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PNC Financial Services (PNC)

Participants
Bill Demchak President and Chief Executive Officer
Bryan Gill Director of Investor Relations
Rob Reilly Chief Financial Officer
Dave George Baird
John Penn Carey Evercore ISI
Scott Siefers Piper Sandler
Betsy Graseck Morgan Stanley
Gerard Cassidy RBC
Mike Mayo Wells Fargo Securities
John McDonald Autonomous Research
Bill Carcache Wolfe Research
Ken Usdin Jefferies
Terry McEvoy Stephens
Matt O'Connor Deutsche Bank
Gerard Cassidy RBC
Mike Mayo Wells Fargo Securities
Call transcript
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Operator

Good morning. My name is Jennifer (ph), and I will be your Conference Operator today. At this time, I'd like to welcome everyone to The PNC Bank's Third Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. reminder, is a recorded. As Instructions] this being call [Operator to the of I turn over the will now call Director Mr. Investor Relations, Bryan Gill. go ahead. please Sir,

Bryan Gill

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

like would I to to call over Now, the turn Bill.

Bill Demchak

everybody. sustained have really proud BBVA for team to dedication growth I got me XX I'm USA, products say integrated Thanks, the of opportunities into ability come. to its our nearly and largest Brian. to attractive coast and and customers, with imagine our talent and and services banking years institution conversion bringing The and XXX earlier $XXX branches is sign, employees the Good about seen to across close, this of nation's PNC million billion convert technology our now BBVA best-in-class heard full a allowed as can X.X talk us year. We're and employees, and states. a bank you've within X us technology to we convert our customers of coast. you from with suite investments markets. morning, of USA our I completed week to X,XXX that the in of roughly XX

expected the operations, be work of site, to for legacy with and some USA we're this to BBVA do, progress Now making which branch is still more and have levels solid bank while we markets. conversion staffing our

our included origination a we're execute a believe with pipelines and estate results, new lot to by residential activity, the secured banking continue environment back we're our the Rob accelerate minutes. addition, we fee runoff, is to following PPP continued we growth on and we income billion BBVA clients. and be on systems, BBVA our originations encouraged previous we're the In to of lending And as strategic actually the rates as both quarter importantly, in through what had grew we you will on in teams had in to seeing corporate businesses, pretty on our the on utilization we've a little we're respect legacy And stabilizing our momentum that particularly and still challenging, same we're while and our much acquisition if categories. portfolio Consumer backup chain encouraged said, what similar of strong spot projections. acquisitions. and And and moving employees runoff That PNC Loan on continues course, And also in of it. to the PNC impacted corporate continued in going and supply to game by almost do of previously, improvements even growing see growth record now have business. consumer third-quarter which know PPP quarter real we legacy loans PNC to by With of and side growth, was last with loans used businesses. build just the Commercial a repositioning results. seeing with issues few take is reported X the expected, the consistent those highlighted also, we the the new revenue solid rising side, quality, so total actually legacy pretty which is we promising parts strong credit to plan That and in

Importantly, you technology strong in strategic substantial liquidity remains base businesses. see with our and and continue capital we're and well-positioned as sheet while and our making balance to customer support to investments very expanded our

an with application with important Another clear our exciting announcement that our protect This is customers so, look impressive on it their of and it then data And information also was to to a of network. our for efforts a The safely to enables allow A to ahead we'll like us thanking their the throughout just questions. they quarter hard choice our our giving us. share by newly-combined with is to going divisions customers. and collaboration cash Rob third-party take in that, customers, data an which to FinTechs And our with access to gives enormous aggregators. and at conversion. and to going Similar integration all millions integration a all I'd across do to over this share the programming It's opportunities franchise integration is serve us development this of interface. enabled if the turn their choose data we'll data. We're for our leader in closer your low applications. this step positions mode, as me financial capitalize significant and help through the technology close I'm to great best employees their innovation work, confidence results, them

Rob Reilly

good morning, and Thanks, Bill, everyone.

from than franchise third following PNC USA the and the notable platform BBVA scale less mentioned, underscores quarter, XX acquisition of we we with franchise. As announcement PNC's this deal. Bill opportunity USA increased in the the months to converted the BBVA the the during just have

well acquisition, just inherent our sheet growth proven We successfully and as to balance way X record we're of on with growing reducing for to accomplishing USA. the quarter third a average impact of the quarter BBVA the full of to Due this shareholder closing and mentioned, reflected opportunities, strategic our acquisition. the the June attractive enhanced identifying And have deliver track value. franchises acquiring risks, Bill

As loans and billion, grew billion. grew deposits billion, securities $XX increased $XX $XX

$XXX relatively rate the loans environment. we X%, few detail forgiveness, drivers much for which PPP presented month next For a on slowed linked-quarter, X% the the or declined BBVA results, of comparative is loans the of quarter balance impact second as just Slide USA X billion purchase quarter, included million more of the basis. sheet Total one or you'll activity grew. unattractive I'll spot Investment in And cover slides. approximately our on $X.X during securities purposes recall declined throughout spot excluding over the

on share Reserve Our the XXth Federal $X billion. liability cash at $XX ratio and value announcement. to USA were the the ended tangible $XX.XX On estimated portfolios. of are balances at the the a balances reflecting We billion grow per XX.X%. with and ended anticipated an pro repositioning declined CETX book of substantially $XXX at we certain billion deal time continued a third Both deposit BBVA above the of of the and quarter September forma side, quarter levels

million dividends During of to $XXX with and common shareholders repurchases the we capital million. quarter, share returned $XXX of

more going level ratios, $X.X continue change PPP a total and XXXX. reflecting to $XX loans. its significant in and linked linked Legacy increased the to billion commercial Growth forward. with we utilization. in linked detail. uptake PNC spot by portfolio, in quarter billion quarter did Consumer growth legacy The our lending. declined aided asset-based driven be while in driven our Average flexibility a higher capital the loans Given balances Slide real PNC's acquisition. billion, our the December of capital look And $X.X impact lows, loans quarter with $XXX consumer grew estate by or Legacy been utilization at X Corporate in spot Banking both within shows balances, has loans closer X%, since strong in near historic quarter was well-positioned by loans stroke $X.X PNC by still loans, grew balances. billion. Taking The reach full residential Commercial excluding slight growth highest billion, loans

loans portfolio, relating due billion $X.X intentional the overlapping run-off declined primarily the exposures Within BBVA to the of non-strategic loans. USA to

intend billion the that acquisition over of our line Looking which in is have additional we with off assumptions. roll BBVA years, let approximately ahead, few $X to we next USA loans

loans our balance on PPP of activity. to as billion sheet. due remained forgiveness And $X.X XXth, loans Finally, declined September of PPP billion $X.X

Moving to driven increased quarter, Slide of average $XXX the by $XX billion deposits the to X, billion second acquisition. compared

certain accelerated of $X.X billion, On can deposits legacy linked-quarter. as see the XX, on this billion, $XXX reflecting grow, period-end decline $X which interest-bearing we or period securities acquired during X deposits was a you deposits now X% or businesses. several customers. BBVA Inside USA billion continued activity. deposits in deploying PNC rationalized non-core liquidity increased basis decline low of levels. our details point and Overall the our our purchasing is the have we of with paid rate historically Reserve in most beginning points change of yield X Federal Slide And we and rate right, approximately to deposit deposits paid Back you disciplined of linked-quarter. September were total rate steepened, the X know, at the on position been third liquidity excess our and as strong the our balances. portfolios $X.X to as basis deposit-related anticipated quarter, exited curve the the of rates as commercial on year billion declined

quarter, second deliberately slowed the purchases However, towards end our yields we declined. the of as

resumed now increased in fourth assets, XX With in of third of XX% will levels approximately purchasing, rates by balances be range to the approximately including to in securities, represent year-end. be still the at of XX% the expect which $X.X reflected of the Average of we quarter, security the interest-earning our increase quarter. and forward-settling end we've billion

our $XXX EPS X, pretax quarter of As integration you costs $X.XX, third on million. The the was Statement see of Income full acquisition. impact reported can the quarter which Slide includes included

adjusted, EPS costs integration Excluding was $X.XX.

was million up was and quarter, additional PNC X.X%, rate and driven as of changes improved well $XX business fee which million $XXX tax increased as was integration BBVA credit fee second pre-provision reflecting revenue expenses, million $X.X XX% of Legacy XX.X%. quality by including $XXX composition billion virtually, XX% or driven million, increased acquisition and million quarter, $XXX USA activity. earnings, organic effective strong X%. Expenses higher or of linked $XX Pre-tax, costs, primarily was with the X the by portfolio integration were operating all months provision our in expenses The excluding growth. re-capture Third-quarter compared or of expenses.

be expect year, to For the approximately tax our full XX%. rate effective we

As Net a $X.X third the quarter. Income was result, total in billion

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

Inside the $X.X our $X.X of earning income asset interest XX%, BBVA $XXX on investment million, portfolio. increased billion by X to that, $XXX slide of of interest reflecting premium lower Turning loans these or income of diversified driven XX% full the million X, from total, USA. up driven USA margin yields. In declined Net acquired points, A by acquired net or million was charts business $X on by security the income million interest BBVA amortization balances quarter. mix. quarter while increased billion illustrate X.XX% revenue the basis primarily linked of was down benefit securities $XXX elevated

Importantly portfolio quarter, securities the decline premium we to on and in amortization expect the meaningfully to fourth increase. the yield

by a quarter quarter driven fee M&A a growth months residential was USA the increase extension as fees linked results. million, increased $XXX adjustment in quarter linked fees income private resolution. quarter, as operating of income of million grew of expected higher million litigation mortgage by derivative more $XX relates related impact BBVA well of or equity additional the revenue. to by billion, adjustment. Other of driven $XXX two third of by recording PNC higher $XXX the fee advisory XX% $XXX revenue non-interest service linked income timing of million XX% offset a of contributed The $XXX Visa corporate million $XXX negative million to as than activity, or a Legacy linked-quarter. $X.X an decreased million This

M&A $XXX expenses $XXX integration or $XXX Turning BBVA X.X% in driven in million was linked-quarter. to million of higher to due and The USA slide incentive higher or X, of primarily impact million. commensurate million advisory $XX expenses increase up a strong of by fee quarter compensation PNC the higher by fees. including our were businesses, quarter with XX% a expenses increased our performance Legacy third expenses record

achieve and management. our Our expenses integration efficiency expense the now full-year costs XX%. we've in but to our track stated with our a acquisition, to ratio expense standalone million disciplined have XXXX, we is we program higher base on goal was Obviously, by nevertheless, target. our for improvement $XXX remain we're as through adjusted reduce around Continuous And PNC previously,

that approximately base, by Additionally, We the of of incur U.S.A.'s expense expense we're net savings expect full the actions $XXX and confident we'll $XXX of all million BBVA forecasts integration have costs. end million and acquisition. And of expect costs of the XXXX teammates virtually done we goals. hard us realize off we $XXX in to appreciate announcement completed on the half the work the incurred to approximately our related these million of savings have track be acquisition, still these keep Since all XXXX. drive mentioned, of integration to the as to to our Bill achieve the of

of represent $X.X presented or XX of performance. $XXX September X% X% to compared credit strong than Slide $X.X loans. continue Our on or XXth, reflect a on $XXX million credit less million Non-performing and total X%. XXth are decreased increased billion loans of and June delinquencies to metrics Total billion

approximately delinquencies operational acquired in loans. quarter-end, all resolved. BBVA includes of of the to million this early-stage process in are related have been operational USA of these However, increase delays being to Subsequent $XX or primarily delinquencies

million Excluding quarter. these, and total of $XX a delinquencies would $XX leases $XXX decline linked million, loans for or million were Net X%. have charge-offs increased

acquisition. quarter included result of charge-offs the related the USA to $XXX BBVA The required treatment and purchase second mostly loans, accounting of million for

annualized third Our net quarter loans XX were points. charge-offs, in the basis

in primarily X% this In fourth view our and annualized in of quality, third significant $XXX growth portfolio driven to third third USA problems, overall this chain the billion summary, credit quarter, a as expect In reserves value declined supply notably, million, we to the due strong add to of representing as quarter, were our earlier variant loans. we At accelerate quarter improvement potential regard GDP realize to PNC continue Delta in $X the quarter-end, With week step our after Company. BBVA the the credit allowance in During of the as reported composition. to franchise. the converted somewhat shareholders above losses X.XX% for the well XXXX completed, to our we combined changes during expect economy, of part and slower to quarter. by

of rate We remain also funds expect zero Fed the for year. near the to the remainder

loan the XXXX to recent Looking quarter we excluding balances, to fourth at be of PPP, results, the compared modestly. average third-quarter up expect

expect down mostly up activity. On to elevated income between X% the percentage we and third X%, to We be a NII basis, M&A be modestly. reflecting expect fee quarter

be between $XXX $XXX X% And to to to $XXX approximate during activity. other expect net On million the to and X% fourth and we and fourth-quarter Bill with We million fees non-interest a income the excluding which your and to million. are And expense, integration between expect take that, be questions. be $XXX non-interest expect $XXX ready we I we and percent, quarter. securities total expense between charge-offs be excluding down net

Operator

ahead line Thank Please Your Instructions] go the Baird. you. your [Operator comes George question first question. from of with with Dave

Dave George:

-- line Good guys. a I loans question Hey, the on morning. had of

Rob Reilly

Dave. morning, Good

Dave George:

-- give so you additional a loans declines running to I've portfolio And of said the us and to see a you $X billion got with there's come. Rob. timing an you BBVA, respect Good Can that On then follow-up. how morning, sense on the off?

Rob Reilly

Sure. Again, Dave. good morning,

remainder, So part billion forward guidance. likely The expect we've that billion off intend that's to next of of we X years. quarter, that the fourth going the the run of of we and in that our off, couple to identified run X over

Dave George:

that. for Thanks Great.

Rob Reilly

Sure.

Dave George:

growth sense, working the not commitments issue. can to PNC curious supply to the outstanding the us the outstandings commitments least the may commercial. be capital inventory little contrast is and and that just new weighing growth of and of with of and difficult, at the I'm needs give growth third business Legacy commercial the but terms I'm it Can In is clearly benefit you in terms today was in if the doing how names chain of on you obviously quarter. relative new this organic respect curious adding CNI and seeing that of a bit see encouraging businesses, a and because in to

Bill Demchak

new have for We've I at of commitments Hi, record couple quarter. but Bill. think increasing our been, it's Rob, last levels, quarters, each money the been, maybe

new business, quarter, utilization, clients, then of this some had. so just cases already in we of kind growth. but most upsizing And new had bit a And we new little what was client

Dave George:

Yeah, that's right.

Bill Demchak

Right.

Rob Reilly

and Dave, of as kicked then know, it was you little Still lows, -- And and but that we've as that bit. utilization mentioned, a part little too. at up historic a bit,

Dave George:

Thanks. guys. good, Sounds

Bill Demchak

Sure.

Operator

you. Thank

line of Carey is next from the please ahead. Penn from question go Evercore John Our ISI,

John Penn Carey

Good morning.

Rob Reilly

Good John. morning,

John Penn Carey

us and Can clients detail areas, areas, that tick on mentioned. build? business loan the starting you up a you little On to the what that start new also which then give industries topic, you're see momentum in utilization more what that that growth to

Bill Demchak

book lending in overall Yeah, higher they're stood the was I they have grew even finally of out the book, some there traditionally went a it because the well. points middle-market in and mean, an the we basis corporate and up average I it But average our the stabilized, secured of kind rate. growth straight in related, so individual in highest with as increase guess areas utilization, couple ways,

Rob Reilly

bit, yeah. little A

John Penn Carey

Yeah.

Rob Reilly

basically or business so and lending group corporate banking. credit, Yeah, asset-based

John Penn Carey

it. Got

your wanted cost the to on million to inflation you're then little net side, or expense if talk if merger wage risks XXX you of so, to the are bit how saves? And see about thinking any see starting about franchise. signs could any a there And if that Thanks Okay. in we're also, in the just costs

Bill Demchak

to increased wage base beyond some to markets. With seen cases in that, rate in least and inflation, announcement we that our XX an respect certain you might at have

-- it So

Rob Reilly

hour. an $XX

Bill Demchak

Yes, sorry.

the It real that pressure offset was saves. cost to just and control to financial is overall way that through But do time anything with only but headcount. increased pressure already doesn't then real, assumptions. in And through recent have automation and there's assumed on frankly so that our there is our

John Penn Carey

Okay.

efficiency you the So say bank? though, on view long-term how for fair to the ratio longer-term impact

Bill Demchak

early our played per you for financial operating continue tell, franchise through We're The time go to employee we going right? to issue scale up. of more We through automation statements, Too we able years. -- our John. -- employees. five quickly that's become need to just positive how just is average here, period trend wages on that continue go so so leverage. be out without if And back even a going for pursuit are of to this to we our larger how

Rob Reilly

And is what to pressure. of terms offset real in wage

Bill Demchak

Yeah.

John Penn Carey

it. Got thank Yeah. right, you. All

Operator

you. Thank

question is with next Our ahead. go Sandler, from line Piper Scott Siefers the of please

Scott Siefers

morning, little Good appear a taking to still quarter, guys. those excellent the strong. very Thanks into question. to for more, Rob, fees, drill come the hoping so down your remain dynamics expense but was this will

in it fee how the how much to kind then contemplates costs cost to expense As related of strong related fit In momentum? million to the or other into next your ongoing of quarter is up come outlook, the XXX you comes size BBVA and the XXXX, maybe into is next guide? words, much how then starts how relates cost-savings can still? guide quarter, sort much And related that of fourth-quarter

Rob Reilly

Sure.

fourth but that lot So Scott, in is guidance for the that's the all to that's quarter. there, the a answer easy

in with Services, Mortgage. Corporate fourth see levels businesses of Services, that fee and third particularly the the And Services, continuing Corporate good M&A of that's So we the your third been exception of we -- -- they've quarter, point, were all guide. in the into all as the in well Management, as the year. been of activity quarter Consumer Asset good Across-the-board quarter, Residential part to have elevated

are with expenses be obviously there'll associated So that that.

some got in quarter, in some XXX but quarter. the savings. Presently, of get savings terms fourth the are the guide, XXXX. That's the in the achieving we more million In the we'll savings, be of in part third bulk we of will

in the guidance. in XXXX, going XXX we'll million of our a reaffirming in into course recognize savings, then of So forward and all portion which XXXX,

Scott Siefers

just you Perfect. BBVA upon expand portfolio your Can at premium touched that the little, Company's you in that And weighed but amortization on yield. consolidated this Thank on then prepared a you. please? that elevated remarks, securities

Bill Demchak

its form, In really low simplest continued that securities through book when closed then in we deal, through marked It at the rates we quarter. was painful. rallied the fact, that --

CMOs had it's to rates you at we prepay -- it, increase, about and the on whatever mark a think their book was, the we So a premium. yield so

low have All caught going rates up. hopefully, mark to them But and rates, then of back that -- we prepays as expect abate premium got as that because of now we securities the the by

Rob Reilly

was a securities. the up it securities timing of acquisition, And of those premium as setting function the

Bill Demchak

In asset. goodwill marked we if in its down simplest knocked is it, book what you did higher-valued the had about a think we form, because way we it a when

bit Income upfront it, fact, it a this little pay and in So, for in took quarter.

Rob Reilly

right. That's

Bill Demchak

Rob book mean, -- XX yielded the securities on or points the that basis guide I something. yield once the like

Rob Reilly

happens, That yeah.

Bill Demchak

expect And it the going to we And forward increase. book Yeah. total is.

Rob Reilly

I right, That's in comments. my what which right. is said That's

Scott Siefers

that. hear to glad I'm Yeah.

Rob Reilly

It is acquisition-related.

Bill Demchak

it painful. and was Yeah,

Scott Siefers

All Good. well right, Exactly. perfect, the I color. appreciate

Operator

you. Thank

Our ahead question Stanley. question. from line of go is with Betsy Please Morgan next with Graseck the your

Betsy Graseck

Hey, good morning.

Rob Reilly

Betsy. Morning

Betsy Graseck

brought just looking had know one I the but at the discussions look a the expense expenses lot had, to rate XQ, there? already of already you've you've three X XQ, something in done a me, so what's and it run far that the just detail When had you that executed in I'm in the your so you X month I'm months far done down I missing what and BBVA around you've trying months because a expenses, from there we've am already, seems I at here looks quarter. like -- of understand to you left or what And bit. bit

Rob Reilly

No. No.

much across but we to work You're to still getting is what as so expense have see you we're so But savings the right. we Betsy, this that all in categories. started would started, Rob, We've you're begun right. just we go. we realize have pretty said, Hey, [Indiscernible],

Betsy Graseck

the a conversion, lift I'm shift of expense save from when the -- part pace thinking about here, of obviously a it then, the function And and Okay. of that is

Rob Reilly

right. Yeah,

Betsy Graseck

after the terms in lift what you expense can then save but of and talk comes us through trajectory? shift, --

Bill Demchak

know to even I what talk about. mean don't -- I

Rob Reilly

and then -- talk activities when you about Like like the

Bill Demchak

Line items? we I have mean, --

Betsy Graseck

really is -- and Like No. and question branch closures -- what the

Bill Demchak

form branch through of Some be it that systems roll and all will There of on time. will its with on stay conversion will contracts different who dependent and stayed the vendor people have of closures be in us shutdown -- through things sorts of of some bonuses.

we Some some little leave as a for notwithstanding of we'll running a around for just and which for in-case. we've bit backup -- fact of leave stuff bit time the up converted, the for

Rob Reilly

think right. -- in we I fourth-quarter but terms activity, started will least at And will at that's vendor those probably We've up pick of up the and that rate. pickup start more we accelerated mix, an savings. in we the the to already will at pick

Betsy Graseck

really shift is And I of cost total question round the saves number? guess percentage is as like a lifting

Bill Demchak

related -- way fact done Legacy now stuff supporting get shutdown, people old time Legacy applications, costs. think through allows that about at to us that that starts it. the point It Vendor all who Because one shutdown, are system. The wrong then rolling that's in System aggressively gives we of to move the

Betsy Graseck

the be my expense that Yeah. not of is And Yes. total portion one save it's it's a done, you'll and generating. point

Bill Demchak

year. -- Yes. the get guidance, the the the next all in to and right? to And more guidance We're then going some we're the going end get you know it fourth quarter at is day of that look,

Rob Reilly

I and it. see Yeah, it. see I just

Bill Demchak

on We're track.

get will the know it line items We will where We come all. it from.

Rob Reilly

it, think sequential. to about is I its think the I Betsy, way just think

speak, deck, sooner later conversion to get in realizing creates shift savings. rather than on so the started that So to lifted those a

Betsy Graseck

you. Got All it. Thank right.

Operator

you. Thank

next line from question Gerard Cassidy ahead. please with Our the go of is RBC,

Gerard Cassidy

morning, Good Rob. morning, Bill. Good

Bill Demchak

Gerard. Hey,

Gerard Cassidy

within companies Business, think press at it Can with come in you Services your record the see the the Rob, as expected than mentioned but your do share the pipeline -- obvious levels, -- was are a into Corporate down. going can lines that front and said else what Other times on you're much Advisory your as left not you in us numbers guys share you I just us about that 'XX? with is you release the and few that in to there's book, seeing guidance, it are you guys M&A? to many just guys M&A you that

Bill Demchak

keep form, its you records. record, the in necessarily won't there that we obviously the suggests There's great simplest going from it's breakout market quarters of you But continue to that, have it's by or Look, have assume for continues, setting fee to here. that set upon nothing [Indiscernible], way, had that [Indiscernible] of you out and If weaken hard a inside income also but a say record. going out keep, record and will Solebury to to advisors. it, we budget related we're but

that. think it's as simple as I

Rob Reilly

right. That's

Gerard Cassidy

services now And of in did Got what it. does it represent corporate or what third it quarter? represent the

Rob Reilly

-- yeah. I'll say, -- do down head No. in let's math know Well the my I XX%. quick the

Gerard Cassidy

Got it.

over loan growth when think get and you do there's when you look do for maybe 'XX But looks system net like the into BBVA there's guys clearly, and the tapering How at on fully is banking and until still parts you loan going then now Fed ratio, to question a -- to come your moving And deposits think you We've end I over. out having you with Okay. deposit 'XX, adding the a shrinkage. loan and folks? deposits deposit to some is of the phase could into down. tapering and and of And the -- is ratio liquidity integrated. lot ratio What to course, enter has you you are peers, of looking an of know be optimal of incredible there? is amounts

Bill Demchak

There's too many variables.

Gerard Cassidy

okay. Yeah,

Bill Demchak

right? I go in where you history, we would if don't mean, operate, I back know People were, XX%, XX%.

Rob Reilly

yeah XX XX. XX, to

Bill Demchak

safety liquidity was function. of kind And that a

that we're shrinks X, that's tapering, at actually not short into at sheet, keep to your of the liquidity is you wholesale ratio about system, to if its kind so the were you'd until going balance and change. wholesale forget reserves point. flush to -- point, raise So next with Fed funding liquidity Today, that

we've I Now, long think accelerated, of for and to see loan even going ratios you're And growth going will percentage years the to therefore, industry. take increase growth exaggerated to talked see about time. play balance to and think security across balances loan to I you're sheet of in the this of deposit -- But going period loan I that. that's And a as think absorb out. low already to going a some it's

Gerard Cassidy

Very Thank color. good. the appreciate I you.

Bill Demchak

Yeah.

Operator

you. Thank

of from ahead Securities, question with Mayo please go question. is from Mike next Wells Fargo Our line your the

Mike Mayo

Hi.

Rob Reilly

Mike. Hi,

Bill Demchak

Mike. Hi,

Mike Mayo

No good deed goes unpunished.

over -- it's a are and lift use Lakes you conversion do announcement that since have? others the Whether million months, more the aren't parts to conversion you or further probably doing Data generally, why under digital having the your cross n't think increasing XX of your or from it's savings? technology of you you advanced far $XXX as shift Cloud But your So think weekend, record that you're completed as validated? have you what something

Bill Demchak

Well out first the the business we're look, in of day, of end figuring question. efficient. the how become always with At the to more

coming items is the of we to know XXX think I get. can know we going and up. they're when from We where line actually they're show

we we'll other probably So stuff you're the at to the By find invest in find some too. some need stuff. way, we'll right margin

on we haven't get " our guidance. we'll So when objective. We'll We you talk "Look, we but get to lost we focus closer just put say that about the into primary 'XX the XXX.

Rob Reilly

and that, Mike. know convert you XXX, we did. the when estimated XXX expectation off The that was we the And

we we didn't thought, we than So, convert on time. it sooner did

Bill Demchak

very team you don't it have don't very the where I and is their and make not and call data what to That API But in if through we've about people as not overnight. in data know made off back-office ripping API years. much Lake, our us, the Lake with somewhere terms we the investment this, linked of got to things, an that's It's PNC precise. easy it this, what it. to I for probably think new job, how -- or their on with hair partners than you the can lake and are Central It the data, some that's effort my applications now. doing effect a they're or to which but their couple we a from did, easy resets just is at a was do So line we've investment and and their it's sound to in rest. it worked. We conversion, don't over everything was business ability it from some and million have agile clients technologists it onboard more working there That technology cultural this side-by-side And talked to other I and having this that, biggest all element phenomenal confusion basic team a the but makes important, on, it's by they're margin, technology worked. password our moving know right it to retail -- overturned but develop product, number We just than Cloud to to hold we the technology businesses in validates the everything. actually Mike, in the we say move items, is that new but Cloud-native. did. until client, they just importantly, had all look, and clients different The in frankly since of they're it Data that The was visual and execute So see worked. technology, all its Native, -- [Indiscernible] important, element own at and the very idea

Mike Mayo

just look them, added? did eventually you did final how at how or from you the many in just more apps keep this, one gigabytes it add in much what So or

Bill Demchak

or keeping ended X -- ended up we we Well I think something.

Mike Mayo

number, last the I think. was It

Bill Demchak

was the that's don't it. business foreign And the personal I the know, what one transfer was. one Yeah, other currency know transfer, you business.

Mike Mayo

I of this and have something you And And out XXX I have that like that? or numbers XXX that and mean, was the you I Was -- thought Company right. smaller. to -- much trying was was

Bill Demchak

feels We head, went but we they through that remember have. before of top I them number can't my that twice -- had off roughly the and the That

Bryan Gill

than They XXX. had XXX. more

Bill Demchak

They bank had XXX, we whole XXX. run on the

Bryan Gill

A little more than XXX.

Bill Demchak

know. programs, using number the you it's right? recreate applications. Yeah. functionality they don't to I Why why think mean, that's state.I and once across and that click start so They're You don't multiple I -- is stands got almost haven't mean, have that? drag, much API-based a had that A out. little as yeah. was many apps twice I we smaller, yet more,

API. can You library whatever need bring simply of functionality from a in you

you account you goes drag an core a your application say have API just you it. needs have write finds an a So ledger, full balance, let's that a and checking just rather balance application that checking than produce account off and we in

of everything just acquisition, think times back do that's a because the did I you'll to the a too to National and alive between one have BBVA lot done onto them. or team you City, want big might this, many when A an of it. part keep choose we two applications we credit application. single don't of also moved you way It's between

Mike Mayo

it. you. Thank Got Alright.

Operator

with please is question. McDonald question from with Research, the of ahead Our John your next line go Autonomous

John McDonald

Hi, good morning guys.

Rob Reilly

John. Hi

John McDonald

dynamics bit are wanted I to all to little of confusing about us, ask just PPP a and that.

then a I what give and you PPP, then you it in PPP So payoffs core PPP had NII, quarter think on it's of NII give growth quarter? the helpful you excludes you the maybe of kind Rob, have included for and sense on outlook, this the in contribution is but fourth to us And that what Sure. also and loan could expect PPP that, beyond?

Rob Reilly

right is that go confusing, it a that to be terms, about the John, net and forward? on and we expect is we $XXX in simple simply fourth $X expect happened contribution XX, guidance. the down million, Yes. in What from guidance, put, In interest NII our PPP In -- to to and quarter our about but approximately third going billion that income to XX PPP down average you're quarter. was

John McDonald

Yes.

Great. Okay, got you.

here. Another cleanup question

-- that could surface On year. to had think? securities, could go about doesn't for this as loan and of but redeployment is deposits, time discussion this get XX% loan much into XX% as into over cash the we with to the Over If that you securities Gerard time? target higher growth

Bill Demchak

I could. think it

you is, because of long deploying the in up about a to a at where John, today, otherwise long-term depends such you end it's might the curve maybe inflation I causes spike you Which than Part be long with the but cash. not that on you that opportunity we slower think issue becomes set, [Indiscernible] think in is that and risk, real. how be risk. margin yield have this tail tail long rates

see risk if increased. that growth, balances normalizes see you'll don't I we think loan as

John McDonald

it. Got

Okay. Thanks, guys.

Rob Reilly

Sure.

Operator

Thank you.

of Our is Bill from question. line next with Wolfe question Carcache with the Research, please ahead go your

Bill Carcache

Bill Thank and morning you. Rob. Good

Rob Reilly

Good morning.

Bill Carcache

Gerard when eventually thinking we deposit as reserve cycle? [Indiscernible] exited how look Following relative up we you ahead on spend tapering rate are hikes, to to last about 's question and

Bill Demchak

lot going not because cash be a they're think lower simply Remember around. there's Fed the so I much to even necessarily they're shrinking. when slash tapers,

And great the with won't deposits be so was. as cash that just as it for system, in once the competition

I So be got lower. margin, they've to at think the

Rob Reilly

have, with all right? And thinking deposits another about we're we way a [Indiscernible], of that, the lot answering not

Bill Carcache

sense. Right. that Yeah, makes

Rob Reilly

Yeah.

Bill Carcache

remain if were next improvement depressed unresolved supply the Understood. That's the to seeing in continued well you're sense with new the helpful. are versus money what's commitments, your the problems remain extent discussions for problems we're relatively from even year to And as as momentum of to customers rates chain utilization I which into chain potential to that seeing guess your going back say. long your supply extend the going

how having. big an a Just get for how had that much -- it's of impact to feel

Bill Demchak

say the but been why execute you're and some the I what shouldn't It lines which that inventory on do clients it somewhat our varies to supply of depends to of question, -- on chain in. they about and is increasing. and have without across build vast industry desire ability Capex, dependent is talk Their industries, need the majority more

on seeing and you're businesses and the Other benefit we not that. for of your a manufacturer, If dependent are are chips could immediately maybe already build it's struggle.

Bill Carcache

about synergy timing can realizing those your around level revenue confidence those, how BBVA opportunities, the and does Got it. of And in if I the magnitude switch to when think you relative just It the RBC? this trying signed what differ you execution seems differences around? you may to guys time that have get for a you sense to but in playbook, see

Rob Reilly

Rob. Bill, it's Hey,

familiar set plans In as that the terms very the confident -- we've It's with it's RBC contracting it's just in RBC, the probably in of very of that course, the than Bill to increment successful, was out is there. we on we're do, just mentioned this bigger. aside, numbers get [Indiscernible], terms better what know to and of We laid RBC because terms but BBVA, of

Bill Demchak

I mean --

Rob Reilly

-- magnitude. more this is

Bill Demchak

clients. the faster of but much them what are we he in in than Mike we And plays there it's with book had of would who -- had than teams business largely hitting with a with runs perhaps out, teams a year business as gets would And RBC, [Indiscernible] as, CNIB a say would terms in also and much because say, say we that on that how ground Mike faster. the are out-calling BBVA place see we're then we'll better faster who RBC. have is place

on very have us about up-sell the of we to you'll being revenue talking just book ability So the business low. percentage fees fee that to of total remember side, their

bit fee we're because momentum a in be RBC we the and faster we have on, early on place we opportunity teams clients just ground to saw have ought an little So grow already. for able in than to what we

Rob Reilly

aspect. revenue the That's

Bill Demchak

Yeah.

Rob Reilly

is significantly expense than aspect, the is that revenue thought I our I the answer. the side, For mentioned question, if higher it the was RBC, magnitude the

Bill Carcache

you've in PNC could Bill, if hear quick squeeze Understood. inside about talked of and thoughts studying That's couple for love helpful is you there one really of from it, one on crypto, about risk opportunity areas a as and teams to your having I from a you perspective, finance? the concerned a risk look second, of. then versus taken are how at decentralized revenue a disruption PNC poster, last

Bill Demchak

ability interested today we app what trade built it is fashion talked we in clients investment, safe XX% and contemplating crypto money to PNC. bad have So of moving out exchanges. in not I XX% our them for a and into through whether are have or investment our have an clients, offering, at what with clients good don't about, we to or we literally are a are to a Crypto pine that look, of mobile think on our we to that's I who certainty know

call on the and the depends either So to ability savings, savings it through in of how suspicious that that's inside also that But people is let a broadly and that. regulatory how to of plays know probably And market The what it there various domestic long arms term. confirm that our or coin, coin our savings even that time. they're what There's think the -- and not real -- Crypto risk collateral I threat whether a surveys [Indiscernible]. having, But disruption aware get behind substantial at the interested clients time control of I and stable of around. with of independent the them. is it, stable money risk money coins through And portion would that their I absorbed financial and we stable a into get let's the that's the are out economy certain think transmission to trade affect that's traditional system. looking emerging out the of supply bodies figure are of

Rob Reilly

Right.

Bill Carcache

to Yeah. even them. There is by a providing portion of revenue it, opportunity from that service just the simply

that is conclusion? fair a So

Bill Demchak

the at Sure. I margin, mean, -- at the I margin.

Rob Reilly

driver. Don't a see big as it

Bill Carcache

Thank super Right, got for it. questions. That's you my again helpful. taking

Rob Reilly

Sure.

Operator

Thank you.

the go Our Jefferies, ahead. next from question please of line Ken with Usdin is

Ken Usdin

amortization that premium you forward? yield, to dollars help I'm premium Company can you wondering even aim if if of either in what going for and expect for what the look X.XX like impact I guys. have or thanks. just back, Good on Can the question? securities was, basis Rob, the morning understand point total come us Hey, you the

Rob Reilly

I'd terms in down But in would close premium yields. a bit if levels. of those decline second-quarter elevated see our for be of But terms dollar guidance in in to the look If can it from expense, the all little yields, the took amounts. you we that's a amortization the say wasn't it you at

Ken Usdin

market you you get you're hands that book, seeing forward And are back your fair. saddling s where is, core these relative the what today to question was book, my second on? front and That's just just and what seeing Okay. in and on

Rob Reilly

what Well, it's to looking the better -- is said we relative

Bill Demchak

today but quarter largely to expect substantially the amortization book next Yields the of increase in it's total pretty because the buying were decrease we yield costs. on

Rob Reilly

right. That's

Ken Usdin

you And do in have accretion, second said XX accounting expect you Do then in that purchase [Indiscernible] was -quarter. anything just to the look how you it lastly, Yes. to the And like third?

Rob Reilly

into and a fourth third is quarter. the good in [Indiscernible] thing. the going -- max The the Which

Ken Usdin

Yeah.

Okay. Great. Thanks.

Operator

you. Thank

Our go next Stephens, of from with please McEvoy ahead. is Terry the question line

Terry McEvoy

an that that was on internally at underperforming Legacy it buy morning. Good BBVA event work it it to Bill, in around? turning month industry you believe or I franchise, mentioned thoughts are build, just is California Thanks. What U.S. last Is the your an is improve franchise?

Bill Demchak

services It's didn't underperforming that have massive. opportunities to And California. the they because it largely corporate mean, building the and way, cover and products I was in opportunity the by that's

effort in ground some us fairly to cover can on for on So feet the corporate cases, who get along and the big we're the is far side, process in bring with clients and, the relationships them.

and branches ground might in of bankers corporate the capital we opportunity need real buy in California California. we But and at to get is coverage rearrange some markets players the the So there. anything, to set TM on the margin, don't

Rob Reilly

instances many in done we've already. Which

Bill Demchak

Yeah.

Terry McEvoy

offense that just of a follow-up fees, And to impact low could is being the think more to talk right is play still roll-out then you And to as Thank mode? that Thanks. it of Is XXX cash that more maybe about defense? product you in you. overdraft then that the the way question, or the allowing about XXX decline is that on fees?

Bill Demchak

And a transfer thing It's millions opposed into to offering which no which we to the choose we what what low complaint we've our but followed most -- know and conversion it different converted It's it's the most who ways, of number and charge. overdraft, with that on hit of I the who return and I how brute in think. been I but products So down the have people our a has cash bill alerts Its money with something. everyone not people that the with solutions, low all or lead industry the and it's into have some customers, and happy of to put cash you've [Indiscernible] Part the this in and the and order through to doing technology, as forget important before We're on millions on about rollout kind was Care of enabled lead was they -- customers items millions return what simply reacted. we we in out. over. over course, people seen is charge lead just gone mode millions Center has doing. being customers current or don't get with XX% at is fees, other seamless empowering stats, been cutting by who discussion of of their all volume of big somewhat our mode, have just BBVA, want a force pay able of part fee. is able --

Rob Reilly

Yeah. overdraft higher On even that. than

Bill Demchak

Yeah.

we what do. would exactly it So it's thought done

Terry McEvoy

Great. Thank you.

Operator

you. Thank

Our question line Bank. is Deutsche Please the with Matt O'Connor go from next ahead. of

Matt O'Connor

a what and I'm getting Good is PNC because that like bigger low-hanging the portfolio the at bucket the next loan BBVA guess by next? seems an be or quarter there loan is years, to at a take USA X XQ of this to of end morning. It if runoff Legacy you will fruit some some maybe de-register less I that of you're quickly? just relatively can runoff holds between mostly opportunity we're just Company bigger couple fill fill versus down billion

Bill Demchak

something we're by organic if flow. wouldn't a going I our in down Matt, do. up grow or mean, by its We'll result quarter, will not appreciate we're to over are follow got we billion It's guidance. -- you not clients. otherwise embedded in It a loans ordinary putty doing the

want can as some and have to is return that really so loans some hold goes And up. of to larger larger to. have other the opportunity And so be to in. no in the equity we than low. in they cases, like those just cases deployed are on riskier just we'd risk cross-sell Company folks Utilization you both we're do, hopefully We business they sensitive holds take a and are if always we we

Rob Reilly

days, growth, But obviously but a I in the time that's next opportunity through central XX acquisition, growth premise so would these big us. generate for to add, would Matt, above-average I mean, expect is necessarily obviously markets, not are we

Matt O'Connor

was looking yeah. guess, next a so fourth-quarter, And few thinking outsized just Okay, I for I quarters [Indiscernible] do wasn't given you just growth the much I get loan

Bill Demchak

go new you're really tailwind of we how of you and X you growth It's to at we look RBC, the back see after going years through accelerate and RBC, did every growth. And if at most a get think you all, said, corporate our loan that. doing And I we at all so that started new fully Admittedly little the customers are loan BBVA period is, the importantly, front just kind If definitely to of of going plus seen, that? some off growth and tepid that a new and out to with fairly the we've we're do were markets, and loan because markets as in run developed. we noise all be expect that. going these able we're And we bit to moment. to outright

Matt O'Connor

Okay. Thank you.

Operator

question Cassidy from is Gerard Instructions] go follow-up RBC. from [Operator Thank Please you. Our next ahead. a

Gerard Cassidy

guys mentioned I'm -- entry-level you feeling the question. for wage follow-up taking raising the Hi. Thank wage you about minimum for your or folks.

program. done of of Some their of XX has last America peers your me, and same, excuse week, raised got the XX% Bank Bank Montreal have XX wages that and

go excuse people the wages how the with in like it is above that a terms branch worker, minimum can question means on meaning for entry-level share So the what the us the of in inflation going this, far of you right -- ripple the because me, up? manager, wage up does entry-level,

Bill Demchak

the is the are for grades. at as the the of compression, in up lowest Most pay goes level. initial cost through to jump straight the It the actually opposed people who

XX-XX at to XX, part are So how it's but numbers went work through the goes up of $XX the of of person or and this to in a to figure work out, way, go get right. majority but up who -- cost. the people person tomorrow to And -- $XX set today if the set I'm some here, you making move majority by the fact, the to XX, that's the a

Gerard Cassidy

Good.

it. appreciate Thank you. I No, Okay.

Bill Demchak

Yeah.

Operator

you. Thank

Mayo with go next of Securities. question a follow-up is Wells Mike ahead. Fargo the Please line Our from

Mike Mayo

question your capital past, over put expectations mentioned Hi. seems into have same That might loan quarter. clients access Can a therefore, and going for the to which be half in companies to back come like don't commercial growth? big the the you And the private you are markets, around they your ribbon you first.

growth, quarter a when growth? get think it three thought What we final you of one away, it think just loan the and big a Is on Is do is away? loan year So why? it away? burst you quarters do

Bill Demchak

that's fourth grown. it's see is in money. going muted. into I this X accelerated -- You and it by which you think what we're you out somewhat way, move we're where utilization. in loan money ago. can hope and the we months And them not I we our than then bounce first foreshadowing me next to we've going is any the be time, just And committed are, right, but I know Mike, seeing sure It's for the I'm I then see it, happens But asked the better wish the growing if guidance. have we're clients said starting If year, predict to next can new guy. been that really door, into to And quarter for not growing what What around far going the

Mike Mayo

-- And I the it was said know you

Bill Demchak

It's hope I is fixed, kind asking and is chain to and me and growth loan of rip -- going hey, you're be say, out to going go to -- supply

Rob Reilly

date. given a By

Bill Demchak

not And I'm I the answer that. hope to it expert but does,

Mike Mayo

a now? the kind Okay. just at utilization? Well, it level a or maybe bit what's was last little level more, where year so, level of normal highest your the the What is since but in the is utilization specific and numbers early

Bill Demchak

points. XX what, still It's

Rob Reilly

XX-XX correct of -- at If you go - normalization. sort and ish, XX a

Bill Demchak

of XX room off here. a year? off peak March we're last least at in and So, points There's the points XX/XX lot probably of

Operator

right. further you. no questions. are Thank All There

Bryan Gill

Thanks. All in look forward to right, fourth to quarter. everybody. the well you, thank talking you I

Rob Reilly

Thank you.

Operator

concludes conference today's call. This

disconnect. not may You