Comerica Inc (CMA) 2012 Q3 法說會逐字稿

Good morning.

My name is Matthew and I will be your conference operator today.

At this time I would like to welcome everyone to the Comerica third quarter 2012 earnings call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions)

Thank you.

Darlene Persons, Director of Investor Relations, you may begin your conference.

Thank you, Matthew.

Good morning and welcome to Comerica's third quarter 2012 earnings conference call.

Participating this call will be our Chairman, Ralph Babb, Vice Chairman and Chief Financial Officer, Karen Parkhill, Vice Chairman of the Business Bank, Lars Anderson, and Chief Credit Officer, John Killian.

A copy of our press release and presentation slides are available on the SEC's website as well as in the Investor Relations Section of our website, Comerica.com.

As we review our third quarter results, we will be referring to the slides which provide additional details on our earnings.

Before we get started, I would like to remind you that this conference call contains forward-looking statements, and in that regard, you should be mindful of the risks and uncertainties that can cause future results to vary from expectations.

Forward-looking statements speak only as of the date of this presentation and we undertake no obligation to update any forward-looking statements.

I refer you to the Safe Harbor statement contained in the release issued today as well as slide 2 of this presentation, which I incorporate into this call, as well as our filings with the SEC.

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

Now I'll turn the call over to Ralph, who will begin on slide 3.

Good morning.

Today we reported third-quarter 2012 earnings per share of $0.61 or $117 million, compared to $0.73 or $144 million for the second quarter, and $0.51 or $98 million for the third quarter of 2011.

Restructuring expenses related to the Sterling acquisition were $25 million or $0.08 per share in the third quarter, compared to $8 million or $0.02 in the second quarter, and $33 million or $0.11 in the third quarter of 2011.

Turning to slide number 4 and further highlights, our customer relationship focus supported loan and deposit growth in the third quarter despite a slow-growing national economy.

Average loans were up $369 million or 1% compared to the second quarter, primarily reflecting an increase of $717 million or 3% in commercial loans.

This was the ninth consecutive quarter of average commercial loan growth, resulting in more than a 20% year-over-year increase including our acquisition of Sterling in July 2011.

The increase in average commercial loans in the third quarter was primarily driven by increases in Mortgage Banker Finance, Technology and Life Sciences, and Energy.

Our focus on faster growing markets and areas of expertise is making a positive difference for us.

Strong non-interest-bearing deposit growth continued in the third quarter.

We had record average deposits of $50 billion in the third quarter 2012, with an increase of $1 billion, primarily driven by the increase in non-interest-bearing deposits.

The FDIC's annual deposit survey as of June 30, 2012, recently made public, shows that we have increased our deposit market share in Texas, Michigan, California, and Arizona.

Net interest income declined slightly reflecting the expected continued shift in loan portfolio mix and decline in accretion, as well as a decline in nonaccrual interest received and a leasing residual value adjustment.

Lower loan and securities portfolio yields were partially offset by increased loan volume.

Noninterest income decreased primarily due to a $10 million decrease in non-customer driven categories, including net securities gains of $6 million, and a $5 million annual incentive bonus from a third party credit card processor, both of which were received in the second quarter and not repeated in the third quarter.

In addition, net income from principal investing and warrants declined $3 million.

We maintained our tight control of expenses in the third quarter.

Excluding the $17 million increase in restructuring charges related to our Sterling acquisition, noninterest expenses were down $1 million.

Restructuring expenses related to the Sterling acquisition are substantially complete and in the third quarter were mostly a result of real estate optimization.

Credit quality continued to be strong in the third quarter.

With 39 basis points of net charge-offs and watchlist loans at 8.3% of the total loan portfolio, we are well within our historical normal range.

Our capital position remains a source of strength to support our growth.

We repurchased 2.9 million shares in the third quarter under our share repurchase program.

Combined with our dividend and in accordance with the capital plan approved earlier this year, we returned $119 million to shareholders in the third quarter.

Our outlook for the full-year 2012 is unchanged other than a slight increase in our expectation for average loan growth, which is now for an increase of 7% to 8% over full year 2011.

Turning to slide 5 and some comments about our markets.

Average loans in Texas grew 1%, including a 3% increase in commercial loans in the third quarter compared to the second, and were up 19% from a year ago including our acquisition of Sterling in the third quarter of last year.

We saw loan growth in the third quarter in Energy, Technology and Life Sciences, and Corporate.

Average deposits in Texas declined from the second quarter as we expected due to runoff in certain non-relationship deposits, and as we adjusted Sterling legacy deposit pricing.

However, deposits in Texas are up 11% from a year ago.

The Texas economy continues to be a growth leader consistently outperforming the national economy.

Overall, job creation in Texas remains well above the national average and is supported by an active energy industry and strong manufacturing conditions, both of which are supporting gains in the service sector.

Average loans in our Midwest market, which is primarily Michigan, decreased modestly compared to the second quarter.

Deposits in the Midwest market increased 2% in the third quarter and were up 6% from a year ago with increases noted in Middle Market, Private Banking, Corporate, and Small Business.

The economic recovery in Michigan is broadening and the state economy continues to improve at a moderate pace, supported by strengthening auto sales.

We are optimistic about the continued improvement in Michigan's economy.

In our Western market, which is primarily California, average loans are up more than 2% compared to the second quarter and were up 11% from a year ago.

We saw loan growth in many areas in the third quarter including Technology and Life Sciences, National Dealer Services, Private Banking, and Corporate.

Average deposits in the Western market are up approximately 6% compared to the second quarter and are up 17% from a year ago.

The California economy is showing more momentum in 2012, particularly in northern California.

Job growth is improving and housing markets are looking firmer.

State fiscal conditions remain challenging and some local governments are also under financial strain.

We expect California's economy to continue to improve.

In closing, we feel confident that our footprint and relationship banking strategy will assist us in growing even in this slowly improving national economy.

Given all of the political and economic headlines, particularly about the looming fiscal cliff, we expect our customers to continue to be cautious.

We are allocating resources to our faster growing markets and industries where we have considerable expertise.

We have demonstrated throughout the cycle that we can carefully manage expenses, offsetting regulatory headwinds.

And our capital position remains strong.

And now I will turn the call over to Karen.

Thank you, Ralph and good morning, everyone.

Turning to slide 6, as Ralph mentioned, total average loan growth was 1% or $369 million quarter-over-quarter as shown on the left-hand side of the slide.

On the right-hand side you can see commercial loans drove the increase up 3% or $717 million primarily due to growth in Mortgage Banker Finance, Technology and Life Sciences, and Energy.

Period end loans increased $202 million, again driven by the commercial loan growth of $445 million with increases noted in most lines of business.

The green part of the bar shows Mortgage Banker average loans growing again this past quarter driven by continued positive trends in the refinance market, as well as the market share gains we are making.

As we have said in the past, Mortgage Banker outstandings can be volatile and should eventually decline as refinance volume slows.

While we continue to see growth in commercial loans, some of this growth has been offset by a decrease of $344 million or 3% in average commercial mortgage and real estate construction loans.

The pace of decline is a reflection of property stabilizing and being refinanced in the end markets as well as the expected runoff of former Sterling real estate loans that don't fit our strategy.

Total commitments increased for the fifth quarter in a row, with $1.2 billion increase in the third quarter.

We had commitment increases in every commercial business line, led by Middle Market and Mortgage Banker, resulting in a relatively stable utilization of 48.2%.

Also, our pipeline remained strong in the third quarter with approximately two-thirds attributed to new business.

As shown on slide 7 our deposits continued to grow and were at an all-time high.

Our average non-interest-bearing deposits increased $1.3 billion or 6.7% over the second quarter.

The growth was broad-based with contributions from almost every business line.

We were able to lower deposit pricing by another basis point, as shown by the yellow diamonds on the slide.

While we continue to monitor and scrutinize deposit pricing, we don't expect to continue the trend of lowering the overall costs.

Our loan to deposit ratio stood at 88% at September 30.

Slide 8 provides details on our securities portfolio which primarily consists of highly liquid, highly rated mortgage-backed securities.

Interest earned on the MBS portfolio decreased $2 million from the second quarter due to lower reinvestment yields.

There was only a small amount of accelerated premium amortization recognized in the quarter.

While the current reinvestment rates for mortgage-backed securities are in the 1.5% range, we do try to invest as opportunistically as possible within our investment parameters to maximize yield, minimize premiums and maintain a short duration.

In fact, we pre-purchased securities to replace fourth-quarter runoff.

Therefore our MBS portfolio ended the quarter at about $10.1 billion.

In addition, with continued strong deposit growth during the quarter, we are managing the size of our portfolio in conjunction with our excess liquidity.

At September 30, the remaining net unamortized premium was about $105 million or just over 1% of the portfolio balance.

The average duration on the portfolio remains low at 2.7 years.

Prepayments were about $850 million in the third quarter.

And we expect prepayments will be between $850 million to $950 million in the fourth quarter, a slight increase from our prior expectation in light of the impact of lower rates as a result of QE3, as well as the current size of the portfolio.

Turning to slide 9, our net interest income declined $8 million in the third quarter.

Absent the impact of accretion, it declined $5 million.

We've summarized in the table on the right the major moving pieces in the quarter.

I'll start with the first two items which are highlighted.

While we receive some interest on nonaccrual loans every quarter, in the second quarter, it was unusually high, driving a decline of $4 million, which had a 3 basis point impact on the third quarter margin.

Also we had a $2 million adjustment to the residual value on two assets in our leasing portfolio which reduced the margin by 2 basis points.

Accretion of the purchase discount on the acquired Sterling loan portfolio declined $3 million in the quarter to $15 million, decreasing the margin by 2 basis points.

As stated before, accretion should continue to trend downward as we expect to recognize accretion of about $7 million to $9 million in the fourth quarter.

While we remain focused on holding spreads for new and renewed credit facilities, the continued shift in our portfolio had a $6 million or 3 basis point impact on the net interest margin, which I'll discuss further on the next slide.

This impact was partially offset by the $3 million benefit from the increase in average loans in the quarter.

As I already mentioned, lower yields on the reinvestment of our mortgage-backed securities portfolio had a $2 million or 2 basis point negative impact.

In addition to lower deposit costs, wholesale funding costs also declined as a result of maturities in the second quarter.

Those two combined led to a decrease of $2 million and provided a 1 basis point increase to the margin.

One additional day in the quarter added $4 million.

And finally average excess liquidity increased $697 million, reducing the net interest margin by 3 basis points.

As we have stated before our asset sensitive balance sheet remains well-positioned for rising rates.

We believe a 200 basis point annual increase in rates, equivalent to 100 basis points on average, would result in over $170 million increase in net interest income.

Flipping to slide 10, as shown in the top left, loan yields declined 13 basis points in total.

Including nine basis points resulting from the decline in accretion, the decrease in nonaccrual interest received, and the lease residual adjustment.

The rest, four basis points of the decline, can be attributed to mix shift in the loan portfolio, include our higher yielding Commercial Real Estate loans being replaced by lower yielding commercial loans.

Older fixed rate loans maturing, some of which are refinanced at current yields, and positive credit migration.

The top right chart shows our proportion of fixed rate loans has declined from 18% to 16% over the past year.

While this does impact us, it is important to note that our fixed rate loans as a percentage of total loans is the lowest among our peers.

And 75% of our floating rate loans are LIBOR-based, predominantly 30-day LIBOR.

Therefore, changes in LIBOR up or down, particularly 30-day LIBOR, have an impact on our yields.

In the bottom left chart, positive credit migration is apparent in the declining proportion of the watchlist loans and increasing proportion of higher quality loans.

Higher-quality credit loans comprise 92% of the portfolio compared to 88% a year ago.

Generally, the lower the credit risk, the lower the yield on a loan.

Lastly, the portfolio mix shift of decreasing Commercial Real Estate loans being replaced by commercial loans is reflected in the bottom right chart.

Commercial Real Estate loans tend to have higher yields than C&I loans.

And C&I loans now make up 62% of our portfolio compared to 55% a year ago.

It is important to note that we expect the impact on our yields from these mix shift factors will slow as the repricing and replacement of fixed rate loans bottoms, Commercial Real Estate will turn at some point, and we are well within our normal historical credit quality range.

Turning to the credit picture on slide 11, credit quality continued to be strong.

Net charge-offs remained low at $43 million or 39 basis points of average loans.

Our provision for credit losses was $22 million.

This was a small increase from the second quarter and reflects the variability you'd expect, given the fact that our credit metrics are within normal historical ranges.

As shown on the right, our watchlist and nonperforming loans continued to trend downward.

Watchlist loans decreased $182 million to $3.7 billion or 8.3% of total loans.

Nonperforming loans decreased $55 million.

We are now at the lowest levels seen since 2008.

The carrying value of our nonaccrual loans is currently about 60% of the contractual value.

Foreclosed property also declined and remains very low at $63 million.

Our allowance to NPL's was 94%.

Slide 12 outlines noninterest income which decreased $14 million in the quarter, with $10 million due to decreases in certain non-customer related categories.

As Ralph mentioned, in the second quarter we recorded net securities gains and an incentive bonus received from our third-party credit card provider that were not repeated in the third quarter.

Also, net income from principal investing and warrants, which varies quarter-to-quarter declined $3 million.

These declines were partially offset by a $5 million decrease in deferred compensation asset returns, which is completely offset in deferred compensation plan expense.

In addition, customer driven fees declined $4 million including a $3 million decrease in customer derivative income.

Almost all other customer fee income categories were relatively stable.

Turning to slide 13, we continued to maintain good expense control.

Excluding restructuring costs, expenses declined $1 million.

We had $25 million in restructuring costs in the third quarter related to the acquisition of Sterling which closed in July of 2011.

We expect restructuring charges related to the Sterling acquisition will be complete, with final restructuring expenses of $1 million to $4 million in the fourth quarter.

We had a $3 million increase in salaries.

The increase was primarily due to a decrease -- was primarily due to a $5 million increase in deferred compensation, which as I mentioned, is completely offset in noninterest income.

Absent the impact from deferred compensation, salaries expense would have been down, driven by a $3 million decrease in executive incentives.

Our workforce was stable quarter-over-quarter and has decreased 7% over the past year, including the headcount related to Sterling as shown in the bottom chart on the slide.

Other noninterest expense included a $5 million decrease in legal expenses.

Moving to slide 14 and capital, as Ralph mentioned, we repurchased 2.9 million shares under our share repurchase program in the third quarter.

And when combined with the shares repurchased in the first two quarters, we have completed $210 million of our $375 million capital plan put in place this past March.

As far as Basel III, we continue to believe that under the proposed stricter capital and risk-weighted assets definition, on a fully phased-in pro forma basis, Comerica is currently estimated to exceed the standards for well-capitalized banks.

If calculated according to the proposed rules, with the balance sheet as it stands today, our Tier 1 capital ratio is estimated to be comfortably above the new 8.5% regulatory standard, which will be phased in over the next seven years.

Finally, turning to slide 15, our outlook for the full year 2012 compared to 2011 has not changed, other than a slight increase to our expectation for loan growth.

We expect average loans to grow 7% to 8%.

Our loan growth so far this year has been strong and broad-based and we have benefited from our expertise in Mortgage Banker, National Dealer Services, and Energy.

Going forward we expect Commercial Real Estate loans to continue to decline and Mortgage Banker outstandings to eventually normalize in line with refinance activity.

In addition, the current uncertain economic environment does bear on demand for new loans and we intend to continue to exercise relationship pricing discipline.

As stated earlier, on net interest income we expect accretion to be $7 million to $9 million in the fourth quarter, down from $15 million in the third quarter and to continue to decline, though at a slower pace each quarter, until the remaining balance of about $60 million is depleted.

In addition to accretion, we expect that the impact from the continued mix shift of the loan portfolio will slow as older fixed rate loans mature and the decline in Commercial Real Estate ultimately turns.

On noninterest income and expense we will continue to work to offset the regulatory headwinds by seeking full customer relationships and maintaining expense control.

In closing, we are pleased with our continued loan and deposit growth, solid customer fee income generation, tight expense management and strong credit performance.

In the current environment, we remain keenly focused on the bottom line.

Now we are happy to answer your questions.

(Operator Instructions)

Steven Alexopoulos, JPMorgan.

Good morning everyone.

Curious, if we look at the list of items impacting the margin on slide 9, is the right way to think about pressure on the margin that the pressure from loan portfolio dynamics, I know Karen, you said that might abate a bit, and the lower MBS yields, which sounds like they might pick up because you pre purchase securities, should that combined continue to put roughly this amount of pressure on the margin each quarter?

Yes, as I said, you should think about the impact on the loan portfolio dynamics, Steve, as slowing over time.

Because it's due to fixed rate loans maturing and those contractual maturities will slow over time.

It's also due to the impact of the Commercial Real Estate and the improving credit quality.

And again, both of those should slow.

On the securities yields, that is obviously a factor of the overall rate environment, and we will think about tactically pre-purchasing to try to -- within our investment parameters, to try to minimize that impact.

Karen, could you just follow-up and give us some color on the yield and duration that you're actually adding new securities today?

Sure.

The yield is very similar to the overall portfolio yield, as you can see, even with the actions that we took this quarter, the duration of the portfolio did not change.

Still at 2.7 years.

And the yields under which we are purchasing today are around the [1.50%] area.

Okay.

Can I ask a follow-up question on that?

Sure.

Just to Ralph?

Ralph, you communicated over the past couple months, and again on this call, this expectation for loan growth to slow, talk around uncertainty in the business community and fiscal cliff.

At this stage is this still chatter among your clients or are you starting to actually see this play out?

Thanks.

I think in answer to your question, customers are continuing to be cautious.

And while we did see growth, it was slowing growth during the quarter.

And I think that's what you would expect, given that a lot of these issues are going to come to fruition here in the next several months.

You'll have the election, you'll have the fiscal cliff, and people are waiting to see what they think will happen.

Lars, have you seen anything different?

No, Ralph, I think that accurately kind of depicts what we're hearing from our customers.

An interesting, I think metric though, that we've got to look at is, our customers are clearly getting healthier.

They're delevering, they're building liquidity.

What, Steve, you may have picked up in the deck was, we did see a very significant increase in commitments.

In fact, those went up over $1.2 billion.

So the interesting thing is we're seeing activity levels, and frankly we're seeing a lot of activity level in just general Middle Market.

They're just not borrowing.

They're not making the investments.

But frankly, we're very encouraged to see that level of commitment rise.

I think that's underlined too with the level of deposits we're seeing with the new record deposits.

And that's coming in from many of our businesses.

People are sitting on the liquidity, as Lars mentioned, and waiting to see what's going to happen here.

The good news is they're making good money and having good growth internally.

But they're being very careful about investing for the future is my editorial comment.

Thanks for the color.

Thank you.

Ryan Nash, Goldman Sachs.

Thanks.

Good morning, Ralph.

Just in terms of the loan growth, commercial was strong once again.

Much of the growth did come from the Mortgage Banker Finance and Karen, I know you said the outlook is for decline, but just given what the industry is seeing in re-fis, it's not surprising to me it's up as much as it is and you noted market share gains, but should we eventually see a decline given, I know you guys have used the NBA forecast?

How are you thinking about normalization as we look into 4Q or even as we look into 2013?

Can you give us a little bit of color in terms of how you're thinking about the normalization from here?

Sure.

Mortgage Banker as we said before can be very variable and is very difficult to predict.

The Mortgage Banker Association forecast for the fourth quarter does show a decline in application volume.

Given the low rate environment, it's hard to see if that will ultimately happen.

But as we've said before, it should decline at some point, it's just difficult to say exactly when.

Got it.

And if I could ask one follow-up question, just in terms, as a follow-up to Steve's question, in terms of securities portfolio you're now at 9.4 on the MBS portfolio.

You've historically talked about $9 billion.

Given where reinvestment yields are right now at 1.5%, as you noted, should we expect to see that portfolio shrink over time and we could actually see the balance sheet shrink a little bit just given where loan yields currently are right now?

Sorry, given where security yields are right now?

Ultimately, we do want loan growth and we want to make sure that we are very positioned for loan growth.

So ultimately that portfolio shrinking is a good sign because it would be a result of loan growth.

In the meantime, we are comfortable with our securities portfolio where it sits today.

We look at it all the time, taking into account our forecast for where deposits are going to be going, where loan growth is going to be going, and keeping in mind the fact that we want to be well-positioned for loan growth.

Great and if I could just -- (multiple speakers) I'm sorry Ralph, go ahead.

It's all you.

No, I was just going to say, that is key as Karen was saying with managing our excess liquidity.

Great.

And if I could squeeze one quick last one in there.

On the commercial loans, the 14 basis points of yield compression you show, can you break it down in terms of how much of that was from runoff of the accretion versus how much are you actually seeing core pricing pressure on the commercial side?

Yes.

I think it's important on the yields to know that 9 basis points of that 14 basis point decline was from accretion, the lease portfolio adjustment, and the impact on the non accruals that we noted.

The rest, the 4 basis point decline, was from those three portfolio impacts that we talked about on slide 10.

Great.

Thanks.

Thank you.

Craig Siegenthaler, Credit Suisse.

Good morning, thank you Ralph.

I was wondering if you could provide us some perspective on why your Midwest loan balances are still declining, especially because many of your larger Midwest competitors have grown in the last year.

And I'm wondering if you can also highlight overall competition pricing and also even kind of cross why your optimistic earlier comments on Michigan haven't yet translated to loan growth yet?

Okay.

Lars, would you like to comment on that?

Yes, I'd be glad to.

In linked quarter you did see in the Midwest market, a slight decline in the balances there.

And it was pretty much in a number of different categories, but on the flip side of that, and I've referenced this earlier, Craig, in my comments to Steve, when we look at the commitment levels in Michigan, they continue to increase.

And in fact they were one of the largest contributors to the increase in overall commitment levels for that portfolio, so a lot of our Middle Market customers, and even our Wealth customers that bank with us, are very connected obviously to the auto industry.

The auto industry has come back very strong.

There's a lot of liquidity, delevering going on.

Frankly, I'm very encouraged with the numbers of customers we have, the numbers of customers we continue to pick up.

We can't control the usage under the facilities, but what we can focus on is the number of customers we're serving in Michigan, the number of customers we're serving in Middle Market banking, executing our relationship banking model.

And I think we've seen, even in the local or the most recent market share gains in deposits, that we continue to stay very focused on this critical market for our franchise.

Frankly, I'm very, very encouraged there.

We're doing some things right now with Wealth Management, with that team cross-selling those products into -- at a much deeper level, our Middle Market banking book of business and frankly, that is going extremely well.

We've got some very experienced bankers, we've got some long-term relationships and I'm very encouraged about that marketplace.

Just to underline that, as we were visiting with customers, recently, we heard from a number of those customers that they are doing what we were indicating earlier, they are building their cash and waiting and want to run with a higher level of liquidity than they have in the past as well.

Yes.

I think to that point we see that in Michigan.

We also see that across the rest of the franchise, frankly.

There is a much more conservative perspective around maintaining liquidity levels for the customers that we bank and we target.

Lars, on the National Dealer business, which is mostly a Western business not a Midwest business for you, do you have an interest in making that more diverse, so growing the Midwest and Texas business there?

And also you're very diverse in terms of the guys you work with, the manufacturers.

Would you want a larger US weighting in their too, from the US manufacturers?

Yes.

Well, first of all, if you look at our business today, 43% of the overall nameplates are the Japanese.

We have somewhere I think just under 25% of the US nameplates and then the balance is a rounded out into others.

Those have shifted over time as I think the market has shifted and consumer demand has changed.

I think we're where we need to be right now to optimize our performance with our dealers.

We're very focused on the dealers, maybe a little less so on the brand.

We've got a number of dealers that we've worked with for a very long period of time, deep relationships, and frankly, some of the nameplates that they carry have changed as we've come through the cycle.

Now, I would point out when you look at the dealer portfolio, you will see a concentration on the West Coast in balances.

That, you have to keep in mind, is where the dealers are headquartered.

Okay?

We're very focused on local relationships, local decision-making.

It's very consistent with our relationship banking strategy.

And frankly, the dealers on the West Coast have performed very, very well, especially the strongest, which as you know is what we focus on in our dealer business.

But many of those dealers are doing business frankly, throughout the country.

So I think it's less about focusing on the West Coast.

It's more about focusing on the very best in the industry.

Keeping the ones we have, and frankly, keeping a very disciplined strategy and staying very focused on picking up new customers that fit in a long-term proven strategy.

Okay.

Thank you.

You might mention too, Lars, about our mega-dealer in underlining the size.

Yes.

That's right.

I guess I took for granted a little bit our strategy that it's really clear, we do take a mega-dealer, we're very focused -- in case you're less familiar on this, with really the larger dealers.

These are dealers that in many cases have multiple, not just points-of-sale, but also have multiple brands.

It creates balance in their franchise, which we really appreciate, but we're really not focused on the moms and the pops.

Of course, many of those got hurt more going through the most recent recession.

We're focused on the best, the strongest we think in the business.

And frankly while we didn't have as much growth in just linked quarters, this has been a great, long-term growth business for us.

And frankly I'm less concerned about the quarter-to-quarter growth in balances as I am about the numbers of dealers that we retain, we deepen our relationships with, and frankly, picking up just the best in the industry.

Great.

Thanks, guys.

Thank you.

Jennifer Demba, SunTrust Robinson.

Thank you, good morning.

I guess this question is for Lars.

Lars, just wondering what kind of competitive dynamics you're seeing in some of your specialty commercial lines, like Energy and Tech and Life Sciences where maybe we've seen some new entrants come in in the last year.

Are you guys -- feel like you're gaining market share in these areas or just can you give us some details there?

Right.

So yes.

What I define as some of our Middle Market industry groups, it's all a part of our Middle Market strategy.

In some of those areas that have had very nice growth, obviously in the US, the auto industry, Technology and Life Sciences and the mortgage businesses, have all benefited nicely.

While with our unique industry expertise we have been able to distinguish ourselves, and clearly, have some leadership positions in those areas, we expect to continue to grow those businesses.

We have very tenured bankers, we have the right products, frankly, we're in the right places.

Now, I would tell you that it is more competitive today, almost across every line of business that we've got.

But I've seen this throughout my career.

You do see different institutions, banks will jump in and out of industries.

We've stayed very consistent in our industry areas, and I think that our customers know that, the industries know that.

We stayed very committed.

And frankly, we get paid a premium for that.

And we're going to continue to stay very focused on our relationship banking model and we're going to stay very focused on getting paid a premium for that.

Even to point out, Jennifer, with the pricing pressures we have gotten in some of these specialty areas as well as Middle Market, Corporate, some of our others, we as a Company have largely been able to hold our loan spreads now for three quarters in a row.

I think that's pretty remarkable, and I think is evidence of our successful relationship banking model.

Thanks a lot.

Thank you.

Matt O'Connor, Deutsche Bank.

Good morning.

This is Rob Plaza from Matt's team.

How are you guys doing?

Just as a follow-up on the topic of loan growth, looking at slide 5 specifically as it relates to the Texas market, the chart seems to indicate the pace of growth is slowing a bit there the past few quarters.

Just given how much of a focus Texas is for Comerica, curious if you could speak to some of the trends you're seeing down there.

Is this just a function of continued uncertainty among customers or --

Lars?

Yes.

Absolutely I'd be glad to answer that.

What you've seen obviously over a long period of time, Rob, is that the Texas market has been a source of excellent growth for our Company.

Quarter-to-quarter, you end up with some lumpiness in particular businesses -- but I'm very, very encouraged.

In fact, if you look at our overall commitments today as a Company, we saw and continue to see excellent positioning in our Texas market.

Utilization rates can kind of move around a little bit, but I feel very encouraged.

In fact I would point out in the Houston market, that continues to be -- which happens to be a big part of the ex-Sterling Bank footprint, that's one of our highest productivity areas for commercial banking, but that includes Small Business banking.

In fact, we're seeing record levels of pipeline building in the Houston metropolitan market in Small Business.

So we're very, very encouraged about what the Sterling franchise has done for us in Texas.

Frankly, one of the things that distinguishes us I think in our business model is our local decision-making, local leadership, Downey Bridgewater, who was CEO of Sterling, is heading that up.

Bringing together all the resources of the bank there and it's not just in Small Business, it's not just in Retail, it's not just in our commercial banking, but we're seeing it in non-interest income opportunities and lifts there too, so I think we're very well-positioned from the macroeconomics of the Texas market, but also with the execution of our relationship banking model here.

What I would just add to that, Rob, going on in Texas is the purposeful decline of some of the Commercial Real Estate loans that we acquired with Sterling.

That's happening on the loan side and even on the deposit side as we reprice the deposits in that market, there is purposeful decline of some of the higher rate CDs going on in that market.

Okay.

Great.

That's helpful.

And also just to follow-up on the decline in loan yields this quarter, should we take your comments to imply that you're actually not seeing any core pricing pressure, but rather it's just some of the one-time items this quarter, the impact from lower accretion and the loan mix shift?

Lars?

Sure.

Clearly, as Karen pointed out well before, we do have the continual runoff and refinancing of some of the higher fixed rate mortgage loans.

Kind of a remix of the business tilting towards C&I.

Less Commercial Real Estate and positive asset quality migration.

Those all contribute to it, but if you put those aside and I look at just our core loan spreads, what we're doing with our new business, with our renewed business overall, I'm not going to tell you it's easy.

It's a fistfight out there in terms of competitive pricing day to day.

My team knows that in the footprint.

The Retail bank, the Wealth Management team.

However, in spite of that as I pointed out before, for three quarters in a row, our loan spreads have held, and frankly, I think that is the best evidence of our relationship banking model, our experienced bankers.

Frankly, our industry expertise.

Okay.

Thanks very much.

Thank you.

Ken Houston, Jefferies & Company.

Hi, good morning.

This is actually Brian Vettori calling for Ken's team.

Good morning.

My question is on the excess liquidity position.

So that obviously built a little bit this quarter and it looks like you guys put some to work at the end of the quarter just buying the securities, but if loan demand remains weak, what is your appetite to further invest or further put that to work in the securities portfolio just given what rates are today?

Karen?

Thank you, Brian.

As I mentioned, we are very focused on loan growth.

That said, we do manage our overall portfolio with a continual eye looking to the future on where we think deposits will go and where we think loans will go.

When we think about the securities portfolio, one of the things that we are very mindful of is the fact that we want to be well-positioned for loan growth and as rates rise, the securities portfolio will be marked and will have an extension risk on it.

And as it's mark to market, with the new proposed Basel III capital rules, and the AOCI filter, that could have a significant impact on capital.

So we are weighing all of these things, where we think deposits will go, where we think loans will go, excess liquidity, the longer-term impact of the securities portfolio, should we increase it as we make these decisions?

It is a fluid process.

We continually monitor it.

Great.

Thanks.

And my follow-up is just on expenses.

So they've been pretty well contained over the past couple quarters and I think we're starting to see the efficiency plan that you guys announced earlier this year show, but if given the low rate environment, are there any other levers you can pull on the expense side to offset some of the pressures that we could see on revenues?

Yes.

We are continually focused on expenses.

And Comerica has been good for a long time at managing our expenses.

With that said, as we continually focus on it and continually look at where we can be more efficient, there will be and are additional levers that we will pull to continually manage expenses, flat to down.

Great.

Thank you.

Thank you.

Erika Penala, Bank of America Merrill Lynch.

Good morning.

My question is on capital return for next year.

Clearly, this year, Ralph, you've returned a good amount of capital back to shareholders.

But what I gather from this call is, given the rate environment and the growth trajectory in the US, and you mentioned that Corporate has tons of cash, the out -- revenue outlook for the industry will remain challenging next year.

I guess, could you give us a sense of how aggressive well-capitalized institutions like Comerica can be next year in terms of the stress test?

Additionally, what is your propensity to buy growth with that excess capital next year?

Well, I think just underlying underlining what Karen was talking about earlier, this is not the time to stretch and go away from your basic model, which is relationship, as you heard Lars talk about on commercial lending, same thing is true in Wealth Management and Retail.

And what's going to happen is we're going to have to see what the rules are as well.

We have not seen yet the final rules from a liquidity standpoint and other things that need to come out.

And therefore, as we have historically, we've been aggressive at returning capital, as you just mentioned.

And we will look at that as well.

But a lot will depend on where we think everything is moving at that point in time and where the rules stand as well.

Karen, you want to add anything to that?

Yes, I would just say, Erika, in particular on the stress test we hope to receive the scenarios from the Fed in early November, so it's too early honestly to say anything about the stress test.

We will be running it this year.

We will be submitting again in January.

And we do recognize that we come at this from a position of strength.

Got it.

And I guess, is it fair to assume if the parameters are similar to last year, that given that you're entering this year, to your point, in a position of even greater capital strength, we could assume that the capital return trajectory for Comerica can continue to keep building?

I think it's too early to assume anything, because it's a new process each year and a new scenario each year.

Okay.

We'll have to work our way through it.

Okay.

Thank you.

Thank you.

Josh Levin, Citigroup.

Good morning.

I wanted to ask more on the NIM, when you were signaling -- I want to understand, you finished the quarter at 2.96% for NIM.

We should think going forward that there is going to be similar compression in the current environment although the weight of compression will abate?

Is that the right way to think about things?

As you know, we focus more on the net interest income on the dollar side than on the rate side.

But what I will say is that you will see some continued decrease in accretion as we've talked about.

We expect the next quarter accretion to be $7 million to $9 million versus the $15 million that we had this quarter.

And going forward accretion should continue to slow as we have about $60 million left of accretion over the four-year life of the rest of the loans.

So that will come in over time, but slow each quarter.

As you think about the rest of net interest income, the loan portfolio dynamics that we talked about on slide 10 should slow over time, but they do exist still.

And on the mortgage-backed securities portfolio, while we continue to manage that as best we can, that is impacted by the current rate environment.

Okay.

And, Ralph and Lars, you talked about some of your clients being reticent right now to actually go ahead and invest in their businesses.

Do they just need some kind of certainty, do they just need to know the outcome of the elections and it doesn't really sort of matter who wins, they'll go ahead and invest in it?

Or is it going to sort of matter who wins the election and I mean, how should we think about it?

They just need certainty or do they actually need to know what path we're going down?

I think it's certainty.

Because I think as you look back over history, people can deal with certainty if they know what the rules are and what the expectations are moving forward.

And that's kind of what we're hearing is more the uncertainty.

And it's a little different for each customer depending on the businesses they're in and how they're impacted, but as was mentioned earlier, everyone is being very cautious here and waiting to get that certainty, but also strengthening their balance sheets, which longer-term, will be a positive from that standpoint.

Thank you very much.

Thank you.

Steve Scinicariello, UBS.

Good morning everyone.

Just want to follow-up on the deliberate mix shift in the loan portfolio.

Just kind of curious, maybe Lars could provide some color with this, I'm just curious given that the yields are holding up much better on the CRE side than on the C&I side, I'm just curious what's going to make the risk reward a little bit more attractive where you don't just see maybe the slowing of the runoff but maybe you see some attractive opportunities on that side of the portfolio?

Yes.

And you're speaking, Steve, particularly to the Commercial Real Estate side of the portfolio, correct?

Exactly.

So first of all, we've shared before our strategy, and continues to be our Commercial Real Estate strategy, is very much of an in footprint urban market kind of oriented focus.

What we are seeing is primarily multifamily activities.

Now, just because the portfolio has seen some declines, and as Karen pointed out, a portion of that is run off of non strategic kind of assets, opportunities, that we've got in the portfolio, that will eventually subside.

We have had over the last number of quarters, though, a lot of volume.

We have closed a lot of multifamily.

We've continued to see a few other asset classes where we've been very deliberate and conservative in our approach, but for example in office, in the northern California market, which frankly is red-hot, industrial, in Southern Cal, which is very, very strong, I think we are very well-positioned.

We've got the right model, we've got the right bankers, we got a lot of experience but we're going to be very deliberate.

We're going to be very focused.

And frankly we're going to make sure that we execute our relationship banking model.

This is not just about project finance.

This is really more about working with developers that we've known for a very, very long period of time.

And by the way, an increasing amount of them are doing their wealth business with us, which is great to see.

Frankly, because we stood by them going through this past cycle and I think we have deeper relationships.

So I do think we're going to continue to see opportunities there.

I do think that a lot of the construction loans that we've closed and as we see fundings are going to start to impact in a positive way, that portfolio.

And clearly we are getting better spreads in that portfolio than you would in a typical Middle Market, the typical Middle Market C&I opportunity.

I see it as source as an opportunity for growth.

It's just we've got to get out I think a little bit further into next year.

Got you.

That's great color.

And then my second question kind of relates to that Michigan market.

And a lot of the positive momentum that you're seeing up there and just kind of curious how you think the recent acquisition of Citizens Republic there, does that create some more potential opportunities for you to take market share?

Or how do you think about that?

We've been in that market, as I think everybody knows, well over 160 years.

We are well known.

We've got a great team there, and as things move forward, as Lars was talking about earlier, the economy will provide increasing opportunities.

I don't think that any one situation will change that to any degree.

Great.

Thanks so much, guys.

Thank you.

Brett Rabatin, Sterne Agee.

Good morning.

Wanted to ask, I have in my notes that the Mortgage Bankers portfolio is about 85% refi.

Can you give any color around if that's sort of the case for the third quarter?

And generally speaking if there's any concerted effort to move that more toward a purchase type model?

Lars?

Yes.

We have seen a bit of a shift.

If you look at the third quarter, our refi volume was about 75%, so we did see some increase in the activity of purchase volumes in the third quarter for volumes.

Are we positioned to capture more of the purchase market?

Absolutely.

The key for us is that we're working with the right mortgage companies.

And there's been a lot of change in shift in how mortgages are originated in this industry.

And frankly, I think that we are very well-positioned.

The mortgage companies that we're working with typically are the larger, stronger, independent ones, and frankly, they're capturing a lot of volume.

And they're doing very well, so I continue to see this as a long-term business for us.

It's going to have some variation in the balances, but I pointed this out before, for me, the key is to have a deep relationship with them, to be one of their preferred lenders.

Our treasury management cross sell, which I use as a nice bellwether for deepening our relationships, is over 90% with the mortgage companies we work with.

Okay.

Great.

Thanks for the color, Lars.

Thank you.

Ken Zerbe, Morgan Stanley.

Good morning.

Can you just talk about dealer just for a second, have you seen the fall off in average balances this quarter?

I'm asking because I'm trying to get a sense of what is going into your 7% to 8% loan growth assumptions for the year.

Lars?

Okay.

Speaking more specifically just about the dealer portfolio, first of all, because we do have obviously a couple businesses including mortgage banking finance with variability.

If you looked back before this year, over the last decade, we really only saw one fall period where we did not see a seasonal decline in inventories as our dealers cleared the lots, really positioned themselves for new year models.

This year, we have not seen it happen.

And I would tell you, the primary reason that we have not seen the declines in the those balances is the Japanese nameplates, frankly, have been rebuilding their market share in the US.

And you see that showing up in the average days on hand of inventory.

That is the days the car sits on the lot, has actually increased in the industry, but that's really driven by the Asian brands.

So we've just seen less variation in that particular business.

The mortgage banking finance, we'll just have to see to Karen's point, how that impacts our outstandings on a go forward basis.

Okay.

That helps.

And then just quick, on the interest on non-accruals, obviously, you made a point saying that second quarter was very high, third quarter was not nearly as high.

When you look at your troubled or your troubled credit portfolio, how much room left is there potentially to get additional increases in the interest on non-accruals as those cure themselves?

Or are we more likely to see a sustainable level at these lower levels of additional interest income?

John?

Every quarter, we see, as Karen alluded to before, kind of a steady-state level of interest that we do earn on nonaccrual loans.

It was just a particular event in the second quarter.

One credit particular cluster, a small part of another, that we had a very fortunate event where they were able to refinance and pay us off in full.

And that spiked the nonaccrual interest in that quarter.

On a going run rate basis, that's really hard to predict that companies can do that, so I would say that Q2 was definitely an aberration, and I'd point you to the steady run rate for prior quarters as the way to look at it going forward.

Perfect.

Thank you.

Thank you.

Terry McEvoy, Oppenheimer.

All the income statement balance sheet questions taken care of, I guess just one question for Ralph, as you look at the revenue pressure across the industry, and the potential for negative earnings growth, next year, at Comerica, if I just look at consensus and where it could go, does that change your appetite at all to do deals as a way to maybe fill in that earnings hole in this challenging revenue environment?

As we've said before, we feel very comfortable today with where our footprint is.

We have a lot of opportunity, especially given the growth we've had here in Texas with the Sterling acquisition that Lars was talking about earlier, and our position in California, two of the largest markets in the country, and now as I mentioned earlier as well, with Michigan's economy picking up, I think we're very well-positioned to take advantage of growth in these markets.

And the acquisitions, while we always look to see those, today, it would have to be a very strategic opportunity, and there wouldn't be many of those from that standpoint.

And, Terry, I would just add that while the environment is not so rosy right now for banks, we are very focused on the bottom line.

And growing that by controlling what we can.

Thank you very much.

Thank you.

Gary Tenner, D.A. Davidson.

Thanks, good morning.

Just had one follow-up.

Just in terms of Lars, your comments on the Commercial Real Estate runoff, can you talk about kind of how much more planned runoff there would be from the Sterling portfolio?

Very difficult to tell.

When you look at that, you've got to keep in mind there's a couple different dynamics going on there.

And frankly, one is the interest rate environment.

The opportunity for some of those customers to refinance in another institution will certainly have some impact on it.

Frankly, I think that we continue to find some opportunities in that portfolio too where it is investor-owned.

We're finding some good private banking wealth management opportunities.

So we're just going to execute.

Were going to continue to work through that portfolio, but I'll tell you it would be very difficult to give you a projection on exactly what kind of runoff we're going to see quarter-to-quarter on the portfolio, but I do think that we will see continued declines.

And just if you look at the commercial mortgage portfolio overall, is it fair to say that the end market appetite has been a little greater than expected and that has attributed to the ongoing run off at the pace it's been?

Yes.

I think that that's the single biggest driver.

I think that as we continue to have stabilization of projects and they become permanent market ready, as the permanent market rates continue to hit very attractive levels, our customers are accessing it and benefiting from that.

Okay.

Thanks.

Thank you.

Paul Miller, FBR Capital Markets.

Good morning, guys.

This is actually Thomas on behalf of Paul.

You touched a bit on businesses and customers sort of in a wait and see approach, but you seem pretty positive on an economic environment.

We're just trying to get a better sense of whether the growth loan growth you're experiencing you contribute -- whether you contribute that to market share gains or sort of an improving economic environment overall in your markets?

Lars?

Well, I would say it is not an improving economic environment that has driven for the most part our growth.

If you look at our commercial loan growth in particular, just as one segment, that's increased over 20% over the last year.

That is market share gains.

That is clearly some of the industry groups that we talked about earlier, where I think we're well positioned with the right bankers, industry expertise, I think Texas has made a real difference in that.

Obviously in the Texas market alone, the economic environment has helped, but keeping in mind the fact that a lot of our customers continue to delever in order to get growth, you do have to move some market share.

And frankly I think with our balance of businesses, and the markets that we serve, frankly, the market has well received our relationship banking model, and I think we've been very well-positioned to operate in a very challenging market.

Frankly, I think those are the key drivers for us.

I would underline what Lars just said on the economies, though, that both Texas, and as I mentioned in my remarks earlier, Michigan is coming back because of the auto industry turn and auto sales now at about 14.9%, that has provided a good economic turnaround.

We're seeing some in California as well, as I mentioned.

And I would underline the specific industries that we're in like Technology and Life Sciences, which has been strong through the downturn, as well.

So it is a business diversity as well as being in the right markets at the right time.

Okay.

I may just underscore the California issue because I think that we've begun to see, and this is really on a go forward basis, that that market appears to be strengthening.

We did get some growth in the past in northern Cal, general Middle Market.

And we are seeing maybe the beginnings of firming up in the economy in the southern Cal market, some promising signs.

Okay.

Great.

That's good color.

Thanks, guys.

Thank you.

John Pancari, Evercore Partners.

Good morning.

Your loan growth outlook, that still implies flat end of period balances for next quarter.

So I just want to confirm that that's fair and that's consistent with your expectation for the fourth quarter.

Also, is that likely to be the case for the first half of '13?

I think what's important in our outlook is that we do expect to continue to see some decline in Commercial Real Estate as we're growing our other businesses.

So that is reflected in our new outlook of 7% to 8%.

Plus the fact that we can't predict with great certainty where Mortgage Banker will go.

Okay.

And in terms of the first half of ' 13 can you give us a little bit of color on how you think about loan trends there?

Yes.

On 2013 we will provide our outlook as we always do on the fourth-quarter earnings call.

But you should think about loan growth from the perspective of where we sit today, where we continue to see some decline in Commercial Real Estate, some variability in Mortgage Banker Finance while we're growing all of our other businesses.

Okay.

And then on the Middle Market side, I know that can really move the needle for you guys and you indicated that loan growth there has been still somewhat sluggish as some of your borrowers are reluctant.

Are you looking at opportunities to get more price competitive there to really drive growth since you command such a big presence in that space?

Yes.

No.

We are not focused on being more competitive.

I think we're fair today in our pricing.

One of the things that we're very focused on is continuing to leverage our relationship banking model.

And I view us as a premium service provider.

We're big enough, we have the products, the expertise, the experience of the bankers that we can go in and really compete well in all of our markets in that general Middle Market space, but frankly, I think we also have the advantages of being nimble enough at our size, local decision-making through the way that we're organized to be more responsive, reliable and flexible.

So while I know pricing is very important, to me, that is just one piece of our strategy.

It's an important piece, but what we are really very focused on is spending more time in the markets, developing relationships with customers.

To your point about Middle Market maybe not having the general Middle Market, some of the growth in there, you have to keep in mind there's a lot of manufacturing in there.

A lot of those companies have delevered, but we've seen a nice pickup in commitment levels there as I mentioned earlier.

And we saw increases in general Middle Market commitments in California, Michigan, and in Texas.

And I think that bodes well for us.

The thing I would add to that too is, I think today, relationships mean more than they did at the height of the economy because of an institution that has been there for our customers through the downturn.

Okay.

Thank you.

Dan Mazur, Harvest Capital.

Good morning.

Thanks for taking my questions.

Just a few quick ones on excess liquidity and securities portfolio.

I think the average deposits at the Fed was over $4 billion in the quarter, so I think that was up around 20% quarter over quarter and I think that represents about 7% of earning assets now.

And I think that's probably earning about 25 basis points, so I think that's one of the higher percentages of the banks that I've looked at and it creates a pretty large drag on NIM.

Just wanted to, in the context of your liquidity position which I think looks pretty solid, and I think Debit Express next year should drive some incremental deposit growth.

So number one question in that context, can you explain the targeting of fixed size for the securities portfolio that you've targeted in that $9 billion to $10 billion range?

And number two, with QE3 driving mortgage securities basically arguably artificially low, are there other securities or other asset classes you may consider investing in in that portfolio?

Karen?

This is something that we manage fluently -- fluidly, Dan.

What I would say on the excess liquidity is yes, it did reach over $4 billion at one point but today it's around $3 billion due to some of the purchases that we've made as well as loan growth.

It is something, as I've said, that we manage looking forward with where we think deposits will go, where we think loan balances will go.

We do want to make sure that we are well positioned for loan growth.

As we think about potential other asset classes, we have -- we continually look at potential other asset classes, but they have to fit our strategy of highly liquid, highly rated portfolio.

And the reality is, within our strategy, there aren't a lot of other options than mortgage-backed securities.

You've seen us, as we've purchased mortgaged backed securities this past quarter we have purchased more CMO's than 15-year pass throughs because CMO's are giving us a little bit better yield today with that short duration that we're looking for.

I don't know if I can answer your question any more, Dan.

No.

So it's something -- so have you changed the $9 billion target?

Is that now risen given that yields have declined?

We like our securities portfolio where it is today when we think of forward-looking.

That $9 billion target that we've talked about in the past is something that we've said we will continually manage and you've seen us do that this quarter.

It's hard to predict where the target will be going forward because again this is something fluid and something that we manage, based on deposit growth, based on loan growth, et cetera.

But we are very comfortable with where our portfolio is today, given all the parameters that I've talked about.

Okay.

Thanks.

Thank you.

Jason Harbes, Wells Fargo.

Good morning guys, thanks for taking the question.

Can you hear me?

Yes.

All right.

So, question on the efficiency ratio.

I know longer term you guys are targeting to get that down below 60%.

But it ticked a bit higher this quarter.

Is it fair to assume that you're really going to need some help on the rates to get there or are there other avenues that you're considering to drive that lower over time?

Karen?

Yes.

We have set an efficiency ratio target to take our ratio below 60% over time.

If you look at us from a year-to-date perspective, we have moved that ratio in the right direction, where we ended 2011 at 72% and year-to-date we are at 70%.

So our focus is to continue to move it in the right direction by controlling what we can control and growing revenues faster than we're growing expenses.

But as we've said in the past, in order to meet our target, we will need a little bit of a rate environment pick up, but clearly not rates back to normal to get there.

Okay.

That's helpful.

And then it looks like the tax rate was a little lower at least than we were looking for.

I think in the past you suggested a way to try to calculate that by netting out about I think $60 million or so of tax credits.

Is that still a fair way to think about it or would you provide any sort of updated guidance on the tax side?

That is still a fair way to think about it.

We did have the benefit this quarter in taxes of having a refund on interest paid to the IRS.

And so that was helping us this quarter.

Okay.

Fair enough.

Thanks a lot.

Thank you.

There are no further questions at this time.

I'll turn the call over to Mr. Ralph Babb, Chairman and CEO, for any closing remarks.

I would just like to thank everybody for taking the time this morning to be on the call and your interest in Comerica.

And I hope everybody has a good day.

This concludes today's conference call.

You may now disconnect.

Thank you.