Dive Brief:
-
Pittsburgh-based PNC Financial Services Group reported profit of $1.39 billion for the quarter ending Sept. 30, a slight decrease of 0.7% compared with $1.4 billion last year.
-
The bank's revenue for the quarter was $4.49 billion, up 3% from $4.36 billion in last year's comparable quarter.
-
The bank reported total deposits of $285.6 billion, a 7.8% increase from $264.9 billion last year. PNC's branch expansion project helped boost deposit growth for the quarter, said William Demchak, the bank's chairman, president and CEO.
Dive Insight:
During the bank's earnings call Wednesday, Demchak discussed the regional bank's plans to open branches in new markets nationwide. So far, the bank has expanded into 10 new cities. And it rolled out a digital retail bank last year, as well as retail locations, or "solution centers," in Kansas City, Missouri, and the Dallas area.
"On the retail side, at this point, it's clearly a net investment, but what we would tell you is that the solution centers we're building are breaking even probably a bit faster than a traditional de novo branch, even though they are paying and affect market leading rates," Demchak told analysts.
In some cases, the deposit growth rate for new branches is as much as five times higher than what the bank typically sees, Demchak said.
"That whole investment on the retail side, at this point, is an investment and is a net drain," he added. “But it is something long term, and I think it's important for our franchise."
The market expansion also gives the bank a degree of confidence when faced with market volatility as it heads into 2020, Demchak said.
"We've been able to grow in effect by pulling share in newer markets, without having to push on credit risk or other levers," he said. "And importantly we've been able to grow fees, concurrent with growing clients. So I think that will continue."
For the overall economy, Demchak said he believes the consumer is holding steady as manufacturing weakens.
"We'll see how long that is sustainable," he said.
