Ralph W. Babb Jr. says moving to Texas has been good for Comerica Inc., but the company isn’t forgetting where it came from.
The Dallas-based bank, which moved its headquarters from Detroit in 2007, is reaping the benefits of a growing population and expanding job base in Texas while its former hometown struggles in bankruptcy.
But Babb, 65, Comerica’s chairman and chief executive officer, who led the move, said it remains committed to the Motor City, where it still has its name on the Detroit Tigers’ baseball stadium.
“It is a market that is very important to us,” he said of Michigan, which remains Comerica’s single biggest market. “I think Detroit has a very good future, and I think people are moving and pulling in the right direction.”
Comerica’s move to Dallas capped a 20-year Sun Belt expansion strategy for the company once known as Detroit Bank & Trust, which dates to 1849. Babb said the bank holding company decided it could grow faster by going where the nation’s population was headed — Texas and California. Its headquarters move to Texas was aided by a $3.5 million grant from the Texas Enterprise Fund.
It entered Texas with its 1988 acquisition of Grand Bancshares and gradually expanded, including adding nine banking centers in Tarrant County since 2009. In 2011, it acquired Houston-based Sterling Bancshares.
While Comerica is by far the biggest bank holding company based in Texas, with assets of $65 billion at year’s end, it’s a smaller player in the Texas market. Based on deposits, Comerica ranked No. 11 in the state as of June 30.
In a recent interview with the Star-Telegram, Babb discussed the economy and the bank’s strategy.
How do you view the economy right now in terms of what you’re seeing with loan activity?
Overall, as you talk to customers today, they are seeing things a little more positive. But they are remaining very cautious. And what I mean by that is they’re not investing far out into the future. They’re doing well in the current environment. They’re kind of waiting to get more certainty around the economy and the regulatory environment. And when I say the regulatory environment, I mean overall changes that affect them directly, whether that be healthcare or taxes or a particular industry they’re in. They continue to be cautious.
We expect Texas to continue to outperform the national economy as it has. I think overall you will see a little more positive environment here.
What do you attribute that to?
There’s a couple of ways to look at that. When you look at the energy sector and high-tech sector, they’re certainly very big strengths of the Texas economy. And as you know, the economy is continuing to grow, and employment is growing, as well as companies coming into the business-friendly environment in Texas.
Your other two big states are Michigan and California. How are those other states doing?
Michigan has turned the corner because of the auto industry resurgence and is doing quite well. It’s expected to really match the national economy this year and was even with the national economy last year. California is similar. It has been slightly above the national economy in 2013 … and expected to be about at the national economy [in 2014].
You decided to move your headquarters down here a few years ago. Can you talk a little about what prompted that decision and how that has worked out for Comerica?
What we were looking at is, if we moved our headquarters to one of our markets, would it accelerate growth? We had been here for over 20 years at the time and knew the market well. And as we just talked about, the growth and future for Texas appears very strong, and that has played out. So we decided that if we moved the headquarters and joined up with our team here, that we could accelerate growth. And I would say today that has been very successful for us.
One of the things we did was open our first office in Fort Worth in 2008, even though we were in the midst of the downturn, in Sundance Square. And we have a great team there led by one of our colleagues, Don Hellman. We now have nine banking centers in Tarrant County and five Fort Worth banking centers. And we opened those really between 2008 and 2011.
Could you not have accelerated growth from Detroit? What does moving a headquarters do for a management team?
We came down with less than 100 people. It was the executive team, and that was to team up with the resources we had here. … By teaming up and being part of the community here in Texas, we have seen opportunities for growth that I think fall right in line with expectations with what would happen if we moved here, because of the dynamic economy, because of the business-friendly atmosphere and the culture here in Texas.
And is that in contrast to the culture in Michigan?
No, I would underline that Michigan is a great market for us, and we were very careful. We wanted to continue to be the bank of choice there, from the standpoint that the people who take care of customers are the people who have been with those customers for a long time. They did not leave the market. Mike Ritchie, who is our current president, is doing a very good job there … growing market share on the deposit side [No. 2 market share], and [we’re] one of the largest employers, with approximately 5,000 people in Michigan. And it is a market that is very important to us.
How many employees do you now have in your Dallas headquarters?
About 360. In Fort Worth, we’ve doubled the amount of people [in Tarrant County]. We started out with a little over 50 in 2008 and have about 125 there today.
Your hometown in Detroit has fallen on hard times and filed for bankruptcy. What is your view of Detroit’s future?
I think Detroit has a very good future, and I think people are moving and pulling in the right direction and trying to work through the problems in a very diligent way. And because of our commitment and because of our long tenure there, it is very important for us that success be there in Detroit.