PNC Financial Services Group plans to close another 19 branches, including two in the Philadelphia region, marking the bank's biggest consolidation effort so far in 2020.
According to a Feb. 14 filing with the Office of the Comptroller of the Currency, PNC (NYSE: PNC) intends to shutter its location at 4753 N. Broad St. in Philadelphia and 1114 W. State St. in Media. Those branches are among five in Pennsylvania that are on the chopping block.
So far in 2020, PNC has filed with the OCC to close 31 branches footprint-wide, after shuttering more than 80 last year.
PNC, Philadelphia's third-largest bank by deposits, said it has typically consolidated 80 to 100 branches annually over the past few years, in large part responding to customers’ changing preferences as they shift increasingly to mobile and online transactions.
All told, PNC had 2,398 branches, 131 of which were within the immediate eight-county Philadelphia metro area, as of June 30, 2019, the end of the Federal Deposit Insurance Corp.’s fiscal year.
Since the start of the new year, applications to add two new ones have been approved. Called solution centers, the sites are in Boston and Houston. PNC has said it plans to open 20 branches in new markets this year.
PNC appears to be using a similar retail strategy of other big banks. For example, JPMorgan Chase & Co. in 2018 announced plans to add 400 branches in new U.S. markets over the next five years. That includes a planned 50 in Philadelphia and Boston and 70 in Washington, D.C. But it is also cutting locations and jobs in its more established markets.
PNC has also been moving into new markets such as Boston, Nashville, Dallas and Kansas City with a plan to target corporate customers. What was originally supposed to be a national digital retail expansion added a brick-and-mortar component.
The reason for this broader strategy is simple. Big banks do not need as many branches in markets where they are already established due to the emergence of online and mobile banking. So they are trimming their brick-and-mortar footprint in those markets and reinvesting the money being saved into either technology improvements and/or branches in markets where they don’t currently have retail locations.
In an interview with the Pittsburgh Business Times last September, PNC Chairman and CEO Bill Demchak said “branches matter.” The newest branches, in Dallas and Kansas City, are garnering deposits “four to five times faster than a traditional de novo. They break even faster.” He added that 85 percent of sales are not from customers going inside of the branch, but rather from PNC employees “going outside, moving into the community” and pursuing opportunities.