Comerica Incorporated

Good day and thank you for standing by. Welcome to the Comerica quarterly earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, press star 0. I would now like to hand the conference over to Darlene Persson, Director of Investor Relations. Thank you. Please go ahead.

Thank you, Stephanie. Good morning, and welcome to Comerica's third quarter 2021 earnings conference call. Participating on this call will be our President, Chairman, and CEO, Kirk Farmer, Chief Financial Officer, Jim Herzog, Chief Credit Officer, Melinda Chausse, and Executive Director of our commercial bank, Peter Sebzik. During this presentation, we will be referring to slides which provide additional details. The presentation slides and our press release are available on the SEC's website, as well as in the investor relations section of our website, Comerica.com. This conference call contains forward-looking statements, and in that regard, you should be mindful of the risks and uncertainties that can cause actual results to vary materially 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. Please refer to the Safe Harbor Statement in today's earnings release and slide two, which I incorporate into this call, as well as our SEC filings for factors that can cause actual results to differ. Now I'll turn the call over to Kurt, who will begin on slide three.

Good morning, everyone, and thank you for joining our call. We generated earnings of $1.90 per share and an ROE of 13.53% in the third quarter. Our results included solid loan growth and a number of business lines, which was overshadowed by headwinds from Triple P loan forgiveness and reduced auto dealer loans due to supply constraints. We continue to drive strong deposit growth, robust fee income, and excellent credit quality. Revenue increased quarter over quarter and year over year despite the low rate environment. Our focus remains on managing expenses while supporting our revenue generating activities. Also during the quarter, we repurchased over 3 million shares, reducing our share count by over 2%. We expect economic metrics to remain relatively strong over the next year, which bodes well for growth. Our corporate mission is to create shareholder value by providing a higher level of banking that nurtures long-lasting relationships. Key to achieving this mission is our dedication to our customers, employees, and communities. Our green loans and commitments continue to increase and total $1.5 billion at quarter end. Recently, we launched a National Asian and Pacific Islanders Resource Group. We now have 10 employee resource groups covering all of our markets. These groups support our diverse team members and strengthen relationships in our communities. I encourage you to review our diversity, equity, and inclusion report, as well as our 13th annual corporate responsibility related report, which were recently published. These reports include updates on our strategies and progress in these important areas. Turning to our third quarter financial performance on slide four. Significant progress was made on Triple P forgiveness, reducing these loans by 1.8 billion or 64% on a period-end basis. Supply constraints continue to impact auto dealer floor plan loans, which average only $600 million, relative to the historical run rate of about $4 billion. Putting Triple P and dealer aside, the average loans in the remainder of our portfolio grew about $600 million, or nearly 1.5% over the second quarter, including a 3% increase in general middle market. Our pipeline is strong, and loan commitments continue to increase. Average deposits increased 5%, or 3.6 billion, to another all-time high. This is due to our customers' solid profitability and capital markets activity, as well as the liquidity injected into the economy through physical and monetary actions. Net interest income increased 10 million, benefiting from an additional day in the quarter, higher loan fees, and deployment of excess liquidity, partly offset by lower rates. Credit quality was excellent, with net charge-offs of only one basis points, and criticized loans have declined to well below our long-term average. As a result, our reserve declined again, and we had a negative provision. Reserve ratio of 1.33% reflects the positive outlook for the economy and our portfolio. Fee-generating activity remained robust. Third quarter non-interest income was up 11% on a year-over-year basis. On a quarter-over-quarter basis, Record warrant income and commercial lending fees were all set by decline in card fees from elevated levels due to lower levels of government stimulus. Our efficiency ratio held steady at 62% as we continued to focus on supporting revenue-generating activity. This includes our technology investments, which help us attract and retain customers and colleagues by enhancing their overall experience and efficiency. We remain focused on our digital transformation by enabling our business with products and services, modernizing our platform, and building our digital future with the right talent, skills, and strategy. As we stated earlier, we continue to manage our capital levels, keeping a close eye on loan trends and capital generation. Using our capital to support our customers and drive growth remains our top priority, while providing an attractive return to our shareholders. We, along with our customers and colleagues across our markets, remain optimistic about the future. We expect economic metrics to remain relatively strong over the next year. Our chief economists forecast real GDP to increase 4.5% in 2022, with each of our three primary markets of California, Texas, and Michigan above that level, which bodes well for growth. And now I will turn the call over to Jim.