Comerica Incorporated (NYSE:CMA) Q1 2018 Earnings Conference Call Transcript

Apr 17, 2018 • 08:00 am ET

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Comerica Incorporated (NYSE:CMA) Q1 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Comerica First Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

I would now like to turn the conference over to Darlene Persons, Director of Investor Relations. Ma'am, you may begin.

Executive
Darlene Persons

Thank you, Regina. Good morning and welcome to Comerica's first quarter 2018 earnings conference call. Participating on this call will be our Chairman, Ralph Babb; President, Curt Farmer; Chief Financial Officer, Muneera Carr; and Chief Credit Officer, Pete Guilfoile.

During this presentation, we will be referring to slides which provide additional detail. 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. I refer you to the Safe Harbor statement in today's release on Slide two, which I incorporate into this call, as well as our SEC filings for factors that could cause actual results to differ. Also this conference call will reference non-GAAP measures and, in that regard, I direct you to the reconciliation of these measures within this presentation.

Now I'll turn the call over to Ralph, who will begin on Slide three.

Executive
Ralph Babb

Good morning, and thank you for joining our call. Today we reported first quarter earnings of $281 million or $1.59 per share. Adjusted net income was $271 million or $1.54 per share after excluding restructuring charges, tax benefits from employee stock transactions and a small deferred tax adjustment. Earnings per share on an adjusted basis increased 20% over the fourth quarter. Relative to the first quarter of last year our earnings per share increased significantly, and pretax income is up 25%. This is primarily due to higher interest rates, as well as continued successful execution of our GEAR Up initiatives. Note that in the first quarter, we adopted a new accounting standard for revenue recognition, which net certain expenses against the related fee income. This change in presentation has no impact on net income. The adjusted non-interest income and expense figures are reflected on the slide for comparability.

On Slide four consistent with the previous quarter, we are outlining adjustments related to certain items including restructuring, impacts from the new tax law and the tax benefited related to employee stock transactions. The adjusted return on assets was 1.56% and adjusted return on equity was 13.85%.

Turning to Slide five and an overview of our first quarter results as a result of typical seasonality and mortgage banker finance, as well as a decrease in corporate banking,