DALLAS, Jan 21, 2010 /PRNewswire via COMTEX/ -- Comerica Incorporated (NYSE: CMA) today reported a fourth quarter 2009 net loss of $29 million, compared to net income of $19 million for the third quarter 2009 and $20 million for the fourth quarter 2008. After preferred dividends of $33 million and $34 million in the fourth quarter and third quarters of 2009, respectively, and $17 million in the fourth quarter 2008, the net loss applicable to common stock was $62 million, or $0.41 per diluted share, for the fourth quarter 2009, compared to a net loss applicable to common stock of $15 million, or $0.10 per diluted share, for the third quarter 2009 and net income applicable to common stock of $3 million, or $0.02 per diluted share, for the fourth quarter 2008. Fourth quarter 2009 included a $257 million provision for loan losses, compared to $311 million for the third quarter 2009 and $192 million for the fourth quarter 2008, and net securities gains of $10 million, compared to $107 million for the third quarter 2009 and $4 million for the fourth quarter 2008.
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(dollar amounts in millions, except per share data) 4th Qtr '09 3rd Qtr '09 4th Qtr '08 ----------- ----------- ----------- ----------- Net interest income $396 $385 $431 Provision for loan losses 257 311 192 Noninterest income 214 315 174 Noninterest expenses 424 399 411 Net income (loss) (29) 19 20 Preferred stock dividends to U.S. Treasury 33 34 17 Net income (loss) applicable to common stock (62) (15) 3 Diluted earnings (loss) per common share (0.41) (0.10) 0.02 Tier 1 capital ratio 12.46 % (a) 12.21 % 10.66 % Tangible common equity ratio (b) 7.99 7.96 7.21 Net interest margin (c) 2.94 2.68 2.82 (a) December 31, 2009 ratio is estimated. (b) See Reconciliation of Non-GAAP Financial Measures. (c) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by ----------------------------------------------------- 13 basis points and 16 basis points in the fourth and third quarters of 2009, respectively, and by 3 basis points in the fourth ----------------------------------------------------- quarter of 2008. Excluding excess liquidity, the net interest margin would have been 3.07%, 2.84% and 2.85% in each respective ------------------------------------------------------- period. -------
Net income was $17 million for full-year 2009, compared to $213 million for full-year 2008. After preferred dividends of $134 million and $17 million in 2009 and 2008, respectively, the net loss applicable to common stock was $117 million, or $0.77 per diluted share, for full-year 2009, compared to net income applicable to common stock of $196 million, or $1.29 per diluted share, for full-year 2008. The most significant items contributing to the decrease in net income were an increase in the provision for credit losses of $397 million, a decline in net interest income of $248 million and an increase in Federal Deposit Insurance Corporation (FDIC) insurance expense of $74 million. These were partially offset by a $176 million increase in net securities gains, an $88 million auction-rate securities charge in 2008 (included in "litigation and operational losses"), and a $94 million decrease in salaries expense.
"We saw many encouraging signs in the fourth quarter, including improved credit metrics, continued strong deposit growth, a slower pace of decline in loan demand and a notable increase in the net interest margin," said Ralph W. Babb Jr., chairman and chief executive officer. "These positive developments lead us to believe our core fundamentals will continue to show improvement in 2010.
"With unemployment still at 10 percent, business owners and managers, as well as consumers, remain cautious. However, our customers are conveying a more confident tone and we are seeing more loans in the pipeline. Combined with our solid capital position and dedicated colleagues, we believe we are ideally positioned to develop new relationships, and expand existing ones, as the economy continues its recovery."
Fourth Quarter and Full-Year 2009 Overview
Fourth Quarter 2009 Compared to Third Quarter 2009
Full-Year 2009 Compared to Full-Year 2008
Net Interest Income and Net Interest Margin
(dollar amounts in millions) 4th Qtr '09 3rd Qtr '09 4th Qtr '08 ---------- ----------- ----------- ----------- Net interest income $396 $385 $431 Net interest margin (a) 2.94 % 2.68 % 2.82 % Selected average balances: Total earning assets $53,953 $57,513 $61,134 Total investment securities 8,587 9,070 8,734 Federal Reserve Bank deposits (excess liquidity) 2,453 3,492 778 Total loans 42,753 44,782 51,338 Total core deposits (b) 36,742 35,807 33,098 Total noninterest- bearing deposits 14,430 13,225 10,575 (a) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 13 basis points and 16 basis points in the fourth and third quarters of 2009, respectively, and by 3 basis points in the fourth quarter of 2008. Excluding excess liquidity, the net interest margin would have been 3.07%, 2.84% and 2.85% in each respective period. (b) Core deposits exclude other time deposits and foreign office time deposits. -------------------------------------------------
Noninterest Income
Noninterest income was $214 million for the fourth quarter 2009, compared to $315 million for the third quarter 2009 and $174 million for the fourth quarter 2008. The $101 million decrease in noninterest income in the fourth quarter 2009, compared to the third quarter 2009, was primarily due to a decrease in net securities gains on sales of mortgage-backed government agency securities of $97 million. Selected categories of noninterest income are highlighted in the following table.
4th Qtr (in millions) 4th Qtr '09 3rd Qtr '09 '08 ------------- ----------- ----------- ------- Net securities gains $10 $107 $4 Other noninterest income Net loss from principal investing and warrants - (1) (5) Deferred compensation asset returns (a) 3 4 (18) Gain on repurchase of debt 8 7 - (a) 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 $424 million for the fourth quarter 2009, compared to $399 million for the third quarter 2009 and $411 million for the fourth quarter 2008. The $25 million increase in noninterest expenses in the fourth quarter 2009, compared to the third quarter 2009, was primarily due to increases in other real estate expense ($12 million) and severance and related expenses ($11 million). Full-time equivalent staff decreased by approximately 54 employees from September 30, 2009 and 856 employees, or eight percent, from December 31, 2008. Certain categories of noninterest expenses are highlighted in the table below.
4th Qtr 3rd Qtr 4th Qtr '09 '09 '08 Salaries Regular salaries $140 $142 $152 Severance 9 - 24 Incentives (including commissions) 15 17 19 Deferred compensation plan costs 3 5 (18) Share-based compensation 7 7 10 Total salaries 174 171 187 Employee benefits Pension expense 14 14 5 Other benefits 35 37 43 Severance-related benefits 2 - 5 Total employee benefits 51 51 53 FDIC insurance expense 15 15 7 Other real estate expense 22 10 5
Credit Quality
"We were pleased to see broad-based improvement in credit quality in the fourth quarter, with declines in net charge-offs, nonperforming assets and the provision for loan losses," said Babb. "We also saw inflows to nonaccrual loans slow in the fourth quarter, and our watch list loans decreased, as well. We believe these improved credit metrics are the result of our diligent management of credit throughout this economic cycle."
(dollar amounts in millions) 4th Qtr '09 3rd Qtr '09 4th Qtr '08 ----------- ----------- ----------- ----------- Net loan charge- offs $225 $239 $133 Net lending- related commitment charge- offs - - - --- --- --- Total net credit- related charge- offs 225 239 133 Net loan charge- offs/ Average total loans 2.10 % 2.14 % 1.04 % Net credit- related charge- offs/ Average total loans 2.10 2.14 1.04 Provision for loan losses $257 $311 $192 Provision for credit losses on lending- related commitments 2 2 (2) --- --- --- Total provision for credit losses 259 313 190 Nonperforming loans 1,181 1,196 917 Nonperforming assets (NPAs) 1,292 1,305 983 NPAs/Total loans and foreclosed property 3.06 % 2.99 % 1.94 % Loans past due 90 days or more and still accruing $101 $161 $125 Allowance for loan losses 985 953 770 Allowance for credit losses on lending- related commitments (a) 37 35 38 --- --- --- Total allowance for credit losses 1,022 988 808 Allowance for loan losses/ Total loans 2.34 % 2.19 % 1.52 % Allowance for loan losses/ Nonperforming loans 83 80 84 (a) Included in "Accrued expenses and other liabilities" on the consolidated balance sheets. -------------------------------------------------
Balance Sheet and Capital Management
Total assets and common shareholders' equity were $59.3 billion and $4.9 billion, respectively, at December 31, 2009, compared to $59.6 billion and $4.9 billion, respectively, at September 30, 2009. There were approximately 151 million common shares outstanding at December 31, 2009.
Comerica's tangible common equity ratio was 7.99 percent at December 31, 2009. The fourth quarter 2009 estimated Tier 1 common, Tier 1 and total risk-based capital ratios were 8.18 percent, 12.46 percent and 16.93 percent, respectively.
Full-Year 2010 Outlook
For 2010, management expects the following, compared to 2009, based on a modestly improving economic environment:
Business Segments
Comerica's continuing operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank, and Wealth & Institutional Management. The Finance Division also is included as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at December 31, 2009 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses fourth quarter 2009 results compared to third quarter 2009.
The following table presents net income (loss) by business segment.
(dollar amounts in millions) 4th Qtr '09 3rd Qtr '09 4th Qtr '08 ------------------ ----------- ----------- ----------- Business Bank $65 $22 $53 Retail Bank (12) (11) (34) Wealth & Institutional Management 5 10 13 ---------------------- --- --- --- 58 21 32 Finance (62) (7) (37) Other (a) (25) 5 25 --------- --- --- --- Total $(29) $19 $20 ----- ---- --- --- (a) Includes discontinued operations and items not directly associated with the three major business ----------------------------------------------------------- segments or the Finance Division. ---------------------------------
Business Bank
(dollar amounts in millions) 4th Qtr '09 3rd Qtr '09 4th Qtr '08 ------------------ ----------- ----------- ----------- Net interest income (FTE) $343 $346 $329 Provision for loan losses 180 252 138 Noninterest income 77 72 61 Noninterest expenses 164 160 172 Net income 65 22 53 Net credit-related charge-offs 183 195 101 Selected average balances: Assets 32,655 34,822 41,332 Loans 32,289 34,116 40,245 Deposits 16,944 15,735 13,789 Net interest margin 4.21 % 4.01 % 3.24 % ------------------- ---- ---- ----
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Retail Bank
(dollar amounts in millions) 4th Qtr '09 3rd Qtr '09 4th Qtr '08 ------------------ ----------- ----------- ----------- Net interest income (FTE) $129 $127 $129 Provision for loan losses 36 42 44 Noninterest income 48 50 49 Noninterest expenses 161 154 180 Net loss (12) (11) (34) Net credit-related charge-offs 30 34 23 Selected average balances: Assets 6,257 6,445 7,007 Loans 5,733 5,904 6,379 Deposits 17,020 17,563 17,065 Net interest margin 3.02 % 2.87 % 3.01 % ------------------- ---- ---- ----
Wealth and Institutional Management
(dollar amounts in millions) 4th Qtr '09 3rd Qtr '09 4th Qtr '08 ------------------ ----------- ----------- ----------- Net interest income (FTE) $42 $42 $38 Provision for loan losses 19 20 13 Noninterest income 60 66 73 Noninterest expenses 76 73 80 Net income 5 10 13 Net credit-related charge-offs 12 10 9 Selected average balances: Assets 4,841 4,856 4,879 Loans 4,746 4,760 4,724 Deposits 2,849 2,735 2,255 Net interest margin 3.50 % 3.48 % 3.14 % ------------------- ---- ---- ----
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 December 31, 2009 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses fourth quarter 2009 results compared to third quarter 2009.
The following table presents net income (loss) by market segment.
(dollar amounts in 4th Qtr millions) 4th Qtr '09 3rd Qtr '09 '08 ------------------ ----------- ----------- ------- Midwest $13 $(6) $14 Western 7 (7) 2 Texas 13 7 4 Florida 3 (12) (7) Other Markets 22 29 15 International - 10 4 ------------- --- --- --- 58 21 32 Finance & Other Businesses (a) (87) (2) (12) --------------- --- --- --- Total $(29) $19 $20 ----- ---- --- --- (a) Includes discontinued operations and items not directly associated with the geographic markets. --------------------------------------------------
Midwest Market
(dollar amounts in millions) 4th Qtr '09 3rd Qtr '09 4th Qtr '08 ------------------ ----------- ----------- ----------- Net interest income (FTE) $205 $209 $202 Provision for loan losses 102 144 59 Noninterest income 106 107 109 Noninterest expenses 192 188 218 Net income (loss) 13 (6) 14 Net credit-related charge-offs 97 102 38 Selected average balances: Assets 16,090 16,987 19,942 Loans 15,811 16,387 18,966 Deposits 17,201 17,395 16,204 Net interest margin 4.73 % 4.72 % 4.21 % ------------------- ---- ---- ----
Western Market
(dollar amounts in millions) 4th Qtr '09 3rd Qtr '09 4th Qtr '08 ------------------ ----------- ----------- ----------- Net interest income (FTE) $163 $159 $157 Provision for loan losses 79 101 70 Noninterest income 33 33 34 Noninterest expenses 110 106 114 Net income (loss) 7 (7) 2 Net credit-related charge-offs 85 95 65 Selected average balances: Assets 13,484 14,114 16,243 Loans 13,289 13,923 16,032 Deposits 11,899 11,146 10,762 Net interest margin 4.85 % 4.53 % 3.88 % ------------------- ---- ---- ----
Texas Market
(dollar amounts in millions) 4th Qtr '09 3rd Qtr '09 4th Qtr '08 ------------------ ----------- ----------- ----------- Net interest income (FTE) $78 $77 $72 Provision for loan losses 20 29 19 Noninterest income 23 22 20 Noninterest expenses 61 58 63 Net income 13 7 4 Total net credit- related charge-offs 13 22 8 Selected average balances: Assets 7,118 7,444 8,215 Loans 6,934 7,221 7,974 Deposits 4,737 4,609 4,070 Net interest margin 4.46 % 4.22 % 3.57 % ------------------- ---- ---- ----
Florida Market
(dollar amounts in millions) 4th Qtr '09 3rd Qtr '09 4th Qtr '08 ------------------ ----------- ----------- ----------- Net interest income (FTE) $10 $11 $11 Provision for loan losses - 24 14 Noninterest income 3 3 4 Noninterest expenses 9 10 11 Net income (loss) 3 (12) (7) Net credit-related charge-offs 4 9 6 Selected average balances: Assets 1,608 1,673 1,938 Loans 1,613 1,674 1,942 Deposits 333 327 222 Net interest margin 2.57 % 2.70 % 2.26 % ------------------- ---- ---- ----
Conference Call and Webcast
Comerica will host a conference call to review fourth quarter 2009 financial results at 7 a.m. CT Thursday, January 21, 2010. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 47127335). 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 January 31, 2010. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 47127335). A replay of the Webcast can also be accessed via Comerica's "Investor Relations" page at www.comerica.com.
Comerica Incorporated is a financial services company headquartered in 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.
This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Comerica's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconcilement to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
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 recently enacted legislation, such as the Emergency Economic Stabilization Act of 2008 and the American Recovery and Reinvestment Act of 2009, and actions taken by the U.S. Department of Treasury, the Board of Governors of the Federal Reserve System, the Texas Department of Banking and the Federal Deposit Insurance Corporation, 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 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.
SOURCE Comerica Incorporated