PNC Expands Physical Branches to Maintain Market Share and Prepare for Future Consolidation
PNC Financial Services Group Inc. is actively increasing its physical branch presence to compete with larger US banks and anticipate potential consolidation among smaller competitors that could create rivals of PNC's scale.
The company aims to reach a branch share of 7-8% in key operating geographies. As of June 30th, its branch share in Houston stood at 5.7%, while Atlanta was at 5.3%, compared to 13.1% in its Pittsburgh home base.
Since 2024, PNC has opened 14 new branches as part of its plan to exceed 200 locations and invest $1.5 billion in branch expansion. Additionally, it acquired Banco Bilbao Vizcaya Argentaria SA's US business in 2021, adding nearly 600 locations.
PNC's geographic expansion has positioned it for faster growth in new markets compared to legacy areas. Despite this momentum, its deposit growth still trails competitors like JPMorgan & Chase Co. and Bank of America Corp.
CEO William Demchak emphasized the importance of scale and PNC's pursuit of organic growth and inorganic acquisitions. However, Demchak noted a lack of interest in mergers and acquisitions among regional banks with assets between $150 billion and $250 billion.
The lack of scale among smaller institutions limits their investment capacity compared to large institutions. Consolidation among smaller regional banks could create a potential competitor of PNC's size within five years, according to Demchak. However, Demchak believes larger banks would also expand their market share during this period.
Regarding succession planning, PNC recently announced the departure of president Michael Lyons. Demchak maintains that the company has ample talent and will not rush to fill the vacancy. He will resume oversight of primary operating lines, with regional presidents reporting directly to him.