PNC Financial Services (PNC) yesterday announced that it will close down 22 of its Cincinnati branches in February 2010, with the accounts at those branches being moved to the nearby National City branch due to the significant overlap in the region.
Almost all of the workers at the 22 branches being closed are expected to be retained by the bank and redeployed into other locations. Of the 22 branches being closed, PNC Financial owns some and leases others. The bank will put some of the properties on the market to be sold. The locations include Hamilton, Butler, Warren, Clermont and Boone counties.
PNC Financial began the first branch conversion in November by transferring 1.8 million customers and renaming 240 branches in Pennsylvania, Ohio and Florida. National City branches in northern Ohio and Michigan will be converted in April 2010. Once the conversion is complete, 4.8 million customers and 1,340 branches will convert to PNC Bank from National City. The transfer is part of a two-year integration plan PNC Financial announced when it bought National City.
PNC Financial was already one of the leading bank wealth managers in the country. The acquisition of National City in December 2008 has clearly strengthened that position further created significant growth potential in new high-net-worth and institutional markets. The acquisition has led to an increase in deposit base along with providing a larger distribution platform for cross-selling the company’s products and services. The integration of National City is on track and has already been accretive to earnings. Cost savings from the acquisition have been more than expected, and management expects opportunities for further growth by expanding the highly successful referral process in new territories.
However, in recent periods, National City’s results had been impacted negatively by a significant amount of asset impairments. The combined results following the acquisition will depend on management’s ability to handle these assets, which require special servicing and management oversight, including disposition if appropriate. As the integration process develops, management may identify other issues with respect to National City’s asset valuation or accounting procedures that may lead to further impairments or write-downs.
National City’s pre-acquisition financial performance, resulting stock price performance and other pre-acquisition activities have led to several lawsuits and governmental investigations and more may be commenced in the future. As a result of this acquisition, PNC Financial now bears the risks associated with lawsuits and governmental investigations, which might have an adverse bearing on the stock of the company.
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