Comerica Incorporated

Hello, and thank you for standing by. Welcome to the Comerica fourth quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question and answer session. To ask a question during this session, you will need to press 1 and 0 on your telephone. To withdraw your question, please press 1 and 0 again. I would now like to turn the conference over to Kelly Gage, Director of Investor Relations. Please go ahead.

Thanks, Craig. Good morning, and welcome to Comerica's fourth quarter 2022 earnings conference call. Participating on this call will be our President, Chairman, and CEO, Kurt Farmer, Chief Financial Officer, Jim Herzog, Chief Credit Officer, Melinda Chausse, and Executive Director of our commercial bank, Peter Sepsic. 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. 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. Also, this conference call will reference non-GAAP measures. And in that regard, I direct you to the reconciliation of these measures on our website, Comerica.com. Please refer to the safe harbor statement in today's earnings release on slide two, which is incorporated 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 Kirk, who will begin on slide three.

Thank you, Kelly. Good morning, everyone, and thank you for joining our call. In 2022, we generated another year of record earnings. And in many ways, it has been an inflection point for our company. Colleagues returned to the office reinvigorated, ready to support our customers and reimagine the way we work. And we delivered results. Strong broad-based loan growth and management of loan and deposit pricing in a rising rate environment drove revenue to an all-time high of $3.5 billion. Prudent expense discipline generated an efficiency ratio of 56%. and earnings per share increased to $8.47. Our strategic investments in balance sheet management help produce superior returns and position us to maintain a high level of performance. Our refreshed logo and core values reinforce our commitment to being a leading bank for business, complemented by strong retail and wealth management solutions. Investments in more collaborative workspace, digital tools, enhanced product and streamlined processes better enable our colleagues to put our customers first and create a more elevated experience. Striving to be a force for good in our communities, we have achieved approximately 85% of our three-year goal to provide $5 billion in small business loans and deployed unique solutions such as American Business HQ, which provides collaborative space in the southern sector of Dallas. Publishing our inaugural TCFD report was an important milestone in our corporate responsibility journey and highlights our long-term commitment to sustainable business. The report outlines our climate strategy, including supporting our customers, integrating climate issues into our business, and reduction of our environmental footprint. As of year end, green loans were $2.7 billion, a 60% increase over 2021, assisted by our renewable energy business, which has already exceeded expectations with almost $350 million in loans. Our commitment to corporate responsibility was once again recognized as we were included for our fourth consecutive year in Newsweek's 2023 list of America's Most Responsible Companies, and also included as one of the greatest workplaces for diversity. Volunteerism remains a priority, and I'm incredibly proud of the over 66,000 hours our colleagues committed to positively impacting their communities. Slide four provides further detail on our four-year results. Relative to 2021, average loans increased $1.4 billion, or 3%, to over $50 billion. Putting aside PPP activity, loans were up $4 billion, or 8%, our highest organic growth rate in well over a decade, with contributions from most businesses. Following growth of almost $13 billion in 2021, driven by government stimulus, Deposits decreased $2.2 billion in 2022 as customers utilized excess cash and we executed strategic pricing actions. Revenue increased 19%, driven by higher interest rates and strong loan rates. Non-interest expenses reflected strategic investments, higher compensation in conjunction with payroll performance, and modernization initiatives totaling $38 million. Credit metrics were excellent, as driven by net charge off of only three basis points, and profitable assets remained well below our historical norm. In summary, a strong performance with an ROE of 18.6% and an ROA of 1.32%. In the fourth quarter, we generated earnings of $350 million, or $2.58 per share, as outlined on block five. Our financial results were excellent, with all-time high revenue of over $1 billion, up 4% over the third quarter. Average loans grew almost $1.3 billion, which includes a $329 million decrease in mortgage banker, where volume has been impacted by higher rates. Average deposits declined $2.6 billion. However, balance has stabilized at quarter end, and we began to see some positive trends. Credit quality was exceptional, with net recoveries, and our percentage of criticized loans remains well below our historical average. We built reserves in conjunction with growth and a slightly more negative economic outlook. Expenses reflected investments in our business and support our revenue-generating activities. It was a record quarter and a record year. We are excited about the investments we are making to support our colleagues and customers, but also to sustain our strong performance as we move forward. And now I'll turn the call to Jim, who will review the quarter in more detail.