CMA - Earnings call transcript Q1 2018

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Operator

Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Comerica First Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions]. [Operator like Investor conference Relations. now Persons, to turn of Director to would over the Darlene I Ma'am, may you begin.

Darlene Persons

on be Thank you, Curt Chief XXXX Participating Credit quarter to Farmer; Comerica’s call Regina. Good Muneera Guilfoile. morning earnings and Chief Financial Officer, conference Carr; Babb; Pete Chairman, Ralph our welcome Officer, first this President, will and call.

as of And release During our expectations. in website, presentation slides from The and provide additional this results should presentation, detail. section SEC’s Relations we Investor the of will comerica.com. our the forward-looking website, actual This conference materially risks be in be are press contains call the referring as uncertainties on statements. cause vary well to you that slides can that regard, which available to mindful and

the Harbor only I release forward-looking in any date this speak to no Safe presentation statements. on undertake this our the within as regard, to that this could in discuss X, non-GAAP statements I for as SEC the and statement these of obligation you to the factors of results referenced incorporate we also Forward-looking into which I direct to would and, call in call update differ. I as Slide today’s measures this cause that presentation. refer reconciliation you of measures actual filings well

begin X. Slide on turn I’ll will to call the who Now Ralph, over

Ralph Babb

we XX%. of as of fourth share is slide over primarily adopted initiatives. up to fee well increased change basis certain income of quarter our employee for net Up expense expenses for transactions. from income interest related first figures was no to reflected previous recognition $X.XX adjusted with revenue a the restructuring on On and certain comparability. higher continued was thank X income. excluding due earnings and Note per which the X.XX% million non-interest related increased income we and quarter, was are an transactions per on benefits successful benefited earnings first our morning you The related year as GEAR the return XX% the that $X.XX is quarter. outlining standard adjustment. consistent equity pretax on Good deferred law $XXX return the tax tax restructuring, tax from adjusted adjusted has after presentation The accounting including reported assets on per employee call. new rates the for charges, are share our or This on and XX.XX%. the impact last in tax Relative stock Earnings a impacts small quarter, significantly, new Adjusted share and to income. and we adjustments first items the or joining net million $XXX per slide This quarter net stock share. in to Today against adjusted execution

decline. A slide in X and as each as the average average loans first our a lines, increased part corporate of first to business well of seasonality banking, loans quarter million quarter Turning typical mortgage a are as of and result banker nearly finance decrease an for X%. overview $XXX two results

non-interest-bearing we fourth in normal the As decline the strong growth as deposits following in saw far seasonal quarter. deposits,

less pricing. last the loan deposit began $X the offset benefit prudently conjunction million. The with increased days our interest balances. recently monitor by in standard lower partially we This loan quarter years. was in million prior net fed’s seeing mid-quarter, Starting in Net closely pricing the to balances, from deposit interest $XX is to two consistent rates managed increased to deposit as we in income continue and continue and was month. for products with loan We rebound and increase certain base and trends to which adjust rate

norm. $X and tax fees first losses more Our offset non-interest million On following offs outside charge a a quarter processing in compensation remain commercial annual adjusted conjunction million, this as fees decrease and strong decrease were as basis, our million fourth $X relatively in increased advertising activity. provision basis decreased XX expenses syndication in in included historical lending decline due non-interest adjusted $X conjunction for decreases in points an with decline non-accruals salaries and to in decreases by refunds. quarter below stock an criticized than and credit well weak Net loans. On market business $X expenses and with was million basis, and income benefits

stock employee and quarter shares tax income million. first $XX of a the credit X.X added in resulted million activity During provision to our

X.X We actively or continue to million and million $XXX repurchased capital and shares. manage our

you As the annual regulator of to response our plan receive our expect submitted quarter. CCAR and from end second we know, the have the towards

And over go regulatory now, who We the Muneera, simplify I on will fed’s detail. are legislation the encouraged the will by including in the more been front proposal to made progress recent requirements. and capital quarter bipartisan

Muneera Carr

Thanks morning, Ralph. everyone. Good

Turning to the and million growth is loan $XXX with normal winter sales. the seasonality hampered first mortgage in in the further declined typical Loan growth. quarter home industry slowdown over slide on Average X. across weak banker loans

as rebound However, balances began expected spring/summer are quarter home to to up. continue and sales grow this to pick

seasonality commodity $XXX capital and declined dealer middle increase and floor as [premise] loans bridge exits. declined offsetting quarter in as declines, fourth partly to result about as there activity of client due prices seasonal plan facility market corporate markets. repayment partly energy Average well relatively in general these due large strong a was to a Following loans million banking of growth

stable services, lines of estate and business as increases entertainment. our half life of the trend quarter. [ph] were environmental smaller back above have went as commercial for quarter with also across Total the the in period-end and well loans average period sciences, technology real in including specialty many positive the and the national We the

remained addition, has In utilization loan Overall, has pipeline our positive. loan increased significantly. customer and up sentiment is

a has our at the partly month term primarily basis primarily rise the the not LIBOR. in the normal as of first Seasonality points declined deposits XX loan the billion, yet. fourth strong interest to fees rate deposits increased LIBOR-based see yield other bulk non-accruals XX-day repriced normal of following dynamics due been decline in growth also so the the recoveries billion impacts increase X. loan decrease as fully recent most as level. quarter. offset $X.X you was captured loans in to Average in portfolio quarter more This by beginning impact of Our the of slide in in short recall, well on can $X.X deposit

a year trend, model $XX.X period-end competitive than a Deposit close past to increased rates inappropriately well billion above Also positive deposits and indicating deposits less relationship the years. offering ensure X However, this we our was to in the priced stay in products. rely of there help the has been decline points, have customers to two average. are basis on seen

marks in Fed the adjusted rates accident certain mentioned, with standard Ralph As of conjunction we products. our

total Our is to while primary objective retain costs. deposits our and attract managing

at shown which Our the modestly. a at slide have $XXX $XX position unrealized billion paydowns on been loss the portfolio carrying low-X $XXX above million under and expected to average transact the securities extends That on about and years The was continues XXX duration as sharp securities the basis estimated quarter of duration remains X. purchases yield years. the rate on the of quarter. X.X book value. on The the each portfolio had way minor to remains points decline two above of our and a Recent impact commodity in million short portfolio X.X

interest the income X. Net $X interest to net points. basis and increased Turning margin million up XX slide was

margin. the less balances. offset added points quarter margin. days loan rates in two increase Our lower XX interest $XX million benefit partly was portfolio or the million XX and to XX points The to the and provided basis by loan in basis This

as As points a quarters elevated recent portfolio X we to fed reminder, million recoveries, dynamics in from the quarter. the contributed basis returns of fees, those to as being more benefited margin. first non-accrual typical higher and in interest include other X the in levels loan Balances which well

certain impact months additional costs costs that added Also, pay due On result along the increased of products. some million, funding six at LIBOR the a million funding funding X wholesale X side, in was deposit to increased rates as attractive up primarily summary, points contributed rates with rise, increase on rate This were XX quarter faster pace the full rates. LIBOR the rise. to the quarter and fed included the from increased basis the benefit XX of December during rate million or increasing margin. net In the March the of

represents total loans. now decrease XX on XX. XXX and quality quarter of points loans includes Net loans end. X.X% criticized million. XX XX XX our basis million basis were credit This points less million to only or Turning comprised of which in than loans Total non-accrual a declined total charge-offs slide at

continue remain concerning are criticized balances, loans remains total Well point, [indiscernible]. At loans, As we this decreased. trends. we far as and quality any strong seeing energy non-accruals all and credit vigilant not

regarding maintaining are conditions. a economic market we However, stance conservative and trade,

to XX. Turning slide

As second rate million card in are competitive in this income a blue levels. excluding whereby non-interest are Both On syndication the fees. of non-interest to last derivative provide expense from half fees The X decline netted X run income X year. decrease difficult loan accounting Customer in decreased decline higher mainly with expenses and and million Ralph change. and commercial figures X million insurance. bank-owned typical in of mentioned, life presentation had effect a certain income thus new predict the the million against the included adjusted corresponding bars the are this basis, the we

GEAR this progress, in million XX. First, million, presentation, in the charges bonus brokerage. we accounting adjusting card, remain our the on a X our achieve year-over-year in as and brokerage To This X basis X employee this on decreases increases decreased fiduciary Up track [ph] expenses can and X see income. increased excludes advertising shown processing X We offsets, restructuring decreased Adjusted the million on million. the to and revenue targets. one-time the and fourth in quarter. growth change partly highlight fee expense Outside received million achieved for slide you after in fiduciary a

under to costs higher from in well shares are fewer well of and In as in rules declined partly repurchased has appendix. equity quarter, of program And to stock of fourth ratio miscellaneous deposit in in be management annual In can tax million remain efficiency and by on our or a compensation we've quarter. included rates. $X helped pension offset benefits initiative, portion XX%. from million X.X the we found of returned continued loan increases periods added quarter controlled during we million $XXX we've Together be activity see can received X.X in adopted be as million business employee More to UP impact as slide addition, activity which the Also, Expenses pricing bonus as and fourth GEAR with days the in our outlines adjusted. achievement expense capital with refund XX%. our our detail the the to not $XX repurchase per resulted you as accounting first salaries onetime Of million paid higher have $XXX shares. XX rates million, share. of income repeated. in higher the positive was tax first This well X which million provision shareholders. interest the tax $X.XX Slide or resulted to credit been dividend, requires of over quarter, new note, the stock the have expected about

$XXX XXXX million. year be have we expected indicated, previously the is benefit XXXX of the rate As to full increases

Of for up first to which In to our fed addition, increased now a first that quarter believe expectations. have a give we $XXX from million have of March an actions somewhat benefit higher the at in estimates $XX sustained be is rate. to factors This the expected million from added this accelerated such million reflected realized in $XX rates this full year million benefits million we $XX year rising to the by deposit beta. relates will depends In sheet run-rate. quarter moving XXXX. LIBOR a first the of we Furthermore, the an higher outcome our full to pace to we $XXX LIBOR includes higher comfort as total, pace our variety result quarter, on Recall our at million which and movement. in The betas as balance $X LIBOR of actions. moves, deposit benefit, loss ultimate million $XX

our deposit majority of in and type from Our Approximately continues are rate of rate or which in our fund betas bearing, interest-bearing LIBOR. benefit the XX% asset our illustrated our Also, our deposits costs positioned the increase sheet increase to expect sensitive be our well quarter a beginning floating cumulative third deposits are yields and in of a XX-day of of since balance in non-interest the the bulk as XXXX. of the retailed. benefit sheet Fed's loans majority rates. are with of balance This to loan with the percentage by is loan cycle real is increase the rate deposit the

XX% X%. our loan while deposit was cumulative beta was cumulative Our only beta

added not hedges asset change have We our sensitivity. to

balance asset rates. Our to committee position outlook our given assess appropriate and path sheet continues to for liability determine our the movements

will the I turn back our XXXX. to update Now, provide Ralph call for to for outlook an

Ralph Babb

Thank you, Muneera.

have been outlook expectations March for the income. We interest by for our furnished XXXX increase our incorporating net into rate

for unchanged. all other outlook Our is categories

rate economic we the of usual, are environment. As and current interest assuming a continuation

should somewhat which muted line be believe with expect energy We GDP. can We growth corporate businesses in drive stable. and continue to total increase banking, most by we to loans average in

seasonal to the customer expect spring. banker and wholesales pick-up particularly areas, picking in positive mortgage the rebound quarter sentiment We Overall activity up. most second in typical as is is see

we indicated, $XXX to XXXX drives short-term from of the Muneera rate with benefit rates. in $XXX the net As full recent the combined for expect million increases year

we increase further increases. offset included outlook, the to partly the March growth. And costs an benefit by somewhat from higher this rate expect full we rate as of not deposit are while a second increases far with position loan any the well As quarter along of benefit from return in short-term quarter,

expect XX quality We to continue be the between points strong. and to as credit XX basis remains provision

to expected higher. second relatively first a quarter, is in the provision be Following quarter provision low

excluding increase from our contribution X% initiatives, X% seasonally GEAR is income. typically in non-interest the comp we quarter to a in charges. second stronger Fee excluding income card expect the growth continue and Up changes with expenses in deferred With in fiduciary higher restructuring income

effect compensation decline the should the lower presentation from new quarter expenses expense. of modestly XXXX due first We’ve base which the was adjusted to quarter the Second earlier. accounting primarily for discussed

favorable It XX% banking strategy our from difficult serving to the pipeline excluding are is to our year and continued loan in rate drive after a tax transactions approximately have and quarter. as position well. significant start, achievement and interest Furthermore, controlling good employee The be rates been result GEAR expect believe, to initiatives Finally, of return seasonality closing, helping benefit [ph] our second will we in ratio effective our The from low efficiency expect credit deposit assist In which as maintain XX%. and predict. manage growing metrics. in the strong we rate economic our Up fees returns stock shift] and prudently growth with loan any increased as strong typical us expenses. in impact regulation to has we helped increases is to growth. We pricing is [related are additional increase changes well as our

any Now, we take of be will happy to questions. your

Operator

Instructions]. [Operator

of Ken the Our first with question come Please line from Usdin Jefferies. ahead. go will

Ken Usdin

side. the couple on income net a of interest Just questions

fed just in way February to outlook about move help And rates the ended in us want understand to the you that you'd hike I and it how can solid same. give just XXX all, you through March you of And forward? variable that quarter. move look expect as the yield understand, that First loan through

Muneera Carr

And that and will will otherwise a would the million loan in portion to said March month impact that $XX XXX. of that basis, and of March. we benefits be non-accrual elevated yields. provide million lot go-forward I of concerned $XX seen in As fees the benefit a was we the March. for substantial the have in far recoveries. that that essentially of benefits clearly as A loan of for have some talked rates From the as yields fourth the month quarter are about felt negated

a the You can was first loan points see the we of that XX the about of coming in basis as side from quarter picked up what happening million $XX on equation. result

know be I about XX would I expect benefit will nicely, yield So, should don't points. basis that loan

Ken Usdin

other the as Okay. it's hike were as to that get that XX Would XX going XX to month. still far offsets the the be you benefits. the be March we might or thanks. say beta whether you next hold? any what to And is will then, deposit be side, And thinking June If one that XX to

Muneera Carr

well mean betas as have under happening see deposit to adjust accordingly. that's tranche. you Well we increasing time I make as And and we'll know are passes, competitive sure that

the So, to the transpires what million $XX in $XX on environment depending million and continue and invest change outside.

Ken Usdin

never you -- thought will but Okay,

Muneera Carr

Ken you, that remember variable I'll what are billion tell just we have rates. loans So, is, of that $XX

the on side that then rates from asset of happened anything up will and And far deposit benefit so, obviously seriously the is side. sensitive and go the that’s

Operator

comes Securities. line of question Please the go Wedbush next from with Peter Your Winter ahead.

Peter Winter

the And confidence just for you've But sentiment wondering pipelines with what average of in loan that the going I'm GDP target the you're the morning. Good GDP. loan that good, type for growth? line hear to you year good. I that forecast hit you gives loan maintained growth are is

Curtis Farmer

you, quarter typically certainly Peter. seasonality. the a quarter. some talked in market, also, seasonality in In just we that But comments. respect of slower that as And Thank impacts businesses the Muneera about saw us us with mean to well finance on middle first for for Yes. banking. I corporate it's for other based her quarter the

think The encouraging of stronger quarter on seasonality as Q setting which which banking us of When were momentum X% much Market loaded. well which environmental for dealer expected you for If as in on we we went is entertainment. and up while building board, growth is exclude for growth growth saw across three Middle say services signs and quarter. building general you markets banker we million the and 'XX that look mortgage an have us very usually financial really number would Q'XX. across into bank backend pipeline based And corporate services, our for I in $XXX saw the not we real quarter all some at had a commercial were I the in mortgage up about a What we average well finance. in a CLS, we estate results businesses the the in as quarter seen mentioned quarter really as versus finance and already, about on bodes

think news is are is feel of were clients, just I translate growth in balance we at I pipeline all of So, economic Obviously, for above benefit in at in helping about to terms see least some that times period end look When fact yet front. the of there the year. we we the for of loans mixed good us our And we increase average cross-expert quarterly the the there for of some in still the positive. with tax in out end some but terms us and increase saw that the the the quarter, the had utilization. at

ability line line the of bodes growth with terms a all GDP in for year. or in full GDP meet think well us growth that for I of in to the

Peter Winter

regards Just With CCAR. on how about you you versus just talk to share question. Can separate a buybacks? dividends view

Ralph Babb

at have longer the the dividends of to share And we a on sustained we pay obviously period And then want the out being in buyback. to Well, with quarter paid look difference is. over a the what the time. as then total dividends ability

Peter Winter

a target ratio? a for Do have you payout

Ralph Babb

this at do not point. We

Peter Winter

you. Thank Okay.

Ralph Babb

we be it go to to traditionally and back history, as buyback, you which at have we dividends, whether the aggressive forward. our over is if important shareholders been But us move in returning

Operator

Please Steve the with next comes from line ahead. question JPMorgan. of Your go Alexopoulos

Steve Alexopoulos

start to wanted growth on second loan up quarter. the the in for following improved expectations I Ralph,

on XQ. typical size Is of given more you If heading improvement increase business the seeing a you the pipeline meaningful the Are the look pipeline tap? loan at in seasonal commercial in it improvement fairly recent into just confidence?

Ralph Babb

improvement comment seeing pipeline because I think Curt, more in you’re of that? you want to confidence. the do on

Curtis Farmer

feel really you Ralph already I traditionally, seasonality, for a the the think conversations clients healthier. we’re current do well. our alluded some Steve, number are or expansion years starting borrowing working like Obviously, conversations to needs. And been CapEx about with across it with businesses, that and to Yes. most of about the have normal last of which we capital so, our pipelines X to like opportunities. And clients meet have said

of macro So, the into I there feeling from think, perspective a starting and some that we’re from micro out things clients. demand actual to our some is economic expand

want that and pipeline at quarter to wrong investors don’t we impression in we feel I the necessarily second this stronger do year. saw the you So, there last gained that example point, for like a what give but is heading

Steve Alexopoulos

good Or in still to the indicator. in at Are commitments? you material a see you leading the as commitments looking build commit up will the

Curtis Farmer

we pull-through put look about not with do feel at grew rate actually quarter have heading good we and the pipeline values look business quarter the associated earlier lines. report overall it [indiscernible] to and Steve, across the We as look [indiscernible] really this at into and first pipeline I on both. We really the try mentioned at the throughout

Steve Alexopoulos

on I guys can to at technology you more do and you think age just on spend? banking? spend Or drive How the year? Thanks. have the of ramp to size like this in that you scale tax compete one need digital question do to this much spend. the you

Ralph Babb

the that our efficiency whole things it also reinvesting. GEAR to of take with focused standpoint Up, technology Europe process biggest reinvestments thinking of you customers. the which the our need to on product was to tools is about be when from both you're they putting of kind back of And provide one standpoint people of internal of a was need going being our the but an care and One to part

through few the go changed is in that very Curt, recently. been you here would a of important So that have if top things the of see you investing. normal on might

Curtis Farmer

us of that technology things moving we the have and relationship to both And work our on is be worked to I that's more products any and improve thing our changed delivering keys experience today and more tools under to building faster and that a one allowed through serve of move ubiquitous. fill customer colleague's really that's becoming is enhancements to leveraging clients leveraging deliver ourselves customization also services. from our think really technology away And ability more front technology. heavy and cloud-based lot agile and

now [ph] adding to platform. application mobile consumer loan CRM consumer well of we're loans in in platform new helps or and helps approval with our so We've a and as a treasury will the as rolled process. new management. done mobile platform rolling enhancement the basically again And platform months we're an the to process, So, like this out done just mortgage both rolling platform an lot credit our the of standpoint. processing the commercial [indiscernible] better month year, XXXX, and sort we've process And employee to along lending the every ongoing delivery made out about that, we from probably to lot and we're a which and [indiscernible] commercial we've management from finance which in NDN employee around specially of around credit digital We've out a a review April capabilities enhancements customer our of for treasury six perspective. customer

delivery. the the key and a feel vendor again of type we're as leveraging able lot cloud and leverage So, off more stay We of we well have things of in agile as some current to relationships like all pipeline.

Ralph Babb

Curt that top on to we efficient was systems talking that that applications And our about. making at our the rationalizing sure things were were of building more

Operator

Please comes the Raymond ahead. Michael Your Rose line with James. question of go from next

Michael Rose

Hey good morning.

capital Any of Have you thanks. had to to Washington the the return a capital guys questions. to back like your how shareholders. and capital free going up overall some study there, proposals levels? potentially impact Just It that would in seems chance it thoughts for would some

Ralph Babb

very it that's both thing talk in as any that we'll to us And said able shareholders We a the returning And most as I want own Whether from you standpoint legislative from about positive that be of been aggressive important always our And are and the to studying you those. as of being taken. appropriate. standpoint the have future is regulatory capital. the a historically to individual capital our Muneera? mentioned we earlier, manage at pieces position

Muneera Carr

including propose a and It's bit proposals in include I third is is buybacks out said step assets you the having step rise so quarter of opportunity say, And with change. able in be always that good next right still direction. our there. which period that size stress, capital, was in do a some of little direction, do we the us, that allow a Ralph. Sure, data the to but to they not proposal the of made believe are right the Ralph, plan, [indiscernible] there including a in year. effective suggesting But out a right weighted we risk our a the seem be we’d in which will have as it that the sooner to proposal not

So, looks good.

Michael Rose

guys mean a be at targeted to like want? have do capital will ultimately Just follow-up if or you you ratio I you that, to as proceed guys a

Ralph Babb

we for was public served feel go And We on control that as we at as the to have our part relooked Muneera well a through of will about us has is where have at have regulations the point not be talking be appropriate just we we out statement been when are. institution. that proposed And put we the a And traditionally to an what well. able amounts always are. chance what

Michael Rose

of forward? Any nearly Thanks. drag commentary releases loan what about cause one growth. would big XX book, has XX% would sort And on for in been some reserve It headwinds separate been that further on Energy portfolio? has a oil a year. the of And that you upgrades in for moving actually into translate of still a topic. to like guys maybe are non-performers the looks more just terms

Ralph Babb

do Pete, address you want to that?

Pete Guilfoile

the pretty by optimistic positive about Yes. way are that make direction, going middle that we pretty looking dent that we’re of Michael, is a through. my right it, we’ll we All And right guess and XX% redetermination in in time, we’re the are through optimistic. the so there substantial in get the process factors we’re is XX%. the

Operator

ahead. go Ken the Stanley. next question of line from Your Zerbe comes Please with Morgan

Ken Zerbe

by talk rate just you mentioned the guys curious explicitly of where normal but customers yields? of saw have conversations other just you about actually that call given Thanks. are a higher that Can it normal of search some seasonality, having about, was saying I’m the out in you customers it rising they’re the driven let’s you with flows about of I actually little part non-interest-bearing bit it, environment.

Curtis Farmer

we ETA are lot of a that with funds the based and/or funds clients, have very large of our some excess perspective of an used for lot oriented our deposit have cash. we obviously, operating to those accounts general and totally client A a clients commercial from had have offset those

having in our we’re to try rates see to with of watch conversations do of for and be increase continue it like alternatives competitive I those conversations terms are as continue say But to continued We primarily. raise exceptions them we we much be make to limited, managing goal appropriate have and we across kind where thus need to but can, about as the would we we’ll now far, to is quite possible so. board, as customer-by-customer right

Ken Zerbe

any or two might any three? terms are were that loaded the there or sort you or to the then Do other of so? end the actually benefit stock outlook were part what employee I question progress over year know last trying is, front guess getting. of And next in of of year And that the you comp guys have the is how in this terms just benefit over tax

Ralph Babb

I they've just the having I think a bit the call think a been up markets. of people catch strength of the And execute I what opportunity to you given. with what will see,

Muneera Carr

available in quarter them. first becomes Typically, the which quarter [indiscernible] is to employees

generally that quarter. predict, So year be quarter level if this as year the activity you quarter compare pent-up clearly quarters And you it's remaining from [indiscernible] of that In to to can down. see first having to there difficult is base well. first of is tends lower. some coming sort last but for And the that the pretty down employee in the first demand coming overtime that's

Operator

line the Please Scott from comes Siefers question next Sandler ahead. O'Neill. of go Your with

Scott Siefers

understand NII correctly. I I just wanted the make to guide sure

hear I March first benefit higher the that increase you into to sounds it prior Did baked number? only So, the already the say like quarter correctly LIBOR is is change the guidance the from the increase.

Muneera Carr

-- LIBOR the the first million it into we million to $XX baked million pieces. in increase the in run-rate. let Some that's that The $XX portion million, to $XX based quarter as million, is so that of me $XX break analyze million is of into the $XX $X

if of run-rate and XX per the benefit. So, about Scott? help you you to Does $XX XX take the quarter midpoint XX is which the million in XX and is that is

Scott Siefers

get just X-months. to think of you benefits in you. guys LIBOR asset increase. guys Yeah are side sensitive just And whereas I the, month, I there the simple move the it the mean there words, higher that the obviously X-month in to I other Thank you does. the the from as benefits one that if are guys well? you movement tend was then on beyond most In most Are to X-month any most LIBOR? get done. another LIBOR from LIBOR guess pronounced

Muneera Carr

that loans well. LIBOR our of portion small a as are have indexed at We XX-day

you slide see on XX. So, can that

there then of a lag at have taxation. we reset. little a yeah, that XX-day loans some times different So and is reset in of bit have also Different that the

Operator

ahead. comes question Please America. from of of next Bank with Erika Najarian Your go the lie

Erika Najarian

to wanted Good question morning. deposits. Ken's up non-interest-bearing I follow about on

strength about rising about non-interest-bearing about lack the rate are park potential So, think interest Comerica excess mix clearly that way ball of could And think forward? there percentage we commercial deposits, we shift as this we accounts the of cash underpin environment. shift attributed what is operating to as or going is versus we in balances those net mix as a think margin for a

Muneera Carr

XX% that about the we of Erica, are balances high our look XX% utilized is And XX% non-interest utilization. of that commercial. that towards that's fee at of the you pretty bearing, products said So, if overall have a management

So looking what we're hopefully a for that gives you sense for?

Erika Najarian

if gotten you give as your of the terrific. management. could you. and follow that's for up a question, wondering, change inquires hopefully management Thank liquidity us change insight better. of what terms some just lot And in a as of No, on I'm regulations could you've capital legislations

how, portfolio, your from And lower I’m here? differently the SIFI to you clearly definition, manage relative You did yielding securities the have pass a especially book legislation wondering, would if securities on any, peers. if

Ralph Babb

opinion substantial agree there how do maturity. And the point. get of this rules at to size could might be be have will different. be my We laid in out, but length with see Muneera you wouldn’t it the that? But

Muneera Carr

like that agree and deposits. loans we Where there, now. have right what on book happens that the with what the We happens growth with with Ralph. securities size billion to I XX we go is going with depend

happens is line front. in managed with that on there what prudently regulation, liquidity beyond So,

Ralph Babb

as how whether grow as times putting hedges be be move at there in and we forward, mentioned rate when, we’ve a many the should we and and are look regularly where that we it to cycle. manage will on we time And do expense

and get as when been managing like level. there, I rates longer we’ll at think in very a have the go we’re at which term, well we conservative back starting careful normalized we time to risk of the very As history, feel to point

Operator

Evercore of Your Please John next ISI. Pancari question comes from with line the ahead. go

John Pancari

pickup growth, that saw the you Regarding in quarter. know the mentioned late loan I you

we is we a balances balances the so, that it as above And period well as here use fair that portfolio just average loan the in of end base they loans? for given came grow can the

Curtis Farmer

is outlook that get will in we GDP said to with the our or what for range. I line you, Yes. growth John, portfolio is back loan the earlier

some balances, period quarter. see forward additional portfolio. with And some in do so, end year of go a for the for remember the the from dealer the think, reasonable the seasonality in March are balances use look But full baseline when We month additional see in perspective. you the to in our seasonality balance we for at third The that. that would we guidance, year of the say I

straight-line it’s scenario. necessarily so, And not a

So, growth for about the GDP tied one that’s in the line when we year, with necessarily for view quarter. talk average growth not and to any year full

John Pancari

beta XX% feel around about industry see that and maintain they’re that we’ve running Are I well I spread And know seen peers below in Because the XX%, like past. to XX on your size. that? work, separately you looks How the know Thanks. starting rate that you mentioned ability compressions? to know you slide is. XX, the do our you’re the around from XX%. that I loan On then the

Curtis Farmer

Yes.

it's same time, And remains that's for we’re but we last and us environment. very time relationship and several focused. We competitive model price client highly relationship deal the competitive been every client client of profile really the the the a that transactions, being or with to pricing customer. chase not to And sacrifice can competitive. it But or we're point been pricing relationship we're more not of at that continues. this make we've got sure me less and the our our on individual based client more. It’s remain relationship with to a are several now that for very risk it we overall environment one tough at any at want that very it has just going base, but really feels think years I where relationship competitive at to build saying work existing been hard competitive years our or we're

Operator

ahead. next line go comes Rabatin with Brett the from of question Please Your Jaffray. Piper

Brett Rabatin

competitively regard just ask earnings morning. see about credit from good and how rate what's the and to that changing? you Wanted expecting Hi, that you're

Curtis Farmer

that our that rate But an are there ECA rate. in look would the treasury Yes, clients remember, from say cover the we've where you to exceptions expect as calls standpoint some would at I appropriate. general, services. hard management ECA the again, made we offset leveraging very and

at where a a I monitor on are. wholesale would so and as relates have watch general, across market seen board basis. we that go-forward lift we to not continue we'll say lot the ECA side, rates deposit that like rates the view And to it ECA surveying do we in to just on a see of

Brett Rabatin

less that And maybe of curious competitive. seeing any more of you the environment kind with a will board little you as pricing? see are where haven't across are get then industries Okay. be mentioned a up in I'm few people a aggressive or follow you that just competitive terms more things or been

Curtis Farmer

all we are has dynamics But the like industry verticals that there markets single the I those pricing it times And environment. are environment in business would within and line portfolio. for industry know, across a we verticals No, certainly them I say with play. where at different of and markets our would and not at board feel dynamics different remains a to within very different competitive single significantly. pricing we those in out changed of just us the have

Brett Rabatin

you. Okay. Thank

Operator

Please Riley comes question B. line go next from Your of ahead. the Steve FBR. with Moss

Steve Moss

based on ratio payout XXXX for Good about example the been morning. think have should CCAR of Wondering just but how the Most my questions XXXX. asked, touch to XXXX? versus wanted we for

Ralph Babb

process the will out And month we where at we this Well of that's will quarter. the are. CCAR will know what hear last of time come we results that

Muneera Carr

of focus hope then look CCAR increased you payout. that at will if we see fact the subsequent components want Steve, as the that you our that sense that the with payout. of So, Ralph That's on the dollar to every the history, dividend And we we amount have to our continue. and percentage mentioned

And what of CCAR. so you expect sort out this that's of should

Operator

Geoffrey Elliot with the question next Research. from of comes line Your ahead. Autonomous Please go

Geoffrey Elliot

Good question. morning, thanks for taking the

elaborate rate in December been doing the Can action pricing bit and March. what how Fed you've rates you there increase? with standard the increases deposit talked in response to increase took the a You after you about compares on that

Muneera Carr

the that a some of talk we in about targeted strategic yes, So with and very we did pricing made differentiated standard a market. in changes different

go But all March to is of would changes that of the of the that we details what XX in XX tell rate for I much have through providing you million guidance included benefit rise. the to the too her. those million So we are impact

that each those us about competitive overall tell in the we you make through good have of I’ll that, our changes we markets. position that made Beyond have

Geoffrey Elliot

call. XQ the on specifically, And

by products on Is us money sense? and you on rate rate about basis over a sort rate Can think increase? compare on XX XX of set and products give deposits rates basis of points. by and it the I same XX million the market retail increase? of December this Can and give magnitude you contrast kind points this a balance you’ve certain us time? talked increased increasing of broader rate higher increase of the March Is you it

Muneera Carr

going to believe see customers just, bit a typically be or into we a we folded helps. small, said, adding pressure estimate be But bigger. slightly of of of some rate-sensitive the specific little I changes, going them it’s mean, have where to be over will many that either if too going competition all that It’s combination we to some it’s like I Yes. provided. them of

Operator

Your line next with Marty ahead. from Mosby question of the Please go comes Vinning Sparks.

Marty Mosby

rates from if I market going deposit. the commercial pressure kind of on sense may a they we from was be are But the coming of, utilize. that looking actually follow-up at to more can customers,

sale banks who was On most that -- of pressure kind if are kind of community from higher? retail curious, those seeing I base is pressures the do where of to and side, so the you where commercial the retail you’re or coming side, biggest push deposit

Ralph Babb

things franchise that of in one do set And every market make that of our have unique unique Sure. is we’re almost competitors a the in today. we

banks. So, and you have we the of more regional larger banks national banks and community all the have

somewhat is do unique against basket we a ourselves so, benchmark And broad that market-by-market.

at kind from across happening perspective. say average an and of we’re outlier. the that, some increases seen to buckets. doing to look going more But an shopping, I And always I all what’s you’re speak we’ve try in all so to, think and been across consideration. wouldn’t when have the try surveying board into competitors we the So, we markets, of that we really And take have X

And our right price some increases those think have and strike and do some thing to do of where between we what seen increases of the the larger banks. some community again, national for with balance regional with you’ve some trying banks sort right with medium increases sensitivity. the all So, we customers, banks, we’re is

Marty Mosby

be And growing is have that use just downturn that LCR ever you about that and sheet rate liquidity that in this deploy actually going expansion? through something to to next held loans probably things on built the carry of the able regulatory requirement balance and question second then how GDP you it? the the if kind to back Or wise all the of next maybe about think call we’re envision, is, if incrementally, through liquidity just we’re and it you’ve you kind do at that the

Muneera Carr

those, we of beyond appropriate, then I securities, But mean, think some I feel that about into point, that that And when growth. deploy long-term loan liquidity clearly, an first, we’ll rates the At that be. that move towards example. cash might the mean, as best securities we balance would are

Marty Mosby

it if some initiative or still doing incrementally something yields any with taking get there from you Are advantage better and to thoughts had about that of it?

Muneera Carr

I something mean depends present that that's upon themselves in just opportunities said, like the it future. I

Operator

the from comes next line of go Capital ahead. Your question Chan Please Lana with BMO Markets.

Lana Chan

Hi, good morning.

on rate XX increases. the a question benefit on again Just the from slide

the in the last assumptions, the deposit in been think calculate have betas I this deposit XX% the I of XX% couple first And the quarter, to quarters, was XX%. range. the beta only

embedded go So, forward could guidance? of you give have us what the you in an idea

Muneera Carr

and towards said isolating to just March will we've till you do talked faster and difficult you have said. tell better I'll start rise with right say, at deposit coming And December math frequency the of us rate every launch becomes December. to then what about be What rate where you to it And December, intermingling. and can really the sort start do just you rate than single you're single it's that and for rise XX%. is beta betas rate actually is is what specific rises what be done and rises a going we've every So, we've historically

there And such put out happens has has fact changes. asset large and approach on so, to we the side side made we used talked numbers, and the a about simplistic that deposit betas, it that impact on of for was what's we retain our putting those fact talked instead decided We've to the pricing fact just our about deposits. certain our that LIBOR a relationship dollars reasons the

that mean up. And deposit so, moving to all of that generally start going help Is don’t that beta you? is

Lana Chan

loan that then impact net assumption Does for include or static on clarify again. And assumption on just income this balance interest helpful. that on that's slide your on growth estimated expectations a from that the XXXX? is year, benefit. Yeah The to sheet

Muneera Carr

there. static growth on dollars is a actually low sheet. Loan at was That balance

Operator

from come Brian Please with will question of Klock go ahead. Woods. final Our Keefe Bruyette the line

Brian Klock

asked I on deposits. loans think questions everyone and

combination guess question on I a So, both. ask I'll

it. again that DDA up your market. side is On the the to been lot middle base based data market seems like with corporate general of And the the in first, franchise reduction was. has segment average a which your brings where me and it larger you looks have middle that some And from average in those balance the guys obviously picking is the it loan still deposits small loan strength customer the downs of you felt remind it happening larger guys Can during us some Maybe where those just is abating. you that quarter headwinds things portfolio the But the the about picking up. saw earlier like talked are is corporate with of momentum business you part feels middle the and are like things really market in quarter. quarter your might it say be the general during there or pay of

within talk loan So maybe that you can portfolio about product the dynamic type? that by

Curtis Farmer

Brian. Yes

about to back I'll there. mentioned market corporate first business you then middle come question small as of at and end talk So, banking your I'll the

did On business. we quarter, it's One, to corporate then strong the quarter the have of we do that corporate book side, first things. banking. seasonality secondly and important couple fourth in have remember And in I of typically a think

of different in buildup number for and normal quarter corporations of You fourth in that in distributions reasons with cash a think occur the QX. sort larger about then

some about the in financing unique We some in we it or somewhat that we payoff. in payoff line, quarter quarter. have We first seasonality related know unique half the And that situation, a was a anticipating declines the bridge where So, we quarter. in nature. best was didn’t occur financing first that. expect of to always business of short-term It our whether in one coming. a was clients done to then knew fourth for was the a would pointed And we were

a item. So repeatable that’s not

banking, that business you look we’ve say normal when in I rate a would opportunity that more run got at So, for corporate we line.

remains pipeline quarter. heading into Our second healthy pretty the

the I talked of earlier And standpoint, banking period solving the quarter, pipeline segments three all utilization average strength, so from business for end we anomaly markets think were what of think there some when general in I not market. of that for small California, markets. QX I three secondly Michigan growth that growth economies end our as as and growth all a for in sort quarter. towards which earlier while, in into and those then think, Texas of And the seen results, new our middle corporate dynamics is balance we the were year about a And saw market as first the of quarter there heading for I well. the we the mentioned covered three in well, the of well market bode growth and have I

Brian Klock

a is I year-over-year know have and X% you the there, utilization seasonality And of deposits there I still X% take Interest little about, and the first side, guys deposit bearing. down. the there? that so that you non-interest is at just still guess you actually deposits are maybe on Is the But talk my there the drawing those end a a last think looking that of bit earlier. deposit there question, where on on period about maybe in anything quarter be or talked some total down about I excess barking down then of [indiscernible] the use going for some before might that line.

side So, getting to on and seeking that some another of their through that to GDP it on growth the is lines they’ll of the then some their later good down turn maybe back your reason that maybe or about, feel liquidity point you’re customers year? and in commercial as excess drawing

Curtis Farmer

exactly client's see combination said. normal of starting and clients hopefully secondly, we then many that’s feel other a of thinking a liquidity that growth And with good growth think you to to like do I forerunner think lending related as about Brian, that activity. start on we’re Yes. utilization opportunities CapEx I our and It’s seasonality. as of is excess

is do investment some customers. beyond many we’re in our in activity of many think our that of for seeing type businesses net what and deposits seasonality pull the of down so, quarter I first And

Operator

I’ll to remarks. any Chairman now for Ralph turn and over back call closing the Babb, CEO

Ralph Babb

everyone like your much. to would our a you on today. all you day. I thank joining hope in Comerica. us I very I Thank appreciate for great And have interest call

Operator

for gentlemen, concludes and you Ladies me. this today’s joining Thank call.

disconnect. now may You

Comerica (CMA) 17 Apr 182018 Q1 Earnings call transcript