PNC Financial (PNC - Free Report) recently announced its plans to open 25 new branches in metropolitan cities. This news was reported by its chairman president, Bill Demchak on Wednesday, at the Barclays Global Financial Services Conference in New York. The bank has decided to set foot in the retail markets of Boston and Nashville, TN. Management further mentioned its plans for expansion in Dallas and Kansas City, MO, where the bank’s branches are already opening doors to the public.
Out of the top 30 markets, the bank has already branched out its operations to 22 from the previous 12, in two years' time. Notably, PNC Financial anticipates to expand its operations across all top 30 markets over the next two years. At present, the bank has two branches in Dallas, the count of which will likely be up to 15, in the near future.
However, given the pace of the expansion process, Demchak believes the company will meet its target in less than two years’ time.
Earlier, PNC Financial had no plans to open branches in new regions but with customers opting for digital banking services, it decided to upgrade existing branches with new technology and also expand in new regions. Also, other major banks, including Bank of America (BAC - Free Report) , JPMorgan (JPM - Free Report) and U.S. Bancorp (USB - Free Report) , are taking efforts to adapt to changing customer needs.
Nonetheless, PNC Financial has proposed to open new branches owing to a number of reasons. Per the bank, online registration sometimes becomes a lengthy process for clients, leading to losing out on customers. Thus, these branches will act more like a solutions center where Virtual Wallet account-related services will be offered, helping clients understand digital banking.
Notably, the latest branches in Dallas and Kansas City are garnering deposits “four to five times faster than a traditional de novo. They break even faster” per Demchak. Also, he noted that 85% of sales are not from customers going inside of the branch, it’s from PNC employees “going outside, moving into the community” and pursuing opportunities.
PNC Financial is shutting branches at a rate of 70-80 a year on one hand, and opening more digitally-advanced ones, on the other hand. This move will likely boost the bank’s profits as well as ensure customer satisfaction. Estimate of the related costs remain undisclosed.
PNC Financial remains committed toward developing its business through organic growth, with improving loan quality. The quality of its loans has improved, and the auto, credit and residential loans compounded around 10% over the past three years.
Overall, the company is on the path of expanding into untapped markets. Though its initiatives might include acquisitions, at the current stage, the bank is focused on organic growth, with rising loans and deposit balances boosting revenues. Additionally, PNC Financial continues to build its technology platform in order to serve clients better and stoke bottom-line growth.
Shares of PNC Financial have gained 16.3% on the NYSE compared with the industry’s rise of 17.2%, year to date.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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