PNC Financial Services Group, one of the fastest-growing banks in the United States, has reached a deal that is expected to make it the largest bank in Denver and add almost 100 retail branch locations to its footprint.
PNC agreed to pay $4.1 billion for FirstBank, a Lakewood, Colorado-based institution that is one of the largest privately held banks in the country. PNC plans to acquire about $26.8 billion of assets, such as loans and investment securities, as well as 95 retail locations in Colorado and Arizona. The sale is expected to close early next year.
Many of the largest U.S. banks are rapidly expanding their retail presence by opening new branches in large cities. Branches are seen as one of the best ways to add deposits, a low-cost source of funds for making loans. JPMorgan Chase, Bank of America and Fifth Third Bank are all opening hundreds of new branches nationwide.
PNC, based in Pittsburgh, is spending about $1.5 billion to open as many as 220 branches in a dozen markets it has identified with the best growth potential, including Houston, Atlanta and Miami. Denver is also a city that PNC has targeted for growth.
FirstBank, which also operates under the brand name 1stBank, has 82 retail locations in Colorado and 13 in Arizona, according to the Federal Deposit Insurance Corp.
The acquisition is expected to triple PNC’s presence in Colorado to 120 branches and make PNC the largest bank in the Denver area as measured by deposit market share, according to a regulatory filing.
FirstBank is heavily involved in lending for both residential and commercial real estate. About half of its $16 billion loan book is held in residential mortgages and home equity loans, and a third of the loan book is in commercial mortgages, according to PNC's regulatory filing on the acquisition agreement.
FirstBank’s “deep retail deposit base, unrivaled branch network in Colorado, growing presence in Arizona and trusted community relationships make it an ideal partner for PNC,” William Demchak, CEO of PNC, said in a news release from the bank.
In addition to Denver, FirstBank’s Colorado branch network is in Colorado Springs, Boulder, Fort Collins, Aspen, Breckenridge and other locations. Its Arizona branches are all located in the Phoenix area.
FirstBank also occupies office space in numerous buildings in Colorado and Arizona. Two of its largest office locations include 127,000 square feet at 12345 W. Colfax Ave. in Denver and 43,000 square feet at 10403 W. Colfax Ave. in Lakewood, according to CoStar data. PNC did not disclose its plans for FirstBank’s office portfolio.
For the record
Wells Fargo is PNC's financial adviser, and Wachtell, Lipton, Rosen & Katz is its legal counsel. Morgan Stanley and Goldman Sachs are FirstBank’s financial advisers, and Sullivan & Cromwell is its legal counsel.