Comerica Incorporated (NYSE:CMA) Q1 2019 Earnings Conference Call - Final Transcript

Apr 16, 2019 • 08:00 am ET


Comerica Incorporated (NYSE:CMA) Q1 2019 Earnings Conference Call - Final Transcript


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Good morning. My name is Michelle and I will be your conference operator today. At this time, I would like to welcome everyone to the Comerica First Quarter 2019 Earnings Call. All lines have been placed on mute to prevent any background noise. (Operator Instructions)

I would now like to turn the call over to Darlene Persons, Director of Investor Relations. Please go ahead.

Darlene P. Persons

Thank you, Michelle. Good morning and welcome to Comerica's first quarter 2019 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 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 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 and Slide 2, which I incorporate into this call, as well as our SEC filings for factors that can 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 3.

Ralph W. Babb

Good morning and thank you for joining our call. Today, we reported first quarter earnings of $339 million or $2.11 per share. Our earnings per share increased 12% over the fourth quarter and reflected solid loan growth, continued careful management of loan and deposit pricing, as well as expense control. In addition, our credit metrics remain strong and we continue our share buyback program repurchasing 5.1 million shares. Altogether, this drove an ROE of over 18% and an ROA of 1.97% for the quarter. Relative to the first quarter of last year, our earnings per share increased 33% and pre-tax income is up 27%. This is primarily due to higher interest rates, good credit quality, successful execution of our GEAR Up initiatives along with active capital management. On Slide 4, we have provided details on the adjustments related to certain items. In the first quarter, we realized $11 million in discrete tax benefits, primarily related to employee stock transactions.

These tax benefits provided the opportunity to reposition $1 billion of lower yielding treasury securities resulting in an $8 million pre-tax loss. This action will increase interest revenue by approximately $1 million per quarter. Prior periods have been adjusted for restructuring charges related to our GEAR Up initiatives. Slide 5 provides an overview of our first quarter results. First quarter average loans increased $845 million from the fourth quarter. This growth was broad-based and is particularly noteworthy as