Comerica Bank in Dallas is looking to capitalize on the potential disruption from two large mergers to capture more loans and deposits in its key markets of Texas and California.
U.S. Bancorp
Peter Sefzik, the executive director of Comerica’s commercial banking unit, said on the bank’s third-quarter earnings call Wednesday that the disruption from the two large deals “bodes well” for the $94.5 billion-asset Comerica.
The company will be “looking hard” at attracting new customers, prospects and talent from the shakeout, he said.
“We’re going to be opportunistic,” Sefzik said. “We really feel like there will be some great opportunities for us.”
Comerica has seen total commercial loans decline in all of its markets over the past year, but executives said they expect organic loan growth to return in 2022.
“Our chief economist forecasts real GDP to increase 4.5% in 2022 with each of our three primary markets of California, Texas and Michigan above that level, which bodes well for growth,” CEO and Chairman Curt Farmer said.
Sefzik said the bank’s pipeline of potential new loans is at prepandemic highs. The company’s credit line utilization rate, which businesses draw on to build inventory, hire new workers and make other investments, was at 47% and was expected to “creep up” in the fourth quarter.
“For sure we feel really good about what that looks like for the fourth quarter and going into 2022 absent any major further disruptions you might see with COVID,” Sefzik said.
Lending to auto dealers for building their inventory of cars for sale is expected to remain muted next year, but the company is expecting loan demand from middle-market businesses and larger corporations to improve. That optimism is a big reason Comerica is unlikely to pursue a merger of its own, analysts said.
“I would be surprised to see [Comerica] make a bank acquisition over the near term given the optimism that commercial loan growth will accelerate in 2022,” said Terry McEvoy, an analyst at Stephens.
Comerica reported net income of $262 million in the third quarter, up 20% from the same period last year. Net interest income climbed 3.7% year over year to $475 million.
Comerica also helped its bottom line by releasing another $44 million in reserves for loan losses, lowering the total allowance to $639 million for the quarter. Its allowance for loan losses in last year’s third quarter was $1 billion.
