PNC Financial Services Group Inc at BancAnalysts Association of Boston Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Dick Manuel - Columbia Threadneedle Investments - Analyst : Great. Thank you, Mike. Compelling slides, I guess, I'll go back to Slide 20. Perhaps you guys could drill down on what you mean by near-term target. And in your mind sort of what are the risks to executing on delivering on the playbook that makes the revenue go from potentially 2% to 3.5%? What are the risks there in executing? But firstly what do you mean by near-term? 2025 I think.

Question: Dick Manuel - Columbia Threadneedle Investments - Analyst : Well, I was building up for that.

Question: Dick Manuel - Columbia Threadneedle Investments - Analyst : So I believe in the first expansion 100 branches, $1 billion investment is there an equivalent number to the $1 billion as you're kind of getting a little bit more aggressive on the strategy? And I think that Mike you mentioned also that you're renovating some of the existing branches in the original plan. Is there a renovation -- like a more aggressive renovation number that we should be thinking about as well?

Question: Dick Manuel - Columbia Threadneedle Investments - Analyst : So how should we be thinking about the expense base? I mean, I know that you made the observation that the incremental margins are really attractive based on your experience. How should we be thinking? And you've laid out kind of the revenue profile potential, how should we be thinking about sort of the interaction with the base level of expenses given some of the lags that we sometimes see in the payout.

Question: Dick Manuel - Columbia Threadneedle Investments - Analyst : On one of the slides you draw a line at 7% market share as sort of the target 17%. Could you just sort of flesh that out a little bit about what's important about the 7%? And what benefits come once you get to 7% and--

Question: Dick Manuel - Columbia Threadneedle Investments - Analyst : Great. So one more for me and then we'll open it up to the rest of the folks here. On one of the slides, you laid out a build or buy and there was an underscore on the or. This seems to be an indication that CCAR is a little bit heavier on the build side. Could you talk a little bit about you mentioned that the prices are a little bit high on the buy side of the CCAR. I just -- could you talk a little bit about that? Like what could change that? Your currency is certainly quite valuable as it should be in my opinion but--

Question: Dick Manuel - Columbia Threadneedle Investments - Analyst : I owe that to you. But so I would imagine that's part of the equation. I would think that maybe you could take advantage of that. But just sort of your thoughts on build versus buy and where it works with the cycles that you've seen in terms of valuations?

Question: Dick Manuel - Columbia Threadneedle Investments - Analyst : Great. All right. So, I'm going to look for hands. Right now, I'm not seeing -- Mike Mayo.

Question: Dick Manuel - Columbia Threadneedle Investments - Analyst : Ryan?

Question: Dick Manuel - Columbia Threadneedle Investments - Analyst : Right. That's longer than our horizon. But like can you just like give us, some of the drivers of how you evaluate these various avenues? I'm not imputing the strategy. I'm just wondering how --

Question: Dick Manuel - Columbia Threadneedle Investments - Analyst : John? John Pancari, Evercore ISI.I guess -- so this is great in terms of the franchise expansion and maybe a little accrete, a bit more to the right side of the balance sheet. I guess on the left side in terms of complementing this expansion with growth efforts. Can you maybe talk about your expansion efforts in, some of your lending areas whether it be card or the corporate side of the business to complement this, then maybe even on the capital market side, just regarding the business expansion. Thanks. Mike Lyons Sure. I'll start and Rob can join in. The core of all of our lending strategies is relationship-based business. So when we talk about card specifically, as a full overhaul of our card business, we want to continue to grow DDA clients the DDA being so critical to a bank strategy and you've heard it throughout the week here. Today, we do -- we are not sufficiently penetrating our core DDA customer base, with our credit card. So our goal when we rethink -- when we think about building card, is not to build loans outstanding. If that happens great. It's to make sure our core DDA customers are doing their daily spending off both our debit card, which naturally comes with it and our credit card piece of it. And we showed you the penetration charts in here. We just haven't done as well as, we have done over time. So we'll build that. If loan growth comes with it, then -- and we would expect it would, but the goal isn't loan growth and let's build a card business to get it. So you won't see us on co-branded card portfolios or some of the other things you would normally see, in a full car company. This is in the context of relationship-based banking. With respect to overall loans on the consumer side, if we do a better job and you saw some of the accelerating DDA growth numbers and we talked about our relative position in the industry, we are performing much better today in retail than we ever have before. And if that momentum continues, you'll see our penetration on auto, direct auto, student, home equity, mortgage, credit card all the areas where we've underperformed go up and that will drive loans up on the outstanding base. But we are not -- I don't want anyone to think we're going in and saying, hey, we're going to be a big consumer lender and try to operate that business nationally. On the corporate side, it is just this maturity curve that we introduced ourselves to that company that we talked about today and five years later made alone. We have thousands of those ships, out to see right now where we're in those periods to build it. And based on -- we're not making it up, it's been 13 years that we've watched this over and over again. So again, the single best and biggest thing we can do is stay after the model, execute in a maniacal way, cover these clients and good things happen. We've seen it just play out so many times before, and we have the (inaudible) support from Bill to go do that, whatever that pace takes. Dick Manuel I think that's a great point to end on. Thank you both very much.