Comerica Inc (NYSE:CMA) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.
John Pancari – Evercore Partners: I wanted to see if you could give us some color on loan pricing, what you’re seeing in your markets, if you’re seeing any ability to the price better given the steepness in the curve at all?
Ralph W. Babb Jr. – Chairman and CEO Comerica Incorporated and Comerica Bank: Okay, Lars?
Lars C. Anderson – Vice Chairman, The Business Bank: Yeah John, so as you know, we typically price with the shorter end of the yield curve, as Karen mentioned earlier. So, as you’re seeing a steepening in the yield curve, that hasn’t had as much kind of impact on us. Obviously the pickup in the loan market did move, I think some activity to the shorter end of the yield curve, which helps senior bank debt, but overall, I don’t think the interest rate shifts really had any significant impact on us and as you know, LIBOR really hasn’t significantly changed. So, we’re staying very – focused on our existing strategy. We haven’t changed our pricing strategy at all, John.
John Pancari – Evercore Partners: Okay. Are you seeing any change in the competitiveness of some of your competing banks on that front at all or any room to improve pricing just given, any changes in the competitive landscape?
Lars C. Anderson – Vice Chairman, The Business Bank: Well, I would say that we have continued to see a very aggressive marketplace in terms of pricing. And if I look back quarters ago to today, I would say that it has gotten relatively more aggressive. We do see durations getting stretched on a number facilities and that’s pretty active across a number of our businesses. So, we’re continuing to just focus on our discipline, our product and what we do and feel very comfortable we’re getting the kind of returns that are attracted to our shareholders and we’re going to stick to your guns with that John. But I don’t see it is as opportunity for us to significantly increase spreads or yields. But I do think that we’re very well positioned with the businesses we have, the expertise we have, the markets that we have to continue to deliver and as you know our loan spreads have largely held here over the last year.
John Pancari – Evercore Partners: And then lastly, Karen your product – shoot me down on this, but on the margin want to see if we can get some just additional color and your thoughts on the margin, could we see a bottoming in the margin over the next couple quarters here and can you talk about the magnitude of compression that we might see?
Karen L. Parkhill – Vice Chairman and CFO: I laughed, John, because you’re right. In terms of the margin as you know it’s extremely difficult to predict and the key variable there is excess liquidity, which can bounce the margin up and down and just very difficult for us to predict. I would say on net interest income which does drive the margin that you will continue to see a decline in the accretion benefit. We’ve mentioned that we expect to see $25 million to $30 million this year. We’ve seen $18 million so far. That means we will continue to see a decline in the next two quarters and that will impact the margin. We do expect the loan growth to offset the decline that we’ve seen on our portfolio loan yield. We do expect that to continue, but eventually vain and it’s just difficult to predict eventually when that will turn around.
Steven Alexopoulos – JPMorgan: I wanted to start regarding the slow of the reinvestment of securities in 2Q. Where are you able to reinvest today and have you started reinvesting that cash?
Karen L. Parkhill – Vice Chairman and CFO: Yeah, Steve, we have started to reinvest. When rates did rise last month, we did move back in the market to purchase securities. Today, we are seeing yields in the 220 to 250 range.
Steven Alexopoulos – JPMorgan: What duration would that be Karen?
Karen L. Parkhill – Vice Chairman and CFO: Similar duration to what we’ve got on the portfolio.
Steven Alexopoulos – JPMorgan: I’m curious what impact has the stock market in terms of awareness, the yield curve steepening. What impact does that had on confidence if any of your business customers? Have you seen anything?
Ralph W. Babb Jr. – Chairman and CEO Comerica Incorporated and Comerica Bank: Lars, you want to comment on that?
Lars C. Anderson – Vice Chairman, The Business Bank: Sure. Yeah, Steven, frankly, we haven’t really seen a significant change in terms of I would say the wealth effect in terms of business owners or I think we’ve seen more activity there, would probably be in our Wealth business. You may have noticed that our wealth loan portfolio had nice growth up almost $80 million, fiduciary fees, asset management fees continue to grow. A part of that’s frankly, we continue to enhance our collaboration, cross sale across our platform and continue to work with those customers, because if you think about it and many of our Middle Market companies that are privately owned, they’re feeling better. Their companies are deleveraging. They’re creating liquidity and they’re thinking about exit plans, and that’s where we bring expertise to the table. So, I think that, that’s one of the areas where we’ve been able to really benefit and I think that that’s showed up in our numbers, but to answer your question specifically for business customers that we would see, say in Middle Market banking, no, I haven’t seen that…
Ralph W. Babb Jr. – Chairman and CEO Comerica Incorporated and Comerica Bank: I think you’re seeing a lot of uncertainty out there, just to add to what Lars was saying and people are waiting and watching to see what’s going to happen, and they’re doing quite well throughout their current operations, but they just don’t want to invest until they know what the outlook’s going to be, including the many uncertainties that are there on particular items that will affect their earnings.
Lars C. Anderson – Vice Chairman, The Business Bank: Yeah, I’d say cautious optimism is probably a pretty good description of the way they’re feeling, but still dampened investment at this point.
Steven Alexopoulos – JPMorgan: Karen, just a final one for you. Can you help us think about the dollars of incremental expense related to the stress test now that you’ll be a CCAR bank?
Karen L. Parkhill – Vice Chairman and CFO: Yes, we will have dollars related to consulting expenses, additional headcount and some software expenses. I’m not giving out the exact dollar, but I will say that related to increased regulatory expenses, we will be spending about $15 million annually a year just related to regulatory expenses. Some of that is already in our run rate, but not all of it.