Great. Moving right along. Very pleased to have PNC Financial with us today. On stage with us, Bill Demchak, Chairman and CEO. Rob Reilly, in the front row, Chief Financial Officer. Bryan Gill. Aaron's around here somewhere as well, so thank you all for joining with us today. We'll put up the first ARS question while everyone gets settled in, but maybe, Bill, maybe the best place to start, you know, we've seen some weaker economic data the last few weeks. A rate cut next week is probably inevitable. Maybe just walk through kind of your current economic assumptions and, you know, whether a soft landing, your kind of views on that, and is that still kind of the base case?
Yeah, we're officially still calling for a soft landing, which, you know, in our minds is kind of job growth slowing, you know, middle of next year to a hundred thousand a month from kind of a one fifty level. We see the Fed now going three times this year and then five times next year. I think that's probably a fair assumption. You know, at the margin, it could be a little bit worse, but I don't know. You know, we could technically print a recession for a short period of time, but I'm not sure that'll actually impact much as it relates to the performance of our bank.
I guess you teed it up right off the bat, so we're just going to dive right in. You know, shifting to three rate cuts, you still talk to two rate cuts. How does that kind of impact the NII outlook, and how would your NII outlook be impacted if that maybe starts to be more aggressive?
You know, on the floating rate side, on our asset streams, we're fairly, if not completely neutral. We're a little bit different than most of our peer banks, I think, because all of our wholesale debt is floating rate. So we don't particularly care what the Fed does in the front end. We're largely indifferent to it. I think at the margin, they cut a few more times, we make a little bit more money on the front end. The bigger issue for us, and frankly, everybody else, is the long-term outlook for rates and the steepness of the yield curve. You know, I'm sure you're going to ask me about our Swoosh in 2025, which remains intact and we're very bullish on.
But, you know, in the out years, so go 2026, 2027, 2028, as things mature, we're, you know, the banking industry does a lot better in a 4% or 5%, you know, 10-year environment, which frankly, I think we'll see, versus rallying back to a flat curve and not high rates. But that remains to be seen.
Got it. Well, tee up the next ARS question. You mentioned Swoosh. I think you kind of coined that term in late last year, but so far it's kind of played out.
Actually, you know, we—I think we drew the chart and somebody... Who wants to take credit for the Swoosh? It wasn't us. It was good.
Um-
But somebody came up with that, though. Yeah.
But, you know, I guess we saw NII and NIM, I think, inflect in the second quarter. I'm going to ask you to confirm that. But I guess maybe more color in terms of how you see NII playing out. Do you expect sequential decreases in Q3, Q4? You talked about record NII in 2025 , and, you know, you've given some guidance of, you know, I think up 1% to 2% in Q3, down 4% in for the full year. But just, you know, given the evolving rate backdrop you talked to, any update you want to provide and just how you're thinking about all that.
So certainly all the guidance remains in place. At the margin, you know, this quarter we're doing a little better, perhaps, higher end of our range. But you know, but over time, what we had expected is occurring. As you know, we did a lot to lock in that performance in 2025, so we feel pretty comfortable.
I guess others have kind of been more kind of cautious on their NII outlooks. What's kind of giving you confidence to guide to the upper end of the range for Q2 and Q3?
You'll rem ember from Q2, and I got in some arguments on a call, but we gave up on loan growth. Doesn't mean it won't ever show up, but we're not reliant on it to basically hit the numbers that we put out there. It's. You know, we've actually been producing, winning new clients and production of new DHE at a pace that is approaching kind of record levels that we might have seen pre-COVID. They're just not funded, right? We continue to see utilization trend down, and we see a lot of payoffs. So, you know, we did that in the second quarter. I just said: Look, I'm going to quit promising growth on the back of some perceived hopeful loan growth number. If it happens, we'll do even better. We're not relying on it.
It's interesting, you know, we've been asking this margin question for a lot of the regional banks presenters and a small sample size, but so far, you have the biggest uplift, at least expected by this audience, in 2025 , NIM.
Yeah.
For what it's worth. No, no pressure, Rob. You know, but I think some of the NII support, you know, maybe comes through some of the actions you took last quarter, obviously, a timely securities portfolio restructuring, aided by the Visa gains. Did you really talk to kind of other potential actions you could take in terms of locking higher yields to kind of help you achieve that 2025 record NII number you expect?
First up, you know, the Visa restructure was a, was only a small part of our actual increase. Last quarter, we naturally had turned the corner. It was inflection. We'll do it again this quarter. And then, you know, what is happening is simply, and we've talked about this for years, is the short maturities of our fixed rate assets, some of which we locked in to give us assurances on the behavior of 2025, right? We've always had a short maturity, fixed rate, short duration book of securities and fixed rate loans that rolls off and reprices.
Part of our comfort level in 2025 was simply we said, you know, on a forward rate basis, and we did this in with some very good timing, let's lock that in, and make sure we can say it with confidence. So that, that's all that is.
Got it. Maybe it's up the next ARS question, but maybe shifting gears to deposits. You know, just given where we are in the rate cycle, how has deposit pricing been behaving? Are there certain markets or products where you still need to pay up to maintain customer balances?
So you saw a lot of stabilization into the second quarter, and that's continued, gotten better. We've probably hit part of that's driven for us, we've hit the floor on our noninterest-bearing on the commercial side. You know, there's a natural floor on that that comes from the amount of balances that are held for treasury management, and then escrow balances, you know, associated with our servicing businesses and so forth. We've actually, you know, on a quarter-to-date, I think we're up on deposits on an average basis with a small shift into interest-bearing, but probably the smallest shift we've had since we've been looking at this thing.
And we've seen, you know, interest bearing deposit costs increase a little bit just on some of our very low-cost stuff, switching to higher beta stuff. But no, we're kind of in a good zone. It's playing out the way we would've hoped. I do think, just as an aside, we continue to think that even if the Fed cuts, there will be continued pressure on, you know, at the money market deposits, you know, as people try to fill their deposit holes. So I'm not so sure that for some consumer deposits, you won't see, you know, a zero beta move for the first couple cuts.
Interesting. So the Feds, say, cut next week, you don't intend to lower consumer deposit pricing?
I think, I mean, for us, right, so all of our wholesale funding drops. All of our corporate-based, you know, went up with a beta of eighty or ninety, it comes straight down. Our high price wealth deposits come straight down. Some of our retail deposits come straight down. We haven't had to chase. You know, we're still, I don't know the number, Rob, but we're over 40 billion, more than that, at the Fed. So we don't need to chase, but the market needs to chase. And so I'm just not certain that that next high price deposit is gonna follow the Fed path down. We don't need it to, but I, you know, it's a competitive market out there.
One of the questions we've been asking the audience for all the regional banks is just their deposit beta expectations for each company. So for you guys, it looks like 40%-50% kind of beta range, which is not so far off where you've been for kind of the last couple of easing cycles. I'm not sure if that's through the cycle, how you're thinking about it.
I don't know that we're thinking about it. I don't know, Rob, you want to comment on that slide? I don't want to comment on it because I'd be guessing.
Yeah.
But I think the most important point, rather than trying to put a number on it, is we're indifferent to what front rates do. So that, you know, the combination of our asset repricing and all of our sources of liabilities that are floating rate, we're largely indifferent to the pace. Maybe that's the simplest way to think about that.
Helpful. Maybe, shifting gears to loan growth. You alluded earlier how you kind of took it out of the guidance. You know, we've been waiting for a while for to see it to come back up. Maybe just talk to in terms of kind of your expectations there, what you're hearing from clients, when you expect to pick up on activity.
You know, I remain a little befuddled. I mean, you can blame some of it on the, you know, the coming election and just uncertainty as to what people face in terms of whether they choose to do CapEx in the current environment. If you look at S&P CapEx, the total level is kind of okay, but it is almost entirely coming out of the tech sector and AI. I think that companies have gotten really efficient at managing working capital, coming from a world where they didn't really have to because rates were zero, and it was free. It didn't cost you anything to be poor at managing that, and I think they've gotten better. So, you know, I would expect that there'll be a pickup if the Fed cuts.
I would expect that there'll be some level of pickup when we have some certainty of what the future regulatory environment looks like, but I think we might be running in a permanently more efficient use of working capital than we were when we were zero interest rates for 10-year, you know, whatever period of time that was, because I don't think they're going back to zero rates.
Yeah. And then on the consumer side, you've been talking for a while now, I guess, wanting to be bigger in that side of the house. Kind of leaning more into credit card, maybe more recently. Can you talk about the recently launched PNC Cash Unlimited card? You know, how's that going? You know, what do you want to accomplish there, and maybe any client metrics?
I mean, just a second on that card. It's now close to our largest card. The spend on it's double the size of the card it replaced, and our FICOs on origination are over 800 . So that card's working. But I think it's more important to talk about the opportunity where we continue to be underpenetrated versus our retail client base, versus most certainly the larger peers. And that's what we aspire to. And by the way, we haven't, you know, blame Bill Demchak on this. We purposefully have underinvested in that product set because we're investing heavily into getting the rest of our retail franchise cloud native, API exposed, real time, and chose to do the modernization of what we did in card kind of now at the tail end of the process.
We needed to, and we are investing not just in the technology side, but importantly in the data side, so live data lakes and using AI in the way that you underwrite and screen, the way that you size credit lines, investing heavily in people, and we intend to be a good competitor with a good product offering for our retail clients, and that's a big opportunity, just that step. We don't want to be the, you know, the name brand just for credit card. We want to serve our clients, and we'll do that.
Maybe turning to fee income. You slightly reduced the full year outlook for fee income due to softness in mortgage and loan-related capital market fees. On the second quarter call, maybe just talk through kind of what you're seeing in the third quarter and, you know, anything suggests maybe you could do a little bit better than that?
Yeah, you should expect we'll be certainly better than our guide. We will be. Part of that better than our guide will come from, you know, volatile line items that may or may not repeat, but we'd be at the high end of the guide or even better, simply on the outperformance of Harris Williams and capital markets relative to what we had expected. It's gonna be a good line for us.
Adding the guidance was up 1%-2%. You're saying up 2% or more?
2% on stuff that repeats. You know, maybe more on, maybe a little bit more on, you know, look, think MSRs or CMSRs, stuff you throw out, we find valuable, but you know, we might have a more positive quarter on that.
Got it. And I guess maybe sticking with fee income-
Rob's getting mad at me.
Yeah. I guess you guys recently announced changes in asset management. Maybe just talk about that business in terms of, you know, is that something you expect kind of growth to accelerate and what you want to accomplish there?
So Carole Brown, who had run that for a bunch of years, retired. Stephanie Novosel is now running it. She actually ran our commercial business and really turned it around over a number of years, from a pure lending, not so exciting business, to one that brought all our technology to bear and had really high cross-sell. So I'm excited to see what she can do in wealth. You know, in wealth, we've had this slow time decay of old trust accounts that come from, you know, years ago and what a wealth business was for a regional bank, and we've done reasonably well in replacing that with asset gathering and a more modern wealth platform. I expect that Stephanie will accelerate that.
She'll be able to use the franchise, given our connections in commercial across our regional president franchise, and technology investments. You know, it's another one of those things that we ought to be really good at for our clients, but we're not gonna be the business that grows that outsize relative to our core client franchise.
Got it. And maybe shifting gears to expenses. PNC has obviously been very good there. I think core expenses will be about, like, 1% since 2021. What do you think is the right kind of normalized, you know, growth rate for PNC? And you talk about this record NII in 2025. Does that, you know, fall to the bottom line, or are you gonna, you know, maybe step up expense growth? How should we think about that?
You should just think that we always strive for positive operating leverage, and we're also a company that has never underinvested in our future, even in the toughest times. I'll leave it at that. 2025 will be 2025 in terms of guide.
Got it. I guess maybe more nearer term, you guided to the upper end on fee income for Rob. How should we think about the expense guide of up 3%-4%? Is that also at the upper end as a result, or?
Yeah, Rob's telling me it holds. I'm just thinking those Harris Williams guys get paid a lot, so it's probably at the higher end of the range.
No good deed goes unpunished. Maybe we'll shift to the next ARS question. About credit quality and as the audience answers that, maybe just talk about the credit outlook, you know, commercial consumer, customer bases. Are there, you know, any areas of the portfolio you're watching more closely, obviously outside of office CRE?
. You know, look at the margin. The economy is a little weaker than it was, but we don't see any particular cracks. You can look at transportation a little bit. You've seen certain parts of discretionary consumer soften. But by and large, now everything seems to hold. I mean, somewhat counterintuitively, consumer is getting a little better. Part of that has to do with some of the vintages we and others put on in kind of 2020 and 2021 normalizing, but we don't see deterioration in that. So we actually feel quite comfortable where we are. CRE obviously is a problem child. We've heavily reserved against it. I think that's going to play out over a longer period of time. We're comfortable with it simply because we, you know, we have the reserves where we are.
It's a known number of loans that we've re-underwritten and reappraised, over and over again. So we're, you know, we're aware of what's there and we're okay with it.
I guess, you know, on the office front, and you obviously have seen pressure across the industry, I guess, where do you think we are in the office credit cycle? Any factors you think result in, you know, easing pressure on the book? Obviously, have the advantage of Midland-
Yeah.
Maybe some more precise insights in terms of what's going on there.
I think we're in the first inning. I think people are underestimating the outcomes on this. I think people are not taking their loan books down to appraised values and reserving against it. I think there's a long burn on fixed rate loans that come due in a couple of years' time, both in CMBS and in smaller banks that haven't been, in effect, mark to market. In other words, can they be financed at current values? I think this plays out through, you know, a handful of years, but I think we're in the first inning. By the way, that's one of the reasons why, you know, I would argue we have one of the best multifamily CRE books, reserved at 14.5%. Multi-tenant, yes sir, not multifamily. Thank you.
I guess, how do we think about early stages, I guess, of the loss cycle, but big reserve?
Yeah.
So as charge-offs materialize, how do we think about that reserve? Does the reserve rate decline, are you going to have to add additional reserves, keep it the same, grow it? Just-
Look, if it plays out, you know, exactly as foretold in our reserve model, which it never will, you know, in theory, I guess, we'll just burn down as we do the charge-offs. In practice, you'd probably see the percentage go up as you get some of the more troubled big assets off the books. But, I mean, all I would say is we're, you know, we have a healthy reserve against our loans as it or against our book as it sits now.
I guess historically, you've talked about through the cycle loan losses of 40-50 basis points. I think you're closer to 30 basis points in the first half of the year.
I think we're like, we're 22, if you take the office out.
I guess, do you ever think we get to 40 to 50? Is that range too high? How do you think about that?
I don't. We'll stick with the 40 to 50, but I got to say that if you back out, we've never actually operated there on a PNC book. You know, through the financial crisis, we had National City, and then we had, you know, Mercantile, both of which had really outsized losses relative to our own legacy books. So I don't know. You know, we always say forty, because I don't know, but I don't think we've ever operated there with our pure PNC balance sheet in effect.
The room thinks you don't get there next year either.
Yeah.
Maybe put up the next ARS question. And as the audience responds to this, Bill, you know, I'll ask you. You know, I guess, Basel III Endgame proposal, there's obviously been some, you know, breaking news on Friday. I know Barr speaks tomorrow. It sounds like we'll get a proposal next week. It feels like Category III banks get the worst of it all because it seems like you're still going to get stuck with the RWA inflation and still get stuck with losing the AOCI opt-out provision. Just, I guess, any thoughts in terms of how you think this plays out and just how this impacts your capital planning?
My best guess, without detailed knowledge, is we'll be back at our standardized floor, so you won't see any impact at all against us other than AOCI, which in the end is fine. I think we were at 8.7, including that at the end of the second quarter. Whether we ever use AOCI again or not, you know, is fine. We'll just, you know, we'll move where we have things in categories. I think we're fine either way.
Got it. And then, you mentioned 8.7% CET1, the factor in AOCI. Just how are you thinking about capital prioritization and, you know, is there a capital ratio you're targeting?
Sorry, I'm reading the results of your chart here.
That'll be the next question.
Okay.
Don't worry. We're going to have your comments on that.
You know, we've told you the same thing kind of forever, right? We use it organically first. We pay a healthy dividend. You know, we're a large capital generator, and at the margin, you know, we return capital to shareholders through buybacks. I said in the second quarter, and you know, we don't have any explicit plan on the table right now to do this, but at the pace we're generating capital against the pace we're seeing loan growth. I think you should expect at the margin, some conversation that at least part of that capital build over time would go back into buybacks. But nothing official yet. It's just logical. We generate a lot of capital. We don't have a lot of loan growth, and we're not going to buy something at a silly price. So ultimately, that leads to buybacks.
Interestingly, looking at that slide, it seems like the room is actually in favor of you acquiring additional banks. Maybe just talk to how you assess the current environment for bank M&A. Obviously, there's some regulatory uncertainties, but, you know, at what point do you think bank M&A makes sense?
First of all, I think we would be allowed to, but the much more important point is there's nothing of value out there that we want to. You know, we've looked at a lot of organizations, and increasingly, the deposit franchises of some of the smallish, not even smallish players, are becoming deteriorated as they're more and more hot money and brokered and high rate, and then the asset side of the balance sheet is getting, you know, over time, increasingly focused on CRE, both commercial and residential, and not really a lot of core clients. So it's really hard to make an argument that there's a huge amount of franchise value than what we see in the market today. I think the market will come to that conclusion at some point, and you know, we know how to...
You know, we can take a lot of money out, and so we know how to deal with those things, but it's not anywhere near today's price point.
I guess, would your preference be kind of in-market, out-of-market, more consumer-focused, because that desire to build that up? I guess, in terms of, you know, should properties come available at the prices that you're interested in, kind of where would your focus lie?
Without question, if I look at the, you know, the long game of PNC, I am absolutely convinced we can go into C&I markets and win our fair share, given our product delivery and our patience and the bankers we have. We need to make sure that we are creating a core deposit franchise to fund that in the long term. Today, we have that. But long term, that would suggest that we need to build our retail presence in our newer markets, pretty aggressively to keep pace with what I know we can do in the C&I side. You've seen, we've, you know, we made an announcement of, you know, over $1 billion in new branch build and refurbishment.
Most of those branch builds are going to gain, you know, towards the target of gaining substantial share in some of these new markets. And we'll just continue to do that. I mean, if on an IRR basis, when you look at our organic opportunity, versus what's out there to acquire, we're going to build the place, and I think we can.
Got it. In, I guess, on that LIBOR-related topic, I think earlier this year, you read or you wrote or I saw an interview, you, you're not shy about your kind of thoughts on scale and kind of the mega banks-
Yeah.
and how kind of banks of your size fit into the world. I guess, how do you kind of solve for that if you're kind of reluctant to maybe do acquisitions in the near term? I guess, how do you solve for that?
Well, welcome to my job. Look, the scale matters. I mean, it matters for us. We are at a point where we're not going to get smaller. We're not going to shrink ourselves to greatness. We need to grow. Now, we have an opportunity to grow. We know we can grow with our C&I franchise. We've just repeated it over and over again as we go into new markets. So the real issue is, can we grow deposit share at a pace when you see the two giant banks growing organic domestic share at a pace where they're growing a PNC every you know five or six years? We need to execute on that. I think open banking is going to allow us to do that.
We'll pull share out of smaller banks who won't have the technology to be able to take advantage of open banking. You know, they, they're doing this because they think they're going to switch lower switching costs. All they're going to do is drain local banks of accounts by big banks who have the technology, but importantly, we're not going to throw shareholder money out the window by buying an overpriced, busted franchise. Like, that, that's not an answer. We have to grow the place, and we think we can, and we have a plan to, and we'll invest into it.
I guess, on that notion, and you touched on it, but maybe delve more into it, you know, just the growth opportunity provided by the BBVA expansion market. Can you just give us an update on how things are progressing there and what's left to be done?
Lots left to be done, but you know, look, our branch productivity in the new markets, sales, deposit growth, you know, deposit growth is higher. Sales have approached the levels of our legacy markets, you know, inside it, I don't know, two and a half years at this point, two years, which is one of the things that gives us confidence to build the new branches into those markets, as an aside. In C&I, you know, we've grown sales compounded 30% last year. We're 30% year to date. You know, outright sales, new client numbers are about the same. Importantly, the fee percentage in those new markets is no different than what we're getting in our legacy markets, right?
So we're not going in and just saying, "Hey, give me a loan, so I show growth." We're actually cross-selling into those markets, same pace as the legacy markets. And, you know, that gives me high confidence that over time, you know, we can build franchise here, and be successful. I mean, right now, they're our growth engine. We'll have just as an aside, on a sales basis, we have one or two of those new markets that are approaching our largest markets, largest legacy markets, and my guess is within a handful of years, they'll blow past it in total revenue. That'll be two of the new markets.
Got a little bit of time left, so I'm going to maybe ask you some bigger picture questions while I got you-
All right.
Because I appreciate your thoughts. But we've seen some of the big bank peers kind of do these credit risk transfer transactions to offload some of the credit risks. What are your thoughts on that?
Look, going back to your former life, yeah, I might have invented that product. Look, it's in today's world, it's perhaps the cheapest way to create capital, but it's complete arbitrage. Presumably, you're not going to sell ... It's common sense, by the way. If you're actually executing that, and a professional risk taker is on the other side, you must presume that he's charging you more for the risk you're hedging than you would charge yourself internally, or you never would have made the loan. You'd never be in the business. This is a near-term Band-Aid to free up capital that you can double down and make the next mistake on.
Interesting. Maybe another bigger picture question. We recently saw one of your smaller regional bank peers announce a strategic capital raise from another-
Yeah.
Bigger northern bank. You know, kind of given your kind of comments earlier, is that something you think we'd see from others? And, you know, is that an alternative to traditional bank M&A, just given the regulatory economic backdrop?
I mean, look, as I understand the Canadian market, you know, high capital generation without high returns, so they want to put capital to work. And I guess if you get equity accounting and record it all on your, you know, 5% notion, it looks like a great return on capital. So I don't know. There might be a financial engineering reason why somebody wants to do that. I think for some of the regional banks, they may have to do it. I mean, it locks in their city. Yeah, I don't know that it solves anybody's problem long term on either side of the border, is, I guess, my blunt answer.
Got it. Any questions from the audience? About five minutes remaining. If not, maybe, Bill, maybe at a high level, obviously, a lot of uncertainties in the environment now, rates, economy, regulation, credit, election, and so forth. Why should investors get excited about PNC in this environment? And I guess maybe what excites you most about the future?
Look, for PNC, it's simple, right? We have a growth plan right in front of us. We're executing it. We don't need any magic to happen. We never got into any businesses that we now need to get out of. We like what we're doing. We've done it for a lot of years. We're doing it in new markets, and we're growing. You know, it's as simple as that. I mean, interest rate cycles come and go, the credit cycle will come and go. We're growing clients in fast-growing markets and doing so efficiently with a smart credit book and a lot of ancillary products that we generate fees from, and we'll keep doing that. That's the most exciting thing. I mean, you know, we're not making up stuff to grow. We're actually doing it the old-fashioned way with new clients and cross-sell.
And you know, that gets me excited. You know, some of the craziness in the near-term environment, you know, somebody wrote about us at one point, and it's true. No matter what happens, we're always going to be the bank that, at the margin, is just inside the hash marks. Irrespective of what happens on regulation or happens on the next credit crisis, that's just how we run the bank, because we don't have to stretch it at the margins. It's who we are, and it's who we will continue to be.
I guess, with that, I mean, have you noticed, I guess, any incremental changes in the competitive landscape? Bigger banks now opening branches, in your markets. Non-banks seem to be getting a bit more aggressive.
Yeah.
I imagine it, it's getting harder, not easier, to kind of keep that going.
The non-banks aren't a threat. For all the talk of private credit, they're playing in a space, at least today, that isn't the space we play in. And to the extent we want to keep clients that are going private, you've seen that we've introduced the TCW partnership to be able to do that. The big banks building branches in every city of America, long term, is a concern. I mean, they will, you know, each of them will have 33% retail deposit share, the two big ones, and we'll see what happens to Wells. Just because, you know, they have pretty good products, and they're going to be ubiquitous, and they're going to be everywhere, and they have big brands. So we need to fight that. That's my worry. Nothing else bothers me at all.
That's my worry, and I need to make sure that of all the five thousand other banks who are going to be drained by the giant banks, that we're doing our share of growth inside of that, and I think we can. We get there through a different in-market model, leading-edge technology, obsession about clients, and not being one of the big, bad guys. I think we can do that.
I guess in that vein, you kind of mentioned, you know, acquiring these smaller banks at these prices, you know, may not make the most sense. You know, how about a merger of equals? Clearly, you know, you're facing the same pressures other banks your size are.
Yeah.
You know, there's certainly synergies that could be derived. Your thoughts around that?
I think that one would be in the waiting room for the rest of our lives from a regulatory standpoint. You know, the more likely outcome, down the road at some point is that we would be able to do very efficient and very fast in-market small deals with really high cost takeout numbers. I think that's a more, where in that instance, your cost savings pay for the sins of the balance sheet.
Right. On that note, please join me in thanking Bill for his time today.