Canadian Imperial Bank of Commerce at National Bank Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : So let's -- with that background and leading up to your current role, let's take a high-level view of the U.S. strategy now that you've been there for a couple of years. I think a couple of your peers got a bit more attention on the U.S. strategy front, so it's a good time to refresh what's going on with CIBC in the U.S. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 26, 2024 / 2:30PM, CM.TO - Canadian Imperial Bank of Commerce at National Bank Financial Services Conference

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : And if we focus a bit on the lending part of the business, which is obviously a core part of it, how would you describe your x Illinois loan growth performance. Is that what's really driving the bus? Because we've seen that from banks in the past where they're more than half of the growth is coming from outside of the core footprint, if you will.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : So as far as the -- just bottom line performance, if I look at ROE of your division, there's been, obviously, fluctuations over the past few years. What's your perspective on, or outlook for, your business generating double-digit ROEs? And then what sort of -- what steps are required to get there? What kind of time line do you have in mind? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 26, 2024 / 2:30PM, CM.TO - Canadian Imperial Bank of Commerce at National Bank Financial Services Conference

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : We'll get back -- we'll get to the wealth angle because that's obviously an interesting one. But before we do that, on the last earnings call, when you were talking about your margin performance, part of the strategy there involves shedding lower-margin clients and then bringing on higher-margin clients. I mean that kind of intuitively makes sense. How do you go about doing that? And what's the -- I guess, is there still a lot of work to be done in terms of improving the overall margin profile?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : So that sounds more of a client-specific type of interaction and evaluation. As far as the portfolio and its composition, one of your peers in the U.S. has been exiting certain activities. I'm wondering if there's a story there at all with regards to CIBC in the U.S. and how that could play into your ROE performance. Are there any activities maybe we should probably rethink that one?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Now bringing it to the Wealth business. When I think about wealth in the U.S., I think of Atlantic Trust that was bought several years ago and a fairly -- well, part of the Private Bancorp was also a wealth operation, nothing -- it wasn't too large. But how have those businesses evolved and become more integrated over the past few years? And is there -- just throwing it out there, but your Atlantic Trust, based in Atlanta, right? And is there any geographic challenge there that's notable or no?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : And I guess you and I were talking yesterday, there was a phase where all the disruption took place in the U.S. and that meant a lot more customers coming to you because they're like, I need something stable in my life, I guess. Has that sort of petered out? Or are you still... REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 26, 2024 / 2:30PM, CM.TO - Canadian Imperial Bank of Commerce at National Bank Financial Services Conference

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : And that brings up a point now. When I look at CIBC in the U.S., I see loans -- if I just look at the segment disclosure, I'm sure it's more complicated than that, but I see a loans-to-deposits ratio of 110%. If you were a stand-alone regional bank, I would say, "Oh, that's possibly a problem." Do regulators look at you -- maybe give me a bigger perspective on your funding in the U.S. and why maybe I shouldn't care about that ratio or look at it in a different context. And then also do regulators look at you differently because you're obviously not a stand-alone regional bank, you're part of a much bigger entity. And therefore, something like that doesn't really pop up as a concern for them.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : And is the wealth business a bit of an untapped source of the business? Undertapped?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Then the other deposit topic, not a huge one, I don't think, but just cross the t, dot the i sort of thing. You and every other bank in the U.S. paid a big assessment to the FDIC, and we're expecting another 1 to come. We expect -- I know you probably can't give me a specific number, but is it going to be smaller than the last one?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Now the rate cut cycle is, obviously, a huge talking point now. It seems like an on again, off again type of thing. Let's just say consensus plays out with 75 basis points of rate cuts this year or so. How do you expect your margins to evolve in that -- if that's the trajectory? Do they go down and then up? Or is it the opposite effect of what we saw when the rates were being hiked?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : So margins could be stable, but NII spread income, we should expect some growth there because I'm -- and maybe you can talk about the pent-up demand effect that your commercial borrowing base is just waiting for rates to be lower to make business decisions and cement them. How -- how do you see that latent growth, I guess, evolving over the next 1.5 years or 2? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 26, 2024 / 2:30PM, CM.TO - Canadian Imperial Bank of Commerce at National Bank Financial Services Conference

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : The other aspect of the rate cut outlook that comes to mind is an important one is the credit quality. And if -- in the U.S., obviously, if rate cuts just keep getting pushed back, is there a component of your borrowing base? Because I've seen this -- I heard this explanation that some of the impairments we're seeing today are from customers that have been just kind of getting by, and they ran out of gas, basically, and the loan becomes imperative. Is that something that could skew the impairments upwards if rate cuts get pushed out even more than what we're currently expecting?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : So that was me asking to put your Chief Risk Officer hat back on. Now I'll ask you to -- the CorpDev hat to -- dust that one off. And I ask this only because I want to feel the pulse for your M&A appetite. Your strategy sounds largely organic. Victor's communication over a number of quarters and years even has been pretty much organic, organic, organic. Is that -- what's the message now in terms of inorganic growth? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 26, 2024 / 2:30PM, CM.TO - Canadian Imperial Bank of Commerce at National Bank Financial Services Conference

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. Well, that wraps it up for us. Thanks, Shawn, for making the trip and taking the time to talk to us.