CMA - Earnings call transcript Q3 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

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 Third Quarter 2019 Earnings Conference Call. [Operator Instructions].

I would now like to turn the call over to Darlene Persons, Director of Investor Relations. Ma'am, you may begin.

Darlene Persons

Regina. you, Thank welcome Call. and Third XXXX Quarter Good to Conference Earnings morning, Comerica's Participating President Pete be Farmer; will bank, on call this our Director our Jim Chief Peter Sefzik. Executive interim Herzog; and Credit and Officer, Guilfoile; of business CFO, Curt CEO,

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

of obligation to release undertake as this presentation, factors actual speak results our incorporate statements in to Harbors which Forward-looking and can I SEC to cause filings Please this refer any into date no forward-looking the statements. Safe Slide X, differ. today's statement call only as and the that as update we well for of

regard, call presentation. Also, that and in within the direct these you non-GAAP to measures, conference will reconciliation the reference of this I measures

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

Curtis Farmer

reported we Good morning, of or $XXX million per quarter everyone. Today, share. third earnings $X.XX

Our active credit growth, ROE items to capital tax rates. third Relative income the benefit strong of quarter to continued X.X% performance. fee drive results declines the positive an demonstrated solid interest in management our quarter, of contributors XX%, with and of returns ability to our despite an ROA quality, second were discrete broad-based

low at helped control cost our under XX%. careful ratio efficiency our addition, In keep

summer from year, Banker sale quarter were activity. are volumes the compared refi the due along loans Historically, average with benefited activity second to increase stable quarter. normal the seasonally weak. home to third This Mortgage robust in

slowdown reduced in as our this anticipation Dealer summer by as a inventory middle XXXX model well decline offset customers the in of However, as difficult was delivery in seasonal National market. of

sentiment customer our and solid. remains is pipeline positive, Overall,

undertaken analytics over includes enterprise-wide resulting and a We seeing marketing in redesign. also This year are customer process past advancement tool, new the initiatives credit have relationship enhanced management greater efficiency or we our from so. number of a

over an increase the money relative to grew $XXX balance deposits $XXX million and including market in quarter, second Average customer million CEs.

a have the noninterest-bearing, have lowest nearly mix favorable we we deposit deposits peers. We will noninterest-bearing amongst as of and to half our component believe continue are

we have relationships. deposit As and the order retain rates throughout to managing carefully we attract cycle, are in

modestly on monitoring We rates. rely are environment our competitive closely adjusting competition expect in the to continue to and

deposits cost strategy The is reduce XX in our decreased working. to loan reduce wholesale growth that to total relationship Our fire our Also, funding loan-to-deposit ratio points. allowed funding XX%. basis us to helped

tied declined X.XX%. $XXX rate combined with growth primarily As net are in far of income, to of deposits, our loans XX million resulted over as interest floating during XX% net the points quarter. in and interest XX-day the and LIBOR, basis which income interest net margin a of This impact, interest-bearing

rates. billion able in September to to in relatively attractive We were swaps $X add at

total were remain build of XX at decreased to net million. $XX provision hedging taking points valuation points. capital the and of as sector time, market to market consisted primarily assets of basis this charge-offs program Nonperforming closely for our advantage basis select loans soft. only quarter, impairment the XX Similar and as with charge-offs credits and on markets energy declined Credit is to strategy arise. over the Our solid remains they second quality opportunities monitoring

fiduciary lending, fee A growth income. $X million broad-based increase of good helped the commercial cards We more offset income challenging environment. had in rate and in

end full-year the along benefits expenses outlook in to in in and expenses. provided flat, shareholders repurchasing This dividends, and costs reached million increase million buyback CETX program. $XX in the salaries quarter. We at shares under a higher returned with is capital in X% XXXX X.X third for restructuring technology increases our million share $XXX return the cost. which through by occupancy of We and hereby remain expected, line our As with we our target to XX% excluding provides resulted have over

line norm. reduced income count in increased resulted share management, Relative of in expense results share third quality Through our credit capital maintained this of earnings year-over-year. was no quarter the while our X%, historical our our active last ability provision drive we per X% our generate growth very nearly year, strong solid provision, Last quarter, by with have discipline. more our Altogether, to year, XX%. to reflect loan and fee growth

And turn month. last the assumed over CFO role of Jim to call interim the now we'll Herzog, who

Our to has our wealth CFO at is Jim? past a years' Comerica over of been a X underway. with knowledge search process has permanent Treasurer the years. identify XX experience Jim for and

James Herzog

Thanks, Curt, and good everyone. morning,

Turning to Slide X.

decreases seasonal general indicated, Dealer benefited an in loans Curt and Banker, stable As by the offset Market strong in third Mortgage which in also average Middle from quarter increase volumes. National with refi were

the Real from addition, in Estate we growth had multifamily largest activity coming In in contribution with Commercial California.

in stable, specialty activity all we Services. Banker, of our as Energy, Total in our period Middle billion loans of markets Environmental as grown and Estate Commercial reflecting average the areas we end Market well $X.X have Mortgage basis, saw in many with the loans National Dealer such Real a in year-over-year same essentially general were Services, balances. X increases as also On

increase yields basis recovery not took loan points was decrease in partly for interest elevated note, was during lease contributing residual of a primarily lower our This that interest XX a in result remains quarter, the loan of the million. second $X fees full Of the by LIBOR, slightly a repeated. were quarter. X-month rates, X.XX%, Our second quarter offset we an adjustment and

over and over Noninterest-bearing details $XXX majority the lines of all while million provides balances business stable, deposits. customer interest-bearing increased balances X Slide deposits X growth $XXX our million. with on increased of Average in across markets. were

increase deposit costs. balances interest-bearing higher-yielding shift in growth This a basis to point the at our guidance we'd is the X end of and The mix lower in provided. drove previously products

I'll to the moment. deposit begun adjust rates, With interest in take decline to the which discuss in rates, further action a we've

not Now as quarter Slide XXX portfolio unamortized average. in on reinvested significant duration environment is throughout third higher-yield can portfolio were a MBS premium, current on steady. full have relatively our second reinvested the the was held purchases benefit offset in The had rate yields range. or lower portfolio in you The small. to securities on been that mostly on quarter Yields has remains our the on impact which recent $XXX The of we the X, on yield quarter see million by stable.

day margin. products, or balances X the added in million increased previously particularly on the the interest the outlined. the and a margin interest XX margin. $X the basis cost interest X. offset the points This $X lower X.XX%. but other basis The deposits, Net fed factor was to I was Higher $XX had X margin. was by income partially impact $XX in points combined, on to offset and by the quarter as factors, well point was lower points higher-yielding XX negative were Turning million of of as additional of a had million $XXX rates, which in interest-bearing basis X major basis margin. or impact Growth Slide impact million million net by and had Loans a which yield,

remains rates and quality summary, the X the along for in interest-bearing margin. points additional reduced offset the solid, wholesale day shown Slide was partially impact deposit $X Lower X. added with Credit million quarter. net by on basis rates costs higher to funding X balances In by as

which is XX Our net charge-offs points, were basis well XX basis XX norm within $XX of historical our million or points. to

Energy, This strong of net were million. portfolio the $XX charge-offs X of basis Excluding remainder for points. recoveries the included only

charge-offs not increase we the was select a trend. energy believe of higher, primarily total loans. due were do While is impairment in charge-offs to this The

of of million points valuations loans by Criticized As been $XXX weak we at XX assets gas our capital or end. basis oil loans liquidating Nonaccrual less of energy have as total volatile remained indicated represent than impacted a low total quarter X% and of loans few last prices and markets. loans. quarter,

as very at decreased energy, loans million We while reserve increased $XX our $XX far level. As a criticized for million. remains which nonaccrual healthy loans increased Energy,

steady held of $X of from quarter. million, million the decline second provision in a a and ratio $XX X.XX% reserve Our resulted at

our tests and CECL parallel are far in on As remain adoption year, next of the for successful running as we first implementation. a quarter track of

or of minus have Given expectation X%, the capital relatively change plus therefore, portfolio short reserves economic ratios. duration of the our a in fairly and commercially on we be will expect our impact little environment, weighted and benign

income, X, million. Turning increased noninterest which to $X Slide

due mainly to Fiduciary increase. strong Our $X card Commercial resulted higher income asset continued fees on focus to values. primarily and $X lending tax a million in income. syndication due $X million increased preparation fees fees million also increased lowering

categories due to returns were exchange. increases in and million on including X million compared other of second comp letters the of offset Deferred lower adjustment. Derivative small to had were rates credit also valuation noninterest impact asset in We in credit $X which $X expenses income the several declined foreign the quarter.

increase mainly our and mentioned a expense. as ratio health $X seasonally a higher of Occupancy drove remained due well I low million additional and initiatives comp in software $X controlled X XX%, the million in and technology on seasonality. shown increased well as as as Also, $X in the Slide to day Salaries efficiency were Expenses result increased previously benefits at XX. expense million deferred quarter. that care increase expense

On count quarter, slide X.X total X% shares shares. down which share share million is under is a of to XX%. we our the Turning in basis, year-over-year our nearly XX, program, repurchased third our repurchase

million Together third in $XXX with the dividends, we returned shareholders quarter. to

shareholders yield to X%. the to well over dividend, our as currently of as is which attractive has healthy provide a goal a way returns Our buyback of by

Turning rate environment. to the slide and XX

more fourth benefit. full is which as impact X interest third we've mix expecting added the $X with from million with costs includes the deposit We deposit have quarter well basis provided to rates as quarter shift. impact anticipated economist we're in decrease December view. rates fed high, to million isolation consistent income. to of rate to Also, interest-bearing points a minimal quarter in an $XX This lower X expect million In our $X to net swaps,

different ranges for our sheet million on movements, under interest a funding. from period. XX-month and at income for of balance factors, fed impact the scenarios to economic $XX interest deposit need on rates our outcome While and on our as a a recent are We've model to cut the rates are expecting depend rates has in few reduction deposit run mixed, will variable markets the ultimate a XX net which net the million scenarios competition depends income The points pace competitive and as beta $XX variety The a basis again. such data standard been moves, with and these estimated major LIBOR the over environment.

mentioned, we XXX swap the average Curt rate an interest $X.X remaining billion As of half term of the September. the we years in fixed of swaps Together book on in since the the put basis with billion with average received rate of added $X X.X points. at swaps sits now first year,

the closely market. to monitor continue We

previously our is quarter. shared, Slide steady XX over our fourth the we program strategy As our for time. involving hedging make to outlook progress provides

in and average Seasonality fourth National a Services Mortgage basis. in expect general remain Middle to increase We Dealer Banker. in an typically loans Market, and quarter stable drives a quarter-over-quarter on the decrease

growth and of we further Energy. slow anticipate our purchase Mortgage to activity, reducing down our is Banker mortgage While XX% and Otherwise, businesses sitting decrease it tied in in volume banking small volumes to we a loans. refi several expect near

anticipate end average growth loans relative Given projection of the of so the in our X% performance to we this reaching loan XXXX. previous X% full year, far to strong year upper

We working. focused We also expect deposit retaining strategies relationship our are stable. and deposits, attracting be remain on and levels to

As core plan relationship brokered deposits down to manage grow, we deposits.

impact a income. ago, interest have discussed about are net $XX on million expected rates I lower As to a net moment

addition, believe recoveries fees quarter the and strong nonaccrual we repeat. loan are third unlikely to interest In

a some in As strong additional migration performance to portfolio. the the believe expect credit, book. in $XX to far $XX continue of the rate of between provision remainder we Energy will we million, be potential as includes have We the which million and

million, income offset it of was $X to difficult which expenses, deferred is predict. comp Excluding in

income expected noninterest be relatively Our to stable. is

will quarter elevated income which reduction We than expect customer-driven by offset and third syndication be fees our modest growth in fiduciary more categories, a number levels. from of in likely

X% benefit expect forecasted our of year-over-year outlook are on income strong we previous increase for to full growth, grow income third basis. fee to the quarter With to X% noninterest to exceed the modestly. Expenses a

revenue-generating We activities. processing related see expect technology to to our higher and in to primarily retail costs investments tied higher expenses bank, outside

occupancy, excluding as incurred employee certain In we pressures and seasonal expenses, continue benefits -- stable, addition, year's marketing. expect to full-year last the remain the restructuring impact a year. we expenses inflationary basis, charges such On to

we ratio XX%. CETX Finally, at about are to our targeting remain

the determine expected growth needs earnings future carefully market our fund of the we we As consider loan share conditions. capital buybacks, pace and generation, to

Now Curt call back to to I'll provide turn remarks. the closing some

Curtis Farmer

XXX-year credit we have across economic, we and continue Jim. history, economic conversations is this and managed and I continued solid as GDP quality. in or of growth colleagues to to year our see tone expansion. slow, with cycles. had deposit markets The we interest well many expect have rate customers core and In credit next optimistic, our you, Thank modest and different loan had with steady as backdrop, growth than With slightly line better see through I've recent

rate the profitable and pension net the believe continued impact in are inflationary we on Yes, expense, with technology, and several pressures rates cuts. in combined in provides with income much reduction The on interest pricing market our is they a currently but from headwinds, interest uncertainty investment fronts, manageable.

our capital our to addition, and our repurchase lower allowed meaningful us excess return count, a EPS. program share providing benefit In to share has

or January. call efficiency provide better and focused performance. on are ratio XXs our a economy controlling low for can to positioned weather ROE control interest things maintaining and earnings more an our the in We With next remain we XX%, we outlook to We changes plan of on rate detailed the strong XXXX in our environment. in the

growth a and In closing, shareholder long-term foundation profitable drive QX our has provided enhance value. we to believe

Specifically, footprint, with time. of includes income deposits expected strategy, to our our result banking is in diverse fee loans, geographic faster-growing combined markets, relationship growth which and over

invest our well. positioned conservative, maintain capital for has including to we continue future. to We the our approach Also, banking, credit us expense consistent as prudent management, discipline and

questions. Now to your take we would be happy

Operator

Instructions]. [Operator

line Ken Our first Zerbe question the Stanley. will from of Morgan come with

Kenneth Zerbe

cut. impact just XX, a first terms my provided December of $XX NII guess for question, in rate a Slide I you million

looks I provide If you the Can that do an cut. building Now is just October does morning, of what cut of probability your in curve instead checked it NII imply the quarter? rate we sensitivity? future's a XX% like this in the December, for October get just us fourth

James Herzog

little and And would certain Ken, year. do get morning. feel is we will before of Thanks, of the rate we also get that a one certain. It Yes. path that a is end is probable We it correlate cut highly a good that the October. little the less will less LIBOR in

cut of point providing at XX And so would we'd December likely specific the path to go I sensitivities with October our somewhat And some rate we're October to Slide to proportional an not that. in total, this be in of should economist a of the to due But guidance and you forecast terms on uncertain just LIBOR. the cut. of point,

Kenneth Zerbe

you. Got

in just the of in are curious you like are quarter, make digits? curve actually It -- I to are high you in appreciate cost might only sense terms how I same just but points, from The just in see you -- know your slide. just question our cut you deposit deposit the different understand. basis Or going answer. I'm going on interest-bearing what to overall comment high. can the future's rate probability of they peers is to down the X X cost a I is so Okay. like a guess I deposit seeing lag down that, what because far maybe peers, far guess I you're like competition. I fourth very but thinking was the single lagging? competition? do

Curtis Farmer

quarter. lagged inflection We a we the lag some up, hence point, do I that competitive remains that before It We deposit fourth environment. little And on we Curt. we gave why costs. guidance that deposit slightly on Kenneth, about way that believe will talked have in probably will some increasing that our downside. we we will the still we down reached the the have -- believe as costs believe question. and this we said, fairly come in is take bit a

we've CD in we're a to evaluate. pricing continuing actions with bit on to in and pricing we're standard well. where -- and starting have in reductions the little taken see some CD reduction And We reduction probably as pricing, seen of

Kenneth Zerbe

in last Okay. I Great. if And could one one. squeeze

charge-offs Energy quarter. in are by broadly just about charge-offs are points? obviously, Just portfolio, provision Energy terms Can be sounds you sizable Can What what higher more of concerned, additional the where this the are? just stress talk of include you I reason Energy? about talk guidance you mean stress does Is your points it the probability like next seeing? there the to quarter.

James Herzog

Sure.

So energy outdated this Energy we is or bit any the little markets, a point, remain quarters the But our not at widespread we're portfolio. credits next charge-offs would some X migration provision for see capital migration are our area. some Energy forecast that in in the assumes There the obviously, that impact, expecting weak that workout the and from in portfolio.

some in other not of overall, weaker credit to that the are quality. a credits this we expect to expecting migration be very significant But result change We in additional portfolio. in in

Operator

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

Brett Rabatin

in any And have based second reserve that are you're does Did that the back terms and anticipating? what XQ know well? of I impact of a the to redetermination for function in weakness tests, just on a factor I that Is go seeing have portfolio? some just talk lending as then their Energy lenders changing wanted you're to additional the a about SNC review season?

James Herzog

weak from are, the synergy first market, not Well, there. are -- seeing SNC we're some very -- felt impact exam tough, certain to value big have what What actually that before. are bring We weak of XXXX. because there a all, the charges probably of assets in liquidation any We expect early that did very part really take Yes. additional those standpoint, credits asset the of in in realize -- assets to the showing sales line with to need the those discounts. book we at is

expecting we're some E&P are credits. like quarter, strong we our took just Again, lot migration so not to last portfolio of charges very And of most there. a additional here, see

liquidity. lower reliant speaking, are strong capital those the very markets. on sheets, And good have average, less credits balance We generally

it's the So dependent upon migration in. the markets that are that more we're really seeing credits capital

Brett Rabatin

other thing And ask Okay. the expenses. Appreciate the to wanted color there. I just about then was

how you You're XXXX, thoughts -- the margin, on year this on give margin your operationally, try would does XXXX, of in tight you for us additional versus manage just things same give on but given given us high-level possibly rate any pressures you're react color pressure? keep about thinking at haven't we're going be and I Or an and guidance heightened looking any mean like the Can And outlook the seem or flattish if you focus pretty XXXX. you expenses in expenses to to that it XXXX, kind can again? would there? know expense

Curtis Farmer

in are of guidance not get Thought that I to related. we we'll would you're rate the primarily aware there year what that my giving remarks expenses of on that correct a interest more until fourth few is the did XXXX the headwinds that be end a we're call in fact quarter in be earnings Brett, January. formal prepared say and in the

mirrored normal standpoint, I've inflationary we focused the items, years. discipline expense we on And cetera. said to expense things. employ sort in expense you the remain the But the last et so as side that of of demonstrated strong continue and will have calls, pension the we occupancy, house, a on the pressure we'll side just on several very of then pension accounting from some And have prior

experience we we even well proved might work us. in the maybe even in that and a some and So Up has think, well a the priority even environment we for in And us an high focus GEAR can declining our manage did, remains that environment expense expenses, normal I XXXX. think on I pressures that positioned that rate with

Operator

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

John Pancari

be you had than in growth loan know, GDP. loan line somewhat XXXX, I indicated outlook, the the or Curt, for growth On better could

we're when looking that could look loan range, So X% if potential at growth that X% you're -- that is -- expecting you some for at moderation you GDP level that in the in that XXXX? does XXXX versus imply you're

Curtis Farmer

going go forecast end the growth start at a give and we when might where strong let would little that specific is some turn, add more going overall just what core growth are moment, where We to year some that, for Sefzik giving we Finance growth of for at saw point, I'm I helped year of commentary, moderate give quarter. to the of a fact alluded slightly refi is we more we're to quarter. very first third XXXX at more the half hint be that anticipating Peter coupled right but the sense recession you We'll in stable we formal that you to give volume of of loan now. say sort Mortgage sort XXXX. I'll in some and the Peter, slowdown with to the in revise the and third were headed towards there or that. activity the think But the going ahead again free, we're to if there that outlook translating Banker into to things

Peter Sefzik

the with fourth that would encouraged I business loan referenced able to think lines real years we're we'll the of continue. the across the still things of along XXXX, are that growth some last Curt here. you add, said encouraged the several work on that over lines over think I would for and most that you've like two feel solid of quarter, I the pipeline about has -- that, is Up. GEAR growth. our are think of helped just We we've what business, and done continue quarters us how good for seen be the I for feel the we're And our last efficiencies And

So...

John Pancari

generally I either about about at appreciate you that in trend what revenue we remain how where think 'XX, gave the the efficiency specifically, And look how XXXX the for coming versus to for in versus expense that through on you're in to light of operating side, of could right. XXXX your help All of terms or color think backdrop, on the you then leverage more in disciplined front 'XX? us you can Okay. efforts terms you when saw for ratio, separately

Curtis Farmer

Yes. What would decline overall, say in that relative we guidance the both have efficiency we given work can for we for I Up. ROA, ratio a operating conference on peers XXXX on we can our perform the our the we around yet. haven't to did last company. to at that But is leverage do that impact efficiency is say any What But or on basis we done perform well that we've that given still cetera, ROE, that well relative believe positioning rate the returns and ratio, on ratio efficiency did an overall we certainly, et continued basis. GEAR given believe would relative

John Pancari

loan Okay. then you Energy stands? loss where reserve, it have And lastly, the do

James Herzog

to We have this Yes. are Energy issues address don't available didn't seen in strongest that would to have at we much amount in and we you Energy those you reserve And disclose at that consider, healthy this we we really Energy I But say in reserves the we issues this reserves that I least do larger or on I allocated quarter amount except probably quarter. the Energy. allocate Energy. reserves have ex John, portfolio allocation would've those whatever when a reserves to of could fair did a amongst to the Energy. time. that the have to we fact the tell though any of a industry all can say anything

Operator

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

Peter Winter

XX, looking Slide was that. I Curt, back at to just going

quarter. net swaps, With second a billion I the the little worse at in it's addition estimated of impact bit interest than income, look when $X the

asset just So about the I just to the sensitivity? details the can a more plans wondering, talk from little was reduce swaps and bit about impact you

Curtis Farmer

more little have are we a the swaps talk I'm the impact bit swaps swap said, asset time towards might the added plans to in to get about calls we sensitivity, or the real to over of hedges Jim on I at measured turn getting we current levels. this specifically first year, and reduce the really What take earnings that impact at going to talk There levels programmatic a about is to or to quarter. and all the position adding is working adding to to a that there. hedged larger and for we're that these going a approach then

so be rate on the our trade-off future that a careful objective recognize portfolio. we to try to and do to And or to is have forecast years. we how But either larger between rate declines potential increases in get

quarter But we and not days we necessarily and so of we only billion of there add has along. couple worth we back will of nothing there. trading favorable, to fraction every And have to programmatically measured time, changed was a go But be swaps. as we where a larger and were able level position move larger that over and will sort add $X get a in

quarter specifically. to the around turn I'll Jim you And

James Herzog

add sensitivities. is take $X the a About shock. for billion of That that swaps. bp will XX off did We from Yes. $X million

deposits know, second you we we an customer that As for sensitivities, asset have quarter in our increase that to by does did fact which increase, significant increase, driven deposits, sensitivity. the had the add an over reported a was and largely

there. scenario So beta increase see that that the million in net $X you result deposit did to of a XX% those

Peter Winter

And on quarter, wondering, those just preferred hit ratio, then you just and issuing I'm target maybe stock? using proceeds then CETX separately, Got to any your it. And buy this on the stock? updated back thoughts

Curtis Farmer

a something we would we but to But not XX% end be are to were that continue have option slightly that level. of number that is below on we we of at focused It's to said kind capital have the all down fourth And we'll exact given only issuing we to stay would that. share our hard the is down this to manage for targets that variables, with a stack along it's guidance get the an the have. capital We preferred decision the given We of manage evaluate had time, right sort and continues a quarter came in preferred stock, number and we any on we The quarter to going we'll consider, level the Board. to to and moving certainly going continue discussion call. forward. to is not earnings

a also, But our making sure and way to to As growth constituents consideration, the continue a are appropriate just loan shareholders, shareholders, regulators growth lending cetera. into have and number we of on rating for said capital in agencies, on that taken we've we we we our bullish side, there obviously, the et meaningful especially previously, company want be opportunities. that capital in return that to

Operator

Your comes with question the Alexopoulos from of JPMorgan. Steven line next

Steven Alexopoulos

view, you value get so From are stabilizes, revenue low will rates Kind of picture years again, be as continues your this prolonged do rates? shareholder higher a you sustained pressure on think drip fed big NIM rates both about start and wanted in to how of to ROE paid deposit it once the base. here start and driving environment under be and to even lower, before could

Curtis Farmer

sort though and prolonged positive there from not low of a what some and do we're on I'm I is economy look even forward positive hearing U.S. consumers caution have remain businesses, that environment, to the I Steve, debate both could out so there. think on we're we rate overall very the going there.

different a on our credit, fight our well think GEAR has to time, us to We Up interest well over to we basis relative that holes economic perform allowed well We've both reinforced as peers. peers. And lot a But yours sort on positioned continue the a some did believe relative on managed can work I good rate, said and around to with that from not and bit through on I this really have and previously may differ anticipate my do and little from perspective any we that, strategy. to our a And of years, comments, we perspective. XXX is said what said longer-term been, in that have for we've change of us perform I perspective. I has basis having so my a

continued part things focused some of markets would and we great we're that on of the some lines can organic business. great we're that that growth and control, So on focus be in

growth a And that driving continue our we're capital a to very priority maintain both an front, in to secondly, strong and on continue To do served remains we've there. And be to of point work good think very believe in alluded been some credit sort expense conservative and then we us reach focused in But and of be talked I progress well lots we as to credit discipline Pete and if job return discipline we the shareholders. make continue will place. on we inflection appropriately, which and which at think hit basis also And help well to believe our you growth We've top I our job on very keep same but of will manage time. I appropriately kind to deposit acquisitions -- to the is able verge we just that. the of have talked a to on fee point, believe hedging one. -- a do expenses capital manage And a using then continue in earlier about And so. that down cycles. growth, managing earlier our We'd to over new done credit about to, deposit in has our income fund costs that earlier, long performance. perform customer as credit. we position, relative to said we we recession, of through can a approach that period we as

we are focused can things that company. a as control, the those on things we're that So

Steven Alexopoulos

That's helpful.

CFO the not the us, In this? underway, terms of you could of left Muneera clear company. now search me color included, why share there on it's still any Is many to

Curtis Farmer

Yes.

a a filings our was Herzog, in lot who We're I just violation, I put Jim she company we lot did our contributions valuable issue, for am financial, CFO us. would think we you CEO, to of Muneera think with launched that I Chief She the team. search the in nothing operational, there's new would did, national of CFO, And with to reemphasize Officer in concern a nature Muneera as that to a to establishing of very have whatsoever. our no my has for of And process, prior say new related what fortunate I role, expect, mean leadership a I as know number nothing filing thing to in and you Accounting interim that Muneera's disagreement of a you years. the obviously, nothing CFO shared our experience that is policy both a that or very departure have in in our as the any make on company, longer was we up role. company, with no the CFO. the last said we

And we remain very wish of the bank. service to well appreciative so her her and

Operator

Your of next Najarian Erika from Bank of question line the comes with America.

Erika Najarian

And floor. what here now stack with how that power capital you time, your CETX you this Was think work from repurchased to to about want relative you've at your your noted buyback past? we in at current the should

Curtis Farmer

Jim?

James Herzog

Yes.

its with target put did I We quarter. model, by needs capital support of into growth And the be. our the repurchase you loan the dividend, is and to and those capabilities, forward, our function that can to hit the are going driven of are you all point -- earnings really share be think, the our supporting purely back back end share if what the in XX% this pleased third at from going we

be it's I so a forward. a factors it that CETX, in of right predictable. kind X a make more are state going does to our steady just share We of those function repurchase in But mentioned now going little activity

Erika Najarian

there a And to? the the more guard in end And that long could is if that Got impact down, the that, of it. go of the have way give what a expenses? curve to that we terms follow-up rates us sensitive be you as pension rails to is to is

James Herzog

end little remeasure. bonds. a rated it course, There's It peg to double-weighted and curve, year at of we And the in of end the Yes. we there. the do the is of long bit of spread credit

So you by interest formed during biggest even on various January last that and are actuarial assumptions rates the financials we good duration look the XX-year, yield the equity and And think, state factor, returns, the every as are there's our a a points December go we spread but And there XX if for other good movement. that that. last in remeasurement look last asset The the the assumptions, basis years XXX far a years of at of since there's markets if interest away the year, longer discount almost rate it, liabilities bps biggest quay, at pretty the are pretty there that's you'll such rates for into credit you little are though or from are bit And proxy XX how XX. but down impact know is XX our about million proxy. determinant. published than I a movement $X little a factors date, and

different come new those and remeasure So there's can January have all still our and we'll end put movement this variables. X. lot again with those then, that we'll occur expense all of consideration, a pension of until we'll year, But at under factors the

Erika Najarian

took one And And if I'm the last you I'm see. just thing. your the thought shareholders flip have what of asked doing been you're too could here. all I and I in that away Steve Curt, one terms in sure cyclicality. wondering question asking offset if right us the I I to

continued nothing result keep how there's do your underperformance in if the growth of enough are mostly enough is of loan offset And due will, running that's have to till part I'm to what all to with I'm if obviously, gains, because, that down vibrant be you've cyclicality that wondering there your And is, XXXX GEAR the business. mentioned that if of the in response is and been market, is XXXX? the you're -- earnings efficiency stable in So earnings for the that wondering going Up. you is earnings to to in cyclicality expectation

Curtis Farmer

occurring the with revenue to or things Okay. We'll in, that into sort January downward focused an are interest other the revenue environment and perspective previously. evolution a rate puts This can around remain that do it's on the of that value side, goal sort And long that's the and the as consideration take weigh the at continue time be in, we growth. very know we franchise markets sensitive, have things institution that factors and cycle give of quarter late take all side, the the guidance this We rate more also not asset from but on even growth factor we just investing our call, and topline credit then reductions, and slowdown. that I'll economic fourth expense term more reemphasize we certainly, quarter to control, industry. so an dare pressure credit have management of formal and we an operate of franchise, to back longer with us we topline our into expense the manage a will that of long-term perspective, mentioned things the but the our balancing the factors, we through that in managed across consideration lots including earnings first we coupled technology you

Operator

Markets. the Capital line comes RBC of Your from with Arfstrom next Jon question

Jon Arfstrom

Question for talk the Middle but you, as I to Pete just for guess, maybe outlook. well, general Market it's about

slowdown summer? in You you cautious like what like in guess view since that's talked at is comments, a you feel little prepared the it I pretty overall saw it's Do do changed you better? and bit a getting about feel still has all environment? Or the

Curtis Farmer

don't answer you to that of mind. I'm Peter if your actually let -- Peter, all going

Peter Sefzik

Yes.

as positive, out ago. our may still it Since still that been not as be days maybe it there, XX I feels pipeline pretty really still good. think was positive But it And but good. it's looks

the world and forward. a ask going going customers Market to Middle on that see things company, general continue of are you But macro see lot talk questions see and the see seasonality, third for some historically, as did we there Our is typically much not we're we encouraged the and they're maybe we about. we in year-over-year what to but middle opportunity. market solid, with have busy, like we quarter growth When in as

Jon Arfstrom

Okay. maybe understand Curt, that optimistic used well? little And us phrase help you then, conversations, bit the as a

Curtis Farmer

Yes.

with just said are our customers, think Peter the current in out serve. that out when of business, I'm I business and mirror working of they're, to borrowing markets lines that, well of us a the we any really as in still market, the lot Peter it's I in what think general, in of said, meet busy. And is A general, in markets are capital. many or

last operating, of several a more is CapEx for haven't of spending, so lot conversations but years, there. occurring seen lot seen We are changed nothing that probably spending the haven't CapEx has There we a terms going really peer very from sort whether trade-related political global in perspective, issues. of are or of are perception things I But sort day-to-day a just customers of it's mentioned macro where busy. about our

of concerns meet In about for bit of having demands, my right fact now a little to around lot not of there comments changed in staff why growth. are has the challenges more labor about reflected example them current enough future having that and which just some a the part but foreshadowing maybe XXXX and

Jon Arfstrom

retail That's and you just expenses, talked, some Okay. investments you quick one there? on and maybe expenses talking about you're you magnitude of talk bank, one. of the the could areas flagged about key And were the where you the When then spending? helpful

Curtis Farmer

can platform digital of banks there to the is one But of the to on us money. very we and allowed focused And of a as are spending colleague some on that front customers we We retail strong and send a the that we sort just we're less And we As were mobile initiative all customer some very well. and on lot reallocate strong new technology things it's have the we of Zelle early banking. enablement. our to chat and franchise have certainly a of said reorient previously, adopt be where our terms lot of were been that today, we front banking sure new that GEAR had to going and on to Up technology aging in into are our that make platforms core we've more and acquisition. doing relevant continue a retail capabilities customer

fronts Comerica a us you'll of side, roll and clients will for for to that speak. revenue easier onboarding, sign to out digital the so see onboarding capabilities be customer of and, platform to lot across so speak, to On a new different up

that's So forthcoming.

new new We've our technology primarily but some then our the continue center work not And as digital done and that supports retail within a to center there adopt call lot capabilities. of just retail around bank, to exclusively. well

interfacing For all are to banking out make itself. center tablet with just within rolling a and their example, we the them capability easier banks the for regional sort and more bankers mobile clients the interface and of

remain are to do but create within for some things had are rate and longer run a sort the to us little to we competitive All customers. hard bit right manage of sure do pressure our of for on a our current thing make working the the that they're for term of these we of we on overall us, and road those on but technology map, relevant

Operator

comes of the with D.A. Tenner Davidson. Gary next Your from line question

Gary Tenner

forecasting Just Slide where of down the XX. disclosures your had the were you How if question Particularly curious X% Energy, that in on about commercial do portfolio? the shake I'm where volatility kind out? the that side reserve. on would adjustment Energy flat on is you're CECL much commercial you CECL from to there portfolio think number the ex think of kind on

James Herzog

Yes.

things. So a couple of

and Energy all quality X credit entire of upon the forecast. all, season segment loan small is First as as of that, portfolio up segment the a from dependent of it's very relatively is and just economic of well portfolio. the make

but other factor, of would almost that remainder have would impact, obviously. credit $XX overwhelmingly, the forecast and but drive from an a of billion the be would the portfolio, economic have from quality, we Energy that it both would some loans be it So a more

Operator

Curt to the now remarks. will for Chief Executive call closing turn I Officer, Farmer, And over back President and

Curtis Farmer

for call you day. appreciate Thank joining interest We today. a great you. Have our everyone's Thank in Comerica.

Operator

this will you for conclude call. and Think Ladies joining. gentlemen, all today's

disconnect. now may You

Comerica (CMA) 16 Oct 192019 Q3 Earnings call transcript