Q2 2025 PNC Financial Services Group Inc Earnings Call

Group, second quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. The question and answer session will follow today's formal presentation.

Greetings, welcome to the PNC Financial Services Group, second quarter 2025 earnings conference call.

At this time, all participants are in listen-only mode.

The question and answer session will follow today's formal presentation.

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please note that today's conference is being recorded.

At this time, it is now my pleasure to turn the conference over to Bryan Gill, Executive Vice President and Director of Investor Relations. Mr. Gill, you may now begin. Well, good morning. Welcome to today's conference call for the PNC Financial Services Group. I am Bryan Gill, the Director of Investor Relations for PNC.

Speaker Change: At this time, it is now my pleasure to turn the conference over to Brian Gil, Executive Vice President and director of investor relations.

Speaker Change: Mr. Jill, you may now begin.

And participating on this call are PNC's Chairman 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 are all available on our corporate website, pnc.com, under Investor Relations. These statements speak only as of July 16, 2025, and PNC undertakes no obligation to update them.

Speaker Change: Well, good morning, welcome to today's conference call for the PNC Financial Services Group. I am Brian, Gill the director of investor relations for PNC and participating on this call are PNC's, chairman and CEO Bill dumb check and Rob Riley Executive Vice President and CFO.

Speaker Change: Today's presentation contains 4 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.

Speaker Change: These are all available on our corporate website, pnc.com under investor relations.

Now, I'd like to turn the call over to Bill. Thank you, Bryan, and good morning, everyone. As you've seen, we had a very strong second quarter fueled by our continued focus on driving growth. We accelerated new customer acquisition while deepening relationships with existing customers across our businesses. Loan growth increased, even through an uncertain macro environment, and we delivered on what we said we would. Our approach to growing our businesses remains consistent. The disciplined way we go to market, bringing the best of PNC's people, products, and services to customers across our expanded franchise, has continued to produce results.

Speaker Change: These statements speak only as of July 16th 2025 and PNC undertakes. No obligation to update them. Now, I'd like to turn the call over to Bill. Thank you, Brian. And good morning everyone. As you've seen, we had a very strong second quarter fueled by our continued focus on driving growth. We accelerated new customer acquisition, while deepening relationships with existing customers across our businesses loan growth, increased even through an uncertain macro environment and we delivered on what we said we would

We reported net income of $1.6 billion, or $3.85 per diluted share. During the quarter, loans grew 2%, reflecting strong commercial loan growth fueled by the highest level of new production in 10 quarters. At the same time, we increased revenue 4% while holding non-interest expenses stable, which resulted in another quarter of positive operating leverage and 10% PPNR growth.

Our approach to Growing our businesses remains consistent, the discipline way. We go to market bringing the best of PNC's, people, products and services to customers across our expanded franchise, has continued to produce results.

during the quarter loans, grew 2%, reflecting, strong commercial loan growth fueled, by the highest level of new production, in 10 quarts,

By now, you've seen our stress test results. We maintained our regulatory minimum stress capital buffer of 2.5%, and our start-to-trough capital depletion of 80 basis points was the lowest in our peer group. And as announced on July 3rd, our board increased our common dividend by 10 cents, or 6% earlier this month.

At the same time, we increase Revenue 4% while holding non-interest expenses stable which resulted in another quarter of positive operating leverage and 10% ppnr growth.

Speaker Change: By now you've seen our stress test results. We maintained our regulatory minimum stress Capital, buffer of 2 and a half percent. And our start Toro Capital depletion of 80 basis. Points was the lowest in our peer group.

Rob is going to go through our performance in more detail, but first I'd like to share some of our business highlights from the quarter. As I mentioned, we continue to see strong results from the execution of our national growth strategy. In CNIB, we saw strong growth in loans and commitments, and our credit trends continue to be very good. Looking at fees, our capital markets and advisory trends remain solid. And as expected, treasury management continues to produce strong results. In retail banking, we are accelerating customer growth. Our consumer checking accounts grew by 2% year over year, including 6% growth in the Southwest.

We also saw record debit and credit card activity this quarter. And we remain on track with our $1.5 billion branch investment, which we plan to open more than 200 branches in our expansion markets. Within our asset management business, we had positive net flows, and new client acquisition increased 16% linked quarter. Inside of that, growth in our expansion markets accelerated, as discretionary assets under management grew nearly three times that of legacy markets, albeit off a small base.

Rob: And is announced on July 3rd, our board, increased our common dividend by 10 cents or 6% earlier this month. Rob is going to go through our performance in more detail. But first I'd like to share some of our business highlights from the quarter. As I mentioned, we continue to see strong results from the execution of our national growth strategy. In cnib. We saw strong growth in loans and commitments in our credit Trends. Continue to be very good looking at fees, our Capital markets and advisory Trends, remain solid. And as expected treasury management continues to produce strong results. In retail banking we are accelerating customer growth, our consumer checking accounts grew by 2% year-over-year including 6% growth in the southwest. We also saw record debit and credit card activity this quarter and we remain on track with our 1 and a half billion dollar Branch investment which we plan to open more than 200 branches in our expansion markets.

In closing, we continue to demonstrate the strength of our national franchise and deliver on our objectives. We are poised to further capitalize on our growth potential, and I remain very optimistic about our future.

Rob: Within our asset management business. We had positive net flows and new client acquisition increased 16% length quarter inside of that growth. In our expansion, markets accelerated as discretionary assets under management grew. Nearly 3 times that of Legacy markets, albeit off a small base,

And finally, I just want to take a minute to thank our talented employees for their efforts, which are vital to all of our success and growth.

With that, Rob will take you through the quarter. Rob? Thanks, Bill, and good morning, everyone. Our balance sheet is on slide four and is presented on an average basis. For the length quarter, loans of $323 billion increased $6 billion, or 2%. Investment securities of $142 billion were stable, and our cash balance at the Federal Reserve was $31 billion, a decrease of $3 billion. Deposit balances increased $2 billion and averaged $423 billion. and our borrowings remain stable at $65 billion. At quarter end, AOCI was negative $4.7 billion, an improvement of $555 million, or 11%, compared with March 31st.

In closing, we continue to demonstrate the strength of our national franchise and deliver on our objectives. We are poised to further capitalize on our growth potential, and I remain very optimistic about our future. And finally, I just want to take a minute to thank our talented employees, for their efforts, which are vital to all of our success and growth with that. Rob will take you through the quarter Rob.

Rob: Thanks Bill, and good morning everyone. Our balance sheet is on slide 4 and is presented on an average basis.

Rob: For the linked quarter loans of 323 billion, increased 6 billion dollars or 2%.

Rob: Investment Securities of 142 billion were stable.

And our cash balance. At the Federal Reserve was 31 billion, a decrease of 3 billion.

Rob: Deposit balance is increased 2 billion and average 423 billion.

Rob: And our borrowings remain stable at 65 billion.

Rob: At quarter end, aoci was -4.7 billion.

And Improvement of 555 million or 11% compared with March 31st.

Our tangible book value increased to approximately $104 per common share, which was a 4% increase link quarter and a 17% increase compared to the same period a year ago. We remain well capitalized with an estimated CET1 ratio of 10.5% and an estimated CET1 ratio inclusive of AOCI to be 9.4% at quarter end. We continue to be well-positioned with capital flexibility. During the quarter, we returned approximately $1 billion of capital to shareholders, which included $640 million in common dividends and $335 million of share repurchases.

Rob: Our tangible Book value increased to approximately 104 dollars per common share, which was a 4% increase link quarter and a 17% increase compared to the same period a year ago.

Rob: We remain well capitalized with an estimated cet1 ratio of 10.5% and an estimated cet1 ratio inclusive of aoci to be 9.4% at quarter end.

Rob: We continue to be well positioned with capital flexibility during the quarter. We returned to proximately 1 billion dollars of capital to shareholders which included 640 million in common dividends and 335 million of share repurchases.

As Bill just mentioned, our board recently approved a 10-cent increase to our quarterly cash dividend on common stock, raising the dividend to $1.70 per share, and we expect repurchases in the third quarter to be between $300 and $400 million. Our recent CCAR results underscore the strength of our balance sheet, and as previously announced, our current stress capital buffer remains at the regulatory minimum of 2.5%.

Rob: As Bill just mentioned our board recently approved a 10-cent increase to our quarterly cash dividend on common stock raising the dividend to a 1.70 per share.

Rob: and we expect repurchases in the third quarter to be between 300 and 400 million

Rob: Our recent car results underscore the strength of our balance sheet and as previously announced our current stress Capital buffer remains at the regulatory minimum of 2 and a half percent.

Slide 5 shows our loans in more detail. During the second quarter, we delivered solid loan growth. Loan balances averaged $323 billion, an increase of $6 billion, or 2 percent, compared to the first quarter. The growth was driven by C&I, which increased $7 billion, or 4%, reflecting strong new production and higher utilization. Commercial real estate loans declined $1 billion, or 4%, as we continue to reduce certain exposures. And during the second quarter, our CRE office balances declined $500 million. Consumer loans were stable as growth in auto balances was offset by a decline in residential real estate loans.

Rob: Slide 5 shows our loans and more detail.

During the second quarter, we delivered solid loan growth.

Rob: Loan balance is average 323 billion. An increase of 6 billion dollars or 2% compared to the first quarter.

Rob: The growth was driven by cni, which increased 7 billion or 4% reflecting strong, new production and higher utilization.

Rob: Commercial real estate loans declined. A billion dollars or 4% as we continue to reduce certain exposures and during the second quarter, our CRA office balances declined, 500 million

Rob: Consumer loans were stable as growth in Auto. Balances was offset by a decline in residential real estate loans.

and our total loan yield of 5.7% was stable with the first quarter.

And our total loan yield of 5.7% was stable with the first quarter.

Slide 6 details our investment securities and swap portfolios. Average investment securities remain stable at $142 billion. During the second quarter, our securities yield was 3.26%, an increase of nine basis points. And as of June 30th, our duration was estimated to be 3.4 years. Our period and securities balances increased $5 billion, or 3%, reflecting net purchases. the majority of which were residential mortgage-backed securities with an average yield of 5.4%. Regarding our swaps, Active Receive Fixed Rate Swaps totaled $40 billion on June 30th with a receive rate of 3.62%, which increased 13 basis points linked quarter. Forward starting swaps were $16 billion with a received rate of 4.07%.

Rob: Slide 6 details are investment, Securities and swap portfolios.

At 142 billion.

Rob: During the second quarter, our Securities yield was 3.26% an increase of 9 basis points.

Rob: And as of June 30th, our duration was estimated to be 3.4 years.

Our period and securities balances increased 5 billion or 3% reflecting that purchases.

Rob: The majority of which were Residential Mortgage back Securities with an average yield of 5.4%.

Rob: Regarding our swaps active receive fixed rate swaps totaled. 40 billion dollars on June 30th with a received rate of 3.62%, which increased 13 basis points, linked quarter.

And approximately 40% of these swaps will become active in 2025.

Rob: For starting swaps were 16 billion with a received rate of 4.07%.

Rob: An approximately 40% of these swaps will become active in 2025.

Slide 7 covers our deposit balances in more detail. Average deposits increased $2 billion, driven by growth in CDs, both brokered and direct, with a balance of consumer and commercial deposits remaining stable during the quarter. Non-interest bearing balances increased $1 billion and remained at 22% of total deposits. and our rate paid on interest bearing deposits stayed essentially flat at 2.24% up just one basis point.

Rob: Slide 7 covers, our deposit, balances and more detail.

Average deposits, increase, 2 billion dollars driven by growth in CDs, both brokered and direct with a balance of consumer and Commercial deposits. Remaining stable during the quarter.

Non-interest-bearing, balances increase 1 billion and remained at 22% of total deposits.

Rob: And our rate paid on interest bearing. Deposits date, essentially flat a 2.24% up, just 1 basis point.

Turning to slide 8, we highlight our income statement trends, comparing the second quarter to the first quarter. Total revenue was up $209 million, or 4%, and non-interest expense was stable, which allowed us to deliver 4% positive operating leverage and 10% growth in PPNR. Provision was $254 million, reflecting the impact of changes in macroeconomic scenarios, tariff considerations, and portfolio activity, including loan growth. Our effective tax rate was 18.8%, and second quarter net income was $1.6 billion, or $3.85 per share. In the first half of the year compared to the same time last year, we've demonstrated strong momentum across our franchise.

Turning the slide 8, we highlight our income statement, Trends comparing the second quarter to the first quarter. Total revenue was up 209 million or 4%. And non-interest expense was stable, which allowed us to deliver 4%, positive operating leverage and 10% growth in ppnr.

Provision was 254 million reflecting the impact of changes. In macroeconomic scenarios tariff considerations and portfolio activity, including loan growth.

Rob: Our effective tax rate was 18.8%.

Rob: And second quarter, net income was 1.6 billion dollars or $3.85 per share.

Total revenue increased $557 million, or 5%, driven by higher net interest income and fee income growth. Non-interest expense increased $79 million, or 1%, reflecting increased business activity, technology investments, and higher marketing spend. and net income grew $321 million, resulting in an EPS growth of 14%.

In the first half of the year compared to the same time. Last year we demonstrated strong momentum across our franchise.

Rob: Total revenue increased, 557 million, or 5%, driven by higher net, interest income and fee, income growth.

Rob: Non-interest expense increased 79 million or 1% reflecting increased business activity, technology Investments, and higher marketing. Spend,

And net income, grew 321 million resulting in the EPS growth of 14%.

Turning to slide 9, we detail our revenue trends. Second quarter revenue of $5.7 billion, increased $209 million, or 4% linked quarter. Net interest income of $3.6 billion increased $79 million, or 2%. The growth was driven by higher loan balances, the continued benefit of fixed-rate asset repricing, and one additional day in the quarter. and our net interest margin was 2.8%, an increase of two basis points. Non-interest income increased $130 million, or 7%. Inside of that, fee income increased $55 million, or 3%, linked quarter to $1.9 billion. Looking at the details, capital markets and advisory revenue increased $15 million, reflecting broad-based increase in capital markets activity, much of which occurred late in the quarter.

Rob: Turning to slide 9, we detail our Revenue trends.

Rob: Second quarter revenue of 5.7 billion dollars increased 209 million, or 4%, linked quarter.

Rob: Net interest income of 3.6 billion increased 79 million or 2%.

The growth was driven by higher loan balances. The continued benefit of fixed rate, asset repricing and 1 additional day in the quarter.

Rob: And our net interest margin was 2.8% and increase of 2 basis points.

Non-interest income increased to 130 million or 7%.

Rob: Inside of that fee income increased 555 million or 3%, linked quarter to 1.9 billion dollars.

Looking at the details, Capital markets and advisory Revenue increased 15 million reflecting broad-based, increase in capital markets activity, much of which occurred late in the quarter.

Card and cash management revenue grew $45 million, or 7%, driven by seasonally higher consumer spending and growth in Treasury management. Mortgage revenue decreased $6 million, or 4%, primarily due to lower residential mortgage servicing activity. and other non-interest income of $212 million, increased $75 million, primarily reflecting visa-related activity and other valuation adjustments.

Rob: Card and cash management Revenue grew 45 million or 7% driven by seasonally higher consumer spending and growth in treasury management.

Rob: Mortgage Revenue decreased 6 million, or 4%, primarily due to lower Residential Mortgage servicing activity.

Rob: And other non-interest income of 212 million increased 75 million primarily reflecting Visa related activity and other valuation adjustments.

Turning to slide 10, our expenses remain well controlled and we're stable linked quarter. Seasonally higher marketing spend and continued technology investments were more than offset by our disciplined expense management. And as we previously stated, we have a goal to reduce costs by $350 million in 2025 through our Continuous Improvement Program. As you know, this program funds a significant portion of our ongoing business and technology investments, and we're on track to achieve our full-year target.

Rob: Turning the slide 10.

Our expenses, remain? Well controlled. And we're stable. Linked quarter.

Rob: Seasonally higher marketing, spend and continued technology Investments were more than offset by our disciplined expense management.

And as we previously stated, we have a goal to reduce costs by 350 million in 2025 through our continuous Improvement program.

As you know, this program funds, a significant portion of our ongoing Business and Technology Investments.

And we're on track to achieve our full year Target.

Our credit metrics are presented on slide 11. Overall, credit quality remains strong with improvements in non-performing loans, delinquencies, and charge-offs. Non-performing loans of $2.1 billion were down $184 million, or 8%, driven by declines in both C&I and commercial real estate non-performing loans. Total delinquencies of $1.3 billion declined to $128 million, or 9% compared with March 31st, reflecting both lower consumer and commercial delinquencies. Net loan charge-offs were $198 million, down $7 million, and represent a net charge-off ratio of 25 basis. And our allowance for credit losses totaled $5.3 billion, or 1.62% of total loans at the end of the second quarter, which included tariff consideration.

Our credit metrics are presented on slide 11.

Overall, credit quality remains strong, with improvements in non-performing loans, delinquencies and charge offs.

Rob: Non-performing loans of 2.1, billion dollars, were down 184 million or 8% driven by declines in both C. And I and commercial real estate non-performing loans.

Rob: Is delinquencies of 1.3 billion declined, 128 million, or 9%, compared with March 31st.

Reflecting, both lower consumer and Commercial delinquencies.

Rob: Net loan, charge, offs were 198, million down, 7 million, and represent a net charge off ratio of 25 basis points.

Rob: And our allowance for credit losses totaled, 5.3 billion or 1.62% of total loans. At the end of the second quarter, which included tariff considerations.

In summary, PNC reported a solid second quarter and we're well positioned for the second half of 2025. Regarding our view of the overall economy, we're expecting continued economic growth in the second half of the year, resulting in real GDP growth of approximately 1.5 percent in 2025, and unemployment to increase to around 4.5 percent over the next 12 months. We expect the Fed to cut rates once in 2025 with a 25 basis point decrease in December.

Rob: In summary PNC, reported a solid second quarter and we're well positioned for the second half of 2025.

Rob: Regarding our view of the overall economy. We're expecting continued economic growth in the second half of the Year resulting in Real GDP. Growth of approximately 1 and a half percent in 2025.

Rob: And unemployment to increase to around 4 and a half percent, over the next 12 months.

Rob: We expect the FED to cut rates once in 2025 with a 25 basis point decrease in December.

Considering our reported first half operating results, third quarter expectations, and current economic forecasts, our full year 2025 guidance is as follows. For the full year 2025 compared to the full year 2024, we expect average loans to be up approximately 1% versus our prior guidance of stable. We expect full-year net interest income to increase approximately 7 percent, up from our previous guidance of up 6 to 7 percent. We now expect non-interest income to be up approximately 4 to 5 percent, down slightly from our previous guidance of up 5 percent, primarily reflecting the continued level of heightened economic uncertainty.

Rob: Considering our reported first half operating results.

Rob: Third quarter, expectations and current. Economic forecasts our full year 2025 guidance is as follows.

Rob: for the full year, 2025 compared to the full year 2024,

Rob: We expect average loans to be up approximately 1% versus our prior guidance of stable.

Rob: We expect full year net, interest income to increase approximately 7% up from our previous guidance of up to 6 to 7%.

Rob: We now, expect non-interest income to be up approximately 4 to 5% down slightly from our previous guidance of up 5%. Primarily reflecting the continued level of heightened economic uncertainty

Taking the component pieces of revenue together, we continue to expect total revenue to be up approximately 6%. We continue to expect non-interest expenses to be up approximately 1%. And we expect our effective tax rate to be approximately 19%. For the third quarter of 2025 compared to the second quarter of 2025, we expect average loans to be up approximately 1%, net interest income to be approximately up 3%. fee income to be up between 3 and 4 percent. other non-interest income to be in the range of $150 to $200 million. Taking the component pieces of revenue together, we expect total revenue to be up between 2 and 3 percent.

Taking the component pieces of Revenue together, we continue to expect total revenue to be up approximately 6%.

We continue to expect non-interest expenses to be up approximately 1%.

Rob: And we expect our effective tax rate to be approximately 19%.

Rob: For the third quarter of 2025 compared to the second quarter of 2025, we expect average loans to be up approximately 1%.

Rob: Net interest income to be approximately up, 3%.

Rob: Fee income to be up between 3 and 4%.

Rob: Other non-interest income to be in the range of 150 to $200 million.

We expect non-interest expense to be up approximately 2 percent. And we expect third quarter net charge-offs to be in the range of $275 to $300 million.

Rob: Taking the component pieces of Revenue together. We expect total revenue to be up between 2 and 3%. We expect non-interest expense to be up approximately 2% and we expect third quarter, net charge off to be in the range of 275 to $300 million

And with that, Bill and I are ready to take your questions. Thank you.

Rob: And with that bill and I are ready to take your questions.

We will now be conducting a question and answer session. If you would like to ask a question at this time, you may press star 1 from your telephone keypad and a confirmation tone will indicate your lines in the question queue. You may press star 2 if you'd like to withdraw your question from the queue. Participants that are using speaker equipment today, it may be necessary to pick up your handset before pressing the start key. One moment, please, before we call for questions. Thank you.

Speaker Change: Thank you. We'll now be conducting a question and answer session.

Speaker Change: If you'd like to ask a question at this time, you may press star 1 from your telephone keypad and the confirmation tone. Indicate your lines in the question queue.

Speaker Change: Let me press star 2. If you'd like to withdraw your question from the queue,

Speaker Change: For participant, study using speaker equipment. Today, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: 1 moment please would pull for questions. Thank you.

And our first question today will be coming from the line of David George with Baird. Please just use your question. Hey, guys, good morning. Question on the pickup you had in loan growth in the quarter.

Speaker Change: Thank you. And our first question today, will be coming from the line of David. George with B, please just use your questions.

A lot of it looks like it's coming from commercial, there's a pickup in line of credit utilization, but we'd like to get some color context around that growth, and how sustainable you think it might be. And then I've got a quick follow up. Yeah, sure. Good morning, David. It's, it's Rob. Yeah, so loan growth was strong in the second quarter. And it really was the combination of an uptick in utilization, you know, in part due to obviously some tariff, tariff related considerations. But importantly, for us, on top of that was also new production, in large part from our growth markets, which is, you know, simply the fruition of years of working toward that.

David George: Hey guys. Good morning, uh, question on the pickup you had in loan growth, uh, in the quarter, a lot of it looks like it's coming from commercial, there's a pickup in the line of credit utilization, but would would like to get some color or context around that growth and how sustainable you think it might be. And then I've got a quick follow-up as well.

So it really was a combination that drove those higher levels. When we look to the balance of the year, the balance of 25, we don't have quite the same loan growth repeating, we do have some more loan growth than what we thought. So we raised, as you saw in our full year guidance, average loans from stable to up 1%. Okay, to that end, it's staying on NII.

David George: Yeah, sure. Good morning, David. It's uh, it's Rob. Um, yeah, it's a loan growth. Uh, was strong in the second quarter and uh, it really was the combination of an uptick in utilization, you know, in part due to obviously some tariff, uh, tariff related, uh, considerations but importantly for us on top of that was also new production. Uh in large part from our, our growth markets, which is, you know, simply the fruition of uh years of of working toward that. So it really was a combination that drove those higher levels.

David George: Uh, when we look to the balance of the year, the balance of, uh, 25, um, we don't have quite the same loan growth, uh, repeating. We do have some more loan growth, uh, than what we thought. So we, we raised as you saw in our, uh, full year guidance, average loans from stable to up 1%

Between the pickup and loan growth, Rob, and as you mentioned, as it secures portfolio towards the end of the quarter, and your inherent positioning with asset repricing and swaps coming off, presumably, you continue to be in a pretty favorable NII position going into the back half and into next year. Just want to get a sense as to how you're thinking about the trajectory of NII in the back half and into 2016. Yeah, sure. So, because of the items that you mentioned, we did up our guidance for the full year from up 6% to 7%, up 7% for NII.

David George: Okay. Um, to that end, it it's staying on knee between the pickup and Loan growth uh, Rob. And and you added, as you mentioned added to secure is portfolio, towards the end of the quarter and and your inherent positioning with asset repricing and swaps coming off. Presumably

David George: Back half and into 26.

And the momentum will continue into 2026. We won't get into specific guidance, but we expect a similar and sustained trajectory. Sounds good. Thanks. Sure.

Speaker Change: Yeah, sure. So, um, so because of the items that you mentioned, we did up our guidance, for the full year, from up 6 to 7% up 7% for nii, uh, and the momentum will continue into into 26. Um, you know, we won't get into specific guidance but, you know, we expect a uh, a similar and sustained trajectory

Speaker Change: Sounds good, thanks.

Speaker Change: Sure.

The next question is from the line of Chris McGrady with KBW. Please proceed with your question. Oh, great. Good morning. Thank you.

The next question is from the line of Chris McGrady with KBW. Please see with your questions.

Chris McGrady: All right, good morning. Thank you. Um,

Bill, kind of a big picture question for you. It feels like we're at a really important spot for the industry given what's happening in Washington, the political environment and the deregulatory environment. I'm interested in how your updated views of how this may play out for PNC. You've talked about, you know, the benefits but also the frustration with scale over the years and also balancing with what is seemingly a little bit better. Thank you.

Chris McGrady: Bill kind of a big picture question for you. It feels like we're at a really important spot for the industry. Given what's happening in Washington, the political environment and to do regulatory environment.

Chris McGrady: Um, I'm interested how you're updated views of how this may play out for PNC. You've talked about, you know, the benefits but also the frustration with scale over the years and also balancing with what is seemingly a little bit better. Organic growth Outlook. Thank you.

Look, ignoring what's happening in DC, we're on a good path. But, you know, new markets and new clients are giving us an organic growth opportunity that we haven't seen in years. At the margin, you know, Washington comes in and out and regulations get easier and harder and and all of those environments. And we're in an environment today where regulation gives us a bit of a tailwind, which is a good thing. And, you know, you'll see that. not just in some of the, you know, capital ratios and adjustments and Basel III endgame and so on and so forth, but also, I think, through time and the amount of money we actually spend.

Chris McGrady: Um look ignoring what's happening in DC? Um, we're on a good path that the, you know, new clock, new markets and new clients are giving us an organic growth opportunity that we haven't seen in years.

Chris McGrady: At the margin, you know, Washington, comes in and out and regulations, get easier and harder and, um, we succeed in in all of those environments. And we're an environment today, where the, where regulation gives us a bit of a Tailwind, uh, which is a good thing. And, you know, you'll see that

on you know, what I'm just going to call busy work. Yeah, responding to regulatory things that that don't necessarily have a lot to do with core risk in the bank. But, you know, all of that. you know, helps at the margin against a backdrop of a company that's actually, you know, growing clients and growing business at a pretty healthy clip.

Chris McGrady: um, not just in some of the, you know, Capital ratios and adjustments in Basel 3 in game and so on and so forth, but also, I think through time and the amount of money we actually spend on

Chris McGrady: You know what? I'm just going to call busy work. Um yeah, responding to regulatory things that that don't necessarily have a lot to do with core risk in the bank. Um but you know, all of that.

We feel pretty good about where we are. Thank you.

You know, helps at the margin um against a backdrop of a company. That's actually, you know, growing clients and growing business at a pretty healthy clip. We feel pretty good about where we are.

Chris McGrady: Thank you.

The next question is from the line of John Pancari with Evercore ISI. Please proceed with your questions. Morning. Good morning. Good job.

Speaker Change: The next question is from the line of John pancari was ever court. Isi, please just see you with your questions.

Chris McGrady: Morning.

Morning.

Just wanted to get some additional color on your fee income outlook for the full year. Your fee trends came in pretty solidly in the second quarter. You cited the upside capital markets and a little bit of upside in other, but you nudged your fee guidance lower. It looks like, you know, the street was already there, but you nudged it lower and you cited the economic uncertainty. If you could maybe just elaborate, you know, what's keeping you from, you know, getting a little bit more confident there. I know you cited that you're seeing record pipelines in your capital markets business.

So maybe just talk about the puts and takes there and the rationale in nudging that. Yeah, sure, John. So, you know, if we go back to our January expectations, relative to total non interest income growth, you know, we'd set up 5%. We've got a small revision to that downward. So, you know, we're now saying 4 to 5%. So that's a 1% decline on an 8.4 plus billion dollar number. So, you know, pretty small. And we chalk that up to sort of the heightened uncertainty that emerged after January that we're all well aware of. And we've seen some soft spots in the first quarter with corporate spending activity in mortgages a touch less.

Just uh, when did they get some additional color on your fee and come out? Look for the for the full year. Your your fee Trends came in Pretty solidly in the second quarter. You cited the upside Capital markets, and a little bit of a of upside in other, but you had nudged your, your fee, guidance lower. Um, it looks like, you know, the street was already there, but you notes, that lowered, you started the economic uncertainty. If you could be just elaborate, you know, what's keeping you from, you know, getting a little bit more confident there. I know you've decided that you're seeing record pipelines in your Capital markets business. So, maybe you just talk about the puts and takes their and the rationale and nudging that lower.

Speaker Change: Yeah, sure John. Uh, so, you know, if we go back to our January expectations, um, relative to total non-interest income growth, uh, you know, we'd set up 5%. Uh, we've got a small revision to that downward. So, you know, we're now saying 4 to 5%. So that's a 1% decline on an 8.4 plus billion dollar number. So, you know, pretty small

And then as we discussed in a recent conference, private equity valuations, which is an other non-interest income, you know, have some headwinds relative to our expectations in January, but it's pretty small. And to your point, you know, the major categories, asset management's ahead of where we expected in January. Capital markets is right on what we expected in January. So, you know, we think it's these are pretty good and they're obviously pretty resilient given, you know, everything that we've been through with the turbulence. Got it. Okay. Thanks for that.

Speaker Change: And we chopped that up to sort of the, the heightened uncertainty that emerged after January that we're all well aware of and we've seen some soft spots, uh, in the first quarter with corporate spending activity in a mortgage, as a touch less. And then as we discussed in a recent conference, private Equity evaluations, which is in other non-interest income, you know, I have some headwinds relative to our expectations that Jan,

Speaker Change: Ary, but it's pretty small, uh, and to your point, uh, you know, the major categories asset Management's ahead of where we expected in January Capital, markets is right on.

Speaker Change: Uh what we expected in January. So, you know, we think it's these are pretty good and they're obviously pretty resilient given, you know, everything that we've been through with the turbulence.

And then just separately, we're hearing some of the banks citing somewhat higher or intensifying competitive pressure around loan pricing. A couple of the banks are citing tighter spreads that's impacting some of their fixed asset loan pricing benefits. Can you maybe talk about what you're seeing out there in terms of loan pricing, particularly as loan growth is accelerating? And I know your loan yields were this quarter. Is competition at all impacting that? Or is that really just the swap? No, I think when you look at when you look at our spreads, our spreads are pretty consistent.

Speaker Change: All impacting matters that really just the swap Dynamics.

So you know, there's always competition. There's, there's certainly no spread expansion, but we haven't seen a lot of contraction. If anything, we might have a little bit of spread pressure just because our asset mix, our loan mix tends recently to be sort of in the higher credit quality but nothing that's thrown us off our yields but when you know rates are fairly steady, spreads are fairly steady, the yields are pretty steady. Competition seems pretty rational. Not much change. Okay, great. Thank you.

Speaker Change: No, I think, um, uh, when you look at, when you look at our spreads, our spreads are pretty consistent. Uh, so, you know, there's always competition. There's, um, uh, there's certainly no spread expansion but we haven't seen a lot of contraction. If anything, we might have a little bit of spread pressure just because our asset mix our loan mix

Speaker Change: Tents uh recently to be sort of in the higher credit quality, but nothing nothing that's thrown us off our yields, but when you know, rates are fairly steady. Uh, spreads are fairly steady, the yields are pretty steady. I'm a competition seems pretty rational yeah. So

Speaker Change: I'm yeah, not much change.

Speaker Change: Okay, great. Thank you.

Next question is from the line of Scott Siefers with Piper Sandler. Please proceed with your question. Morning, guys. Thanks for taking the question. Let's see. Brad, I just wanted to ask a little on the margin dynamics. Excuse me. I think in the past you all have talked about the margin potentially expanding up toward like $290 by the end of the year. That's something you're still sort of pointing towards or hoping to achieve. I guess as I think of things, the asset repricing story, it's pretty much become self-evident at this point. It's terrific. I would imagine deposit benefits just get tougher if the Fed isn't cutting as aggressively.

Scott: Next question is from the line of Scott seafirst with Piper Sandler. This is you with your questions.

I think you said you only have the one rate cut in December in your model, so maybe how you're thinking about that trajectory would be great. Sure, I think you summed it up well, that nothing's changed, you know, we're still tracking to that 290 range by the end of the year that I said on the first quarter earnings call.

Morning guys. Thanks for taking the question. Um, let's see. Rob, just wanted to ask a little on the margin margin Dynamic, excuse me. Um, I think in the past you all have talked about, uh, the margin potentially expanding up toward like 290 by the end of the year. Um, that's something you're you're still sort of uh, pointing towards or hoping to achieve. Um, I guess as I think of things that you have to repricing stories, pretty. It's pretty much become self-evident at this point. It's it's terrific. Um, but I would imagine deposit benefits just get tougher. If the Fed isn't cutting as as aggressively. I think you said you only have the 1 um, rate cut in December. Um,

In your in your model. So, maybe how you're thinking about that. Uh, trajectory would be great, please.

Rob: Sure. No, no, I think you summed it up well that nothing's changed. You know, we're still tracking to uh, that 290 range, uh, by the end of the year that uh, that I I said on the first quarter earnings call,

Okay, perfect, thank you.

And then I guess a small, on any rationale behind the thought that third quarter charge-offs would increase, I guess it feels like there's been a couple quarters in a row where the expectation has turned out to be worse than the reality, which is a good thing. But just curious if there's anything behind the thinking. Yeah, lower charge odds are definitely a better thing, Scott. Yeah. So, yeah, charge odds have come in favorably year-to-date relative to our expectations. We did lower our guide, meaning improved. We've been running at estimating $300 million a quarter. We've been doing closer to $200 million.

Okay, perfect, thank you. And then um, I guess a small on any, um, rationale behind the the thought that third quarter charge offs would increase, I guess? Um, you know it feel feels like, there's been a couple quarters in a row where the expectation has turned out to be, you know, worse than the reality, which is, you know, a good thing, but just curious if there's anything, uh, behind the thinking there.

So we lowered our guide to $275 million to $300 million because there is still this sort of pipeline of charge odds related to commercial real estate office that we know is going to pull through. All fully reserved. So not an economic impact, but at some point they will flow through, and we expect that to occur over the next several quarters. Gotcha. But other than that, credit quality, the credit quality is very. Yeah, no, it seems that way. So, but I appreciate the color. Thanks a lot, Rob. Sure.

Rob: Yeah. Lower charge offs are definitely a better thing. Uh Scott yeah, yeah. So uh, yeah, charge offs have come in favorably year to date relative to our expectations. Uh we did lower our guide. Uh, meaning uh improved. Uh, we had been running at estimating 300 million a quarter. Uh, we've been doing closer to 200, uh, so we lowered our guide to 275 to 300 because there is still this

Rob: Uh, sort of pipeline of charge loss related to commercial real estate office, that we know is going to pull through all fully reserved. So not an economic impact, but at some point, they will flow through. Uh, and uh, you know, we expect that to occur over the next several quarters.

Speaker Change: Gotcha. But other than that credit quality is a credit quality is very good.

Yeah, no it seems that way. So but appreciate the color. Thanks a lot Rob.

Speaker Change: Sure.

The next questions come from the line of Ebrahim Poonawala with Bank of America. Please use your questions. Hey, good morning. I guess, sorry if I missed this, Rob, just talk to us how you're thinking about. Capital levels mean we have a bunch of like regulatory changes sort of on the come, but as we think about the right target CT1 capital for PNC in a world where banks triple your size are seeing requirements coming lower. How do you think about it? Like I was going back, there've been times when you operated with a nine and a half CT1.

Speaker Change: The next question is coming from the line of Abraham Walla with Bank of America. Please see a few questions.

Hey, good morning.

Speaker Change: Good morning.

I guess uh sorry if I missed this Rob, just talk to us how you're thinking about

Speaker Change: Capital levels means we have a bunch of like regularly changed changes, sort of on the Comm. But as we think about the right target, ct1 Capitol 4 PNC in a world where Banks triple your size or seeing requirements coming lower.

Just what the thought process is, even if you're not willing to sort of commit to a certain target today, would love to hear how you think about your capital relative to larger peers. Just as we think about just the relative competitive advantage versus disadvantage. Sure, yeah.

Speaker Change: How do you think about it? Like I was going back, they've been time when you operated with a 9 and a half, ct1 just what the thought process is even if you're not willing to sort of commit to a certain Target, today, would love to hear how you think about your Capital relative to larger peers.

Speaker Change: Just as we think about just the relative competitive Advantage was disadvantaged, thanks.

Well, so hi, Ebrahim, it's Rob. So, yeah, so you saw we printed CET1, the 10.5, AOCI included 9.4, and our recent stress tests require 7%, so we're in a healthy excess capital position. You know, the short answer is, you know, we think at the levels that we are right now with rules still yet to be finalized, feels about right. We did up our share repurchases as a result in the second quarter and said that we're going to sustain that $300 million to $400 million of repurchases into the third quarter. You know, obviously, the highest and best use of our capital is for loans.

Sorry sure, yeah. Well so, uh, pyramid, it's Rob. Um

Speaker Change: So yeah. So you saw we print cet1 the 10 and a half uh with aoci uh included 9.4 uh in our recent stress tests um that require 7%. So we're in a healthy excess, Capital position. Uh, you know the short answer is you know we think at the levels that we are right now with the rules still yet to be finalized feels about right. Um we did up our Sherry purchases as a result uh in the in the second quarter and said that we're going to sustain that 300 to 400 million of repurchases.

You know, we're pointed to and hopeful that we'll be able to use that capital towards that loan growth. But, you know, generally speaking, in terms of our capital levels, we feel like we're in the right place right now, we've got some flexibility, we've upped the share repurchases, we increased the dividend, so I think we're in a good spot. The only thing I'd add, you might have seen a comment letter that BPI put out about one of the rating agencies, which is the binding constraint for the industry right now. And so we're all Even in today's environment, higher than we need to be vis-a-vis regulatory rules.

Speaker Change: A good spot. The only thing I'd add you might have seen a comment letter that uh BPI put out about 1 of the rating agencies, which is The Binding constraint for the industry right now. Um and so we're all

Speaker Change: you know, even in today's environment, um,

Higher than we need to be bzv. Um regulatory rules. Um,

But we're not necessarily there vis-a-vis rating agency rules. And there's some pushback on that. And that applies to all of us. you know, our size are smaller, the giant banks, it's one of the things we're all dealing with and we need to. We've heard that, so thanks for mentioning that.

Speaker Change: But we're not necessarily their bcv rating agency rules, so there's some push back on that and that applies to all of us, not just, you know, our size are smaller or the giant Banks. It's 1 of the things we're all dealing with and we need to work our way through.

And I guess just one follow-up, like, on loan growth and capital markets, like, is momentum picking up as we think about just conversations with clients and all of these? I'm just trying to get a sense of, is there upside to growth outlook for the back half into 26? Should we be excited about that, or is it still early days yet? We're still watching tariffs closely. Where do you kind of shake out between those two views? Thank you.

Speaker Change: We've heard that. So thanks for that mentioning that and I guess just 1 follow-up like on loan growth and capital markets like is momentum picking up as we think about this conversation with clients and all of these I'm I'm just letting you get a sense of is there upside to growth outlook for the back, half into 26? Should we be excited about that? Or is it still early days, yet we still watching tariffs closely and like, where do you kind of shake out between those 2 views?

that the one thing I will say on loan growth, because we've been terrible predicting it as an industry as an industry, which is which we're a part of prediction out there. But as I've said before, if there is long growth in the industry, we will participate in it and likely do better just given our efforts in the newer market. The momentum is really good at the moment, but as we've seen, that can be disrupted pretty easily by. you know, the political environment and Thank you. Thank you.

Speaker Change: The the the 1 thing I will say on loan growth um because we've been terrible predicting it as an industry as an industry. And and well, which is well, yeah. Which we're a part, we don't want a prediction out there. But uh, as I've said before, if there is lung growth

Speaker Change: In the industry. Uh, we will participate in it and likely do better just give on our

Speaker Change: You know, efforts in the newer markets. Um, the momentum is really good at the moment, but as we've seen, that can be disrupted, pretty easily by uh you know the political environment and tariffs.

Speaker Change: Got, thank you.

The next question comes from the line of Steve in Alexopolis with TD Cowen. Please proceed with your question. start maybe following up on what you just said in response to Ebrahim's question. So the commercial loan growth is coming from the newer markets, the higher growth MSAs. Is this really a function of new bankers and share gains? Are you guys seeing broad-based improved operations? across those faster-growing...

Speaker Change: Thank you. The next question comes from the line of Stephen alexopoulos. With TD Cowen, please receive with your questions.

Speaker Change: I want to start maybe following up on what you just said in response to ibrahim's question. So the the commercial loan growth is coming from the newer markets. The higher growth msas. Is this really a function of new bankers and sheer gains? Are you guys seeing broad-based? Improved? Optimism across those faster. Growing msas.

It's largely share gain.

Speaker Change: It's, it's largely share game.

Speaker Change: Got it. Okay. Some more specific to PNC. Okay.

And Bill, this is my first time on your call. And I wanted to take a minute and revisit the scale. I just had the big four banks report, when I look at your results compared to them, you guys are very efficient, right, you look at the retail bank, really solid, good organic growth, growing checking accounts. But you don't have the complexity of a trillion plus. Me, you seem to be in the sweet spot, but I know you've talked quite a bit about needing more scale.

Speaker Change: And Bill. This is my first time on your call, and I wanted to take a minute and and revisit the scale argument. We just had the Big 4 Banks report when I look at your results. Compared to them, you guys are very efficient, right? You look at the retail bank, really solid, good organic growth grow and checking accounts.

What's the benefit of doing a larger deal, moving much above your current size, because you seem to be in a great spot right now? Well, you didn't hear us talk about doing a large deal. You just said bigger is better. And, you know, left to our own devices and organic growth, we will get there. That the argument for scale, largely is around the very visible concentration consolidation of retail share in the U.S. And to succeed long-term, as you watch the very big banks grow, you know, we need to be in all markets and have really good products and low cost to serve those clients because that feeds the rest of our engine, right?

Speaker Change: But you don't have to complexity of a trillion plus bank, to me using to be the sweet spot, but I know you, you've talked quite a bit about needing more scale, what's the benefit to, you know, doing a larger deal, moving much above your current size because you seem to be in a great spot right now.

Speaker Change: Well, you didn't hear us talk about doing a large deal.

Speaker Change: We just said bigger is better and you know, left to our own devices and organic growth. We will get there. The, the argument for scale, um largely is around the very visible concentration

I am 100% convinced we can grow our C&I franchise. There's a race on retail deposits, and that's why we have this big focus on the investment in building branches, and we're refurbishing, I don't remember the number, Rob, but the majority of our old branches we're pulling out, we're probably halfway through now the rollout of a new online banking, we're going to put out new mobile, with JetTech AI and client service, all of the things you need to do to win in this space. With that comes the ability to spread marketing dollars, the ability to spread spread of technology dollars, you know, and everything else that is kind of self-evident in scale.

Speaker Change: Um, consolidation of retail share in the US and to succeed, long term. As you watch the, the very big Banks grow, you know, we need to be an all markets, um, and have really good products, uh, and low cost uh to serve those clients because that feeds the rest of our engine, right? I am 100%.

Speaker Change: Advanced. We can grow our cni franchise organically. Um, there's a race on retail deposits, uh, and that's why we have this big focus on the investment in building branches and, you know, we're refurbishing.

Speaker Change: Um I don't remember the number Rob but the majority of our old branches um were rolling out. Uh we're probably halfway through now the roll out of a new online banking, we're going to put out new mobile um you know agent Ai and client service. All of the things you need to do to win in this space.

Speaker Change: um, you know with that comes the ability to spread marketing dollars, the ability to spread

Speaker Change: spread technology dollars.

particularly the technology dollars, which are increasing. Okay, thanks for the call.

Speaker Change: Um, you know, and and and everything else that is kind of self-evident and scale itself and particularly the technology dollars which are increasing. Uh, yeah.

Got it. Okay, thanks for the caller.

Our next questions are from the line of Betsy Graseck with Morgan Stanley. Please receive their questions. Hi, good morning. Good morning. 4% positive operating leverage, very impressive. And I just wanted to get, and I know you've always got continuous improvement. Every year, washer and trapeze, helping drive that bus. How does AI impact the... get even more efficient from here?

Betsy Grac: Turn on the line of Betsy. Grac with Morgan Stanley. Please receive your questions.

Hi, good morning.

Speaker Change: Good morning.

Um, for

Speaker Change: very impressive, and I just wanted to get and I and I know you've always got continuous Improvement every year washrooms repeat helping drive that bus. How does AI impact? The

Speaker Change: um, degree to which you can

Is it just starting and we have to wait five years or is it heavily embedded already in the results and it's here today or some other answer? Just wondering. Thank you.

Speaker Change: Get even more efficient from here. Is it just starting? And we have to wait 5 years or is it um heavily embedded already in the results and it's here today or some other answer just wondering, thank you.

That's actually a really good way to state the question. So I can give you a million ways we're using AI and thinking about AI, but the more interesting question is how is it going to help you make more money or save costs? And, you know, in the what's in use today that is saving us a lot of money, you know, principally in, you know, fraud-related areas, so you see, you know, charges go way down. In document sort, that helps our employees get answers faster. In data lake creation and burst through capacity, the clouds that help us deliver more accurate models faster.

Speaker Change: That that's actually a um a really good way to State the question so I can give you a million ways for using Ai and thinking about AI. But the more interesting question is, how's it going to make? How's it going to help you make more money or save costs?

And then the basic, you know, how do you save money through time, Betsy, is this continuation of automation that we've had largely in our back office for the last 10 years. You know, this may accelerate it, but continuous improvement for years has been figuring out how to do the same workload with less and AI, you know, is going to be a big part of that. We're looking at it and everything we can. Okay, thanks.

Um and you know in the what's in use today that is saving us a lot of money um you know, principally in, you know, fraud related areas. So you see, you know, charges go way down um in documents sort that helps our employees get answers faster. Um, in data Lake creation, uh, and burst through capacity that clouds that help us deliver more accurate models, faster.

Betsy Grac: And then the the basic, you know, how do you save money through time Betsy? Is this continuation of automation that we've had largely in our back office for the last 10 years? You know, this may accelerate it but continuous Improvement for years, has been figuring out how to do the same workload with less and AI, you know, is going to be a big part of that and it's we're looking at it and and everything we do.

It's early days. not um I just don't think there's going to be this gigantic change in the cost base. I think you're just going to see, at least in our instance, our ability to, you know, keep expenses, you know, on the low end, as it relates to people, even as we invest in the technology. It'll be the same trend, go through our line, go through our employee cost line versus our tech line for the last 10 years. And I just think it continues. And AI is the next leg of that, in effect.

Speaker Change: Okay, thanks. So it's early days.

Speaker Change: No. Um

More interesting, longer term is away from. You know, the. cool stuff we all talk about in AI, you know, the, you could be faster, you can solve models for all that stuff, is the how might it change the overall delivery of financial services? And that occupies a lot of our time. So, so, you know, we keep talking about the tools, we don't actually talk about the clients and how you end up delivering financial services in a world where you know, advice can be computer generated. you know, through and mobile and that that's that's where we're spending all.

Speaker Change: I just don't think there's going to be this gigantic change in the cost base. I think you're just gonna see at least in our instance, our ability to, you know, keep expenses, you know, on the low end as it relates to people. Even as we invest in the technology, it'll be the same Trend go through our line. Go through our employee cost line versus our tech line for the last 10 years. And I I just think it continues and AI is the next leg of that. Uh, in effect more interesting longer term is, is away from

Speaker Change: You know that?

The the cool stuff we all talk about in AI, you know, the you could be faster, you can solve models probably all that stuff. Is the how might it change? The overall delivery of financial services?

Um, and that occupies a lot of our time. So so, you know, we keep talking about the tools. We don't actually talk about the clients and how you end up delivering Financial Services in a world where, um,

Speaker Change: You know, advice could be computer generated.

Got it. Thanks so much. Appreciate it, Bill.

Speaker Change: You know, through in, in in Mobile and that, that's, that's where we're spending all our time.

Speaker Change: Got it.

Speaker Change: Thanks so much. Appreciate it.

Bill. Yeah.

Our next questions are from the line of Matt O'Connor with Deutsche Bank. Please proceed with your question. Good morning. I just wanted to get any thoughts you have on deposit pricing and how you're thinking about growth. Slide seven shows just, you know, a very modest tick up in the rate paid, I think, as you grew the brokered. And just thoughts going forward. You've got plenty of deposits to grow loans, given that loan to deposit ratio is so low. But my guess is you want to grow deposits still.

Speaker Change: Our next question is from the line of Matt. Oconor with Deutsche Bank, please assist you with your questions.

Matt Oconor: Good morning. Um I just want to give my thoughts you have on deposit pricing and how you're thinking about growth. Um slide 7 shows just you know a very modest tick up in the rate paid. I think as he grew uh the broker and I just thought it's going forward, you've got plenty of deposits to grow loans, giving out loan to deposit ratio so low. But um my guess is you want to go deposit still?

Yeah, hey, Matt. It's Rob. So you're right on it. Rate paid in the quarter was pretty stable up just one basis point over the first quarter. For the balance of the year, we do project more deposit growth. And the rate paid could actually go up a little bit, not huge, barring any rate cuts. In addition to what we already expect at the end of the year, and that'll probably be more just sort of mix oriented rather than anything, anything step change.

Matt Oconor: Yeah, uh, hey, Matt, uh, it's Rob so, yeah, you're you're right on it. Um, you know, rate paid in a quarter was pretty stable up, just 1 basis point over the first quarter, uh, for the balance of the year. We do project more deposit growth. Um, and the rate pay could actually go up a little bit. Not not huge borrowing, any rate cuts

In addition, to what we already expect at the end of the year, uh, and that'll probably be more just sort of mix, uh, oriented rather than anything. Um, anything step change wise.

And just as an aside, we are at least in the conversation as it relates to our new bills in the newer markets as to whether We should purposefully be more competitive in those markets to gain share faster. We're much more interested in actually just growing DBA households, but some of the optics, at least in some of the research pieces in investors' minds are how fast are you actually growing deposit. You know, thus far through this whole cycle, we've had one of the lowest cost deposit bases out there and haven't had to chase rate at all.

but just as an aside, um, we are at least in the conversation as it relates to our new bills uh, in the newer markets as to whether

But it's at least part of our conversation internally right now as to whether or not we might change strategy on that particular parts of the markets we're trying to grow. And we do that all the time. It's deliberate and, you know, we'll pick our spot. But, you know, generally speaking, pretty stable. It might drift up a bit, but nothing. Okay, that makes sense.

Matt Oconor: Some of the Optics. Um, at least in some of the research pieces. Uh, I'm an Investor's minds are how how fast are you actually growing deposits? Um, you know, thus far through this whole cycle, we've had 1 of the lowest cost deposit bases, uh, out there, um, and haven't had to chase rate at all, um, but it's at least part of our conversation internally right now, as to whether or not, we might change strategy on that particular parts.

Of the markets were trying to grow. And we, we do that all the time. It's deliberate and, you know, we'll take our spot. But yeah, generally speaking, the pretty stable, it might drift up a bit but nothing, um, a big magnitude,

And then just on the DDA counts, and sorry if you've disclosed this, but do you give the level of the DDA counts and any split between kind of the growth markets and the legacy markets in terms of growth rates? Yeah, so we've, we've grown, you know, year to date, we've grown DDA is 2%. And within that 6% growth in the Southwest market. So you see that dynamic. playing out there.

Okay. That makes sense and then just on the DDI account. Um, and as far as you disclose this but do you uh, give the level of the DDA accounts and any split between kind of the growth markets and the Legacy markets in terms of um growth rates, thanks?

Matt Oconor: Yeah, so we've uh We've grown, you know, year to date, we've grown ddi's 2% and within that uh 6% growth in the southwest market. So you see that Dynamic uh,

Of playing out there.

This is another just as an aside, this is an example of this issue for scale and needing to be in all markets. So we're going down into the southwest, southeast and gaining share at a rapid At the same time, our growth rate in our legacy markets, because we have the big banks building branches next to us here in Pittsburgh, is slowing down. Right. And so we're a player who can maintain market leading, you know, can grow and maintain market leading share in each market. And over time, that's going to happen.

This is another just as an aside. This is an example of this issue for scale and needing to be in all markets. So we're going down into the Southwest Southeast and gaining chair um at a rapid pace.

At the same time, our growth rate and our Legacy markets because we have the big Banks building branches. Next to us here in Pittsburgh is slowing down.

Speaker Change: Right. And so we're a player who can maintain

But that means you need to be in the markets, which is why we're we're going so heavy into the building. Okay, thank you.

Speaker Change: Market leading, you know, can grow and maintain Market leading share in each market. Uh and over time that's going to happen. But that means you need to be in the markets um which is why we're we're going so heavy into the bill that we're doing.

Next time. The next questions are from the line of Ken Ustin with Autonomous Research. Please proceed with your question. Hey, thanks, guys. Good morning. Just a question.

Okay, thank you. Makes sense.

Speaker Change: The next question is from the line of Ken Houston with autonomous research. Please just see with your questions,

Rob, you've mentioned, and it's on one of the slides, about starting to lock in higher yields and repricing risk. And it looks like it wasn't a lot of new activity with the swaps book and the securities book was flat. So I'm just wondering if you can kind of help us understand what you might be able to do as you look further out and start to think about protecting NII as you look ahead. Yeah, sure. So, yeah, we spoke about that on the first call. So, you know, from our perspective, in terms of 2025, NII is largely bait.

As we look into additional years out, and that relates to the earlier question, we see ourselves sustaining that trajectory. So, you know, most of what we're doing and we've done a lot is sort of sustaining that growth rate. Sustaining that growth rate. And most of what we've done is sort of largely in place. So not a lot of activity relative to that in the last 90 days. But, you know, we're well positioned and feel good about the NII trajectory. Okay, great. Got it.

Speaker Change: Hey, thanks guys. Good morning. Um, just a question. Um, Rob you've mentioned and it's it's on 1 of the slides about. Um, starting to lock in higher yields and and and repricing risk. And it just, you know, it looks like, you know, it wasn't a lot of new activity with, you know, with with the swaps book and the Securities book was flat. So I'm just wondering if you can kind of help us understand what you might be able to do. As you look further out and start to think about protecting, you know, knee as as you as you look as as you look ahead. Yeah. Yeah. Sure. Sure can. Um, so yeah, we we spoke about that that on the first call. So you know, for from our perspective in terms of 2025 knee is largely baked. Uh as we look into additional years out, then that relates to the earlier question. We see ourselves sustaining um the sustaining that trajectory so you know most of what we're doing and we've done a lot is sort of uh sustaining that.

Speaker Change: Growth rate. It's a thing in that growth rate.

Speaker Change: And most of uh you know what we've done is sort of largely in place. So not a lot of activity relative to that uh in the last 90 days. But you know, we're well positioned. Um,

Speaker Change: Uh, and feel good about the nii trajectory.

And then just one follow-up on the fees. I know you covered the fee categories and such, but just like within that capital markets business, you've got Harris-Williams and you've got kind of the other related capital markets stuff. I think you said in the past that Harris-Williams has kind of been fairly steady, but just wondering what you're seeing across the two sides of those businesses and what activity feels like, you know, underneath the surface. Thanks. Yeah, capital markets, we feel good about it. Like I said, we are tracking to what we expected back in January. Paris Williams, which is our largest component of the capital markets segment is about 30-40% of it, and they're tracking right on to what we expected, which is above last year.

Speaker Change: Okay. Great. Got it and and then just 1 follow up on the fees. I know you covered the fee categories and such but just like within that that Capital markets business, you've got Harris Williams and you've got kind of the other related Capital markets stuff. I think you said in the past that, that Harris Williams has kind of been fairly steady, but just just wondering what your what you're seeing a cross, the 2 sides of those businesses. And and and and what activity feels like, you know, underneath the surface. Thanks.

And last year was a pretty good year. What we saw at the end of the first quarter was just a pickup on our bread-and-butter FX and derivative-based business volumes. So Harris Williams is kind of a headline item, but remember, we have trading businesses and foreign exchange and derivatives. straight fixed income. We have new issue business. There's a lot of stuff in there. Yeah, no, that's right. And to Bill's point, that was a little bit soft in the first quarter that has come back in the second quarter. We expect to Okay. Okay. Got it. All right.

Speaker Change: Yeah, I, you know, I Capital markets, uh, you know, we feel good about it. Like I said, um, we are tracking to what we expected back in January, uh, Paris Williams, which is our largest, uh, component of the capital markets. Uh, segment is about 30 40% of it and they're tracking right on to what we expected, which is above last year and last year was a pretty good year. So, um, what we saw at the end of the first quarter, was just a, you know, a a pickup on our bread and butter FX and derivative based business.

Speaker Change: Uh, volumes. You know? So Harris Williams is kind of a headline item, but remember we have, you know, trading businesses and foreign exchange and derivatives and, and, uh, straight fixed income. We have new issue business. We've seen that, but there's a lot of stuff in there. Yeah, no, that's right. And and the Bill's Point, um, that was the sound a little bit soft in the first quarter that has come back.

Speaker Change: On the second quarter and we expect to continue to the third quarter.

Thanks, guys.

Okay. Okay, got it. All right, thanks guys.

The next question is from the line of Bill Carcache with Wolf Research. Please just use your question. Thanks. Good morning, Bill and Rob. Following up on the acceleration in loan production comments, are you hearing anything from clients on whether bonus depreciation in the tax bill could serve as a potential catalyst for incremental loan growth from your commercial clients? Not directly, I mean intuitively it should, but I don't know that I've heard of anybody running out ready to spend. The bill passed. Got it.

Speaker Change: The next question is from the line of bill karkashi with wolf research. Please just see us your questions.

Thanks. Good morning Bill and Rob.

Speaker Change: From, from your commercial clients.

Speaker Change: Correctly. I mean intuitively it

Speaker Change: the bill passed, right?

And then on the topic of charging fintechs for consumer bank data, can you discuss how you're thinking about fintech data access fees? We're in discussions on it. I applaud what JP did. I think they're exactly right. I think there's a big cost to keeping this data secure and producing it. for our clients. of So we're, you know, we're thinking about it.

Got it. And then on the topic of charging fintechs for Consumer Bank data, uh, can you discuss how you're thinking about fintech data access fees?

Speaker Change: Um,

Speaker Change: we're in, discussions on it. Uh, I applaud what JP did I think, they're exactly right. Uh, I think there's a big cost to keeping this data secure and producing a form that's readable for our clients. Um,

Speaker Change: So we're, you know, we're thinking about it.

Okay, and then Bill, following up on your scale comments, does seeing some of your competitors enter into M&A transactions make you feel a greater sense of urgency in any way? Do you worry about falling behind, you know, certain peers by perhaps not taking advantage of a favorable regulatory environment under the current administration at a time where others are more active? So, okay. Okay, fair enough.

Speaker Change: Okay, and then Bill following up on your scale. Comments does seeing some of your competitors enter into m&a transactions. Make you feel a greater sense of urgency in any way. Do you worry about falling behind you know certain peers by perhaps not taking advantage of a favorable regulatory environment under the current Administration and at a time where others are are more active

Speaker Change: so,

Speaker Change: Okay.

That's all I had. Thank you.

Speaker Change: Okay. Uh, fair enough

Speaker Change: Um, that's all I have. Thank you.

Our next question comes from the line of Mike Mayo with Wells Fargo. Please receive your question. Hey, could you share some light on the loan growth and... you know, how much you would consider from your traditional middle market relationship-based sources. And if you, by the way, if you mentioned utilization already, I might have missed it, but how the utilization did compared to more capital markets-oriented type loan growth. And by the way, I thought you said you weren't going to have any loan growth, or you're assuming no loan growth this year, so I guess that's a bit more than expected.

Our next question comes from the line of Mike Mayo with Wells. Fargo, please receive your questions.

Uh, hey.

um,

Speaker Change: could you share some light on the loan growth and

Speaker Change: you know how much you would consider from your traditional?

But I guess what I'm getting at is you said the loan growth might not all repeat, and you had a disproportionate amount from your CIB, so it sounds like more of your loan growth is that capital markets variety as opposed to that kind of bread and butter middle market loan. Is that a correct conclusion? And if not, if you could educate me.

No, that isn't what happened, Mike. Two things. One was we saw a continuation of utilization increase, largely in sort of our asset-backed areas in some middle market. And then, secondly, we just grew a lot of clients. You know, the new markets are coming online. The pre-screen activity and deal activity coming out of our new markets is multiples out of the legacy, and it's starting to bear fruit. And it's our traditional bread-and-butter clients of middle market to smaller, large corporate together with TM relationships and everything else we do as part of delivering all of PNC to new clients.

Middle Market relationship based sources. And if you by the way, I, if you mentioned utilization already, um I might have missed it but how they utilization did compared to more Capital markets oriented type loan growth than. And by the way, I thought you said you were in can loan growth or you assuming No loan growth this year. So I guess that's a bit more than expected. But I guess what I'm getting at is you said the loan growth might not all repeat, he had a disproportionate amount from your CIB, so it sounds like more of your loan growth. Is that Capital markets variety as opposed to that kind of bread and butter Middle Market loan? Is, is that a correct? Conclusion? And if not, if you could educate me? Yeah.

Speaker Change: No that that that isn't what happened Mike? We um, 2 things 1 was we saw continued continuation of utilization. Increase, um, uh, largely in sort of our asset backed areas, um, and some Middle Market. And then

Across all industries, it was broad-based across all our assets. It's just us executing. You know, the issue, I didn't say we weren't going to grow loans. I said if there was loan growth out there, we'd get more than our fair share. But as you've seen, it's Other than this quarter, it's been somewhat flatlined for a while, but our share gains utilization increase, you know, paid dividends this year or this quarter.

Secondly, we just grew a lot of clients. You know, the new markets are coming online, the pre-screen activity and deal activity. Coming out of our new markets is multiple is what it is out of the Legacy. And it's, you know, starting to bear fruit. And it's, you know, our traditional bread and butter clients of Middle Market to smaller, large, corporate together, with TM relationships and everything else we do is, is part of delivering, all of PNC to new clients across all Industries. It was broad-based across all our assets. It's it's just us executing. You know, the issue I didn't I didn't say we weren't going to grow loans. I said we would, you know if there was loan growth out there, we'd get more than our fair share. Um, but you know, as you've seen it's it's, you know,

Other than this quarter, it's been somewhat Flatline for a while. Um but our share gains utilization increase um you know, pay dividends this year for this quarter.

Alright, so is long growth back to the industry? Or is it back for PNC? And I mean, you're implying market share gains more than it's coming back to the industry? Or is the appetite of your clients increased? But my guess is you're going to the utilization increase, you'll see broad based just on the back of people, you know, front running tariff impact and their in their inventory levels. But the, you know, a big chunk of our growth is just organic growth, new clients at new markets, and I suspect will stand out. And the two words where you said not repeating, what did you mean by that?

All right, so is loan growth back to the industry or is it back for PNC? And I mean, you're implying market share gains more than it's coming back to the industry or is the the appetite of your clients increasing.

Speaker Change: But my guess is you're gonna the the utilization increase, you'll see broad-based just on the back of people, you know, front running tariff impact in their, in their inventory levels. Um,

Speaker Change: But the, you know, a big chunk of our growth is just organic growth, new clients, and new markets, uh and I suspect we'll stand out on that.

Speaker Change: And the the 2 world where you said not repeating. Um, what did you mean by that?

Should I say that again? I thought you, in reference to loan growth, you said something's not repeating. Or maybe I misheard that. I... I just say in terms of loan growth, you know, the tariff-driven increase in utilization across broad assets is probably in some form present at all banks, where we're different are these growth markets that are adding to that loan growth that are independent of sort of a reaction to the current environment. The utilization number, does it go up or down from here is really a punt on tariffs. You know, if tariffs went completely away and people would drop their inventories to all levels, you'd see, you'd see utilization across the industry decline.

So I say that again.

Speaker Change: I thought you in reference to Long growth, you said not, repeat, something's not repeating.

Speaker Change: Or maybe I missed a heard that.

Uh, I I, I maybe I can, maybe I can jump in. I, I just say, in terms of lung growth, uh, you know, the Tariff driven increase in utilization across broad, uh, uh, assets is probably in some form, uh, present at all banks. We're we're different, uh, are these growth markets uh that are adding to that loan growth that are independent of sort of the reaction to the current environment?

Speaker Change: Number, does it go up or down from here is really a ponton tariffs?

You know, if tariffs went completely away and people would drop their inventories to all levels, you'd see and you'd see utilization across the industry decline again.

So I, you know, which is one of the reasons which to forecast aggressive home growth. All right, so the market share you're saying is more a permanent driver of loan growth, the tariff-driven part of that loan growth waits to be seen. Correct.

Speaker Change: So I, you know, which is 1 of the reasons we took, forecast, aggressive long crop. Yeah.

all right, so the market share, you're saying is more a permanent driver of loan growth, the Tariff driven part of that loan growth waste to be seen

Speaker Change: correct.

All right.

Thank you.

Speaker Change: Got it. All right. Thank you.

The next questions are from the line of Gerard Cassidy with RBC Capital Markets. Hi, Bill. Hi, Rob. Bill G. . Your comments about the BPI making the letter to the rating agencies about capital requirements may turn out to be the binding constraint rather than the regulatory requirements. In your guys' estimation, based upon your working experience with both the regulators and the credit agencies, rating agencies, do they kind of work together or is this kind of a divide that is something new or do they ignore one another in the past? How is this going to maybe play out is what I'm trying to get at.

The next question is from the line of Gerard Cassidy with RBC Capital markets, we just use your questions.

Speaker Change: Hi Bill. Hi Rob.

Speaker Change: You're comments about the BPI making you know the letter to the reading agencies about the capital requirements may turn out to be the binding constraint rather than the regulatory requirements in your guys's estimation based upon your working experience with both the regulators and the Credit Agencies reading agencies. Do they kind of work together or is this kind of a, a divide that is something new or or do they ignore 1 another in the past? How's this going to maybe play out is what I'm trying to get at?

Rob may have different comments. I don't think they talked. Okay, on methodologies, on anything, it's... There's an opportunity to reconcile the two views to the extent that they do that, you know, it's obviously a...

Um Rod may have different comments. Um I don't think they talked to each other. Okay, on methodologies on anything. It's

It's yeah, it's frustrating. There's an opportunity to reconcile the 2 views, uh, to the extent that they do that. Uh you know, it's obviously up to them.

Right, possibly the Capital Framework Conference next week in Washington might shed some light on that one, possibly. And Bill and Rob, your guys' thoughts on this one. It's more of a macro question. Obviously, there's been a lot of talk about stablecoin. You've got the Coin Act down in Washington that's likely to be passed very soon. What are your guys' view on stablecoins and how it may impact the payments business for PNC as well as deposits? Any thoughts there?

Speaker Change: Right. Possibly the capital framework Conference next week in Washington my shitt some light on that. Possibly um and Bill and and Rob. You you guys thoughts um on this 1 it's more of a macro question obviously. There's been a lot of talk about stable coin. You got the coin act down in Washington. It's likely to be passed very soon. What are your guys view on stable coins and how it may impact?

The payments business for PNC as well as deposits. Any thoughts there?

Yeah, let me take a bit of a broader angle on the whole thing and let's talk about crypto and payment. and Stablecoin, how we may or may not play, or I should say how we will play. First off, you should expect to see from us announcements with respect to using our payment technology to help crypto companies. So, you know, now we are allowed to bank. and the people in that business. And just given our raw capabilities, you would expect. Meaningful client. Secondly, we will enable our clients... in the very near term to be able to use crypto, you know, to have a wallet and to trade it.

Speaker Change: Yeah, let let me uh, take a bit of a broader angle on the whole thing and let's talk about crypto and payments and and stable coin, how we may or may not play a place to say how we will play, um, first off, uh, you should expect to see from us.

Speaker Change: Um, announcements with respect to using our payment technology to help crypto companies. So, you know, now we are allowed to bank.

Speaker Change: Of people in that business. Um, and just giving our raw capabilities, you would expect that, you know, we'll get some meaningful clients there. Um, secondly, we will enable our clients.

Thirdly, you would expect My expectation is an industry solution with respect to an industry led stable point and we would clearly be part of Now, what does all that necessarily mean in terms of payments in stablecoin? massively changed the ecosystem today. I think despite, you know, a lot of the hype, there isn't really a cost advantage or a driving need to use stablecoin, at least in domestic commerce. There's use cases, in terms of external transfers out of the country, there's use cases of just storing dollars out of the country. some of which will be stopped.

Speaker Change: Um, in the very near term, to be able to um, use crypto, to see in their, you know, to to have a wallet, um, and to trade it.

Speaker Change: thirdly, um, you would expect

Speaker Change: My expectation is an industry solution with respect to an industry-led stablecoin and we would clearly be part of that.

Speaker Change: Now, what does all that necessarily mean uh in terms of payments and stablecoin and does it?

Speaker Change: Massively change the ecosystem today. Um, I think despite, you know, a lot of the hype there isn't really a cost advantage or a driving need to use stablecoin at least in domestic. Commerce, there's use cases in terms of external transfers out of the country. There's use cases of just storing dollars out of the country, um, some of which will be stopped.

by the stable coin bill simply because of know your customer rules. you know, whether it takes off in cross-border commerce, I'm probably less bullish than some. But if it does, we will have it enabled inside of our Pinnacle platform such that somebody gives us a payment file and our job is to optimize the cost of executing those payments. We'll be fully capable of using Stablecoin in that payment stream. you know, the same way we use wire, or we use ACH, or we use PCAR, another tool. Yeah, it's just another thing.

Speaker Change: By the stablecoin bill simply because I know your customer rules.

Speaker Change: Um,

You know, whether it takes off in cross-border Commerce. Um, I'm probably less bullish than some. Um, but if it does, we will have it enabled inside of our Pinnacle platform. Such that somebody gives us a

Payment file and our job is to optimize the cost of executing. Those payments will be fully capable of using stable coin in that payment stream.

As it relates to deposit. You know, am I worried that it's somehow going to drain deposits from the system? I am not. It's a good fear factor if you want to, you know, if we want to rile people up, but, you know, practically there's trillions of dollars in money funds today that you could move in and out of using ACH linkages. We're competitive on rates. you know, if there's a bank scare and where does it run to? You know, we saw that 23, it all ran to the money funds. Maybe some will run the stable point at some point in the future, but ultimately it comes back into our accounts as we've seen.

Speaker Change: You know, um, the same way we use wire or we use AC, or we use peacock and other tool. Yeah, it's just another thing. Is it relates to deposits? Uh,

Speaker Change: you know, don't am I worried that it's somehow going to drain deposits from the system. I am not.

Speaker Change: People up but you know practically there's trillions of dollars in money funds today that you can move in and out of using AC linkages. Um, we're competitive on rates.

You know, if there's a bank scare and where does it run to, you know, we saw that 23, it all ran to the money funds. Um,

I, you know, there's going to be another payment tool, we're going to add it to the Quiver tools that we have, we're going to empower our clients if they want to use it, because we do what our clients want. I think the revenue opportunities for us. beyond just serving clients day to day, are likely to be seen in our payment business and our treasury management business as we enable both new clients and then blockchain technology for existing clients.

Speaker Change: Maybe some will run to stable point at some point in the future, but ultimately, it comes back into our accounts as we've seen. So I

Speaker Change: I you know, this is going to be another payment tool. We're going to add it to the quiver of tools that we have. We're going to empower our clients if they want to use it. Um, because we do what our clients want. Um I think the revenue opportunities for us

Speaker Change: Beyond just serving clients day-to-day um, are likely to be seen in our payment business, in our treasury management business, as we've been able um both new clients and then blockchain technology for existing clients.

Very helpful. Thank you.

Very helpful. Thank you.

Speaker Change: Yep.

As a reminder, if you'd like to ask a question at this time, you may press star one from your telephone keypad.

Thank you as a reminder. If you'd like to ask a question at this time, you may press star 1 from your telephone keypad.

The next question is from the line of Saul Martinez with HSBC. Please proceed with your question. Hey, good morning. Just a real quick one on your retail lending strategy. You know, auto book has grown a bit, cards are, you know, sort of flattish, you know, to down. Can you just give us an update on what your, what the strategy is here, what you're doing? Do you expect these businesses to grow? Is it important to grow? And do you need to, or does it make sense to look at organic growth for this to be, for these businesses to become relevant as a part of your business mix?

Speaker Change: The next question is from the line of s Martinez with HSBC, please receive your questions.

Speaker Change: Hey, good morning. Um, just just a real quick 1 on uh, your retail lending strategy. Uh, you you know Autobook is is grown a bit cards. Are you know sort of flattish you know to down. Can you just give us an update on what your what the strategy is here? What you're doing? Do do you expect these businesses to to grow as an important to grow and um do you need to um or does it make sense to to look at inorganic growth for this to be for these business to be businesses to become relevant as as a as a part of your business, mix?

We'll answer the back part first. It is extremely unlikely that we would look at inorganic growth in the retail credit space simply because, in most instances, the thing that's available to buy is broken and we are not experts at fixing a broken credit. We are building that expertise. We have heavy investment card. We would love to grow card balances, and we think we can do that simply through deeper penetration with our existing client base. Our auto book has been growing largely because we didn't run for the hills, you know, in the slight bobble of the economy.

Speaker Change: We'll answer the back part first. Um, it is extremely unlikely that we would look at in our organic growth in the retail credit space. Um, simply because in most instances, the thing that's available to buy is broken and we are not experts at fixing a broker.

Speaker Change: Um, we are building that expertise, we have heavy investment card. We would love to grow card balances and we think we could do that simply through deeper penetration with our existing client base.

We're going to keep investing organically on product capability, credit underwriting, marketing offers, convenience for clients, as it relates to the ability to open accounts online and so on and so forth, and hopefully deepen. cross-sell penetration of our existing clients, but you won't see us buy. And thanks, that's helpful.

Speaker Change: Um, our autofocus has been growing largely because we didn't run for the hills, you know, in the in the slight problems economy. Earlier last year, I guess that others were on. Yeah.

Speaker Change: Um, you know, so we're going to keep investing, uh, organically on product capability. Credit underwriting marketing offers convenience for clients.

um, as it relates to the ability to open accounts online and so on and so forth and hopefully deepen, um,

Speaker Change: Cross sales penetration of our existing clients. But you won't see us by somebody

Speaker Change: And thanks, that's helpful.

The next question is a follow-up from the line of Gerard Cassidy with RBC. Pleased to see you with your questions. Thank you. Bill and Rob, can you guys comment, obviously, they had the big meeting up at Carnegie Mellon yesterday, I think it was yesterday, with the AAI investments. What could that mean for the Pennsylvania or the Pittsburgh area in terms of economic activity? And obviously, I assume you guys will benefit from that as well. Yeah, no, thanks for the question. I spent the better part of Monday and Tuesday as part of that conference. It's pretty exciting.

Speaker Change: Next question, is a follow-up from the line of Gerard Cassidy with RBC pleased to see you with your questions.

Thank you. Uh, Bill, erupt can you guys comment obviously, in the big meeting up regarding a melon yesterday. I think it was yesterday with the AI Investments, what, what could that mean for the Pennsylvania? Or the Pittsburgh area in terms of economic activity? And obviously, I assume you guys will benefit from that as well.

There's, you know, we announced $92 billion of investment into Pennsylvania, largely around building the energy and data structure, sorry, data infrastructure to support AI. You know, we have you know, as a state, sort of all of the core resources. We're in the right FEMA zone. We have, you know, lots of natural gas. We have analytic and uh you know college resources and talented people and you know people are kind of coming together to cause it to happen so it's it's pretty exciting uh the place is bustling i you know that uh one of the things independent of my PNC job is i i sit on the Allegheny conference which looks at the 10 county zone here and the the take-up of available build spaces so think land and large you know mega project sites some of which have been there for years they're disappearing fast and it's pretty exciting Very good, I appreciate it, thank you.

Speaker Change: Spent the better part of Monday and Tuesday is is, is part of that, um, conference. It's pretty exciting. There's, you know, we announced 92 billion of investment into Pennsylvania, um, largely around building the energy and data structure in.

Speaker Change: And sorry, data infrastructure um, to support AI. Um, you know we have

Speaker Change: you know, as a state sort of all of the the core resources or and the right FEMA Zone, we have you know lots of

Speaker Change: Natural Gas.

we have analytic and and um,

Uh, you know, collateral sources and talented people, and, you know, people are kind of coming together to cause it to happen, so it's it's pretty exciting. Uh, the place is bustling. I, you know, that the 1 of the things independent of my PNC job is I I sit on the alligator conference which looks at the 10 County Zone here and the the take up of available build spaces. So I think land and large, um, you know, Mega projects sites, um, some of which have been there for years, um, they're disappearing fast and it's pretty exciting.

Speaker Change: I appreciate it. Thank you.

Thank you.

Speaker Change: Thank you.

At this time, we've reached the end of our question and answer session, and I'll hand the call back to Bryan Gill for closing comments. Well, thank you all for joining our call today and your interest in and support of PNC, and please feel free to reach out to the IR team if you have any follow-up questions. Thank you. Ladies and gentlemen, thank you for your participation.

At this time, we've reached the end of our question and answer session and I'll hand the call back to Brian Gil for closing comments.

Well, thank you all for joining our call today and your uh interest in and support of PNC. And uh please feel free to reach out to the team if you have any follow-up questions.

Speaker Change: Thank you. Thank you.

This does conclude today's teleconference. You may now disconnect your lines and have a wonderful day.

Speaker Change: Ladies and gentlemen, thank you for your participation. This does conclude today's tele conference, you may now disconnect your lines and have a wonderful day.