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Comerica Reports Second Quarter 2015 Net Income Of $135 Million, OR 73 Cents Per Share
Average Loan Growth of $682 Million, or 1 Percent, Compared to First Quarter 2015 and $2.1 Billion, or 5 Percent, Compared to Second Quarter 2014
Revenue Increased 2 Percent Compared to First Quarter 2015
Returned $96 Million to Shareholders Through Equity Buybacks and Increased Dividend

DALLAS, July 17, 2015 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported second quarter 2015 net income of $135 million, compared to $134 million for the first quarter 2015 and $151 million for the second quarter 2014. Earnings per diluted share were 73 cents for both the second and first quarters of 2015 and 80 cents for the second quarter 2014.

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(dollar amounts in millions, except per share data)

2nd Qtr '15


1st Qtr '15


2nd Qtr '14


Net interest income

$

421



$

413



$

416



Provision for credit losses

47



14



11



Noninterest income (a)

261



255



220



Noninterest expenses (a)

436


(b)

459



404



Provision for income taxes

64



61



70










Net income

135



134



151










Net income attributable to common shares

134



132



149










Diluted income per common share

0.73



0.73



0.80










Average diluted shares (in millions)

182



182



186










Basel III common equity Tier 1 capital ratio (c) (d)

10.53

%


10.40

%


n/a



Tier 1 common capital ratio (c) (e)

n/a



n/a



10.50

%


Tangible common equity ratio (e)

9.92



9.97



10.39





(a)

Effective January 1, 2015, contractual changes to a card program resulted in a change to the accounting presentation of the related revenues and expenses. The effect of this change was increases of $44 million to both noninterest income and noninterest expenses in both the second and first quarters of 2015.

(b)

Reflects a $31 million reduction in litigation-related expense.

(c)

Basel III capital rules (standardized approach) became effective for Comerica on January 1, 2015. The ratio reflects transitional treatment for certain regulatory deductions and adjustments. For further information, see "Balance Sheet and Capital Management". Capital ratios for prior periods are based on Basel I rules.

(d)

June 30, 2015 ratio is estimated.

(e)

See Reconciliation of Non-GAAP Financial Measures.

n/a - not applicable.



 

"Our second quarter results reflect the advantages of our diverse geographic footprint and industry expertise," said Ralph W. Babb, Jr., chairman and chief executive officer. "Average loans were up $2.1 billion, or 5 percent, compared to a year ago and were up $682 million, or 1 percent, relative to the first quarter, with increases in most markets and business lines. Relative to the first quarter, average deposits increased $408 million, or 1 percent, with noninterest-bearing deposits up $668 million.

"Revenue was up 2 percent, with growth in both net interest income and fee income in the second quarter. Charge-offs, nonaccruals and criticized loans remained well below normal historical levels. The provision for credit losses increased, primarily as a result of an increase in reserves for energy exposure. Noninterest expenses decreased $23 million to $436 million, primarily due to a decrease in litigation-related expense.

"Our balance sheet is well positioned to benefit as rates rise. We remain focused on the long term with a relationship banking strategy that continues to serve us well."

Second Quarter 2015 Compared to First Quarter 2015

  • Average total loans increased $682 million, or 1 percent, to $48.8 billion, primarily driven by a $690 million increase in Mortgage Banker Finance, as well as increases in general Middle Market, Private Banking and National Dealer Services, partially offset by decreases of $276 million in Energy and $151 million in Corporate Banking. Average loans increased across all markets except Texas, which decreased as a result of Energy. Period-end total loans increased $669 million, to $49.7 billion.
  • Average total deposits increased $408 million, or 1 percent, to $57.4 billion, primarily driven by an increase in noninterest-bearing deposits of $668 million, across all markets. Period-end total deposits increased $690 million, to $58.3 billion.
  • Net interest income increased $8 million, or 2 percent, to $421 million in the second quarter 2015, compared to $413 million in the first quarter 2015, primarily due to an increase in loan volume and one additional day in the quarter.
  • Net charge-offs were $18 million, or 0.15 percent of average loans, in the second quarter 2015, compared to $8 million, or 0.07 percent, in the first quarter 2015. The provision for credit losses increased to $47 million in the second quarter 2015, primarily as a result of an increase in reserves for energy exposure.
  • Noninterest income increased $6 million in the second quarter 2015, primarily due to an increase in card fees, as well as small increases in several other fee categories, partially offset by a decrease in commercial lending fees.
  • Noninterest expenses decreased $23 million in the second quarter 2015, primarily reflecting a $31 million decrease in litigation-related expense and a seasonal decrease in salaries and benefits expense, partially offset by an increase in outside processing fees.
  • Capital remained solid at June 30, 2015, as evidenced by an estimated common equity Tier 1 capital ratio of 10.53 percent and a tangible common equity ratio of 9.92 percent.
  • The quarterly dividend increased 5 percent, to $0.21 per share in the second quarter 2015, and Comerica repurchased approximately 1.0 million shares of common stock and 500,000 warrants under the equity repurchase program. These equity repurchases, together with dividends, returned $96 million to shareholders.

Second Quarter 2015 Compared to Second Quarter 2014

  • Average total loans increased $2.1 billion, or 5 percent, reflecting increases in almost all lines of business.
  • Average total deposits increased $4.0 billion, or 8 percent, driven by increases in noninterest-bearing deposits of $3.4 billion, or 14 percent, and money market and NOW deposits of $1.4 billion, or 6 percent, partially offset by decreases in other deposit categories. Average deposits increased in all major lines of business and markets.
  • Net interest income increased $5 million, largely due to loan growth, partially offset by an $8 million decrease in accretion on the purchased loan portfolio.
  • The provision for credit losses increased $36 million, primarily as a result of an increase in reserves for energy exposure.
  • Excluding the impact of a change to the accounting presentation for a card program, which increased both noninterest income and noninterest expenses by $44 million in the second quarter 2015, noninterest income decreased $3 million, primarily reflecting increases in fiduciary income, service charges and card fees, which were more than offset by declines in foreign exchange income and several non-fee categories; and noninterest expenses decreased $12 million, largely reflecting a $33 million reduction in litigation-related expenses, partially offset by higher outside processing expenses related to revenue generating activities and an increase in technology-related contract labor expenses.

 


Net Interest Income













(dollar amounts in millions)

2nd Qtr '15


1st Qtr '15


2nd Qtr '14

Net interest income

$

421



$

413



$

416








Net interest margin

2.65

%


2.64

%


2.78

%







Selected average balances:






Total earning assets

$

63,981



$

63,480



$

60,148


Total loans

48,833



48,151



46,725


Total investment securities

9,936



9,907



9,364


Federal Reserve Bank deposits

4,968



5,176



3,801














Total deposits

57,398



56,990



53,384


Total noninterest-bearing deposits

27,365



26,697



24,011


 

  • Net interest income increased $8 million to $421 million in the second quarter 2015, compared to the first quarter 2015.
    • Interest on loans increased $11 million, primarily reflecting the benefit from an increase in average loan balances (+$5 million), the impact of one additional day in the second quarter (+$4 million) and an increase in yields (+$2 million), in part reflecting an increase in LIBOR rates.
    • The increase in interest on loans was partially offset by decreases totaling $3 million resulting primarily from lower yields on investment securities, a decrease in average Federal Reserve Bank deposit balances and an increase in interest expense on debt.
  • The net interest margin of 2.65 percent increased 1 basis point compared to the first quarter 2015, primarily due to higher loan yields.

Noninterest Income
Noninterest income increased $6 million in the second quarter 2015, compared to $255 million for the first quarter 2015. The increase primarily reflected a $5 million increase in card fees as well as small increases in service charges on deposit accounts, fiduciary income and brokerage fees, partially offset by a $3 million decrease in commercial lending fees. The increase in card fees primarily reflected increased revenue from merchant payment processing services and interchange. The decrease in commercial lending fees was primarily due to decreases in unused commitment fees and syndication agent fees.

Noninterest Expenses
Noninterest expenses decreased $23 million in the second quarter 2015, compared to $459 million for the first quarter 2015, primarily reflecting a $31 million decrease in litigation-related expenses and a $2 million decrease in salaries and benefits expense, partially offset by an $8 million increase in outside processing fees associated with revenue-generating activities. Related to litigation expense, on July 1, 2015, the Montana Supreme Court issued a ruling favorable to Comerica on a lender liability case, which reversed a jury verdict and sent the case back for a new trial. The decrease in salaries and benefits expense primarily reflected seasonal decreases in payroll taxes and share-based compensation expense, partially offset by an increase in technology-related contract labor expense and the impact on salaries of merit increases and one additional day in the second quarter.

Credit Quality
"Overall, credit quality remained solid. Net charge-offs continued to be well below normal levels at 15 basis points, or $18 million," said Babb." Net charge-offs related to our energy exposure were nominal. The provision for credit losses increased from a very low level due to an increase in criticized loans related to energy, as well as uncertainty due to continued volatility and the sustained low oil and gas prices. The reserve to total loans ratio increased to 1.24 percent, and the reserve covered nonperforming loans 1.7 times.

"Our Energy customers are generally decreasing their loan commitments and outstandings as they take the necessary actions to adjust to lower energy prices, such as reducing their expenses, disposing of assets, and tapping the capital markets. On average, loan to values remained stable from the last redetermination.

Over the past 30 years, we have built our energy business with a strategy to withstand the ups and downs of the cycles."

 














(dollar amounts in millions)

2nd Qtr '15


1st Qtr '15


2nd Qtr '14

Net loan charge-offs

$

18



$

8



$

9


Net loan charge-offs/Average total loans

0.15

%


0.07

%


0.08

%







Provision for credit losses

$

47



$

14



$

11








Nonperforming loans (a)

361



279



347


Nonperforming assets (NPAs) (a)

370



288



360


NPAs/Total loans and foreclosed property

0.74

%


0.59

%


0.75

%







Loans past due 90 days or more and still accruing

$

18



$

12



$

7








Allowance for loan losses

618



601



591


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

50



39



42


Total allowance for credit losses

668



640



633








Allowance for loan losses/Period-end total loans

1.24

%


1.22

%


1.23

%

Allowance for loan losses/Nonperforming loans

171



216



170





(a)

Excludes loans acquired with credit impairment.


(b)

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

 

  • The provision for credit losses increased to $47 million in the second quarter 2015, primarily reflecting higher reserves for loans related to energy(a) as a result of an increase in criticized loans and the impact of continued volatility and sustained low energy prices. To a lesser extent, Technology and Life Sciences as well as Corporate Banking contributed to the increase in the provision, largely as a result of charge-offs and variability. These increases were partially offset by credit quality improvements in the remainder of the portfolio.
  • Net charge-offs increased $10 million to $18 million, or 0.15 percent of average loans, in the second quarter 2015, compared to $8 million, or 0.07 percent, in the first quarter 2015.
  • During the second quarter 2015, $145 million of borrower relationships over $2 million were transferred to nonaccrual status, of which $100 million were loans related to energy.
  • Criticized loans increased $294 million to $2.4 billion at June 30, 2015, compared to $2.1 billion at March 31, 2015, reflecting an increase of approximately $329 million in criticized loans related to energy.

(a)  Loans related to energy at June 30, 2015 included approximately $3.3 billion of outstanding loans in our Energy business line as well as approximately $725 million of loans in other lines of business to companies that have a sizable portion of their revenue related to energy or could be otherwise disproportionately negatively impacted by prolonged low oil and gas prices.

Balance Sheet and Capital Management
Total assets and common shareholders' equity were $69.9 billion and $7.5 billion, respectively, at June 30, 2015, compared to $69.3 billion and $7.5 billion, respectively, at March 31, 2015.

There were approximately 178 million common shares outstanding at June 30, 2015. Share repurchases of $49 million (1.0 million shares) and warrant repurchases of $10 million (500,000 warrants) under the equity repurchase program, combined with dividends of 21 cents per share, returned 71 percent of second quarter 2015 net income to shareholders. Diluted average shares remained stable at 182 million for the second quarter 2015, as an increase in share dilution from options and warrants due to an increase in Comerica's average stock price offset the impact of equity repurchases.

The estimated common equity Tier 1 capital ratio, reflective of transition provisions and excluding accumulated other comprehensive income ("AOCI"), was 10.53 percent at June 30, 2015. Certain deductions and adjustments to regulatory capital began phasing in on January 1, 2015 and will be fully implemented on January 1, 2018. The estimated ratio under fully phased-in Basel III capital rules is not significantly different from the transitional ratio. Comerica's tangible common equity ratio was 9.92 percent at June 30, 2015, a decrease of 5 basis points from March 31, 2015.

Full-Year 2015 Outlook
Management expectations for full-year 2015 compared to full-year 2014, assuming a continuation of the current economic and low-rate environment, are as follows:

  • Average full-year loan growth consistent with 2014, reflecting seasonal declines in Mortgage Banker Finance and National Dealer Services in the second half of the year, a continued decline in Energy, and a sustained focus on pricing and structure discipline.
  • Net interest income relatively stable, assuming no rise in interest rates, reflecting a decrease of about $30 million in purchase accounting accretion, to about $6 million, and the impact of a continuing low rate environment on asset yields, offset by earning asset growth.
  • Provision for credit losses higher, with third and fourth quarter net charge-offs each at levels similar to the second quarter. If energy prices remain low, continued negative migration is possible, which may be offset by lower exposure balances.
  • Noninterest income relatively stable, excluding the impact of the change in accounting presentation for a card program. Stable noninterest income reflects growth in fee income, particularly card fees and fiduciary income, mostly offset by a decline in warrant income and regulatory impacts on letter of credit and derivative income.
  • Noninterest expenses higher, excluding the impact of the change in accounting presentation for a card program, with continued focus on driving efficiencies for the long term. Expenses for the second half of 2015 are expected to be higher than the first half, reflecting three more days in the second half, the impact of merit increases, a ramp-up in the second half of technology and regulatory expenses, as well as higher pension, outside processing and occupancy expenses.
  • Income tax expense to approximate 32 percent of pre-tax income.

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, 2015 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses second quarter 2015 results compared to first quarter 2015.

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




















(dollar amounts in millions)

2nd Qtr '15


1st Qtr '15


2nd Qtr '14

Business Bank

$

182


81

%


$

189


85

%


$

197


82

%

Retail Bank

18


8



17


8



16


7


Wealth Management

26


11



16


7



25


11



226


100

%


222


100

%


238


100

%

Finance

(90)




(89)




(91)



Other (a)

(1)




1




4



    Total

$

135




$

134




$

151





(a)

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

 

Business Bank













(dollar amounts in millions)

2nd Qtr '15



1st Qtr '15



2nd Qtr '14


Net interest income (FTE)

$

375



$

370



$

375


Provision for credit losses

61



25



35


Noninterest income

140



142



100


Noninterest expenses

176



200



143


Net income

182



189



197








Net credit-related charge-offs

22



9



9








Selected average balances:






Assets

39,135



38,654



37,305


Loans

38,109



37,623



36,367


Deposits

30,229



30,143



27,351




 

  • Average loans increased $486 million, primarily reflecting increases in Mortgage Banker Finance, general Middle Market and National Dealer Services, partially offset by decreases in Energy and Corporate Banking.
  • Average deposits increased $86 million, primarily reflecting increases in Technology and Life Sciences, general Middle Market and Corporate Banking, partially offset by a decrease in Commercial Real Estate.
  • Net interest income increased $5 million, primarily due to the benefit from an increase in average loan balances and one more day in the quarter, partially offset by a lower funds transfer pricing (FTP) crediting rate.
  • The provision for credit losses increased $36 million, reflecting higher reserves for loans related to energy as a result of an increase in criticized loans and the impact of continued volatility and sustained low energy prices. To a lesser extent, Technology and Life Sciences as well as Corporate Banking contributed to the increase in the provision, largely as a result of charge-offs and variability. These increases were partially offset by credit quality improvements in the remainder of the portfolio.
  • Noninterest income decreased $2 million, primarily due to decreases in customer derivative income and commercial lending fees, partially offset by an increase in card fees.
  • Noninterest expenses decreased $24 million, primarily driven by a reduction in litigation-related expense, partially offset by an increase in outside processing fees.

 


Retail Bank













(dollar amounts in millions)

2nd Qtr '15



1st Qtr '15



2nd Qtr '14


Net interest income (FTE)

$

155



$

151



$

152


Provision for credit losses

(8)



(8)



(6)


Noninterest income

46



42



41


Noninterest expenses

182



175



174


Net income

18



17



16








Net credit-related charge-offs

1





3








Selected average balances:






Assets

6,459



6,368



6,222


Loans

5,770



5,694



5,554


Deposits

22,747



22,404



21,890


 

  • Average loans increased $76 million, largely due to an increase in Small Business.
  • Average deposits increased $343 million, primarily reflecting an increase in noninterest-bearing deposits.
  • Net interest income increased $4 million, primarily due to an increase in net FTP credits, largely due to the increase in average deposits and the impact of one additional day in the quarter.
  • Noninterest income increased $4 million, due to small increases in several fee categories.
  • Noninterest expenses increased $7 million, primarily reflecting an increase in outside processing fees and salaries expense. Salaries expense increased primarily due to the impact of merit increases and one additional day in the quarter.

 


Wealth Management













(dollar amounts in millions)

2nd Qtr '15



1st Qtr '15



2nd Qtr '14


Net interest income (FTE)

$

45



$

43



$

44


Provision for credit losses

(9)



(1)



(10)


Noninterest income

60



58



62


Noninterest expenses

74



77



76


Net income

26



16



25








Net credit-related charge-offs (recoveries)

(5)



(1)



(3)








Selected average balances:






Assets

5,153



5,029



4,987


Loans

4,954



4,834



4,804


Deposits

4,060



3,996



3,616


 

  • Average loans increased $120 million.
  • Average deposits increased $64 million, primarily reflecting an increase in noninterest-bearing deposits.
  • Net interest income increased $2 million, largely driven by the increase in average loan balances and one additional day in the quarter.
  • The provision for credit losses decreased $8 million, primarily reflecting credit quality improvement.
  • Noninterest income increased $2 million, primarily reflecting the impact of a securities loss in the first quarter which was not repeated.
  • Noninterest expenses decreased $3 million, reflecting 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, 2015 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 '15


1st Qtr '15


2nd Qtr '14

Michigan

$

98


44

%


$

73


33

%


$

77


32

%

California

71


31



73


33



63


27


Texas

14


6



32


14



39


16


Other Markets

43


19



44


20



59


25



226


100

%


222


100

%


238


100

%

Finance & Other (a)

(91)




(88)




(87)



   Total

$

135




$

134




$

151





(a)

 Includes items not directly associated with the geographic markets.

 

  • Average loans increased $236 million in California and $67 million in Michigan (primarily general Middle Market), and decreased $281 million in Texas (primarily Energy). The increase in California was led by Technology and Life Sciences, National Dealer Services and Private Banking.
  • Average deposits increased $438 million in California and decreased $51 million and $4 million in Texas and Michigan, respectively. The increase in California was primarily due to increases in Technology and Life Sciences and general Middle Market, partially offset by a decrease in Commercial Real Estate.
  • Net interest income increased $5 million and $2 million in California and Michigan, respectively, and decreased $1 million in Texas. The increase in California primarily reflected the benefit from an increase in loan balances, while the decrease in Texas was primarily the result of decreased loan balances. Net interest income in all three markets reflected the benefit from one additional day in the quarter.
  • Net charge-offs decreased $5 million in Michigan, and increased $5 million in California and $2 million in Texas. The provision for credit losses decreased $5 million in Michigan and increased $7 million in California and $22 million in Texas. The decrease in Michigan primarily reflected improved credit quality throughout the portfolio. The increase in Texas was driven by higher reserves due to an increase in criticized loans related to energy and the impact of continued volatility and sustained low energy prices, while the increase in California primarily reflected higher reserves in Technology and Life Sciences.
  • Noninterest income increased $5 million in Michigan, remained unchanged in California and decreased $5 million in Texas. The increase in Michigan primarily reflected small increases in several fee categories. The decrease in Texas was primarily due to decreases in commercial lending fees, customer derivative income and foreign exchange income.
  • Noninterest expenses decreased $26 million in Michigan, primarily reflecting a decrease in litigation-related expense, decreased $2 million in Texas and increased $1 million in California.

 

Michigan Market













(dollar amounts in millions)

2nd Qtr '15



1st Qtr '15



2nd Qtr '14


Net interest income (FTE)

$

179



$

177



$

182


Provision for credit losses

(13)



(8)



(9)


Noninterest income

85



80



89


Noninterest expenses

128



154



159


Net income

98



73



77








Net credit-related charge-offs (recoveries)

(2)



3



10








Selected average balances:






Assets

13,852



13,736



13,851


Loans

13,290



13,223



13,482


Deposits

21,706



21,710



20,694




California Market













(dollar amounts in millions)

2nd Qtr '15



1st Qtr '15



2nd Qtr '14


Net interest income (FTE)

$

181



$

176



$

176


Provision for credit losses

4



(3)



14


Noninterest income

37



37



38


Noninterest expenses

100



99



100


Net income

71



73



63








Net credit-related charge-offs

6



1



5








Selected average balances:






Assets

16,696



16,461



15,721


Loans

16,429



16,193



15,439


Deposits

17,275



16,837



15,370




Texas Market













(dollar amounts in millions)

2nd Qtr '15



1st Qtr '15



2nd Qtr '14


Net interest income (FTE)

$

130



$

131



$

137


Provision for credit losses

43



21



22


Noninterest income

31



36



35


Noninterest expenses

94



96



89


Net income

14



32



39








Net credit-related charge-offs

5



3



2








Selected average balances:






Assets

11,878



12,192



11,661


Loans

11,254



11,535



10,966


Deposits

10,959



11,010



10,724


 

Conference Call and Webcast
Comerica will host a conference call to review second quarter 2015 financial results at 8 a.m. CT Friday, July 17, 2015. Interested parties may access the conference call by calling (877) 523-5249 or (210) 591-1147 (event ID No. 61399381). 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," "projects," "models" 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 changes in interest rates; changes in regulation or oversight; Comerica's ability to maintain adequate sources of funding and liquidity; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers, including the energy industry; operational difficulties, failure of technology infrastructure or information security incidents; reliance on other companies to provide certain key components of business infrastructure; factors impacting noninterest expenses which are beyond Comerica's control; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; changes in Comerica's credit rating; unfavorable developments concerning credit quality; the interdependence of financial service companies; the implementation of Comerica's strategies and business initiatives; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; any future strategic acquisitions or divestitures; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; changes in accounting standards and the critical nature of Comerica's accounting policies. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. In particular, please refer to "Item 1A. Risk Factors" beginning on page 12 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2014. 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)

2015

2015

2014


2015

2014

PER COMMON SHARE AND COMMON STOCK DATA







Diluted net income

$

0.73


$

0.73


$

0.80



$

1.46


$

1.54


Cash dividends declared

0.21


0.20


0.20



0.41


0.39









Average diluted shares (in thousands)

182,422


182,268


186,108



182,281


186,402


KEY RATIOS







Return on average common shareholders' equity

7.21

%

7.20

%

8.27

%


7.20

%

7.97

%

Return on average assets

0.79


0.78


0.93



0.78


0.90


Common equity tier 1 risk-based capital ratio (a) (b)

10.53


10.40


n/a





Tier 1 common risk-based capital ratio (c)

n/a


n/a


10.50





Tier 1 risk-based capital ratio (a) (b)

10.53


10.40


10.50





Total risk-based capital ratio (a) (b)

12.53


12.35


12.52





Leverage ratio (a) (b)

10.57


10.53


10.93





Tangible common equity ratio (c)

9.92


9.97


10.39





AVERAGE BALANCES







Commercial loans

$

31,788


$

31,090


$

29,890



$

31,442


$

29,130


Real estate construction loans

1,807


1,938


1,913



1,872


1,871


Commercial mortgage loans

8,672


8,581


8,749



8,627


8,759


Lease financing

795


797


850



796


849


International loans

1,453


1,512


1,328



1,482


1,315


Residential mortgage loans

1,877


1,856


1,773



1,866


1,749


Consumer loans

2,441


2,377


2,222



2,409


2,232


Total loans

48,833


48,151


46,725



48,494


45,905









Earning assets

63,981


63,480


60,148



63,732


60,033


Total assets

68,963


68,735


64,878



68,852


64,794









Noninterest-bearing deposits

27,365


26,697


24,011



27,033


23,626


Interest-bearing deposits

30,033


30,293


29,373



30,163


29,453


Total deposits

57,398


56,990


53,384



57,196


53,079









Common shareholders' equity

7,512


7,453


7,331



7,482


7,280


NET INTEREST INCOME (fully taxable equivalent basis)







Net interest income

$

422


$

414


$

417



$

836


$

828


Net interest margin

2.65

%

2.64

%

2.78

%


2.65

%

2.78

%

CREDIT QUALITY







Total nonperforming assets

$

370


$

288


$

360












Loans past due 90 days or more and still accruing

18


12


7












Net loan charge-offs

18


8


9



$

26


$

21









Allowance for loan losses

618


601


591





Allowance for credit losses on lending-related commitments

50


39


42





Total allowance for credit losses

668


640


633












Allowance for loan losses as a percentage of total loans

1.24

%

1.22

%

1.23

%




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

0.15


0.07


0.08



0.11

%

0.09

%

Nonperforming assets as a percentage of total loans and foreclosed property

0.74


0.59


0.75





Allowance for loan losses as a percentage of total nonperforming loans

171


216


170








(a)

Basel III rules became effective on January 1, 2015, with transitional provisions. All prior period data is based on Basel I rules.


(b)

June 30, 2015 ratios are estimated.

(c)

See Reconciliation of Non-GAAP Financial Measures.

n/a - not applicable.

 

 















CONSOLIDATED BALANCE SHEETS

Comerica Incorporated and Subsidiaries











June 30,

March 31,

December 31,

June 30,

(in millions, except share data)

2015

2015

2014

2014


(unaudited)

(unaudited)


(unaudited)

ASSETS





Cash and due from banks

$

1,148


$

1,170


$

1,026


$

1,226







Interest-bearing deposits with banks

4,817


4,792


5,045


2,668


Other short-term investments

119


101


99


109







Investment securities available-for-sale

8,267


8,214


8,116


9,534


Investment securities held-to-maturity

1,952


1,871


1,935








Commercial loans

32,723


32,091


31,520


30,986


Real estate construction loans

1,795


1,917


1,955


1,939


Commercial mortgage loans

8,674


8,558


8,604


8,747


Lease financing

786


792


805


822


International loans

1,420


1,433


1,496


1,352


Residential mortgage loans

1,865


1,859


1,831


1,775


Consumer loans

2,478


2,422


2,382


2,261


Total loans

49,741


49,072


48,593


47,882


Less allowance for loan losses

(618)


(601)


(594)


(591)


Net loans

49,123


48,471


47,999


47,291







Premises and equipment

541


531


532


562


Accrued income and other assets

3,978


4,183


4,434


3,933


Total assets

$

69,945


$

69,333


$

69,186


$

65,323







LIABILITIES AND SHAREHOLDERS' EQUITY





Noninterest-bearing deposits

$

28,167


$

27,394


$

27,224


$

24,774







Money market and interest-bearing checking deposits

23,786


23,727


23,954


22,555


Savings deposits

1,841


1,817


1,752


1,731


Customer certificates of deposit

4,367


4,497


4,421


4,962


Foreign office time deposits

99


135


135


148


Total interest-bearing deposits

30,093


30,176


30,262


29,396


Total deposits

58,260


57,570


57,486


54,170







Short-term borrowings

56


80


116


176


Accrued expenses and other liabilities

1,265


1,500


1,507


990


Medium- and long-term debt

2,841


2,683


2,675


2,618


Total liabilities

62,422


61,833


61,784


57,954







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

2,158


2,188


2,188


2,175


Accumulated other comprehensive loss

(396)


(370)


(412)


(304)


Retained earnings

6,908


6,841


6,744


6,520


Less cost of common stock in treasury - 49,803,515 shares at 6/30/15, 50,114,399 shares at March 31, 2015, 49,146,225 shares at 12/31/14, and 47,194,492 shares at 6/30/14

(2,288)


(2,300)


(2,259)


(2,163)


Total shareholders' equity

7,523


7,500


7,402


7,369


Total liabilities and shareholders' equity

$

69,945


$

69,333


$

69,186


$

65,323


 

 
















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)

2015

2014


2015

2014

INTEREST INCOME






Interest and fees on loans

$

389


$

385



$

767


$

761


Interest on investment securities

52


53



105


108


Interest on short-term investments

3


3



7


7


Total interest income

444


441



879


876


INTEREST EXPENSE






Interest on deposits

11


11



22


22


Interest on medium- and long-term debt

12


14



23


28


Total interest expense

23


25



45


50


Net interest income

421


416



834


826


Provision for credit losses

47


11



61


20


Net interest income after provision for credit losses

374


405



773


806


NONINTEREST INCOME






Service charges on deposit accounts

56


54



111


108


Fiduciary income

48


45



95


89


Commercial lending fees

22


23



47


43


Card fees

72


22



139


45


Letter of credit fees

13


15



26


29


Bank-owned life insurance

10


11



19


20


Foreign exchange income

9


12



19


21


Brokerage fees

5


4



9


9


Net securities (losses) gains




(2)


1


Other noninterest income

26


34



53


63


Total noninterest income

261


220



516


428


NONINTEREST EXPENSES






Salaries and benefits expense

251


240



504


487


Net occupancy expense

39


39



77


79


Equipment expense

13


15



26


29


Outside processing fee expense

85


30



162


58


Software expense

24


25



47


47


Litigation-related expense

(30)


3



(29)


6


FDIC insurance expense

9


8



18


16


Advertising expense

6


5



12


11


Other noninterest expenses

39


39



78


77


Total noninterest expenses

436


404



895


810


Income before income taxes

199


221



394


424


Provision for income taxes

64


70



125


134


NET INCOME

135


151



269


290


Less income allocated to participating securities

1


2



3


4


Net income attributable to common shares

$

134


$

149



$

266


$

286


Earnings per common share:






Basic

$

0.76


$

0.83



$

1.51


$

1.59


Diluted

0.73


0.80



1.46


1.54








Comprehensive income

109


172



285


377








Cash dividends declared on common stock

37


36



73


71


Cash dividends declared per common share

0.21


0.20



0.41


0.39


 

 






























CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries
























Second

First

Fourth

Third

Second


Second Quarter 2015 Compared To:


Quarter

Quarter

Quarter

Quarter

Quarter


First Quarter 2015


Second Quarter 2014

(in millions, except per share data)

2015

2015

2014

2014

2014


Amount

Percent


Amount

Percent

INTEREST INCOME












Interest and fees on loans

$

389


$

378


$

383


$

381


$

385



$

11


3

%


$

4


1

%

Interest on investment securities

52


53


51


52


53



(1)


(1)



(1)


(2)


Interest on short-term investments

3


4


4


3


3



(1)


(9)





Total interest income

444


435


438


436


441



9


2



3


1


INTEREST EXPENSE












Interest on deposits

11


11


12


11


11








Interest on medium- and long-term debt

12


11


11


11


14



1


5



(2)


(8)


Total interest expense

23


22


23


22


25



1


2



(2)


(5)


Net interest income

421


413


415


414


416



8


2



5


1


Provision for credit losses

47


14


2


5


11



33


n/m



36


n/m


Net interest income after provision for credit losses

374


399


413


409


405



(25)


(6)



(31)


(8)


NONINTEREST INCOME












Service charges on deposit accounts

56


55


53


54


54



1


3



2


4


Fiduciary income

48


47


47


44


45



1


1



3


6


Commercial lending fees

22


25


29


26


23



(3)


(9)



(1)


(3)


Card fees

72


67


24


23


22



5


7



50


n/m


Letter of credit fees

13


13


14


14


15






(2)


(8)


Bank-owned life insurance

10


9


8


11


11



1


5



(1)


(10)


Foreign exchange income

9


10


10


9


12



(1)


(11)



(3)


(24)


Brokerage fees

5


4


4


4


4



1


5



1


9


Net securities (losses) gains


(2)



(1)




2


66





Other noninterest income

26


27


36


31


34



(1)


(4)



(8)


(24)


Total noninterest income

261


255


225


215


220



6


2



41


18


NONINTEREST EXPENSES












Salaries and benefits expense

251


253


245


248


240



(2)


(1)



11


5


Net occupancy expense

39


38


46


46


39



1


3





Equipment expense

13


13


14


14


15






(2)


(12)


Outside processing fee expense

85


77


33


31


30



8


12



55


n/m


Software expense

24


23


23


25


25



1


1



(1)


(3)


Litigation-related expense

(30)


1



(2)


3



(31)


n/m



(33)


n/m


FDIC insurance expense

9


9


8


9


8






1


7


Advertising expense

6


6


7


5


5






1



Gain on debt redemption




(32)









Other noninterest expenses

39


39


43


53


39








Total noninterest expenses

436


459


419


397


404



(23)


(5)



32


8


Income before income taxes

199


195


219


227


221



4


3



(22)


(10)


Provision for income taxes

64


61


70


73


70



3


6



(6)


(8)


NET INCOME

135


134


149


154


151



1


1



(16)


(11)


Less income allocated to participating securities

1


2


1


2


2



(1)




(1)



Net income attributable to common shares

$

134


$

132


$

148


$

152


$

149



$

2


1

%


$

(15)


(11)%


Earnings per common share:












Basic

$

0.76


$

0.75


$

0.83


$

0.85


$

0.83



$

0.01


1

%


$

(0.07)


(8)%


Diluted

0.73


0.73


0.80


0.82


0.80






(0.07)


(9)














Comprehensive income

109


176


54


141


172



(67)


(38)



(63)


(37)














Cash dividends declared on common stock

37


36


36


36


36



1


5



1


3


Cash dividends declared per common share

0.21


0.20


0.20


0.20


0.20



0.01


5



0.01


5



n/m - not meaningful

 

 

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)

Comerica Incorporated and Subsidiaries















2015


2014

(in millions)

2nd Qtr

1st Qtr


4th Qtr

3rd Qtr

2nd Qtr








Balance at beginning of period

$

601


$

594



$

592


$

591


$

594









Loan charge-offs:







Commercial

22


19



8


13


19


Commercial mortgage

2




2


7


5


Lease financing

1







International

6


2



6




Residential mortgage

1




1


1



Consumer

3


2



3


3


4


Total loan charge-offs

35


23



20


24


28









Recoveries on loans previously charged-off:







Commercial

10


9



6


6


11


Real estate construction

1




2


1


1


Commercial mortgage

5


3



10


12


3


Residential mortgage


1




1


3


Consumer

1


2



1


1


1


Total recoveries

17


15



19


21


19


Net loan charge-offs

18


8



1


3


9


Provision for loan losses

35


16



4


4


6


Foreign currency translation adjustment


(1)



(1)




Balance at end of period

$

618


$

601



$

594


$

592


$

591









Allowance for loan losses as a percentage of total loans

1.24

%

1.22

%


1.22

%

1.24

%

1.23

%








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

0.15


0.07



0.01


0.03


0.08


 

 

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

Comerica Incorporated and Subsidiaries















2015


2014

(in millions)

2nd Qtr

1st Qtr


4th Qtr

3rd Qtr

2nd Qtr








Balance at beginning of period

$

39


$

41



$

43


$

42


$

37


Less: Charge-offs on lending-related commitments (a)

1







Add: Provision for credit losses on lending-related commitments

12


(2)



(2)


1


5


Balance at end of period

$

50


$

39



$

41


$

43


$

42









Unfunded lending-related commitments sold

$

12


$

1



$


$

9


$





(a)

Charge-offs result from the sale of unfunded lending-related commitments.

 

 

NONPERFORMING ASSETS (unaudited)

Comerica Incorporated and Subsidiaries















2015


2014

(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

$

186


$

113



$

109


$

93


$

72


  Real estate construction

1


1



2


18


19


  Commercial mortgage

77


82



95


144


156


  Lease financing

11







  International

9


1






  Total nonaccrual business loans

284


197



206


255


247


Retail loans:







  Residential mortgage

35


37



36


42


45


  Consumer:







  Home equity

29


31



30


31


32


  Other consumer

1


1



1


1


2


    Total consumer

30


32



31


32


34


  Total nonaccrual retail loans

65


69



67


74


79


Total nonaccrual loans

349


266



273


329


326


Reduced-rate loans

12


13



17


17


21


Total nonperforming loans (a)

361


279



290


346


347


Foreclosed property

9


9



10


11


13


Total nonperforming assets (a)

$

370


$

288



$

300


$

357


$

360









Nonperforming loans as a percentage of total loans

0.72

%

0.57

%


0.60

%

0.73

%

0.73

%

Nonperforming assets as a percentage of total loans and foreclosed property

0.74


0.59



0.62


0.75


0.75


Allowance for loan losses as a percentage of total nonperforming loans

171


216



205


171


170


Loans past due 90 days or more and still accruing

$

18


$

12



$

5


$

13


$

7









ANALYSIS OF NONACCRUAL LOANS







Nonaccrual loans at beginning of period

$

266


$

273



$

329


$

326


$

317


Loans transferred to nonaccrual (b)

145


39



41


54


53


Nonaccrual business loan gross charge-offs (c)

(31)


(21)



(16)


(20)


(24)


Loans transferred to accrual status (b)


(4)



(18)




Nonaccrual business loans sold (d)

(1)


(2)



(24)


(3)


(6)


Payments/Other (e)

(30)


(19)



(39)


(28)


(14)


Nonaccrual loans at end of period

$

349


$

266



$

273


$

329


$

326


(a) Excludes loans acquired with credit impairment.

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

(c) Analysis of gross loan charge-offs:







    Nonaccrual business loans

$

31


$

21



$

16


$

20


$

24


    Consumer and residential mortgage loans

4


2



4


4


4


  Total gross loan charge-offs

$

35


$

23



$

20


$

24


$

28


(d) Analysis of loans sold:







      Nonaccrual business loans

$

1


$

2



$

24


$

3


$

6


      Performing criticized loans


7



5



8


   Total criticized loans sold

$

1


$

9



$

29


$

3


$

14


(e) 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, 2015


June 30, 2014


Average


Average


Average


Average

(dollar amounts in millions)

Balance

Interest

Rate


Balance

Interest

Rate









Commercial loans

$

31,442


$

478


3.06

%


$

29,130


$

453


3.13

%

Real estate construction loans

1,872


32


3.43



1,871


32


3.42


Commercial mortgage loans

8,627


146


3.41



8,759


170


3.92


Lease financing

796


12


3.12



849


16


3.66


International loans

1,482


27


3.69



1,315


24


3.66


Residential mortgage loans

1,866


35


3.77



1,749


33


3.84


Consumer loans

2,409


39


3.23



2,232


35


3.19


Total loans (a)

48,494


769


3.19



45,905


763


3.35










Mortgage-backed securities (b)

9,064


100


2.24



8,954


107


2.39


Other investment securities

858


5


1.13



369


1


0.44


Total investment securities (b)

9,922


105


2.15



9,323


108


2.31










Interest-bearing deposits with banks

5,216


7


0.25



4,695


7


0.26


Other short-term investments

100



0.75



110



0.63


Total earning assets

63,732


881


2.79



60,033


878


2.94










Cash and due from banks

1,034





917




Allowance for loan losses

(607)





(602)




Accrued income and other assets

4,693





4,446




Total assets

$

68,852





$

64,794












Money market and interest-bearing checking deposits

$

23,809


13


0.11



$

22,279


12


0.11


Savings deposits

1,810



0.02



1,721



0.03


Customer certificates of deposit

4,423


8


0.37



5,075


9


0.36


Foreign office time deposits

121


1


1.36



378


1


0.52


Total interest-bearing deposits

30,163


22


0.14



29,453


22


0.15










Short-term borrowings

94



0.05



198



0.03


Medium- and long-term debt

2,675


23


1.78



3,270


28


1.64


Total interest-bearing sources

32,932


45


0.28



32,921


50


0.30










Noninterest-bearing deposits

27,033





23,626




Accrued expenses and other liabilities

1,405





967




Total shareholders' equity

7,482





7,280




Total liabilities and shareholders' equity

$

68,852





$

64,794












Net interest income/rate spread (FTE)


$

836


2.51




$

828


2.64










FTE adjustment


$

2





$

2











Impact of net noninterest-bearing sources of funds



0.14





0.14


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



2.65

%




2.78

%



(a)

Accretion of the purchase discount on the acquired loan portfolio of $4 million and $22 million in the six months ended June 30, 2015 and 2014, respectively, increased the net interest margin by 1 basis point and 7 basis points in each respective period.

(b)

Includes investment securities available-for-sale and investment securities held-to-maturity.

 

 

ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)

Comerica Incorporated and Subsidiaries

























Three Months Ended


June 30, 2015


March 31, 2015


June 30, 2014


Average


Average


Average


Average


Average


Average

(dollar amounts in millions)

Balance

Interest

Rate


Balance

Interest

Rate


Balance

Interest

Rate













Commercial loans

$

31,788


$

244


3.07

%


$

31,090


$

234


3.06

%


$

29,890


$

231


3.10

%

Real estate construction loans

1,807


16


3.51



1,938


16


3.36



1,913


16


3.44


Commercial mortgage loans

8,672


73


3.38



8,581


73


3.44



8,749


85


3.88


Lease financing

795


6


3.19



797


6


3.05



850


7


3.26


International loans

1,453


13


3.68



1,512


14


3.71



1,328


12


3.64


Residential mortgage loans

1,877


18


3.78



1,856


17


3.76



1,773


17


3.82


Consumer loans

2,441


20


3.25



2,377


19


3.21



2,222


18


3.22


Total loans (a)

48,833


390


3.20



48,151


379


3.19



46,725


386


3.31














Mortgage-backed securities (b)

9,057


49


2.23



9,071


51


2.26



8,996


53


2.35


Other investment securities

879


3


1.16



836


2


1.10



368



0.46


Total investment securities (b)

9,936


52


2.13



9,907


53


2.16



9,364


53


2.28














Interest-bearing deposits with banks

5,110


3


0.25



5,323


4


0.26



3,949


3


0.25


Other short-term investments

102



0.42



99



1.11



110



0.61


Total earning assets

63,981


445


2.79



63,480


436


2.78



60,148


442


2.95














Cash and due from banks

1,041





1,027





921




Allowance for loan losses

(613)





(601)





(602)




Accrued income and other assets

4,554





4,829





4,411




Total assets

$

68,963





$

68,735





$

64,878
















Money market and interest-bearing checking deposits

$

23,659


6


0.11



$

23,960


6


0.11



$

22,296


6


0.10


Savings deposits

1,834



0.02



1,786



0.03



1,742



0.03


Customer certificates of deposit

4,422


4


0.37



4,423


4


0.37



5,041


5


0.36


Foreign office time deposits

118


1


1.26



124


1


1.46



294



0.68


Total interest-bearing deposits

30,033


11


0.14



30,293


11


0.15



29,373


11


0.15














Short-term borrowings

78



0.04



110



0.06



210



0.03


Medium- and long-term debt

2,661


12


1.83



2,686


11


1.73



2,998


14


1.77


Total interest-bearing sources

32,772


23


0.28



33,089


22


0.27



32,581


25


0.30














Noninterest-bearing deposits

27,365





26,697





24,011




Accrued expenses and other liabilities

1,314





1,496





955




Total shareholders' equity

7,512





7,453





7,331




Total liabilities and shareholders' equity

$

68,963





$

68,735





$

64,878
















Net interest income/rate spread (FTE)


$

422


2.51




$

414


2.51




$

417


2.65














FTE adjustment


$

1





$

1





$

1















Impact of net noninterest-bearing sources of funds



0.14





0.13





0.13


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



2.65

%




2.64

%




2.78

%



(a)

Accretion of the purchase discount on the acquired loan portfolio of $2 million, $2 million and $10 million in the second quarter 2015, the first quarter 2015 and the second quarter 2014, respectively, increased the net interest margin by 1 basis point, 2 basis points and 7 basis points in each respective period.

(b)

Includes investment securities available-for-sale and investment securities held-to-maturity.

 

 

CONSOLIDATED STATISTICAL DATA (unaudited)

Comerica Incorporated and Subsidiaries













June 30,

March 31,

December 31,

September 30,

June 30,

(in millions, except per share data)

2015

2015

2014

2014

2014







Commercial loans:






Floor plan

$

3,840


$

3,544


$

3,790


$

3,183


$

3,576


Other

28,883


28,547


27,730


27,576


27,410


Total commercial loans

32,723


32,091


31,520


30,759


30,986


Real estate construction loans

1,795


1,917


1,955


1,992


1,939


Commercial mortgage loans

8,674


8,558


8,604


8,603


8,747


Lease financing

786


792


805


805


822


International loans

1,420


1,433


1,496


1,429


1,352


Residential mortgage loans

1,865


1,859


1,831


1,797


1,775


Consumer loans:






Home equity

1,682


1,678


1,658


1,634


1,574


Other consumer

796


744


724


689


687


Total consumer loans

2,478


2,422


2,382


2,323


2,261


Total loans

$

49,741


$

49,072


$

48,593


$

47,708


$

47,882








Goodwill

$

635


$

635


$

635


$

635


$

635


Core deposit intangible

11


12


13


14


14


Other intangibles

4


3


2


1


1








Common equity tier 1 capital (a) (b)

7,280


7,230


n/a


n/a


n/a


Tier 1 common capital (c)

n/a


n/a


7,169


7,105


7,027


Risk-weighted assets (a) (b)

69,145


69,514


68,273


67,106


66,911








Common equity tier 1 risk-based capital ratio (a) (b)

10.53

%

10.40

%

n/a


n/a


n/a


Tier 1 common risk-based capital ratio (c)

n/a


n/a


10.50

%

10.59

%

10.50

%

Tier 1 risk-based capital ratio (a) (b)

10.53


10.40


10.50


10.59


10.50


Total risk-based capital ratio (a) (b)

12.53


12.35


12.51


12.83


12.52


Leverage ratio (a) (b)

10.57


10.53


10.35


10.79


10.93


Tangible common equity ratio (c)

9.92


9.97


9.85


9.94


10.39








Common shareholders' equity per share of common stock

$

42.18


$

42.12


$

41.35


$

41.26


$

40.72


Tangible common equity per share of common stock (c)

38.53


38.47


37.72


37.65


37.12


Market value per share for the quarter:






High

53.45


47.94


50.14


52.72


52.60


Low

44.38


40.09


42.73


48.33


45.34


Close

51.32


45.13


46.84


49.86


50.16








Quarterly ratios:






Return on average common shareholders' equity

7.21

%

7.20

%

7.96

%

8.29

%

8.27

%

Return on average assets

0.79


0.78


0.86


0.93


0.93


Efficiency ratio (d)

63.68


68.50


65.26


62.87


63.35








Number of banking centers

477


482


481


481


481








Number of employees - full time equivalent

8,901


8,831


8,876


8,913


8,901







(a)

Basel III rules became effective January 1, 2015, with transitional provisions. All prior period data is based on Basel I rules.

(b)

June 30, 2015 amounts and ratios are estimated.

(c)

See Reconciliation of Non-GAAP Financial Measures.

(d)

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

n/a - not applicable.

 

 

PARENT COMPANY ONLY BALANCE SHEETS (unaudited)

Comerica Incorporated









June 30,

December 31,

June 30,

(in millions, except share data)

2015

2014

2014





ASSETS




Cash and due from subsidiary bank

$

7


$


$

5


Short-term investments with subsidiary bank

861


1,133


796


Other short-term investments

94


94


96


Investment in subsidiaries, principally banks

7,500


7,411


7,369


Premises and equipment

2


2


2


Other assets

122


138


217


  Total assets

$

8,586


$

8,778


$

8,485






LIABILITIES AND SHAREHOLDERS' EQUITY




Medium- and long-term debt

$

903


$

1,208


$

958


Other liabilities

160


168


158


  Total liabilities

1,063


1,376


1,116






Common stock - $5 par value:




Authorized - 325,000,000 shares




Issued - 228,164,824 shares

1,141


1,141


1,141


Capital surplus

2,158


2,188


2,175


Accumulated other comprehensive loss

(396)


(412)


(304)


Retained earnings

6,908


6,744


6,520


Less cost of common stock in treasury - 49,803,515 shares at 6/30/15, 49,146,225 shares at 12/31/14 and 47,194,492 shares at 6/30/14

(2,288)


(2,259)


(2,163)


  Total shareholders' equity

7,523


7,402


7,369


  Total liabilities and shareholders' equity

$

8,586


$

8,778


$

8,485


 

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, 2013

182.3


$

1,141


$

2,179


$

(391)


$

6,318


$

(2,097)


$

7,150


Net income





290



290


Other comprehensive income, net of tax




87




87


Cash dividends declared on common stock ($0.39 per share)





(71)



(71)


Purchase of common stock

(3.0)






(141)


(141)


Net issuance of common stock under employee stock plans

1.6



(25)



(17)


74


32


Share-based compensation



22





22


Other



(1)




1



BALANCE AT JUNE 30, 2014

180.9


$

1,141


$

2,175


$

(304)


$

6,520


$

(2,163)


$

7,369










BALANCE AT DECEMBER 31, 2014

179.0


$

1,141


$

2,188


$

(412)


$

6,744


$

(2,259)


$

7,402


Net income





269



269


Other comprehensive income, net of tax




16




16


Cash dividends declared on common stock ($0.41 per share)





(73)



(73)


Purchase of common stock

(2.5)






(115)


(115)


Purchase and retirement of warrants



(10)





(10)


Net issuance of common stock under employee stock plans

0.9



(23)



(10)


43


10


Net issuance of common stock for warrants

1.0



(21)



(22)


43



Share-based compensation



24





24


BALANCE AT JUNE 30, 2015

178.4


$

1,141


$

2,158


$

(396)


$

6,908


$

(2,288)


$

7,523


 

 

BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)

Comerica Incorporated and Subsidiaries




































(dollar amounts in millions)

Business


Retail


Wealth







Three Months Ended June 30, 2015

Bank


Bank


Management


Finance


Other


Total

Earnings summary:












Net interest income (expense) (FTE)

$

375



$

155



$

45



$

(155)



$

2



$

422


Provision for credit losses

61



(8)



(9)





3



47


Noninterest income

140



46



60



14



1



261


Noninterest expenses

176



182



74



3



1



436


Provision (benefit) for income taxes (FTE)

96



9



14



(54)





65


Net income (loss)

$

182



$

18



$

26



$

(90)



$

(1)



$

135


Net loan charge-offs (recoveries)

$

22



$

1



$

(5)



$



$



$

18














Selected average balances:












Assets

$

39,135



$

6,459



$

5,153



$

11,721



$

6,495



$

68,963


Loans

38,109



5,770



4,954







48,833


Deposits

30,229



22,747



4,060



93



269



57,398














Statistical data:












Return on average assets (a)

1.87

%


0.30

%


2.01

%


N/M



N/M



0.79

%

Efficiency ratio (b)

34.19



89.88



70.27



N/M



N/M



63.68















Business


Retail


Wealth







Three Months Ended March 31, 2015

Bank


Bank


Management


Finance


Other


Total

Earnings summary:












Net interest income (expense) (FTE)

$

370



$

151



$

43



$

(152)



$

2



$

414


Provision for credit losses

25



(8)



(1)





(2)



14


Noninterest income

142



42



58



12



1



255


Noninterest expenses

200



175



77



2



5



459


Provision (benefit) for income taxes (FTE)

98



9



9



(53)



(1)



62


Net income (loss)

$

189



$

17



$

16



$

(89)



$

1



$

134


Net loan charge-offs (recoveries)

$

9



$



$

(1)



$



$



$

8














Selected average balances:












Assets

$

38,654



$

6,368



$

5,029



$

12,137



$

6,547



$

68,735


Loans

37,623



5,694



4,834







48,151


Deposits

30,143



22,404



3,996



170



277



56,990














Statistical data:












Return on average assets (a)

1.95

%


0.30

%


1.29

%


N/M



N/M



0.78

%

Efficiency ratio (b)

39.20



90.57



74.58



N/M



N/M



68.55















Business


Retail


Wealth







Three Months Ended June 30, 2014

Bank


Bank


Management


Finance


Other


Total

Earnings summary:












Net interest income (expense) (FTE)

$

375



$

152



$

44



$

(160)



6



$

417


Provision for credit losses

35



(6)



(10)





(8)



11


Noninterest income

100



41



62



15



2



220


Noninterest expenses

143



174



76



2



9



404


Provision (benefit) for income taxes (FTE)

100



9



15



(56)



3



71


Net income (loss)

$

197



$

16



$

25



$

(91)



$

4



$

151


Net loan charge-offs (recoveries)

$

9



$

3



$

(3)



$



$



$

9














Selected average balances:












Assets

$

37,305



$

6,222



$

4,987



$

11,055



$

5,309



$

64,878


Loans

36,367



5,554



4,804







46,725


Deposits

27,351



21,890



3,616



258



269



53,384














Statistical data:












Return on average assets (a)

2.11

%


0.29

%


2.02

%


N/M



N/M



0.93

%

Efficiency ratio (b)

30.07



90.06



72.11



N/M



N/M



63.35




(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, 2015

Michigan


California


Texas


Markets


& Other


Total

Earnings summary:












Net interest income (expense) (FTE)

$

179



$

181



$

130



$

85



$

(153)



$

422


Provision for credit losses

(13)



4



43



10



3



47


Noninterest income

85



37



31



93



15



261


Noninterest expenses

128



100



94



110



4



436


Provision (benefit) for income taxes (FTE)

51



43



10



15



(54)



65


Net income (loss)

$

98



$

71



$

14



$

43



$

(91)



$

135


Net loan charge-offs (recoveries)

$

(2)



$

6



$

5



$

9



$



$

18














Selected average balances:












Assets

$

13,852



$

16,696



$

11,878



$

8,321



$

18,216



$

68,963


Loans

13,290



16,429



11,254



7,860





48,833


Deposits

21,706



17,275



10,959



7,096



362



57,398














Statistical data:












Return on average assets (a)

1.73

%


1.54

%


0.46

%


2.05

%


N/M



0.79

%

Efficiency ratio (b)

48.21



46.04



58.20



61.45



N/M



63.68





















Other


Finance



Three Months Ended March 31, 2015

Michigan


California


Texas


Markets


& Other


Total

Earnings summary:












Net interest income (expense) (FTE)

$

177



$

176



$

131



$

80



$

(150)



$

414


Provision for credit losses

(8)



(3)



21



6



(2)



14


Noninterest income

80



37



36



89



13



255


Noninterest expenses

154



99



96



103



7



459


Provision (benefit) for income taxes (FTE)

38



44



18



16



(54)



62


Net income (loss)

$

73



$

73



$

32



$

44



$

(88)



$

134


Net loan charge-offs

$

3



$

1



$

3



$

1



$



$

8














Selected average balances:












Assets

$

13,736



$

16,461



$

12,192



$

7,662



$

18,684



$

68,735


Loans

13,223



16,193



11,535



7,200





48,151


Deposits

21,710



16,837



11,010



6,986



447



56,990














Statistical data:












Return on average assets (a)

1.30

%


1.63

%


1.01

%


2.26

%


N/M



0.78

%

Efficiency ratio (b)

60.23



46.36



57.43



61.45



N/M



68.55





















Other


Finance



Three Months Ended June 30, 2014

Michigan


California


Texas


Markets


& Other


Total

Earnings summary:












Net interest income (expense) (FTE)

$

182



$

176



$

137



$

76



$

(154)



$

417


Provision for credit losses

(9)



14



22



(8)



(8)



11


Noninterest income

89



38



35



41



17



220


Noninterest expenses

159



100



89



45



11



404


Provision (benefit) for income taxes (FTE)

44



37



22



21



(53)



71


Net income (loss)

$

77



$

63



$

39



$

59



$

(87)



$

151


Net loan charge-offs (recoveries)

$

10



$

5



$

2



$

(8)



$



$

9














Selected average balances:












Assets

$

13,851



$

15,721



$

11,661



$

7,281



$

16,364



$

64,878


Loans

13,482



15,439



10,966



6,838





46,725


Deposits

20,694



15,370



10,724



6,069



527



53,384














Statistical data:












Return on average assets (a)

1.42

%


1.54

%


1.30

%


3.28

%


N/M



0.93

%

Efficiency ratio (b)

58.67



46.64



51.67



38.73



N/M



63.35




(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)

2015

2015

2014

2014

2014







Tier 1 Common Capital Ratio:






Tier 1 and Tier 1 common capital (a)

n/a


n/a


$

7,169


$

7,105


$

7,027








Risk-weighted assets (a)

n/a


n/a


68,269


67,102


66,909








Tier 1 and Tier 1 common risk-based capital ratio

n/a


n/a


10.50

%

10.59

%

10.50

%







Tangible Common Equity Ratio:






Common shareholders' equity

$

7,523


$

7,500


$

7,402


$

7,433


$

7,369


Less:






Goodwill

635


635


635


635


635


Other intangible assets

15


15


15


15


15


Tangible common equity

$

6,873


$

6,850


$

6,752


$

6,783


$

6,719








Total assets

$

69,945


$

69,333


$

69,186


$

68,883


$

65,323


Less:






Goodwill

635


635


635


635


635


Other intangible assets

15


15


15


15


15


Tangible assets

$

69,295


$

68,683


$

68,536


$

68,233


$

64,673








Common equity ratio

10.76

%

10.82

%

10.70

%

10.79

%

11.28

%

Tangible common equity ratio

9.92


9.97


9.85


9.94


10.39








Tangible Common Equity per Share of Common Stock:






Common shareholders' equity

$

7,523


$

7,500


$

7,402


$

7,433


$

7,369


Tangible common equity

6,873


6,850


6,752


6,783


6,719








Shares of common stock outstanding (in millions)

178


178


179


180


181








Common shareholders' equity per share of common stock

$

42.18


$

42.12


$

41.35


$

41.26


$

40.72


Tangible common equity per share of common stock

38.53


38.47


37.72


37.65


37.12




(a)

Tier 1 capital and risk-weighted assets as defined by Basel I risk-based capital rules.

n/a - not applicable.

 

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 Basel I risk-based capital rules in effect through December 31, 2014. Effective January 1, 2015, regulatory capital components and risk-weighted assets are defined by and calculated in conformity with Basel III risk-based capital rules. 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.

Logo - http://photos.prnewswire.com/prnh/20010807/CMALOGO

 

SOURCE Comerica Incorporated

For further information: Media Contact: Wayne J. Mielke, (214) 462-4463; Investor Contacts: Darlene P. Persons, (214) 462-6831, Chelsea R. Smith, (214) 462-6834
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