As the Federal Reserve continues to mull cutting interest rates, Dallas-based Comerica Inc. has been pricing in those possible cuts to deposit and loan portfolios, executives said during the bank's third-quarter earnings call.
Interim CFO James Herzog said lower rates are expected to have a $35 million impact on the bank's net interest income, assuming the Fed cuts rates again in December.
President and CEO Curtis Farmer added that the low rate environment could be "prolonged."
"I do remain very positive on the U.S. economy overall on what we're hearing both from consumers and businesses, even though there is some caution out there," Farmer said. "But having said that, what we said previously and now reinforced is that we do not anticipate any change to our strategy."
Farmer also said that the bank has "reached some inflection point" on its deposit costs and has been cutting costs in certificates of deposits accounts, as the competition for deposits continues to be high. Farmer said the bank released guidance that its deposit costs will likely fall in the fourth quarter.
Separately, as the current expected credit loss accounting standard goes into effect for the bank in early 2020, the bank expects its reserves will be "plus or minus 5%," Herzog said, which will have little effect on its capital ratios.