Good day and thank you for standing by. Welcome to the Comerica Bank Q1 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone. If you require any further assistance, please press star zero. I would now like to hand the conference over to speaker today, Darlene Persons, Director of Investor Relations. Please go ahead. Thank you, Mary. Good morning, and welcome to Comerica's Q1 2022 earnings conference call. Participating on this call will be our President, Chairman, and CEO, Curt Farmer; Chief Financial Officer, Jim Herzog; Chief Credit Officer, Melinda Chausse; and Executive Director of our Commercial Bank, Peter Sefzik. During this presentation, we'll 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, comerica.com. This conference call contains forward-looking statements. 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. Please refer to the safe harbor statement in today's earnings release in slide two, which is incorporated into this call, as well as our SEC filings for factors that can cause actual results to differ. Now I'll turn the call over to Curt, who will begin on slide 3. Good morning, everyone, and thank you for joining our call. The economy in the Q1 was relatively strong despite the surge of COVID cases in January and the war in Ukraine. On the whole, our customers are in good shape, and they remain cautiously optimistic about the future. Loan growth in the Q1 was solid and exceeded our expectations in several businesses. Compared to the Q1 last year, general middle market average loans were up 16%, excluding PPP loans, and large corporate loans were up 20%. Credit quality remained very strong, and expenses were well controlled. We are actively managing our balance sheet and remain well-positioned for the rising rate environment. Overall, the year is off to a good start. Highlighted on the slide are recent accomplishments associated with our corporate responsibility platform. We are pleased with the progress we are making. Related to environmental sustainability, climate risk is an emerging priority for all regulators, and last month, the SEC released a notice of proposed rulemaking for climate-related disclosures. For the past 13 years, we have disclosed our progress in reducing our scope one and two greenhouse gas emissions, discussing our goals in our annual corporate responsibility reports, and providing annual responses to CDP's Climate Change Questionnaire. We will be publishing our corporate responsibility report in June. Through our membership in the Partnership for Carbon Accounting Financials, or PCAF, we have begun to develop estimates of our commercial lending portfolio's financed emissions. We expect to continue on this path and meet any reporting or regulatory requirements. We look forward to keeping you apprised of our progress. In light of the evolving post-COVID environment, we are taking a fresh look at our retail banking approach, corporate facilities, and technology platform. These are areas that we are constantly evaluating, but with the pace of change accelerating, we are acting with even more urgency. For example, within our Retail Bank, we continue to focus on transforming the delivery of our services, aligning resources to best serve our customers, and enhancing our small business focus. Also, we are developing additional initiatives around optimizing our facilities for our employees. The goal is to better accommodate flexible work arrangements, reduce our footprint, and improve efficiency while maximizing locations that best serve our customers. As far as technology, we are increasingly focused on ways to meet customers' and colleagues' rapidly increasing desire to utilize digital channels. We believe these initiatives are essential and foundational to continuing to effectively execute our relationship banking strategy as we have for the past 173 years. Turning to our Q1 results, which are outlined on slide four. We generated earnings of $1.37 per share. Solid, broad-based loan growth momentum was partly offset by a large decrease in mortgage banking due to lower refi volumes and typical Q1 slower purchase volume, as well as the continued wind down of PPP loans. Deposits in the Q1 are typically impacted by seasonality, and this year was no exception following record activity in the Q4. Net interest income benefited from loan growth as well as our larger securities portfolio as we work to deploy excess liquidity and lock in higher yields. These benefits were offset by a $10 million decline in PPP income. Strong credit quality resulted in a small reserve release. As expected, maintaining the record levels of fee income we generated last year was challenging. The Q1 was impacted by a large decline in warrant-related income and negative returns on deferred compensation assets. In addition, we saw a seasonal decline in customer activity intensified by Omicron in January. We believe activity should be more revised as we move through the year. Expenses declined $13 million and included the decrease in deferred comp and seasonality in several categories such as annual stock compensation. Overall, companies are working on growing their businesses, rebuilding inventory levels, and increasing capital expenditures despite higher costs and labor shortages. In general, customers have been able to pass on price increases, and their balance sheets are strong with excess liquidity. Despite some uncertainty, customer sentiment remains positive, which is reflected in our pipeline and growing loan commitment levels. Now I'll turn the call over to Jim to review the quarter in more detail. Thanks, Curt, and good morning everyone. Turning to Slide 5. As Curt just mentioned, we had solid broad-based loan growth, which was partly offset by an $852 million decline in Mortgage Banker and a $354 million decrease in PPP loans. Loan commitments increased in most businesses and the line utilization rate held steady at about 46%. Positive trends continued in general middle market and corporate banking, which both grew over $400 million. Excluding PPP, general middle market loans increased $562 million or 5%. Higher commodity prices and growing inventory levels are in part resulting in increasing working capital needs. M&A and CapEx are also drivers. We continue to have great success in our equity fund services business, where we provide capital call and subscription lines to venture capital and private equity firms. The pipeline is strong and the activity remains high. The increase in national dealer services loans included a small increase in floor plan loans, which totaled a little over $600 million and remains extraordinarily low relative to the typical historical run rate of about $4 billion. We expect it will take some time for inventory levels to rebuild as supply issues are resolved and pent-up demand is satisfied. Environmental services continued to build on the strong growth we've seen over the past year. Opportunities are abundant, and we continue to attract new relationships, resulting in record loans and strong syndication activity. Mortgage Banker declined significantly as refi activity slowed with higher rates and home sales fell to seasonal levels. However, we expect to see an increase in purchase activity as we enter the spring selling season. Housing supply is expected to grow as we progress through the year. We believe we are well positioned as 71% of our mix is purchase related. Loan yields decreased 4 basis points as the benefit from higher rates was more than offset by lower PPP revenue. As the bulk of our portfolio is floating rate and largely reprices at the end of the month, the full benefit of the recent rate increase is expected to be reflected in the Q2. As shown on slide six, average deposits declined in the Q1, mostly due to seasonality. This follows record deposit growth in the Q4 when we had the highest quarter-over-quarter growth rate amongst our peers. Deposits were up 11% year-over-year, and we believe deposits will remain elevated, but slowly decline as the Fed increases interest rates and significantly shrinks its balance sheet. The average cost of interest-bearing deposits remained at an all-time low of 5 basis points. With the loan-to-deposit ratio for us and our peers at low levels, we expect deposit rates to adjust slowly as rates rise. Slide seven provides details on our securities portfolio. Our goal is to prudently reduce our asset sensitivity as rates rise. In part, this can be achieved through deploying excess liquidity by opportunistically growing the securities book. Through the Q1, we purchased $3.6 billion worth of securities with average yields of about 250 basis points, with recent purchases exceeding 300 basis points. A larger portfolio and to a lesser extent, favorable new purchase yields, resulted in a $6 million increase in securities income. Holding balances and rates steady at the March 31st level, Q2 securities revenue would increase to about $90 million. We will continue to assess relative value between MBS and swaps as we execute our balance sheet hedging, potentially leading to some incremental growth in the portfolio, although likely at a reduced pace. The rise in rates resulted in a mark-to-market impact of $965 million, which runs through OCI and affects our book value, but not our regulatory capital ratios. This accounting treatment does not capture the significant economic value created by higher rates on other parts of our balance sheet that are not marked, such as deposits. Of note, we typically hold these securities to maturity, in which case the unrealized losses should be recouped. Turning to slide eight, net interest income decreased $5 million, including a $10 million decline in PPP income. The net interest margin increased 15 basis points, mainly due to a decrease in excess liquidity. As far as the details, the decline in PPP income, two fewer days in the quarter and lower nonaccrual activity together had a $19 million impact. This was partly offset by growth in non-PPP loans, which added $5 million. The benefit from higher rates was $4 million and included a partial offset from lower rates on floors. With the average rate on floors now at 59 basis points, floors become less relevant as rates rise. As I mentioned, the increase in the size of the securities portfolio at higher yields added $6 million. The decrease in balances of the Fed reduced net interest income by $1 million and added 17 basis points to the margin. Fed deposits remained high at over $17 billion and weighed heavily on the margin with an impact of 52 basis points. As far as credit, which is outlined on slide 9, our metrics remained excellent, including net charge-offs of only 6 basis points. Gross charge-offs declined while recoveries decreased from elevated levels of recent quarters. Criticized and nonaccrual loans remain low. Our provision was a credit of $11 million. Sustained strong credit metrics and a continuing favorable economic forecast, albeit with elements of uncertainty, resulted in a modest reduction in the allowance for credit losses to 1.21% of loans. Through the cycles, our credit performance relative to the industry has been a key differentiator. With our consistent, disciplined approach to credit, we believe we could continue to outperform in the event we encounter a recessionary environment. We are closely monitoring the portfolio, looking for potential signs of stress from supply chain disruptions, labor constraints, and inflation. Overall, our customers have been able to manage through these challenges, performing well and maintaining their strong balance sheets. Non-interest income is outlined on slide 10. Warrant-related income decreased $14 million following elevated gains on monetization in the Q4. In addition, deferred comp, which is offset in expenses, decreased $12 million to a negative $7 million. Derivative income declined $5 million due to a $6 million change to the Credit Valuation Adjustment, mostly related to higher energy prices impacting our customers' positions. Several customer-related categories which reached record levels in the Q 4 were challenged by seasonal factors, market performance, and the slower economic environment in January attributed to Omicron. This included a decline in commercial lending fees, particularly syndications, fiduciary income, and card. As Curt mentioned, we believe activity will improve as we progress through the year. We continue to maintain our expense discipline as we position for the future growth, as shown on slide 11. Total expenses decreased $13 million in the quarter. Salaries and benefits decreased $3 million, including the $12 million decrease in deferred comp, which is offset in non-interest income. Performance-based incentives were lower as we reset targets to normal levels. Seasonal factors included annual stock comp, higher payroll taxes, and lower staff insurance. Of note, our staff levels increased slightly as we are successfully retaining and attracting talent in a very competitive market. Occupancy and advertising were seasonally lower. Also, legal expenses declined following elevated year-end activity. Lower outside processing is partly related to slower card activity and operational losses and FDIC expenses, which are difficult to predict, were at elevated levels. We kicked off certain initiatives related to modernization, as Curt described, which increased expenses by $6 million, specifically related to consulting, severance, and asset impairment. This is a journey which includes transformation of our retail banking delivery model, alignment of corporate facilities, and technology optimization. We look forward to providing more information as these initiatives form. The cost savings generated are expected to be reinvested as we continue to evolve. As always, our goal is to prudently manage expenses while enhancing our customers' and colleagues' experiences. Slide 12 provides details on capital management, loan and securities portfolio growth, the impact from customer derivatives combined with share repurchases, [which] resulted in a decrease in our CET1 ratio to an estimated 9.93%. We continue to closely monitor loan trends and capital generation as we focus on our 10% target. Our priority is to use our capital to support our clients and customers and drive growth while providing an attractive return to shareholders. Slide 13 provides an overview of our interest rate sensitivity and the benefit of the rising rate environment. Our standard model assumes a non-parallel rise in rates with a dynamic balance sheet. Based on the balance sheet as of March 31st, we estimate a $160 million increase in annual net interest income over 12 months as rates gradually rise 100 basis points, and the benefit will be slightly greater again in year two. We've also provided various alternative scenarios. For the purpose of providing an outlook for 2022 net interest income, we added the expected 50 basis points rise in May using swaps and securities at March 31 levels and our outlook for loan and deposit activity for the remainder of the year. In this scenario, we expect net interest income to increase by more than 13% relative to 2021 and increase 15% in the Q2 relative to the Q1. Our outlook for 2022 is on slide 14 and assumes the economy remains strong with gradual improvement of supply chain and labor challenges. Aside from the significant upside from rates, our outlook for the full year is unchanged from our January earnings call. There is no change in our expectation for broad-based average loan growth on a year-over-year basis in the mid-single digit range, excluding the decline in Triple P loans. This includes a decline in Mortgage Banker from the continued normalization of refi volumes and lower National Dealer due to a slower rebound as a result of supply chain issues. Including Triple P, average loans year over year are expected to be stable. This outlook reflects our robust pipeline and positive momentum in many businesses. Relative to the Q1, we expect average loans to grow 1%-2% each quarter with a seasonal pickup in Mortgage Banker along with growth in nearly every business line. Post the seasonal decline in the Q1, our base assumption is that deposits are expected to modestly decline for the remainder of the year with modest growth in Wealth Management and Retail more than offset by a moderate decline in Commercial deposits. However, the magnitude may be impacted by the pace of Fed tightening and economic trends as these are major drivers for deposits. I already reviewed our net interest income expectations but note that rate increases beyond May and the growth of our securities and swap portfolios present additional upside. Credit quality is expected to remain strong, with net charge-offs continuing to trend to the lower end of our normal 20-40 basis points. Assuming sustained economic strength and the impacts from supply chain issues, labor constraints, and inflation remain manageable, we expect criticized and nonaccrual loans to remain low. As far as non-interest income, there is no change to our outlook. 2021 was the highest on record, and the level of some categories are unlikely to repeat in 2022, such as warrant-related activity, derivative income, including favorable CVA, stimulus-related card fees, and deferred compensation. For the remainder of the year, we expect significant broad-based growth in customer-driven fee categories as activity picks up. This includes card, deposit service charges, commercial lending fees, warrants, as well as fiduciary, which benefits from tax filings in the Q2. In addition, deferred comp and securities gains and losses are difficult to predict, therefore, we assume will not repeat. We continue to expect low single digits increase in 2022 expenses. Q2 expenses are expected to be relatively stable relative to the Q1. Salary and benefits are expected to decrease modestly as the Q1 annual stock comp and lower payroll taxes are mostly offset by merit, staff insurance, and added staff, as well as deferred comp. Outside of salaries and benefits, we expect higher advertising due to seasonality, outside processing tied to revenue and technology expense to be mostly offset by lower operating losses. We expect the tax rate to be 22%-23%, excluding discrete items. Finally, as I indicated on the previous slide, we are focused on our CET1 target of 10% as we monitor loan growth trends. Now, I'll turn the call back to Curt. Thank you, Jim. As I said in my opening remarks, many business lines are showing good momentum with increases in loans, commitments and pipeline. Our credit culture continues to produce strong results, and our expense discipline was evident as we continue to invest in products and services and make progress on our ongoing digital journey. The nature of our business results in a balance sheet structure that quickly produces benefits from rising rates. In the current rate environment, we expect to continue to appropriately grow our securities and swap portfolios with the goal of providing more consistent earnings performance through the cycles. Our unique expertise in many areas as well as our geographic footprint offer significant growth opportunities. I am honored to work along such a talented and committed team. We are well-positioned as we move forward in 2022. Thank you for your time, and now we'd be happy to take questions. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Again, to ask a question, press star one on your telephone. Please stand by while we compile the Q&A roster. Our first question comes from the line of Bill Carcache from Wolfe Research. Your line is open. Thank you. Morning, Bill. Good morning. Good morning. Curt, you said that you expect fee income to be more robust as we move through the year. Can you discuss a little bit more on what gives you confidence in that? Then maybe just a little bit more color more broadly on the optimism that you're hearing from your customers and what your sense is that that optimism is going to be enough to translate into continued loan growth. I'll ask maybe Jim to talk about fee income, and then maybe Peter talk about optimism overall. Great. Yeah, good morning, Bill. Yeah, there are a couple of factors in play here. First, it's important to remember that, you know, we are always seasonally lower in Q1. It typically gets off to a lower start, you know, fewer days and just overall a little bit lower seasonal activity. Beyond that, you know, we had the added burden, as I mentioned, of Omicron that we don't expect to repeat. Of course, we had significant impact from market-related fees. I think it was about $32 million just from market impacts on things like CVA, you know, deferred comp, warrant valuation. We had a lot of anomalous things going on in the first quarter. We do expect all those to be removed as we move through the last three quarters of the year and get the normal seasonal pickup. You layer that on top of just some customer, you know, cautious optimism, and we do think we'll see more activity in non-interest income as the year goes on. Maybe I'll flip it over to Peter for other comments. Yeah, Bill, I would just add to Jim's comments. I probably even a little more than cautious optimism. I think our customer base continues to perform really well. We've communicated to you guys that our pipelines are still above pre-COVID levels, and we're seeing that. Really across our footprint in just about every business line the outlook is pretty good. I don't know that I can say that it's as maybe robust as it was middle of last year, but it's still really strong. Obviously, there's a number of things going on in the economy that customers are being cautious about or prepared for, but I don't know that I would say they're pulling back at all. I think they're moving forward and we feel really good about where we sit and our ability to capture that. That's very helpful. Thank you. If I may, follow up with just one additional question. Your peers are assuming more rate hikes than the 75 basis points that you have in your outlook. Was the objective there just to be conservative? Then sort of along those lines on your interest rate sensitivity assumptions on slide 13 It looks like your asset sensitivity came down a bit. You've talked about reducing some of your asset sensitivity as rates rise. Is that something that like this is indicating you've started doing already, or do you expect to wait a bit before more aggressively lowering your asset sensitivity? Thanks. Yeah, Bill. You know, we very purposefully took down our asset sensitivity to a certain degree this quarter. You know, certainly deposits were a piece of that. I'd mentioned at the January earnings call that we did have some seasonal deposits that were inflating our asset sensitivity. That piece was not a surprise. Beyond that, we did enter into a very significant level of fixed receive contracts, you know, $6.3 billion worth of received contracts, you know, made up of $3.5 billion of off-balance sheet swaps, $2.8 billion of net securities, once you account for the pay downs. That was a pretty significant move. It brings a lot of those rate hikes forward. You know, we are essentially taking 250 basis points worth of received fixed instruments, making that a certainty by pulling it forward into the run rate for the time value of money. In exchange for that, we did give up about $23 million of asset sensitivity. You know, most of the rest of that was deposits. It has been a goal of ours to stabilize our net interest income, take advantage of higher rates as they increase, and that's exactly what we're doing. We feel really good about the progress we made this quarter. We continue to expect to continue to do that as the quarters go on throughout the year. Understood. Thank you for taking my questions. Our next question comes from the line of Gerard Cassidy from RBC Capital Markets. Your line is open. Morning, John. John? I'm here. Sorry about that. Okay. No problem. Just one follow-up on that last question on hedging, Jim. What is the longer-term goal or philosophy of the hedging? You know, what are you really trying to accomplish there? You know, the ultimate goal is to smooth out our net interest income and asset sensitivity. You know, we don't like the feast or famine cycle that Comerica had been in for really a number of cycles. Our goal is to take advantage of the higher rates as they exist today to lock those in, so that we're protected from a risk standpoint when rates drop. The good news is we're always going to leave a little bit of asset sensitivity on the table. The goal is to protect ourselves from a drop in rates, take advantage of the rates that we see out there today, lock them in, bring them forward, and still leave a little bit of asset sensitivity on the table. You know, we will likely have asset sensitivity in the low single-digit% area. I think we're always going to benefit from rates rising. It's important to us to lock in opportunistic rates like we're seeing today and take advantage of putting those really in the income stream for the next several years. It's a very balanced approach, and we will do this gradually over the next several quarters. We certainly made a lot of progress this quarter and expect to make a lot of progress over the next several quarters. Okay. Good. Thank you on that. Then on the deposit beta question. Last quarter you asked a little bit about the likelihood of being closer to 10% versus 30% in your standard model. Have you seen anything in terms of deposit pricing pressure or requests from your clients after this first hike? Just curious on your thinking that we could be closer to 10% deposit beta at least early on than the 30% standard model. Yeah. I'm going to offer some general comments, then maybe I'll flip it to Peter for some customer color on that. We still feel with all the liquidity in the economy that the first several hikes will be below 10%. You know, we'll get closer to the 10% as the subsequent hikes happen. We still feel pretty good about following the pattern of the last cycle. The Fed has gotten more hawkish since we talked in January on the earnings call. There's probably a little bit more pressure on that beta than I might have thought, but it doesn't take us above 10% for the first few. We still feel pretty good about a manageable beta in the short to medium term. In terms of color from the customer side, I'll flip it to Peter. Yeah, John. I think the other thing I would say is, like everything that we do, it's very much relationship focused. You know, so far that hasn't been a major point of conversation. I suspect as we get further into the year, it will be. You know, in your larger businesses that are moving bigger deposits, there might be a little more sensitivity to it, just because of their access to other rates across the country. So far it hasn't been something that we've really faced as a big challenge. We're prepared to talk about it and we know that it'll be something as the year goes on we'll need to be out front with our customers on. Yep. Okay. Thank you. Thank you. Our next question comes from the line of John Pancari from Evercore ISI. Your line is open. Morning, John. Morning. Appreciate all the guidance detail, particularly you know around the fee trends and NII. I guess putting it all together, how should we think about the level of total revenue growth expectation for 2022? You know, I know you gave some detail around NII of around up 13%. You know, there's a lot of puts and takes there, particularly on the fee side, as you were talking about. Is it reasonable to assume perhaps a 5%-6% revenue growth expectation for the year, or could it be better than that? Thanks. Yeah, John. You know, number one, starting with net interest income, and maybe I'll circle back to part of Bill's question that I'm not sure I answered fully. You know, we did offer some guidance. We assumed the 25 basis points from March in our guidance. We assumed the 50 basis points in May. And I think the question Bill had was, you know, are we being conservative? Do we not think those future rate hikes are going to happen? That is absolutely not the case. You know, the rationale for our guidance being set up the way it was is there is a wide range of opinions out there in terms of where Fed hikes are going to go. I think even amongst the estimates on the sell-side analyst side, there's a wide range of estimates. Rather than try to pick one, we thought it would be, you know, more helpful to give, you know, the hikes that we know are happening for certain and then give you the model, and you have the $160 million for a, you know, average 50 bip hike or a point to point 100. You have the model for that that you can plug in. You can apply the sensitivities that we have on deposit betas that are on the slide. It's a little bit of a plug and play. You know, we're trying to be helpful there in terms of giving you the certainty aspect of the May hike, and then you can put in as many hikes as you want and prorate it by that model that we provided. In terms of revenue growth for the year, you know, I would bifurcate it between, you know, what's going to happen with net interest income. Again, there's a wide range of outcomes there in terms of Fed hikes, as well as what we might add on in terms of additional swaps and securities. Just some tremendous upside there. We know that non-interest income is going to be lower than 2021. We tried to make that as clear as possible. You know, if you look at some of the anomalous income we had in 2021, which I think is in the earnings materials, you know, whether it be stimulus-related card fees, CVA in the derivative portfolio, warrants. You know, we have about $70 million of anomalous income that occurred in 2021 that will not occur in 2022. We will have a negative% for 2022 relative to non-interest income. That's not new news at all. I think we've been real clear on that. Non-interest income, though, has some tremendous capacity to create a very significant growth rate. You know, just apply the modeling that we provided, add as many swaps and securities as you think might make sense. You know, we're certainly going to keep up a pace somewhat similar to what we had in the first quarter. You know, we feel really good about revenue growth in 2022, but there's going to be a range of outcomes there depending on how many hikes you have. Okay. All right. Thanks for that. I guess another way to that I maybe can go about asking is, I guess also, you know, wanted to get your thoughts on the magnitude of positive operating leverage that you think you can achieve for 2022, given your low single-digit growth and expense expectation. Fair to assume that you can achieve possibly 200-300 basis points of positive operating leverage, or if you can help us think about that. Thanks. Yeah. You know, I would probably go back to the previous answer. Again, a wide range of outcomes depending on hikes, but it's going to be a substantially favorable number. So again, we feel really good about it and it just depends, you know, how the interest rate environment goes throughout the year. Okay. No, got it. Thank you for that. One very quick last one. I know you mentioned the floor plan portfolio increase from $3.9 billion-$4.1 billion, I think, on average. Just your expectation, you think you can continue to see modest increases from here? John, it's Peter. I think the short answer to that is probably yes, but very modest. I mean, we're not expecting a huge recovery in floor plan. We do feel like, you know, you're starting to see car assembly pick up. You're starting to see some progress, I think, in the auto supply chain. I don't think that's going to translate to floor plan balances just because the demand for cars is still so high. What we hear from our customers is they're pretty much sold the moment they're rolled off the truck. I think that's probably going to continue for sure the rest of this year, maybe through the rest of next year, quite candidly, on some of the things that we're hearing. We think we'll see a little bit. If you look at a lot of the balance growth that we saw, it was mostly financing real estate. We're financing some M&A activity because, you know, our customers are going to be on the winning side, if you will, of buying other dealerships. That's where we're really staying focused right now. Great. Thanks. Take all my questions. Yep. Our next question comes from the line of Ebrahim Poonawala from Bank of America. Your line is open. Ebrahim, good morning. Hey, good morning. I guess just the first question around line utilization. Was wondering if you can elaborate why we didn't see a pickup. We've heard from some of your peers who've observed a pickup during the quarter driven by capital markets being tighter, demand picking up, CapEx, et cetera. Would love any sort of thoughts around what you think needs to happen to see a meaningful pickup in line utilization from here. Then just outlook on the mortgage banker businesses then. Yeah, Ebrahim, it's Peter. I think a little bit of it's portfolio mix. Our overall corporate line utilization, as we communicated, was about flat. When you look at sort of our general middle market and our general businesses, business banking, U.S. banking and so forth, we did see a good increase there quarter-over-quarter. We're starting to see some utilization. I wouldn't say it's back to historic levels, but we did see a little bit of utilization. I think the difference you might be seeing there is mostly portfolio mix. It's a good segue to your question on mortgage. Mortgage saw a big drop in utilization in the quarter, and I think our outlook there is still positive. There's not anything per se that isn't normal seasonality that we've seen. We still feel really good about the mortgage business. I think as the year unfolds, you'll continue to see you know, I've tried to communicate to you all that if you look at that quarterly chart in the appendix, it's up into the right over a long period of time, and we're focused on adding new customers and increasing that overall warehouse lines that we have out, and we think we'll be able to continue to do that. We do think, though, year over year, we will be down as we've communicated in Mortgage Banker. Do you also expect the Mortgage Banker spreads to narrow as well? Even though it's a LIBOR-based book, given the market backdrop, you see spreads coming down, so that's going to impact how that reprices? Ebrahim, I think you're asking me about pricing and mortgage in general. You know, I guess my answer to that question is we do think it's getting more competitive in Mortgage Banker than it was kind of right when the pandemic started. There's probably a little bit of pricing pressure there, but nothing that we're not used to in all of our businesses. Got it. Just one quick question. Sorry for going back to this. I understand there are, like, a wide options around, but do you have a number in terms of what NII would look like if you just assume that forward curve plays out as expected, and where NII would land in that backdrop? Ebrahim, yeah, we have played with a number of scenarios, but at this point, again, there are so many potential permutations, that I think for now we're going to hold to the 75 pip guidance that we've offered and just offer the model and let people plug that in. Got it. Thanks for taking my questions. Thank you. Our next question comes from the line of Scott Siefers from Piper Sandler. Your line is open. Morning, Scott. Morning, guys. Hey. Just wanted to ask a question on deposit balances. Is your feeling? I know you expect modest declines through the remainder of the year vis-à-vis the Q1, but will the Q1 have been sort of the worst of the deposit contraction in your view? Oh, it absolutely will be the worst, Scott. Yeah, we had a lot of seasonality that occurred, as we mentioned. You know, some of the structural things, cyclical things related to Fed movements has not really kicked in yet, and that will pressure us probably with our business model and our heavy dependence on commercial deposits. We will be impacted probably a little bit more than other banks, but we don't expect for any one quarter that impact to be nearly as impactful as the seasonal runoff that we saw in the Q1. Perfect. All right. Thank you. The Q4 being record. Yeah. Yep, understood. Thank you. Maybe a follow-up just regarding rate sensitivity. Can you speak qualitatively to your preference for adding securities versus swaps in moderating your rate sensitivity? Yeah. We, you know, we are always looking at relative value between the two. You know, that's certainly a factor. We also look at capital implications. You know, some securities come with capital you have to hold against them, so that's a factor, and that factors into the overall pricing comparison and relative value between the two of them. Of course, liquidity levels, you know, our cash levels are coming down, and that will probably make us a little more cautious about adding securities going forward. We have been adding an abundant amount of both over the last couple quarters. Certainly we stepped it up a lot in the Q1. I do think as the quarters go on, you'll see fewer and fewer securities added and more and more swaps in terms of the proportion. They both have their advantages on a relative value basis. One can look better than the other at times. We'll utilize both going forward, but I think you'll see us continue to pivot a little bit more towards off-balance sheet swaps as opposed to on-balance sheet securities. Yep. Okay. Perfect. Thank you very much. Thank you. Thanks, Scott. Our next question comes from the line of Steven Alexopoulos from J.P. Morgan. Your line is open. Good morning, Steve. Hey, good morning, everyone. Morning. I wanted to start on the rate sensitivity. I know you've been very clear you have a goal to reduce asset sensitivity, but what's the thought on adding all of the swaps here? Why not wait until rates go up before trimming the asset sensitivity? Because it just feels like you're leaving a lot of economic benefit on the table by doing so much right now. Hey, good morning, Steve. Yeah, we do not want to pick our point where we think rates are going to peak. You know, we saw a little bit of that in the last cycle, and that's not something we're interested in doing again. I think it's really important to mention that we are just getting started. We have a lot of swaps, a lot of interest sensitivity still on the table. We will be taking advantage of these rates over the next several quarters. We have quite a way to go, so I wouldn't necessarily think about it in terms of we put our, you know, stake in the sand in the Q1 of 2022. That's by no means the case. We are going to try to avoid picking where we think rates are going to peak. We're going to stay, you know, methodical, as I've said in the past, and we have a long ways to go. By the way, even when we're done, we're going to leave some asset sensitivity on the table, and we'll still benefit from higher rates. We'd like to have our cake and eat it too. To a certain extent, we're adding significant amounts of income to the run rate now, but we have a lot further to go in terms of adding swaps. As rates go up, if we're fortunate enough that they do go up continuously over the next year, we will certainly be in a position to take advantage of that. Jim, I might just add a little color. This is Curt, a little color commentary and sort of our thinking here. We lived through close to an 8- or 10-year cycle of near-zero interest rates, beginning with the financial crisis, which was really challenging for us on the revenue side of the house. When we saw rates increasing in 2017 and 2018, we were a little bit more probably focused on picking a higher point in terms of where the rate cycle might go. We made some progress on hedging, but not nearly enough, and we saw the dramatic decrease in rates going to zero as the COVID crisis began. We lived through one of those cycles, and we're just trying to be prudent. There's no going to be no change to our model. We are primarily a commercial bank, so no matter what, as we add more loans and customer relationships, we're always going to be asset sensitive as an organization and probably highly asset sensitive relative to some in our peer group. We want to make sure we're dollar cost averaging here, if you think about your stock portfolio, and that we're adding appropriately hedges to the portfolio throughout the cycle. We're all assuming continued rate increases. We also weren't assuming COVID. We weren't assuming the Ukrainian war. There's a lot that, you know, no matter what could derail a scenario. We're just trying to be prudent in sort of solidifying our revenue stream on a go-forward basis, not just for a short-term cycle but over, you know, several years going forward. Yeah. I might add to that. There are really two components of leveling out the asset sensitivity. You know, there's a risk control aspect, and there's a profit maximization aspect. You know, Steve, I think you're thinking of the profit maximization aspect as you know, many equity analysts would. There is a risk control standpoint to this in that we want to make sure that if things do go south, that we can be as confident as we can be in protecting that common dividend, which was not a sure thing back when rates were zero and we were having credit pressures. You know, we want to make sure that you know, from a credit rating agency standpoint, we're always in good stead. You know, with the customer base we have, we think our credit rating is extremely important. Our customers value that. I feel like a lot of the wood that we've chopped so far is really taking care of that risk control aspect that to some extent we've, you know, secured the dividend. You know, we've done those things to make sure that we can withstand a downturn if rates were to go the other direction. As rates continue to go higher, I think we start transitioning from the risk control aspect to more of the profit maximization. Really a couple objectives there that we're trying to check the box on. Okay. That's very helpful color, actually. For Curt, in your prepared comments when you talked about modernization efforts and you indicated a greater sense of urgency, is the message to the market that there could be more spend coming from the company at some point? Or are you simply saying that you recognize that to be competitive and improve the client experience, you need to take modernization to the next level? Steve, it's a little bit of both. I just think over the last, what, 24 months, the whole world, the whole corporate America has learned a lot. I really think as a CEO of a company, whether you're a bank or a non-bank, you've got to be thinking about sort of the operating model in a post-COVID world. The way I think you should think about this is that it's really a continuation of a path that we've been on for some time, and we're finding ways to accelerate our progress in terms of our retail branch delivery and sort of the customer experience there, continued investment in digital and in our real estate footprint. I can go into detail on all those, but on the retail side, you know, we've been a very good steward of over time trimming our network there. We operate a fairly thin branch franchise today. But we think we've got some opportunities to continue to look selectively at locations, and those would sort of bleed out over future quarters as we have opportunities there. We're just looking at sort of our model around branch delivery to make sure it's as efficient as it possibly can be. With really the goal of always doing a good job of the customer experience, but also enabling our colleagues with digital delivery, et cetera. On the real estate side, we've done a very good job there. We've reduced our real estate footprint in the last, really since 2015, about 20%-25%. But with all these flexible work arrangements, being more accommodative to the new world of balancing work from home and work from the office, we think there's opportunities there to continue to rationalize some of our real estate, but also create space that we think is very attractive to our employees and accommodate some more, you know, collaborative sort of open floor plan. Technology is an ongoing journey. A lot of the savings that we realize through those two initiatives, which are sort of heavy real estate-focused, we're going to continue to invest in digital. The reason we're pointing this out to you is we did have some charges in the quarter that we called out. They were fairly modest. We anticipate as we think about these things, we haven't yet decided all of them, that we may in subsequent quarters have some additional charges. I might let Jim Herzog add some additional color there. Yeah. You know, I think of this in a couple aspects. You know, we're going to have what I call some exit and transitional charges, of which you saw $6 million in the Q1. You'll see some additional charges in subsequent quarters. Some will be smaller than the six, some will be larger. You know, those would not be in our outlook since they're not even formed yet. But I do think of those as exit and transitional charges. You know, we talked about asset impairments and severance in this most recent $6 million. To the extent we actually have investment in our applications, in our core product suite. You know, those are not the types of things that I think is something we would call out. We try to self-fund those as much as we can. I think about those in terms of our normal investment portfolio that we do each year on the technology side, as well as just any normal evergreening of facilities and banking centers. We'll manage it really from two aspects, and we'll probably report it as such. You know, we certainly will call out the exit and transitional costs that occur, but we will attempt to self-fund many of the investments in this on the pure product side as we can. More to come, and of course, these are still forming. Okay. Appreciate all the color. Thanks for taking my questions. Thank you. Our next question comes from the line of Ken Usdin from Jefferies. Your line is open. Morning, Ken. Hi. Thanks. Good morning, all. I want to go back to page 13 in the deck and the projected swap benefit. It's as of 3/1/2022. Can you just help us understand, like, is that marked at a certain LIBOR rate, or, and then that'll change as LIBOR goes up that slide? Or are you just locked in knowing that that chart and the expected contribution, you know, is sticky and will carry with you through this period that you show on the lower right chart? Thanks. Yeah. Good morning, Ken. Yeah, those benefits are based on LIBOR rates and BSBY rates as of the end of March. To the extent you get a rise in those rates, you will bring in less income or recognize less income on the swaps. Of course, you more than make that up many times over on the loan side, and the impact of both of those are already forwarded into the modeling that we have on the bottom left side of that page. It is all accounted for. Right. Okay, got it. Moving to that then, can you just walk us through just the percentage of the book that's tied to the various LIBOR rates, you know, whether one month, three months, six months, prime, et cetera, if there's a general way that you can help us with that? Thanks. Yeah. Well, if you turn to slide 17, of course, we do split out the 60-day rates versus the 30-day rates. Right. The 60-day plus as well as the 30-day. You know, the vast majority of our book is still on LIBOR because we didn't start making BSBY and SOFR loans until January 1, or we started really the momentum right as the year was ending in 2021. At this point, the vast majority is still LIBOR. You know, we do turn our book over every two to three years, so you can kind of prorate that to get a feel for the rate at which BSBY and SOFR would start to replace the LIBOR loans. Got it. Yeah, forgot about that chart. Thank you for a reminder. Last one just on your comments about your belief that a low beta, you said 10% or so for the first couple hikes. You know, what's your line of sight on how long the betas could stay that low? You know, how do you look at that just in, you know, is that in the Q2 guidance? How far out do you have a line of sight on the beta staying that low? Thanks, guys. Yeah, Ken, you know, I'd mentioned that in the first few hikes of the last cycle. It was really the first five. We stayed below a 10% beta for each of those. That's still our kind of base case at this point, that we will stay below 10% for the first five. The guidance that we offered in the outlook, that takes that into account. That does have a somewhat moderate beta in it, so that is accounted for. Okay, thanks, guys. Our next question comes from the line of Jennifer Demba from Truist Securities. Your line is open. Morning, Jennifer. Good morning. Question on asset quality. It remains excellent. You had another negative provision in the quarter. How much longer can we see negative provisions in this environment where it's a bit more uncertain as rates are going up so fast and we have obviously more geopolitical risk? Good morning, Jennifer. This is Melinda. You know, it's really difficult to predict under the CECL methodology exactly what's going to happen with provision. Suffice it to say, as was already mentioned, I mean, we feel really good about the underlying quality of the portfolio. Assuming that the economic environment stays relatively positive and stable, you know, it is possible, given that CECL is still new, we don't really know where the bottom is. It is possible that we could have very modest levels of provision, negative provision, and then stabilizing. You know, we expect charge-offs, as Jim and Curt mentioned, to sort of stabilize to the low end of our normal range. Although asset quality, again, is excellent right now, it is not sustainable in the long run. I mean, we are a commercial bank. We lend money and, you know, customers have challenges. There's a lot of economic uncertainty right now, just given all the inflationary pressure. We saw just a little bit of migration in the Q1 in terms of our criticized assets. Nothing that, you know, would lead us to be concerned about any particular portfolio, but we continue to watch those portfolios that are more sensitive to just the general economic challenges. Possible to have a negative provision, small negative provision for a couple of quarters, but very difficult to predict specifically. Which portfolios, do you feel are most vulnerable with a rising rate environment at Comerica? Certainly our leverage portfolio. I mean obviously, given the amount of leverage that they have, they are very sensitive to interest rate increases. We do sensitize that portfolio when we underwrite initially. Again, our leverage portfolio is really part of our middle market kind of core C&I relationship strategy. We underwrite strong companies and management teams, and have a lot of confidence that they'll be able to manage through that. That book is kind of the tip of the spear for credit quality concerns, and we continue to watch that one closely. Automotive, the supplier base has obviously been challenged given the chip shortage, plus you add on to that all the other uncertainty around the inflationary pressures. It's a relatively small book compared to the total, and we have many, many decades of experience in that automotive supplier base, and they have managed through many, many cycles successfully. Those are the two portfolios I'd say that we are watching most closely. Small business, obviously they have less pricing capability in terms of just all the inflationary pressures, less ability to pass that on. That book has held up incredibly well. It has good liquidity, but we have less visibility into a small customer versus some of our larger customers, so we're watching that one as well. Thanks so much. You're welcome. Our next question comes from the line of Peter Winter from Wedbush Securities. Your line is open. Morning, Peter. Thanks. Good morning, Curt Farmer. I was just curious about if there are any plans to manage the available for sale securities portfolio in a rising rate environment, and any thoughts on maybe moving it to HTM or hedging it, especially since I think, Jim Herzog, you said that you hold the available for sale to HTM anyway. Yeah. Good morning, Peter. Yeah. We have absolutely no plans to move any of that to HTM. Really, we discount the entire AOCI discussion. I know it does have an impact on tangible book value per share. I know that's a bit of an optic. I think when you look through the true economics, which I think everyone should, you know, you look at other parts of our balance sheet that are not marked, in particular deposits, as I mentioned. We benefit so much economically from an economic value of the franchise from rising rates that we are not concerned about a single line item being marked down and what that does to tangible book. We think the real economic value needs to be looked at, and we think it's just a bit of window dressing to put it in the hold to maturity, so certainly no plans there. Okay. Just on energy, it's under, I guess, 3% of the loans now. Is there an interest in growing this portfolio? I feel like underwriting standards are much stronger. Loan spreads are better just due to less competition. Peter, it's this is Peter. I think we are focused on continuing to be an energy bank. We feel really good about our energy portfolio that we have today. I don't know that we're going to return to the levels that you saw, you know, five or six years ago as far as the percentage of the portfolio. We did see a little increase this quarter, but not a lot. It's a business that we've been in for a long, long time. We plan to stay in it, but I don't think it'll get to the size that it was, like I said, probably five or six years ago. We feel real good about the level that we're at and plan to maintain that. Got it. Thanks for taking my questions. Thank you. Our next question comes from the line of Chris McGratty from KBW. Your line is open. Morning, Chris. Hey, good morning. Just wanted to revisit the size of the balance sheet for a moment. Combining the comments you made on, you know, the tempering of the securities growth, the cash normalization process and deposit growth. Just taking a step back, how do we think about near-term earning assets relative to the $83 billion, $80.5 billion this quarter? How do we think about the cadence of that in the next couple quarters? Yeah. Good morning, Chris. You know, we do think that, to some extent, we will see, you know, temp investments go down and loans will eat into some of that. The bottom line is deposits are also going to decrease, and that will probably be what really moves the balance sheet. We will see a very modest reduction in earning assets. To the extent deposits go down, that shrinks the overall size of the balance sheet. There'll be some, you know, moving parts there, definitely going both directions. Okay, just to reiterate, the drop that we saw this quarter, you know, we're talking much more manageable declines in earning assets. Much more manageable, yes. From there, later in the year, as you kind of look to next year, would you expect this trend to reverse as deposit growth, you know, resets with the Fed doing everything like that? You know, the Fed's going to stay active, you know, probably for a couple years. You know, we don't expect their balance sheet to return to the level the Fed's likely to target until about 2024. You know, rate increases will probably go through at least, you know, part of 2023. Of course, sometimes customers react on a bit of a lag. I think you'll see deposits kind of languish just slightly down from where they're at now, probably over the next couple years is our best guess. Very, you know, there's no exact equation for this. There are so many moving parts in the economy with money supply that it's hard to say. Certainly the Fed actions will cast a shadow over deposit growth, and those will continue over the next couple years, most likely. Okay, great. Then if I could just squeeze one more in. The buyback is seemingly, you know, reaching the end, as you've achieved your capital targets. Is there anything to speak of in terms of inorganic capital use, M&A? Yeah. No new information there, Chris. We continue to be very focused on organic growth and are having a lot of good success both in our legacy franchise, but also in examples like our expansion into the Southeast into North Carolina as we set up commercial loan offices there and have now added Wealth Management capabilities. We envision eventually adding a Retail Bank there as well down the road. We've added some staff in our Denver office as well on the middle market side. We've got really good opportunities in our existing franchise, still in some of the best markets in the United States in terms of major metro markets, especially in Texas and California, but Michigan is doing well also. We've been able to parlay that into expansion into other markets, as well. Great. Thanks for taking the question. Thank you. Our next question comes from the line of Gary Tenner from D.A. Davidson. Your line is open. Thanks. Good morning. I just had a follow-up on the ACL question. I'm just wondering, as you work through the Q1 and your CECL model, have you made any active changes to your probability weightings in terms of kind of recession risks, GDP growth, et cetera? You know, any detail you could provide on that. Yeah, Gary, this is Melinda. You know, the economic forecast that we selected in the Q1 was relatively consistent with the economic forecast in the Q4. The way we approach that economic uncertainty is to look at certain portfolios and then stress them to a higher recessionary scenario, which we did. We used a more severe recessionary forecast for a portion of the portfolio to add to the qualitative reserves to come up with again that kind of small release number that we had this quarter. Good. Thank you for that. Just one more follow-up just on the AOCI question that Peter had asked. You know, your point is well taken in terms of it being kind of a timing issue and temporary. But in terms of, you know, we've still seen obviously the belly of the curve rates move higher here over the first month of the Q2. Can you know, give any color in terms of the sensitivity of, you know, AOCI to additional moves from here? Obviously, the base that they're moving up from is higher than it was, you know, from year-end 2021. Yeah. Gary, in our modeling, it's not a lot different from what we've seen. You know, we saw kind of that medium part of the curve where our securities were, you know, moved about 100 bps over the last couple quarters. We took that close to $1 billion hit to AOCI. It's about the same sensitivity. You know, 100 bps would generate about $1 billion hit or $250 million for every 25 bp. It's somewhat linear, so kind of in that ballpark. Yeah. Thank you. Thank you. Our next question comes from the line of Brian Foran from Autonomous. Your line is open. Hi. I definitely appreciate the comments that everyone's making different assumptions on rates, and you guys don't want to be creating point estimates. Just coming back to your plug and play comment. I mean, if I'm trying to work back to, you know, what it seems like the central case of the market that maybe the Fed has to go to 3% or 3.5% this year. I mean, is the plug and play as simple as, you know, your guidance implies $2.1 billion of NII this year? There's no rate benefit really in the Q1, so that's more like $2.2 billion on a run rate. Then if I throw in $310 million, you know, that gets me close to 3% on Fed funds and maybe throw in a little bit more than that if the Fed, you know, goes to 3.25% or 3.50%. It's like, you know, if I'm working back to that central case of the market, of the fixed income market, at least of a 3%-3.5% Fed funds rate is like a $2.5 billion NII at least using your plug and play correctly, or I guess, you know. It's hard for you to bless that, I guess, but maybe like the Fed, you can issue a non-objection to make sure I'm reading the slide wrong. Yeah. You know, the model's pretty linear, and it's not going to change a lot, as you know, rates continue to move higher. You know, from an exact modeling standpoint, I just remind you, as I mentioned in the script, that most of our floating rate loans reset at the end of the month following a rate hike. So, you'd want to get that right in terms of your quarterly impact assumptions. But it is pretty linear along the lines of what you're describing and what the graph shows. Then the added challenge is, you know, again, if I believe the fixed income market, I'm supposed to be maybe modeling some cuts in 2024. You know, so I think you said by the time this process is done, you'd like asset sensitivity to be in the low single digit range. Is the just logical implication that, you know, next time around, if and when the Fed cuts, you know, we're talking like a $100 million adjustment to NII, not like the much bigger numbers we would've seen historically? That is exactly the goal. Okay. Maybe if I could squeeze in the last one. I mean, just trying to translate all this to like a normalized earnings power. If you want to just give me normalized DPS, that would be great. You know, credit's the other big swing factor. Can you just remind us, you know, what do you think is a reasonable, you know, either point estimate for charge-offs or range? You know, I know it's tricky because you're always, you know, commercial books are rarely at normalized charge-offs. They're either, you know, they're a trough for a long time, and then they're briefly at a peak. You know, as you think about through the cycle of credit costs, what kind of range of charge-offs do you plug in? Yeah, this is Melinda. I think as Curt or Jim already mentioned, I mean, we do expect these extremely low levels of charge-offs to continue to normalize, and we would guide towards the low end of our kind of normal range of 20-40 basis points would be what we would expect. Great. I appreciate it. Thank you. Thank you, Brian. Our next question comes from the line of Steve Moss from B. Riley Securities. Your line is open. Morning, Steve. Good morning. I just want to ask a little further on balance sheet positioning here with higher rates. Obviously a pretty big mark down on the securities book. Just kind of curious, is there an AOCI mark that could cause you to stop securities purchases? The other part here, just kind of thinking about what is the percentage of cash to assets, maybe if you think of it as a ratio that you guys want to hold going forward. All right. Good morning, Steve. Thanks for the question. Yeah, to your first question, we are not concerned about the AOCI impact, so there is no level that would cause us to not buy securities or do something different. We're very focused on the economics just as we think everybody else should be. I'm sorry, what was the second question? Just as thinking of, you know, you said you're going to focus more on probably more swaps and less securities going forward. Just kind of curious, what's the percentage of cash- Oh, the cash. You seek to hold? Yeah. Yeah. We've always targeted because we do have a commercial base that's a little bit lumpy, and we can see some larger ins and outs out of our cash position, perhaps relative to some pure banks. You know, we typically like to hold, you know, $3 -$4 billion worth of cash. Used to be our own benchmark. Of course, we'll look at the changes to the environment as we come into the next cycle and, the options for tapping into funding on a very expedient basis. Sometimes we'll move that number up or down just depending on our access to funding. But kind of in that, you know, $3 billion, maybe $3 -$4 billion range is kind of the level of cash we like to hold. Okay. Great. Thank you very much. Appreciate all the color. Thanks for the question. Our next question comes from the line of Michael Rose from Raymond James. Your line is open. Good morning, Michael. Hey. Hey, good morning. Thanks for taking my questions. Just wanted to hit on the technology and life sciences business. Looks like the average loans hit an inflection point this quarter, so I just wanted to get the outlook there. On the equity fund services, obviously good Q-on-Q growth, and the outlook, I think, for the National Venture Capital Association is still pretty robust. Just any sort of color there on outlook would be great. Thanks. Yeah, Michael, it's Peter. Both of those are businesses that we want to continue to invest in, that we're wanting to add resources to. The TLS business is one that you're right, it did feel like it hit an inflection point maybe this quarter, and we're seeing really good volume there and feel like we've got an opportunity to continue to grow that. On the EFS side, I would say the same thing. Both of those businesses, the outlook feels really good and you know the pipeline activity is really good. Across the country, we're finding opportunities to add people or pick up people. It is extremely competitive in the TLS business, I would tell you. A number of banks, I think, are wanting to get into it. We've been in it for a long, long time, and I think we're in a great position to capture what feels like a growth business. Yeah, thanks for asking about both of those. We feel real good about the outlook on each. Great. Thanks for taking my question. Yep. Our next question comes from the line of Ryan Nash from Goldman Sachs. Your line is open. Morning, Ryan. Hey. Hey, good morning, Curt. Good morning, Jim. Jim, maybe just a couple of follow-ups on the asset sensitivity on the back of Ken and Brian's question. You know, on slide 13, can you maybe just talk about what the receive rate was on the swaps that you added? Jim, maybe more just philosophically, can you maybe just talk about what you're looking at to trigger additions to the swaps? Is there a minimum receive fix level that you're looking at based on your view of the rate environment? Is there a set notional amount we should expect you to be adding on a quarterly basis to reduce the sensitivity? I'm just trying to think about mechanically how you're going to do this, given that, you know, I think on our math, you need to add another $25 billion-$30 billion of swaps. I'm just curious on the receive rate and how you think about adding over the next couple of quarters. Hey, good morning, Ryan Nash. You know, the ones we added in the Q1, you know, the gross receive rate was just a tad over 2%, very close to 2%. Of course, we paid BSBY, which is actually running below LIBOR at this point. You know, that would give you a perspective for the rates. In terms of the volume, you know, I would go back to my more global comments that, you know, we're looking at this holistically in terms of, you know, what are the securities options on the balance sheet, what are the swap options off the balance sheet. As I mentioned, we will likely start pivoting more towards the swaps. You know, if you look at what we did with securities and swaps in the Q1, it was $6.3 billion on a net basis. You know, that was a pretty stepped-up pace. I don't know if we'll run quite at that pace every quarter. It'll depend on market conditions. You know, we'll certainly be running close to that for the next couple quarters, and you will see more of a pivot towards swaps, I suspect, over the next couple quarters. Got it. Just on your follow-up for the, you know, for the modest decline in deposits. You know, just given the pace of rate hikes that we're expecting over the next couple of quarters, how are you thinking about the mix of deposits? You know, you're currently in the mid-fifties on non-interest bearing, and I think last cycle as we got to, you know, 150 basis points or so we started to see deposits look for, you know, a little bit more rate on what they were receiving. I'm just curious what are you assuming for mix shift over the course of the next couple of quarters? Yeah. I think to the extent we lose deposits, it will be disproportionately to non-interest bearing. I think even beyond that, we will likely see a modest shift each rate hike from non-interest bearing to interest bearing. That's just natural. We saw it go the other direction as rates were going down. You know, customers just became less rate sensitive. We will see a gradual remix of that portfolio towards interest bearing over time. Got it. Appreciate the call. Having just said that, you know, our portfolio is so heavy on the commercial banking side in our deposit mix, and so much of that is operating funds for businesses and companies that we work with, we're always going to have a high non-interest bearing component, probably relative to our peer group even if we see some mix shift occurring. Yep. Yeah. That's actually part of the value of the business model here at Comerica, you know, heavy in treasury management services and they're certainly a foundational piece in terms of operational deposits. Got it. Thanks again. Thank you, Ryan. I will now turn the call back over to Curtis C. Farmer, President, Chairman, and CEO. Please go ahead. As always, thank you for your interest in Comerica, and I hope you have a good day. Thank you. This concludes today's conference call. Thank you everyone for participating. You may now disconnect.