The combined BB&T and SunTrust Banks will soon overtake PNC Financial Services Group as the nation's sixth-largest bank, but that doesn't seem to faze PNC Chairman and CEO Bill Demchak.
Demchak said Wednesday that the Pittsburgh company has no interest in acquiring another bank to gain scale and that it will stick to its strategy of pursuing growth through expanded lending and brach openings in new markets.
"We certainly don't need to buy something today to execute on what we're trying to accomplish," Demchak said at the Barclays Global Financial Services Conference in New York. "In fact, if we bought something today it would make it harder not easier."
BB&T and SunTrust expect their deal to close by the end of the year. The combined company, to be called Truist Financial, will hold an estimated $453 billion of assets, pending likely branch divestitures to gain regulatory approval. PNC has $406 billion of assets.
Demchak did not comment specifically on BB&T and SunTrust during his appearance at the Barclays conference. Asked why PNC is not interested in acquisitions, Demchak said that large banks come with too much execution risk and smaller banks are overpriced.
"The small banks ... they're just wildly mispriced for what it is we would end up wanting from them," Demchak said. "We don't want their balance sheet. We want their deposits and they're trading at two times book [value], so they just don't work for us."
PNC will continue its expansion strategy of opening branches across the country, Demchak said. So far this year it has added new branches in Overland Park, Kan., Kansas City, Mo., and Plano, Tex., a Dallas suburb. PNC has about 2,400 branches in 20 states and the District of Columbia and eventually wants to have a retail branch in all large metropolitan markets.
Two of PNC's larger rivals, JPMorgan Chase and Bank of America, are also adding branches in new markets and Demchak said that PNC has to employ a similar strategy in order to keep up.
"In Pittsburgh we have BofA and JPMorgan building branches. And, by the way, they will get share," he said. "If all I did was try to defend the markets that I'm in today ... my growth opportunity shrinks."
He added that PNC is " wreaking havoc in Dallas," where BofA and JPMorgan Chase have the No. 1 and No. 2 market share. "That's a lot of fun," he said.