The PNC Financial Services Group, Inc. (NYSE:PNC) Q4 2019 Earnings Conference Call - Final Transcript

Jan 15, 2020 • 09:30 am ET

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The PNC Financial Services Group, Inc. (NYSE:PNC) Q4 2019 Earnings Conference Call - Final Transcript

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Q & A
Executive
Robert Q. Reilly

lot of work as you know, both in terms of what we've done as we ran through parallel in 2019 to establish our transition amount. But going forward, we feel good about our framework. We've got a three-year reasonable and supportable forecast, we've got the four macroeconomic scenarios that will detail in our 2020 disclosures. But to Bill's point, and what I said in my opening comments, there's just a lot of factors. And then on top of that, it's new. So there's just going to be some learning curve aspects to sort of the practical application of CECL real time.

Executive
William S. Demchak

And on the C&I side, John, we really haven't seen anything, you'll see some specific credits we're adding to. By the way we've been doing this for five years. What's changed is the recoveries that we've gotten through time.

Executive
Robert Q. Reilly

Yeah. That's right.

Executive
William S. Demchak

Way back from the crisis are gone. So it's not so much that our new stuff is elevated in any given point as our recoveries have dropped.

Analyst
John Pancari

Got it. Okay, that's helpful. And if I could just ask one more, on the margin side, the -- I know you gave the spread income guidance for the linked quarter and for the full year expectation. But how do you think the margin will traject from here? Should we see some stabilization now that we have the pause? Thanks.

Executive
Robert Q. Reilly

Yeah, yeah. I think so. I think so, John. We expect rates to be stable. We don't -- we don't have NIM guidance, officially that's more of an outcome. But I think we will spend most of it. If everything stays constant, we'll spend the next year pretty much in this range. We could actually go up in a particular quarter as deposit costs are continuing to come down, but not a lot in either direction.

Executive
William S. Demchak

Yeah. One of the things that hit us this quarter was just elevated amortization [Speech Overlap] on our premium mortgage securities, which we think has probably hit its peak.

Executive
Robert Q. Reilly

But I think we'll be in this range, up or down.

Analyst
John Pancari

Okay, great. Thanks, Rob. Thanks, Bill.

Executive
Robert Q. Reilly

Sure.

Executive
William S. Demchak

Yeah, sure.

Operator
Operator

Your next question comes from the line of Erika Najarian with Bank of America. Please go ahead.

Analyst
Erika Najarian

Hi, good morning.

Executive
William S. Demchak

Good morning, Erika.

Analyst
Erika Najarian

Just wanted to ask a little bit more detail, Rob about, on the previous question. So how should we think about one, the opportunity to deploy what seems like an extra $6 billion to $7 billion of cash? What opportunities you see for that cash going forward and also deposit costs trending down sort of balancing what has been a really successful initiative to go beyond your legacy footprint with reflecting lower rates.

Executive
Robert Q. Reilly

Okay. Well, so the first part of that, in terms of the new LCR requirements, we have and we will continue to work down our cash balances to the new requirement of 85%. The first step as we talked about this on the third quarter call is to pay