PNC CEO Bill Demchak on Friday sought to distinguish the Pittsburgh-based lender as a national bank, not a regional one, asserting that the latter category faces a stiffer challenge.
“A regional bank that’s trying to protect its moat in a shrinking market, as the large banks and PNC come into their market, is a tough place to be,” Demchak said during the company’s fourth-quarter earnings call.
The distinction between national and regional lender “is as much aspiration as it is where we are from the starting point,” Demchak said of PNC. “We are national in terms of our presence, both with [corporate and institutional] and retail.”
“To succeed, particularly with a retail platform, you have to have a national and ubiquitous presence and share in each market that allows you a fair fight,” he said.
Demchak frequently beats the scale drum: He’s been outspoken about the need for scale to compete with the likes of JPMorgan Chase and Bank of America, and he’s determined to double PNC’s size. In banking, economies of scale matter more than ever before, he’s told regulators.
On the regulatory front, banking agencies seem amenable to regional banks getting larger, as evidenced by acquisition approvals such as, most recently, the Fifth Third-Comerica deal.
PNC made its own acquisition – which closed this month – absorbing Colorado lender FirstBank for $4.1 billion. The transaction will triple PNC’s presence in Colorado and expand it in Arizona. The Pittsburgh-based bank is also spending about $2 billion to build new branches and refurbish others as part of its push to gain share in various markets.
PNC had $573 billion in assets as of the fourth quarter; the FirstBank acquisition pushes that figure to $590 billion, the Federal Reserve noted in its approval of the deal. With that bank purchase, PNC “effectively bought Colorado,” Demchak said in September.
As bigger banks push into expansion markets and digital capabilities allow lenders to serve customers anywhere in the U.S., “I don’t think anybody has an ability to defend home turf,” Demchak asserted.
He noted that the nation’s largest banks, plus PNC “and at least one other of the smaller banks in the country,” are establishing branches in new territory, and said, apparently to smaller lenders, “We’re coming into your market.”
“If you’re not coming into our market to come fight us, we’re coming to your market to come fight you,” Demchak said. “And we’re going to get some percentage of your market, as is JP[Morgan Chase] and BofA. … if you’re not growing, you’re shrinking.”
“Long-term survivability, at least in our view, is dependent on the ability to take the fight to all the markets in the U.S. and win,” Demchak said.
Demchak, however, made a distinction between the largest banks and PNC when it comes to technology spending. In wealth, retail and C&I, PNC’s tech spending and core infrastructure are at least on par with competitors, and the bank has a competitive product set, he said.
But “some of our larger friends who’ve reported so far, they could choose to go build another Visa or Mastercard, or Stripe, or Shopify,” he said. “They could choose to build a whole other business inside of their existing operating platform, where what we’re doing with our tech spend is optimizing the businesses we’re in today. I think that’s the big difference.”
It should be noted that, by asset size, PNC is slightly ahead of Truist. But Citi and Wells Fargo – each hovering around $2 trillion in assets – are roughly four times PNC’s size, while Bank of America has more than $3 trillion in assets.
PNC spends about $3.5 billion on technology and that’s set to increase about 10% this year, with AI spending being about 20% of that, the CEO said.
The bank expects to generate cost savings through automation, some of which is related to artificial intelligence, he said.
Headcount is one area that becomes apparent. “The most obvious example there is simply using agentic AI for coding,” Demchak said. But even more comes from contract savings in tech, as the bank shuts down old systems and rolls in new ones, he added.
Automation in retail and customer care center operations resulted in 30 points of operating leverage between 2022 and 2025, and executives anticipate even more to be gained through 2030 with the use of AI, Demchak said.
“We have 171 different opportunities outlined and $1.4 billion of total addressable spend that we’re able to go after and through,” he said. “We’ll use the term AI, but I just think of it as the same march that we’ve been along with automation that has given us all those efficiencies between [20]22 and [20]25.”
