PNC to shut 200 branches as part of $700 million in cuts
PNC Financial Services Group disclosed plans on Tuesday to close about 200 retail branches this year as part of a plan to reduce expenses by $700 million in a tough operating environment for banks.
PNC spokeswoman Amy Vargo said it is too early to say how many Pittsburgh-area branches and jobs will be eliminated.
PNC has about 2,900 branches in 19 states and 170 branches in Western Pennsylvania. It closed two branches last month — in Freeport and Mt. Lebanon.
The news from PNC follows cost-saving moves by other banking giants in recent months as they try to cope with the challenges of a sluggish economy, the cost of complying with new regulations, and thin profit margins from lending in the low interest-rate economy.
Last week, for example, JPMorgan Chase said it would slash 17,000 jobs by the end of 2014, or 7 percent of its 259,000-person workforce.
The planned closings by PNC were announced by the Pittsburgh bank's president, William Demchak, at a conference for industry analysts in Boston. Demchak was chosen last month to succeed James Rohr as the bank's chief executive in April.
In mid-January, Rohr said PNC's goal is to slash expenses by $700 million this year. The bank closed 65 branches last year. It employs 56,285 people. Banks have been pushing consumers to conduct business online, on mobile phones and at ATM machines.
Demchak, who joined PNC in 2002 as chief financial officer, said PNC doesn't need as many branches because a growing portion of its customers rarely visit them.
“We're serving two demographics today,” those who visit branches and those who don't, he said. “We need both of those customers and have to figure out how to serve both of those customers without alienating either one.”
Transactions at branches cost much more to process than at automated teller machines, on mobile devices or through a telephone banking center. A check deposited via an image sent from a mobile phone costs $3.88 less than a check deposited at a branch, Demchak said.
PNC earned $664 million in the October-December quarter, or 47 percent more than the $451 million it reported in the same period a year ago. However, the bank's earnings for all of 2012 fell 5.5 percent to $2.83 billion from $3 billion a year earlier.
PNC hopes to increase revenue this year by ramping up cross-selling efforts, especially in its wealth-management business and in the Southeast, a market PNC entered last March with the purchase of 400 branches from the Royal Bank of Canada.
Demchak said PNC has “a huge opportunity in a great market” in the Southeast, in terms of adding residential mortgages, asset management customers, and commercial and industrial loans.
Thomas Olson is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or firstname.lastname@example.org.