Robert Q. Reilly, CFO of PNC Financial Service Group Inc (PNC), said the company is focusing on under-penetrated markets and growing its fee income businesses as goals for the long term. He was speaking at the 33rd annual BancAnalysts Association of Boston Conference at the Langham Hotel.
PNC is a top 10 U.S. bank, with deposits of $226 billion and assets of $334 billion, making it the seventh-largest wealth manager in the country, according to rankings compiled by SNL DataSource. The company has a footprint that covers nearly half of the U.S. population, and its focus going forward is on growing its Southeast and Midwest assets to match its legacy locations in the Northeast.
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“PNC is focused on the things we can manage,” said Reilly. He cited growing loans that reflect the bank’s risk appetite and controlling expenses as keys to that strategy, adding that PNC’s year-to-date performance is in line with expectations. The company reports second quarter to third quarter revenue growth of 1%, with noninterest income growth of 3%. The Q3 noninterest income is 45% of the total revenue, Reilly said.
The PNC strategic priorities include increasing client investment assets and deepening relationships with those clients, Reilly said. The total client assets at the bank are now $302 billion, up 9% year over year from September 30, 2013, he added.
PNC has been revamping its retail banking model, using less physical space and more technology at its locations. Reilly said 200 branches will be converted to its new retail banking model by the end of the year.
Reilly mentioned the Southeast as a particular area of growth opportunity. The company acquired the territory when it purchased RBC Bank USA two and a half years ago. “We now have 6000 employees in the market,” said Reilly, noting brand awareness is up in the new region. Southeast sales have a 20%-plus CAGR from 2012 to 2014, while Midwest sales have 8%-plus CAGR from 2009-2014, Reilly said.
To expand its fee-based businesses, PNC is seeking to grow its customers, deepen relationships with existing clients and generate new relationships, Reilly said. It is already providing noninterest income in consumer services, corporate services, residential mortgages, service charges on deposits and asset management.
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