Bill Callihan - Director of Investor Relations Bill Demchak - President and CEO Rob Reilly - Executive Vice President and CFO

Matt O’Connor - Deutsche Bank Paul Miller - FBR Erika Najarian - Bank of America Betsy Graseck - Morgan Stanley Keith Murray - ISI John McDonald - Sanford Bernstein Ken Usdin - Jefferies Steve Scinicariello - UBS Gerard Cassidy - RBC Matt Burnell - Wells Fargo Securities Brian Foran - Autonomous Research Chris Mutascio - KBW

Good morning. My name is [Penna] and I will be your conference operator today. At this time, I would like to welcome everyone to The PNC Financial Services Group Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded. I will now turn the call over to the Director of Investor Relations, Mr. Bill Callihan. Sir, please go ahead.

Thank you and good morning. Welcome to today’s conference call for the PNC Financial Services Group. Participating on this call are PNC’s President and Chief Executive Officer, Bill Demchak; and Rob Reilly, Executive Vice President and Chief Financial Officer. Today’s presentation contains forward-looking information. Our forward-looking statements regarding PNC’s performance assume a continuation of the current economic conditions and do not take into account the impact of potential legal and regulatory contingencies. Actual results and future events could differ, possibly materially, from those anticipated in our statements and from other historical performance due to a variety of risks and other factors. Information about such factors, as well as GAAP reconcilements and other information on non-GAAP financial measures we discuss is included in today’s conference call, earnings release, related presentation material and in our 10-K and various other SEC filings and investor materials. These are all available on our corporate website, pnc.com, under Investor Relations. These statements speak only as of April 16, 2014, and PNC undertakes no obligation to update them. And now, I’d like to turn the call over to Bill Demchak.

Thanks, Bill and good morning everyone. As you have seen this morning, we reported net income of $1.1 billion or $1.82 per diluted common share with a return on average assets of 1.35%. It was a good quarter for us highlighted by aggressive expense control and continued improvement in credit quality inside of a somewhat difficult revenue environment. You saw that we grew loans by $2.6 billion and deposits by about $1.5 billion. On the loan side, once again the growth came from the commercial side of our business with our retail balances actually declining slightly. Expenses were down due to seasonality and our continued emphasis on improving efficiency throughout the organization. And Rob is going to take you through some details on this in his comments. It’s worth noting though that expenses were down even as we’re making significant investments across our company to bolster our core infrastructure including cyber and to continue to support our ability to deliver the products and services that our customers want. I mentioned it’s been a tough revenue environment and in fact revenues declined quarter-over-quarter. Now, some of this decline reflects seasonally lower activity and a lower day count as well as a lower benefit from release of residential mortgage repurchase reserves. But beyond this, we remain in a low rate environment, fierce competition for earning assets as we try to outpace purchase accounting run-off and lower mortgage revenues with poor loan growth and fee growth across all of our lines of businesses. While we lost that race in the first quarter, I am somewhat encouraged by the modest increases in utilization we’ve seen in our commercial balances, the continued success of our specialty lending areas as well as our year-on-year growth in core non-interest income. We continue to make ongoing progress against our strategic priorities which I’ve outlined here in the past. This quarter actually marked 2 years since we closed on our acquisition of RBC Bank USA. Starting with only a retail branch network, we have fully built out our asset management and corporate banking businesses across the southeast. We now have about 4,000 frontline employees working across our markets in the southeast and we’re growing the business there faster than we anticipated on the back of a significantly improved brand recognition. Now intense competition has made it somewhat more difficult to win new clients in certain segments than when we first arrived there, but across all lines of business we’re pleased with growth that is outpacing the growth in our Northeast and Midwest markets and continues to gain momentum. To highlight another of our strategic priorities, in the retail bank, customers continue to migrate to ATM online and mobile channels as their preferred vehicles for everyday transactions. And this year, we’re focusing on piloting a conversion of our traditional branches to the universal branch model, which emphasizes consultation and sales. The transformation of our retail banking business is being self funded with the savings we’re generating through our continuous improvement process. As we’ve said, our strategic priorities are long-term efforts and our intended to deliver a differentiated customer experience and to create long-term shareholder value. To that end, we continue to strengthen our capital position in the quarter and then keeping with our previously stated intention to return more capital to our shareholders, we announced an increase in our quarterly common stock dividend of 9% to $0.48 per share beginning with the May 2014 payment. We also announced plans to repurchase up to $1.5 billion of common stock over the next four quarters. So with that I’ll turn it over to Rob to take you through the first quarter results.

Thanks Bill and good morning everyone. Overall we had a successful first quarter. Our results were driven by continued loan and deposit growth, well controlled expenses and credit quality improvement. As is usually the case in the first quarter, seasonal factors affected revenue and expenses and I’ll cover that in a moment. As Bill just discussed, these continued achievements are enabling us to return more capital to our shareholders. Let me start with our balance sheet on slide four. As you can see, total assets on our balance sheet increased by $3.2 billion or 1% on a linked-quarter basis, primarily driven by net loan growth of $2.6 billion or 1.3%. Total commercial lending during the first quarter of 2014 grew $3.6 billion or 3%, primarily in real estate, corporate banking and business credit. And consumer lending was down by $1 billion or 1%, linked-quarter as increases in automobile lending were offset by declines in other consumer and residential mortgage lending. Investment securities decreased by $1.7 billion or 2.7% in the first quarter as securities sales and prepayments exceeded purchases. And lastly, our balances with the Federal Reserve increased in anticipation of proposed rules on liquidity coverage standards. Total deposits increased by $1.5 billion or 1% in the first quarter of this year. Deposit growth in the first quarter was primarily driven by increases in transaction deposits, which were up $1.7 billion or 1% related to growth in consumer transaction deposits including higher interest-bearing demand deposits. Shareholders’ equity increased by $987 million or 2.3% in the first quarter, primarily due to growth in retained earnings and to a lesser extent, higher AOCI related to net unrealized securities gains. This helped drive our capital ratios higher. As a result, our pro forma Basel III Tier 1 common equity ratio was estimated to be 9.7% without the benefit of phase-ins as of March 31st, a 30 basis point increase from prior year-end. As we highlighted in our most recent 10-K, this ratio is computed using the standardized approach. As you know, from a regulatory capital perspective, our binding constraint for 2014 is the transitional B3 ratio, which was estimated to be 10.8% as of March 31st. As I mentioned, our balance sheet reflects our efforts to comply with the proposed liquidity coverage ratio. For example, our interest-earning deposits with banks, which are primarily with the Federal Reserve, increased by $2.7 billion on a linked-quarter basis and by more than $13 billion compared to the same time a year ago. We increased total borrowings by $700 million or 2% linked-quarter and a substantial portion of this supported our enhanced liquidity position, as well as loan growth. As you know, the rules on LCR are still in proposed form; however we have a clear line of sight on reaching the final targets once they are established. Finally, our tangible book value reached $56.33 per common share as of March 31, a 3.2% increase linked-quarter and a 12% increase year-over-year, reflecting our commitment to delivering shareholder value. Turning to our income statement, as you can see on slide five, net income was $1.1 billion or $1.82 per diluted common share and our return on average assets was 1.35%. Our first quarter results for net interest income and non-interest income were as expected, while exceeding expectations on expenses and provision. Let me highlight a few items in our income statement. Net interest income declined by $71 million or 3% compared to the fourth quarter. Virtually all of this decline was due to lower purchase accounting accretion of $28 million and fewer days in the quarter, which accounted for approximately $35 million. Importantly, core run rate NII remained relatively consistent with fourth quarter levels as loan growth substantially offset continued modest spread compression. Non-interest income decreased by $225 million or 12% linked-quarter, primarily due to the higher fourth quarter benefit we had from the release of repurchase reserves and seasonal declines in fee income. I will provide more detail on this in a moment. As a result, total revenue for the first quarter was $3.8 billion, a decline of $296 million or 7% compared to the fourth quarter consistent with our expectations. With regard to expenses we were very pleased with our first quarter performance. Non-interest expense declined by $250 million or 10% compared to the fourth quarter as a result of overall disciplined expense management, as well as some seasonally favorable effects. Finally, provision in the first quarter declined to $94 million due to continued overall positive credit trends. Comparing results to the prior year quarter, our net income was up $65 million or 7% primarily due to well managed expenses and lower credit costs. Now, let’s discuss the key drivers of this performance in more detail. Turning to net interest income, as you can see on slide 6, total net interest income decreased by $71 million or 3% for the reasons I just highlighted. As you can see, purchase accounting accretion declined on a linked quarter basis consistent with our expectations. Looking ahead, we continue to expect purchase accounting accretion to be down approximately $300 million for full year 2014 compared to 2013. Net interest margin declined by an overall 12 basis points linked quarter. Of that amount, approximately 4 basis points was attributable to the lower purchase accounting accretion while the remaining 8 basis point decline in core NIM, 4 basis points was due to the increased Fed balances as well as other LCR related actions. And the other 4 basis points was primarily due to spread compression at levels consistent with what we’ve been experiencing for several quarters. In terms of interest rate sensitivity, our balance sheet remained asset sensitivity as we have maintained the duration of equity of approximately negative 2 years. Going forward, we will continue to remain disciplined with the focus on achieving appropriate risk adjusted returns. Turning to non-interest income, consistent with our expectations, our fee income declined by a $158 million or 11% on a linked quarter basis, primarily due to reserve releases related to our repurchase obligations and seasonal factors. However, excluding the impact of residential mortgage, the linked quarter decline in fee income was $48 million or 4%, largely reflecting seasonality. Year-over-year fee income increased $85 million or 8%. Asset management fees held steady on a linked quarter basis reflecting stable equity markets. Compared to the same quarter a year ago asset management fees increased by $56 million or 18%. Assets under administration were $255 billion as of March 31st, an increase of $19 billion or 8% compared to the same time a year ago. Consumer services fees and deposit services charges were both lower compared to fourth quarter results, again reflecting a seasonally lower volume of customer initiated transactions. Compared to the first quarter of last year, volumes underlying consumer services fees were up, brokerage fees increased $3 million or 6%, reflecting our strategic priorities, and deposit service charges increased $11 million or 8% as a result of growth in customer activity and changes in product offering. Corporate services fees were flat linked quarter. Our merger and acquisition advisory fees were above typical first quarter activity but below their record fourth quarter volume. This decline was partially offset by a net increase in our CMSR valuation as a result of movement in interest rates. Compared to the first quarter of last year, corporate service fees increased by $24 million or 9%, driven by higher merger and acquisition advisory fee and capital markets activity. Let me spend a few minutes discussing residential mortgage as fees declined by $110 million linked quarter. Virtually all of that was driven by the impact of the mortgage repurchase reserve release related to our settlement with Fannie Mae and Freddie Mac which we made in the fourth quarter. In addition, we also saw lower loan sales revenue as originations volume fell to $1.9 billion in the first quarter from $2.5 billion in the fourth quarter and from $4.2 billion in the same quarter a year ago. While our volumes were down in both comparisons on a percentage basis, we experienced less decline than the broad industry. The gain on sale margin was 453 basis points in the first quarter. As you know, our margins tend to be higher than the industry as we don’t utilize the broker channel to originate loans. However, this quarter, our margins benefited even further due to favorable mark-to-market accounting adjustments. We continue to expect our margin to trend closer to 300 basis points through the remainder of 2014. In regard to expenses, as you know, we announced expense reductions in Residential Mortgage during the fourth quarter of last year and we have fully captured those savings. Going forward, we will continue to monitor trends in the business and proactively manage expenses in line with revenues throughout 2014. Other noninterest income decreased by a $134 million linked quarter, primarily due to lower revenue from private equity investments, which had a particularly strong fourth quarter. We also had lower credit valuations for customer related derivative activities and lower asset sales. These decreases were partially offset by the impact of the sale of Visa stock in the first quarter. Despite these all pressures, non-interest income to total revenue was 42% in the first quarter, down slightly from fourth quarter levels, but up 2 percentage points from the same quarter a year ago. Turning to expenses on slide 8, first quarter levels were down by $250 million or 10% as a result of strong benefits from our continuous improvement broke ground, overall expense management and some seasonality. As we previously stated, our CIP program has a goal to reduce costs by $500 in 2014. We’re one quarter delay through the year and we’ve already completed actions relating to capturing more than 35% of our goal. And as a result, we’re confident we will achieve our full year target. In addition to CIP savings, we had seasonally lower costs this quarter in virtually all categories. With these savings to-date, along with further planned activities, we intend to fund the significant investments we’re making in our infrastructure and in our retail bank transformation. One last item on expenses. During the first quarter, we did adopt new accounting guidance related to low income housing tax credits. As you are aware, this change reclassifies non-interest expenses on certain tax credit investments to tax expense with minimal impact to EPS. In line with accounting requirements, we did recast prior periods to reflect the impact of these changes. As a result, this changes year-over-year expense neutral and does not impact expense guidance. It does however increase our effective tax rate which we now expect to be approximately 26%. As you can see on slide 9, overall credit quality continued to improve in the first quarter. Non-performing loans were down $141 million or 5% compared to the fourth quarter as we saw continuing broad based improvements across both commercial and consumer loan portfolios. Past due loans: Past due loans decreased by $264 million or 11% linked quarter and net charge-offs held steady. Net charge-offs for the first quarter were 38 basis points of average loans which was consistent with the ratio for the fourth quarter. Our provision of $94 million declined by $19 million or 17% on a linked quarter basis and this was driven by continued improvements in credit quality and increases in home values. Finally, the allowance for loan and lease losses declined on both the linked quarter and a year-over-year basis and is now at 1.78%. While we were pleased with this performance, we continue to believe credit trends may not remain at these levels. In summary, PNC posted a successful first quarter consistent with our expectations. Assuming a continuation of a current economic environment, we continue to expect that full year revenue will be under some pressure and as a result could likely be down year-over-year due to further purchase accounting accretion declines as well as lower residential mortgage revenues. In this environment, we will remain focused on disciplined expense management and we continue to expect full year expenses to be down when compared to 2013. Looking ahead to the second quarter, we expect modest growth in loans, we expect net interest income to be down modestly due to the continued decline in purchase accounting accretion and further spread compression. We expect fee income to increase in the low single-digits, reflecting continued focus on our strategic priorities. We expect non-interest expense to be up by low single-digits as second quarter expenses typically increase compared to first quarter. And finally, assuming a continuation of current credit trends, we expect the provision for credit losses to be between $100 million and $150 million. And with that, Bill and I are ready to take your questions.

Thank you. (Operator Instructions). Your first question comes from the line of Matt O’Connor from Deutsche Bank. Please proceed with your question. Matt O’Connor - Deutsche Bank: Good morning.

Good morning Matt. Matt O’Connor - Deutsche Bank: Just to follow-up on some of the net interest income comments you made heading into 2Q, as we look at core net interest income ex the purchase accounting accretion, do you expect that to be relatively flat or what’s the outlook for core NII and core NIM?

Yes. Sure Matt. So, our guidance is for the full NII and NIM, obviously when we say modestly down if you take out purchase accounting that modestly down decreases by a bit. But it’s really going to be a function of what Bill mentioned in his comments, which is that rate so to speak between loans and yields. So that will determine the core NII levels and of course the core NIM. Matt O’Connor - Deutsche Bank: Okay. So it sounds like it still might be under a little bit of pressure from hearing you correctly in 2Q?

Well, I think yields are certainly under pressure and then the loan growth is in terms of the modest growth that we expect to be seeing would offset that. Matt O’Connor - Deutsche Bank: Okay. And then on expenses, obviously better than expected this quarter, should we think about that as flowing through for rest of the year that you’re going to beat some of the targets, you’re at 35% already or were you able to front-end some of it and just stick to kind of the original expectation?

Yes. Sure Matt. The short answer is, it’s too early to extrapolate our first quarter results. We’re pleased with the level in terms of the $250 million decrease linked-quarter. So we’re pleased that that performance prompts that question. But there is seasonality involved there; there are further investments in the business that we’re going to make in the balance of the year. So, it’s too early to extrapolate that, but it is safe to conclude that we’re off to a good start. Matt O’Connor - Deutsche Bank: Okay. And then just lastly, at this point, you guys expect to use all of your buyback capacity that you were approved for from the Fed on the CCAR?

We shall see, right? We’re going to just kick that off. We are obviously value dependent to some point to some extent. We see value where we are today. So, maybe I’ll leave it at that and we’ll see where we end up as we go through the year. Matt O’Connor - Deutsche Bank: Okay, that’s helpful. Thank you.

Thank you, Mr. O’Connor. Continuing on, our next question comes from the line of Mr. Paul Miller from FBR. Please proceed with your question. Paul Miller - FBR: Yes. Thank you very much. Can you address a little bit on the Southern I guess, the RBC franchise, where that is, and then how is that growing year-over-year? Just add color around that, those comments.

Sure. Just anecdotally, across virtually all of our lines of businesses, the growth in the Southeast is outpacing what we’re doing in our legacy franchises. Surprisingly to me at least probably most pronounced on the retail side where client growth there is much higher than legacy markets. C&IB and wealth kind of starting from scratch, continue to add good clients and loan balances and fee income inside of wealth. So, it’s progressing well largely across all of the markets that we acquired. It’s coming, we’ve said this before, it’s coming certainly in terms of C&IB and wealth off of such a small base, their percentages are massive in terms of increases. The impact to our bottom-line, it’s still early days and that will grow through time. Paul Miller - FBR: And then can you talk a little bit about the competitive nature especially in the CRE books? We’re hearing a lot of some regional banks talk about that there are more and more people at the table, be it insurance companies, smaller regional banks and what not. How competitive is that CRE market out there right now and C&I, I should say?

Well, let’s just start on real estate, I mean you have to remember the capacity that left the market post crisis with the European banks pulling back. A lot of that slack being -- the slack from that and then the CMBS market shrinking being taken up by insurance companies and new bank entrants. The competition in the market is accelerated, as I look at sort of our spread declines quarter-on-quarter or over the last 6 months is probably most accelerated inside at real estate, structures are still good. I think one of the things that we benefit from is because we lent straight through the crisis to our core good Class A clients. They continue to come back to us. So, we need to be on market, we don’t need to be through market. We continue to see good growth again led by multifamily, some term stuff on balance sheet, a pickup and office properties and even a little bit in lodging. On the C&I side, it’s a tough fight. It’s harder and harder to pull certainly versus the crisis to pull a client away from a competitor. Interestingly, the spread declines seem to have slowed down relative to what we were kind of marching through last year and it varies by segment. So on the specialty businesses and asset-based lending, certain public finance products and equipment leasing; there is less providers, so therefore less competition and a little bit more room on spread. The generic product is tough. Paul Miller - FBR: Okay. Thank you very much, guys.

Thank you. And continuing on, our next question comes from the line of Erika Najarian from Bank of America. Please proceed with your question. Erika Najarian - Bank of America: Good morning.

Good morning. Erika Najarian - Bank of America: My first question, if we could just get a little bit more detail on the LCR. I was just wondering does your guidance for net interest income for the remainder of the year include the balance sheet actions that you plan to take for LCR. And underneath that, how should we think about the dynamic of balance sheet growth versus loan growth as you build liquidity? And is the 4 basis point impact from liquidity action this quarter going to be a similar impact in the following quarters?

Yes okay, Erika this is Rob. I will try to answer most of that, remind me what I didn’t answer. In regard to the liquidity coverage ratio and our efforts to move in compliance, as you know the rules aren’t finalized yet so we are moving towards that somewhat of an unknown target. That said, we have done quite a bit. And that has shown up in our net interest income and our NIM. Last quarter you will recall 7 basis points of our NIM contraction was LCR related, in this quarter as I said in my comments it’s four basis points. So, where we don’t know where the final stop is, I think it is sufficient to say that we are more than half way there in the bulk of what we experienced in NIM compression related to LCR activities based on what we know now is more behind us than ahead of us. Erika Najarian - Bank of America: Got it. And Bill you’ve really delivered on what you had talked about last year in terms of expense management and your efficiency ratio was 60% this quarter. As we think about your guidance for full year and for next quarter, do you think you could keep your efficiency ratio at the 60% level for the duration of a year? And given your strong comments on RBC, does that contemplate upside or does it -- could we be surprised any upside by the contribution from your southeast franchise?

I think we’ve given, Rob has kind of given you all the guidance, we’re going to give you in terms of level one detail, but some colored commentary. First on the expenses, I didn’t deliver the company deliver. And it’s an important point that the franchise really has gotten its arms around the importance of saving money to reinvest money and the importance of improving our efficiency ratio. The end result of that, we’re going to play out this year if we continue to see positive trends in loan growth whether from the southeast or simply from some of the utilization increase we have seen in our C&I space maybe there is upside to it and then that will roll through to the efficiency ratio. But we’re one quarter into the year. We had a strange first quarter just in terms of weather-related impact and some of the seasonality so I don’t know exactly how to extrapolate from here and give you anything more than what Rob already gave you. Erika Najarian - Bank of America: Okay. Thank you for answering my questions.

Thank you. Continuing on, our next question comes from the line of Betsy Graseck from Morgan Stanley. Please proceed with your question. Betsy Graseck - Morgan Stanley: Hi, good morning.

Good morning.

Good morning. Betsy Graseck - Morgan Stanley: Couple of questions one is on the reinvestments, I am just wondering if you feel that the reinvestments that you are making into the franchise are at run rate in first quarter or are they accelerating as you go through the rest of this year?

Two answers of that question. The investments show-up in terms of cash spent, not necessarily in terms of expense yet because a lot of them are capitalized and then depreciated through time, so we will, we’re probably investing at a steady phase for a period of time with depreciation to roll-on somewhere down the line as we take out further costs to fund the depreciation. So we’re early days in what we are investing and the end outcome of these investments particularly as it relates to our infrastructure and operational areas is more efficient back office and better customer service through automation and less manual process. So we’re spending the dollars steady state, you are not necessarily seeing that inside of the expense line directly today. Betsy Graseck - Morgan Stanley: Okay, got it. And then the second question just has to do with CCAR, I’m just wondering how you felt the process went this year and looking to understand, do you think that they are, all that seems equal, which is I know is a aggressive statement, but all that seems equal, do you feel like there is any room for bumping up the request into 2015, I mean because your gross payout ratio roughly 55%ish now at least in our numbers and mid 40s it feels like there is a lot of opportunity there for reinvesting in the franchise maybe, lot of capital accretion. So, just wondering what you’re seeing in the process this year and do you think there is room to bump it up into next year?

Too early to comment on next year, but one of the things that did happen this year, if you look at our results versus the federal reserve’s results and this was true for all of our peers, their asset growth assumption in result and risk-weighted assets. The differential between patterns where we were was largely the difference between their outcome and ours. I’ll remind you that we talk about the binding constraint being the obvious comment, the ending ratio not the starting ratio and we obviously had room on a phased in Basel III number this year, where conceivably we could have done more, we think we did a lot. We will reevaluate next year as a function of what they are going to look at in terms of how they calculate the bottom number vis-à-vis Basel III. Our intention and I’d probably just leave it here, our intention is to return more rather than less inside of a fairly complexed framework in terms of both what we measure as to what we have available and what they think we have available. Betsy Graseck - Morgan Stanley: I guess the question is essentially because, you end up accreting capital otherwise unless the payout ratios go up and then it built into the questions around, spread compression and competition, try to use [life] as a capital?

No, look it is the right question, right. So whether we go from 55% to 65% to 75% to 90%, right we’re going to continue to build the capital base that inside of our own plans given our assumptions that we’re not going to be buying anything any time soon, effectively built capital levels for us. You guys use the term capital trap, but what do you do about it. One of the things that I think we and the rest of the industry, I should just speak for we, one of the things I think eventually happens is that we move beyond what we would do directly and share repurchase is a way to return capital into sort of annual special dividend as part of this process, I don’t know when that is, but it’s quite clear to me that all else equal, they will stay just the way they are we and the rest of the industry are going to book capital levels well beyond what the required minimums are. Betsy Graseck - Morgan Stanley: Yes, because you’ve got this hypothetical CCAR in the real world trapped capital issue, right?

Yes. And we also have inside of the earnings assumptions or the revenue assumptions in the base case of CCAR, we have some inconsistencies versus what we would actually think we can make because we don’t count certain revenues in CCAR that for us are repeatable and recurring. So there is a disconnect on that side as well.

This is Rob, just to emphasize those points that issue is largely an industry issue. Betsy Graseck - Morgan Stanley: Right, exactly. Okay, thanks.

And thank you for your questions. Continuing on, our next question comes from the line of Keith Murray from ISI. Please go ahead Mr. Murray. Keith Murray - ISI: Thank you. Good morning.

Good morning, Keith. Keith Murray - ISI: Could you just clarify, you mentioned the mark-to-market accounting adjustment that benefited the gain on sale of mortgage, is there a dollar amount you can give or basis point impact benefit to the margin there?

Yes, it’s pretty straight forward; it’s relatively small $24 million basis points 125 or so. Keith Murray - ISI: Okay, thanks. And then on deposit service charges and overdraft behavior obviously there is seasonality in the first quarter. But have you seen a meaningful change in consumer behavior on that and how does that impact your view on that line item going forward?

We have an overdraft where it’s been pressure on numbers in front of me, but been pressured year-on-year largely I think because of consumer behavior. Keith Murray - ISI: Okay. And then on the LCR, does that change your view on commercial deposits and have you adjusted pricing on those deposits yet or is that something that’s still a work in progress given its early stages?

On the commercial side, deposit pricing is pretty competitive to outright market rates, I think money market type yields and have been and we continue to be there. Those deposits don’t count for much inside of LCR though, right? So transaction deposits are where it makes a difference or where money market accounts with consumers. And we are changing pricing at the margin as it relates to those products. Part of the issue, Rob mentioned the rules aren’t finalized yet as we try to figure out how much of a gap we have or don’t have; there is 2 or 3 items that they’re still working through the LCR common process related to look through on securitizations, municipal deposits, some draw rates on other products that have a material impact on our outcome. And so, we’re not in a huge hurry to change what we’re doing today until we know what the final rules are because we don’t want to do long-term structural change the way we fund ourselves unless we have to.

And that the rules are clear.

Yes.

And filed. Keith Murray - ISI: Understood. And just finally I am sitting on pretty sizeable unrealized gains filled with Visa shares, going forward if you would realize some of that your thoughts around capital planning there, is that something maybe you would go and revisit with the Fed as far as doing, repurchasing shares with those gains?

We’ve been pretty clear through time that we’ll monetize the Visa stake through time as we see value, we’ve been doing that fairly consistently for the last couple of years. Given what we might do this year, I don’t see us going back for the federal money mature if we could to go back and request additional capital actions. It obviously adds to our capital base which will come into play for next year, as we take gains this year though.

Yes. And just to add to that the stake, at the end of the quarter about 9.5 million shares worth $850 million on our books worth $130 million, so then realized gain is just north of $700 million. Keith Murray - ISI: Okay. Thank you.

Thank you, sir. Continuing on, our next question comes from the line of John McDonald from Sanford Bernstein. Please go ahead sir. John McDonald - Sanford Bernstein: Hi. I think Bill in the beginning mentioned some signs of modest improvement in line utilizations on the commercial side. Could you add some color on what you are seeing there, Bill and any hope for what might be driving that?

Yes. So, it’s early days but we’ve seen a decent chunk of the growth in the first quarter and C&I come through utilization increases interestingly for the first time in a really long time in the middle market book. So the plain vanilla revolver middle market corporate America were popped up I think 50 basis points plus or minus. We’ve actually seen a continuation of that into the front couple of weeks of April. Now, I would tell you with all sorts of caveats that people tell me that utilization typically does pop in the second quarter, so maybe that’s just seasonal and it’s going to go away. The bull case on this whole thing is, if you look, if you follow the CEO Confidence Index and people have been showing me these chats where you kind of regret that against capital expenditures. It is highly correlated and we’ve seen that the CEO index increase. So maybe we’re finally getting the pop in capital expenditures which are driving these line increases. But we’re quarter into the year, we had a weird couple of months to the start of the year because of weather. And [a boy] I’d like to continue to trend, but I can’t tell you it’s going to happen yet. John McDonald - Sanford Bernstein: Okay, thanks. That’s helpful. And Rob on the fee income outlook any color on what you’re looking to as the drivers of improvement in the second quarter on the fee income side?

Yes. And I think it’s pretty straight forward John. There is a seasonality effect and we’ll get the lift there. And then in addition to that, it’s just returns on the investments and the strategic emphasis that we put on those businesses.

We had some weird quarter-to-quarter swings too with CVA impacting results and Harris Williams traditionally has it and did last year a really strong fourth quarter. We saw weakness in corporate bond fees in the first quarter while we’re less dependent on it. But nonetheless, it impacts our number along with the rest of large banks reporting capital markets income. That on the normalize out. And when you get over the year end the effects, pretty confident that we would do well in the second quarter. John McDonald - Sanford Bernstein: Okay. And then last thing on the provision outlook, Rob can you break that down a little bit just in terms of what you’re assuming for charge-offs going forward and reserve release breaking down between those 2 items.

Yes, sure. So charge-offs in the first quarter were -- net charge-offs were $186 million, our provision was $94 million, which generated a 92 release. Going forward, assuming credit quality and credit trends all stay consistent we see net charge-offs in a similar kind of range which is where they have been for a while. Provision: Our provision guidance in terms of that 100 to 150 is our estimate in terms of sort of what we are seeing. And if that all plays out, we would have further releases although not necessarily at the same level in the first quarter. John McDonald - Sanford Bernstein: Okay, thank you.

Thank you, Mr. McDonald continuing on our next question comes from the line of Ken Usdin from Jefferies. Please proceed with your question. Ken Usdin - Jefferies: Thanks a lot. Robert, I wanted to ask you a little bit about balance sheet efficiency. Loans have been out growing deposits and you are also obviously doing the build for mix I should say shift for LCR. And so you have done a double dose of both bank note senior debt and FHLB. I guess as you look out and you think about the best mix going forward, should loan growth continue to outpace deposits, how do you think about the right mix of liabilities looking ahead?

That’s a big part of the effort obviously Ken, particularly in terms of the LCR. So to the extent that the LCR is part of that we have been pretty clear in terms of we are moving along in terms of where we think we are going but not quite sure where the final target is. In regard to loan and deposits, we remain core funded. We plan to stay that way. You are correct that loans at least recently I think growing faster than deposits. And that’s something that we manage actively, but that core funding is our philosophy and we continue to manage in that direction.

If you are thinking of the deposit growth numbers, we continue to run off sort of non-core and CD not having as much impact on our margin as it once did. But I believe and somebody can correct me here if I am wrong, I think our core transaction deposits are actually outpacing loan growth; it’s just the run off in the CD balances that are causing that mix to shift. So, I think as we kind of burn through the residual of the non-core, we’re actually running a much more balanced production of deposits against loans. Were that to change, right, the levers we have certainly on the consumer side, which are morality or friendly is to get more aggressive inside the money market space on rate paid, which probably in this environment doesn’t make a huge difference, but as rates begin to rise through time, I think we’ll move flows. Ken Usdin - Jefferies: Okay. And then just one more clarification on the LCR build. You are doing the remix and Rob I heard your point that you are further along towards, and then further away. But when you think about the overall size of the securities portfolio as a proportion of the balance sheet, are we also at the right spot or should we still expect there to be just net growth over time?

Net growth in the securities balances? Ken Usdin - Jefferies: Yes.

Not necessarily. So, you see, the decline on spot balance is towards the first. That duration was replaced largely inside of the swap book, just received fixed on swap. So, the other thing inside of our securities book today is a lot of the stuff that we own is floating rate and not adding duration. So, our ability to get the duration we need in a higher rate environment can be done, as you know, with same notionals and longer duration of the underlying securities and/or the swap book. And all of that will be a function of market opportunity. But one thing we have done is inside of the securities book, the percentage of that book that is level one, securities has increased through time, right? So, to the extent that it’s on our balance sheet and level one is not really impacting our LCR calculation versus just having cash set at the Fed. Ken Usdin - Jefferies: Right. Okay. And then my last one, just when you -- the commentary about NII coming down in the second quarter is clear, but I’m just wondering, we know about obviously a $300 million of accretion and we know that your point about loan yields coming in and Bill your point to just about this remixing issue, but how do you size for us the magnitude of core margin compression that you see is being left just given on the rollover effects on the asset side?

It’s a good question. How low can it go? Ken Usdin - Jefferies: Yes. I mean really that’s a question, right, I think because I think people are wondering why can’t core grow, because obviously we know NII is going to be down just because of the purchase accounting pressures, but I guess the question underlies is how you -- what stops them to believe of the core NIM compression if I could just ask as that simply then?

I think inside of that number you have the impacts from loans and the impact from securities yield. And on the loan side, we are kind of grinding lower on average spread across the book at a slower pace than we once were. So, maybe we’re approaching some neutral point. Securities balances, we’ve again seen yields, we got excited that tenure went over 3% for a day and that is back down. So, reinvestment yield and securities continues to be less than the average yield on a book by a fair margin. And in fact if anything we continue to get shorter in that book rather than longer given the opportunity we see on where yields are. So that -- look at the end of the day, we have $58 billion of securities yielding what 3, a little over 3%. We’re reinvesting to the extent we do at 2.5%. So, you get 50 basis points and $58 billion over $300 billion, you can do the math and run it through our margins.

That sounds good, something similar to what we saw in the first quarter of last year. Ken Usdin - Jefferies: Yes.

So that switches almost instantaneously, if we trade again back to the top-end of the range in yields that we’ve kind of been bouncing around for the -- I keep talking about the tenure, but it’s really the middle of the curve that we focus on. Ken Usdin - Jefferies: Yes, got it. All right, great. Thanks for the help.

Thank you for your question. Continuing on, your next question comes from the line of Steve Scinicariello. Please proceed and he is from UBS. Steve Scinicariello - UBS: Good morning everyone.

Good morning. Steve Scinicariello - UBS: Hey, I just wanted to get a little color just given really the strong loan growth especially on the commercial side. Just kind of curious where you’re seeing kind of the best risk adjusted returns across some of those sub-segments and sectors?

Yes. Sure. I can answer that. In terms of the loan growth most of it is coming from the C&IB space as we mentioned and within that in the quarter commercial real estate, further improvement in commercial real estate, corporate banking to Bill’s point around the middle-market book and business credit. And I think probably those are the areas with the exception of the middle-market where we’re seeing the better spread, specialty businesses, commercial real estate and business credit in particular done equipment spending.

And just on return on Rob is our asset-based book is probably the best we have. But we don’t -- we measure return across our client not just on the credit extension. So, inside the corporate book where the returns on the loans and sales might be marginally lower, the return on the client given cross-sell off treasury management and other products typically makes it really attractive. Steve Scinicariello - UBS: Makes sense. And then you had mentioned kind of the amount of capacity that has gone out of the system whether it’s the foreign banks, the CMBS market et cetera, how long a runway do you think you guys have? Should it be something we should measure in terms of years potentially or how big is this kind of market share opportunity that companies like you have?

It’s probably measured in years if for no other reason and a substantial part of our growth continues to be in project loans, which fund up over the course of a couple of years by definition, yes. We have seen spreads come in, in that segment, but risk adjusted returns still look pretty good. And as I said before, we have seen that the partnerships we had and supported through the downturn continue to reward us with business in a way that that isn’t necessarily jumped off of the highest bidder credit provider which is great. Steve Scinicariello - UBS: Perfect. Thank you so much.

And thank you for your question. Moving on next, our next question comes from the line Gerard Cassidy from RBC. Please go ahead. Gerard Cassidy - RBC: Thank you. Good morning guys. Bill, I got a question on the capital levels for PNC. Where do you think the Tier 1 common ratio should get to where you’re comfortable to say that that’s enough, or and if you can’t really answer that today, what do we need to see whether it’s from the regulators or from you folks to where you can say at this point, okay we are very comfortable with our capital levels, we don’t want them to go any higher from where they are?

Look, it’s a great question, but the way I am going to answer it is, will get backwards. So, we basically want to be able to say that in an adverse case, our capital ratio won’t drop below the 7% threshold. And in a severely adverse flow, the 4.5 inclusive of those 2 things, we’d also run a buffer that’s a function of some of our idiosyncratic risk. So, I define my starting point as a function of my ending point and struggle with giving you a number on the starting point is every year we get hit with a new scenario. And even when we can expect what the scenario is, we might get hit with a rule change. So this year kind of at the 11th hour, we had loan balances grow in the Fed case. We don’t necessarily think that what happened, but nonetheless that’s what they ran in their numbers. So that’s our challenge. I would like to think that we’re at a level today that supports, and I do think that we’re at a level today that supports our needs and is above what our threshold ought to be. We then get back to the issue of what can I actually do about it being so high given that we have constraints on how much we can return to shareholders through the capital return request. So, I think we’re where we need to be. I don’t think we’re supposed to grow from here, mechanically we may end up growing. Gerard Cassidy - RBC: Thank you. And regarding your comments a moment ago about the special dividend, which I concur with, have you bounced that off of the regulators yet, are they in that mode of thinking about it recognizing, nobody is doing it, I don’t think this year, but has that entered into the discussion yet with the Fed?

It has. Yes, it has entered into discussion not in any formal sense, so I brought up in discussions. So I think of course the issue with dividends is the repeatability of it, if it’s a special dividend then in fact, it’s a one-time request not the similar from the share repurchase. The issue we will face should things trend that direction has been able to get a valuation multiple, effectively the repeatability of that special dividend, so that shareholders value beyond just the one time. All that needs to be worked through. But I think at some point, I mean if you just run through in our case, the potential capital return, at some point we are appropriately price sensitive to where we would be buying back shares and at some point, returning capital through dividend is I think a smarter long-term thing for our shareholders. Gerard Cassidy - RBC: Sure. On the universal branches, is there a target of where you eventually want that number to reach as a percentage of your total branch footprint? Is it someday in five plus years a 100% or where do you see that number going?

Well, it’s certainly going to grow; it’s kind of in pilot phase if that’s all right. We’re kind of learning from experience in the customer experience inside those branches and tweaking it as we go. But you got to remember that somewhere down the road, if you think of touch points with our retail clients; we will have what looks like a traditional branch, but it will be a universal branch. We’ll also have lots micro branches and technology branches, effectively, a smart ATM. So, our full service branches being universal branches I would think that most if not all of them would transform into that model or whatever that, however we perfect that model. But beyond that we’re going to have a lot of branches that are more technology-based and may have fewer, if any employees. Gerard Cassidy - RBC: Great. And speaking of technology, Bank of America held their call this morning and Brian Moynihan mentioned that they are spending $3.5 billion a year in technology.

We have been processing. Gerard Cassidy - RBC: What are you guys -- I hope so. Do you guys have a number that you could share with us and what you're spending on this initiative to make these branches more in the 21st century than prior time period?

We haven't put a specific number out there. Our capital spend so across technology and just physical plant if we, some of this is just rolling out image-enabled ATMs and some other things. It is 20%, 30% higher than a run rate we might have had a handful of years ago and it will be elevated for a couple of years. That's probably the best I can give you. Again we expect on the back-end of this through automation to takeout manual process that largely funds it. But it's not just, some of this is [the client] facing technology, which is important, but a big part of it is core infrastructure and cyber, it's resiliency, it is ease of use for our employees and customers, it's big data. It's all the stuff that I think it takes to be a leading edge bank as we move into the future here. Gerard Cassidy - RBC: And then just my final question, I’m looking on my screen at your January 2010 slide deck where you put out the framework for success, your long-term goals and impressively you have met just about every one of them. Is that kind of slide can we see something like that again where you put out where you hit the ROE target in a 130 basis points at the time you are in 62 et cetera. Something like that in the future possibly?

We can say it question a lot. People asking can we kind of put aspirational targets out there and most of you have heard my speech and I struggle with doing that because if you tell me an interest rate environment I will tell you an ROA and ROE. We need to do more though in terms of talking about the power and potential of this franchise and it’s something we are working on and I would expect that one of the upcoming conferences will go through that in some detail. Gerard Cassidy - RBC: I Appreciate it. Thank you, Bill.

Thank you, Mr. Cassidy. (Operator Instructions). Gentlemen, our next question comes from the line of Matt Burnell from Wells Fargo Securities. Please proceed with your question sir. Matt Burnell - Wells Fargo Securities: Good morning. Thanks for taking my question. I guess Bill a question for you, you have mentioned a couple of times on the call today that you think the relative to buyback that your stock is currently is that a value that encourages you to think about doing $1.5 billion in buybacks that you have been approved for, I guess I just want to get a little more into your thinking as to at what point does that valuation is currently about 1.5 times your stated tangible book value get a little bit dicier in terms of buying back? And then in a related question what type of loan growth scenario would you want to see before you started thinking about not meeting your $1.5 billion buyback target?

Well, just on value on the shares I am not going to go down the path of telling you a price target and where I am a buyer and where I am not other than just say as we said before we see value where we are today and we’ll play it out from there. As it relates to loan growth independent of share price performance here I don’t see in any viable scenario where loan growth will impact that.

That’s right.

I mean it would have to be some unachievable percentage before we’d run into a constraint vis-à-vis our buyback driven just by asset growth as opposed to where we’re seeing value and shares. Matt Burnell - Wells Fargo Securities: Okay. And then maybe question for Rob, in the presentation you all made in February you mentioned about 5% of your transactions in ‘13 were done via the mobile route. And I guess I am just curious if you’re seeing a greater level of pick up in mobile banking activity and products in the newer markets i.e. in the Southeast relative to your more traditional markets or is it roughly similar across your franchise.

Just a clarification in terms of non-teller transaction or deposit activities, the numbers were more a year ago 18% to now in the 30% range. And in terms of the southeast, not necessarily seeing a higher percentage, it’s pretty much a clean double across all of our markets, we went through that monthly sale ago and it’s in the 30% range and in all of our legacy markets as well as the Southeast. Matt Burnell - Wells Fargo Securities: Okay. Just…

Yes, which were ahead of it. Matt Burnell - Wells Fargo Securities: Yes. Just for clarification on the February deck you have on page 12 you have mobile transactions at about 5% of total deposit transaction, that’s really the number…

That might not have included the ATM. Yes we focus on non-tailor but the mobile are increasing commensurately as well. Matt Burnell - Wells Fargo Securities: Okay. Thanks for taking my questions.

Sure.

Thank you, Mr. Burnell. Continuing on, our next question comes from the line of Brian Foran from Autonomous Research. Please proceed with your question. Brian Foran - Autonomous Research: Hi, good morning.

Good morning. Brian Foran - Autonomous Research: Bill, I know you’ve talked a lot about technology, both on this call and really for a couple of years now and you’ve also been pretty consistent about [DM] sizing M&A as part of the go forward strategy. You gave an interview, maybe a week or two ago now where I think you linked those more clearly than I remember, you had before and I’m going to paraphrase it poorly, but basically saying any deal, even if it’s pretty small really slows down your ability to change technology and the franchise. I was wondering if you could [twist] it out generally and maybe specifically is that a near-term change in thinking, this year just had a lot of technology and shift and so to it’s sort of big year issue or do you think that’s something longer term where technology change organically has just become more valuable than M&A and cost saves and revenue synergies?

I mean I think it’s a near-term issue. Our issue is when you do an integration particularly one that it involves consumer accounts, loan accounts, you basically map the two technologies together field-to-field, record-to-record and you have to freeze everything, because at some point you are going to move all of those files over under the remaining system. So any application updates that you might be doing in the ordinary course during that mapping process, you have to stop. Our particular issue is that because we had been pretty active acquirers over the last multiple years, we froze changes that we probably should have made. So now we’re catching up, we’re getting applications up to speed, we’re refreshing datacenters, we’re improving cyber, we’re doing a lot of things. I don’t want to freeze that progress to do a small bank deal, even if I saw value in a small bank deal, which today we don’t which is a separate issue. Down the road, it actually becomes a competitive advantage if you have a technology platform that would allow you to integrate faster, that's a good thing. So it's kind of near-term priority for us to get our technology agenda behind us. I don't think there is any opportunity cost associated with that, because we don't see value in small deals today that may change later. Brian Foran - Autonomous Research: Thank you. I appreciate it.

And thank you sir. Continuing on, our next question comes from the line of Chris Mutascio from KBW. Please proceed with your question. Chris Mutascio - KBW: Thank you. Good morning Bill and Rob. How are you?

Just great. Chris Mutascio - KBW: Good. Rob just a quick question for you on the fee income guidance. I saw a couple of numbers out here, but I just want to make sure I have this right. You are expecting low single-digit type growth first quarter to second, if I use, just for the sake of argument, use 3%, I’m not putting words in your mouth, so that gets you to about $1.63 billion in second quarter. But then if I back out the [Visa] gains and also the gain on sale of margin benefit you had in first quarter, first quarter I don’t want to call, but first quarter could have been more or like $1.49 billion. So the difference in your guidance and first quarter extra gain on sale and extra Visa is about a 9% increase or about a $140 million increase. So, does that imply additional Visa gains in the second quarter in your guidance or is this all made up by seasonality?

Yes. That's a good question. But that's -- and really it's not any guidance around Visa. Your question really relates to the other non-interest income, which a short answer is we average $300 million there on that line. We were down this quarter in the first quarter would largely drive that category and there is a number of sub-categories, so it largely drives that category; our private equity investments, credit valuation adjustments and loan, our asset sales. And in the first quarter, all three of those were down linked-quarter, which if unusual in our history that all three of those categories are down simultaneously. They are unrelated, but that’s what occurred in the first quarter. So, the short answer is, we still feel good in terms of our guidance, but that $300 million number not including Visa is a good number for the other. Chris Mutascio - KBW: Great, thank you very much.

Sure.

[Penna], with that I think we are well over our allotted time. So I think we are going to wrap up the call now, Bill do you have any closing remarks?

Just quickly again to reiterate where we are; we continue to be focus on strategic priorities which we are making good progress on. We are intensely focused on controlling expenses because they are the one thing we can drive here in what is a tough revenue environment. I am pleased with the organization’s progress as we go into the Southeast and against our other priorities, we’ll play the year out here, but I think we are in pretty good shape. So, continue to deliver for shareholders, I’ll just end there.

Great, thank you all for attending today’s call.

Thank you. This concludes today’s conference call. You may now disconnect. Thank you everyone. Have a great day.