In the era of fintech and neobanks, an old-school financial playbook is being dusted off: Pittsburgh-based PNC is trying to build a coast-to-coast US bank for the first time since the 1990s acquisition spree that created Bank of America.
PNC’s $4.1 billion deal this week for Denver’s FirstBank is the start of an expected wave of sizable deals consolidating the country’s 4,500 banks. After being shut out of the bidding for First Republic in 2023 — a wound that CEO Bill Demchak has nursed for two years — he’s back with a deal that puts the industry on notice.
“Our first priority is organic growth,” Demchak’s No. 2, Mark Wiedman, told Semafor, “and yes, M&A is an essential part of the toolkit.” (He had a copy of BankTown, which chronicles Bank of America’s consolidation, on his desk.)
PNC is forecasting a 25% return on the deal, figuring it can turn FirstBank’s customers into private-bank clients and commercial borrowers. “An acquirer that knows what it’s doing, and even pays a rich price, can actually make a lot of money,” Wiedman said. “That’s going to be a signal to the marketplace both with our strategy, but I’m sure others will observe as well.”