into full year one internal controls and SOX certifications at one-year program as opposed to a five-year program. But we knew that upfront but it was certainly a…

Okay. So I mean, taking that all and it sounds like excluding anything M&A related near-term 60% cost income is it still the right number but like I said maybe be higher margin revenues have been higher but the expense run rate should normalize in the lower $70 million-ish type range versus kind of that target of high 60s previously, is that a fair summarization?

Yes, I think 70, 72 couple percent inflation maybe offsets slightly by the structured expense save programs but I would agree with you that we're still very focused on it but yet is cost of being a public company is a bit higher than not for good reason.

Okay, that's very helpful Mike. Thank you and then just one last question from me, maybe for Dan, although the rundown on the DB deal and accretion was very helpful, honestly as you mentioned that 9% figure seems like it's more of a 19 figure once this deal is all done and you guys mentioned there are some it seems like some tranches of deposits that would be coming over different times, you maybe just talk or give us a little bit more color on the timing over 2018 and how these deposits are going to come on board? And I guess just that that would be helpful.

Okay, so it's a great question. So, we really don't anticipate taking up much in terms of deposits and so you get into the latter stages of the second quarter, I think it will be and even then I don't know that we'll start to see inflows until really the fourth quarter. So there's a chunk of the deposit that are tied to custody agreements and custody arrangements and moving the custody assets and then the line assets is just a process. And that process will take us, so we think the majority of the deposits will be on our books by the fourth quarter with a little bit in the second, a little bit in the third and the majority and the rest on by the fourth quarter. We will think -- we'll have the business up and running stabilized, all staff moved across that we're taking by the fourth quarter. So I think you're start seeing normalized run rate late fourth quarter in the 2019 really I think Mike by the time we get it done, the Big Bang Date for staff to move across the schedule for very early in the fourth quarter at which point we would think we will have picked up the majority of deposits. So December will be the first month maybe where it's normalized and then for all of '19.

Perfect. And actually you guys -- I am going to sneak in one more, but just any more specific thoughts on the closing of the Global Trust Deal and did these two deals kind of take you guys out of the M&A arena for six months or so here or how you guys, how are you thinking about that, Michael?

I don't think, I wouldn't say would take us out of the M&A arena for six months but as you know there's a long lead time in these discussions. I think it does a number of things, I mean I think it cements our position as the kind of go to acquire for offshore trust companies as onshore banks continue to sell them and I think this most recent transaction that cements our position as we go to acquire four subsidiaries, offshore subsidiaries and onshore banks that are getting out of the market and I think what we've been able to do everybody Dan and his team is I think people are interested in talking to us because first of all I think we're practical easy to work with and we've gotten a reputation for treating the not only the customers but the employees very well because I think we understand is in these small markets particularly in the Trust side the employees will be on their clients. So it's really important that we treat them well and so I think banks and trust companies that are thinking about selling their offshore subsidiaries will naturally think of us. So I think we have a lot more M&A opportunity given these two transactions but to your point in 2018 is really going to be focused on finishing up DTS as quickly as possible and then interpretation is going well and then this new transaction which obviously somewhat transforms our balance sheet given the size of the deposit base is going to be our focus to. So we'll keep working on it talking to people but these are really our two focuses for the year.

What I would say Mike just for the specificity on GTS. We're still anticipating early second quarter close at worse. We had over 90% of the staff except employment office where this and that deal was always about the staff we're in very good client take up, we are group had a trust was in Asia with their private CBS, private banking and wealth team. I just talked to general -- runs Switzerland foresees office South America again with CBS wealth management and private banking, so I think the transactions going very well. In terms of this transaction, we will utilize capital because our balance sheet will get bigger. In terms of just ranking DC to TA, it doesn't really use much if any capital to actually make the acquisitions, so it really is. It has necessarily used that capital we may have available to do a transaction or ways we could do it because it's just. It's the structure of the transaction.

Perfect. Thank you guys very much. I appreciate all the color and for taking my questions.

Thanks, Mike.

Thank you. [Operator Instructions] And the next question comes from Will Nance with Goldman Sachs.

Hey guys, congratulations on finding another acquisition. I think a lot of my question at this point has been answered. Maybe I'll circle back to the margin and just see, if you guys have any thoughts on kind of a near term margin dynamics, any impact from a commercial book like the impacts in the second quarter on the residential book and just any thoughts on kind of the trajectory there?

So I would say, well, it stand we saw the good object from the resi book as from the rate move. We've not yet decided to do, what we'll do if they move in March but again the only decision we make really is on the residential side. So again we would pick up if there's a rate move in March. We would pick up on the commercial side of the full rate move we just have some thinking to do on the residential side to see what unfolds. We're not really seeing any pricing pressure on the deposit side. We have launched a couple of new term deposit accounts to try to create flexibility for our client base. Take up on those has been quite muted, so again we're not really seeing a big movement, so I think you should expect margin to expand. I think we'll start to be able to take some of the floaters we have sitting in the investment portfolio now. Jennie [ph] floaters has started moving some of that into a bit higher to rate it, longer to rate it assets which should pick up a couple 150 to 200 basis points in yield which will help the margins, so I think it's fair to model our margin expansion as we get through 2018. Especially with three rate moves and opportunities in the investment portfolio that we're now seeing, I would expect margins to expand.

Got it. That's helpful and then maybe just on the acquisition, you mentioned there's not a whole lot of lending in the existing business, just having the banking license open you up to further lending opportunities in those markets, is there much of a lending market there. And just kind of what is your thought on kind of growth in the loan portfolios. It sounds like you're having more powder to kind of grow the U.K. mortgage book and entering a new market?

Yes, so well, it's a great question. So I think initially this business requirement is very much like the Guernsey and Bermuda came again. It's a financial intermediaries business, so it's not a local branch based business. It tends to be trust company, fund families and the like which great country opportunities for us good non-interest income as well as a sizeable deposits that grades interesting time for us. So there's not a natural retail offering where we would be doing lending but we are thinking about what we could do in the Guernsey and Jersey markets. Lending opportunities, residential lending opportunities are markets are quite muted compared to what you would see in the U.K. or even the scale of our Bermuda lending opportunity, so if we get do something I don't think it's a big needle mover. The reality is the U.K. is going quite well, finding some more native town funding was a really attractive part of this transaction. So I would hope that we would be able to continue to stretch that in the U.K. The Bermuda and Cayman bucks are holding up as we've always modeled broadly flat a little bit up with some sovereign lending we've done and there's a bit of activity in Cayman that we're in able to lend into but again I don't know how much lower growth story we are but there might be a bit. Yes.

Got it. That's very helpful and just finally a very administrative question on my and just point when you think about the two acquisitions you guys have outstanding are there any kind of like shareholder or regulatory approvals that you guys still need, I guess what is -- what the process looks like from here?

So, well it's Dan again, so we have complete approval from Deutsche who gone through their regulatory regimes. We have our board approval, we are -- we still do need regulatory approval from the BMA, we have rather we have preliminary conversations and we anticipate hopefully before coming. So there is a little bit of regulatory here that's clear. But it's very different than that question if I was sitting in the U.S. so the regulatory hurdles are meaningfully shorter, smaller, closer to the ground. Then the hurdles you would find, I think if I was just in the U.S. so we are pretty confident and as I said we've already reached our conversations with New Jersey regulator in August of last year about getting a banking license and investment license in New Jersey in anticipation that this deal may happen. So we've been working with New Jersey regulator and the currency regulator for more than six months in anticipation and team has already given consent in Kenya. And then, it didn't require a same approval based on the scale of the transaction. So I think we are in good shape well to just move forward, it's really going to be clients concerned in the base of the transfer because it really is up to the client about how we can make sure it's least disruptive for them.

Understood. All right, thanks for taking my questions.

Thank you. And the next question comes from Timur Braziler of Wells Fargo.

Hi, good morning gentlemen.

Good morning, Timur.

My first question; back to loan growth, what was the fact that the Bermuda government loan this quarter?

So we had about 50 throughout to the Bermuda government and it may grow more than that. But we had about 50 to go out. It won't be huge that might be two or three times or five more times and it may, it's sort of more flexibility overtime because it don't end up going back to bond markets, so we've been very helpful over the past few years in terms of bridging them in between bond issue. So it won't always be there as well.

And with much of the remaining length quarter growth as much of that coming out of the U.K. portfolio?

Yes.

So I guess as we look at that business with a couple of consecutive quarters now a pretty strong growth. I guess relative to your initial expectations and entering that space I guess, what's driving the out performance and is this type of growth something that there is a decent pipeline for especially now that it can be kind of self funded. I guess the pipeline on that geography would be really appreciated?

So again the customer we are focused are its Dan again. So where we are focused is and the client or also fine networks are certainly upper end of high networks, individuals and nice in terms of -- that market is huge, it's probably in terms of property values, it's really a couple of trillion dollars probably. So we are taking a very small lever of the overall activity that goes on. We believe still have room and that we are offering. It's very, very custom-tailored, very manual, very personal interactions, so we think we have room to grow and continue to pick up a little bit more share because we are not doing the kinds of bonds we are doing is not the mass volume and there is a an opportunity there. We just hired a new team from another lending shop which we are glad to pickup and so I think there is an opportunity for us to continue to grow. Again, we are not really big loan growth story, it will -- it will help but I don't think it's transformational, does that make sense?

Right, now that's good color. And then, just maybe looking at the Bermuda ready book, I know we are still waiting for the September hike to be reflected in those figures. The December hike, can it be passed along, has that been decided already?

Yes, it's Michael Schrum, Timur. So the December when we passed on through to the base rate as well and obviously has a 90 lag on it and as well. So I think one other across margin, it's both the commercial and -- we had a bit of noise in the previous quarter. They are actually very well behaved this quarter both in terms of volumes and NII and you can clearly see that although you are not getting the full flow through on the revenue side of 25 bps because it's somewhat muted by the volume is coming out a bit, low yield U.K. mortgages you are still seeing that sort of 12 basis points upper tick coming further.

Okay. As we look on the go forward basis should we now expect to get more in a rhythm of every other rate hike or that's still pretty discretionary for each REIT?

Yes, I mean it's pretty discretionary that's that as you know, that's what we model in our asset sensitivity. So we are still very asset-sensitive, I think at the early part of the cycle we all -- we are all kind of in agreement that we should, we were uncertain what was sort of happening to the funding rates in the market. I think there is a bit more uncertainty around that and it's fair to say just like with everybody else. Everyone gets a little bit harder and a little bit more discussion around it. So but I think it's fair to say, it will be good modeling assumption with every other one in just like we've done.

Yes because I think it's just looking forward inflation obviously hardening. I think we can kind of see a bit more balances as we go forward. I think we are nervous in the early stages of the rate turns that is obviously was going to reverse it up quick to I think your thoughts on rates.

Okay. And then, just switching back to expenses for one more from me here, can you quantify what the total pull forward of expenses were in the fourth quarter, so as we kind of remove some of the noise from finishing out this year and some of the pull forward expense with a clean number that we should be looking at as we enter 2018?

Yes I think. I mean, I clearly look at this in a considerable amount of detail. So I think we posted 78, I think for the quarter, which was successfully higher than what we would want on a fourth quarter average basis. If you will so I think if you said sort of 72, would probably not be a bad number to use for that, it's a little bit higher than the previous guidance. There is a little bit of inflation there and then there is a little bit of structured expense say from obviously the Halifax initiatives as well. And then, as we there is a bit of timing that's just some existing businesses and that I'll get you comfortably to 60% just with the current revenue base if you pull forward the revenue that's still coming in. So I think that's kind of a good number to use obviously as we expand the franchise we will try and give good color around what that means I think Dan has given some initial numbers about what that looks like in expenses and we will certainly give some more color to start to onboard people and make sure that you have a good number there.

Okay, but it seems like a lot of the more or less onetime or kind of accelerated expense occurred in the fourth quarter those should be shed pretty quickly in getting to your run rate, starting pretty much in the beginning of the year?

Yes, I know we said sort of the near term obviously with this completing starts with the 28 process we had the first year fully integrated audit. So you know that's half the quarter if you will and then it's hand's down and sort of think about what SOX to look like and some of the new programs coming on a much smaller. I think you know, clearly I think like data loss prevention and cyber et cetera but they are much more flushed out already and much smaller than the heavy I assume we've done on SOX and some of the compliance infrastructure as we've done over the last year.

Okay, that's helpful. And then, maybe just one more if I can on the M&A front congrats on getting a second deal here now. Was part of this deal kind of triggered by the October announcement of the GTS transaction again how closely are these related, was there something that you were looking at even back then and they just took a little bit of time to get on paper or kind of how that the timeframe from October to now or go with these two announcements.

So Timur, it's a good question. They are sort of related. I would say that the corporate development team, the team that we developed the good working relationship at Deutsche was really how to get through the GTS transaction to free up enough head space to be able to work on this transaction. So they were always going to be more sequential but the underlying business teams are meaningfully different. So from the integration perspective on our part it really is banking in custody and team New Jersey that doesn't overlap really with our trust operation so that while we are integrating the trust business, the banking folks can get on with integrating this business so, it really does work so they were sort of related but not as high as the HSBC transaction was where the trust and the asset management and the wealth business have all racked up into one thing. This is by no means all wrapped up and actually it is important within the DP hierarchy to different people. So, no, it really was just getting corporate debt being freed up, but I think overall I think Deutsche's view we are able to execute GTS and again as I said earlier that we are able to execute it and be practical, easy to work with you know, really treat their people well. I think that gave them a lot of confidence that we were the right buyer for the second business. So very different businesses but I think related to the sense that we are developing reputation of an acquired that just what we say we are going to do.

Great, Thank you very much. Nice quarter.

Thanks.

Thanks.

Thanks.

Thank you. And the next question comes from Don [indiscernible] of Raymond James.

Thank you. Good morning, everyone.

Good morning, Donald.

Good morning, Donald.

A couple of things; one, were there any repurchases this quarter?

No, on the capital, we came out with the dividend and a new plan the old share repurchase plan lapsed immediately after that was, shortly after the IPO as you know, we raised primary equity in the IPO in '16 and so really wanted to build that cushion in and on the capital, before sort of evolving the capital management framework to where we are now.

Okay. And then, are you still kind of targeting payout ratio of about 50%?

Yes, that's exactly right. And we sort of reconfirm good discussions in the board meetings. I think we certainly - we certainly are targeting around the 50% I think everyone is conscious that we also want to make sure that we have enough tools and to about to recurrent capital and we don't let the dividend run into non-sustainable level, which I have clearly isn't the case at the moment as we expanding the franchise but they were good, that's a good, that was a good discussion to have there and yes it's still 50, around 50.

Okay, great. And then, just in terms of on the non-core expenses, do you expect or I guess I should say how much longer do you think this tax compliance review cost will -- can be part of your non-core expenses?

Yes, I mean this was triggered by an event that happened in 2013 and spend a lot of time on this going through all of our files and emails back to make sure that we had good line of side to how many people were banking from all the different countries et cetera. I mean, to some extent this noise goes away in the future because of the common reporting standard and FATCA. Unfortunately, and I think we are certainly at the end of where we've given everything that we can to the U.S. attorney's office and we are sort of waiting for that to kind of work its way through the system. Unfortunately, sometimes that doesn't happen on the timeframe that we would like for it to happen but I think we are hopeful that we are getting closer to a resolution that's productive.

Okay. All right, thanks Michael, that's all I have.

All right. Thanks, Don.

Thank you. And as there are no questions at the moment, we would like to turn the call to management for any closing comments.

Thank you Keith, and thanks to everyone for dialing today. We look forward to speaking with you again next quarter. Have a great day.