Dive Brief:

• Aided by a boost in loans, PNC Financial Services Group reported profit of $1.38 billion for the quarter ending Dec. 31, an increase of 2.2% from $1.35 billion in 2018’s comparable quarter.

• The Pittsburgh-based bank’s loan portfolio grew 6% to $239.8 billion during the quarter. The bank’s commercial lending unit accounted for 67% of total loans during the period.

• "PNC delivered excellent results in 2019 against the backdrop of continued change across our industry,” Bill Demchak, PNC's chairman, president and CEO, said in a statement. “Earnings per share increased and we generated record revenue and positive operating leverage for the year.”

Dive Insight:

PNC had a strong 2019, closing out the year with record revenue of $17.82 billion. The bank’s total revenue for the quarter was $4.61 billion, an increase of 6.2% from 2018’s comparable quarter. 

The bank’s expansion into new markets represents a “healthy percentage” of PNC’s loan growth, “far outpacing the legacy books,” Demchak said Wednesday during a conference call with analysts. ​

PNC has expanded into 10 cities, in addition to rolling out a digital retail bank in 2018.

When asked about the bank’s strategy for winning customers in new markets, Demchak said the bank relies on a number of factors, including community involvement, a regional president model and its products. 

“We show up in a market, we get embedded in the community and centers of influence, we go in with our foundation,” he said. “We pick the clients we want to cover and bank long term, and we’re very patient. We will call on them for two and three years before we get a shot on goal. When we get that, our products are very good. Particularly in comparison to some of the smaller in-market players.”

Demchak said it’s a strategy the bank has deployed going back to its 2011 acquisition of the Royal Bank of Canada's U.S. retail business. 

The $3.45 billion deal, which at the time made PNC the fifth-largest bank in the U.S. by branches, allowed PNC to expand into the Southeast. 

“It works. We use the same playbook in each market we go into. We talk about breaking even inside of three years, and we’ve been able to do that,” he said.

Demchak credited market expansion for the 7.8% growth in deposits the bank reported last quarter.

Meanwhile, branch consolidation will likely become "more aggressive" in markets in which the bank is already established, Dawn Fabian, PNC's retail transformation manager​, said in November. The bank expects to consolidate 80 to 100 branches per year over the next five years​, she said.