DETROIT, April 15 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today
reported first quarter diluted earnings per share of $0.88, compared to $0.74
in 1997, an increase of 19 percent. Net income was $144 million, up 17
percent from $124 million for the first quarter of 1997. Return on common
equity was 22.09 percent and return on assets was 1.61 percent, compared to
20.41 percent and 1.46 percent, respectively, for the first quarter of 1997.
"Our financial performance in the first quarter, highlighted by a return
on equity in excess of 22 percent, reflects continued strong commercial loan
growth, solid asset quality and our unwavering commitment to create
shareholder value," said Eugene A. Miller, chairman and chief executive
officer.
"The end of the first quarter also marks the successful conclusion of
Direction 2000: Phase III, a comprehensive effort to improve customer service,
increase efficiency, enhance revenue and provide funding for future growth,"
Miller added. "More than 2,000 employee-originated ideas were implemented
during Phase III, which is expected to have an annual pre-tax earnings impact
of $90 million in 1998 and $110 million beginning in 1999."
Net interest income for the first quarter of 1998 was up $14 million, or 4
percent, compared to the first quarter of 1997, primarily as a result of an 18
percent increase in average commercial loans. The decrease in the net
interest margin, from 4.59 percent for the comparable quarter of 1997 to 4.50
percent for the first quarter of 1998, was primarily due to a greater reliance
on higher cost interest bearing sources of funds to support the growth in
earning assets.
Noninterest income was $135 million for the first quarter of 1998,
compared to $129 million for the same quarter last year. Excluding the effect
of certain nonrecurring items, principally a $17 million gain on the sale of
the bond indenture services business in the first quarter of 1997 and
divestitures in both periods, noninterest income increased 20 percent in the
first quarter of 1998 compared to the first quarter of 1997.
Noninterest expenses were relatively unchanged at $250 million for the
first quarter of 1998, up $1 million from the first quarter of 1997, due to
continued focus on efficiency and the recognition of the positive effects of
Direction 2000: Phase III.
Comerica is pursuing the sale of approximately $2.1 billion of assets in
its Individual Bank. These assets, which include indirect consumer loans,
certain credit card receivables and mortgage servicing rights, are classified
in the balance sheet at March 31, 1998 as, "Assets held for sale," and are
being carried at the lower of cost or market. No write-down was necessary as
a result of the reclassification. "The proposed sale of these assets is part
of our continuing strategy to improve performance by reallocating resources
and capital to our core growth businesses within our Business, Individual and
Investment banks," Mr. Miller commented.
The provision for credit losses was $28 million in the first quarter of
1998, a decrease of $13 million compared to the same period in 1997. Net
charge-offs for the quarter were $22 million or 0.31 percent of average total
loans, compared with $17 million or 0.26 percent in the first quarter of 1997.
Nonperforming assets were $88 million or 0.32 percent of loans and other real
estate at March 31, 1998, compared to $96 million or 0.36 percent at March 31,
1997. The allowance as a percent of loans was 1.58 percent at March 31, 1998,
compared to 1.45 percent at the end of the first quarter of 1997 and 1.47
percent at December 31, 1997.
Assets totaled $36 billion at March 31, 1998, compared to $35 billion in
1997, while common shareholders' equity was $2.6 billion in 1998, compared to
$2.3 billion in 1997. On January 15, 1998, the Board of Directors of Comerica
Incorporated authorized a three-for-two stock split effected in the form of a
50 percent stock dividend, and increased the quarterly cash dividend by 12
percent to $0.32 on a post-split basis. Common shareholders received one new
share for every two shares registered in their name as of the close of
business on March 15, 1998. The split was payable April 1, 1998, and
increased the number of common shares outstanding to 157 million. Total loans
were $27 billion at quarter-end 1998 and 1997, and quarter-end deposits were
$23 billion, compared to $22 billion at March 31, 1997.
Comerica Incorporated is a diversified financial services provider
headquartered in Detroit that operates banking subsidiaries in Michigan,
California, Texas and Florida.
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
(in thousands, except share data)
Mar. 31 Dec. 31
1998 1997
Assets
Cash and due from banks $1,883,135 $1,927,087
Interest-bearing deposits
with banks 3,671 3,319
Federal funds sold and
securities purchased
under agreements to
resell 94,171 149,801
Trading account securities 4,064 9,102
Assets held for sale 2,132,337 40,735
Investment securities
available for sale 3,744,532 4,005,962
Commercial loans 16,498,894 15,805,549
International loans 2,084,372 2,085,090
Real estate construction
loans 912,100 940,910
Commercial mortgage loans 3,696,455 3,633,785
Residential mortgage loans 1,462,667 1,565,445
Consumer loans 2,000,608 4,347,665
Lease financing 554,017 516,600
Total loans 27,209,113 28,895,044
Less allowance for credit
losses (429,648) (424,147)
Net loans 26,779,465 28,470,897
Premises and equipment 362,905 380,157
Customers' liability on
acceptances outstanding 12,081 18,392
Accrued income and other
assets 1,475,990 1,286,946
Total assets $36,492,351 $36,292,398
Liabilities and Shareholders'
Equity
Demand deposits
(noninterest-bearing) $6,211,420 $6,761,202
Interest-bearing deposits 16,981,882 15,825,115
Total deposits 23,193,302 22,586,317
Federal funds purchased and
securities sold under
agreements to repurchase 2,387,061 592,860
Other borrowed funds 914,094 2,600,041
Acceptances outstanding 12,081 18,392
Accrued expenses and other
liabilities 422,111 446,625
Medium- and long-term debt 6,736,815 7,286,387
Total liabilities 33,665,464 33,530,622
Nonredeemable preferred stock
- $50 stated value:
Authorized - 5,000,000 shares
Issued - 5,000,000 shares at
3/31/98, 12/31/97 and 3/31/97 250,000 250,000
Common stock - $5 par value:
Authorized - 250,000,000
shares
Issued - 157,188,873 shares
at 3/31/98, 156,815,367
shares at 12/31/97 and
105,861,240 shares at
3/31/97 785,944 784,077
Capital surplus 12,906 -
Unrealized gains and losses
on investment securities
available for sale 4,425 (1,937)
Retained earnings 1,814,056 1,731,419
Deferred compensation (1,570) (1,783)
Less cost of common stock in
treasury-578,661 shares
at 3/31/97 (38,874) -
Total shareholders'
equity 2,826,887 2,761,776
Total liabilities and
shareholders' equity $36,492,351 $36,292,398
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
(in thousands, except share data)
Mar. 31
1997
Assets
Cash and due from banks $1,703,871
Interest-bearing deposits
with banks 66,847
Federal funds sold and
securities purchased
under agreements to
resell 53,650
Trading account securities 6,319
Assets held for sale 30,970
Investments securities
available for sale 4,798,923
Commercial loans 14,158,843
International loans 1,933,784
Real estate construction
loans 786,227
Commercial mortgage loans 3,509,272
Residential mortgage loans 1,722,274
Consumer loans 4,514,663
Lease financing 424,624
Total loans 27,049,687
Less allowance for credit
losses (391,418)
Net loans 26,658,269
Premises and equipment 397,955
Customers' liability on
acceptances outstanding 34,692
Accrued income and other
assets 1,116,212
Total assets $34,867,708
Liabilities and Shareholders'
Equity
Demand deposits
(noninterest-bearing) $6,491,323
Interest-bearing deposits 15,656,476
Total deposits 22,147,799
Federal funds purchased and
securities sold under
agreements to repurchase 1,500,964
Other borrowed funds 2,663,017
Acceptances outstanding 34,692
Accrued expenses and other
liabilities 459,716
Medium- and long-term debt 5,492,082
Total liabilities 32,298,270
Nonredeemable preferred stock
- $50 stated value:
Authorized - 5,000,000 shares
Issued - 5,000,000 shares at
3/31/98, 12,31/97 and 3/31/97 250,000
Common stock - $5 par value:
Authorized - 250,000,000
shares
Issued - 157,188,873 shares
at 3/31/98, 156,815,367
shares at 12/31/97 and
105,861,240 shares at
3/31/97 529,306
Capital surplus -
Unrealized gains and losses
on investment securities
available for sale (49,847)
Retained earnings 1,842,488
Deferred compensation (2,509)
Less cost of common stock in
treasury-578,661 shares
at 3/31/98 -
Total shareholders'
equity 2,569,438
Total liabilities and
shareholders' equity $34,867,708
CONSOLIDATED FINANCIAL HIGHLIGHTS
Comerica Incorporated and Subsidiaries
(in thousands, except per share data,
average balances and ratios)
Three Months Ended
March 31
1998 1997
Per Share and Common Stock
Data
Net income $0.88 $0.74
Cash dividends declared 0.32 0.29
Common shareholders' equity
(at March 31) 16.45 14.61
Average diluted shares 159,768 162,399
Key Ratios (in percent)
Return on average common equity 22.09% 20.41%
Return on average assets 1.61% 1.46%
Average common equity as a
percentage of average
assets 7.06% 6.91%
Core capital ratio 7.10% 6.90%
Total capital ratio 11.10% 10.64%
Leverage ratio 7.21% 6.98%
Average Balances (in millions)
Commercial loans (including
lease financing) $16,512 $13,905
International loans 2,082 1,784
Real estate construction loans 945 755
Commercial mortgage loans 3,663 3,470
Residential mortgage loans 1,521 1,735
Consumer loans 4,198 4,580
Total loans 28,921 26,229
Earning assets 32,938 31,115
Total assets 35,908 33,872
Interest-bearing deposits 16,303 15,958
Noninterest-bearing deposits 5,997 5,676
Total interest-bearing
liabilities 26,664 25,057
Common shareholders' equity 2,537 2,342
Net Interest Income
Net interest
income (fully taxable
equivalent basis) $367,578 $354,262
Fully taxable equivalent
adjustment 1,971 2,477
Net interest margin (in percent) 4.50% 4.59%
Credit Quality
Nonaccrual loans $73,446 $60,645
Reduced-rate loans 8,207 8,785
Other real estate 6,306 26,745
Total nonperforming assets 87,959 96,175
Loans 90 days past due 61,110 54,860
Gross charge-offs 32,838 28,476
Recoveries 10,339 11,729
Net charge-offs 22,499 16,747
Allowance for credit losses
as a percentage of total
loans (in percent) 1.58% 1.45%
Nonperforming assets as a
percentage of total
loans and other real
estate (in percent) 0.32% 0.36%
Net loans charged off as
a percentage of average
total loans (in percent) 0.31% 0.26%
Allowance for credit losses
as a percentage of total
nonperforming assets (in
percent) 488% 407%
Additional Data
Goodwill $226,776 $247,764
Core deposit intangible 22,018 27,352
Other intangibles 2,906 4,865
Loan servicing rights 26,849 23,605
CONSOLIDATED STATEMENTS OF INCOME
Comerica Incorporated and Subsidiaries
(in thousands, except per share data)
Three Months Ended
March 31
1998 1997
Interest Income
Interest and fees on loans $606,990 $545,572
Interest on investment
securities:
Taxable 62,306 76,483
Exempt from federal income
tax 2,093 3,055
Total interest on investment
securities 64,399 79,538
Trading account interest 44 65
Interest on federal funds
sold and securities purchased
under agreements to resell 1,560 728
Interest on time deposits
with banks 42 747
Interest on assets held for sale 826 593
Total interest income 673,861 627,243
Interest Expense
Interest on deposits 167,137 159,666
Interest on short-term
borrowings:
Federal funds purchased and
securities sold under
agreements to repurchase 30,597 28,450
Other borrowed funds 13,249 26,989
Interest on medium- and
long-term debt 109,828 75,681
Net interest rate swap income (12,558) (15,328)
Total interest expense 308,253 275,458
Net interest income 365,608 351,785
Provision for credit losses 28,000 41,000
Net interest income after
provision for credit losses 337,608 310,785
Noninterest Income
Income from fiduciary
activities 40,735 33,076
Service charges on deposit
accounts 38,450 34,954
Securities gains/(losses) (1,150) 122
Other noninterest income 56,817 61,242
Total noninterest income 134,852 129,394
Noninterest Expenses
Salaries and employee benefits 134,767 132,915
Net occupancy expense 22,761 23,292
Equipment expense 15,124 16,068
Telecommunications expense 6,622 7,144
Other noninterest expenses 70,599 69,318
Total noninterest expenses 249,873 248,737
Income before income taxes 222,587 191,442
Provision for income taxes 78,204 67,670
Net income $144,383 $123,772
Net income applicable to common
stock $140,108 $119,497
Basic net income per common
share $0.89 $0.75
Diluted net income per common
share $0.88 $0.74
Cash dividends declared
on common stock $50,191 $45,682
Dividends per common share $0.32 $0.29
SOURCE Comerica Incorporated
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