William H. Callihan - SVP, Investor Relations William S. Demchak - Chairman, President and CEO Robert Q. Reilly - Executive Vice President and CFO

Jessica Ribner - FBR Capital Markets John McDonald - Sanford Bernstein Scott Siefers - Sandler O'Neill Steven Duong - RBC Capital Markets Erika Najarian - Bank of America Robert Placet - Deutsche Bank Ken Usdin - Jefferies Bill Carcache - Nomura Securities Nancy Bush - NAB Research Marty Mosby - Vining Sparks David Hilder - Drexel Hamilton Kevin Barker - Compass Point Christopher Mutascio - KBW John Pancari - Evercore

Good morning. My name is Amanda 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 call is being recorded. And I would now like to turn the call over to the Director of Investor Relations, Mr. Bill Callihan. Sir, please go ahead. William H. Callihan: Thank you and good morning. Welcome to today's conference call for the PNC Financial Services Group. Participating on this call our PNC's Chairman, 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 trends 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 the historical performance due to a variety of risks and other factors. Information about such factors, as well as GAAP reconciliations and other information on non-GAAP financial measures we discuss is included in today's conference call, earnings release, and related presentation materials and in our 10-K, 10-Q and various other SEC filings and investor materials. These are all available on the corporate website, pnc.com, under the Investor Relations section. These statements speak only as of January 16, 2015, and PNC undertakes no obligation to update them. Now, I’d like to turn the call over to Bill Demchak. William S. Demchak: Thanks, Bill, and good morning, everybody. As you've seen today, we reported net income of $4.2 billion or $7.30 per diluted common share for the full year, now, that compares with 2013 net income of $4.2 billion or $7.36 per diluted common share. Our return on average assets for the full year was 1.28%. 2014 was a successful year for PNC, despite what proved to be a pretty challenging revenue environment with low rates and elevated competition. We grew loans 4% and deposits 6%. Fee income was up 4% and represented a higher percentage of our total revenue mix in 2014 than in 2013. We strengthened our capital position even as we continued to return capital to shareholders through repurchases and higher dividends. We controlled expenses well and like the rest of the industry, benefited from continued outstanding credit quality. And importantly, we've made significant progress against our strategic priorities in 2014. You know, we're almost 3 years now into the RBC acquisition, and we continue to grow in the southeast faster than in our legacy markets. Brand awareness there is up to about 65% from 50% a year ago. We're thrilled with the team we have on the ground. And importantly, there are no material incremental investment costs to come in the southeast, really just incremental revenue as we continue to develop relationships, win business, and gain share. We know it's going to take time for us to build a leading banking franchise in the southeast, but we are exceeding our expectations. We're extremely excited about the potential in the region. Inside of our Asset Management Group, we continued to grow assets in 2014 or assets under administration, driven by increases in the equity markets, new sales production, and cross sell referrals from other lines of business. Our transformation of the retail banking experience continues to gain momentum. We are well on our way to completing about 300 branch conversions by the end of the first quarter, which is increasingly important as the number of customers who prefer non-branch channels for their routine banking transactions approaches 50%. These new, more efficient branches offer more technology and more opportunities for a meaningful sales and service conversation with those customers who do walk through the door, resulting in our best chance to truly understand our customer's needs and build deeper, more profitable relationships with them. With regard to mortgage, Rob will talk with you in a few minutes about the financial results and there is no denying that it remains a challenging time for this segment of the industry. Strategically, we've made a lot of progress in cleaning up the mortgage business we acquired as part of the National City deal and increasingly making it a core part of our consumer product offering. We have and will continue to improve the home buying experience for those of our customers who come to us with their mortgage needs. Lastly, looking at technology, we made a great deal of progress over the last year, particularly with regard to improving our cyber defenses and our data center strategy. We have a lot of ground still to cover as we execute our multi-year technology plan, but we are right where we aim to be in this effort to improve long-term efficiency, effectiveness, and scalability. So we are executing well with regard to the things that we can control. As I turn back to the fourth-quarter results, you're going to see that revenues were elevated by gains on asset dispositions and expenses were elevated due to a contribution to the PNC Foundation as well as higher legal and compliance costs. While there are a number of elevated items in both revenues and expenses, they all basically net to roughly zero. So you can view our reported pre-tax pre-provision earnings as largely representing our core pretax, pre-prevision earnings. However, below the line we did have one specific item that drove a lower than normal effective tax rate, and Rob will take you through some more details on this. One thing you'll notice on our balance sheet is that our security balances remained flat quarter-to-quarter, versus the declines we had posted in the second and third quarter. In fact, during the course of the fourth quarter, we tactically added swaps, securities, and some forward starting positions to the balance sheet. We remain very asset sensitive; but inside of this core position, you'll occasionally see us tactically move the portfolio composition and related duration, as we did in the fourth quarter. I like how we are positioned for 2015 and beyond. The coming year looks a lot like 2014 at the moment, which means revenue growth will remain a challenge, particularly until we get a rise in rates. In addition, while we and the rest of the industry continue to benefit from abnormally low credit costs, this will eventually reverse itself. These two factors, interest rates and credit costs, will play off against each other as we move into 2015 and beyond. Notwithstanding these headwinds, we are a year further into the execution of our strategic priorities and we continue to make important progress across the board. We enjoy a stronger capital position as we enter 2015. We have a more liquid balance sheet that is now compliant with LCR requirements. We also have a terrific team of employees across our franchise, committed to delivering a superior banking experience for every customer and focused on creating long-term value for our shareholders. With that, I'll turn it over to Rob for a closer look at the fourth quarter and full year results, and then we'll take your questions. Robert Q. Reilly: Great. Thanks, Bill, and good morning, everyone. As Bill just mentioned, 2014 was a very good year for PNC. Our net income exceeded $4 billion again this year, as we successfully executed our strategic objectives within what continues to be a challenging revenue environment. Importantly, the year played out largely as we expected and consistent with our guidance. Our fourth quarter results contributed to those outcomes and reflected themes we saw throughout the year. Turning to our average balance sheet on slide 4, average total assets increased by $10 billion or 3% on a linked quarter basis. Average total assets increased by $25.6 billion or 8% over the fourth quarter of last year. In both periods, the increase was driven by higher deposits held with the Federal Reserve and higher average loan balances. Average commercial loans during the fourth quarter were up $3.3 billion or 3% from the third quarter. Average consumer lending declined slightly linked quarter, as growth in credit card and automobile loans was more than offset by the runoff of non-strategic home equity and education loans. On a spot basis, fourth quarter loan balances increased by $3.9 billion or 2% linked quarter. All of this increase came from commercial lending, which was up $4.3 billion or 3% due to increases in nearly every category. Compared to the fourth quarter last year, total average loans increased by $8.3 billion or 4%, as total commercial lending grew $10.2 billion or 9%, primarily driven by growth in specialty lending. These increases were partially offset by declines in consumer and residential mortgage loans, most of which were non-strategic. For the full year, total non-strategic loans declined by more than $1.5 billion. Average investment securities were flat linked quarter as reinvestment activity offset net payments and maturities. As Bill mentioned, prior to the market rally, we added securities that will settle in the first quarter. Compared to the prior year fourth quarter, investment securities were down $3.1 billion or 5%. And lastly, our average interest earning deposits with banks, primarily with the Federal Reserve, were $27.7 billion for the fourth quarter, largely related to addressing the requirements of the liquidity coverage rules that went into effect January 1st, 2015. I'll have more to say on that in a moment. On the liability side, total average deposits increased by $5.6 billion or 2% when compared to the third quarter, driven mostly by higher money market and demand deposits. Compared to the same quarter a year ago, total average deposits increased by $12.4 billion or 6%, as growth in demand, money market, and savings deposits was partially offset by lower retail CDs. On an average basis, total equity remained stable in the fourth quarter compared to the third quarter, primarily due to increased stock buybacks. Compared to the fourth quarter last year, total equity increased by $2.9 billion or 7%. As I mentioned, our balance sheet reflects our efforts to comply with the liquidity coverage standards and support loan growth. For example, our average interest earning deposits with banks, primarily with the Federal Reserve, increased by $5.6 billion or 25% linked quarter, and by $17.2 billion or 165% compared to the same time a year ago. Further, on the liability side, we increased average total borrowings by $3 billion or 6% linked quarter, and by $9.3 billion or 22% compared to December 31st, 2013. The Federal Reserve short term liquidity coverage ratio went into effect on January 1st. PNC is an advanced approaches bank, and we are subject to the full LCR approach. Using the month end reporting methodology, the minimum phase-in requirement as of January 1st, 2015, is 80%. As of December 31st, 2014, our estimated pro forma ratio exceeded 95% and 100% for the bank and bank holding company respectively. Turning to capital, we maintained strong capital levels throughout the year while at the same time delivering significant capital return to our shareholders. During the fourth quarter, we purchased 6.1 million common shares for approximately $500 million. Since the beginning of our current program, which began in the second quarter of 2014, we've purchased 12.9 million common shares for $1.1 billion and are on target to meet our approved total capital plan of $1.5 billion for the four CCAR quarters ending March 31st, 2015. Our Standardized Approach risk-weighted assets increased by $3.7 billion on a linked quarter basis as a result of higher commercial loan balances. As of December 31st, 2014, our pro forma Basel III common equity Tier 1 capital ratio, fully phased-in and using the standardized approach, was estimated to be 10%, a 10 basis point decrease from the end of the third quarter due essentially to capital return and to a lesser extent, higher risk-weighted assets. For the full year, our estimated ratio has increased by 60 basis points. Finally, our tangible book value reached $59.88 per common share as of December 31st, a 1% increase linked quarter and a 10% increase compared to a year ago. Turning to our income statement on slide 6, net income was $1.1 billion or $1.84 per diluted common share, and our return on average assets was 1.23%. Our fourth quarter performance was marked by elevated noninterest income and expenses compared to the third quarter, stable credit quality, and disciplined expense management. Let me highlight a few items in our income statement. Net interest income declined slightly by $7 million compared to the third quarter, as lower purchase accounting accretion was partially offset by higher core net interest income. Noninterest income was $1.9 billion, an increase of $113 million or 7% linked quarter. This was higher than expected, driven by $130 million of gains on asset dispositions, including the sale of PNC's Washington, DC, regional headquarters and Visa stock. Noninterest expense increased by $182 million or 8% compared to the third quarter. Of this increase, $128 million reflected several elevated items, of which the largest was our contribution to the PNC Foundation, as well as higher legal and residential mortgage compliance costs and higher fixed asset write-offs. Setting those aside, fourth quarter expenses were in line with our expectations and continued to be well managed, due in part to the success of our continuous improvement program. Importantly, we expect expenses in the first quarter of 2015 to decline and likely approximate the levels in the third quarter of 2014. As a result of the tax favorability of our contribution to the PNC Foundation and to a lesser extent some tax credits, our effective tax rate was 22.1% in the fourth quarter, down from 27.4% in the third quarter. For the full year, our effective tax rate was 25.1%, which was in line with our guidance. We expect our 2015 effective tax rate to be between 25% and 26%. Finally, provision in the fourth quarter declined to $52 million, as overall credit quality remained stable. For the full year, net income was $4.2 billion or $7.30 per diluted common share and our return on average assets was 1.28%. Now let's discuss the key drivers of this performance in more detail. Turning to net interest income on slide 7, total net interest income decreased by $7 million for the reasons I just highlighted. Average interest earning assets grew by $9 billion or 3% linked quarter, and the full year increase was $22.7 billion or 9%. As I mentioned, purchase accounting accretion of $126 million declined by $21 million linked quarter. Core net interest income increased by $14 million, due to higher commercial loan growth and securities yields. For the full year 2014, purchase accounting accretion was down $260 million compared to 2013, in line with our expectations. For 2015, we continue to expect purchase accounting to be down approximately $225 million compared to 2014. Net interest margin declined 9 basis points linked quarter, of that amount, 3 basis points was attributable to purchase accounting and the remaining 6 basis points was due to liquidity related actions. Spread compression was entirely offset by volume increases in commercial lending. In terms of our interest rate sensitivity, our duration of equity has naturally increased as rates declined, but we did take some tactical actions in the fourth quarter. Specifically, we purchased agency residential mortgage-backed securities that will settle in the first quarter. As you know, our balance sheet remains asset sensitive, reflecting our view of the interest rate environment. And as we have said for some time, we recognize this will likely constrain our NII growth in the short term. Turning to noninterest income on slide 8, our diverse businesses drove relatively stable fee income this quarter. As you recall, we expected this due to elevated third quarter levels. Full-year fee income grew by $189 million or 4% as increases in corporate services and asset management fees, along with service charges on deposits were partially offset by lower residential mortgage income. Excluding residential mortgage, fee income increased by $442 million or 10%. Total noninterest income increased by $113 million or 7% linked quarter and was essentially flat compared to 2013. Notably, the increase in the core fee component of noninterest income reflects our success in growing higher quality, more sustainable revenue streams in 2014. Asset management fees declined $35 million or 9% on a linked quarter basis, entirely due to lower earnings from PNC's equity investment in BlackRock, as described in their call yesterday. PNC's Asset Management business performed well in the fourth quarter, in line with third quarter results. For the full year, asset management fees were up $171 million or 13% compared to 2013, reflecting stronger equity markets and sales production. Consumer services fees were essentially unchanged in the fourth quarter and for the year. On a business level, we saw mid to high single digit growth for brokerage, debit card, credit card, and merchant services. However, these gains were offset by lower revenue from previously discontinued insurance programs, as well as the termination of our debit cards rewards program in the fourth quarter of 2013, which resulted in a prior year benefit and consequently diluted the year-over-year growth comparison. Corporate services fees grew $23 million or 6%, reflecting higher merger and acquisition advisory fees and other capital markets revenue. For the full year, corporate services fees increased $205 million or 17%. Although this category benefited from the impact of a fee reclassification starting in the second quarter of 2014, as well as our recent acquisition of Solebury Capital Group, the primary driver was higher merger and acquisition advisory fees as Harris Williams, our M&A advisory services firm had a record year. Residential mortgage banking noninterest income declined by $5 million linked quarter or 4%. Fourth quarter origination volume was $2.4 billion, down 5% from the third quarter. For the full year, residential mortgage banking noninterest income declined by $253 million or 29%, reflecting lower loan sales activity and significantly lower MSR gains. Service charges on deposits were relatively flat linked quarter, but for the full year they increased by $65 million or 11% compared to 2013. The year-over-year comparison benefited primarily from changes in product offerings and higher customer related activity. Other categories of noninterest income increased by $128 million linked quarter, which was primarily attributable to the sale of our regional headquarters building in Washington, DC. Given that we occupy only a couple of floors in that building, which we will continue to occupy on a leased basis, and taking into consideration the real estate prices in that market, the sale of this building made sense to capture a significant gain for our shareholders. For the full year, noninterest income to total revenue was 45%, up 2 percentage points compared to the prior year. Turning to expenses on slide 9, fourth quarter levels increased by $182 million or 8%. There were 3 items that elevated expenses by $128 million in the quarter. First, the primary driver was the contribution we made to the PNC Foundation, which accounted for the majority of the increase. Second, higher legal and residential mortgage compliance costs, and third, higher fixed asset write-offs. Excluding these items, our fourth quarter expenses were in line with the guidance we provided. These results reflect our disciplined expense management and the benefits from our continuous improvement program. We completed actions and exceeded our full 2014 goal of $500 million in cost savings. As a result, full year expenses declined by $193 million or 2% and in effect, more than funded investments in our retail transformation and technology infrastructure, as intended. This marks the second straight year we reduced total costs while supporting significant investments in our business. Looking forward to 2015, we will continue this approach and have targeted an additional $400 million in cost savings through our continuous improvement program, which again we expect to help fund our business and technology investments. As you can see on slide 10, overall credit quality remained relatively stable in the fourth quarter compared to the third quarter, and improved over the comparable quarter of last year. A current area of focus is our exposure in the oil and gas sector. We have a total of $2.9 billion in outstandings, which equates to approximately 2% of our total commercial lending portfolio. The oil and gas book includes approximately $800 million in traditional exploration and production deals, which are secured and covered by margin requirements, and an additional approximate $800 million in the midstream and downstream space. The balance of the outstandings, which is approximately $1.3 billion is in the services space and the majority of that or approximately $1 billion, is asset based. So the remaining amount of about $300 million is not asset-based lending and is non-investment-grade. In our view, these are the loans most likely to be impacted by the drop in oil prices and we are watching that closely. But when put into the context of our broader lending portfolio, our exposure is relatively minimal. Turning to slide 10 and across the broader credit portfolio, nonperforming loans were down $102 million or 4% compared to the third quarter. And for the full year, nonperforming loans were down $578 million or 19%. In both periods, we saw improvements across our commercial and consumer portfolios. Total past-due loans decreased by $60 million or 3% linked quarter. We did see some small increases in the 30 and 60 day categories, but view these as more deal specific than any change in trends. Net charge-offs of $118 million increased by $36 million or 44% linked quarter, primarily due to higher recoveries in the third quarter. As a result, net charge-offs were 23 basis points of average loans on an annualized basis, up 7 basis points linked quarter. Our provision of $52 million declined by $3 million or 5% on a linked quarter basis. And, finally, the allowance for loan and lease losses to total loans is 1.63% as of December 31st. This compares to 1.84% at the same time a year ago. While we were pleased with this performance and as we've acknowledged for some time, we continue to believe credit trends may not remain at these levels. In summary, PNC posted successful fourth quarter and full year 2014 results. Turning to 2015, we believe the domestic economy will continue to expand at a steady pace. This is our basis for expecting higher interest rates during the course of 2015. However, we recognize the global macro factors are likely to persist and could prevail in delaying and or diminishing otherwise anticipated rate increases. With that in mind, we expect full year revenue in 2015 will continue to be under pressure compared with 2014, as we expect the combined revenue growth from our businesses to partially offset the decline in purchase accounting accretion. Operating in this challenging revenue environment, disciplined expense management will continue to be a priority. We expect full year expenses to be stable compared to 2014, as we intend to fund the investments we're making in our businesses primarily through expense savings. Looking ahead at the first quarter of 2015 compared to the fourth quarter of 2014, we expect modest loan growth. We expect net interest income to remain stable. We expect fee income to be down mid single digits due to seasonality and typical first quarter client activity. We expect expenses to be down high single digits, more in line with third quarter 2014 levels. And we expect provision to be between $50 million and $100 million. And with that, Bill and I are ready to take your questions. William H. Callihan: Operator, if you could give our participants the instructions, please.

Wonderful. Thank you, sir. [Operator Instructions] And our first question on the line comes from the line of Paul Miller with FBR Capital Markets. Your line is open. Please go ahead.

Good morning, guys. It's Jessica Ribner in for Paul. How are you? William H. Callihan: Good morning, Jessica. Robert Q. Reilly: Good morning, Jessica.

One question on your mortgage bank. I know you guys have been focusing there and given where rates are now in the 30 year down to 3.66%, what are you seeing in the first quarter? Can you give us some color? Robert Q. Reilly: Yes.

And then, how do you think the purchase market is shaping up actually? Because we know refis right, are going to be a little bit stronger? Robert Q. Reilly: Yes, hi, Jessica. Good morning; it's Rob. To answer your question, in the first couple weeks here of the year, given the rate movement that you reference, we've seen a significant jump in applications, particularly on the refi side, which are up almost 170% versus this time last year. Purchases is about the same; but the real driver is on the refi because of the rates that you mentioned.

Okay. Great. Then in terms of expenses, you're targeting that $400 million of cost saves, but you expect to reinvest that. I just want to be clear. Robert Q. Reilly: Yes, absolutely clear. That's what we've done for the last couple of years, and that program has worked for us and we're committed to continuing that program in 2015.

So based on that, can you give us an idea of where you think your efficiency ratio could settle out? Robert Q. Reilly: Yes, we don't have a specific efficiency ratio target, because the biggest driver of that is really outside of our control; and that's interest rates. What we do is manage our expenses, as I've mentioned in this challenging revenue environment with a high degree of discipline. And we are committed to keeping those stable as we make continued investments in mostly our technology and retail bank transformation.

Okay. Great. Thanks so much. William H. Callihan: You're welcome. Next question please.

And your next question comes from the line of John McDonald with Sanford Bernstein. Your line is open. Please go ahead.

Morning, guys. William H. Callihan: Hey, John. Robert Q. Reilly: Good morning.

Was wondering if you could talk about the fee income drivers that you are looking for in 2015. Feels like it's going to be a tough year on NII and as Bill mentioned, provision gets a little tougher. So fee income seems to be an important driver to help revenues this year. What are some of the drivers you're looking for this year? Robert Q. Reilly: Well, I – you're absolutely right, and a lot of our strategies are around driving the fee income. We've had a lot of success with that in 2014 in terms of the growth that you've seen. If you just take a look at the broad categories, asset management, we continue to experience high single digit growth and have those types of expectations. Consumer services, we're seeing mid to high single digit growth in the products that I mentioned. The year-over-year comparison had some unfortunate year-over-year comparisons, because of the diluted effect of some of the contra-revenue items, but we continue to see growth there. Corporate services, we say mid single growth. I caveat that, though, just with the biggest driver in 2014 was Harris Williams, our M&A advisory piece, which had a record year, easily twice the level of what they had had the previous year, which I think was a record year, Bill, or close to a record year. William S. Demchak: Yes. Robert Q. Reilly: So that could ease off a bit. Mortgage, we'll see. Our view is that we'll see some flattening there. And the rest, in terms of some of the other noninterest incomes are not core fee and those tend to happen.

Okay. So the drivers of the outlook for revenues to be down is really on the purchase accounting side, it sounds like, Rob? Robert Q. Reilly: Yes, I think that's right.

Okay. Just on loan growth, the C&I loan growth was a nice number for the quarter. Any green shoots of better line utilization there or is other drivers to highlight? And can you just comment a little bit about spreads in C&I, and whether that got any better? William S. Demchak: Yes, it's Bill. You remember in the third quarter, we kind of had a bit of a hiccup in our trend line of loan growth and we thought it was an anomaly, and it turned out to be the case. So we saw growth into the fourth quarter, again, basically in our specialty businesses, coming off of asset base, some of our public finance healthcare leasing, and so forth. No real growth in the core middle market commercial space. In fact commercial, which is our lower $50 million and under sales businesses, basically declined quarter-to-quarter with some of the runoff from the acquisitions. Just on spreads, you're seeing, the highest areas in asset-based lending, where with fees we're still probably over 300 basis points. Core middle market, new originations around 200. Corporate finance, the higher-cap guys maybe 175 or so. We continue to kind of see the 3, 4, 5 basis point down quarter-to-quarter in average loan yields and that doesn't seem to be abating.

Okay. And then finally, any thoughts on how the energy pullback might affect C&I demand more broadly, Bill? And just kind of a review of where your exposure lies on the energy side and some of the puts and takes you see there? William S. Demchak: Yes, I mean, Rob went through some of the detail in his comments on the energy portfolio. Just to drill down on that real quickly, some of its reserve based. It's smaller, it's new for us. It's secured and hedged. So we're not sweating that yet. The stuff we have on the servicing side, the bulk of it is inside of our asset-based lending group. And while there could be difficulties there, our ability to – because we are collateralized and work through that, we wouldn't expect material losses. It really focuses in on our unsecured servicing book, much of which is actually done in small business in commercial and small balance. And if we're going to have problems, it's probably there and it's $300 million of funded loans. So I don't sweat that too much. I think as you go through the rest of our footprint and market, we don't really operate in the places that – with the exception of Pennsylvania, Ohio, and I'll talk about that in a second, we don't really operate in the places that have kind of boomed as a function of energy. And even here, gas and investment in gas seems to be taking a bit of a different tack than what we've seen in oil. So we don't see it really manifesting itself locally in any material form. I think you're going to see just in the broader economy, right, that consumer is empowered here. You see consumer spending up, you're going to see retailers do better. So a little bit of a mix shift. But we continue to be pretty constructive on the benefit to the US economy as a function of lower gas prices and lower oil prices.

Okay. Great. Thanks. William H. Callihan: Next question please.

And our next question comes from the line of Scott Siefers with Sandler O'Neill. Your line is open. Please go ahead.

Morning, guys. William S. Demchak: Good morning, Scott.

Maybe Bill or Rob, I was hoping you might be able to spend a quick second just on – so has there been any sort of lasting change in the way you are approaching the securities portfolio? Bill, you've been probably more unequivocal than most about sort of investing and the risks of doing so, given the curve. William S. Demchak: Yes.

You got a little more, it seems like opportunistic this quarter. But just want to make sure the philosophy still holds true, see if there is any change to the way you're approaching things? William S. Demchak: Yes, we remain committed to the core asset sensitivity that we hold. In the fourth quarter, it became pretty apparent that the yield differential between the US and Europe and the strength of the dollar was such that we probably had to take a few chips off the table and we did. Our conviction on rates here as you just look forward, as Rob said, the US economy still feels pretty strong. My own expectation and there is some debate here, is that we'll still see the Fed do something in 2015. At issue is how much they would do, again given the strength of the dollar and low CPI and more importantly whether, even if they raise short-term rates, there is any impact on long-term rates. Having said all of that, I always go back to my core theme, which, you know, the opportunity cost of remaining short just doesn't – just is not that high and it doesn't affect our strategic priorities and our ability to execute on the business we pursue. Robert Q. Reilly: So no major change in philosophy. William S. Demchak: No major change, although I would tell you I wish I was a bit more tactical than I was in the fourth quarter.

Okay. That's perfect and I appreciate that. And then wanted to come back, Bill, to a comment. I know this is pretty small in the scheme of your overall footprint. But in places like Pennsylvania and Ohio where you've got the shale activity, can you spend a little more time just discussing kind of how the investments there have been different? I guess my impression has been it's been – kind of we're still more in our infancy there than in other parts of the country. But by the same token, I would imagine that CapEx cut at larger energy companies would have broad based implications even in kind of the natural gas space. So what are your thoughts around that issue? William S. Demchak: Yes, you know, I saw some stats that I think 1% of the – it was a tiny number of the employment growth inside of the Pittsburgh region came from energy, which actually surprised me. I would have thought it had been more. Just on the CapEx side, you're right. For the large guys you would – in effect, capital expenditure is substitutable. But what we are seeing is the cuts into oil are deeper than what's happening in gas. And so there hasn't been any kind of immediate impact. You also have the issue just with gas, you'll remember as part of energy policy, the switch of the utilities to gas long-term out of coal, causes this need to continue, independent of what's going on with raw oil prices.

Okay. All right. That's perfect. I appreciate all the color on that. William H. Callihan: Next question please.

Our next comes from the line of Gerard Cassidy with RBC Capital Markets. Your line is open. Please go ahead.

Hi, everyone. This is actually Steven Duong in for Gerard. Thanks for taking our call. So, just looking at 2015, what do you guys see as the biggest challenge for the year that's coming up? William S. Demchak: I mean, beyond – and there's nothing we can do about it, interest rates are obviously the biggest drivers that ultimately are bottom line in 2015. Challenges are somewhat related to that. We continue to execute on what we set out there, but I would tell you competition continues to get tougher. The willingness of competitors to stretch on risk and yield, particularly as we see NIM pressures because of rates, I think is probably going to accelerate. And for us it's basically staying inside of our credit box, continuing to win new customers and cross-sell in an environment where we'll progressively see more irrational competition.

Great. Thank you. And just following up on interest rates then, have you guys looked into scenarios of flattening or inverted yield curve? Like, how would that impact 2015? William S. Demchak: We've looked into every iteration of the yield curve. I think, the impact into 2015, while obviously being negative, would be less dramatic than what that would cause longer-term, obviously. We do think in its most basic form right, NII will benefit from short rates going up, simply because of the repricing of loans and the degree of stickiness in our deposits. You lose the ability of carry on your securities books. So the upside isn't as much as it would be if we just see the front end increase. My own expectation, I don't, look, I don't think even if the Fed goes that they are going to go to a point where they cause an inversion here. But you could definitely see a flattening of the curve and I would expect you would see one.

Great. Thank you. And just last question, just regarding your tax rate getting back to the 25%, 26% range. Is that mainly due to the charitable foundation that you guys did this quarter? Robert Q. Reilly: The reason that our tax rate was lower than that, at the 22% or so was primarily because of the foundation and as I mentioned, some tax credits. So the guidance between 25% and 26% is the go forward.

Okay, great. Well, thank you for taking our questions. William H. Callihan: Next question please.

[Operator Instructions] And our next question comes from the line of Erika Najarian with Bank of America. Your line is open. Please go ahead.

Yes, good morning. Robert Q. Reilly: Good morning. William S. Demchak: Good morning.

Morning. My first question, Rob, on the full year revenue outlook for 2015, I just want to be clear that it doesn't contemplate shifts in either end of the curve, either increases in the short end or any significant change on the long end? Robert Q. Reilly: No, I would say in terms of our 2015 outlook, as Bill mentioned, we do have built in some rise in rates in the second half of the year. So that is part of our thinking. William S. Demchak: Yes, but in effect what we do inside of the budgeting process and the guidance we give is we do it off of forward rates. I would tell you that since we put that in place we've seen forwards decline. So it's one of the reasons that Rob is a little soft on kind of suggesting that there is going to be revenue pressure in 2015. Robert Q. Reilly: Yes.

Understood. And now that the CCAR documents have been submitted to the extent that you could share with us, do you think there is any more flexibility from the Fed for well capitalized regional banks such as yourselves to have a little bit more control over your capital return outside the regular dividend? Either in terms of a special or higher payouts through buybacks, higher than what we've seen so far from regional banks? Robert Q. Reilly: I can answer a little bit; and then, Bill, you can jump in. I would say we have submitted our plan. There is not a lot to say about that. When we get the results we'll share them with you, of course. There won't be a special dividend. I think everybody knows that. So that's not in the cards for 2015. So, Bill? William S. Demchak: I think, look, absent the recent submission, it is very clear and I – my own belief is that the Fed understands this, that eventually banks are going to have to get to the place where they can return 100% of the capital they generate once they hit acceptable total capital levels. And I think the regulators get that, right. They don't have a desire to have us drive our capital ratios to infinity. The notion of doing a special dividend or something is a conversation at this point and an interest, but nothing that is inside of guidance. It can be done as part of CCAR.

Got it. Thank you. Robert Q. Reilly: Okay. William H. Callihan: Next question please.

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

Hi, good morning. This is Rob Placet from Matt's team. First question, I was just curious if you could talk to the puts and takes included in your outlook for flat net interest income in 1Q, just given pressure from purchase accounting accretion, likely some pressure from day count, and the boost you received from higher securities yields this quarter? Robert Q. Reilly: I think you just covered it. Yes, those are the elements. We are calling for modest loan growth. As we mentioned, some change in our securities portfolio that will settle in the first quarter. So that's – those are the pluses working against some of the minuses that you mentioned.

Right, okay. Thanks. And then just a clarification question. Your comment for flat expenses in 2015, is that on a core basis or reported? Robert Q. Reilly: Well, it's stable and it's on a reported basis.

Okay, great. Thanks very much. Robert Q. Reilly: Sure. William H. Callihan: Next question please.

And our next question comes from the line of Ken Usdin with Jefferies. Your line is open. Please go ahead.

Thanks. Morning, guys. Hey, just to take the guidance point one point further, since you've gotten a couple of questions on it, all of the guidance is off a reported basis, is that correct? William S. Demchak: That's correct. Robert Q. Reilly: Yes.

Right, okay. So Rob, just underneath the NII side, PA going to be down again this year. So it would imply also that it's just going to be tough to grow core NII enough to balance that off on the NII side, even with the probably better than expected starting point for the first half of the – for the first part of the year? Robert Q. Reilly: I think I caught most of that. Its – I'm not sure about our line, there's a line issue there. But I think the question was, yes, that's right. The purchase accounting guidance which will be down $225 million is our estimate there, will make it tough to grow total NII above that.

And do you – but do you expect to be able to have enough core balance sheet growth to offset the core NIM pressure to be able to deliver core NII growth? Sorry, that was the essence of the question. Can you grow core NII this year? Robert Q. Reilly: Well, I think the – I think we're close. I think it largely going to depend on what's outside of our control in terms of rates. But naturally what's – what we can do, it will depend on the loan growth in the securities book that we have. But it's close.

Understood. And then should we just assume that your ability and willingness to take additional Visa gains will be opportunistic throughout the year, but nothing that we can necessarily depend on as far as guidance? Robert Q. Reilly: Yes, that's right, that's exactly right. And we don't include that in our guidance.

Right, okay. Thanks, guys. Robert Q. Reilly: Sure. William H. Callihan: Okay. Next question please.

Our next question comes from the line of Bill Carcache with Nomura Securities. Your line is open. Please go ahead.

Thank you. Good morning. Bill, it looked for a time like you guys were focused on slowing your commercial loan growth while the rest of the industry continued to step on the gas somewhat. And you seem to be going somewhat against the broader trends based on what I think you guys were highlighting as some frothiness that you saw in certain areas. But this quarter, as you talked about earlier, we saw you guys once again accelerate commercial loan growth. And that seems a little bit more consistent with the strong industry growth that we're seeing in the H8 data. So I guess my guess is that pricing hasn't necessarily gotten more attractive given where we are in the cycle. But I was hoping that you could share some perspective on what's happening and in particular whether there's anything that you'd call out as fueling your appetite to grow more aggressively in commercial now, relative to the deceleration? William S. Demchak: Well, let me – yes, sure. Let me just clarify. We like commercial loan growth. So we never suggested we wanted to slow it. We did see a slowing in the third quarter. At issue for us is finding returns on clients that basically pay for the capital committed. So as spreads come in, we need more cross-sell for it to make sense. So we haven't changed our risk return bucket at all. We found opportunities in the fourth quarter with new clients and existing clients, it just grew balances. But it wasn't because we changed our appetite on risk or our willingness to do sub economic returns. We just did better than we did in the third quarter. Again, where we're seeing core growth is probably a little bit atypical than some of our competitors. It's not in the traditional plain vanilla commercial middle market space, it's in our specialty businesses. So in asset based lending and real estate leasing, some of the public finance specialties, and asset securitization and some other things. So we're seeing growth in places where, frankly, there is just less competition and we are taking advantage of that.

I see. That's really helpful. Separately, some banks have commented on the punitive nature of municipal deposits, while this quarter we've also heard others talk about how they view their municipal deposits as a positive, particularly in light of the most recent LCR revisions. Can you update us on how PNC is thinking about municipal deposits and whether you see any potential revenue opportunity there? William S. Demchak: Yes, sure. So we do – we have a big business with municipalities on the issuance side, deposit side, treasury management side and other things. At issue with the LCR as it related to muni deposits and in the first proposal, to the extent that you had to pledge securities, in particular, Level 1 securities against the deposit balances, you both lost the ability to count those securities as part of your Level 1 securities and you also had to treat the deposits as if they were repo or in effect immediate runoff. The revisions to LCR cause you to still lose the ability to count the securities in your base, but they dramatically shifted the runoff in deposits. So the runoff is now 15% or something versus the 100% immediate it was before. So it's gotten better. It's still not without pain. Having said that, our relationship with municipalities go beyond what we do in deposits. And so like all our clients, we look across the broad based relationship and to the extent that the collective business makes sense to us, we do it.

That is extremely helpful. Thanks, Bill. If I may, one last one on asset quality for Rob. Your net charge-off rate ticked higher this quarter for the first time in quite a while. And I think – was the last quarter the trough, would you say and we're likely to kind of continue to move gradually higher from these levels at a similar pace to roughly the 7 basis point increase that we saw this quarter? William S. Demchak: Well, I've said that for seven quarters running… Robert Q. Reilly: Yes, it's all consistent. I mean, the last quarter the charge-off ratio was 16 basis points. So if that's not the trough, that's getting down to about as low as you can go. So at 23 basis points we still think on a normalized sort of look that's on the low end. But I'd say charge-offs and recoveries have sort of been fairly steady, and in the short term we don't see dramatic changes to that. But over time we do see those levels going back to more normal levels, as Bill mentioned in his opening comments.

So the reserve – any kind of reserve building going forward or would you say it is more a function of growth – being driven by growth than any kind of… Robert Q. Reilly: Well, growth will obviously add to reserves. What I've said before and said this morning as far as releases, we did have a release here in the fourth quarter, and we would expect everything else staying the same by going forward that we may have further releases, although not necessarily at these levels.

Excellent. Thank you very much. Robert Q. Reilly: Sure. William H. Callihan: Okay. Next question please.

And our next question comes from the line of Nancy Bush with NAB Research. Your line is open. Please go ahead.

Good morning, gentlemen. Robert Q. Reilly: Good morning.

Bill, you started off your commentary with talking about growth in the southeast, et cetera. Could you just add some color to that, and so that the percentage of revenues that you're driving from the southeast right now, and whether you see opportunities for acquisitions here? William S. Demchak: Well, I'll get the last question first, which is – as we've stated many times, we're not in the market for acquisitions at this point, a bunch of different reasons, from price through to wanting to complete our technology initiatives. The growth in the southeast, generic. It's coming across all the businesses. As I said, it's at a – we're growing at a faster pace than we're growing our legacy franchise. I think at this point it's kind of 11% of our total revenue, so it's starting to matter. We did a lot of things right down there. We – from the brand equity we got from the branch acquisition, we added really good people both from legacy markets we sent down as well as people who were attracted to our brand and wanted to work with us. We've gathered great clients. We focused on getting the right clients and had the patience to spend the time to get the right clients and it's just working. I mean, in addition, look, the southeast continues to be a pretty hot part of the economy and we've seen it rebound back probably better than we had expected when we did the deal.

Well, I'm speaking to you from Atlanta, so I can pretty much say that that is the case. William S. Demchak: You see all the cranes there. I think as an aside, I'm reasonably sure this is accurate. Our Atlanta market had what was one of our largest markets for corporate banking fees this year. Robert Q. Reilly: Yes, that's right.

Yes. Secondly, there was an article in the financial press a couple of days ago about the reemergence of the CMBS business. And you guys have been material in that business for a long period of time. I just wanted to check in and get your observations? William S. Demchak: I'm a little bit distanced from it. We're material in it in the sense that we have the probably largest or second largest bank owned servicing operations…

Right. William S. Demchak: In the form of Midland that we've grown servicing year-on-year inside of that business. What we have seen, we had balance sheet growth through term loan lending in real estate, largely in competition with life companies over the last couple years and that is starting to slow down given the reemergence of the CMBS market. We play at the margin in origination of CMBS loans that will be contributed to somebody else's deals. But it's just small amount – a small amount and not material to us.

Okay. Great. Thank you very much. William S. Demchak: Yes. William H. Callihan: Thank you. Next question please.

Our next question comes from the line of Marty Mosby with Vining Sparks. Your line is open. Please go ahead.

Thank you. I wanted to ask you about another strategy you-all been talking about with asset management and corporate services, two big growers in fee income. The momentum that you've seen with focusing on that, is there some recollection of business that left the banking system prior to the financial crisis that are coming back, that’s helping that along, as you've seen over the last couple years? William S. Demchak: I mean two different themes. Just on the corporate services side, we acquired companies, first in National City and then in RBC, who basically didn't have the products and services and the cross sell ratios that PNC had. So we have had the opportunity to cross sell more products into existing clients. Importantly, through the downturn, we added clients in the corporate book, key clients at a 10% compounded pace for 3 or 4 years. So what we're doing now and you're seeing it show up in the corporate services line, is cross selling to these new clients that we basically got through extending credit. So that's driving the corporate service line, in addition to the success of Harris Williams. It's a record M&A year kind of across the industry, and Harris Williams took advantage of it. The asset management growth has been a key focus for the better part of 4 or 5 years now where, I don't know; Rob, you know the numbers, but we've more than doubled the sales force who's out talking to clients and our differential advantage largely comes through our ability to cross sell and refer existing clients in the business – or existing clients in the bank into that business. We have good products and services, but what we do better than most is get those in fact in front of clients who already trust us through other relationships. Robert Q. Reilly: Both consumer and institutional clients. William S. Demchak: Yes.

And what I was kind of referring to is, with a little bit of a squeeze at the upper end in the really large banks, capital wise, regulatory wise, with some of the absence of other competitors, with the weakness of the financial markets, it seems like the super regional banks have all been showing some really nice progress here. And I'm just wondering if you all's piece of the pie hadn't been getting bigger over the last couple years? William S. Demchak: At the margin, probably, but our business model hasn't changed. We talk about being a Main Street bank, we make loans, take deposits, help people with payments and do retirement. That's what we've been doing for a number of years. At the margin you see things, the European banks who have shrunk their balance sheets, that led to opportunities inside of real estate lending for example. We clearly have gained share in asset based lending as others have exited. So I couldn't point to a line item and say that X percent of our growth came from somebody else shrinking. But I'm sure it's somewhere embedded in our numbers. Robert Q. Reilly: And in asset management, as you know, it's a highly fragmented industry. So market share leaders are in the single digit percent kind of numbers.

Perfect. Thanks. Robert Q. Reilly: Okay. William H. Callihan: Next question please.

Our next question comes from the line of David Hilder with Drexel Hamilton. Your line is open. Please go ahead.

Thanks. Good morning. I guess I'd like to ask the capital return question in a slightly different way. It looks like your – you distributed about 50% of net income to shareholders through dividends and share repurchases in 2014. And please correct my math if that's not a good round number. Is that something you'd like to see increase as a percentage in 2015? Do you have any particular goals or targets or ranges? William S. Demchak: Just correct your number for a second. The issue – the comparative math in 2014 was largely we didn't get back into the market until the second quarter. So you've kind of have to annualize the back three to get to the right number. Having said that, it is well below 100% and a couple basic reasons for that. One was that's what we asked for. But two is the capital – or the return that you ask for is off of your CCAR base case. And in our case when we submit our base case CCAR run it tends to be lower for a variety of reasons, than what we actually produce. So we'll ask for a higher percentage than what it looks like when we actually earn our money. What we've said all along here is we are biased towards greater capital returns rather than less and I would hope you'd see that in what we're able to do. But until we hear from – we've submitted our request and our CCAR runs and we await to hear the Fed's views on these.

Okay. Thanks very much. That's helpful. William H. Callihan: Next question please.

Our next question comes from the line of Kevin Barker with Compass Point. Your line is open. Please go ahead.

Congrats on achieving your record price per square foot in the Washington, DC, area. Robert Q. Reilly: Thank you.

You added… William S. Demchak: We gave credit to Jim Rohr for that.

I think it was the first time in Washington, DC, they had a price over $1,000 per square foot. William S. Demchak: That's right.

I notice you added a lot of swaps and hedges to reduce your asset sensitivity, given what's happened with rates recently. How much of that balance sheet reorganization is eating into the $200 million of potential NII that's lost by not fully deploying your excess liquidity? William S. Demchak: Boy, that’s a bit – there is a bunch of embedded questions in there and one I can't answer with exact science. In effect, though, one of the things that happened to us through the second and third quarter, first, you saw our security balances decline, so we were net getting shorter. In addition, we were growing deposits. If you looked at our deposit lines quarter-by-quarter through the year, you'll see a big acceleration in the third and fourth quarter. So a lot of what we did in the fourth quarter was simply reverse some of the shortening we had in the second and third and then put to work the value of the deposits that we created. So net-net-net I'm not sure, all else equal, that we changed a whole lot our sensitivity to forward NII as a function of rising rates.

Okay. And then could you break out the size of the contribution to the PNC Foundation, and the difference between the legal and residential mortgage compliance costs? Robert Q. Reilly: No, we haven't disclosed those specifics. But the bulk of that $128 million, $130 million was the foundation.

Okay. Then the mortgage compliance costs, are those something you expect to recur going forward, given your making investments around the mortgage business? Or is that something that you see as just a one-time charge? William S. Demchak: We'd like it to be the latter, but in this environment it's tough to say that you don't expect any further legal costs. I would remind you that everything we know about our outstanding litigation is disclosed inside of our Qs and will be again at the end of the year. Robert Q. Reilly: 10-K.

I totally understand. And then considering the outsized amount of refinances that you do compared to the industry and your elevated gain on sale margins compared to peers. Do you have an outsized amount of HARP and FHA streamlined refinances in your mortgage production business? Robert Q. Reilly: No. No, we don't. The gain on sale margin, why it's higher, it's higher for two reasons. One is we tend to be higher than the industry because we don't work through the brokerage channels. But the bigger delta as it's been in past quarters, is we've had some fair value marks, which expand that spread. But they are relatively small numbers. So the fair value marks in total were $24 million.

And do you expect it to go back to the 300 basis points like you said… Robert Q. Reilly: Yes. Yes. Yes, we do.

Okay. All right. Thank you for taking my questions. William H. Callihan: Sure. Next question please.

Our next question comes from the line of Chris Mutascio with KBW. Your line is open. Please go ahead.

Good morning, all. Thanks for taking my questions. Robert Q. Reilly: Yes.

Bill, my first question is to you. Can you give me your macro views onto why you're seeing a bit of a bifurcation in the fact that your, kind of your specialty commercial borrowers are – there is some demand there, but your traditional commercial borrowers you are seeing less demand? Is it purely competition in those two different spaces? Or there is balance sheet issues between those two borrowers? You're seeing kind of a bifurcation in the demand in those two different segments. William S. Demchak: It's a good question. I think in its most basic form, I think our specialty businesses just have less competition. So we are gathering greater share of what the opportunities are in that market. Inside of each one of them there is a different story. So inside of asset based lending, we've seen a lot of the middle market private equity shops start to rely on asset based as their core financing product and not go back to cash flow, because they find that it's easier to work with the lenders in the event of a crisis. They figured that out through the last recession. I think in real estate it was – real estate came back, and the European banks exited, and there was just big opportunity and we have a great business there. So it's case-by-case. But in summary, I just think there's – lending is not a commodity when it's inside of one of these segments versus a straight commercial loan where there's 6,900 banks in the country who want to do it.

Fair enough. Rob, just a real quick question. You'd mentioned I think some forward securities purchases that will settle in first quarter. Can you provide the dollar amount of what those securities will be? Robert Q. Reilly: No, no, no. We haven't disclosed that.

Okay. All right. Thank you. Robert Q. Reilly: Sure. William H. Callihan: Okay. Next question please.

And our last question on the telephone lines comes from the line of John Pancari with Evercore. Your line is open. Please go ahead.

Good morning, guys. Robert Q. Reilly: Hey, John. William S. Demchak: Morning.

Wanted to see if you could give the expected NII benefit in 2015 from the swaps. If you could give us a little bit of color there. I appreciate the fourth quarter color you gave, but I wanted to see if we can get the full year expectation. William S. Demchak: No. William H. Callihan: That would be an awful lot of detail in terms of our guidance, John. I think we've given you a general trend, but I think that would be parsing it down too much in terms of our guidance right now.

Right. No, I get it. I'm just kind of… William S. Demchak: It's embedded. At the end of the day it doesn't matter where it's coming from, but it's embedded in Rob's forward guidance on what we talked about on core NII.

Okay. All right. Fair enough. And then on energy, we did have a couple of the other energy lenders indicate that the demand for energy lending they could certainly see a spike initially, as you could have the capital markets seize up to a degree, and accordingly you get draws on lines at first and then a pullback in demand later on. Is that consistent with what you would expect at PNC? And how would you view that initial draw volume differently from a credit perspective? William S. Demchak: We didn't see, just third quarter, the fourth quarter, we saw marginal increases in line utilization, nothing dramatic, as projects funded out. We saw some balance growth inside of our asset based business, which is kind of great. As people turn to asset based as the way to raise financing. It's secured and we're happy with it. But we haven't seen people draw lines in the event of panic, which it sounds like… Robert Q. Reilly: Dislocation. William S. Demchak: Yes, yes.

Okay. All right. And then my last question is – and you might have addressed this to a degree with Bill Carcache's question. But in terms of the bottoming of the loan loss reserve, relative to loans, just want to get an idea of where you think you could level out there. Robert Q. Reilly: I think we're in the range. Like I said, we could have some small releases going forward, but generally speaking, our allowance and our provision is in the right range. William S. Demchak: The big issue with that, I mean everybody tries to figure out if reserve releases can drive 2015. The longer term issue, the longer term value issue, is that the industry and we are running materially below what ought to be through the cycle charge-offs. Now, maybe we're in this utopian period of great loans for a few years. But practically we've talked about a charge-off ratio, 50 or 60 basis points through the cycle… Robert Q. Reilly: Being normalized, right… William S. Demchak: Yes, and we're running 16. So I don't expect that to happen in the visible future. But I'd put it out there as something of, you know, if you look at back earnings today, that would be a normalized charge-off rate and the offset to that in the right environment would be higher rates. We're just in this dislocated place where both remain abnormally low right now.

Okay. Got it. Thank you. William S. Demchak: Yes. End of Q&A William H. Callihan: That concludes the call. I don't know, Bill, if you have any final summary remarks. William S. Demchak: No, I just – real quickly, thank you for your time again today. We do think we've produced a solid 2014 for our shareholders, particularly within the things that we can control. We remain committed to growing this company across the strategic priorities we outlined. I think we have the ability to do that. I think it creates long-term value. We do recognize that there's near term headwinds in the form of interest rates that we're going to have to work our way through. But there's nothing we can do to control that. It's a message you've heard from me for a while. We'll continue on the path. We're not going to change our risk box. We continue to grow clients, grow the balance sheet through loans and deposits and we'll execute to the long-term. With that, thank you for your time this morning. William H. Callihan: Thank you, operator.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.