The PNC Financial Services Group, Inc. (NYSE:PNC) Q4 2016 Earnings Conference Call - Final Transcript

Jan 13, 2017 • 11:00 am ET

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The PNC Financial Services Group, Inc. (NYSE:PNC) Q4 2016 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Your first question comes from the line of Scott Siefers with Sandler O'Neill & Partners. Please proceed.

Analyst
Scott Siefers

Good morning, guys.

Executive
William S. Demchak

Hi, Scott.

Analyst
Scott Siefers

With the -- either Bill or Rob, something you could just sort of address the idea of the pace at which you would anticipate deploying liquidity favor the course of the year can be, I guess, I can get a directional sense for what you've been doing in the earning asset base, but just curious kind of philosophically how are you thinking about legging into higher interest rates as we look throughout 2017?

Executive
William S. Demchak

I mean, look, there is no magical answer to that. Through the course of the last bunch of years even with rates largely flat inside of kind of up and down cycles. We invest opportunistically small bets, we remain very short today, so we have a big opportunity, but we are not going to bet on red all-in sort of one rate move. So you will see us through the course of the year if rates continue their path and what we expect to deploy liquidity and reduce our asset sensitivity, but there is no perfect answer to that, it certainly isn't programmatic.

Analyst
Scott Siefers

Okay. And then maybe skipping over to the sort of the volume side of the NII equitation, the -- I think the first quarter guidance is still for more modest growth, but then you got the stronger growth outlook for the full year on overall loan growth. Just curious how you see things building as it relates to overall loan growth in some of the actual favorable impact to some of these new initiatives on both equity, consumer and commercial sides?

Executive
Robert Q. Reilly

Yeah. Well, this, as it relates to the first quarter issue on NII, I mean, that's largely a day count issue, where we had two days.

Executive
William S. Demchak

On the NII, yeah, they are stable --

Executive
Robert Q. Reilly

Yeah.

Executive
William S. Demchak

So loans are --

Executive
Robert Q. Reilly

So back that out, I mean, loans just in terms of our guidance, we kind of assume flat across the year. But I would tell you inside of that we have kind of continued fourth quarter pace for C&I and we have kind of continued fourth quarter pace for what we had in consumer. Inside of consumers, we've got a number of initiatives that ought to allow us to accelerate that through time, not changing our credit back so much, it's just improving our process.

And inside of C&I, a couple of sound bites, December was the highest sales month ever for our corporate bank. The fourth quarter inside of middle markets, the first quarter and multiple quarters, where we actually had growth in plain vanilla middle market loans.

Analyst
Scott Siefers

Okay.

Executive
Robert Q. Reilly

And so, maybe we're doing a great job, but maybe some of the sentiment you're hearing and feeling coming out of corporate America actually plays out and what we have in our forecast didn't really build in that impact. So there's probably upside to that. And the consumer piece, there is