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PNC Financial Services (PNC)

Participants
Bryan Gill Director of Investor Relations
Bill Demchak Chairman, President and Chief Executive Officer
Rob Reilly Executive Vice President and Chief Financial Officer
John McDonald Bernstein
John Pancari Evercore ISI
Gerard Cassidy RBC Capital Markets
Ken Usdin Jefferies
Erika Najarian Bank of America Merrill Lynch
Saul Martinez UBS
Kevin Barker Piper Jaffray
Brian Klock Keefe, Bruyette & Woods, Inc.
Call transcript
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Operator

Good morning. My name is Carlos, 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 recorded. As Instructions] this being call [Operator call to the I like the over Mr. would now Relations, turn to Investor Director of Gill. Bryan go please Sir, ahead.

Bryan Gill

financial well thank Demchak; on Today’s other information. non-GAAP in available this earnings to are PNC’s and update everyone. to These as the Well, CFO. PNC of and only presentation Financial pnc.com Reilly, call included reconciliations good measures Cautionary our of CEO, speak today’s them. Executive statements website are as President this call release and are President undertakes Bill PNC Participating as forward-looking conference information, Rob under January well statements for no Welcome SEC materials Group. These XXXX, Services Investor Chairman, on corporate and you, and obligation materials, investor contains as our filings as today’s Relations. about and morning, materials. Vice XX,

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

Bill Demchak

good morning, The strong reported $X.X capped per share. common Bryan, net full diluted quarter. billion for or Thanks, PNC of solid with results everybody. by year was income and XXXX $XX.XX year we another Today

their will down, this asset share. charge about and decline BlackRock's clients for look $X.X management in Pulling this quarter investment as that quarter to charge grew XXXX us. driven saw more a in but lower fourth per to flows Rob their revenue to quality quarter as talk you Non-interest the you quarter. hard controlled our their expenses. I'm a net We earnings strong includes we sure, restructuring ongoing – by all PNC net growth, PNC remained income at credit provision want call work and largely continued the was and well very reflecting employees for loan second, deposits, thank in that the diluted related I income saw to due or our our trust from You year, BlackRock and was for in for morning. loans, interest increased through reported income equity $X.XX the of and successful the of to for we billion in that while back And our

achieved the income revenue, full interest For year, and net generated income total positive – and sorry, the operating were for non-interest we non-interest leverage record we and income up year.

expansion, businesses loans expanded to and continued our also reach through ratio well even we the heavily franchise, and We even our as moved our through expenses and and middle deposits of -- invested people, grew and our We of strategy. manage both year. pretty our improving national XXXX digital efficiency retail our into the market through launch our Nashville, Houston Denver, but into you in successful saw into we

XXX million shareholders to share Finally, total total repurchases, began shares dividends. $X.X XX% we we've our to in and billion through share in billion actually returned by since we from capital and million decreased And through has repurchases returned repurchasing in than the count and our $XX more dividends shares. capital XXX XXXX, way,

is largely our manufacturing volatility, Consumer to recession. the provide although in highs towards bullish. headed it's for of off the going confidence expansionary we're remain remains and over As and them, yield tensions, XX% XXXX, to political know spending, don't think trade recent despite admittedly consumer market you domestic clients we and Both a as accounts at entered in -- the which curve high we inversion for levels, surveys remained GDP. we as services and corporate talk recent support

multinational over impact for if the China loan an the healthy the out establish going business trickle think by on growing currently we disagreements can a change, banks. down sorted the don't In we be case. trade see government broadening customer shutdown back economy we economy. the of in We this that's we new large at of period could with markets brand. of demand to X.X% this broader to time aren’t all particularly of our as Instead, to to Of the capital longer environment, example, persists drives starts and as keep being the and course felt continue the believe reach the risk to for relationships, or re-pricing

banking by achieve you of clients bringing We that any cycle us their also going creating it been path investing time. continue products the in has run opportunities the relationships ahead. our grow perform of detail year can for our the value priorities customers investors the market strategic I'm XXXX for front that we with enabled in to superior continuing are of and Rob alongside and for Rob? management experience, financial responsibly believe our our lot We've deepen us we've delivering Furthermore, excited be through simply by to existing on we'll questions. a a with more to to turn to innovative goals. over to got long-term to happy about risk and expense in to the company answer the we'll through to through now then going share year who’s this we execute guidance And results and and

Rob Reilly

Yeah, Bill everyone. morning, great. good and Thanks,

$XX.XX share. full reported or net diluted $X.X common billion we year $X.X share quarter $X.XX per mentioned, was or net just billion income diluted common per fourth of income Bill As and

and compared third presented the fourth sheet growth Total quarter compared quarter is of compared to is increased to slide in on to billion Investment were X% billion basis. $X.X Growth billion to and and balance was $X.X grew mortgage-backed or of securities. U.S. fourth an Our or loans the average $X.X four $X.X $XX.X billion XXXX quarter quarter. linked the primarily compared securities X% billion a the or billion on quarter $XXX Purchases a ago. or XX% X%. year residential treasuries same

Spot for the Deposits at on $XX.X fourth were up quarter we opportunistically Fed and basis. resale billion as the $X.X year-over-year quarter $XX.X averaged the quarter, and cash down Fed billion balances linked billion were December the at X% XXst billion agreements year-end. linked balances cash cash at $X.X Our at both invested year-over-year. and

As Tier of X our at September to X.X%, III estimated X.X% be Equity XX, XXth. was ratio XXXX, December from Common up Basel

repurchases XXXX, billion $X.X the increased we billion year returned full $X.X For our prior over and authorization. repurchases, capital dividends This $X.X in in of which was year to shareholders. of common increase recently XX% a comprised the represented share included under and billion

on for Our was X.X%. assets fourth quarter return average the

common return Our return on average tangible on equity XX.XX%. common XX.XX%, and our was was equity

in third three multifamily This quarter an balances was continues September comprises flow, loan XXth. grew to of quarter. commercial increase banking, about the deposits our by secured of five categories; X% real XXst, credits, an detail. reflects business, secured $X.X to or book corporate warehouse billion agency Our business or compared finance driven X% $X.X loans lending compared estate, we Average fourth Average tangible portfolio our shows equipment value increase as of $XX.XX increased C&IB common billion linked per growth the X% loans which to a our billion lending Slide and and lending, and cash portfolio. approximately lending, our be in share If quarter commercial more and linked last $X.X December businesses. think in traditional year.

linked equipment and finance lending and define as quarter, business fourth X% XX% secured asset-backed, which the we businesses, quarter grew the credit, During year-over-year.

quarter. balances. lending Deposits increased Growth to compared primarily quarter approximately in category, billion grew. deposits in and related We year side, X%, to traditional million continued real quarter in was mortgage, interest-bearing linked And with lending second sixth ago, fourth $X.X that by Consumer consumer equity or was multifamily year-over-year. a credit $XXX as growth and balances consumer commercial a had in residential deposits while stable The quarter home $XXX commercial category, Compared billion in increased and linked accounts. the card, relatively installment consecutive total our by auto, $X to commercial growth same billion average This estate, education remained X%. portfolio expected the warehouse declined flow balances was typical increased X% unsecured the the reflecting $X both and largely the and our loans, quarter decline. or agency deposits consumer were excluding approximately third seasonality On to billion cash quarter. flat. third

deposit cumulative is of beta in commercial increased the at X% stated cumulative from effectively to below XX%. driven The stated consumer. overall and fourth level and beta our Our commercial our quarter quarter the level XX% by beta remained our increased both and third consumer cumulative

overall million slide income up million million $XXX you X%. rates business six, by grew $XX.X reflecting record Net income increased or and see $XXX revenue billion, or on X%, can full higher interest a and X%, growth. was XXXX interest As or non-interest by $XXX year

As included $XXX totaling a approximately items expense XXXX reminder, million. non-interest significant

increased and reflecting businesses, full deliberate expense in people. items, these Excluding our investment year non-interest technology,

quarter Full and for million million. million $XX For the to or $XXX to $XX of credit declined XXXX fourth linked quarter, by in increased X%. compared $XXX $XX year losses decreased fourth provision million million by quarter the provision expenses

performance more detail. Now let's discuss in drivers key the of this

interest for or slide offset $XXX to XXXX a yields higher higher balances earning net increased partially interest Turning by XXXX year record seven, was costs. full income PNC. X% funding asset with million income compared Net and for as XXXX, $X.X were billion,

XX XXXX. basis Our increased to net X.XX%, margin to interest up in XXXX points compared

points basis interest quarter. X.XX%, other of a net X calculation linked resulted decline For due average of basis the margin earning during processes fourth operational the was The fourth our automating the asset, which to from of X certain quarter. quarter, point decline quarter refinement a was interest

average and by impacting result, was increased accordingly. As other assets interest earning amount an unaffected, NIM income a interest immaterial net

eight. the included was Full third a and quarter. income million $XXX up $XX X%, decline compared quarter million, slide to in Turning non-interest the or fourth to year

to a fee Importantly, in $X.X businesses of continue grow to on at categories. look detailed record each our the execute fee our franchise in XXXX to fee strategy help more billion. efforts Taking across drive and performance of our we those our income

year, result flow $XXX BlackRock. through for tax Asset declined in million XXXX million of equity a our management legislation full benefit from or investment fees included X% $XXX the as

benefit, up this or asset fees million Excluding $XXX X%. were management

$XX services fees adjustment management by driven $X the Consumer M&A $XX million, driven declined However or for higher rewards. advisory The margins and to residential increased restructuring million deposits services of on linked-quarter linked-quarter million, customer both $XXX the challenged. services and fees $XX treasury X%, compared BlackRock's activity decline investment Linked-quarter asset non-interest linked $XX full driven recently for activity or mortgage debit increased fees by with servicing $XX declined card by the services comparison, card X%, rights X%, related enhancements. asset as reflecting third increased grew to X%. by in including a impact charges announced quarter, quarter. management including mark. million, primarily Residential higher PNC's linked from fees. volumes net or was activity, consumer income year, equity Compared and for year, driven the million credit fees full Service average fourth quarter by valuation Corporate higher and product on syndication basis, the negative and $XX or to adjustment BlackRock, quarter, million, in year, full increased linked-quarter, grew fees. third year both quarter X%, corporate loan in in remain no full reflecting fees and flow-through fees mortgage PNC's million by million, also in fees lower charge. earnings declined lower management brokerage

for related million to Finally, adjustments, in included fourth $XXX other during share non-interest Visa million income $XX price change Visa quarter quarter. was the primarily derivative from the benefit the and

billion slide $XX.X were nine, full XXXX to to year compared billion expenses our XXXX. in $XX.X Turning

significant digital personnel the expenses and with seasonal than look approximately million of mentioned, million quarter. marketing previously elimination the Taking fourth offset and Lower comparison. in occupancy higher third a declined included $XX or XXXX the the the X%, $XX equipment surcharge expense. of As items quarter, increases quarterly I FDIC million, $XXX more year-over-year impacting assessment at compared expense and

a Expense remain management our quarter full we XXXX, fourth disciplined lowest XX% and to in for be for several Our in efficiency approach. us and focus continues was the years. the the for overall ratio XX% year

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

million. For increased by $XX annual to target million XXXX, $XXX our we've CIP

also are represented XX slide losses provision million and down $XXX million, strong. million $XXX year $XXX XXXX. in declined for loan to XXXX Our credit in $XXX metrics million from charge-offs totaled Net from Full remained XXXX. quality on in

both the portfolio. For fourth the increased handful slightly as commercial XXXX, total loan reserves growth and X.XX%. of in well in declined to linked-quarter reserves from quarter of to specific On to the loans consumer commercial X.XX% in as million due basis $XX a impact a provision loans,

the we're highlighted experience to of absolute As is past given to reserves viewed levels quarter-over-quarter does of releases size basis. in full provisions the on the likely tend the portfolios, the timing we've to or volatility level specific low as loan but when not year out specific a of relative uniform, some

Importantly, reserves delinquencies compared would loans broad were that deterioration. we're And indicate significant X%. loans. within or to and not $XXX both any or down Nonperforming these $XX million December declines in with down commercial total year-over-year X% XXXX were seeing XX, specific trends million potentially consumer

we're improve for have low can credit to levels. these you see over a summary, XXXX well-positioned last reported and As very continued In metrics PNC to XXXX. the years on five the slide successful

we end we we single-digit rate expect We rates basis in range; positive XXXX Based growth expect of our expect the short-term we leverage XXXX. believe end full lower XXXX in expect to occurring be steady we to expect expense range; in of single-digit and to year we we expect X%; the in guidance the X% growth increase upper range this results to XX%. one continue Looking growth these to compared guidance, year, year low in ahead tax effective continued assumptions low our the on approximately will growth on now of of the in be this loan follows; deliver is operating revenue XX of the GDP. the September. Based as interest to full in rest points year the

to single quarter reflecting $XXX fee to be income million your two first expect million XXXX to $XXX income the million. expect we securities expect we and the ready to days to and results, at to quarter And and are net quarter; XXXX $XXX and be Bill income expect of between take fewer activity; Visa Looking loans low excluding be we be to be net compared stable; fourth we we other expenses we noninterest stable; in provision down be expect $XXX expect million interest stable, digits; and total to that with between I questions.

Operator

of our first John Bernstein. And with comes your with Instructions] [Operator you. Thank line McDonald question. Please question from the proceed

John McDonald

Hi, morning, good guys.

of of good what off of you years and wondering, down could seeing understanding, in if credit we're couple Just last in quality of drill you're a for the obviously, bit performance little coming the terms you really credit terms a industry.

higher your wondering models? early quarter much Just, a indicators provision changes credit kind this of, what in much in you by called slightly first models drove the for quality driven that and is in for by the growth, that increase of of How see provisioning your how rate in and in the or quarter.

Rob Reilly

down, down, so down credit delinquencies what measure, couple Hi, virtually that. Rob. mentioned Yeah, John, to this of reiterate Bill is just NPAs every really and charge-offs on By strong. just quality things Again said is I year-over-year.

regard up the also of growth fourth of that these – to provision for changed. had. we this So of In that specific and quarter, handful I’d that the chalk names names hasn't some to

provision So – total some at when you low levels. look down our pretty year-over-year, of $XXX we're bouncing it's take a off million XXXX

So that fourth of explains the XXXX. quarter

in trends For any We we quarter first a we I One, do good. again, that that would growth. don't see couple of deterioration categories but is any broad XXXX forward, quality substantial the see see suggest going credit things. mentioned of asset

Bill Demchak

I associated in had they credits and things. with John, word But but were fourth strange we the all frankly, completely not four commercial substantial, any used idiosyncratic go you deterioration, mean NPA there's the – quarter

where even still really auto, in tick consumer, in on So nothing slight there. that's back based the the been a up broader There's economy. – of to hurricane hurricane going nothing And to there's kind damage.

Rob Reilly

No.

were portfolio that I is in to a low, commercial quarter. think and that the our on complete billion million XXXX $XX right. first mentioned, on portfolio. is Bill And -- total in I just do charge-offs $XXX commercial thought so

some a come So point to gradual. but got it's up that's bit, at

Bill Demchak

-- it to at can't quarter don't It for just stay Yes, forever. your just the can't first see that short the guidance but is, low the we answer this on question anything.

Rob Reilly

point, my right. That's

Bill Demchak

you of says though about back on today kind see tell we a the everybody economy, the don't slightly So that's a true. weaker is that of fact we but higher talking number anything that slightly

John McDonald

Okay. Got of it. given in That's really terms helpful. outlook, an upper And revenues low-single digits. the outlook you've on revenue of XXXX, end for

how enter you momentum And your the little a Thanks. outlook? revenue wondering a it of And what revenue more where just split be outlook challenging? Maybe with revenue do where in see the little and tailwinds? good the So between kind level bit and NII year you might fees? confidence

Rob Reilly

Sure.

guidance which to low-single being guidance X% in coming So calls terms in growth. low-single versus of revenue, for of growth loan NII of is see do is the you can revenue, the end lower growth of do up which the And in our math more fees, sort from connected to the end. upper of of outlook fee that X% digits, our the on the We contribution digit terms the fees. but

Bill Demchak

corporate Yes, had had a of activity what impact weaker this little a market year. great bit lot on is, BlackRock, a could we it year that year absent be into fees, services depending next of in we

we inside of other The have on thing our just forecast, expectation is included the line. in fee market’s in the effect BlackRock

that versus internal be causing own our subdued that's somewhat So to growth.

John McDonald

that the growing Rob, interest see growth…? in with net Okay kind line do income terms of And of you loan in the

Rob Reilly

Yes.

John McDonald

pretty around and the obviously, but much NIM in loan with got growth? line You've puts some takes

Rob Reilly

Yes, John. that's right,

John McDonald

you. Thank Okay.

Operator

ahead. Our Evercore. Pancari line comes the from go question John next with Please of

John Pancari

morning. Good

Rob Reilly

John. morning, Good

John Pancari

don't XXX Is commercial holds you fair then And $XXX where million handful also provision the credit think stays? level assume you to quarter it through we here. it credit? of come the out of the know the for $XXX material your that names through as that points. change that indicated impacted million XXXX expectation a the I do Does could beyond or that basis number that provisioning around a year, reserve first in if or to see front, on range we Also came mean move down

Bill Demchak

we That's range. a why you gave

Rob Reilly

pretty yes. gradual. terms word in That's of right. small they're the the range, is the key And -- That's ranges

fairly see So and we of in terms we're don't adequately reserve as that major being I But ratio, I I think see think, shifts. the reserved stable.

John Pancari

Okay. All basis the was when of point process X still still at you hike. the flat right. it. It impact despite And that Got look it excluding margin, then, change. ongoing was Fed

you if can your it I asset on comment the progression what margin -- margin here? XXXX And mean we do playout? have stops if or hike we near about the rate of and is think assumption How does to sensitivity get So type some don't see your do in one what of in hike, we down? term we you do get expansion Fed flat through the here incremental that the XXXX?

Bill Demchak

Well, that to whole you question into embedded issues fit. bunch different a of

of see sensitivity, you in out play That our in will NIIs In in as sensitive. out remain NIM. or play asset we and asset play may not could terms guidance, may out

rate slow All kind interest to and that to So the to down. momentum manage we of company going margin industries fairly to the NIM. never on of hikes really back had the two, you���re and net on that we've is predictable have had the going the said, separate

things bounce our issue current guess had around would through we income, our of you change it printed had best the us, could hedge had the bunch easily that to impact we going a is other that that that went income, ineffectiveness levels that on net have do lower had not economics quarter the swaps doesn't my year. is average So I balance, whole with that have way. assets, course the to number, we nothing some against tell we of but NIM, this earning interest a

the forward. asset It's related or not worried else about So I sensitivity. in I'm see related It's to But short to pickup don't not from big in just think you're that. going rise going rates end. us anybody

continue to as I said, in -- see think NII. we we'll growth we'll

Rob Reilly

to short just what are we don't expectations -- And where point, expect we'd that for the our to this the are be NIM term. reiterate provide Bill's guidance, but is current right now we rate

Bill Demchak

Yes.

John Pancari

lot. a Thanks it. Got

Rob Reilly

X.XX. Yes.

John Pancari

Right.

Okay. Got you. Thank it.

Operator

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

Gerard Cassidy

morning, Good guys.

Bill Demchak

Gerard. Hi,

Gerard Cassidy

into on could as on, competition the touched multiple up you If it it all difficulties at in if C&I on ever? the banking ease tough competition. If shadow the going on calls us this. throughout you there or some industry, the as if fourth How it's C&I whether XXXX, can apologize I quarter you There's conference know. run the compare did side? is give you you as color will,

Bill Demchak

in that think impact banks. is to I here credit that the going Well, to yes. in the answer capital crack spreads markets offer after the is what opportunity And you're and the

clients syndicate, is has do the has So not Bs, what banks seen some because business, of the happened in price the that they're coming off opened has of at doesn't least the play are into into of, willing has kind really underwrite banks our I five they to them market the we're thus deals. the who in this and really they at you've run That also in much on banks up use point side moved leverage so the they’d back them. lending markets, to banks for call and favor differential lending not bond where hung bottom as What backed far have and some terms and though use are, people model

that see we So benefit.

rates As still on it's cash a hasn't brutal name it in middle competition that head-to-head market changed. to bank bank traditional flow,

still is simplest answer is that fierce competition bank-to-bank moved So in question bank-to-capital competition market maybe the of way has favor banks. to

Gerard Cassidy

recession you if XXXX. believed have in And recession I we're good. table, off follow-up don't take then anybody that, to the going think the Very on

you're by revenues? risks focusing episodic year at these – risk the earnings in So or and global make business you guys on sure not of table When to off look this for if bill. you take caught some that are risks you're that your what that the

Bill Demchak

Yeah.

down. a we But actually be might So, tariffs me book and the our our credit before really by at economy, domestic the And of specific a you've strong economy. inside and we look is reserves this heard who impacted trickle remain directly enlarge served have say And – clients that both domestic by against we've actually we done strong. today.

can the obviously, we and trickle-down of by global don't effect to by some But face the if the economy. because any – it. larger it impacted, as industries global be that's Now worse concentrated And see relates economy won't the we to troubles the or have at cover. of businesses their the margin ultimately they far multinational case happens, we impact

We a will a as expect broadly economy of function simply impacted impacted be the from defined. slower

Gerard Cassidy

the Appreciate you. color. Thank Great.

Operator

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

Ken Usdin

previously good deposit Thanks a deposit got cost and really I growth has Can to guys. have to do overall Looks, one talk the this been cycle? deposit Hi, this rate going in a year, side? how good view side. you on given continue slower through just just than up. you competition the obviously just the question anticipate your morning. of And deposit hike anticipated evolve presumably you competition

Bill Demchak

to varies And question. what we're good a it's trying Yeah, by it do.

strategy, seeing So not deposits. it was paying retail than was bounce largely at massive online through and for as least actually And this less and traditional the rate. third thus quarter, far the around market But that then competition in a we're our of on market we're – we kind continues. interesting money It's quarter year. principally at against – go our digital data I think playing all banks the national we're

from I deposits Fed then you think pull as does out from system. continued the of trend cash to banks. sheet that's larger this draws banks continues. services have the of smaller industry think that of And continue the balance shrinkage flows overlay that I rate which And depended We independent and to the

of you XXXX factors of our there's time that don't a beta. massive doesn't impacted. see total such which we've change thus a really But online a So trends I through will today there. will see shift seen from our and portions number. far. coming channel, the lot deposits greater the in course of It small it’s Through

Ken Usdin

follow Can And you're just you're up. endeavor? national and of the the maybe flush and strategy from growth a on just markets seeing that progress making type out, new the new the as the you

Rob Reilly

the on side. consumer Yes,

Balances of markets we grow well months. on to of and new it now on accounts been continued or to But to exceeding for our range the expectations. XX% that So XX,XXX We've close the over side. across have of are consumer commercial a getting also new just expansion in it's which the side, those now going is at geographies high-teens XX% XX,XXX lot PNC. the – three

far so overseeing like we but So early. its

Bill Demchak

say, our original of track the physical One we're far I'd that validates activity as have things seeing what of seeing about thoughts. stuff, in soon of we're things that by data is that terms as Couple of in hear and we talking on start these way, record and some presence we accounts you but enough a guys and matters. of couple this of so lot get we'll a

go origination are So per do me. the draw share of customers being accounts the Kansas capita. it. disproportionate they’ll that surprise wallet versus to of virtual City are that to continues And people opening in are Solutions is, Center we opened at number in used Two least travel, online terms by willing new channel continues we to

I XX%. don't think I a know third it's -- or

Rob Reilly

yes. About XX, XX%. About

Bill Demchak

us And interesting their to who bank. totally to PNC, And as using that's us. primary are new clients quite

Rob Reilly

encouraging. And

Bill Demchak

with accounts it. to move depositors so going forth. out what trends around how deposit sticky types far But figure on these we're activity, do to so how to happy and some of are, so that Yes, with and analysis have we're pretty

Ken Usdin

much. Thanks right. All very

Bill Demchak

Sure

Operator

Instructions]. [Operator

Bryan Gill

please. question Next

Operator

follow-up line ahead. go the from question John is McDonald Bernstein. next of a Please Our of

John McDonald

guys. Hey,

little a to bit wanted drove Just on.

Bill Demchak

You’re back.

John McDonald

I'm Yes, back.

that about single-digits operating in On up leverage, signal and of the gymnastics how like end to the terms low a higher of outlook be three linguistic me end idea the on you the of seems it are could revenues one lower slide, it thinking of at two. guys to is

about that this seems that it of points a you kind XXX XXX for reasonable for think guys to like operating leverage. of like you're maybe shooting are bogey So year? to saying Is basis us

Rob Reilly

Yes, yes. right. That's

John McDonald

Talk Rob. bit, about a Yes. little that

Rob Reilly

right Yes. no, that's No, on.

of low single around Put digits, little just a So and end X% higher end lower X%. put average. a around band band

Bill Demchak

story performance long of we the short, price, in And put pretty our share the notwithstanding John, good guidance. we about feel XXXX.

John McDonald

should we obviously, efficiency operating Good. continued we ratio if the mathematically And down that leverage. grind on your with that

Rob Reilly

Yes. right. right. That's That's Yes.

John McDonald

Okay.

Rob Reilly

Yes.

John McDonald

Thanks All circle guys. I right. again. won't back

Rob Reilly

lines, a the those in there we handle fourth on five quarter. efficiency John, along did ratio the hit

on our we're way. So

John McDonald

good think that's Yes. No I I – see improvement. the to think yes,

were I also to of commitment kind looking and helpful. hoping think continue are XX people the think I for, below improvement get you is

Rob Reilly

Yes. Good.

Bill Demchak

please. question, Next

Operator

next comes go Erika from America. with ahead. question Our Bank of of line the Najarian Please

Erika Najarian

Hi. Good morning.

Bill Demchak

Hi, Erika.

Rob Reilly

Erika. Hi,

Erika Najarian

to wanted your just outlook. for also in I year net consensus It expectation XXXX. a in looks BlackRock like X% has decline income full clarify

yet Of this for course, morning. adjusted not

like core through it positive So that's actually a XXXX sounds given how all we're is momentum BlackRock revenue coming interpretation good trend? leverage that better of that line. your operating and for the versus thinking about revenue Is

Rob Reilly

And numbers for do we Yes. use the consensus BlackRock.

Erika Najarian

longer many that particularly last the But in Fed as does the Okay, Ken's stopped September up the we a in experience? is think pricing thinking hike the strategy, is money than your reprising, perfect. you're a about for thinking deposit also catching on embedding quarters market to until pause And how your just hike question, market deposit follow-up that guide. perhaps

Bill Demchak

How hike… many quarters until last the

Rob Reilly

quarters many how last hike? mean You after the

Erika Najarian

quarters last the how after hike? many Yes,

Bill Demchak

you hold Fed you the smaller time its -- time lot this, at since rate on long tail. today, Through of online sheet. The we've there's the And gone on the history, have problem clients. you first as is been course, banks as same to of a you Yes. shrinking competing for they have a a to really pretty have have have accounts balance through

know don't and the I I deposit I rates how guess for you, move are what factors going we that think plays forward. impact So sit but here can those that out. happens are to as to

will I think of for core the provide continue ability our that we as margin lag for services the ourselves, largely to clients banks such remain our the back on them. at to

Rob Reilly

Yes.

of right. Erika, know, that's And you I moved. think has course, commercial, as

it's all consumer the deposits. So about

Bill Demchak

Yes.

Erika Najarian

terms bit in has continuation should request stock ratios a at And your Got little arrived buyback and the price increase proposal, if of looking Fed, we to potential I'm it. relative Fed peers? a the given CETX wondering particularly expect from the of

Bill Demchak

answer The yes. is

of Although, CCAR, that on on at still through in impact of unclear share us But any year they’re this give margin that will pretty CCAR it's out by heavy guidance, both and where terms of the otherwise I sorting this how remember certainly the be to CCAR buyback. to will at the included be coming in are that. much think those increased unlikely the flexibility new are this things price proposals have and

Erika Najarian

it. you. Got Thank

Rob Reilly

haven't we seen yet. course, scenario And, the of

just it’s a speculation. So,

Erika Najarian

it. Got Thanks.

Operator

ahead. Our next of Martinez the comes Please from Saul UBS. question with go line

Saul Martinez

so? good just when update done already morning. your Can – on plan Hey, you give with you where to when you've unless you think an stand or start on CCAR preparation, parallel us you runs

Bill Demchak

Yeah. Sure.

Saul Martinez

And the just when when we any just estimate of impact? we and can – think update some do can upfront you on have

Bill Demchak

run our here to busy intention that. so we're working on XXXX. begin progress. before, first We track of parallel it's half said making in We're do the had Yeah, and to on it good

that, in So provide to the in being second with from regard and half. sometime you information insight to able

Saul Martinez

second half. the in Sometime

Okay. Thanks enough. a Fair lot.

Bill Demchak

Sure.

Operator

Our of next of the Kevin ahead. line Barker question go Jaffray. comes Please from Piper

Kevin Barker

Good morning.

Rob Reilly

Good Kevin. morning,

Kevin Barker

comments Is of financing upon? – anything was the particular in equipment expand seen on credit In on particular you've the following-up there pickup to can XX-day delinquency a that you some regards there lease there rate. in

Bill Demchak

there. was that to a some in yeah, No – there it we those and some a delinquencies to software relative elevated was tick administrative that leasing of up Kevin, change Equipment XX-day created delinquencies. are the made there category

that just seasonal. elevation otherwise some that's coming it’s that, from there’s part that's of So

Rob Reilly

a a do that us them system whereas, differently in to the The payments as delinquent, book is way it’s really old change system cause there. certain not didn't that. processing credit conditions in But

Bill Demchak

Yeah. Administrative.

Rob Reilly

And we’ll clear those up.

Kevin Barker

So, do on top of a broad your you make systems in administrative to premium calculation this? impact your change

Rob Reilly

two No, things. separate, completely it's completely separate

Bill Demchak

automating All that been amount bumps of the separate But calculation we rid that process of system thing. manual – minimis sheet. these good basically in balance in issue a found are see We're couple us that causing balance it delinquencies. are off on getting manual leasing yeah, calculation of a mean I sheet completely doing in the We're historically new the is it a difference just new and system. this de in inside automation that totally But stuff you and The is things we are thing. on – put processes the has look, good. is have we a putting

find we So things time every we do it.

Kevin Barker

Right.

And so it’s no deterioration credit. just… And in

Rob Reilly

We've anything good stay I always in just No, the these There’s that nothing that mean, books hedge the that trend. basic but we that to with notion any the can't all the forever. is of way of continuation beginning. back suggesting this see the

Kevin Barker

of it, in And absent regards possibly from there, loan I broader Are last, pickup from focus okay. and your year commercial you've order some side two and the giving you the X%, non-banks a competition, the then little a I'd Got slowdown on of consumer the bit the a in say easing tailwind any guess in of a of potentially with X%, been over growth as or changes seeing the well, economy. given more that to consumer? the making to

Bill Demchak

know, you've and I don't seen for six continues work five That or quarters.

Rob Reilly

Six quarters.

Bill Demchak

are big against a base. consumer despite grow to existing I’d able that without running to -- would simply those you we the that client to good, that getting run-offs, lending. we're our see continue are we equity into our by of products penetration To we it be in changing run-off terms its good to that do think and risk but pretty in like in taking doing on credit headwind the better accelerate executing student in continue home to ought

know So it if but I don't it continue. accelerates to ought

Rob Reilly

than we portfolios. do growth more commercial with side see Yes, certainly X%, X% but point, of on growth to to in Bill’s our the in continue, both consumer guidance terms but

Bill Demchak

continue growth itself the paying have XXXX see estate. the that of kind of full in as real some the in specialty have of certain growth purpose way, just secured are absent freight. the we to weren’t some commercial we unlikely run-off businesses other segments we and businesses, By will repeat in saw is, our to But thing the

pretty feel we So good about that number.

Kevin Barker

Okay. Thank you very much.

Operator

the Matthew go of Next line question comes ahead. Bank. Deutsche O'Connor with Please from

Unidentified Analyst

update is there are Yes. versus making on on curious Rob just expectations? things on Hi. you progress was just curious new I'm your an you're tracking expansion I how just provide your if Matt. This can markets, for

Bill Demchak

one it's of relatively good about sales non-credit. are And close loans faster there are again most Yes, our But book. a and than legacy is oriented to business, of, are report of of are is then encouraged the the in those terms that we these relationship I which each growing in composition I markets in half think we new. think what

just is in to blind credits, markets. participation what model build in we intended not it our out to was So do these

So, so good. very far

Unidentified Analyst

Okay, on your and then just liquidity position.

year-end? You agreements at in mentioned, you resale invested some

Bill Demchak

Yes. Yes.

Unidentified Analyst

in other Is about that here? assets deployment then end basis? increase just to thinking your corresponds maybe an on period continued And a on the from update

Bill Demchak

sure. just that’s a year-end. it does Yes, thinking No,

of was So that just a for time. short period

no, Going liquidity, terms in feel our where terms of of are. good we in forward we about

We are won't satisfying LCR lower but of obligations, in substantially is XXXX. XXX%. likely current There us for proposal occur a our go a north to that

are we good. So

the redeploy plays We level of have we may Fed. out. balances one higher-yielding We roughly securities and the other that in billion could as year those range the do $XX in securities,

Unidentified Analyst

Okay. Thanks.

Bill Demchak

Sure.

Operator

Klock with ahead. question Brian Bruyette line next comes Woods. go of & Keefe, Our Please from the

Brian Klock

Hey, good gentlemen. morning,

Bill Demchak

Good morning.

Brian Klock

growth at some the collateral line end period. perspective. a from looking six type -- earlier Just table you just loan about the I talked on your of business a quick the on that’s in had question was in of of sup-pack

because out a pretty other was in that's up of sort that part seen just good and said, more sequentially. then within little there lot you've what of it like than another $X the of And billion growth so On in Anything I fourth anything you…? that retail, quarter was the growth the growth? that was bit C&I a jumps industries. That – Is much significant wholesale from catch-all the C&I, had that a trade quarters? you drove

Bill Demchak

have of that otherwise but down if come table gets build a for our that in front clients, me, the Christmas ready retailers it's of draw as inclusive don't for asset-based will the inventory it lending, heavy I season. but of from pretty lot were basically year-end

Brian Klock

Got you.

Rob Reilly

there's but there. Yes. unusual of the I'm aware nothing table,

Bill Demchak

and inventory. probably build they draw as think I down came lines the that the lending from asset-based traditional on

Brian Klock

it. Got

in your the I DDA then, on And helpful. balances have follow-up on declining the discussion. system, growth been mentioned it autopilot. obviously, well, year. guess Bill, a when throughout seems obviously liquidity guess, lot with guess pulling that’s C&IB of The But been pretty in good. had on the if Okay. was And I That’s autopilot, out liquidity Fed has you industry I I segment. And like and guess the remain a they your it retail like the DDA of earlier,

into, visibility might in that runoff So I any like, kind is you the when stabilize? think that Or there could abate? DDA C&IB of guess when do

Bill Demchak

I the I don't know that insight any into model, have it.

giving higher think, that. smart and to than because it now, for have My already rates on out then I period that time do doing they're and about to don't the simple notion the weigh, They is choose they're are been that money. get guess way XX% corporates money has zero caused of some raising everyday.

So my we're be. guess we're to is going where probably

Rob Reilly

the saw at decline rate at lower that quarter but of just much side, but what non-interest-bearing a take in on look point. than if we declined year, the accounts. point. to tell, fourth they a Time to terms add will commercial They did of To beginning your you'd in the the

Brian Klock

fair. That’s Yes. it. fair. That’s Thanks Appreciate guys.

Bill Demchak

Thank you.

Operator

on phone Returning There are call… the the line. no questions further

Bill Demchak

you everybody. thank Well,

Rob Reilly

Yes. Thank you. Thanks.

Bill Demchak

Yes.

Operator

today's concludes conference call. This

You may now disconnect.