Here's what a First Republic buy would mean for PNC

PNC has not commented on whether or not it intends to purchase San Francisco's First Republic Bank despite the fact that the FDIC deadline for bids expired at noon on Sunday.

According to multiple reports by the Wall Street Journal, Reuters & Bloomberg, JPMorgan Chase & Co. and Pittsburgh's PNC Financial Services Group Inc.

U.S. Bancorp and Bank of America Corp. are also potential buyers.

No one is talking.

Federal Deposit Insurance Corp. may make an announcement late Sunday.

If PNC were to be the buyer, the bank would continue the structure that it has been building for nearly two years in California, and add its wealth management division, which was appointed in San Diego in early 2023.

According to Federal Deposit Insurance Corp. data on deposit market shares for the fiscal period ending June 30, 2022, First Republic was California's fifth largest bank. Stock prices began to drop from $115 per stock on March 8, as Silicon Valley Bank and Signature Bank failed.

First Republic, a subsidiary of First National Bank, received $30 billion in deposits from 11 banks on March 16, including $5 billion by Chase and $1 billion by PNC.

First Republic claimed that there had been no deposit run. First Republic revealed on April 24 that after SVB and Signature failed, customers had withdrawn more than $100,000,000 in deposits. First Republic shares dropped steadily from $15 on Monday to $3.51 at the end of trading on April 28, as rumors swirled about regulators seizing the bank.

PNC is the No.6 bank in terms of assets nationally. The regulatory environment has been hostile to acquisitions. In a situation such as this, in order to avoid a failure of a bank, buyers are welcomed. The San Francisco Business Times (a sister publication) pointed out that a deal could include government aid to absorb some losses on First Republic’s balance sheet.

PNC has a network of 60 branches or so in California, thanks to its acquisition of BBVA USA Bancshares by 2021. Bill Demchak has repeatedly emphasized that California offers 'enormous opportunities' for PNC. BBVA, on the other hand, underperformed. He said that BBVA's underperformance was due to the fact that they did not have products and services for the corporate community.

Demchak saw the opportunity in corporate banking, treasury and hiring experienced bankers.

PNC is known for buying banks that are in trouble or are deemed to be underperforming and then leveraging cross-selling of its products and service. After almost 10 years of not acquiring anything, PNC completed its $11.6 billion acquisition of BBVA USA Bancshares in 2021. This purchase took PNC from coast to coast via the southwest.

First Republic will essentially double the number of PNC branches in California. Some minor overlap may occur. Around 60 of First Republic’s 80+ branches, or about three-fourths are spread across the state. Thirty are in San Francisco. The bank would be able to draw on local talent with a strong community connection. PNC has appointed regional presidents for key metros throughout California, including San Diego and Greater Los Angeles.

First Republic has a reputation for targeting high-net worth individuals, which is a market that any large bank would love to tap into. First Republic's national footprint covers eight states, including high-income communities like Beverly Hills and Palm Beach in Florida. Emily Bouchard was appointed as the new director of PNC Hawthorn Institute for Family Success in February. Bouchard is based out of San Diego.