PNC Financial Services Group Inc. will not increase its office exposure despite attractive opportunities.

"We're not going to add to office. There's actually a lot of office deals I'd like to do, but the headline number of, 'Hey, your office exposure went up,' isn't worth it," Chairman, President and CEO William Demchak said June 1 during an industry conference.

Demchak described the headline risk dynamic as "the unfortunate truth about banking" because "people are watching numbers."

The company's total exposure to the office sector is $8.9 billion, or just "a couple of percent" of its total loans, Demchak said. Within its office portfolio, there are four categories: government, medical, single-tenant and multi-tenant. The first three are "great," but multi-tenant, which comprises about $5.4 billion or $5.5 billion of total office exposure, "isn't so great," the CEO said.

PNC has reserved its multi-tenant office properties "to a level that the values of them can fall to 25% of their original appraised value when we did the loan and be wholesale," Demchak said. That equates to a 9% or 10% reserve against the book. Therefore, even though the company anticipates impending charge-offs, it expects to be "covered against what's going to come in a lumpy form over the next couple of years."

The banking industry is bracing for potential future challenges with their commercial real estate portfolios — and office specifically. The industry's commercial real estate loan delinquency rate rose sharply in the first quarter from the previous quarter.