PNC Bank hits five-year mark in Houston, plans more growth for next five years - Houston Business Journal (2024)

In just over five years, PNC Bank has gone from entering the Houston market for the first time to being the fifth-largest bank in the region, based on local deposits. That's just the start of its growth here in Houston, the bank’s local leader said.

PNC Bank, the subsidiary of Pittsburgh-based PNC Financial Services Group Inc. (NYSE: PNC), expanded to Houston in 2018, hiring Julie Young Sudduth as regional president in July of that year. When the bank entered the market, it planned to leverage its corporate banking services and build upon its local energy practice to start growing locally, Sudduth told the Houston Business Journal. PNC planned to follow that with a branch-light retail bank expansion and aimed to phase in each of its business lines over a 10-year period.

That all changed with PNC’s acquisition of Houston-based BBVA USA Bancshares.

PNC announced its plans to acquire BBVA USA Bancshares and its Birmingham, Alabama-based subsidiary, BBVA USA, from Spain-based Banco Bilbao Vizcaya Argentaria SA (NYSE: BBVA) for $11.6 billion in November 2020. The acquisition closed in June 2021, and conversion of BBVA’s customers to PNC was completed in October 2021. The deal caused PNC’s Houston deposits to skyrocket from $25.45 million to $11.28 billion between 2021 and 2022 and gave the bank a substantial retail footprint in the region.

For the past two years, Sudduth said PNC’s focus in Houston has been to deepen existing relationships — especially those which came to the bank via the deal with BBVA — and build new relationships. The BBVA deal allowed the bank to add products and services locally at a quicker pace than originally intended, but that has also allowed the bank to capitalize on opportunities to cross-sell to its clients and serve more of their banking needs.

“It was an important milestone for PNC in Houston,” Sudduth said. “From that point, it supercharged our growth.”

How PNC Bank grew in Houston in 2023

As banks experienced significant deposit flights in 2023 thanks to rising interest rates and regional bank failures in the early half of the year, PNC prioritized growing noncredit income streams in Houston, Sudduth said.

Because of that, the bank had a number of bright spots in 2023 — even in the face of local deposits decreasing over 14% between June 2022 and June 2023. PNC’s local treasury management group grew revenue by over 100%, its capital markets team had a record year in revenue, and the bank continues to grow its commercial team, which works with businesses with between $5 million and $50 million in annual revenue.

In 2023, the bank also repurposed some of its existing office space in its Houston headquarters at 2200 Post Oak Blvd. in the Galleria area. PNC converted some of the space to create larger meeting rooms to accommodate larger teams and additional training. The bank also added two employee resource groups last year, and it plans to add two more in 2024.

On the deposit side, Sudduth said she doesn’t focus on growing PNC’s local deposits as much as she prioritizes adding more households and relationships to the bank. With that will come additional deposits — as well as opportunities to grow other lines of business — but she said the bank has a lot of room to grow given its relative youth in the market.

“As we continue to build brand awareness and acquire new households, I know that our deposit share will increase,” Sudduth said.

How PNC Bank plans to grow in Houston in 2024

Now that the bank has hit five years in the market, Sudduth said PNC is at an inflection point and is preparing to go on the offensive in Houston over the next five years.

The strategy won’t necessarily differ from the first five years, she said, as the bank will continue to focus on deepening existing client relationships and adding new clients to PNC. The bank also has some clear objectives in the market, such as to invest in its treasury management platform, build out its asset management group and add digital tools for its clients.

PNC doesn’t plan to open new retail branches in the Houston market in 2024, but the region has largely been spared from the bank’s plans to consolidate its footprint in other markets around the country. Sudduth said the BBVA acquisition gave PNC a retail footprint that would have taken decades to build from the ground up, so the bank feels as if it already has an optimized local branch network. Additionally, PNC is focused on increasing its digital offerings alongside its physical presence.

“We know the branch is still really important, but we also know that customer needs are changing and evolving,” Sudduth said. “We're trying to give the best of both worlds to customers and have a really efficient, strong network of local locations, but also have (digital) channels that can serve customers effectively.”

Ultimately, Sudduth said she is encouraged by the growth PNC has seen in the Houston market over the past five years, and she said that growth lays the foundation for the next chapter of the bank’s development locally.

“I think we’re uniquely positioned to make strategic investments over the next five years (in Houston) as you’ve seen us do in the first five years of operating in the market,” Sudduth said. “Houston represents a big growth opportunity for us."

PNC Bank is No. 5 on the HBJ's 2023 Largest Houston-Area Banks List, based on its $9.69 billion in local deposits as of June 30, 2023.