Greetings and welcome to the PNC Financial Services Group earnings conference call. At this time, all participants are in a listen-only mode. The question-and-answer session will follow the formal presentation. If you would like to ask a question during this time, please press star one on your telephone keypad. If you would like to withdraw your question, please press star two on your telephone keypad. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bryan Gill. Thank you, Bryan. You may begin. Well, good morning and welcome to today's conference call for the PNC Financial Services Group. I am Bryan Gill, the Director of Investor Relations for PNC, and participating on this call are PNC's Chairman and CEO, Bill Demchak, and Rob Reilly, Executive Vice President and CFO. Today's presentation contains forward-looking information. Cautionary statements about this information, as well as reconciliations of non-GAAP measures, are included in today's earnings release materials as well as our SEC filings and other investor materials. These are all available on our corporate website, pnc.com, under Investor Relations. These statements speak only as of April 16, 2024, and PNC undertakes no obligation to update them. Now I'd like to turn the call over to Bill. Thank you, Bryan, and good morning, everyone. In the first quarter, we executed well and delivered solid financial results. We generated $1.3 billion in net income, and adjusting for the FDIC special assessment, $3.36 per share. Rob will provide details on our results in a moment, but I'll start with a few thoughts. First, we continued to grow our business. In the first quarter, we added new customers across our segments and increased deposits on a spot basis. We're continuing to invest heavily in our franchise to drive growth and gain share, particularly in our retail banking technology platform, our payments businesses, and our expansion markets. To that end, in the first quarter, we announced a multi-year investment of nearly $1 billion in our branch network to renovate more than 1,200 locations and open new branches in key locations, including Austin, Dallas, Denver, Houston, Miami, and San Antonio. Second, expenses were well managed during the quarter. As we've indicated, expense discipline remains a top priority, and we are on track to maintain stable core expenses in 2024. Third, credit quality remained stable during the quarter. The office portfolio remains an area of focus, but we are adequately reserved overall, and particularly with respect to CRE. We believe our thoughtful approach to managing risk, customer selection, and long-term relationship development will continue to serve us well. And fourth, we continue to build on our strong liquidity and capital position during the quarter, providing us with the financial strength and flexibility to help us support our clients, grow our businesses, and capitalize on future opportunities. In summary, we delivered solid results during the first quarter and positioned ourselves well for the balance of 2024 and beyond. Last month, we launched a brand campaign celebrating our "boring" approach to banking. Now, obviously, we're using humor in the campaign to have a little fun and grab the public's attention. But inside of that humor is honesty about who we are, how we think about risk, and how we run our company. In short, it is everything we do to be steady and predictable. Finally, I just want to thank our employees for everything they do for our customers, for each other, and for all of our stakeholders. With that, I'll turn it over to Rob to take you through the quarter. Rob? Thanks, Bill, and good morning, everyone. Our balance sheet is on slide 4 and is presented on an average-linked quarter basis. Loans of $321 billion decreased $4 billion, or 1%. Investment securities declined $2 billion, or 1%. Our cash balances at the Federal Reserve were $48 billion, an increase of $6 billion, or 13%. On a spot basis, our cash at the Fed was $53 billion, up from $43 billion in the prior quarter, reflecting higher period-end deposits. Deposit balances averaged $420 billion, a decline of $4 billion, or 1%, reflecting seasonally lower commercial deposits. However, on a spot basis, deposits were up $4 billion, reflecting growth in both commercial and consumer deposits. Borrowed funds increased $3 billion to $76 billion, primarily driven by parent company debt issuances early in the quarter. At quarter-end, AOCI was a negative $8 billion compared to a negative $7.7 billion at December 31, reflecting the impact of higher interest rates. Our tangible book value increased to $85.70 per common share, an 11% increase compared to the same period a year ago. We remain well capitalized with an estimated CET1 ratio of 10.1% as of March 31. While we recognize the likelihood of potentially substantial changes to the Basel III Endgame NPR, under the currently proposed capital rules, our estimated fully phased-in expanded risk-based CET1 ratio would be approximately 8.3% as of March 31, 2024. We continue to be well positioned with capital flexibility. Share repurchases approximated $135 million, or roughly 1 million shares, and when combined with $624 million of common dividends, we returned $759 million of capital to shareholders during the quarter. Slide 5 shows our loans in more detail. Compared to the fourth quarter, average loan balances decreased 1%, primarily driven by lower commercial loan balances. Commercial loans were $219 billion, a decrease of $3.4 billion, driven by lower utilization as well as soft loan demand. Within the corporate and institutional bank, utilization rates have remained below 2023 year-end levels and have not increased in the first quarter, as is historically typical. We expect utilization to increase throughout the year. Notably, each percent of utilization within C&IB equates to $4 billion of loan growth. Consumer loans declined approximately $600 million, driven by lower credit card and home equity balances, and total loan yields increased 7 basis points to 6.01% in the first quarter. Slide 6 details our investment security and swap portfolios. Average investment securities of $135 billion decreased 1% as curtailed purchase activity was more than offset by portfolio paydowns and maturities. The securities portfolio yield increased 3 basis points to 2.62%, reflecting the runoff of lower-yielding securities. As of March 31, the securities portfolio duration was four years. Our received Fixed Swaps pointed to the commercial loan book totaled $37 billion on March 31. The weighted average received fixed rate of our swap portfolio increased 20 basis points to 2.3%, and the duration of the portfolio was two years. Through the end of 2024, 13% of our securities and swap portfolio is scheduled to mature, which will allow us to reinvest into higher-yielding assets, providing a meaningful benefit to Net Interest Income in the second half of the year. Accumulated Other Comprehensive Income was negative $8 billion at March 31, which will accrete back as our securities and swaps mature, resulting in continued Tangible Book Value growth. Slide 7 covers our deposits in more detail. Average deposits decreased $4 billion to $420 billion during the quarter, as growth in consumer deposits was more than offset by a seasonal decline in commercial deposits. Regarding mix, consolidated non-interest-bearing deposits were 24% in the first quarter, down slightly from 25% in the fourth quarter. Notably, on a spot basis in the first quarter, non-interest-bearing deposits had the smallest dollar decline since the Fed began raising rates in 2022, which gives us confidence that the non-interest-bearing portion of our deposits has largely stabilized. Our rate paid on interest-bearing deposits increased to 2.6% during the first quarter, up from 2.48% in the prior quarter. As of March 31, our cumulative deposit beta was 45% and consistent with our expectations. We believe our deposit betas have approached their peak levels, although we do expect some potential drift higher through the period leading up to a Fed rate cut, which we currently expect to occur in July. In regard to the timing and amount of potential rate cuts, we recognize there's a lot of fluidity and uncertainty. However, our 2024 NII will largely be unaffected by any short-term interest rate movement or lack thereof. This is because our floating-rate assets are aligned with our floating-rate liabilities, including our high-beta commercial interest-bearing deposits and our long-term debt, which is almost entirely swapped to floating rates. Importantly, going forward, we remain well positioned for the NII benefit of repricing low-yielding fixed-rate securities and loans, maturing during the latter half of 2024 and into 2025. Turning to the income statement on slide 8, first-quarter net income was $1.3 billion, or $3.10 per share, which included a pre-tax non-core non-interest expense of $130 million, or $103 million after tax, related to the increased FDIC special assessment. Excluding non-core expenses, adjusted EPS was $3.36 per share. Total revenue of $5.1 billion decreased $216 million, or 4%, compared to the fourth quarter of 2023. Net interest income declined by $139 million, or 4%. Our net interest margin was 2.57%, a decline of 9 basis points, resulting primarily from higher funding costs. Non-interest income decreased $77 million, or 4%. Non-interest expense of $3.3 billion declined $740 million, or 18%, and included a $130 million FDIC special assessment. Importantly, core non-interest expense was $3.2 billion and decreased $205 million, or 6%. Provision was $155 million in the first quarter, reflecting portfolio activity and improved macroeconomic factors. Our effective tax rate was 18.8%. Turning to slide 9, we highlight our revenue trends. First-quarter revenue was down $216 million, or 4%, driven by lower net interest income and, in part, a seasonal decline in fee income. Net interest income of $3.3 billion declined $139 million, or 4%, reflecting increased funding costs, lower loan balances, and one less day in the quarter. Fee income was $1.7 billion and decreased $74 million, or 4% linked quarter. Looking at the detail, asset management and brokerage revenue was up $4 million, or 1%, reflecting higher average equity markets. Capital markets and advisory fees declined $50 million, or 16%, driven by lower M&A advisory activity off elevated fourth-quarter levels, partially offset by higher underwriting fees. Card and cash management decreased $17 million, or 2%, driven by seasonally lower consumer transaction volumes, partially offset by higher treasury management fees. Lending and deposit-related fees declined $9 million, or 3%, reflecting the reduction of customer fees on certain checking products. Residential and commercial mortgage revenue declined $2 million, or 1%, and included lower residential mortgage activity. Other non-interest income of $135 million decreased $3 million, or 2%, reflecting lower gains on sales. The first quarter also included a negative $7 million Visa fair value adjustment compared to a negative $100 million adjustment in the fourth quarter. Turning to slide 10, our core non-interest expense of $3.2 billion decreased $205 million, or 6% linked-quarter, reflecting strong expense management. Importantly, compared to the first quarter of 2023, core non-interest expense declined $117 million, or 4%, with a decline in every expense category. This broad-based result reflects the impact of expense actions taken in 2023. As we've previously stated, we implemented expense management actions that will drive $750 million of cost savings in 2024. These actions include the $325 million workforce reduction effort last year, which was realized in our first-quarter expense run rate, and our $425 million 2024 continuous improvement program goal, which we're well on track to achieve. We remain diligent in our expense management efforts, and these actions give us confidence that we'll keep our year-over-year expenses stable. Our credit metrics are presented on slide 11. While overall credit quality remains resilient, the pressure we anticipated within the commercial real estate office sector has continued. Non-performing loans increased $200 million, or 9% linked quarter, almost entirely driven by commercial real estate, which increased $188 million. Inside of that, approximately $150 million was related to the CRE office portfolio. Total delinquencies of $1.3 billion decreased $109 million, or 8% linked quarter, driven by lower consumer and commercial delinquencies. Net loan charge-offs were $243 million in the first quarter, and our annualized net charge-offs to average loans ratio was 30 basis points. Our allowance for credit losses totaled $5.4 billion, or 1.7% of total loans on March 31, stable with December 31. Slide 12 provides more detail on our CRE office credit metrics. While NPLs have increased over the past few quarters, our criticized balances have remained relatively consistent. The migration of criticized loans to non-performing status is an expected outcome as we work to resolve the occupancy and rate challenges inherent to this portfolio. In the first quarter, net loan charge-offs within the CRE office portfolio were $50 million, essentially in line with the previous quarter level. Ultimately, we expect continued charge-offs on this portfolio, and accordingly, we believe we are adequately reserved. As of March 31, our reserves on the office portfolio were 9.7% of total office loans, and inside of that, 14.4% on the multi-tenant portfolio. Importantly, we continue to manage our exposure down, and as a result, our balances declined 3%, or approximately $200 million linked-quarter. In summary, PNC reported a solid first quarter 2024 and were well positioned for the remainder of the year. Regarding our view of the overall economy, we're expecting economic expansion in the second half of the year, resulting in real GDP growth of approximately 2% in 2024 and unemployment to increase modestly to 4% by year-end. We expect the Fed to cut rates two times in 2024, with a 25 basis point decrease in July and another in November. Looking at the second quarter of 2024 compared to the first quarter of 2024, we expect average loans to be stable, net interest income to be down approximately 1%, and as I mentioned previously, we expect NII and net interest margin to trough in the second quarter. Fee income to be up 1%-2%. Other non-interest income to be in the range of $150 million and $200 million, excluding Visa activity. Taking the component pieces of revenue together, we expect total revenue to be stable. We expect total core non-interest expense to be up 2%-4%. We expect second-quarter net charge-offs to be between $225 and $275 million. As a reminder, PNC owns 3.5 million Visa Class B Shares with an unrecognized gain of approximately $1.6 billion. Under the terms of Visa's current exchange program, scheduled to close on or about May 3rd, Class B shareholders will have the opportunity to monetize 50% of their holdings. We've not included the impact of monetizing the Visa gain in our forecast. Turning to slide 14, our full-year 2024 guidance is unchanged from our January earnings call. As a reminder, for the full-year 2024 compared to the full-year 2023, we expect average loan growth of approximately 1%. Total revenue to be stable to down 2%. Inside of that, our expectation is for net interest income to be down in the range of 4%-5% and non-interest income to be up 4%-6%. Core non-interest expense, which excludes the FDIC assessment, is expected to be stable. We expect our effective tax rate to be approximately 18.5%. With that, Bill and I are ready to take your questions. Thank you. We will now be conducting a question-and-answer session. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first questions come from the line of Betsy Graseck with Morgan Stanley. Please proceed with your questions. Hi. Hi. Good morning. Morning. Okay. Just want to make sure you can hear me okay. Sure. Yeah. No, this is great. The first question I have just has to do with how you're thinking about the NII indicating 2Q as the trough, improving from there. And I would think that the majority of that improvement is coming from loan growth. But correct me if I'm wrong, how you're thinking about that NII trajectory into the second half of the year. And then, well, I'll start there. Okay. Yeah. Good Good morning, Betsy. This is Rob. So in terms of NII and the trajectory that we're on, we knew at the beginning of the year that we would trough around this time in the second quarter, and that's what's happening. We expect to grow from that trough level based on the repricing of our fixed-rate assets as rates settle down. There is some reliance on the back half for loan growth, but all consistent with our full-year guidance, average loans up 1%. Just on that loan growth piece. The biggest. Yeah. Go ahead. I was just going to say that the largest driver is repricing of fixed-rate assets. We expect some loan growth, but it's not a heroic number in there. It's simply the roll-down of our securities book. Okay. Got it. Yep. All right. On the loan side, it is interesting to see the utilization rates ticking down here. Do you think that's just a function of Fed funds is 5.5, and that's the base rate from which C&I is priced off of, or is there other dynamics there besides just rate? It's a variety of things. I think the capital markets activity in the first quarter in investment-grade debt put a lot of cash into the system, and you saw companies that could hit that market pay down revolvers. So that was sort of a near-term impact to it. As we look out, there hasn't been any real inventory build, which I would expect given retail sales. There hasn't been much capex, and capacity utilization's been holding constant at a pretty high level. So at some point, this needs to turn. But I think the first quarter kind of surprised us, and my best guess was that was on the back of just how liquid the public markets were. Okay. Got it. Thanks so much. Really appreciate it, Bill. Thank you. Our next questions come from the line of John Pancari with Evercore ISI. Please proceed with your questions. Good morning. Hey, John. On the expense front, it looks like within expenses, they came in a bit better than expected, mainly on the comp side and certain other areas. You cited the solid expense management and your cost-save effort. Would you say that trends are coming in perhaps a bit better than you had forecasted as you look at your expense saves? Is there any thought process that potentially your full-year 2024 outlook could prove conservative in terms of your stable expectations? But John, this is Rob. So I'd say for the full year, we're still planning and guiding towards stable. In the first quarter, you're right. We're off to a good start in terms of realizing the expense actions that we took last year and the CIP program that we have this year. But it's a little early in the year to roll that all forward. And like I said, we're off to a good start, and we're well positioned for stable. Okay. Thanks, Rob. That's helpful. And then just separately, on the credit side, we can see the commercial real estate stress that you mentioned and the prudently added to the office reserve in the quarter, but relatively stable or down a little bit in terms of your firm-wide reserve. Can you maybe talk about the progression in credit in other areas? Are you seeing any mounting stress at all in C&I that could potentially keep the reserve currently stable, or could you continue to, from a firm-wide perspective, bleed the reserve here? Bleed is a bad word. But the credit action at the moment is in the real estate book and specifically inside of office. Consumer at the margin, a little bit worse. But there isn't anything systematic going on in C&IB that would cause us to have any different expectations than what we see now when we're reserved for the moment based on our economic forecast. Yeah. The pressure is in the CRE book, specifically the office book. Okay. Then just related to that, are you seeing migration in the office book that is surprising you, given your forecast on the added, notably, to the office reserve? Is there anything there that's surprising you in terms of your reappraisals or your work on that front? No. No surprises. Yeah. Everything's progressing as we expected. We started with the criticized. The NPLs are up a little bit, but everything's consistent with what we've been seeing. Got it. All right. Thanks, Rob. Thank you. Our next question has come from the line of Matt O'Connor with Deutsche Bank. Please proceed with your questions. Good morning. I'm looking at slide 6 here where you show the runoff of the fixed-rate securities and swaps. Any way to size the revenue pickup from this, either anchoring to the forward curve or current rates? We put out some crude analysis that showed about a $2 billion impact and just said it was linear, so half this year, half next. Obviously, it was just a rough cut at it. I don't know if you have any comments on that or framing it on using your estimates. Thanks. No. I would say so we laid it out in the slides in terms of what we see in terms of runoff and obviously the projected AOCI burn-down as it relates to capital. But all of that's in our guide. So in terms of what our expectations are in terms of that behavior, that's in our full-year NII guide, which is down 4%-5%. But it does make the point in terms of what we were saying earlier. To go forward, the biggest variable is the repricing of our fixed-rate assets and, in this case, securities. And I think what everybody's struggling with here is this notion of what's the Fed going to do in the next period of time? Is it 2 cuts or no cuts or 3 cuts? Remember, we started out with 6 cuts. We didn't. Yeah. We did not, but the market did. We know, based on forward curve, the repricing of our fixed-rate assets, the amount of incremental money we will earn from that has increased because term rates have increased. At the same time, the assumption that the Fed will maintain rates here longer causes us to pause on what happens to deposit pricing through time. Right? So there's a trade-off. Higher rates in the long run obviously help us on our fixed-rate assets. Deposit repricing continues on if the Fed holds longer, a much slower pace than it's been in the past. But I think it would be a bit of a heroic assumption for anybody to say that deposit costs won't continue to creep up in the face of a steady Fed. And so that's the trade-off in the near term. Longer term, the repricing of the fixed-rate assets dwarfs the repricing of deposits. That's kind of why we say, "Look, in the second quarter, we trough, and then we pick up from there. Into 2025. Yeah. That makes sense. And then sorry if I missed it earlier, but did you reiterate your view that 2025 net interest income would be record level? And if you did, what would derail that? If the higher for longer doesn't sound like that'll change it, is there still a loan growth component? Or if rates go down too much, just what would be the risk of achieving that if you still had that view? Thank you. I mean, the biggest risk would be a massive curve inversion such that we were repricing fixed-rate securities at lower yields than the. Than they are today. Well, I mean, than what they were. In the book. Three months ago. Right. You're repricing. No. Our original assumptions in that forecast, yields were 100 lower than they are right now. If they were to fall well below that, we would be at risk at that record number, although still a high number. And Matt, this is Rob. It's Rob. Rob. I'll take the opportunity to reiterate our view that 2025 will be a record NII. Yes. Okay. Thank you very much. Thank you. Our next questions come from the line of Gerard Cassidy with RBC Capital Markets. Please proceed with your questions. Hi, Bill. Hi, Rob. Hi, Gerard. Rob, you talked about the utilization of the C&IB loans that it was lower in the first quarter, and normally, it kind of ticks up a bit. Question on that: do you think your customers are just uncertain about their outlooks, which has kind of held them back from drawing down on lines of credit? Or do you think that they're having access to other lenders, meaning the private credit market or the public markets, that has taken away opportunities for banks to have these companies increase those lines of utilization? Yes. I think it's both. The capital markets activity in the first quarter, we're not the private credit side on leverage d finance doesn't really impact us. But the public markets were wide open. By the way, our fees were up in that space for serving clients that way. But naturally, at the margin, that causes our utilization to go down. The other issue you can't ignore, right? We've seen capital spend and inventory build be next to nothing, even though capacity utilization is high, retail sales are high. And at some point, that's got to give. But I do think there continues to be hesitancy on manufacturers in particular, just in the face of this economy. And I think that's part of it. And looking for a stability factor, which will help. Very good. And then I know, Rob, I think you touched on in an answer to a question about the commercial real estate outlook, office in particular. And everything appears to be going in your expectations. What kind of pricing declines in appraisals that have come up and where you've had to reappraise certain properties, are you seeing price declines 10%, 15%, 20% on those appraisals or more? Any color there? I mean, much higher than that. Well, variance. There's still… Yeah. The variance is all over the place. But as a practical matter, if we were underwritten at the start at 50-55 cents on whatever the appraised value was at that point in time, a big chunk of the book right now is effectively at par. When we look at resolutions that we've gone through, we've had everything from we get out whole to we lose 75 cents on the dollar on a given loan. That's the variance factor. Yeah. So it's building-specific. It's market-specific that's driving this. But loss rates are a lot higher. If you looked at office and said, "Hey, how much of values fall?" It's a lot higher than 15%. I mean, personally, across the space, in my view, it's closer to 30% or 40% or even higher. Right. You're thinking ahead. You're thinking ahead in terms of where we're going. Well, it's not showing up in appraisals here. We're just seeing it in actual resolution of properties. Got it. Thank you. Thank you. Our next questions come from the line of Dave Rochester with Compass Point. Please proceed with your questions. Hey. Good morning, guys. Just back on the NII guide, you mentioned the largest driver of the growth you're looking for in the back half of the year is coming from the repricing. Then you got the loan growth as another factor. I was just wondering what you're assuming for deposit flows within that as well. I would assume that those could be a little bit better just from a seasonal perspective in the back half of the year. And then on the securities rolling off, how much of that liquidity is getting plowed back into the securities book? And what kind of yields are you looking at there at this point on purchases? So I'll let Rob hit deposits in a second. I mean, we have roll-off of both fixed-rate loans and fixed-rate securities. And the yields we assume in our forecast at this point are just forward curve adjusted for whatever the right spread is of the asset we'd be replacing, so like for like. Yeah. And then just on the deposits, back at the beginning of the year, we expected deposits to decline year-over-year, low single digits. We still expect that, albeit in the first quarter, we did outperform that a bit. But our expectations are for slightly lower deposits through the balance of the year. Okay. And then on the loan growth outlook, which you talked about, I guess, on an end-of-period basis last quarter, does higher for longer impact that expectation at all? And what's your outlook for the longer end of the curve through the year? I don't know. I don't know that I've thought much about how higher for longer impacts loan growth or not. The outlook that we have for rates at this point, our official outlook is we have, what do we say, two cuts starting in July at this point, with the curve largely staying where it is. Our forecast, whether we're using current forward curve or even when rates were lower, our NII forecast isn't terribly sensitive to what we're assuming, at least for this year, because the incremental amount we'd make from higher yields on bonds and loans repricing, we're assuming, is largely offset on the deposit cost leakage that occurs if the Fed doesn't cut rates. So we're not making heroic assumptions on rates. We kind of don't, we don't really care where they go in the near term. What we know is once we get through the second quarter here, that the repricing of fixed-rate assets simply starts to dwarf the potential repricing on deposits independent of where rates are. Got it. Great. Thanks, guys. Thank you. Our next questions come from the line of Ebrahim Poonawala with Bank of America. Please proceed with your questions. Good morning. I guess maybe the 10th question on your loan growth outlook for the back half, I think I guess the macro concern is that higher for longer will eventually tip this economy into a recession. Would love to hear, Bill, Rob, your perspective based on what you are hearing from your bankers' clients. If we don't get any rate cuts for the year, based on what you're seeing, could we have a blind spot where the economy really kind of tails off, where a lot of these things catch up, we enter some version of a stagflation? Just how do you handicap that downside risk heading into the back half of the year? Okay. I think that's a possibility. One of the peculiar things about utilization is when credit conditions tighten, utilization increases. It's actually one of the primary drivers of utilization. So bizarrely, loan growth would increase if you ran because utilization would increase if you ran into that scenario. But I do worry about that. Look, eventually, if the only way to get rid of inflation is to really hurt the economy, I worry less about loan growth and more about long-term credit losses for the whole industry, just as right now, everybody's planning for a soft landing. Got it. You still think soft landing is base case in terms of most likely outcome right now? Yes. Got it. Separately, one, I think thanks for your advocacy on bank M&A. Just wanted to follow up on the letter you wrote to the OCC. One, are you finding any kind of sympathy within the regulatory apparatus around the case for allowing for larger bank M&A? And is there any possibility that we see deal-making pick up ahead of the elections? Sorry. Any possibility of what? Of deal-making picking up ahead of the November elections? Well, look, the letter was self-explanatory, and we've kind of beaten the topic to death. I guess what I would suggest is I think the banking industry, by and large, is set up to do well over the next 18 months or so simply through rates normalizing, assuming you didn't have big concentrations to real estate and office. And I think everybody in the near term is focused on that. I think long-term, some of the charts we put in that letter, they're just hard to ignore. You see the 2 largest banks in the country who, in the last 4 years, grew of size larger than Truist, U.S. Bank and PNC put together. I don't know what the regulators think or don't think about that. The intent of the letter was to just point out that if what they wrote in the OCC comment letter was to freeze M&A across the country for any bank over $50 billion, I think you can see the outcome that we'll have in this country, which is a massive consolidation with the giant national banks. So all my point was. Got it. Do you see the backdrop conducive for deal-making over the coming months, quarters, or? What? To anything near term. For us? Yeah. Or the industry? No. I think most banks are content to hang out the next 18 months because their earnings are going to improve, and their internal forecasts are going to look good, and everything's rosy. I worry about the out years. But in the near term, I imagine everybody's internal look looks pretty good. And we don't control others' timing, so that's up to them. That's fair. Got it. Thank you so much. Thank you. Our next questions come from the line of Bill Carcache with Wolfe Research. Please proceed with your questions. Thanks. Good morning, Bill and Rob. Following up on your comments around soft loan demand and utilization rates, assuming we avoid recession and the soft landing scenario plays out, how would you respond to the view that the ingredients may not be in place for a reacceleration in loan growth given this environment where Fed funds is running above CPI and the Fed can't cut amid sticky inflation? We spent most of the post-GFC era with Fed funds running below CPI and had mid-single-digit loan growth. But just love your thoughts on the risk that loan growth may not go up much if the Fed can't cut below CPI. And do you lean more heavily into your fee-based businesses if that happens? I'm not sure Fed funds versus CPI necessarily has much to do with loan growth. I think loan growth ultimately is driven by the economy, and the economy's been running hotter than most people had assumed, and it's been running hotter than most people had assumed without big inventory builds. If you look at fourth-quarter GDP, there was a drawdown on inventories. Inventories are directly correlated with utilization and loan growth. CapEx has been muted. If the economy slows, if the Fed has to slow the economy to a point where it's not a soft landing in order to get inflation under control, that can hurt loan growth. If the economy's strong, you just saw retail sales. Eventually, it's going to translate into loan growth independent of whether there's positive real rates, I think. Yeah. It's a strong correlation there. Yeah. That's helpful. Thank you. And then as a follow-up on your comments about the Visa B shares, how should we think about the dollar amount and the use of proceeds? Well, so yeah, as I mentioned in our comments on May 3rd, we'll have the opportunity to monetize 50% of our holdings, which our holdings are roughly $1.6 billion in unrealized gains. And that'll just be capital. And we'll look at how we apply everything in terms of our excess capital. But we'll wait until we get the capital to do that. Got it. Thank you for taking my questions. We monetize half of the $1.6. Thank you. Our next questions come from the line of Ken Usdin with Jefferies. Please proceed with your questions. Hey, guys. Good morning. Just to follow up on the fee side, I think when you spoke in January, you talked about expected slowness in capital markets and M&A to begin the year. And then I think you were thinking about a 20% growth overall. Just wondering just how that's looking in terms of the body language you're getting from those middle-market clients and Harris Williams, and then also if you have any other color on what you think the other drivers of fees are going to be. Thanks. I mean, the Harris Williams pipeline at the moment is larger. It'd be larger than it's ever been, but it's larger than it was last year, which is their first quarter relative to their fourth quarter was light, and that's what drove the quarter-on-quarter change in our total fees. Yeah. So Ken, to answer your question, we are sticking to the 20% expectation for growth in capital markets year-over-year. Bill's right, first quarter was off elevated fourth-quarter levels. But in terms of the comp last year, in the second and third quarter, capital markets was really soft. Harris Williams was really soft. And the pipeline suggests we are not going to repeat that. We'll be well above those levels. Okay. Got it. All right. And the last one, just on the asset and wealth side, I think you've had some pretty good flows of things like that. That That first quarter starting point was more the markets. I know you put a lot of effort into that business. Any sense of just change in terms of asset flows and new business wins and incremental potential revenue growth out of that business specifically? We have had success over the last year kind of repositioning who and what we are in the market, bringing in new assets. To accelerate that to a level where it becomes a meaningful part of our company, I think, is a bit of a challenge. It's a service to our clients, and we're good at it. But the trends are going the right way. Yeah. I would just add to that, Ken. Obviously, the business is doing well with the equity markets supporting that. The growth opportunity is in the new BBVA markets in the Southwest where you recall BBVA really didn't have a wealth management business. So we're de novo, so to speak, in all those markets. But we're up and running with teams. Asset inflows are occurring. Long term, that's where the incremental growth will come from. One more just follow-up. Is that an area that you could add to inorganically over time? I know it's tough just because of multiples and whatnot, but you've done it organically, as you just said. That's a tough business, in my view, to add to inorganically. Cultural differences, the way you go to market, the outright price and the goodwill associated with it, and the return on equity that comes with that makes it all really difficult to do. And at least historically, the opportunity to grow organically is much stronger than going out and trying to add to it through purchase. Okay. Got it. Thank you. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next questions come from the line of Mike Mayo with Wells Fargo. Please proceed with your questions. Hi. It looks like we're leaning into the expense control this quarter, but I'm just trying to figure out ahead. So you mentioned $750 million of cost savings for this year. How much of that was in the first quarter? But you also mentioned $1 billion of extra spending for branches. How much of that was in the first quarter, and how should we think about those offsets? And I know it's a tough fight to get positive operating leverage this year. Do you feel better, worse, or the same as you did three months ago? Thanks. Well, yeah, we'll chunk that down. So we'll start with the positive operating leverage for the full year. We still think that's pretty tough, not including any Visa gains, of course, simply because of the NII and the rate issues and those run rates. We do feel good about our expenses. We've projected and guided to being stable year-over-year. We're off to a good start in the first quarter, a little bit ahead of where we expected to be, but we still got a long way to go. So all of the items that you talked about, they're in there. But the guidance is stable year-over-year, which is important to us. Okay. I'll shift gears back. Bill, you were talking about commercial real estate. Look, you reserve 10% for office. And you said the value of the underlying properties are probably down 30%-40% or more. So I guess that is reflected in your reserving, which I think is more than the average bank. Do you see a difference by and I know it changes by region and subregion and property and type and all that. But do you see a difference by region, whether it's the big cities? Give a little sense of that variance. You said it's all over the place. If you just fill in a few data points around that, that'd be great. Yeah. Well, no surprise. Parts of California are the worst. But it really comes down to the building and the market. I mean, you could have a building that's in the right place in Pittsburgh, and it's doing absolutely fine. And you could have a building that's in the wrong place in Pittsburgh, and it's literally worth zero. And that's the market we're playing with right now. Now, inside of that whole thing, we do feel that we've been ahead of this game, that we're reserved correctly, that we are conservatively taking marks, and we have the opportunity to do so. But this is going to play out over time. And your eyes aren't lying to you when you look out and see vacancies. And I think ourselves and the large banks have been pretty open about it. It's going to be an issue. It's not a massive book of business for us. I'm not particularly worried about it. We're well reserved. But it's going to roll through the country and impact some of the smaller banks, I think, in a way that is probably larger than people think. Disproportionately. Yeah. Just one short follow-up on that one. The longer rates stay higher, do you expect this to bleed over from office to other areas of commercial real estate? At the margin, yes. But it is kind of just at the margin. So you see debt service coverage ratios decline as interest costs take more of the cash flow out. And in multifamily, for example, rents aren't increasing at the pace they once were. The massive difference, though, Mike, is that all other types or virtually all other types of real estate are cash-flowing. So there's a value to them, right? They just might not cash flow to support the original amount of debt they had. The problem you have in office is, in many instances, there's no cash flow at all. So it's really a unique animal at the moment. Great. Thank you. Thank you. Our next questions come from the line of John McDonald with Autonomous Research. Please proceed with your questions. Hey, guys. Just wanted to just touch base on how you're thinking about capital build. Obviously, you're building organically. You've got some Visa that will add 14-15 bps next quarter, I guess. Are you just kind of thinking of gradually kind of building from this 10% reported and the 8.3% fully loaded to get to 9% or 10% or so over the next year? Do a little bit of buybacks? Just kind of what's the plan there? Well, you phrased the question almost exactly correctly, so. Congratulations. Almost. I'll take home… Yeah. So think about it. Inside, we have all these moving pieces. So inside of the NPR, Basel III Endgame, it's all up in the air. But the one thing that you got to believe is going to stick is AOCI. And so if that's the case, then our printed 8.3% number is kind of our real number. And that would be otherwise too low for us, and we want to build that through time. Some of that'll happen just from the rundown of the book. And some of that'll happen through us building capital. The ultimate, where should we be Basel III Endgame, everything settled out number, I don't know that we've necessarily set yet other than it's higher than where we sit today on the 8.3%. I think that's sort of. Oh, that's fair. That's fair. And we've got capital flexibility, as you know, John. And that's where you want to be right now with the fluidity of everything. And so for the near term, Rob, is this kind of the ballpark? Is it $100 million a little bit north of that? Is that kind of the ballpark until you get a little more clarity? Yeah. That's right. Yeah. Okay. Okay. Thanks, guys. Sure. Thank you. There are no further questions at this time. I would now like to turn the floor back over to Bryan Gill for closing comments. Oh, well, thank you all for joining the PNC call this morning. If you have any follow-up questions, please feel free to reach out to the team. Take care. Thank you. Thank you. This concludes today. Sorry about that. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.