The PNC Financial Services Group, Inc. (NYSE:PNC) Q3 2023 Earnings Call Transcript

Ken Usdin: Completely understood. The second question I had, Bill, is you mentioned in a higher longer for environment, we got to see what the Fed does in terms of where deposit betas and mix goes. On the asset side, however, though, can you help us understand what happens in terms of fixed rate loan repricing versus — and how much you might still have left in that versus obviously when we get to a peak in Fed funds, we’ll know that the variable rates have — will have gotten there?

Bill Demchak: Yeah. So we have, I mean, beyond our securities book and swaps, which obviously we will reprice over the next several years, we have, I don’t know the percentage off the top of my head, percentage of our loan book, either fixed rate to begin with, think of an auto loan, or with swaps on top of it, floating rate loan, we swap to fix, and those fixed rate loans and swaps are shorter duration typically than what we have in the securities book and there’s a lot of dry powder there that we’ll reprice. We are back to this notion that, hey, we’re out there competing and growing this company, we will be originating those loans as they reprice. We’re not dumping assets and getting out of things. It’s going to shrink the total volume that’s on our book.

Ken Usdin: Yeah. No, I totally understand. I would think it would be a net positive as an offset to whatever has happened.

Bill Demchak: You have the competing parts, right? We’re going to have repricings of fixed rate assets fighting reprices of our liabilities. At some point, that’s going to cross, and banks are going to grow NII at high percentages. I just can’t tell you when that is yet, and we haven’t done our budget next year.

Ken Usdin: Yeah, that’s fair. Okay. Thank you.

Operator: And there are no further questions on the phone lines at this time.

Bryan Gill: Okay. Well, thank you…

Bill Demchak: Thanks, everybody.

Bryan Gill: Yeah. Thanks for participating. If you have any follow-up questions, please feel free to reach out to the IR team. Thanks.

Rob Reilly: Thank you.

Operator: That does conclude the conference call for today, and we do thank you for your participation.