Each year, the Journal checks in with some of the key figures in commercial banking in Sonoma, Solano, Marin, Napa, Mendocino and Lake counties. Here is our conversation with Elizabeth Karbousky, director of commercial banking and wine industry services for Union Bank.
What two or three elements of the commercial banking business have changed in the last five years?
ELIZABETH KARBOUSKY: Regulation and technology are the two biggest change agents in my opinion over the last five years. Regulations, especially since the Great Recession, create significant impact on operations of banks, including the required level of capital banks hold for loans. Changes to this have negatively impacted the profitability banks earn on loans, forcing banks to diversify revenue streams into other areas beyond core loans and deposits.
As for technology, the growth of artificial intelligence, blockchain, and other fintech developments are rapidly changing how banks process transactions as well as compete for deposits. There is a lot of upside to technological improvements, but also challenges, especially as it involves security. Data security is paramount to a bank’s success, so staying current with the rapidly changing landscape has become a required core competency for banks.
In the North Bay specifically, what market forces might change significantly in 2019 and beyond, and why?
KARBOUSKY: The health of the larger economy will naturally impact the North Bay. Volatility in global markets is increasing, driven by a drop in corporate confidence as a result of trade wars, global political events (e.g. Brexit), and slower economic growth across the globe. All of this manifests in a yield curve which is becoming flatter by the day.
Labor market seems to have peaked (and we see that locally with record low unemployment), but unlike other parts of the country the North Bay continues to have a strong pipeline of construction projects already funded (both public and private jobs) which indicates continued demand for services. Just how much that pipeline helps reduce the impact of a potential recession in the near future remains to be seen.
How have customer profiles and requirements changed? For example, are customers generally more cautious or bullish in their projects?
KARBOUSKY: The last several years were strong with fairly bullish customer views reflected in the willingness to take on more risk. In the last year that view has changed somewhat to become more cautious. Revenue growth isn’t a given anymore, so clients are focusing on smart ways to grow but also equally concerned about managing costs to maintain profit.
Changing markets and consumer spending patterns are driving changes to business strategies, but the upside to this is that innovation is playing a bigger role. Innovation doesn’t have to be major new inventions, but companies are starting to shift towards more creativity in delivering value to their customers.
What’s your institution’s long term view for business in the North Bay?
KARBOUSKY: Union Bank remains bullish in the long term for the North Bay. As the region becomes more connected through both urban sprawl and increased travel options (e.g. SMART, added airline routes), it’s enabling the diversification of business outside of the long-held agriculture roots without replacing agriculture. Union Bank has a healthy appetite for increased business in the North Bay and has a history of committing to its communities throughout economic cycles.
Most inspiring commercial banking story you were part of in the past two years?
Director of commercial banking and wine industry services
50 Old Courthouse Square, Suite 407, Santa Rosa, CA; 707-540-9596
Year you assumed this position: 2017 (came to the North Bay with Union Bank in 2011)
How long have you worked in commercial banking?: 13 years
Read other conversations with this year's North Bay leaders in commercial banking.