Decision To Trim Costs Comes on Heels of What CEO Calls ‘Disruptive Year’ for Financial Services
Originally posted by Candace Carlisle, CoStar News
National bank Comerica plans to close 27 of its U.S. banking locations spanning four states as well as lay off about 250 employees as it gets ready for what executives call an industrywide reset this year.
The Dallas-based financial services firm reported its fourth quarter 2023 earnings were hit by the broader macroeconomic trends affecting this sector of the economy. In a call, President, CEO and Chairman Curt Farmer told investors that 2023 was “a disruptive year” for the company, with a broader “reset for the industry.”
He said he expects some recalibration this year. Farmer added that he believes interest rates “are going to come down,” but he declined to share details of those expectations. But Farmer also appears prepared to pivot on plans if interest rates remain elevated.
“We are focused on top-line revenue growth,” Farmer told investors. “We believe we have opportunities on both the fee-income side and with the loan portfolio. If the economy does not move in the right direction, if interest rates don’t move in the right direction, allowing us to get some relief, then we’ll continue to look at expense opportunities.”
In all, Comerica plans to close 27 of its branch locations in Texas, Michigan, Arizona and California, said Michael Venetis, the bank’s national transaction director. He clarified the numbers from the earnings presentation, where only 26 of the 27 closings were identified.
“For years, we have gone through this annual exercise where we decide which sites are profitable and which aren’t,” Venetis said in an interview with CoStar News. He added that this year’s real estate closures were more robust than prior years, reflecting the broader market. “We are always investing in cost-cutting measures and reviewing our portfolio.”
Comerica works with CBRE on marketing its real estate, he said. The addresses of the bank’s soon-to-be-closed locations, which were determined by the company’s executives as having a “nominal customer impact,” were not immediately disclosed.
“About 10 of these locations are leases and the remaining are fee-owned sites,” Venetis continued. “Once they are ready to be put on the market, I can be more open with where they are located.”
Depending on where the banking centers are situated, there could be interest in these properties from growing retailers seeking to get a foothold in these markets. In Texas, Dallas-based Weitzman recently held an event showing the occupancy rate in the state has reached record levels with few existing expansion options on the horizon for incoming retailers.