Comerica at Morgan Stanley Conference: Strategic Growth Amid Economic Challenges

On Wednesday, 11 June 2025, Comerica Inc. (NYSE:CMA) presented at the Morgan Stanley US Financials, Payments & CRE Conference 2025. The company outlined its strategic focus on growth in payments and deposits while balancing efficiency and navigating economic uncertainties. While optimistic about future growth, Comerica acknowledged potential headwinds in the broader economic environment.

Key Takeaways

• Comerica is targeting a 5% to 7% compound annual growth rate (CAGR) in deposits, driven by investments in faster payments technologies and fintech partnerships.
• The bank aims to return to a 50% efficiency ratio, leveraging revenue growth and maturing swaps and securities.
• Loan growth is expected to be steady, with potential for further expansion contingent on reduced economic uncertainties.
• Comerica completed $100 million in common share repurchases and redeemed its preferred stock to enhance capital efficiency.
• Management remains optimistic about deposit growth in the latter half of the year, supported by product and technology investments.

Financial Results

• Net Interest Income (NII): Projected to increase by 5% to 7% for the year, driven by maturing swaps and securities.
• Efficiency Ratio: The bank is aiming to achieve a 50% efficiency ratio, primarily through revenue growth.
• Deposit Growth: Although moderating in the second quarter, optimism remains for the second half of the year.
• Fee Income: Expected growth in customer-related fees, bolstered by wealth management and capital markets.
• Capital Management: Completed $100 million in share repurchases and redeemed preferred stock to improve capital efficiency.

Operational Updates

• Payments Business: Comerica is investing in faster payments technologies like RTP and FedNow, and expanding treasury APIs. Fintech partnerships are a key focus, with a target of 5% to 7% CAGR in deposits.
• Middle Market and Business Banking: Growth is concentrated in Dallas-Fort Worth (DFW), Los Angeles, and Houston.
• Wealth Management: Expansion of Comerica Financial Advisors and enhancement of private banking, trust, and investment management services.
• Capital Markets: Investments in M&A teams, with a strong position in leading mid-sized bank deals.

Future Outlook

• Loan Growth: Expected to be steady, with growth across various sectors such as technology, life sciences, and environmental services.
• Deposit Growth: Optimistic for the second half of the year, driven by strategic investments.
• NII and Fee Income: Anticipated growth in NII on a quarterly basis, with an increase in fee income from wealth management and payments businesses.
• Capital Strategy: Continued share buybacks are planned for the remainder of the year.

Q&A Highlights

• Loan Growth Drivers: Growth is seen in middle market segments and commercial real estate, with strong performance in technology and environmental services.
• Deposit Growth Factors: Seasonality and customer investments are influencing deposit trends, with a shift in the rate curve noted.
• Regulatory Environment: Comerica supports tailored bank regulation and aims to focus more on revenue initiatives.

In conclusion, Comerica’s strategic initiatives and disciplined management position the bank well for future growth. For more detailed insights, readers are encouraged to refer to the full conference call transcript.

Full transcript - Morgan Stanley US Financials, Payments & CRE Conference 2025:

Manon, Morgan Stanley Sales Representative, Morgan Stanley: All right, we’re excited to have Comerica up next here. I’ll get our usual disclosure out of the way. For important disclosures, please see the Morgan Stanley Research disclosure website at morganstanley.com/researchdisclosures. The taking of photographs and use of recording devices is not allowed. If you have any questions, please reach out to your Morgan Stanley sales representative.

Now we’re delighted to have with us today Jim Herzog, Chief Financial Officer Peter Cefcic, Chief Banking Officer and Allison Fleming, Head of Payments at Comerica. Thanks so much all for joining us. Good morning. Before we move to Q and A, Peter, let me pass it on to you. I know you have some opening remarks, and then we can go into Q and A.

Peter Cefcic, Chief Banking Officer, Comerica: Sounds good. Okay. Good morning, everyone, and thank you, Morgan Stanley. Thank you, Manon, having us here. We’re excited to be here and talk about what’s going on in the quarter and what’s going on in Comerica.

So hopefully, yesterday, you saw that we published a presentation with an update on the quarter. And in that deck, we will be talking about forward looking statements this morning. And so in the deck, there’s some disclosures about our forward looking statements and our remarks and our non GAAP financial measures. So let me start off by saying that the bank is over 175 years old. We have a fantastic foundation of what we have built during that time period.

You can see on this slide that we are known as having a fantastic credit culture. We’ve got great capital, good liquidity. We have a very good diverse deposit base that we’re very, very proud of. We feel like we have a differentiated strategy. We’re in great markets around the country.

We’ve been in Michigan since we were founded. But we’ve been in Texas and California for over thirty years. And we’ve been very successful in those markets, and we have tremendous opportunity to continue to grow our businesses. We’ve also entered into the Southeast over the last few years. And really, although we might be viewed as a regional bank, we are a national player and we play in a lot of the states across the country and many of our national and specialty businesses.

So we’re very focused on growth right now. We feel like we have positioned the balance sheet, our markets, our people in a really, really good spot to grow. So you may remember last quarter, those of you that were at another conference, we started to talk about some of our growth initiatives that we were attempting to execute on. We talked about middle market and business banking and small business at that conference. And on each of these conferences going forward, we’re going to find opportunities to double click into some of our businesses and give you guys a little more purview into what we’re investing in and the choices that we’re making there.

So today, we’re here to talk a little bit more about payments and deposits business. Treasury management has been an important business for Comerica for a really, really long time. I’ve always felt like we were an outstanding middle market treasury management bank. We started to realize a few years ago though that we had the opportunity to be a real leader in payments. And what that looked like on a go forward basis was something that required us to go out and find some new talent, create some new products and services and really invest in this business.

So Alison Fleming joined us a few years ago. She’s about three years into her tenure at the bank coming from large national and multinational banks. And we’re thrilled with the hiring and the development and all of the things that are going on in our payment space. And so I’m going to have Alison come up and tell you a little bit about that.

Allison Fleming, Head of Payments, Comerica: Thank you, Peter, and thank you for the opportunity to talk a little bit about our payments business. I would echo what Peter said and that we’re incredibly proud of the foundation that we built in our payments space, particularly in treasury management and card. And what we’re really excited about is the opportunity to expand upon this success with new payment engines. What that looks like practically is the potential for strong core deposit growth as we power payments for high growth verticals like embedded finance companies and as we deploy customized deposit suite solutions for banks and nonbank financial institutions. These verticals have the potential to bring high quality, diversified, and sticky deposits and drive meaningful fee income growth while also providing scale that the entire portfolio can benefit from.

This isn’t future strategy. We’re actually actively deploying on this strategy right now, and we feel like we have a clear roadmap for ongoing growth. We also believe that the future of banking is increasingly diversified with technology companies driving differentiated experiences for commercial customers and consumers alike and non banks and banks partnering together to deliver compelling solutions for customers. And again, ecosystems that are being created are not new to us, nor are the verticals. Merely, what we’re trying to do is expand on our foundation to drive growth into the future.

So we’ve invested a significant amount in the payment space already. And these investments have allowed us to deliver on our value proposition, which is big bank solutions, small bank touch. Our differentiation is in how we serve, not just what we offer. By big bank capability, what we mean by that is we offer comprehensive products and services to our customers and a tenured team that brings incredible experience across verticals and industries that we support. And by our small bank touch, what we mean is we offer personalized advice and also a service model that cares deeply for our customers from start to finish across the customer life cycle.

This service model was developed specifically to support the needs of complex payment customers. When I’m out in market talking to customers, what I frequently hear is they chose us because of the way that we know them, care for them, and our flexibility in deploying our payment solutions. Investing in our payments platform has been a targeted investment strategy for us. And we feel like we have a proven track record here. And I would point out a couple of examples.

So our maximize product solution is for small business customers. We started with 74,000,000 We’re up to over $1,000,000,000 over six quarters in that particular solution. And that was, again, a combination of the solution plus the model in which we deploy it with bankers out into the market. Another example I would give you is our commercial sweeps, where we’ve grown that business significantly from $400,000,000 to over $3,500,000,000 today. Admittedly, some of this was defensive.

However, it also allowed us to go on the offensive and drive balances onto the balance sheet that would have been off balance sheet or elsewhere. And we feel like these tools and the continued investment in these journeys will allow us to play offense into the future. We also believe that we’re positioned for growth. We’ve made a significant amount of investment in talent across the board from our strategy teams to our product teams, middle office, and our sales teams. We believe we have the focus to deliver against our primary initiatives here, which is investing in payments, specifically faster payments, our treasury APIs, and our fintech and financial institutions embedded partnerships.

These investments, we believe, will allow us to grow our deposits over time. We’re seeking to deliver a 5% to 7% CAGR growth there and also drive new sources of fee income for us. We are aspiring to drive more efficient fee income as we look at new models. And one of the things that I would highlight is the opportunity to continue to focus on our card businesses. And we’ve specifically invested in commercial card and merchant talent.

And I would point to some of our success being that we have a 40% penetration rate in some of our verticals. We see additional opportunity as we seek that kind of penetration in new verticals for us. We also see opportunity in some of the sponsorship potential, and especially in the acquiring side. To deliver partnerships with our customers are key. I’m going to highlight a couple of things that we’re excited about.

This week, we went live with an exciting partnership with another financial institution. We believe that partnership has the potential to double our wire volume over the near future. We also have launched our API based deposit suite solution. Later this month, we’ll be launching an API based party clearing solution. And together, all of these solutions are allowing us to expand our partnership model.

We’re really excited about the growth potential in this particular space, and we look forward to continuing to provide you updates as we move into the future. And with that, I think I’ll hand it back to you to answer some questions.

Manon, Morgan Stanley Sales Representative, Morgan Stanley: All right, perfect. So before we dig in on some of the recent trends, I wanted to spend some time on some of the growth areas that you mentioned. And Alison, given you just went into a lot of detail on the payment side, I think that’s a great place to start. You spoke about the investments you’re making in the business. You spoke about how there’s not just a deposit opportunity, but there’s also opportunity to partner with non banks.

Can you I know that payments is understandably a big area of focus, not just for Comerica, but also for many of your peers. So talk a little bit more about what Comerica is doing to capitalize on these opportunities and how the product set is differentiated.

Allison Fleming, Head of Payments, Comerica: Sure. We’re aspiring to leap forward. And so one area I would highlight is the focus on going 20 by March, especially as we think about the opportunity to build customized suite solutions. And to do that, we’re really focused on some of the faster payment models that are out there, particularly RTP and FedNow. So we are active today in RTP, but we’re expanding the way we deliver that.

And we’ll be adding FedNow into the mix later this year. And we believe those solutions together, the way we’ve designed them, offer a compelling opportunity for some of the nonbanks and the banks themselves to manage their deposit solutions effectively. The other area I would highlight is the ability to really bring a digitized solution to life for a customer. And the way that we’re thinking about that is also a leap forward. We believe that in the future, customers will not only want to interact directly with their bank but also with a party of their choice.

And so from consumer all the way up through some of our larger customers, we’re looking at how to deliver that over time to make sure that we’re everywhere our customers want to be.

Manon, Morgan Stanley Sales Representative, Morgan Stanley: Excellent. Peter, maybe pivoting over to you. On that slide, multiple growth opportunities. You spoke about middle market, capital markets, wealth management, geographic expansion. What are you most excited about from a one to two year time frame?

Peter Cefcic, Chief Banking Officer, Comerica: Yeah. I’m probably the most excited about, quite candidly, certainly what Allison is talking about today. I think we’re very excited about that. We feel like we’ve been known as a strong C and I lender for a long, long time, but we feel like there’s an opportunity to be a C and I payments bank as well. And that’s something that I just don’t think the market and our customer base has fully appreciated just yet.

So I’m terribly excited about this story. And I think it’s one that is going to be really, really compelling for us going forward. That said, I’m probably next super excited about what we talked about last quarter with the efforts that we’re making in just middle market, business banking, and small business. So I’ve said this in different settings. But the opportunity that we have in DFW, Los Angeles, Houston to be as big as we are in Detroit is tremendous.

And over the years, I just don’t know that we’ve necessarily been aggressive about hiring talent. And that’s something that we’re being very deliberate about right now is not only hiring but also growing our own talent in these markets where we are known. We’ve been in California and Texas for thirty years. We just need more people on the streets. And what we find is that our customers love us, but a lot of our prospects don’t necessarily know who we are.

They’re trying to understand who’s Comerica, how do we get out there. And so even though we’ve been there for a while, I think that putting more people on the streets is going to be very, very compelling for us. Like I said, we have the opportunity to do something in those markets like we have in Michigan. And so that’s where I’m really excited. And that’s where we’re very focused.

Manon, Morgan Stanley Sales Representative, Morgan Stanley: All right, great. And Jim, talk a little bit about how you’re balancing the strategic investments that you’re making in all of these businesses with your efficiency goals as you aim to get back into the 50% efficiency ratio range.

Jim Herzog, Chief Financial Officer, Comerica: Yes, I mean, is a calibration effort for sure. You say balance. off, I’ll say that beyond any core business improvement that we make, which I’ll talk about in a minute, certainly the maturing swaps in securities will just be a tailwind for many quarters and years to come. So that will provide steady improvement in the efficiency ratio and ROE just on its own. But in terms of core business, yes, we have to be focused on both sides of that efficiency ratio.

We have to focus on the revenue side, got to do the right thing on the expense side. Having said that, I do think when we look back two or three years from now, we’re going to find that it was really the revenue side that drove a lot of the improvement in both efficiency ratio and ROE. And the reason I say that is I just think it’s a very compelling story. You think about revenue initiatives, Peter and Allison have talked about some today already. Kurt, Peter and I have talked about them in the past.

The revenue story is very compelling when you think about a high compounded annual growth rate on revenue. I don’t think that you’ve quite that same powerful effect on the expense side. You can’t reverse compound expenses forever. You would just end up starving investment. Now having said that, you do have to do the right thing on the expense side.

It is again a two sided equation. Day to day expense management, which I think we’re really good at, we have to make sure we’re prioritizing the right revenue projects, the one that give us the biggest bang for the buck. And we see that they’re not delivering, we’d be willing to pull back on some of those. And then finally, we do need to and we have to self fund some of our revenue investments. I’ll point you back to just a little over a year ago, we announced the efficiency program of cutting $45,000,000 out in that January earnings call of 24,000,000 and that was to support investment in product, technology, people and risk framework.

So we are willing to make those types of investments also and do what it takes to provide the investment dollars to push the needle forward. So I do think overall we’re going to see steady improvement and it’s going to be a combination of all those things I mentioned and looking forward to seeing that play out. Excellent.

Manon, Morgan Stanley Sales Representative, Morgan Stanley: Peter, I wanted to switch over to the broader macro environment. You spoke about the strong middle market business and the growth opportunities that Comerica has. In that business in April, I think you used the analogy of clients taking their foot off the accelerator but not hitting the brakes yet. Can you give us a mark to market on what you’re hearing from clients there?

Peter Cefcic, Chief Banking Officer, Comerica: Yeah, I won’t keep going on my car analogy as to what that looks like right now. But I would say that things are a little better than I felt like they were probably at the end of the first quarter. We certainly see that in our mid quarter update on loans. Across the board, just about all of our businesses are seeing loan growth. We’ve sort of seen two dealer and equity fund services that have not necessarily had loan growth just yet, but our outlook there is still very positive.

So I think things are a little better. I think when we get customer sentiment feedback for Q2, I think it’s probably going to be more positive than it was at the end of Q1. Now all of that said, I don’t know that I’ve been asked in different settings, have animal spirits come back? I don’t know that we’re necessarily there yet. I do think that things are a little better.

I think that your average Main Street middle market customer is probably feeling a little bit more confident about moving forward. But I don’t know that we’re necessarily seeing massive increases in pipelines or tremendous activity in M and A out in the market or huge, huge increases in demand for loans. It just feels like kind of nice steady growth across the board. And it’s also pretty consistent in all the geographies. Michigan, for example, last quarter, I probably wasn’t too excited about.

But I think this quarter and going into the part of the year, we feel pretty good about what we’re seeing, which is kind of interesting with all of the noise that we’ve had around tariffs in Michigan and Canada and auto. And I think that that’s being navigated very well. So I would say it feels better than we probably thought it would at the end of Q2, but it’s not necessarily back to a super robust animal spirit type loan demand environment that I think ultimately we’re all kind of hoping for at some point.

Manon, Morgan Stanley Sales Representative, Morgan Stanley: And what do you think we need to get to that super robust environment? Is it just more certainty on the tariff side? Do we need some more progress on taxes? What are clients looking for?

Peter Cefcic, Chief Banking Officer, Comerica: Yes. I think probably both of those things would be great. And I think that anything that sort of helps reduce the amount of uncertainty on those two topics for your average customer would be good. I also think, frankly, some additional relief on interest rates would be helpful. I think that some businesses are really challenged at these interest rates for their models to work, particularly on the M and A side when you look at what private equity is or isn’t willing to do.

So I think a little bit of interest rate reduction would be helpful. Think to your point, reduction in clarity on some of those issues would be good. And I think if you put all that together, your average entrepreneur owner managed business is going to feel a lot better about what the opportunities are for them.

Manon, Morgan Stanley Sales Representative, Morgan Stanley: Got it. But that said, you’re saying things are certainly looking better. We can see that in your loan growth guide quarter to date. Can you talk a little bit more about what’s driving that?

Peter Cefcic, Chief Banking Officer, Comerica: Quarter to date? Yes.

Allison Fleming, Head of Payments, Comerica: Correct.

Peter Cefcic, Chief Banking Officer, Comerica: Well, again, across middle market is up in all of our businesses all of our geographies, which feels pretty good. The other nice thing is we haven’t seen and this is sort of the downside, I guess, maybe to interest rates not going down is commercial real estate has really hung in there on balances. We had expected to see that come down a little faster. We haven’t really seen that. So commercial real estate, I think, is going to hang in there a little longer than what we’d expected.

Our Environmental Services renewables group continues to just every quarter is ticking up. There’s tremendous opportunity there. So we feel like that’s a space we’re going to continue to invest in. And like I said, just about each one of our other specialty businesses, technology, life sciences, entertainment, kind of across the board, we’ve seen good growth in the quarter so far. So and I would even add to that wealth management and even what we’re kind of seeing in the retail side, small business and our consumer business.

So it’s really sort of every line item for our businesses except for EFS and dealer where we haven’t seen growth just yet. So pretty broad based there? Feels like it, yes.

Manon, Morgan Stanley Sales Representative, Morgan Stanley: Got it. Jim, let’s pivot over to the other side of the balance sheet. Core deposit growth has been strong in general, maybe down a touch quarter to date. But can you talk about some of the key drivers of that core deposit growth?

Jim Herzog, Chief Financial Officer, Comerica: Yes, it really has been a good few quarters for deposits. Just for context, really strong deposit growth in the second half of last year. And I would even say once you account for the seasonality in the first quarter, which really came in as we expected, Pretty good deposit performance in the first quarter also. I will say it’s a little softer than we might have expected in the second quarter. And we think there’s a couple of reasons for that.

We do see a little bit more latent seasonality than we might have expected to have seen. So we expect to move past that, if not already. Also consistent with the fact that our customers are investing in their businesses, as evidenced by the fact that we actually do have some pretty good loan growth in the second quarter, we do see some broad based utilization of funds. So that’s accounting for a little bit of a pause also. And I do think the shift in the rate curve is not a big factor, but maybe in the margins, that’s a little bit of a contributor also.

Having said all that, we don’t think that’s a medium term trend, a long term trend. We are bullish still on deposits going forward and for the half of the year. For many of the reasons that Alison talked about, it’s the investment in the products, the technology, the people, it’s the focus on those businesses that are deposit rich. It’s Peter continuously fine tuning his incentive programs to make sure that we keep people focused on deposits and we actually saw a lot of these, as Allison said, they’ve been in place in some cases for a little while now. We saw some great performance related to all these drivers in the second half of last year and we really do expect it to continue and pick up as we move through the second half of twenty twenty five.

So feel really good about deposits. And just on that drawdown point that you made, so the drawdown in deposits is usually a precursor to loan growth? They’re often correlated with each other. That’s right. Now economic activity stepping up sometimes can be good for deposit growth too, but a lot of times you will see them move in tandem, especially in a higher rate environment where customers might be a little more likely to use their deposits and not just use credit to invest

Manon, Morgan Stanley Sales Representative, Morgan Stanley: in their businesses. Got it. And then you also spoke about, I think at earnings, you spoke about how you’ve had faster deposit betas in the way down then on the way up. And that you might have to block and tackle a little bit in the near future. So how should we think about deposit betas from here?

Well, we did

Jim Herzog, Chief Financial Officer, Comerica: have the cumulative beta on the way up of about 60%. And I mentioned at earnings that if you go back to the FOMC cut in September through the end of the first quarter, the beta was down about 70% during that period of time. But that wasn’t surprising to me and it was somewhat by the playbook. If you look at rates as they moved up through the cycle, some of the more accelerated beta steps were in the latter half or latter part of that upcycle. And so we did expect some level of symmetry and in the early stages of the way down, we also expected to see some good beta.

So not terribly inconsistent there. I have been saying since early in the year that while we wouldn’t buy the playbook and it worked out quite well and met our expectations, all along we knew there would be some small pockets here and there, maybe some give back on pricing and we still feel that way. I think that’s a prudent thing to do to make sure that we maintain our strong core deposit base. So in some cases, there will be little pockets of give back, but I don’t expect that to be excessive by any means. Now having said this, the FOMC pausing a little bit, there is a little more attentiveness to rates on the part of customers, so we’ll have to navigate that as time goes on.

Also, we do have some opportunities, if you look back to Allison’s presentation to go after a customer base that might not have been available to us in the past. And in some cases, these are very efficiently priced deposits, but in some cases, they are more market based deposits and we’re not going to shy away from going after those because we love all deposits. I say all the time in our company, there’s no such thing as a bad deposit. To the extent we can raise deposits, even if they are a little pricier, it allows you to grow the loan book, which is doing quite well without having to rely on wholesale funding. I’m actually pretty excited about it.

You may see a little bit of push on pay rates to the extent we’re successful with gathering those deposits, but I’ll take that all day long. So anything to call out on the broader full year guide that you gave at earnings? Really nothing to call out relative to both second quarter guidance and full year guidance. We are keeping an eye on a number of things. I do think that loans are looking like they have the potential to be a little bit of a tailwind.

I would say deposit trends, if they did continue, would be a bit of a headwind to the guidance, but we’re not expecting those to continue. So you have a little bit of canceling out there. But overall, we’re leaving guidance where it’s at.

Manon, Morgan Stanley Sales Representative, Morgan Stanley: Perfect. So as we think about that NII guide of up 5% to 7% for the year, can you give us what the drivers are for that momentum and growth that you’re seeing in NII?

Jim Herzog, Chief Financial Officer, Comerica: Well, the drivers for the 5% to 7% are really different than the drivers as we move through the year, because when you look at a full year basis, the 5% to 7%, I mean, it really is driven by the swaps and securities maturing and the BISB accretion, which we always itemize out in the appendix. Loans and deposits are actually a little bit of a headwind on a full year to full year basis because they did have a trajectory down in 2024. We started from a low point. And so as you know, overall the guidance is for loans, at least back in April, for loans to be down 1% to 2% on average and non interest bearing deposits because we started from a low point also to be down a little bit on a full year average basis. But that’s different than what you’ll see as we move through the year.

We think it’s actually a really good story quarter to quarter now as we move through the year. We expect deposits to continue to grow. We expect loans to continue to grow. We still have the same business people we counted on. We still have the same maturing swaps and securities that we’d counted on.

And so you should see, as I’ve been saying, increasing net interest income on a quarter to quarter basis and that’s not just for this year, but for many quarters and arguably years after this year. So a lot to look forward to on net interest income. Perfect. And Peter, maybe on fees, you expect some nice growth in customer related fees for the year. Can you talk about the main drivers there?

Peter Cefcic, Chief Banking Officer, Comerica: Sure. So when we talked about noninterest income for us, we sort of put it into three major categories. So we talked about payments this morning. That is one of the biggest categories. would be what we do in our capital markets business and then what we do in wealth management.

So let me maybe take wealth management I think probably the most exciting thing that we’ve done there is what we call Comerica Financial Advisors. So that would be our financial advisor teams that are out in the markets and taking care of customers. And we think we’ve got tremendous opportunity to grow that investment business into the future. And so it’s something that we’re very, very excited about. Wealth management across the board, I think that we have a fantastic offering.

We’ve been at it a long, long time, private banking, trust, wealth planning, investment management and then, of course, what we do in Chimeric Financial Advisors. So across the board, it’s really an opportunity for us to continue to add people. And kind of like I was saying, as we start to add middle market business banking in some of these other markets, we’re going to very quickly follow that with what our wealth management teams because there’s a great partnership between those two businesses and we have a tremendous opportunity to capture when our owner managed businesses have events that lead to liquidity. So wealth management is a huge opportunity for us. And then capital markets, would just say we play way above our weight class on capital markets.

We’ve got a great syndications team. We can do all the risk management products that our customers need, interest rates, FX, commodity hedging as well. We’ve got debt equity capital markets abilities. And most excited is that we’ve had have added M and A teams. That’s something that we had not had in the past.

And we’re about two years into this investment, and it’s starting to lead to results. And again, having those M and A teams is terribly important to be able to support our customer base as well as capture the wealth management assets that happen when there’s an event. Those three big categories are ones that really over the last two or three years, we’ve started to lean into heavier and have added more people. And I think that we’re on the cusp of seeing some really, really good results from that investment.

Manon, Morgan Stanley Sales Representative, Morgan Stanley: And it sounds like that helps you to bring the entire relationship as well. So whether it’s on the lending side, the fee side, the deposit side, it checks all boxes.

Peter Cefcic, Chief Banking Officer, Comerica: Absolutely. I mean, being able to be full service all of those. I mean, quite candidly, there’s a lot of years, and I as an RM remember, it’s really hard to capture when your customer has an event if you’re not the one providing the M and A services. That’s a really difficult task. And we’re in a much better spot to win now on that opportunity than we were prior to having our own M and A teams.

Manon, Morgan Stanley Sales Representative, Morgan Stanley: Got it. And can you talk a little bit about the environment on the capital market side? I know there’s a little bit of volatility, but at the same time, you do have a larger DCM business and syndication business. So can you talk about what the environment is for that business?

Peter Cefcic, Chief Banking Officer, Comerica: Yes. I think that I mean, again, when it comes to leading, call it, three, four bank deals, we are absolutely the best bank to be in that space. I think that Comerica can lead an agent and syndicate four to six bank sized deals in the market. Right now, the activity level there is not as robust as we’d like it to be. I think some of that goes to what I was saying on where interest rates are at.

I think sort of your leveraged finance space, private equity deals, there’s just not a ton of M and A. But we’re not going to back away from the investment we’ve made here because as soon as that starts to open up, I think we’ve got tremendous opportunity there. So and the nice thing about it is we kind of feel like we’ve got now that we have all of these products and services, at any one time, one of them is kind of doing better than another. But across the board, we feel like it’s something that is growing for us. And so I think that that’s how I would answer that one.

Manon, Morgan Stanley Sales Representative, Morgan Stanley: Perfect. Jim, you spoke a little bit earlier about the opportunity to calibrate expenses depending on which way the revenue environment is going. Any changes in how you’re thinking about the expense outlook for the

Jim Herzog, Chief Financial Officer, Comerica: The short answer is no, we feel pretty good about where expenses are, feel good about the revenue side. So no real change in that stance and I’ll just augment it by saying, there is some level of base investment that we want to keep going regardless. We don’t think it’s productive to start and stop some of the most important strategic investments and initiatives that we have going, but there is always the opportunity for those things that aren’t quite as critical or more discretionary to pull back if we had to, but we’re just not seeing the need to at this point in time and we feel like everything’s pretty calibrated at this point.

Manon, Morgan Stanley Sales Representative, Morgan Stanley: Right, I’ll pivot over to credit and then see if there’s any questions in the room. Peter, anything specific you’re focused on the credit side? Any specific industries where you’re seeing a little bit more stress in this environment?

Peter Cefcic, Chief Banking Officer, Comerica: At the moment, I would say no. We do have a slide in our deck where we kind of highlight some of the businesses that we pay more attention to than maybe others. Technology life sciences is always one that we want to pay attention to. Our leveraged finance business is one that we really want to pay attention to. But across the board, I can’t say that we’re seeing anything that would change the comments we made at Q1.

I think, obviously, with some loan growth, you’re going to have a little bit of an increase in provision as we get into the quarter. And we’ll just that all seems pretty normal right now. All those things said, I think that we are in an environment where Comerica is going to shine really well if there ends up being credit challenges across the economy. I think that we’ve got a great model to be able to handle any sort of challenges that start to show up in the country when it comes to credit. But so far, we can’t say that we’re seeing anything that is different from what we mentioned at Q1.

Got it. Are there any questions in the room?

Jim Herzog, Chief Financial Officer, Comerica: Mon and I have one little public service announcement Some good news on the capital side. We did complete $100,000,000 of common share repurchase in the quarter, which is kind of the upper end of what we had indicated at the earnings call. And also some of you may have seen an eight ks yesterday morning on redeeming our preferred stock, which while not expensive by today’s market standards was still a little bit of a drag on EPS. So I feel like we have taken a couple of nice steps just in recent times to improve the capital efficiency. So another tailwind for us as we move through the half of the year.

Manon, Morgan Stanley Sales Representative, Morgan Stanley: Yes, I was just going to end on that note on capital. So it feels like the 12% CET1 gives you enough flexibility even in this more volatile environment for the long end of the curve to lean into buybacks?

Jim Herzog, Chief Financial Officer, Comerica: Yes, we feel good about our capital position. We are going to run higher than the 10% long term target just because of the OCI and the volatility in the five and the ten year. So we think that’s prudent. We certainly want to be there to provide capital for the loan growth that Peter is generating. But even with very strong loan growth, our capital position is so strong that I feel like we’re in a really good position to continue share buyback at some levels the rest of the year and beyond.

So I think capital is a good news story.

Manon, Morgan Stanley Sales Representative, Morgan Stanley: And the other piece I wanted to get your thoughts on, Michelle Bowman laid out her priorities for bank regulation last Friday. Part of what she was focused on was tailoring bank regulation to size and she spoke even about maybe tailoring regulations to banks within categories. If that were to go through, how would that impact how you’re thinking about Comerica’s growth trajectory and the investments you’re making right now?

Jim Herzog, Chief Financial Officer, Comerica: Well, lot of the investments on the revenue side of course would continue. It’s hard to say, there’s a spectrum of outcomes, a range of outcomes, but I did really welcome Governor Bowman’s comments. I thought they were really on point. Hard to say where this is going to go, but there are scenarios where we can pull back a little bit on category four readiness and maybe focus on more revenue initiatives. Having said that, political regimes can be fickle and change every few years.

So I don’t know that we would totally stop doing some of the things we’re doing. Some of them do have business benefit. But it certainly would be a net benefit for us if we saw some of those things go through.

Manon, Morgan Stanley Sales Representative, Morgan Stanley: All right, perfect. With that, we’re out of time. Thanks so much all for joining us.

Jim Herzog, Chief Financial Officer, Comerica: Thank you, Manin. Thanks for your interest.

Manon, Morgan Stanley Sales Representative, Morgan Stanley: Right. Thanks so much. That was

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