A financial heavyweight from Steel City has forged a deal to join the local banking industry.
The parent of Pittsburgh's PNC Bank said Monday it is buying the U.S. lending arm of Royal Bank of Canada, marking the end of a disappointing, decade-long run for North Carolina-based RBC Bank (USA).
The deal is expected to close in March.
Jim Westlake, chief executive for Raleigh-based RBC Bank, was candid in explaining the primary reason for the sale.
"At a high level, it's a bank that really has not lived up to expectations in terms of financial performance," Westlake told The Post and Courier on Monday.
PNC Financial Services Group Inc. is paying about $3.45 billion for RBC Bank's $25 billion in assets and its 424 retail branches in six Southeast states, including a handful in South Carolina.
"We felt we would have to invest quite a lot more money and more time to really get it to where we thought it should be and ... an opportunity came up to do a deal with PNC," Westlake said. "We felt it was an attractive price, and probably with their products and operational capabilities, they have better opportunity to grow than we do."
The transaction does not include the Toronto-based seller's other U.S. businesses that offer capital markets and wealth-management services.
Also, Westlake said, the deal will not affect Royal Bank of Canada's newly unveiled five-year sponsorship of the Heritage professional golf tournament on Hilton Head Island. Westlake called the timing of the announcements "odd" but unavoidable.
Royal Bank of Canada had ambitious growth plans when it entered the Carolinas and the Charleston market in 2001 through its buyout of North Carolina-based Centura Banks Inc.
It never made deep inroads in the Palmetto State. RBC Bank opened just nine South Carolina branches, with two of those in the Charleston area: at 100 Calhoun St. on the peninsula and at 1021 eWall St. in Mount Pleasant.
Locally, it accounted for about $69 million in deposits, or less than 1 percent of the total for the three-county region as of last June 30.
Westlake called PNC as "a market-leading organization that can build on the recent improvements we have made in operations and effectively serve clients as the market returns to more stable conditions."
PNC said the acquisition will give it a total to 2,870 branches and make it the fifth biggest among U.S. banks. CEO Jim Rohr predicted a smooth changeover, citing previous buyouts.
"We know how to integrate our banking acquisitions," Rohr said during a conference call with analysts.
PNC spokesman Fred Solomon said the bank is committed to keeping the Charleston offices. "PNC is going to convert the branches and operate them," he said.
Solomon said the bank will seek to increase its presence, and that business and retail customers will have access to larger assortment of financial products that PNC offers. Front-line branch employees will remain after the deal is finalized, he said.
The sale of RBC's Southeast operations was announced just as another Canadian-owned lender, TD Bank, put its name on the local Carolina First branches it acquired last fall.
Contact John McDermott at 937-5572.