Bankers should stop thinking of small companies as difficult to serve, Comerica's Brian Haney says; "How does succeeding in small business make the retail bank stronger?"

"We'll be taking steps to offset expense pressures," CEO Curtis Farmer told analysts after the company reported an 11% year-over-year jump in costs and falling profits.

Comerica CEO Curt Farmer and CFO James Herzog as well as the company itself face a purported class action by shareholders for allegedly making false and misleading statements about the Dallas company's oversight of the Treasury Department's Direct Express program.

The rapid pace of innovation, reliance on a web of vendors and regulatory scrutiny means fourth-party risk is a more pressing consideration than in the past.

The Dallas-based company, which saw $3.7 billion of deposits withdrawn after Silicon Valley Bank failed, now predicts average deposits will fall 14% to 15% compared with last year. However, the pace of outflow is slowing, say the bank's executives.

Curt Farmer, CEO of the Dallas company, defends its management of a Treasury Department program that provides federal benefits on prepaid cards. He says a recent American Banker investigative article "ignores the fact that Comerica took steps to protect Direct Express users when it became aware that a third-party vendor had not followed program protocols for reviewing customer inquiries."

Comerica's shoddy handling of its Treasury contract to manage Social Security and veterans benefits — including outsourcing fraud claims to a vendor in Pakistan — is emblematic of how the banking industry treats the poor.

A Comerica Bank executive admitted to major failures in its handling of the Treasury Department's Direct Express program, including data and resolved fraud disputes sent to a vendor's office in Lahore, Pakistan, a "serious" contract violation.

The Dallas-based bank, whose deposit base is more commercial-focused, has seen significant outflows in deposits over the past year. But last quarter's declines were "better than we expected," and there are other signs that the environment may moderate this year, its CFO said.

The Dallas-based company is expanding in the Southeast and the Mountain West, and overhauling its digital systems, as part of a plan that executives say will pay off over a two- to five-year period.