Operator: Our next question is from the line of Betsy Graseck with Morgan Stanley. Please go ahead.
Betsy Graseck: I wanted to talk a little bit about the expense side. And I know you mentioned that there was a part of the expenses this quarter that was associated with revenue generating activities like capital markets, and so that is a net positive to PPOP. So let’s leave those expenses aside. I wanted to dig in more to the expenses that did not come with commensurate revenues and understand what the drivers were behind those increasing and then talk a little bit about your outlook for 2023 off of what is now higher based on what people have been expecting coming into today.
Rob Reilly: Sure. I can start there. So in regard to the fourth quarter expenses, the biggest driver of the increase was personnel expense. And to your point, inside of that, the variable comp associated with the higher business activity. In addition to that, we did have some medical expenses that we expect seasonally, but they came in a little bit higher than what we would have expected. Outside of that…
Bill Demchak: Lane wise seasonal.
Rob Reilly: Seasonal. Well, sure. Well, essentially.
Bill Demchak: You basically burn through your…
Rob Reilly: The deductibles. Yes, the deductibles and then like the Company takes over after that. So — and that happens, that happens seasonally this season, it was a little bit higher than what we expected. Outside of that, when you look at the marketing spend, that’s sort of timing in terms of how that falls in the year, but the impairments that we took on various investments and assets, which is part of your question. There wasn’t anything singular that would stand out. It was a.
Bill Demchak: Yes, there was. We wrote off everything we had to do with crypto.
Rob Reilly: Well, that was part of it. That was part of it. So maybe Bill wants to answer these questions. But I would say there wasn’t anything single. There’s a handful of items that we took down in technology, and that shows up in our equipment expense in occupancy, with or were some facilities that we right-sized for our space needs going forward, that kind of thing. So, on the margin
Bill Demchak: I’ll talk about that.
Rob Reilly: Yes, sure. And then on the margin, the — I’m sorry, just going into — Bill’s giving me another question, but I’d say on the margin going into ’23, those impairments reduced some of our expense rates, so that sort of helped. So our guide is 2% to 4% in all of ’23. That’s how that all stays connected.
Bill Demchak: But it’s kind of frustrating because none of the stuff in our expense line in the fourth quarter has anything to do with how we spend money. I mean the comp with new business is great. Everything else was kind of we flushed a couple tech projects that didn’t work out. We right-sized occupancy, marketing went up a little bit. And then we get hit this quarter on charge-offs, which are — I’m not going to call them artificially high. They are what they are, but they’re kind of lumpy as a function of something that we’ve been staring at for a while that finally hits the books.
Rob Reilly: And we’re largely reserved to your point.
Betsy Graseck: Okay. So as I think about the guide into next year for total expenses up 2% to 4% that is really related more towards your revenues of 6% to 8% and the crypto thing, whatever is a onetime one and done gone, that’s down to zero.
Rob Reilly: And that’s why — and I said in my opening comments, we point to strong positive operating leverage in ’23.
