DETROIT, April 17, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Comerica Incorporated (NYSE: CMA) today reported first quarter 2007 income from continuing operations of $189 million, or $1.19 per diluted share, compared to $185 million, or $1.16 per diluted share, for the fourth quarter 2006 and $207 million, or $1.26 per diluted share, for the first quarter 2006. Fourth quarter 2006 income from continuing operations included 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. First quarter 2006 income from continuing operations included a negative provision for loan losses of $27 million.
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In the fourth quarter 2006, Comerica sold its stake in Munder Capital Management (Munder) for an after-tax gain of $108 million ($0.68 per diluted share). Comerica reports Munder as a discontinued operation in all periods presented.
(dollar amounts in millions,
except per share data) 1st Qtr '07 4th Qtr '06 1st Qtr '06
Net interest income $502 $502 $479
Provision for loan losses 23 22 (27)
Noninterest income 203 262 195
Noninterest expenses 407 457 429
Income from continuing operations,
net of tax 189 185 207
Net income 190 299 194
Diluted EPS from continuing
operations 1.19 1.16 1.26
Diluted EPS from discontinued
operations - 0.71 (0.08)
Diluted EPS 1.19 1.87 1.18
Return on average common
shareholders'
equity from continuing operations 14.83 % 14.03 % 16.31 %
Return on average common
shareholders' equity 14.86 22.63 15.33
Net interest margin 3.82 3.75 3.80
The following table illustrates certain items impacting diluted earnings per share from continuing operations:
(dollar amounts per diluted
share) 1st Qtr '07 4th Qtr '06 1st Qtr '06
FSD-related lawsuit settlement $- $0.19 $-
Loss on sale of Mexican bank
charter - - (0.02)
Net income (loss) from principal
investing and warrants (0.02) 0.01 0.01
Tax adjustments - (0.14) 0.09
Tax-related interest adjustments - (0.05) (0.09)
Performance-based compensation
related to Munder gain - (0.04) -
Charitable Foundation contribution - (0.04) -
"The financial results highlight our positive financial performance in the first quarter," said Ralph W. Babb Jr., chairman and chief executive officer. "Our net interest margin rose seven basis points from the fourth quarter of 2006. Credit quality was solid across all markets and expenses were well controlled."
First Quarter 2007 Compared to Fourth Quarter 2006
- On an annualized basis, excluding Financial Services Division loans,
average loans increased six percent, led by growth of 15 percent in the
Western market, five percent in the Texas market, four percent in the
Florida market, three percent in Other markets and 18 percent in the
International market, with the Midwest market down one percent. The
Texas loan growth, impacted by pay downs in January, rebounded in
February and March with low double-digit annualized average loan growth
rates.
- The net interest margin was 3.82 percent in the first quarter 2007, an
increase of seven basis points from 3.75 percent in the fourth quarter
2006.
- Net credit-related charge-offs were $19 million, or 16 basis points as
a percent of average total loans, for the first quarter 2007, compared
to $23 million, or 19 basis points as a percent of average total loans,
for the fourth quarter 2006. Fourth quarter 2006 included a $9 million
charge-off to reflect the estimated fair value of a portfolio of loans
related to manufactured housing that were transferred to held-for-sale.
- Noninterest expenses, excluding the provision for credit losses on
lending-related commitments, decreased $52 million from the fourth
quarter 2006, the detail of which is discussed in "Noninterest
expenses" below. Employee levels from continuing operations (FTE)
decreased slightly from December 31, 2006, to March 31, 2007. This
decrease occurred even as nine new banking centers were opened in the
first quarter 2007.
- The provision for income taxes decreased primarily due to a fourth
quarter 2006 adjustment to tax reserves of $22 million. Refer to "Tax-
related items" below for further discussion.
- Open market share repurchases in the first quarter 2007 totaled 3.4
million shares, or two percent of total shares outstanding at
December 31, 2006.
Net Interest Income Stable and Net Interest Margin Rises
(dollar amounts in millions) 1st Qtr '07 4th Qtr '06 1st Qtr '06
Net interest income $502 $502 $479
Net interest margin 3.82 % 3.75 % 3.80 %
Selected average balances:
Total earning assets $53,148 $53,289 $50,977
Total loans 48,896 48,568 46,479
Total loans, excluding FSD loans
(primarily low-rate) 47,327 46,659 43,570
Total interest-bearing deposits 30,417 30,554 27,589
Total noninterest-bearing
deposits 12,162 12,649 13,609
Total noninterest-bearing
deposits, excluding FSD 8,712 8,696 8,926
- A seven basis point improvement in the net interest margin offset the
impact of two less days in the first quarter 2007 ($11 million).
Average earning assets remained relatively stable in the first quarter
2007, when compared to fourth quarter 2006.
- The first quarter 2007 net interest margin reflected stable loan yields
and a decline in deposit rates. The positive impact of lower average
Financial Services Division loans (primarily low-rate) was essentially
offset by a decline in Financial Services Division noninterest-bearing
deposits.
Steady Noninterest Income, Excluding Identified Items
Noninterest income was $203 million for the first quarter 2007, compared to $262 million for the fourth quarter 2006 and $195 million for the first quarter 2006. The $59 million decrease in noninterest income in the first quarter 2007, compared to the fourth quarter 2006, was primarily the result of income of $47 million from the settlement of a Financial Services Division- related lawsuit received in the fourth quarter 2006, a $7 million decrease in income from principal investing and warrants and a $6 million decrease in investment banking fees, partially offset by positive trends in several categories (including fiduciary income, brokerage fees and card fees). Certain categories of noninterest income are highlighted in the table below.
(in millions) 1st Qtr '07 4th Qtr '06 1st Qtr '06
Net income (loss) from principal
investing and warrants $(4) $3 $3
Net gain (loss) on sales of
businesses 1 - (5)
Income from lawsuit settlement - 47 -
Other noninterest income
Investment banking fees 4 10 5
Noninterest Expenses Well Controlled
Noninterest expenses were $407 million for the first quarter 2007, compared to $457 million for the fourth quarter 2006 and $429 million for the first quarter 2006. The $50 million decrease in noninterest expenses in the first quarter 2007, compared to the fourth quarter 2006, reflected decreased salaries expense of $25 million. The decrease in salaries expense was due primarily to decreased incentives tied to performance, including the fourth quarter 2006 gain on the sale of Munder, contract labor costs associated with technology-related projects, and severance, partially offset by an increase in share-based compensation expense. The increase in share-based compensation expense reflected the annual award of restricted stock to retirement-eligible employees, granted in the first quarter each year, which must be expensed in the period granted. Also reflected in the decrease in noninterest expenses was a decrease in interest on tax liabilities of $15 million (see "Tax-related items" below), and a fourth quarter 2006 contribution of $10 million to the Comerica Charitable Foundation.
Certain categories of noninterest expenses are highlighted in the table
below.
(in millions) 1st Qtr '07 4th Qtr '06 1st Qtr '06
Salaries
Regular salaries $154 $162 $149
Severance - 5 1
Incentives 29 52 25
Share-based compensation 23 12 18
Total salaries 206 231 193
Employee benefits 46 42 50
Provision for credit losses on
lending-related commitments (2) (4) 13
Other noninterest expenses
Interest on tax liabilities n/a 15 26
Charitable Foundation
contribution - 10 -
Other real estate expense - (2) 4
Redemption premium on trust
preferred securities - 3 -
n/a - not applicable
Tax-related Items
On January 1, 2007, Comerica adopted the provisions of FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109," (FIN 48). FIN 48 permits Comerica to prospectively change its accounting policy as to where interest on tax liabilities is classified on the consolidated statements of income. Effective January 1, 2007, Comerica changed its accounting policy and began to classify interest on tax liabilities in the "provision for income taxes" on the consolidated statements of income. Prior to January 1, 2007, interest on tax liabilities was classified in "other noninterest expenses." In the first quarter 2007, the Securities and Exchange Commission requested that the American Institute of Certified Public Accountants clarify that an election to change classification under the Interpretation could only be prospective. Therefore, for all prior periods presented, interest on tax liabilities remained classified in "other noninterest expenses" on the consolidated statements of income. The provision for income taxes included interest on tax liabilities of $1 million for the first quarter 2007. Noninterest expenses in 2006 included $38 million of interest on tax liabilities, including $15 million in the fourth quarter 2006 and $26 million in the first quarter 2006.
Fourth quarter 2006 reflected a charge to Comerica's combined tax and related interest reserves for disallowed loan benefits related to a series of loans to foreign borrowers of $31 million after-tax based on settlements discussed with the Internal Revenue Service. 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.
Income from Discontinued Operations
In December 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) 1st Qtr '07 4th Qtr '06 1st Qtr '06
Income from discontinued
operations, net of tax:
Gain on sale of Munder $1 $108 $-
Cumulative effect of change in
accounting principle - - (8)
Operating net income and other - 6 (5)
Total 1 114 (13)
Credit Quality Remained Solid
"Net charge-offs were lower and nonperforming assets were unchanged," said Babb. "We continued to manage our credit risk effectively, particularly the automotive and commercial real estate portfolios. Our people, and the enhanced risk management tools they use, have helped us to maintain solid credit quality in all markets."
- The provision for loan losses reflected challenges to industries
located in Michigan (Midwest market), including the automotive
industry.
- Fourth quarter 2006 net loan charge-offs included a $9 million charge-
off to reflect the estimated fair value of a portfolio of loans related
to manufactured housing that were transferred to held-for-sale.
- Nonperforming assets remained at the low level of 49 basis points of
total loans and foreclosed property, compared to the fourth quarter
2006. During the first quarter 2007, $69 million of loan relationships
greater than $2 million were transferred to nonaccrual status, an
increase of $3 million from the fourth quarter 2006.
(dollar amounts in millions) 1st Qtr '07 4th Qtr '06 1st Qtr '06
Net loan charge-offs $16 $22 $17
Net lending-related commitment
charge-offs 3 1 5
Total net credit-related
charge-offs 19 23 22
Net loan charge-offs/Average
total loans 0.13 % 0.18 % 0.14 %
Net credit-related charge-
offs/Average total loans 0.16 0.19 0.19
Provision for loan losses $23 $22 $(27)
Provision for credit losses on
lending-related commitments (2) (4) 13
Total provision for credit
losses 21 18 (14)
Nonperforming assets (NPAs) 233 232 141
NPAs/Total loans and foreclosed
property 0.49 % 0.49 % 0.32 %
Allowance for loan losses $500 $493 $472
Allowance for credit losses on
lending-related commitments* 21 26 41
Total allowance for credit
losses 521 519 513
Allowance for loan losses/Total
loans 1.04 % 1.04 % 1.06 %
Allowance for loan losses/NPAs 214 213 334
* Included in "Accrued expenses and other liabilities" on the
consolidated balance sheets
Balance Sheet and Capital Management
Total assets and common shareholders' equity were $57.5 billion and $5.1 billion, respectively, at March 31, 2007, compared to $58.0 billion and $5.2 billion, respectively, at December 31, 2006. There were approximately 156 million shares outstanding at March 31, 2007, compared to 158 million shares outstanding at December 31, 2006. Open market share repurchases for the current and prior quarter are shown in the following table:
1st Qtr '07 4th Qtr '06
Number Number
(in millions) of Shares Amount of Shares Amount
Open market share
repurchases 3.4 $207 1.5 $86
In the first quarter 2007, Comerica generated approximately $145 million of capital from the issuance of trust preferred securities, net of redemptions, and used $100 million of the proceeds to repurchase approximately 1.7 million additional shares.
Comerica's first quarter 2007 estimated tier 1 common, tier 1 and total risk-based capital ratios were 7.47 percent, 8.17 percent and 12.21 percent, respectively.
New Accounting Pronouncements
Comerica adopted FSP 13-2 (Accounting for a Projected Change in the Timing of Cash Flows Related to Income Taxes Generated by a Leveraged Lease Transaction) and FIN 48 (Accounting for Uncertainty in Income Taxes) as of January 1, 2007. The effect of adoption was a reduction to retained earnings of $46 million and a lowering of 2007 income earned on lease financing loans for FSP 13-2 and an increase to retained earnings of $3 million for FIN 48. The effects of FSP 13-2 will reverse over periods ranging from four to 20 years.
Full Year 2007 Outlook
Comerica's outlook for full-year 2007, compared to full-year 2006, is as follows:
- Mid to high single-digit average loan growth, excluding Financial
Services Division loans, with flat growth in the Midwest market, and
low double-digit growth in the Western and Texas markets
- Average earning asset growth slightly less than average loan growth
- Average Financial Services Division noninterest-bearing deposits
remaining at first quarter 2007 level of $3.5 billion. Financial
Services Division loans will fluctuate in 2007 with the level of
noninterest-bearing deposits
- Average full year net interest margin of about 3.75 percent to 3.80
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, from a 2006 adjusted
base of $820 million which excludes the Financial Services Division-
related lawsuit settlement and the loss on sale of the Mexican bank
charter
- Flat noninterest expenses, excluding the provision for credit losses on
lending-related commitments. Outlook reflects anticipated 2007 costs
associated with the previously announced headquarters move to Dallas,
Texas (expected to be about $10 million) and tax-related interest in
2006 (classified in the provision for income taxes in 2007)
- 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)
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 March 31, 2007 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses first quarter 2007 results compared to fourth quarter 2006.
The following table presents net income (loss) by business segment.
(dollar amounts in
millions) 1st Qtr '07 4th Qtr '06 1st Qtr '06
Business Bank $141 72 % $154 80 % $151 73 %
Retail Bank 33 17 27 14 38 19
Wealth & Institutional
Management 21 11 11 6 17 8
195 100 % 192 100 % 206 100 %
Finance 1 (4) (2)
Other* (6) 111 (10)
Total $190 $299 $194
* Includes discontinued operations and items not directly
associated with the three major business segments or the Finance
Division
Business Bank
(dollar amounts in millions) 1st Qtr '07 4th Qtr '06 1st Qtr '06
Net interest income (FTE) $329 $335 $315
Provision for loan losses 14 15 (29)
Noninterest income 61 116 63
Noninterest expenses 170 194 193
Net income 141 154 151
Net credit-related charge-offs 15 6 16
Selected average balances:
Assets 40,059 39,872 38,100
Loans 39,015 38,766 36,883
FSD loans 1,569 1,909 2,909
Deposits 16,710 17,110 18,899
FSD deposits 4,698 5,291 6,969
Net interest margin 3.42 % 3.43 % 3.45 %
- The net interest margin was relatively unchanged, as both loan spreads
and deposits spreads were relatively stable.
- Excluding the $340 million decline in the Financial Services Division,
average loans increased $589 million, or six percent on an annualized
basis, primarily due to growth in the National Dealer Services, Middle
Market and Global Corporate Banking business lines.
- Average deposits increased $193 million, excluding the $593 million
decline in the Financial Services Division, primarily in the Technology
and Life Sciences and Global Corporate Banking business lines.
- Noninterest income decreased $55 million, primarily due to income of
$47 million from a Financial Services Division-related lawsuit
settlement in the fourth quarter 2006, lower investment banking fees
and a negative warrant fair value adjustment in the first quarter 2007.
- Noninterest expenses decreased $24 million, primarily due to decreases
in net corporate overhead expenses, incentive compensation and legal
fees. Net corporate overhead expenses decreased due to the impact on
overhead of higher fourth quarter 2006 tax-related interest expense
(see "Tax-related Items" above) and a fourth quarter 2006 contribution
to the Comerica Charitable Foundation.
Retail Bank
(dollar amounts in millions) 1st Qtr '07 4th Qtr '06 1st Qtr '06
Net interest income (FTE) $157 $159 $155
Provision for loan losses 5 6 6
Noninterest income 52 53 50
Noninterest expenses 153 164 143
Net income 33 27 38
Net credit-related charge-offs 4 16 5
Selected average balances:
Assets 6,840 6,810 6,782
Loans 6,095 6,100 6,076
Deposits 17,033 16,969 16,736
Net interest margin 3.74 % 3.71 % 3.76 %
- The net interest margin of 3.74 percent increased three basis points,
primarily due to an increase in deposit spreads, partially offset by a
decline in loan spreads.
- Average loans remained relatively flat, as increases in small business
commercial loans were offset by a decline in consumer loans resulting
from the first quarter 2007 sale of $74 million of manufactured housing
loans.
- Average deposits increased $64 million, primarily due to growth in
customer certificates of deposit.
- Fourth quarter 2006 net credit-related charge-offs included $9 million
related to the transfer of the previously mentioned manufactured
housing loans to held-for-sale.
- Noninterest expenses decreased $11 million, primarily due to a decrease
in net corporate overhead expenses (as described in the Business Bank).
- Opened nine new banking centers in the first quarter 2007.
Wealth and Institutional Management
(dollar amounts in millions) 1st Qtr '07 4th Qtr '06 1st Qtr '06
Net interest income (FTE) $36 $36 $37
Provision for loan losses (1) 2 -
Noninterest income 71 67 64
Noninterest expenses 76 86 75
Net income 21 11 17
Net credit-related charge-offs - 1 -
Selected average balances:
Assets 3,898 3,794 3,623
Loans 3,747 3,646 3,473
Deposits 2,317 2,351 2,449
Net interest margin 3.88 % 3.90 % 4.28 %
- Average loans increased $101 million, or 11 percent on an annualized
basis.
- Average deposits decreased $34 million, primarily due to decreased
noninterest-bearing accounts.
- Noninterest income increased $4 million, primarily due to increased
trust fees in the first quarter 2007.
- Noninterest expenses decreased $10 million, primarily due to a decrease
in net corporate overhead expenses (as described in the Business Bank),
severance and incentive compensation.
Geographic Market Segments
Comerica also provides market segment results for four primary geographic markets: Midwest, Western, Texas and Florida. In addition to the four primary geographic markets, Other Markets and International are also reported as market segments. The financial results below are based on methodologies in effect at March 31, 2007 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses first quarter 2007 results compared to fourth quarter 2006.
The following table presents net income (loss) by market segment.
(dollar amounts in
millions) 1st Qtr '07 4th Qtr '06 1st Qtr '06
Midwest $90 45 % $78 41 % $99 48 %
Western 66 34 83 43 66 32
Texas 22 11 17 9 23 11
Florida 3 2 3 1 4 2
Other Markets 5 3 4 2 4 2
International 9 5 7 4 10 5
195 100 % 192 100 % 206 100 %
Finance & Other* (5) 107 (12)
Total $190 $299 $194
* Includes discontinued operations and items not directly
associated with the geographic markets
Midwest
(dollar amounts in millions) 1st Qtr '07 4th Qtr '06 1st Qtr '06
Net interest income (FTE) $244 $248 $243
Provision for loan losses 30 37 -
Noninterest income 116 123 117
Noninterest expenses 206 232 223
Net income 90 78 99
Net credit-related charge-offs 22 23 17
Selected average balances:
Assets 22,755 22,843 22,332
Loans 21,783 21,836 21,303
Deposits 16,657 16,713 17,039
Net interest margin 4.52 % 4.49 % 4.51 %
- The net interest margin of 4.52 percent increased three basis points,
primarily due to an increase in deposit spreads, partially offset by a
decrease in loan spreads.
- Average loans decreased $53 million, primarily due to the first quarter
2007 sale of $74 million of manufactured housing loans.
- Average deposits decreased $56 million, primarily due to a decline in
money market accounts.
- The provision for loan losses decreased $7 million. Fourth quarter
2006 included a $9 million charge-off related to the sale of
manufactured housing loans, discussed above.
- Noninterest income decreased $7 million, primarily due to a decrease in
investment banking fees.
- Noninterest expenses decreased $26 million, primarily due to decreases
in net corporate overhead expenses (as described in the Business Bank)
and incentive compensation.
- Two new banking centers were opened in Michigan.
Western Market
(dollar amounts in millions) 1st Qtr '07 4th Qtr '06 1st Qtr '06
Net interest income (FTE) $176 $178 $168
Provision for loan losses (11) (15) (14)
Noninterest income 28 74 28
Noninterest expenses 110 122 109
Net income 66 83 66
Net credit-related charge-offs (5) (2) -
Selected average balances:
Assets 16,782 16,572 16,261
Loans 16,241 16,037 15,644
FSD loans 1,569 1,909 2,909
Deposits 13,696 14,145 15,405
FSD deposits 4,515 5,130 6,855
Net interest margin 4.40 % 4.40 % 4.25 %
- Excluding the Financial Services Division, average loans increased
$544 million, or 15 percent on an annualized basis, primarily due to
growth in the Middle Market Banking, National Dealer Services,
Technology and Life Sciences, Commercial Real Estate, Entertainment
Lending and Global Corporate Banking business lines.
- Excluding the Financial Services Division, average deposits increased
$166 million, primarily due to interest-bearing checking, money market
accounts and growth in customer certificates of deposit.
- Noninterest income decreased $46 million, primarily due to income from
a $47 million Financial Services Division-related lawsuit settlement in
the fourth quarter 2006 and a negative warrant fair value adjustment in
the first quarter 2007.
- Noninterest expenses decreased $12 million, primarily due to lower net
corporate overhead expenses (as described in the Business Bank) and
legal fees.
- Three new banking centers were opened in California.
Texas Market
(dollar amounts in millions) 1st Qtr '07 4th Qtr '06 1st Qtr '06
Net interest income (FTE) $67 $69 $61
Provision for loan losses (1) 3 (4)
Noninterest income 19 20 18
Noninterest expenses 54 59 50
Net income 22 17 23
Total net credit-related charge-
offs 3 2 1
Selected average balances:
Assets 6,719 6,631 5,611
Loans 6,444 6,360 5,355
Deposits 3,843 3,794 3,662
Net interest margin 4.19 % 4.27 % 4.46 %
- The net interest margin of 4.19 percent declined eight basis points,
primarily due to a decline in loan spreads.
- Average loans increased $84 million, or five percent on an annualized
basis, primarily due to growth in Commercial Real Estate, Global
Corporate Banking, National Dealer Services and Small Business. The
Texas loan growth, impacted by pay downs in January, rebounded in
February and March with low double-digit annualized average loan growth
rates.
- Average deposits increased $49 million, primarily due to growth in
interest-bearing checking and customer certificates of deposit.
- The provision for loan losses decreased $4 million, primarily due to
improved credit quality.
- Noninterest expenses decreased $5 million, primarily due to a decrease
in net corporate overhead expenses (as described in the Business Bank).
- Four new banking centers were opened.
Florida Market
(dollar amounts in millions) 1st Qtr '07 4th Qtr '06 1st Qtr '06
Net interest income (FTE) $11 $11 $10
Provision for loan losses 1 1 -
Noninterest income 4 4 4
Noninterest expenses 9 10 8
Net income 3 3 4
Net credit-related charge-offs - - 2
Selected average balances:
Assets 1,646 1,631 1,390
Loans 1,626 1,611 1,371
Deposits 284 292 307
Net interest margin 2.84 % 2.80 % 2.91 %
- Average loans increased $15 million, or four percent on an annualized
basis.
- Average deposits decreased $8 million.
Conference Call and Webcast
Comerica will host a conference call to review first quarter 2007 financial results at 8 a.m. ET Tuesday, April 17, 2007. Interested parties may access the conference call by calling (706) 679-5261 (event ID No. 3046574). 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 until May 1, 2007. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 3046574). 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 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.
ADD: /FIRST AND FINAL ADD -- CLTU045 -- Comerica Earnings/
CONSOLIDATED FINANCIAL HIGHLIGHTS
Comerica Incorporated and Subsidiaries
Three Months Ended
December
March 31, Dec. 31, March 31,
(in millions, except per share data) 2007 2006 2006
PER SHARE AND COMMON STOCK DATA
Diluted income from continuing
operations $1.19 $1.16 $1.26
Diluted net income 1.19 1.87 1.18
Cash dividends declared 0.64 0.59 0.59
Common shareholders' equity (at
period end) 32.84 32.70 31.39
Average diluted shares (in thousands) 158,915 160,063 164,057
KEY RATIOS
Return on average common
shareholders' equity from continuing
operations 14.83 % 14.03 % 16.31 %
Return on average common
shareholders' equity 14.86 22.63 15.33
Return on average assets from
continuing operations 1.33 1.29 1.50
Return on average assets 1.33 2.07 1.41
Average common shareholders' equity
as a percentage of average assets 8.93 9.16 9.17
Tier 1 common capital ratio * 7.47 7.54 7.66
Tier 1 risk-based capital ratio * 8.17 8.02 8.24
Total risk-based capital ratio * 12.21 11.63 11.68
Leverage ratio * 9.98 9.76 9.84
AVERAGE BALANCES
Commercial loans $27,757 $27,609 $26,620
Real estate construction loans 4,249 4,204 3,530
Commercial mortgage loans 9,673 9,515 8,998
Residential mortgage loans 1,705 1,647 1,492
Consumer loans 2,405 2,468 2,660
Lease financing 1,273 1,335 1,298
International loans 1,834 1,790 1,881
Total loans 48,896 48,568 46,479
Earning assets 53,148 53,289 50,977
Total assets 57,088 57,612 55,277
Interest-bearing deposits 30,417 30,554 27,589
Total interest-bearing liabilities 38,498 38,334 35,371
Noninterest-bearing deposits 12,162 12,649 13,609
Common shareholders' equity 5,101 5,280 5,072
NET INTEREST INCOME
Net interest income (fully taxable
equivalent basis) $503 $503 $480
Fully taxable equivalent adjustment 1 1 1
Net interest margin 3.82 % 3.75 % 3.80 %
CREDIT QUALITY
Nonaccrual loans $218 $214 $122
Foreclosed property 15 18 19
Total nonperforming assets 233 232 141
Loans past due 90 days or more and
still accruing 15 14 16
Gross loan charge-offs 34 31 25
Loan recoveries 18 9 8
Net loan charge-offs 16 22 17
Lending-related commitment charge-offs 3 1 5
Total net credit-related charge-offs 19 23 22
Allowance for loan losses 500 493 472
Allowance for credit losses on
lending-related commitments 21 26 41
Total allowance for credit losses 521 519 513
Allowance for loan losses as a
percentage of total loans 1.04 % 1.04 % 1.06 %
Net loan charge-offs as a percentage
of average total loans 0.13 0.18 0.14
Net credit-related charge-offs as a
percentage of average total loans 0.16 0.19 0.19
Nonperforming assets as a percentage
of total loans, and foreclosed
property 0.49 0.49 0.32
Allowance for loan losses as a
percentage of total nonperforming
assets 214 213 334
* March 31, 2007 ratios are estimated
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
March 31, Dec. 31, March 31,
(in millions, except share data) 2007 2006 2006
ASSETS
Cash and due from banks $1,334 $1,434 $1,685
Federal funds sold and securities
purchased under agreements to resell 1,457 2,632 2,837
Other short-term investments 220 327 190
Investment securities available-for-
sale 3,989 3,662 4,251
Commercial loans 26,681 26,265 24,738
Real estate construction loans 4,462 4,203 3,679
Commercial mortgage loans 9,592 9,659 9,146
Residential mortgage loans 1,741 1,677 1,516
Consumer loans 2,392 2,423 2,607
Lease financing 1,273 1,353 1,292
International loans 1,848 1,851 1,761
Total loans 47,989 47,431 44,739
Less allowance for loan losses (500) (493) (472)
Net loans 47,489 46,938 44,267
Premises and equipment 596 568 516
Customers' liability on acceptances
outstanding 55 56 60
Accrued income and other assets 2,387 2,384 2,635
Total assets $57,527 $58,001 $56,441
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits $13,584 $13,901 $15,772
Money market and NOW deposits 14,815 15,250 15,653
Savings deposits 1,410 1,365 1,480
Customer certificates of deposit 7,447 7,223 6,122
Institutional certificates of deposit 5,679 5,783 4,129
Foreign office time deposits 735 1,405 940
Total interest-bearing deposits 30,086 31,026 28,324
Total deposits 43,670 44,927 44,096
Short-term borrowings 329 635 1,901
Acceptances outstanding 55 56 60
Accrued expenses and other
liabilities 1,205 1,281 1,228
Medium- and long-term debt 7,148 5,949 4,062
Total liabilities 52,407 52,848 51,347
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 178,735,252 shares at
3/31/07, 12/31/06 and 3/31/06 894 894 894
Capital surplus 524 520 466
Accumulated other comprehensive loss (284) (324) (198)
Retained earnings 5,311 5,282 4,880
Less cost of common stock in treasury
- 22,834,368 shares at 3/31/07,
21,161,161 shares at 12/31/06 and
16,461,565 shares at 3/31/06 (1,325) (1,219) (948)
Total shareholders' equity 5,120 5,153 5,094
Total liabilities and
shareholders' equity $57,527 $58,001 $56,441
CONSOLIDATED STATEMENTS OF INCOME
Comerica Incorporated and Subsidiaries
Three Months Ended
March 31,
(in millions, except per share data) 2007 2006
INTEREST INCOME
Interest and fees on loans $851 $723
Interest on investment securities 42 44
Interest on short-term investments 8 5
Total interest income 901 772
INTEREST EXPENSE
Interest on deposits 286 199
Interest on short-term borrowings 22 42
Interest on medium- and long-term debt 91 52
Total interest expense 399 293
Net interest income 502 479
Provision for loan losses 23 (27)
Net interest income after
provision for loan losses 479 506
NONINTEREST INCOME
Service charges on deposit accounts 54 54
Fiduciary income 50 44
Commercial lending fees 16 15
Letter of credit fees 16 16
Foreign exchange income 9 10
Brokerage fees 11 10
Card fees 12 11
Bank-owned life insurance 9 13
Net income (loss) from principal
investing and warrants (4) 3
Net securities losses - (2)
Net gain (loss) on sales of businesses 1 (5)
Other noninterest income 29 26
Total noninterest income 203 195
NONINTEREST EXPENSES
Salaries 206 193
Employee benefits 46 50
Total salaries and employee benefits 252 243
Net occupancy expense 35 30
Equipment expense 15 13
Outside processing fee expense 20 21
Software expense 15 14
Customer services 14 13
Litigation and operational losses 3 1
Provision for credit losses on
lending-related commitments (2) 13
Other noninterest expenses 55 81
Total noninterest expenses 407 429
Income from continuing operations
before income taxes 275 272
Provision for income taxes 86 65
Income from continuing operations 189 207
Income (loss) from discontinued
operations, net of tax 1 (13)
NET INCOME $190 $194
Basic earnings per common share:
Income from continuing operations $1.21 $1.28
Net income 1.21 1.20
Diluted earnings per common share:
Income from continuing operations 1.19 1.26
Net income 1.19 1.18
Cash dividends declared on common stock 101 96
Dividends per common share 0.64 0.59
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
Comerica Incorporated and Subsidiaries
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
(in millions, except per 2007 2006 2006 2006 2006
share data)
INTEREST INCOME
Interest and fees on loans $851 $858 $843 $792 $723
Interest on investment securities 42 42 43 45 44
Interest on short-term investments 8 12 7 8 5
Total interest income 901 912 893 845 772
INTEREST EXPENSE
Interest on deposits 286 298 272 236 199
Interest on short-term borrowings 22 15 28 45 42
Interest on medium- and long-term
debt 91 97 91 64 52
Total interest expense 399 410 391 345 293
Net interest income 502 502 502 500 479
Provision for loan losses 23 22 15 27 (27)
Net interest income after
provision for loan losses 479 480 487 473 506
NONINTEREST INCOME
Service charges on deposit accounts 54 54 56 54 54
Fiduciary income 50 47 45 44 44
Commercial lending fees 16 19 16 15 15
Letter of credit fees 16 16 17 15 16
Foreign exchange income 9 10 9 9 10
Brokerage fees 11 10 10 10 10
Card fees 12 12 11 12 11
Bank-owned life insurance 9 9 8 10 13
Net income (loss) from principal
investing and warrants (4) 3 - 4 3
Net securities gains (losses) - 1 - 1 (2)
Net gain (loss) on sales of businesses 1 - (7) - (5)
Income from lawsuit settlement - 47 - - -
Other noninterest income 29 34 30 29 26
Total noninterest income 203 262 195 203 195
NONINTEREST EXPENSES
Salaries 206 231 202 197 193
Employee benefits 46 42 48 44 50
Total salaries and employee
benefits 252 273 250 241 243
Net occupancy expense 35 34 31 30 30
Equipment expense 15 14 13 15 13
Outside processing fee expense 20 21 21 22 21
Software expense 15 15 13 14 14
Customer services 14 14 11 9 13
Litigation and operational losses 3 4 3 3 1
Provision for credit losses on
lending-related commitments (2) (4) (5) 1 13
Other noninterest expenses 55 86 62 54 81
Total noninterest expenses 407 457 399 389 429
Income from continuing operations
before income taxes 275 285 283 287 272
Provision for income taxes 86 100 88 92 65
Income from continuing operations 189 185 195 195 207
Income (loss) from discontinued
operations, net of tax 1 114 5 5 (13)
NET INCOME $190 $299 $200 $200 $194
Basic earnings per common share:
Income from continuing
operations $1.21 $1.17 $1.22 $1.21 $1.28
Net income 1.21 1.89 1.25 1.24 1.20
Diluted earnings per common share:
Income from continuing
operations 1.19 1.16 1.20 1.19 1.26
Net income 1.19 1.87 1.23 1.22 1.18
Cash dividends declared on common
stock 101 94 94 96 96
Dividends per common share 0.64 0.59 0.59 0.59 0.59
First Quarter 2007 Compared To:
Fourth Quarter First Quarter
2006 2006
(in millions, except per share data) Amount Percent Amount Percent
INTEREST INCOME
Interest and fees on loans $(7) (0.7)% $128 17.9%
Interest on investment securities - (1.1) (2) (4.6)
Interest on short-term investments (4) (39.7) 3 44.9
Total interest income (11) (1.3) 129 16.8
INTEREST EXPENSE
Interest on deposits (12) (3.9) 87 43.7
Interest on short-term borrowings 7 54.3 (20) (48.2)
Interest on medium- and long-term debt (6) (6.9) 39 75.4
Total interest expense (11) (2.6) 106 36.2
Net interest income - (0.2) 23 4.9
Provision for loan losses 1 4.5 50 N/M
Net interest income after
provision for loan losses (1) (0.4) (27) (5.2)
NONINTEREST INCOME
Service charges on deposit accounts - (2.6) - (1.3)
Fiduciary income 3 5.5 6 11.3
Commercial lending fees (3) (15.8) 1 5.5
Letter of credit fees - (2.1) - 0.5
Foreign exchange income (1) (4.7) (1) (4.5)
Brokerage fees 1 5.7 1 6.6
Card fees - 2.2 1 13.3
Bank-owned life insurance - 10.4 (4) (28.5)
Net income (loss) from principal
investing and warrants (7) N/M (7) N/M
Net securities gains (losses) (1) N/M 2 N/M
Net gain (loss) on sales of
businesses 1 N/M 6 N/M
Income from lawsuit settlement (47) N/M - N/M
Other noninterest income (5) (12.8) 3 10.4
Total noninterest income (59) (22.5) 8 4.1
NONINTEREST EXPENSES
Salaries (25) (10.6) 13 6.6
Employee benefits 4 7.5 (4) (6.8)
Total salaries and employee
benefits (21) (7.8) 9 3.8
Net occupancy expense 1 2.7 5 16.1
Equipment expense 1 5.5 2 9.8
Outside processing fee expense (1) (6.1) (1) (1.5)
Software expense - 1.8 1 11.3
Customer services - 7.6 1 5.0
Litigation and operational losses (1) (34.7) 2 173.7
Provision for credit losses on
lending-related commitments 2 51.9 (15) N/M
Other noninterest expenses (31) (36.6) (26) (32.6)
Total noninterest expenses (50) (11.1) (22) (5.1)
Income from continuing operations
before income taxes (10) (3.6) 3 1.3
Provision for income taxes (14) (14.2) 21 32.8
Income from continuing operations 4 2.2 (18) (8.5)
Income (loss) from discontinued
operations, net of tax (113) N/M 14 N/M
NET INCOME $(109) (36.5)% $(4) (2.5)%
Basic earnings per common share:
Income from continuing
operations $0.04 3.1 % $(0.07) (5.5)%
Net income (0.68) (36.0) 0.01 0.8
Diluted earnings per common share:
Income from continuing
operations 0.03 2.9 (0.07) (5.6)
Net income (0.68) (36.4) 0.01 0.8
Cash dividends declared on common
stock 7 7.6 5 4.5
Dividends per common share 0.05 8.5 0.05 8.5
N/M - Not meaningful
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
Comerica Incorporated and Subsidiaries
2007 2006
(in millions) 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
Balance at beginning of period $493 $493 $481 $472 $516
Loan charge-offs:
Commercial 13 7 9 16 12
Real estate construction:
Commercial Real Estate
business line 1 - - - -
Other - - - - -
Total real estate
construction 1 - - - -
Commercial mortgage:
Commercial Real Estate
business line 3 3 1 - -
Other 14 4 4 3 2
Total commercial
mortgage 17 7 5 3 2
Residential mortgage - - - - -
Consumer 3 13 3 4 3
Lease financing - 3 - 1 6
International - 1 - 1 2
Total loan charge-offs 34 31 17 25 25
Recoveries on loans previously
charged-off:
Commercial 10 5 13 5 4
Real estate construction - - - - -
Commercial mortgage - 1 1 - 2
Residential mortgage - - - - -
Consumer 1 1 - 1 1
Lease financing 4 - - - -
International 3 2 - 1 1
Total recoveries 18 9 14 7 8
Net loan charge-offs 16 22 3 18 17
Provision for loan losses 23 22 15 27 (27)
Balance at end of period $500 $493 $493 $481 $472
Allowance for loan losses as a
percentage of total loans 1.04 % 1.04 % 1.06 % 1.04 % 1.06 %
Net loan charge-offs as a
percentage of average total
loans 0.13 0.18 0.02 0.15 0.14
Net credit-related charge-offs as
a percentage of average total
loans 0.16 0.19 0.06 0.16 0.19
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED
COMMITMENTS
Comerica Incorporated and Subsidiaries
2007 2006
(in millions) 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
Balance at beginning of period $26 $31 $41 $41 $33
Less: Charge-offs on lending-related
commitments (1) 3 1 5 1 5
Add: Provision for credit losses on
lending-related commitments (2) (4) (5) 1 13
Balance at end of period $21 $26 $31 $41 $41
Unfunded lending-related commitments
sold $60 $20 $28 $14 $52
(1) Charge-offs result from the sale of unfunded lending-related
commitments.
NONPERFORMING ASSETS
Comerica Incorporated and Subsidiaries
2007 2006
(in millions) 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
SUMMARY OF NONPERFORMING
ASSETS AND PAST DUE LOANS
Nonaccrual loans:
Commercial $73 $97 $83 $74 $53
Real estate construction:
Commercial Real
Estate business line 21 18 4 5 2
Other 4 2 - - -
Total real estate
construction 25 20 4 5 2
Commercial mortgage:
Commercial Real
Estate business line 17 18 10 11 11
Other 84 54 46 35 29
Total commercial
mortgage 101 72 56 46 40
Residential mortgage 1 1 1 1 1
Consumer 4 4 5 3 2
Lease financing 4 8 12 12 7
International 10 12 13 16 17
Total nonaccrual
loans 218 214 174 157 122
Reduced-rate loans - - - - -
Total
nonperforming
loans 218 214 174 157 122
Foreclosed property 15 18 23 17 19
Total
nonperforming
assets $233 $232 $197 $174 $141
Nonperforming loans as a
percentage of total loans 0.45 % 0.45 % 0.37 % 0.34 % 0.27 %
Nonperforming assets as a
percentage of total loans
and foreclosed property 0.49 0.49 0.42 0.37 0.32
Allowance for loan losses as
a percentage
of total nonperforming
assets 214 213 251 278 334
Loans past due 90 days or
more and still accruing $15 $14 $18 $15 $16
ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans at beginning
of period $214 $174 $157 $122 $138
Loans transferred to
nonaccrual (1) 69 66 39 51 20
Nonaccrual business loan
gross charge-offs (2) (31) (16) (14) (21) (21)
Loans transferred to
accrual status (1) - - - - -
Nonaccrual business
loans sold (3) (4) - - - (9)
Payments/Other (4) (30) (10) (8) 5 (6)
Nonaccrual loans at end of
period $218 $214 $174 $157 $122
(1) Based on an analysis of nonaccrual loans with book balances greater
than $2 million.
(2) Analysis of gross loan charge-offs:
Nonaccrual business
loans $31 $16 $14 $21 $21
Performing watch list
loans - 2 - - 1
Consumer and
residential mortgage
loans 3 13 3 4 3
Total gross loan charge-
offs $34 $31 $17 $25 $25
(3) Analysis of loans sold:
Nonaccrual business
loans $4 $- $- $- $9
Performing watch list
loans - 25 7 15 30
Total loans sold $4 $25 $7 $15 $39
(4) Net change related to nonaccrual loans with balances less than $2
million, other than business loan gross charge-offs and nonaccrual
loans sold, are included in Payments/Other.
ANALYSIS OF NET INTEREST INCOME (FTE)
Comerica Incorporated and Subsidiaries
Three Months Ended
March 31, 2007
Average Average
(dollar amounts in millions) Balance Interest Rate
Commercial loans (1) (2) $27,757 $499 7.30 %
Real estate construction loans 4,249 91 8.66
Commercial mortgage loans 9,673 175 7.35
Residential mortgage loans 1,705 26 6.11
Consumer loans 2,405 43 7.14
Lease financing 1,273 10 3.18
International loans 1,834 32 7.07
Business loan swap expense - (24) -
Total loans (2) 48,896 852 7.06
Investment securities available-for-
sale 3,745 42 4.35
Federal funds sold and securities
purchased under agreements to resell 276 4 5.39
Other short-term investments 231 4 6.79
Total earning assets 53,148 902 6.86
Cash and due from banks 1,480
Allowance for loan losses (503)
Accrued income and other assets 2,963
Total assets $57,088
Money market and NOW deposits (1) $14,749 111 3.05
Savings deposits 1,381 3 0.85
Customer certificates of deposit 7,345 80 4.44
Institutional certificates of deposit 5,823 78 5.44
Foreign office time deposits 1,119 14 4.96
Total interest-bearing
deposits 30,417 286 3.81
Short-term borrowings 1,655 22 5.32
Medium- and long-term debt 6,426 91 5.74
Total interest-bearing
sources 38,498 399 4.20
Noninterest-bearing deposits (1) 12,162
Accrued expenses and other
liabilities 1,327
Common shareholders' equity 5,101
Total liabilities and
shareholders' equity $57,088
Net interest income/rate spread (FTE) $503 2.66
FTE adjustment $1
Impact of net noninterest-bearing
sources of funds 1.16
Net interest margin (as a percentage
of average earning assets) (FTE)(2) 3.82 %
(1) FSD balances included above:
Loans (primarily low-rate) $1,569 $3 0.68 %
Interest-bearing deposits 1,248 12 3.91
Noninterest-bearing deposits 3,450
(2) Impact of FSD loans (primarily
low-rate) on the following:
Commercial loans (0.40) %
Total loans (0.22)
Net interest margin (FTE)
(assuming loans were
funded by noninterest-
bearing deposits) (0.11)
ANALYSIS OF NET INTEREST INCOME (FTE)
Comerica Incorporated and Subsidiaries
Three Months Ended
December 31, 2006 March 31, 2006
(dollar amounts in Average Average Average Average
millions) Balance Interest Rate Balance Interest Rate
Commercial loans (1) (2) $27,609 $502 7.21 % $26,620 $412 6.26 %
Real estate construction
loans 4,204 92 8.72 3,530 72 8.24
Commercial mortgage loans 9,515 178 7.43 8,998 155 6.97
Residential mortgage loans 1,647 25 6.11 1,492 22 5.88
Consumer loans 2,468 46 7.34 2,660 45 6.83
Lease financing 1,335 13 3.88 1,298 13 4.03
International loans 1,790 33 7.25 1,881 30 6.56
Business loan swap expense - (30) - - (25) -
Total loans (2) 48,568 859 7.02 46,479 724 6.30
Investment securities
available-for-sale 3,842 42 4.27 4,154 44 4.10
Federal funds sold and
securities purchased
under agreements to
resell 325 4 5.38 189 2 4.58
Other short-term
investments 554 8 5.80 155 3 7.95
Total earning assets 53,289 913 6.79 50,977 773 6.12
Cash and due from banks 1,460 1,648
Allowance for loan losses (504) (512)
Accrued income and other
assets 3,367 3,164
Total assets $57,612 $55,277
Money market and NOW
deposits (1) $14,705 117 3.15 $16,595 105 2.57
Savings deposits 1,376 3 0.90 1,476 2 0.65
Customer certificates of
deposit 7,191 80 4.39 5,887 51 3.52
Institutional certificates
of deposit 5,783 79 5.44 2,624 30 4.62
Foreign office time
deposits 1,499 19 5.06 1,007 11 4.26
Total interest-
bearing deposits 30,554 298 3.87 27,589 199 2.93
Short-term borrowings 1,053 15 5.30 3,753 42 4.52
Medium- and long-term debt 6,727 97 5.76 4,029 52 5.22
Total interest-
bearing sources 38,334 410 4.24 35,371 293 3.36
Noninterest-bearing
deposits (1) 12,649 13,609
Accrued expenses and other
liabilities 1,349 1,225
Common shareholders'
equity 5,280 5,072
Total liabilities and
shareholders' equity $57,612 $55,277
Net interest income/rate
spread (FTE) $503 2.55 $480 2.76
FTE adjustment $1 $1
Impact of net noninterest-
bearing sources of funds 1.20 1.04
Net interest margin (as a
percentage of average
earning assets) (FTE) (2) 3.75 % 3.80 %
(1) FSD balances included
above:
Loans (primarily low-
rate) $1,909 $3 0.66 % $2,909 $3 0.43 %
Interest-bearing
deposits 1,338 13 3.94 2,286 21 3.74
Noninterest-bearing
deposits 3,953 4,683
(2) Impact of FSD loans
(primarily low-rate) on
the following:
Commercial loans (0.49) % (0.72) %
Total loans (0.25) (0.40)
Net interest margin
(FTE) (assuming
loans were
funded by
noninterest-
bearing
deposits) (0.11) (0.22)
CONSOLIDATED STATISTICAL DATA
Comerica Incorporated and Subsidiaries
March 31, Dec. 31, Sept. 30,
(in millions, except per share data) 2007 2006 2006
Commercial loans:
Floor plan $2,970 $3,198 $2,628
Other 23,711 23,067 23,127
Total commercial loans 26,681 26,265 25,755
Real estate construction loans:
Commercial Real Estate business
line 3,708 3,449 3,352
Other 754 754 770
Total real estate construction
loans 4,462 4,203 4,122
Commercial mortgage loans:
Commercial Real Estate business
line 1,286 1,534 1,529
Other 8,306 8,125 7,956
Total commercial mortgage loans 9,592 9,659 9,485
Residential mortgage loans 1,741 1,677 1,622
Consumer loans:
Home equity 1,570 1,591 1,668
Other consumer 822 832 830
Total consumer loans 2,392 2,423 2,498
Lease financing 1,273 1,353 1,321
International loans 1,848 1,851 1,712
Total loans $47,989 $47,431 $46,515
Goodwill $150 $150 $213
Loan servicing rights 14 14 15
Tier 1 common capital ratio* 7.47 % 7.54 % 7.48 %
Tier 1 risk-based capital ratio* 8.17 8.02 8.04
Total risk-based capital ratio * 12.21 11.63 11.25
Leverage ratio* 9.98 9.76 9.68
Book value per share $32.84 $32.70 $32.79
Market value per share for the
quarter:
High $63.39 $59.72 $58.95
Low 56.77 55.82 51.45
Close 59.12 58.68 56.92
Quarterly ratios:
Return on average common
shareholders' equity 14.86 % 22.63 % 15.38 %
Return on average assets 1.33 2.07 1.41
Efficiency ratio 57.66 59.81 57.15
Number of banking centers 402 393 382
Number of employees - full time
equivalent
Continuing operations 10,661 10,700 10,568
Discontinued operations - - 167
June 30, March 31,
(in millions, except per share data) 2006 2006
Commercial loans:
Floor plan $3,166 $3,078
Other 22,762 21,660
Total commercial loans 25,928 24,738
Real estate construction loans:
Commercial Real Estate business
line 3,222 2,996
Other 736 683
Total real estate construction
loans 3,958 3,679
Commercial mortgage loans:
Commercial Real Estate business
line 1,537 1,483
Other 7,826 7,663
Total commercial mortgage
loans 9,363 9,146
Residential mortgage loans 1,568 1,516
Consumer loans:
Home equity 1,740 1,748
Other consumer 753 859
Total consumer loans 2,493 2,607
Lease financing 1,325 1,292
International loans 1,764 1,761
Total loans $46,399 $44,739
Goodwill $213 $213
Loan servicing rights 16 17
Tier 1 common capital ratio* 7.69 % 7.66 %
Tier 1 risk-based capital ratio* 8.26 8.24
Total risk-based capital ratio * 11.55 11.68
Leverage ratio* 9.83 9.84
Book value per share $31.99 $31.39
Market value per share for the
quarter:
High $60.10 $58.62
Low 50.12 54.23
Close 51.99 57.97
Quarterly ratios:
Return on average common
shareholders' equity 15.50 % 15.33 %
Return on average assets 1.41 1.41
Efficiency ratio 55.41 63.39
Number of banking centers 378 374
Number of employees - full time
equivalent
Continuing operations 10,549 10,517
Discontinued operations 169 170
* March 31, 2007 ratios are estimated
PARENT COMPANY ONLY BALANCE SHEETS
Comerica Incorporated
March 31, December 31, March 31,
(in millions, except share data) 2007 2006 2006
ASSETS
Cash and due from subsidiary bank $- $122 $13
Short-term investments with subsidiary
bank 462 246 298
Other short-term investments 97 92 -
Investment in subsidiaries,
principally banks 5,599 5,586 5,591
Premises and equipment 3 4 3
Other assets 167 152 262
Total assets $6,328 $6,202 $6,167
LIABILITIES AND SHAREHOLDERS' EQUITY
Long-term debt $956 $806 $803
Other liabilities 252 243 270
Total liabilities 1,208 1,049 1,073
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 178,735,252 shares at
3/31/07, 12/31/06 and 3/31/06 894 894 894
Capital surplus 524 520 466
Accumulated other comprehensive loss (284) (324) (198)
Retained earnings 5,311 5,282 4,880
Less cost of common stock in treasury
- 22,834,368 shares at 3/31/07,
21,161,161 shares at 12/31/06 and
16,461,565 shares at 3/31/06 (1,325) (1,219) (948)
Total shareholders' equity 5,120 5,153 5,094
Total liabilities and
shareholders' equity $6,328 $6,202 $6,167
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Comerica Incorporated and Subsidiaries
Accumu-
lated
Common Stock Cap- Other Total
ital Compre- Re- Trea- Share-
(in millions, except In Sur- hensive tained sury holders'
per share data) Shares Amount plus Loss Earnings Stock Equity
BALANCE AT JANUARY 1,
2006 162.9 $894 $461 $(170) $4,796 $(913) $5,068
Net income - - - - 194 - 194
Other comprehensive
loss, net of tax - - - (28) - - (28)
Total comprehensive
income 166
Cash dividends declared
on common stock ($0.59
per share) - - - - (96) - (96)
Purchase of common
stock (1.5) - - - - (87) (87)
Net issuance of common
stock under employee
stock plans 0.9 - (18) - (14) 52 20
Recognition of share-
based compensation
expense - - 18 - - - 18
Other - - 5 - - - 5
BALANCE AT MARCH 31,
2006 162.3 $894 $466 $(198) $4,880 $(948) $5,094
BALANCE AT DECEMBER 31,
2006 157.6 $894 $520 $(324) $5,282 $(1,219) $5,153
FSP 13-2 transition
adjustment, net of tax - - - - (46) - (46)
FIN 48 transition
adjustment, net of tax - - - - 3 - 3
BALANCE AT JANUARY 1,
2007 157.6 894 520 (324) 5,239 (1,219) 5,110
Net income - - - - 190 - 190
Other comprehensive
income, net of tax - - - 40 - - 40
Total comprehensive
income 230
Cash dividends declared
on common stock ($0.64
per share) - - - - (101) - (101)
Purchase of common
stock (3.5) - - - - (208) (208)
Net issuance of common
stock under employee
stock plans 1.8 - (20) - (17) 103 66
Recognition of share-
based compensation
expense - - 23 - - - 23
Employee deferred
compensation
obligations - - 1 - - (1) -
BALANCE AT MARCH 31,
2007 155.9 $894 $524 $(284) $5,311 $(1,325) $5,120
BUSINESS SEGMENT FINANCIAL RESULTS
Comerica Incorporated and Subsidiaries
Wealth &
(dollar amounts in millions) Business Retail Institutional
Three Months Ended March 31, 2007 Bank Bank Management
Earnings summary:
Net interest income (expense) (FTE) $329 $157 $36
Provision for loan losses 14 5 (1)
Noninterest income 61 52 71
Noninterest expenses 170 153 76
Provision (benefit) for income taxes
(FTE) 65 18 11
Income from discontinued operations,
net of tax - - -
Net income (loss) $141 $33 $21
Net credit-related charge-offs $15 $4 $-
Selected average balances:
Assets $40,059 $6,840 $3,898
Loans 39,015 6,095 3,747
Deposits 16,710 17,033 2,317
Liabilities 17,565 17,045 2,317
Attributed equity 2,850 835 312
Statistical data:
Return on average assets (1) 1.41 % 0.75 % 2.17 %
Return on average attributed equity 19.80 15.97 27.09
Net interest margin (2) 3.42 3.74 3.88
Efficiency ratio 43.56 73.11 70.74
Three Months Ended March 31, 2007 Finance Other Total
Earnings summary:
Net interest income (expense) (FTE) $(17) $(2) $503
Provision for loan losses - 5 23
Noninterest income 16 3 203
Noninterest expenses 2 6 407
Provision (benefit) for income taxes
(FTE) (4) (3) 87
Income from discontinued operations,
net of tax - 1 1
Net income (loss) $1 $(6) $190
Net credit-related charge-offs $- $- $19
Selected average balances:
Assets $5,015 $1,276 $57,088
Loans 17 22 48,896
Deposits 6,490 29 42,579
Liabilities 14,600 460 51,987
Attributed equity 574 530 5,101
Statistical data:
Return on average assets (1) N/M N/M 1.33 %
Return on average attributed equity N/M N/M 14.86
Net interest margin (2) N/M N/M 3.82
Efficiency ratio N/M N/M 57.66
Wealth &
Business Retail Institutional
Three Months Ended December 31, 2006 Bank Bank Management
Earnings summary:
Net interest income (expense) (FTE) $335 $159 $36
Provision for loan losses 15 6 2
Noninterest income 116 53 67
Noninterest expenses 194 164 86
Provision (benefit) for income taxes
(FTE) 88 15 4
Income from discontinued operations,
net of tax - - -
Net income (loss) $154 $27 $11
Net credit-related charge-offs $6 $16 $1
Selected average balances:
Assets $39,872 $6,810 $3,794
Loans 38,766 6,100 3,646
Deposits 17,110 16,969 2,351
Liabilities 17,993 16,978 2,348
Attributed equity 2,748 833 307
Statistical data:
Return on average assets (1) 1.54 % 0.61 % 1.17 %
Return on average attributed equity 22.32 13.00 14.43
Net interest margin (2) 3.43 3.71 3.90
Efficiency ratio 43.11 77.81 82.90
Three Months Ended December 31, 2006 Finance Other Total
Earnings summary:
Net interest income (expense) (FTE) $(23) $(4) $503
Provision for loan losses - (1) 22
Noninterest income 16 10 262
Noninterest expenses 7 6 457
Provision (benefit) for income taxes
(FTE) (10) 4 101
Income from discontinued operations,
net of tax - 114 114
Net income (loss) $(4) $111 $299
Net credit-related charge-offs $- $- $23
Selected average balances:
Assets $5,515 $1,621 $57,612
Loans 25 31 48,568
Deposits 6,817 (44) 43,203
Liabilities 14,623 390 52,332
Attributed equity 568 824 5,280
Statistical data:
Return on average assets (1) N/M N/M 2.07 %
Return on average attributed equity N/M N/M 22.63
Net interest margin (2) N/M N/M 3.75
Efficiency ratio N/M N/M 59.81
Wealth &
Business Retail Institutional
Three Months Ended March 31, 2006 Bank Bank Management
Earnings summary:
Net interest income (expense) (FTE) $315 $155 $37
Provision for loan losses (29) 6 -
Noninterest income 63 50 64
Noninterest expenses 193 143 75
Provision (benefit) for income taxes
(FTE) 63 18 9
Loss from discontinued operations,
net of tax - - -
Net income (loss) $151 $38 $17
Net credit-related charge-offs $16 $5 $-
Selected average balances:
Assets $38,100 $6,782 $3,623
Loans 36,883 6,076 3,473
Deposits 18,899 16,736 2,449
Liabilities 19,733 16,735 2,446
Attributed equity 2,557 822 303
Statistical data:
Return on average assets (1) 1.59 % 0.87 % 1.86 %
Return on average attributed equity 23.71 18.63 22.29
Net interest margin (2) 3.45 3.76 4.28
Efficiency ratio 51.08 69.45 74.62
Three Months Ended March 31, 2006 Finance Other Total
Earnings summary:
Net interest income (expense) (FTE) $(24) $(3) $480
Provision for loan losses - (4) (27)
Noninterest income 17 1 195
Noninterest expenses 2 16 429
Provision (benefit) for income taxes
(FTE) (7) (17) 66
Loss from discontinued operations,
net of tax - (13) (13)
Net income (loss) $(2) $(10) $194
Net credit-related charge-offs $- $1 $22
Selected average balances:
Assets $5,228 $1,544 $55,277
Loans 3 44 46,479
Deposits 3,214 (100) 41,198
Liabilities 10,956 335 50,205
Attributed equity 471 919 5,072
Statistical data:
Return on average assets (1) N/M N/M 1.41 %
Return on average attributed equity N/M N/M 15.33
Net interest margin (2) N/M N/M 3.80
Efficiency ratio N/M N/M 63.39
(1) Return on average assets is calculated based on the greater of
average assets or average liabilities and attributed equity.
(2) Net interest margin is calculated based on the greater of average
earning assets or average deposits and purchased funds.
FTE - Fully Taxable Equivalent
N/M - Not Meaningful
MARKET SEGMENT FINANCIAL RESULTS
Comerica Incorporated and Subsidiaries
(dollar amounts in millions)
Three Months Ended March 31, 2007 Midwest Western Texas Florida
Earnings summary:
Net interest income (expense) (FTE) $244 $176 $67 $11
Provision for loan losses 30 (11) (1) 1
Noninterest income 116 28 19 4
Noninterest expenses 206 110 54 9
Provision (benefit) for income taxes
(FTE) 34 39 11 2
Income from discontinued operations,
net of tax - - - -
Net income (loss) $90 $66 $22 $3
Net credit-related charge-offs
(recoveries) $22 $(5) $3 $-
Selected average balances:
Assets $22,755 $16,782 $6,719 $1,646
Loans 21,783 16,241 6,444 1,626
Deposits 16,657 13,696 3,843 284
Liabilities 17,430 13,732 3,858 288
Attributed equity 1,955 1,177 556 87
Statistical data:
Return on average assets (1) 1.58 % 1.57 % 1.30 % 0.80 %
Return on average attributed equity 18.40 22.37 15.73 15.22
Net interest margin (2) 4.52 4.40 4.19 2.84
Efficiency ratio 57.17 54.23 62.24 59.07
(dollar amounts in millions) Finance
Other Inter- & Other
Three Months Ended March 31, 2007 Markets national Businesses Total
Earnings summary:
Net interest income (expense) (FTE) $7 $17 $(19) $503
Provision for loan losses (1) - 5 23
Noninterest income 9 8 19 203
Noninterest expenses 9 11 8 407
Provision (benefit) for income taxes
(FTE) 3 5 (7) 87
Income from discontinued operations,
net of tax - - 1 1
Net income (loss) $5 $9 $(5) $190
Net credit-related charge-offs
(recoveries) $- $(1) $- $19
Selected average balances:
Assets $713 $2,182 $6,291 $57,088
Loans 704 2,059 39 48,896
Deposits 482 1,098 6,519 42,579
Liabilities 482 1,137 15,060 51,987
Attributed equity 57 165 1,104 5,101
Statistical data:
Return on average assets (1) 3.04 % 1.68 % N/M 1.33 %
Return on average attributed equity 38.24 22.27 N/M 14.86
Net interest margin (2) 4.22 3.22 N/M 3.82
Efficiency ratio 55.46 42.08 N/M 57.66
Three Months Ended
December 31, 2006 Midwest Western Texas Florida
Earnings summary:
Net interest income (expense) (FTE) $248 $178 $69 $11
Provision for loan losses 37 (15) 3 1
Noninterest income 123 74 20 4
Noninterest expenses 232 122 59 10
Provision (benefit) for income taxes
(FTE) 24 62 10 1
Income from discontinued operations,
net of tax - - - -
Net income (loss) $78 $83 $17 $3
Net credit-related charge-offs
(recoveries) $23 $(2) $2 $-
Selected average balances:
Assets $22,843 $16,572 $6,631 $1,631
Loans 21,836 16,037 6,360 1,611
Deposits 16,713 14,145 3,794 292
Liabilities 17,521 14,180 3,807 296
Attributed equity 1,901 1,140 559 87
Statistical data:
Return on average assets (1) 1.36 % 2.01 % 1.03 % 0.70 %
Return on average attributed equity 16.37 29.14 12.20 13.03
Net interest margin (2) 4.49 4.40 4.27 2.80
Efficiency ratio 62.64 48.59 66.36 66.69
Finance
Other Inter- & Other
Three Months Ended December 31, 2006 Markets national Businesses Total
Earnings summary:
Net interest income (expense) (FTE) $8 $16 $(27) $503
Provision for loan losses (1) (2) (1) 22
Noninterest income 7 8 26 262
Noninterest expenses 9 12 13 457
Provision (benefit) for income taxes
(FTE) 3 7 (6) 101
Income from discontinued operations,
net of tax - - 114 114
Net income (loss) $4 $7 $107 $299
Net credit-related charge-offs
(recoveries) $- $- $- $23
Selected average balances:
Assets $705 $2,094 $7,136 $57,612
Loans 698 1,970 56 48,568
Deposits 439 1,047 6,773 43,203
Liabilities 437 1,078 15,013 52,332
Attributed equity 56 145 1,392 5,280
Statistical data:
Return on average assets (1) 2.05 % 1.37 % N/M 2.07 %
Return on average attributed equity 25.57 19.74 N/M 22.63
Net interest margin (2) 4.38 3.25 N/M 3.75
Efficiency ratio 58.27 50.47 N/M 59.81
Three Months Ended March 31, 2006 Midwest Western Texas Florida
Earnings summary:
Net interest income (expense) (FTE) $243 $168 $61 $10
Provision for loan losses - (14) (4) -
Noninterest income 117 28 18 4
Noninterest expenses 223 109 50 8
Provision (benefit) for income taxes
(FTE) 38 35 10 2
Loss from discontinued operations,
net of tax - - - -
Net income (loss) $99 $66 $23 $4
Net credit-related charge-offs
(recoveries) $17 $- $1 $2
Selected average balances:
Assets $22,332 $16,261 $5,611 $1,390
Loans 21,303 15,644 5,355 1,371
Deposits 17,039 15,405 3,662 307
Liabilities 17,811 15,440 3,666 306
Attributed equity 1,803 1,078 496 72
Statistical data:
Return on average assets (1) 1.79 % 1.60 % 1.63 % 1.05 %
Return on average attributed equity 22.14 24.56 18.40 20.18
Net interest margin (2) 4.51 4.25 4.46 2.91
Efficiency ratio 61.83 55.74 63.50 55.72
Finance
Other Inter- & Other
Three Months Ended March 31, 2006 Markets national Businesses Total
Earnings summary:
Net interest income (expense) (FTE) $8 $17 $(27) $480
Provision for loan losses 1 (6) (4) (27)
Noninterest income 7 3 18 195
Noninterest expenses 8 13 18 429
Provision (benefit) for income taxes
(FTE) 2 3 (24) 66
Loss from discontinued operations,
net of tax - - (13) (13)
Net income (loss) $4 $10 $(12) $194
Net credit-related charge-offs
(recoveries) $- $1 $1 $22
Selected average balances:
Assets $590 $2,321 $6,772 $55,277
Loans 579 2,180 47 46,479
Deposits 601 1,070 3,114 41,198
Liabilities 600 1,091 11,291 50,205
Attributed equity 53 180 1,390 5,072
Statistical data:
Return on average assets (1) 2.44 % 1.77 % N/M 1.41 %
Return on average attributed equity 30.06 22.90 N/M 15.33
Net interest margin (2) 5.30 2.97 N/M 3.80
Efficiency ratio 54.90 64.03 N/M 63.39
(1) Return on average assets is calculated based on the greater of average
assets or average liabilities and attributed equity.
(2) Net interest margin is calculated based on the greater of average
earning assets or average deposits and purchased funds.
FTE - Fully Taxable Equivalent
N/M - Not Meaningful
SOURCE Comerica Incorporated
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/ /FIRST AND FINAL
ADD -- TABULAR MATERIAL -- TO FOLLOW
http://www.comerica.com/
