PNC Financial Services (PNC) 12 Jan 182017 Q4 Earnings call transcript

Good morning. My name is Jennifer and I will be your conference operator today. At this time, I would like to welcome everyone to The PNC Financial Services Group Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. reminder, is a January recorded As XXXX. XX, Instructions] today’s being call Friday, [Operator like the to the now would I turn Investor Mr. Director conference Relations, of to over Bryan Gill. Sir, go ahead. please

today’s Financial Services Group. Vice Rob on good forward-looking everyone. and and you Chairman, are Reilly, Officer. President Participating contains for Bill Chief information. thank Financial Welcome Executive Executive this Well, Officer, to Today’s PNC presentation The conference PNC’s morning, Chief President call and call and Demchak;

of earning These only obligation them. forward-looking of the in behavior all significant new and Investor items our income and additional performance PNC we trends customer and available today’s to could regarding and our These Information Actual statements XXXX website, measures tax to enacted release provided performance a pnc.com, call, the take continuation slides. account well which have corporate changes release filings no reflect anticipated information statements economic forward-looking Our risks future factors, as and factors. the any of other various differ, in undertakes as under contingencies. GAAP to financial impact current continuing and on XX-K, assume appendix due presentation from non-GAAP historical amounts, those statement and and and materials. SEC included to due of such conference and into other as is adjusted speak investor we federal update in XX, and into factored events of Relations. legislation in tax of materially, results about and are legislation. reconciliations regulatory not our other guidance our Also presentation do materials possibly January this quarter XX-Qs from Throughout earnings on potential refer PNC in statements not to the related our impact fourth the legal federal discuss in and a impact details we variety

to Bill I’d Now, like to the Demchak. over call turn

and good Thanks, morning, Bryan everybody.

adjustments reported reform given net legislation quarter, our results banking this our really diluted to with have you was And from various of if tax noisy that federal per signed bad the can common seen is the to billion today, us we helps $XX.XX As Tax significant that walk into tax flow. and our benefits leave share drive and which cash December. it $X.X for full-year is per also new share. businesses, our that quarter Clearly you employees, good results communities, and or am current produced us to Main our has shareholders XXXX benefited news flexibility in a the and ongoing in more Street for through this it both in invest it is law tangible has The all news our call value – I going for income book reform Rob higher that, quarter including to increase you there. model. future

$X.XX well other customers billion grew loans thank for across We I deposits continued PNC us. common the our their all XXXX their our and hard clients added as significant to want of our $X.X do impacts net legislation the Excluding for in businesses. items, income employees work, our for and trust and as and per was tax XXXX was or year successful of full-year a share. diluted

quality XXXX. progress we franchise is driving were of going bank. to reinvention one Satisfaction important And to particularly been We ongoing for year which technology record proud time of continued are this investing also executed focus markets, We and services go on our albeit into ranking our J.D. retail and Importantly, we we the on strategic this middle into our Power’s and those agenda, the more to the this pleased and are our modestly the and secure as our and enabling market banking experience. expense here. more four modernize fee am grew consumer management our a years and made information in After now expansion us income turn I generated in on new into year Survey. focus digital in infrastructure, National earn years. are Bank number key quarter to priorities, work loan in us We somewhat going progress a in the investments products has fortify the we our and for isn't including deliver more that customer-facing balances for higher convenient making first we the of fourth change year

a You of as guidance work billion results And of that, and we and our and will in will returned run] acquisitions share the execute products market And to franchise. expansion smaller, initiatives, PNC lending through services, shareholders. several Rob? XXXX us take detail with let an Finance, for our Trout shareholders. XXXX including of lending continue the on our Vendor for for going announced then aimed be in home is out Advisors, you transformation see I’ll be middle course of $X.X happy this questions. of and that capital but XXXX and more Relations, all further year with value we of [ECN], number the at to creating to ongoing Investor long-term our we Fortis build to with strategic important the digital is [Rob

Bill. Good morning and thanks

the income or And quarter billion or was net share. $X.X income moment. net share. from mentioned, billion legislation, fourth tax common $X.XX by items about just per Both in periods new diluted common offset talk benefited $X.X was that Bill $XX.XX diluted As a I'll full-year partially per our significant

home fourth quarter. balances billion compared information is and average lending to businesses. growth $XXX and Slide up education C&IB the quarter offset $X.X more equity Our and was the is X% mortgage, it our Consumer on increased in auto an across card, were third balances credit grew as basis. sheet lending X or presented loans. $X.X lower balance and million, on in Loans residential growth than broad-based with billion billion $XXX.X Commercial

most on an but a year-over-year grew the challenging to loans decreased by comparison, by again billion or $X.X XXXX. we faced average third basis, quarter X%. quarter and lending as $XXX basis. throughout same total million year-ago investment lending $X.X compared $X.X spot securities $XX.X $XX.X by a million. the in or by a X%, Average reinvestment with or billion was billion on broad-based, quarter securities X% compared consumer Commercial increased billion, declined billion quarter, increased For $XXX Investment the to of the fourth up environment

up Fed Our the an Compared to the by year, million. fourth $X.X billion from average last quarter were driven the by $XXX fourth billion for $XX.X at in of balances quarter, the and increase quarter liquidity from balances third Federal higher borrowings. Reserve deposits increased

On total approximately growth reflecting fourth $XXX Average total year-over-year, billion deposits to strong businesses. our substantial capital or or earnings, billion by shareholders' to year, quarter, in $XXX.X in quarter as seasonal the commercial increased driven fourth with quarter million equity common continue X%, liability side, our $XXX and shareholders. consumer deposits by third to even by by Compared growth increased the we due million and X% of linked quarter in the $X.X compared to the return billion $X.X last increased deposits. to commercial both

and billion million XX% billion full-year were $X.X $X.X million XXXX, to the $XXX in a of of and the repurchases X% Period we $XX returned This shareholders. to down in or end common year billion prior share capital year XXXX. compared $X.X outstanding For over represented comprised increase dividends. end common was shares

capital XX, to be X.X% XX of was estimated Tier share of tax inclusive forma same pro our book common and was III year-ago. As of common $XX.XX of the December to up as compared date X% equity December legislation, a XXXX, the tangible Basel per value ratio X impact

As in and you billion the were billion full-year for the $X.X on fourth legislation income quarter. by quarter. see $X.X and X, tax these significant Slide the items Clearly fourth impacted in results that occurred can net was

or $XXX billion shown to to underlying higher quarter. This commercial due revenue $XXX reflecting overall by business numbers net income Full-year for us. $XXX non-interest focus managed the stable well impact total yields. up Full-year by interest the to overall quality fourth reported approximately compared business $XX.X full-year losses in be performance the for income. credit of was primarily to compared million remains and $X fourth items on $X our loan was Total quarter and fourth grew growth remain increased favorable billion billion Net income growth. million related Provision million X%. X% this and slide increased million by linked-quarter. include credit $X.X a interest XXXX strong. $XXX stable. loan The fourth or X% in reported by was million for was X% or income significant non-interest a driven of or and down basis, $XXX And million XXXX. third up However, million as $XXX revenue the quarter continue $X.X On quarter. the Expenses the quarter million provision remained to

line can income Finally, our recent from tax you legislation. benefited see the as tax

here fourth Turning the items the to X, are significant impacted highlighted Slide that quarter.

are deferred due result of tax recognized benefit to the federal income the primarily of of we equity which a the billion BlackRock. in related to revaluation stake our net legislation, $X.X tax As tax majority liabilities, our the

In as addition, in had we and fourth they quarter significant follows. are occurred that the items

the XX% our contribution including credit and but income And employees, early result are $XXX benefits a employee a This the pension million million legislation non-interest flow real expense million As to our $XXX cash employees. strategy. tax million previously related $XXX announced, for approximately benefit a of contribution our charge education. of estate balance from as previously data includes shares Other and supports $XXXX our equity of dispositions $XXXX not A cash childhood payment accounts which significant a investment. items communities reported to a which to BlackRock’s funded Foundation, of BlackRock exits in amount stock. announced, center through a to was $XXX second, of through related PNC our today to

two of due value a sites. is which we square total, negative used the second significant reliant on million of on And items to for lastly, and our financial $XX million Class our value these estate of mortgage the servicing Visa XXXX as will impact of fair financial managed completed reduce shows represents fourth resolution, assumption by This basis first centers, legislation build-out for is X result adjustments an XX%. rights our In of As better our footage new now updates. our adjusted the derivative are business $XXX some million agreements. legacy of results. guidance. data and and for one and dispositions PNC’s related real be B $XXX to our extension approximately primarily results the fair the expected XXXX these full-year quarter Slide litigation full-year We tax will and underlying less timing performance residential quarter of believe

per net $X.XX can the And see, income income you $X.X adjusted diluted our $X.X As quarter, or $X.XX common billion our share. net share. was per was billion adjusted full-year fourth or for

Reported X, rates higher to Turning growth revenue offset by or increased costs. by deposit compared borrowing interest driven and billion. income higher net interest for X% by Slide XXXX million $XXX with full-year and XXXX XXXX loan was partially $XX.X

by to margin fourth decline the X%. included million periods was X.XX%, detail interest NII reduced points. income. offset NIM basis points and of Compared results million was million our higher $XX the fee broad-based on in impact provides up primarily by higher or X was to our and $XXX XX related basis These or three non-interest which X%. interest tax increased net quarter quarter legislation leases, included up Our non-interest basis Slide full-year improvement growth yields majority points. Full-year interest quarter, to borrowing $XXX net by Fourth by businesses. was three leveraged income more income income of non-interest stable X.XX%. costs. margin net third loan The the by driven up XXXX partially to in Both

other strategies XX% and to businesses our grow On record non-interest excluding significant help income efforts those the continue the of items. execute adjusted income in tax of on to our impact drive XXXX even both We franchise, revenue. fee XXXX, and across our reported basis, legislation our fee represented and to

as a million the included $XXX through tax our $XXX by the equity million full-year, or revenue management of XX%. For benefit of increased BlackRock. in flow This legislation asset result investment

full-year increased residential services XX%, well or loans full-year income and corporate or linked-quarter both syndications mortgage fair consumer grew On activity, contributed a services and credit $XXX X% stronger million fees treasury the million as non-interest of to increased related card addition, results by activity a a $XX higher increase a year-end the both to grew markets for acquisition as and in rights. net $XXX in million servicing or rewards. X% fees. periods fees XXXX average under and card and Residential management, fees on brokerage by quarterly In equity linked-quarter assets basis million fees and and which negative mortgage value management basis, fees $XX linked-quarter $XXX declined higher On Corporate basis X%. fees billion a to from million $XX XX, of driven on debit assumptions at or $X for services XXXX. December full-year billion basis. XXXX as higher included reflect impact by services advisory Consumer increased update merger

full-year Beyond by other increased million related charges or deposits for lastly increased X%. non-interest by sale items. negative significant $XX a And to million net full-year that income income lower linked-quarter was sales $XXX and a growth other decline. impact driven down and by on basis production activity. million $XX included revenue $XXX On contributed and lower the non-interest or to Service million client the X%

to overall and in us approach. to expense remain management our for we a disciplined Turning be Slide XX, focus continues

As we our to cost you had $XXX continuous completed that we program achieve of improvement and million successfully goal savings know through goal. actions XXXX in

to items were the $XXX reflecting charges, contribution estate and in pension along fourth real $X.X to the These Our $XX.X in XXXX, approximately quarter. significant full-year cash XXXX disposition of the compared million Foundation, PNC employee include and expenses billion exit billion account payments credit. with

basis, ratio adjust in our XXXX. Importantly XX% efficiency an was on

fund XXXX, Looking again cost technology which additional to partially an business and CIP, investments. our expect saving we to through continuing forward have we $XXX targeted million in

in just quality more quarter. loan linked-quarter quarter million essentially equity quality or represent stable the growth, credit impact X% mentioned credit to essentially than offset in of the Turning and loans lower than the Total less the to overall delinquencies third were the and for Slide non-performing $XXX to reflecting and of Net hurricane of auto were annualized delinquencies remain third commercial third flat compared XX, Total the fourth up compared X%, were quarter. to due XXXX. seasonality loans. total residential $X of reversal in to part ratio due and Provision losses by for results and million In were the provision of for These the by and and reported card the compared to and provision in the related residual well I charge-off a credit portfolio points. home loan Hurricane. prior linked-quarter, period, increases million to reserve auto lending impact consumer mortgage increases lending release increased reserves. credit for positioned card reflecting successful XX credit we PNC basis stable $XXX the decreased continue the summary, quarter charge-offs very XXXX was qualitative the flat net are

as the follows. results year, steady In rates, in we short-term this continued the September growth basis Based rest to being each adjusted XXXX increase Slide is and these year. interest compared a on of in and XXXX our guidance X with GDP corresponding ahead as December to June, increase XX additional outlined three expect points. Looking full-year on assumptions, times

expect We mid growth. single-digit loan

expect revenue mid single-digit growth. We

expenses, and operating be guidance, in expect Based will We we deliver expect we believe low tax leverage this single-digit rate a increase in XX%. on approximately to we XXXX. effective PNC’s positive

we quarter first results, the modest quarter XXXX fourth adjusted growth. at to compared ahead of expect Looking loan XXXX

interest to income We remain expect net stable. total

quarter lower fees categories. fourth typically income fee to single-digits quarter client mid certain expect in low first down be elevated activity and due We to

income to We expect non-interest $XXX the be other in million million to $XXX range.

$XXX We expect single-digits take million And down I ready million. expect between with expenses $XXX low provision Bill we that, to questions. and your be and and to be are to

Jennifer, for questions? could please poll you

line the proceed Evercore. comes your question first Your Instructions] [Operator you. question. John Thank Pancari with from with of Please

morning. Good

Good morning, John.

John. Hey

banks it the gets about that to expected longer-term over much not talk but XX% there to of of a going that environment, rate tax to some competitive erode does risk of appears competed is some that benefit the The be listening like assume time. seems away, that really

So benefit or expectation on that can comment just that I you you out some find your its you the there was of think if wondering of do see way Thanks. numbers?

lowering numbers I or of think higher in spreads that and/or get to a rate function tax – the Rob’s a seen. above the as is line tax think whether that remains deposit be not costs I rate, reduced

because rate. equity to in time equity Yes, practice, and our on of So going return theory to competition. return tax increase it's some – customers. in see in not is is to It's that given our on in you'll kind really through [heavy] of going after-tax and

John, Rob. this is

a Just based sort obviously, of but away, the of of tell some to too expect early, bit, broaden that extent activity early question it's will little of that that. in we would to that terms on it's compete banks historical

Yes.

mind you of our The the keep thing of tax our lower but capital actually value jumps other that when of and this theory, increases because to shield in of funding. kind into cost – from the

then the of actually just book is give get all So that tax that risk loan some there's on you independent the rate sort away in of return you pure is. ways what can and it

to So just there's could drop factors clients. some mitigating you it to notion off that

it. Got Right.

the note sluggish growth for mortgage loans at on finance basis some know period were of Okay. of sounds anything. end wanted on least to been that at somewhat on And an then may and like I loan about outlook. in I it least separately, that have your ask or quarter the

mid little expected been on would I for bit little there, have a color a XXXX in would it's it's but higher than bit XXXX line, but maybe want single-digit the outlook I your somewhat the separately more expectation, outlook, So stable. have

strengthening So a loan in see why growth XXXX? not real in

effect, change We in didn’t in demand a assume right. loan

comes your were up was fourth that lines, we kind on pretty the of the up a in originations which sort se. built a more that there a market, into mortgage was spot to expect function aggressive if the versus decline. multifamily along capital a of loans had loans the don't of right mid borrowings. might permanent on be paydowns of estate fourth in the number, terms. quarter, interesting, that as economic numbers in question quarter changed number have you're basis were for So C&I kind what that pick do And warehouse real third But that caused finance line quarter tax healthy, in runoff change out we and in per Interestingly We quarter by what our markets. were in taken by really estate the taken that real

So our pays to deals win deals ability fund continues to and healthy.

Thank great. you. Okay,

John. Thanks

line of question. the Our your next Scott question & Sandler Siefers with Partners. comes Please from with proceed O'Neill

adjusted for appreciate guys. the FTE and between would does Good tax on rate, and through Rob, basis that I tax morning, anticipate I so XXX an FTE rate? you question so everything rate, effective color what maybe effective the walk the implying your typically gap on that like you think change? tax call Can point how rate? the there's sort that. been XX% numbers of

Yes. there, big Not Scott. a swing

and off XX% You a that. big compression the lower just reduce with that rate, start not roughly would tax to of by number what so of the

Yes.

visible we that… Okay. And result step down changes the FTE tax anything any in or as expect the a on is like margin should then or – of any impact

around it We Yes. basis gauge points. X

targets new more on the if now capital maybe Thank you. broadly Okay, is thoughts any And that official, changes change tax aspirations? or how role your return great. all at then

to expect, is popular Well, the answer so to obviously, going a that which what premature. is that's you're question,

Fed test. received haven't for We this scenarios stress year's the

return So equal, but theory, return. tax to that's capital a stays in have else determining component because in else if we'll a have will we rate key being more all the what be, everything equal lower

be see Rob store the set. have bias on CCAR what And do this our talked we've out remaining finish on side, quarters next on of in before the we inside the but they two we’ll would for that dividend as have then and or us about

We have dividend Directors to we’ll be that our higher and I but of flow the flow approval, Board subject think. cash towards biasing cash

between As far repurchases. and share as mix the dividend

Yes.

guys you Okay. All much. right, terrific. very Thank

Sure Scott.

proceed of question next Our Najarian line Erika question. with of your with from comes the Please Bank America.

Hi, morning. good

Hi, good morning.

good Erika. morning, Hi,

consumer the And mortgage remain said residential Bill context wondering peers So of of of bit this clearly the this loan in one progress for still conference rule question. I'm sort everybody's tight at from changes call growth, that potential Mentioned a is for your part an waiting morning. standards two and on earlier agencies. underwriting a

lending or prospects sort and an expense If now update embedded the not the home you sized, the of residential origination do us of with the and is you give some transformation in on standards this also view could terms mortgage? right also year still agree terms base that for the is underwriting whether for there of in conservatism

and been underwriting are still given bit a given standards, systems. off litigation say transformation, I history on be lending by where the past you let conservative more be the comment running everybody the Just that saying as we of Rob risk. in doing and but risk [put-back] has we're broad-based might implementation the I’ll yes, program otherwise kind some margin would not expenses on that places on will than just we lead home

quarter I our did Yes, this new what We're add on are. mortgage track of in Erika. to move to can platform. originations terms that We our plans

XXXX. We then the with and part of have mortgage work some in that home plans more and the to in up here follow equity spring later

you as will So complex of is savings executing portion XXXX, that work about the the good feel set. plan, likely on most very be a know but expense in which we

And as and Rob. follow-up, it. a Bill just Got

does an and of two Senate at from speaking billion. generally definition, management threshold strategy billion threshold thinking doesn't about clearly at capital that threshold prevail $XXX here? has prevail terms of asset there version change So how House just an XX in bipartisan asset or the you're asset the still a the dueling all have $XXX Should [indiscernible] is and bills, dollar

change about so I And matter, Well, the effect for that that thing mean doesn't way binding in change bill constrains our wouldn't the a us, it practical as anything that is in thinking. or which billion threshold. we're mentioned we're field most in with playing bill is it the [indiscernible] But of in concerned mentioned bill. the not is $XXX leveling LCR, that terms that

So either to hard lined think approach us. we'd through to where kind because change doesn't like relief see of have is in the we through less and way you will be time through or said change or on single law, LCR some regulatory we law that exposure, to But we'll it that, and that the goes. thing we keep see pushing it impacts through

be or may That not the by determined may threshold.

Yes.

for follow-up benefits. it. the Got offline potential Thank you. I'll

Sure.

Our your with comes the proceed John Bernstein. from question. with next of line McDonald question Please

and outlook mid operating a for Rob the in drivers XXXX. at was when we revenue nice wondering single-digit. leverage Have look I in the

would driven whether about If drivers Thanks. of helpful? fees by revenue sense and you it's NII a thinking roughly that could of kind what give you're broad for equally be in us

percentage. sure John. higher of both the growth and mid mid the NII NII there, or in fee and income middle Yes, up mid both single-digits single-digits Yes single-digits NII in going single-digits sort little fees a maybe the terms end the more of of non-interest in and so income fees so than mid

are kind where feeling size you drivers about the good of the of as year? And fee in Okay. you the the

in look see. were up services up up get overall the the the of corporate service up mid the because consumer services a single-digits of quarter, for then terms would the in single-digits performance All year – low mid that single-digits, on services mortgage for at single-digits, just high the take and say single-digits, we the fees. up components components fees, single-digits just mid is to the single-digits. Yes, elevated breakdown asset charges the and reason corporate deposits can as so management record to you whole we low you fourth fees of And low when into

Got it.

very helpful. Okay, very Thanks much.

sure. Yes,

line Bank. your with from Deutsche question of comes Please O'Connor the with Matt next proceed Our question.

morning. for Hi, is good This Yes. Rob Matt.

an on your we was backed questions loan up just excess thinking if here? update some Just get your curious liquidity. I that now on have rates can

Yes.

accelerated handful see crossing bit because Just quickly, over cash. that more this deploying just quarter I it's a XX-year push the little that rates margin of last X%. I guess borrowings in said we back we've up a you've got that start And [indiscernible] weeks we remember did. you that, mean is elevated Having with seen a to the Obviously would some the rates carry now floating but to because short it it to We'd redeploy securities X Level curves on even reduced we if flat, to see into work. higher likely like with money you'll an duration the a that matter but work backend rate and remain we is put to is in put us it assets, as opportunity have to. practical choose

count relates you continue footprint, to to this quarter. Okay. just your branch reduce it as separately And branch then

you then number been was that was target of for give consolidation couple that. I could a second, year. your universal branch quarters. lower curious noticed I trending in the has this branch to last First, speak if I And count wondering

Yes, sure.

In XXXX. other they're close the measured in we've though if to same those. as regard way expectations, universal, to consolidations not couple you branches because of in we some would last that that they're universal the in branch in the around couple branches year closed of We’ve or see a some things and there. of themselves, been to actually branches we'll XXX on neighborhood years a terms expect they're running and be So cases, in somewhere performing branches even universal our

bigger our just psychology and the of as approach, the the effective what has though the in I configuration conversation universal think format. be is branches can method but we've and customers branch traditional branch a learned the universal terms is of around set in our definition interacting that with

some sort also our include which approach format our it's an and of branches. So universal of alternative branches can legacy

role change customer-facing of the to and So tellers, a to more XXX spend people mix the grand effect employees branch. have we to redo in less and XX we don't but

right. That's

Thanks. Got it.

Sure.

question. Terry Stephens. from Our the line next of question Please McEvoy your with with comes proceed

morning. Good thanks. Hi,

was about in to CRE in the Could then growth appetite in just pay fourth down XXXX? talk and And XXXX. flat question, for you down a quarter? First any activity your just opportunities overall bit

mean right? You XXXX,

XXXX, yes, sorry.

CRE On much that of what elevated, strong. is of more second of outs originations Bill the year. is The XXXX the the particularly saying. were in in It half sort the were was take actually pretty

think that years. see seen still couple last growth, we I at some rate into not but of the going the in XXXX, we've

Thanks.

that. about Sorry

Our next proceed of Gerard from question line question. your comes Cassidy. Please the with

guys. morning, Good

Gerard. Hey

a dividends your On dividend? that obviously a do addressed return, what’s basis if their of for kind to have that? to regulators, get seem sign valuation you hesitancy the thinking wrestle XX in at the with by to to very jump part some past Bill, from buying return. How And do well stock in of the prices the of capital the the your you I you know minute, banks I stock has relative your be they regulators capital as special amount back special But of to that versus allow the regulators this. would supportive elevated or call there over with be new so last done I months. apologize if

the rate, dividends have of ratios think margin in industry towards than that answer are. to flow of opposed of We And the special book buyback. still lower did be healthy our cash as that sort all non-special, is, I but where the price would to valuations simple the the this our kind increased the given talk I be buyback, common sense, given for towards bias bias said point, would push get increase rather given buyback. dividend to Well, of is tax the question, because at about pretty us we versus a or

know the probably over this and tax been to in growth an if years course. guys we reform have Very asset-sensitive that XXXX that And bank, assume good. of I leads economic stronger And you way XXXX, how sensitive? would which asset Are making maybe sensitive, it are at sheet? higher about interest imply balance you keeping you guys it asset or more the is less rates, thinking the

and theory theory the the hard, isn't simple, Well, is look practice the right. – is

been or recovering added just very with prior into the recession tax as going fiscal the been long effect the program. coming with and effect going of has rates the get from stimulus You up asset in to short in limit economy the fuel our we’ve sensitive

close You and our see time. us negative leg duration over in will of some

it's is was that gap an of earnings than One that will because we terms in of curve management the close it But flattened. run. this measure opposed as the economic the value maturity we a windfall – sort terms things yield mentioned, – once once carry I measure approach call it the is from to beyond as less I’ll – simply the pure as of risk as

already. that of done We've some

Thank guys. Great. you,

Gerard. Yes. Thanks

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

because going you much. tax there thanks follow-up Hey, so and Bill a to of just shield the bit a think the how equity up to your could the adjusting give just cost what is around little color on cost moving from wanted equity comments what? you about down, of

as on a relationship is percentage operating I our way on often without I up it. used our a capital not of bases so at capital pursue performance and our a to of tax reason The risk it, our look it measure debt forth. less. our client function funding on through credit right, committed we and theory. mix from total a bring shield numbers differs relationships and own capital putting We that’s part practice and is theory as the of Well, mean it's By so calculation, mathematical

take there's So saying benefit cost and could of that tax bringing effective simply my offsetting our sort through we competed business up the only point in without effect in capital. away whole to and costs of thing entire is that

wasn't associated there's tax a also bit risky you also in with less that credit risk well. little that is you're suggesting because I if were taking business sure as your the shield that core Okay.

implying wasn't credit increases wanted No you environment, if I but I the although, to in math, is. that, lower a you really with what the won't tax that bore and capital actual economic into get

can bore Okay. I'd with bore be Maybe that offline you if me, happy conversation. you

– in – target. up I than of know harvest as more there's be less other ramp CIP second year, there lower that as, also so is we on where there do it's there The a interpreting a areas last is we investment should isn't just question implication of spend? hey there the to or was

get, more tool total more number, the a think it's and definition, and that's last I of what we a keep expenses terms each it’s guidance total year to still our baked build No, there's efficient significant by five definition just but get guidance former it's years. in by into to in in less expense check used we've in for

is that's number we offices hit we're AI don't easy through out work internally lending focus of opposed we're more that doing have probably and over fund of costs and that just our of in what's RPA. this doing home sort to we're we've number mix longer-term investment, with then in in But taking that's back opportunity that's going automation Part we Yes, as most in our to the of We about the things quantify on sort we opportunity of the of in to something talked work transformation. a retail a the of could happening kind and work will investment. but we've used this and play is terms of years out. year. longer-term our There the be some in all we a

Right.

that up does investment law And you the help little with change Okay. ramping maybe? a bit tax spend

dollars much of decision for us spend. more, – and They our invest is to as Our it opportunities our to it In XXXX on theory could shy guidance heard new by efficiently ability for oftentimes as guidance invest our is. haven't you've as by we take been is but future have company, and driven our about XXXX. to we execute say

sequencing of that. some the for necessary that's And

Yes.

Got it.

lot. a Thanks Okay.

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

again X, good Hey, guys. for really helpful. morning, that Also Thanks. Slide thanks

Just a that presume the if just the but help basis just other way up all to outlook. all first quarter, you on that are revenue Rob, I XXX full-year a not non-FTE can the understand us baking inclusive, couple for is clean of for total in XXX you and it's things year? your through the

are. we Yes,

it. Got Okay.

time. that changed line, We guidance quarter-to-quarter provide can long for but in hasn’t that a guidance for that

Even it most though it for of year. largely last above was year the

most spoken in about I it, Ken, year was It was calls, we've above as previous how private had that last mentioned and of Yes. our it performs it largely equity really business. in

markets. good Understood. Which could continue

Which continue, outlook. in but bit that our we could a normalize

Understood.

kind on about and if it. for got to on outlook talk some then you're on help to this Okay, within tax given also you'd your America consumer And get we the of but of just and for America, wonder keeping your just additional overall thinking how stuff could the just your you credit especially outlook just secondly credit, credit XXX year, XXX that XXX, corporate – of might views that? be quality just

up you as better, that has quarter in I prime been can Ken, be this in consumer think that good lower the be there, the pretty then in mentioned you even side. the book as space stable feel see pretty we the consumer it's credit same. the space in to particularly say on going quality healthy. I rate results in We're is on is but pretty so and remains these good, comments a about credit And opening largely and that corporate as will tax the with corporate

management, that high presume through BlackRock expected income in gap one, little also double you of Last comment as off benefit the get the single-digits for higher asset fees Okay. pulling that from there does mentioned you'll well?

does. it Yes does. it Yes,

guys. it. Okay, Appreciate thanks understood. All right,

bet you Ken. Yes,

Thank you.

Barker with the Piper question. line from with Please Kevin comes question your next Our proceed of Jaffray.

right it with color Within is around the from the spread [two combined you flattening just you. XX three assume is? yield you that over slightly curve just base yield Where your further hikes stays are saying or flattening given are where mentioned outlook? now? curve of give tens] points little where we you rate Could bit us guidance you for that a a Thank have

of our… terms In

think matter. practical is I a it

the think is that going get investment affect, over as the our the end it rate two trade portfolio. tens from drop front very is with will relates three I I carry at forecast the typical in increases think as trade a probably least flattening to we to carry with have

to probably it. So years flattening we continue would XX from Fed see funds trend

By definition...

Well yes. not by practically, definition, but

Yes.

to amount peers, given and outside your compared should of Right and shorter rate? benefit of liquidity duration higher sheet from we shorter and the balance the moving

our whatever and be higher ultimately majority yield book. the securities loan the a fixed shorter transaction funding on by was duration invest of we in on remain to the carry increases will the So loan going than what basis, cost we from less that at least what rate and swaps, we short rate so the book. put on is it Value the on will once from initiation of flattens maturity is curve floating

the follow-up a system comment regarding then and loan of acceleration consumer Okay, and your on implementations growth.

consumer It got mentioned and other little later projections equity implementation than these on normal. for are you today platform that a the XXXX? the mortgage home Is finalized that piece a a seems products that of that and was growth You in there loan couple of in will little in headwind the delay bit your of bit the and would that as follow and few new up quarters XXXX?

I was thought. we than lending mean more thought money cost home to thought of that harder it’s we a project practical matter than that the we longer redo entirety the

of what and inside it's equity platform, yes on yes So do same remain as work the home pretty said a in end, bullish the you strong and there. front mortgage given get guidance that which been all we lending system with and yes, we digital can we've having what of originations to has on lot the home

into place about some it’s timeframe the our at as time And all of end we've guidance time. the been for the XXXX from what built talking

you. Okay. Thank

of proceed question Our Please last Fargo question. with Securities. your with comes Mayo Wells Mike the from line

Hi, Bill.

Mike. Hi,

cost bore and that challenge is that would to made the capital you with like that would you on one I of discussion. point us you

loan of had the you the – and you internally that prescribe the distribution nature in that tax units debate capital because shield. Not given the the what downside the to rates effect capital fat-tail that economic the do we a on is a it. of That's capital actually in reason boring up cost tax a lose to lower goes

take today. loan you XXX have I of offline, had in if rate, units units capital XX XX.X or If XX effect I at for tax yield but it of

to boring we're bunch bank not it's Bill. where again interesting – analysts, sense, makes of a of its kind conceptually A

Right. Right.

corporate growth? let's expect more you you are. growth be tax change could change? credit But you than the Or the lower of for Are loan do because budgeting impact of demand? going you or Do CapEx think this guiding further for faster it beyond? take loan resources and to corporate seems cycle you as you to like that people Do increase far be to that a expect as of kind on the the change it's taxes

more to need terrific. I if that we would know budget resources That's don't that happens.

just have fund before practice, that think meet in corporate hurdle I’m my you the did this In play projects manager, need if I at I'm you investments those. at of I terms than margin, to more a margin. going the out, if to

as Now probably they But have borrow willingness fund had need and more cash flow a than a before. desire well. to to there's those a and they

Europe. thing other course cash the our we The back we have don't of have repatriation really that out of arms that yet around is coming

have who matter been those the of most people anyway. practical a as Now aren't borrowing people

has material know that a So I on impact don't that credit. dampening

I increased equal, So loan else demand. change economy, stronger answer, guess code, audit, tax long-winded all

into our built that guidance. We haven't

bond sort type loan active of some on corporate which we an to side. what see the offset record of be would in I markets, think same see the at time we

And that’s what just know we today.

that mean happens Yes. guidance. isn’t if Look that terrific, in know that as do if this, our you happens, we I but how

better you before. would Do And credit otherwise you you without thought it be the tax this think than to cut? alluded gets

all cash flow, else corporate function a flow America. for it, don't generate of lever margin trade so cash going them. high to is equal, that the people more help This leverage the time There's all kind fact ought there's investment-grade but all equal. we're of at If particularly to that up offs, notwithstanding as else

years? is few part, last about then what over you capital? think your to has cost that do the how And the just and past boring What question on it changed

that. out is as this – We it it I know a measure We I'm different actually to into get every what don't quarter practical it quarter. not matter. of look things. at for a going number

on you that Mike. to get can We

We haven’t down. it calculated

All sounds It thanks a right, lot. good.

Yes. of Q&A End

time. this no further And audio at we’re questions lines showing the on

you, Okay. Well you quarter first again strong the for and Look thank listen, everybody. talking XXXX. in to forward to a

Thank you.

call. concludes conference this gentlemen, Ladies and today's

may You disconnect. now