PNC Financial at Barclays Conference: Strategic Growth and Market Expansion

On Tuesday, 09 September 2025, PNC Financial Services Group Inc (NYSE:PNC) presented its strategic vision at the Barclays 23rd Annual Global Financial Services Conference. The discussion, led by CEO William S. Demchak, centered on PNC’s growth initiatives, the acquisition of FirstBank, and a cautious yet optimistic macroeconomic outlook. While PNC emphasized its strategic growth in the Southeast and Southwest markets, it also acknowledged challenges such as a slowing economy and the evolving landscape of financial services.

Key Takeaways

• PNC is focusing on organic growth in the Southeast and Southwest markets.
• The FirstBank acquisition aims to bolster PNC’s presence in Colorado.
• PNC predicts a slowing economic growth rate of 1% to 1.5% this year.
• Net interest margin is expected to reach 2.90% by year-end.
• The partnership with Coinbase allows PNC customers to trade cryptocurrency.

Financial Results

• Loan Growth: Average loans increased by 1%, driven by new production rather than overall economic activity.
• Deposit Dynamics: Positive trends with stable non-interest-bearing deposits; corporate deposits are growing.
• Net Interest Income (NAI): Anticipated full-year growth of 7%, continuing into 2026 due to asset repricing.
• Net Interest Margin (NIM): Expected to approach 2.90% by year-end, with potential to exceed 3% next year.
• Fee Income: Revised growth guidance to 4% to 5% due to delays in private equity, though capital markets perform well.

Operational Updates

• FirstBank Acquisition: Strategic move to gain a leading presence in Colorado, leveraging low deposit costs and cross-selling opportunities.
• Market Expansion: Strong growth in the Southeast and Southwest, driven by demographic and corporate expansions.
• Consumer Business: Focus on increasing wallet share with existing customers.
• Treasury Management: Achieved double-digit growth with a 98% retention rate.
• Technology and AI: Investment in technology to reduce costs and enhance efficiency, with AI expected to lower the need for coders.

Future Outlook

• NAI Growth: Projected to continue the trajectory seen in 2025 into 2026, driven by asset repricing.
• Macroeconomic Outlook: Anticipates economic growth to slow to 1% this year and 1.5% next year, though consumer spending remains robust.

Q&A Highlights

• FirstBank Acquisition: Described as a low-risk, simple product acquisition with strong personnel.
• Capital Allocation: Plans to increase share buybacks, with updates expected in the third quarter.
• Coinbase Partnership: Enables PNC customers to trade cryptocurrencies, leveraging Coinbase’s technology.
• Stablecoins: Not expected to significantly impact PNC’s payment business or revenue model.

For a deeper dive into PNC’s strategic initiatives and financial outlook, refer to the full conference call transcript below.

Full transcript - Barclays 23rd Annual Global Financial Services Conference:

Interviewer: Just to start off, you know, clearly you kind of kicked off the conference yesterday morning, even though you weren’t presenting today, with an announcement of the acquisition of FirstBank. Maybe just talk about it. You didn’t have a conference call, so maybe this is kind of your first opportunity to talk on a mic about the transaction, the strategic rationale, and, you know, why you decided this one was kind of the one worth pursuing.

William S. Demchak, PNC: Yeah, sure. I mean, hopefully the strategic rationale is pretty obvious. We just effectively bought Colorado, with the leading J.D. Power branch network, low cost of deposits, impossibly low historical charge-off ratios, really good retail brand and franchise that brings us an opportunity to cross-sell our other products into that market. You know, why now? You know, banks are sold, they’re not bought, and for a variety of reasons, the private ownership of that entity, not just wealth transfer, there’s been some articles about that, but also the need to bring better products to their clients and for their employees to sell, kind of put it in our lap, which is how we ended up with it.

Interviewer: I guess when we think about the transaction, is there anything we should be reading into the fact that you chose to acquire FirstBank as opposed to maybe waiting for something larger to acquire scale? Do you see a larger deal unlikely, or can you just do, this doesn’t preclude you from doing a larger deal?

William S. Demchak, PNC: You know, the path to growth is long and curious and unpredictable. I would say that if you asked me a year ago if a small bank existed that looked like this one exists, I probably would have said no. They’re all kind of broken and put together from old FDIC deals, yet here this is. If we saw something else like that, we’d likely do it. I think on the big bank side, it’s just a really good environment for banking, and people don’t want to sell. They’re all buyers. People you think might be sellers are actually buyers. Interest rates are normalizing, credit’s good. I just see no reason that you’re going to see anybody raise their hand and sell anytime soon. In fact, I’d be somewhat shocked by it. We don’t, you know, we’re not going to push on that string, right?

We react to opportunity sets, and if there aren’t any, that’s fine. We have that organic growth right now. New customers will hit record levels this year based on all our new markets, and we’re fine just doing what we’re doing.

Interviewer: Clear. Maybe now, maybe shift gears. We usually start just on the macro-economic environment. You know, starting to see the impact of tariffs maybe come through in some of the economic data. Likely feels like in a rate cut next week. Just how you’re thinking about the current outlook for the U.S. economy.

William S. Demchak, PNC: At the margin, it’s slowing. You know, I think we see 1% growth this year, maybe 1.5% next year. We’re in this strange place in the labor market where unemployment remains low, both because the supply is low and the demand is low, and there just isn’t churn. That feels a little bit unhealthy, long term, which is probably what’s going to cause the Fed to act. Consumer remains really strong. We saw record spending, I think this quarter across both our debit and credit cards. I think as long as that keeps going, the economy otherwise stays pretty healthy, notwithstanding the noise, both near-term and potentially a little bit longer term on tariffs.

Interviewer: I think maybe drilling to the consumer side, we’re getting some more questions there, but you obviously have a large retail franchise across the country. Maybe just dig into the health of the consumer and any recent changes in behavior that you observed against the current macro backdrop.

William S. Demchak, PNC: Nothing alarming. We’re actually seeing deposits grow at the margin. They’re, you know, across all categories. The worst I would say is they’ve stabilized at levels much, much higher than they were pre-COVID, which is encouraging. We’ve seen strong spend, probably larger growth in spend at the lower credit quality end, still under-leveraged relative to history, and no real cracks in delinquencies or anything. Long term, that’s a downward trend as it were relative to what we’ve seen. We’ve seen a tiny uptick. We track everybody who gets unemployment payments, cohorts going back years, and we’ve seen tiny increases in that, measured in basis points. The turnover in that, how quickly they get on and off those roles, continues to be really fast. Nothing alarming.

Interviewer: Got it. I guess against that backdrop, you had your outlook slide in your earnings deck. Any updates to the range you provided in July?

William S. Demchak, PNC: No, Rob’s getting really good at this after all these years.

Interviewer: It’s been long enough.

William S. Demchak, PNC: No, we’re kind of hitting on all numbers, and if anything, we’re edging towards the upside of the ranges we provided. It’s a good quarter.

Interviewer: Anything? No, we’ll skip this way. Maybe you just talked about, maybe we’ll start with loan growth. You know, we saw some pickup in the second quarter. You mentioned strong levels of new production as a driver. I guess maybe have you seen that continue to the third quarter and just maybe spend a moment on kind of bar demand client activity across the commercial loan?

William S. Demchak, PNC: Yeah, so we got into average loans up 1%. That feels likely where we’re going to end up. You know, we saw the big jump in utilization first quarter, a little bit into second quarter, and it’s held. Growth off of that is largely coming off of new production, not off of new production in terms of client share, not off of what I would say is activity in the broader economy, right? CapEx away from energy and data centers is somewhat subdued, and I suspect it stays that way until we get some clarity on exactly where tariffs land.

Interviewer: Got it. You know, you’ve talked in the past about just the opportunity in the Southeast and Southwest markets. I think that was a driver of some of the loan growth you talked to in the second quarter. Maybe just dig deeper in terms of the growth strategy in these new markets. Do you feel pretty established in these markets or is there still more work to do?

William S. Demchak, PNC: Oh, there’s always more work to do, but the dynamics in Florida, Texas, Colorado, and Arizona are just wildly different than the dynamics in the Northeast in terms of population growth and corporate growth, just shots on goal of new people into the market. Our growth rate there has been really strong. We’ve invested heavily into it, and we’re good at executing. We’ve seen, I don’t know what the current % are, but just way outsized growth in % terms, dollar terms, and number terms in the new markets relative to the old markets. That ought to continue. It’s a market where share is shuffling aggressively, and there’s a big opportunity.

Interviewer: It seems like a lot of people, I don’t want to say copied your strategy, but are doing similar strategies in terms of in those markets. I feel like a lot of banks yesterday and today talked about expanding in the Southeast. Has it kind of altered the competitive landscape as much or changed it, kind of the opportunity set, or it hasn’t really changed?

William S. Demchak, PNC: Not really. You know, we compete locally with a hundred different banks and nationally with three. We go into a market, we do it with patience, we do it with the right people, we do it with the right investment dollars, and we’re there to stay. It makes a difference. Sometimes it takes us three and five years to actually gain share on the corporate side, even after we call on them month after month after month, and eventually they say, you know what, you’re the only banker that’s actually been with the same institution since you started calling on me, so come see me, we’re going to do something with you. It’s a good strategy, so I don’t blame them for doing it, but we’re doing just fine, you know, being a couple of years ahead of the game.

Interviewer: When you think about PNC’s loan portfolio, it’s almost 70% commercial. Is there anything more you can be doing to grow in the consumer side of the house?

William S. Demchak, PNC: Oh, a lot of stuff, but it’s not going to change the %. We have revamped all the technology behind what we do on consumer credit and the front ends and the decision process and the speed and the line sizing and the pricing, and the people, which, you know, should allow us through time to get a greater share of wallet with our existing customers. We’re underpenetrated with our existing customers versus where we should be. That’s on us, and it’s an opportunity set. We’re never going to be the player that’s mass market, you know, non-branch driven retail credit. It’s not who we aspire to be, and, you know, it would be illogical given our strategic plan for us to acquire a consumer credit company that just did that, right? Simply because, hey, it’s an asset type.

Look, the banks that, the bank that’s probably the best at this in the U.S. trades at book value. So it’s not a big value driver for us.

Interviewer: Got it. Maybe just sticking with the balance sheet, you know, deposit dynamics have certainly been in focus. Maybe just in terms of what you’re seeing in terms of deposit behavior, maybe mixed balances.

William S. Demchak, PNC: Yeah, it’s been positive this quarter. Non-interest bearing’s been stable. We have grown deposits largely on the corporate side. You’ll see, just because of the mix shift, our total deposit costs go up a couple basis points, but it’s mix shift more than anything else. I saw some comments on people saying there’s big deposit competition. I don’t know that we see that.

Interviewer: I guess a couple basis points last quarter, interest bearing deposit cost.

William S. Demchak, PNC: I feel like some of it, it was two different things. One, if you simply get more corporate deposits as a % relative to your, you know, so your growth is coming from corporate, which is more expensive, you’re going to see that mixed shift. The second thing is, on the consumer side, at the margin, we’re repricing a backbook. You know, as people roll CDs and so forth, so that has an impact, but a smaller impact.

Interviewer: Presumably that’s going to cut next week. Can we just talk to kind of what impact that has? I think betas have been kind of in the high 40% range. You know, is that how to think about it?

William S. Demchak, PNC: That should hold. Yeah, I mean, we ought to behave the same way we did through the last cuts.

Interviewer: One thing that caught my attention when we were kind of rereading transcripts on the fair for the conference was your comments on the second quarter call in terms of how you were thinking about deposit pricing elasticity, especially in some of the newer markets. Maybe just dig deeper into that and talk about how you’re balancing this idea of growing deposit share in key markets while staying disciplined in your approach to deposit pricing.

William S. Demchak, PNC: When I said that, and I’ll say now, we’re thinking about it, right? Our focus has been on growing households. Ultimately, that will lead to deposit growth. Yet we recognize the investment in new branches, particularly as we saturate a newer market, could benefit, in effect, from pricing up deposits. It would be geofenced and everything else. I’m not sure it’s worth it, and I’m not sure it’s actually long-term value creating. It’s a conversation that we’re having at the moment. I don’t know that you would necessarily see it inside of our large numbers, but if the headline somebody gets says, oh, I’m growing deposits in this region at this pace, yet they’re paying way over market to do it, maybe good optics and bad economics. Should you play a little of that game? I don’t know yet.

Interviewer: Got it. Why don’t we put up the next ARS question? Maybe just kind of tying together, you know, we talk about loans and deposits. Maybe just talk about NAI growth.

William S. Demchak, PNC: Oh, this will be good. Yeah, I’m just looking at this question.

Interviewer: Let me see that. We’ll get to that.

William S. Demchak, PNC: I don’t know the answer to that.

Interviewer: Yeah, we have obviously visibility into NAI growth for this year, you know, which you started to lay out, I think, two years ago at this conference. You know, we increased your full year NAI guide in July. You know, I think you were talking about, you know, NAI up 7% for the full year, up 3% in the third quarter. You know, I’m not sure how you’re thinking about that, if you want to update that, and just, you know, how you’re starting to think about momentum into next year.

William S. Demchak, PNC: Next year we’ve talked about this and, you know, we’ll put some numbers out at the turn of the year or something, but you should expect, largely driven off of asset repricing, that the growth trajectory that we’ve seen in 2025, you’d see again in 2026. I mean, it’s just kind of math under the assumption that the yield curve stays anywhere near where it is today. We have been selectively locking in those forward rates. Remembering that we’re rolling off 1.5%, 2% assets, and if we’re rolling into 4%, it’s a huge increase. So anything is better than what we had. We’re locking some of it in, it’s pretty predictable, and it’s an easy statement to make.

Interviewer: I think this year you’re talking about NAI up 7%. ’26 looks like the room is not fully at 7%.

William S. Demchak, PNC: I can’t help that.

Interviewer: I guess maybe just talk about NIM. You’ve talked about, I think it’s on the call, NIM approaching 2.90% by the end of the year, maybe approaching 3% sometime next year. In terms of the declining rate environment, where do you think PNC should operate in terms of NIM, and can we get above 3% at some point?

William S. Demchak, PNC: Yeah, historically we’ve been, you know, I don’t know, was it 2.70 to 3, and we ought to blow through that next year by a bit. We do have the potential to go higher, at least based on my view of forward rates. I think we’re going to have a pretty steep curve. I think, you know, even if the Fed starts cutting in the front end, I’m not a believer that the back end’s going to rally, and that bodes well for our net interest margin and net interest income. You know, we operate in an otherwise normal world somewhere around 3%, but we might see a period where it’s a bit better than that.

Interviewer: I think it was $280 million in the second quarter.

William S. Demchak, PNC: Yeah.

Interviewer: Some improvement from there. I guess maybe, moving on to the fee income side of the house. In July you kind of trimmed the, you know, the full year guide. I think you said up 4% to 5% versus up 5% prior.

William S. Demchak, PNC: Yeah.

Interviewer: Obviously it was an uncertain market. It feels like it’s a little bit more certain now. Just maybe talk to anything you’ve seen so far in the third quarter that suggests that uncertainty abating is kind of translating into revenues.

William S. Demchak, PNC: We had a bit of a hiccup on our private equity book and that realizations were kind of delayed. What you should assume is everything we thought at the start of the year, absent that little piece, is now kind of on its same path. We’ve seen good growth in capital markets, syndications, Harris Williams back on track as that backlog starts to clear, which is actually pretty bullish for the economy. We feel good about our fee guide.

Interviewer: Right, okay.

William S. Demchak, PNC: It literally was, there was like a month of, you know, we had a miss on a couple deals in private equity and then Harris Williams had an off month, and it kind of took us off what is otherwise now the same growth rate.

Interviewer: Got it. Maybe deal a little bit deeper into, you know, capital markets. You know, you touched on a pickup in activity there. Harris Williams is, you know, M&A shop. We’ve seen a big pickup in just kind of a publicly announced transaction.

William S. Demchak, PNC: Yeah.

Interviewer: You know, talk to the outlook.

William S. Demchak, PNC: Things are moving, right? We talked about, you know, even when they were slow, these record backlogs. By the way, there’s still a record backlog, but deals are starting to kind of move through the pipe, and, you know, this whole notion of buyers and sellers are just in different places is starting to close, and we’ve seen a lot of activity this quarter.

Interviewer: Treasury management is something you’ve been talking about for a long time.

William S. Demchak, PNC: Forever.

Interviewer: It seems like a lot of banks are newer to talking about it, at least at this conference. I feel like a lot of them talked about it in the last couple of days. Maybe just talk about what you’re offering when you kind of say treasury management is versus others. Are they kind of catching up to you? Is that, you know, becoming maybe less of a differentiator for PNC as others kind of catch on to that?

William S. Demchak, PNC: It’s a cool thing to say. You know, I’m going to be the primacy bank and offer treasury management. Treasury management can mean somebody has a DDA account with you, or it can mean that you’re netting their global FX and netting their global cash settlements. It means many different things. We’ve been investing in it for years. During the course of that investment, we’ve taken our entire tech stack, both in treasury management, but also in our core franchise, and basically made it cloud native and microservices. Why is that important? Today, if you use Oracle as your system or any number of other ones, you can actually load our products into that through APIs. We’re, I think, unique in the ability to do that. We’re in a whole generation down the road, I think, of people who are just waking up to the opportunity set in this market.

I think it’s just huge barriers to entry. It’s a product that, when you get in the door with a basic product, the upsell opportunity is continuous. The menu never really ends. The retention rate for us is 98%. You’ll remember, I don’t know, I think it might have been at your conference. We talked about, we’re number one in every category of treasury management across the country as we measure this through surveys. I get why people want to do it. It’s a $4 billion business for us. We grow it at double digits, low double digits, and we’ll keep doing that. We’ll keep investing in it, and we keep gaining share in it.

Interviewer: Got it. Maybe put up the next ARS question. I guess as we shift gears to expenses, you know, historically you talked about this continuous improvement program to kind of fund the portion of technology investment. Maybe just kind of dig deeper into your expense base, how you’re thinking about the comp position evolving over time, particularly as you continue to invest in technology, AI, and whether that might become a more meaningful portion of your expense base going forward.

William S. Demchak, PNC: Yeah, it’s a great question. If you track back through time, you would have seen our expense base shift from occupancy into equipment, which is our tech line. You see personnel costs up, but personnel headcount largely flat. The cost of people going up is the degree of expertise that we have across things increases. That continues. The introduction of AI, I don’t know, we spent $50 million today on it or something, probably not including what we put into our data center complex. Where you’re likely to see the biggest impact of that, away from the impact you don’t see today in fraud and other things that save us money, is in headcount related to technology. Right? Agentic AI and the ability we’re using it today to create, for example, the top of the screen new mobile experience we’ll have. We don’t need the coders anymore.

We need the engineers and the people who can describe the outcome they want. You end up describing to an agent that’s an AI agent how to create this screen. I want it to look like this. I want to bring this balance here. I want the other balance below it. Because everything we build is microservices, the AI agent can actually simply write the script to connect the microservice to produce that above the screen instance. That massively changes the number of programmers we need through time. The way it’ll show up for us is probably in a much lower consultant expense. You don’t see it, but our headcount, you have base level employees and then you augment it with consultants up or down depending on the project. That number ought to come down through time pretty aggressively.

Interviewer: We asked the room what they think about expense growth for next year as you start to enter the 2026 budgeting process. They looked like up 2% to 3%.

William S. Demchak, PNC: I don’t know yet. Looks good. It’s a bar chart, right? Normal distribution there.

Interviewer: Yeah, we’ll see. Certainly equates to nice positive operating leverage. If you take what they said on the 6% to 7% NAI growth, call it 2% to 3% expense growth, continuous fee growth.

William S. Demchak, PNC: Yeah.

Interviewer: Maybe on the credit quality front, it hasn’t really been a big topic at this conference, but you know, there’s a lot of tariff-induced pressure in certain pockets of commercial. Maybe what are you watching? What are you monitoring? Any areas of concern?

William S. Demchak, PNC: By and large, our clients and corporate America have kind of figured out how to deal with this. I think everybody was shocked on Tariff Day, whatever that word is. Subsequent to that, they have come up with all their battle plans of, I’m going to source differently here, I’m going to pass this along, I’m going to eat some of this. Everybody has a playbook dependent on what happens ultimately with tariffs. Inside of our credit book, as we go through our book, you saw us take some tariff-specific qualitative reserves, I don’t know, first or second quarter or maybe both. That was largely around the assumption that margins would decrease and we would have downgrades at the margin because corporate margins, which are records, would decline.

The people who really get crunched are the ones who are entirely dependent on tariff-impacted imports as their core cost of goods sold. A lot of that’s in small business. In small business, they’re bigger depositors than they are borrowers, so it doesn’t really, we’re not particularly worried about it other than the impact potentially to the broader economy.

Interviewer: Office CRE is an area of focus for the market. I know you’re not as big in that, but last year at this conference, you made the comment we’re only in the first inning of that cycle. Just how has that evolved over the last year and where would you say we are in the office credit cycle?

William S. Demchak, PNC: In our, you know, remember we focus on kind of our multi-tenant office space, and I think we still hold 17% reserves against that book, which, you know, is plenty. What’s changed last year to this year is we’ve dropped our balances as we’ve resolved a bunch of these. Importantly, a year ago, if you were taking a building to market, you might see one bid on it. Today you see five or six. There’s credibility now in your assumed appraisals because you see transactions. The levels are terrible, but it gives us a high degree of confidence, vis-a-vis our reserves and our ability to go forward from here.

Interviewer: Got it. I guess you own Midland Servicing. I guess anything, observations from that you’d like to share that you’re seeing in terms of the office?

William S. Demchak, PNC: Look, their balances are up at the margin, not a lot. They’re turning properties. Same thing. The bulk of what they’re seeing is office, but there’s bids in the market, and they’re moving their way through it.

Interviewer: On the capital front, once again, you’re kind of at the regulatory minimum in terms of the SCP-driven requirement. We just talked to capitals for managing or providers for managing capital. You’re at that 10.5% CET1 ratio. Is that the right number? How do you think about that and the whole AOCI impact?

William S. Demchak, PNC: I assume, I think it’s a safe assumption, AOCI is going to roll into our capital ratio. That’s fine. We’ll change the way we manage the balance sheet in terms of which buckets we put duration in. We’re still well capitalized. You count it, you don’t count it, you count anything you want. We’re well capitalized. The binding constraint today is more Moody’s than it is any of our regulatory ratios. Our SCB, we got the two and a half, but we were well below that. I think we had the lowest drawdown again versus any of our peers. I can’t explain Moody’s math as to why they think we need to hold that, but that’s a constraint and that’s what you’ll hear from probably all of our peers in terms of what’s keeping us where we are.

Interviewer: Got it. Maybe we’ll put up the next ARS question. We should add, you know, should acquire another bank, to number two, but I guess against that backdrop, maybe we just talk a bit more. Obviously, growing the franchise is a number one priority. You know, buyback’s been modest. How does that fit in? I know in the deck, yes, on Monday, it said kind of the deal doesn’t impact your buyback program. Just maybe elaborate on that because I guess the buyback space has been relatively modest and just how you think about that versus the other opportunities.

William S. Demchak, PNC: We’ll update this perhaps in the third quarter, but you should assume at the margin that we’ll do more than we’ve been doing. If it was up to me, we would have done a lot more cash in this deal and knocked our ratio down. The sellers love our stock, so it is what it is. You know, we hold capital in the first instance to support our clients and grow our loan book, but we have a lot of capital. Typically, we have an ability to generate more capital than we can intelligently deploy. We offer a healthy dividend and buyback during the ordinary course, so we’ll keep doing that.

Interviewer: I guess just staying on the topic of M&A, in addition to the transaction you announced Monday, starting to see activity pick up within the industry. We’ve definitely had a few other announcements over the past few months. Do you think this is a function of a more kind of friendly regulatory environment? We’re starting to see other banks recognize the need for scale, which you’ve been very vocal about.

William S. Demchak, PNC: Yeah.

Interviewer: You know, just maybe talk to that.

William S. Demchak, PNC: We’ve seen, look, every deal is unique. The regulatory environment’s easier, but you know, you heard me say in the prior administration, I thought we could get a deal done, and I believe that to be true. Maybe it’s a little bit easier at the margin now. By the way, FirstBank is really simple, integration-wise. You know, it’s super low risk, simple products, great people. You know, it’s just not a big deal on pulling that thing together. Every deal’s unique. As I kind of said earlier, banks need to be up for sale. Smaller banks are coming to the conclusion at the margin that it’s tough for them to compete and they see eroding franchise value. There’s not a lot of, we don’t have a lot of interest in a typical smaller bank, in terms of where they’re valued today.

You see a lot of little banks getting together with what I would suggest is maybe inflated currency, but there are some gems out there. We found one of them. You look at what’s out there and you make a decision as to whether or not you’d rather pursue organic growth, because we kind of know the return in doing that takes longer, but we know we can succeed at it, or if an opportunity arises, you do it. The whole big bank, are you going to do, oh, some giant bank deal to cement your size at some big size, none of that. That’s banker talk. That’s not PNC talk, right? If one of those things made sense for our franchise and it made sense for our shareholders and you actually had somebody who had any interest whatsoever in pursuing it with us, we’d look at it.

None of that’s true right now.

Interviewer: Got it. It looks like the number one answer is to do additional bank acquisitions in the Southeast and Southwest from the audience. That’s not always the case for every bank.

William S. Demchak, PNC: What did this look like for other banks?

Interviewer: More buyback is, you know, don’t do deals, do buyback instead. We have some time left. I’m not sure if there’s any question or two from the audience. I guess Bill, I’ll ask the next one while they’re shy. Maybe talk about the recent announcement with Coinbase.

William S. Demchak, PNC: Yeah.

Interviewer: Certainly, that segment’s getting a lot of attention, but what does this mean for kind of PNC and just how you’re thinking about PNC strategy on crypto or stablecoin?

William S. Demchak, PNC: Yeah, so we’ve known Coinbase kind of since the beginning and back pre the regulatory freeze on crypto. We were actually close to bringing them on as a white label supporter for our wealth clients and ultimately retail. So we did that. You know, it’s a simple thing. They have great technology. We bring it onto our systems. We’ll, you know, merge it into our mobile and online apps and allow our customers to trade crypto and see their balances if they want to do that. I don’t know that it’s any sort of moneymaker for us, but I think if that’s going to be a thing that people want to do, we need to offer it as kind of table stakes. Same for our corporate clients.

If and when, I don’t think it will be, but if and when it becomes a payment mechanism the corporates want to use, it’ll just be one of the menu items in our treasury management suite along with, you know, real-time payments and wires and ACH and so on and so forth. The other side of that was just our banking relationship with Coinbase, which was also prohibited, but is taking our treasury management suite and offering it to them as a corporate client. Not surprisingly, they move a lot of fiat currency and have a lot of deposits. So it’s pretty exciting to us.

Interviewer: Got it. Any other questions?

William S. Demchak, PNC: Yes, sir. I think we put it in a press release, but it’s like 10 bps by the time the thing closes.

Interviewer: The question for those listening in was what the capital impact of the recent acquisition to CT1.

William S. Demchak, PNC: Yeah.

Interviewer: I see one over there.

William S. Demchak, PNC: Yeah.

Interviewer: The question was the impact of stablecoins on PNC’s business model.

William S. Demchak, PNC: We are involved, I’m involved in industry-based conversations as to whether or not one of our industry utilities should promote its own stablecoin and/or build rails to move that. It’s likely you’ll see an announcement in the not distant future that will talk about an industry offering. Domestically, it’s a real struggle to find a use case that makes sense for stablecoin other than onboarding onto blockchain to be able to trade Bitcoin. It is not cheaper as a payment rail. It doesn’t pay more interest than the, you know, that everybody assumes, I think correctly, that whatever interest is earned by the issuer is going to be taken away by rewards pretty instantaneously. We’ll see.

I think we look at international transfers and then importantly, unrelated to how it impacts The PNC Financial Services Group, I worry a lot about the dollarization of smaller countries because there is a real use case for individuals in foreign countries with volatile currencies who want to hold dollars to use stablecoin to do that. That’s almost a savings mechanism and it’s one that is afforded consumers in foreign countries in a way that doesn’t have to go through the same AML restrictions that we would offer should they want to open up a bank account. That’s kind of a regulatory arbitrage that at some point in the future is going to be figured out and shut down, but not today.

Our business model, it’s all, we can do anything anybody wants to do in stablecoin, but I don’t see it as a big change agent in our payments business or in our revenue model.

Interviewer: Maybe I’ll ask the final word, but you know, Bill, let me just at a high level, just kind of what excites you most about PNC’s position in the industry and just the longer term growth opportunity.

William S. Demchak, PNC: Oh, it’s just the new markets we’re in. I mean, it’s hard to describe unless you were trying to grow your business in Pittsburgh, you know, where we have 60% market share. The shots on goal you get in these new markets, with new people moving into the markets, but just the number of corporate clients who are either there or moving there, is phenomenal. We’re good at winning business. We go head to head with people. We win business. We have great bankers, and we continue to hire more. We have a great product set. I can remember at points in my career and at The PNC Financial Services Group early on where you’d look and you’d say, how can, like, I don’t know how to make this bigger. Right? Because you can’t invent your way into a new product. You can’t, you know, there’s no financial alchemy.

I mean, there is, but it always leads to tears. In front of us today is this giant menu of new markets and growth opportunity that we just need to execute on. No big stretches, no change in products, no new focus on this strategy or that strategy or selling this or buying that, just going to work every day. It’s just staring us in the face. It’s huge.

Interviewer: On that note, please join me in thanking William S. Demchak for his time today.

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