When PNC Financial Services Group combines with National City Corp. next year, the Pittsburgh area will still have about 9,000 jobs between them, analysts said Monday. They just won't all be the same jobs and the same people.
Many of their branches will be sold to other banks, which would likely hire National City or PNC workers, said the analysts. Other National City workers might transfer to Pittsburgh to process the transactions that will come with the acquisition.
PNC announced the buy of National City, the nation's eighth-largest bank, on Friday for about $5.6 billion in a government-assisted merger. Cleveland-based National City has about $98 billion in deposits, compared with $82 billion of PNC.
"Pittsburgh won't lose jobs in this," said PNC Chief Executive James Rohr after the deal was announced.
Rohr said PNC will not retain all of National City's 158 branches in the seven-county Pittsburgh market. But he declined to say how many would be added to PNC's 96 branches here.
"We will consolidate some branches and sell a few," said Rohr. "We'll have some time to do that."
PNC spokesman Fred Solomon said yesterday that the bank will spend the next 23 months evaluating National City branches and other assets, and then integrating the two organizations.
PNC can finance the deal from the $7.7 billion it's getting for selling preferred stock to the U.S. Treasury. It is part of the government's $250 billion program to stabilize the nation's banking system, including support for acquiring troubled banks such as National City.
The future is less clear for National City's non-branch workers. About 250 of the bank's area employees work at the regional headquarters on Stanwix Street, Downtown. Many others -- the bank won't say how many -- work at Allegheny Center on the North Side in mortgage, human resources, security and other bank operations.
PNC would not say whether, or to what degree, PNC might ramp up its mortgage business by adding National City's home-mortgage business. Currently, PNC only writes such loans for the customers in its branches.
Analysts believe PNC will need to sell branches because it would control too high a concentration of deposits -- nearly 53 percent -- in the seven-county region. According to the Federal Deposit Insurance Corp., PNC now has 37 percent, and National City, ranked second, holds 15.5 percent.
"That's a huge concentration to have that much pricing power," said Derek Ferber, a research analyst with SNL Securities, Charlottesville, Va. "To acquire the No. 2 bank and push it to almost 53 percent is going to set off an alarm to regulators that PNC is going to have to divest some deposits."
Federal Reserve rules say 35 percent is generally the limit for deposit concentration.
Several banks are interested in branches PNC will put on the block, said Robert Wagner, senior vice president of securities firm Ferris Baker Watts' office in Mt. Lebanon. He singled out Fifth Third Bank and First Commonwealth Bank, among others.
"That would be one of the alternatives we would consider for enhancing our presence in this market," said Fifth Third Bank's Western Pennsylvania market President James "Jay" Ferguson III. Based in Cincinnati, Fifth Third has 13 branches in this region.
"Our ideal structure would be 45 to 50 branch locations here over the next four years," said Ferguson.
First Commonwealth, based in Indiana, Pa., in fact, filed a shelf registration yesterday to sell $100 million in common stock. Proceeds will be used, in part, "to support the continued growth" of the bank, it said. A bank spokesperson could not comment, citing securities regulations.
Huntington Bancshares Inc. of Columbus, could buy branches from PNC. Huntington, which has nearly 30 branches in Allegheny, Washington and Westmoreland counties, "is always looking for ways to increase customer convenience," including addition of branches, said Vincent Locher, president of Huntington Bank's Pittsburgh market.
Other analysts wonder if bank regulators will enforce antitrust guidelines very much, given today's financial crisis, and instead allow higher deposit concentrations than in the past.
"I think some of the old guidelines of antitrust and market concentration have kind of taken a back burner," said Frank Barkocy, research director of Mendon Capital Advisors, N.Y.
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