Comerica Reports Second Quarter 2013 Net Income Of $143 Million

Earnings Per Share 76 Cents, Up 9 Percent from First Quarter 2013

Average Total Loan Growth Continues - Driven by a $337 Million Increase in Commercial Loans

Noninterest Income Up $8 Million, or 5 Percent, from First Quarter 2013

Share Repurchases, Combined with Dividends, Returned 72 Percent of Second Quarter 2013 Net Income to Shareholders

Jul 16, 2013

DALLAS, July 16, 2013 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported second quarter 2013 net income of $143 million, compared to $134 million for the first quarter 2013. Earnings per diluted share were 76 cents for the second quarter 2013, compared to 70 cents for the first quarter 2013.

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(dollar amounts in millions, except per share data)

2nd Qtr '13

 

1st Qtr '13

 

2nd Qtr '12

 

Net interest income (a)

$

414

   

$

416

   

$

435

   

Provision for credit losses

13

   

16

   

19

   

Noninterest income

208

   

200

   

211

   

Noninterest expenses

416

   

416

   

434

 

(b)

Provision for income taxes

50

   

50

   

50

   
             

Net income

143

   

134

   

143

   
             

Net income attributable to common shares

141

   

132

   

141

   
             

Diluted income per common share

0.76

   

0.70

   

0.73

   
             

Average diluted shares (in millions)

187

   

187

   

194

   
             

Tier 1 common capital ratio (d)

10.41

%

(c)

10.37

%

 

10.39

%

 

Basel III Tier 1 common capital ratio (d) (e)

10.1

   

10.1

   

10.0

   

Tangible common equity ratio (d)

10.04

   

9.86

   

10.31

   
   

(a)

Included accretion of the purchase discount on the acquired loan portfolio of $7 million ($4 million, after tax), $11 million ($7 million, after tax) and $18 million ($11 million, after tax) in the second quarter 2013, first quarter 2013 and second quarter 2012, respectively.

(b)

Included restructuring expenses of $8 million ($5 million, after tax), associated with the 2011 acquisition of Sterling Bancshares, Inc.

(c)

June 30, 2013 ratio is estimated.

(d)

See Reconciliation of Non-GAAP Financial Measures.

(e)

Estimated ratios based on the standardized approach in the final rule and assuming the election to exclude most elements of accumulated other comprehensive income (AOCI).

 

"Average loan growth and fee growth, expense control and continued solid credit quality, contributed to our 9 percent increase in earnings per share in the second quarter," said Ralph W. Babb Jr., chairman and chief executive officer. "Average total loans grew $276 million compared to the first quarter, and reflected an increase of $337 million, or 1 percent, in commercial loans. Our Middle Market business lines across all three of our major geographies were a key contributor to our loan growth in the second quarter. Overall, customers remain cautious, but relatively more positive, in this slow growing economy.

"Economic indicators in Texas and California are positive, with job growth in both markets above the U.S. average, while increased auto production and sales have strengthened the Michigan economy. We are well positioned in our primary markets, where our relationship-based approach and experience combine to make a positive difference for our customers.

"Our capital position continues to be a source of strength to support our growth. We repurchased 1.9 million shares in the second quarter under the share repurchase program and combined with dividends, returned 72 percent of second quarter net income to shareholders."

Second Quarter 2013 Compared to First Quarter 2013

  • Average total loans increased $276 million, or 1 percent, to $44.9 billion, primarily reflecting an increase of $337 million, or 1 percent, in commercial loans, partially offset by a decrease of $67 million, or 1 percent, in combined commercial mortgage and real estate construction loans. The increase in commercial loans was primarily driven by increases in general Middle Market and National Dealer Services, partially offset by a decrease in Corporate Banking. Period-end total loans increased $392 million to $45.5 billion, primarily reflecting a $678 million increase in commercial loans, partially offset by a $227 million decrease in combined commercial mortgage and real estate construction loans.
  • Average investment securities available-for-sale decreased $228 million, or 2 percent, to $9.8 billion, primarily reflecting a slowing of reinvestments related to paydowns on mortgage-backed investment securities. Period-end investment securities decreased $655 million, or 6 percent, to $9.6 billion, primarily reflecting both a slowing of reinvestments related to paydowns and a $219 million decrease in net unrealized gains on mortgage-backed investment securities due to rising interest rates during the period.
  • Average total deposits increased $756 million, or 1 percent, to $51.4 billion, primarily reflecting increases of $570 million, or 3 percent, in noninterest-bearing deposits and $250 million, or 1 percent, in money market and interest-bearing checking accounts. The increase in average noninterest-bearing deposits primarily reflected increases in Corporate Banking and the Financial Services Division. Period-end total deposits decreased $862 million to $51.3 billion, reflecting a decrease of $907 million in noninterest-bearing deposits.
  • Net interest income remained relatively stable at $414 million in the second quarter 2013, compared to $416 million in the first quarter 2013, as one additional day in the second quarter and loan growth partially offset a decrease in accretion and lower loan yields due to shifts in the loan portfolio mix.
  • The provision for credit losses decreased $3 million to $13 million in the second quarter 2013, compared to $16 million in the first quarter 2013, reflecting strong credit quality.
  • Noninterest income increased $8 million to $208 million in the second quarter 2013, compared to $200 million in the first quarter 2013, reflecting broad-based growth in several categories as well as an annual incentive received from our third-party credit card provider.
  • Noninterest expenses of $416 million in the second quarter 2013 were unchanged compared to the first quarter 2013, primarily reflecting a $6 million decrease in salaries expense, offset by a $4 million write-down on other foreclosed assets and a $2 million increase in outside processing fee expense.
  • The provision for income taxes was stable at $50 million for the second quarter 2013. The effective tax rate decreased to 25.8 percent for the second quarter 2013, compared to 27.1 percent in the first quarter 2013, primarily reflecting a $2 million net benefit in the second quarter 2013 from certain discrete tax items.
  • Comerica repurchased 1.9 million shares of common stock ($72 million) in the second quarter 2013 under the share repurchase program. Combined with dividends, 72 percent of net income was returned to shareholders in the second quarter 2013.
  • Capital remained solid at June 30, 2013, as evidenced by an estimated Tier 1 common capital ratio of 10.41 percent and a tangible common equity ratio of 10.04 percent.

Net Interest Income

                       

(dollar amounts in millions)

2nd Qtr '13

 

1st Qtr '13

 

2nd Qtr '12

Net interest income

$

414

   

$

416

   

$

435

 
           

Net interest margin

2.83

%

 

2.88

%

 

3.10

%

           

Selected average balances:

         

Total earning assets

$

58,928

   

$

58,607

   

$

56,652

 

Total loans

44,893

   

44,617

   

43,228

 

Total investment securities

9,793

   

10,021

   

9,728

 

Federal Reserve Bank deposits (excess liquidity)

3,968

   

3,669

   

3,463

 
           
           

Total deposits

51,448

   

50,692

   

48,672

 

Total noninterest-bearing deposits

22,076

   

21,506

   

20,128

 
   
  • Net interest income of $414 million in the second quarter 2013 decreased $2 million compared to the first quarter 2013.
    • One additional day in the second quarter 2013 increased net interest income by $4 million.
    • An increase in loan volumes increased net interest income by $2 million.
    • A decrease in funding costs increased net interest income by $1 million, primarily reflecting the maturity of debt in the second quarter 2013 and a decline in the rate paid on total average interest-bearing deposits of 2 basis points.
    • A decrease in the accretion of the purchase discount on the acquired loan portfolio decreased net interest income by $4 million.
    • Lower loan yields due to shifts in the loan portfolio mix decreased net interest income by $4 million.
    • Lower reinvestment yields on mortgage-backed investment securities and a decrease in average balances decreased net interest income by $1 million.
  • Average earning assets increased $321 million in the second quarter 2013, compared to the first quarter 2013, primarily reflecting increases of $299 million in excess liquidity and $276 million in average loans, partially offset by a $228 million decrease in average investment securities available-for-sale.
  • The net interest margin of 2.83 percent decreased 5 basis points compared to the first quarter 2013. The decrease in net interest margin was primarily due to lower accretion on the acquired loan portfolio (3 basis points), lower loan yields (2 basis points) and an increase in excess liquidity (1 basis point), partially offset by lower funding costs (1 basis point).

Noninterest Income
Noninterest income increased $8 million to $208 million for the second quarter 2013, compared to $200 million for the first quarter 2013. Customer-driven fee income increased $4 million and noncustomer-driven income increased $4 million. The increase in customer-driven fee income was primarily due to a $3 million increase in customer derivative income and broad-based increases across most customer-driven fee income categories, partially offset by a $2 million decrease in service charges on deposit accounts from high first quarter 2013 levels. The increase in noncustomer-driven income was primarily due to a $6 million annual incentive received in the second quarter 2013 from Comerica's third-party credit card provider, partially offset by a second quarter 2013 securities loss of $2 million.

Noninterest Expenses
Noninterest expenses of $416 million in the second quarter 2013 were unchanged compared to the first quarter 2013, as a $6 million decrease in salaries expense was offset by a $4 million write-down on other foreclosed assets and a $2 million increase in outside processing fee expense. The decrease in salaries expense was primarily due to decreases in incentive and stock based compensation and lower staffing levels, partially offset by the impact of merit increases and one additional day in the quarter.

Credit Quality
"Credit quality was solid in the second quarter, with net charge-offs of 15 basis points, which is the lowest level since the first quarter of 2007," said Babb. "Nonaccrual loans also decreased, as did watch list loans. These positive metrics are indicative of our strong credit culture and have resulted in a $3 million decrease in the provision for credit losses."

                       

(dollar amounts in millions)

2nd Qtr '13

 

1st Qtr '13

 

2nd Qtr '12

Net credit-related charge-offs

$

17

   

$

24

   

$

45

 

Net credit-related charge-offs/Average total loans

0.15

%

 

0.21

%

 

0.42

%

           

Provision for credit losses

$

13

   

$

16

   

$

19

 
           

Nonperforming loans (a)

471

   

515

   

747

 

Nonperforming assets (NPAs) (a)

500

   

555

   

814

 

NPAs/Total loans and foreclosed property

1.10

%

 

1.23

%

 

1.85

%

           

Loans past due 90 days or more and still accruing

$

20

   

$

25

   

$

43

 
           

Allowance for loan losses

613

   

617

   

667

 

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

36

   

36

   

36

 

Total allowance for credit losses

649

   

653

   

703

 
           

Allowance for loan losses/Period-end total loans

1.35

%

 

1.37

%

 

1.52

%

Allowance for loan losses/Nonperforming loans

130

   

120

   

89

 
     

(a) Excludes loans acquired with credit impairment.

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

  • Nonaccrual loans decreased $45 million, to $449 million at June 30, 2013, compared to $494 million at March 31, 2013.
  • Internal watch list loans decreased $224 million, to $2.9 billion at June 30, 2013, compared to $3.1 billion at March 31, 2013.
  • During the second quarter 2013, $37 million of borrower relationships over $2 million were transferred to nonaccrual status, an increase of $3 million from the first quarter 2013.

Balance Sheet and Capital Management
Total assets and common shareholders' equity were $62.9 billion and $6.9 billion, respectively, at June 30, 2013, compared to $64.9 billion and $7.0 billion, respectively, at March 31, 2013. The $2.0 billion decrease in total assets primarily reflected decreases of $1.9 billion in excess liquidity and $655 million in investment securities available-for-sale, partially offset by a $392 million increase in loans. Common shareholders' equity included a $128 million increase in accumulated other comprehensive loss, primarily reflecting a temporary unrealized loss on investment securities available-for-sale of $142 million, net of tax, largely due to the impact of rising rates on the fair value of mortgage-backed investment securities.

There were approximately 185 million common shares outstanding at June 30, 2013. Diluted weighted average shares of 187 million at June 30, 2013 were unchanged compared to March 31, 2013, as the impact of the repurchase of $72 million of common stock (1.9 million shares) under the share repurchase program during the second quarter 2013 was offset by the impact of an increase in share dilution from options and warrants due to an increase in Comerica's stock price. Combined with the dividend of $0.17 per share, share repurchases under the share repurchase program and dividends returned 72 percent of second quarter 2013 net income to shareholders.

Comerica's tangible common equity ratio was 10.04 percent at June 30, 2013, an increase of 18 basis points from March 31, 2013. The estimated Tier 1 common capital ratio increased 4 basis points, to 10.41 percent at June 30, 2013, from March 31, 2013. The estimated Tier 1 common ratio under fully phased-in Basel III capital rules was 10.1 percent percent at June 30, 2013, assuming the election to exclude most elements of AOCI. If the option to exclude most elements of AOCI is not elected, the estimated ratio would be 9.3 percent.

Full-Year 2013 Outlook
For full-year 2013, management expects the following compared to full-year 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 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. Purchase accounting accretion is expected to be $25 million to $30 million for full-year 2013, compared to $71 million in full-year 2012.
  • Provision for credit losses declining, reflecting lower nonperforming loans and net charge-offs, partially offset by loan growth. The provision for credit losses for the second half of 2013 is expected to be similar to the provision for the first six months of 2013.
  • Customer-driven noninterest income relatively stable, reflecting cross-sell initiatives partially offset by regulatory pressures on certain fees. 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. Full-year 2012 included restructuring expenses of $35 million.
  • 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 June 30, 2013 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses second quarter 2013 results compared to first quarter 2013.

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

                                   

(dollar amounts in millions)

2nd Qtr '13

 

1st Qtr '13

 

2nd Qtr '12

Business Bank

$

207

 

85

%

 

$

198

 

85

%

 

$

206

 

84

%

Retail Bank

11

 

5

   

10

 

4

   

19

 

8

 

Wealth Management

24

 

10

   

25

 

11

   

20

 

8

 
 

242

 

100

%

 

233

 

100

%

 

245

 

100

%

Finance

(98)

     

(98)

     

(92)

   

Other (a)

(1)

     

(1)

     

(10)

   

     Total

$

143

     

$

134

     

$

143

   

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

 

Business Bank

                       

(dollar amounts in millions)

2nd Qtr '13

   

1st Qtr '13

   

2nd Qtr '12

 

Net interest income (FTE)

$

372

   

$

375

   

$

379

 

Provision for credit losses

10

   

20

   

12

 

Noninterest income

80

   

77

   

83

 

Noninterest expenses

147

   

146

   

151

 

Net income

207

   

198

   

206

 
           

Net credit-related charge-offs

11

   

16

   

26

 
           

Selected average balances:

         

Assets

36,017

   

35,780

   

34,373

 

Loans

34,955

   

34,753

   

33,449

 

Deposits

25,987

   

25,514

   

24,143

 
   
  • Average loans increased $202 million, primarily reflecting increases in National Dealer Services and general Middle Market, partially offset by a decrease in Corporate Banking.
  • Average deposits increased $473 million, primarily reflecting increases in Corporate Banking and Commercial Real Estate.
  • Net interest income decreased $3 million, primarily due to a decrease in accretion of the purchase discount on the acquired loan portfolio, lower loan yields and a decrease in funds transfer pricing (FTP) credits, partially offset by the benefit provided by an increase in average loans and one additional day in the quarter.
  • The provision for credit losses decreased $10 million, primarily reflecting a decrease in Middle Market, partially offset by an increase in Mortgage Banker Finance. The decrease in Middle Market primarily reflected decreases in Technology and Life Sciences, Environmental Services and Energy.
  • Noninterest income increased $3 million, primarily due to an increase in income from principal investing and warrants and small increases in several other noninterest income categories, partially offset by a decrease in service charges on deposit accounts from high first quarter 2013 levels.
  • Noninterest expenses increased $1 million, primarily due to a $4 million write-down on other foreclosed assets and an increase in outside processing fee expense, partially offset by a decrease in salaries expense.

Retail Bank

                       

(dollar amounts in millions)

2nd Qtr '13

   

1st Qtr '13

   

2nd Qtr '12

 

Net interest income (FTE)

$

154

   

$

155

   

$

161

 

Provision for credit losses

5

   

6

   

3

 

Noninterest income

46

   

41

   

47

 

Noninterest expenses

178

   

175

   

177

 

Net income

11

   

10

   

19

 
           

Net credit-related charge-offs

4

   

8

   

9

 
           

Selected average balances:

         

Assets

5,962

   

5,973

   

5,945

 

Loans

5,271

   

5,276

   

5,250

 

Deposits

21,241

   

21,049

   

20,524

 
   
  • Average loans decreased $5 million, primarily due to a decrease in Retail Banking, partially offset by an increase in Small Business.
  • Average deposits increased $192 million, primarily due to increases in Retail Banking and Small Business.
  • Noninterest income increased $5 million, primarily due to a $6 million annual incentive received in the second quarter 2013 from Comerica's third-party credit card provider, partially offset by a second quarter 2013 securities loss of $2 million.
  • Noninterest expense increased $3 million, primarily due to small increases in several categories.

Wealth Management

                       

(dollar amounts in millions)

2nd Qtr '13

   

1st Qtr '13

   

2nd Qtr '12

 

Net interest income (FTE)

$

46

   

$

46

   

$

46

 

Provision for credit losses

(3)

   

(6)

   

2

 

Noninterest income

65

   

65

   

66

 

Noninterest expenses

77

   

79

   

79

 

Net income

24

   

25

   

20

 
           

Net credit-related charge-offs

2

   

   

10

 
           

Selected average balances:

         

Assets

4,828

   

4,738

   

4,604

 

Loans

4,667

   

4,588

   

4,529

 

Deposits

3,701

   

3,682

   

3,640

 
     
  • Average loans increased $79 million, primarily due to an increase in Private Banking.
  • Noninterest expenses decreased $2 million, primarily due to small decreases in several categories.

Geographic Market Segments
Comerica also provides market segment results for three primary geographic markets: Michigan, California and Texas. In addition to the three primary geographic markets, Other Markets is also reported as a market segment. 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 June 30, 2013 and are presented on a fully taxable equivalent (FTE) basis.

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

                                   

(dollar amounts in millions)

2nd Qtr '13

 

1st Qtr '13

 

2nd Qtr '12

Michigan

$

77

 

32

%

 

$

77

 

34

%

 

$

81

 

33

%

California

65

 

27

   

56

 

24

   

66

 

27

 

Texas

46

 

19

   

44

 

18

   

49

 

20

 

Other Markets

54

 

22

   

56

 

24

   

49

 

20

 
 

242

 

100

%

 

233

 

100

%

 

245

 

100

%

Finance & Other (a)

(99)

     

(99)

     

(102)

   

     Total

$

143

     

$

134

     

$

143

   

(a) Includes items not directly associated with the geographic markets.

  • Average loans increased $370 million and $108 million in California and Texas, respectively, and decreased $52 million in Michigan. The increase in California primarily reflected increases in National Dealer Services and Commercial Real Estate. In Texas, the increase was primarily due to an increase in general Middle Market.
  • Average deposits increased $315 million and $228 million in California and Texas, respectively, and decreased $96 million in Michigan. The increase in California primarily reflected increases in general Middle Market and Corporate Banking. In Texas, the increase was primarily due to increases in Corporate Banking, Technology and Life Sciences, and Energy.
  • The provision for credit losses in California decreased $14 million, primarily reflecting decreases in Technology and Life Sciences and general Middle Market.

Michigan Market

                       

(dollar amounts in millions)

2nd Qtr '13

   

1st Qtr '13

   

2nd Qtr '12

 

Net interest income (FTE)

$

187

   

$

189

   

$

196

 

Provision for credit losses

(4)

   

(8)

   

(6)

 

Noninterest income

88

   

92

   

96

 

Noninterest expenses

161

   

168

   

175

 

Net income

77

   

77

   

81

 
           

Net credit-related charge-offs

4

   

5

   

10

 
           

Selected average balances:

         

Assets

14,022

   

14,042

   

14,028

 

Loans

13,598

   

13,650

   

13,759

 

Deposits

20,159

   

20,255

   

19,224

 

 

California Market

                       

(dollar amounts in millions)

2nd Qtr '13

   

1st Qtr '13

   

2nd Qtr '12

 

Net interest income (FTE)

$

173

   

$

171

   

$

171

 

Provision for credit losses

7

   

21

   

6

 

Noninterest income

36

   

35

   

37

 

Noninterest expenses

100

   

97

   

97

 

Net income

65

   

56

   

66

 
           

Net credit-related charge-offs

12

   

10

   

12

 
           

Selected average balances:

         

Assets

14,155

   

13,795

   

12,870

 

Loans

13,912

   

13,542

   

12,647

 

Deposits

14,671

   

14,356

   

14,149

 

 

Texas Market

                       

(dollar amounts in millions)

2nd Qtr '13

   

1st Qtr '13

   

2nd Qtr '12

 

Net interest income (FTE)

$

131

   

$

135

   

$

143

 

Provision for credit losses

6

   

8

   

9

 

Noninterest income

34

   

31

   

31

 

Noninterest expenses

89

   

91

   

88

 

Net income

46

   

44

   

49

 
           

Net credit-related charge-offs

(3)

   

6

   

4

 
           

Selected average balances:

         

Assets

10,886

   

10,795

   

10,268

 

Loans

10,179

   

10,071

   

9,506

 

Deposits

10,187

   

9,959

   

10,185

 

 

Conference Call and Webcast
Comerica will host a conference call to review second quarter 2013 financial results at 7 a.m. CT Tuesday, July 16, 2013. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 96351362). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A replay of the Webcast can 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

 

Six Months Ended

 

June 30,

March 31,

June 30,

 

June 30,

(in millions, except per share data)

2013

2013

2012

 

2013

2012

PER COMMON SHARE AND COMMON STOCK DATA

           

Diluted net income

$

0.76

 

$

0.70

 

$

0.73

   

$

1.46

 

$

1.39

 

Cash dividends declared

0.17

 

0.17

 

0.15

   

0.34

 

0.25

 

Common shareholders' equity (at period end)

37.32

 

37.41

 

36.18

       

Tangible common equity (at period end) (a)

33.79

 

33.90

 

32.76

       
             

Average diluted shares (in thousands)

186,998

 

187,442

 

194,487

   

187,219

 

195,254

 

KEY RATIOS

           

Return on average common shareholders' equity

8.23

%

7.68

%

8.22

%

 

7.95

%

7.86

%

Return on average assets

0.90

 

0.84

 

0.93

   

0.87

 

0.89

 

Tier 1 common capital ratio (a) (b)

10.41

 

10.37

 

10.39

       

Tier 1 risk-based capital ratio (b)

10.41

 

10.37

 

10.39

       

Total risk-based capital ratio (b)

13.27

 

13.41

 

13.91

       

Leverage ratio (b)

10.81

 

10.75

 

10.97

       

Tangible common equity ratio (a)

10.04

 

9.86

 

10.31

       

AVERAGE BALANCES

           

Commercial loans

$

28,393

 

$

28,056

 

$

25,983

   

$

28,225

 

$

25,359

 

Real estate construction loans:

           

Commercial Real Estate business line (c)

1,218

 

1,116

 

1,035

   

1,167

 

1,046

 

Other business lines (d)

235

 

198

 

385

   

217

 

391

 

     Total real estate construction loans

1,453

 

1,314

 

1,420

   

1,384

 

1,437

 

Commercial mortgage loans:

           

Commercial Real Estate business line (c)

1,798

 

1,836

 

2,443

   

1,817

 

2,482

 

Other business lines (d)

7,394

 

7,562

 

7,540

   

7,478

 

7,611

 

     Total commercial mortgage loans

9,192

 

9,398

 

9,983

   

9,295

 

10,093

 

Lease financing

855

 

857

 

869

   

856

 

883

 

International loans

1,262

 

1,282

 

1,265

   

1,272

 

1,235

 

Residential mortgage loans

1,602

 

1,556

 

1,487

   

1,579

 

1,503

 

Consumer loans

2,136

 

2,154

 

2,221

   

2,145

 

2,239

 

Total loans

44,893

 

44,617

 

43,228

   

44,756

 

42,749

 
             

Earning assets

58,928

 

58,607

 

56,652

   

58,769

 

56,418

 

Total assets

63,709

 

63,451

 

61,681

   

63,736

 

61,513

 
             

Noninterest-bearing deposits

22,076

 

21,506

 

20,128

   

21,793

 

19,882

 

Interest-bearing deposits

29,372

 

29,186

 

28,544

   

29,302

 

28,609

 

Total deposits

51,448

 

50,692

 

48,672

   

51,095

 

48,491

 
             

Common shareholders' equity

6,982

 

6,956

 

7,002

   

6,969

 

6,971

 

NET INTEREST INCOME

           

Net interest income (fully taxable equivalent basis)

$

415

 

$

416

 

$

435

   

$

831

 

$

878

 

Fully taxable equivalent adjustment

1

 

 

   

1

 

1

 

Net interest margin (fully taxable equivalent basis)

2.83

%

2.88

%

3.10

%

 

2.86

%

3.14

%

CREDIT QUALITY

           

Nonaccrual loans

$

449

 

$

494

 

$

719

       

Reduced-rate loans

22

 

21

 

28

       

Total nonperforming loans (e)

471

 

515

 

747

       

Foreclosed property

29

 

40

 

67

       

Total nonperforming assets (e)

500

 

555

 

814

       
             

Loans past due 90 days or more and still accruing

20

 

25

 

43

       
             

Gross loan charge-offs

35

 

38

 

64

   

$

73

 

$

126

 

Loan recoveries

18

 

14

 

19

   

32

 

36

 

Net loan charge-offs

17

 

24

 

45

   

41

 

90

 
             

Allowance for loan losses

613

 

617

 

667

       

Allowance for credit losses on lending-related commitments

36

 

36

 

36

       

Total allowance for credit losses

649

 

653

 

703

       
             

Allowance for loan losses as a percentage of total loans

1.35

%

1.37

%

1.52

%

     

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

0.15

 

0.21

 

0.42

   

0.18

%

0.42

%

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

1.10

 

1.23

 

1.85

       

Allowance for loan losses as a percentage of total nonperforming loans

130

 

120

 

89

       
     

(a)

See Reconciliation of Non-GAAP Financial Measures.

(b)

June 30, 2013 ratios are estimated.

(c)

Primarily loans to real estate 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

         
 

June 30,

March 31,

December 31,

June 30,

(in millions, except share data)

2013

2013

2012

2012

 

(unaudited)

(unaudited)

 

(unaudited)

ASSETS

       

Cash and due from banks

$

1,016

 

$

877

 

$

1,395

 

$

1,076

 
         

Federal funds sold

31

 

 

100

 

 

Interest-bearing deposits with banks

2,878

 

4,720

 

3,039

 

3,064

 

Other short-term investments

119

 

115

 

125

 

170

 
         

Investment securities available-for-sale

9,631

 

10,286

 

10,297

 

9,940

 
         

Commercial loans

29,186

 

28,508

 

29,513

 

27,016

 

Real estate construction loans

1,479

 

1,396

 

1,240

 

1,377

 

Commercial mortgage loans

9,007

 

9,317

 

9,472

 

9,830

 

Lease financing

843

 

853

 

859

 

858

 

International loans

1,209

 

1,269

 

1,293

 

1,224

 

Residential mortgage loans

1,611

 

1,568

 

1,527

 

1,469

 

Consumer loans

2,124

 

2,156

 

2,153

 

2,218

 

          Total loans

45,459

 

45,067

 

46,057

 

43,992

 

Less allowance for loan losses

(613)

 

(617)

 

(629)

 

(667)

 

          Net loans

44,846

 

44,450

 

45,428

 

43,325

 
         

Premises and equipment

604

 

618

 

622

 

667

 

Accrued income and other assets

3,822

 

3,819

 

4,063

 

4,138

 

          Total assets

$

62,947

 

$

64,885

 

$

65,069

 

$

62,380

 
         

LIABILITIES AND SHAREHOLDERS' EQUITY

       

Noninterest-bearing deposits

$

21,870

 

$

22,777

 

$

23,279

 

$

21,330

 
         

Money market and interest-bearing checking deposits

21,677

 

21,540

 

21,273

 

19,993

 

Savings deposits

1,677

 

1,652

 

1,606

 

1,629

 

Customer certificates of deposit

5,594

 

5,753

 

5,531

 

6,045

 

Foreign office time deposits

437

 

395

 

502

 

376

 

          Total interest-bearing deposits

29,385

 

29,340

 

28,912

 

28,043

 

          Total deposits

51,255

 

52,117

 

52,191

 

49,373

 
         

Short-term borrowings

131

 

58

 

110

 

83

 

Accrued expenses and other liabilities

1,049

 

1,023

 

1,106

 

1,154

 

Medium- and long-term debt

3,601

 

4,699

 

4,720

 

4,742

 

          Total liabilities

56,036

 

57,897

 

58,127

 

55,352

 
         

Common stock - $5 par value:

       

     Authorized - 325,000,000 shares

       

     Issued - 228,164,824 shares

1,141

 

1,141

 

1,141

 

1,141

 

Capital surplus

2,160

 

2,157

 

2,162

 

2,144

 

Accumulated other comprehensive loss

(538)

 

(410)

 

(413)

 

(301)

 

Retained earnings

6,127

 

6,020

 

5,931

 

5,744

 

Less cost of common stock in treasury - 42,999,083 shares at 6/30/13, 41,361,612 shares at 3/31/13, 39,889,610 shares at 12/31/12 and 33,889,392 shares at 6/30/12

(1,979)

 

(1,920)

 

(1,879)

 

(1,700)

 

          Total shareholders' equity

6,911

 

6,988

 

6,942

 

7,028

 

          Total liabilities and shareholders' equity

$

62,947

 

$

64,885

 

$

65,069

 

$

62,380

 

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries

           
 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

(in millions, except per share data)

2013

2012

 

2013

2012

INTEREST INCOME

         

Interest and fees on loans

$

388

 

$

408

   

$

778

 

$

819

 

Interest on investment securities

52

 

59

   

105

 

122

 

Interest on short-term investments

3

 

3

   

6

 

6

 

Total interest income

443

 

470

   

889

 

947

 

INTEREST EXPENSE

         

Interest on deposits

15

 

18

   

30

 

37

 

Interest on medium- and long-term debt

14

 

17

   

29

 

33

 

Total interest expense

29

 

35

   

59

 

70

 

Net interest income

414

 

435

   

830

 

877

 

Provision for credit losses

13

 

19

   

29

 

41

 

Net interest income after provision for credit losses

401

 

416

   

801

 

836

 

NONINTEREST INCOME

         

Service charges on deposit accounts

53

 

53

   

108

 

109

 

Fiduciary income

44

 

39

   

87

 

77

 

Commercial lending fees

22

 

24

   

43

 

49

 

Letter of credit fees

16

 

18

   

32

 

35

 

Card fees

13

 

12

   

25

 

23

 

Foreign exchange income

9

 

10

   

18

 

20

 

Bank-owned life insurance

10

 

10

   

19

 

20

 

Brokerage fees

4

 

4

   

9

 

9

 

Net securities (losses) gains

(2)

 

6

   

(2)

 

11

 

Other noninterest income

39

 

35

   

69

 

64

 

Total noninterest income

208

 

211

   

408

 

417

 

NONINTEREST EXPENSES

         

Salaries

182

 

189

   

370

 

390

 

Employee benefits

63

 

61

   

126

 

120

 

Total salaries and employee benefits

245

 

250

   

496

 

510

 

Net occupancy expense

39

 

40

   

78

 

81

 

Equipment expense

15

 

16

   

30

 

33

 

Outside processing fee expense

30

 

26

   

58

 

52

 

Software expense

22

 

21

   

44

 

44

 

Merger and restructuring charges

 

8

   

 

8

 

FDIC insurance expense

8

 

10

   

17

 

20

 

Advertising expense

6

 

7

   

12

 

14

 

Other real estate expense

1

 

1

   

2

 

4

 

Other noninterest expenses

50

 

55

   

95

 

115

 

Total noninterest expenses

416

 

434

   

832

 

881

 

Income before income taxes

193

 

193

   

377

 

372

 

Provision for income taxes

50

 

50

   

100

 

98

 

NET INCOME

143

 

143

   

277

 

274

 

Less income allocated to participating securities

2

 

2

   

4

 

3

 

Net income attributable to common shares

$

141

 

$

141

   

$

273

 

$

271

 

Earnings per common share:

         

Basic

$

0.77

 

$

0.73

   

$

1.48

 

$

1.39

 

Diluted

0.76

 

0.73

   

1.46

 

1.39

 
           

Comprehensive income

15

 

169

   

152

 

329

 
           

Cash dividends declared on common stock

32

 

29

   

64

 

49

 

Cash dividends declared per common share

0.17

 

0.15

   

0.34

 

0.25

 

 

CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries

                       
 

Second

First

Fourth

Third

Second

 

Second Quarter 2013 Compared To:

 

Quarter

Quarter

Quarter

Quarter

Quarter

 

First Quarter 2013

 

Second Quarter 2012

(in millions, except per share data)

2013

2013

2012

2012

2012

 

Amount

Percent

 

Amount

Percent

INTEREST INCOME

                     

Interest and fees on loans

$

388

 

$

390

 

$

398

 

$

400

 

$

408

   

$

(2)

 

%

 

$

(20)

 

(5)%

 

Interest on investment securities

52

 

53

 

55

 

57

 

59

   

(1)

 

(3)

   

(7)

 

(13)

 

Interest on short-term investments

3

 

3

 

3

 

3

 

3

   

 

   

 

 

Total interest income

443

 

446

 

456

 

460

 

470

   

(3)

 

(1)

   

(27)

 

(6)

 

INTEREST EXPENSE

                     

Interest on deposits

15

 

15

 

16

 

17

 

18

   

 

   

(3)

 

(21)

 

Interest on medium- and long-term debt

14

 

15

 

16

 

16

 

17

   

(1)

 

(7)

   

(3)

 

(15)

 

Total interest expense

29

 

30

 

32

 

33

 

35

   

(1)

 

(6)

   

(6)

 

(18)

 

Net interest income

414

 

416

 

424

 

427

 

435

   

(2)

 

   

(21)

 

(5)

 

Provision for credit losses

13

 

16

 

16

 

22

 

19

   

(3)

 

(15)

   

(6)

 

(30)

 

Net interest income after provision

for credit losses

401

 

400

 

408

 

405

 

416

   

1

 

   

(15)

 

(3)

 

NONINTEREST INCOME

                     

Service charges on deposit accounts

53

 

55

 

52

 

53

 

53

   

(2)

 

(3)

   

 

 

Fiduciary income

44

 

43

 

42

 

39

 

39

   

1

 

2

   

5

 

10

 

Commercial lending fees

22

 

21

 

25

 

22

 

24

   

1

 

5

   

(2)

 

(7)

 

Letter of credit fees

16

 

16

 

17

 

19

 

18

   

 

   

(2)

 

(7)

 

Card fees

13

 

12

 

12

 

12

 

12

   

1

 

7

   

1

 

9

 

Foreign exchange income

9

 

9

 

9

 

9

 

10

   

 

   

(1)

 

(4)

 

Bank-owned life insurance

10

 

9

 

9

 

10

 

10

   

1

 

15

   

 

 

Brokerage fees

4

 

5

 

5

 

5

 

4

   

(1)

 

(7)

   

 

 

Net securities (losses) gains

(2)

 

 

1

 

 

6

   

(2)

 

N/M

   

(8)

 

N/M

 

Other noninterest income

39

 

30

 

32

 

28

 

35

   

9

 

28

   

4

 

11

 

Total noninterest income

208

 

200

 

204

 

197

 

211

   

8

 

5

   

(3)

 

(1)

 

NONINTEREST EXPENSES

                     

Salaries

182

 

188

 

196

 

192

 

189

   

(6)

 

(3)

   

(7)

 

(4)

 

Employee benefits

63

 

63

 

59

 

61

 

61

   

 

   

2

 

3

 

Total salaries and employee benefits

245

 

251

 

255

 

253

 

250

   

(6)

 

(2)

   

(5)

 

(2)

 

Net occupancy expense

39

 

39

 

42

 

40

 

40

   

 

   

(1)

 

 

Equipment expense

15

 

15

 

15

 

17

 

16

   

 

   

(1)

 

(5)

 

Outside processing fee expense

30

 

28

 

28

 

27

 

26

   

2

 

7

   

4

 

12

 

Software expense

22

 

22

 

23

 

23

 

21

   

 

   

1

 

2

 

Merger and restructuring charges

 

 

2

 

25

 

8

   

 

   

(8)

 

N/M

 

FDIC insurance expense

8

 

9

 

9

 

9

 

10

   

(1)

 

(13)

   

(2)

 

(14)

 

Advertising expense

6

 

6

 

6

 

7

 

7

   

 

   

(1)

 

(15)

 

Other real estate expense

1

 

1

 

3

 

2

 

1

   

 

   

 

 

Other noninterest expenses

50

 

45

 

44

 

46

 

55

   

5

 

10

   

(5)

 

(9)

 

Total noninterest expenses

416

 

416

 

427

 

449

 

434

   

 

   

(18)

 

(4)

 

Income before income taxes

193

 

184

 

185

 

153

 

193

   

9

 

6

   

 

 

Provision for income taxes

50

 

50

 

55

 

36

 

50

   

 

   

 

 

NET INCOME

143

 

134

 

130

 

117

 

143

   

9

 

8

   

 

 

Less income allocated to participating securities

2

 

2

 

2

 

1

 

2

   

 

   

 

 

Net income attributable to common shares

$

141

 

$

132

 

$

128

 

$

116

 

$

141

   

$

9

 

8

%

 

$

 

%

Earnings per common share:

                     

Basic

$

0.77

 

$

0.71

 

$

0.68

 

$

0.61

 

$

0.73

   

$

0.06

 

8

%

 

$

0.04

 

5

%

Diluted

0.76

 

0.70

 

0.68

 

0.61

 

0.73

   

0.06

 

9

   

0.03

 

4

 
                       

Comprehensive income (loss)

15

 

137

 

(30)

 

165

 

169

   

(122)

 

(89)

   

(154)

 

(91)

 
                       

Cash dividends declared on common stock

32

 

32

 

28

 

29

 

29

   

 

   

3

 

8

 

Cash dividends declared per common share

0.17

 

0.17

 

0.15

 

0.15

 

0.15

   

 

   

0.02

 

13

 

N/M - Not Meaningful

 

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)

 

Comerica Incorporated and Subsidiaries

             
 

2013

 

2012

(in millions)

2nd Qtr

1st Qtr

 

4th Qtr

3rd Qtr

2nd Qtr

             

Balance at beginning of period

$

617

 

$

629

   

$

647

 

$

667

 

$

704

 
             

Loan charge-offs:

           

     Commercial

19

 

21

   

42

 

19

 

26

 

     Real estate construction:

           

          Commercial Real Estate business line (a)

2

 

   

1

 

2

 

2

 

          Other business lines (b)

 

   

 

 

1

 

               Total real estate construction

2

 

   

1

 

2

 

3

 

     Commercial mortgage:

           

          Commercial Real Estate business line (a)

2

 

1

   

5

 

12

 

16

 

          Other business lines (b)

7

 

12

   

6

 

13

 

11

 

               Total commercial mortgage

9

 

13

   

11

 

25

 

27

 

     International

 

   

 

1

 

 

     Residential mortgage

1

 

1

   

2

 

6

 

3

 

     Consumer

4

 

3

   

4

 

6

 

5

 

          Total loan charge-offs

35

 

38

   

60

 

59

 

64

 
             

Recoveries on loans previously charged-off:

           

     Commercial

11

 

6

   

13

 

7

 

10

 

     Real estate construction

1

 

1

   

1

 

3

 

1

 

     Commercial mortgage

3

 

5

   

6

 

5

 

4

 

     International

 

   

1

 

 

 

     Residential mortgage

1

 

1

   

1

 

 

 

     Consumer

2

 

1

   

1

 

1

 

4

 

          Total recoveries

18

 

14

   

23

 

16

 

19

 

Net loan charge-offs

17

 

24

   

37

 

43

 

45

 

Provision for loan losses

13

 

12

   

19

 

23

 

8

 

Balance at end of period

$

613

 

$

617

   

$

629

 

$

647

 

$

667

 
             

Allowance for loan losses as a percentage of total loans

1.35

%

1.37

%

 

1.37

%

1.46

%

1.52

%

             

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

0.15

 

0.21

   

0.34

 

0.39

 

0.42

 
     

(a)

Primarily charge-offs of loans to real estate 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)

2nd Qtr

1st Qtr

 

4th Qtr

3rd Qtr

2nd Qtr

             

Balance at beginning of period

$

36

 

$

32

   

$

35

 

$

36

 

$

25

 

Add: Provision for credit losses on lending-related commitments

 

4

   

(3)

 

(1)

 

11

 

Balance at end of period

$

36

 

$

36

   

$

32

 

$

35

 

$

36

 
             

Unfunded lending-related commitments sold

$

1

 

$

2

   

$

 

$

 

$

 

 

NONPERFORMING ASSETS (unaudited)

Comerica Incorporated and Subsidiaries

             
 

2013

 

2012

(in millions)

2nd Qtr

1st Qtr

 

4th Qtr

3rd Qtr

2nd Qtr

             

SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS

   

Nonaccrual loans:

           

     Business loans:

           

          Commercial

$

102

 

$

102

   

$

103

 

$

154

 

$

175

 

          Real estate construction:

           

               Commercial Real Estate business line (a)

26

 

30

   

30

 

45

 

60

 

               Other business lines (b)

2

 

3

   

3

 

6

 

9

 

                    Total real estate construction

28

 

33

   

33

 

51

 

69

 

          Commercial mortgage:

           

               Commercial Real Estate business line (a)

69

 

86

   

94

 

137

 

155

 

               Other business lines (b)

157

 

178

   

181

 

219

 

220

 

                    Total commercial mortgage

226

 

264

   

275

 

356

 

375

 

          Lease financing

 

   

3

 

3

 

4

 

          Total nonaccrual business loans

356

 

399

   

414

 

564

 

623

 

     Retail loans:

           

          Residential mortgage

62

 

65

   

70

 

69

 

76

 

          Consumer:

           

               Home equity

28

 

28

   

31

 

28

 

16

 

               Other consumer

3

 

2

   

4

 

4

 

4

 

                    Total consumer

31

 

30

   

35

 

32

 

20

 

          Total nonaccrual retail loans

93

 

95

   

105

 

101

 

96

 

     Total nonaccrual loans

449

 

494

   

519

 

665

 

719

 

Reduced-rate loans

22

 

21

   

22

 

27

 

28

 

Total nonperforming loans (c)

471

 

515

   

541

 

692

 

747

 

Foreclosed property

29

 

40

   

54

 

63

 

67

 

Total nonperforming assets (c)

$

500

 

$

555

   

$

595

 

$

755

 

$

814

 
             

Nonperforming loans as a percentage of total loans

1.04

%

1.14

%

 

1.17

%

1.57

%

1.70

%

Nonperforming assets as a percentage of total loans

and foreclosed property

1.10

 

1.23

   

1.29

 

1.71

 

1.85

 

Allowance for loan losses as a percentage of total

nonperforming loans

130

 

120

   

116

 

94

 

89

 

Loans past due 90 days or more and still accruing

$

20

 

$

25

   

$

23

 

$

36

 

$

43

 
             

ANALYSIS OF NONACCRUAL LOANS

           

Nonaccrual loans at beginning of period

$

494

 

$

519

   

$

665

 

$

719

 

$

830

 

          Loans transferred to nonaccrual (d)

37

 

34

   

36

 

35

 

47

 

          Nonaccrual business loan gross charge-offs (e)

(25)

 

(34)

   

(54)

 

(46)

 

(56)

 

          Loans transferred to accrual status (d)

 

   

 

 

(41)

 

          Nonaccrual business loans sold (f)

(9)

 

(7)

   

(48)

 

(20)

 

(16)

 

          Payments/Other (g)

(48)

 

(18)

   

(80)

 

(23)

 

(45)

 

Nonaccrual loans at end of period

$

449

 

$

494

   

$

519

 

$

665

 

$

719

 

(a) Primarily loans to real estate 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

$

25

 

$

34

   

$

54

 

$

46

 

$

56

 

          Performing watch list loans

5

 

   

 

1

 

 

          Consumer and residential mortgage loans

5

 

4

   

6

 

12

 

8

 

               Total gross loan charge-offs

$

35

 

$

38

   

$

60

 

$

59

 

$

64

 

(f) Analysis of loans sold:

           

          Nonaccrual business loans

$

9

 

$

7

   

$

48

 

$

20

 

$

16

 

          Performing watch list loans

40

 

12

   

24

 

42

 

7

 

               Total loans sold

$

49

 

$

19

   

$

72

 

$

62

 

$

23

 

(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

               
 

Six Months Ended

 

June 30, 2013

 

June 30, 2012

 

Average

 

Average

 

Average

 

Average

(dollar amounts in millions)

Balance

Interest

Rate

 

Balance

Interest

Rate

               

Commercial loans

$

28,225

 

$

462

 

3.30

%

 

$

25,359

 

$

446

 

3.54

%

Real estate construction loans

1,384

 

28

 

4.10

   

1,437

 

32

 

4.54

 

Commercial mortgage loans

9,295

 

183

 

3.97

   

10,093

 

231

 

4.59

 

Lease financing

856

 

14

 

3.23

   

883

 

15

 

3.35

 

International loans

1,272

 

23

 

3.72

   

1,235

 

23

 

3.71

 

Residential mortgage loans

1,579

 

33

 

4.21

   

1,503

 

35

 

4.65

 

Consumer loans

2,145

 

36

 

3.33

   

2,239

 

38

 

3.43

 

Total loans (a)

44,756

 

779

 

3.51

   

42,749

 

820

 

3.86

 
               

Mortgage-backed securities available-for-sale

9,532

 

104

 

2.18

   

9,312

 

120

 

2.60

 

Other investment securities available-for-sale

374

 

1

 

0.55

   

496

 

2

 

0.79

 

Total investment securities available-for-sale

9,906

 

105

 

2.16

   

9,808

 

122

 

2.57

 
               

Interest-bearing deposits with banks (b)

3,990

 

5

 

0.26

   

3,723

 

5

 

0.26

 

Other short-term investments

117

 

1

 

1.67

   

138

 

1

 

1.76

 

Total earning assets

58,769

 

890

 

3.06

   

56,418

 

948

 

3.39

 
               

Cash and due from banks

975

       

965

     

Allowance for loan losses

(629)

       

(723)

     

Accrued income and other assets

4,621

       

4,853

     

Total assets

$

63,736

       

$

61,513

     
               

Money market and interest-bearing checking deposits

$

21,442

 

15

 

0.14

   

$

20,623

 

18

 

0.18

 

Savings deposits

1,640

 

 

0.03

   

1,575

 

1

 

0.08

 

Customer certificates of deposit

5,715

 

13

 

0.45

   

6,042

 

17

 

0.55

 

Foreign office time deposits

505

 

2

 

0.57

   

369

 

1

 

0.61

 

Total interest-bearing deposits

29,302

 

30

 

0.20

   

28,609

 

37

 

0.26

 
               

Short-term borrowings

158

 

 

0.09

   

73

 

 

0.11

 

Medium- and long-term debt

4,374

 

29

 

1.37

   

4,897

 

33

 

1.37

 

Total interest-bearing sources

33,834

 

59

 

0.35

   

33,579

 

70

 

0.42

 
               

Noninterest-bearing deposits

21,793

       

19,882

     

Accrued expenses and other liabilities

1,140

       

1,081

     

Total shareholders' equity

6,969

       

6,971

     

Total liabilities and shareholders' equity

$

63,736

       

$

61,513

     
               

Net interest income/rate spread (FTE)

 

$

831

 

2.71

     

$

878

 

2.97

 
               

FTE adjustment

 

$

1

       

$

1

   
               

Impact of net noninterest-bearing sources of funds

   

0.15

       

0.17

 

Net interest margin (as a percentage of average earning assets) (FTE) (a) (b)

   

2.86

%

     

3.14

%

(a)

Accretion of the purchase discount on the acquired loan portfolio of $18 million and $43 million in the six months ended June 30, 2013 and 2012, respectively, increased the net interest margin by 6 basis points and 15 basis points in each respective period.

(b)

Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 18 basis points and 20 basis points in the six months ended June 30, 2013 and 2012, respectively.

 

ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)

Comerica Incorporated and Subsidiaries

                       
 

Three Months Ended

 

June 30, 2013

 

March 31, 2013

 

June 30, 2012

 

Average

 

Average

 

Average

 

Average

 

Average

 

Average

(dollar amounts in millions)

Balance

Interest

Rate

 

Balance

Interest

Rate

 

Balance

Interest

Rate

                       

Commercial loans

$

28,393

 

$

233

 

3.29

%

 

$

28,056

 

$

229

 

3.31

%

 

$

25,983

 

$

227

 

3.52

%

Real estate construction loans

1,453

 

15

 

4.04

   

1,314

 

13

 

4.15

   

1,420

 

15

 

4.50

 

Commercial mortgage loans

9,192

 

88

 

3.86

   

9,398

 

95

 

4.08

   

9,983

 

112

 

4.46

 

Lease financing

855

 

7

 

3.22

   

857

 

7

 

3.23

   

869

 

7

 

3.28

 

International loans

1,262

 

12

 

3.81

   

1,282

 

11

 

3.62

   

1,265

 

12

 

3.66

 

Residential mortgage loans

1,602

 

16

 

4.04

   

1,556

 

17

 

4.39

   

1,487

 

17

 

4.53

 

Consumer loans

2,136

 

18

 

3.30

   

2,154

 

18

 

3.36

   

2,221

 

18

 

3.37

 

Total loans (a)

44,893

 

389

 

3.47

   

44,617

 

390

 

3.54

   

43,228

 

408

 

3.79

 
                       

Mortgage-backed securities available-for-sale

9,415

 

51

 

2.17

   

9,650

 

53

 

2.19

   

9,262

 

58

 

2.51

 

Other investment securities available-for-sale

378

 

1

 

0.56

   

371

 

 

0.54

   

466

 

1

 

0.85

 

Total investment securities available-for-sale

9,793

 

52

 

2.15

   

10,021

 

53

 

2.17

   

9,728

 

59

 

2.49

 
                       

Interest-bearing deposits with banks (b)

4,125

 

3

 

0.26

   

3,852

 

2

 

0.27

   

3,555

 

3

 

0.26

 

Other short-term investments

117

 

 

1.05

   

117

 

1

 

2.30

   

141

 

 

1.55

 

Total earning assets

58,928

 

444

 

3.02

   

58,607

 

446

 

3.09

   

56,652

 

470

 

3.35

 
                       

Cash and due from banks

972

       

979

       

931

     

Allowance for loan losses

(625)

       

(633)

       

(710)

     

Accrued income and other assets

4,434

       

4,498

       

4,808

     

Total assets

$

63,709

       

$

63,451

       

$

61,681

     
                       

Money market and interest-bearing checking deposits

$

21,544

 

8

 

0.13

   

$

21,294

 

7

 

0.14

   

$

20,451

 

8

 

0.18

 

Savings deposits

1,658

 

 

0.03

   

1,623

 

 

0.03

   

1,607

 

1

 

0.07

 

Customer certificates of deposit

5,685

 

6

 

0.43

   

5,744

 

7

 

0.47

   

6,107

 

9

 

0.53

 

Foreign office time deposits

485

 

1

 

0.60

   

525

 

1

 

0.55

   

379

 

 

0.64

 

Total interest-bearing deposits

29,372

 

15

 

0.19

   

29,186

 

15

 

0.21

   

28,544

 

18

 

0.25

 
                       

Short-term borrowings

193

 

 

0.07

   

123

 

 

0.11

   

68

 

 

0.12

 

Medium- and long-term debt

4,044

 

14

 

1.43

   

4,707

 

15

 

1.32

   

4,854

 

17

 

1.40

 

Total interest-bearing sources

33,609

 

29

 

0.34

   

34,016

 

30

 

0.36

   

33,466

 

35

 

0.42

 
                       

Noninterest-bearing deposits

22,076

       

21,506

       

20,128

     

Accrued expenses and other liabilities

1,042

       

973

       

1,085

     

Total shareholders' equity

6,982

       

6,956

       

7,002

     

Total liabilities and shareholders' equity

$

63,709

       

$

63,451

       

$

61,681

     
                       

Net interest income/rate spread (FTE)

 

$

415

 

2.68

     

$

416

 

2.73

     

$

435

 

2.93

 
                       

FTE adjustment

 

$

1

       

$

       

$

   
                       

Impact of net noninterest-bearing sources of funds

   

0.15

       

0.15

       

0.17

 

Net interest margin (as a percentage of average earning assets) (FTE) (a) (b)

   

2.83

%

     

2.88

%

     

3.10

%

(a)

Accretion of the purchase discount on the acquired loan portfolio of $7 million, $11 million and $18 million in the second and first quarters of 2013 and the second quarter of 2012, respectively, increased the net interest margin by 5 basis points, 8 basis points and 13 basis points in each respective period.

(b)

Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 18 basis points and 17 basis points in the second and first quarters of 2013 and 18 basis points in the second quarter of 2012, respectively.

 

CONSOLIDATED STATISTICAL DATA (unaudited)

Comerica Incorporated and Subsidiaries

           
 

June 30,

March 31,

December 31,

September 30,

June 30,

(in millions, except per share data)

2013

2013

2012

2012

2012

           

Commercial loans:

         

     Floor plan

$

3,241

 

$

2,963

 

$

2,939

 

$

2,276

 

$

2,406

 

     Other

25,945

 

25,545

 

26,574

 

25,184

 

24,610

 

          Total commercial loans

29,186

 

28,508

 

29,513

 

27,460

 

27,016

 

Real estate construction loans:

         

     Commercial Real Estate business line (a)

1,223

 

1,185

 

1,049

 

1,003

 

991

 

     Other business lines (b)

256

 

211

 

191

 

389

 

386

 

          Total real estate construction loans

1,479

 

1,396

 

1,240

 

1,392

 

1,377

 

Commercial mortgage loans:

         

     Commercial Real Estate business line (a)

1,743

 

1,812

 

1,873

 

2,020

 

2,315

 

     Other business lines (b)

7,264

 

7,505

 

7,599

 

7,539

 

7,515

 

          Total commercial mortgage loans

9,007

 

9,317

 

9,472

 

9,559

 

9,830

 

Lease financing

843

 

853

 

859

 

837

 

858

 

International loans

1,209

 

1,269

 

1,293

 

1,277

 

1,224

 

Residential mortgage loans

1,611

 

1,568

 

1,527

 

1,495

 

1,469

 

Consumer loans:

         

     Home equity

1,474

 

1,498

 

1,537

 

1,570

 

1,584

 

     Other consumer

650

 

658

 

616

 

604

 

634

 

          Total consumer loans

2,124

 

2,156

 

2,153

 

2,174

 

2,218

 

          Total loans

$

45,459

 

$

45,067

 

$

46,057

 

$

44,194

 

$

43,992

 
           

Goodwill

$

635

 

$

635

 

$

635

 

$

635

 

$

635

 

Core deposit intangible

18

 

19

 

20

 

23

 

25

 

Loan servicing rights

2

 

2

 

2

 

2

 

3

 
           

Tier 1 common capital ratio (c) (d)

10.41

%

10.37

%

10.14

%

10.37

%

10.39

%

Tier 1 risk-based capital ratio (c)

10.41

 

10.37

 

10.14

 

10.37

 

10.39

 

Total risk-based capital ratio (c)

13.27

 

13.41

 

13.15

 

13.69

 

13.91

 

Leverage ratio (c)

10.81

 

10.75

 

10.57

 

10.78

 

10.97

 

Tangible common equity ratio (d)

10.04

 

9.86

 

9.76

 

10.30

 

10.31

 
           

Common shareholders' equity per share of common stock

$

37.32

 

$

37.41

 

$

36.87

 

$

37.01

 

$

36.18

 

Tangible common equity per share of common stock (d)

33.79

 

33.90

 

33.38

 

33.56

 

32.76

 

Market value per share for the quarter:

         

     High

40.44

 

36.99

 

32.14

 

33.38

 

32.88

 

     Low

33.55

 

30.73

 

27.72

 

29.32

 

27.88

 

     Close

39.83

 

35.95

 

30.34

 

31.05

 

30.71

 
           

Quarterly ratios:

         

     Return on average common shareholders' equity

8.23

%

7.68

%

7.36

%

6.67

%

8.22

%

     Return on average assets

0.90

 

0.84

 

0.81

 

0.75

 

0.93

 

     Efficiency ratio (e)

66.43

 

67.58

 

68.08

 

71.68

 

67.53

 
           

Number of banking centers

484

 

487

 

487

 

490

 

493

 
           

Number of employees - full time equivalent

8,929

 

9,001

 

9,035

 

9,079

 

9,083

 
     

(a)

Primarily loans to real estate developers.

(b)

Primarily loans secured by owner-occupied real estate.

(c)

June 30, 2013 ratios are estimated.

(d)

See Reconciliation of Non-GAAP Financial Measures.

(e)

Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains.

 

PARENT COMPANY ONLY BALANCE SHEETS (unaudited)

Comerica Incorporated

     
       
 

June 30,

December 31,

June 30,

(in millions, except share data)

2013

2012

2012

       

ASSETS

     

Cash and due from subsidiary bank

$

3

 

$

2

 

$

2

 

Short-term investments with subsidiary bank

473

 

431

 

442

 

Other short-term investments

92

 

88

 

86

 

Investment in subsidiaries, principally banks

6,979

 

7,045

 

7,130

 

Premises and equipment

4

 

4

 

4

 

Other assets

137

 

150

 

146

 

     Total assets

$

7,688

 

$

7,720

 

$

7,810

 
       

LIABILITIES AND SHAREHOLDERS' EQUITY

     

Medium- and long-term debt

$

622

 

$

629

 

$

633

 

Other liabilities

155

 

149

 

149

 

     Total liabilities

777

 

778

 

782

 
       

Common stock - $5 par value:

     

     Authorized - 325,000,000 shares

     

     Issued - 228,164,824 shares

1,141

 

1,141

 

1,141

 

Capital surplus

2,160

 

2,162

 

2,144

 

Accumulated other comprehensive loss

(538)

 

(413)

 

(301)

 

Retained earnings

6,127

 

5,931

 

5,744

 

Less cost of common stock in treasury - 42,999,083 shares at 6/30/13, 39,889,610 shares at 12/31/12 and 33,889,392 shares at 6/30/12

(1,979)

 

(1,879)

 

(1,700)

 

     Total shareholders' equity

6,911

 

6,942

 

7,028

 

     Total liabilities and shareholders' equity

$

7,688

 

$

7,720

 

$

7,810

 

 

 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)

Comerica Incorporated and Subsidiaries

         
               
       

Accumulated

     
 

Common Stock

 

Other

   

Total

 

Shares

 

Capital

Comprehensive

Retained

Treasury

Shareholders'

(in millions, except per share data)

Outstanding

Amount

Surplus

Loss

Earnings

Stock

Equity

               

BALANCE AT DECEMBER 31, 2011

197.3

 

$

1,141

 

$

2,170

 

$

(356)

 

$

5,546

 

$

(1,633)

 

$

6,868

 

Net income

 

 

 

 

274

 

 

274

 

Other comprehensive income, net of tax

 

 

 

55

 

 

 

55

 

Cash dividends declared on common stock ($0.25 per share)

 

 

 

 

(49)

 

 

(49)

 

Purchase of common stock

(4.1)

 

 

 

 

 

(125)

 

(125)

 

Net issuance of common stock under employee stock plans

1.1

 

 

(49)

 

 

(27)

 

60

 

(16)

 

Share-based compensation

 

 

21

 

 

 

 

21

 

Other

 

 

2

 

 

 

(2)

 

 

BALANCE AT JUNE 30, 2012

194.3

 

$

1,141

 

$

2,144

 

$

(301)

 

$

5,744

 

$

(1,700)

 

$

7,028

 
               

BALANCE AT DECEMBER 31, 2012

188.3

 

$

1,141

 

$

2,162

 

$

(413)

 

$

5,931

 

$

(1,879)

 

$

6,942

 

Net income

 

 

 

 

277

 

 

277

 

Other comprehensive loss, net of tax

 

 

 

(125)

 

 

 

(125)

 

Cash dividends declared on common stock ($0.34 per share)

 

 

 

 

(64)

 

 

(64)

 

Purchase of common stock

(4.1)

 

 

 

 

 

(146)

 

(146)

 

Net issuance of common stock under employee stock plans

1

 

 

(19)

 

 

(17)

 

45

 

9

 

Share-based compensation

 

 

18

 

 

 

 

18

 

Other

 

 

(1)

 

 

 

1

 

 

BALANCE AT JUNE 30, 2013

185.2

 

$

1,141

 

$

2,160

 

$

(538)

 

$

6,127

 

$

(1,979)

 

$

6,911

 

 

 
                                               

BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)

Comerica Incorporated and Subsidiaries

                       
                       

(dollar amounts in millions)

Business

 

Retail

 

Wealth

           

Three Months Ended June 30, 2013

Bank

 

Bank

 

Management

 

Finance

 

Other

 

Total

Earnings summary:

                     

Net interest income (expense) (FTE)

$

372

   

$

154

   

$

46

   

$

(165)

   

$

8

   

$

415

 

Provision for credit losses

10

   

5

   

(3)

   

   

1

   

13

 

Noninterest income

80

   

46

   

65

   

15

   

2

   

208

 

Noninterest expenses

147

   

178

   

77

   

3

   

11

   

416

 

Provision (benefit) for income taxes (FTE)

88

   

6

   

13

   

(55)

   

(1)

   

51

 

Net income (loss)

$

207

   

$

11

   

$

24

   

$

(98)

   

$

(1)

   

$

143

 

Net credit-related charge-offs

$

11

   

$

4

   

$

2

   

   

   

$

17

 
                       

Selected average balances:

                     

Assets

$

36,017

   

$

5,962

   

$

4,828

   

$

11,514

   

$

5,388

   

$

63,709

 

Loans

34,955

   

5,271

   

4,667

   

   

   

44,893

 

Deposits

25,987

   

21,241

   

3,701

   

283

   

236

   

51,448

 
                       

Statistical data:

                     

Return on average assets (a)

2.30

%

 

0.20

%

 

2.00

%

 

N/M

   

N/M

   

0.90

%

Efficiency ratio (b)

32.41

   

87.98

   

69.86

   

N/M

   

N/M

   

66.43

 
                       
 

Business

 

Retail

 

Wealth

           

Three Months Ended March 31, 2013

Bank

 

Bank

 

Management

 

Finance

 

Other

 

Total

Earnings summary:

                     

Net interest income (expense) (FTE)

$

375

   

$

155

   

$

46

   

$

(167)

   

$

7

   

$

416

 

Provision for credit losses

20

   

6

   

(6)

   

   

(4)

   

16

 

Noninterest income

77

   

41

   

65

   

14

   

3

   

200

 

Noninterest expenses

146

   

175

   

79

   

3

   

13

   

416

 

Provision (benefit) for income taxes (FTE)

88

   

5

   

13

   

(58)

   

2

   

50

 

Net income (loss)

$

198

   

$

10

   

$

25

   

$

(98)

   

$

(1)

   

$

134

 

Net credit-related charge-offs

$

16

   

$

8

   

$

   

   

   

$

24

 
                       

Selected average balances:

                     

Assets

$

35,780

   

$

5,973

   

$

4,738

   

$

11,747

   

$

5,213

   

$

63,451

 

Loans

34,753

   

5,276

   

4,588

   

   

   

44,617

 

Deposits

25,514

   

21,049

   

3,682

   

275

   

172

   

50,692

 
                       

Statistical data:

                     

Return on average assets (a)

2.21

%

 

0.18

%

 

2.12

%

 

N/M

   

N/M

   

0.84

%

Efficiency ratio (b)

32.30

   

89.37

   

71.09

   

N/M

   

N/M

   

67.58

 
                       
 

Business

 

Retail

 

Wealth

           

Three Months Ended June 30, 2012

Bank

 

Bank

 

Management

 

Finance

 

Other

 

Total

Earnings summary:

                     

Net interest income (expense) (FTE)

$

379

   

$

161

   

$

46

   

$

(160)

   

9

   

$

435

 

Provision for credit losses

12

   

3

   

2

   

   

2

   

19

 

Noninterest income

83

   

47

   

66

   

17

   

(2)

   

211

 

Noninterest expenses

151

   

177

   

79

   

3

   

24

   

434

 

Provision (benefit) for income taxes (FTE)

93

   

9

   

11

   

(54)

   

(9)

   

50

 

Net income (loss)

$

206

   

$

19

   

$

20

   

$

(92)

   

$

(10)

   

$

143

 

Net credit-related charge-offs

$

26

   

$

9

   

$

10

   

   

   

$

45

 
                       

Selected average balances:

                     

Assets

$

34,373

   

$

5,945

   

$

4,604

   

$

11,684

   

$

5,075

   

$

61,681

 

Loans

33,449

   

5,250

   

4,529

   

   

   

43,228

 

Deposits

24,143

   

20,524

   

3,640

   

171

   

194

   

48,672

 
                       

Statistical data:

                     

Return on average assets (a)

2.40

%

 

0.35

%

 

1.80

%

 

N/M

   

N/M

   

0.93

%

Efficiency ratio (b)

32.73

   

84.87

   

73.87

   

N/M

   

N/M

   

67.53

 

(a) Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.

(b) Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains.

FTE - Fully Taxable Equivalent

N/M - Not Meaningful

 

MARKET SEGMENT FINANCIAL RESULTS (unaudited)

Comerica Incorporated and Subsidiaries

                       
                       

(dollar amounts in millions)

           

Other

 

Finance

   

Three Months Ended June 30, 2013

Michigan

 

California

 

Texas

 

Markets

 

& Other

 

Total

Earnings summary:

                     

Net interest income (expense) (FTE)

$

187

   

$

173

   

$

131

   

$

81

   

$

(157)

   

$

415

 

Provision for credit losses

(4)

   

7

   

6

   

3

   

1

   

13

 

Noninterest income

88

   

36

   

34

   

33

   

17

   

208

 

Noninterest expenses

161

   

100

   

89

   

52

   

14

   

416

 

Provision (benefit) for income taxes (FTE)

41

   

37

   

24

   

5

   

(56)

   

51

 

Net income (loss)

$

77

   

$

65

   

$

46

   

$

54

   

$

(99)

   

$

143

 

Net credit-related charge-offs

$

4

   

$

12

   

$

(3)

   

$

4

   

$

   

$

17

 
                       

Selected average balances:

                     

Assets

$

14,022

   

$

14,155

   

$

10,886

   

$

7,744

   

$

16,902

   

$

63,709

 

Loans

13,598

   

13,912

   

10,179

   

7,204

   

   

44,893

 

Deposits

20,159

   

14,671

   

10,187

   

5,912

   

519

   

51,448

 
                       

Statistical data:

                     

Return on average assets (a)

1.47

%

 

1.65

%

 

1.62

%

 

2.79

%

 

N/M

   

0.90

%

Efficiency ratio (b)

58.17

   

47.73

   

53.39

   

46.04

   

N/M

   

66.43

 
                       
             

Other

 

Finance

   

Three Months Ended March 31, 2013

Michigan

 

California

 

Texas

 

Markets

 

& Other

 

Total

Earnings summary:

                     

Net interest income (expense) (FTE)

$

189

   

$

171

   

$

135

   

$

81

   

$

(160)

   

$

416

 

Provision for credit losses

(8)

   

21

   

8

   

(1)

   

(4)

   

16

 

Noninterest income

92

   

35

   

31

   

25

   

17

   

200

 

Noninterest expenses

168

   

97

   

91

   

44

   

16

   

416

 

Provision (benefit) for income taxes (FTE)

44

   

32

   

23

   

7

   

(56)

   

50

 

Net income (loss)

$

77

   

$

56

   

$

44

   

$

56

   

$

(99)

   

$

134

 

Net credit-related charge-offs

$

5

   

$

10

   

$

6

   

$

3

   

$

   

$

24

 
                       

Selected average balances:

                     

Assets

$

14,042

   

$

13,795

   

$

10,795

   

$

7,859

   

$

16,960

   

$

63,451

 

Loans

13,650

   

13,542

   

10,071

   

7,354

   

   

44,617

 

Deposits

20,255

   

14,356

   

9,959

   

5,675

   

447

   

50,692

 
                       

Statistical data:

                     

Return on average assets (a)

1.47

%

 

1.45

%

 

1.54

%

 

2.86

%

 

N/M

   

0.84

%

Efficiency ratio (b)

59.53

   

47.04

   

54.99

   

42.11

   

N/M

   

67.58

 
                       
             

Other

 

Finance

   

Three Months Ended June 30, 2012

Michigan

 

California

 

Texas

 

Markets

 

& Other

 

Total

Earnings summary:

                     

Net interest income (expense) (FTE)

$

196

   

$

171

   

$

143

   

$

76

   

$

(151)

   

$

435

 

Provision for credit losses

(6)

   

6

   

9

   

8

   

2

   

19

 

Noninterest income

96

   

37

   

31

   

32

   

15

   

211

 

Noninterest expenses

175

   

97

   

88

   

47

   

27

   

434

 

Provision (benefit) for income taxes (FTE)

42

   

39

   

28

   

4

   

(63)

   

50

 

Net income (loss)

$

81

   

$

66

   

$

49

   

$

49

   

$

(102)

   

$

143

 

Net credit-related charge-offs

$

10

   

$

12

   

$

4

   

$

19

   

$

   

$

45

 
                       

Selected average balances:

                     

Assets

$

14,028

   

$

12,870

   

$

10,268

   

$

7,756

   

$

16,759

   

$

61,681

 

Loans

13,759

   

12,647

   

9,506

   

7,316

   

   

43,228

 

Deposits

19,224

   

14,149

   

10,185

   

4,749

   

365

   

48,672

 
                       

Statistical data:

                     

Return on average assets (a)

1.60

%

 

1.74

%

 

1.71

%

 

2.57

%

 

N/M

   

0.93

%

Efficiency ratio (b)

59.96

   

46.54

   

51.33

   

44.63

   

N/M

   

67.53

 

(a) Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.

(b) Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains.

FTE - Fully Taxable Equivalent

N/M - Not Meaningful

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

Comerica Incorporated and Subsidiaries

           
 

June 30,

March 31,

December 31,

September 30,

June 30,

(dollar amounts in millions)

2013

2013

2012

2012

2012

           

Tier 1 Common Capital Ratio:

         

Tier 1 and Tier 1 common capital (a) (b)

$

6,800

 

$

6,748

 

$

6,705

 

$

6,685

 

$

6,676

 

Risk-weighted assets (a) (b)

$

65,312

 

$

65,099

 

$

66,115

 

$

64,486

 

$

64,244

 

Tier 1 and Tier 1 common risk-based capital ratio (b)

10.41

%

10.37

%

10.14

%

10.37

%

10.39

%

           

Basel III Tier 1 Common Capital Ratio:

         

Tier 1 common capital (b)

$

6,800

 

$

6,748

 

$

6,705

 

$

6,685

 

$

6,676

 

Basel III adjustments (c)

 

(1)

 

(39)

 

(17)

 

(35)

 

Basel III Tier 1 common capital (c)

6,800

 

6,747

 

6,666

 

6,668

 

6,641

 

Basel III adjustments (d)

(537)

 

(409)

 

(413)

 

(253)

 

(301)

 

Basel III Tier 1 common capital (d)

$

6,263

 

$

6,338

 

$

6,253

 

$

6,415

 

$

6,340

 

Risk-weighted assets (a) (b)

$

65,312

 

$

65,099

 

$

66,115

 

$

64,486

 

$

64,244

 

Basel III adjustments (c)

2,165

 

1,996

 

1,854

 

2,313

 

2,329

 

Basel III risk-weighted assets (c)

$

67,477

 

$

67,095

 

$

67,969

 

$

66,799

 

$

66,573

 
           

Tier 1 common capital ratio (b)

10.4

%

10.4

%

10.1

%

10.4

%

10.4

%

Basel III Tier 1 common capital ratio (c)

10.1

 

10.1

 

9.8

 

10.0

 

10.0

 

Basel III Tier 1 common capital ratio (d)

9.3

 

9.4

 

9.2

 

9.6

 

9.5

 
           

Tangible Common Equity Ratio:

         

Common shareholders' equity

$

6,911

 

$

6,988

 

$

6,942

 

$

7,084

 

$

7,028

 

Less:

         

Goodwill

635

 

635

 

635

 

635

 

635

 

Other intangible assets

20

 

21

 

22

 

25

 

28

 

Tangible common equity

$

6,256

 

$

6,332

 

$

6,285

 

$

6,424

 

$

6,365

 
           

Total assets

$

62,947

 

$

64,885

 

$

65,069

 

$

63,000

 

$

62,380

 

Less:

         

Goodwill

635

 

635

 

635

 

635

 

635

 

Other intangible assets

20

 

21

 

22

 

25

 

28

 

Tangible assets

$

62,292

 

$

64,229

 

$

64,412

 

$

62,340

 

$

61,717

 
           

Common equity ratio

10.98

%

10.77

%

10.67

%

11.24

%

11.27

%

Tangible common equity ratio

10.04

 

9.86

 

9.76

 

10.30

 

10.31

 
           

Tangible Common Equity per Share of Common Stock:

         

Common shareholders' equity

$

6,911

 

$

6,988

 

$

6,942

 

$

7,084

 

$

7,028

 

Tangible common equity

6,256

 

6,332

 

6,285

 

6,424

 

6,365

 

Shares of common stock outstanding (in millions)

185

 

187

 

188

 

191

 

194

 

Common shareholders' equity per share of common stock

$

37.32

 

$

37.41

 

$

36.87

 

$

37.01

 

$

36.18

 

Tangible common equity per share of common stock

33.79

 

33.90

 

33.38

 

33.56

 

32.76

 

(a) Tier 1 capital and risk-weighted assets as defined by regulation.

(b) June 30, 2013 Tier 1 capital and risk-weighted assets are estimated.

(c) Estimated ratios based on the standardized approach in the final rule for the U.S. adoption of the Basel III regulatory capital framework and assuming the election to exclude most elements of AOCI.

(d) Estimated ratios based on the standardized approach in the final Basel III capital rules, assuming no election to exclude most elements of AOCI.

 

The Tier 1 common capital ratio removes preferred stock and qualifying trust preferred securities from Tier 1 capital as defined by and calculated in conformity with bank regulations. The Basel III Tier 1 common capital ratio further adjusts Tier 1 common capital and risk-weighted assets to account for the final rule approved by U.S. banking regulators in July 2013 for the U.S. adoption of the Basel III regulatory capital framework. The final Basel III capital rules are effective January 1, 2015 for banking organizations subject to the standardized approach. The tangible common equity ratio removes preferred stock and the effect of intangible assets from capital and the effect of intangible assets from total assets. Tangible common equity per share of common stock removes the effect of intangible assets from common shareholders equity per share of common stock. Comerica believes these measurements are meaningful measures of capital adequacy used by investors, regulators, management and others to evaluate the adequacy of common equity and to compare against other companies in the industry.

SOURCE Comerica Incorporated

For further information: Media, Wayne J. Mielke, (214) 462-4463, or Investors, Darlene P. Persons, (214) 462-6831, or Brittany L. Butler, (214) 462-6834


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