PITTSBURGH, Nov. 16, 2020 /PRNewswire/ -- The PNC
Financial Services Group, Inc. (NYSE: PNC) and the Spanish
financial group, Banco Bilbao Vizcaya Argentaria, S.A. (NYSE and
MAD: BBVA) today announced that they have signed a definitive
agreement for PNC to acquire BBVA USA Bancshares, Inc., including its U.S.
banking subsidiary, BBVA USA, for
a purchase price of $11.6 billion to
be funded with cash on hand in a fixed price structure.
BBVA USA Bancshares, with
$104 billion in assets and
headquartered in Houston, Texas,
provides commercial and retail banking services through its banking
subsidiary BBVA USA and operates
637 branches in Texas,
Alabama, Arizona, California, Florida, Colorado and New
Mexico. When combined with PNC's existing footprint, the
company will have a coast-to-coast franchise with a presence in 29
of the 30 largest markets in the U.S.
"Our acquisition of BBVA USA
will accelerate our growth trajectory and drive long-term
shareholder value through a strategic deployment of the proceeds
from the sale of our BlackRock investment," said William S. Demchak, PNC's chairman, president
and chief executive officer. "This transaction is an opportunity to
navigate our future from a position of strength, accelerating PNC's
national expansion strategy while drawing on our experience as a
disciplined acquirer. We are excited to bring our industry-leading
technology and innovative products and services to new markets and
clients, leveraging our mutual commitment to building diverse and
high performing teams and supporting the communities we serve."
"This is a very positive transaction for all sides. PNC has
recognized the great value of our unique client franchise and of
our great team in the U.S., who will be part of a leading financial
services group in the country," said BBVA Group Executive Chairman
Carlos Torres Vila. "The deal
enhances our already strong financial position. We will have ample
flexibility to profitably deploy capital in our markets
strengthening our long-term growth profile and supporting economies
in the recovery phase, and to increase distributions to
shareholders."
PNC expects the transaction to be approximately 21% accretive to
earnings in 2022 and to substantially replace the net income
benefit from PNC's passive equity investment in BlackRock that was
divested in May 2020. The transaction
has an estimated internal rate of return to PNC in excess of 19%.
The purchase price is estimated at 134% of BBVA USA's tangible book value, based on its
balance sheet as of Sept. 30, 2020,
and reflects a deposit premium of 3.7%.
The acquisition adds approximately $86
billion of deposits and $66
billion of loans based on BBVA USA's Sept. 30,
2020 balance sheet. Post-closing, the estimated allowance
for credit losses to total loans for the combined entity is 2.85%,
including reserves for the acquired loans from BBVA USA of 3.85%.
PNC expects to incur merger and integration costs of
$980 million, inclusive of
approximately $250 million in
write-offs of capitalized items, and achieve cost savings in excess
of $900 million, or 35% of BBVA
USA's 2022 estimated annual
noninterest expense through operational and administrative
efficiency improvements.
The transaction, which has been approved by both companies'
boards of directors, is expected to close in mid-2021, subject to
customary closing conditions, including regulatory approvals. Upon
closing, PNC intends to merge BBVA USA Bancshares into PNC with PNC continuing as
the surviving entity. Post-closing, PNC intends to merge BBVA
USA into PNC Bank, N.A. and
convert BBVA USA customers to the
PNC platform with BBVA USA
branches assuming the PNC Bank name. PNC is not acquiring BBVA
Securities, Inc., Propel Venture Partners Fund I, L.P. and BBVA
Processing Services, Inc.
PNC has a long history of supporting the communities it serves.
The company has earned an "Outstanding" rating under the Community
Reinvestment Act since those examinations began more than 40 years
ago. Furthermore, PNC has long supported full inclusivity of all
people and groups, and remains committed to strengthening and
enriching the lives of the communities where it operates. This
includes PNC's 2020 pledge to provide $30
million in charitable support for COVID-19 relief efforts,
and a $1 billion commitment announced
earlier this year to support economic empowerment and combat
systemic racism of Black Americans and low to moderate income
communities. PNC will include all new markets in these initiatives,
while maintaining its commitment to those it currently
serves.
Bank of America, Citi, Evercore and PNC Financial Institutions
Advisory acted as financial advisers to PNC and Wachtell, Lipton,
Rosen & Katz was legal counsel. J.P. Morgan Securities plc
represented BBVA as financial adviser and Sullivan & Cromwell
LLP was legal counsel.
CONFERENCE CALL AND SUPPLEMENTAL INFORMATION
PNC
Chairman, President and Chief Executive Officer William S. Demchak and Executive Vice President
and Chief Financial Officer Robert Q.
Reilly will hold a conference call for investors today at
8:00 a.m. Eastern Time regarding the
announcement of the definitive agreement. Dial-in numbers for the
conference call are (877) 402-9115 and (303) 223-4398
(international) and Internet access to the live audio listen-only
webcast of the call is available at www.pnc.com/investorevents.
PNC's press release and presentation slides to accompany the
conference call remarks will be available at
www.pnc.com/investorevents prior to the beginning of the call. A
telephone replay of the call will be available for one week at
(800) 633-8284 and (402) 977-9140 (international), conference ID
21972430 and a replay of the audio webcast will be available on
PNC's website for 30 days.
The PNC Financial Services Group, Inc. is one of the largest
diversified financial services institutions in the United States, organized around its
customers and communities for strong relationships and local
delivery of retail and business banking including a full range of
lending products; specialized services for corporations and
government entities, including corporate banking, real estate
finance and asset-based lending; wealth management and asset
management. For information about PNC, visit www.pnc.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION
This press release contains forward-looking
statements regarding our outlook or expectations with respect to
the planned acquisition of BBVA USA Bancshares, Inc., the combination of BBVA
USA Bancshares, Inc. into PNC and
BBVA USA into PNC Bank, and the
impact of the transaction on PNC's future performance.
Forward-looking statements are necessarily subject to numerous
assumptions, risks and uncertainties, which change over time.
Future events or circumstances may change our outlook and may also
affect the nature of the assumptions, risk and uncertainty to which
our forward-looking statements are subject. The forward-looking
statements in this press release speak only as of the date of this
press release, and we assume no duty, and do not undertake, to
update them. Actual results or future events could differ, possibly
materially, from those that we anticipated in these forward-looking
statements. As a result, we caution against placing undue reliance
on any forward-looking statements.
Forward-looking statements in this press release are subject to
the following risks and uncertainties related both to the
acquisition transaction itself and to the integration of the
acquired business into PNC after closing:
- The business of BBVA USA
Bancshares, Inc., including its U.S. banking subsidiary, BBVA
USA, going forward may not perform
as we currently project or in a manner consistent with historical
performance. As a result, the anticipated benefits, including
estimated cost savings, of the transaction may be significantly
harder or take longer to achieve than expected or may not be
achieved in their entirety as a result of unexpected factors or
events, including those that are outside of our control.
- The combination of BBVA USA
Bancshares, Inc., including its U.S. banking subsidiary, BBVA
USA, with that of PNC and PNC Bank
may be more difficult to achieve than anticipated or have
unanticipated adverse results relating to BBVA USA Bancshares, Inc., including its U.S.
banking subsidiary, BBVA USA, or
our existing businesses.
- Completion of the transaction is dependent on the satisfaction
of customary closing conditions, which cannot be assured. The
timing of completion of the transaction is dependent on various
factors that cannot be predicted with precision at this point.
These forward-looking statements are also subject to the
principal risks and uncertainties applicable to our businesses
generally that are disclosed in PNC's 2019 Form 10-K and 2020 Form
10-Qs and in PNC's subsequent SEC filings. Our SEC filings are
accessible on the SEC's website at www.sec.gov and on our corporate
website at www.pnc.com/secfilings. We have included these web
addresses as inactive textual references only. Information on these
websites is not part of this document.
CONTACTS:
MEDIA:
Marcey Zwiebel
(412) 762-4550
media.relations@pnc.com
INVESTORS:
Bryan Gill
(412) 768-4143
investor.relations@pnc.com
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SOURCE The PNC Financial Services Group, Inc.