[Management View]
Earnings Per Share (EPS) for Q2 2025 was $1.42, a 14% increase over the prior quarter. Net interest income remained stable at $575 million for the third consecutive quarter. Average loans rose approximately 1%, and period-end loans grew about 3% sequentially. Management highlighted strategic capital actions, including redeeming preferred stock and accelerating share repurchases, resulting in an estimated CET1 ratio of 11.94%.

[Outlook]
Management projects average loans to be flat to down 1% for full-year 2025, average deposits down 2%-3%, net interest income growth of 5%-7%, non-interest income growth of 2%, and non-interest expenses up 2%. Q3 2025 net interest income is expected to decline due to higher deposit pricing and lost interest from preferred redemption, before resuming growth in Q4 2025. The company plans to repurchase approximately $100 million of common stock in Q3 2025.

[Financial Performance]
- EPS: $1.42, up 14% QoQ
- Net Interest Income: $575 million, stable for three consecutive quarters
- Average Loans: Up 1% QoQ
- Period-End Loans: Up 3% QoQ
- Average Deposits: Down just over 1% QoQ
- Non-Interest Income: Increased by $20 million QoQ
- Non-Interest Expense: Decreased by $23 million QoQ
- CET1 Ratio: 11.94%, above the 10% strategic target

[Q&A Highlights]
Question 1: I wanted to start on the NII trajectory. It seems like you're implying that NII is down in 3Q and then up in the fourth quarter. So I was wondering if you could give us some more color on that.
Answer: We expect a slight decrease in Q3 before continuing our upward trajectory in Q4 and beyond. Key drivers include strong loan growth, stronger deposits, and the continued maturity of our swaps and securities. However, headwinds in Q3 include the redemption of preferred stock and increased pay rates on deposits, which are expected to step up significantly.

Question 2: Maybe if I can ask the same question on the expense side. The guidance implies a $600 million expense number roughly for 3Q and 4Q. I was wondering if you could help us with how you're thinking about the expense side as well.
Answer: The increase from Q2 to Q3 is largely due to notable items not repeating, seasonality, inflation, and deferred project expenses. We remain disciplined in our focus to drive improved efficiency over time.

Question 3: Can you give us a little bit more on the pipelines and activity? How should we think about longer-term loan growth potential beyond maybe a quarter or two?
Answer: Our manager surveys came in more positive, and we saw good uptick in loan growth and pipeline activity. We feel good about the second half of the year and expect continued loan growth, though we are not back to pre-SVB pipeline numbers yet.

Question 4: How do you get off the lower end of the 5%-7% NII growth range? What needs to happen to generate NII growth that's maybe midpoint or higher in the range?
Answer: Stability in non-discretionary deposits is a key factor. Seeing an inflection point in non-interest-bearing deposits would be significant.

Question 5: How are you thinking about longer-term improvement of performance and enhancing shareholder value?
Answer: We are focused on improving performance metrics, generating positive operating leverage, and investing in growth markets and new capabilities. We are aware of the landscape and will do the right thing by our shareholders.

Question 6: If the $100 billion asset threshold on cap four is moved, how would this impact your willingness and timeline to pursue a whole bank acquisition?
Answer: The $100 billion threshold is not a governor for us. We focus on organic growth and strategic acquisitions that make sense for our geographies and culture.

Question 7: Do you expect to see clients utilize deposit funds in the second half?
Answer: We may see some of that in a higher rate environment, but positive tailwinds with deposits should drown out any use of funds going forward.

Question 8: Under what conditions would you say that Comerica has not earned the right to remain independent every day?
Answer: We are always focused on performing at an acceptable level relative to our peer group and market. We are aware of the landscape and will do the right thing by our shareholders.

Question 9: Why would deposit pricing headwinds ease in 4Q, particularly if you expect strong customer deposit growth and loan growth momentum?
Answer: The reset in consumer pricing towards the end of Q2 is a one-time event. We expect to track the market in Q4, and any increase in deposit pay rates would be accompanied by higher deposits, benefiting the bank.

Question 10: Are you considering leveraging Stablecoins technology down the road?
Answer: It is still too early to tell how this will play out, but we are monitoring the situation and feel positioned to be involved.

Question 11: Can you provide an update on your expectations for deposit cost through pricing and any opportunities for repricing?
Answer: The environment remains competitive, and we stay focused on growing our customer base and managing pricing on both sides of the balance sheet.

Question 12: Could you provide more color on the increase in criticized loans this quarter?
Answer: The increase was moderate and concentrated in three credits with consumer components. The higher for longer interest rates and inflationary pressures are common factors.

[Sentiment Analysis]
Analysts' tone was inquisitive and focused on understanding the drivers behind NII and expense projections, as well as long-term growth and strategic positioning. Management's tone was confident, emphasizing strategic investments, disciplined expense management, and a focus on long-term growth.

[Quarterly Comparison]
| Metric | Q2 2025 | Q1 2025 | % Change |
|-------------------------|---------|---------|----------|
| EPS | $1.42 | $1.25 | +14% |
| Net Interest Income | $575M | $575M | 0% |
| Average Loans | +1% | - | - |
| Period-End Loans | +3% | - | - |
| Average Deposits | -1% | - | - |
| Non-Interest Income | +$20M | - | - |
| Non-Interest Expense | -$23M | - | - |
| CET1 Ratio | 11.94% | - | - |

[Risks and Concerns]
- Economic and geopolitical uncertainty
- Persistent industry-wide volatility
- Higher for longer interest rates and inflationary pressures
- Competitive deposit pricing environment

[Final Takeaway]
Comerica's Q2 2025 performance was marked by strong EPS growth and stable net interest income, driven by loan expansion and strategic capital actions. Management remains focused on disciplined expense management and strategic investments to drive long-term growth. Despite economic and geopolitical uncertainties, the company is well-positioned to support its customers and capitalize on growth opportunities. Analysts' inquiries centered on understanding the drivers behind NII and expense projections, with management providing detailed explanations and expressing confidence in their strategic direction.