Encouraging Commercial Real Estate
Jon Arfstrom – RBC Capital Markets: Question for you on commercial real estate. Karen, you talked a little bit about declining but at a slower pace. Can you give us a little more color as to what you’re seeing there? That’s obviously the one area of your balance sheet that continues to be a bit of a drag.
Ralph W. Babb Jr. – Chairman and CEO, Comerica Incorporated and Comerica Bank: Why don’t we ask Lars to comment on that. Lars?
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Lars C. Anderson – Vice Chairman, The Business Bank: Right. Hey Jon, yeah, let me talk about that just for a second. As we have previously shared, we do see continued moderation of those balances over the next quarter or two throughout the balance of the year. We’re continuing to see our customer base access the long-term kind of permanent market and move some their assets there and that clearly is putting some downward pressure on that portfolio. But on the flip side, I would tell you, I’m very encouraged as we’ve shared in previous calls, we’ve had some very nice activity volumes that is consistent with our existing strategy, which we have not changed. It’s very much down on a footprint, you know urban market-oriented portfolio strategy, we’re working with experienced developers, many that we’ve gone through the crisis with and they are in very good condition. We’re seeing a lot of multifamily opportunities, very well capitalized in California and in Texas. So I think that we’re going to begin to see the benefits of those construction loans that are very well-capitalized as we head into next year, but we would expect some moderation in those balances throughout the balance of the year.
Jon Arfstrom – RBC Capital Markets: Then Karen just a question for you. What are you expecting on the pace, on the buyback? It looks like you still have about $250 million left. I’m just curious if something – this is something you expect to spread over the next three quarters or accelerated a bit?
Karen L. Parkhill – Vice Chairman and CFO: Yeah, you should expect it to spread over the quarters. We don’t claim to be market timers on anything including share repurchase and so we are in the market everyday that we can be repurchasing shares.
Looking at Loan Growth
Brett Rabatin – Sterne, Agee & Leach: Why don’t you ask – just given the strong loan growth that you did have in a couple of key businesses this quarter, I guess I thought the growth that you were implying would be a little stronger going forward and I realize you’re concerned somewhat about that Mortgage Warehouse possibly having some decline. Are you seeing, I guess – the number that you gave last quarter (indiscernible) can you give us that, I missed it if you gave it and then just can you talk maybe more about the pipeline in terms of the middle market, large corporate, et cetera.
Ralph W. Babb Jr. – Chairman and CEO, Comerica Incorporated and Comerica Bank: Sure, Lars?
Lars C. Anderson – Vice Chairman, The Business Bank: Yes, I’d be glad to take that Ralph. Brett, first of all, I don’t believe in the prior quarter we shared the commitments to commit, we did give a little bit of guidance into our overall commitments which through this past quarter it was the fourth consecutive quarter of commitment increases up $636 million, so I think that that’s really good. That was building on about $1 billion of expansion in our two overall commitments in the first quarter. For this quarter it was really driven by Dealer, Energy, TLS, MBF, a number of other businesses. The overall, though, as we look at the balance of year, the loan growth opportunity source, yes, we were up in commercial loans a $1 billion, $2 billion roughly or 5% as Ralph pointed out about a 20% annualized growth rate, which has been nice, our Dealer business has obviously benefited. That was up 13% quarter-over-quarter, Global Corporate Banking, Middle Market which was great to see, California really impacted that, in particular Northern California having a positive impact and Energy. So, all of those were some nice tailwinds that we had expected, and we’re doing well, I think, in those segments. I would say though as we look to the balance of the year, it’s important to keep in mind, as I’ve shared just a minute ago, we do expect some moderation in commercial real estate balances, at least for the balance of this year. Also two of our businesses with unique variability characteristics, first Mortgage Banking Finance, which at least the Mortgage Banking Association’s forecast would lead us to expect that balances and that portfolio would moderate here over the next two quarters. Then I think the other key component of that would be Dealer, which we have previously shared, Brett, that’s seasonal business. We do see inventories clear during the summer, getting ready for new models to come in. So, nothing unusual there. One last footnote, you’ve not been spending a lot of time in the markets with customer’s prospects and it’s pretty clear to me there is a rising sense of kind of uncertainty, given the fiscal clear political environment, there is a lot going on. I think there is peoples that are becoming more reticent about making investment. So, all of those would factor into, I think, our thinking for the balance of the year.
Brett Rabatin – Sterne, Agee & Leach: Then the follow-up I wanted to ask was the guidance, with the loan guidance that you have for average balances, it implies slightly lower end of period balances and the spread revenue guidance, essentially I know you don’t want to give margin guidance explicitly, but it assumes that the margin would be under some additional pressure. Question there is just on is it going to be on the securities portfolio or do you also continue to see any pressure on loan portfolios going forward? Are you seeing – do you expect more pressure on the loan portfolio yields, I guess, is easiest way to ask it?
Lars C. Anderson – Vice Chairman, The Business Bank: Yeah. First of all, I think it’s good news in terms of loan spreads. We’ve gone through a period of crisis and then a lot of competitive pressures on pricing on loans, obviously as banks have become much more active in the marketplace, you may have seen the second quarter Fed survey that outlined that loans spreads had compressed kind of about record level since 1986. So it is a competitive market. For us, we have largely held our loan spreads and I think that’s good news. and frankly, I would expect that to continue. Our value proposition, our relationship-focused approach I think is being well received in the marketplace.
Karen L. Parkhill – Vice Chairman and CFO: I would just add to that on loan yields, that in our overall portfolio we are obviously seeing higher-yielding commercial real estate assets come off the books, while higher credit quality but lower-yielding middle market types loans coming on the books, which has impacted the loan yields so far this year and we think will continue. Finally, the benefit of accretion, as we mentioned before, will be slowing as we approach the end of the year.
Ralph W. Babb Jr. – Chairman and CEO, Comerica Incorporated and Comerica Bank: Really a change in mix.