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PNC Financial Services (PNC)

Participants
Bill Demchak Chairman, President and Chief Executive Officer
Rob Reilly Executive Vice President and Chief Financial Officer
Dave George Baird
John Pancari Evercore
Erika Najarian UBS
Betsy Graseck Morgan Stanley
Gerard Cassidy RBC
Mike Mayo Wells Fargo Securities
Bill Carcache Wolfe Research
Ken Usdin Jefferies
John McDonald Autonomous Research
Call transcript
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Operator

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

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

Bill Demchak

Brian everybody. morning and Thanks, good

pleased and that come. will coast-to-coast As been us we in of U.S. opportunities details. meet BBVA into inside quarter organic the early in our strategy strong strategies, positions transaction exceed technology to including with talent, XXXX. had quarter our acquisition to markets. successfully now as transaction The USA XX you’ve a and especially Rob and we a will for organization one continues I continued years fourth and year the since have our We those conversion this the combine a full top hard of for fourth to along in XX the completed provide growth a the or seen, our announce, give Challenges size we our of the The to of running and growth a Vegas, some then. way have notwithstanding, projections had you expansion and convert accomplish ability close by am deal and this of months. with recent presence Las all to bank presence

will in year you in XXXX. Street results impacted are a We generate which the through and markets, executing focus have this Main the be in walk for are opportunity excited and that will our details. our That our our out do primary model. obviously relationship-based ability building to confident said, Rob the new of to and the we full presents by work BBVA on we expansion lot we about growth recognized

highlighted businesses. non-interest revenue, across commercial contributions our strong with Excluding and by record consumer income broad-based generated BBVA, we

outstanding a maintained We very credit position. capital also and quality strong

throughout excess yielding rate the with well-positioned environment. of capitalize into substantial to year, While to cash excess interest some securities remain we opportunistically rising deploy liquidity higher our continue we a on

for $XXX million of quarter results the reported impact the reflected Our fourth BBVA costs. integration of almost

of these, solid generated income net $X.X Excluding nearly we returns. billion and

core impact Importantly, loan choice, PPP long-term very quality uptick our more will our we rates, due rethinking and discuss the dynamics and some the trends our will experienced utilization in we given substantially encouraging, continuous driving expect offset to recent the the we of ourselves underlying for pride being coming the saw growth we detail. is the of and improvement these Critical decent of automation increases include quarter to fourth look great greater which persist as wage resignation, increased the pressure further that been an Naturally, In excluding part forgiveness, during which success year. I of Rob loan employer talent. competition stability talent and in into of efforts, to with has and processes. to

money their are convenient, continue where to cash manage looking to capabilities ways be XX% digital tools enhance financial smarter technology providers in are expanded up are transaction whether increasingly mode. invest or volumes and Customers Zelle, world. that for faster, innovative help in that our an to low that use more offer We to cases in their them

their at close a then and our serve to overdraft results it year commitment all employees, customers XXXX we over our our beyond. steadfast employees with by had well-positioned and and questions. take and for closer fees to are reduced mode of for example, And in cash and your turn and a that, I stakeholders we’ll For substantially our low Because remarkable hard of complaints. by customer look providing will Rob and thanking account work transparency will our has related control, communities. I to

Rob Reilly

everyone. morning Thanks, Bill good and

XX%, on is driven is BBVA Overall, increased by presented Loans sheet the acquisition grew year-over-year was grew and XX%. and growth of securities Slide balance USA. primarily average on balance Our investment an sheet basis. XX%, X deposits

the were billion, $X.X X%. of decline quarter quarter the $XXX at loans or billion fourth for a linked Looking changes,

or by forgiveness Excluding drivers PPP much over $X.X Accordingly, activity cover we cash activity, detail the increased loans the Reserve few billion grew of higher $X.X at I and throughout or X% X% Investment balances securities quarter. the as of $X next maintained billion. billion slides. Federal more in declined billion purchasing will the $X

side, declined repricing portfolios negatively offset strategic deposits quarter $X.X balances quarter USA were balances. of and during that liability consumer billion BBVA the deposit as third fourth higher average certain related runoff the the and On by to commercial deposits impacted

above spot However, X%, anticipated value when XX levels CETX the reflecting total positions the end, our billion increased was deposits per our deal. on book or of ratio customers. was liquidity strong we December At $X forma we both announced a common tangible are continued substantially year basis, share XX.X%, the to pro of our which as be and $XX.XX estimated

the capital $XXX share quarter, of million million. we approximately During $X.X of repurchases shareholders of common via billion $XXX and dividends returned to

well-positioned decline and Given declined more $X.X going more loans billion. growth than Slide flexibility In quarter, fourth deposits capital shows in forward. was billion in significant we our the commercial ratios, a of consumer X strong by our $X.X detail. PPP average loans and loans in continue with to be offset loans capital as

by corporate Excluding billion the lending. commercial or driven asset-based of impact PPP, banking by and in X%, growth loans $X.X grew

expanded steady quarter, fourth our and and pipelines. During to and business increase slow corporate utilization continue see in with institutional banking within rates a we the along that

auto residential loans for balances linked Consumer were are by driving quarter XXXX. and higher factors higher real offset loan Taken mostly home loans. lower together, equity as modestly estate increased growth in expectations our these

change to billion of of $X.X of as by Finally, PPP Average I points. loans balance to sheet. interest-bearing on at remained in $X.X as balances. our average And on basis deposits $XXX Reserve billion paid decline linked our Federal previously loans stable billion due securities mentioned, and continued December the I reasons XX, PPP deposits rate X remained quarter for forgiveness details our X the declined Overall, mentioned. Slide activity.

fourth of opportunistically add end and quarter quarter, our third throughout primarily to the As at portfolio, U.S. the continue rates the securities to we treasuries. increased

As a $XXX billion balances fourth to an billion X% of XXXX in and assets. third compared quarter, averaged $X.X of represent quarter of the result, or the increase interest-earning securities now XX%

$XX us We environment. excess have we positions rate liquidity averaging for substantial balances which rising Fed continue to with cash fourth believe during a quarter, the well billion

on EPS As $X.XX, see XXXX X, quarter integration million. included fourth pre-tax you was can $XXX which costs of Slide reported

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

the deal incurred $XXX by the of by integration integration approximately $XXX fourth increased million have reduced expenses the million during half we total which essentially write-offs items. Since and the we including acquisition, costs, expected, revenue announcement expected XX% As of for quarter, million. $XX costs, total incurred $XXX million our anticipated capitalized now of of

linked in $XX The increased of million $X.X Expenses continued or quarter in was X% impact quarter. million, million costs, million, $XXX fourth improvements declined recapture Net fourth billion revenue the X%. the was quarter environment. earnings the integration was and of $XXX or or pre-tax integration $XX excluding costs pre-provision million provision X%. reflecting pre-tax down Excluding $XX income, economic

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

Net the balances. $X.X these X, slightly, for was interest charts fourth securities interest Slide quarter, at of decreased of diversified higher stable $XX revenue quarter up billion mix. was result billion, X.XX%. to income illustrate business primarily Total non-interest of linked reflecting Turning million $X.X our a Net income. lower margin

million was and As million, treasury $XX million $XX and costs management reduced declined $XX Fourth million X% fee integration waivers, quarter. of $XX billion non-interest I by $X.X lease fee mentioned, costs, waivers. $XX income, quarter of of or linked integration income included million which exit excluding costs, overdraft

integration as service related loan equity services X%, fees activity. a primarily fourth grew adjustment of as elevated quarter of due mortgage offset Looking markets. million derivative million third was management negative higher to driven in a quarter BBVA loan linked of RMSR revenue. to $XX $XX advisory result and the at sales lower revenue. the on and declined Visa increased credit brokerage USA corporate revenue. activity valuation income $X to average million converting higher million impact decreased or excluding adjustments Residential million customers a $XX Corporate quarter fees positive or reflecting overdraft $XXX was non-interest Consumer structure. as in detail, continued or well compared deposits PNC’s to higher income, X%, increased costs, Service $XX charges product by the non-interest pricing Other equity stable syndications the adjustment fair and value asset card million primarily by X% private $X million, lower

fourth expenses. million our up XX, expenses X% was increase Slide primarily or quarter quarter. integration growth to linked million $XXX by were driven $XXX by The in Turning

incentive X%. or of to continuous Excluding program, related goal. elevated $XXX an our the strong through employee expense as largely increase by had activity. in well and compensation driven non-interest our The personnel as was expense, increased fee $XXX million expenses costs within integration XXXX successfully achieve of that higher hourly savings minimum we million, a actions goal improvement cost growth impact rate million of benefits to in completed pay $XX of We

Looking forward to XXXX, once will be goal $XXX again CIP million. our annual

XXXX, realized that provide the expense is to which in completed we will that our USA the in of $XXX BBVA to and I be will all million end a XXXX actions year we minutes. few fully related of of expect as savings Importantly, in acquisition, reflected drive guidance

XX XX. driven and first Slide $XX by this which or charge-offs, in increase $X of on loans of $X.X of the of Commercial and or the other was of consumer $XX increased were million, expect billion it net December delinquencies less auto will large charge-offs X% and well Non-performing we as to a million $XX half resolved September million, an X% on by grew Obviously, conversion-related as Total an than XX%. billion offset million increased presented million but $XXX BBDA represent higher $XX XX conversion-related increase, consumer million primarily Net be $XX are declined operational seasonality. $X net of consumer. XXXX. loans metrics million, credit delays, USA $XXX was administrative impacts loans. continue million reflecting leases compared and Our increase decreased to largely for of Inside linked within charge-offs quarter. total

a reported summary, the concluded strong course our regard successful fourth as of of we XXXX potential our over view to $XXX overall be X.XX% we coast-to-coast a well million, In the fourth quarter XXXX was growth. credit during losses our end, XX Our loans average reflecting $X.X quarter loans. in in continued reserves for to representing the At of the and allowance declined our In were points. continues basis economic net quarter, fourth improvements the environment. expect billion, annualized realize XXXX, which PNC franchise. low to we GDP X.X% And the charge-offs resulting economy, are to and quarter, of growth for continue strong positioned in

expect also Funds in May, point Fed We in increases by XXX XXXX, June, September rate in and in beginning followed the basis increases additional December.

impact our as into for compared XXXX ahead, X XXXX. results XXXX results of Looking XXXX Taking guidance outlook our is year for year USA the to of BBVA months months full XX includes that in to full compared only account follows.

approximately spot average loan expect on We of XX% basis. a and X% growth

expect We to total XX%. X% growth to revenue be

tax expense be excluding year Based in expenses, here, increase operating will XXXX. X we clear this be of on rate a full integration which equates of million expect months effective expect We our and expect to positive XX%. this we X% up USA additional And to operating includes approximately expenses, BBVA to leverage to to $XXX solid X%. be generate guidance, approximately we

the XXXX up we X%. balances, compared expect ahead quarter recent average first PPP, results, of X% excluding fourth XXXX loan be at the approximately to to to Looking quarter

approximately days a to and quarter NII in $XX in expect be approximately interest the We million decline X% fewer to PPP-related reflecting X down income. of X%,

in down We fourth to first activity X% elevated income categories. as client expect X% seasonally fees well to fee certain be quarter to as lower due quarter

consideration, all other securities non-interest million of between our to as be into well total million, costs to guidance integration as income $XXX decline expect revenue approximately we X%. and components expect these to for We and X% revenue $XXX Taking net excluding activities.

costs, X% incur we million integration to excluding expect expense down X%. non-interest And to to total be quarter, during expense. integration the approximately expect We of $XX

that, Finally, net your quarter Bill are with And to ready we charge-offs take million $XXX expect be and to between and questions. I first $XXX million.

Operator

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

Dave George

I had and capital capital morning. question Good guys. about Hey, allocation. a

dividend of tangible kind You when obviously which CETX, know at your your is of the year payout finished I ahead XX.X% you’ve you stock cash BBVA. And targets book, $X.X, about and the initial up. is talked $X.X at taking announced of

thinking about got you’re of Bill, allocation And So follow-up. curious, capital year? I’ve in just then kind how the new one

Bill Demchak

accelerate equal focus strong market kind dividend, question see in that smaller on capabilities much, you All the of potential some this we’re loan those still won’t a probably first using of be good the add – will consistent. on side else have of we way, of the in they and Well, And but things and acquisitions bolt-ons the bias in shares. you’ll go it up we’re your growth into us environment way, towards into bias, because digitized adding to I own world. repurchase answered product an part important doing activity a None so of think just but the too forth. TM a by become core we of as terms

Dave George

of XX% know, I Bill, just using four in there. of you’ve you a percentage being the you’re Do I number? got continued in that how hikes is particular, Thanks forward the. to curve about then as you liquidity for you’ve a curious Okay. in guidance, on your kind liquidity up assume Thanks. mentioned assets, know the deployment embedded deployment, and to XX%. I securities expect talked XX%. NII, earning And much question

Bill Demchak

I’m actually So and it’s than committee, aggressive for to but going more our be think hikes. our outlier economist I we.... in that, expects an

Rob Reilly

Yes. one vote. only The

Bill Demchak

the And point. our at this much at this pretty forward point, forecast on is curve

really at wasn’t talk you gradually in, the Rob’s we’re assumption and more each Rob, year. it, go think for I of would don’t plan, the guidance even any we aggressively want to magic we duration in know it that didn’t plan build throughout I the if to some to There add reacted. going to

Rob Reilly

that’s XX% In XX% our that range we the range have to the guidance. that in date range still

Bill Demchak

Yes.

Dave George

it. Appreciate thanks. Okay,

Bill Demchak

Yes.

Operator

And now Evercore. Thank have with we question. Please from you. with next, your proceed the John a question Pancari of up line

John Pancari

guys. morning, Good

Rob Reilly

John. morning, Good Hi.

John Pancari

you year could wanted X% in year of the whatever you the On of Thanks. is if terms for to see on side things, the some that full the the to just for revenue NII the versus trajectory of unpack trajectory think how income I we guide bit flagged? dynamics XX%, the growth little help of you and given fee a reasonable of view

Rob Reilly

Yes, sure, John.

down in then and full fees, that opening revenue those interest year net that X% teens. low year-over-year. comments – revenue factor rate – full increases So digits we that break components, spoke the And income up does to XX%, mid-single about the does the up comments in on

to the X% So, XX%. to those you two together get

John Pancari

side of color certainly Got growth that XX% Thanks, a you the the us you at it. more you’re growth And the what the All versus that’s on maybe are on you consumer? you helpful. could period as is give right. that on acceleration of you that to growth then end drivers loan the acceleration expecting an biggest expectations think little front, trends just indicated commercial that loan achievable book? loan be implies seeing, And the look given

Rob Reilly

Yes, sure.

is average average, but it’s year full of number. guide, because the probably the XX% dynamics a the just acquisition for on the spot So better indicator

from some what to the And quarter, then side. through customers with see less see still up the spot book, of which utilization pretty a commercial consumer on bit Consumer in fourth in we flush we expanded end XXXX. cash. little up the X%. picking started continuation was So, are And a period

expect we than to commercial certainly demand of the side. loan be there, the half XXXX, in first So softer

John Pancari

I it. meant helps, say That to the growth. Yes, on Got thanks. average

Rob Reilly

Yes. Yes.

John Pancari

the Alright. color. I appreciate Thanks.

Rob Reilly

bet. You

Operator

you. question your And with the with UBS. we Najarian question. Please line proceed of now a Erika Thank from have

Erika Najarian

morning. Hi. Good

Bill Demchak

Erika. morning, Good

Erika Najarian

you in follow-up to NII your assuming NII are embedded And happen? on in what trajectory guide what the you answered But do beta? on will question liquidity of deposit assuming you’re what the what’s think Rob, the you deployment. about on the for Wanted questions guide. actually

Rob Reilly

what Well, in what the we’ve cycles, guidance, be lag past in is which, terms in Erika, terms speaking, apply generally of end. we front our will seen of beta a on

that of beta of we into some guidance more will until the end ‘XX. So in increase, we a it see the factor probably XXXX but and built my and what is not expectation will be

and the have. deposits because levels that we of liquidity of Just

Erika Najarian

Got it.

Okay.

comparing assumes ‘XX first in your deposit actually, I’m if let’s to ‘XX, XXX terms points, to your So slower ramp a the beta, of, say, to guidance that. than ‘XX in it basis previous

Rob Reilly

exactly That’s right. right. That’s

Erika Najarian

question the Bill. Got second And follow-up it. for is

a in your had spend. expenses higher peers, One of XXXX, Jamie, obviously to for guidance accelerated investment given pointing

As we In X% as XXXX? investment guidepost spend expenses in think obviously, about But in environment, the of front-load of to going start an thinking growth future some words, did other for BBVA a is more investors your this some in X% to ‘XX? normalized you X% the this X%, a P&C’s – is rising profitability in appropriate rate past about baseline.

Bill Demchak

No. No.

So P&C X%. the I – the guide legacy the expenses to unpack for think maybe year, up are next

Rob Reilly

non-BBD Yes. The USA.

Bill Demchak

Yes. Yes.

investment? did $XXX prepack level We’ve we’ve you’ll we our are of cost against said for was had number we in million business. steady BBVA of actually that a so all the then that a going And to markets. along high core and netted guidance that make saves, state build the investments those remember And in out investment to in a fairly

already actually lot seeing of into everything you’re it. inside a So of there investment has built

Rob Reilly

of improvement a for continuous that our number been of $XXX course, something we’ve of years. And offset doing that’s million investments. And

Erika Najarian

it. Got

Bill Demchak

lock improvement. debate of up it continuous right track environment in see be just improvement shows in all it think as process The – – also do, we yet. we’re I forward it, know continuous you kind can We and BBVA. think there. is larger? the now, of it’s it’s it know operating don’t worth the still down we and move is can something you whereas with Once know where number some we we’ve internally in challenge we continuous I we’ve Because improvement opportunities had noting, on had the can

Rob Reilly

won’t it. from that us And going Yes. stop after

Bill Demchak

Exactly.

Erika Najarian

Got you. it. Thank

Operator

Thank we line with have you. Graseck Stanley. the Morgan a now Please question ahead. Betsy And from of go

Betsy Graseck

Good Hi. morning.

Bill Demchak

Betsy. Hey,

Betsy Graseck

Okay.

thinking the just One, about the Maybe the securities questions. what’s we’re the soon. you to could reinvestment I mean, portfolio two how of in NII we’re curve because give be little So about into about you’re we forward us the pace baked going sense a think does as guide on suggest as know, NII pretty that reinvesting. to hitting thinking your we guide as well?

So current you Or do for at in rates? to that? wait lag do you start even

Bill Demchak

But on course. remember, in guide liquidity We profile. throughout our will the what’s doesn’t our in dent leg securities,

guide working towards we kind It to here XX% what the could deployment in of dent So liquidity. have even balances. what will potential with steady doesn’t is we do our XX% add of the

Rob Reilly

With the Fed cash balances.

Bill Demchak

Yes. Yes.

Betsy Graseck

You are still looking for that…

Bill Demchak

of even So rates kind do but we a a a if or – rates high where go. they think need The following. we is this. boring. gone probably it’s go the rates the there to not get to We beyond I do that, they’ll have right place now. where that’s If contemplated could baseline go, budget have we not if We as increase forecast that in think as it’s

Betsy Graseck

in to fair? XX%, to right your like is I that am earning of XX% range Because assets thinking target securities

Bill Demchak

Yes.

Rob Reilly

Yes.

right. that’s So

Betsy Graseck

then just follow-up… a And Okay.

Bill Demchak

taken recent further remember yields. that’s out And big of the our yield treasuries, going difference which extension been in inside you and risk short-dated of in kind that curve securities, of out. mix, the Massive once coming trade back of versus right, has towards the is mortgages going difference out portfolio assume a buying big

it’s of So it’s – notional security. of some

by will Some buying the driven speed for outlook and over and be what time. of it’s rates those of both you’re actually

Betsy Graseck

Right.

extension expectation, of on I’m RMBS reflecting risk as hearing of kind and the approach side. what upside baseline the we rates full your So view is but

Bill Demchak

is But in is my forwards and individual leg state upside. steady of we’ve time. of is that in the and right, lot plan you the No, forecast our what’s follow over kind if there Yes. view given a

Betsy Graseck

Okay.

Rob Reilly

the On simpler can on yields terms, securities change the portfolio a lot.

Bill Demchak

Yes.

Betsy Graseck

it. got I Right. Right.

in to bit investments And you acquisitions us you color then doing, pieces bolt-on also, is you that digitization? the looking understand a of as a the could to your more thinking mix, improve? Okay. would reinvestment new slightly are just where need to little these there? the What longer what bit separately, your to you for different branch have enhance Thanks. in there digitization of for detail looking a to just a Bill, term, geographies And little on a in are give little just maybe skew branches trying you’re had

Bill Demchak

you’ve done probably to are not the Two interesting we Tempus that. modules we the of bought questions. bring and one more By unique capabilities number that small most we’re and at but banks your things, then And the of oftentimes, scaled seen, a in that platform. we’ve be very certain lead you different as We of – way, get can terribly being where A payment across more opportunities. see expensive, those. sort of into broader They space. of in playing are other not lot technology

digital just we I you’re the corporate. both that see – to that’s going to for of continue more So as space in the think compete and consumer

at branch as plans of we’re you’ll numbers the But we do, the the see to no markets all we’ve selectively so change given time, in there we On our that’s always real of underpenetrated. continue the in same build you. further us practice market consolidating and the thicker kind side, out where have

Betsy Graseck

you. thank Okay,

Operator

Cassidy with your line RBC. you. question ahead the we Please with a have go now question. Thank of And from Gerard

Gerard Cassidy

Rob. Bill. Hi, Hi,

Bill Demchak

Gerard. morning, Good

Rob Reilly

morning. Good

Gerard Cassidy

Can XXXX? comparing right more standards, today and then today? with then. them receive start subject us at attention what credit guys that little you share give us be to, we’re the to compare say, How XXXX going call about look Can in earnings talking January the ‘XX. fourth to might figure of quarter for be in trying out the your of underwriting I a you a compared you color? to they think them to how I’m And let’s pandemic

Bill Demchak

companies something, measure. or inside they time. can clients said that to, of you we got of are over box the more credit poorly. are otherwise doing Having even have, the change – se, box Well, the separate trending you per doing course, better So all they of to leverage that lend right? would our that, really so We type things don’t

a of we going to are the into go towards end think here year. as we go the I time of period

we of going all you talking help pressure credit, kind are into ratio, terms before the when we the actually legacy and Rob is you you changed our it for it growth, particularly equal, performance. I that of because ratio will help going downgrade on us rising us, if reserves raw rest think are is book versus going our – underwriting know of which adjust rate you environment, to but because of feeling credit in balance call, healthy call our standards, a else We which and I not to of where will are loan were percentages industry time there just the versus cards, reserve look when through will can’t where I at you and be change. the of against compare period

Rob Reilly

from pandemic. resulting the And unique dynamics of the

So, it’s an unusual setup.

Bill Demchak

Yes.

Gerard Cassidy

pointed Very And XXXX. that Rob you loan to a decent then you follow-up, for as growth, some have good.

last years, over XXXX? could something seeing the BBVA that X guys C&I, us growth estate, give Within come years coming not some from maybe the the you from markets Are are might more or but with they you entered real traction that you early X dissect us you can areas, or where if with customers, the share or commercial have in C&I, newer color.

Bill Demchak

of markets for accelerated newer of related the new And is the the how and right, many somebody it’s the months big BBVA a markets. to are last right, of kind across just that wins out, out clients borrowing lot Well, is we the think line clients everything. new bunch new so we that utilization if of are you drawn we it’s not, about the coming The and distributed part, money have, what is more has now committing, is so out under including broad-based. some money money or whether

Rob Reilly

Yes.

that, that strong. are other percentage-wise the new to I would in in significantly. is they markets, that pipelines And commercial book up The thing the our Gerard, add are

Gerard Cassidy

Very good. Thank you.

Operator

go Securities. with now Mayo Wells line Please We you. a the of from Fargo Mike ahead. have Thank question

Mike Mayo

Hi.

Bill Demchak

Hi Mike.

Mike Mayo

that Bill, any expense but you synergies exceeded like to think or off or I led expectations, – saying I BBVA has heard anything didn’t I don’t changes that. savings

you you worse So, it, better expected? talk can going than quantify can’t what’s even or if about

Bill Demchak

than Will largely… expected deal is look better on terms initial

Rob Reilly

Of not. course,

Bill Demchak

on. were wins, up at and clients Yes, better markets assumptions marked with look to able is the with all clients turned early with having out the are economy, able we in RBC talent sort at with deploy volume in teams saw new just at our then able wildly what new market, had, the call than have credit showing to we we been we to the looked The hire what that amount to were with of where it, talent that and conservative. of the of new we expected, the I in think largely clients, products do old credit if that products we newer be some That that and some BBVA new But and that right. people the outpacing that’s the point. markets in I past of and

that. continues including guess to guide, say I we we million build once is go mean of a we point, take But we hit It to this I And would are through investment, The the and to and ability looking leave thought. guys better doesn’t stick there. to of our it we stop us expense our to going kind business on Rob’s just you guide. So, that time. know credit the than The there we expense in all that’s side us comfort and markets. out momentum lot $XXX out give

Mike Mayo

Where guess question. leaving my is, I you was are really

it, saving are just waiting just So, not or expense or are your being conservative that why longer? target you increase or quantify you that? because you are reinvesting Is

Bill Demchak

it, that talking But little today. while know answer to thought metrics ago. way is kind there together, easiest am there I the we some until think and can about some I when a continuous was process stuff improvement We is through sure. but of I we that in know action I is to an measure expense going it, how quantify guide an are probably to plan going not there put – can’t throw embedded, not I just am

Rob Reilly

it’s And is Mike. I I think just think Rob, just this – premature.

savings get $X.X we hard that worked in in that XXXX run to billion $XXX million rate. So, into

to got we So, get going is part. this going, getting and

Mike Mayo

know You U.S. all are now. XX of in I want to then And top And expand. your part markets know – you I

the you positive I said, that. operating you leverage for, so did for get And guide year, solid

On getting new to with a hand, lot expansion help to isn’t more people it that hire the other expensive in the markets?

Bill Demchak

but teams we of converted, understand, markets, – when them these the then you we had built is, hit hired Mike. need closed off. have basically It all largely we out We to and in

our rate. in are run they So,

Mike Mayo

mean how hired? many of are right? – I lot mean you and stuff, I these people have a the

Bill Demchak

Yes, people. of a lot

Rob Reilly

question Okay. is, is your into to do The pressure our expansion we going in we are built we to that weight, and expect see expense do guidance. wage XXXX, see of

Mike Mayo

enough. Fair you. Thank Alright. Okay.

Operator

We Instructions] with line a Carcache of Bill question question. proceed Please with [Operator Wolfe the Research. from have your

Bill Carcache

Good morning Bill and Rob.

commentary, your the to potential given are a in risk versus beta it’s thinking play serve about last it runoff, the that when could we one, bit sheet on impact last up expected deposit bigger exited cycle? the that you the balance role how Following cycle have versus this

Bill Demchak

got them you would they dramatically, it. obviously It’s though, impact their shrink to extreme, right. deposits, remember The that, And balance betas sheet going make a you higher. it offset great growth, with question, impact and to in is if obviously and create that’s the loan actually to

actually Fed that generates which isn’t their loan deposits. if dropping sheet, growth growth is loan as up, does balance pick the unlikely, So,

you think capital on and a hold just everywhere else. about for goes money the loan leverage If the you the

two way through other next not years. the liquid how combination several am I have those than it leave sure should us that’s the I exactly play deposit-wise iterated for going to So, feels things out like my extremely of

Rob Reilly

is Which expectation. base our

You eye it. have to keep on got an

Bill Demchak

Yes.

Bill Carcache

thought feel PNC guess you less makes That sense. the Yes. Bill, banks in more perhaps on do exposed little continuing that deposits that bit and directly And some process, the I involved creation dealers process? than is under QE the primary those of a of are larger

Bill Demchak

you way. sheet, works think likely If that Fed think I cash know will that the balance that don’t – I corporate its way. you the don’t see can through it system shrinks

the largely think corporates banking the same behave function behavior as like I mix, a I it consumers. system consumers everybody corporate think and corporates of it through their and like but hits consumer and transmits

Bill Carcache

pipeline high I to lastly, you a it, is just to XX%, which I that trends I strong describing fund maybe a able I extent to just point if your willingness to both your that guess loan growth on portfolio finer – persist? on then interaction? are but think I be you liquidity touched or take you the do And comment can higher it. that your the is the this, as think Got on as influences think does if willingness – your stronger do and is or sufficient wonder to that to growth loan security guess how you put securities

Bill Demchak

do of have both. We liquidity plenty to

Bill Carcache

Yes. Got for it. Thank you my questions. taking

Bill Demchak

Thank you.

Operator

with the question of ahead. now And we line a have you. Jefferies. from Ken Thank go Usdin Please

Ken Usdin

Thanks. Hey. morning Good guys.

also digits, to growth includes wanted Just broke you mentioned the had at the that in the are and great that for see follow-up, underneath down guidance year revenue I underlying stuff. of obviously, it’s ridiculously surface, as the Rob, when mid-single rollover? fees BBVA outside am the you looking wondering think I you just do drivers corporate especially. you BBVA Last the services, being what year,

Rob Reilly

single-digit the than elevated hit to we in levels taking BBVA if due of at Yes. consumer a it corporate continue such on you the range, just part would that, year, categories, say, look But just would services, in expect increase that are as had addition going in asset Ken, franchise. the the you through management, we I higher to full to mid XXXX.

XXXX up cash we from expectations service and bit deposits charges of effect that mode. expect reduced down be on then mortgage Our down overdraft get fees are year as we Residential a bit. the full low for may a little

you all together, you get mid-single that’s So, how to put that digits.

Ken Usdin

full you for Okay. you Got that other categories, kind quarter? it about in year? then Is same of the of it. And how just terms still think thing how the about for thinking live about thinking it are you are first in the zone that

Rob Reilly

yes. That is,

Ken Usdin

cleanup securities that BBVA… One little yields, just you the on Last Okay. quarter, negative impact Rob. from had

Rob Reilly

that. We did Yes.

Ken Usdin

quarter, it would I was flattish think the of that. this And with even, then absence

us point at So, are the you – in the any? if can are of still how you kind are through quarter, the fourth seeing what yields? you where And you reinvestment better was just impact work

Bill Demchak

to. Yes, are starting we

was still the the On I what down amortization was yield It investment quarter, normal issue think but which would went I premium in levels. story. it’s fourth a elevated elevated. third quarter, of the over consider

worked a as little that bit against us So, well.

Ken Usdin

Okay, understood. Alright. Thanks Rob.

Operator

Thank you. Autonomous a from And now question we Research. Please ahead sir. have John the line of with go McDonald

John McDonald

at Rob. One of to it it the quarter annualized, on implies I that’s If lower, more guide the a ‘XX. run guys. Hi expense for pretty kind relative rate, the look about it’s for impressive X% fourth quarterly expenses,

just high such cost then kind getting lower are lot banks of how helpful. So, the is quarter that eating X% little pressures, a unpacking a other when be that, be year and you fourth inflationary year-over-year are strong revenues. this would capital guess And inflation to markets still I of having because the of

Bill Demchak

on definitely in were hit back And into year. side what the goes in go No, you the we Yes. goes quarter. we of earlier fourth back the saying out terms it. it It’s wage to laid It how as just we XXXX.

locked We cost BBVA saves have for side. the the in

investments side are on offset continuous improvement have We numbers. that by non-BBVA the our largely

we how plan. it together, that’s all put the that’s and So,

Rob Reilly

because all just employees I our are of John, listening. know

plan market need just this – assumes elsewhere we to paying We to competitive that going are in talented competitively the are do that. find for people able to be We dollars a to people.

Bill Demchak

right. That’s

John McDonald

have basis. of a every like working type environment. peers, Got lot CECL we adjusted it. mix for on growth seen never question to And guys, you But industry then relative you a in reserves loan one have

provisions contemplated to to picks to growth, X% thoughts growth-driven industry, add loan in as growth we math of up, So, growth need start could growth you the the just up starts like to do as see you pick reserves or provisioning? add growth have for just and reserves or is kind for guys’ where today, some your your loan

Bill Demchak

complex. high haven’t know we an through know can get run answer concert sheets, terms. loan percentage will where But where instances, point grow we in some to still That’s like we if I terms I CECL that to one, And environment don’t in Yes, balance we will in because John. this that. But reserves speaking, academically running of in with we are balances. bigger the are we place need your

in is offsetting going some there my to guess XXXX. be there So, factors is

John McDonald

Yes.

Okay. Thanks. Fair enough.

Operator

back the Thank Mr. Thank you. your you, remarks. turn concluding I sir. now Demchak to conference will for

Bill Demchak

and Alright. Thanks. for No a concluding busy. remarks. I quarter. today. calls know dialing are first you you you we forward in of to lot the got talking to Look guys Thank

Rob Reilly

Thank you.

Operator

you conclude We participation ask all for your day you. once call conference great everyone. the for you you that please again. does a And today. Thank lines. and thank your that disconnect Thank Have