Lars Anderson - Vice Chairman, Member of Management Policy Committee and Vice Chairman of The Business Bank Dale Greene - Member of Management Policy Committee, Executive Vice President of Business Bank and Executive Vice President of Comerica Bank Beth Acton - Chief Financial Officer, Executive Vice President, Member of Management Policy Committee, Chief Financial Officer of Comerica Bank and Executive Vice President of Comerica Bank Ralph Babb - Chairman, Chief Executive Officer, President, Chairman of Special Preferred Stock Committee, Chairman of Capital Committee, Member of Management Policy Committee, Chairman of Comerica Bank, Chief Executive Officer of Comerica Bank and President of Comerica Bank Darlene Persons - Senior Vice President and Director of Investor Relations John Killian - Chief Credit Officer, Executive Vice President, Member of Management Policy Committee, Chief Credit Officer of Comerica Bank and Executive Vice President of Comerica Bank

Robert Placet - Deutsche Bank AG Craig Siegenthaler - Crédit Suisse AG L. Erika Penala Bryan Batory - Jefferies & Company, Inc. Brian Klock - Keefe, Bruyette, & Woods, Inc. Michael Rose - Raymond James & Associates, Inc. John Pancari - Evercore Partners Inc. Gary Tenner - D.A. Davidson & Co. Ken Barker Brent Erensel - Portales Partners Terence McEvoy - Oppenheimer & Co. Inc. Steven Alexopoulos - JP Morgan Chase & Co Ken Zerbe

Good morning. My name is Ashley, and I will be your conference operator today. At this time, I would like to welcome everyone to the Comerica First Quarter 2011 Earnings Conference Call [Operator Instructions]. Thank you. I would now like to turn today's conference over to Darlene Persons, Director of Investor Relations. Ma'am, you may begin your conference.

Thank you, Ashley. Good morning, and welcome to Comerica's First Quarter 2011 Earnings Conference Call. Participating on this call will be our Chairman, Ralph Babb; our Chief Financial Officer, Beth Acton; our Chief Credit Officer, John Killian; Lars Anderson, Vice Chairman of Business Bank; and Dale Greene, Executive Vice President of the Business Bank. A copy of our press release and presentation slides are available on the SEC's website, as well as in the Investor Relations section of our website, Comerica.com. As we review our first quarter results, we will be referring to the slides, which provide additional details on our earnings. Before we get started, I would like to remind you that this conference call contains forward-looking statements. And in that regard, you should be mindful of the risks and uncertainties that can cause future results to vary from expectations. Forward-looking statements speak only as of the date of the presentation, and we undertake no obligation to update any forward-looking statements. I refer you to the Safe Harbor statement contained in this release issued today, as well as Slide 2 of the presentation, which I incorporate into this call, as well as our filings with the SEC. Also, this conference call will reference non-GAAP measures. And in that regard, I would direct you to the reconciliation of these measures within this presentation. Now I'll turn the call over to Ralph.

Good morning. Turning to Slide 3, today, we reported first quarter net income of $103 million or $0.57 per share, an increase of 8% over the fourth quarter of 2010, primarily driven by reduced credit costs and good control of expenses. First quarter revenue was down 3% from the fourth quarter, primarily driven by lower total average loans, which decreased $448 million or 1% compared to the fourth quarter of 2010. Among the many encouraging and positive signs we saw in the first quarter were loan growth in our Global Corporate Banking, Energy and Middle Market lines of business and an acceleration of loan growth in Texas. These were more than offset by our planned and continued reductions in Commercial Real Estate and by a decrease in Mortgage Banker Finance. In Texas, average loans increased $389 million or 6% with increases in all major business lines other than the expected reductions in Commercial Real Estate. Average core deposits were up $290 million or about 1% from the fourth quarter of 2010. With respect to credit quality, the first quarter results displayed a continuation of the steady improvement we have seen in our credit metrics the last 6 quarters. First quarter, net credit related charge-offs decreased $12 million, with a significant decline in Commercial Real Estate, partially offset by an increase in Middle Market net charge-offs. The increase in Middle Market net charge-offs was primarily the result of several previously identified problem loans that are working their way through the collection process. As a result of the broad-based improvement we have seen in credit quality, the provision for loan losses decreased $8 million. Our credit culture has served us well. It is one of our key strengths and has resulted in some of the best credit metrics among our peers. We continue to manage our expenses effectively as noninterest expenses were down 5% from the fourth quarter of 2010. Our capital position remained strong. Our Tier 1 capital ratio is estimated to be 10.37% at March 31. In addition, the quality of our capital remains solid as evidenced by a tangible common equity ratio of 10.43%. Assuming a continuation of the modest growth in the economy, we would expect to be an active re-purchaser of shares for the balance of 2011. Turning to our Sterling acquisition on Slide 4, we are excited about our pending acquisition of Sterling Bancshares. Sterling has a very appealing branch network located in one of the fastest-growing markets in the U.S. The acquisition almost doubles our presence in Houston, provides an entry into the San Antonio market and complements our banking center network in Dallas Fort Worth. Also, the composition of Sterling's deposits is very attractive with a relatively large component of non-interest-bearing deposits. We are pleased with the timing of this acquisition as we are gaining momentum in our Texas market. We believe Sterling gives us the ability to leverage additional marketing capacity to offer a wide array of products through a larger distribution network, particularly to middle market and small-business companies. We do not see any significant changes to the estimated synergies, merger-related charges and loan marks we provided in January when we announced the acquisition. Sterling also reported first quarter 2011 earnings today, and they were consistent with our expectations. We expect a smooth integration given the size of the transaction and our in-depth knowledge of the Texas market. We continued to be on track to close the acquisition in the second quarter, subject to customary closing conditions including regulatory and Sterling shareholder approvals. Preparations for the integration of Sterling are moving forward as planned. We expect to complete the systems conversions in the fourth quarter and anticipate a smooth and seamless transition. The more work we do and the better we get to know Sterling, the more confident we are in the fit of our two organizations. Turning to the economy, the tragic earthquake and tsunami in Japan, the continued unrest in the Middle East and increasing food and energy prices here in the U.S., appear to be dampening confidence in spending somewhat, while fueling inflation fears. Even with these headwinds, the national economy continues to move forward, perhaps at a slower pace given the challenges I just noted. Throughout our geographic footprint, customers and prospects remain optimistic in this uncertain environment. This can be seen in our loan pipeline, which is strong. Reflecting on what we are seeing across our geographies, our Chief Economist, Dana Johnson, believes that the Texas economy should outperform the national economy in 2011 just as it did in 2010. Texas has a growing population and a pro-business climate in the state attracts companies of all sizes. We believe we are ideally positioned to capitalize on the growth opportunities here, underscored in the first quarter by loan growth in Texas in all major lines of business except Commercial Real Estate. Loan commitments are also up in the state, and we see good deposit growth and excellent credit quality. In California, our Chief Economist expects the state economy to make modest gains in 2011, calling it a hesitant recovery. Still, we are seeing some good opportunities in the state, particularly in Middle Market and Global Corporate Banking. Loan commitments are also up in California. Michigan is a state on the road to a comeback with its economy improving at a solid pace. Unemployment in Michigan is down 3.5 points since year-end 2010. The auto and auto parts sector has played a key role in the state's recent economic growth, with strong auto sales leading the way. Our National Dealer Services business is up in the state and Middle Market had the best first quarter for new business in 5 years. Looking ahead, we expect to see improvement in the earnings power of our bank this year compared to last year based on the expectation of moderate economic improvement. We have improved our outlook for net interest income in 2011 while reaffirming the other components of our outlook that were provided in January. Finally, we intend to continue our share repurchase program and maintain our strong capital, which will support our growth as the economy improves. We believe we are in the right markets with the right people and products to build upon our momentum going forward. And now I'll turn the call over to Beth and John, who will discuss our first quarter results in more detail.

Thank, Ralph. Turning to Slide 5 which provides highlights of the financial results for the first quarter compared to the fourth quarter. Net income increased 8% from the fourth quarter. Improving credit quality and careful expense management offset muted loan demand in a slowly growing economy. Average loans decreased 1% as a result of the continuing runoff of Commercial Real Estate, as expected, as well as the 49% decline in Mortgage Banker Finance. This was partially offset by loan growth in several business lines and an acceleration of loan growth in Texas. Deposit growth continued in the first quarter with average core deposit levels increasing $290 million from the fourth quarter. The net interest margin decreased 4 basis points in the first quarter to 3.25%, primarily a result of higher excess liquidity and maturities of interest rate swaps. Expenses were well controlled, decreasing 5% over the fourth quarter. Broad-based improvement in credit quality continued. Net credit-related charge-offs decreased by $12 million from the fourth quarter to $101 million. Inflow to non-performing loans, total non-performing loans and watch list loans all declined. These continued positive trends led to an $8 million decline in a provision for loan losses to $49 million. Our capital position remain strong as evidenced by our Tier 1 common capital ratio of 10.37%. Turning to Slide 6, average loan outstandings increased in the first quarter in Global Corporate Banking, Energy, Middle Market, as well as National Dealer Services and Technology and Life Sciences. Lower average outstandings in the first quarter were primarily a result of a large decrease in Mortgage Banker Finance as high consumer refinance volumes in the fourth quarter declined. Commercial Real Estate also decreased and is expected to continue to decline for the foreseeable future as there have been few new origination opportunities. In total, average loans of $39.6 billion declined $448 million or 1% in the first quarter. Loan growth in Texas accelerated in the first quarter with average loans increasing $389 million or 6% after a $78 million increase in the fourth quarter. This growth was noted in all major lines of business with the exception of Commercial Real Estate. Line utilization for the portfolio as a whole was down about 1 percentage point to 44%, as the increase in commitments was greater than the change in outstandings. Commitments increased in Texas and the Western market. Our loan pipelines remain strong and grew in the first quarter across most lines of business. The chart on the slide shows that Comerica's commercial and industrial loans declined at a slower pace for several quarters and now in the first quarter, C&I loans are growing at a faster pace than the average bank, as indicated by the Federal Reserves' weekly H.8 data. As shown on Slide 7, core deposit growth was strong in the first quarter. Average core deposits increased $290 million as money market and NOW deposits increased $495 million. This was partially offset by a decline in noninterest-bearing deposits of $148 million and $93 million decline in customer CDs. Increased average deposits were noted in the Midwest and Texas markets, which were partially offset by a decrease in the Western market. By line of business, deposit growth was led by Global Corporate Banking, Technology and Life Sciences and Personal Banking. As outlined on Slide 8, the net interest margin of the 3.25% decreased 4 basis points compared to the fourth quarter. An increase in excess liquidity was a key reason for the decrease in the margin. Excess liquidity was represented by an average of $2.3 billion deposited with the Federal Reserve in the first quarter. This was a $500 million increase from the fourth quarter. The increase was due to strong deposit growth, which was more than we have anticipated. Loan yields were mostly lower, partially reflecting lower contribution from maturing interest rate swaps. We have not seen any material loans for compression, only selectively for larger federated companies. Our balance sheet remains well positioned for rising rates. We believe that a 200 basis point increase in interest rates over a 12-month period, equivalent to a 100 basis point increase on average would result in about $100 million increase in annual net interest income. Turning to Slide 9, noninterest expenses declined 5% or $22 million from the fourth quarter. The decline was primarily due to a $17 million decrease in salaries expense and a $5 million onetime charge recognized in the fourth quarter related to the redemption of our Trust Preferred Securities. These decreases were partially offset by a $7 million increase in employee benefit expense, which were primarily pension. Lower salaries expense was a result of an $8 million decline in business unit and executive incentive, a $6 million decrease on severance expense and 2 less days in the first quarter, which contributed $3 million to the decrease. This was partially offset by an increase in share base compensation expense of $5 million related to annual share base grants for retirement-eligible employees in the first quarter. Our largest expense item is salaries and, therefore, we carefully manage the size of our workforce. We have consistently reduced our workforce over the past several years. Our workforce decreased by approximately 3% from year-ago levels. We are operating with 17% fewer people today than we were in 2007 when the recession began. Now John Killian, our Chief Credit Officer, will discuss credit quality starting on Slide 10.

Good morning. In the first quarter, we saw continued broad-based improvement in credit quality. The first quarter marked the seventh consecutive quarter of decline in net charge-offs. Net credit-related charge-offs decreased $12 million to $101 million. Non-performing assets declined by $131 million. Foreclosed property declined $38 million. Loans past due 90 days or more and still accruing increased $10 million to $72 million but remained at low levels. And the watch list, which is the best early indicator we have for future credit quality declined $376 million. The watch list is primarily comprised of special mention, substandard and nonaccrual loans. 2/3 of the decline was in the special mention category, reflecting the positive migration patterns we have been seeing across the portfolio. The watch list has declined $3.1 billion since the peak in the third quarter of 2009. The improvement in all of these metrics led to a decrease in the provision for loan losses to $49 million. The provision for loan losses decreased $8 million, primarily due to reductions in Commercial Real Estate, Global Corporate Banking, Private Banking and Specialty Businesses, partially offset by an increase in Middle Market. As one consequence of the tragic events in Japan, we have seen an impact on vehicle production. We believe the impact on our portfolio will be temporary, and we do not anticipate any long-lasting effect on Auto Dealer Floor Plan or Auto Supplier businesses. Turning to Slide 11, the provision with less than charge-offs for the fourth consecutive quarter, reflecting our overall credit performance including improving migration trends. Net charge-offs of $101 million declined $12 million from the fourth quarter, reflecting decreases in net charge-offs of $29 million in Commercial Real Estate, $13 million in Private Banking and $7 million in the Specialty Businesses. This was partially offset by a $36 million increase in Middle Market. The decrease in Commercial Real Estate net charge-offs reflects the fact that we have been proactive in assessing values throughout the cycle and taking marks when required. We believe that the Commercial Real Estate industry will have a prolonged recovery, and we will continue to work through our Commercial Real Estate problem loans. The increase in Middle Market charge-offs is a result of several previously identified problem loans that are working their way through the collection process. Based on our analysis of Middle Market default rates, risk rating migration patterns, as well as the watch list and nonaccruals, which were stable, we believe that the increase in charge-offs this quarter is not a trend. The allowance for credit losses decreased $55 million and was 2.17% of total loans and 82% of total non-performing loans. Recoveries remained strong at $22 million. While this is a decrease from $27 million in the fourth quarter, it is double the amount recovered a year ago. We sold $60 million of non-performing loans in the quarter, as well as $35 million in performing loans. In total, prices approximated our carrying value. The recoveries, as well as the loan sales, reflect the fact that we have remained prudent in the marks we have taken throughout the cycle. Turning to Slide 12, total nonaccrual loans decreased $84 million to $996 million. The largest portion of the nonaccrual loans continues to be to Commercial Real Estate line of business, which declined $53 million in the quarter. Nonaccruals also decreased $19 million in the Specialty businesses, and Middle Market was stable. By geography, nonaccrual loans decreased in the Western market by $64 million and Texas by $39 million. Midwest nonaccrual loans were up $33 million. Foreclosed property decreased $38 million as we successfully sold a number of properties at or above carrying value. ORE expense increased as a result of lower gains on sales than in the fourth quarter of 2010, but was significantly lower than the first quarter 2010. Total troubled debt restructurings or TDRs increased $37 million to $202 million in the first quarter. Of the total TDRs, $56 million were accruing, $34 million were reduced rate and $112 million were nonaccrual. We review workout strategies, reserves and carrying values for each individual non-performing loan at least quarterly. This proactive strategy has contributed to the decline in net charge-offs, as well as an average carrying value of our nonaccrual loans of 54% compared to contractual values. Slide 13 provides detail in our Commercial Real Estate line of business. The planned runoff in Commercial Real Estate continues. Total outstandings of $3.5 billion were down over $1 billion from a year ago. Net charge-offs for Commercial Real Estate were $11 million in the first quarter, a decrease of $29 million from the fourth quarter. A net recovery of $1 million was recorded in residential properties. Inflows to nonaccrual is greater than $2 million. Total nonaccruals and watch list loans all decreased in the first quarter. Values have stabilized and even improved in certain locations. To conclude on credit, we are pleased with the continued improvement in credit quality including migration trends. Our outlook for credit quality for 2011 has not changed from what we provided in January. We continue to expect full year 2011 net credit related charge-offs of $350 million to $400 million. We expect the provision for credit losses will be $150 million to $200 million. Now I'll turn the call back to Beth.

Thanks, John. Turning to Slide 14, our capital position continues to be strong. And our capital quality is the best in our peer group. Historically, we have been active capital managers. We expect to remain cautious in managing our capital until the economy is on sounder footing, and we have more clarity on regulatory capital requirements. Effective January 1, we doubled our quarterly dividend to $0.10 per share. In addition, in the first quarter, we commenced our share repurchase, buying back 400,000 shares. Looking ahead, shareholder distribution including dividends and share repurchases will be a function of earnings strength. We continue to target an annual earnings payout ratio including dividends and share repurchases up to 50% of full year earnings. We do not expect this target to be impacted by the Sterling acquisition. Slide 15 provides our outlook for the full year 2011 compared to full year 2010. As has been our practice, we expect to update our outlook each quarter when we announce our financial results. Please note that this outlook does not include any impact from the pending acquisition of Sterling Bancshares. There is no change in our expectations for loans in 2011. We continue to expect a low single-digit decline in average loan as growth in commercial loans will be muted by continued runoff Commercial Real Estate loans. Excluding the Commercial Real Estate line of business, we expect a low single-digit increase in average loans. We expect that commercial loan growth momentum will build as the year progresses and the economy improves. Average earning assets for approximately $48.5 billion is expected for 2011. This is slightly higher than the expectation we had in January due to the higher excess liquidity in the first quarter. Excess liquidity is expected to dissipate throughout the year due to debt maturities combined with the slowing of deposit growth and increasing loan growth. We expect a net interest margin of 3.25% to 3.30%. This represents an improvement over our prior outlook as prepayments in the Investment Securities portfolio has slowed, and the reinvestment rate is higher than we had anticipated. We expect the margin in the second half of the year to be stronger than in the first half due to lower excess liquidity. As a reminder, changes in excess liquidity and the resulting impact on earning assets and the net interest margin have no meaningful impact on net interest income. As John mentioned, our credit outlook is unchanged. Also, our outlook for noninterest income, noninterest expense, taxes and capital management have not changed. In the event that the Durbin interchange rules are delayed, we would expect our 2011 noninterest income would be stable relative to 2010. In closing, we weathered the challenges of the economic cycle well, maintaining strong liquidity, solid capital, tight control of expenses and with credit metrics that are among the best in our peer group. As the economy improves and interest rates increase, we expect to see loan growth and margin expansion. We expect to accelerate our growth in Texas with the pending Sterling Bank acquisition. We believe we are ideally positioned for the future. Now we'd be happy to answer any questions.

[Operator Instructions] Our first question comes from the line of Erica Penala with Bank of America Merrill Lynch. L. Erika Penala: My first question is on your priorities for capital distribution of more of a medium-term basis because even if I assume a significant pick-up in loan growth post-Sterling, and I buy back shares and I increase your dividend, you still have plenty of Tier 1 common on a bottle-free basis. I guess my question is, what is your appetite clearly after you well-integrated the Sterling deal for dipping your toe on M&A waters again?

Well, as we've said in the past that we're always looking for opportunities. If the opportunity is there and it fits, and when I say fit, it needs to be in one of our major metropolitan areas, at least partially, in either California or Texas and like when we talk about Sterling has a customer base that is very similar to ours and a culture within their organization that would fit into ours because we want to use acquisitions growth and opportunity, not just the consolidation. So we are very careful as we look at opportunities. And I think that is apparent when you look at the way we built out California. That was approximately 10 years ago with an acquisition in Southern California and now the opportunity that Sterling has provided in joining us in the Houston market. But we're always looking for those type of opportunities. L. Erika Penala: Okay. And my follow-up question is on the -- when you mentioned that 200 basis points increase in the REITs would increase your net interest income by $100 million, I was wondering what kind of attrition assumption you are using for corporate DDAs?

No. We don't disclose a lot of the detail on the assumptions around the modeling there. We do make reasonable assumptions in the context of the economic environment. It would be our expectation that we will see, at some point, DDA decline. We actually have been surprised that it has been going so well for so long. And I think there are number of factors that caused, frankly, a re-intermediation of deposits into the bank system and including efforts that we specifically made to improve our deposit-gathering capabilities. But we do have an expectation that DDA will decline. It has declined slightly in the first quarter. But I don't think it will be at kind of the pace that perhaps it historically been. It feels like corporations are having a bias toward to maintain more liquidity than they have in the past. L. Erika Penala: Okay. Thank you.

Thank you.

And our next question comes from the line of Steven Alexopoulos with JPMorgan. Steven Alexopoulos - JP Morgan Chase & Co: I'd like to start -- maybe we can talk about the commitments outstanding because I noticed that commercial lending fees were down and the reserve for unfunded commitments was down a bit. Can you talk about the changing commitments outstanding in the quarter and maybe what the pipeline looks like going into 2Q?

Okay. Let me ask Dale to answer that question.

Sure. So we indicated the pipeline continues to be strong, and we continue to see commitments grow. But obviously, the utilization rate is down a point or so from last quarter due to the fact that our commitments are growing on a faster rate than outstandings. So I'm looking forward to the economy picking up, so we get to see utilization rates increase, which I think will have a fairly significant increase in our outstandings. So in these commitments, by and large, are across pretty much all of our business lines. We’re certainly seeing strength in the Middle Market. We're certainly seeing strength at POS and energy, global and corporate. And even within Michigan, we're beginning to see some activity even though at a somewhat slower pace. So it is there. Structures are still pretty decent. Pricing is still pretty decent. There is some pressure, of course, competitively there, which you would expect from where we are. Our pipelines continue to grow and our commitments to commit continue to be strong, which is the quality piece of the backlog. Steven Alexopoulos - JP Morgan Chase & Co: Okay. Thanks, Dale. Maybe just a follow-up question on capital. Just following up on comments that you plan to be active with share buyback in 2011. One, related to the Sterling deal, when will the window open when you could start buying back stock? And then second, it looks like you may have tweaked the guidance a bit, focusing on full-year payout of 50%. Is this a signal that you're increasing the amount of shares you expect to buy back in 2011?

The guidance we gave in January was that we would pay, it would be less than 50%. We have, as to your point, we wanted to make it clear because the payout in the first quarter was not as close to that level. We do want to make it clear that we do intend to repurchase shares, as well as including the dividend up to the 50%. So there will be a variation by quarter, a little less in the first quarter. We would anticipate, when you add up the quarters together for the full year, we would be close to that 50%. Steven Alexopoulos - JP Morgan Chase & Co: And Beth, any blackout windows related to the Sterling deal?

We don't have any inhibitors to allow us to accomplish what we need to accomplish for share repurchase related to Sterling. Steven Alexopoulos - JP Morgan Chase & Co: Okay. Thanks.

Thanks.

And our next question comes from the line of Matthew O'Connor with Deutsche Bank. Robert Placet - Deutsche Bank AG: This is actually Rob Placet from Matt's group. First question, as it relates to your Commercial Real Estate portfolios, they've been declining for some time. How much more runoff do you think you'll have here? And any sense of when you'll see growth in your core Commercial portfolios more than offset additional declines in real estate?

Sure. This is Dale. I'll answer that. It's an interesting situation because as you know, we've been working on our Real Estate portfolio, Commercial Real Estate, for some time, which at the end of the day, I think, has been a good thing because we've got in front of a lot of a lot of the issues pretty early. The liquidity in the market has increased the -- a lot of our real estate project, the vast majority, the construction is completed. So that risk is gone. And most of these projects are performing reasonably well, leasing up nicely and so forth. So there will be more likely to go to an end market that we are not -- or typically looking for permanent loan market. We are, obviously, construction lenders. With that said, so we'll continue to see some runoff as we have seen. But we are seeing more opportunities, particularly on the multi-family side and particularly in California and Texas. But those properties have fared well during this downturn. And I think there are great opportunities to grow there, and we are doing that now. But we won't grow enough just looking at that piece to offset the decline in Commercial Real Estate. So I suspect we'll continue to see runoff in that book certainly through the rest of this year.

But you had also asked about loan, kind of inflection point on loans. And I think our expectation is that we would begin to see that stabilize even with Commercial Real Estate and, in fact, I’m looking into the second half of the year.

And to the point on mortgage banking for a moment because that was obviously a key ingredient to average loans declining at the quarter. There was a huge runoff particularly in the fourth quarter of consumer re-fis given the rate environment. The rate environment has changed, the re-fis are way down. So we fell off from about $1 billion or so. Our mortgage banking outstanding is down to something closer to $500 million. My expectation would be that we're not going to see certainly any significant declines from the level we're at today. We may see a little better improvement there. But certainly, we wouldn't expect to see the level of falloff, which would really be the rest of the portfolio because it's fallen so dramatically. I think we've seen kind of a close to a stabilization in that particular book.

And I think if you look at it, if you excluded Mortgage Banker Finance decline in the first quarter, we actually would have been up even with Real Estate, commercial Real Estate runoff.

Right.

Yes, that's the key. That's the key. Robert Placet - Deutsche Bank AG: Okay, thanks. And just a follow up on your loan pipeline improving this quarter, what do you think it'll take for this to translate into actual loan growth?

Well, my I view is, employment growing, the economy getting some legs under it a bit now as Ralph said on his comments. And as you all know, there's been so many sort of disruption, whether it's about the issues that occurred in Japan, the Middle East itself, which is still not stable. Energy prices, fuel prices increasing. There's still a lot of concern, I think, about where this economy is today and, in fact, where it's headed. So I think until there's more clarity and, frankly, that's one of the reasons I think deposits continue to increase as corporations are very conservative today, holding on to more liquidity, which will probably continue to be the case even as the economy rebounds. So I wish I knew the answer to that. All I can tell you is that the economy has got to look a little better and be more predictable. And part of that is just employment growth to me. We are starting to see some of that, but it's very, very modest right now.

Yes. And as Dale said, that will build the confidence. And I think that’s kind of the one thing that's of concern at the moment are the various things that Dale reiterated. People want to feel like things are stable. And as confidence builds, you'll start to see people move out and invest in the future. They're getting positioned. And it's still a positive tone. But I think it needs a period of time where people can see exactly what's happening even if it's slow so that they have confidence in investing and thinking about returns to the future. Robert Placet - Deutsche Bank AG: Okay. Thanks very much.

And our next question comes from the line of John Pancari with Evercore. John Pancari - Evercore Partners Inc.: In terms of your margin outlook, the modest increase in your outlook, it implies a pretty good pick-up in the trajectory in the margin. Can you talk about your thought process on how you get there? Is it more so a function of the improving loan trends or deposit costs?

We did, as you said, revised upward our outlook for net interest margins. And we did also indicated in our comments that we would expect the second half margin -- in the second half of the year to be higher than first half. And primarily, that's due to the fact that it is our expectation that excess liquidity will be lower in the second half than the first half, primarily driven by 3 factors. One is we have debt maturities of $1.4 billion which are in second and third quarters. And we expect the deposit growth to, at least, stabilize and perhaps go down. And as I mentioned earlier, we expect loan growth to begin to head in a positive direction. So all of those work together to have excess liquidity to be lower in the second half of the year, which helps the rate margin improve. John Pancari - Evercore Partners Inc.: Okay. So that does assume some runoff in your deposit base?

Some, but it's combined with the $1.4 billion debt maturities and also traction on loan outstandings increasing at some point. John Pancari - Evercore Partners Inc.: Okay. All right. And then in terms of Securities portfolio, can you just update us on your plans for the portfolio and if you're looking to essentially reinvest cash flows into loans as loan growth improves?

Yes. We have indicated that we would still expect that our portfolio, the available for-sale portfolio, excluding our auction-rate securities would be about the $6.5 million level. That can vary up and down around any quarter. But we don't have any change in that outlook, that continues to be the case. So we are reinvesting the pre-pays that come on the mortgage-backed securities into additional mortgage-backed securities so to maintain the average outstandings to about the $6.5 billion excluding auction rate securities. John Pancari - Evercore Partners Inc.: Okay. All right. And do you have the monthly or the quarterly cash flows coming off of the book?

Well, what I can say is we have -- you're talking about the mortgage-backed portfolio? John Pancari - Evercore Partners Inc.: Right, or the Securities portfolio in total, whichever you have in terms of the total cash flow.

Yes. Well the -- we are seeing our prepays on the Mortgage-backed Securities portfolio peaked in December. And in March, those levels were half of the prepay levels during December. So we've seen the prepay levels significantly decline so the reinvestment of cash flow is, obviously, a lot less in the month of March than it was at December. John Pancari - Evercore Partners Inc.: Great. All right. Thank you.

Thank you.

And our next question comes from the line of Ken Zerbe with Morgan Stanley.

Thanks. You mentioned in the press release the essence swaps that runoff in the quarter. Do you guys have any plans to put on additional swaps or, I guess, in any other way change your asset sensitivity profile?

With interest rates so low, that's why we enter into interest rate swaps is to hedge the downside risk because we're more impacted from our balance sheet structure to falling rates. Because we don't anticipate rates falling any further, it is not our bias to put on additional swaps because there's no protection provided really for falling rates. We don't expect it. As rates begin to rise, and they will at some point, we will be evaluating, obviously, interest rate swaps and hedges as we look toward the next downturn in rates. But that will be a while, as you can imagine.

Yes. Okay. And then just one quick question, the other noninterest income line looks like it was up about $17 million year-over-year and sort of drove the total noninterest income up. Just remind us, what was in that number? And is that particular line item sustainable?

You're referencing year-over-year?

Yes. I mean, yes, the $37 million this quarter.

There were a number of things in the category this quarter compared to year ago levels that we mentioned principal investing in warrants were higher in the first quarter of this year versus last. We also had deferred comp, which was a higher number, deferred compensation asset returns in the first quarter this year. We also had higher customer derivative income. Some of those, the principal warrants and deferred comp fluctuates from quarter-to-quarter depending on the market returns in the marketplace. In customer derivative, we've made good improvements over the last year in terms more activity in that realm. Principal investing and warrants again could be more variable from quarter-to-quarter. So there -- it's hard to answer the question on which kind of the run rate is there. But we've certainly seen nice improvements over the last year.

Okay. Now that helps. Thank you.

Thank you.

And our next question comes from the line of Paul Miller with FBR.

This is Kevin Barker for Paul Miller here. Just wanted to get into the Texas market and some of the stuff you're seeing on C&I, what specific markets. Is it specifically Houston, or elsewhere? Is it all C&I? I'm just wondering if you could delve into the loan growth there?

Okay. Lars, you want to...

Yes. Frankly, the Texas market, I would say, very broadly speaking, it's been good for us across a number of energy groups. If you'd look at what we reported, clearly, our energy group has been a nice source of growth. However, our just kind of core Middle Market lending has continued to show very, very nice results both in commitments and in outstanding. Frankly, I think with the acquisition of Sterling, it really positions us to take advantage of Houston and introduces us, in a broader sense, into a very attractive San Antonio market really firms up our Dallas presence. So I would really characterize it as kind of a broad-based across the Texas market and our industry groups.

Okay. Thank you.

Thank you.

And our next question comes from the line of Craig Siegenthaler with Crédit Suisse. Craig Siegenthaler - Crédit Suisse AG: Just first, I just want to hit on loan growth here and really C&I loan growth, specifically. Was there any kind of large unusual pieces that kind of went into the fourth quarter, went out the first quarter that may have hurt the comparison? And also kind of net-net, what's really driving the trend here? Is it really kind of increased competition in your desire to maintain attractive pricing, or is it really kind of lower demand in maybe some of your markets?

Dale, you want to take that?

Yes. I think that overall, there wasn't anything in particular, if you will, that went in and out in terms of new sort of things we look at in the fourth quarter, the things we booked from the strong backlog and so forth. Because again, a lot of the things we booked in the fourth quarter, some of which had draw downs, some of which didn't in some of those commitments. Clearly, mortgage banking was the key issue in the quarter that we just talk about. It's hard to, if you will, offset $500-some million of reduction quarter-over-quarter in outstandings in the mortgage banking, especially when you couple that with the runoff in Commercial Real Estate in the quarter of about another $300 million. If you, for the moment, stepped out on the side of the table and as we've talked about before you look at where we've seen the growth, it's where you'd like to see it. It's in the growth markets. It's in Middle Market. It's in energy. It's in POS. It's in dealer. So those things continue to do well. We're seeing 5%, 6% growth rates typically there. Middle Market, about 1%. We're competitive. We understand we have pricing disciplines. We understand that at the end of the day, we're going to underwrite credit the way we've always underwritten credit because we've all seen how well that positions us in the kind of tough economy we've been through. But we are very competitive in our markets. I think we've got a reputation, particularly in our Specialty businesses, and we have a lot of Specialty businesses. But we've been in Middle Markets, strong Middle Market lenders for years. So is the competition tough? Sure. But I think we're always going to be in the deal that we want to be in, and chances are, given typically the relationships we have, we're going to win the day.

And I'd like to add that actually, if you compare the lines of business growth in the first quarter, there were more lines of business growing than there were in the fourth quarter. And again, Mortgage Banker is a big impact. But apart from Mortgage Banker, we had more lines of business grow in the first quarter than we did in the fourth.

And yield is holding up well.

Yes. Our margins, our loan margin were, I think, looked really good in the quarter as well. So that just speaks to what I said in terms of our pricing discipline.

It is building relationships. It is not just plain price.

Connectivity matters.

Right. Craig Siegenthaler - Crédit Suisse AG: Thanks. And I heard you kind of qualify the loan pipeline, the C&I loan pipeline is improving and stronger. Is there any way you can help us think about it quantitatively, roughly what it's done quarter-over-quarter?

No, we don't talk about that. But just suffice it to say that our commitments to commit, which to me, what that simply means is, we've approved something. We've been working with the client, whether with some existing client or a new client. We've improved something. We've put it in front of them. They're considering it, in many cases, they've already had signed it, saying yes, we're going to go with you. We're going to move our relationship. I emphasize relationship. That commitments to commit number is stronger, and has been improving, I think, steadily over the last few quarter. I look at that as really the quality aspect of the pipeline. Craig Siegenthaler - Crédit Suisse AG: Got it. All right great. Thank you, guys.

Thank you.

Thank you.

And our next question comes from the line of Brian Klock with KBW. Brian Klock - Keefe, Bruyette, & Woods, Inc.: Just to follow-up on that one, Dale, can you actually give us the amount of your actual commitments quarter-to-quarter? I know that utilization rates were down because of the increase in commitments. But do you actually have a dollar amount of those commitments?

Dale?

I don't -- did we disclose that, the dollar amount?

The commitments are up in Texas and Western. They are down somewhat in Midwest. So they're not up a lot. They were up nicely in the fourth quarter, up a lesser amount in this quarter in total but, impacted a little by a reduction of some commitments in the Midwest. So Texas and Western, the commitments were up in the quarter.

Brian, our key businesses commitments were up. There were some losses else where. The point there is, the utilization rates were not as high, obviously, probably 44% from about 45% a quarter ago. So utilization is still a key issue for us.

And I wanted to harken back to what Dale said about commitments to commit because we've talked about that number before. In the third and fourth quarters, those were about $800 million commitments to commit. They were $1.3 billion in the first quarter, so up very nicely. And those are a better indicator than the pipeline because in the end, pipeline doesn't all turn into actual commitments. So commitments to commit, as Dale mentioned, were in the last phases of documentation and all the things that go into it. So that was up significantly in the quarter.

Because again, it's the quality piece of the backlog.

Yes. Brian Klock - Keefe, Bruyette, & Woods, Inc.: Great. That's very helpful. That's very helpful. And maybe just another quick follow up, I guess, the discussion earlier, John, you had made a point about the tsunami impact did affect the Auto Supply chain. And I guess, the Auto Floor Plan business was down a little bit in the quarter, but we didn't have strong auto sales in the first quarter. So is there any sort of a replenishment that we could maybe see that Floor Plan business come back in the second quarter? And maybe you could talk about the auto supplier book, too? Is there any sort of maybe move over to domestic suppliers getting more business out of this? Maybe you can just talk about that?

Let me take that, Brian. This is Dale again. We are clearly -- there's a couple of phenomena, if you will, in the Dealer Floor Plan business. Historically, dealers have large amounts of inventory days on hand, 70, 80 days wasn't necessarily unusual. Dealers and the OEM, the manufacturers, are much more disciplined, at least, for the moment. So what's happening is the amount of inventory on dealer lots is a lot less on average. The days on hand is lower, which obviously then means that the floor plan draws tend to be a little less. And that's just a phenomena that's occurred over the last year or two. If you look at our Floor Plan business, we're looking at a lot of opportunities. As you know, we're a top-tier Auto Dealer Floor Plan financer. That's the kind of client we want. I suspect that as auto sales continue to do fairly well, I mean, we're looking at $13 million or so units, maybe more. But we'll see. We'll continue to see, I think, the Dealer business do well in both. As far as the suppliers are concerned, I think the suppliers are doing very well. They have rationalized their expense base. As I've said before, they're dealing historically through the cycle, the ones that have survived or dealt with some lower revenue numbers. We're starting to see the revenue numbers come back a bit as the car sales begin to increase. So all in all, I think that's a good sign.

And Brian, this is John. And while you might see some availability issues that could reduce unit sales somewhat, you're going to see better margins on the cars that are sold because the incentives are all going to melt away due to availability concerns. Brian Klock - Keefe, Bruyette, & Woods, Inc.: Right. And I guess maybe just the one comment I just want to make, it seems like you've got a pipeline that's building. So you had a lot of noise with the Mortgage Banker Finance book that had a big impact on your commercial balances for the quarter. The runoff is flowing in Commercial Real Estate, and it seems like if you're sticking to the same sort of full-year guidance of low single-digit decreases in average loans, it seemed like that's somewhat conservative. And it seems like there is some dry powder that could come out of the balance sheet here, and especially with the commitments picking up. And if your margin is, at least, stable where it is, it seems like you could see something in the second half of the year that actually starts to be some positive loan growth.

Yes. And Brian, you have to remember that guidance is full year '10 -- '11 versus full year '10. So we are starting off the year $1.7 billion lower in loans in the first quarter of this year than a year ago. So that's why when you actually do the math -- and as I mentioned earlier, we see, perhaps, even in the second, we're trying to cross that line, if you will, of having increased loan growth and then having a better situation in the second half. But the way you do the math year-over-year, we're still -- are still estimated that we're going to be down low-single digits.

Right. Brian Klock - Keefe, Bruyette, & Woods, Inc.: Right. So from here, it looks like we could see that, like you said, maybe across the line in the second quarter with [indiscernible].

It could be. And as we mentioned earlier, if you exclude Mortgage Banker this quarter, we have loan growth even with Commercial Real Estate runoff. So that's a good sign. And as Dale mentioned, Mortgage Banker is much lower levels of $566 million on average in the quarter. That's down from $1.1 billion. And it doesn't feel like it's going to go significantly lower then that. It's been kind of a run rate, as in kind of average that it ran in '09 actually.

So our feel for core C&I looks -- I mean, we're optimistic with the pipelines where they are. And so we'll see. But we certainly hope that the economy continues to make some progress there because clearly, that will only benefit everyone in the economy. So we're looking forward to that. Brian Klock - Keefe, Bruyette, & Woods, Inc.: All right. Great. Thanks for taking my questions.

Thank you.

And our next question comes from the line of Ken Usdin with Jefferies. Bryan Batory - Jefferies & Company, Inc.: Bryan Batory from Ken's Team. I was wondering if you guys could let me know what your thoughts are on Reg Q and if you see any adverse impact on deposit pricing or asset sensitivity longer term?

Reg Q a lot permits interest to be paid on deposit doesn't require it. So that's the first point. The second is, today, we already -- some of our customers, corporate customers give value to those balances anyway through an earnings credit. So to the extent that economic equation kind of continues whether in explicit interest or it's the earnings credit situation, we don't see unless there's an economic change of relationship on value between us and our customers that will give significant impact from Reg Q and particularly in this low-rate environment. As rates rise and as behaviors of bankers turn into a different situation, then we'll have to monitor it. But I also see Reg Q as a possibility to continue to encourage re-intermediation into the banking system. And that's a positive from our vantage point and could be opportunities there as well. And certainly, if it is allowing us to increase deposits even further, then it's certainly a cheaper way to raise funding than it is through wholesale funding. So while there's some negatives to it, we also see some positives. And we'll just know over time how it's working out. Bryan Batory - Jefferies & Company, Inc.: Okay, thanks. And one follow up, longer-term, do you guys see the margin being capable of getting back to the 4%-plus level that had ran previously? And if so, what are some of the drivers of that? Thanks.

We don't see structural reasons why our balance sheet hasn't fundamentally changed. The kinds of business that we do has not fundamentally changed in a significant way. So, fundamentally, I don't see any inhibitor to getting back to the margin levels that we've had in the past, high 3s, low 4s. Obviously, an important aspect of that is getting interest rates at a higher, more normal level. If we get rates at what you would say would more normalized, just a 300 or 400 basis points versus 25, we could get back to those levels. Bryan Batory - Jefferies & Company, Inc.: Okay. Thanks.

Thank you.

And our next question comes from the line of Terry McEvoy with Oppenheimer. Terence McEvoy - Oppenheimer & Co. Inc.: I know your guidance -- or excuse me, your full year outlook does not incorporate the Sterling transaction. But since it is going to close in the second quarter, could you maybe talk about the impact, particularly to average earning assets. Sterling had, I believe, $1.6 billion of securities at the end of the first quarter and $2.6 billion of loans. So would you expect that the securities part, in particular, to decline in size once it's incorporated into Comerica's balance sheet?

Terry, we will be giving guidance in July in connection with our second quarter earnings, which we'll have Sterling in for a period of time, which would incorporate the bank in total, the consolidated entity, so you can get some understanding of what that means, whether it's similar to the kinds of guidance we give today. We are going through an evaluation of a lot of different aspects of both the funding side, as well as the investment side for Sterling. I would say -- I could say that we are certainly going to have a bigger balance sheet. And as a result of that, probably, the $6.5 billion that we have of the Securities portfolio will likely be higher, whether it's the full amount of the $1.5 billion they have paid or continuing to evaluate. But clearly, the consolidated entity will have a larger Securities portfolio than Comerica's standalone will.

And over time, it will match our portfolio.

The portfolio from a quality standpoint and duration standpoint will look very similar to ours as well. Terence McEvoy - Oppenheimer & Co. Inc.: And just one follow up on credit. I guess, first off, the recovery in the Residential/Commercial Real Estate did not go unnoticed. I know that's been a tough two years. And now the question on credit was just any theme or consistency among those C&I Middle Market charge-offs that you commented on earlier that showed a slight increase in the first quarter?

Nothing that I would say is a theme. The trend was dominated by a couple of credits that were previously identified in the Michigan Middle Market portfolio. And they're, I guess, working their way through the system. When you take a look at our major credit metrics, as we said before, they've improved yet again this quarter and 6 or 7 quarters in a row. There was a great improvement in the watch list as well. So we have analyzed that Middle Market trend this quarter in about every which way we can think of from the watch list to migration trends, to default trends and nonaccruals. And everything looks stable. We don't believe that is a trend of future indications in Middle Market. Terence McEvoy - Oppenheimer & Co. Inc.: Thanks, John.

Thank you.

Our next question comes from the line of Gary Tenner with Davidson. Gary Tenner - D.A. Davidson & Co.: Just a question, I know you commented a little bit earlier on the competitive environment. I wonder if you could differentiate the competitive environment a bit between Texas and California right now?

Dale?

Well, I would say couple of things that in the Texas market, in particular, where we clearly established, I think, a great presence particularly since we have our headquarters here and all of our senior executives are very active in the market, very active in the community. We clearly, I think, have a nice advantage competitively. And I think we're doing well particularly in the space that we want to participate in Small business, Middle Market, Energy. We clearly -- those are business lines that we've been in for some time and have successfully prosecuted. And our market share is -- and particularly with the acquisition of Sterling, I think, will help a lot. In California, we're dealing with a number of competitors depending on the business line. The Technology and Life Sciences business, for example, will have a very limited number of technology competitors that we know very well and compete well against versus the Middle Market whether you're in the South or the North, it can have some difference on kind of the way your competitors are. But it's generally the folks that you all know. So the competitive environment in the Middle Market, generally in California, is very aggressive. It's clearly on structure and price. But even there, we see nice inroads, we've seen nice growth in backlogs and increasing market share. It's a large market where we have a small share. We prosecute the same brand of business banking there that we do on all of our other markets, and we believe that given what we do, and how long we've been in that market, we will continue to be successful. Gary Tenner - D.A. Davidson & Co.: Would you say, on the Middle Market front, the pricing competition is greater in California and Texas right now?

I don't know that I would characterize it as more competitive on the pricing front in California versus Texas, perhaps a bit. Clearly, folks are sitting with a lot of liquidity and looking to deploy that in any way they can, looking for, obviously, good earning assets. So California may be a bit more competitive. But again, it depends on the market. It depends on the line of business. For us, frankly, if you look at our TLS business, which has grown nicely and has big deposit business and strong backlogs, the pricing there tends to be -- I don't want to say it's not competitive, but because it is, we kind of -- I think we hold our own very well. Middle Market has to be perhaps a little competitive there. But in general, the competition is tough in most places where we're doing business. We've seen that. And from our perspective as well, we tend to sit in kind of the space that says we like granularity in our portfolios. We see a lot of competitors may be looking to take bigger pieces of loans that maybe we would otherwise like to take, and we're careful about that as well. So it kind of depends on the line of business and the competitor. There are very large competitors in California, which we may not see as much in Texas. Gary Tenner - D.A. Davidson & Co.: Okay, great. And just one last question if I can. On the commercial loan side where you have had some growth, how much of that would you estimate has come participating in syndicated loans versus your own loans?

Most of that stuff, we've just originated ourselves. There is really -- the only place, frankly, you might see a little bit more of that might be in our energy book because there, you're not doing the very large folks. You're doing kind of the mid-cap kind of companies where you want to share the risk and share the deals. But even there, we're looking for, obviously, full relationships. And many times, we leave those deals because we've got a strong Energy business. But everything else would be -- really, we're the only bank. Gary Tenner - D.A. Davidson & Co.: Okay, great. Thanks for the color.

Thank you.

And our next question comes from the line of Michael Rose with Raymond James. Michael Rose - Raymond James & Associates, Inc.: Just two quick questions for you. First, when I look at your loans by market, is there anything in the international line of business that caused the increase quarter-over-quarter?

No. I would say there is nothing in particular that would've caused that. Frankly, a lot of what we look at there is reverse investment, foreign firms doing business in the states, typically. And so we've seen some nice activity there, but those tend to be Middle Market-like deals that happened to be owned by foreign parents often times. Michael Rose - Raymond James & Associates, Inc.: Okay, great. And then secondarily, on the Sterling results this morning, was there -- I know you said it was in line kind of with your expectations. But was there anything, either positive or negative, that surprised you?

I think the comment is very much in line with our expectations.

And our next question comes from the line of Brent Erensel with Portales Parters. Brent Erensel - Portales Partners: On the return of capital, you talked about 50%, and it was likely resume in the second half. Just doing the math, I guess, the dividend is going to cost you by $80 million a year, and that leaves maybe $120 million for buybacks. That's about 3 million shares. Is that sort of in your thinking?

Well, if I told you, if I answer that, I'd be giving you earnings guidance, which we don't. All I can say is the case that which you saw in the first quarter, we are at about a 33% payout. Our goal is to get to a full year payout in total for the full year of up to 50%. And so, obviously, the pace will pick up for the balance of the year in order to get to that goal. Brent Erensel - Portales Partners: Okay. More specifically, do you base this on annual or quarterly results?

The guidance we gave you was looking at it on an annual basis. But, obviously, we monitor the capital situation on a quarterly basis. But we're really looking at a -- the guidance we gave you was an annual target, but we do get consideration as we go through the quarters. Brent Erensel - Portales Partners: Okay. Thank you.

Thank you.

And there are no further questions in the queue at this time. I would now turn the conference over to Ralph Babb for any further presentation.

Well, I would like to thank everyone for joining us and your interest in Comerica. Thank you very much.

Thank you. Ladies and gentlemen, this does conclude today's conference call. You may now disconnect.