Comerica 3Q16 Earnings Call Notes

Comerica’s (CMA) CEO Ralph Babb on Q3 2016 Results

We are not relying on better economic environment to execute our plan

“We are not relying on a significantly better economic environment or a substantial increase in interest rates. We have already begun to execute our plan and many of our larger initiatives have been completed or are well underway.”

There are a lot of good things happening in energy right now

“Well we look at every quarter from the ground up credit-by-credit and energy has been playing a big factor in the level of our reserves and so why that we have to do is what happens with energy. There is a lot of positive things happening in energy right now. Prices have been stable. Capital markets are improving. Asset sales remain very robust. We’re getting a lot of pay downs on our criticized credits and of course this quarter our charge-offs where down as well. But on the other hand there is still a number of these E&P credits that are in bankruptcy and we want to see what happens there. Drilling activity has been coming back, but it’s as robust as we would like to see it.”

Seeing people be a lot more conservative than they have been in the past

” I think what we’ve seen to date is people are being a lot more conservative than they have been in the past. They’re sitting on a lot of cash. They’re in a good financial position and as things begin to pick up, which we’re hopeful they will and that’s the reason we focus on GDP and where GDP is going, that our customers will begin to invest more in the future as well as some of the new products and services that Curt was talking about that we have or we’ve upgraded that gives us opportunity as well not only with our current customer base, but also in looking for new customers and growing with the markets where we are.”

Peter Guilfoile

No deterioration in Texas at all

David, we really haven’t seen any deterioration in Texas at all. The portfolio in Houston continues to perform well there are market, small business, commercial real estate down there. That portfolio is holding up really well. So we are very encouraged by that.

Credit problems in energy should be stable at $40 oil

“Yeah, I think we’re getting to a point where the inflows are stabilizing with prices in this general range and we don’t expect necessarily prices are going to stay at $50 or above, they’ll fluctuate between probably $40 in the mid $50. As long as it’s in that trading range that’s been in the last three months, I think you’re going to see some stabilization of inflows to criticize. Borrowers are doing a great job of reducing the breakevens and those that can’t get their cost structure in line are selling assets to others that have lower cost structures or and/or lower leverage. So we’re seeing a lot of that.”