PNC Financial Services Group Boosts Branch Investment To $2 Billion
The Pittsburgh-based PNC Financial Services Group has announced its plans to invest $2 billion in the expansion of its branch network by 2030. The decision aims to bolster the bank’s presence in its current operational markets, primarily focusing on regions exhibiting rapid growth. This strategic move aligns with the bank’s continuing efforts to integrate its latest acquisitions while simultaneously focusing on organic growth.
Details of PNC’s Expansion Plan
PNC’s expansion strategy includes the addition of 300 new branches in high-growth markets, doubling its initial goal of adding 100 branches announced at the beginning of 2024. According to Alex Overstrom, the head of retail banking at PNC, the bank is targeting a 7% local branch share, at which point growth “really accelerates”.
Overstrom further explained that this strategy is not primarily about adding new markets to PNC’s map but rather about bulking up in the regions where PNC is already operational. “We like the opportunity in the markets we’re in,” he said. “What you saw in the announcement today is really us bringing a lot of those markets … to the degree of scale we think is opportunistic to accelerate our growth.”
The Strategy at Play
The bank’s expansion strategy includes increasing its presence in Nashville and Chicago with a combined 60 new branches. In addition, it plans to establish 40 new locations in cities across Florida and North Carolina. These two states are known for their stiff bank competition and rapid growth in local economies.
It’s worth noting that PNC is not alone in its pursuit of growth in these regions. Many financial institutions have launched aggressive strategies to add branches in the Southeastern and Southwestern states in response to the growing populations in these areas. Some of these banks have even announced plans to use acquisitions to expand their footprints.
PNC’s Dual Approach
PNC is taking a dual approach to growth by both expanding its branch network and making strategic acquisitions. In September, PNC announced its decision to buy FirstBank Holding Company in a deal valued at $4.5 billion. This acquisition will significantly boost PNC’s presence in Colorado and Arizona, effectively accelerating the bank’s growth in these markets.
Following the FirstBank deal, PNC has also targeted organic growth across Texas and several Southeastern states. In these regions, PNC expanded its footprint in 2021 with the purchase of BBVA USA. However, PNC’s CEO Bill Demchak has tempered speculation about any further acquisitions following the FirstBank deal.
The Impact on Legacy Markets
As PNC boosts its presence in high-growth regions, it is simultaneously reducing its footprint in legacy states such as Pennsylvania, Ohio, New Jersey, and Michigan, which are experiencing less economic growth. Over the past seven years, PNC has decreased its overall branch network by 200, closing approximately 700 branches in its legacy markets while adding about 500 locations in growth markets.
With more than 40% of the company’s branches now based in “fast-growing expansion markets,” PNC expects this brick-and-mortar buildout to increase its retail deposits by at least $20 billion, or roughly 10%, according to Overstrom.
The bank also plans to add 2,000 more employees to support its expansion. However, Overstrom also noted that PNC has reduced its operational and middle-office workforce by the same amount in the last two years due to automation and efficiency efforts. “We want to invest to grow,” he said. “And we think it’s really important to do our part to self-fund as much of that investment as we can through automation, through technology and just sort of rigorously running the business every day.”
This article is based on the information provided by American Banker. You can read the original source Here.
