PNC Financial Services Group, Inc. (The)

the PNC Financial Services Group. Participating on this call are PNC's Chairman, President, and CEO, Bill Demchek, and Rob Riley, 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 materials are all available on our corporate website, pnc.com, under Investor Relations. These statements speak only as of April 14th, 2022, and PNC undertakes no obligation to update them. Now, I'd like to turn the call over to Bill.

Thanks, Brian, and good morning, everybody. As you've seen, we had a solid start to the year as we grew loans and securities, controlled expenses, and our credit quality reserves and capital levels remain very strong. As we've previously disclosed, non-interest income was below our expectations for the quarter, And while we had expected fees to be down sequentially, reflecting typical first quarter seasonality, the decline actually exceeded normal interest rate volatility. And probably the Russian-Ukraine conflict adversely impacted certain of our capital markets businesses, among other areas. You know, as we look forward, we're clearly in an environment of uncertainty here. We're also in an environment with rising interest rates. which benefit banks with increased loan demand, which benefit banks. And in PNC's case, a business or a bank that never changed its credit box from credit terms got really easy. A business that has a very, or a bank that is a very solid mix of fee-based businesses, and importantly, a bank that has substantially expanded its geographic presence. And I want to hit on that in a second, just as it relates to our progress on BBVA. You know, I would tell you, I just, I couldn't be more proud of what we've been able to accomplish over the, you know, the last about 15 months in total now, but in particular over the last couple of quarters. And we still have a lot of work to do, but to put it in perspective, our staffing is largely complete, and our calling effort particularly versus the fourth quarter, has increased substantially. And our sales and pipelines are robust. Just to give you an idea of the activity behind this, in the legacy BBVA USA geographies, corporate commercial banking calls have doubled since the fourth quarter. And sales have increased almost 50%. Now, as we expected across CNIB, nearly half of these sales are actually non-credit related in the legacy BBVA USA geographies. We switched to the retail side. We're obviously focused on building customer relationships. Just to give you an idea, our sales per branch were approximately 60% higher in March compared to what they were in December, with improvements across mortgages, cards, and referrals to PNC investments. In our asset management group, we're making great progress in strategic investments to hire key people in business development and advisor roles. And importantly, our client opportunity pipelines are really strong. From a balance sheet perspective, we continue to deploy our excess liquidity, as you've seen, with solid loan growth and securities purchases. Spot loans grew $6 billion and a quarter, driven by the commercial side, which saw a nice increase in utilization. In fact, if we exclude the impact of PPP loan forgiveness, spot commercial loans grew $7 billion, the fastest organic quarterly growth we've seen since the commercial defensive draws that we saw at the start of the pandemic. And by the way, we've seen that growth carry into the early part of April. We also remain active on the security side with net purchases of almost $6 billion during the quarter. From a balance sheet perspective, the securities were offset by unrealized losses due to rising interest rates, which Rob's going to discuss in a few minutes. This doesn't impact our regulatory capital or earnings, but during the quarter, we moved approximately $20 billion of our securities available for sale to help the maturity to limit future valuation changes due to interest rates. Importantly, we saw a solid rebound in the yield on our securities. Overall, we believe we are well positioned for the rising interest rate environment to deliver net interest income growth and NIM expansion throughout the year. And finally, during the quarter, we returned about $1.7 billion of capital to shareholders through share repurchases and dividends. And importantly, based on our performance, our strong capital levels, and the Board's confidence in our execution of our strategic priorities, we recently announced a substantial increase to our quarterly dividend of 25 cents per share to $1.50, or 20%. I just want to close by thanking our employees for their hard work and dedication to our customers and communities. Moving forward, as I said, we believe we are well-positioned to continue to grow shareholder value as the economy normalizes and interest rates move higher, and we realize the full potential of the combined PNC and BBVA-USA. Well, then I'll turn it over to Rob for a closer look at our results, and then we'll take your questions.

Thanks, Bill, and good morning, everyone. Our balance sheet is on slide three and is presented on an average basis. During the quarter, loans increased by $2 billion, or 1%. Investment securities grew $6 billion, or 5%. And Federal Reserve cash balances declined $13 billion, or 17%, reflecting higher securities and loan balances, as well as lower borrowed funds. Deposit balances averaged $453 billion and were relatively stable compared to the prior quarter. Our tangible book value was $79.68 per common share as of March 31st, a 15% decline linked quarter, which was entirely driven by mark-to-market adjustments in our securities and swap portfolios as a result of higher interest rates. As a Category 3 institution, we opted out of recognizing AOCI and regulatory capital And as of March 31st, 2022, our CET1 ratio was estimated to be 9.9%. Given our strong capital ratios, we continue to be well positioned with significant capital flexibility. And as Bill just mentioned, our board recently approved a 25 cent increase to our quarterly cash dividend on common stock, raising the dividend to $1.50 per share. Additionally, during the first quarter, we completed share repurchases of $1.2 billion for 6.4 million shares. Slide 4 shows our loans in more detail. Average loans increased $2 billion linked quarter, and on a spot basis, loans grew $6 billion, or 2%. PPP loan balances continued to decline and impacted first quarter growth by approximately $2 billion on both an average and spot basis. Looking at loan growth excluding the impact of PPP loans, average loans increased $4 billion, or 1%. driven by $5 billion of growth in commercial and industrial loans, partially offset by a billion-dollar decline in commercial real estate balances, and average consumer loans were stable linked quarter. On a spot basis, loans grew $8 billion. Commercial loans grew $7 billion, driven by higher utilization, as well as new production within corporate banking and business credit businesses. Notably, in our CNIB segment, the utilization rate increased 85 basis points, and our overall commitments were 2% higher compared to year-end 2021. And consumer loans increased $900 million, as higher mortgage balances were partially offset by lower auto and credit card loans. Moving to slide five, average deposits of $453 billion remained stable compared to the fourth quarter. On the right, you can see total deposits at period end were $450 billion, a decline of $7 billion, or 2% linked quarters. All of the decline was on the commercial side, where deposits were $10 billion lower, primarily driven by seasonal cash deployment. Partially offsetting the commercial decline, consumer deposits increased $3 billion, reflecting seasonally higher balances related to tax refund payments. Overall, our rate paid on interest-bearing deposits remained stable at four basis points. And importantly, we remained poor-funded, with a loan-to-deposit ratio of 65% at the end of the first quarter. Slide six details the change in our average securities and Federal Reserve balances. We've maintained high levels of liquidity over the past year while opportunistically purchasing securities. This trend continued into the first quarter as we added primarily U.S. Treasuries and agency RMBS. As a result, average security balances increased by 5% for $6 billion compared to the fourth quarter of 2021 and now represent 27% of interest-earning assets. Slide 7 highlights the composition of our high-quality securities portfolio, as well as the balance changes from year-end March 31st. During the first quarter, we added to our portfolio with net purchases of approximately $6 billion. However, the increase in rates during the first quarter resulted in higher net unrealized losses of approximately $6 billion, and accordingly, our period end balances remained relatively stable. To moderate the impact of rising rates on security values and correspondingly AOCI, we transferred approximately $20 billion of securities from our available for sale portfolio into held maturity at quarter end. Importantly, fluctuations in AOCI do not have an impact on our earnings. However, we are mindful of the AOC impact on tangible book value, and we'll continue to evaluate potential opportunities for further transfers. Turning to the income statement on slide eight, as you can see, first quarter 2022 reported EPS was $3.23. which included pre-tax integration costs of $31 million. Excluding integration costs, adjusted EPS was $3.29. During the first quarter, integration costs reduced revenue by $16 million and increased expenses by $15 million. First quarter revenue was down $435 million, or 8%, compared with the fourth quarter. Expenses declined $619 million, or 16%, linked quarter, And excluding the impact of integration expenses, non-interest expense declined 7%. The first quarter provision recapture was $208 million, primarily reflecting the impact of improved COVID-19-related economic conditions. And our effective tax rate was 17%. So in total, net income was $1.4 billion in the first quarter. Now let's discuss the key drivers of this performance in more detail. Slide 9 details our revenue trends. Total revenue for the first quarter of $4.7 billion declined $430 million late quarter. Net interest income of $2.8 billion was down $58 million, or 2%. Higher securities and loan balances, as well as increased security yields, were more than offset by a $74 million decline in PPP revenue due to loan forgiveness activity and the impact of two fewer days in the quarter. A net interest margin of 2.28% was up one basis point. As we recently announced and affected for the first quarter, we recategorized the presentation of our non-interest income and provided an update to the related guidance. Consistent with those revisions, first quarter fee income was $1.7 billion, a decline of $296 million, or 15% linked quarter. Looking at the detail of each revenue category, asset management and brokerage fees decreased $8 million, or 2%, reflecting lower average equity marks. Capital markets related fees declined $208 million, or 45%, driven by lower M&A advisory fees, mostly due to elevated fourth quarter transaction levels, but also some delayed transaction activity in the first quarter. Card and cash management revenue decreased $26 million, or 4%, driven by seasonally lower consumer spending activity. Lending and deposit services was essentially stable linked quarter, declining only $4 million. Residential and commercial mortgage non-interest income was $50 million lower, primarily due to decreased commercial mortgage activity. And finally, other non-interest income declined $81 million, primarily due to lower private equity-related revenue, and once again, compares to elevated fourth quarter levels. Turning to slide 10, our first quarter expenses were down by $619 million, or 16% linked quarter. Excluding the impact of integration expenses, Non-interest expense declined $243 million, or 7%. The majority of the decline was in lower personnel expense, primarily reflecting lower incentive compensation. We remain deliberate around our expense management. By year end 2021, we achieved our objective to reduce BBVA USA's annual operating expense run rate by $900 million. And as we previously stated, we have a goal to reduce costs by $300 million in 2022, through our continuous improvement program, and we're confident we'll achieve our full-year target. As you know, this program funds a significant portion of our ongoing business and technology investments. Our credit metrics are presented on slide 11. Non-performing loans of $2.3 billion decreased $182 million, or 7%, compared to December 31st, and continue to represent less than 1% of total loans. Total delinquencies were $1.7 billion on March 31st, a $286 million decline from year end, reflecting lower consumer and commercial loan delinquencies. The majority of these decreases resulted from our progress in resolving BBVA-USA conversion-related administrative and operational delays. Net charge-offs for loans and leases were $137 million, an increase of $13 million linked quarter. Our annualized net charge-offs to average loans continues to be historically low at 19 basis points. And during the first quarter, we reduced our allowance for credit losses by approximately $300 million, and our reserves now total $5.2 billion for 1.8% of total loans. In summary, PNC reported a solid first quarter, and we're well positioned for the remainder of 2022 as we continue to realize the potential of our coast-to-coast franchise. In regard to our view of the overall economy, we expect strong growth over the course of 2022 resulting in 3.7% average GDP growth. We also expect the Fed to raise rates by an additional cumulative 175 basis points through the remainder of this year to a range of 2% to 2.25% by year-end. And all of this is consistent with the update in our recent 8K filing. Looking at the second quarter of 2022 compared to the first quarter of 2022, we expect average loan balances to be up 2% to 3%. which includes a $1.3 billion decline in PPP loans. We expect net interest income to be up 10 to 12 percent. We expect non-interest income to be up 6 to 8 percent, which results in total revenue increasing 9 to 11 percent. We expect total non-interest expense to be up 3 to 5 percent, and we expect second quarter net charge-offs to be between $125 and $175 million. Considering our reported first quarter operating results, second quarter expectations and current economic forecast for the full year 2022 compared to the full year 2021, we expect average loan growth of approximately 10% and spot loan growth of 5%. We expect total revenue growth to be 9% to 11%. We expect expenses, excluding integration expense, to be up 4% to 6%. And we now expect our effective tax rate to be approximately 19%. And with that, Bill and I are ready to take your questions.

Thank you. And ladies and gentlemen, at this time, if you would like to ask a question, please press the 1 followed by the 4 on your telephone keypad. You will hear a three-tone prompt to acknowledge your request. Once again, if you would like to ask a question, please press the 1 followed by the 4 on your keypad. Please hold while we compile the Q&A roster. Our first question is from the line of John Picari with Evercore ISI. Please go ahead. Morning.

Hey, John.

I want to see if you could give us a little bit more color on how you're thinking about the capital markets revenues from here. Obviously, you saw a pretty good step down this quarter given the activity that the broader markets saw clearly. Just wanted to get your thoughts on how we can expect to think about the remaining quarters, if you could see an increase from here, and if the capital markets outlook has impacted your full-year revenue view. Is that baked in there as well? Thanks.

Yes, sir. Hey, John, it's Rob. Good morning. So, you know, in regard to capital markets, you'll recall at the beginning of the year, our expectations for capital markets was to be down, you know, approximately 20% or so from 21 levels just because the 21 levels were so elevated. The first quarter was slower than we expected, even at those reduced levels. But for the full-year guide, I have most of that back in there. So most of what we expected to occur in the first quarter that didn't occur is still in the full-year guidance. So that's why we're still 9% to 11% growth.

Okay, got it. All right, that's helpful. Thanks, Rob. And then secondly, on the deposit side, just given the move in rates that we're looking at here, clearly a lot of focus on deposit flows. For the spot balances, you saw about a 2% decline in your deposits there. Can you maybe give us a little bit of color of what you're seeing in terms of depositor behavior here near term? Is that more commercially oriented in terms of the deposits that you saw in terms of the decline? And then Can you talk about your betas that you think you'll see in the near term as rates rise and then further out after the first hundred of debt hikes? Thanks.

Yeah, okay. This is Rob again, John. So on the deposits in the quarter, we saw a spot decline, and all of that was on the commercial side, which we see as largely seasonal. Consumer deposits on a spot basis were actually up, reflecting tax refunds and some seasonality there. That's the story on the deposits. For the full year in regard to the betas, relative to what we expected at the beginning of the year, we have increased our betas consistent with the increase in the Fed rate hike forecast. Along the lines of what we saw in the last cycle, maybe a little bit less just because we're working off such high levels. Very quiet, as you pointed out, very quiet on the first 100 basis points or so, but showing up if our rate forecast is correct, showing up in the third and fourth quarter.

Got it. Thanks. If I could ask just one more thing on the loan side. I know you mentioned the higher line utilization on the commercial side. Are you beginning to see CapEx plans drive loan demand? And then lastly, are you seeing any of the volume coming back from the capital markets back to the bank loan market yet on the commercial side?

I think the utilization is part of, you know, reflects part of the slowdown on the capital market side in bonds. Clients continue to be active. So, yes, pick up in CapEx, build an inventory. The other thing we're seeing, you know, beyond the utilization change, I think we saw a similar percentage increase in just new dollars out. or sorry, not percentage, but notional amount increase of new DHE commitments out. So some of its utilization, some of its winning clients, utilization driven by capital markets being a bit of disarray together with increased CapEx.

And higher inventory levels, of course.

Got it. Okay, great. Thank you. Sure.

Our next question is from the line of Scott Seavers with Piper Sandler. Please go ahead.

Good morning, guys. Thanks for the question. So, Rob, it was great to see you reiterate the full year 22 revenue outlook. And I think you sort of addressed this in response to the capital markets question previously. But I was hoping broadly you could just kind of parse the guide between what comes from and what comes from fees. I think 90 days or so ago, you guys have been thinking maybe mid single digit, all in growth for 22, if I remember correctly, but just given sort of the change in reporting and others, et cetera. Just curious to hear your thoughts.

Sure, sure. So nine to 11 total for the full year. Compared to the beginning of the year, net interest income is a bigger component of that because of the rate increases and the higher balances. So we're looking at that to be inside of that 9 to 11, the NII and the high teens. And then on the core fee piece, looking more toward flattish to maybe down low single digits, and most of the change there being on the mortgage outlook from the beginning of the year. So most of our fee categories are tracking to what we expected for the full year, including capital markets, as I just mentioned. But mortgage, we're off from what we thought at the beginning of the year because of rates. So residential and commercial mortgage, we expect it to be down low single digits. We're now looking at maybe down 25% or 30% year over year. So that's where the fee change is largely resident.

Perfect. And you just captured my second question as well. So thank you. I appreciate it. Sure.

Yeah, sure.

As a reminder, if you would like to register for a question, please press the 1 followed by the 4 on your telephone. Our next question is from the line of Mike Mayo with Wells Fargo Securities. Please go ahead.

Hi. Good morning. So you're guiding for 9% to 11% revenue growth, 4% to 6% expense growth. So you're guiding now for 500 basis points of positive operating leverage. curious, aren't you tempted to spend some of that and invest more of that spread? I relate this. I'm not telling you to do or not do. There's always a trade-off, but I want to tie this back to your CEO letter, Bill, where your first goal was to gain share in especially your new markets, and your second goal was to improve share with your customers. I guess The concrete question is, do you have any metrics to say what kind of share you'd like to improve by market and by corporate and consumer customer? And to do that, are you tempted to spend some of that excess of the revenue growth over expense growth? Thanks.

Thanks for the question, Mike. In short, we don't have to. you know, we've always been investing in our franchise. So if you think about, we talk about our new markets, as I said in my comments, they are largely staffed at this point. And, you know, so if I think about our people spend, we're kind of where we need to be. If I think about our technology spend, you know, you know, we've been going hard at that for a number of years, and we're more in the place of what can we actually get done in a sequence timeline than we are about, hey, spend more money. So you're not going to see, you know, increases against, you know, what we expected in that space. So anyway, short answer to your question is no, we don't need to spend the money, and not spending the money in no way detracts from spending you know, the growth that I think we're capable of.

Or in other words, we are spending the money on investments, and that's part of the guide.

Yeah, another way to put it, yeah.

So it's baked in there. Can you put some numbers around your CEO letter? Like I said, it's your three goals, gains shared by your markets, gains shared by customers, and technology, at least for your first two goals. Where is it shared today, and where do you hope to get it to? You have not given that before, but it'd be nice to know, is it bigger than a bread box or what?

No, it's a fair question. I don't know that you were going to define share by share of C&I loans in a market. I think what we have to do and we're working on, Mike, is presentation of just progress in underpenetrated markets compared to what we execute in one of our mature markets and then tracking that for you. I think that's the best metric. So You know, we look at loan balances, we look at fees, we look at percent of fees as a percentage of total revenues, we look at calling volume, we look at new clients, all the things you'd expect us to. And we need to figure out, and I'll commit to you that we will, we need to put out metrics so you can track it through time. We do it internally.

And then lastly, as it relates to buybacks, you have the book value regulatory capital dichotomy here. Which wins out when you think about buybacks?

I'm not sure I follow the question.

9.9% CET1 ratio. That's fine. That's good. But your book value went down. That's not as good. Do you still buy back the same amount of stock? Do you slow buy back? Do you not buy back stock at all? Sorry. OCI impact.

Yeah, yeah, yeah. So if you're simply asking the question, do we view our available capital based on the 9-9, the answer to that is yes.

Okay. And then does that mean you continue to pay some buybacks, or how do you think about that?

Yeah, no, we're going to be in the market. It's obviously, you know, I think it's more attractive today to buy back shares than it was, you know, towards the end of the year. So, yeah, no, we're going to be in the market, and we'll see.

I don't know what we publicly said. No, no, that's right. The answer is it is the regulatory capital that we look at, Mike, and the current pace that we've been on, we expect to continue. The average quarterly pace. We were a little bit more this past quarter.

Got it. Thank you. Sure.

Our next question is from the line of Bill Karachi with Wolf Research. Please go ahead. Thank you.

Good morning, Bill and Rob. Good morning. Following up on your deposit beta expectations being a bit lower this cycle given all the liquidity in the system, you said on the last call that you'd expect to see higher betas if the Fed shrinks its balance sheet dramatically, but that loan growth would be an offset to that. Could you help square those two points for us and I guess just maybe discuss the risk that the pace the Fed has communicated could lead to to higher deposit flight risk?

So, I mean, there are two opposing forces, right? So when the Fed shrinks its balance sheet, which it will, you know, even if they let it run off, they're saying, you know, whatever that number is, 90 million, is it a month or a quarter? I don't even remember. But, you know, it will pull deposits from the system. At the same time, when there is loan growth, it puts deposits back into the system. And the reason for that, if you think about it, is just leverage on the capital. Assume everybody holds 10% on a loan. They borrow from us. They deposit somewhere else. It collectively builds deposits into the system. Collectively, we think that's going to cause deposit growth too slow, but we actually think deposit growth is still going to be positive. for the system and for us. So, again, Fed balance sheet shrinks, but at the same time, we're going to see loan demand. We expect to see loan demand. We have seen loan demand at a pace that would generate deposits. So, you know, we're not particularly worried about that. Now, what will happen, of course, is the Fed gets rates substantially higher. You know, the betas are going to have to do a big catch up move because all of a sudden it's going to matter. You know, interest rates are going to get back to a place where people start paying attention again. Now, I don't know what that level is. I don't know that we've ever come off of, you know, a base of zero and tried to play catch up. The last time we thought about that, the Fed reversed course pretty quickly. So we're going to have to see how that plays out. But I think deposits in the system will still be there. We just won't see the same growth we have over the last couple of years.

Got it. That makes sense. And taking that thought process and going inside your outlook, does that contemplate the possibility of maybe simply letting some of the liquidity that you're sitting on today outflow if necessary rather than paying up to keep it to fund loan growth?

Well, we haven't had to pay up. I mean, as you see, I think our average cost of funds stays four basis points. There's some percentage of that on the corporate side in particular that will be, you know, that looks for direct substitutes from competitors or money market funds on a given day. And we assume, and in our forecast, we assume that that will have very high, if not, you know, betas of one. And that's fine. That's part of our funding model. You know, it's embedded in our forecast. And we never, you know, we don't consider those necessarily Core deposits, even though they're core clients, if that makes sense to you.

Yep. Yep.

If I can ask... And that's four basis points on core deposits. Yeah. Or borrowings are a little higher.

Okay. Thank you. That's helpful. If I could ask on CRE, can you talk about the risk that tenants may remain good credits and continue to abide by their lease obligations through the end of their lease terms, but ultimately not renew because they just don't need as much space?

Look, I think that's one of our fears. I think we're going to see that weakness in office properties flow through over a longer period of time. And I think, by the way, that's very market-specific. So I would tell you, for example, I think in Pittsburgh here, we're going to struggle with that. We don't have exposure to it. Interestingly, we don't have a lot of exposure here, but practically I think there'll be less people in the buildings in Pittsburgh, and I think that's going to be the case in many metro areas around the country. And yes, I think that's going to cause lease rates to drop over time, and yes, I think that's going to impact office properties. But we're reserved for that, have been watching that. We pick our clients carefully, and at this point we think most, if not all of them, have the wherewithal to make their way through that.

That's helpful. Thank you. If I could squeeze in one last one. Bill, you shared in the past a vision of giving consumers the ability to use Zelle at the point of sale for retail payments. Can you update us on whether that's something that you'd still support? And how do you think about the risk of cannibalizing or that that could cannibalize your debit and credit volumes?

Look, I'm not going to speak on behalf of EWS, the company. simply because that's a collective decision from the ownership group of EWS. I think everybody's interest is to make payments easier, to make payments be more fraud resistant, and look, to be able to make some return on payments. We collectively look through all those things against the current rails and as the Payment landscape changes, you know, we'll adapt with it. We are going to start using Zelle, you know, we and a few of the other ownership banks to allow purchase for services and for, you know, small business. So it will get out there into the P to merchant space. Just, you know, at this point, not direct competitor to the card rails. for a variety of reasons, but not yet.

Understood. That's super helpful. Thank you for taking my questions.

Sure.

Next question, please.

And as a reminder, if you'd like to register for a question, please press the 1 followed by the 4 on your telephone. Our next question is from the line of Gerald Cassidy from RBC. Please go ahead. Thank you. Hi, Bill. Hi, Rob.

Hey, Gerard.

Can you guys – I know you talked about the capital utilization rates going up, possibly customers with capital expenditure, but can you share with us where are they now and what would you consider to be a normal rate of capital utilization at your organization?

Yeah, and we've talked about this before, Gerard. You know, right now we're in the low 50s up from the high 40s that we saw through the bulk of last year. And normal, just whatever normal is, we might expect somewhere in the mid-50s. So we're moving toward that. Not there yet.

And, Rob, is there any difference, have you discovered yet, with the BBVA customer, that C9 customer versus a legacy P&Z customer? No.

No, it's interesting. On the commercial side, we were talking about that this morning. It's very, very similar in terms of the borrowing traits. So there really is no difference in terms of the utilization of the lines. They're all up in sort of similar amounts.

Very good. And then I know you mentioned in your remarks about transferring over some of the available for sale securities. I think it was 20 billion into the health and maturity. Would they transfer it over at a discount and then will that discount accrete into, you know, your capital over time? Yes.

Yeah, exactly. Yeah. And again, and again, and again, you know, it doesn't affect earnings. It's, uh, you know, it's, uh, it's all going to pull. We, uh, We balance between the flexibility benefit of available for sale versus the AOCI component of or benefit of held immaturity. So, you know, we'll continue to look at that. But it'll run its course and, again, doesn't affect earnings.

Right. Okay. And just lastly, I know you guys, when you did the BBVA transaction, you were quite excited about the money transfer business between, I believe it was maybe Mexico and the U.S., Can you share with us any color on how is that going? Is it going as well as you expected? Have you been able to expand it?

We've actually been really happy with it. It has expanded, and we're currently looking. It's through several countries in Latin America today, and we're actually looking at expanding that through relationships into other countries there, and I think into Europe as well. Although I'm not certain about that. It's dependent on correspondent banking relationships in the receiving countries that are responsible for Know Your Customer drug. But no, it's a big business. We actually white label it for others, and we're excited by it. We've been, you know, it's now mainstream on our consumer apps. And importantly, we're looking at some of that functionality to be tied into some of the things that we're actually doing on the corporate side.

Great. Thank you, Bill. Appreciate it.

Yeah.

And there are no further questions. I'll turn the presentation back to the speakers.

Okay. Well, thank you very much. And if you have any follow-up questions, please feel free to reach out to the IR team.

Thanks, everybody. Thanks, folks.

Thank you. And that does conclude today's conference. You may now disconnect.