Good morning. My name is Tom and I will be your conference operator for 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. I would now turn the call over to Director of Investor Relations, Mr. Bryan Gill. Sir, please go right ahead.

Well, thank you and good morning. And welcome to today’s conference call for The PNC Financial Services Group. Participating on this call are PNC’s Chairman, President and CEO, Bill Demchak; and Rob Reilly, Executive Vice President and Chief Financial Officer. Today’s presentation contains forward-looking information. Our forward-looking statements regarding PNC 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 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-Qs and 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 October 13, 2017 and PNC undertakes no obligation to update them. Now, I’d like to turn the call over to Bill Demchak.

Thanks, Bryan. Good morning, everybody. As you have seen this morning, PNC reported net income of $1.1 billion or $2.16 per diluted common share in the third quarter. As Rob is going to lay out in more detail in just a second, this is a good quarter for us. Couple of things stood out. I’m just going to comment on those very quickly before I turn it over to Rob. First, we continued to experience solid loan growth driven by our commercial lending business and we saw some growth on the consumer side as well. Within the commercial business, we’re growing loans and adding clients around a diversified product offering and we’re capitalizing on opportunities in our underpenetrated and newer markets. Importantly, we haven’t changed our credit standards here, and there is in one particular lending product that stands out. But in the end, we’re effectively executing on a model that’s based on patience, consistency of coverage and good ideas. And this loan growth together with a higher interest rates and continued low betas on our deposit pricing, allowed us to grow net interest income, even as security balances declined slightly. Second, on the fee revenue side, we saw a drop in corporate services fees, which was largely expected given that we’d had a record second quarter. And notwithstanding that, this is actually the second best quarter ever for non-interest income in C&IB. You’ll notice, we also saw provision up to at least in part to the impact of hurricanes Harvey and Irma along with loan growth and some seasonal consumer trends. And beyond that, it’s a pretty uneventful quarter. Rob is going to quickly take you through the results and then we’ll take your questions. Over to your, Rob.

Okay. Good morning. Thanks, Bill, and good morning, everyone. As Bill just mentioned, our third quarter net income was $1.1 billion or $2.16 per diluted common share. Our balance sheet is on slide four and is presented on an average basis. Total loans grew by $2.9 billion or 1% linked quarter. Commercial lending was up $2.7 billion from the second quarter as we saw growth in our secured lending businesses as well as large corporate in middle markets. Consumer lending increased by approximately $200 million linked quarter, driven by growth in residential mortgage, auto and credit card, partially offset by lower home equity and education loans, which included our run-off portfolios. Investment securities decreased by approximately $900 million or 1% linked quarter, as a result of lower reinvestments due in part to a relatively less attractive market opportunity during the third quarter. Compared to the same quarter a year ago, securities were up $2.8 billion or 4%. Our interest earning deposits with banks mostly at the Federal Reserve were $23.9 billion for the third quarter, up $1.3 billion from the second quarter. On the liability side, total deposits increased by $3.1 billion or 1% compared to the second quarter, driven by seasonal growth in commercial deposits. Average shareholders’ equity increased by approximately $300 million linked quarter and we continue to return substantial capital to shareholders. During the third quarter, our capital return totaled to $898 million, comprised to $535 million in share repurchases and $363 million in common dividends. This resulted in a payout ratio of approximately 86%. Period-end common shares outstanding were 476 million, down 12 million or 2% compared to the same time a year ago. As of September 30, 2017, our fully phased-in Basel III common equity Tier 1 capital ratio was estimated to be 9.8%. As you can see on slide five, net income was $1.1 billion and we continued to generate positive operating leverage on both the linked quarter and year-to-date basis. Revenue was up $65 million or 2% from the second quarter, driven by growth in net interest income. Non-interest expense remained well-managed and decreased by $23 million or 1% compared to the second quarter. Provision for credit losses in the third quarter was $130 million and included $10 million related to hurricanes Harvey and Irma. In addition, loan growth and some seasonality in the performance of certain consumer categories contributed to the increase. Our effective tax rate in the third quarter was 26.8%. For the full year 2017, we continue to expect the effective tax rate to be between 25% and 26%. Turning to slide six. Our third quarter performance is reflected in these metrics, which have all improved over the past year. Our return on average assets for the third quarter was 1.2%, our return on average common equity was 9.89%, our return on tangible common equity was 12.66%, and our tangible book value increased to $69.72 per common share as of September 30th. We believe our well-positioned balance sheet, diversified revenue mix, and focus on expense management provides momentum for us to continue to deliver strong results. Now, let’s discuss the key drivers of this performance in more detail. Turning to slide seven. Revenue increased by $296 million or 8% year-over-year, driven by higher net interest income of $250 million or 12% and non-interest income growth of $46 million or 3%. It’s worth noting that our fee income on a year-to-date basis was a record setting $4.3 billion, reflecting efforts to grow our fee-based businesses with increases in every category except for residential mortgage. On a linked quarter basis, net interest income increased by $87 million or 4%. The increase was driven by higher loan yields and balances, partially offset by higher funding costs. Additionally, the third quarter of this year benefited from one additional day compared to the second quarter. Our net interest margin expanded by 7 basis points linked quarter to 2.91%, driven by higher interest rates. And our third quarter non-interest income decreased slightly linked quarter. Looking at the various fee categories, asset management revenue, which includes earnings from our equity investment in BlackRock was up $23 million or 6% linked quarter; year-over-year, asset management revenue increased by $17 million or 4%. Both comparisons benefited from higher equity markets and client activity. Consumer services fees were down slightly linked quarter, as credit card fee growth was offset by lower merchant services and debit card. Compared to the same quarter a year ago, consumer services fees were up $9 million or 3% due to growth in credit card, debit card and brokerage fees. Within that, higher credit card fees were partially offset by increased year-over-year rewards activity. Corporate services fees decreased by $63 million or 15%, following a record second quarter, which was driven by elevated loan syndication and Harris Williams revenue. Compared to the same quarter a year ago, corporate services fees were down $18 million or 5%, primarily due to lower merger and acquisition advisory fees. Third quarter residential mortgage non-interest income remained flat linked quarter as increased production revenue was offset by lower net hedging gains on mortgage servicing rights. The year-over-year comparison decreased $56 million or 35% due to both lower loan sales revenue and lower net hedging gains on mortgage servicing rights. Service charges on deposits increased by $11 million or 6% linked quarter and $7 million or 4% compared to the third quarter of last year. Growth in both periods correlated with increased customer activity. Other non-interest income increased $10 million linked quarter or 3% and included higher gains on asset sales, partially offset by lower net securities gains. Compared to the same quarter a year ago, other non-interest income increased by $87 million or 34% and included higher revenue from private equity investments. We expect other non-interest in the fourth quarter to be in the range of $250 million to $300 million. Turning to slide eight. Expenses continue to be well-managed, due in large part to our continuous improvement program. Through the first three quarters of the year, we are on track and confident we will achieve our annual target of $350 million in expense savings, which as you know, have helped find our technology and business investments. Importantly, our efficiency ratio declined to 60% in the third quarter. On a linked quarter basis, our expenses decreased by $23 million or 1% as higher personnel costs were more than offset by lower equipment and marketing expense as well as the benefit of our continued focus on expense management. Personnel expense increased primarily due to higher headcount related to business growth and an additional day in the quarter. Compared to the third quarter last year, expenses increased by $62 million or 3%. This reflects investments in technology and our business initiatives. Additionally, our expenses reflected the impact of operating costs associated with the ECN acquisition which closed in April of this year. Turning to slide nine. Overall credit quality remained benign in the third quarter. Total non-performing loans were down $84 million or 4% linked quarter and continue to represent less than 1% of total loans. Total delinquencies however were up $93 million or 7%. Although this is primarily due to early -- or I’m sorry, due to higher early stage consumer delinquencies in hurricane affected states. Provision for credit losses was $130 million in the third quarter. As I mentioned, the increase included $10 million related to hurricanes Harvey and Irma. It also reflected loan growth and seasonal credit performance within the consumer loan categories. Net charge-off decreased $4 million to $106 million in the third quarter and the annualized net charge-off ratio was 19 basis points, down 1 basis-point linked quarter. In summary, PNC posted a successful third quarter driven by growth in loans, deposits and revenue, along with well-managed expenses. For the remainder of the year, we expect continued steady growth in GDP and a 25 basis-point increase in short-term interest rates in December. As you can see on slide 10, looking ahead to the fourth quarter of 2017 compared to the third quarter of 2017 reported results, we expect modest growth in loans; we expect net interest income, fee income and expenses to each be up in the low single digits; and finally, we expect provision to be between $100 million and a $150 million. And with that, Bill and I are ready to take your questions.

Operator, could you please poll for questions?

Thank you. [Operator Instructions] And your first question comes from the line of John Pancari with Evercore. Please go ahead.

Good morning.

Hey, good morning, John.

Just regarding the CIP program, wanted to see if you can give a little bit of color there in terms of how you’re thinking about 2018. I know you’re confident in the 350 for 2017. How should we think about the likelihood of a new program in 2018 and the magnitude of the efficiency that you can get off of that? Thanks.

Yes, sure. John, this is Rob. Well, we’re going to refrain on this call, and I will just state this upfront, from 2018 guidance. So that’s just for the future people in the line there. The continuous improvement program obviously has worked well for us. It’s been in place for several years. It’s a mechanism that we use to hold expenses in check, particularly those expenses that are targeted towards investments and technology and business growth. So, we have just started our budgeting process for 2018. We’re far from complete. My sense is, we will continue to use the tool but I don’t have a number for you this morning for 2018.

Okay. All right, thanks Rob. And then separately, just on the loan growth side. Just wanted to get an idea, if you could help size up the new market initiative, how much in loan balances do you have in these newer markets right now? And how much of the loan growth that you saw in the quarter, came from this expansion into some of the corporate relationships in these newer markets?

Yes. Again, this is Rob, John. The new markets unquestionably, what we call our underpenetrated markets are contributing at a greater rate than our legacy markets. The balances themselves are pretty small as an overall percentage, but the growth rates in those southeast markets and we include in those underpenetrated markets Chicago as well, are running at about two times the legacy growth rates. So, they’re big part of our loan growth story in the commercial side.

Thank you very much. We’ll get to our question on the line from the line of Betsy Graseck with Morgan Stanley. Please go ahead.

Hey. I’ll kick off with my typical question and then a follow-up. But the typical question is excess liquidity. You’ve got a decent amount; I know that rates were not that attractive this quarter. And so, you’re kind of -- I don’t know, hoarding a little bit on the cash side. Could you give us a sense as to what kind of rates curve, shape you’re looking for? And how you think about the fed balance sheet normalization? I know it’s not going to impact your deposits too much, but how you’re thinking about whether or not that gives you opportunities on the reinvestment side?

Start Rob. There is a lot of questions…

Okay. I can handle hoarding part. I don’t know if much has changed. I mean, as you saw in the third quarter there, the yield curve flattened out a bit, more than we would have liked, which in essence had us dial back a bit in terms of how we deployed into investment securities. It’s improved somewhat off of those levels. So, we’ve begun some more purchases than we had then. But, I don’t know, when we look forward, Bill, the yield curve is pretty flat, so we don’t see anything dramatically changing there.

Yes. I think the issue of the Fed unwinding its balance sheet, we’re going to -- we, like everybody else, are in the sort of wait and see as it relates to the impact that ultimately has on rates. We expect them to drift higher but how much and how fast is up in the air. And that’s going to be impacted as well by the choice of the Fed chairman ultimately. And we’ll react to that. I mean we’ve said this for years, but we -- within what has been effectively a range bound term rate in the market, we’ve been pretty good at sort of getting in and getting out at the margin and deploying cash when it makes sense. In the third quarter, the yield that we actually reinvested at because we did reinvest, we just -- we didn’t reinvest everything that was running up, the yield was actually below the average book yield on that remaining securities book. So, we would hope that we had at one point crossed that line and then rallied through that and we hope to get back to that at some point.

And then, how you’re thinking about the loan-to-deposit ratio? I think you’re currently running at about 85%. I know it’s a new world with the LCR and everything, so it’s hard to use history as a guide. Just want to understand how you’re thinking about managing the loan growth, the deposits and how you’re thinking about the deposit betas and competing there?

I think, it’s interesting. Loan-to-deposit in some ways ends up being a byproduct these days to compliance with the LCR. So, it almost is an outcome and not directly relevant, depending on how many of our deposits come from corporate deposits which are less impactful to the LCR. We purposely got ahead of LCR compliance going back more than a year, thinking it would be easier to do it when rates were low than in the rising rate environment, and that has proven to be true. As we see rates go up and other people move towards compliance, at the same time as the Fed taking cash out, we are starting to see at the margin, pretty competitive pricing on the retail side. We haven’t had to react to that yet. We will continue to watch and see if we do so. But right now, what we focus on is making sure we stay in compliance with LCR, which we are and that loan-to-deposit will end up being sort of an outcome from that as much as anything else.

And just to extend on that, Betsy, around the betas. We see a continuation of what we talked about in July on the second quarter call, following the June rate hike, more activity on the commercial side and the beginning of activity on the consumer side, although it’s still very low.

Thank you very much. We will go to our next question on the line from Erika Najarian from Bank of America. Please go ahead.

Yes, hi. Good morning. Just a question on some of the loan trends this quarter. On both on average and spot basis, your loan growth was best-in-class. I am wondering, under the financial services category, I understand that some of that growth has been for warehouse financing for CRE. And I am wondering is that level of growth in that category is sustainable, is there a seasonality that we should think about going forward?

It bounces around. I guess what I would say on loan growth and I’ve kind of put this in my opening comments is, we continue across the board to win clients and do new deals, and it becomes harder to predict into which buckets we’re going to see growth. So, this quarter, we did see growth in the CRE warehouse line, but we also saw in asset based lending which had been down in the second quarter, we saw some of it in utilization, we saw middle market continue to grow, and we saw pretty big increases in equipment finance, but it bounces around. So, we’ve put kind of low guidance on loan growth and get comfortable with the notion that if we just keep growing clients, it will show up, albeit kind of across the categories, so without a real clear ability to predict which ones.

Yes, Erika, and I can add to that. On the financial services category, it does represent the warehouse lending. But in addition to that, it includes asset-backed transactions which were substantial in the third quarter. So, even though they are extended and used by companies outside of financial services, the structure requires a categorization in financial services.

Got it. And my follow-up question is, Bill, since after the crisis, PNC has been known to manage exposures very well and not grow for the sake of growth. And I am wondering, and you’re also one of the few regional bank CEOs that have been talking about the Fed balance sheet reduction. There has been a lot of discussion on the impact of deposits. But I am wondering if you could give us a sense on how you are anticipating the impact to commercial real estate. If we do get some steepness to the curve, how you think that would impact first growth and then credit?

Yes. So, let’s accept out what the impact that the Fed balance sheet would have and just look at rising rates. Rising rates to the real estate market are troublesome. They impact cap rates, they -- if -- as rates go up in the front end, since most of the borrowings on the projects are floating rate, you expose coverage ratios in those loans. Now, a lot of real estate developers use interest rate caps and other things to manage that exposure, some don’t. So, at the margin, I would expect higher rates are going to cause greater delinquencies in real estate, and it’s one of the reasons we have at the margin, dialed back our growth. I would tell you today, our real estate book has never looked better. I think, just looking to stats, Robert, delinquencies and non-performers kind of…

All of this. Typically growth has slowed; commercial real estate growth has slowed, reflecting some of that.

We’ll get to our next question on the line from Scott Siefers with Sandler O’Neill Partners. Please go ahead.

I was hoping that you could for a second, just talking about the lower corporate service line, I mean I definitely get that you come off the record 2Q, but it’s just become a little uncharacteristic for you guys to have any year-over-year decline in that line item. So, just curious, if you can impart any more color and sort of how we should be thinking about it?

We feel very good about that line. The second quarter was particularly high in two categories, which the combination effect made it a significant high point. So, loan syndications and Harris Williams. Within that, treasury management and our other capital markets are all doing well. So from the quarter-over-quarter, there was a bit of decline just because of second quarter was so good in both of those categories. So, we feel very good.

Yes. I think importantly if you track that line just through time, recognizing that it’ll be volatile, we continued to gain share and grow the underlying businesses. But it does bump around quarter-to-quarter.

And importantly, as part of our guidance, we expect future growth.

And then, maybe you could spend just a quick second on even if it’s just qualitative commentary on provision and just slightly higher guide, there is obvious normalization and then you guys are seeing pretty study loan growth. But just curious in your mind, what is it at sort of -- where we are in the cycle causes the need for a higher provision despite no real actual deterioration in credit trends?

Yes. This is Rob, Scott. So, a couple of things there and mostly in terms of just sort of the high level. You’re right on, it’s the gradual normalization that we’ve expected for some time off of really, really low levels. So, in this quarter, obviously on the top, it’s the Hurricane, QFR that aside, we did have growth and in this quarter, the growth tended to be more in the secured transactions within corporate banking which carry a higher provision. And then, we had some seasonality on the consumer side. So, no big changes, I would say, most of it for the quarter and in our guidance reflects the gradual normalization that we’ve been talking about for some time.

We’ll get to our next question on the line, from the line of John McDonald from Bernstein. Please go ahead.

I was wondering if you could just give us an update where you stand on the home lending, transformation and also on some of the other consumer lending initiatives.

John, good morning, it’s Rob. On the home lending, that’s a big work set for us and we continue to do a lot of work in that regard and we are making progress. Although, the results that you’re most interested in are probably a late-stage 2018 kind of occurrence. But we are making progress in terms of combining our mortgage operations with our home equity operations. Here in the fall, soon we’ll be able to do mortgage originations off our new platform. Next spring, we’ll be able to do servicing on both home equity and mortgage and then later in the year originations on the home equity. So, we’re making progress. We have a lot of confidence and conviction it’s the right thing to do. It’s just a lot of hard work and it takes time.

The other thing I would just say on the consumer lending transformation broadly defined, we’re making really good progress on sort of the -- build digital delivery of those products or some of that will show up with mortgage and home equity, other parts with card and auto as we bring some things in the mobile. We’re making progress and you see it in some of our volumes on our sort of policies and procedures as it relates to things we should have been doing based on our credit appetite that we just weren’t. And where we probably underestimated the work set is the work that needs to go on inside of the core servicing and the automation of some of the new regulatory compliance that is frankly slowing down fulfillments inside the consumer space. So, we’re making progress on everything as we kind of dig on to the covers on the core operations and think about what it takes to use automation inside of that space, probably a little bit harder than we had assumed.

And Bill, maybe a little more color similarly on your tech investments and the kind of platform transformation. I think back office wise, I think you shift to data centers is complete this year. How should we think about your kind of trajectory of tech investments and transforming the customer experience as well as the back office?

We’re shifting the spend to customer experience, to employee-enablement, part of that is what will happen inside of the servicing platforms. We actually have -- it’s interesting in our budgeting exercises and Rob can talk about this, we always show tech spend going down and I always plug it to say that it’s going to at least stay and/or go up simply because I just think that it is going to accelerate into what will be a digital based financial services network and we have to be part of that. Now, we’ll talk about 2018 when we get to 2018 but my best guess is we’ll simply shift the dollar spend and put more and more on the client acquisition and servicing side versus building a core infrastructure which now allows that to be...

It’s the foundation.

Got it. And then one quick follow-up, Rob, I don’t know if you’ve got this earlier on deposit betas. Just on the retail side, have you guys seen anything in terms of deposit beta just on retail banking and if you could just comment on the wealth management side as well?

Beta for…

Yes, exactly, the deposit beta…

Yes. We did at the front of the call, John. So, following the June rate hike where consumer beta had been zero, we are seeing some activity and some pick-up but still very, very low. It is our expectation that they’ll continue to rise, we’ll just have to see at what pace. But our folks feel and we’ve said this for most of year that it’s probably another rate hike or two before they totally normalize.

Got it.

Still low.

And wealth management, we’ve seen some other banks kind of pushing up there…

No, it’s fairly consistent there. Our wealth book in terms of our deposits is about $12 billion. So, it’s relatively small and it’s married basically to consumer behavior, maybe a little bit more.

Thank you very much. [Operator Instructions] And we’ll get to our next question on the line, Mr. Kevin Barker from Piper Jaffray. Please go right ahead.

Good morning. In regards to your auto loan growth, you guys have been outpacing most peers the past few quarters, despite what we’ve seen is a decline in overall new car sales and auto originations. You’ve obviously pulled back in 2014 and 2015 as the industry was getting very heated, remained in the space. Could you just talk about the state of the auto industry and what your expectations are for loan growth going forward?

I think, I mean we ought to just step back to the basic comment that we really haven’t changed what we’ve been all along. At one point, that allowed us to do greater volume, both because we were lending when some others weren’t, and also because that the industry itself was producing greater volume. What’s happened of course is we keep our boxes same, and more and more products goes to leasing or longer tenure or more loan-to-value, we’ve had less share and less growth. As we expand our markets and into the newer markets, we have this opportunity to take share, simply because we’re entering new markets, notwithstanding the fact that the total size of the market is declining. The other thing that’s happening is we move more -- if you look at our growth rates in direct versus indirect and the products we’re rolling out on mobile Check Ready which we’re going to enhance with some other features in the coming months, we’re moving the way people borrow money from us to buy a car. And my suspicion is that that will likely accelerate, even as the total lending volume and the industry stabilizes are false, accelerate for us and others is more of this moves direct and more on the mobile.

And the attractiveness of the product to the consumer.

Yes, it’s very easy.

And add to that just in terms of our auto book, which is roughly $12.5 billion in outstandings, we feel good about the credit quality, where a prime book average FICO is 730 and originations actually this quarter were above that, more -- approximately like 750; tenures are 70 months; loan-to-values 90% and we’re not in the leasing business. So, we feel good about our credit quality of the book.

Okay. And then, follow-up on some -- on the commercial real estate. You’ve seen quite a bit of increase in your asset yields in commercial real estate, up almost 40 basis points over the last year. Could you talk about the shift in your book and where new money yields are…

I don’t think I think all you’re seeing is the pull through of rising chart rates. So, there hasn’t really been a shift in our book at all. I mean, at the margin, we’ve seen growth in the term product that kind of comes on as a fixed rate. But most of that is what you’re seeing is just a run up in LIBOR and the underlying spreads has been -- if anything creeping out at the margin in real estate but our new volume has been such that that has an impact in the overall market just because our volumes -- I think zero percent year-on-year.

Yes. And that’s true just for commercial yields in general beyond commercial real estate, it’s rate driven.

Thank you very much. We’ll get to our next question on the line from Ken Usdin with Jefferies. Please go right ahead.

Thanks. Good morning, guys. Follow-up on the balance sheet. You guys talked about kind of restarting little purchasing on the securities and obviously you’ve had good loan growth, which has been matched nicely by the deposit growth. As we go forward, and I know you’ve talked about this a little bit, again, I just wanted to get your updated thoughts. Do you anticipate seeing mix shift on the balance sheet as we look ahead and effects from Fed normalization? And are the deposits you’re getting still just coming from new customers or you’re still getting more money from existing customers? Thanks, guys.

Well, I don’t where to jump in on that. I don’t see any -- on the Fed unwind, Bill said it well, we’ll see. This is new and we will see what the ramifications are. So setting that aside, I don’t see a big balance sheet shift. I do see some intensifying around deposit relative to the betas on the pricing. So, I do think that that will intensify, but I don’t see anything dramatically shifting. Bill?

Yes, I don’t think so. Look at, in a perfect world, we would use more of our liquidity for loan growth that fits within our credit capacity. We continue to grow but not at the pace that we’re generating liquidity. We have that liquidity to deploy, much of it would be pointed towards sort of level one securities if and when yields get to a place where they make sense to us. Today we continue to run the balance sheet very short as it relates to interest rates that service well, we’ll continue to do that. And so, we accelerate into -- hopefully accelerate into higher rates as the Fed one unwinds its balance sheet.

Yes, and let me -- I can qualify my second question more. I was more thinking about, are you seeing mix shift, meaning are you seeing customers come out of non-interest bearing into interest bearing? I know we are seeing that into betas. But…

Yes.

Growing your commercial customers and I am more wondering just about where the incremental deposit is going as far as the deposit mix? That’s really what I meant to get at.

Yes. So, obviously, very different on the corporate side versus the consumer side. The corporate side, there continues to be a bit of differentiation between the larger corporates who are frankly shopping rates a little bit more, and that’s a product that has effectively had a beta of 1 since the beginning. Some of our more active treasury management clients who use balances to offset fees are a little bit less sensitive to that. On the consumer side, at the margin, we’ve seen growth in our interest bearing through time as people see that hey there’s money on the table to....

This has been a case for a while.

Yes.

No big shift.

Yes. And Bill, last little one. On the earnings credit rate, are we seeing any of that inside the treasury management business, are you starting to get back some more there at all?

It’s a much lower beta than what a straight corporate deposit would demand, which continues to be for hot money that corporates kind of shop around the banks, it’s our primary competition or the treasury base, government base money market fronts, and we’re basically priced right on top of that moving with it. Less impact on the compensating balances.

Thank you very much. We do have one more question queued up on the line from Gerard Cassidy with RBC. Go right ahead.

Thank you. Good morning, guys. Rob, you mentioned about the more rapid growth you are seeing in some of your newer territories that you’ve gone into de novo like Chicago on the commercial loan side. Can you share with us how you are achieving -- I know you’re coming off a low base, but how are you achieving that faster loan growth in these new territories?

It’s Bill, Gerard. Think about it, we got in there bunch of years ago and we planted a bunch of seeds. We hired very good employees, we called on the right clients and we called on them for what is now three and four years. And after you do that, you eventually get a shot on goal as something comes up for renewal. There’s been disruption in the market that we’ve taken advantage of and we’re just getting…

And we’re doing what we do in these new markets now year five. So, it’s just reflecting a lot of efforts, to Bill’s points that were made years ago. I should mention too as the earlier question, we are up and running in Dallas, Kansas City and Minneapolis, but that’s early. The energy is high, the progress is real. So, we’re excited about it. But there is just in terms of vintage, a little early to conclude anything.

Think about it, you go into a market, this isn’t you just show up, they don’t put an RFP out for a new loan and you show up some bids on new loan. We’ve been calling on it for years and something gets renewed, we maybe are already a participant, they bring us in to see how we might do it and we displace the left lead on this indication take a bigger hold and have a bigger share of what we do with that client. And that -- we’re good at that. That’s what we do, but it takes a lot of years. It’s not something you just show up and do. Because, when you show up, all you can do is kind of participate on somebody else’s credit. That’s not so much our gain.

And requires the patience, as you talk about...

Right. And without naming names, do you guys find when you have these successes, you’re taking the business away from middle market type banks or are these very large universal type banks where you seem to be getting these customers from?

It’s all the above. But I would say that we have seen an acceleration in what we are getting from some of the larger banks.

And Bill just as a comment on, obviously the treasury has come out with these white papers on how they want to change the regulatory outlook for the banks. When you get your chance to sit down with the new Vice Chairman of the Federal Reserve for example, what are the topics that are important to you, for PNC that you like to see address and get some relief?

LCR, LCR and LCR. I think it is simplest form. Regulation looked at a risk-based or activities-based model as opposed to an asset threshold model, in terms of the way they apply all regulations. I think we’d be in a better place. Our business model is much more similar to the people smaller than us than is to the people who are four times our size; we tend to get caught in that bucket. So, inside of that, relief on LCR, at the margin some stuff that they do in Volcker, some of the activities around stress test and other things. By and large, I think the treasury papers and suggestions or actually, the one at capital markets are less equity relevant to us. But the first one, I think it was pretty on point, we agree with most stuff in there.

Thank you very much. And we have no further questions on the phone lines.

Okay. Well, thank you all for participating on the call.

Thanks a lot.

Thank you.

Thank you. And this concludes today’s conference call. You may now disconnect.