Comerica Reports First Quarter 2013 Net Income Of $134 Million - 70 Cents Per Share

Broad-Based Average Total Loan Growth Continues

Noninterest Expenses Reflect Continued Tight Expense Control

Share Repurchases, Combined with Dividends, Returned 77 Percent of First Quarter 2013 Net Income to Shareholders

Apr 16, 2013

DALLAS, April 16, 2013 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported first quarter 2013 net income of $134 million, compared to $130 million for the fourth quarter 2012. Earnings per fully diluted share were 70 cents for the first quarter 2013, compared to 68 cents for the fourth quarter 2012.

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(dollar amounts in millions, except per share data)

1st Qtr '13

 

4th Qtr '12

 

1st Qtr '12

Net interest income (a)

$

416

   

$

424

   

$

442

 

Provision for credit losses

16

   

16

   

22

 

Noninterest income

200

   

204

   

206

 

Noninterest expenses

416

   

427

   

448

 

Provision for income taxes

50

   

55

   

48

 
           

Net income

134

   

130

   

130

 
           

Net income attributable to common shares

132

   

128

   

129

 
           

Diluted income per common share

0.70

   

0.68

   

0.66

 
           

Average diluted shares (in millions)

187

   

188

   

196

 
           

Tier 1 common capital ratio (c)

10.40

%

(b)

10.17

%

 

10.30

%

Tangible common equity ratio (c)

9.86

   

9.76

   

10.25

 
   

(a)

Included accretion of the purchase discount on the acquired loan portfolio of $11 million ($7 million, after tax), $13 million ($8 million, after tax) and $25 million ($16 million, after tax) in the first quarter 2013, fourth quarter 2012 and first quarter 2012, respectively.

(b)

March 31, 2013 ratio is estimated.

(c)

See Reconciliation of Non-GAAP Financial Measures

"Broad-based average loan growth in each of our primary geographic markets, together with tight expense controls, contributed to our increased net income in the first quarter," said Ralph W. Babb Jr., chairman and chief executive officer. "Our commercial banking expertise drove our overall loan growth. An expected decline in Mortgage Banker Finance was more than offset by increases in general Middle Market, National Dealer Services, Energy, and Technology and Life Sciences. Credit quality continued to be stable.

"We remain focused on total payout to shareholders, reflected by share repurchases and dividends, while maintaining our strong capital ratios. We repurchased 2.1 million shares in the first quarter and combined with dividends, we returned 77 percent of first quarter net income to shareholders. On March 14, we announced that the Federal Reserve had completed its 2013 capital plan review and did not object to our capital plan and contemplated capital distributions. Our capital plan includes up to $288 million in share repurchases for the four-quarter period that ends in the first quarter 2014."

First Quarter 2013 Compared to Fourth Quarter 2012

 

  • Average total loans increased $498 million, or 1 percent, to $44.6 billion, primarily reflecting an increase of $594 million, or 2 percent, in commercial loans, partially offset by a decrease of $106 million, or 1 percent, in combined commercial mortgage and real estate construction loans. A $356 million decrease in Mortgage Banker Finance was more than offset by broad-based increases in other business lines, including general Middle Market, National Dealer Services, Energy, and Technology and Life Sciences. Period-end total loans decreased $990 million, or 2 percent, to $45.1 billion, primarily reflecting a decrease of $687 million in Mortgage Banker Finance.
  • Average total deposits decreased $590 million, to $50.7 billion, primarily reflecting a decrease of $1.3 billion, or 6 percent, in noninterest-bearing deposits. The decrease in average noninterest-bearing deposits reflected a $675 million decrease in the Financial Services Division, which provides services to title and escrow companies. Period-end total deposits decreased $74 million to $52.1 billion, reflecting a decrease of $502 million in noninterest-bearing deposits, largely offset by increases of $267 million in money market and interest-bearing checking deposits and $222 million in customer certificates of deposit.
  • Net interest income was $416 million in the first quarter 2013, compared to $424 million in the fourth quarter 2012. The $8 million decrease in net interest income was primarily due to two fewer days in the first quarter. Accretion of the purchase discount on the acquired loan portfolio was $11 million in the first quarter 2013, compared to $13 million in the fourth quarter 2012.
  • Stable credit quality continued in the first quarter 2013. The provision for credit losses of $16 million in the first quarter 2013 was unchanged compared to the fourth quarter 2012.
  • Noninterest income decreased $4 million to $200 million in the first quarter 2013, compared to $204 million in the fourth quarter 2012, primarily reflecting decreases in customer derivative income and commercial lending fees from high fourth quarter 2012 levels.
  • Noninterest expenses decreased $11 million to $416 million in the first quarter 2013, compared to $427 million in the fourth quarter 2012, primarily due to a decrease in salaries expense.
  • Comerica repurchased 2.1 million shares of common stock ($71 million) in the first quarter 2013 under the 2012 capital plan. Combined with dividends, 77 percent of net income was returned to shareholders in the first quarter 2013.
  • As previously announced, the Federal Reserve completed its review of Comerica's 2013 capital plan in the first quarter 2013 and did not object to the capital distributions contemplated in the plan, including up to $288 million of share repurchases for the four-quarter period ending March 31, 2014.
  • Capital remained solid at March 31, 2013, as evidenced by an estimated Tier 1 common capital ratio of 10.40 percent and an estimated Tier 1 common capital ratio under fully phased-in Basel III (as proposed) of 9.4 percent.

Net Interest Income

                       

(dollar amounts in millions)

1st Qtr '13

 

4th Qtr '12

 

1st Qtr '12

Net interest income

$

416

   

$

424

   

$

442

 
           

Net interest margin

2.88

%

 

2.87

%

 

3.19

%

           

Selected average balances:

         

Total earning assets

$

58,607

   

$

59,276

   

$

56,185

 

Total loans

44,617

   

44,119

   

42,269

 

Total investment securities

10,021

   

10,250

   

9,889

 

Federal Reserve Bank deposits (excess liquidity)

3,669

   

4,638

   

3,799

 
           
           

Total deposits

50,692

   

51,282

   

48,311

 

Total noninterest-bearing deposits

21,506

   

22,758

   

19,637

 
   
  • Net interest income of $416 million in the first quarter 2013 decreased $8 million compared to the fourth quarter 2012. 
    • Two fewer days in the first quarter 2013 decreased net interest income by $7 million.
    • An increase in loan volumes increased net interest income by $4 million.
    • Lower loan yields due to shifts in the loan portfolio mix decreased net interest income by $2 million and a decline in LIBOR decreased net interest income by $1 million.
    • A decrease in the accretion of the purchase discount on the acquired loan portfolio decreased net interest income by $2 million. 
    • A decrease in funding costs increased net interest income by $2 million. The rate paid on total average interest-bearing deposits decreased 1 basis point to 21 basis points for the first quarter 2013.
    • Lower reinvestment yields on mortgage-backed investment securities and a decrease in average balances decreased net interest income by $2 million.
  • Average earning assets decreased $669 million in the first quarter 2013, compared to the fourth quarter 2012, primarily reflecting decreases of $969 million in excess liquidity and $229 million in average investment securities available-for-sale, partially offset by a $498 million increase in average loans.
  • The net interest margin of 2.88 percent increased 1 basis point compared to the fourth quarter 2012. The increase in net interest margin was primarily due to the benefit provided by a decrease in excess liquidity (4 basis points) and lower deposit costs (1 basis point), partially offset by lower loan yields (2 basis points), lower accretion on the acquired loan portfolio (1 basis point) and lower yields on mortgage-backed investment securities (1 basis point).

Noninterest Income
Noninterest income decreased $4 million to $200 million for the first quarter 2013, compared to $204 million for the fourth quarter 2012. The decrease was primarily due to decreases of $5 million in customer derivative income and $4 million in commercial lending fees, both from high fourth quarter 2012 levels, partially offset by a $3 million seasonal increase in service charges on deposit accounts.

Noninterest Expenses
Noninterest expenses decreased $11 million to $416 million in the first quarter 2013, compared to $427 million in the fourth quarter 2012. The decrease was primarily due to decreases of $8 million in salaries expense, largely reflecting two fewer days in the quarter and a decrease in severance expense, $3 million in net occupancy expense, $2 million in restructuring expenses and $2 million in other real estate expense, partially offset by an increase of $4 million in employee benefits expense, primarily due to an increase in pension expense.

Provision for Income Taxes
The provision for income taxes was $50 million in the first quarter 2013, compared to $55 million in the fourth quarter 2012. The fourth quarter 2012 provision for income taxes included adjustments for certain discrete state tax items totaling $5 million.

Credit Quality
"Our strong credit culture continued to be reflected in solid credit quality metrics," said Babb. "We had lower net charge-offs along with a decline in nonperforming assets. Our provision for credit losses was basically unchanged from the fourth quarter 2012."

 

 
                       

(dollar amounts in millions)

1st Qtr '13

 

4th Qtr '12

 

1st Qtr '12

Net credit-related charge-offs

$

24

   

$

37

   

$

45

 

Net credit-related charge-offs/Average total loans

0.21

%

 

0.34

%

 

0.43

%

           

Provision for credit losses

$

16

   

$

16

   

$

22

 
           

Nonperforming loans (a)

515

   

541

   

856

 

Nonperforming assets (NPAs) (a)

555

   

595

   

923

 

NPAs/Total loans and foreclosed property

1.23

%

 

1.29

%

 

2.14

%

           

Loans past due 90 days or more and still accruing

$

25

   

$

23

   

$

50

 
           

Allowance for loan losses

617

   

629

   

704

 

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

36

   

32

   

25

 

Total allowance for credit losses

653

   

661

   

729

 
           

Allowance for loan losses/Period-end total loans

1.37

%

 

1.37

%

 

1.64

%

Allowance for loan losses/Nonperforming loans

120

   

116

   

82

 
     

(a)

Excludes loans acquired with credit impairment.

(b)

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

  • Nonaccrual loans decreased $25 million, to $494 million at March 31, 2013, compared to $519 million at December 31, 2012.
  • Internal watch list loans remained stable at $3.1 billion at both March 31, 2013 and December 31, 2012. 
  • During the first quarter 2013, $34 million of borrower relationships over $2 million were transferred to nonaccrual status, a decrease of $2 million from the fourth quarter 2012.   

Full-Year 2013 Outlook
For full-year 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.
  • Customer-driven noninterest income relatively stable, reflecting cross-sell initiatives and selective pricing adjustments partially offset by regulatory pressures on certain products, such as customer derivatives. 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.
  • Effective tax rate of approximately 27.5 percent.

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 March 31, 2013 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses first quarter 2013 results compared to fourth quarter 2012.

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


 


 

 

 

 

(dollar amounts in millions)

1st Qtr '13

 

4th Qtr '12

 

1st Qtr '12

Business Bank

$

198

 

85

%

 

$

209

 

90

%

 

$

203

 

89

%

Retail Bank

10

 

4

   

8

 

3

   

13

 

6

 

Wealth Management

25

 

11

   

16

 

7

   

13

 

5

 
 

233

 

100

%

 

233

 

100

%

 

229

 

100

%

Finance

(98)

     

(100)

     

(88)

   

Other (a)

(1)

     

(3)

     

(11)

   

Total

$

134

     

$

130

     

$

130

   

(a)

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

Business Bank

                       

(dollar amounts in millions)

1st Qtr '13

   

4th Qtr '12

   

1st Qtr '12

 

Net interest income (FTE)

$

375

   

$

387

   

$

373

 

Provision for credit losses

20

   

6

   

2

 

Noninterest income

77

   

79

   

81

 

Noninterest expenses

146

   

149

   

158

 

Net income

198

   

209

   

203

 
           

Net credit-related charge-offs

16

   

26

   

28

 
           

Selected average balances:

         

Assets

35,780

   

35,359

   

33,178

 

Loans

34,753

   

34,325

   

32,238

 

Deposits

25,514

   

26,051

   

23,997

 
   
  • Average loans increased $428 million, primarily reflecting an increase in Middle Market, partially offset by a decrease in Mortgage Banker Finance. The increase in Middle Market was primarily due to increases in general Middle Market, National Dealer Services, Energy, and Technology and Life Sciences.
  • Average deposits decreased $537 million, primarily reflecting a decrease in Middle Market, partially offset by an increase in Corporate. The decrease in Middle Market was primarily due to decreases in the Financial Services Division, Technology and Life Sciences, and Energy.
  • Net interest income decreased $12 million, primarily due to two fewer days in the quarter, a decrease in funds transfer pricing (FTP) credits, due to a decrease in average deposits, and lower loan yields, partially offset by the benefit provided by an increase in average loans.
  • The provision for credit losses increased $14 million, primarily reflecting an increase due to the impact of enhancements to the approach used to estimate probability of default statistics used in determining the allowance for loan losses, partially offset by improvements in credit quality.
  • Noninterest income decreased $2 million, primarily due to decreases in commercial lending fees, customer derivative income and letter of credit fees, partially offset by an increase in service charges on deposit accounts.
  • Noninterest expenses decreased $3 million, primarily due to decreases in salaries expense and legal fees.

Retail Bank

                       

(dollar amounts in millions)

1st Qtr '13

   

4th Qtr '12

   

1st Qtr '12

 

Net interest income (FTE)

$

155

   

$

156

   

$

167

 

Provision for credit losses

6

   

7

   

6

 

Noninterest income

41

   

43

   

42

 

Noninterest expenses

175

   

181

   

183

 

Net income (loss)

10

   

8

   

13

 
           

Net credit-related charge-offs

8

   

6

   

12

 
           

Selected average balances:

         

Assets

5,973

   

5,952

   

6,173

 

Loans

5,276

   

5,255

   

5,462

 

Deposits

21,049

   

20,910

   

20,373

 
   
  • Average loans increased $21 million, primarily due to an increase in Small Business, partially offset by a decrease in Retail Banking.
  • Average deposits increased $139 million, primarily due to an increase in Retail Banking, partially offset by a decrease in Small Business.
  • Noninterest income decreased $2 million, primarily due to decreases in customer derivative income in Small Business and service charges on deposit accounts.
  • Noninterest expense decreased $6 million, primarily due to a decrease in salaries expense and smaller decreases in several other noninterest expense categories.

Wealth Management

                       

(dollar amounts in millions)

1st Qtr '13

   

4th Qtr '12

   

1st Qtr '12

 

Net interest income (FTE)

$

46

   

$

47

   

$

47

 

Provision for credit losses

(6)

   

2

   

12

 

Noninterest income

65

   

65

   

65

 

Noninterest expenses

79

   

84

   

80

 

Net income

25

   

16

   

13

 
           

Net credit-related charge-offs

   

5

   

5

 
           

Selected average balances:

         

Assets

4,738

   

4,686

   

4,636

 

Loans

4,588

   

4,539

   

4,569

 

Deposits

3,682

   

3,798

   

3,611

 
     
  • Average loans increased $49 million, primarily due to an increase in Private Banking.
  • Average deposits decreased $116 million, primarily due to a decrease in Private Banking.
  • The provision for credit losses decreased $8 million, primarily due to improvements in credit quality, partially offset by the impact of enhancements to the approach used to estimate probability of default statistics used in determining the allowance for loan losses.
  • Noninterest expenses decreased $5 million, primarily due to an operational loss recorded in the fourth quarter and a decrease in salaries expense.

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 March 31, 2013 and are presented on a fully taxable equivalent (FTE) basis.

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

 

(a)

Includes items not directly associated with the geographic markets.

 

 
                                   

(dollar amounts in millions)

1st Qtr '13

 

4th Qtr '12

 

1st Qtr '12

Michigan

$

77

 

33

%

 

$

74

 

32

%

 

$

78

 

34

%

California

56

 

24

   

62

 

26

   

64

 

28

 

Texas

44

 

19

   

47

 

20

   

41

 

18

 

Other Markets

56

 

24

   

50

 

22

   

46

 

20

 
 

233

 

100

%

 

233

 

100

%

 

229

 

100

%

Finance & Other (a)

(99)

     

(103)

     

(99)

   

     Total

$

134

     

$

130

     

$

130

   
  • Average loans increased $235 million in Michigan, $267 million in California and $253 million in Texas.
  • Average deposits decreased $1.1 billion in California and increased $236 million in Michigan and $150 million in Texas. The decrease in California was primarily due to decreases in Middle Market and Private Banking, partially offset by an increase in Corporate. The decrease in Middle Market primarily reflected decreases in the Financial Services Division and Technology and Life Sciences.
  • The provision for credit losses in California increased $14 million, primarily reflecting an increase due to the impact of enhancements in the approach used to estimate probability of default statistics used in determining the allowance for loan losses.

Michigan Market

                       

(dollar amounts in millions)

1st Qtr '13

   

4th Qtr '12

   

1st Qtr '12

 

Net interest income (FTE)

$

189

   

$

192

   

$

196

 

Provision for credit losses

(8)

   

(8)

   

(3)

 

Noninterest income

92

   

97

   

98

 

Noninterest expenses

168

   

180

   

179

 

Net income

77

   

74

   

78

 
           

Net credit-related charge-offs

5

   

1

   

18

 
           

Selected average balances:

         

Assets

14,042

   

13,782

   

14,092

 

Loans

13,650

   

13,415

   

13,829

 

Deposits

20,255

   

20,019

   

19,415

 
                 
                 

California Market

                       

(dollar amounts in millions)

1st Qtr '13

   

4th Qtr '12

   

1st Qtr '12

 

Net interest income (FTE)

$

171

   

$

178

   

$

165

 

Provision for credit losses

21

   

7

   

(3)

 

Noninterest income

35

   

35

   

33

 

Noninterest expenses

97

   

100

   

99

 

Net income

56

   

62

   

64

 
           

Net credit-related charge-offs

10

   

12

   

11

 
           

Selected average balances:

         

Assets

13,795

   

13,549

   

12,310

 

Loans

13,542

   

13,275

   

12,096

 

Deposits

14,356

   

15,457

   

13,688

 

 

Texas Market

                       

(dollar amounts in millions)

1st Qtr '13

   

4th Qtr '12

   

1st Qtr '12

 

Net interest income (FTE)

$

135

   

$

136

   

$

150

 

Provision for credit losses

8

   

4

   

25

 

Noninterest income

31

   

31

   

31

 

Noninterest expenses

91

   

90

   

93

 

Net income

44

   

47

   

41

 
           

Net credit-related charge-offs

6

   

5

   

7

 
           

Selected average balances:

         

Assets

10,795

   

10,554

   

10,080

 

Loans

10,071

   

9,818

   

9,295

 

Deposits

9,959

   

9,809

   

10,229

 

 

Conference Call and Webcast
Comerica will host a conference call to review first quarter 2013 financial results at 7 a.m. CT Tuesday, April 16, 2013. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 22329365). 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 April 30, 2013. The conference call replay can be accessed by calling (855) 859-2056 or (404) 537-3406 (event ID No. 22329365). 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; any future acquisitions or divestitures; 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; 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 13 of Comerica's Annual Report on Form 10-K for the year ended December 31, 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

 

March 31,

December 31,

March 31,

(in millions, except per share data)

2013

2012

2012

PER COMMON SHARE AND COMMON STOCK DATA

     

Diluted net income

$

0.70

 

$

0.68

 

$

0.66

 

Cash dividends declared

0.17

 

0.15

 

0.10

 

Common shareholders' equity (at period end)

37.38

 

36.87

 

35.44

 

Tangible common equity (at period end) (a)

33.87

 

33.38

 

32.06

 
       

Average diluted shares (in thousands)

187,442

 

187,954

 

196,021

 

KEY RATIOS

     

Return on average common shareholders' equity

7.68

%

7.36

%

7.50

%

Return on average assets

0.84

 

0.81

 

0.85

 

Tier 1 common capital ratio (a) (b)

10.40

 

10.17

 

10.30

 

Tier 1 risk-based capital ratio (b)

10.40

 

10.17

 

10.30

 

Total risk-based capital ratio (b)

13.45

 

13.18

 

14.03

 

Leverage ratio (b)

10.76

 

10.57

 

10.99

 

Tangible common equity ratio (a)

9.86

 

9.76

 

10.25

 

AVERAGE BALANCES

     

Commercial loans

$

28,056

 

$

27,462

 

$

24,736

 

Real estate construction loans:

     

Commercial Real Estate business line (c)

1,116

 

1,033

 

1,056

 

Other business lines (d)

198

 

266

 

397

 

Total real estate construction loans

1,314

 

1,299

 

1,453

 

Commercial mortgage loans:

     

Commercial Real Estate business line (c)

1,836

 

1,939

 

2,520

 

Other business lines (d)

7,562

 

7,580

 

7,682

 

Total commercial mortgage loans

9,398

 

9,519

 

10,202

 

Lease financing

857

 

839

 

897

 

International loans

1,282

 

1,314

 

1,205

 

Residential mortgage loans

1,556

 

1,525

 

1,519

 

Consumer loans

2,154

 

2,161

 

2,257

 

Total loans

44,617

 

44,119

 

42,269

 
       

Earning assets

58,607

 

59,276

 

56,185

 

Total assets

63,451

 

64,257

 

61,345

 
       

Noninterest-bearing deposits

21,506

 

22,758

 

19,637

 

Interest-bearing deposits

29,186

 

28,524

 

28,674

 

Total deposits

50,692

 

51,282

 

48,311

 
       

Common shareholders' equity

6,956

 

7,062

 

6,939

 

NET INTEREST INCOME

     

Net interest income (fully taxable equivalent basis)

$

416

 

$

425

 

$

443

 

Fully taxable equivalent adjustment

 

1

 

1

 

Net interest margin (fully taxable equivalent basis)

2.88

%

2.87

%

3.19

%

CREDIT QUALITY

     

Nonaccrual loans

$

494

 

$

519

 

$

830

 

Reduced-rate loans

21

 

22

 

26

 

Total nonperforming loans (e)

515

 

541

 

856

 

Foreclosed property

40

 

54

 

67

 

Total nonperforming assets (e)

555

 

595

 

923

 
       

Loans past due 90 days or more and still accruing

25

 

23

 

50

 
       

Gross loan charge-offs

38

 

60

 

62

 

Loan recoveries

14

 

23

 

17

 

Net loan charge-offs

24

 

37

 

45

 
       

Allowance for loan losses

617

 

629

 

704

 

Allowance for credit losses on lending-related commitments

36

 

32

 

25

 

Total allowance for credit losses

653

 

661

 

729

 
       

Allowance for loan losses as a percentage of total loans

1.37

%

1.37

%

1.64

%

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

0.21

 

0.34

 

0.43

 

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

1.23

 

1.29

 

2.14

 

Allowance for loan losses as a percentage of total nonperforming loans

120

 

116

 

82

 
     

(a)

See Reconciliation of Non-GAAP Financial Measures.

(b)

March 31, 2013 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

     
       
 

March 31,

December 31,

March 31,

(in millions, except share data)

2013

2012

2012

 

(unaudited)

 

(unaudited)

ASSETS

     

Cash and due from banks

$

877

 

$

1,395

 

$

984

 
       

Federal funds sold

 

100

 

10

 

Interest-bearing deposits with banks

4,720

 

3,039

 

2,965

 

Other short-term investments

115

 

125

 

180

 
       

Investment securities available-for-sale

10,286

 

10,297

 

10,061

 
       

Commercial loans

28,508

 

29,513

 

25,640

 

Real estate construction loans

1,396

 

1,240

 

1,442

 

Commercial mortgage loans

9,317

 

9,472

 

10,079

 

Lease financing

853

 

859

 

872

 

International loans

1,269

 

1,293

 

1,256

 

Residential mortgage loans

1,568

 

1,527

 

1,485

 

Consumer loans

2,156

 

2,153

 

2,238

 

Total loans

45,067

 

46,057

 

43,012

 

Less allowance for loan losses

(617)

 

(629)

 

(704)

 

Net loans

44,450

 

45,428

 

42,308

 
       

Premises and equipment

618

 

622

 

670

 

Accrued income and other assets

3,819

 

4,063

 

5,147

 

Total assets

$

64,885

 

$

65,069

 

$

62,325

 
       

LIABILITIES AND SHAREHOLDERS' EQUITY

     

Noninterest-bearing deposits

$

22,777

 

$

23,279

 

$

20,741

 
       

Money market and interest-bearing checking deposits

21,540

 

21,273

 

20,502

 

Savings deposits

1,652

 

1,606

 

1,586

 

Customer certificates of deposit

5,753

 

5,531

 

6,145

 

Foreign office time deposits

395

 

502

 

332

 

Total interest-bearing deposits

29,340

 

28,912

 

28,565

 

Total deposits

52,117

 

52,191

 

49,306

 
       

Short-term borrowings

58

 

110

 

82

 

Accrued expenses and other liabilities

1,023

 

1,106

 

1,033

 

Medium- and long-term debt

4,699

 

4,720

 

4,919

 

Total liabilities

57,897

 

58,127

 

55,340

 
       

Common stock - $5 par value:

     

Authorized - 325,000,000 shares

     

Issued - 228,164,824 shares

1,141

 

1,141

 

1,141

 

Capital surplus

2,157

 

2,162

 

2,154

 

Accumulated other comprehensive loss

(410)

 

(413)

 

(326)

 

Retained earnings

6,020

 

5,931

 

5,630

 

Less cost of common stock in treasury - 41,361,612 shares at 3/31/13, 39,889,610 shares at 12/31/12 and 31,032,920 shares at 3/31/12

(1,920)

 

(1,879)

 

(1,614)

 

Total shareholders' equity

6,988

 

6,942

 

6,985

 

Total liabilities and shareholders' equity

$

64,885

 

$

65,069

 

$

62,325

 

 

 

CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries

               
                       
 

First

Fourth

Third

Second

First

 

First Quarter 2013 Compared To:

 

Quarter

Quarter

Quarter

Quarter

Quarter

 

Fourth Quarter 2012

 

First Quarter 2012

(in millions, except per share data)

2013

2012

2012

2012

2012

 

Amount

Percent

 

Amount

Percent

INTEREST INCOME

                     

Interest and fees on loans

$

390

 

$

398

 

$

400

 

$

408

 

$

411

   

$

(8)

 

(2)%

   

$

(21)

 

(5)%

 

Interest on investment securities

53

 

55

 

57

 

59

 

63

   

(2)

 

(4)

   

(10)

 

(16)

 

Interest on short-term investments

3

 

3

 

3

 

3

 

3

   

 

   

 

 

Total interest income

446

 

456

 

460

 

470

 

477

   

(10)

 

(2)

   

(31)

 

(7)

 

INTEREST EXPENSE

                     

Interest on deposits

15

 

16

 

17

 

18

 

19

   

(1)

 

(7)

   

(4)

 

(21)

 

Interest on medium- and long-term debt

15

 

16

 

16

 

17

 

16

   

(1)

 

(3)

   

(1)

 

(6)

 

Total interest expense

30

 

32

 

33

 

35

 

35

   

(2)

 

(5)

   

(5)

 

(14)

 

Net interest income

416

 

424

 

427

 

435

 

442

   

(8)

 

(2)

   

(26)

 

(6)

 

Provision for credit losses

16

 

16

 

22

 

19

 

22

   

 

   

(6)

 

(27)

 

Net interest income after provision

for credit losses

400

 

408

 

405

 

416

 

420

   

(8)

 

(2)

   

(20)

 

(5)

 

NONINTEREST INCOME

                     

Service charges on deposit accounts

55

 

52

 

53

 

53

 

56

   

3

 

5

   

(1)

 

(2)

 

Fiduciary income

43

 

42

 

39

 

39

 

38

   

1

 

4

   

5

 

11

 

Commercial lending fees

21

 

25

 

22

 

24

 

25

   

(4)

 

(17)

   

(4)

 

(14)

 

Letter of credit fees

16

 

17

 

19

 

18

 

17

   

(1)

 

(7)

   

(1)

 

(7)

 

Card fees

12

 

12

 

12

 

12

 

11

   

 

   

1

 

6

 

Foreign exchange income

9

 

9

 

9

 

10

 

10

   

 

   

(1)

 

(4)

 

Bank-owned life insurance

9

 

9

 

10

 

10

 

10

   

 

   

(1)

 

(12)

 

Brokerage fees

5

 

5

 

5

 

4

 

5

   

 

   

 

 

Net securities gains

 

1

 

 

6

 

5

   

(1)

 

(89)

   

(5)

 

(96)

 

Other noninterest income

30

 

32

 

28

 

35

 

29

   

(2)

 

(1)

   

1

 

1

 

Total noninterest income

200

 

204

 

197

 

211

 

206

   

(4)

 

(2)

   

(6)

 

(3)

 

NONINTEREST EXPENSES

                     

Salaries

188

 

196

 

192

 

189

 

201

   

(8)

 

(4)

   

(13)

 

(7)

 

Employee benefits

63

 

59

 

61

 

61

 

59

   

4

 

7

   

4

 

6

 

Total salaries and employee benefits

251

 

255

 

253

 

250

 

260

   

(4)

 

(1)

   

(9)

 

(4)

 

Net occupancy expense

39

 

42

 

40

 

40

 

41

   

(3)

 

(7)

   

(2)

 

(6)

 

Equipment expense

15

 

15

 

17

 

16

 

17

   

 

   

(2)

 

(10)

 

Outside processing fee expense

28

 

28

 

27

 

26

 

26

   

 

   

2

 

7

 

Software expense

22

 

23

 

23

 

21

 

23

   

(1)

 

(2)

   

(1)

 

(3)

 

Merger and restructuring charges

 

2

 

25

 

8

 

   

(2)

 

N/M

   

 

 

FDIC insurance expense

9

 

9

 

9

 

10

 

10

   

 

   

(1)

 

(10)

 

Advertising expense

6

 

6

 

7

 

7

 

7

   

 

   

(1)

 

(15)

 

Other real estate expense

1

 

3

 

2

 

 

4

   

(2)

 

(58)

   

(3)

 

(70)

 

Other noninterest expenses

45

 

44

 

46

 

55

 

60

   

1

 

   

(15)

 

(26)

 

Total noninterest expenses

416

 

427

 

449

 

433

 

448

   

(11)

 

(3)

   

(32)

 

(7)

 

Income before income taxes

184

 

185

 

153

 

194

 

178

   

(1)

 

(1)

   

6

 

3

 

Provision for income taxes

50

 

55

 

36

 

50

 

48

   

(5)

 

(9)

   

2

 

4

 

NET INCOME

134

 

130

 

117

 

144

 

130

   

4

 

3

   

4

 

3

 

Less income allocated to participating securities

2

 

2

 

1

 

2

 

1

   

 

   

1

 

21

 

Net income attributable to common shares

$

132

 

$

128

 

$

116

 

$

142

 

$

129

   

$

4

 

3%

   

$

3

 

2%

 

Earnings per common share:

                     

Basic

$

0.71

 

$

0.68

 

$

0.61

 

$

0.73

 

$

0.66

   

$

0.03

 

4%

   

$

0.05

 

8%

 

Diluted

0.70

 

0.68

 

0.61

 

0.73

 

0.66

   

0.02

 

3

   

0.04

 

6

 
                       

Comprehensive income (loss)

137

 

(30)

 

165

 

169

 

160

   

167

 

N/M

   

(23)

 

(15)

 
                       

Cash dividends declared on common stock

32

 

28

 

29

 

29

 

20

   

4

 

12

   

12

 

61

 

Cash dividends declared per common share

0.17

 

0.15

 

0.15

 

0.15

 

0.10

   

0.02

 

13

   

0.07

 

70

 

N/M - Not Meaningful

 

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)

 

Comerica Incorporated and Subsidiaries

 
             
 

2013

 

2012

(in millions)

1st Qtr

 

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr

             

Balance at beginning of period

$

629

   

$

647

 

$

667

 

$

704

 

$

726

 
             

Loan charge-offs:

           

Commercial

21

   

42

 

19

 

26

 

25

 

Real estate construction:

           

Commercial Real Estate business line (a)

   

1

 

2

 

2

 

2

 

Other business lines (b)

   

 

 

1

 

 

Total real estate construction

   

1

 

2

 

3

 

2

 

Commercial mortgage:

           

Commercial Real Estate business line (a)

1

   

5

 

12

 

16

 

13

 

Other business lines (b)

12

   

6

 

13

 

11

 

13

 

Total commercial mortgage

13

   

11

 

25

 

27

 

26

 

International

   

 

1

 

 

2

 

Residential mortgage

1

   

2

 

6

 

3

 

2

 

Consumer

3

   

4

 

6

 

5

 

5

 

Total loan charge-offs

38

   

60

 

59

 

64

 

62

 
             

Recoveries on loans previously charged-off:

           

Commercial

6

   

13

 

7

 

10

 

9

 

Real estate construction

1

   

1

 

3

 

1

 

1

 

Commercial mortgage

5

   

6

 

5

 

4

 

3

 

International

   

1

 

 

 

1

 

Residential mortgage

1

   

1

 

 

 

1

 

Consumer

1

   

1

 

1

 

4

 

2

 

Total recoveries

14

   

23

 

16

 

19

 

17

 

Net loan charge-offs

24

   

37

 

43

 

45

 

45

 

Provision for loan losses

12

   

19

 

23

 

8

 

23

 

Balance at end of period

$

617

   

$

629

 

$

647

 

$

667

 

$

704

 
             

Allowance for loan losses as a percentage of total loans

1.37

%

 

1.37

%

1.46

%

1.52

%

1.64

%

             

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

0.21

   

0.34

 

0.39

 

0.42

 

0.43

 
     

(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

             
 

2013

 

2012

(in millions)

1st Qtr

 

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr

             

Balance at beginning of period

$

32

   

$

35

 

$

36

 

$

25

 

$

26

 

Add: Provision for credit losses on lending-related commitments

4

   

(3)

 

(1)

 

11

 

(1)

 

Balance at end of period

$

36

   

$

32

 

$

35

 

$

36

 

$

25

 
             

Unfunded lending-related commitments sold

$

2

   

$

 

$

 

$

 

$

 

 

 

NONPERFORMING ASSETS (unaudited)

Comerica Incorporated and Subsidiaries

             
 

2013

 

2012

(in millions)

1st Qtr

 

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr

             

SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS

   

Nonaccrual loans:

           

Business loans:

           

Commercial

$

102

   

$

103

 

$

154

 

$

175

 

$

205

 

Real estate construction:

           

Commercial Real Estate business line (a)

30

   

30

 

45

 

60

 

77

 

Other business lines (b)

3

   

3

 

6

 

9

 

8

 

Total real estate construction

33

   

33

 

51

 

69

 

85

 

Commercial mortgage:

           

Commercial Real Estate business line (a)

86

   

94

 

137

 

155

 

174

 

Other business lines (b)

178

   

181

 

219

 

220

 

275

 

Total commercial mortgage

264

   

275

 

356

 

375

 

449

 

Lease financing

   

3

 

3

 

4

 

4

 

International

   

 

 

 

4

 

Total nonaccrual business loans

399

   

414

 

564

 

623

 

747

 

Retail loans:

           

Residential mortgage

65

   

70

 

69

 

76

 

69

 

Consumer:

           

Home equity

28

   

31

 

28

 

16

 

9

 

Other consumer

2

   

4

 

4

 

4

 

5

 

Total consumer

30

   

35

 

32

 

20

 

14

 

Total nonaccrual retail loans

95

   

105

 

101

 

96

 

83

 

Total nonaccrual loans

494

   

519

 

665

 

719

 

830

 

Reduced-rate loans

21

   

22

 

27

 

28

 

26

 

Total nonperforming loans (c)

515

   

541

 

692

 

747

 

856

 

Foreclosed property

40

   

54

 

63

 

67

 

67

 

Total nonperforming assets (c)

$

555

   

$

595

 

$

755

 

$

814

 

$

923

 
             

Nonperforming loans as a percentage of total loans

1.14

%

 

1.17

%

1.57

%

1.70

%

1.99

%

Nonperforming assets as a percentage of total loans

and foreclosed property

1.23

   

1.29

 

1.71

 

1.85

 

2.14

 

Allowance for loan losses as a percentage of total

nonperforming loans

120

   

116

 

94

 

89

 

82

 

Loans past due 90 days or more and still accruing

$

25

   

$

23

 

$

36

 

$

43

 

$

50

 
             

ANALYSIS OF NONACCRUAL LOANS

           

Nonaccrual loans at beginning of period

$

519

   

$

665

 

$

719

 

$

830

 

$

860

 

Loans transferred to nonaccrual (d)

34

   

36

 

35

 

47

 

69

 

Nonaccrual business loan gross charge-offs (e)

(34)

   

(54)

 

(46)

 

(56)

 

(55)

 

Loans transferred to accrual status (d)

   

 

 

(41)

 

 

Nonaccrual business loans sold (f)

(7)

   

(48)

 

(20)

 

(16)

 

(7)

 

Payments/Other (g)

(18)

   

(80)

 

(23)

 

(45)

 

(37)

 

Nonaccrual loans at end of period

$

494

   

$

519

 

$

665

 

$

719

 

$

830

 

(a) Primarily loans to real estate investors and developers.

(b) Primarily loans secured by owner-occupied real estate.

(c) Excludes loans acquired with credit impairment.

(d) Based on an analysis of nonaccrual loans with book balances greater than $2 million.

(e) Analysis of gross loan charge-offs:

           

Nonaccrual business loans

$

34

   

$

54

 

$

46

 

$

56

 

$

55

 

Performing watch list loans

   

 

1

 

 

 

Consumer and residential mortgage loans

4

   

6

 

12

 

8

 

7

 

Total gross loan charge-offs

$

38

   

$

60

 

$

59

 

$

64

 

$

62

 

(f) Analysis of loans sold:

           

     Nonaccrual business loans

$

7

   

$

48

 

$

20

 

$

16

 

$

7

 

     Performing watch list loans

12

   

24

 

42

 

7

 

11

 

Total loans sold

$

19

   

$

72

 

$

62

 

$

23

 

$

18

 

(g) Includes net changes related to nonaccrual loans with balances less than $2 million, payments on nonaccrual loans with book balances greater than $2 million and transfers of nonaccrual loans to foreclosed property. Excludes business loan gross charge-offs and business nonaccrual loans sold.

 

 

ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)

Comerica Incorporated and Subsidiaries

                       
     

Three Months Ended

   

March 31, 2013

   

December 31, 2012

     

March 31, 2012

 

Average

 

Average

   

Average

     

Average

 

Average

(dollar amounts in millions)

Balance

Interest

Rate

   

Balance

Interest

   

Balance

Interest

Rate

                         

Commercial loans

$

28,056

 

$

229

 

3.31

%

 

$

27,462

 

$

230

 

3.33

%

 

$

24,736

 

$

219

 

3.56

%

Real estate construction loans

1,314

 

13

 

4.15

   

1,299

 

15

 

4.32

   

1,453

 

17

 

4.58

 

Commercial mortgage loans

9,398

 

95

 

4.08

   

9,519

 

100

 

4.22

   

10,202

 

119

 

4.73

 

Lease financing

857

 

7

 

3.23

   

839

 

7

 

3.27

   

897

 

8

 

3.41

 

International loans

1,282

 

11

 

3.62

&nb