Comerica (CMA) Morgan Stanley US Financials, Payments & CRE Conference 2024 summary

Business Model, Strategic Positioning, and Market Focus

• Maintains a strong foundation with industry-leading credit performance, robust capital, and liquidity, including CET1 at 11.48%, well above regulatory minimums.

• Executes a diversified strategy across high-growth markets and business units, focusing on 14 of the 15 largest and 8 of the 10 fastest-growing U.S. markets, with investments in Texas and the Southeast.

• Experienced management teams foster deep industry knowledge and customer relationships.

• Peer-leading noninterest-bearing deposit mix and compelling cross-sell in treasury management.

• Investments in fee income and noninterest income aim to provide consistent, capital-friendly growth.

Macroeconomic and Client Sentiment

• Business activity remains solid, though recent months have seen more challenges and delayed decisions.

• Election year dynamics and interest rate uncertainty are causing some business owners to wait before making decisions.

• Clients are performing well, but not at the exceptional levels seen in prior years.

• Interest rate relief would likely accelerate business activity.

Loan, Deposit, and Financial Performance Trends

• Utilization rates are at historic lows, but pipelines for new business are healthy, especially in Texas and California.

• 1Q24 saw a 2.7% decline in average loans due to prior rationalization and muted demand, while deposits declined mainly from a deliberate reduction in brokered time deposits.

• Core deposits are stable; brokered deposits have been reduced by $1.5 billion, improving balance sheet flexibility.

• Non-interest-bearing deposits have declined, mainly due to customer fund usage and high-rate environment.

• FY24 outlook anticipates loan and deposit growth in 2H24, with structural benefits to NII from maturing swaps and securities repayments.