Comerica Incorporated

We're excited to be here and talk about what's going on in the quarter and what's going on at 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. 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 30 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. 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've 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 Allison 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 Allison come up and tell you a little bit about that.

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 payment space, particularly in treasury management and card. And what we're really excited about is the opportunity to expand upon the 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 sweep solutions for banks and non-bank 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 the 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, these 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 million, we're up to over a billion, over six quarters in that particular solution. And that was again, a combination of the solutions 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 million to over 3.5 billion 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 team. 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 that partnership has the potential to double our wire volume over the near future. We also have launched our first API based deposit suite solution. Later this month, we'll be launching an API-based third-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.

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. Allison, 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 You know, 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.