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Comerica Reports Fourth Quarter 2012 Net Income Of $130 Million

11 Percent Increase in Net Income From Third Quarter 2012 Reflects Loan and Fee Income Growth, Expense Control

Full-Year 2012 Net Income of $521 Million Up 33 Percent From 2011

10 Million Shares Repurchased in 2012 Under the Share Repurchase Program

79 Percent of 2012 Net Income Returned to Shareholders

Jan 16, 2013

DALLAS, Jan. 16, 2013 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported fourth quarter 2012 net income of $130 million, compared to $117 million for the third quarter 2012. Earnings per fully diluted share were 68 cents for the fourth quarter 2012, compared to 61 cents for the third quarter 2012.

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Full-year 2012 net income was $521 million, an increase of $128 million, or 33 percent, compared to 2011. 2012 net income included restructuring expenses associated with the acquisition of Sterling Bancshares, Inc. (Sterling) of $35 million ($22 million, after tax), compared to $75 million ($47 million, after tax) for 2011. Earnings per fully diluted share were $2.67 for 2012, compared to $2.09 for 2011.













(dollar amounts in millions, except per share data)

4th Qtr '12


3rd Qtr '12


4th Qtr '11

Net interest income (a)

$

424



$

427



$

444


Provision for credit losses

16



22



18


Noninterest income

204



197



182


Noninterest expenses (b)

427



449



479


Provision for income taxes

55



36



33








Net income

130



117



96








Net income attributable to common shares

128



116



95








Diluted income per common share

0.68



0.61



0.48








Average diluted shares (in millions)

188



191



197








Tier 1 common capital ratio (d)

10.11

%

(c)

10.35

%


10.37

%

Tangible common equity ratio (d)

9.71



10.25



10.27


(a)

Included accretion of the purchase discount on the acquired Sterling loan portfolio of $13 million ($8 million, after tax), $15 million ($9 million, after tax) and $26 million ($16 million, after tax) in the fourth quarter 2012, third quarter 2012 and fourth quarter 2011, respectively.

(b)

Included restructuring expenses of $2 million ($1 million, after tax), $25 million ($16 million, after tax) and $37 million ($23 million, after tax) in the fourth quarter 2012, third quarter 2012 and fourth quarter 2011, respectively, associated with the acquisition of Sterling.

(c)

December 31, 2012 ratio is estimated.

(d)

See Reconciliation of Non-GAAP Financial Measures.

"Loan and fee income growth combined with expense control contributed to our 11 percent increase in net income, when compared to the third quarter," said Ralph W. Babb Jr., chairman and chief executive officer. "In this slow growing national economy, we continue to benefit from our position in growth markets and industry expertise, which helped drive an increase in average total loans of $522 million, primarily reflecting an increase of $762 million, or 3 percent, in commercial loans. We continue to capitalize on opportunities by allocating resources to faster growing markets and segments.

"Average total deposits increased $1.4 billion in the fourth quarter to a record $51.3 billion, primarily reflecting an increase of $1.3 billion, or 6 percent, in noninterest-bearing deposits."

"Excluding accretion, net interest income was stable in the fourth quarter, and noninterest income increased $7 million to $204 million, primarily due to increases in customer-driven categories. Credit quality continued to be strong and our capital position remains a source of strength to support our growth. We repurchased 3.1 million shares in the fourth quarter and 10.1 million shares for the full-year 2012 under our share repurchase program. Combined with dividends, we returned 79 percent of 2012 net income to shareholders.

"Looking ahead, we believe our focus on relationships, growth markets, industry expertise and expense management should assist us in increasing returns to shareholders and provide us the momentum that will not only carry us through an extended low-rate environment, but enable us to succeed in it, too."

Fourth Quarter and Full-Year 2012 Overview

Fourth Quarter 2012 Compared to Third Quarter 2012

  • Average total loans increased $522 million, or 1 percent, to $44.1 billion, primarily reflecting an increase of $762 million, or 3 percent, in commercial loans, partially offset by a decrease of $241 million, or 2 percent, in commercial real estate loans (commercial mortgage and real estate construction loans). The increase in commercial loans was primarily driven by increases in National Dealer Services, Energy, general Middle Market and Mortgage Banker Finance, partially offset by a decrease in Corporate. Period-end loans increased $1.9 billion, or 4 percent, to $46.1 billion, primarily reflecting an increase of $2.1 billion, or 7 percent, in commercial loans, partially offset by a decrease of $239 million, or 2 percent, in commercial real estate loans.
  • Average total deposits increased $1.4 billion, to $51.3 billion, primarily reflecting an increase of $1.3 billion, or 6 percent, in noninterest-bearing deposits. Period-end deposits increased $2.2 billion, to $52.2 billion.
  • Net interest income was $424 million in the fourth quarter 2012 compared to $427 million in the third quarter 2012. Excluding the $2 million decrease in the accretion of the purchase discount on the acquired Sterling loan portfolio, net interest income was stable.
  • Strong credit quality continued in the fourth quarter 2012. Nonaccrual loans decreased $146 million, to $519 million at December 31, 2012. Net credit-related charge-offs decreased $6 million to $37 million, or 0.34 percent of average loans, in the fourth quarter 2012. The provision for credit losses was $16 million in the fourth quarter 2012 compared to $22 million in the third quarter 2012.
  • Noninterest income increased $7 million to $204 million in the fourth quarter 2012 compared to $197 million for the third quarter 2012. The increase was primarily due to increases in customer driven categories.
  • Noninterest expenses decreased $22 million to $427 million in the fourth quarter 2012, compared to $449 million in the third quarter 2012. Fourth quarter 2012 included final restructuring expenses of $2 million related to the Sterling acquisition, a decrease of $23 million compared to the third quarter 2012.
  • Comerica repurchased 3.1 million shares of common stock under the share repurchase program in the fourth quarter 2012. Combined with the dividend, $121 million, or 93 percent of net income, was returned to shareholders in the fourth quarter.

Full-Year 2012 Compared to Full-Year 2011

  • Net income of $521 million for 2012 increased $128 million, or 33 percent, compared to 2011.
  • Average total loans increased $3.2 billion, or 8 percent, to $43.3 billion in 2012, in part due to the acquisition of Sterling and reflecting an increase of $4.0 billion, or 18 percent, in commercial loans, partially offset by a decrease of $636 million in commercial real estate loans. The increase in commercial loans was primarily driven by increases in Energy, Mortgage Banker Finance, National Dealer Services, general Middle Market, Technology and Life Sciences, and Corporate. Period-end total loans increased $3.4 billion, or 8 percent, to $46.1 billion from year-end 2011 to year-end 2012.
  • Average total deposits increased $5.8 billion, or 13 percent, to $49.5 billion in 2012, in part due to the acquisition of Sterling. Period-end total deposits increased $4.4 billion, or 9 percent.
  • Net interest income increased $75 million, or 5 percent, primarily due to an increase in average earning assets of $5.4 billion and an $18 million increase in the accretion of the purchase discount on the acquired Sterling loan portfolio, partially offset by a decrease in yields.
  • Credit quality improved significantly. The provision for credit losses declined $65 million to $79 million in 2012, compared to 2011. Net credit-related charge-offs decreased $158 million to $170 million.
  • Noninterest income increased $26 million compared to 2011, primarily in customer-driven categories.
  • Noninterest expenses decreased $14 million. 2012 included Sterling-related merger and restructuring charges of $35 million, compared to $75 million in 2011. Salaries and employee benefits expense increased $43 million, primarily due to increased pension expense and the impact of Sterling.
  • 10.1 million shares were repurchased in 2012, which, combined with dividends, returned 79 percent of 2012 net income to shareholders.

Net Interest Income














(dollar amounts in millions)

4th Qtr '12


3rd Qtr '12


4th Qtr '11

Net interest income

$

424



$

427



$

444








Net interest margin

2.87

%


2.96

%


3.19

%







Selected average balances:






Total earning assets

$

59,276



$

57,801



$

55,676


Total loans

44,119



43,597



41,454


Total investment securities

10,250



9,791



9,781


Federal Reserve Bank deposits (excess liquidity)

4,638



4,160



4,216














Total deposits

51,292



49,857



47,779


Total noninterest-bearing deposits

22,758



21,469



19,176




  • Net interest income of $424 million in the fourth quarter 2012 decreased $3 million compared to the third quarter 2012.
    • An increase in loan volumes increased net interest income by $4 million.
    • The continued shift in the loan portfolio mix reduced net interest income $4 million. The change in loan portfolio mix primarily reflected a decrease in higher-yielding commercial real estate loans, an increase in lower-yielding commercial loans, the maturity of higher-yielding fixed-rate loans and positive credit quality migration throughout the loan portfolio.
    • A decline in LIBOR reduced net interest income $2 million.
    • Accretion of the purchase discount on the acquired Sterling loan portfolio decreased $2 million to $13 million in the fourth quarter 2012, compared to $15 million in the third quarter 2012.
    • Interest earned on investment securities available-for-sale decreased $2 million, primarily as a result of lower reinvestment yields on mortgage-backed investment securities, partially offset by an increase in volume.
    • Funding costs decreased $1 million due to lower deposit rates. In addition, third quarter 2012 included a $2 million negative residual value adjustment to assets in the leasing portfolio.
  • Average earning assets increased $1.5 billion in the fourth quarter 2012, compared to the third quarter 2012, primarily reflecting a $522 million increase in average loans, a $478 million increase in excess liquidity and a $459 million increase in average investment securities available-for-sale.
  • Average deposits increased $1.4 billion in the fourth quarter 2012, compared to the third quarter 2012, primarily due to a $1.3 billion increase in average noninterest-bearing deposits. The rate paid on total average interest-bearing deposits decreased 2 basis points, to 22 basis points.
  • The net interest margin of 2.87 percent decreased 9 basis points compared to the third quarter 2012. The net interest margin was negatively impacted by the continued shift in mix in the loan portfolio (4 basis points), lower yields on mortgage-backed securities (3 basis points), the decline in LIBOR (2 basis points), the increase in excess liquidity (2 basis points), and lower accretion on the acquired Sterling loan portfolio (1 basis point). The third quarter negative residual value adjustment (2 basis points) and lower funding costs (1 basis point) partially offset the decline.

Noninterest Income

Noninterest income increased $7 million to $204 million for the fourth quarter 2012 compared to $197 million for the third quarter 2012. The increase was primarily due to increases in customer driven categories, including increases in commercial lending fees of $3 million, customer derivative income of $3 million and fiduciary income of $3 million, partially offset by a decrease in letter of credit fees of $2 million.

Noninterest Expenses

Noninterest expenses decreased $22 million to $427 million in the fourth quarter 2012, compared to $449 million in the third quarter 2012. The decrease was primarily due to decreases of $23 million in restructuring expenses, $4 million in legal fees and $2 million in employee benefits expense, partially offset by an increase of $4 million in severance expense. In addition, noninterest expenses were reduced by $6 million in the third quarter 2012 due to gains on sales of assets. Restructuring charges related to the Sterling acquisition are complete.

Provision for Income Taxes

The provision for income taxes was $55 million in the fourth quarter 2012, compared to $36 million in the third quarter 2012. The $19 million increase in the provision for income taxes reflected the increase in income before income taxes, as well as adjustments for certain discrete state tax items totaling $5 million in the fourth quarter 2012. In addition, the third quarter 2012 provision for income taxes included a benefit of $4 million from interest on tax refunds, net of tax.

Credit Quality

"Credit quality continued to be strong in the fourth quarter, with lower nonaccrual loans, watch list loans and provision for credit losses," said Babb. "With net charge-offs of 34 basis points, we are well within our historically normal range. We have demonstrated throughout the cycle that we can effectively manage credit."













(dollar amounts in millions)

4th Qtr '12


3rd Qtr '12


4th Qtr '11

Net credit-related charge-offs

$

37



$

43



$

60


Net credit-related charge-offs/Average total loans

0.34

%


0.39

%


0.57

%







Provision for credit losses

$

16



$

22



$

18








Nonperforming loans (a)

541



692



887


Nonperforming assets (NPAs) (a)

587



755



981


NPAs/Total loans and foreclosed property

1.27

%


1.71

%


2.29

%







Loans past due 90 days or more and still accruing

$

23



$

36



$

58








Allowance for loan losses

629



647



726


Allowance for credit losses on lending-related commitments (b)

32



35



26


Total allowance for credit losses

661



682



752








Allowance for loan losses/Period-end total loans

1.37

%


1.46

%


1.70

%

Allowance for loan losses/Average total loans

1.43



1.48



1.75


Allowance for loan losses/Nonperforming loans

116



94



82





(a)

Excludes loans acquired with credit impairment.


(b)

Included in "Accrued expenses and other liabilities" on the consolidated balance sheets.

  • Internal watch list loans continued the downward trend, declining $565 million in the fourth quarter 2012, to $3.1 billion at December 31, 2012. Nonperforming assets decreased $168 million to $587 million at December 31, 2012.
  • During the fourth quarter 2012, $36 million of borrower relationships over $2 million were transferred to nonaccrual status, an increase of $1 million from the third quarter 2012.

Balance Sheet and Capital Management

Total assets and common shareholders' equity were $65.4 billion and $6.9 billion, respectively, at December 31, 2012, compared to $63.3 billion and $7.1 billion, respectively, at September 30, 2012. There were approximately 188 million common shares outstanding at December 31, 2012. Comerica repurchased $93 million of common stock (3.1 million shares) under the share repurchase program during the fourth quarter 2012. Combined with the dividend of $0.15 per share in the fourth quarter 2012, share repurchases and dividends returned 93 percent of fourth quarter 2012 net income to shareholders. Common shareholders' equity also reflected a $160 million decline in accumulated other comprehensive income, net of tax, including temporary unrealized losses on investment securities available-for-sale of $49 million and a net decline of $111 million due to actuarial losses as a result of changes in defined benefit plan assumptions, net of amortization. For full-year 2012, share repurchases totaled $304 million (10.1 million shares), which, combined with dividends, returned 79 percent of 2012 net income to shareholders.

Comerica's tangible common equity ratio was 9.71 percent at December 31, 2012, a decrease of 54 basis points from September 30, 2012. The estimated Tier 1 common capital ratio decreased 24 basis points, to 10.11 percent at December 31, 2012, from September 30, 2012. The estimated Tier 1 common ratio under fully phased-in Basel III (as proposed) was 9.1 percent at December 31, 2012.

Full-Year 2013 Outlook

For 2013, management expects the following compared to 2012, assuming a continuation of the current slow growing economic environment:

  • Continued growth in average loans at a slower pace, with economic uncertainty impacting demand and a continued focus on maintaining pricing and structure discipline in a competitive environment.
  • Lower net interest income, reflecting both a decline of $40 million to $50 million in purchase accounting accretion and the effect of continued low rates. Loan growth should partially offset the impact of low rates on loans and securities.
  • Provision for credit losses stable, reflecting loan growth offset by a decline in nonperforming loans and net charge-offs.
  • Increase in customer-driven noninterest income, reflecting continued cross-sell initiatives and selective pricing adjustments. (Outlook does not include expectations for non-customer driven income).
  • Lower noninterest expense, reflecting further cost savings due to tight expense control and no restructuring expenses.
  • Income tax expense to approximate 36.5 percent of pre-tax income less approximately $66 million in tax benefits.

Business Segments

Comerica's operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank and Wealth Management. The Finance Division is also reported as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at December 31, 2012 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses fourth quarter 2012 results compared to third quarter 2012.

The following table presents net income (loss) by business segment.



















(dollar amounts in millions)

4th Qtr '12


3rd Qtr '12


4th Qtr '11

Business Bank

$

212


90

%


$

211


84

%


$

201


94

%

Retail Bank

8


3



10


8



10


4


Wealth Management

16


7



18


8



5


2



236


100

%


239


100

%


216


100

%

Finance

(105)




(103)




(94)



Other (a)

(1)




(19)




(26)



    Total

$

130




$

117




$

96



(a) 

 Includes items not directly associated with the three major business segments or the Finance Division.

Business Bank














(dollar amounts in millions)

4th Qtr '12



3rd Qtr '12



4th Qtr '11


Net interest income (FTE)

$

393



$

386



$

381


Provision for credit losses

8



15



(6)


Noninterest income

79



76



73


Noninterest expenses

149



144



162


Net income

212



211



201








Net credit-related charge-offs

26



27



32








Selected average balances:






Assets

35,362



34,863



32,151


Loans

34,325



33,856



31,260


Deposits

26,051



25,143



23,296




  • Average loans increased $469 million, primarily reflecting increases in Middle Market and Mortgage Banker Finance, partially offset by decreases in Corporate and Commercial Real Estate. The increase in Middle Market was primarily due to increases in National Dealer Services, Energy and general Middle Market.
  • Average deposits increased $908 million, primarily reflecting increases in Corporate, Middle Market and Mortgage Banker Finance. The increase in Middle Market was primarily due to an increase in the Financial Services Division.
  • Net interest income increased $7 million, primarily due to a decrease in net funds transfer pricing (FTP) charges on loans and an increase in loan volume, partially offset by a decrease in accretion on the acquired Sterling loan portfolio.
  • The provision for credit losses decreased $7 million, primarily reflecting decreases in Corporate and Commercial Real Estate, partially offset by an increase in Middle Market. The increase in Middle Market primarily reflected increases in the Environmental Services Group and general Middle Market.
  • Noninterest income increased $3 million, primarily due to increases in commercial lending fees and customer derivative income, partially offset by a decrease in letter of credit fees.
  • Noninterest expenses increased $5 million, primarily due to increases in salaries expenses and net allocated corporate overhead expenses, partially offset by a decrease in legal expenses. The increase in salaries primarily reflected increases in severance and business unit incentives. In addition, noninterest expenses were reduced in the third quarter due to gains on sales of assets.

Retail Bank














(dollar amounts in millions)

4th Qtr '12



3rd Qtr '12



4th Qtr '11


Net interest income (FTE)

$

156



$

161



$

176


Provision for credit losses

7



6



15


Noninterest income

43



41



35


Noninterest expenses

181



181



182


Net income (loss)

8



10



10








Net credit-related charge-offs

6



13



16








Selected average balances:






Assets

5,952



5,964



6,250


Loans

5,255



5,265



5,571


Deposits

20,910



20,682



20,715





  • Average loans decreased $10 million, primarily due to a decrease in Personal Banking.|
  • Average deposits increased $228 million, primarily due to an increase in Small Business.
  • Net interest income decreased $5 million, primarily due to a decrease in net FTP funding credits on deposits and lower accretion on the acquired Sterling loan portfolio.
  • Noninterest income increased $2 million, primarily due to an increase in customer derivative income.

Wealth Management














(dollar amounts in millions)

4th Qtr '12



3rd Qtr '12



4th Qtr '11


Net interest income (FTE)

$

47



$

47



$

47


Provision for credit losses

2



3



11


Noninterest income

65



62



55


Noninterest expenses

84



78



83


Net income

16



18



5








Net credit-related charge-offs

5



3



12








Selected average balances:






Assets

4,686



4,566



4,672


Loans

4,539



4,476



4,623


Deposits

3,798



3,667



3,400





  • Average loans increased $63 million, primarily due to an increase in Private Banking. |
  • Average deposits increased $131 million, primarily due to increases in Private Banking.
  • Noninterest income increased $3 million, primarily the result of increases in fiduciary income and net securities gains.
  • Noninterest expenses increased $6 million, primarily as a result of an operational loss.

The decrease in the net loss of $18 million in the Other segment primarily reflected the after-tax impact of the decrease in restructuring expenses in the fourth quarter 2012, compared to the third quarter 2012.

Geographic Market Segments

The geographic market segments were realigned in the fourth quarter 2012 to reflect Comerica's three largest geographic markets: Michigan, California and Texas. Other Markets includes Florida, Arizona, the International Finance division and businesses that have a significant presence outside of the three primary geographic markets. The tables below present the geographic market results based on the methodologies in effect at December 31, 2012 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses fourth quarter 2012 results compared to third quarter 2012.

The following table presents net income (loss) by market segment.



















(dollar amounts in millions)

4th Qtr '12


3rd Qtr '12


4th Qtr '11

Michigan

$

74


31

%


$

71


30

%


$

54


25

%

California

64


27



70


29



67


31


Texas

45


19



45


19



55


26


Other Markets

53


23



53


22



40


18



236


100

%


239


100

%


216


100

%

Finance & Other (a)

(106)




(122)




(120)



    Total

$

130




$

117




$

96



(a)

 Includes items not directly associated with the geographic markets.

Michigan Market














(dollar amounts in millions)

4th Qtr '12



3rd Qtr '12



4th Qtr '11


Net interest income (FTE)

$

193



$

194



$

202


Provision for credit losses

(9)



2



20


Noninterest income

98



95



85


Noninterest expenses

183



175



185


Net income

74



71



54








Net credit-related charge-offs

1



12



32








Selected average balances:






Assets

13,782



13,784



13,976


Loans

13,415



13,475



13,725


Deposits

20,019



19,628



19,076




  • Average loans decreased $60 million, primarily due to decreases in Corporate, Personal Banking and Commercial Real Estate, partially offset by an increase in Middle Market, primarily in National Dealer Services.
  • Average deposits increased $391 million, primarily due to increases in Corporate, Middle Market and Small Business.
  • The provision for credit losses decreased $11 million, primarily due to a decrease in general Middle Market.
  • Noninterest income increased $3 million, primarily reflecting increases in customer derivative income and commercial lending fees.
  • Noninterest expenses increased $8 million, primarily due to an operational loss and third quarter 2012 gains on sales of assets that reduced noninterest expenses.

California Market














(dollar amounts in millions)

4th Qtr '12



3rd Qtr '12



4th Qtr '11


Net interest income (FTE)

$

180



$

178



$

166


Provision for credit losses

6



5



(12)


Noninterest income

35



34



32


Noninterest expenses

100



98



101


Net income

64



70



67








Net credit-related charge-offs

12



11



5








Selected average balances:






Assets

13,551



13,173



11,959


Loans

13,275



12,915



11,743


Deposits

15,457



14,965



13,472




  • Average loans increased $360 million, primarily due to an increase in Middle Market, primarily reflecting an increase in National Dealer Services.
  • Average deposits increased $492 million, primarily due to increases in Middle Market and Private Banking. The increase in Middle Market was primarily due to an increase in general Middle Market.
  • Net interest income increased $2 million, primarily due to an increase in average loan balances and a decrease in net FTP funding charges.
  • The provision for loan losses increased $1 million, primarily due to an increase in Middle Market, partially offset by decreases in Commercial Real Estate and Corporate.
  • Noninterest expenses increased $2 million, primarily due to nominal increases in several categories, partially offset by a decrease in legal expenses.

Texas Market














(dollar amounts in millions)

4th Qtr '12



3rd Qtr '12



4th Qtr '11


Net interest income (FTE)

$

138



$

139



$

158


Provision for credit losses

9



10



8


Noninterest income

31



30



26


Noninterest expenses

90



89



89


Net income

45



45



55








Net credit-related charge-offs

5



7



4








Selected average balances:






Assets

10,555



10,327



9,712


Loans

9,818



9,585



8,952


Deposits

9,809



9,941



10,333




  • Average loans increased $233 million, primarily due to an increase in Middle Market. The increase in Middle Market was primarily due to an increase in Energy.
  • Average deposits decreased $132 million, primarily reflecting decreases in Middle Market and Corporate, partially offset by increases in Small Business and Personal Banking.
  • Net interest income decreased $1 million, primarily due to a decrease in accretion on the acquired Sterling loan portfolio.
  • The provision for credit losses decreased $1 million, primarily due to a decrease in Private Banking.

Conference Call and Webcast

Comerica will host a conference call to review fourth quarter 2012 financial results at 7 a.m. CT Wednesday, January 16, 2013. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 80972031). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A telephone replay will be available approximately two hours following the conference call through January 31, 2013. The conference call replay can be accessed by calling (855) 859-2056 or (404) 537-3406 (event ID No. 80972031). A replay of the Webcast can also be accessed via Comerica's "Investor Relations" page at www.comerica.com.

Comerica Incorporated is a financial services company headquartered in Dallas, Texas, and strategically aligned by three major business segments: The Business Bank, The Retail Bank and Wealth Management. Comerica focuses on relationships and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico.

This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Comerica's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as a reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Forward-looking Statements

Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "anticipates," "believes," "contemplates," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "opportunity," "initiative," "outcome," "continue," "remain," "maintain," "on course," "trend," "objective," "looks forward" and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "might," "can," "may" or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica's management based on information known to Comerica's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica's management for future or past operations, products or services, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries, estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in general economic, political or industry conditions; changes in monetary and fiscal policies, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; changes in Comerica's credit rating; the interdependence of financial service companies; changes in regulation or oversight; unfavorable developments concerning credit quality; the acquisition of Sterling Bancshares, Inc., or any future acquisitions; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers; the implementation of Comerica's strategies and business models, including the implementation of revenue enhancements and efficiency improvements; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; operational difficulties, failure of technology infrastructure or information security incidents; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; changes in accounting standards and the critical nature of Comerica's accounting policies. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. In particular, please refer to "Item 1A. Risk Factors" beginning on page 12 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2011 and "Item 1A. Risk Factors" beginning on page 73 of Comerica's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.


















CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

Comerica Incorporated and Subsidiaries









Three Months Ended


Years Ended


December 31,

September 30,

December 31,


December 31,

(in millions, except per share data)

2012

2012

2011


2012

2011

PER COMMON SHARE AND COMMON STOCK DATA







Diluted net income

$

0.68


$

0.61


$

0.48



$

2.67


$

2.09


Cash dividends declared

0.15


0.15


0.10



0.55


0.40


Common shareholders' equity (at period end)

36.87


37.01


34.80





Tangible common equity (at period end) (a)

33.38


33.56


31.42












Average diluted shares (in thousands)

187,954


191,492


196,729



192,473


186,168


KEY RATIOS







Return on average common shareholders' equity

7.36

%

6.67

%

5.51

%


7.43

%

6.18

%

Return on average assets

0.81


0.74


0.63



0.83


0.69


Tier 1 common capital ratio (a) (b)

10.11


10.35


10.37





Tier 1 risk-based capital ratio (b)

10.11


10.35


10.41





Total risk-based capital ratio (b)

13.11


13.67


14.25





Leverage ratio (b)

10.52


10.73


10.92





Tangible common equity ratio (a)

9.71


10.25


10.27





AVERAGE BALANCES







Commercial loans

$

27,462


$

26,700


$

23,515



$

26,224


$

22,208


Real estate construction loans:







Commercial Real Estate business line (c)

1,033


999


1,189



1,031


1,429


Other business lines (d)

266


390


430



359


414


Total real estate construction loans

1,299


1,389


1,619



1,390


1,843


Commercial mortgage loans:







Commercial Real Estate business line (c)

1,939


2,140


2,552



2,259


2,217


Other business lines (d)

7,580


7,530


7,836



7,583


7,808


Total commercial mortgage loans

9,519


9,670


10,388



9,842


10,025


Lease financing

839


852


919



864


950


International loans

1,314


1,302


1,128



1,272


1,191


Residential mortgage loans

1,525


1,488


1,591



1,505


1,580


Consumer loans

2,161


2,196


2,294



2,209


2,278


Total loans

44,119


43,597


41,454



43,306


40,075









Earning assets

59,276


57,801


55,676



57,484


52,121


Total assets

64,559


63,276


61,045



62,855


56,917


Noninterest-bearing deposits

22,758


21,469


19,176



21,004


16,994


Interest-bearing deposits

28,534


28,388


28,603



28,536


26,768


Total deposits

51,292


49,857


47,779



49,540


43,762









Common shareholders' equity

7,062


7,045


6,947



7,012


6,351


NET INTEREST INCOME







Net interest income (fully taxable equivalent basis)

$

425


$

428


$

445



$

1,731


$

1,657


Fully taxable equivalent adjustment

1


1


1



3


4


Net interest margin (fully taxable equivalent basis)

2.87

%

2.96

%

3.19

%


3.03

%

3.19

%

CREDIT QUALITY







Nonaccrual loans

$

519


$

665


$

860





Reduced-rate loans

22


27


27





Total nonperforming loans (e)

541


692


887





Foreclosed property

46


63


94





Total nonperforming assets (e)

587


755


981












Loans past due 90 days or more and still accruing

23


36


58












Gross loan charge-offs

60


59


85



$

245


$

423


Loan recoveries

23


16


25



75


95


Net loan charge-offs

37


43


60



170


328









Allowance for loan losses

629


647


726





Allowance for credit losses on lending-related commitments

32


35


26





Total allowance for credit losses

661


682


752












Allowance for loan losses as a percentage of total loans

1.37

%

1.46

%

1.70

%




Net loan charge-offs as a percentage of average total loans (f)

0.34


0.39


0.57



0.39

%

0.82

%

Nonperforming assets as a percentage of total loans and foreclosed property (e)

1.27


1.71


2.29





Allowance for loan losses as a percentage of total nonperforming loans

116


94


82








(a)

See Reconciliation of Non-GAAP Financial Measures.


(b)

December 31, 2012 ratios are estimated.

(c)

Primarily loans to real estate investors and developers.

(d)

Primarily loans secured by owner-occupied real estate.

(e)

Excludes loans acquired with credit-impairment.

(f)

Lending-related commitment charge-offs were zero in all periods presented.












CONSOLIDATED BALANCE SHEETS

Comerica Incorporated and Subsidiaries







December 31,

September 30,

December 31,

(in millions, except share data)

2012

2012

2011


(unaudited)

(unaudited)


ASSETS




Cash and due from banks

$

1,395


$

933


$

982






Federal funds sold

100




Interest-bearing deposits with banks

3,039


3,005


2,574


Other short-term investments

125


146


149






Investment securities available-for-sale

10,297


10,569


10,104






Commercial loans

29,513


27,460


24,996


Real estate construction loans

1,240


1,392


1,533


Commercial mortgage loans

9,472


9,559


10,264


Lease financing

859


837


905


International loans

1,293


1,277


1,170


Residential mortgage loans

1,527


1,495


1,526


Consumer loans

2,153


2,174


2,285


Total loans

46,057


44,194


42,679


Less allowance for loan losses

(629)


(647)


(726)


Net loans

45,428


43,547


41,953






Premises and equipment

622


625


675


Accrued income and other assets

4,353


4,489


4,571


Total assets

$

65,359


$

63,314


$

61,008






LIABILITIES AND SHAREHOLDERS' EQUITY




Noninterest-bearing deposits

$

23,279


$

21,753


$

19,764






Money market and interest-bearing checking deposits

21,284


20,407


20,311


Savings deposits

1,606


1,589


1,524


Customer certificates of deposit

5,531


5,742


5,808


Foreign office time deposits

502


486


348


Total interest-bearing deposits

28,923


28,224


27,991


Total deposits

52,202


49,977


47,755






Short-term borrowings

110


63


70


Accrued expenses and other liabilities

1,385


1,450


1,371


Medium- and long-term debt

4,720


4,740


4,944


Total liabilities

58,417


56,230


54,140






Common stock - $5 par value:




Authorized - 325,000,000 shares




Issued - 228,164,824 shares

1,141


1,141


1,141


Capital surplus

2,162


2,153


2,170


Accumulated other comprehensive loss

(413)


(253)


(356)


Retained earnings

5,931


5,831


5,546


Less cost of common stock in treasury - 39,889,610 shares at 12/31/12, 36,790,174 shares at 9/30/12 and 30,831,076 shares at 12/31/11

(1,879)


(1,788)


(1,633)


Total shareholders' equity

6,942


7,084


6,868


Total liabilities and shareholders' equity

$

65,359


$

63,314


$

61,008

















CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries








Three Months Ended


Years Ended


December 31,


December 31,

(in millions, except per share data)

2012

2011


2012

2011

INTEREST INCOME






Interest and fees on loans

$

398


$

415



$

1,617


$

1,564


Interest on investment securities

55


63



234


233


Interest on short-term investments

3


3



12


12


Total interest income

456


481



1,863


1,809


INTEREST EXPENSE






Interest on deposits

16


21



70


90


Interest on medium- and long-term debt

16


16



65


66


Total interest expense

32


37



135


156


Net interest income

424


444



1,728


1,653


Provision for credit losses

16


18



79


144


Net interest income after provision for credit losses

408


426



1,649


1,509


NONINTEREST INCOME






Service charges on deposit accounts

52


52



214


208


Fiduciary income

42


36



158


151


Commercial lending fees

25


23



96


87


Letter of credit fees

17


18



71


73


Card fees

12


11



47


58


Foreign exchange income

9


10



38


40


Bank-owned life insurance

9


10



39


37


Brokerage fees

5


5



19


22


Net securities gains (losses)

1


(4)



12


14


Other noninterest income

32


21



124


102


Total noninterest income

204


182



818


792


NONINTEREST EXPENSES






Salaries

196


205



778


770


Employee benefits

59


52



240


205


Total salaries and employee benefits

255


257



1,018


975


Net occupancy expense

42


47



163


169


Equipment expense

15


17



65


66


Outside processing fee expense

28


27



107


101


Software expense

23


23



90


88


Merger and restructuring charges

2


37



35


75


FDIC insurance expense

9


8



38


43


Advertising expense

6


7



27


28


Other real estate expense

3


3



9


22


Other noninterest expenses

44


53



205


204


Total noninterest expenses

427


479



1,757


1,771


Income before income taxes

185


129



710


530


Provision for income taxes

55


33



189


137


NET INCOME

130


96



521


393


Less income allocated to participating securities

2


1



6


4


Net income attributable to common shares

$

128


$

95



$

515


$

389


Earnings per common share:






Basic

$

0.68


$

0.48



$

2.68


$

2.11


Diluted

0.68


0.48



2.67


2.09








Comprehensive income (loss)

(30)


(30)



464


426








Cash dividends declared on common stock

28


20



106


75


Cash dividends declared per common share

0.15


0.10



0.55


0.40































CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries














Fourth

Third

Second

First

Fourth


Fourth Quarter 2012 Compared To:


Quarter

Quarter

Quarter

Quarter

Quarter


Third Quarter 2012


Fourth Quarter 2011

(in millions, except per share data)

2012

2012

2012

2012

2011


Amount

Percent


Amount

Percent

INTEREST INCOME












Interest and fees on loans

$

398


$

400


$

408


$

411


$

415



$

(2)


%


$

(17)


(4)

%

Interest on investment securities

55


57


59


63


63



(2)


(2)



(8)


(12)


Interest on short-term investments

3


3


3


3


3








Total interest income

456


460


470


477


481



(4)


(1)



(25)


(5)


INTEREST EXPENSE












Interest on deposits

16


17


18


19


21



(1)


(6)



(5)


(23)


Interest on medium- and long-term debt

16


16


17


16


16








Total interest expense

32


33


35


35


37



(1)


(3)



(5)


(13)


Net interest income

424


427


435


442


444



(3)




(20)


(4)


Provision for credit losses

16


22


19


22


18



(6)


(25)



(2)


(7)


Net interest income after provision

for credit losses

408


405


416


420


426



3


1



(18)


(4)


NONINTEREST INCOME












Service charges on deposit accounts

52


53


53


56


52



(1)


(2)





Fiduciary income

42


39


39


38


36



3


4



6


14


Commercial lending fees

25


22


24


25


23



3


19



2


8


Letter of credit fees

17


19


18


17


18



(2)


(8)



(1)


(10)


Card fees

12


12


12


11


11






1


10


Foreign exchange income

9


9


10


10


10






(1)


(13)


Bank-owned life insurance

9


10


10


10


10



(1)


(7)



(1)


(8)


Brokerage fees

5


5


4


5


5








Net securities gains (losses)

1



6


5


(4)



1


N/M



5


N/M


Other noninterest income

32


28


35


29


21



4


5



11


55


Total noninterest income

204


197


211


206


182



7


4



22


12


NONINTEREST EXPENSES












Salaries

196


192


189


201


205



4


3



(9)


(5)


Employee benefits

59


61


61


59


52



(2)


(4)



7


13


Total salaries and employee benefits

255


253


250


260


257



2


1



(2)


(1)


Net occupancy expense

42


40


40


41


47



2


4



(5)


(10)


Equipment expense

15


17


16


17


17



(2)


(6)



(2)


(11)


Outside processing fee expense

28


27


26


26


27



1


7



1


6


Software expense

23


23


21


23


23








Merger and restructuring charges

2


25


8



37



(23)


(94)



(35)


(95)


FDIC insurance expense

9


9


10


10


8






1


6


Advertising expense

6


7


7


7


7



(1)


(16)



(1)


(15)


Other real estate expense

3


2



4


3



1


36





Other noninterest expenses

44


46


55


60


53



(2)


(2)



(9)


(16)


Total noninterest expenses

427


449


433


448


479



(22)


(5)



(52)


(11)


Income before income taxes

185


153


194


178


129



32


20



56


43


Provision for income taxes

55


36


50


48


33



19


50



22


64


NET INCOME

130


117


144


130


96



13


11



34


36


Less income allocated to participating securities

2


1


2


1


1



1


12



1


82


Net income attributable to common shares

$

128


$

116


$

142


$

129


$

95



$

12


11

%


$

33


36

%

Earnings per common share:












Basic

$

0.68


$

0.61


$

0.73


$

0.66


$

0.48



$

0.07


11

%


$

0.20


42

%

Diluted

0.68


0.61


0.73


0.66


0.48



0.07


11



0.20


42














Comprehensive income (loss)

(30)


165


169


160


(30)



(195)


N/M

















Cash dividends declared on common stock

28


29


29


20


20



(1)


(1)



8


43


Cash dividends declared per common share

0.15


0.15


0.15


0.10


0.10






0.05


50


N/M - Not Meaningful



















ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)



Comerica Incorporated and Subsidiaries









2012


2011

(in millions)

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr


4th Qtr








Balance at beginning of period

$

647


$

667


$

704


$

726



$

767









Loan charge-offs:







Commercial

42


19


26


25



28


Real estate construction:







Commercial Real Estate business line (a)

1


2


2


2



4


Other business lines (b)



1




1


Total real estate construction

1


2


3


2



5


Commercial mortgage:







Commercial Real Estate business line (a)

5


12


16


13



17


Other business lines (b)

6


13


11


13



24


Total commercial mortgage

11


25


27


26



41


International


1



2



2


Residential mortgage

2


6


3


2



2


Consumer

4


6


5


5



7


Total loan charge-offs

60


59


64


62



85









Recoveries on loans previously charged-off:







Commercial

13


7


10


9



11


Real estate construction

1


3


1


1



4


Commercial mortgage

6


5


4


3



9


International

1




1




Residential mortgage

1




1




Consumer

1


1


4


2



1


Total recoveries

23


16


19


17



25


Net loan charge-offs

37


43


45


45



60


Provision for loan losses

19


23


8


23



19


Balance at end of period

$

629


$

647


$

667


$

704



$

726









Allowance for loan losses as a percentage of total loans

1.37

%

1.46

%

1.52

%

1.64

%


1.70

%








Net loan charge-offs as a percentage of average total loans

0.34


0.39


0.42


0.43



0.57


(a)

Primarily charge-offs of loans to real estate investors and developers.

(b)

Primarily charge-offs of loans secured by owner-occupied real estate.



















ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited)

Comerica Incorporated and Subsidiaries









2012


2011

(in millions)

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr


4th Qtr








Balance at beginning of period

$

35


$

36


$

25


$

26



$

27


Add: Provision for credit losses on lending-related commitments

(3)


(1)


11


(1)



(1)


Balance at end of period

$

32


$

35


$

36


$

25



$

26



























NONPERFORMING ASSETS (unaudited)

Comerica Incorporated and Subsidiaries









2012


2011

(in millions)

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr


4th Qtr








SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS




Nonaccrual loans:







Business loans:







Commercial

$

103


$

154


$

175


$

205



$

237


Real estate construction:







Commercial Real Estate business line (a)

30


45


60


77



93


Other business lines (b)

3


6


9


8



8


Total real estate construction

33


51


69


85



101


Commercial mortgage: