Loading...
Docoh

PNC Financial Services (PNC)

Participants
Bryan Gill Director of Investor Relations
Bill Demchak Chairman, President and CEO
Rob Reilly Executive Vice President and CFO
Betsy Graseck Morgan Stanley
John McDonald Autonomous Research
Scott Siefers Piper Sandler
Erika Najarian Bank of America
Ken Usdin Jefferies
Mike Mayo Wells Fargo Securities
Gerard Cassidy RBC
Matt O'Connor Deutsche Bank
Bill Carcache Wolfe Research
Call transcript
Due to licensing restrictions, you must log in to view earnings call transcripts.
Operator

Good morning. My name is Frank, 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. Instructions]. [Operator

ahead, this over recorded. Investor to Bryan Please reminder, turn will Relations, is Gill. call the the go call a I being now Mr. As sir. Director of

Bryan Gill

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

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

Bill Demchak

everybody. Thanks, Bryan, and good morning,

As positive you and to had expenses the to the our controlled grew start generate as solid we leverage quarter year comparison. revenue in linked saw, operating a we

potential recapture, over changes an continue Our also driven reserves by our Despite secular asset through benefited the improving work to X% work at our this understand economic on and provision first largely remain to of loans outlook. we recapture, from results quarter as classes. fallout COVID certain

period liquidity highs. increased end. remain at record some also liquidity With rise by excess capital Our been levels securities $X our yields, and at deploying in a and of this investment billion term we've

later average an in much You'll the notice didn't change basis as they we bought quarter. on

quarter, time loans the levels the we've in $X another based [TBAs] deployed into notwithstanding over high early can to on are Fed market the and purchase or activity And continued of in finally, we added continue second cash operate, here. very that this settle quarter to be that actually at also second going securities opportunities. our billion We in at

loan low demand market pay expect on utilization not quarter While drive utilization economy, historically surprise, U.S. higher would face loan bond to the downs the ultimately a the levels, resulting demand see in by continued improve of over and in we competition levels. Based rates of weak strength the strong was and time. impacted issuance

which We on on well approval. regulatory our progress continue acquisition strategic to USA. execute accelerate our BBVA including will a and planning through expansion, national track priorities, pending integration close, our of significantly making against are We're midyear for pending good BBVA

regarding technology our BBVA of found everything, quality haven't working any on including effectively business, nature conversion. surprises the BBVA's or and their significant We employees the are counterparts with

proving -- quality the largest in With would. be hoped is the BBVA quality it in in their to market, Texas, and especially and especially their we largest everything of markets, Texas markets, of

determining existing significant control. their We customer cure balance drives checking is national payments customer we customers by As result through a time. accounts dissatisfaction have XX integration fees year believe whether this contribution least go estimate expansion and to changes that can differentiator about -- balance the as differentiated million Mode, negative, time represents avoid we our reduction, are leverage BBVA Virtual If own as strategy. happening allows drive or Cash and approximately fees execute we we might allowing of Earlier for Low PNC Cash see technology customer's we customers. for overdraft negative we planned real did will they Virtual Low believe by invest unprecedented the USA, over Wallet and which a our anticipated processed hours to outlook in control account to and what's This Wallet industry's our to growth Mode at customers certain that is approach, believe to experience BBVA’s new overdraft serve widely to transparency $XXX the payment our of in our relationships that better their our away in Cash help unsustainable. 'XX overdraft used in revenue fee Low banking in customers fundamentally which shift 'XX significant continue PNC's launched avoid will approach PNC. otherwise of full full this a so them week, this which is $XXX control overdrafts. million from Mode firmly annually. PPNR to negative and

a as closer to -- this various look I'd to that, And by it take we'll results for the and and through support COVID communities at value-added challenges continue to who then change. Rob impacted on thanking executing As clients our a model. result, with relationship-based a employees is like our by not over turn I'll result by questions. close and our

Rob Reilly

good and Bill, Thanks, everyone. morning,

diluted first billion per share. reported we $X.XX of $X.X income net As quarter or common you've seen,

Our and balance X is an basis. on on average is presented sheet Slide

declined or During Investment quarter. to soft lower loans securities X% and demand. the linked quarter, continued utilization approximately due grew billion or X% by loan $X $XXX million

to a on $X increased end the steepening the the our balances accelerated as of near billion quarter spot basis, or However, yield activity XX% purchase we due curve.

first to lower quarter, growth balance. Reserve balances at billion grew by loan in and the driven continued deposit cash average the Our $XX Federal

side, billion On to to quarter. due debt balances redemption compared and the fourth obligations. the billion were of $XXX linked and X% up $X billion decreased runoff the funds quarter averaged deposit $X liability Borrowed or

value a tangible March was estimated as Year-over-year, primarily book tangible a AOCI. increased of our XXXX, to common ratio per XX.X%. CETX Our be in decline value March XX%. XX, decrease on of as And basis book share as -- a due to $XX.XX was March linked-quarter XX,

of await you $XXX our for continue regulatory quarterly dividend as or $X.XX we as Board And Regarding our capital suspend stock repurchases pending return, acquisition. we per recently share USA a the share during first approval cash quarter approximately our on million. know, common to approved BBVA

of the billion in we in year. were fourth rates close, levels. the or loan billion repurchases quarter loan detail. $XXX balances historically $X Commercial expect declined loans share the first Assuming compared and to resume more declined of $X.X half in X second a balances deposits Slide utilization our overall average shows Average to quarter. to down as the low or X% X% billion midyear

increase loans remained seasonally Beyond our declined originations cash fourth were business, that, quarter. Program all balances multifamily $X basis continued to And Paycheck as $X.X The were real Protection to yield demand soften higher to lower categories warehouse was billion. offset compared flat loan balances the down within across the with balances consumer a X consumer estate loans billion point as by lending levels. forgiven. on by loan due Consumer commercial X.XX%,

payments. customers. forgiveness PPP basis linked higher XX% on Deposits Average However, the commercial In average billion stimulus or the government deposits X% increased due increase a comparison, point of real cash were rate year-over-year our decreased or liquidity, estate paid $X of by to increased first quarter. during occurred the enhanced X prepayment X% fees primarily to The interest-bearing quarter. the or high reflected loans elevated $X driven decline points, deposits $XX billion X total is driven our and loan and by elevated quarter primarily again, basis XXXX. billion, the now during that related consumer balances the drawdown

year roughly higher XX% consumer point of than account context, a average, are, balances on a ago. time checking this As

first Federal quarter and or balances of securities period-end result, average ratio Reserve the Slide at year. loan first XXXX. period a a our the compared in As in in compared has a deposit low $X end historic period the change increased year our details to X ago. the billion balances of to to same XX% Security the in declined of past billion X% XX% the to over same quarter the $XX

our have from Over as equity as fivefold balances time, driven BlackRock. government by the increased sale significant same our investment the in proceeds Fed well the nearly stimulus of

during know, were low patient in we while interest you of deploying most excess liquidity, at historically rates this As remained levels. XXXX,

we billion of balances security our to to to billion, by However, securities Average interest-earning March curve increasing now spot steepening, by these forward another assets. approximately purchasing, settling as expectation XX% recent of our XX% year-end. with rate of balances our XX% approximately is accelerated XX. of $X And balances the represent $X build with yield

can $X.X grew billion XX% provision to X, recapture. you Slide fourth pre-tax of see the strong reflecting net pre-provision on a substantial quarter income compared As and earning

and was slightly forecasted billion, XX% remained of million $XXX or revenue compared economic declined fourth controlled. of provision by well lower loan balances. higher the improved up recapture million quarter $X.X Expenses driven reflected quarter The X% which income, the in first quarter. with $XXX and conditions First total was non-interest revenue

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

XXXX. million fewer Total Net margin Net income chart primarily lower declined Turning Fed basis illustrates $XX X%, to the was points, due our to compared increased revenue balances million of days. of This mix. the $X.X X.XX% $XX down of fourth X X cash of and Slide loan higher reflecting business quarter impact X. diversified interest balances. to interest or billion

million Most slowly quarter. we Importantly, quarter or to income million the XXXX. decline advisory related NIM fourth driven to grew it of Fee this service Non-interest quarter was rise decreased and the with throughout fees billion activity. lower bottomed expect $XXX acquisition compared income and merger think of has X%. $XX fourth by corporate $X.X elevated

million equity a in fees decrease interest declined growth reflecting fourth as and rates impact volumes income seasonally million, of balances. higher on in And down and non-interest was Other quarter ago, and to the from both and partially $XXX $XXX Additionally, asset total of by grew revenue the slightly, offset management million revenue quarter. decline. Compared negative from charges growth cash revenue growth businesses. some in broad-based offset $XXX private fee and $XXX period included residential adjustment higher same partially mortgage the reflected net of our Linked services consumer both in Visa income also a service deposits underwriting. were derivative lower consumer interest activity year lower the the and million

quarter expenses due and or and to remained categories, X. Turning X% were across down primarily increased million Year-over-year $XX management Slide linked controlled. disciplined expense $XXX by or all to million well Expenses X% seasonality.

deliberate goal million costs we X% stated, And During ratio achieve generated we're continuous linked as a leverage. management. we've target. a in We the confident result, expense previously first $XXX remain as full first our our through efficiency positive by our and quarter improvement we'll our around program have operating And was reduce to XXXX year the we quarter XX%. quarter, for

in know, a business our you portion investments. of this significant As funds ongoing program technology

forbearance. result loans a Total million primarily well $XXX at real Non-performing Consumer credit Our Net presented $XXX real Commercial X categories. COVID. residential period basis year. during first reduction to XX net in $XX $XXX delinquencies declined changes as million. compared of December total consumer of Consumer first improvement losses estate in driven by decreased credit these million to loans. of qualitative for non-performing or all lower of $XXX on outlook increased gross charge-offs loans in lower major $XXX release auto was XX. the of declined and allowance was which million, as representing a Slide XX related in by quarter. delinquencies of million our in same shows our delinquencies charge-offs home reserves XX economic billion, reserves $XX charge-offs decreased exiting due impacted compared $XXX performance. non-performing Commercial areas to and X million total, million reserves was or primarily of X.X% March by million partially million loans and loans or within XX%, credit $X.X Improvement decreased $X. balances. lower to our to $XX X% to In and Slide card billion declined the $XX decreased charge-offs of portfolio, points, and loan borrowers Portfolio $XX the CRE the quarter. residential by improved are particularly metrics credit reflect estate auto last And million million, our primarily for decline, by reflected by related leases activity million, commercial as loan $XXX decline equity linked and charge-offs. million loans million were increased portfolio million loans our $XX represented XX%. $XXX driven directly were the Annualized in X economic the portfolios. the offset XX basis of in a decrease points net by loan end our by net quarter quarter factors. $XX and

laid on of track Slide the XX, remain ability our want Notably, reported the that pre-close Fed of a to BBVA We're announced key the we've economy, the to In summary, the remain progress midyear the prerecession expectations during in to number deal. quarter. I objectives strong we all and throughout we financial In applications and have near to out objectives. achieve overall completing at for view made first GDP to time levels major towards for Turning acquisition to USA. current a funds filed acquisition the regulatory we sometime are highlight the and to close third rate XXXX. completed of the our our surpass zero regard PNC quarter confident our

Looking second quarter stable. expect loan we to Compared quarter XXXX, at average the XXXX. first the of be balances total to of

We X%. approximately NII to be expect up

fee approximately X% income to expect We to up be X%.

between $XXX income be Visa and $XXX million excluding We activity. non-interest expect other and to securities million net

between stable, $XXX to non-interest and total expense second to million. expect be $XXX net and quarter expect million be we We charge-offs

guidance, in benefits standalone we revenue do expenses. expect rate higher both a from PNC year to securities and Looking balances. increased expect stable at XXXX regard remain full environment and revenue year-over-year to We the

to year, remains However, but the of that a drag at growth is will seen, first not included be in the during some upside spot to XXXX. acknowledge loans our loan of average result, half continue through as and the a be exists in guidance. half second We least

from refinements that, acquisition and pending quarter, and million, for of And benefit to to integration with take to midyear net PNC's our Consistent close. with questions. assumptions. ready a pre-provision expectation we're Regarding the $XXX interest the year primarily BBVA costs last revenue this increasing are USA, Bill I by XXXX assumes driven $XXX to excludes rate million expectations your full

Operator

first Our from question Instructions] Graseck Morgan Stanley. comes [Operator Betsy with

Betsy Graseck

One, questions. X So guide. on your NII

around… the You quarter. approximately commentary X%, mentioned up that's first the for then But in

Rob Reilly

Second quarter.

Betsy Graseck

sorry. Second quarter,

Rob Reilly

That's Yes. right.

Betsy Graseck

commentary by -- in XX% the highlighting XX% to what, to year-end. Right. to your book were to securities raise And planning book, that then securities around you XX% XX% you're

of towards get in sense around you're in persist could it improvement NII as this of is So anticipating quarter second XQ we as I kind just forward change goal well? the be wanted should that your expecting where sticks year-end, and rate if we XQ to by building your curve should that is something of be

Rob Reilly

Sure.

So at that guidance year, guide. was stable for is for revenue look on When the take the and NII the year being quarter of full again, in our this part full second we of that's the yes, -- we some a we at bit securities than do little NII the loan offset going by our expecting increase of be more to year. expect growth less a from what as book were the balances, and we the beginning terms

out to come steepened. has we we terms really. work of things, to where more money securities In have up put that's because stable. book, I X mean, it's So building in the regard the One, curve the of

balances percentage And we're foreseeable be securities at a to then to the do assets Second, level. as measured in for going way. third, that higher future, continue a we'll a our running interest-earning of

XX% to more So the of historically, We're we've range. in XX% XX% range. approximately toward the guiding been

Bill Demchak

thing not a a now Yes. the is, have that of on It's reason said just there they given really as add that frankly, assets whole NII quarter. them actions to It's you are in and cash the that our likely throughout balances, been waited. put were simply to is have the our -- and year much that historically. carry If of in do the sitting Waiting And do how flat. the you our percentage than security trying goal. in quarter run would right industry for fourth front-loaded a And done. Betsy, And I total it's the see and higher sorry, expectation, we we'll kind late goal. keep those drive we're the to thing. that. the adding at -- we us we've that. didn't in you'll as see late opportunistically We out But the to lower have NII, turns yields right had We purchases could we first only

us that, continue do of us the do you'll through see year. that the but seen You've course to

Betsy Graseck

And an that loan-to-deposit lot so with books, function ratio that year the is Is for and it. that the liquidity on with I mean get here a the commentary such full your that's makes loan just environment so It's going you of expected. a the stable sense. totally of revenue the unusual of low the PPP fair? in I is with made, being roll-off part what's

Rob Reilly

Yes, part. in part. Yes, all that's built That's in. all

Betsy Graseck

your And then ahead. -- on yes, go

Bill Demchak

even corporate -- the I’d whatever just Utilization economy taken of growth for inventory we and build that waiting the maybe it of look, start guess our the loan in to reason, know when off happens, build is happen, starts as kind loan really inventory be. and the that's here, But when haven't X is I happen, historic appreciable XX for points growth. the say, below biggest to certainty points And averages. unknown running you pandemic. on is as for peak, seen though below will would much specifically sort the going customers. We the don't mechanically hesitancy see economy, almost CapEx typical just to pretty you're this on when more inventory going just has see that it

Rob Reilly

it XXXX. relates as to Particularly

Bill Demchak

Yes.

Betsy Graseck

that then Got it. And separately $XXX What's prior delta? projected guide. BBVA up the All USA million driving right. $XXX that PPNR, your from million, on just

Rob Reilly

Yes.

in true-ups relative in said at announced comments had time we this that assumptions deal. some the I Betsy, my around refinements the and As our the is interest rates we to -- It's Rob. that assumptions largely general

Betsy Graseck

conversation, book sensitivity than But they before? thought their is more just asset our it expecting you prior you're on that in based have more

Rob Reilly

Not No. necessarily.

Bill Demchak

of variety things, There's expense things. We're and a moved really they doing our little Rates favor. in so up… ended whole opportunities, many on well

Rob Reilly

changed and assumptions from made we true-ups last right, a the lot. that's has November, that environment Yes,

Bill Demchak

knowledge. our And

Rob Reilly

right. our knowledge, that's That's right. And

Operator

with McDonald from Research. Our Autonomous next question comes John

John McDonald

We're wanted you loan corporates and thoughts. How kind out the is because the kind think follow-up on and now? just not loan all that to cash much other CapEx a right loud factor growth could the demand Bill, we a see have going do but here. of see But pickup, of of still supply? thinking lot alternatives too in inventory on I

Bill Demchak

corporate That XX-plus-percent clients think its will book, bulk ever. utilization companies. our obviously impact rate private has which book, lowest our remember, But moment, some are our the of at the of I large

cash and the our so and that doesn't middle that build in to seeing public market And book have you're markets large commercial really corporate. access

I seen our asset-based way, there of increase. but So to kind book in lending see small. place we've utilization utilization see first think By would it. increases the you'll the expect do they're That's you

So that's encouraging.

John McDonald

it. your Rob, in second did And pickup not Got that you a expectation? building half say you're much too in

Rob Reilly

Yes. said, Because it’s what That John, yes. this point, is I at conjecture.

John McDonald

for a forma you I fair all quite to don't your and it ratios Is now. fair you But remind Yes. as get -- -- what deal us to that a higher us could Obviously, it where want for capital -- And Rob, guys to deal appropriate follow-up target end us high. you. to you assumptions And ratio know the close for CETX into have and you're given is think that. the gone than longer starting with capital just feels you'll just from X.X% pro term?

Rob Reilly

Yes. Sure. Sure.

once deal. the everything, CETX for assumptions including for bunch at we're would a I of our say, But of have the BBVA, ratio. the tracking you or On whole purposes, we'll on today's we all above close numbers

we it level lot will bank. we'll always be been with. the X.X%, that that of In around regard been detail our Obviously, felt are but that. comfortable higher own X.X%. estimations So into than we a to sort targets, yes, once we've we've than that the that That's set higher my get

years isn't ago. that was a the as of it strong number So as few relevance

Bill Demchak

going John, answer share that and deployed you're excess are in other the have And can things. capital to is, yes. the asking buybacks we question, be

Rob Reilly

Yes. That's right.

John McDonald

the deal level how And doesn't right the Yes. the about or for company? change you think capital

Rob Reilly

No. No.

Operator

Piper Our Siefers next question with comes from Scott Sandler.

Scott Siefers

And thing. loan growth maybe the to revisit

you certain else, country down. you et on in unique I quickly, differences I cetera. curious or seeing inventory? a They trends country of reopened mean, the there the but any more geographically guys if necessarily just you shut So much are I of hesitancy on utilization bit geographic anywhere? are see. everybody earlier, just of parts mean, same any terms as or how of I'm Are guess, guys sort there's didn't either differences

Rob Reilly

Not particularly, no.

differences. geographic across Utilization haven't board. is We seen low the

Bill Demchak

issues production strangely actually held that of people think the And can't capacity. supply been demand I we're build disrupted one and is back have inventory. by chains being so

Scott Siefers

there. Yes. of but just Yes, just that definitely I maybe makes It's [ticky-tack] such an unusual sense. And thoughts phenomenon, then the appreciate one. more

this a The it expectation, was quarter other fee very, strong quarter. so very

I typical think bit the is a in higher second is quarter. guide the than

Rob, Just forward? nuance, going about maybe sort line the just sort thinking of how of you're that

Rob Reilly

of million volatility $XXX second But we occur on to is That's the we there's a elements what lot quarter-to-quarter that some is the quarter. Yes. because in -- get there. expect $XXX to guide million

Operator

next comes with Erika Bank Najarian America. from Our of question

Erika Najarian

questions this given of could During loan Bill, you when potentially better think and midyear newer to this we wondering, standpoint. once to close could we've of analysts come? how markets earnings cyclical recovery asked loan recover growth season, about But through capture opportunity a I'm as lot talk these is how even to potentially a the help. give from deal going that as an Maybe, growth in expected

Bill Demchak

we've also careful our I across one offset that because you going recognize think growth in sheet be of case. want sectors there things balance be we these of But likely don't in, sort shrink, around by would think BBVA guys been we are new of framing their to but parts combined to they there are of the I both the expectations the firm that concentrations that's for markets. some because to and do our

won't. trade-off of the we But to you, growth sort in to is a our we're business we of we this going we've -- there's shrink we the potential. year for as and first So little the really in -- numbers gave growing some want the or business going so, bullish I years, the out be about get we'll of all be

road. So of is couple a the years acceleration real down the probably

Erika Najarian

you have going that and still Got can to us there's progress be on to the terms made franchise investment other like of sense have towards more it. closing as a deal, not amount combined -- of significant you you put give the things. feel of, into technology And you in a

was thinking So lot about another deal some was that a obviously, little of closed the that a a there bit spend investors investment had are where surprise. prior, question. That's of

Bill Demchak

won't numbers what doing, are pretty it's nailed other know have -- we've talk the down. you. all I about but given in people much we and this We

We faster a for our to going the are it's invest thing not all But example, to are be of that to -- deal some and big capacity in have on those proving given was certain all on capacity deal, correct. branches, expand compute the it assumptions for you their we going and cloud. we're connectivity, routers, in all we've of

Operator

with question Ken Jefferies. next Our comes Usdin from

Ken Usdin

just the to follow-up the I X begin first. side, numbers wanted in good the to fee was X to pretty on second. growth in It

is to just understand us coming you expect help that and what you forward? going could is growth think from you if lead where do wondering Just

Rob Reilly

low Sure, the to deposits, and single-digits. of probably fees, then corporate and management, mid-single-digit and will charges up, Ken. we'd that look Yes, forward the on I to second asset as we services fee expect other quarter be on the relative guide, categories, in consumer sort would range services service the mortgage say

to So of that's range. get how sort that we

Ken Usdin

But guys. platform. Great. in as new you have not been the and follow-up a relatively mortgage, making the on you just just some Okay. changes for given then guys line a business And obviously, bigger

build just you how just against margins in see gain share time? of to And do the Just opportunities? is over continue fight resi can terms gain-on-sale

Rob Reilly

others, opportunities Particularly, excited the market of what Yes. I have. of mean, percentage hey, isn't our the built expanded as building as very side and particularly we BBVA acquisition. in we've around the our the will terms what purchase market with -- customers, consumer is we're the as be mortgage which about out do business will big but do that a will

Ken Usdin

Okay. follow up. little Last

But bond help premium has a Just, just inside buying really us probably of a some understand, book. guys Rob, on I -- bonds, a buying you the Is don't just can bonds, drag? number you premium give it know too. it still us you're lot been you're

think we big about picture? Just that how should just

Rob Reilly

come down down expect come continue It's bit, bit. we'd Yes. a it a to and to little

Ken Usdin

with Even purchases?

Rob Reilly

the purchases. in numbers. the is with even it And Yes,

Operator

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

Mike Mayo

is you of the to so index when the up XX% announced million since the for guidance November terms In the XX deal. million. acquisition, $XXX $XXX Look, bank from

it guess, benefits are price. fixed your especially be going I logical So that to seems a greater, with

of So if what be the XXXX look you it it's savings? the mean the -- at kind say mathematically, it at point. of that course ultimate BBVA, and industry at for couple higher look Can does for this you and next what timing. It should good you I years? of mean, is means

Bill Demchak

the updates deal, on and air we guidance deal, we'll is integration. marvels markets give a on we're I'm trying a some close the I numbers figure worth going to once excited that. saves -- forth. are so in you're out for growth where with And year Mike. franchise and The you that, up mean, all cost to and we're going cross-sell the I phenomenal. really tend in -- potential the I The clients potential when kind and do really even of We these and you of also you -- and by is of when deal. for what of working a thrown half you're excited by we new of give phenomenal. the would is, to say a this guess I extent, you remain growth remain, to potential greater

Mike Mayo

I'll close wait information get until more I XXXX you for guess it guidance. just and

Rob Reilly

And we'll have it.

Bill Demchak

Yes.

Mike Mayo

about data. Okay. I Well, just data. what let -- me get you're some the saying concrete you. numbers loan I love I from love

average, utilization peak If also that you're below points what those, are utilization the would numbers? that you could is And percentage? have lowest points XX great. you say corporate So when and ever. What's X below lending be say I those

Bill Demchak

think can is, off I think of I finance some.... the number. my And of head right one I only the saw of the top -- So corporate our peak is XX% utilization

Rob Reilly

Yes. That was lower there.

Bill Demchak

of off average areas cash. high hit all than drop that's been saw, way first impacted the a the of is during we And year, corporate others. the certain which the of why down. quarter -- Mike, the have And X%. more all That last with it's function was way, the is XX-point utilization draws utilization municipal maybe

As way is asset-based the typically really inventory. way, fairly said, which has high our struggled build given runs Even utilization ability of I lack finance down. just corporate to business,

So levels bunch retail know against growth, if with of it whole we've if in inventory messed as to it's should an I up sales, of over economic can't kind XX. be Rob, the haven't loan you answer remember squared but a growing it. I things you why. -- number, against just other don't seen today. utilization, regress give and We around -- different And

Mike Mayo

last then And one.

said private are customers much a your that say? could how of XX% of percentage balances, be loan you over as companies of You

Bill Demchak

That's number. by

I'm So by going say half. -- to loan it's balances, it's

Rob Reilly

Yes, obviously that's that's And institutional side. Yes. corporate number. on right. That's a the better

Mike Mayo

being starting or asset-based just And I what? quarter You're to but It's Because the you're your not an conservative just it mean, it the -- see expectations you're saying fourth I in to guess happen. for to year. of has this in lending, you're “Mechanically building has process.” even

being you just that conservative is or…? So

Bill Demchak

sit Yes. here them, look, No, could it's of latched and Mike, all of these you -- and calls. us I’ve some saying we tell

year wonderful. really But that…. the be half if can't right. the right, they're be I hope will promise great. back of And well. So we'll to do going is you they're Everything I

Rob Reilly

timing. specific Or

Bill Demchak

I is and that. are our grow can't going economy improves either. that they stuff you else to timing of we inventories. the nobody mechanically tell you the What we I the know. balances as By the loan show Yes. know can way, build

Operator

Instructions]. [Operator

RBC. next from comes with Cassidy Our question Gerard

Gerard Cassidy

are Can your up dramatically. course, deposit balances, -- you guys talk of about

us. deposits of deposit that possibly And Or loan-to-deposit hoping short-term your having down. a much the your to to you bring having about bring for without the of driver Bill, custody banks to Is your rates the guys help higher historical interest rates balances would ratio relationship in balances grow rising liquidity. How customers dramatically? you've down but necessarily loans to that their get utilization the given more of the You've some custody of talked is #X your with peer, taking not down? are the bank

Bill Demchak

think at rates don't rising all. I any short-term has impact

excess driven here the transfers, deposit with I a growth. think long deposit by sheet Fed soon. Loan will in balances stay fiscal the is and we is drive time. period Because I growth actually sheet to the are I of more don't loan the size to anytime practical balances in system a as a that. in balance matter, pickup once see for And their liquidity think Fed's of think industry the balance shrink going coupled

going going I more in higher to structural time. balances an period So think -- liquidity, have which in change banking, be security extended there's a is for we're to a of

Rob Reilly

foreseeable future the for For sure.

Bill Demchak

Yes.

Gerard Cassidy

them what to be the here, guys January months above XX the better well reserves those reserves losses which drives And than good, Very think color with them. reserves your you even XXXX, that factors, get was X to on think gave and you come Shifting number over X on you're what influence the show going and just X, day thought levels well. is to compare next that as I level? BBVA low? which obviously, the Or the January down. out in if is all the with back But to this guys slide, look Do and the pre-pandemic, you the I XX, you that would XX going on credit qualitative we agree allowance us you the good changes suggest in for economic to XXXX, still when should you'd X, too you over that at on economy Slide years. portfolio close is to day recognizing it

Rob Reilly

No.

to I timing. terms question in pointed can out of there you that a you get It's just like level. think as

our continue right there, current reflect bullish So more Gerard, If forecast. that to difficult are per reserves earlier about. would forecasts But the or we'll comments, optimistic, of more subsequent be we precise how on now get fast our trend. it’s timing

Operator

next with question comes from O'Connor Our Bank. Matt Deutsche

Matt O'Connor

and those about you your then in pieces, you realize what of moving Can in some I securities expectations fold portfolio after rate would plan but are positioning your how to in you X there in you in? factoring talk sensitive the things interest terms be are also post USA? asset BBVA the actions take

Rob Reilly

Fed sensitivity equity with and the measured but asset tell rise about that's suggested being asset I we're build, of in and end because rates, doing less deposits a are the our of sensitive. more that the even has the going largely We're have as to decreased still to mean, what with function in convexity about duration negative be to the balance bank's we're our I going you large. would up going quite sheet.

Matt O'Connor

you to I long just both kind way end? how guess, short and Any be will frame the levered rates, Okay. meaningfully to of

Bill Demchak

mean…. I No.

Matt O'Connor

now, put rising the you leverage guess, I rates like as of have way, securities lot but book… a another you grow to

Bill Demchak

have the any buying the We're hardly the it. you always see the we're massive cash our our security going gets way you you dent do, loan incrementing in end balances. as increment I XX%. to where is what deploy mean want But buying -- long But way, our that chart us in. balances opportunity that. we curve growth there, we're of to a not there, going we By to the in to and -- we chart have versus way we're see in

Matt O'Connor

separately, a nationally. ahead clearly after to wanting I'm the myself as we deal would Or would then be basically another And branches do think to little certainly view lead your your We closes, here. getting platform, ready to folding than would be because with the BBVA deal. you've shifted do thought growth? probably maybe And But organic you deal, into quicker you're mechanically be ready normally? to them another of

smaller a technology because I in for shift years, we of [ramp]. serve a things, choose you function it organically, where created we seen cost institutions would then the which that I think will that of it's personally customers. bunch of in to simply was massive to value. the like of technology It's see believe and all that opportunities cheaper go we've

not create So lot big are low technology to continue I growth, give to of costs us loan scale. a going to think opportunities rates,

Rob Reilly

And capabilities. we'll those have

Bill Demchak

Yes.

Operator

comes Bill from Carcache with Research. Wolfe next Our question

Bill Carcache

how discuss to review? you consumer gearing versus both access guys and greater Rob, and how shape Bill excess about customers? your the commercial thinking are is Where you reopening can savings and liquidity So pent-up to sides, there on demand dynamics for

Rob Reilly

outlook lending, of is at? for what getting our that consumer of sort sort Well, you're

Bill Demchak

find Trying your question. to

Bill Carcache

like sitting thinking and Maybe does are these you similarly the Like the demand on balance guess, There's dynamics around commercial just about, animal of like of we of unleashed and pent-up each how to spirits of positive as does side? lot delay of going kind growth. the sides look being sort differ commercial balance to Or to Yes. side? both a loan that as -- Like the a But like between I and of consumer of has on for all look that be affected there's reopening year like half of sort being that the or sort the and rebound of some sheets. perspective. liquidity differently? lot consumer a savings. sort growth second in

Bill Demchak

see I going. where you're

lending consumer going increase. drag think C&I I is to

I think with consumers really cash. are flushed

retail seen You've sales.

have time payments sitting by I think you that see normally massive borrow are buying transaction they volumes. don't way. and are who balance they're before to seeing We're who people fiscal would that to continue going what's to on happening people through the over accelerate, But growth. is burn the

you're our growth. swipe balanced don't we see it So effect. fees in But I that in know to going see

balance think their non-public place public inside lag to of some of on where this companies companies the even rely will continue smaller commercial, sheets growth. consumer will and back I I commercial. And smaller bank get to fuel the

Bill Carcache

with Bill, you just a Got on things on times debit players exemption bank ago the these -- uneven asked It them. world, of -- cap are playing particularly any sort active interchange, that in on for like it. I'd these was can a financial was discussions about with regulators you you could some are from that maybe never benefiting players, question small regarding And I helpful. intended very color like back the of post there, unregulated sort many more for for and maybe technology how of of which specifically field Durbin. while players perhaps of That's was the the like smaller circle give the intended

of playing this Or is is there so landscape sort of that leveling you And see expectation any field, guess, future? the competitive the of in a reality? is the I new the sort do of

Bill Demchak

rules the of the payment probably is interest, -- not environment. the about seen just frankly, a Chime exponential protection And competition specifically, increase in and topic the because and but to referring and rather fraud new about and into not on we've space, know-your-customer entrants it robust political and of So because soundness fraud. side, COVID less and regulatory more safety of I'm data both less

question technology before. And effectively exciting and That in Cash because banks to product institution we're I these accounts. allows what's accounts, has Go has their their happy customers' of -- going is in of processors. office, cobalt-based -- competition is of asked only process, their batch which, accounts. somewhat that politicians on our Mode therefore, real-time to some bring No, XX-year-old that of in a result side, yesterday, Get them therefore, what's on going I'm and small compete. we All point, years on, us, back a in nobody's attention At The competition. they of about existence. have to going world rolled gathered showing fintech back in investment and actually, me turn, the as the the that rely mainframe-based think, capability regulators. justify to what's this on on empowering Low day out not them are need relying to make money core choose their to they that. on on shocked very

have products. think a to of I think ease customers And very Our do we our the that. technology we use with this, we and proposition challenge great is backbone -- to do best and the presenting

being So I'm and don't with shared about who understand has customers worried our competing is soundness access and disruption and system to about to I'm data somebody. safety data less and who worried the more where to it.

Bill Carcache

that question. That's which I’d to in IPO, clients businesses service, treasury sort to argue about move but We've more field, direction. could the with talk out maybe new save of guess, allocation one. like some of remotely you CNBC, it about having left departments the ask very on even of I your figured I If Are one And can the of in any last a seen it squeeze I becoming Bitcoin? bit I was I some helpful. my saw going mainstream. seems you considering it's perhaps coin-based of idea

And crypto treasury function on And guys are wealth Coinbase? exposure your aftermath of clients something are assets? any any Any positioned of to gaining how then wealth potential as especially you preparing the the so for? emergence class, is is crypto that just in that potential that side, sort a interest of in on wondering, for maybe thoughts asset expressing

Bill Demchak

platform, Coinbase Coinbase our around we've talked our Well, issues had a The we've more would importantly, long you clients. a choosing Practically, before stream for clients. compliance-based choose and and isn't expect; then transfer our a both the partners as stretch technology you clients for custody importantly, we've big wealth been this, on a and corporate working to and the platform. trading for also custody but wealth that of back, partnership about deal work would that It's us. right went public this for treasury,

here. continuing an that's open So dialogue and

Rob Reilly

And suitability fiduciary. in

Bill Demchak

Yes.

disclosure It's of own risk. for wealth your be that a imagine around. clients, there'd can You lot

Rob Reilly

Right. Right.

Operator

Mayo follow-up from Securities. Mike Wells a Fargo have We with

Mike Mayo

The not another to me fintech question. ask comment,

now. looking customer you with broadly, for to some and a the banking-as-a-service think continue getting customers as players If of big to some about bank, an directly? bilateral starting they're you relationships, in are to you relationships like that's kind go the the versus cost tech. industry, with Or your going going with more the of looking permanently Are B? acquisition more consumer, up especially multilateral directly option in plan you And national partner even to lower set

Bill Demchak

owns the Mike, relationship, whatever franchise It's you that, relationship when platform a Jamie provider sold to going the as front think we disaster. the well. client low-cost in owns is your this soul tech fintech need -- as the X,XXX on customer alternative the your industry participants, offer who this It's talk doesn't you and products relationships, offering space just of devil. need playing. end a -- to customer have somebody own it’s effectively that we space I through get directly. your you've you're We're If and else the to into of to to them need the an with you the end. then heard to to become right? We gets the commodity deserve own beginning provider Look And to the relationship, about

can't to end default You that game.

You have to own the customer.

Mike Mayo

hand data, think to risk does if when banking other data and defend extent to the customers with providers, more? about you the against opt-in open with how your And share their force that do customers that? Or you

Bill Demchak

that, CFPB, they're of -- scraping. flows data regulators. there's focus towards at way, for working biggest lot I by talking various need think payment other about consumer but and we're is data. The and account wants systemic not is We the People talk disruption of because The view. solved, on moment appropriate the our data. know, bank cyber, the what through at API-based corrupted. share, that. working screen to our I consumer through tokenized is authorization really way the data. on That my And about And is ultimately flows, a is soundness safety politicians around this as what in risk the

otherwise, places want. be my around it not and the they the everything that and to in think to data of end I game. not when the terms consumer has data. ultimate share the that's their they Not want all in and to But to but empowered controls regulated view, share not data, are time

Rob Reilly

that monetize in to some data looking way. And

Bill Demchak

Yes.

Operator

are at further this no time. There questions

Bryan Gill

closing Okay. you like would Well, thanks, to Frank. any time. make Bill,

Bill Demchak

to second talking the Stay quarter. forward end Look at everybody. safe. you, of the Thank

summer the I here, hope to doing you're forward same. Looking

Rob Reilly

care. Take

Bryan Gill

you. Thank

Operator

This conference concludes call. today's

all Have day, great a You everyone. now may disconnect.