Dave Rochester: And then back on your deposit betas you’re assuming in the guide, are you thinking you can move those commercial rates down materially more like right out of the gate with the first cut, or are you baking in some sort of a lag at least for the first couple of cuts?
Bill Demchak: It’d be pretty fast.
Operator: Our next question comes from Vivek Juneja with JPMorgan. We do have a question from Mike Mayo with Wells Fargo.
Mike Mayo: Just a follow-up on your commercial loan growth, like why you’re punching your weight in the growth rate, and which areas of commercial loan growth? And I know you’ve deployed teams to all these cities near the Nashville Main Street Bank and you’re trying to gain share and all that. Is it that effort the market share by city, is it kind of smaller middle market, is it that effect you talked about scale versus the smaller competitors? I mean how much we put in each bucket as far as your delta versus peer when it comes to commercial loan growth?
Bill Demchak: Look, I would tell you that we’re winning more than we’re losing on pitches, and that’s more true today than it was pre-March. We’re winning at a higher percentage just because there’s more shots on goal in the new markets than we are in the old markets. So the growth there is higher, and that’s — those new markets and the fact that we have them fully staffed, including products might differentiates us in a world where total loan growth may be somewhat tepid. And importantly, we’ve said this for years as we go into new markets, we are not leading with credit in these new markets. Fee based growth actually outpaces our loan based growth in those markets as we cross sell into TM and other products and services. So we look at pipelines, we look at line of sight into what we have in each market. I don’t know that there’s any particular product that stands out as something that’s growing faster than another one. It’s just we’re winning clients.
Mike Mayo: Last follow-up. How much faster would your commercial loan growth be if there were no private capital competitors right now?
Bill Demchak: I think the only way that impacts us directly — I mean that the margin may be something in business credit and as you know, we partner with a lot of the private credit guys inside of that business. And then to the extent companies are taken private, which I think is going to slow down given the cost of capital, we sometimes will lose a client to a leverage lender because they were taken private,but that’s kind of…
Rob Reilly: A structure we [Multiple Speakers] that’s it right, that would be the margin. If that wasn’t available that would otherwise be a conventional loan.
Operator: And we have a question from Vivek Juneja with JPMorgan.
Vivek Juneja: Bill, question for you. I mean when — your deposits at the Fed keeps growing, at what point are you thinking about putting some of that or locking some of the yields on that? What’s your thinking there, especially given all your other commentary about rates peaking, mild recession, loan growth, et cetera, triangulating all of those factors?
Bill Demchak: Well, in the near term, we think the market’s got ahead of itself. I think until we’re clear of the outcome here we’re clear. Inflation and Fed actions, we’re happy to kind of stay neutral. I think my own expectation here, Vivek, is notwithstanding what the Fed does through the course of ’24 with the Fed funds rate. My expectation is you’re not going to see a lot of action in the longer rate simply because of the supply calendar and the fact that inflation will have a tail and while the Fed could ease somewhat, I think inflation is still going to be running against versus their goal. We’ll have a lot of issues. So long story short, we don’t see a burning desire to put money to work here because we think that opportunity is going to remain and the durations we typically invest in, and probably get a little bit better just given how hot the market got post the last Fed meeting.
Vivek Juneja: And second one, you talked about a lot of companies going into private hands and obviously, that creating competition from private credit for loans. But on the other hand, you’ve got increasing capital requirements, so which is translating into higher spreads, so as to maintain returns. How do you balance that out, on the one hand, not losing share to the private market and on the other hand, maintaining that? Do you see — given that, do you see spreads staying high or do you think that turns course the other way?
Bill Demchak: So again, we’re kind of talking about two different universes of credit. But having said that, and I’m sure you’ve heard this inside of your own shop. Lending money for the sake of lending money doesn’t give us an adequate return on capital. Didn’t before, it doesn’t now. What gives us a return on capital is the relationship, the annuity-like fees you get from TM, the additive fees you get from capital markets related activity, and price is kind of a third order effect on the return on capital we get with that client relationship. Private credit at the moment sees a return in private credit because they could put some leverage on it, and there’s not a big opportunity in private equity and yields are high. And I’ll chase that for a period of time. I don’t know that, that’s a particularly great investment through the cycle and we don’t try to compete with it in that lending environment.
