'The Economy Has Been Plugging Along This Year'

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The economy is a hot topic this year, with concerns about inflation, tariffs, unemployment, and interest rates dominating the news. And banks and other financial institutions are coping with those issues and many more.

What are the concerns? And what is South Carolina doing better than other states.

Integrated Media Publishing hosted a roundtable discussion over Zoom with three leaders in the world of banking on Sept. 16, 2025. We asked those questions and more, and three financial experts shared their insights.

Here are excerpts from that conversation, edited for brevity and clarity.

The participants were:

Richard Bhola, member, Scott and Company

Tom Coker, senior vice president, commercial banker, United Community

Devin Green, chief operating officer, The Capital Corporation

Integrated Media Publishing Editor David Dykes moderated the discussion.

Question: Good morning, everyone. I want to welcome everybody to Integrated Media's Banking and Finance Roundtable, another in our series of monthly discussions on topics of importance to the business community, to the state of South Carolina, and to our regions as a whole. We'd like to thank Scott and Company for sponsoring this roundtable. I want to start off with a general question, just talking about the broader economy. What are your thoughts on where the economy is right now. There’s a big rate consideration this week. Talk about the broader economy and how it impacts the financial industry. Richard, we'll start with you.

Richard Bhola, member, Scott and Company: I think there's a macroeconomic impact in the capital markets and then the impact on banking and financial services. I'll let Tom answer the banking and financial services piece. I do know we see from an audit perspective, as rates change, obviously, that affects everyone. Mortgage rates have gone up, and everyone's in a holding pattern as to what to do next. And so you see a lot of banks trying to figure out what new offerings do they need to make in order to keep up with those changes. I know I saw a lot of higher interest rates on deposits, and a lot of the smaller community banks that I look at are a little bit slow to respond to that, which resulted in some cash constraints, affecting their own growth. I think the interest rate obviously has a big impact on the financial industry and the broader economy. And then I think the way financial institutions and financial industry respond to some of those changes, things like the tariffs have a pretty significant impact in the broader economy, whether it continues to grow or it stays the same or it shrinks.

Question: Tom, what does your crystal ball tell you?

Tom Coker, senior vice president, commercial banker, United Community: I wish I had one. But from our side at the bank, we see that the economy has been plugging along this year. Growth remains positive, but we are seeing it start to slow down a little bit. Unemployment ticking up a little bit last month, and inflation do remain concerns for us as it's managing through tariffs for both businesses and consumers. The good news is, here in the Upstate, we do remain a little bit stronger, probably than the national economy, with a lot of folks moving to the Upstate. I saw a number yesterday that Upstate unemployment was 4.2, which was better than the 4.3 national number. So I think there are a lot of positive things going for us here in the Upstate with business growth and population growth that is going to help support and help drive the economy for us locally in the Upstate and across the Southeast. But nationally, economically, macro level, we see growth as being positive, but starting to slow down a little bit. Within the financial industry, we saw rate cuts last year drove some improving loan demand this year. And we do think from talking to a lot of our clients, both locally and across the bank, that if we do see some rate cuts … then that's going to continue to drive some people breaking ground on projects and expansions in their businesses. So we think rate cuts will be helpful, both to the broader economy and to the banking industry.

Q. What do you think this portends for the M&A market and clients that you're talking to?

Devin Green, chief operating officer, The Capital Corporation: It's interesting. We look for … leading and lagging indicators. And I'm biased because of the lens I look through, but one of the leading indicators we look at is M&A activity. Private equity guys and strategic buyers, they have different hold philosophies and timelines, but direction, not perfection. If you're a private equity buyer, you're looking at making a five-year investment in a business, in an industry, in a market. And we watch that activity pretty closely. If it's a robust activity, than that signals some things for us, and the contrary does. So we are seeing quite a lot of activity. … Private equity buyers, if you stratify the market, obviously, there's sections in the market where they are putting their pencils down. But for the most part, the activity has continued to stay quite strong. We find that quite encouraging. They are making five-year bets. They are not slowing down and making five-year bets. They are moving to certain markets and industries to do that. But there's a lot of smart people out there putting money to work, and the activity continues to be at a very high rate. One other thing, just not to get too technical, but there's something called an overhang. It's a fancy word of saying how much money is private equity raised that hasn't found a home for yet. They haven't allocated it to the companies they've bought. It's somewhere in the $800 billion number in the United States. So they are continuing to raise money to continue to double, triple down in this economy. They're not seeing anything that scares them to suggest otherwise.

Q. So nothing to scare them as far as they tell you, right?

Green: No, nothing to scare them. There's tweaks, there's adjustments. We all adjust in business. So they might press pause on certain industries for now. But generally speaking, they are pouring into more industries than not and continuing to do so. And South Carolina was mentioned. … South Carolina ranks up there on a number of levels on (being) business friendly, as we all know. But to use an example, it was recently ranked the No. 1 state for manufacturers in the entire United States. And so when people are looking in the business community, it's important to watch the headlines nationwide. Obviously, it affects all of us. But when we look at our ecosystem here, we're not insulated from things, but we can take a shock or two based on the preferential position we have in South Carolina on a number of fronts.

Q. Let me just throw this up to the group. Talk about AI. How is it transforming your business and what lies ahead in terms of AI?

Green: One of the things that makes The Capital Corporation a little different is we're an investment bank, but then we're part of a portfolio of companies that is owned by the same owner, Dan Adams. We operate companies, and we help sell companies. So within our portfolio, we are using AI on a number of fronts. AI, by the way, to me, is a pretty agnostic term. It can mean a lot of things to a lot of people. It seems like that continues to evolve. So at the risk of misusing that term, we are using it in call centers. We are using it in digital marketing. We are using it with respect to diligence in mergers and acquisitions. … I do think the applications are starting to become more commercialized, and there's some convergence on how to tie loose ends together with real business decision making and AI. I also think it's got a lot of room to run before it really becomes something that can be rolled out across a lot of the business front. So I think we are dabbling in it. We are an early adopter in it on a couple of levels, both in M&A and owning and operating businesses. But I think there's a little bit more learning to be done on how to really, really unlock the value of it.

Q. Tom, do you agree?

Coker: I do agree. We actually do use a lot of AI and have been using AI in a lot of our processes. How we're using it is evolving over time. Historically, we’ve used it a lot in our IT and our fraud detection area. Our IT folks have used it to write code and in management of large data sets such as fraud detection, when we're looking at millions of transactions, we're using AI, and our vendors are using AI to improve our ability to detect fraud and help keep our customers' money safe from transactions that may not be legitimate transactions. So, using it with data, with large volumes of data, and also from a coding and building processes is helping us create efficiencies and operate efficiently. One thing we're very cognizant of is keeping a human involved with how we're using it. We're using it to help our employees be more efficient, but not necessarily to where it would do a job of an employee. We've used it in the back office and behind the scenes for a lot of years. But as language models have developed and improved, we are using it more in some of our front-line interactions. A great example I got from our head of IT the other day is, we've integrated a chatbot as part of our online banking to answer simple questions that customers may have, such as location, hours, fact-based questions. And that lets our employees in our call center respond to those more in-depth questions from clients. The AI can answer the very simple fact-based things. And then if it goes beyond that basic set of parameters, then the chat kicks over to a live human in our contact center so that they can dig in to maybe a more in-depth question that a customer may need human help to solve. But there's little things and utilizing it for small factual questions and some beginning customer interfaces has helped us find some efficiencies on that side. In our industry, we balance the need for efficiency that AI can help bring. It is very important that we do put some walls around it, especially related to customer privacy and information privacy. As a bank, there are some unique risks in that, in how we adopt and roll out the AI is that is unique to banking is that we've got to be sure that the models are keeping our customer data confidential and within the bank, and that it's not feeding broader information, and no customer information is escaping outside of our four walls that may compromise privacy of our customers. So we are embracing it and finding ways to use it to help people do their jobs more efficiently, and we are using it more and more as time goes on and maybe in more customer-facing applications than we have before, where it was just really back office-focused. But also ensuring that we're keeping oversight over it to ensure we're protecting information privacy, which is really, really important to us. And also keeping the human touch so that when we're looking at data and analyzing data with it, of course, there are bias risks and models, and managing model risk is another back-office piece. … But bottom line is we are embracing it as an opportunity to help our employees be more efficient in their jobs and get back to customers and take care of customers more quickly and efficiently, but also ensuring that we keep the guardrails of a human touch with the AI to validate our models and be sure that the results are making sense.

Q. Richard, let me ask you this, is AI a watershed event or is it just evolving?

Bhola: I think it's continuing to evolve. I think to Devin's point of it being agnostic, it's so embedded in so many different things in so many different ways. And of course, it's continuously learning based on whatever information it's processing. I think what we're seeing is just the beginning of AI being implemented in several different places, and we'll continue to see that. One, because it's a huge advantage to automate certain processes that we may have depended on human beings for, but it's not necessarily to eliminate using human beings within our process, but I think we know that there's a limited labor force available to us. In South Carolina, for example, we have one of the lower labor participation rates. Maybe not in Greenville, but the state as a whole, I think certainly struggles with having adequate labor force. Post-pandemic, we’ve seen a huge increase in cyber fraud. A lot of people get random text messages, they get emails and all kinds of things from fraudsters, and that increase in fraud activity has become impossible for human beings to monitor all of it. Of course, when people lose their money, the first thing they call the bank and they said, Why would you let this transaction go? There's no human being looking at those transactions. I think there's a huge opportunity there, as Tom mentioned, for fraud detection and prevention as you leverage some of that AI. I think that's going to continue to evolve, and it's necessary. I don't think we're going to be able to keep up with maybe some of the evil forces acting on institutions without leveraging AI just because of the number of transactions that we're having to monitor in the process. So I think it'll continue to evolve. No one knows where it's going to end up, but I think there are huge opportunities. There is so little that we know about it. Even in our profession, we're slowly trying to leverage it. There's so many different options out there and just parsing through some of it and making a decision as to which one you go with and which one you don't is a continuous process.

Q. If I understand the three of you correctly, you don't see it as an automatic displacement of your current workers. Is that correct?

Bhola: I think on our end, certainly not the case. We've got a huge deficit in our profession as a whole. As people leave, the number of people coming into the accounting profession is significantly less. So we've got a huge deficit, I think, that runs all the way to 2030. And so we'll hire everybody that's available that's willing to work in our profession. The problem is we don't have enough people, and we have people leaving. So that certainly hasn't been our experience, both on the audit and tax side, even in some of the rural areas and some of the community banks that I audit. There's such a huge lack of human resource that people will take anything they can get. And so I haven't seen it being a major displacement of actual human labor force.

Q. Devin, do you agree?

Green: I agree. It complements our team right now when we use it. It supplements the human capital side. Could it replace some the way we're using it eventually maybe, but we’re not close enough to have a line of sight on making that happen right now.

Q. Tom, your thoughts?

Coker: I agree with you and what everybody said; we see it as a complement or supplement to what folks are doing today to help them do more and be efficient, but with where it stands today, not a replacement for people. So from our side, we see it as small efficiency pickups for everybody today, but that may evolve into greater efficiency over time, but not a substitute today.

Q. Let me switch to the regulatory environment. Where are we in terms of the regulatory environment from your perspective?

Green: In M&A, when there’s a regulatory shift or a legislative shift, oftentimes it can create gaps and pain points for the value chain of people involved. So I think that's the fascinating part on any regulatory change or legislative change is the ripple effect of, how does it disrupt, how things were being done, by whom, who has more pain, who has a greater value prop to solve that pain? … To me, that ripple effect creates opportunities from an investment standpoint and from a merger and acquisition standpoint. And that's something that we watch closely.

Q. The banking industry obviously watches the regulatory environment very closely. Where does it stand for you?

Coker: As you guys know, the banking environment is a highly regulated environment. We're used to operating in that as different administrations may come and go. I would say we feel that the regulatory environment has had a variety of positive developments this year. First off … in the banking world, we see an openness to bank M&A as a very positive thing. We're seeing regulators more open to M&A and speeding approval up of the transactions pretty significantly for where things have been. And so the openness and the speed of M&A is a very positive development in the banking industry. The other development we've seen this year … is a refocus on safety and soundness of banks and getting that in exams to focus on safety and soundness of banks making good loans, getting back to the blocking and tackling of making loans, taking care of deposits, and taking care of customers, and supporting customers with what they need for themselves or for their businesses to grow. And so we've seen that as a positive development that's making it a little bit easier to do business within the banking industry and getting back to some of the basics of banking.

Q. Richard, your thoughts?

Bhola: I think industry regulations work positively in a lot of ways, a lot of it geared towards consumer protection, ensuring market integrity and confidence, and then maybe hopefully fueling some economic growth. My only struggle with it … is when you apply it across the board, it may not be beneficial to everyone. You may have some regulations, for example, within the banking industry that may apply to all banks, but not necessarily affect a small community bank in the same way. And some of those compliance with those regulations, the costs can outweigh the benefits. Some of it obviously works well to protect the consumer, to protect financial institutions. But some of it can become burdensome if it just applies across the board, regardless of size. And we do see some of the struggles with some of the smaller banks trying to keep up with some of those regulatory compliance that is not necessarily significantly affecting their portfolio.

Q. Let me throw this out to all of you. The American consumer, how resilient is it, does it need to be, and will it be?

Coker: With the bank, we've seen that the consumer so far has been very resilient through the year. Americans tend to be a resilient bunch. We've seen personal income and salaries remain strong throughout the year, but we are starting to see spending starting to decline slightly, and you are starting to see, especially in the news, on a macro level, some of the subprime lenders are beginning to see some cracks and some delinquencies rise as unemployment has ticked up a little bit over the course of the year. But we have seen, overall, the consumers stay strong, but beginning to pump the brakes and slowing down on spending a little bit.

Q. Richard, is that what your firm is seeing?

Bhola: I think for the most part, it's been difficult post-pandemic to measure the resilience of the American consumer, because I do think we're really good at sensing big things happening in the economy and restricting our spending or increasing our spending. I know that we're very responsive to interest rate changes and big things like purchasing a home. You saw a lot of people pull back and say, Well, I'm not going to go ahead and purchase a home now just because the rates are so high. I'm going to keep my cash. You did see as well a lot of people being willing to move their deposits from different institutions because they saw increase in rates in some institutions while not necessarily increasing as quickly as others. And so they're very on top of that and knowing where to keep their money and when to spend their money and where to spend their money on big-ticket items. But I also think we've seen a little bit of spending more on post-pandemic, a lot of experiences, things like travel. I'm surprised when I'm at an airport, how busy it is and how full it is. I think overall, I would say the American consumer is pretty resilient. But like I said earlier, I do think it's become a lot easier to spend our funds. And so sometimes that consumer spending can get away from us, which I think is also showing a little bit on the increase in the use of credit cards by consumers. That, I think, has gone up over the last couple of years.

Q. How are businesses and your clients adjusting to the changing economic policies and conditions that we're facing these days?

Green: Tell me more about the changing policies and conditions you're thinking about.

Q. I'm thinking about businesses looking at the uncertainty in the M&A market. Like you said, they're still plowing ahead. But do you detect any changes in the speed with which the M&A market works? Is it slowing down?

Green: What comes to mind is some businesses, just like everything in life, some are affected more, some are affected less. The use case we're seeing a lot of with some of the policies right now and how it's rippling through M&A is for companies that have cross-border supply chains, given the tariff situation, we are seeing a big-time ripple effect there with respect to both ops and M&A. … Companies this year have been looking at the country of origin of where they're sourcing items, and they're looking at the tariff impact, and they're trying to optimize that supply chain. And so a number of our clients who are preparing to sell their business right now, we are looking at how to reallocate their footprint appropriately on where they're sourcing from, amongst other things. And so that is one example, an obvious one on the tariff side, that is rippling through operations for some of these companies, and it's impacting M&A. Some buyers right now, if they are looking at a domestic service provider versus an international manufacturer, they're going towards the domestic service provider because the tariffs, there's not a direct correlation on tariff impact to them. So some people are pressing pause on certain sectors of the market because there's some uncertainty associated with it. And some are forging ahead. But it's thinning out the buyer landscape on some industries where there's uncertainty, if that makes sense. It's still active. It's just thinning out some people because they're pressing pause until they have better certainty.

Q. In terms of the M&A market, you said there's a lot of money to be spent. How much longer before that floodgate opens, or will it just not open for the foreseeable future?

Green: This overhang I keep talking about, it's a good metric. All this money that's been raised that hasn't yet found a company to buy and be allocated towards the $800 billion-plus number. Private equity funds keep raising more money, so as they allocate this money and buy companies, they're raising more and keeping that overhang to where it is today. So that's been a pretty static number the last however many years. It is a seller's market. I'm not trying to sound biased. It just is. Valuations are inflated. The private equity funds, and I’ve got a lot of friends in private equity … there’s so much money that’s been raised. They are trying to find a place to put this money to work because they're getting pressure from their limited partners, the people that invested in private equity fund to put their money to work. And so that is increasing the valuations. And if private equity valuations are going up, guess what's happening to strategic buyers valuations? They're going up. So it has been a seller's market for years. My hope and expectation is it will continue to be unless there's a material shift. And we've been seeing that dynamic to be holding true for the last five, six, seven years. It's been a good run.

Q. What particular sectors are the strongest or the weakest right now?

Green: I think of quants and quals, quantitative and qualitative considerations of businesses. If you have what drives value, and this is not necessarily what you asked, but I think it's relevant. Growth, margin, free cash flow, and certainty of future cash flow. If you can sit there and say, We are growing quickly. We have high line of sight on that future growth, and we're making a lot of money when we do it. And then there's qualitative things, barriers to entry, strength of management team,brbrand, IP. Sectors that have those elements that are not being affected directly by any policies such as tariffs are highly active right now. But then you've got this dynamic where there's so much money out there. If there are businesses on the margin where they don't necessarily check all the boxes, but they check some of them, they are getting a lot of looks from buyers because buyers are trying to continue to build their portfolio of companies because of the dynamic we discussed. It’s not binary, either you’re in this strike zone or you’re out, there’s a lot of shades of gray, and I am seeing buyers expand their thinking to be a lot more flexible on how to deploy their money because of that fact that the money industry has been overbuilt. There's an excess supply of money.

Q. Let me throw this out. South Carolina's economy – everybody says it's in good shape, but it still is heavily dependent on manufacturing. Do you see a robust future for entrepreneurs, startup companies in South Carolina?

Green: Absolutely. The buyers that we talk to for South Carolina companies love South Carolina … the tax landscape, the cost of living, the accessibility with the infrastructure, all of it. They are targeting the Southeast and South Carolina. And labor was mentioned earlier, Richard, I think you said it, about how it's hard to continue to fill the labor needs. I have a client in Chicago. They went to a movie theater, and they're sitting there in front of the big screen at an AMC movie theater, and there's an ad for Greenville to move to Greenville. So this state is recruiting people to relocate here because the business demand is so high. South Carolina is near or at the top of the list for a lot of buyers, everything else equal to invest in.

Q. Richard, same thing you’re hearing?

Bhola: Yeah, I think that's consistent. I do think that there are a few things for the state of South Carolina to work on, but I do think we continue to be a very attractive place to do business. I think you saw that a little bit with the Scout plant that's under construction in Blythewood. When that's up and running, I think there'll be a huge demand for local labor, and that's going to be a pretty big deal for the Midlands. We do have a little bit of a low labor participation rate. But it doesn't mean that we don't have the capacity, the ability to increase that. I'm part of a few discussions on the Chamber of Commerce side, and I know that there's constant work being done there to address some of that. But I think, if I remember correctly, South Carolina was the No. 1 state last year for people moving into the state across the entire U.S. And in looking at those numbers, they aren't just retirees, because I know we're obviously in an attractive climate, and it's still relatively affordable to live in South Carolina. So I think there are a lot of positive things about the state. I know we're constantly looking at our neighboring states and what they're doing relative to us in terms of small business policies and attractiveness and coming to the state and working pretty hard to make sure that we stay competitive. We've still got some work to do, of course, because we've got North Carolina and Georgia right there, but we're on top of it. I think we certainly have the capacity and the attractiveness. I agree with Devin that people want to be in South Carolina to do business. We're a friendly bunch of people and hard-working, but I think just the lower cost is very attractive as well.

Q. Tom, let me ask you this. Your bank is headquartered in Greenville. Does a lack of corporate headquarters put South Carolina back at all?

Coker: I think it does. I think we're a very business-friendly state, very entrepreneurial friendly. There is a lot of opportunity to attract corporate headquarters and the jobs and the wealth creation that corporate headquarters bring that would benefit the state. So, I do think we've got some work to do. I think the talent pool that Richard has talked about before is something that corporate headquarters look for. Low cost is certainly important. … But the ability to attract new talent to the area and to South Carolina would be something that would be helpful to hopefully grow the number of companies that are headquartered here.

Q. And finally, let me throw out this question. But if you were governor, if you go back and one thing differently for South Carolina, what would that be?

Bhola: I think we could benefit a lot from investing in some public transport. I talk about the labor participation rate. South Carolina is such an interesting state. We've got the big cities of Greenville and Charleston and places like Columbia. I think maybe if we're able to look at the unemployment levels in those smaller places, in those smaller cities in rural South Carolina, we'll realize that there's a lot of opportunity there. But we don't have a very good public transport system. And so it isn't as easy for those people to get to the places where those jobs may be available. I think we have jobs. We don't have an issue with jobs. I think we just don't have the people to fill those roles, and they're just not able to show up for work if they live in some of those rural areas. … I do think maybe we can drive more business in some areas of rural South Carolina. If we're able to do that, I do think the state as a whole I could benefit from that. But public transport would be my top point.

Q. Tom?

Coker: I don't know that I would do it differently, but I would say it's something that frame it in what can we do to enhance things for the future would be a continued and greater investment in education, both K through 12 and in our community college system, technical college system, and in our larger research institutions. I think North Carolina, as an example, has put a lot into that educational ecosystem, and that has paid dividends for the state in terms of attracting knowledge jobs to the economy, and also back to the corporate headquarters question. An educated workforce can be a more productive workforce and can make it a more attractive place to come. I think South Carolina has been doing a good job, but I think we can do more with funding and expanding education. Our technical college system has been an integral part of attracting some great businesses here in the Upstate. I think of Michelin, I think of Ryobi, I think of BMW. Our technical college system here has been a big part of educating a workforce to staff those clients and giving people skills to obtain more jobs with higher salaries and that education broadly would help us attract more business to the state and address some of the people shortage that we've all talked about.

Q. Any other comments you'd like to make in closing?

Green: The lens I look through is small business and specifically mergers and acquisitions, but I think right now we are as busy as we've ever been. It's a seller's market. And for some of the reasons we discussed, South Carolina is a great place to play in this space. I just wanted to reiterate that right now we're optimistic and encouraged by what we're seeing and the activity we're seeing.

Q. Richard, final thoughts?

Bhola: I think we live in a time of probably the greatest uncertainty and more changing things every day. And that’s becoming harder on multiple levels, in terms of how we’re leveraging technology, issues with labor force, issues with different generations in the workforce and being able to work with all of them at the same time. But I do think that we’re in a good place to continue to be resilient. We’re responding a lot faster than we used to as well. So I think that says a lot. I’ve been living in Columbia since 2012, and I’ve certainly seen some significant growth over those years in very different parts of the city itself. And I know that a lot is happening across the state as well. I’m encouraged by it. We benefited a lot from the migration during Covid. … I think we're poised to be ready for all of the changes that's happening.

Q. Thank you. Tom, a final thought?

Coker: I think in the banking industry, we are very optimistic. We're optimistic with where things are going in the industry and with where South Carolina is going. Also seeing a lot of M&A activity, both within the industry and with our customers. And so we've got a very optimistic view of where things are going for the industry and for the state.