PNC Says Regulatory Reforms Will Save Banks ‘Hundreds and Hundreds’ of Full-Time Equivalents

Asked by analysts about the potential tailwind banks could see from these regulatory changes, Demchak said that PNC had not really quantified the amount of time spent on regulators’ matters requiring attention (MRAs) but that he estimates it amounts to “hundreds and hundreds” of full-time equivalents (FTEs) and half of the time he spends with the board.

Demchak added that the number of hours banks spend on MRA compliance has at least doubled since 2020.

“What they’re talking about is a material change; we’ll have to work our way through what that actually means,” Demchak said during the call.

“Importantly, it doesn’t mean we’re going to back off on what we actually do to monitor risk, including compliance and some of the things we used to get MRAs for that we won’t get anymore,” Demchak said. “It just means that we won’t have all the process around it. And the process is what kills us. It’s not actually the work to fix things; it’s the documentation and the databases and the meetings and the committees and the secretaries of the committees.”

Demchak said earlier in the call that because of the ancillary work involved with minor MRAs, banks spend 1,000 hours in the MRA process to fix an issue that could be fixed in 10 hours.

“So, if it actually comes out the way they wrote their proposal, it’s a massive work set decline inside of our company — not because we’re not going to fix issues, but rather that we’re going to just fix issues as opposed to talk about them for months,” Demchak said.

Demchak also said during the call that PNC saw better-than-expected growth across all its business lines in the third quarter, with credit quality remaining strong, consumer spending “remarkably resilient” and corporate clients “expressing cautious optimism.”

“Ultimately, this is driving a sound economy,” Demchak said.

Demchak also said that PNC’s plan to build more than 200 new branches by 2029 remains on track and that its plan to acquire Colorado-based FirstBank positions PNC for growth.

“Upon closing, this deal will propel PNC to the No. 1 market share position in retail deposits in branches in Denver,” Demchak said. “It will also more than triple our branch footprint in Colorado while adding additional presence in Arizona.”