DETROIT, April 17 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today
reported first quarter 2001 earnings per share of $0.50, compared with $1.08
for the 2000 first quarter, a decrease of 54 percent. Net income was $94
million, compared with $197 million for 2000. The company's return on common
equity was 8.11 percent and its return on assets was 0.76 percent, compared
with 20.66 percent and 1.72 percent, respectively, for the 2000 first quarter.
All prior period financial information has been restated to reflect the
acquisition of Imperial Bancorp, which was completed during the first quarter
2001 and accounted for as a pooling-of-interests.
Excluding the previously announced $95 million after-tax restructuring
charge for the Imperial merger and the effect of a one-time $34 million after-
tax charge related to long-term incentive plans at an unconsolidated
subsidiary of Munder Capital Management (the company's investment management
subsidiary), net income for the first quarter of 2001 was $223 million, or
$1.21 per share. On this basis, Comerica's return on common equity and return
on assets were 19.85 percent and 1.81 percent, respectively.
"Comerica delivered solid core operating results during the first quarter
of 2001, generating continued loan and deposit growth, while maintaining
expense discipline and satisfactory credit quality trends. The integration of
our recent acquisition of the $7 billion Imperial Bancorp continues on
schedule and according to plan," said Eugene A. Miller, chairman, president,
and chief executive officer. "A slowing economy and volatility in the
securities markets can be expected to slow the pace of earnings growth across
the industry; nonetheless, we believe Comerica is well positioned to sustain
its evolution into one of the nation's leading middle-market focused financial
services providers.
"Given demographic and wealth management trends, the asset and fund
management business remains an important component of our long-term strategy
to enhance our sources of recurring, noninterest income. However, we are
disappointed to report both a special one-time charge related to incentive
compensation plans at a foreign subsidiary of Munder, and an additional
deferred distribution costs impairment charge of $17 million after-tax related
to decreases in the net asset value of technology mutual funds at Munder,"
Miller added.
Net interest income for the first quarter of 2001 totaled $512 million, an
increase of $28 million, or 6 percent, from the same period last year. This
increase was primarily due to an increase in average business loans of $4
billion, or 11 percent, over last year's first quarter. Adjusting for the
divestiture of revolving check credit and bankcard loans in the first quarter
of 2000, net interest income increased $37 million, or 8 percent, over the
same period last year.
The net interest margin was 4.55 percent for the first quarter of 2001,
compared with 4.60 percent for the comparable quarter of 2000. Excluding the
effect of the divestiture, the net interest margin decreased 2 basis points
from the same period in 2000, primarily as a result of the changing mix of
funding required to support the company's continued strong pace of commercial
lending.
Noninterest income was $170 million for the first quarter of 2001,
compared with $255 million for the same quarter last year. Noninterest income
in the first quarter of 2001 was reduced by the $26 million impairment charge
($17 million after-tax) and a one-time $53 million charge ($34 million after-
tax) related to an unconsolidated subsidiary which is discussed more fully
below. Noninterest income benefited from securities gains of $24 million, and
$11 million of net gains resulting from the purchase and subsequent sale, all
within the first quarter, of interest rate derivative contracts which failed
to meet Comerica's stringent risk-reduction criteria.
Noninterest income in the first quarter of 2000 included a $30 million
gain associated with the sale of revolving check credit and bankcard loans
mentioned above. Excluding the effect of securities gains, warrant income and
large, nonrecurring items and the impact of last year's revolving check credit
and bankcard loan sale, noninterest income increased 3 percent in the first
quarter 2001 from the first quarter of 2000.
The $26 million pre-tax deferred distribution costs impairment charge at
Munder resulted from the company's reassessment of its ability to recover the
unamortized cost of the commissions to brokers for selling certain shares,
principally shares in Munder's NetNet, International NetNet and Future
Technology funds. Net asset values in these technology funds suffered as
market conditions weakened significantly following the peak in the first half
of 2000. After a fourth quarter 2000 impairment charge of $7 million, this
sector of the equity markets declined another 26 percent in the first quarter
2001. This prompted Comerica's current revaluation of expected future cash
flows from the funds, which are based on a percentage of assets under
management and early redemption fees. Net remaining deferred distribution
costs at March 31, 2001, were $54 million. Excluding the impairment charges,
investment advisory revenues totaled $17 million in the first quarter of 2001,
a decrease of $8 million from the fourth quarter 2000 and $17 million from the
first quarter 2000. The decrease is primarily attributable to the decline in
the market values of technology-related stocks from their record highs during
the first quarter of last year.
At March 31, 2001, assets under management at Munder were $44 billion,
including $2.9 billion in the NetNet, International NetNet and Future Tech
funds. Munder manages and offers 15 wrap-fee products, 24 equity funds, 8
fixed income funds, 6 money market and 2 balanced funds covering a wide array
of investment options, including its original menu of "Growth at a Reasonable
Price" or "GARP" offerings.
The $53 million pre-tax charge is related to long-term incentive plans at
a United Kingdom subsidiary, Framlington Holdings Limited, of which Munder is
a minority owner. In May 2000, the announcement that the majority owner was
being acquired triggered a change-in-control provision which fully vested all
options and restricted shares. In March 2001, all outstanding options held by
employees were exercised and their shares were sold to Framlington, requiring
U.S. accounting recognition of the expense. The pre-tax charge, included in
equity in earnings of unconsolidated subsidiaries, reflects Munder's portion
of the resulting expense.
Noninterest expenses, which included $94 million of the previously
announced merger-related restructuring charge, were $450 million in the first
quarter of 2001, compared with $367 million in 2000, an increase of 23
percent. Excluding the restructuring charge, noninterest expenses decreased
$11 million, or 3 percent, compared with the same quarter last year, primarily
due to a decline in revenue-related incentives.
Income tax expense was reduced $7 million, or $0.04 per share, for a tax
benefit related to the Imperial Bancorp acquisition that was immediately
recognizable, but only after Imperial became part of Comerica.
The provision for credit losses was $72 million in the first quarter of
2001, an increase of $5 million compared with the first quarter of 2000.
Included in the 2001 provision for credit losses is a merger-related charge of
$25 million to conform the credit policies of Imperial with Comerica. Net
charge-offs for the quarter were $35 million or 0.34 percent of average total
loans, compared with $34 million or 0.36 percent in the first quarter of 2000.
Nonperforming assets were $476 million or 1.16 percent of loans and other real
estate at March 31, 2001, compared with $339 million or 0.84 percent at
December 31, 2000, and $230 million or 0.61 percent at March 31, 2000. The
increase in nonperforming assets from year-end includes the addition of one
$70 million loan to a commercial finance company. The allowance for credit
losses as a percent of loans was 1.57 percent at March 31, 2001, a 3 basis
point increase from 1.54 percent at March 31, 2000.
The level of nonperforming assets currently is expected to trend toward
historical averages, in a range of 115 to 130 basis points of total loans and
other real estate for the year 2001.
Outlook for 2001: Earnings for the full year 2001, excluding the
restructuring charge for the Imperial merger, of which $0.52 per share was
included in the current quarter, and the effect of a one-time $0.19 per share
charge related to long-term incentive plans at an unconsolidated subsidiary of
Munder, are expected to range between $4.75 and $4.95 per share, based on an
assessment of current economic conditions, the level of equity markets and
interest rates, progress toward business objectives and other factors.
Assets totaled $50 billion at March 31, 2001, and $47 billion at March 31,
2000, while common shareholders' equity was $4.4 billion at March 31, 2001,
compared to $3.8 billion one year earlier. Shares of common stock outstanding
were 178 million at March 31, 2001 and 177 million at March 31, 2000. Total
loans were $41 billion at March 31, 2001, compared to $38 billion a year ago.
Total deposits were $37 billion at March 31, 2001, compared to $29 billion at
March 31, 2000.
A conference call reviewing Comerica's first quarter 2001 financial
results will be held at 8:30 a.m. ET today, April 17, 2001. Interested
parties may access the conference call by calling 706-679-5261 (event ID No.
92476). The call is also accessible through the Investor Relations link on
Comerica's home page at www.comerica.com . A replay of the conference call
will be available approximately two hours following the call through April 24,
2001.
The conference call replay can be accessed by calling 800-642-1687 or
706-645-9291 (event ID No. 92476). The replay can also be accessed through
the Investor Relations link on Comerica's home page at www.comerica.com .
SAFE HARBOR STATEMENT
Matters discussed in this news release contain certain forward-looking
statements that are based on management's beliefs and assumptions based on
information currently known to Comerica's management. Forward-looking
statements may include descriptions of plans or objectives of Comerica's
management for future or past operations, products or services, and forecasts
of the Company's revenues, earnings or other measures of economic performance
including statements of profitability of business segments and subsidiaries,
estimates of credit quality trends and current integration. Such statements
reflect the view of Comerica's management, as of the date of this conference
call, with respect to future events and are subject to risks and
uncertainties, such as changes in Comerica's plans, objectives, expectations
and intentions and do not purport to speak as of any other date. Should one
or more of these risks materialize or should underlying beliefs or
assumptions prove incorrect, the Company's actual results could differ
materially from those discussed in this conference call. Factors that could
cause or contribute to such differences are changes in interest rates, changes
in the industries in which Comerica has a concentration of loans, changes in
the level of fee revenues, changes in the accounting treatment of any
particular item, the entry of new competitors into the banking industry as a
result of the enactment of the Gramm-Leach-Bliley Act of 1999, changes in
general economic conditions and related credit and market conditions,
difficulties in integrating Imperial Bancorp or retaining key personnel and
other factors discussed in Comerica's filings with the Securities and Exchange
Commission.
Forward-looking statements speak only as of the date they are made.
Comerica does not undertake to update forward-looking statements to reflect
circumstances or events that occur after the date the forward-looking
statements are made. Without limiting the foregoing, Comerica undertakes no
obligation to update earnings guidance including any of the factors that
influence earnings.
Comerica Incorporated is a multi-state financial services provider
headquartered in Detroit, with bank subsidiaries in Michigan, California and
Texas, banking operations in Florida, and businesses in several other states.
Comerica has an investment services affiliate, Munder Capital Management, and
operates banking subsidiaries in Canada and Mexico.
CONSOLIDATED FINANCIAL HIGHLIGHTS
Comerica Incorporated and Subsidiaries
Three Months Ended
(in thousands, except
per share data, March 31, December 31, March 31,
average balances and ratios) 2001 2000 2000
----------- ------------ -----------
PER SHARE AND COMMON STOCK DATA
Diluted net income $0.50 $0.94 $1.08
Cash dividends declared 0.44 0.40 0.40
Common shareholders' equity
(at period end) 24.80 23.98 21.51
Average diluted shares 180,248 179,453 179,232
KEY RATIOS
Return on average common equity 8.11% 16.05% 20.66%
Return on average assets 0.76% 1.43% 1.72%
Average common equity as a
percentage of average assets 8.93% 8.70% 8.17%
Core capital ratio (March 2001
estimated) 7.36% 7.35% 7.29%
Total capital ratio (March 2001
estimated) 11.13% 11.11% 11.00%
Leverage ratio (March 2001
estimated) 8.77% 8.74% 8.38%
AVERAGE BALANCES (in millions)
Commercial loans (including lease
financing) $27,764 $26,997 $25,096
International loans 2,603 2,547 2,598
Real estate construction loans 2,955 2,826 2,282
Commercial mortgage loans 5,500 5,275 5,000
Residential mortgage loans 800 810 859
Consumer loans 1,478 1,466 1,408
----------- ------------ -----------
Total loans $41,100 $39,921 $37,243
Earning assets 45,615 44,586 42,312
Total assets 49,331 48,221 45,697
Interest-bearing deposits 24,167 22,727 20,215
Noninterest-bearing deposits 9,370 9,357 8,612
Total interest-bearing
liabilities 34,469 33,650 32,425
Common shareholders' equity 4,407 4,195 3,733
NET INTEREST INCOME
Net interest income (fully taxable
equivalent basis) $513,340 $520,040 $484,554
Fully taxable equivalent
adjustment 1,048 841 959
Net interest margin 4.55% 4.64% 4.60%
CREDIT QUALITY
Nonaccrual loans $470,478 $331,361 $209,391
Reduced-rate loans 275 2,306 8,888
Other real estate 5,577 5,577 11,357
Total nonperforming assets 476,330 339,244 229,636
Loans 90 days past due 55,260 36,176 40,894
Gross charge-offs 45,327 100,855 37,121
Recoveries 9,916 7,293 3,569
Net charge-offs 35,411 93,562 33,552
Allowance for credit losses as a percentage
of total loans 1.57% 1.51% 1.54%
Nonperforming assets as a percentage of
total loans and other real estate 1.16% 0.84% 0.61%
Net loans charged off as a percentage of
average total loans 0.34% 0.94% 0.36%
Allowance for credit losses as a percentage
of total nonperforming assets 135% 179% 253%
ADDITIONAL DATA
Goodwill $356,925 $366,550 $388,232
Core deposit intangible 7,176 7,883 11,481
Other intangibles 1,215 3,472 4,047
Loan servicing rights 8,470 6,657 6,396
Deferred mutual fund distribution
costs 54,045 85,849 87,199
Amortization of intangibles 8,685 9,549 8,731
