Comerica at Barclays Conference: Strategic Focus on Growth and Stability

On Tuesday, 09 September 2025, Comerica Inc. (NYSE:CMA) participated in the Barclays 23rd Annual Global Financial Services Conference. The company’s leadership, led by CEO Curt Farmer and CFO Jim Herzog, presented a strategic overview highlighting both opportunities and challenges. While emphasizing strong franchise performance and growth potential in high-growth markets, the executives also addressed concerns regarding commercial real estate and seasonal business slowdowns.

Key Takeaways

• Comerica remains committed to enhancing shareholder value through strategic initiatives and expense management.
• The company expects continued loan growth, particularly in the middle market sector, despite challenges in commercial real estate.
• Deposit growth has exceeded expectations, driven by organic growth and larger transactions.
• Comerica plans to increase share repurchases and continue investments in core businesses.
• The transition process for the Direct Express program is expected to extend into 2026.

Financial Results

Comerica’s financial performance was a focal point of the conference call, with several key metrics highlighted:

• Loan Growth: The middle market sector, including core manufacturing and service companies, is identified as a primary growth area. However, commercial real estate balances are declining.
• Deposit Growth: Overall deposit growth is strong, with expectations to exceed third-quarter and full-year outlooks. Non-interest-bearing deposits are performing better than anticipated, allowing flexibility in wholesale funding.
• Net Interest Income (NII): Comerica anticipates a decline in NII for Q3 but projects a 5% to 7% growth for the year, with an ascending trajectory in the coming quarters.
• Expenses: Expenses are expected to rise in the second half of the year due to seasonal factors and project investments.

Operational Updates

Comerica’s operational strategies focus on leveraging its national and specialty businesses:

• National and Specialty Businesses: These sectors contributed over 25% to non-interest income and more than 75% to capital markets income in 2024. Future growth is expected in the mid-single-digit range.
• Capital Markets: Investments in the syndications team and M&A advisory are boosting capital markets income.
• Direct Express Program: No account migrations have occurred, and the transition is expected to be lengthy, with no significant impact anticipated until 2026.
• Expense Management: Efforts to improve the efficiency ratio include real estate rationalization and tech optimization.

Future Outlook

Looking ahead, Comerica maintains a positive outlook on several fronts:

• Net Interest Income (NII): A continuous increase in NII is expected over the next several quarters.
• Deposit Growth: Confidence remains high in the growth trajectory of non-interest-bearing deposits.
• Efficiency Ratio: Comerica is exploring opportunities to enhance the efficiency ratio and improve return on equity (ROE).
• Direct Express Program: The transition process is anticipated to extend beyond 2025 without a meaningful impact until 2026.

Q&A Highlights

During the Q&A session, Comerica addressed several key concerns:

• Customer Sentiment: Remains positive, with customers borrowing for working capital and investments.
• Auto Industry Exposure: The greatest tariff impact is on auto suppliers, with an exposure of $700-$800 million.
• Private Credit Competition: Comerica is facing competition in leveraged transactions but remains competitive in its niche.
• Capital Distribution: The company is in a strong capital position and continues to increase share repurchases.

In conclusion, Comerica’s presentation at the Barclays Conference underscored its strategic focus on growth and stability. For a detailed understanding, readers are encouraged to review the full transcript.

Full transcript - Barclays 23rd Annual Global Financial Services Conference:

Jason Goldberg, Analyst, Barclays: If everyone gets seated, I’m Jason Goldberg. I cover the U.S. large-cap bank stocks here at Barclays. Welcome to day two of our 23rd Annual Global Financial Services Conference. We’re glad you all could be here. We have a very strong showing today, particularly in this room of almost all the major large-cap banks. I’m very pleased to have it kicking off this morning with Comerica from the company Chairman and CEO, Curt Farmer, and Jim Herzog, Chief Financial Officer. What we thought we’d do is they put out a slide deck last night. Curt’s not going to go through all of it, don’t worry. Maybe just spend five minutes touching on some topical things, and then we’re going to do a fireside chat. Curt, let me turn it over to you. If you could just put up the first ARS question while he’s speaking.

Curt Farmer, Chairman and CEO, Comerica: Good morning. I know many of you have been focused on Comerica over the past few weeks, and I’m pleased to have this opportunity to provide some detail on our strategy. Hopefully, you all had a chance to take a look at the slides that were posted last night. In those materials we provided are forward-looking statements and non-GAAP financial measure notices, which also apply to this entire webcast. The number one priority of both management and our board is to protect and grow shareholder value. That’s our duty to our shareholders, and we and the board take it very seriously. The core of our franchise is strong and differentiated. We’re concentrated in desirable high-growth markets, including 13 of the 15 largest and 7 of the 10 fastest-growing MSAs. Our competitive funding profile is built on a solid foundation of a pure leading mix of non-interest-bearing deposits.

Our strong capital position provides flexibility for both organic growth and capital return. We’re well positioned for the future between the structural tailwinds supporting our net interest income and targeted revenue strategies. We’re focused on a number of initiatives to drive shareholder value, some of which we’ll delve into later in this presentation, including responsible loan growth, strategic investments aligned with our core relationship banking model to drive sustainable revenue growth across middle market and business banking, payments, national and secured specialty businesses, capital markets, and wealth management. We’re working to reduce our efficiency ratio by successfully executing on these initiatives while also taking a hard look at expenses. We’re continuing to optimize our capital position.

Our main focus remains on levering this robust franchise to enhance profitability and drive value, and we believe our strategic positioning and strong balance sheet give us the engine and flexibility to meet the demands ahead of us. We spent time this year providing investors more visibility into our revenue roadmap, and I’d like to touch on a few slides that continue to demonstrate the investments we’re making and growth potential we see in our business. In the first quarter, we discussed middle market and business banking. In June, we spoke about our payments business and deposits. Today, we’ll round out the rest of our commercial portfolio by talking about our national and specialty businesses. We’ll also highlight our capital markets business, which is a natural complement to our commercial customer base and a strong contributor to capital efficiency income.

Our national and specialty businesses are actually a combination of 11 distinct business lines. On this slide, you can see our primary office locations, but as the name implies, our coverage and customer base are national in scope. While the industries represented are varied, what they have in common is a highly discerning approach to customer selection, a thoughtful and proven credit process, and a targeted go-to-market strategy. These combine to create a diverse set of businesses driving growth. With tenured colleagues and deep industry knowledge in these sectors, we deliver tailored solutions, consistency, and thought leadership that supports our ability to retain existing and win new customer relationships. In fact, in a number of these verticals, such as entertainment and environmental services, we feel we have market-leading positions.

Although we have made deliberate decisions over time to manage select exposures, our national and specialty businesses have demonstrated an ability to grow. We believe this supports our expectation of future growth, which could approach the mid-single-digit range even after potential pressure from commercial real estate. Beyond being a loan engine, our relationship approach in these businesses drove over 25% of Comerica’s overall non-interest income and over 75% of our capital markets income in 2024. This is a good segue to capital markets on slide six. When we talk about larger bank capabilities, our capital markets focus is a great example. With our commercial customer base, we often say we punch above our weight with a tailored set of products that meet the unique needs of our customers.

This could include managing rate, currency, or commodity risk, accessing the debt or equity markets, or expanding our customers’ access to senior credit. In the last several years, we’ve invested to drive even more growth. We expanded and realigned our syndications team, created a development program to build a pipeline of future talent, and built an M&A advisory practice. We’ve seen results from these investments driving higher capital markets income and supporting expectations for ongoing growth. Capital markets have been a good news story for us, and we see promising future potential. In closing, we think about the accumulated benefit of all of our revenue initiatives in conjunction with the structural tailwinds built into our portfolios, and we feel we have a compelling story to drive growth.

Further, I do want to reinforce that our management team and board are always focused first and foremost on enhancing value for our shareholders. Everything we discussed about our strategy and initiatives today and everything our board reviews now and in the future is guided by that principle. Jason, thank you for the time. We’d be happy to take some questions.

Jason Goldberg, Analyst, Barclays: Thank you. I guess maybe just start off by talking about just customer sentiment. You kind of, on the July earnings call, talked about sentiment showing some signs of customers beginning to make more investments. I know the summer season is slow, but just maybe update us on kind of what you’re hearing or seeing.

Curt Farmer, Chairman and CEO, Comerica: I think the sentiment has pretty much remained the same. We’re continuing to see customers borrow for both working capital and starting to make some investments in their business as well. I’ll probably talk more as you ask some more questions about loans, but in general, we feel really good about the pipeline overall and believe that bodes well for growth in the second half of the year. We are seeing a little bit of seasonal slowdown in the third quarter, primarily in our dealer business. I can talk a little bit more about that as we go along. I think despite some of the macro and micro issues that are out there and some uncertainty still around trade policy as well as interest rate movements, I think in general, sentiment remains pretty positive.

Jason Goldberg, Analyst, Barclays: You talk about seasonal slowdown in dealer, I guess, is that the auto tariffs impacting the auto industry? I know Comerica’s exposure there. How does that play through it?

Curt Farmer, Chairman and CEO, Comerica: Yeah. We have a long history of exposure and interface with the auto industry, given our history in the Michigan market and Detroit. I would say that in general, the impact is a bit greater on the auto suppliers as it relates to tariffs. It is a manageable part of our portfolio. It’s about $700 or $800 million of our overall exposure. What we’re seeing there, especially with a few of the auto stampers, is a little bit of migration in the portfolio. I think they’re doing a good job overall in managing sort of their expenses, managing liquidity, etc. Many of these auto suppliers have lived through so many cycles over time, including the last five years and including COVID. I think that space has gotten a lot more efficient. There’s been a lot of M&A and consolidation.

They’re better capitalized than they were previously, but we are seeing a little bit of weakness there. In terms of auto dealers, which we provide floor plan financing, floor plan financing is down some as inventories are lower, especially with select OEMs, select nameplates. Most of the dealers we work with have, you know, 10, 15, 20 different varieties of nameplates in their portfolio and distribution points, really in major metro areas. They’re holding up pretty well overall. I think that as cars continue to age, they’re making a lot of money off of servicing as well. I think there is some near-term pressure and there’s a little bit of downturn in borrowing that we’re seeing from dealers in general. Some of that is just sort of third-quarter seasonality waiting for the fourth quarter inventory to come forth. Overall, I think we continue to feel good about the space.

I would say in general that when it relates to tariffs, that’s probably where we’re seeing the greatest impact is in the auto sector.

Jason Goldberg, Analyst, Barclays: Got it. Maybe before we kind of just delve into the key earnings drivers, in your July deck, you kind of lay out on slide 13 a pretty good outlook for the third quarter and full year. Jim, may I get any updates to that slide as we sit here today, and how does the Fed potentially cutting next week impact that?

Jim Herzog, Chief Financial Officer, Comerica: Good morning, Jason, and good morning, everyone. As I look at the first two months of the quarter and what I see in the remaining month of the third quarter, we feel pretty good about the outlook that we provided in July. We really don’t have any material changes to that. There could end up being some small puts and takes between line items, nothing too material. On the whole, I think it nets to be consistent with what we had provided back in July. In terms of the rate cut, we’ll see what happens next week. We contemplated a partial cut using the July 31 curve, and we may get the full 25, if not more, it sounds like next week. We had mentioned that we do expect a lower than maybe standard beta for that first rate cut.

As a result, we will have to keep an eye on the competitive landscape and just see how the market responds. Overall, I would refer you back to my comments on the rate cut and impact that I gave in July. Big picture, I feel like where we stand today is pretty consistent with the overall outlook that we provided back in that July earnings call.

Jason Goldberg, Analyst, Barclays: Got it. Maybe just kind of delve into more of some of the key drivers. On loan growth, last quarter we talked about an inflection and kind of thinking about today’s progress about the back half of the year. You talked about dealer, but maybe just talk to kind of some other areas of strength or weakness. It looks like quarterly average loans are relatively stable, maybe running a bit below what we initially thought.

Curt Farmer, Chairman and CEO, Comerica: Oh, Curt. Yeah, I just would say in general that we believe that the greatest opportunity and the greatest sort of pipeline opportunity for us continues to be in general middle market, which is pretty dispersed across our geographies with core manufacturing and service companies as well. We talked about dealer being a little bit soft, but we still feel good about the outlook for that overall in the second half of the year. I would say that, you know, we’ve continued to have a little bit of headwind with commercial real estate as we have seen balances continue to trail off in that portfolio. It’s mostly construction, multifamily, industrial, etc. A lot of that has been rolling over to the permanent market with less new originations occurring in that space. Although we remain very bullish on commercial real estate longer term.

The rest of our businesses are all, you know, relatively healthy from a pipeline perspective. We mentioned the entertainment business earlier, equity fund services, tech and life sciences, etc. Kind of across environmental services, across the rest of the portfolio, we feel like the opportunities are pretty robust. Probably the greatest opportunity for us is in the middle market lending space.

Jason Goldberg, Analyst, Barclays: I guess on middle market lending, we’ve been hearing a bit more about just private credit getting more active in that space. How does that kind of impact what you, the competitive environment, and what you’re doing?

Curt Farmer, Chairman and CEO, Comerica: Yeah, it’s been a growing theme. We certainly are seeing private credit in select areas. I would say there’s a lot of our portfolio where we do not see private credit. In middle market, it tends to be more leveraged transactions, typically deals that we would be a little bit less interested in doing, where someone is looking for a little bit more of a credit extension, a little bit higher leverage, a little bit more availability, and maybe more favorability in terms of elongated terms than you might see private credit come in. Typically, we’re looking for more cash equity and less leverage in the transaction. We’ll participate in some of those, and others we’ll take a pass on them. We are starting to see a little bit more there. I think we feel like we’re able to compete and kind of stay in our swim lane.

The other area would be in our environmental services. That’s the waste haulers, so waste management business. We are seeing private credit there, but we’ve seen it there for a bit. Those tend to be more leveraged just by nature. In some cases, we’re able to partner with private credit. In other cases, we are able to compete well against private credit. In some cases, there are deals that we need to pass on. I would say it’s primarily in those two areas. I wouldn’t say it’s necessarily getting significantly more, it’s just been sort of a steady stream, just like we saw the advent of private equity a few years ago.

Jason Goldberg, Analyst, Barclays: Got it. I guess maybe turning to deposits, in your slide deck last night, it actually showed a little bit better than expected deposit growth after a decline last quarter. Maybe just kind of flesh out what you’re seeing. If I do some crude math on the mix of non-interest bearing was down a little bit. Interest bearing was up actually a decent amount. Maybe just kind of elaborate in terms of just the growth trajectory and mix you’re seeing.

Jim Herzog, Chief Financial Officer, Comerica: Yeah, Jason, we’re really pleased with deposit performance so far this quarter. We did have some seasonality that extended a little bit later into the second quarter than we’d expected, but that did pivot in June. I would say since the month of June, it’s really been on a continuous upward trajectory since then. It does look like we’re going to exceed both the outlook that we offered on not just the third quarter, but it feels like the full year also if this continues. I think we’re set up for a strong second half of the year. It’s really nice to see some of the focus that we’ve had on deposits pay off. We’ve focused on a number of areas. Tactically, we focus on things like performance measurement, incentives, the way we have conversations with customers.

We’ve done a lot of product development over the last couple of years, so great to see that pay off. Thirdly, we have had a strategic focus on bringing in new types of deposit customers and relationships. Alison Fleming talked about some of these opportunities at the June Investor Conference that we had. It’s really great to see those pay off. I will say that beyond just the good organic growth that we’ve had of customer acquisition, we have had larger transaction activity with our existing customers. That’s not surprising. We do see that quite often. Being a larger commercial bank, you do see some larger transactions come through that can help augment those balances. That’s something that can come and go, but certainly not unusual to see.

In terms of the overall mix, we do expect the brokered deposits to trail down as we move through the third quarter, probably close to zero by the end of the year, given the strong core deposit growth that we have. Great to see there. In terms of non-interest bearing deposits, overall, continuing to perform actually better than expected. Yes, the percentage of total deposits, non-interest bearing to total deposits, did drop slightly, but that was really more of a function of the great success we’ve had with interest bearing deposits. They have had a significant increase this quarter, and we welcome that. I’ll take a little bit higher pay rate and a little higher mix of interest bearing deposits any time to help relieve the pressures on any wholesale funding that might come with the great loan growth that we have.

Overall, even though the percentage dropped a little bit and we are slightly lower in the absolute sense in the third quarter compared to the second, we’re actually coming in higher than I outlooked back in July. Overall, I’m really pleased to see how non-interest bearing deposits have leveled off, actually slightly outperforming, and makes me feel good about the setup for the rest of the year. Finally, I’ll just comment that it’s great to see that it was somewhat broad-based in terms of where the deposits are coming from. Particular strength in middle market, you know, our bread and butter, private banking, EFS, but for the most part, pretty broad-based across. Just great to see our deposits, deposit initiatives continue to pay off, and we just think it’s a great setup for the last half of the year.

Jason Goldberg, Analyst, Barclays: I guess maybe just to follow up on deposit pricing, your interest bearing deposit costs went up in the second quarter. A lot of banks saw declines. There had been some pressure last quarter on pricing in the commercial space. Just talk to what you’re seeing so far in the third quarter and your expectations on costs.

Jim Herzog, Chief Financial Officer, Comerica: Yeah, in terms of how it’s tracking in the third quarter, it’s actually tracking almost exactly as we had indicated at that July earnings call. We’re tracking very closely to that number that I provided. I talked about it being a little bit more than maybe twice the four bps up that we saw in the second quarter. No surprises there. Just as a reminder, and I think this is really important, if you go back to the first Fed cut back in mid-September of last year, we’ve had the highest beta on the way down of any period that I know of, certainly amongst the highest, about 67%. I was pretty consistent in saying that we were moving somewhat assertively to lower deposit rates, but we were also pretty consistent in saying that we thought at some point there would be a little bit of a give-back.

I think that give-back was partly precipitated by the fact that the Fed really went on pause for quite a while. You’ll recall the last Fed cut we had was last December, mid-December. We’ve had about nine months of just flat rates. We did have to recalibrate the strategy a little bit, and that was not surprising to us. We did raise our rates on certain consumer products at the end of the quarter. The give-back that we had there really accounted for about half of that guidance that I mentioned back in July. We’ll get the full impact of that rate adjustment in the third quarter. We’re not expecting additional rate adjustments going forward beyond the third quarter. It was kind of a one-time reset.

The other half of the increase I’d mentioned in the July earnings call, and I think this is still true to form, is the fact that we have been very successful in gathering additional deposits and additional customers. Again, that’s something we would welcome. We sometimes pay a little bit higher rate for those, but still well below wholesale funding costs and allows us to maintain a very healthy loan-to-deposit ratio and support the loan engine that is Comerica. Overall, tracking very closely to what we had projected.

Jason Goldberg, Analyst, Barclays: Got it. Maybe throughout the next ARS question, and while the audience looks at that, maybe just kind of tie together the loan and deposit commentary with respect to net interest income. I guess your guidance in July pointed to a decline in Q3. Just maybe talk to kind of your outlook, you know, kind of Q3 and Q4. I think you were talking kind of a low end of 5% to 7% for the year. Just, you know, how do we start to think about, I guess, the back half of this year and, you know, think about net interest income, net interest margin into 2026?

Jim Herzog, Chief Financial Officer, Comerica: Yeah, good setup. As a reminder, we did guide to be slightly lower in the third quarter relative to the second quarter on net interest income. As Jason said, lower end of the 5% to 7% range on full year-over-year net interest income growth. I still feel like we’re tracking pretty well to that. As a reminder, the driver in the third quarter was the fact that we had that one-time reset of deposit pricing and also the preferred redemption that we did on July 1 that was a little bit delayed in replenishing as we moved through the third quarter. Those were just more one-time events I would consider. Overall, expect to be on an overall trajectory of increasing net interest income quarter to quarter going forward. In the fourth quarter, we will have good organic core growth on the balance sheet.

Growing loans and deposits will be very accretive to net interest income. We do have a Bisbee drag that will occur quarter to quarter, which is non-core. That will be more than offset by the maturing swaps and securities and those tailwinds. That’s a phenomenon that won’t just be for the fourth quarter. It’ll really be practically every quarter in the foreseeable future as well as future years. The tailwinds from those maturing swaps and securities will more than outpace any Bisbee drag on a consistent basis. We feel pretty good about the overall trajectory going forward on net interest income. When I think about 2026, those comments apply to 2026 also. I will say the X factor in my mind for 2026 is what happens with non-interest bearing deposits.

That’s been our X factor for some time, and that’s the case for most banks, but maybe a little more so for Comerica. I am encouraged by what I’m seeing with non-interest bearing deposits, and I’d like to be in a position to say that with nominal economic growth in 2026, as well as the tailwinds of lowering interest rates, we should see finally some growth and trajectory upward in non-interest bearing deposits at some point during 2026. It feels like we’re getting there. I’m starting to feel that much better about non-interest bearing deposits, but that’s something we’ll be keeping our eye on.

Jason Goldberg, Analyst, Barclays: Looks like the room is modest growth for NAI for 2026. I guess by your comments, though, it feels like that Q3 should mark kind of the inflection point for NAI as we kind of look out over the next several quarters.

Jim Herzog, Chief Financial Officer, Comerica: Yeah, I certainly think so. Sometimes you have a seasonal factor early in the year. We’re not necessarily projecting that right now. I would say it was kind of anomalous events that you saw in the third quarter, the one-time deposit reprice, reset, and the preferred redemption. Those are things you would expect to continue going forward.

Jason Goldberg, Analyst, Barclays: There has been a lot of discussion about your hedging strategy and securities portfolio profitability. We have seen some banks take pretty large repositionings of low-yielding securities. I remember you did a little bit last year in the fourth quarter, but you have kind of shied away from that. As you’re thinking on this, has it changed at all? Would you consider doing any more repositioning?

Jim Herzog, Chief Financial Officer, Comerica: Yeah, we’ve been pretty consistent in saying that our uses of capital start with supporting our customers’ loan growth. After that, supporting the dividend, share repurchase would be next. Securities repositioning is a use of capital. I would rank it lower than the ones I just mentioned there. We’ve been pretty consistent in saying that share repurchase would be a higher priority than really the temporary tangible book value benefit of doing a securities repositioning. Having said that, securities repositioning is a temporary use of capital as opposed to the other items I mentioned, which are a more permanent use. There could be some tranche of capital available to do a securities repositioning. It wouldn’t be outsized. It would be very tactical. We’re not committing to that at this point.

We’ve not made a decision to do it, but there might be some amount out there that would be available in terms of capital deployment to do a tactical securities repositioning. That’s an option we’ll leave on the table, but again, I would summarize it as not the highest priority right now.

Jason Goldberg, Analyst, Barclays: Got it. I guess before I move off of NAI, one question we get a lot about is just Direct Express. At some point, it’s expected to go away, 15% of non-interest bearing deposits. First off, does this happen all at once or does this happen gradually? How do you kind of replace this free funding and how do you just think about it normalizing then?

Curt Farmer, Chairman and CEO, Comerica: Yeah, Jason, what I would say on Direct Express is that really we do not have any change in sort of the status. We continue to manage the program. To date, there has been no migration of accounts out of the program, even though it was announced that we would move to another provider. In fact, we actually have seen enrollments continue to grow in the program. It has been a bit of business as usual for us. We’re taking care of the customers and supporting the physical service and the Treasury with the program. At some point, we assume that a transition will occur and it is still believed on our part to be a lengthy process for that transition. We’ve been saying for some time, kind of longer versus shorter. We assume at some point that we would start seeing balances run off of the program.

To date, we have not seen any occur and we’re not expecting any in 2025 and really don’t believe that it will have a meaningful impact in 2026, but sort of stay tuned on that. We have been continuing to work on strategies to offset those deposits. I mentioned in my comments and Jim’s alluded to a little bit in his comments already. Alison Fleming was here, who has Payments and Treasury Management for us, back in June or at the conference in June, and working on a number of things. One, to drive more granular deposits, we’ve been focused heavily on our small business strategy. We’ve hired over 100 small business bankers, have worked on really retooling their product set, their Treasury Management capabilities, their lending capabilities, although it’s less of a lending business and more a depository business. We have about $5.3 billion in small business deposits already.

That’s pretty very successful for us, very aligned with our sort of Commercial Bank focus as an institution in a space that we did not focus on a lot historically. We tended to focus more on business banking, middle market, on up. Secondly, we’ve been looking at embedded finance opportunities. We think we’re uniquely positioned there given our Payments and Treasury capabilities and the rails that we have set up as a wholesale bank. We’ve seen a number of nice opportunities there and some wins already and a number that are in the pipeline. We are continuing to drive deposit prioritization across our entire portfolio as we see growth occurring with customers, both in our Commercial Bank, Wealth Management, and Retail Bank. We believe we’ve got good opportunities for continued growth on the depository side and feel good about the trends that we’re seeing.

We think that at some point, the program does trail off, but we believe that we can continue to work on replacing those deposits over time and believe that it will be manageable from a transition standpoint.

Jim Herzog, Chief Financial Officer, Comerica: Maybe I’ll pick up on the NIM. I think you asked about NIM at the end too. Of course, I don’t like to give NIM % guidance. Again, I always comment that you don’t always have a correlation between NIM and net interest income. I did mention earlier, I expect net interest income to have a continuous ascending path over the next several quarters and really years. It’s hard to say, as Curt said, what the exact timing of the Direct Express deposit exit will be when it occurs someday. Depending on where we’re at with our deposit gathering initiatives that we reference, it’s possible you could have some very short-term interruption in that trajectory upwards. A transition period wouldn’t be totally surprising, but we do think it’d be very manageable. We’ll just have to wait and see how the timing works out.

Jason Goldberg, Analyst, Barclays: Fair enough. Maybe just on expenses, I guess the guidance seems to imply that we’ll have a kind of an uplift in the back half of the year. Is that still the case?

Jim Herzog, Chief Financial Officer, Comerica: Yeah, it is still the case. I’ll point out that we actually had very well-controlled expenses in the first half of the year. They came in below outlook and consensus, with a very low growth rate from previous quarters, so very well controlled. We do expect a pickup in the second half of the year, really driven by a number of factors. One would simply be that we had some notable items that we talked about in the first half of the year of 2024. We wouldn’t expect those types of notable items to repeat in the second half, beginning of 2025, I should say. We don’t expect those to repeat in the second half of 2025. Secondly, we do have typical seasonal challenges in the third and fourth quarter relative to the second quarter. That’s fairly normal for us and for most banks.

We do expect a little bit of seasonal pickup in the expense spend rate. Finally, project investment. We continue to invest in the revenue-oriented projects. We did not see as many of those expenses the way the first two quarters played out in the first half of 2025, but we do expect some of that to transpire and become a little more apparent in the 2025 second half. Overall, kind of a normalization of the expense run rate. We were just a little bit suppressed in the first half of 2025, and we expect between seasonal patterns and just normal investment for that to pick up in the second half of the year.

Jason Goldberg, Analyst, Barclays: That kind of places your efficiency ratio at the upper end of peers. Let me talk to how you’re just starting to think about 2026 and any opportunities to improve that efficiency ratio on the cost side.

Curt Farmer, Chairman and CEO, Comerica: Yeah, I’ll take that one, Jason. If we look at sort of our growth rate from a CAGR standpoint on expenses, we’ve been tracking fairly in line with peers. Having said that, we do have a high efficiency ratio, which we continue to believe is a bit more on the revenue challenge than on the expense challenge. Having said that, we’re looking at every lever that we possibly can to improve that efficiency ratio and ultimately improve ROE. That includes a hard look at expenses that I and my management team are going through right now. That would include all the things that you might think about. Real estate, we’ve done a good job there. I think we’ve closed close to 50 banking centers and done a fair amount of rationalization of our portfolio in the last couple of years.

There’s always more opportunities, and we’re looking hard across the portfolio at sort of real estate costs. We’re also looking at our tech stack. All banks have had to spend a lot of money on technology, whether it’s for customer enablement, whether it’s digital, AI, etc., but also on the regulatory side. There’s always opportunities to be more efficient with technology. We’re looking a lot at sort of our technology prioritization and where we need to prioritize spend on a go-forward basis. Looking across the portfolio at headcount, I think we’ve done a good job there and are fairly in line from an efficiency standpoint in terms of headcount. We are always looking for opportunities to be more efficient on the headcount front and then just third-party spend, whether it’s consultant spend or just other third-party spend. We’ve got a whole sort of stream of work we’re looking at there.

Nothing to announce today, Jason, on the expense front. I would say as we get into the latter half of the year and normally give guidance for 2026 on the fourth quarter earnings call, we’re looking for opportunities to lean in a little bit heavier on the expense side than we have year to date. We want to do that though in a way that protects sort of the revenue things that we’re working on. I mentioned a number of those earlier that we’ve been heavily invested in, whether it’s payments, treasury management, wealth management, capital markets, expansion into new markets, etc. We’re trying to figure out that right balance, as leading the company, of how do we short-term improve performance of the company and recognize that we do have a high efficiency ratio relative to peers. How do we balance that against the need to drive revenue longer term?

Understanding that we’ve got these structural tailwinds coming behind us that we believe will benefit us on the NII side longer term, all those are things we’re trying to balance as we think about structurally and strategically how we manage for the next couple of years in the cycle that we’re in right now. Lastly, I would say that the last balancing act for us is just that we feel really good about pipeline and opportunities that we’re looking at. The last thing you want to do in that environment is cut client-facing employees who are the sources of that revenue for us and in many cases who drive long-term relationships for us. Clearly, we understand the need to perform and improve the efficiency ratio for the company overall. We continue to look at how we balance those across the portfolio between expenses and revenue.

Jason Goldberg, Analyst, Barclays: Expense reduction program possibly announced in January. Stay tuned.

Curt Farmer, Chairman and CEO, Comerica: Yeah, I would not use the word expense reduction program. I just would say that we are continuing to look for not a named sort of expense reduction program, but I would say that we continue to look for chances to rationalize expenses across the portfolio, and to the degree that we can find opportunities to do so, that sort of balance for us between expenses and revenue, we’re going to do just that. We’ve done a good job, I think, historically of managing expenses for the company. I don’t believe our expenses are necessarily out of line, but I do understand the near-term pressure we have around efficiency ratio, which again, I think is a little bit more revenue catching up.

Jason Goldberg, Analyst, Barclays: All right. I guess July earnings call, you had some challenging questions. In late July, a shareholder put out a deck that said you should engage an investment banker, announce a marketing process, and sell yourself. I think we could debate some of the ticker selections. We could debate maybe some of the math, but I think we could both agree Comerica is a valuable franchise. This industry is consolidating. You could probably have gone to a premium. I guess given the current landscape, how do you think about earning your independence and have any of those recent events and other recent events change your thinking or cause you to take any other actions?

Curt Farmer, Chairman and CEO, Comerica: I think I said it, and I know I said it in the beginning and end of my prepared remarks earlier, and I would just reinforce that I, my management team, the board, you know, we fully understand our fiduciary responsibility. That is always the case. You know, that is always something that we’re aware of, to do the right thing for enhancing shareholder value. I, our management team, we’re very focused on that. How do we enhance shareholder value? How do we execute against the strategic priorities that we have set forth that we believe are the right things for our company and sort of drive value longer term? We also are very focused on not doing harm to the company. We have a great franchise, as you said earlier. Thank you for acknowledging that.

175-year plus history as an organization, deep customer relationships, especially in the commercial space, great markets that we operate in today, long tenured bankers, great credit expertise, and a very strong capital position. I feel very good about sort of pipeline momentum across both the deposit and lending side of the organization. I think we’ve got some high areas or some unique areas of specialization that many others don’t bring to the table. As I said earlier, I think in many cases we punch above our weight sort of in this commercial space. We want to protect all that while also acknowledging that we need to continue to perform better as an organization. As I’ve been out, Jim and I and Kelly and others meeting with shareholders in the last 45 days or so, and they’ve met with a fair number of long-term shareholders of the company.

I think they acknowledge all that and all the things they like about Comerica, but they also acknowledge that we need to improve our performance metrics. The things that we’ve been talking about are the things that we’re focused on. We know it’s all about execution. I and myself and the board hold ourselves accountable to that high standard. Again, we understand our responsibility to enhance shareholder value.

Jason Goldberg, Analyst, Barclays: I guess you talked about the need to do better. What’s, I guess, is there a timeframe you have in mind in terms of maybe more openly consider joining another organization? How do you kind of think about that? How does the board think about that?

Curt Farmer, Chairman and CEO, Comerica: Yeah, Jason, I’d go back to what I said earlier. I don’t know that I have anything additional to say. I think we fully appreciate that this is an environment where there’s always speculation about M&A across our industry, and it ebbs and flows from time to time. I’ve been leading or serving in the banking industry for 41 years, and I’ve seen lots of cycles come and go. We’re not trying to manage for a certain cycle. We’re trying to manage for the long term. We are very focused on taking care of all the constituents that we serve, whether it’s our customers, our employees, our communities, and most importantly, our shareholders, and recognize, again, our responsibility to our shareholders. Those are all things that we take into consideration seriously. We are going to execute on the plan we’ve got, but also be aware of the landscape.

Jason Goldberg, Analyst, Barclays: I guess one of the things we saw in the deck last night was it bought back $150 million shares, quarter data from $100 million we expected. CET1 ratio is still high. I know on a marked basis it’s lower, but those AOCI losses are all burning off. You know, do you become more kind of active in terms of capital distribution? How do you think about that?

Jim Herzog, Chief Financial Officer, Comerica: Yeah, we are in a very strong capital position, you know, top quartile in terms of CET1 of our peers and well above peers on tangible common equity ratio. We are in a very strong capital position, proud of the increasing share repurchases that we’ve had so far in this year. I think we’re in a very strong position to continue, you know, strong capital return. First and foremost, we want to make sure we have the capital there for our customers. I think that AOCI is probably still the thing I keep the closest eye on. I’m continuing to feel better about that. Having said that, the 10-year has still moved in a 50-bps range in the last three months, and it’s trending downward.

I do feel better about it, but there was even like a one-day spike up last week where people talked about bond vigilantes coming back again. It feels like we’re never totally out of the woods, but I’ll just say I am feeling continuously better. I like the overall trend of, you know, rates coming down. It appears the long end is becoming a little more behaved. Maybe the short end cuts will help there. You know, feeling better about it. I think we’re in a good position to continue strong capital return.

Jason Goldberg, Analyst, Barclays: Can’t believe there’s 30 seconds on the clock and we’re just getting to asset quality. As we wrap up, obviously charges have been relatively low at the bottom end of the year range. I guess anything you’re mindful of we should keep an eye on?

Jim Herzog, Chief Financial Officer, Comerica: You know, we’re Comerica. It won’t surprise you to say that credit continues to be stable. We have no change to our 20 to 40 bps net charge-off ratio for the year. The portfolios that we closely monitor continue to be very stable. Curt mentioned in his comments earlier that we continue to keep an eye on certain auto suppliers, but that wasn’t totally unexpected. I feel good about credit. Maybe one public service announcement, given that you are a sell-side analyst, Jason, not so much you, but I did want to mention, going back to your expense question, that I have seen some expense consensus numbers that are out of step with the outlook that I gave back in July. I just mentioned that there seemed to be a little bit of dislocation there, and I’ll leave that up to the investment community how they want to absorb that.

Jason Goldberg, Analyst, Barclays: Fair enough. With that, please join me in thanking Jim Herzog and Curt Farmer for their time today.

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