DETROIT, Jan. 18 /PRNewswire-FirstCall/ -- Comerica Incorporated (NYSE: CMA) today reported fourth quarter 2006 earnings of $299 million, or $1.87 per diluted share, compared to $200 million, or $1.23 per diluted share, for the third quarter 2006 and $207 million, or $1.25 per diluted share, for the fourth quarter 2005. Fourth quarter 2006 results included an after-tax gain of $108 million ($0.68 per diluted share) from the sale of Comerica's stake in Munder Capital Management (Munder), income of $47 million ($31 million after-tax, or $0.19 per diluted share) from the settlement of a Financial Services Division (FSD)-related lawsuit, and the net after-tax impact of a charge to tax and related interest reserves of $31 million, or $(0.19) per diluted share, discussed under "Tax-related items" below. Comerica reports Munder as a discontinued operation in all periods presented.
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(dollar amounts in millions,
except per share data) 4th Qtr 3rd Qtr 4th Qtr
'06 '06 '05
Net interest income $502 $502 $500
Provision for loan losses 22 15 (20)
Noninterest income 262 195 207
Noninterest expenses 457 399 469
Net income 299 200 207
Diluted EPS from continuing
operations 1.16 1.20 1.04
Diluted EPS from discontinued
operations 0.71 0.03 0.21
Diluted EPS 1.87 1.23 1.25
Return on average common
shareholders' equity 22.63 % 15.38 % 16.28 %
Net interest margin 3.75 3.79 4.00
Net income for 2006 was $893 million, or $5.49 per diluted share, compared to $861 million, or $5.11 per diluted share, for 2005. Net income from continuing operations for 2006 was $782 million, or $4.81 per diluted share, compared to $816 million, or $4.84 per diluted share, for 2005. Return on average common shareholders' equity was 17.24 percent and return on average assets was 1.58 percent for 2006, compared to 16.90 percent and 1.64 percent, respectively, for 2005.
The following table illustrates certain items impacting diluted earnings per share from continuing operations:
Full Full
(dollar amounts per diluted share) 4th Qtr 3rd Qtr Year Year
'06 '06 2006 2005
FSD-related lawsuit settlement $0.19 $- $0.19 $-
Loss on sale of Mexican bank
charter - (0.03) (0.05) -
Tax adjustments (0.14) - (0.04) -
Tax-related interest adjustments (0.05) - (0.13) -
Warrant accounting adjustments - - - 0.06
Performance-based compensation
related to Munder gain (0.04) - (0.04) -
Charitable Foundation contribution (0.04) - (0.04) (0.04)
"Our financial performance in 2006 is the result of the successful execution of our strategy, which focuses on exporting our expertise to high- growth markets, and building and enhancing customer relationships. We opened 25 new banking centers in 2006, the majority of which are located in California and Texas," said Ralph W. Babb Jr., chairman and chief executive officer. "Loan growth increased at a strong pace in our high-growth markets and credit quality remained solid. The loan and deposit environment continued to be competitive," added Babb.
Fourth Quarter and Full Year 2006 Highlights
Fourth Quarter 2006 Compared to Third Quarter 2006
* On an annualized basis, excluding Financial Services Division loans,
average loans increased five percent, led by growth of 10 percent in the
Western market, 15 percent in the Texas market and 16 percent in the
Florida market, with the Midwest & Other Markets down one percent.
* The net interest margin was 3.75 percent in the fourth quarter 2006, a
decrease of 4 basis points from 3.79 percent in the third quarter 2006.
* Total revenue (net interest income + noninterest income) increased
$67 million, or 10 percent. Excluding income of $47 million from the
settlement of a Financial Services Division-related lawsuit in the
fourth quarter 2006, and excluding an incremental loss on the sale of
the Mexican bank charter of $7 million in the third quarter 2006, total
revenue increased $13 million, or two percent.
* Net credit-related charge-offs were $23 million, or 19 basis points as a
percent of average total loans for the fourth quarter 2006, compared to
6 basis points for the third quarter 2006. In the fourth quarter, a
decision was made to sell a $74 million portfolio of loans related to
manufactured housing, located primarily in Michigan and Ohio. As a
result, these loans were transferred to held for sale (classified as
other short-term investments). A $9 million charge-off was made to
reflect the estimated fair value of the loans.
* Noninterest expenses, excluding the provision for credit losses on
lending-related commitments, increased $57 million over the third
quarter 2006, primarily due to increases in salaries expense of $29
million, (from higher incentives tied to performance, including the
gain on the sale of Munder, contract labor costs associated with
technology-related projects and increased severance), interest on tax
liabilities of $13 million and a contribution of $10 million to the
Comerica Charitable Foundation in the fourth quarter 2006. There was $11
million of incremental performance-based compensation related to the
gain on the sale of Munder, $9 million of which was recorded in salaries
expense. Employee levels from continuing operations (FTE) increased one
percent from September 30, 2006, to December 31, 2006.
* The provision for income taxes increased due to an adjustment to tax
reserves of $22 million (discussed under "Tax-related items" below).
* Open market share repurchases in the fourth quarter 2006 totaled 1.5
million shares, or one percent of total shares outstanding at September
30, 2006.
Full Year 2006 Compared to Full Year 2005
* Average loan growth, excluding Financial Services Division loans, was
eight percent, with growth of 15 percent in the Western market, 19
percent in the Texas market, 25 percent in the Florida market and one
percent in Midwest & Other Markets.
* The net interest margin was 3.79 percent in 2006, which was consistent
with the 2006 outlook.
* Total revenue increased $63 million, or two percent, and net interest
income increased one percent. Excluding income of $47 million from the
settlement of a Financial Services Division-related lawsuit and the loss
on the sale of the Mexican bank charter of $12 million in 2006, and a
warrant accounting adjustment of $20 million in the third quarter of
2005, total revenue increased $48 million, or two percent.
* Net credit-related charge-offs as a percent of average total loans were
15 basis points for 2006, down from 26 basis points in 2005.
* The provision for loan losses was $37 million for 2006, compared to a
negative $47 million for 2005. The provision for credit losses on
lending-related commitments was $5 million for 2006, compared to $18
million for 2005.
* Noninterest expenses, excluding the provision for credit losses on
lending-related commitments, increased $74 million largely due to
increases in salaries and employee benefits expense of $43 million
(primarily explained by merit increases, the adoption of SFAS 123( R )
for share-based compensation and higher pension expenses) and interest
on tax liabilities of $27 million, partially offset by a decrease in
customer services expense in the Financial Services Division of $22
million. Also included in noninterest expenses was an increase of $15
million related to new banking centers. Employee levels from continuing
operations (FTE) increased less than one percent from the prior year-
end.
* The provision for income taxes increased a net of $6 million due to
adjustments in the first and fourth quarters (discussed under "Tax-
related items" below).
* Open market share repurchases totaled 6.6 million shares.
Net Interest Income and Net Interest Margin in Line with
Full-Year 2006 Outlook
(dollar amounts in millions) 4th Qtr 3rd Qtr 4th Qtr
'06 '06 '05
Net interest income $502 $502 $500
Net interest margin 3.75 % 3.79 % 4.00 %
Selected average balances:
Total earning assets $53,289 $52,500 $49,764
Total loans 48,568 48,125 45,249
Total loans, excluding FSD loans
(primarily low-rate) 46,659 46,032 42,480
Total interest-bearing deposits 30,554 29,133 26,320
Total noninterest-bearing deposits 12,649 12,723 15,158
FSD noninterest-bearing deposits 3,953 4,079 5,866
* Net interest income in the fourth quarter 2006, when compared to the
third quarter 2006, was relatively unchanged. The benefit of earning
asset growth in the fourth quarter 2006 was offset by a small decline in
noninterest-bearing deposits and funding loan growth with non-core
deposits and purchased funds.
* The fourth quarter 2006 net interest margin reflected competitive
deposit pricing, a change in the interest bearing deposit mix toward
higher-cost deposits, and loan growth in excess of deposit growth,
partially offset by the positive impact of lower average Financial
Services Division loans (primarily low-rate).
Noninterest Income Reflects Positive Trends in Fee Income
Noninterest income was $262 million for the fourth quarter 2006, compared to $195 million for the third quarter 2006 and $207 million for the fourth quarter 2005. The $67 million increase in noninterest income in the fourth quarter 2006, compared to the third quarter 2006, reflected income of $47 million from the settlement of a Financial Services Division-related lawsuit in the fourth quarter 2006, positive trends in several categories (particularly in investment banking and commercial lending fees) and a $7 million incremental loss recognized on the sale of the Mexican bank charter in the third quarter 2006. Certain categories of noninterest income are highlighted in the table below.
(in millions) 4th Qtr 3rd Qtr 4th Qtr
'06 '06 '05
Warrant income (loss) $(1) $(5) $2
Net loss on sales of businesses - (7) -
Income from lawsuit settlement 47 - -
Other noninterest income
Investment banking fees 10 3 4
Noninterest Expenses Reflect Continued Investments and Include Unusual Items
Noninterest expenses were $457 million for the fourth quarter 2006, compared to $399 million for the third quarter 2006 and $469 million for the fourth quarter 2005. The $58 million increase in noninterest expenses in the fourth quarter 2006, compared to the third quarter 2006, reflected higher salaries expense of $29 million. The increase in salaries expense was due to incentives tied to performance, including the gain on the sale of Munder, contract labor costs associated with technology-related projects and increased severance. Also reflected in the increase in noninterest expenses was a charge of $14 million for interest on tax liabilities, discussed under "Tax- related items" below, and a Charitable Foundation contribution of $10 million. Net gains on the disposal of other real estate of $2 million in the fourth quarter 2006 and a decrease in employee benefits expense of $6 million, primarily due to decreased staff insurance expense, partially offset these increases.
Certain categories of noninterest expenses are highlighted in the table
below.
(in millions) 4th Qtr 3rd Qtr 4th Qtr
'06 '06 '05
Salaries
Regular salaries $162 $156 $151
Severance 5 1 3
Incentives 52 32 47
Share-based compensation 12 13 11
Total salaries 231 202 212
Employee benefits 42 48 45
Customer services 14 11 19
Provision for credit losses on
lending-related commitments (4) (5) 25
Other noninterest expenses
Interest on tax liabilities 15 2 3
Charitable Foundation
contribution 10 - 10
Other real estate expense (2) 1 9
Redemption premium on trust
preferred securities 3 - -
Tax-related items
As previously disclosed in quarterly and annual SEC filings under the heading "Tax Contingency," the examination staff with the Internal Revenue Service (IRS) disallowed the benefits related to a series of loans to foreign borrowers. Comerica has had ongoing settlement discussions with the IRS related to the disallowance. Based on such discussions, Comerica recorded a charge to its combined tax and related interest reserves for the disallowed loan benefits of $31 million after-tax in the fourth quarter 2006. Of the total, $22 million was included in the provision for income taxes and $14 million ($9 million after-tax) was for tax-related interest included in other noninterest expenses. Other adjustments to tax-related items affected both the first and second quarter 2006. In the first quarter 2006, federal taxes decreased $16 million and interest on tax liabilities increased $23 million ($15 million after tax) due to an updated assessment of reserves on structured lease transactions and a series of loans to foreign borrowers, and final resolution of all other matters from tax years 1996-2000. The second quarter 2006 interest on tax liabilities was reduced by $6 million ($4 million after tax) due to settlement of various refund claims with the IRS.
Munder Sale Closes
On December 29, 2006, Comerica completed the sale of its stake in Munder to an investor group and recognized an initial after-tax gain from the sale of $108 million, reflected in "income from discontinued operations, net of tax" on the consolidated statements of income. Comerica reports Munder as a discontinued operation in all periods presented; therefore, the after-tax earnings of Munder, including the gain from its sale, are reported as a single item at the bottom of the income statement. The following table summarizes significant items affecting income from discontinued operations, net of tax:
(in millions) 4th Qtr 3rd Qtr 4th Qtr
'06 '06 '05
Income from discontinued
operations, net of tax:
Gain on sale of Munder $108 $- $-
Gain on sale of Framlington - - 32
Operating net income 6 5 4
Total 114 5 36
Credit Quality Remained Solid
"Credit quality continued to be solid, particularly in the Western and Texas markets," said Babb. "Credit quality in the Michigan market showed a slight deterioration in the fourth quarter. As the fourth quarter results demonstrate, we continue to manage our credit risk effectively, paying particular attention to our automotive and commercial real estate portfolios, which continue to perform well."
* The provision for loan losses reflects the stress testing analysis of
the automotive suppliers loan portfolio.
* In the fourth quarter, a decision was made to sell a $74 million
portfolio of loans related to manufactured housing, located primarily in
Michigan and Ohio. As a result, these loans were transferred to held for
sale (classified as other short-term investments). A $9 million charge-
off was made to reflect the estimated fair value of the loans.
* During the fourth quarter 2006, $66 million of loans greater than $2
million were transferred to nonaccrual status, an increase of $27
million from the third quarter 2006. While nonperforming assets
increased by seven basis points of total loans compared to the third
quarter 2006, the ratio remained at the low level of 49 basis points of
total loans and other real estate.
(dollar amounts in millions) 4th Qtr 3rd Qtr 4th Qtr
'06 '06 '05
Net loan charge-offs $22 $3 $22
Net lending-related
commitment charge-offs 1 5 6
Total net credit-related
charge-offs 23 8 28
Net loan charge-offs/Average
total loans 0.18 % 0.02 % 0.20 %
Net credit-related charge-
offs/Average total loans 0.19 0.06 0.25
Provision for loan losses $22 $15 $(20)
Provision for credit losses
on lending-related commitments (4) (5) 25
Total provision for
credit losses 18 10 5
Nonperforming assets (NPAs) 232 197 162
NPAs/Total loans & other real
estate 0.49 % 0.42 % 0.37 %
Allowance for loan losses $493 $493 $516
Allowance for credit losses
on lending-related commitments* 26 31 33
Total allowance for
credit losses 519 524 549
Allowance for loan
losses/Total loans 1.04 % 1.06 % 1.19 %
Allowance for loan
losses/NPAs 213 251 319
* Included in "Accrued expenses and other liabilities" on the
consolidated balance sheets
Balance Sheet and Capital Management
Total assets and common shareholders' equity were $58.0 billion and $5.2 billion, respectively, at December 31, 2006, compared to $58.5 billion and $5.2 billion, respectively, at September 30, 2006. Shareholders' equity was reduced on December 31, 2006 by a $209 million after-tax charge associated with a new accounting standard (SFAS 158) on pension and post-retirement plan accounting. Based on the interim decision issued by the banking regulators, this charge was excluded from the calculation of regulatory capital ratios. There were approximately 158 million shares outstanding at December 31, 2006, compared to 159 million shares outstanding at September 30, 2006. Open market share repurchases for the current and prior quarter and full-year 2006 are shown in the following table:
4th Qtr '06 3rd Qtr '06 Full Year 2006
Number Number Number
of of of
(in millions) Shares Amount Shares Amount Shares Amount
Open market share
repurchases 1.5 $ 86 3.7 $ 210 6.6 $ 383
Comerica's fourth quarter 2006 estimated tier 1 common, tier 1 and total risk-based capital ratios were 7.51 percent, 7.99 percent and 11.59 percent, respectively.
2007 Outlook
Comerica's outlook for full-year 2007, compared to full-year 2006 (as reclassified for FIN 48, explained below), is as follows:
* High single-digit average loan growth, excluding Financial Services
Division loans, with low single-digit growth in the Midwest market and
low double-digit growth in the Western and Texas markets
* Financial Services Division noninterest-bearing deposits declining about
10 to 15 percent from the fourth quarter 2006 average of $4.0 billion.
Financial Services Division loans of $1.9 billion in the fourth quarter
2006 will fluctuate in 2007 with the level of noninterest-bearing
deposits
* Average full year net interest margin of about 3.75 percent
* Average net credit-related charge-offs of about 20 basis points of
average loans, with a provision for credit losses modestly exceeding net
charge-offs
* Low single-digit growth in noninterest income, excluding the Financial
Services Division-related lawsuit settlement and the loss on sale of the
Mexican bank charter in 2006
* Low single-digit growth in noninterest expenses, excluding the provision
for credit losses on lending-related commitments, basing the increase on
noninterest expenses in the table below
* Effective tax rate of about 32 percent
* Active capital management within targeted capital ratios (tier 1 common
of 6.50 percent to 7.50 percent and tier 1 of 7.25 percent to 8.25
percent)
In the first quarter 2007, the Corporation will adopt the provisions of Financial Accounting Standards Board Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" (FIN 48). FIN 48 permits the Corporation to elect a change in its accounting policy related to classification of interest on tax liabilities in the consolidated statements of income. Effective January 1, 2007, the Corporation will change its policy and classify interest on tax liabilities in the provision for income taxes and will reclassify all prior periods presented. Upon adoption, the Corporation's 2006 summarized statement of income from continuing operations will be as follows:
Statement of Income Adjusted for
Adoption of FIN 48 Year Ended
(in millions) December 31, 2006
Net interest income $1,983
Provision for loan losses 37
Noninterest income 855
Noninterest expenses 1,636
Income from continuing operations before income taxes 1,165
Provision for income taxes 383
Income from continuing operations $782
Business Segments
Comerica's continuing operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank, and Wealth & Institutional Management. The Finance Division also is included as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at December 31, 2006 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses fourth quarter 2006 results compared to third quarter 2006.
The following table presents net income (loss) by business segment.
(dollar amounts in
millions) 4th Qtr '06 3rd Qtr '06 4th Qtr '05
Business Bank $157 82 % $145 74 % $136 81 %
Retail Bank 25 13 36 18 29 18
Wealth & Institutional
Management 10 5 15 8 2 1
192 100 % 196 100 % 167 100 %
Finance (5) (5) (4)
Other* 112 9 44
Total $299 $200 $207
* Includes discontinued operations and items not directly associated
with the three major business segments or the Finance Division
Business Bank
(dollar amounts in millions) 4th Qtr 3rd Qtr 4th Qtr
'06 '06 '05
Net interest income (FTE) $335 $332 $337
Provision for loan losses 15 15 (31)
Noninterest income 116 55 71
Noninterest expenses 185 166 226
Net income 157 145 136
Net credit-related charge-offs 6 2 21
Selected average balances:
Assets 39,897 39,722 37,166
Loans 38,766 38,473 35,849
FSD loans 1,909 2,093 2,769
Deposits 17,111 17,183 20,578
FSD deposits 5,291 5,544 8,479
Net interest margin 3.43 % 3.41 % 3.76 %
* Average loans increased $293 million, or three percent on an annualized
basis. Excluding the $184 million decline in Financial Services
Division, average loans increased $477 million, or five percent on an
annualized basis, primarily due to growth in the Middle Market, Global
Corporate Banking, National Dealer Services and Technology and Life
Sciences businesses.
* Average deposits increased $181 million, excluding the $253 million
decline in the Financial Services Division.
* Net interest income increased $3 million, primarily due to an increase
in loans.
* The provision for loan losses reflects the stress testing analysis of
the automotive suppliers loan portfolio.
* Noninterest income increased $61 million, primarily due to income of $47
million in the fourth quarter 2006 from the settlement of a Financial
Services Division-related lawsuit, a $7 million increase in investment
banking fees, and a $7 million incremental loss recognized on the sale
of the Mexican bank charter in the third quarter 2006.
* Noninterest expenses increased $19 million primarily due to increases in
net corporate overhead expenses, incentive compensation and a slowing in
credit improvements reflected in the provision for credit losses on
lending-related commitments. The increase in net corporate overhead
resulted primarily from increased tax-related interest and a charitable
foundation contribution.
Retail Bank
(dollar amounts in millions) 4th Qtr 3rd Qtr 4th Qtr
'06 '06 '05
Net interest income (FTE) $159 $160 $156
Provision for loan losses 6 6 8
Noninterest income 53 53 51
Noninterest expenses 169 153 154
Net income 25 36 29
Net credit-related charge-offs 16 6 8
Selected average balances:
Assets 6,786 6,741 6,599
Loans 6,073 6,037 5,891
Deposits 16,968 16,742 16,778
Net interest margin 3.71 % 3.80 % 3.75 %
* The net interest margin of 3.71 percent decreased nine basis points,
primarily due to a change in the deposit mix as customers moved from low
cost deposits into higher cost deposits.
* Average loans increased $36 million, or two percent on an annualized
basis.
* Average deposits increased $226 million, primarily due to an increase in
customer certificates of deposit.
* The net credit-related charge-offs were impacted by $9 million from the
previously mentioned decision to sell the manufactured housing
portfolio.
* Noninterest expenses increased $16 million, primarily due to an increase
in corporate overhead expenses for the same reasons noted in the
Business Bank, as well as expenses related to salaries, advertising and
new banking centers.
* Opened 11 new banking centers in high-growth markets in the fourth
quarter 2006 and 25 in 2006.
Wealth and Institutional Management
(dollar amounts in millions) 4th Qtr 3rd Qtr 4th Qtr
'06 '06 '05
Net interest income (FTE) $36 $37 $39
Provision for loan losses 2 - 2
Noninterest income 67 64 63
Noninterest expenses 89 79 96
Net income 10 15 2
Net credit-related charge-offs 1 - 1
Selected average balances:
Assets 3,822 3,714 3,631
Loans 3,673 3,577 3,470
Deposits 2,351 2,327 2,557
Net interest margin 3.90 % 4.13 % 4.46 %
* The net interest margin of 3.90 percent declined 23 basis points,
primarily due to declines in both loan and deposit spreads.
* Average loans increased $96 million, or 11 percent on an annualized
basis.
* Average deposits increased $24 million.
* The provision for loan losses increased $2 million, primarily due to a
decline in the credit quality of a specific customer in the fourth
quarter.
* Noninterest expenses increased $10 million, partially due to an increase
in net corporate overhead expenses for the same reasons noted in the
Business Bank.
Geographic Market Segments
Comerica also provides market segment results for four primary geographic markets: Midwest & Other Markets, Western, Texas and Florida. The financial results below are based on methodologies in effect at December 31, 2006 and are presented on a FTE basis. The accompanying narrative addresses fourth quarter 2006 results compared to third quarter 2006.
The following table presents net income (loss) by market segment.
(dollar amounts in
millions) 4th Qtr '06 3rd Qtr '06 4th Qtr '05
Midwest & Other Markets $88 46 % $111 57 % $83 50 %
Western 84 43 56 29 64 38
Texas 17 9 22 11 18 11
Florida 3 2 7 3 2 1
192 100 % 196 100 % 167 100 %
Finance & Other* 107 4 40
Total $299 $200 $207
* Includes discontinued operations and items not directly associated with
the four primary geographic markets
Midwest and Other Markets
(dollar amounts in millions) 4th Qtr 3rd Qtr 4th Qtr
'06 '06 '05
Net interest income (FTE) $270 $274 $272
Provision for loan losses 34 21 (16)
Noninterest income 137 126 129
Noninterest expenses 252 227 288
Net income 88 111 83
Net credit-related charge-offs 23 5 27
Selected average balances:
Assets 25,165 25,286 24,799
Loans 24,010 24,043 23,512
Deposits 18,159 18,243 18,833
Net interest margin 4.44 % 4.49 % 4.55 %
* The net interest margin of 4.44 percent declined five basis points,
primarily due to a decline in both loan and deposit spreads.
* Average loans declined $33 million and average deposits declined $84
million.
* The provision for loan losses reflects the stress testing analysis of
the automotive suppliers loan portfolio. The increase in charge-offs was
partially due to the decision to sell the manufactured housing portfolio
which resulted in a $9 million charge-off.
* Noninterest income increased $11 million, primarily due to an increase
in investment banking fees and an incremental loss of $7 million on the
sale of the Mexican bank charter in the third quarter 2006.
* Noninterest expenses increased $25 million, primarily due to an increase
in net corporate overhead expenses for the same reasons noted in the
Business Bank, incentive compensation, and a slowing in credit quality
improvements reflected in the provision for credit losses on lending-
related commitments.
Western Market
(dollar amounts in millions) 4th Qtr 3rd Qtr 4th Qtr
'06 '06 '05
Net interest income (FTE) $179 $176 $188
Provision for loan losses (15) 4 (4)
Noninterest income 75 23 34
Noninterest expenses 122 108 124
Net income 84 56 64
Net credit-related charge-offs (2) - 1
Selected average balances:
Assets 16,699 16,557 15,646
Loans 16,156 16,000 14,963
FSD loans 1,909 2,093 2,769
Deposits 14,168 14,005 17,048
FSD deposits 5,130 5,408 8,438
Net interest margin 4.38 % 4.37 % 4.37 %
* Average loans increased $156 million, or four percent on an annualized
basis. Excluding the Financial Services Division, average loans
increased $340 million, or 10 percent on an annualized basis, primarily
due to growth in the Commercial Real Estate, Technology and Life
Sciences, Private Banking, and National Dealer Services businesses.
* Average deposits increased $163 million. Excluding the Financial
Services Division, average deposits increased $441 million, primarily
due to growth in the Commercial Real Estate, Retail Bank, Technology and
Life Sciences, Middle Market, and Global Corporate Banking businesses.
* The provision for loan losses declined $19 million, primarily due to an
improvement in credit quality trends.
* Noninterest income increased $52 million, primarily due to income of $47
million from the settlement of a Financial Services Division-related
lawsuit in the fourth quarter 2006.
* Noninterest expenses increased $14 million, primarily due to an increase
in net corporate overhead expenses for the same reasons noted in the
Business Bank, as well as expenses related to salaries, incentive
compensation and new banking centers.
Texas Market
(dollar amounts in millions) 4th Qtr 3rd Qtr 4th Qtr
'06 '06 '05
Net interest income (FTE) $69 $67 $62
Provision for loan losses 3 (1) (2)
Noninterest income 20 19 19
Noninterest expenses 59 54 55
Net income 17 22 18
Total net credit-related charge-offs 2 3 (1)
Selected average balances:
Assets 6,704 6,475 5,451
Loans 6,429 6,202 5,251
Deposits 3,811 3,691 3,718
Net interest margin 4.26 % 4.28 % 4.73 %
* Average loans increased $227 million, or 15 percent on an annualized
basis, primarily due to growth in the Commercial Real Estate, National
Dealer Services, Small Business, and Energy Lending businesses.
* Average deposits increased $120 million, primarily due to growth in
customer certificates of deposit and increases in commercial
noninterest-bearing deposit balances.
* The provision for loan losses increased $4 million, from a negative
provision in the prior quarter.
* Non-interest expenses increased $5 million, primarily due to an increase
in net corporate overhead expenses for the same reasons noted in the
Business Bank, as well as expenses related to new banking centers.
Florida Market
(dollar amounts in millions) 4th Qtr 3rd Qtr 4th Qtr
'06 '06 '05
Net interest income (FTE) $12 $12 $10
Provision for loan losses 1 (3) 1
Noninterest income 4 4 3
Noninterest expenses 10 9 9
Net income 3 7 2
Net credit-related charge-offs - - 3
Selected average balances:
Assets 1,937 1,859 1,500
Loans 1,917 1,842 1,484
Deposits 292 313 314
Net interest margin 2.63 % 2.63 % 2.70 %
* Average loans increased $75 million, or 16 percent on an annualized
basis.
* Average deposits decreased $21 million.
* The provision for loan losses increased $4 million, from a negative
provision in the prior quarter.
Conference Call and Webcast
Comerica will host a conference call to review fourth quarter and full year 2006 financial results at 8 a.m. ET Thursday, January 18, 2007. Interested parties may access the conference call by calling (706) 679-5261 (event ID No. 4709098). The call and supplemental financial information can also be accessed on the Internet at www.comerica.com. A replay will be available approximately two hours following the conference call for a period of one year. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 4709098). A replay of the Webcast can also be accessed via Comerica's "Investor Relations" page at www.comerica.com.
Comerica Incorporated is a financial services company headquartered in Detroit, strategically aligned into three major business segments: the Business Bank, the Retail Bank, and Wealth & Institutional Management. Comerica focuses on relationships and helping businesses and people to be successful. Comerica Bank locations can be found in Michigan, California, Texas, Florida and Arizona, with select businesses operating in several other states, Canada and Mexico.
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," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "outcome," "continue," "remain," "maintain," "trend," "objective" 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 the pace of an economic recovery and related changes in employment levels, the effects of war and other armed conflicts or acts of terrorism, the effects of natural disasters including, but not limited to, hurricanes, tornadoes, earthquakes and floods, the disruption of private or public utilities, the implementation of Comerica's strategies and business models, management's ability to maintain and expand customer relationships, management's ability to retain key officers and employees, changes in the accounting treatment of any particular item, the impact of regulatory examinations, declines or other changes in the businesses or industries in which Comerica has a concentration of loans, including, but not limited to, automotive production, the anticipated performance of any new banking centers, the entry of new competitors in Comerica's markets, changes in the level of fee income, changes in applicable laws and regulations, including those concerning taxes, banking, securities and insurance, changes in trade, monetary and fiscal policies, including the interest rate policies of the Board of Governors of the Federal Reserve System, fluctuations in inflation or interest rates, changes in general economic conditions and related credit and market conditions and adverse conditions in the stock market. Comerica cautions that the foregoing list of factors is not exclusive. 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
SOURCE Comerica Incorporated
CONTACT:
Media, Wayne J. Mielke,
+1-313-222-4732;
or Investors, Darlene P. Persons,
+1-313-222-2840,
or Paul Jaremski,
+1-313-222-6317,
all of Comerica Incorporated
Web site: http://www.comerica.com
