Dive Brief:

• PNC reported profit of $1.83 billion for the first quarter of 2021, a 140% increase from $759 million over 2020's comparable quarter, the bank said Friday.

• A $551 million release of loan loss provisions buoyed that figure. That's more than double the $254 the bank released in the fourth quarter. The Pittsburgh-based bank had set aside $914 million in loan loss reserves a year ago, joining many banks as in preparing for loan defaults brought on by the impact of the coronavirus pandemic, as well as new accounting standards. The lender’s reserves stand at $5.2 billion. 

• The bank is on track to complete its $11.6 billion acquisition of BBVA USA by midyear, PNC CEO Bill Demchak said Friday on a call with analysts.

Dive Insight:

"PNC had a solid start to 2021. We grew revenue, managed expenses and achieved positive operating leverage," Demchak said in a statement Friday. "We recorded a substantial provision recapture, saw improvement in our credit metrics, and capital and liquidity are at record levels."

Planning for PNC’s pending BBVA deal saw "considerable progress," Demchak said, as the bank pursues its goal of building a "coast-to-coast national franchise." 

"The potential for cross-sell and for growth of new clients is phenomenal," he said. "And we're really excited by that." 

In preparation of the merger, the bank said it has established direct connections between PNC and BBVA’s data centers, and initiated test data transmissions and mapping, and conducted listening sessions with community organizations across the combined footprint.

Demchak said he thinks the current economic environment and demand for technology will give rise to more acquisition openings for the bank.

"I personally believe that we will see opportunities in smaller institutions, simply because of the massive shift in technology and the cost of technology that we've seen to serve customers," he said. "Low rates, not a lot of loan growth, and big technology costs are going to give us opportunities to continue to create scale." 

Asked whether PNC would ever consider offering Banking-as-a-Service (BaaS) as a cheaper method to acquire new customers, Demchak said BaaS was not part of the bank’s customer relationship strategy. He called the business model a "commodity provider industry" and "a disaster" for lenders who ultimately lose ownership of the customer.

"As the low-cost provider to somebody else who owns the relationship, you've just sold your soul to the devil," he said of the BaaS model. "It's the beginning of the end of your franchise in whatever space you're playing. We need to own the customer relationship and we need to deserve to own the customer relationship through an offering that doesn't need that fintech platform on the front end."