PNC doubles its branch expansion plan

PNC Financial Services Group, which announced a major expansion of its branch network in February, now says it will build double the number of locations it previously planned in a bid to add scale and drive higher returns.

The superregional bank will spend an additional $500 million to build more than 100 branches in Atlanta, Charlotte, Orlando, Phoenix, Raleigh and Tampa, and renovate 200 existing locations around the country over the next five years, executives announced Friday.

That’s on top of the Pittsburgh-based company’s previously announced $1 billion plan to open 100 new branches in Austin, Dallas, Denver, Houston, Miami and San Antonio, and renovate more than 1,200 others.

PNC will build 40 branches in Miami, rather than the five it originally planned, due to “strong success” with the branches it has already opened in that market, a company spokesperson said in an email Friday. Miami is one of the fastest-growing cities in the country.

“As we’ve said many times, scale matters more today than ever before in banking,” PNC President Michael Lyons said Friday at the BancAnalysts of Boston conference. “So our focus is squarely on profitable and responsible growth, not shrinking or divesting.”

PNC is the eighth-largest banking company in the United States, with assets of $564.9 billion. Its branch network is the nation’s fourth largest, topping 2,200 locations across 29 states.

PNC’s announcement “reinforces the importance of scale in an industry dominated by a handful of existing, and a couple of emerging, national players,” Scott Siefers, an analyst at Piper Sandler, wrote in a research note.

Competitor JPMorgan Chase, the nation’s largest bank by assets, has been on a years-long branch expansion journey and is currently in the midst of opening more than 500 branches and renovating about 1,700 existing offices by the end of 2027.

Much of PNC’s recent growth is due to acquisitions, most recently its 2021 purchase of the U.S. arm of Spanish giant Banco Bilbao Vizcaya Argentaria. The acquisition of BBVA USA added offices in seven states — Texas, Alabama, Arizona, California, Florida, Colorado and New Mexico.

How the mergers-and-acquisitions environment in banking will unfold under a second Trump administration remains to be seen. Bankers are hopeful that friendlier regulators will lead to more M&A deals, including larger deals, which were largely stagnant during the Biden administration.

At PNC, the organic growth strategy is taking precedent over acquisitions, at least for now, Lyons said. 

While organic growth requires spending and can take more time than mergers and acquisitions, “when done right, it comes with very attractive returns that are much higher” than what banks can get through M&A, he said. Secondly, it offers banks more control, he added.

“We get to choose the employees who work for us, the clients we bring on and the assets that we put onto our balance sheet,” he said.

Echoing comments that PNC Chairman and CEO Bill Demchak made during the company’s third-quarter earnings call, Lyons said that “current valuations of well-suited targets” are beyond what PNC thinks they’re actually worth.

Demchak told analysts on the October earnings call that certain potential M&A targets “just don’t pencil out when you look at their balance sheet and the amount of investment we have to put in the franchise, and just the time sink it takes to do it.”

Although the company doesn’t “see a logical deal in the near term,” it isn’t ruling out merger-and-acquisition opportunities, Lyons said Friday.

“Our pursuit of organic growth doesn’t preclude us from doing a strategic acquisition at an attractive price if one happens to materialize,” Lyons said. “We’re just not going to sit around waiting for that to happen.”