2 min read October 2022 — The economic slowdown will likely impact areas like capital spending and mergers and acquisitions, but Jerry Bowen, Southeast market president of Comerica Bank, told Invest: that this has not happened yet for his North Carolina banking business where there is still a lot of liquidity in the market, and he remains bullish on the long-term prospects for the region.
What has been Comerica’s approach to growth?
Comerica has been around for over 173 years. It has a large presence in Michigan, Texas and California, a smaller presence in Arizona and a very small presence in Florida, but the bank has approximately $6 billion in commitments across the Southeast in different industry sectors.
Strategically the approach has been to come into the Southeast markets with our commercial bank and our private wealth banking teams and then follow with retail banking at some point in the future. In the last year, we’ve been running a couple of parallel paths while recruiting people. We opened up our Raleigh office in July 2022. We followed that with a Charlotte office in August and we have leased space in Winston-Salem. So, the last year has been spent in North Carolina launching a presence in the marketplace, recruiting people across commercial banking, wealth private banking and treasury management, getting office space secured and working to develop the market.
What is the bank’s strategy in terms of market segments?
Comerica does not yet have regional banking branches in the Carolinas but, strategically, the plan all along for this bank has been to come into markets across the Southeast.
The world of retail banking has changed dramatically. If you go back four or five years ago, roughly 70% of what used to transact in the branch now occurs on your phone, your computer or an ATM. Different banks have different strategies in that regard. Comerica Bank’s balance sheet is roughly 75% based on commercial banking, 15% to 20% on wealth private banking, and then a smaller part on retail banking. That is not to say retail banking is not important at Comerica, but we are not on the same scale as the mass-market brands for retail banking.
How is Comerica leveraging technology today?
You have to invest in digital capabilities to meet client and marketplace demand. Whether consumer or commercial customers, people are interacting much more in a digital fashion today and we have to continue to invest in this area to meet our customers where they expect to be engaged. You have to make sure that you are building your technology platform in a manner that allows you to drive internal efficiencies, including internal processes. It is also important that you make sure you understand how your customer base expects to interact with the bank and how they expect you to deliver your product and services to them. The cost of doing that now is high. The evolution of technology is so rapid that you could find yourself spending several years building and installing technology and then by the time you finish it, it might not be as relevant as you thought it would be. There just needs to be continuous investments in technology. Without a doubt, it will be the largest CAPEX and spending for banks in general. You will continue to see investment in technologies in the world of payments and payment processing on the consumer side or the ability to exchange funds via channels such as Venmo or Zelle.
What is the effect of the current economy on the banking business?
We still see healthy loan demand. We have not seen a significant drop-off in loan demand at this point. Typically, there tends to be about a 90-day to six-month lag when you see a lot of choppiness in the markets, which we are starting to experience now. On the commercial banking and corporate banking side, we are starting to see a couple of things. One, there has been a pause in the acquisitions that companies were contemplating. As interest rates go up, that is going to affect the company’s valuations. If you’re the seller, you still want to get paid what you thought the valuation was 90 days ago. If you’re the buyer, you have to factor in the changes in interest rates.
There’s also going to be a pause in some segments of the marketplace regarding capital spending until people get a little more clarity about where rates are going to go and how strong the economy is going to be. Having said that, there is still a lot of liquidity in the marketplace from an investor standpoint. People are still trying to figure out what to do with that excess liquidity.
How do you see the economic outlook for North Carolina?
The outlook for the North Carolina area for the long term is still very positive. I’ve yet to talk to anybody within our region who is not bullish on North Carolina, the Southeast, and the Triangle in particular. The long-term prospects for this area are very bright and will continue to be very bright. The region will continue to attract people and it will continue to attract capital.
What are your main priorities for the bank?
We will continue to invest and build out our North Carolina operation. We plan to have a banking center presence here with retail branches to complement the investment in commercial, wealth and private banking. We’ve added people in some markets in Florida. We are going to continue to build out what we started a year ago and try to do that as efficiently as we possibly can.
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