Q2 2021 PNC Financial Services Group Inc Earnings Call
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Yes.
Okay.
Good morning, My name is Panama and the I'll be your conference operator today at.
At this time I would like to welcome everyone to the PNC Financial Services Group earnings Conference call.
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After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press the number 1 followed by the number for on your telephone keypad.
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As a reminder, this call is being recorded.
And now turn the call over to the director of Investor Relations Mr. Brian Kill Sir. Please go ahead.
Well, thank you Pam and good morning, everybody 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 dot com under Investor Relations. These statements speak only as of July 14th 2021, and PNC undertakes no obligation to update them now I'd like to turn the call over to Bill.
Thanks, Brian and good morning, everybody as you've seen we've accomplished a lot and the second quarter and most important was the closing of the acquisition of BBVA USA and June 1st obviously this created a fair amount of noise and our reported results, adding 1 month of BBVA USA operating results and the impact of.
Of purchase accounting adjustments as well as merger related impacts I'm, Rob is going to take you through all of that and a couple of minutes, but putting those things aside we had a pretty good quarter driven by solid net interest income strong fee growth continued improvements and credit quality.
And announcement of higher castle of returns.
While loans increased primarily due to the acquisition, we did have spot loan growth from both consumer and C&I and the legacy PNC balance sheet.
And we've seen loan utilization rates stabilized within our corporate and institutional banking business. However.
And they remain near historic lows and while new loan approvals have rebounded actually the the highest level and a couple of years, that's been offset by continued paydowns.
Within the legacy within the PNC legacy consumer book, we saw loans grow and the quarter, which was encouraging.
And we're confident that strong economic growth is ultimately going to drive strong loan growth, but it remains an open debate as to the timing of that loan growth relative to the second half of 'twenty, 1 and into 'twenty 2.
During the quarter, we continued to deploy excess liquidity through 10 billion of net security purchases going forward and considering the significant recent rally in treasuries will be disciplined as we look to reduce our elevated cash position.
You saw that our recent CCAR results underscore the strength of our balance sheet and our commitment to returning capital to our shareholders. Following the results, we announced the 9% increase and our quarterly common stock dividend and of $2.9 billion share repurchase program and importantly, we're well position with substantial capital and liquidity to continue.
To support our customers and invest in our businesses.
Regarding BBVA I couldnt be more pleased with where we are PNC and BBVA employees of hit the ground running and are making great progress and preparing for successful of conversion and integration the deal significantly expands our footprint gives us access to 29 of the top 30 msas across the country with a coast to coast.
And it provides us with an opportunity for growth for years to come.
All of our original deal metrics are the same or better than we estimated and rob's going to take you through those and finally, the underlying growth opportunities and the new markets are outstanding across this footprint and employees are making joint calls and we are seeing deal pipelines build especially as we present, our enhanced capabilities and scale of the other new markets.
Continue to believe the revenue synergy opportunity is significant as we look to drive Bbva's U S. P. P V. A U S. A's noninterest income contribution to total to total revenue closer to the legacy PNC is mid 40% level.
And the integration front, we're leveraging our past investments and technology and automation to expedite the process drive synergies and reduce complexity. We're moving the data for more than 600, BBVA USA applications to PNC applications taken a lift and shift approach that allows us to simplify the customer conversion.
And I also want to mention that our continued rollout of low cash mode, which was available the 2 and a half million virtual wallet customers as of the end of June.
And we're planning to roll it out to the remaining $1.1 million virtual wallet customers by the end of this month and look forward to making it available the BBVA customers. Upon conversion later this year since announcing the product and April we've delivered over 10 million low cash mode of alerts and his inc. Strong engagement with the experiences of it helps to address a major.
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For many of our customers.
Cross the industry over time, we expect it to drive significant growth and new and existing customer relationships as we execute our national expansion strategy.
Finally, I'd like to close by thanking our legacy PNC and the new BBVA USA employees for all of their hard work that allowed us allowed us to close the steel early and provision and prepare for conversion and long term success and with that I'll turn it over to Rob for a closer look at our results from and we will take your questions.
Thanks, Bill and good morning, everyone.
As Bill just mentioned and notable during the second quarter, we successfully completed our acquisition of BBVA USA <unk>.
Expanding our footprint, which now includes growth markets throughout the Sunbelt region.
Our balance sheet is on slide 4 and is presented on a spot basis.
While we typically cover our average balance sheet that will focus this quarter on spot balances due to the timing of the June 1 closing of the acquisition.
Overall linked quarter balance sheet growth was driven by the acquisition of course, which contributed $60 billion and loans $18 billion of investment securities and $82 billion of deposits at quarter end.
Excluding those additions during the quarter legacy PNC loan balances declined $3 billion investment securities increased $10 billion and deposits declined by $4 billion and I'll cover the drivers in more detail over the next few slides.
We ended the quarter with the tangible book value of $93.83 per share and and estimated CET 1 ratio of 10% substantially above the levels, we anticipated at the time of the deal announcement.
As a result, we're well positioned with significant capital flexibility and as Bill just mentioned, we recently announced the 10% increase to our quarterly cash dividend on common stock raising the dividend of $1.25 per share.
Additionally, we reinstated our share repurchase programs of up to $2.9 billion for the 4 quarter period, beginning in the third quarter of 2021.
Slide 5 shows our period end loans and deposits accounting for the acquisition and highlighting the relative contributions total loans for $295 billion at quarter end and with the acquisition our loan mix remains consistent at approximately 2 thirds of commercial and 1 third consumer.
Total deposits were $453 billion at June 30th and.
The rate paid on interest bearing deposits is now 5 basis points of 1 basis point decline linked quarter.
Taking a closer look at loans.
Marshall loan balances of $200 billion increased $35 billion BBVA contributed $39 billion and spot PNC legacy growth of approximately $1 billion was offset by a $4.5 billion decline and PPP loans.
<unk> loans were up $23 billion represented by $22 billion of acquired loans as well as growth and legacy PNC consumer loans, primarily in the residential real estate portfolio.
The yield on loan balances were stable at 338% compared to the first quarter and reflected the combined loan portfolio.
Slide 6 details of the change and our spot securities and Federal reserve balances over the past year.
<unk> balances were $127 billion at the end of the second quarter of $28 billion increased linked quarter due to the addition of $18 billion of securities from the acquisition and $10 billion of net purchases.
Our fed cash balances decreased $14 billion linked quarter, reflecting continued deployment into securities and the payment of $11.5 billion for the acquisition.
Despite the linked quarter decline of our liquidity position remains in excess of our LCR requirements.
As you can see on slide 7 and our second quarter income statement includes the impact of the acquisition our reported EPS was $2.43.
Which included an initial provision for BBVA USA of $1 billion and integration costs of $111 million adjusted for these items EPS was $4.50, and the second quarter.
Second quarter revenue was $4.7 billion up $447 million compared with the first quarter, reflecting the acquisition as well as strong organic fee growth.
Expenses increased $476 million or 18% linked quarter, including $181 million of significant items related to integration expenses and litigation reserves as well as 1 month of BBVA operating expenses and higher legacy PNC business activity the.
The provision of $302 million included a provision recapture of $704 million related to improve credit quality and macroeconomic factors as well as balance reductions, which was more than offset by a $1 billion initial provision in connection with the acquisition.
As a result total net income was $1.1 billion and the second quarter now lets the Scott and discuss the key drivers of this performance in more detail.
Turning to slide 8.
These charts illustrate our diversified business mix with noninterest income representing 45% of total revenue and the second quarter net.
Net interest income of $2.6 billion was up $233 million or 10% and net interest margin of $2..2 9% was up 2 basis points, both of which reflect the impact of the acquisition.
Second quarter fee income of $1.6 billion increased $229 million or 16% linked quarter.
Within that legacy PNC fees grew by $167 million and BBVA USA is 1 month of operations contributed $62 million.
Taking a more detailed look at the performance and each of our fee categories.
Asset management revenue increased $13 million or 6% as a result of higher average equity markets consumer services fees grew $73 million of our 19% primarily due to increased transaction volume and higher merchant services revenue.
Services increased $133 million or 24% driven by higher M&A advisory activity and Treasury management product revenue.
Service charges on deposits grew $12 million or 10% due to the addition of BBVA USA.
Other noninterest income of $468 million declined $15 million linked quarter and included the negative visa derivative adjustment lower security gains as well as higher private equity revenue.
And total noninterest income of $2.1 billion increased $214 million or 11% compared to the first quarter, driven primarily by legacy PNC fee growth as well as $80 million of noninterest income from the acquisition.
Turning to slide 9 our second quarter expenses were up by $476 million or 18% linked quarter and included $181 million of significant items related to integration expenses and the addition to legal reserves. The remainder of the increase was driven by BBVA is 1 month operating expenses of 179 million.
And as well as increased business activity and marketing for legacy PNC.
Obviously with the acquisition our operating expenses are going to be higher going forward. Nevertheless, we remain disciplined around our expense management and as we've previously stated we have a goal to reduce pnp standalone expenses by $300 million and 2021 through our continuous improvement program and we're on track to achieve our full year target and.
And we're confident we'll realize the full of $900 million and net expense savings of BBVA USA its expense base and 2022.
Our credit metrics are presented on slide 10, and reflect the impact of the acquisition.
Apart from the addition of the acquired loans credit performance improved considerably within the legacy PNC portfolio.
Nonperforming loans for $2.8 billion at June 30, and.
And $871 million for related to the acquired loans.
<unk> legacy nonperforming loans declined $230 million due to decreases in both commercial and consumer.
Total delinquencies for $1.3 billion at June 30th of which the acquisition of impact was $291 million legacy PNC delinquencies declined $147 million.
And net charge offs for legacy PNC were $58 million the lowest level since 2007 with an annualized charge off the total loans ratio of 10 basis points.
Wired loan net charge offs for $248 million, which was largely the result of required purchase accounting treatment for the acquisition.
Slide 11 shows the change and our allowance for credit losses during the second quarter.
Within our legacy portfolio, we have.
The least reserves by approximately $700 million related to both improve credit quality and macroeconomic factors.
Upon closing the acquisition, we established a $2.2 billion ACL for the acquired loans were 3.5% through fair value loan marks of $1.2 billion related to purchase credit deteriorated loans and and initial provision of $1 billion related to non PCI loans.
The initial BBVA USA ACL to total loans of 3.5% with the subsequently reduced to 3.1% at the end of the quarter as a result of portfolio changes.
And total as a result of.
The total quarter year end reserves for the combined entity were $6.4 billion, representing 2.6% of consolidated loans outstanding.
Turning to slide 12, now that we've closed the BBVA USA acquisition and I wanted to provide an update to some of the deal metrics all of which are the same or have improved since our deal announcements.
As you know the purchase price was an all cash fixed price and was approximately $11.5 billion at closing.
And as I've already mentioned tangible book value per share and the CET 1 ratio are favorable relative to our original expectations.
We continue to project and internal rate of return in excess of 19% earnings per share accretion of more than 20% and and annualized expense reduction of $900 million in 2022 and.
Additionally, our expectations for nonrecurring merger and integration costs as of.
Proximately $980 million, the majority of which we expect to be recognized in 2021 consistent with our initial expectations.
Taking a look at the credit metrics. These of all improved since we've announced the deal and as a result, the ACL to total loans for BBVA USA is better than our original expectations.
In addition, and as and as anticipated our net purchase accounting adjustment is nominal with the net fair value premium of $322 million, the majority of which will be amortized over the next several years for.
For the second quarter due to the maturity of some short dated acquired assets, we realize the $30 million benefit to net interest income, which will not recur.
In summary, PNC reported a strong second quarter highlighted by the successful acquisition of BBVA USA.
And we expect the transaction to add significant value to our shareholders as we begin to realize the potential of the combined franchise and.
In regard to our view of the overall economy. Our current expectations are for GDP, the surpassed pre recession levels sometime during the third quarter and for the fed funds rate to remain near zero throughout 2021.
Looking at the third quarter of 2021, which will now include a full quarter impact of BBVA USA operations compared to the second quarter of 2021.
We expect total spot loan balances to be up modestly which include the $3.5 billion decline and PPP loans.
On a percentage basis, we expect NII to be up and the mid teens, we expect fee income to be up and the mid single digits. We expect total noninterest expense, excluding integration expenses to be up and the high single digits.
And we expect other noninterest income to be between $325 and $375 million, excluding net securities gains and these activities and.
And we expect third quarter net charge offs to be between $150 million and $200 million.
For annual guidance, taking into account our first half operating results and the addition of 6 more months of BBVA USA forecasted operating results.
Our expectation for modest loan growth and the second half of the year, we expect revenues to be up between 12% to 14% and expenses, excluding integration costs to be up between 13% and 15% for the full year 2021, compared with PNC Standalone 2020.
And we acknowledged some upside exists and spot loan growth during the second half of the year, but that remains to be seen and as a result. It is not included in our guidance and.
And with that Bill and I are ready to take your questions.
Thank you.
This time, if you would like to ask a question. Please press the number 1 followed by the number for on your telephone keypad.
Please hold while we compile the Q&A last day.
Yeah first question comes from the line of net peak the.
Zack <unk> with Morgan Stanley.
Please go ahead.
Hi, good morning.
Hey, good morning Betsy.
So it's great to see the loan growth start to pick up here the firm.
Question I have is just on how we should think about.
The loan growth and your book now that the VA has come and is there going to be a churn period here, where you've got some loans and that book that you're likely to be exiting and then you know growing through that churn or would you suggest that that's not really dig in.
No matter when we're thinking about the loan growth.
The margin, it's going to matter, but it's extended over a bunch of years, we're not we're not kind of sell portfolios or or for rapid exit. So through time, we will mature things and those balances will likely run off from certain industries as we grow balances from.
And from other targeted industries, but that stretches over.
3 for years.
Okay, Great Alright, and then.
Separately you know your Harris Williams business, obviously, it's already national but does the BBVA footprint that you've added now do anything for them and their business with the middle market.
At the margin right.
To add to the larger network of potential clients of conversations so.
And now they obviously are in.
All of these markets to some extent already but now we have more clients.
And we will therefore have more dialogue, so I would expect the low debt.
For sure so we'll be able to introduce our new commercial clients who of BBVA USA. The Harris Williams, if they haven't already been introduced.
Alright, Yeah, no that was a really strong results from them. This quarter and then just lastly, the dividend hike that you recently announced how do you. How do you think about that from the perspective of payout ratio.
And I'm just wondering should we expect that your full run rate of the BDO USA, our expenses coming out of its already and you know how and in your earnings outlook. When you were thinking about setting that dividend up.
And I'm trying to think of the simple way to answer this so.
Long story short there's room on the dividend on our forward income we were in a bit of a fire drill because.
We managed to close the deal of months sooner than we thought which meant that we kind of had CCAR results and the deal closed, which then threw us into the fire drill and figure out what we could do.
Okay.
And I say in a hurry, but.
On short notice.
Which is what we did and acceleration and acceleration of kind of what we had thought so so theres room on that.
Certainly as we go forward and we just thought it was important to get something done and not missed the cycle.
Which is what we ask the dog.
Okay. That's in the long term it makes that we've I'm sorry, we said for years that we expect.
This model and this business mix that of 40% to 50% payout ratio and the dividend is our target range.
Okay, Great Alright, Yeah, no that was my gut feel that there is room there. So I appreciate that the.
For the commentary thanks, so much.
Sure.
And thank you for your question.
The next we have a question from the line of Bill kind of Russia with Wolfe Research. Please proceed with your question.
Thank you good morning, Bill and Rob.
Hey, good morning, guys.
You guys have made impressive progress and international expansion strategy. As you look ahead, how integral is the acquisition of additional branches to furthering your national expansion on paper, it's easy to do of traditional analysis, where you look at PNC EES revenues per branch and BBVA revenue Bbva's revenues per branch to ice.
Sleep the opportunity to improve productivity and what that would mean in terms of incremental revenue as per branch, but when you try to sell the idea of acquiring additional branches to generalists there.
The natural pushback and why those branch acquisitions are necessary and the first place given what we're seeing with the Digitization of the business RBC is a great example of where we saw your branch count rise sharply in 2012 before falling significantly and for the better part of the next decade.
How important was at 2 of part of those branches to begin with I know, there's a lot there, but I was hoping you could speak to that point in general.
And I wouldn't focus so much on branches as I would on clients.
So in the future could you see us the dues.
2 smaller deals and market to gain greater share of possibly the values today.
The simple way too high to me, but possibly but the purpose of that wouldn't be to get branches per se and said it would be to get clients and then we would optimize the branch network and with as we did with RBC.
After the fact.
And some natural conversion to solution centers from the traditional branches, which is to your point, though we have been doing.
Right.
Understood.
With the separately with the curve, having flattened a bit since your comments last quarter and has there been any change to your thought process around deploying a larger percentage of your liquidity into securities and within that how worried are you about.
Giving up some of your future asset sensitivity and exchange for the near term and I add benefit we're hearing different philosophies from from different banks, but would just love to get your thoughts.
Well I guess first off as you saw when we went at it pretty aggressively before we saw the the the big rally here.
We still have a lot of the liquidity, we barely put a dent and our liquidity even after writing the.
The checks for BBVA, So we're still very asset sensitive.
The the recent rally is going to cause us to slowdown and.
The more tactical than we are.
And then during the last quarter and we'll watch how this plays out.
Personally believe that the current rally as the way overdone and I don't fully understand it.
And we're likely to or not likely we will slowdown relative to what we saw and the last quarter and our expectations of that are built into our guidance.
Got it and then if I could squeeze and 1 last 1 of them I wanted to ask if you could look ahead, a bit longer term and the opportunity to drive efficiency improvements. If the forward curve is right and we get 1 hike around the end of 2022 and another in the middle of 'twenty, 3 and assume no further steepening.
There are a lot of moving parts here, but could you just speak to your confidence level and being able to drive your efficiency ratio and to that sort of the high 50% range.
The math takes you there the.
Question is simply a function of you.
And when we look out to 'twenty 2 function of the tailing integration costs as to whether you see it.
What period of time, you'll actually see it but the math takes you there once we get the costs out of the EBITDA franchise, and what we would expect that revenue environment and to look like.
Great. Thank you for taking my questions.
Sure. Thank you.
And up next we have a question from the line of Mike Mayo with Wells Fargo Securities. Please go ahead Sir.
Hi.
Good morning, Mike.
So.
And I guess that I have the short term question of long term question of the long term question is you know what inning are you in and your Tech transformation and you spent 7 years at <unk>.
Getting your common infrastructure together and that prepares you well for the BBVA integration. So that's kind of the the good news and you know what inning are you in but then I think the bad news is you're guiding this year for slightly negative operating leverage the last slide and.
And then I know you don't like having that and and <unk>.
Why is that worst and expected when you should be having some synergies from BB and B E.
So let me hit of the short term loans.
The no I'm glad you asked that question Mike is that first rate you might conclude debt, but that's not what we're saying, what we're saying and the guidance for full year with revenue percentage is going up less and expense percentage is that simply the overlay of the BBVA USA acquisition 6 months into our results.
They are they have a higher efficiency ratio. So that's if you think about it that's that largely the opportunity there.
PNC stand alone.
And at the beginning of the year. It was going to be stable, we were going to fight for positive operating leverage halfway through.
Revenue is up.
Low single digits expenses are up low single digits. So we're still fighting.
And as I mentioned and my comments.
Prior to the Q&A, we're going to keep fighting.
And Bill I don't know if you want to do the long term.
All of that might've been its simple we layered on a less efficient organization on top of us and its causes of the amount to be what it is that the legacy PNC business as kind of a target for what we said and then the opportunity set is to drive the new organization down too.
PNC level of efficiency.
We're better okay.
And that's a lot of try the question, yes, the the issue of the technology I mean think about.
Look were.
80% of the way, along where we would like to be in terms of what I would just call a modern platform.
Across everything from data centers of the weighted we develop to the way, we do automated testing and deploy and so on and so forth. So we're pretty far along I think what happens down the road with technology is much more about client facing tech.
<unk> technology, and the ability to compete effectively and the new ecosystem of Fintech, and where payments are going and all of that stuff.
And we're prepared for that we're going to invest hard into that.
We have the core technology behind us to allow us to play in that space, but that's where the fight is going to be.
And I think the games just getting started.
And well it there and.
Thanks, and sorry to extend the metaphor the.
And going into extra innings technology is going to be around for a while.
And where do you think I mean your.
And I appreciate and a number like 80% and building a modern platform and again after you know 7 or 8 years of doing that where do you think the the average bank is and that transformation because you've been talking about this more than the others.
Yes look I don't know I don't have an informed view, it's hard to figure out.
What other people are actually do and if I just think about our ideal state compared to where we are.
PNC is the ideal state might be different than some of what somebody else aspires too.
I still see us with.
Certain applications that.
The need to be reengineered to to kind of be plug and play through API and other people may or may not care about that so.
Yeah.
And we're playing our own game.
Our goal obviously is to be able to use technology as an advantage not just in terms of cost, but also in terms of speed of market and creativity as to what we can offer to clients.
And we're well on our way right.
Okay. Thanks, a lot.
Uh huh.
Thank you for your question and now we have a question from the line of John and Kelly.
The core ISI. Please go ahead Sir.
Good morning, and.
Jonathan John.
I wonder if the if you could give a little more color on loan demand, particularly on the commercial side or are you starting to see any signs of capex activity beginning to influence our line draw Downs and if you are aware and what areas are you seeing some strength and what borrower segments.
Yeah, Hey, John and trial, but and I can give you a little bit of color there the.
Generally speaking utilization rate.
We're up a little bit quarter over quarter, though not much.
And where we are seeing continued growth that we started to see its green shoots and the first quarter is and our business credit asset based book.
The real growth there that is encouraging because that tends to be a leading indicator of.
The loan demand.
That's largely where we've seen the growth.
On the margin, we would expect to see in terms of getting to where strong loan growth would be coming more utilization across the general middle market book, which has yet to show up.
I mean, the good news inside of all of that is we're actually winning a lot of clients and we're extending facilities at a pace beyond that where we've been for a bunch of years. The problem is theyre just not drawing under the credit facility, that's right and so yeah. So we're we're in a good place for for when loan demand.
It comes back and we continue to grow client share and when you see that by the way and the fee growth that we're getting through T M and and and other activities picked up yeah.
Okay. So we've made it.
And the advance from the first quarter.
Right got.
Got it.
Okay, and then on the M&A front and they are still digesting the the BBVA deal and everything but as you look at other markets are there any other markets geographically and you think.
The deal would make sense to give you a more critical mass just like you've looked at the south east that way.
And I just wanted to see if you could talk a little bit about your footprint. How do you think about that and then separately Bill and I'm curious what your take is on president and bite into the executive order.
Particularly implying more scrutiny around bank mergers does that change how you think about deals.
Yeah.
Well, yes to the second and the first issue you should just assume that.
We look at all of the same stuff that you do I'm not going to give you a very of the country and we look and you've seen us through time and make decisions based on value.
And our value creation for shareholders so that.
May or may not mean, additional geographies and may or may not mean filling and an existing geography.
It will very likely mean, we will continue to do small add on acquisitions that give us product.
The capability for our clients.
The executive order.
Looking at competition amongst banks, I mean, as a practical matter the.
The.
What would actually have to change for the bank approval process to change.
And would be more about the feds rules.
Rules.
Approving mergers and I think it would be.
Coming out of out of.
The president of items order.
I am not expert on it.
But he and I think it is safe to say that a larger deal in todays environment.
And much more political scrutiny of noise.
And then we did with the BBVA deal.
With the.
That weighs on us.
Got it alright, thanks, that's help that helps.
And thank you for your question.
And now have the question from the line of Scott Peters with price.
Sandler. Please go ahead Sir.
Good morning, guys and thanks for taking the question.
It's going to be.
And can sort of back into things like based on the guidance, but just would be curious to hear your thoughts on how the.
Net interest margin rate moves from here just like you know lots of moving parts between shifting some of the cash and securities layering and a full quarter of BBVA and the new we've got the fair value premium amortization as well, so any and any thoughts there would be appreciated yet and thats a lot there Scott.
And back in the first quarter, we had said we called the drop in NIM.
Still holding that I do think NIM will drift higher.
And not necessarily by a lot, but I think we've seen the bottom.
Okay, perfect and then just on the reserves I think sort of pre adjustments that were made for COVID-19, but post seasonal adoption I think you guys were around the 145 ish.
The reserve is that is that a good number to assume you'll you'll geared toward even with BBVA now and the mix.
Well our day, 1 was $1.50 for not not $1.45, and that was PNC standalone right now.
And then.
If you do some of the math the blend and BBVA is day, 1 we're going to be a little bit higher than that on average.
So as we've said in the answer to that question. All along has been if you consider those times normal back to normal would be somewhere in that neighborhood.
Yeah, Okay, perfect Alright Goodbye I appreciate the thoughts.
Thank you.
And sort of a 90 day, if you wish to register for the question. Please press the nimble and 1 follow up but the number for <unk>.
Yes.
We now have a question from the line.
Non of Gerard Cassidy with RBC. Please go ahead Sir.
Thank you good morning, Bill good morning, Rob.
Hey, Gerard.
Bill can you share with us when you think back to the National City deal and the RBC deals that you guys did over 10 years ago and granted there are different and the BBVA deal.
And that experience is giving you confidence on this deal can.
Can you share with us when do you think the BBVA gets fully integrated based upon the experiences and you guys had the dose prior to deals is it 3 years out for yourself and how long does it really become seamless where you can't do everything is running very smoothly.
Theres, a lot and better than the question I mean, the basic service structure. So what happens in a branch of the applications.
The product delivery all of that stuff base.
Basically we will be done by the end of this year right. So the real question then becomes how do we get the client penetration and growth rates and the newer markets the fee penetration to grow to the legacy.
PNC markets and what we found and RBC is and some of those newer markets that took.
Somewhere around 3 years, I guess, Rob we expect it will be faster of.
Today first because of BBVA actually had a reasonable book of business that we could cross sell into immediately.
And secondly, we just kind of have a better playbook, we've been out of it for a while so we have the teams built today, they're calling today.
And generally we would expect yeah, I think I'd be a little faster and I think the receptivity to the PNC brand.
It's probably a little more than it was thought of as ago, So that helps too.
Very good and then I apologize if you addressed this already and your comments, but.
And Robert you guys have any timing on the share repurchase program. I think you said, there's going to be over 4 quarters, but I know theres no restrictions now and like the old CCAR tests and limit.
And on top of gigabyte and you've given the.
And so on and how you want to calibrate the the repurchases.
Well, we're going to do it opportunistically Gerard so we will do it.
Ideally.
We'll put together like we always have.
Some of them some auto pilot program and then on top of that some discretionary piece and the discretionary piece will be the.
Variable obviously.
And that's what we've done and the path that's what we'll continue to do so.
There is some more flexibility there, obviously and we will take advantage of that.
Very good thank you.
Sure.
Yeah.
Thank you.
And our next question comes from the line of.
Yeah.
Terry Mcevoy from Stephens. Please proceed with your question.
Thanks. Good morning, just 2 questions here I'm wondering if you could discuss the strength and consumer services fees last quarter was up $442 million just on a standalone basis and I know when the released its and increased business activity. I was wondering if you could provide any more color there.
Yeah, Hey, Terry this is Rob.
Yes, we did we saw a lot of activity there and most of that is just more consumer activity. As you would expect as the economy comes back on track inside of that where we saw particular strength was debit card spend.
It is the debit card spend and is a big component of it and the acceleration there was really strong.
And just maybe more color and you want but what showed up this quarter or are they set and debit card spend and our team is telling us what a lot of micro purchases that had gone away so cups of coffee and.
Purchases on the on the way to work.
And now are now part of the part of the volume again.
Perfect and then as a follow up just the corporate service fees, maybe if you could talk about the pipelines there and is the quarterly run rate now is that of 600 plus million dollars and revenue quarterly run rate today.
Well I would say just in terms of the kind of it. So you got to take a look at it now obviously with and combined for them and put in a full.
3 months of BBVA, but.
Corporate and corporate fees also as we said earlier are showing increased activity we are of <unk>.
The elevated and the second quarter because of the Harris Williams, which hit twice the volume of.
Of the first quarter, so you've got to take that into account, but the your maths and the right run rate place.
Great. Thank you Rob.
Sure.
Thank you and.
We now have a follow up question from the line of kind of.
The cash.
Research. Please proceed.
Thanks for the follow up but just kind of a quick quick 1 on the money transfer business and the opportunity that you see there. Some investors have expressed concerns over disintermediation risk and that business is the cost of transferring money continues to fall and competitors and the speech leverage technology to help consumers transfer money more cheaply.
Disintermediation risk and legacy Bbva's money transfer business of concern for you guys and and if you could discuss how you're thinking about the growth outlook.
For that business and the opportunities that you guys have to maybe leverage technology, and just speak speak to that opportunity and general that'd be helpful.
I think the whole product, including the business transfer services is the.
The disintermediation of product and it was.
What we have is the same thing that other people are building and frankly doing and more scale the.
A key to success on it.
Is to make sure that you have.
Distribution, receiving and networks, which we do have through.
Latin America and Europe.
And that you have comply of scale to build it. So it's a competitive space I'm glad we have the product I think the actual product is going to be table Stakes for banks.
Our ability to grow it and the scale it.
And through different use cases that bring.
Non potential corporate disbursements and other things that we haven't thought of before but I think it becomes the table Stakes products that started through disintermediation kind of to your original question right. This was build outside of the banking system BBVA just happened to have built 1.
But we're now integrating into our core platform. So we're pretty excited by it.
And I think time will tell all of that product evolves and who uses it.
And in February of helping thank you of the financial impact isn't large so it's more of the upside and.
And anything.
Understood. Thank you.
Thank you.
And there are no further questions.
All right very good thanks, everybody and we'll see at the end of the third quarter. Thank you.
Thank you. This concludes today's conference call you may now disconnect.
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