Welcome to today's conference call for the P&C Financial Services Group. Participating on this call are P&C's Chairman, President and CEO, Bill Demchak and Rob Reilly, 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 corporate website, pnc.com under Investor Relations.
These statements speak only as of July 14, 2021 and P&C undertakes no obligation to update them. Now I'd like to turn the call over to Bill.
Thanks, Brian. Good morning, everybody. As you've seen, we accomplished a lot in the Q2 and most important was the closing of the acquisition of BBVA USA on June 1. Obviously, this created a fair amount of noise in our reported results adding 1 month of BBVA USA operating results and the impact of purchase accounting Adjustments as well as merger related impacts. Rob is going to take you through all of that in a couple of minutes.
But putting those things aside, we had a pretty good quarter driven by solid Net interest income, strong fee growth, continued improvements in credit quality and announcement of higher capital returns. While loans increased primarily due to the acquisition, we did have spot loan growth in both consumer and C and I in the legacy P and C balance sheet. We've seen loan utilization rates stabilize within our Corporate and Institutional Banking business. However, they remain near historic lows. And while new loan approvals have rebounded, actually to the highest level in a couple of years, that's been offset by continued pay downs.
Within the legacy Within the P&C legacy consumer book, we saw loans grow in the quarter, which was encouraging, and we're confident that strong economic is ultimately going to drive strong loan growth, but it remains an open debate as to the timing of that loan growth relative to the second half of twenty twenty one and into twenty 2. During the quarter, we continued to deploy excess liquidity through $10,000,000,000 of net security purchases. Going forward and considering the significant recent rally in treasuries, we'll be disciplined as we look to reduce our elevated cash position. You saw that our recent CCAR results underscore the strength of our balance sheet and our commitment to returning capital to our shareholders. Following the results, we announced a 9% increase in our quarterly common stock dividend and a $2,900,000,000 share repurchase program.
Importantly, we're well positioned with substantial capital and liquidity to continue to support our customers and invest in our businesses. Regarding BBVA, I couldn't be more pleased with where we are. P&C and BBVA employees have hit the ground running and are making great progress in preparing for successful conversion and integration. The deal significantly expands our footprint, gives us access to 29 of the 30 MSAs across the country with a coast to coast franchise and it provides us with an opportunity for growth for years to come. All of our original It's outstanding.
Across this footprint, employees are making joint calls and we are seeing deal pipelines build, especially as we present our enhanced capabilities and scale of the new markets. We continue to believe the revenue synergy opportunity is significant as we look to drive PPVA USA's non interest income contribution to total revenue closer to legacy P&C's mid-forty percent level. On the integration front, we're leveraging our past investments in technology and automation to expedite the process, drive synergies and reduce complexity. We're moving the data for more than 600 BBVA USA applications to P and C applications, taking a lift shift approach that allows us to simplify the customer conversion. I also want to mention that our continued rollout of low cash mode, which was available to 2,500,000 virtual wallet customers as of the end of June.
We're planning to roll it to the remaining 1,100,000 virtual wallet customers by the end of this month and look forward to making it available to BBVA customers upon conversion later this year. Since announcing the product in April, we've delivered over 10,000,000 low cash mode alerts and have seen strong engagement with the It helps to address a major frustration for many of our customers across the industry. Over time, We expect it to drive significant growth in new and existing customer relationships as we execute our national expansion strategy. Finally, I'd like to close by thanking our legacy P and C and the new BBVA USA employees for all of their hard work that allowed us to close this deal early and prepare for conversion and long term success. And with that, 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. As Bill just mentioned and notable during the Q2, we successfully completed our acquisition of BBVA USA, significantly expanding our footprint, which now includes growth markets throughout the Sunbelt region. Our balance sheet is on Slide 4 and is presented on a spot basis. While we typically cover our average balance sheet, we'll focus this quarter on spot balances due to the timing of the June 1 closing of the acquisition. Overall linked quarter balance sheet growth was driven by the acquisition, of course, which contributed $60,000,000,000 in loans, $18,000,000,000 of investment securities and $82,000,000,000 of deposits at quarter end.
Excluding those additions during the quarter, Legacy P&C loan balance has declined $3,000,000,000 investment securities increased $10,000,000,000 and deposits declined by $4,000,000,000 And I'll cover the drivers in more detail over the next We ended the quarter with a tangible book value of $93.83 per share and an estimated CET1 ratio of 10%, substantially above the levels we anticipated at the time of the deal announcement. As a result, we're well positioned with significant capital flexibility. And as Bill just mentioned, we recently announced a $0.10 increase to our quarterly cash dividend on common stock, raising the dividend to $1.25 per share. Additionally, we reinstated our share repurchase programs of up to $2,900,000,000 for the 4th quarter period beginning in Q3 of 2021. Slide 5 shows our period end loans and deposits, accounting for the acquisition and highlighting the relative contributions.
Total loans were $295,000,000,000 quarter end. And with the acquisition, our loan mix remains consistent at approximately 2 thirds commercial and 1 third consumer. Total deposits were $453,000,000,000 at June 30 and our rate paid on interest bearing deposits is now 5 basis points, a 1 basis point decline linked quarter. Taking a closer look at loans, commercial loan balances of $200,000,000,000 increased $35,000,000,000 BBVA contributed $39,000,000,000 and spot P and C legacy growth of approximately $1,000,000,000 was offset by a $4,500,000,000 decline in PPP loans. Consumer loans were up $23,000,000,000 represented by $22,000,000,000 of acquired loans as well as growth in legacy P&C consumer loans, primarily in the residential real estate portfolio.
The yield on loan balances was stable at 3.38% compared to the Q1 and reflected the combined loan portfolio. Slide 6 details the change in our spot securities and Federal Reserve balances over the past year. Securities balances were $127,000,000,000 at the end of the second quarter, a $28,000,000,000 increase linked quarter due to the addition of $18,000,000,000 of securities from the acquisition and $10,000,000,000 in net purchases. Our Fed cash balances decreased $14,000,000,000 linked quarter, reflecting continued deployment into securities and the payment of $11,500,000,000 for the acquisition. Despite the linked quarter decline, our liquidity position remains in excess of our LCR requirements.
As you can see on Slide 7, our 2nd quarter income statement includes the impact of the acquisition. Our reported EPS was $2.43 which included an initial provision for BBVA USA of $1,000,000,000 and integration costs of $111,000,000 Adjusted for these items, EPS was $4.50 in the 2nd quarter. 2nd quarter revenue was $4,700,000,000 up $447,000,000 compared with the Q1, reflecting the acquisition as well as strong organic fee growth. Expenses increased $476,000,000 or 18% linked quarter, including $181,000,000 significant items related to integration expenses and litigation reserves as well as 1 month of BBVA operating expenses and higher legacy P and C business activity. The provision of $302,000,000 included a provision recapture of $704,000,000 related to improved credit quality and macroeconomic factors as well as balance reductions, which was more than offset by $1,000,000,000 initial provision in connection with the acquisition.
As a result, total net income was $1,100,000,000 in the 2nd quarter. Now let's discuss the key drivers of this performance in more detail. Turning to Slide 8. These charts illustrate our diversified business mix with non interest income representing 45% of total revenue in the 2nd quarter. Net interest income of $2,600,000,000 was up $233,000,000 or 10%.
And net interest margin of 2.29 percent was up 2 basis points, both of which reflect the impact of the acquisition. 2nd quarter fee income of $1,600,000,000 increased $229,000,000 sourced 16% linked quarter. Within that, legacy P and C fees grew by $167,000,000 and BBVA USA's 1 month of operations contributed $62,000,000 Taking a more detailed look at the performance in each of our fee categories, asset management revenue increased $13,000,000 or 6% as a result of higher average equity markets. Consumer services fees grew $73,000,000 or 19%, primarily due to increased transaction volume and higher merchant services revenue. Corporate services increased $133,000,000 or 24%, driven by higher M and A advisory activity and treasury management product revenue.
Service charges on deposits grew $12,000,000 or 10% due to the addition of BBVA USA. Other non interest income of $468,000,000 declined $15,000,000 linked quarter and included a negative Visa derivative adjustment, lower securities gains as well as higher private equity revenue. In total, non interest income $2,100,000,000 increased $214,000,000 or 11% compared to the Q1, driven primarily by legacy P and C fee growth as well as $80,000,000 of non interest income from the acquisition. Turning to Slide 9. Our second quarter expenses were up by $476,000,000 or 18% linked quarter and included $181,000,000 of significant items related to integration expenses and the addition to legal reserves.
The remainder of the increase was driven by BBVA's 1 month operating expenses of $179,000,000 as well as increased business activity and marketing for legacy P&C. Obviously, with the acquisition, our operating expenses are going to be higher going forward. Nevertheless, we remain disciplined around our expense management. And as we previously stated, we have a goal to reduce P&C standalone expenses by $300,000,000 in 2021 through our continuous improvement program and we're on track to achieve our full year target. Additionally, we're confident we'll realize the full $900,000,000 in net expense savings of BBVA USA's expense base in 2022.
Our credit metrics are presented on Slide 10 and reflect the impact of the acquisition. Apart from the addition of the acquired loans, credit performance improved considerably within the legacy P and C portfolio. Non performing loans were $2,800,000,000 at June 30 and $871,000,000 were related to the acquired loans. PNC's legacy non performing loans declined $230,000,000 due to decrease in both commercial and consumer. Total delinquencies were $1,300,000,000 at June 30, of which the acquisition impact was $291,000,000 Legacy P&C's delinquencies declined $147,000,000 Net charge offs for legacy P&C were $58,000,000 the lowest level since 2007 with an annualized charge off to total loans ratio of 10 basis points.
Acquired loan net charge offs $248,000,000 which was largely a result of required purchase accounting treatment for the acquisition. Slide 11 shows the change in our allowance for credit losses during the Q2. Within our legacy portfolio, We released reserves by approximately $700,000,000 related to both improved credit quality and macroeconomic factors. Upon closing the acquisition, we established a $2,200,000,000 ACL for the acquired loans or 3.5% through fair value loan marks of $1,200,000,000 related to purchase credit deteriorated loans and an initial provision of $1,000,000,000 related to non PCD loans. The initial BBVA USA ACL to total loans of 3.5% was subsequently reduced to 3.1% at the end of the quarter as a result of portfolio changes.
So in total, as a result, our total quarter year end Reserves for the combined entity were $6,400,000,000 representing 2.16% of consolidated loans outstanding. Turning to Slide 12. Now that we've closed the BBVA USA acquisition, I wanted to provide an update to some of the deal metrics, all of which are the same or have improved since our deal announcement. As you know, the purchase price was an all cash fixed price and was approximately $11,500,000,000 at closing. And as I've already mentioned, tangible book value per share and the CET1 ratio are favorable relative to our original expectations.
We continue to project an internal rate of return in excess of 19%, earnings per share accretion of more than 20% and an annualized expense production of $900,000,000 in 2022. Additionally, our expectations for non recurring merger and integration costs is approximately $980,000,000 the majority of which we expect to be recognized in 2021, consistent with our initial expectations. Taking a look at the credit metrics, these have all improved since we've announced the deal. And as a result, the ACL to total loans for BBVA USA is better than our original expectations. In addition and as anticipated, our net purchase accounting adjustment is nominal with a net fair value premium of $322,000,000 the majority of which will be amortized over the next several years.
For the Q2, due to the maturity of some short dated acquired assets, we realized a $30,000,000 benefit to net interest income, which will not recur. In summary, P&C reported a strong Q2 highlighted by the successful acquisition of BBVA USA. We expect this transaction to add significant value to our shareholders as we begin to realize the potential of the combined franchise. In regard to our view of the overall economy, Our current expectations are for GDP to surpass pre recession levels sometime during the Q3 and for the Fed funds rate to remain near 0 throughout 2021. Looking at the Q3 of 2021, which will now include a full quarter impact of BBVA USA's operations compared to the Q2 of 2021.
We expect total spot loan balances to be up modestly, which includes a $3,500,000,000 decline in PPP loans. On a percentage basis, we expect NII to be up in the mid teens. We expect fee income to be up in the mid single digits. We expect total non interest expense, excluding integration expenses, to be up in the high single digits. We expect other non interest income to be between $325,000,000 $375,000,000 excluding net securities gains and Visa activity.
And we expect Q3 net charge offs to be between $150,000,000 $200,000,000 For annual guidance, taking into account our first half operating results and the addition of 6 more months of BBVA USA forecasted operating results, plus our expectation for modest loan growth in the second half of the year, we expect revenues to be up between 12% to 14% and expenses excluding integration costs to be up between 13% 15% for the full year 2021 compared with P&C standalone 2020. We acknowledge some upside exists in spot loan growth during the second half of the year, but that remains to be seen and as a result is not included in our guidance. And with that, Bill and I are ready to take your questions.
Thank you. Your first question comes from the line of Betsy Graseck with Morgan Stanley. Please go ahead.
Hi, good morning.
Hey, good morning, Betsy.
So it's great to see the loan growth start to pick up here. The first question I have is just on how we should think about The loan growth in your book now that BBVA has come in, is there going to be a churn period here where you've got some loans In that book that you're likely to be exiting and then growing through that churn? Or Would you suggest that that's not really big enough to matter when we're thinking about the loan growth?
The margin, it's going to matter, but it's extended over a bunch of years. We're not going to sell portfolios or Rapid exit. So through time, we will mature things and those balances will likely run off from certain industries as we grow balances From other target industries, but that stretches over 2, 3, 4 years.
Okay, great. All right. And then Separately, your Harris Williams business obviously is already national, but does the BBVA footprint that you've added now do anything for them in their business With middle market.
It's a margin, right. It just adds a larger network of potential clients and conversations. So yes, now they obviously are in all of these markets to some extent already, but now we have more clients And we'll therefore have more dialogue. So I would expect it will help. Yes.
That's it for sure. So we'll be able to introduce Our new commercial clients through BBVA USA to Harris Williams, if they haven't already been introduced.
Yes. Great.
Yes. No, that was a really strong Results from them this quarter. And then just lastly, the dividend hike that you recently announced, how do you think about that from the perspective of Payout ratio. And I'm just wondering, should we expect that your full run rate of the BBVA USA Expenses coming out is already in how in your earnings outlook when you were thinking about setting that dividend up?
I'm trying to think of the simple way to answer this. So long story short, there's room on the dividend on our forward income. We were in a bit of a fire drill because We managed to close the deal a month sooner than we thought, which meant that we kind of had CCAR results and the deal closed, which then threw us into Fire drill to figure out what we could do. I'm not going to say in a hurry, but on short notice, Which is what we did. And acceleration.
And acceleration of kind of what we had thought. So there's room on that Certainly as we go forward and we just thought it was important to get something done and not miss this cycle, which is what we acted on.
Okay. That sounds like that
makes sense.
And we've
said I'm sorry, we've said for years that we expect with this model and this business mix that a 40% to 50% payout ratio on the dividend is Our target range.
Okay, great. All right. Yes, that was my gut feel that there was room there. So I appreciate that commentary. Thanks so
much. Sure.
And thank you for your question. Up next, we have a question from the line of Bill Karasy with Wolfe Research. Please proceed with your question.
Thank you. Good morning, Bill and Rob.
Hi, good morning.
You guys have made impressive progress in your national expansion strategy. As you look ahead, how integral Is the acquisition of additional branches to your furthering your national expansion on paper? It's easy to do a traditional analysis where you look at P&C's revenues per branch and BBVA's revenues per branch to isolate the opportunity to improve productivity what that would mean in terms of incremental revenues per branch. But when you try to sell the idea of acquiring additional branches to generalists, There's a natural pushback on why those branch acquisitions are necessary in the first place given what we're seeing with the digitization of the business. RBC is a great example where we saw your branch count rise sharply in 2012 before falling significantly for the better part of the next decade.
So how important was it to acquire those branches to begin with? I know there's a lot there, but I was hoping you could speak to that point in general.
I wouldn't focus so much on branches as I would on clients. So in the future, could you see us Do smaller deals in market to gain greater share, possibly now the values today Just seemed way too high to me, but possibly. But the purpose of that wouldn't be to get branches per se, instead it would be to get clients and then we would optimize the Branch network, as we did with RBC, after the fact.
And some natural conversion to solution centers which we to your point Bill, we've been doing.
Right. Understood. With separately, with the curve having flattened a bit since your comments last quarter, has there been any change to your thought process around deploying a larger percentage of your liquidity into And within that, how worried are you about giving up some of your future asset sensitivity in exchange for the near term NII benefit? We're hearing different From different banks, but would just love to get your thoughts.
I guess, first off, as you saw, We went at it pretty aggressively before we saw the big rally here. We still have a lot of liquidity. We barely put a dent Our liquidity even after writing the check for PBVA, so we're still very asset sensitive. Having said that, the recent rally is going to cause us to slow down And be more tactical than we had been during the last quarter and we'll watch how this plays out. I personally believe that The current rally is way overdone and I don't fully understand it.
And we're likely to Not likely. We will slow down relative to what we saw in the last quarter.
And our expectations of that are built into our guidance.
Yes.
Got it. And if I could squeeze in one last one. I wanted to ask if you could look ahead a bit longer term at the opportunity to drive efficiency improvements. The forward curve is right and we get one hike around the end of 2022 and another in the middle of 2023 and assume no further steepening. There are a lot of moving parts there, but could you just speak to your confidence level in being able to drive your efficiency ratio into that sort of high 50% range?
The math takes you there. The question is simply a function of when we Look out to 2022, a function of the tailing integration costs as to whether you see it, what period of time you actually see it, but the math takes you there once we get the costs out of the EBBA franchise and what we would expect that revenue environment to look like.
Great. Thank you for taking my questions.
Sure.
Thank you. And up next, we have a question from the line of Mike Mayo with Wells Fargo Securities. Please go ahead, sir.
Hi. Good morning, Mike.
So I guess I have a short term question Long term question. The long term question is what inning are you in, in your tech transformation? And you spent 7 years Getting your common infrastructure together and that prepares you well for the BBVA integration. So that's kind of The good news and what inning are you in, but then I think the bad news is you're guiding this year for slightly negative operating leverage, the last slide. And I know you don't like having that.
And why is that worse than expected when you should be having some synergies from BBVA? Thanks.
Why don't I just You want me to do the short term one? No, I'm glad you asked that question, Mike, because at first read, you might conclude that. But that's Not what we're saying. What we're saying in the guidance for full year with revenue percentages going up less than expense percentages, that's simply the overlay Of the BBVA USA acquisition 6 months into our results. They have a higher efficiency ratio.
So that's If you think about it, that's largely the opportunity there. P&C standalone, we said at the beginning of the year, it was going to be stable. We were going to fight for Positive operating leverage halfway through, revenues up low single digits, expenses are up low single digits, so we're still fighting. And as I mentioned in my comments prior to the Q and A, we're going to keep fighting. And Bill, I don't know if you want to do that long term.
No.
Do you follow that, I mean, it's simple. We layered on a less efficient organization on top of us and causing the math to be what it is. The legacy P&C business is kind of on target for what we said. And then the opportunity set is to drive The new organization down to our level of efficiency, yes, or better.
Okay. That's a long term question.
Yes. The issue on technology, I mean, think about, Look, we're 80% of the way along where we would like to be in terms of what I would just call a modern platform Across everything from data centers to the way we develop to the way we do automated testing and deploy and so on and so forth. So we're pretty far along. I think What happens down the road with technology is much more about client facing technology and the ability to compete Teed effectively in the new ecosystem of FinTechs and where payments are going and all of that stuff. And we're prepared for that.
We're going to invest hard into We have the core technology behind us to allow us to play in that space, but that's where the fight is going to be. And I think that game is just getting started.
And to extend the metaphor, Yes, the game is going into extra innings. Technology is going to be around for a while. Fair. Fair.
And where do you think I mean, you're I appreciate a number like 80% on building a modern platform. But again, after 7 or 8 years of doing that, where do you think The average bank is in that transformation because you've been talking about this more than others.
Yes. Look, I don't have an informed view. It's hard to figure out what other people are actually doing. If I just think about our ideal state Compared to where we are, P&C's ideal state might be different than what somebody else aspires I still see us with certain applications that need to be reengineered to kind of be plug and play through API. Other people may or may not care about that.
So we're playing our own game. Our goal obviously is to be able to use technology as an advantage, not just in terms of cost, but also in terms speed of market and creativity as to what
we can offer to clients. And we're well on our way. All right.
Okay. Thanks a lot.
Thank you for your question. And now we have a question from the line of John Pancari with Evercore ISI. Please go ahead, sir.
Good morning.
Hey, Jonathan. Hey, John.
Want to see if
you can give a little more color on loan demand, particularly on the commercial side. Are you starting to see any signs of CapEx Activity beginning to influence line drawdowns. And if you are, where in what areas are you seeing some strength in what Borrower segments. Thanks.
Yes. Hey, John, it's Rob. I can give you a little bit of color there. Generally speaking, utilization rates were up a little bit quarter over quarter, though not much. Where we are seeing continued growth that we started to see as green shoots in the Q1 is in our business credit asset based book.
Real growth there that is encouraging because that tends to be a leading indicator of loan demand. So that's largely where we've seen the growth. But on the margin, we would expect to see in terms of getting to where Strong loan growth would be coming more utilization across the general middle market book, which is yet to show up.
I mean the good news inside all of that is we're actually winning a lot of clients and we're extending facilities at a pace Beyond that where we've been for a bunch of years. The problem is they're just not drawing under that.
Credit facility. That's right. Yes.
So We're in a good place for when loan demand comes back and we continue to grow client share and we see that by the way in the fee growth that we're getting Through TM and others.
Activities picked up. Yes. Okay. So we made it, thanks. We've definitely advanced in the Q1.
Right. Got it. Okay. And then on the M and A front, I know you're still digesting the VBDA deal and everything. But As you look at other markets, are there any other markets geographically that you think a deal would make sense to give you a more critical mass just like you looked Got the Southeast that way.
I just want to see if you could talk a little bit about your footprint and how you think about that. And then separately, Bill, I'm curious what your take is on President Biden's executive order, particularly implying more scrutiny around bank mergers. Does that change how you think about deals? Thanks.
Well, yes to the second. On the first issue, you should just assume that Yes, we look at all the same stuff that you do. I'm not going to give you a theory of the country. We look and you've seen us through time make decisions based on value Value creation for shareholders. So that may or may not mean additional geographies.
It may or may not mean filling in an existing geography. It will very likely mean we'll continue to do small add on acquisitions that give us product capability for clients. The executive order on looking at competition amongst banks, I mean, it's a practical matter that What would actually have to change for the bank approval process to change, would be more about the Fed's rules on approving mergers, then I think it would be coming out of President Biden's order. I'm not expert on it, but I think it is safe to say that a larger deal in today's environment Would get much more political scrutiny and noise than we did with the BBVA deal. Then that weighs
on us.
Got it. All right. Thanks. That helps.
And thank you for your question. We now have a question from the line of Scott Siefers with Piper Sandler. Please go ahead, sir.
Good morning, guys. Thanks for taking the question. Maybe, Rob, I can sort of back into things based on the guidance, but just would be curious to hear your thoughts on how the net interest margin rate Moves from here, just lots of moving parts between shifting some of the cash into securities, layering in a full quarter BBVA and then we've got the fair value Premium amortization as well. So any thoughts there would be appreciated.
Yes. No, that's a lot there, Scott. Back in the Q1, we said we called a drop NIM, we're still holding that. I do think NIM will drift higher, not necessarily by a lot, but I think we've seen the bottom.
Okay, Perfect. And then just on the reserves, I think, sort of pre adjustments that were made for COVID, but post CECL adoption. I think you guys were around a 1.45 ish reserve. Is that a good number to assume you'll gear down toward even with BBVA Now in the mix.
Well, our day 1 was 154, not 145. That was P and C standalone. Okay. Yes. And then if you do some of the math, you blend in BBVA, day 1, we're going to be a little bit higher on that on average.
So as we've said, the answer to that question all along has been, if you consider those times normal, back to normal would be somewhere in that neighborhood.
Yes. Okay, perfect. All right. Good. Well, I appreciate the thought.
Thank you. We now have a question from the line of Gerard Cassidy with RBC. Please go ahead, sir.
Thank you. Good morning, Bill. Good morning, Rob.
Hey, Gerard.
Bill, can you share with us when you think back to the National City deal and the RBC deals that you guys did over 10 years ago, I'm glad that they're different than the BBVA deal. But obviously, that experience has given you confidence on this deal. Can you share with us when do you think the BBVA gets fully integrated based upon the experiences that you guys have with those prior two deals? Is it 3 years out, 4 years out. How long does it really become seamless where you can tell everything is running very smoothly?
There's a lot embedded in that question. I mean, the basic service structure, so what happens in a branch, the applications, The product delivery, all of that stuff, basically will be done by the end of this year, right? So the real question then becomes, How do we get the client penetration and growth rates in the newer markets, the fee penetration to grow Legacy P and C Markets. And what we found in RBC is in some of those newer markets that took Correct. Somewhere around 3 years, I guess, Rob.
We expect it will be faster today first because BBVA actually had a reasonable book of business that we could cross sell into immediately. And secondly, we Kind of have a better playbook. We've been at it for a while. So we have the teams built today. They're calling today.
And I generally would expect we'd
Yes, I think that'd be a little fast. And I think the receptivity to the P&C brand is probably a little more than it was 3 years ago. So that helps too.
Very good. And then I apologize if you addressed this already in your comments. But Bill and Robert, do you guys have any timing on the share repurchase program? I think you It's going to be over 4 quarters, but I know there's no restrictions now like the old CCAR test, you guys had limited on how much you could buy. You've given any thought on how you want to calibrate the repurchases?
Well, we're going to do it opportunistically, Gerard. So we will do it. Ideally, we'll put together like we always have some autopilot Program and then on top of that some discretionary piece. And the discretionary piece will be the variable obviously. That's what we've done in the past.
That's what we'll continue to do. There's some more flexibility there, obviously, and we'll take advantage of that.
Very good. Thank you.
Sure.
Thank you. And our next question comes from the line of Terry McEvoy from Stephens. Please proceed with your question.
Hi, thanks. Good morning. Just two questions here. I wonder if you could discuss the strength in consumer services fees last quarter. It was up, what, dollars 442,000,000 Just on a standalone basis.
And I know in the release it said increased business activity. I was wondering if you could provide any more color there.
Yes. Hi, Terry. This is Rob. Yes, we did we saw a lot of activity there and most of that is just More consumer activity as you'd expect as the economy comes back on track. Inside of that where we saw particular strength was debit card spend.
Debit card spend is a big component of it and the acceleration there was really strong. When did you say that? Yes, just some more maybe more color than you want, but what showed up this quarter, as they said in debit card spends, what our team was telling us was a lot of micro purchases that had So cups of coffee and morning purchases on the way to work are now part of the volume again.
Perfect. And then as a follow-up, just the corporate service fees, maybe if you could talk about the pipelines there. And is the quarterly run rate now, Is that a $600 plus 1,000,000 in revenue quarterly run rate today?
Well, I would say just in terms of So you got to take a look at it now, obviously, within combined form and put in a full 3 months of BBVA. But Corporate fees also, as we said earlier, are showing increased activity. We were a little elevated in the second quarter because of Harris Williams, Which did twice the volume of the Q1. So you got to take that into account. But your math is in the right run rate place.
Great. Thank you, Rob.
Sure.
Thank you. And we now have a follow-up question from the line of Bill Karkash with Wolfe Research. Please proceed.
Thanks for the follow-up. I just had a Quick one on the money transfer business and the opportunity that you see there. Some investors have expressed concerns over Disintermediation risk in that business as the cost of transferring money continues to fall and competitors in the space leverage technology to help consumers transfer money more cheaply. Is disintermediation risk in legacy BBVA's money transfer business a concern for you guys? And if you could discuss how you're thinking about the growth outlook For that business and opportunities that you guys may have to maybe leverage technology and just speak to that opportunity in general, that would be helpful.
I think the whole product, including the business transfer service is a disintermediated product. I mean, it was What we have is the same thing that other people are building and frankly doing in more scale. The key to success on it is to make sure that you have distribution receiving end networks, which we do have through Latin America and Europe. And that you have compliance to be able to build it. So it's a competitive space.
I'm glad we have the product. I think the actual product is going to be table stakes for banks. Our ability to grow it and scale it, we're going through different use cases that Bring on potential corporate disbursements and other things that we hadn't thought of before. But I think it becomes a table stakes products that started Through this intermediation kind of to your original question, right? This was built outside of the banking system.
BBVA just happened to have built 1 that we're now integrating into our core platform. So we're pretty excited by it. And I think Time will tell how that product evolves and who uses it.
And in terms of the financial impact isn't large. So it's more the upside Fair than anything.
Understood. Thank you.
Thank you. There are no further questions.
All right. Well, very good. Thanks everybody and we'll see you at
the end of the Q3. Thank you.
Thank you. This concludes today's conference call. You may now disconnect.