DALLAS, Oct. 17 /PRNewswire-FirstCall/ -- Comerica Incorporated (NYSE: CMA) today reported third quarter 2008 income from continuing operations of $27 million, or $0.18 per diluted share, compared to $56 million, or $0.37 per diluted share, for the second quarter 2008 and $180 million, or $1.17 per diluted share, for the third quarter 2007. Third quarter 2008 included a $174 million provision for credit losses, compared to $177 million for the second quarter 2008 and $45 million for the third quarter 2007. During the third quarter 2008, Comerica recognized a pre-tax charge of $96 million ($61 million after-tax, or $0.40 per diluted share), recorded in "litigation and operational losses," related to a previously announced offer to repurchase (at par) auction-rate securities (ARS) from customers. In addition, third quarter 2008 net income reflected a $27 million pre-tax gain ($17 million after-tax, or $0.11 per diluted share) related to the sale of shares in Visa, Inc. (Visa) and net after-tax charges of $7 million ($0.04 per diluted share) which included settlements with the Internal Revenue Service on disallowed foreign tax credits related to a series of loans to foreign borrowers and both the net interest income impact and tax-related interest on certain structured leasing transactions, as well as other adjustments to tax reserves.
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(dollar amounts in millions,
except per share data) 3rd Qtr '08 2nd Qtr '08 3rd Qtr '07
Net interest income $466* $442* $503
Provision for loan losses 165 170 45
Noninterest income 240 242 230
Noninterest expenses 514 423 423
Income from continuing operations,
net of tax 27 56 180
Net income 28 56 181
Diluted EPS from continuing operations 0.18 0.37 1.17
Return on average common shareholders'
equity from continuing operations 2.12% 4.26% 14.27%
Tier 1 capital ratio 7.35** 7.45 7.68
Net interest margin 3.11* 2.91* 3.66
* Third quarter 2008 and second quarter 2008 net interest income declined
$8 million and $30 million, respectively, and the net interest margin
declined six basis points and 19 basis points, respectively, due to
tax-related non-cash lease income charges. Excluding these charges, the
net interest margin would have been 3.17 percent in the third quarter
2008 and 3.10 percent in the second quarter 2008.
** September 30, 2008, ratio is estimated.
The following table illustrates the after-tax impact of certain items on income from continuing operations.
3rd Qtr '08 2nd Qtr '08
(dollar amounts in millions,
except per share data) Amount Per Share Amount Per Share
Gains on sales of Visa and
MasterCard shares $17 $0.11 $9 $0.06
Offer to repurchase ARS (61) (0.40) - -
Tax-related non-cash charges to
lease income (6) (0.04) (19) (0.13)
Other tax-related items (1) - (13) (0.08)
"In an economic environment that is as challenging and volatile as any we have ever seen, Comerica's core operating earnings remained stable compared to the prior two quarters," said Ralph W. Babb Jr., chairman and chief executive officer. "As expected, net credit-related charge-offs and the provision for loan losses were unchanged.
"In this uncertain environment, we are taking actions to improve our capital ratios and enhance our balance sheet strength, including a previously announced intention to reduce our dividend and the execution of a loan optimization program, which is working and producing the desired results. Maintaining a solid capital position is prudent and provides us the flexibility to navigate these swift economic currents and continue to invest in our growth markets."
Third Quarter 2008 Compared to Second Quarter 2008
-- In response to Comerica's loan optimization plan, average loans declined seven percent on an annualized basis, with declines of five percent in the Texas market, three percent in the Midwest market and 13 percent in the Western market.
-- On an annualized basis, average noninterest-bearing deposits, excluding Financial Services Division (FSD) deposits, increased 13 percent.
-- September 30, 2008, core deposits, excluding the Financial Services Division, increased $273 million compared to June 30, 2008, due to increases in noninterest-bearing deposits and customer certificates of deposit.
-- The net interest margin was 3.11 percent in the third quarter 2008, or 3.17 percent excluding the charge to interest income on certain structured lease transactions.
-- Net credit-related charge-offs were $116 million, or 90 basis points as a percent of average total loans, for the third quarter 2008, compared to $113 million, or 86 basis points as a percent of average total loans, for the second quarter 2008. The provision for loan losses was $165 million for the third quarter 2008, compared to $170 million for the second quarter 2008, and the period-end allowance to total loans ratio increased to 1.38 percent from 1.28 percent at June 30, 2008.
-- Excluding net securities gains, noninterest income decreased $15 million, primarily the result of a $10 million decrease in deferred compensation asset returns (which is offset by a decrease in deferred compensation plan costs in noninterest expenses).
-- Noninterest expenses increased $91 million from the second quarter, due to the $96 million charge related to the offer to repurchase ARS, partially offset by a decrease in deferred compensation plan costs ($10 million).
-- The estimated Tier 1 common and Tier 1 capital ratios were 6.69 and 7.35 percent, respectively, both within the targeted ranges. The $96 million ($61 million, after-tax) ARS charge and related commitment to repurchase reduced the estimated Tier 1 common and Tier 1 capital ratios by 21 basis points and 22 basis points, respectively.
Net Interest Income and Net Interest Margin
(dollar amounts in millions) 3rd Qtr '08 2nd Qtr '08 3rd Qtr '07
Net interest income $466* $442* $503
Net interest margin 3.11%* 2.91%* 3.66%
Selected average balances:
Total earning assets $59,946 $61,088 $54,641
Total investment securities 8,146 8,296 4,405
Total loans 51,508 52,367 49,874
Total core deposits**, excluding FSD 31,439 32,058 31,141
Total noninterest-bearing deposits 10,646 10,648 10,840
Total noninterest-bearing deposits,
excluding FSD 9,104 8,825 8,265
* Third quarter 2008 and second quarter 2008 net interest income declined
$8 million and $30 million, respectively, and the net interest margin
declined six basis points and 19 basis points, respectively, due to
tax-related non-cash lease income charges. Excluding these charges, the
net interest margin would have been 3.17 percent in the third quarter
2008 and 3.10 percent in the second quarter 2008.
** Core deposits exclude institutional certificates of deposit and foreign
office time deposits.
-- The $24 million increase in net interest income in the third quarter 2008, when compared to second quarter 2008, resulted primarily from the second quarter $30 million non-cash charge to lease income, partially offset by the third quarter $8 million non-cash charge to lease income.
-- The net interest margin of 3.11 percent increased seven basis points, after excluding the tax-related non-cash lease income charges of 19 basis points in the second quarter 2008 and six basis points in the third quarter 2008, due to improved loan spreads and lower deposit rates.
-- September 30, 2008, core deposits, excluding the Financial Services Division, increased $273 million compared to June 30, 2008, due to increases in noninterest-bearing deposits and customer certificates of deposit.
-- Total average Financial Services Division deposits decreased $368 million from the second quarter 2008 and $1.3 billion from the third quarter 2007. This division serves title and escrow companies that facilitate residential mortgage transactions and benefits from customer deposits related to mortgage escrow balances. Deposits declined due to cooling of the California housing market, combined with destabilization of the mortgage market.
Noninterest Income
Noninterest income was $240 million for the third quarter 2008, compared to $242 million for the second quarter 2008 and $230 million for the third quarter 2007. Net securities gains in noninterest income included a $27 million gain on the sale of Comerica's remaining ownership of Visa shares in the third quarter 2008 and a $14 million gain on the sale of MasterCard shares in the second quarter 2008. In addition, deferred compensation asset returns decreased $10 million in the third quarter 2008, when compared to the second quarter 2008 (which is offset by a decrease in deferred compensation plan costs in noninterest expenses). Certain categories of noninterest income are highlighted in the table below.
(in millions) 3rd Qtr '08 2nd Qtr '08 3rd Qtr '07
Net securities gains $27 $14 $4
Other noninterest income
Net income (loss) from principal
investing and warrants 1 (3) 11
Deferred compensation asset returns* (6) 4 (2)
* Compensation deferred by Comerica officers is invested in stocks and
bonds to reflect the investment selections of the officers. Income
(loss) earned on these assets is reported in noninterest income and the
offsetting increase (decrease) in the liability is reported in salaries
expense.
Noninterest Expenses
Noninterest expenses were $514 million for the third quarter 2008, compared to $423 million for both the second quarter 2008 and third quarter 2007. The $91 million increase in noninterest expenses in the third quarter 2008, compared to the second quarter 2008, reflected the $96 million charge related to the offer to repurchase ARS (included in "litigation and operational losses"), partially offset by a decrease in deferred compensation plan costs ($10 million). The ARS repurchases from customers will be completed in the fourth quarter 2008. Certain categories of noninterest expenses are highlighted in the table below.
3rd Qtr '08 2nd Qtr '08 3rd Qtr '07
Salaries
Regular salaries $155 $151 $162
Severance 2 1 -
Incentives 31 35 35
Deferred compensation plan costs (6) 4 (2)
Share-based compensation 10 11 12
Total salaries 192 202 207
Employee benefits 46 48 49
Customer services 2 3 11
Litigation and operational losses 105* 3 6
Provision for credit losses on
lending-related commitments 9 7 -
Other noninterest expenses
FDIC insurance 6 2 1
* Third quarter 2008 litigation and operational losses included a
$96 million charge related to an offer to repurchase auction-rate
securities from customers.
Tax-related Items
The third quarter 2008 provision for income taxes reflected net after-tax charges of $1 million which included the acceptance of a global settlement offered by the Internal Revenue Service (IRS) on certain structured leasing transactions, settlement with the IRS on disallowed foreign tax credits related to a series of loans to foreign borrowers and other adjustments to tax reserves. The second quarter 2008 provision for income taxes reflected an after-tax charge of $13 million related to the structured leasing transactions. The reassessment of the size and timing of tax deductions related to the leasing transactions also resulted in the $8 million ($6 million after-tax) and $30 million ($19 million after-tax) respective charges to lease income in the third and second quarters of 2008 previously discussed.
Credit Quality
"Net charge-offs related to Western market residential real estate development were lower than the two previous quarters, reflecting our aggressive management of this portfolio," said Babb. "As expected, we are seeing softness in small business and middle market, which is consistent with our outlook."
-- The allowance to loan ratio increased to 1.38 percent at September 30, 2008, from 1.28 percent at June 30, 2008.
-- The provision for loan losses and loan quality reflected continuing challenges in residential real estate development located in the Western market (primarily California) and the economies in all major markets.
-- Net credit-related charge-offs in the Commercial Real Estate business line in the third quarter 2008 were $57 million, of which $39 million were from residential real estate developers in the Western market. Comparable numbers for the second quarter 2008 were $73 million in total, of which $56 million were from residential real estate developers in the Western market.
-- Net loan charge-offs, excluding the Commercial Real Estate business line, were $59 million in the third quarter 2008, or 52 basis points of average non-Commercial Real Estate loans, compared to $40 million, or 35 basis points, in the second quarter 2008.
-- Nonperforming assets increased to 1.71 percent of total loans and foreclosed property for the third quarter 2008. During the third quarter 2008, $280 million of loan relationships greater than $2 million were transferred to nonaccrual status, a decrease of $24 million from the second quarter 2008. Of the transfers of loan relationships greater than $2 million to nonaccrual in the third quarter 2008, $145 million were in the Commercial Real Estate business line, a decrease of $43 million from the second quarter 2008.
(dollar amounts in millions) 3rd Qtr '08 2nd Qtr '08 3rd Qtr '07
Net loan charge-offs $116 $112 $40
Net lending-related commitment
charge-offs - 1 -
Total net credit-related
charge-offs 116 113 40
Net loan charge-offs/Average
total loans 0.90% 0.86% 0.32%
Net credit-related charge-offs/
Average total loans 0.90 0.86 0.32
Provision for loan losses $165 $170 $45
Provision for credit losses on
lending-related commitments 9 7 -
Total provision for credit losses 174 177 45
Nonperforming loans 863 731 272
Nonperforming assets (NPAs) 881 748 291
NPAs/Total loans and foreclosed
property 1.71% 1.44% 0.59%
Allowance for loan losses $712 $663 $512
Allowance for credit losses on
lending-related commitments* 40 31 19
Total allowance for credit losses 752 694 531
Allowance for loan losses/Total loans 1.38% 1.28% 1.03%
Allowance for loan losses/
Nonperforming loans 82 91 176
* Included in "Accrued expenses and other liabilities" on the
consolidated balance sheets.
Balance Sheet and Capital Management
Total assets and common shareholders' equity were $65.2 billion and $5.1 billion, respectively, at September 30, 2008, compared to $66.0 billion and $5.1 billion, respectively, at June 30, 2008. There were approximately 150 million shares outstanding at September 30, 2008. No shares were repurchased in the open market in the first nine months of 2008.
Comerica's third quarter 2008 estimated Tier 1 common, Tier 1 and total risk-based capital ratios were 6.69 percent, 7.35 percent and 11.22 percent, respectively. The $96 million ($61 million, after-tax) ARS charge and related commitment to repurchase reduced the estimated Tier 1 common, Tier 1 and total capital ratios by 21 basis points, 22 basis points and 29 basis points, respectively.
Full-Year 2008 Outlook Compared to Full-Year 2007 from Continuing Operations
-- Low to mid single-digit full-year average loan growth, with loans declining in the fourth quarter 2008.
-- Mortgage-backed FNMA and FHLMC securities (AAA-rated) averaging about $8 billion for the fourth quarter 2008. In addition, about $1.4 billion of ARS will be repurchased during the fourth quarter 2008.
-- Average full-year net interest margin about 3.05 percent (3.10 percent excluding the second and third quarter lease income charges), with a net interest margin of about 3.00 percent in the fourth quarter 2008. The fourth quarter net interest margin reflects the three basis point negative impact of ARS repurchases and the 50 basis point reduction in the federal funds rate announced October 8, 2008. This full-year net interest margin reflects a five basis point decline from the previous outlook.
-- Full-year net credit-related charge-offs of about $450 million. The provision for credit losses is expected to exceed net charge-offs.
-- Mid single-digit growth in noninterest income.
-- Low single-digit increase in noninterest expenses (low single-digit decrease excluding the charge related to the offer to repurchase ARS).
-- Effective tax rate of about 27 percent for the full year, with a rate of about 20 percent for the fourth quarter 2008.
-- Maintain a Tier 1 capital ratio within a target range of 7.25 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 September 30, 2008 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses third quarter 2008 results compared to second quarter 2008.
The following table presents net income (loss) by business segment.
(dollar amounts in millions) 3rd Qtr '08 2nd Qtr '08 3rd Qtr '07
Business Bank $65 186% $57 73% $137 70%
Retail Bank 21 57 7 9 39 20
Wealth & Institutional
Management (51) (143) 14 18 20 10
35 100% 78 100% 196 100%
Finance (2) (5) (8)
Other* (5) (17) (7)
Total $28 $56 $181
* Includes discontinued operations and items not directly associated with
the three major business segments or the Finance Division.
Business Bank
(dollar amounts in millions) 3rd Qtr '08 2nd Qtr '08 3rd Qtr '07
Net interest income (FTE) $323 $296 $337
Provision for loan losses 135 123 43
Noninterest income 75 92 82
Noninterest expenses 175 185 177
Net income 65 57 137
Net credit-related charge-offs 95 96 30
Selected average balances:
Assets 41,357 42,335 40,796
Loans 40,506 41,510 39,745
FSD loans 401 469 1,191
Deposits 14,933 15,384 15,947
FSD deposits 2,449 2,817 3,789
Net interest margin 3.17% 2.85% 3.36%
-- Average loans decreased $1.0 billion, led by declines in National Dealer Services and Middle Market.
-- Average deposits, excluding the Financial Services Division, decreased $83 million, primarily due to Technology and Life Sciences and smaller declines in other businesses, partially offset by an increase in Global Corporate. Financial Services Division deposits decreased $368 million.
-- The net interest margin was impacted by non-cash charges to lease income in both the third and second quarter 2008. Excluding these charges, the net interest margin increased 10 basis points from increased loan spreads and decreases in lower-spread money market accounts and certificates of deposit.
-- The provision for loan losses increased $12 million, primarily in Global Corporate, Technology and Life Sciences and Specialty Businesses, partially offset by a decline in Commercial Real Estate.
-- Noninterest income decreased $17 million, mostly due to a second quarter 2008 gain on the sale of MasterCard shares of $14 million.
-- Noninterest expenses decreased $10 million, partially due to lower salaries and employee benefits.
Retail Bank
(dollar amounts in millions) 3rd Qtr '08 2nd Qtr '08 3rd Qtr '07
Net interest income (FTE) $142 $146 $169
Provision for loan losses 33 29 7
Noninterest income 80 54 56
Noninterest expenses 161 161 160
Net income 21 7 39
Net credit-related charge-offs 17 14 9
Selected average balances:
Assets 7,046 7,100 6,854
Loans 6,362 6,348 6,111
Deposits 16,596 17,043 17,145
Net interest margin 3.40% 3.44% 3.91%
-- Average loans increased $14 million, or one percent on an annualized
basis.
-- Average deposits decreased $447 million, primarily due to decreases in money market investment accounts and customer certificates of deposit.
-- The net interest margin of 3.40 percent declined four basis points, primarily due to a decline in loan and deposit spreads.
-- The provision for loan losses increased $4 million due to Small Business.
-- Noninterest income increased $26 million, due to a third quarter 2008 gain of $27 million on the sale of Visa shares.
-- Eight new banking centers were opened in the third quarter 2008 (six in the Western market).
Wealth and Institutional Management
(dollar amounts in millions) 3rd Qtr '08 2nd Qtr '08 3rd Qtr '07
Net interest income (FTE) $37 $37 $37
Provision for loan losses 7 5 (5)
Noninterest income 71 74 70
Noninterest expenses 180 83 81
Net income (51) 14 20
Net credit-related charge-offs 4 3 1
Selected average balances:
Assets 4,759 4,646 4,152
Loans 4,624 4,502 3,990
Deposits 2,351 2,493 2,378
Net interest margin 3.17% 3.28% 3.59%
-- Average loans increased $122 million, or 11 percent on an annualized basis.
-- Average deposits decreased $142 million, primarily due to declines in money market investment account balances, interest-bearing transaction deposit accounts and customer certificates of deposit.
-- The net interest margin of 3.17 percent declined 11 basis points, primarily due to a decline in deposit spreads.
-- Noninterest expenses increased $97 million, due to the $96 million charge related to the offer to repurchase auction-rate securities from customers.
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 September 30, 2008 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses third quarter 2008 results compared to second quarter 2008.
The following table presents net income (loss) by market segment.
(dollar amounts in millions) 3rd Qtr '08 2nd Qtr '08 3rd Qtr '07
Midwest $51 144% $52 68% $79 40%
Western 9 25 (20) (26) 55 28
Texas 13 36 17 21 27 14
Florida (1) (3) (1) (2) 2 1
Other Markets (44)* (123) 23 29 18 9
International 7 21 7 10 15 8
35 100% 78 100% 196 100%
Finance & Other Businesses** (7) (22) (15)
Total $28 $56 $181
* Third quarter 2008 included a $96 million charge ($61 million,
after-tax) related to an offer to repurchase auction-rate securities
from customers.
** Includes discontinued operations and items not directly
associated with the geographic markets.
Midwest
(dollar amounts in millions) 3rd Qtr '08 2nd Qtr '08 3rd Qtr '07
Net interest income (FTE) $197 $172 $222
Provision for loan losses 52 24 15
Noninterest income 142 136 119
Noninterest expenses 205 205 206
Net income 51 52 79
Net credit-related charge-offs 44 42 23
Selected average balances:
Assets 19,820 19,891 19,131
Loans 19,125 19,255 18,526
Deposits 15,926 16,056 15,636
Net interest margin 4.08% 3.58% 4.73%
-- Average loans decreased $130 million, led by declines in Middle Market and National Dealer, partially offset by growth in Global Corporate.
-- Average deposits decreased $130 million, primarily due to a decrease in Personal Banking, partially offset by an increase in Global Corporate.
-- The net interest margin was impacted by non-cash charges to lease income in both the third and second quarter 2008. Excluding these charges, the net interest margin increased seven basis points due to an increase in loan spreads.
-- The provision for loan losses increased $28 million due to Commercial Real Estate and Global Corporate.
-- Noninterest income increased $6 million and included $22 million of the third quarter 2008 gain on the sale of Visa shares, partially offset by a second quarter 2008 gain of $14 million on the sale of MasterCard shares.
Western Market
(dollar amounts in millions) 3rd Qtr '08 2nd Qtr '08 3rd Qtr '07
Net interest income (FTE) $169 $171 $185
Provision for loan losses 82 113 23
Noninterest income 38 34 36
Noninterest expenses 112 115 110
Net income (loss) 9 (20) 55
Net credit-related charge-offs 51 59 7
Selected average balances:
Assets 16,627 17,241 17,095
Loans 16,381 16,918 16,543
FSD loans 401 469 1,191
Deposits 11,729 12,345 13,009
FSD deposits 2,255 2,611 3,607
Net interest margin 4.09% 4.04% 4.43%
-- Average loans decreased $537 million, due to declines in the National Dealer Services, Middle Market and Commercial Real Estate lines of businesses.
-- Average deposits, excluding the Financial Services Division, decreased $260 million, primarily due to decreases in Private Banking and Middle Market. Financial Services Division deposits decreased $356 million.
-- The net interest margin of 4.09 percent increased five basis points, primarily due to a decrease in low-rate loans in the Financial Services Division and decreases in lower-spread money market accounts and certificates of deposit.
-- The provision for loan losses decreased $31 million, primarily due to Commercial Real Estate, partially offset by increases in Technology and Life Sciences and Small Business.
-- Noninterest income increased $4 million, primarily due to an increase in principal investing and warrant income.
-- Six new banking centers were opened in the third quarter 2008.
Texas Market
(dollar amounts in millions) 3rd Qtr '08 2nd Qtr '08 3rd Qtr '07
Net interest income (FTE) $73 $74 $73
Provision for loan losses 18 6 (2)
Noninterest income 27 22 24
Noninterest expenses 61 63 58
Net income 13 17 27
Total net credit-related
charge-offs 9 3 1
Selected average balances:
Assets 7,945 8,063 7,172
Loans 7,691 7,795 6,902
Deposits 3,956 4,061 3,920
Net interest margin 3.75% 3.78% 4.17%
-- Average loans decreased $104 million, primarily due to declines in Energy Lending and National Dealer Services, partially offset by growth in Commercial Real Estate.
-- Average deposits decreased $105 million, primarily due to declines in Personal Banking and Technology and Life Sciences.
-- The net interest margin of 3.75 percent decreased three basis points, primarily due a decline in deposit balances and deposit spreads.
-- The provision for loan losses increased $12 million, primarily in Energy Lending.
-- Noninterest income increased $5 million and included $4 million of the third quarter 2008 gain on the sale of Visa shares.
-- One new banking center opened in the third quarter 2008.
Florida Market
(dollar amounts in millions) 3rd Qtr '08 2nd Qtr '08 3rd Qtr '07
Net interest income (FTE) $12 $12 $12
Provision for loan losses 7 7 3
Noninterest income 4 4 4
Noninterest expenses 10 11 10
Net income (loss) (1) (1) 2
Net credit-related charge-offs 3 8 1
Selected average balances:
Assets 1,900 1,854 1,706
Loans 1,900 1,851 1,692
Deposits 262 306 271
Net interest margin 2.53% 2.50% 2.94%
-- Average loans increased $49 million, primarily due to growth in Private Banking, Commercial Real Estate and Middle Market, partially offset by a decrease in National Dealer Services.
-- Average deposits decreased $44 million due to a decline in Private Banking and balance transfers in Global Corporate from Florida to Other Markets.
-- One new banking center opened in the third quarter 2008.
Conference Call and Webcast
Comerica will host a conference call to review third quarter 2008 financial results at 7 a.m. CDT Friday, October 17, 2008. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 65151410). The call and supplemental financial information can also be accessed on the Internet at http://www.comerica.com. A replay will be available approximately two hours following the conference call through October 31, 2008. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 65151410). A replay of the Webcast can also be accessed via Comerica's "Investor Relations" page at http://www.comerica.com.
Comerica Incorporated is a financial services company headquartered in Dallas, Texas, and strategically aligned by three major business segments: the Business Bank, the Retail Bank, and Wealth & Institutional Management. Comerica focuses on relationships and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada, China 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 further economic downturns, changes in the pace of an economic recovery and related changes in employment levels, changes in real estate values, fuel prices, energy costs or other events that could affect customer income levels or general economic conditions, changes related to the headquarters relocation or to its underlying assumptions, 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, fires, droughts 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, changes in customer borrowing, repayment, investment and deposit practices, 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, the automotive production industry and the real estate business lines, 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, political or industry conditions and related credit and market conditions, the interdependence of financial service companies and adverse conditions in the stock market. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of these and other factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect 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 -- LAF507 -- Comerica Incorporated Earnings/
CONSOLIDATED FINANCIAL HIGHLIGHTS
Comerica Incorporated and Subsidiaries
Three Months Ended
September 30, June 30, September 30,
(in millions, except per share data) 2008 2008 2007
PER SHARE AND COMMON STOCK DATA
Diluted income from continuing
operations $0.18 $0.37 $1.17
Diluted net income 0.19 0.37 1.18
Cash dividends declared 0.66 0.66 0.64
Common shareholders' equity (at
period end) 33.89 33.78 33.56
Average diluted shares (in thousands) 150,795 150,819 153,096
KEY RATIOS
Return on average common
shareholders' equity from continuing
operations 2.12% 4.26% 14.27%
Return on average common
shareholders' equity 2.25 4.25 14.41
Return on average assets from
continuing operations 0.17 0.34 1.22
Return on average assets 0.18 0.33 1.23
Average common shareholders' equity
as a percentage of average assets 7.82 7.87 8.57
Tier 1 common capital ratio * 6.69 6.79 7.01
Tier 1 risk-based capital ratio * 7.35 7.45 7.68
Total risk-based capital ratio * 11.22 11.21 11.44
Leverage ratio * 8.59 8.53 9.60
AVERAGE BALANCES
Commercial loans $28,521 $29,280 $28,052
Real estate construction loans 4,675 4,843 4,607
Commercial mortgage loans 10,511 10,374 9,829
Residential mortgage loans 1,870 1,906 1,865
Consumer loans 2,599 2,549 2,320
Lease financing 1,365 1,352 1,319
International loans 1,967 2,063 1,882
Total loans 51,508 52,367 49,874
Earning assets 59,946 61,088 54,641
Total assets 64,863 65,963 58,546
Interest-bearing deposits 29,267 33,116 30,276
Total interest-bearing liabilities 47,560 48,483 41,406
Noninterest-bearing deposits 10,646 10,648 10,840
Common shareholders' equity 5,075 5,193 5,015
NET INTEREST INCOME
Net interest income (fully taxable
equivalent basis)** $467 $443 $504
Fully taxable equivalent adjustment 1 1 1
Net interest margin** 3.11% 2.91% 3.66%
CREDIT QUALITY
Nonaccrual loans $863 $731 $272
Reduced-rate loans - - -
Total nonperforming loans 863 731 272
Foreclosed property 18 17 19
Total nonperforming assets 881 748 291
Loans past due 90 days or more and
still accruing 97 112 63
Gross loan charge-offs 122 118 47
Loan recoveries 6 6 7
Net loan charge-offs 116 112 40
Lending-related commitment charge-offs - 1 -
Total net credit-related charge-offs 116 113 40
Allowance for loan losses 712 663 512
Allowance for credit losses on
lending-related commitments 40 31 19
Total allowance for credit losses 752 694 531
Allowance for loan losses as a
percentage of total loans 1.38% 1.28% 1.03%
Net loan charge-offs as a percentage
of average total loans 0.90 0.86 0.32
Net credit-related charge-offs as a
percentage of average total loans 0.90 0.86 0.32
Nonperforming assets as a percentage
of total loans and foreclosed
property 1.71 1.44 0.59
Allowance for loan losses as a
percentage of total nonperforming
loans 82 91 188
Nine Months Ended
September 30,
(in millions, except per share data) 2008 2007
PER SHARE AND COMMON STOCK DATA
Diluted income from continuing operations $1.28 $3.61
Diluted net income 1.28 3.63
Cash dividends declared 1.98 1.92
Common shareholders' equity (at period end)
Average diluted shares (in thousands) 150,783 156,202
KEY RATIOS
Return on average common shareholders'
equity from continuing operations 4.98% 14.86%
Return on average common shareholders' equity 5.00 14.92
Return on average assets from
continuing operations 0.40 1.30
Return on average assets 0.40 1.30
Average common shareholders' equity as a
percentage of average assets 7.94 8.74
Tier 1 common capital ratio *
Tier 1 risk-based capital ratio *
Total risk-based capital ratio *
Leverage ratio *
AVERAGE BALANCES
Commercial loans $28,992 $28,046
Real estate construction loans 4,776 4,454
Commercial mortgage loans 10,343 9,713
Residential mortgage loans 1,898 1,788
Consumer loans 2,532 2,351
Lease financing 1,354 1,293
International loans 2,013 1,880
Total loans 51,908 49,525
Earning assets 60,183 54,036
Total assets 64,917 57,923
Interest-bearing deposits 31,931 30,247
Total interest-bearing liabilities 47,612 40,031
Noninterest-bearing deposits 10,638 11,540
Common shareholders' equity 5,153 5,065
NET INTEREST INCOME
Net interest income (fully taxable
equivalent basis)** $1,387 $1,517
Fully taxable equivalent adjustment 3 3
Net interest margin** 3.08% 3.75%
CREDIT QUALITY
Nonaccrual loans
Reduced-rate loans
Total nonperforming loans
Foreclosed property
Total nonperforming assets
Loans past due 90 days or more and still accruing
Gross loan charge-offs $356 $124
Loan recoveries 18 38
Net loan charge-offs 338 86
Lending-related commitment charge-offs 1 3
Total net credit-related charge-offs 339 89
Allowance for loan losses
Allowance for credit losses on lending-related
commitments
Total allowance for credit losses
Allowance for loan losses as a percentage
of total loans
Net loan charge-offs as a percentage
of average total loans 0.87% 0.23%
Net credit-related charge-offs as a
percentage of average total loans 0.87 0.24
Nonperforming assets as a percentage
of total loans and foreclosed property
Allowance for loan losses as a percentage
of total nonperforming loans
* September 30, 2008 ratios are estimated
** Third quarter 2008 and second quarter 2008 net interest income declined
$8 million and $30 million, respectively, due to tax-related non-cash
lease income charges. Excluding these charges, the net interest margin
would have been 3.17% and 3.10% for the three-month periods ended
September 30, 2008, and June 30, 2008, respectively, and 3.16% for the
nine-month period ended September 30, 2008.
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
September June December September
(in millions, except share data) 30, 2008 30, 2008 31, 2007 30, 2007
ASSETS
Cash and due from banks $1,404 $1,698 $1,440 $1,271
Federal funds sold and securities
purchased under agreements to resell 3 77 36 129
Other short-term investments 247 249 373 293
Investment securities
available-for-sale 8,158 8,243 6,296 4,942
-
Commercial loans 28,604 28,763 28,223 27,392
Real estate construction loans 4,565 4,684 4,816 4,759
Commercial mortgage loans 10,588 10,504 10,048 9,994
Residential mortgage loans 1,863 1,879 1,915 1,892
Consumer loans 2,644 2,594 2,464 2,397
Lease financing 1,360 1,351 1,351 1,319
International loans 1,931 1,976 1,926 1,843
Total loans 51,555 51,751 50,743 49,596
Less allowance for loan losses (712) (663) (557) (512)
Net loans 50,843 51,088 50,186 49,084
Premises and equipment 668 674 650 635
Customers' liability on acceptances
outstanding 21 15 48 39
Accrued income and other assets 3,809 3,959 3,302 3,629
Total assets $65,153 $66,003 $62,331 $60,022
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits $12,094 $11,860 $11,920 $11,290
Money market and NOW deposits 13,553 14,506 15,261 14,814
Savings deposits 1,279 1,391 1,325 1,402
Customer certificates of deposit 8,147 7,746 8,357 8,010
Institutional certificates of deposit 3,670 5,940 6,147 5,049
Foreign office time deposits 802 879 1,268 1,355
Total interest-bearing deposits 27,451 30,462 32,358 30,630
Total deposits 39,545 42,322 44,278 41,920
Short-term borrowings 3,625 4,075 2,807 2,813
Acceptances outstanding 21 15 48 39
Accrued expenses and other liabilities 1,486 1,651 1,260 1,276
Medium- and long-term debt 15,376 12,858 8,821 8,906
Total liabilities 60,053 60,921 57,214 54,954
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 178,735,252 shares at
9/30/08, 6/30/08, 12/31/07 and
9/30/07 894 894 894 894
Capital surplus 586 576 564 551
Accumulated other comprehensive loss (129) (207) (177) (238)
Retained earnings 5,379 5,451 5,497 5,475
Less cost of common stock in treasury
- 28,249,360 shares at 9/30/08,
28,281,490 shares at 6/30/08,
28,747,097 shares at 12/31/07 and
27,725,572 shares at 9/30/07 (1,630) (1,632) (1,661) (1,614)
Total shareholders' equity 5,100 5,082 5,117 5,068
Total liabilities and
shareholders' equity $65,153 $66,003 $62,331 $60,022
CONSOLIDATED STATEMENTS OF INCOME
Comerica Incorporated and Subsidiaries
Three Months Nine Months
Ended Ended
September 30, September 30,
(in millions, except per share data) 2008 2007 2008 2007
INTEREST INCOME
Interest and fees on loans $634 $895 $2,037 $2,628
Interest on investment securities 99 52 288 140
Interest on short-term investments 2 5 10 18
Total interest income 735 952 2,335 2,786
INTEREST EXPENSE
Interest on deposits 141 294 576 864
Interest on short-term borrowings 30 29 78 75
Interest on medium- and long-term debt 98 126 297 333
Total interest expense 269 449 951 1,272
Net interest income 466 503 1,384 1,514
Provision for loan losses 165 45 494 104
Net interest income after provision
for loan losses 301 458 890 1,410
NONINTEREST INCOME
Service charges on deposit accounts 57 55 174 164
Fiduciary income 49 49 152 147
Commercial lending fees 17 19 53 52
Letter of credit fees 19 16 52 47
Foreign exchange income 11 11 33 30
Brokerage fees 10 11 30 32
Card fees 15 14 45 40
Bank-owned life insurance 11 8 29 27
Net securities gains 27 4 63 4
Net gain on sales of businesses - - - 3
Other noninterest income 24 43 88 112
Total noninterest income 240 230 719 658
NONINTEREST EXPENSES
Salaries 192 207 594 628
Employee benefits 46 49 141 145
Total salaries and employee
benefits 238 256 735 773
Net occupancy expense 40 34 114 102
Equipment expense 15 15 46 45
Outside processing fee expense 26 23 77 67
Software expense 18 16 57 46
Customer services 2 11 11 36
Litigation and operational losses 105 6 100 -
Provision for credit losses on
lending-related commitments 9 - 20 (4)
Other noninterest expenses 61 62 180 176
Total noninterest expenses 514 423 1,340 1,241
Income from continuing operations
before income taxes 27 265 269 827
Provision for income taxes - 85 76 262
Income from continuing operations 27 180 193 565
Income (loss) from discontinued
operations, net of tax 1 1 - 2
NET INCOME $28 $181 $193 $567
Basic earnings per common share:
Income from continuing operations $0.18 $1.18 $1.29 $3.67
Net income 0.19 1.20 1.29 3.69
Diluted earnings per common share:
Income from continuing operations 0.18 1.17 1.28 3.61
Net income 0.19 1.18 1.28 3.63
Cash dividends declared on common stock 99 97 298 296
Dividends per common share 0.66 0.64 1.98 1.92
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
Comerica Incorporated and Subsidiaries
Third Second First Fourth Third
(in millions, except per Quarter Quarter Quarter Quarter Quarter
share data) 2008 2008 2008 2007 2007
INTEREST INCOME
Interest and fees on loans $634 $633 $770 $873 $895
Interest on investment securities 99 101 88 66 52
Interest on short-term investments 2 3 5 5 5
Total interest income 735 737 863 944 952
INTEREST EXPENSE
Interest on deposits 141 182 253 303 294
Interest on short-term borrowings 30 19 29 30 29
Interest on medium- and long-term
debt 98 94 105 122 126
Total interest expense 269 295 387 455 449
Net interest income 466 442 476 489 503
Provision for loan losses 165 170 159 108 45
Net interest income after
provision for loan losses 301 272 317 381 458
NONINTEREST INCOME
Service charges on deposit accounts 57 59 58 57 55
Fiduciary income 49 51 52 52 49
Commercial lending fees 17 20 16 23 19
Letter of credit fees 19 18 15 16 16
Foreign exchange income 11 12 10 10 11
Brokerage fees 10 10 10 11 11
Card fees 15 16 14 14 14
Bank-owned life insurance 11 8 10 9 8
Net securities gains 27 14 22 3 4
Other noninterest income 24 34 30 35 43
Total noninterest income 240 242 237 230 230
NONINTEREST EXPENSES
Salaries 192 202 200 216 207
Employee benefits 46 48 47 48 49
Total salaries and employee
benefits 238 250 247 264 256
Net occupancy expense 40 36 38 36 34
Equipment expense 15 16 15 15 15
Outside processing fee expense 26 28 23 24 23
Software expense 18 20 19 17 16
Customer services 2 3 6 7 11
Litigation and operational losses
(recoveries) 105 3 (8) 18 6
Provision for credit losses on
lending-related commitments 9 7 4 3 -
Other noninterest expenses 61 60 59 66 62
Total noninterest expenses 514 423 403 450 423
Income from continuing operations
before income taxes 27 91 151 161 265
Provision for income taxes - 35 41 44 85
Income from continuing operations 27 56 110 117 180
Income (loss) from discontinued
operations, net of tax 1 - (1) 2 1
NET INCOME $28 $56 $109 $119 $181
Basic earnings per common share:
Income from continuing
operations $0.18 $0.37 $0.74 $0.78 $1.18
Net income 0.19 0.37 0.73 0.80 1.20
Diluted earnings per common share:
Income from continuing
operations 0.18 0.37 0.73 0.77 1.17
Net income 0.19 0.37 0.73 0.79 1.18
Cash dividends declared on common stock 99 100 99 97 97
Dividends per common share 0.66 0.66 0.66 0.64 0.64
N/M - Not meaningful
Third Quarter 2008 Compared To:
Second Quarter Third Quarter
2008 2007
(in millions, except per share data) Amount Percent Amount Percent
INTEREST INCOME
Interest and fees on loans $1 - % $(261) (29)%
Interest on investment securities (2) (1) 47 92
Interest on short-term investments (1) (32) (3) (53)
Total interest income (2) - (217) (23)
INTEREST EXPENSE
Interest on deposits (41) (22) (153) (52)
Interest on short-term borrowings 11 55 1 1
Interest on medium- and long-term debt 4 4 (28) (22)
Total interest expense (26) (9) (180) (40)
Net interest income 24 6 (37) (7)
Provision for loan losses (5) (3) 120 N/M
Net interest income after
provision for loan losses 29 11 (157) (34)
NONINTEREST INCOME
Service charges on deposit accounts (2) (1) 2 4
Fiduciary income (2) (2) - 1
Commercial lending fees (3) (16) (2) (9)
Letter of credit fees 1 2 3 18
Foreign exchange income (1) (13) - 2
Brokerage fees - (3) (1) (13)
Card fees (1) (9) 1 7
Bank-owned life insurance 3 31 3 30
Net securities gains 13 87 23 N/M
Other noninterest income (10) (28) (19) (44)
Total noninterest income (2) (1) 10 4
NONINTEREST EXPENSES
Salaries (10) (5) (15) (7)
Employee benefits (2) (2) (3) (5)
Total salaries and employee
benefits (12) (5) (18) (7)
Net occupancy expense 4 9 6 15
Equipment expense (1) (4) - (2)
Outside processing fee expense (2) (8) 3 10
Software expense (2) (5) 2 16
Customer services (1) (1) (9) (74)
Litigation and operational losses
(recoveries) 102 N/M 99 N/M
Provision for credit losses on
lending-related commitments 2 38 9 N/M
Other noninterest expenses 1 1 (1) (3)
Total noninterest expenses 91 22 91 21
Income from continuing operations
before income taxes (64) (70) (238) (90)
Provision for income taxes (35) N/M (85) N/M
Income from continuing operations (29) (51) (153) (85)
Income (loss) from discontinued
operations, net of tax 1 N/M - N/M
NET INCOME $(28) (48)% $(153) (84)%
Basic earnings per common share:
Income from continuing operations $(0.19) (51)% $(1.00) (85)%
Net income (0.18) (49) (1.01) (84)
Diluted earnings per common share:
Income from continuing operations (0.19) (51) (0.99) (85)
Net income (0.18) (49) (0.99) (84)
Cash dividends declared on common stock (1) - 2 3
Dividends per common share - - 0.02 3
N/M - Not meaningful
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
Comerica Incorporated and Subsidiaries
2008 2007
(in millions) 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr
Balance at beginning of period $663 $605 $557 $512 $507
Loan charge-offs:
Commercial 48 36 33 27 30
Real estate construction:
Commercial Real Estate business
line 40 57 52 24 6
Other business lines - - 1 1 2
Total real estate construction 40 57 53 25 8
Commercial mortgage:
Commercial Real Estate business
line 17 14 20 7 2
Other business lines 11 7 2 9 4
Total commercial mortgage 28 21 22 16 6
Residential mortgage 1 1 - - -
Consumer 5 3 7 4 3
Lease financing - - - - -
International - - 1 - -
Total loan charge-offs 122 118 116 72 47
Recoveries on loans previously
charged-off:
Commercial 3 5 3 7 5
Real estate construction 1 - 1 - -
Commercial mortgage - 1 1 1 1
Residential mortgage - - - - -
Consumer 1 - 1 1 1
Lease financing 1 - - - -
International - - - - -
Total recoveries 6 6 6 9 7
Net loan charge-offs 116 112 110 63 40
Provision for loan losses 165 170 159 108 45
Foreign currency translation
adjustment - - (1) - -
Balance at end of period $712 $663 $605 $557 $512
Allowance for loan losses as a
percentage of total loans 1.38% 1.28% 1.16% 1.10% 1.03%
Net loan charge-offs as a
percentage of average total loans 0.90 0.86 0.85 0.50 0.32
Net credit-related charge-offs as
a percentage of average total
loans 0.90 0.86 0.85 0.50 0.32
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED
COMMITMENTS
Comerica Incorporated and Subsidiaries
2008 2007
3rd 2nd 1st 4th 3rd
(in millions) Qtr Qtr Qtr Qtr Qtr
Balance at beginning of period $31 $25 $21 $19 $19
Less: Charge-offs on lending-related
commitments (1) - 1 - 1 -
Add: Provision for credit losses on
lending-related commitments 9 7 4 3 -
Balance at end of period $40 $31 $25 $21 $19
Unfunded lending-related commitments
sold $- $2 $3 $22 $-
(1) Charge-offs result from the sale of unfunded lending-related
commitments.
NONPERFORMING ASSETS
Comerica Incorporated and Subsidiaries
2008 2007
(in millions) 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr
SUMMARY OF NONPERFORMING ASSETS
AND PAST DUE LOANS
Nonaccrual loans:
Commercial $206 $155 $87 $75 $64
Real estate construction:
Commercial Real Estate business
line 386 322 271 161 55
Other business lines 5 4 4 6 4
Total real estate
construction 391 326 275 167 59
Commercial mortgage:
Commercial Real Estate business
line 137 143 105 66 63
Other business lines 114 95 64 75 77
Total commercial mortgage 251 238 169 141 140
Residential mortgage 8 4 1 1 1
Consumer 4 5 3 3 4
Lease financing - - - - -
International 3 3 3 4 4
Total nonaccrual loans 863 731 538 391 272
Reduced-rate loans - - - 13 -
Total nonperforming loans 863 731 538 404 272
Foreclosed property 18 17 22 19 19
Total nonperforming assets $881 $748 $560 $423 $291
Nonperforming loans as a percentage
of total loans 1.67% 1.41% 1.03% 0.80% 0.55%
Nonperforming assets as a percentage
of total loans and foreclosed
property 1.71 1.44 1.07 0.83 0.59
Allowance for loan losses as a
percentage of total nonperforming
loans 82 91 112 138 188
Loans past due 90 days or more and
still accruing $97 $112 $80 $54 $56
ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans at beginning of
period $731 $538 $391 $272 $244
Loans transferred to
nonaccrual (1) 280 304 281 185 94
Nonaccrual business loan
gross charge-offs (2) (116) (113) (108) (68) (44)
Loans transferred to accrual
status (1) - - - - (5)
Nonaccrual business loans
sold (3) (19) - (15) - (11)
Payments/Other (4) (13) 2 (11) 2 (6)
Nonaccrual loans at end of period $863 $731 $538 $391 $272
(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 $116 $113 $108 $68 $44
Performing watch list loans - 1 1 - -
Consumer and residential
mortgage loans 6 4 7 4 3
Total gross loan
charge-offs $122 $118 $116 $72 $47
(3) Analysis of loans sold:
Nonaccrual business loans $19 $- $15 $- $11
Performing watch list loans 3 7 6 13 -
Total loans sold $22 $7 $21 $13 $11
(4) Includes net changes related to nonaccrual loans with balances less
than $2 million, other than business loan gross charge-offs and
nonaccrual loans sold, and payments on nonaccrual loans with book
balances greater than $2 million.
ANALYSIS OF NET INTEREST INCOME (FTE)
Comerica Incorporated and Subsidiaries
Nine Months Ended
September 30, 2008
Average Average
(dollar amounts in millions) Balance Interest Rate
Commercial loans (1) (2) $28,992 $1,135 5.23%
Real estate construction loans 4,776 184 5.16
Commercial mortgage loans 10,343 442 5.71
Residential mortgage loans 1,898 85 5.99
Consumer loans 2,532 100 5.29
Lease financing (3) 1,354 (4) N/M
International loans 2,013 79 5.24
Business loan swap income (expense) - 19 -
Total loans (2) 51,908 2,040 5.25
Investment securities
available-for-sale 7,889 288 4.88
Federal funds sold and
securities purchased
under agreements to resell 100 2 2.40
Other short-term investments 286 8 3.93
Total earning assets 60,183 2,338 5.19
Cash and due from banks 1,228
Allowance for loan losses (661)
Accrued income and other assets 4,167
Total assets $64,917
Money market and NOW
deposits (1) $14,774 170 1.54
Savings deposits 1,371 5 0.50
Customer certificates of deposit 8,003 200 3.35
Institutional certificates of
deposit 6,719 176 3.49
Foreign office time deposits 1,064 25 3.09
Total interest-bearing
deposits 31,931 576 2.41
Short-term borrowings 4,084 78 2.54
Medium- and long-term debt 11,597 297 3.42
Total interest-bearing
sources 47,612 951 2.67
Noninterest-bearing deposits (1) 10,638
Accrued expenses and other
liabilities 1,514
Shareholders' equity 5,153
Total liabilities and
shareholders' equity $64,917
Net interest income/rate
spread (FTE) $1,387 2.52
FTE adjustment $3
Impact of net noninterest-bearing
sources of funds 0.56
Net interest margin (as a
percentage of average earning
assets) (FTE) (2) (3) 3.08%
N/M - Not meaningful
(1) FSD balances included above:
Loans (primarily low-rate) $557 $6 1.36 %
Interest-bearing deposits 998 16 2.11
Noninterest-bearing
deposits 1,752
(2) Impact of FSD loans
(primarily low-rate) on the
following:
Commercial loans (0.07) %
Total loans (0.04)
Net interest margin (FTE)
(assuming loans were
funded by
noninterest-bearing
deposits) (0.02)
(3) Year-to-date 2008 net interest income declined $38 million and the net
interest margin declined eight basis points due to tax-related non-
cash lease income charges. Excluding these charges, the net interest
margin would have been 3.16%.
September 30, 2007
Average Average
(dollar amounts in millions) Balance Interest Rate
Commercial loans (1) (2) $28,046 $1,538 7.33%
Real estate construction loans 4,454 282 8.47
Commercial mortgage loans 9,713 534 7.35
Residential mortgage loans 1,788 82 6.12
Consumer loans 2,351 125 7.12
Lease financing (3) 1,293 32 3.26
International loans 1,880 99 7.07
Business loan swap income
(expense) - (61) -
Total loans (2) 49,525 2,631 7.10
Investment securities
available-for-sale 4,080 140 4.47
Federal funds sold and
securities purchased
under agreements to resell 189 8 5.36
Other short-term investments 242 10 5.73
Total earning assets 54,036 2,789 6.89
Cash and due from banks 1,390
Allowance for loan losses (513)
Accrued income and other assets 3,010
Total assets $57,923
Money market and NOW
deposits (1) $14,858 344 3.09
Savings deposits 1,393 9 0.91
Customer certificates of
deposit 7,505 250 4.46
Institutional certificates of
deposit 5,490 224 5.45
Foreign office time deposits 1,001 37 4.92
Total interest-bearing
deposits 30,247 864 3.82
Short-term borrowings 1,919 75 5.24
Medium- and long-term debt 7,865 333 5.65
Total interest-bearing
sources 40,031 1,272 4.25
Noninterest-bearing
deposits (1) 11,540
Accrued expenses and other
liabilities 1,287
Shareholders' equity 5,065
Total liabilities and
shareholders' equity $57,923
Net interest income/rate
spread (FTE) $1,517 2.64
FTE adjustment $3
Impact of net noninterest-bearing
sources of funds 1.11
Net interest margin (as a
percentage of average earning
assets) (FTE) (2) (3) 3.75%
N/M - Not meaningful
(1) FSD balances included above:
Loans (primarily low-rate) $1,445 $7 0.63 %
Interest-bearing deposits 1,230 36 3.95
Noninterest-bearing
deposits 3,097
(2) Impact of FSD loans (primarily
low-rate) on the following:
Commercial loans (0.36)%
Total loans (0.20)
Net interest margin (FTE)
(assuming loans were funded by
noninterest-bearing deposits) (0.09)
(3) Year-to-date 2008 net interest income declined $38 million and the
net interest margin declined eight basis points due to tax-related
non-cash lease income charges. Excluding these charges, the net
interest margin would have been 3.16%.
ANALYSIS OF NET INTEREST INCOME (FTE)
Comerica Incorporated and Subsidiaries
Three Months Ended
September 30, 2008
Average Average
(dollar amounts in millions) Balance Interest Rate
Commercial loans (1) (2) $28,521 $347 4.85%
Real estate construction loans 4,675 55 4.65
Commercial mortgage loans 10,511 142 5.38
Residential mortgage loans 1,870 28 5.92
Consumer loans 2,599 31 4.83
Lease financing (3) 1,365 4 1.07
International loans 1,967 24 4.85
Business loan swap income (expense) - 4 -
Total loans (2) 51,508 635 4.91
Investment securities available-for-sale 8,146 99 4.85
Federal funds sold and securities purchased
under agreements to resell 70 - 1.87
Other short-term investments 222 2 3.49
Total earning assets 59,946 736 4.89
Cash and due from banks 1,228
Allowance for loan losses (723)
Accrued income and other assets 4,412
Total assets $64,863
Money market and NOW deposits (1) $14,204 45 1.26
Savings deposits 1,350 1 0.42
Customer certificates of deposit 7,690 53 2.73
Institutional certificates of deposit 5,209 37 2.81
Foreign office time deposits 814 5 2.51
Total interest-bearing
deposits 29,267 141 1.92
Short-term borrowings 5,413 30 2.20
Medium- and long-term debt 12,880 98 3.02
Total interest-bearing
sources 47,560 269 2.25
Noninterest-bearing deposits (1) 10,646
Accrued expenses and other
liabilities 1,582
Shareholders' equity 5,075
Total liabilities and
shareholders' equity $64,863
Net interest income/rate spread (FTE) $467 2.64
FTE adjustment $1
Impact of net noninterest-bearing
sources of funds 0.47
Net interest margin (as a percentage
of average earning assets) (FTE)
(2) (3) 3.11%
N/M - Not meaningful
(1) FSD balances included above:
Loans (primarily low-rate) $401 $2 1.74%
Interest-bearing deposits 907 4 1.65
Noninterest-bearing deposits 1,542
(2) Impact of FSD loans (primarily low-rate) on the following:
Commercial loans (0.05)%
Total loans (0.02)
Net interest margin (FTE)
(assuming loans were
funded by noninterest-
bearing deposits) (0.01)
(3) Third quarter 2008 and second quarter 2008 net interest income
declined $8 million and $30 million, respectively, and the net
interest margin declined six basis points and 19 basis points,
respectively, due to tax-related non-cash lease income charges.
Excluding these charges, the net interest margin would have been 3.17%
in the third quarter 2008 and 3.10% in the second quarter 2008.
Three Months Ended
June 30, 2008
Average Average
(dollar amounts in millions) Balance Interest Rate
Commercial loans (1) (2) $29,280 $357 4.90%
Real estate construction loans 4,843 59 4.89
Commercial mortgage loans 10,374 141 5.47
Residential mortgage loans 1,906 29 6.03
Consumer loans 2,549 32 5.06
Lease financing (3) 1,352 (19) N/M
International loans 2,063 25 4.86
Business loan swap income (expense) - 10 -
Total loans (2) 52,367 634 4.87
Investment securities available-for-sale 8,296 101 4.89
Federal funds sold and securities purchased
under agreements to resell 150 1 2.17
Other short-term investments 275 2 3.73
Total earning assets 61,088 738 4.86
Cash and due from banks 1,217
Allowance for loan losses (664)
Accrued income and other assets 4,322
Total assets $65,963
Money market and NOW deposits (1) $14,784 46 1.26
Savings deposits 1,405 2 0.45
Customer certificates of deposit 8,037 64 3.20
Institutional certificates of deposit 7,707 61 3.21
Foreign office time deposits 1,183 8 2.77
Total interest-bearing deposits 33,116 181 2.20
Short-term borrowings 3,326 19 2.33
Medium- and long-term debt 12,041 95 3.15
Total interest-bearing sources 48,483 295 2.45
Noninterest-bearing deposits (1) 10,648
Accrued expenses and other liabilities 1,639
Shareholders' equity 5,193
Total liabilities and shareholders'
equity $65,963
Net interest income/rate spread (FTE) $443 2.41
FTE adjustment $1
Impact of net noninterest-bearing
sources of funds 0.50
Net interest margin (as a percentage
of average earning assets) (FTE) (2) (3) 2.91%
N/M - Not meaningful
(1) FSD balances included above:
Loans (primarily low-rate) $469 $2 1.42%
Interest-bearing deposits 994 4 1.81
Noninterest-bearing deposits 1,823
(2) Impact of FSD loans (primarily
low-rate) on the following:
Commercial loans (0.06)%
Total loans (0.03)
Net interest margin (FTE)
(assuming loans were
funded by noninterest-
bearing deposits) (0.01)
(3) Third quarter 2008 and second quarter 2008 net interest income
declined $8 million and $30 million, respectively, and the net
interest margin declined six basis points and 19 basis points,
respectively, due to tax-related non-cash lease income charges.
Excluding these charges, the net interest margin would have been 3.17%
in the third quarter 2008 and 3.10% in the second quarter 2008.
Three Months Ended
September 30, 2007
Average Average
(dollar amounts in millions) Balance Interest Rate
Commercial loans (1) (2) $28,052 $520 7.37%
Real estate construction loans 4,607 97 8.33
Commercial mortgage loans 9,829 181 7.30
Residential mortgage loans 1,865 29 6.12
Consumer loans 2,320 41 7.06
Lease financing (3) 1,319 11 3.25
International loans 1,882 33 6.98
Business loan swap income (expense) - (16) -
Total loans (2) 49,874 896 7.13
Investment securities available-for-sale 4,405 52 4.60
Federal funds sold and securities purchased
under agreements to resell 99 1 5.25
Other short-term investments 263 4 5.27
Total earning assets 54,641 953 6.91
Cash and due from banks 1,351
Allowance for loan losses (521)
Accrued income and other assets 3,075
Total assets $58,546
Money market and NOW deposits (1) $14,996 119 3.14
Savings deposits 1,380 3 0.97
Customer certificates of deposit 7,702 87 4.48
Institutional certificates of deposit 5,170 72 5.49
Foreign office time deposits 1,028 13 4.96
Total interest-bearing deposits 30,276 294 3.85
Short-term borrowings 2,278 29 5.15
Medium- and long-term debt 8,852 126 5.61
Total interest-bearing sources 41,406 449 4.29
Noninterest-bearing deposits (1) 10,840
Accrued expenses and other
liabilities 1,285
Shareholders' equity 5,015
Total liabilities and
shareholders' equity $58,546
Net interest income/rate spread (FTE) $504 2.62
FTE adjustment $1
Impact of net noninterest-bearing
sources of funds 1.04
Net interest margin (as a percentage
of average earning assets) (FTE) (2) (3) 3.66%
N/M - Not meaningful
(1) FSD balances included above:
Loans (primarily low-rate) $1,191 $2 0.71%
Interest-bearing deposits 1,214 12 4.06
Noninterest-bearing deposits 2,575
(2) Impact of FSD loans (primarily low-rate)
on the following:
Commercial loans (0.30)%
Total loans (0.16)
Net interest margin (FTE)
(assuming loans were
funded by noninterest-
bearing deposits) (0.07)
(3) Third quarter 2008 and second quarter 2008 net interest income
declined $8 million and $30 million, respectively, and the net
interest margin declined six basis points and 19 basis points,
respectively, due to tax-related non-cash lease income charges.
Excluding these charges, the net interest margin would have been 3.17%
in the third quarter 2008 and 3.10% in the second quarter 2008.
CONSOLIDATED STATISTICAL DATA
Comerica Incorporated and Subsidiaries
September 30, June 30, March 31,
(in millions, except per share data) 2008 2008 2008
Commercial loans:
Floor plan $2,151 $2,645 $2,913
Other 26,453 26,118 26,562
Total commercial loans 28,604 28,763 29,475
Real estate construction loans:
Commercial Real Estate business line 3,937 4,013 3,990
Other business lines 628 671 656
Total real estate construction
loans 4,565 4,684 4,646
Commercial mortgage loans:
Commercial Real Estate business line 1,668 1,620 1,541
Other business lines 8,920 8,884 8,941
Total commercial mortgage loans 10,588 10,504 10,482
Residential mortgage loans 1,863 1,879 1,926
Consumer loans:
Home equity 1,693 1,649 1,619
Other consumer 951 945 829
Total consumer loans 2,644 2,594 2,448
Lease financing 1,360 1,351 1,341
International loans 1,931 1,976 2,034
Total loans $51,555 $51,751 $52,352
Goodwill $150 $150 $150
Loan servicing rights 12 12 12
Tier 1 common capital ratio* 6.69% 6.79% 6.75%
Tier 1 risk-based capital ratio* 7.35 7.45 7.40
Total risk-based capital ratio * 11.22 11.21 11.06
Leverage ratio* 8.59 8.53 8.82
Book value per share $33.89 $33.78 $34.93
Market value per share for the quarter:
High $54.00 $40.62 $45.19
Low 19.31 25.61 34.51
Close 32.79 25.63 35.08
Quarterly ratios:
Return on average common shareholders'
equity from continuing operations 2.12% 4.26% 8.51%
Return on average common shareholders'
equity 2.25 4.25 8.42
Return on average assets from continuing
operations 0.17 0.34 0.69
Return on average assets 0.18 0.33 0.68
Efficiency ratio 75.53 63.02 58.25
Number of banking centers 424 416 420
Number of employees - full time
equivalent 10,347 10,530 10,643
* September 30, 2008 ratios are estimated
December 31, September 30,
(in millions, except per share data) 2007 2007
Commercial loans:
Floor plan $2,878 $2,601
Other 25,345 24,791
Total commercial loans 28,223 27,392
Real estate construction loans:
Commercial Real Estate business line 4,089 4,007
Other business lines 727 752
Total real estate construction loans 4,816 4,759
Commercial mortgage loans:
Commercial Real Estate business line 1,377 1,467
Other business lines 8,671 8,527
Total commercial mortgage loans 10,048 9,994
Residential mortgage loans 1,915 1,892
Consumer loans:
Home equity 1,616 1,582
Other consumer 848 815
Total consumer loans 2,464 2,397
Lease financing 1,351 1,319
International loans 1,926 1,843
Total loans $50,743 $49,596
Goodwill $150 $150
Loan servicing rights 12 13
Tier 1 common capital ratio* 6.85% 7.01%
Tier 1 risk-based capital ratio* 7.51 7.68
Total risk-based capital ratio * 11.20 11.44
Leverage ratio* 9.26 9.60
Book value per share $34.12 $33.56
Market value per share for the quarter:
High $54.88 $61.34
Low 39.62 50.26
Close 43.53 51.28
Quarterly ratios:
Return on average common shareholders'
equity from continuing operations 9.20% 14.27%
Return on average common shareholders'
equity 9.35 14.41
Return on average assets from continuing
operations 0.77 1.22
Return on average assets 0.79 1.23
Efficiency ratio 62.76 58.00
Number of banking centers 417 403
Number of employees - full time equivalent 10,782 10,683
* September 30, 2008 ratios are estimated
PARENT COMPANY ONLY BALANCE SHEETS
Comerica Incorporated
September 30, December 31, September 30,
(in millions, except share data) 2008 2007 2007
ASSETS
Cash and due from subsidiary bank $16 $1 $5
Short-term investments with subsidiary
bank 158 224 222
Other short-term investments 99 102 101
Investment in subsidiaries, principally
banks 5,849 5,840 5,799
Premises and equipment 5 4 4
Other assets 163 166 152
Total assets $6,290 $6,337 $6,283
LIABILITIES AND SHAREHOLDERS' EQUITY
Medium- and long-term debt $969 $968 $956
Other liabilities 221 252 259
Total liabilities 1,190 1,220 1,215
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 178,735,252 shares at
9/30/08, 12/31/07, and 9/30/07 894 894 894
Capital surplus 586 564 551
Accumulated other comprehensive loss (129) (177) (238)
Retained earnings 5,379 5,497 5,475
Less cost of common stock in treasury
- 28,249,360 shares at 9/30/08,
28,747,097 shares at 12/31/07 and
27,725,572 shares at 9/30/07 (1,630) (1,661) (1,614)
Total shareholders' equity 5,100 5,117 5,068
Total liabilities and
shareholders' equity $6,290 $6,337 $6,283
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Comerica Incorporated and Subsidiaries
Accumulated
Common Stock Other Total
Compreh- Treas- Share-
(in millions, except In Capital ensive Retained ury holders'
per share data) Shares Amount Surplus Loss Earnings Stock Equity
BALANCE AT JANUARY 1,
2007 157.6 $894 $520 $(324) $5,230 $(1,219) $5,101
Net income - - - - 567 - 567
Other comprehensive
income, net of tax - - - 86 - - 86
Total comprehensive
income 653
Cash dividends declared
on common stock ($1.92
per share) - - - - (296) - (296)
Purchase of common
stock (9.0) - - - - (533) (533)
Net issuance of common
stock under employee
stock plans 2.4 - (16) - (26) 139 97
Recognition of share-
based compensation
expense - - 46 - - - 46
Employee deferred
compensation
obligations - - 1 - - (1) -
BALANCE AT SEPTEMBER
30, 2007 151.0 $894 $551 $(238) $5,475 $(1,614) $5,068
BALANCE AT JANUARY 1,
2008 150.0 $894 $564 $(177) $5,497 $(1,661) $5,117
Net income - - - - 193 - 193
Other comprehensive
loss, net of tax - - - 48 - - 48
Total comprehensive
income 241
Cash dividends declared
on common stock ($1.98
per share) - - - - (298) - (298)
Purchase of common
stock - - - - - (1) (1)
Net issuance of common
stock under employee
stock plans 0.5 - (19) - (13) 32 -
Recognition of share-
based compensation
expense - - 41 - - - 41
BALANCE AT SEPTEMBER
30, 2008 150.5 $894 $586 $(129) $5,379 $(1,630) $5,100
BUSINESS SEGMENT FINANCIAL RESULTS
Comerica Incorporated and Subsidiaries
Wealth &
(dollar amounts in millions) Business Retail Institutional
Three Months Ended September 30, 2008 Bank Bank Management
Earnings summary:
Net interest income (expense) (FTE) $323 $142 $37
Provision for loan losses 135 33 7
Noninterest income 75 80 71
Noninterest expenses 175 161 180
Provision (benefit) for income taxes
(FTE) 23 7 (28)
Income from discontinued operations,
net of tax - - -
Net income (loss) $65 $21 $(51)
Net credit-related charge-offs $95 $17 $4
Selected average balances:
Assets $41,357 $7,046 $4,759
Loans 40,506 6,362 4,624
Deposits 14,933 16,596 2,351
Liabilities 15,633 16,583 2,359
Attributed equity 3,318 656 340
Statistical data:
Return on average assets (1) 0.64% 0.48% (4.29)%
Return on average attributed equity 7.98 12.53 (60.04)
Net interest margin (2) 3.17 3.40 3.17
Efficiency ratio 43.92 82.39 N/M
Wealth &
Business Retail Institutional
Three Months Ended June 30, 2008 Bank Bank Management
Earnings summary:
Net interest income (expense) (FTE) $296 $146 $37
Provision for loan losses 123 29 5
Noninterest income 92 54 74
Noninterest expenses 185 161 83
Provision (benefit) for income taxes (FTE) 23 3 9
Income from discontinued operations,
net of tax - - -
Net income (loss) $57 $7 $14
Net credit-related charge-offs $96 $14 $3
Selected average balances:
Assets $42,335 $7,100 $4,646
Loans 41,510 6,348 4,502
Deposits 15,384 17,043 2,493
Liabilities 16,156 17,041 2,501
Attributed equity 3,277 657 333
Statistical data:
Return on average assets (1) 0.53% 0.15% 1.19%
Return on average attributed equity 6.86 4.13 16.57
Net interest margin (2) 2.85 3.44 3.28
Efficiency ratio 49.26 80.61 75.20
Wealth &
Business Retail Institutional
Three Months Ended September 30, 2007 Bank Bank Management
Earnings summary:
Net interest income (expense) (FTE) $337 $169 $37
Provision for loan losses 43 7 (5)
Noninterest income 82 56 70
Noninterest expenses 177 160 81
Provision (benefit) for income taxes (FTE) 62 19 11
Income from discontinued operations,
net of tax - - -
Net income (loss) $137 $39 $20
Net credit-related charge-offs $30 $9 $1
Selected average balances:
Assets $40,796 $6,854 $4,152
Loans 39,745 6,111 3,990
Deposits 15,947 17,145 2,378
Liabilities 16,783 17,159 2,385
Attributed equity 2,903 848 338
Statistical data:
Return on average assets (1) 1.35% 0.86% 1.90%
Return on average attributed equity 18.96 18.23 23.42
Net interest margin (2) 3.36 3.91 3.59
Efficiency ratio 42.90 70.90 75.92
(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
BUSINESS SEGMENT FINANCIAL RESULTS
Comerica Incorporated and Subsidiaries
(dollar amounts in millions)
Three Months Ended September 30, 2008 Finance Other Total
Earnings summary:
Net interest income (expense) (FTE) $(26) $(9) $467
Provision for loan losses - (10) 165
Noninterest income 20 (6) 240
Noninterest expenses 3 (5) 514
Provision (benefit) for income taxes (FTE) (7) 6 1
Income from discontinued operations,
net of tax - 1 1
Net income (loss) $(2) $(5) $28
Net credit-related charge-offs $- $- $116
Selected average balances:
Assets $10,096 $1,605 $64,863
Loans (3) 19 51,508
Deposits 5,588 445 39,913
Liabilities 24,359 854 59,788
Attributed equity 878 (117) 5,075
Statistical data:
Return on average assets (1) N/M N/M 0.18%
Return on average attributed equity N/M N/M 2.25
Net interest margin (2) N/M N/M 3.11
Efficiency ratio N/M N/M 75.53
Three Months Ended June 30, 2008 Finance Other Total
Earnings summary:
Net interest income (expense) (FTE) $(28) $(8) $443
Provision for loan losses - 13 170
Noninterest income 18 4 242
Noninterest expenses 2 (8) 423
Provision (benefit) for income taxes (FTE) (7) 8 36
Income from discontinued operations,
net of tax - - -
Net income (loss) $(5) $(17) $56
Net credit-related charge-offs $- $- $113
Selected average balances:
Assets $10,333 $1,549 $65,963
Loans 5 2 52,367
Deposits 8,409 435 43,764
Liabilities 24,334 738 60,770
Attributed equity 949 (23) 5,193
Statistical data:
Return on average assets (1) N/M N/M 0.33%
Return on average attributed equity N/M N/M 4.25
Net interest margin (2) N/M N/M 2.91
Efficiency ratio N/M N/M 63.02
Three Months Ended September 30, 2007 Finance Other Total
Earnings summary:
Net interest income (expense) (FTE) $(32) $(7) $504
Provision for loan losses - - 45
Noninterest income 17 5 230
Noninterest expenses 2 3 423
Provision (benefit) for income taxes (FTE) (9) 3 86
Income from discontinued operations,
net of tax - 1 1
Net income (loss) $(8) $(7) $181
Net credit-related charge-offs $- $- $40
Selected average balances:
Assets $5,564 $1,180 $58,546
Loans 2 26 49,874
Deposits 5,748 (102) 41,116
Liabilities 16,970 234 53,531
Attributed equity 614 312 5,015
Statistical data:
Return on average assets (1) N/M N/M 1.23%
Return on average attributed equity N/M N/M 14.41
Net interest margin (2) N/M N/M 3.66
Efficiency ratio N/M N/M 58.00
(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 September 30,
2008 Midwest Western Texas Florida
Earnings summary:
Net interest income (expense) (FTE) $197 $169 $73 $12
Provision for loan losses 52 82 18 7
Noninterest income 142 38 27 4
Noninterest expenses 205 112 61 10
Provision (benefit) for income taxes
(FTE) 31 4 8 -
Income from discontinued operations,
net of tax - - - -
Net income (loss) $51 $9 $13 $(1)
Net credit-related charge-offs $44 $51 $9 $3
Selected average balances:
Assets $19,820 $16,627 $7,945 $1,900
Loans 19,125 16,381 7,691 1,900
Deposits 15,926 11,729 3,956 262
Liabilities 16,541 11,698 3,973 258
Attributed equity 1,631 1,367 623 131
Statistical data:
Return on average assets (1) 1.05% 0.21% 0.65% (0.25)%
Return on average attributed equity 12.70 2.61 8.22 (3.62)
Net interest margin (2) 4.08 4.09 3.75 2.53
Efficiency ratio 64.48 54.68 63.16 67.40
Three Months Ended June 30, 2008 Midwest Western Texas Florida
Earnings summary:
Net interest income (expense) (FTE) $172 $171 $74 $12
Provision for loan losses 24 113 6 7
Noninterest income 136 34 22 4
Noninterest expenses 205 115 63 11
Provision (benefit) for income taxes
(FTE) 27 (3) 10 (1)
Income from discontinued operations,
net of tax - - - -
Net income (loss) $52 $(20) $17 $(1)
Net credit-related charge-offs $42 $59 $3 $8
Selected average balances:
Assets $19,891 $17,241 $8,063 $1,854
Loans 19,255 16,918 7,795 1,851
Deposits 16,056 12,345 4,061 306
Liabilities 16,750 12,326 4,076 302
Attributed equity 1,649 1,336 614 118
Statistical data:
Return on average assets (1) 1.05 % (0.46)% 0.81 % (0.37)%
Return on average attributed equity 12.67 (5.97) 10.66 (5.84)
Net interest margin (2) 3.58 4.04 3.78 2.50
Efficiency ratio 69.48 56.09 65.55 72.21
Three Months Ended September 30,
2007 Midwest Western Texas Florida
Earnings summary:
Net interest income (expense) (FTE) $222 $185 $73 $12
Provision for loan losses 15 23 (2) 3
Noninterest income 119 36 24 4
Noninterest expenses 206 110 58 10
Provision (benefit) for income taxes
(FTE) 41 33 14 1
Income from discontinued operations,
net of tax - - - -
Net income (loss) $79 $55 $27 $2
Net credit-related charge-offs
(recoveries) $23 $7 $1 $1
Selected average balances:
Assets $19,131 $17,095 $7,172 $1,706
Loans 18,526 16,543 6,902 1,692
Deposits 15,636 13,009 3,920 271
Liabilities 16,307 13,045 3,937 273
Attributed equity 1,700 1,201 597 97
Statistical data:
Return on average assets (1) 1.64 % 1.29 % 1.51 % 0.56 %
Return on average attributed equity 18.50 18.34 18.09 9.78
Net interest margin (2) 4.73 4.43 4.17 2.94
Efficiency ratio 60.88 49.96 59.83 59.15
(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) Finance
Other Internat- & Other
Three Months Ended September 30, 2008 Markets ional Businesses Total
Earnings summary:
Net interest income (expense) (FTE) $36 $15 $(35) $467
Provision for loan losses 15 1 (10) 165
Noninterest income 7 8 14 240
Noninterest expenses 117 11 (2) 514
Provision (benefit) for income taxes
(FTE) (45) 4 (1) 1
Income from discontinued operations,
net of tax - - 1 1
Net income (loss) $(44) $7 $(7) $28
Net credit-related charge-offs $9 $- $- $116
Selected average balances:
Assets $4,493 $2,377 $11,701 $64,863
Loans 4,134 2,261 16 51,508
Deposits 1,231 776 6,033 39,913
Liabilities 1,330 775 25,213 59,788
Attributed equity 406 156 761 5,075
Statistical data:
Return on average assets (1) (3.91)% 1.24 % N/M 0.18%
Return on average attributed equity (43.35) 18.83 N/M 2.25
Net interest margin (2) 3.49 2.64 N/M 3.11
Efficiency ratio N/M 44.21 N/M 75.53
Finance
Three Months Ended June 30, 2008 Other Internat- & Other
Markets ional Businesses Total
Earnings summary:
Net interest income (expense) (FTE) $36 $14 $(36) $443
Provision for loan losses 7 - 13 170
Noninterest income 16 8 22 242
Noninterest expenses 25 10 (6) 423
Provision (benefit) for income taxes
(FTE) (3) 5 1 36
Income from discontinued operations,
net of tax - - - -
Net income (loss) $23 $7 $(22) $56
Net credit-related charge-offs $1 $- $- $113
Selected average balances:
Assets $4,589 $2,443 $11,882 $65,963
Loans 4,212 2,329 7 52,367
Deposits 1,375 777 8,844 43,764
Liabilities 1,466 778 25,072 60,770
Attributed equity 389 161 926 5,193
Statistical data:
Return on average assets (1) 1.96% 1.21% N/M 0.33%
Return on average attributed equity 23.17 18.31 N/M 4.25
Net interest margin (2) 3.41 2.42 N/M 2.91
Efficiency ratio 48.61 45.61 N/M 63.02
Finance
Three Months Ended September 30, 2007 Other Internat- & Other
Markets ional Businesses Total
Earnings summary:
Net interest income (expense) (FTE) $34 $17 $(39) $504
Provision for loan losses 12 (6) - 45
Noninterest income 14 11 22 230
Noninterest expenses 23 11 5 423
Provision (benefit) for income taxes
(FTE) (5) 8 (6) 86
Income from discontinued operations,
net of tax - - 1 1
Net income (loss) $18 $15 $(15) $181
Net credit-related charge-offs
(recoveries) $9 $(1) $- $40
Selected average balances:
Assets $4,428 $2,270 $6,744 $58,546
Loans 4,047 2,136 28 49,874
Deposits 1,475 1,159 5,646 41,116
Liabilities 1,591 1,174 17,204 53,531
Attributed equity 343 151 926 5,015
Statistical data:
Return on average assets (1) 1.60% 2.68% N/M 1.23%
Return on average attributed equity 20.67 40.33 N/M 14.41
Net interest margin (2) 3.35 3.05 N/M 3.66
Efficiency ratio 48.71 42.95 N/M 58.00
(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
