DALLAS, Oct. 20 /PRNewswire-FirstCall/ -- Comerica Incorporated (NYSE: CMA) today reported third quarter 2010 net income of $59 million, compared to $70 million for the second quarter 2010. Third quarter 2010 included a total provision for credit losses of $116 million, compared to $126 million for the second quarter 2010.
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(dollar amounts in
millions, except per
share data) 3rd Qtr '10 2nd Qtr '10 3rd Qtr '09
--------------------- ----------- ----------- -----------
Net interest income $404 $422 $385
Provision for loan losses 122 126 311
Noninterest income 186 194 315
Noninterest expenses 402 397 399
Net income 59 70 19
Net income (loss)
attributable to common
shares 59 69 (16)
Diluted income (loss) per
common share 0.33 0.39 (0.10)
Tier 1 capital ratio 9.97% (a) 10.64% 12.21%
Tangible common equity
ratio (b) 10.39 10.11 7.96
Net interest margin 3.23 3.28 2.68
(a) September 30, 2010 ratio is estimated and excludes trust
preferred securities, fully redeemed on October 1, 2010.
(b) See Reconciliation of Non-GAAP Financial Measures.
"In this sluggish and still uncertain economic environment, our customers have remained understandably cautious. This is reflected in the weak loan demand and continued strong core deposit levels," said Ralph W. Babb Jr., chairman and chief executive officer. "Our solid capital and liquidity position enabled us to fully redeem our trust preferred securities on October 1, which will reduce interest expense. This uniquely positions us as the only bank in our peer group to have redeemed TARP and eliminated trust preferred securities.
"Our third quarter financial results reflected the continued improvement in credit quality and careful control of expenses. Our skill-based, relationship-driven strategy and our prudent, conservative approach to banking continued to serve us well."
Third Quarter 2010 Highlights Compared to Second Quarter 2010
-- Credit quality continued to improve. Net credit-related charge-offs
decreased $14 million to $132 million and the provision for credit
losses, which includes both the provision for loan losses and the
provision for credit losses on lending-related commitments, decreased
$10 million to $116 million. Watch list loans - generally consistent
with regulatory defined special mention, substandard and doubtful
(nonaccrual) loans - declined $480 million to $6.2 billion.
-- The pace of decline in loans continued to slow in the third quarter
2010. Average loans decreased $570 million, compared to declines of
$641 million and $1.4 billion in the second and first quarters of 2010,
respectively. About one-half of the third quarter 2010 decrease in
average loans was in the Commercial Real Estate business line. Average
loans increased in the third quarter 2010 in the Mortgage Banker
Finance, National Dealer Services and Energy Lending business lines.
-- Average deposit levels remained strong in the third quarter 2010,
decreasing only one percent from the second quarter 2010. Growth in
business deposits was offset by reduced Personal and Private Banking
deposits.
-- Net interest income decreased $18 million to $404 million for the third
quarter 2010, compared to $422 million for the second quarter 2010.
Average earning assets decreased $1.6 billion in the third quarter 2010,
compared to the second quarter 2010, and the net interest margin of 3.23
percent decreased five basis points, from 3.28 percent in the second
quarter 2010.
-- Expenses remained well controlled in the third quarter 2010.
Noninterest expenses increased one percent from second quarter 2010 to
third quarter 2010. Full-time equivalent staff decreased by
approximately 300 employees, or three percent, from September 30, 2009.
-- Capital ratios remained strong. The tangible common equity ratio
increased 28 basis points to 10.39 percent at September 30, 2010 and the
estimated Tier 1 common ratio increased 16 basis points, to 9.97 percent
at September 30, 2010, from June 30, 2010. The estimated Tier 1 capital
ratio was 9.97 percent at September 30, 2010, compared to 10.64 percent
at June 30, 2010, reflecting the redemption of trust preferred
securities.
Net Interest Income and Net Interest Margin
(dollar amounts in millions) 3rd Qtr '10 2nd Qtr '10 3rd Qtr '09
---------------------------- ----------- ----------- -----------
Net interest income $404 $422 $385
Net interest margin 3.23% 3.28% 2.68%
Selected average balances:
Total earning assets $50,189 $51,835 $57,513
Total investment securities 6,906 7,262 9,070
Federal Reserve Bank deposits
(excess liquidity) (a) 2,983 3,719 3,492
Total loans 40,102 40,672 44,782
Total core deposits (b) 38,786 38,928 35,807
Total noninterest-bearing
deposits 14,920 15,218 13,225
(a) See Reconciliation of Non-GAAP Financial Measures.
(b) Core deposits exclude other time deposits and foreign office time
deposits.
-- The $18 million decrease in net interest income in the third quarter
2010, when compared to second quarter 2010, resulted primarily from
decreases in earning assets and the net interest margin.
-- Average earning assets decreased $1.6 billion, including decreases of
$736 million in average Federal Reserve Bank deposits, $570 million in
average loans and $356 million in average investment securities. The
decrease in average loans reflected decreases in the Middle Market,
Commercial Real Estate and Global Corporate Banking business lines,
partially offset by increases in the Mortgage Banker Finance, National
Dealer Services and Energy Lending business lines.
-- The net interest margin of 3.23 percent decreased five basis points,
compared to second quarter 2010. The third quarter 2010 was negatively
impacted by a reduction in deferred loan fees recognized, compared to
the second quarter 2010, resulting from a higher rate of loan
prepayments in the first half of 2010, and accelerated prepayments on
higher-yielding mortgage-backed investment securities in the third
quarter 2010. A reduction in excess liquidity partially offset these
decreases. The net interest margin was reduced by approximately 19 and
23 basis points in the third and second quarters of 2010, respectively,
from excess liquidity, which was represented by $3.0 billion of average
balances deposited with the Federal Reserve Bank in the third quarter
2010, compared to $3.7 billion of average balances in the second quarter
2010.
-- Third quarter 2010 average core deposits decreased $142 million compared
to second quarter 2010.
Noninterest Income
Noninterest income was $186 million for the third quarter 2010, compared to $194 million for the second quarter 2010. The $8 million decrease resulted primarily from decreases of $6 million in customer derivative income (included in "other noninterest income") and $2 million in foreign exchange income, partially offset by a $3 million increase in investment banking income (included in "other noninterest income").
Noninterest Expenses
Noninterest expenses were $402 million for the third quarter 2010, compared to $397 million for the second quarter 2010. The $5 million increase in noninterest expenses in the third quarter 2010, compared to the second quarter 2010, was primarily due to increases in salaries expense ($8 million) and employee benefits expense ($2 million), partially offset by a decrease in the provision for credit losses on lending-related commitments ($6 million). The increase in salaries expense reflected the impact of one additional day in the third quarter 2010 and included an increase in share-based compensation expense of $6 million as a result of third quarter 2010 stock grants. Full-time equivalent staff decreased by approximately 300 employees, or three percent, from September 30, 2009.
Credit Quality
"The continued improvement in credit quality is reflected by the decline in net charge-offs for the fifth consecutive quarter, as well as the $10 million decline in the provision for credit losses compared to the second quarter," Babb said. "The increase in inflows to nonaccrual loans primarily reflected commercial real estate, which we believe will continue to exhibit variability with a downward trend. Overall, credit migration has actually improved, as evidenced by the $480 million decline in the watch list, which is our best early indicator of future credit quality. Our early recognition of credit issues and our ability to quickly and proactively work through them remains one of our key strengths."
-- Net credit-related charge-offs decreased $14 million to $132 million in
the third quarter 2010, from $146 million in the second quarter 2010.
The decrease in net credit-related charge-offs resulted primarily from a
$39 million decrease in the Middle Market business line in the third
quarter 2010, partially offset by a $24 million increase in the
Commercial Real Estate business line, primarily in the Western and
Midwest markets.
-- Watch list loans declined $480 million to $6.2 billion from June 30,
2010 to September 30, 2010.
-- The provision for credit losses decreased $10 million, primarily due to
declines in the Middle Market, Energy Lending and Entertainment Lending
business lines, partially offset by increases in the Private Banking and
Commercial Real Estate business lines.
-- During the third quarter 2010, $294 million of loan relationships
greater than $2 million were transferred to nonaccrual status, an
increase of $95 million from the second quarter 2010, primarily due to a
$100 million increase in transfers from the Commercial Real Estate
business line. Of the transfers of loan relationships greater than $2
million to nonaccrual in the third quarter 2010, $132 million were from
the Commercial Real Estate business line, primarily in the Western and
Florida markets, $91 million were from the Middle Market business line,
primarily in the Midwest market, and $28 million were from Energy
Lending in the Texas market.
-- Nonperforming assets increased $97 million to $1.3 billion, or 3.24
percent of total loans and foreclosed property, at September 30, 2010.
-- Nonaccrual loans were charged down 45 percent as of both September 30,
2010 and June 30, 2010, compared to 41 percent one year ago.
-- Foreclosed property increased $27 million to $120 million at September
30, 2010, from $93 million at June 30, 2010.
-- Loans past due 90 days or more and still accruing were $104 million at
September 30, 2010, a decrease of $11 million compared to June 30, 2010.
-- The allowance for loan losses to total loans ratio was 2.38 percent at
both September 30, 2010 and June 30, 2010.
(dollar amounts in millions) 3rd Qtr '10 2nd Qtr '10 3rd Qtr '09
---------------------------- ----------- ----------- -----------
Net credit-related charge-offs $132 $146 $239
Net credit-related charge-
offs/Average total loans 1.32% 1.44% 2.14%
Provision for loan losses $122 $126 $311
Provision for credit losses on
lending-related commitments (6) - 2
--- --- ---
Total provision for credit
losses 116 126 313
Nonperforming loans 1,191 1,121 1,196
Nonperforming assets (NPAs) 1,311 1,214 1,305
NPAs/Total loans and
foreclosed property 3.24% 2.98% 2.99%
Loans past due 90 days or more
and still accruing $104 $115 $161
Allowance for loan losses 957 967 953
Allowance for credit losses on
lending-related commitments
(a) 38 44 35
--- --- ---
Total allowance for credit
losses 995 1,011 988
Allowance for loan losses/
Total loans 2.38% 2.38% 2.19%
Allowance for loan losses/
Nonperforming loans 80 86 80
(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 $55.0 billion and $5.9 billion, respectively, at September 30, 2010, compared to $55.9 billion and $5.8 billion, respectively, at June 30, 2010. There were approximately 176 million common shares outstanding at September 30, 2010.
On October 1, 2010 Comerica fully redeemed $500 million of trust preferred securities. Subsequent to the redemption, no additional trust preferred securities remained outstanding. As previously announced, Comerica will recognize a one-time, pre-tax charge of approximately $5 million in the fourth quarter 2010, reflecting accelerated accretion of the remaining trust preferred original issuance discount. The $500 million of trust preferred securities outstanding at September 30, 2010 were excluded from Tier 1 and total capital in the computation of estimated risk-based capital ratios as of September 30, 2010.
Comerica's tangible common equity ratio was 10.39 percent at September 30, 2010, an increase of 28 basis points from June 30, 2010. The estimated Tier 1 common ratio increased 16 basis points, to 9.97 percent at September 30, 2010, from June 30, 2010. The estimated Tier 1 capital ratio was 9.97 percent at September 30, 2010, compared to 10.64 percent at June 30, 2010. The decrease in the Tier 1 capital ratio reflected the redemption of the trust preferred securities, which accounted for 83 basis points in the June 30, 2010 Tier 1 capital ratio.
Fourth Quarter 2010 Outlook
For the fourth quarter 2010, management expects:
-- Average earning assets of approximately $48 billion in the fourth
quarter 2010, largely reflecting a decline in average excess liquidity
from $3.0 billion in the third quarter 2010 to approximately $1 billion
in the fourth quarter 2010. Excess liquidity is expected to decline
primarily due to debt maturities and the redemption of the trust
preferred securities.
-- An average net interest margin between 3.30 percent and 3.35 percent
primarily based on a decline in excess liquidity.
-- Fourth quarter 2010 net credit-related charge-offs similar to third
quarter 2010. The provision for credit losses is expected to be below
net credit-related charge-offs.
-- A low single-digit decline in noninterest income compared to the third
quarter 2010. Market-related fees are expected to be lower as customers
remain cautious in a sluggish and still uncertain economic environment.
-- A low single-digit increase in noninterest expenses compared to the
third quarter 2010. Included in the outlook is an estimated $5 million
negative impact reflecting accelerated accretion of the remaining
original issuance discount on the redemption of trust preferred
securities.
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, 2010 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses third quarter 2010 results compared to second quarter 2010.
The following table presents net income (loss) by business segment.
3rd Qtr 2nd Qtr 3rd Qtr
(dollar amounts in millions) '10 '10 '09
---------------------------- ------- ------- -------
Business Bank $133 $135 $22
Retail Bank (7) (3) (11)
Wealth & Institutional
Management (10) 5 10
---------------------- --- --- ---
116 137 21
Finance (58) (57) (7)
Other (a) 1 (10) 5
--------- --- --- ---
Total $59 $70 $19
----- --- --- ---
(a) Includes discontinued operations and items not directly
associated with the three major business segments or the Finance
Division.
Business Bank
(dollar amounts in 3rd Qtr 2nd Qtr 3rd Qtr
millions) '10 '10 '09
------------------ ------- ------- -------
Net interest income
(FTE) $336 $351 $346
Provision for loan
losses 57 83 252
Noninterest income 69 78 72
Noninterest expenses 155 157 160
Net income 133 135 22
Net credit-related
charge-offs 99 113 195
Selected average
balances:
Assets 30,309 30,609 34,822
Loans 29,940 30,353 34,116
Deposits 19,266 19,069 15,735
Net interest margin 4.45% 4.63% 4.01%
------------------- ---- ---- ----
-- Average loans decreased $413 million, reflecting declines in all major
markets. The decrease in average loans reflected decreases in Commercial
Real Estate, Middle Market and Global Corporate Banking, partially
offset by increases in Mortgage Banker Finance, National Dealer Services
and Energy Lending. The decline in loans continued to slow in the third
quarter 2010.
-- Average deposits increased $197 million, primarily due to increases in
Middle Market, Energy Lending and the Financial Services Division,
partially offset by a decline in Global Corporate Banking.
-- The net interest margin of 4.45 percent decreased 18 basis points, due
in part to a reduction in deferred loan fees recognized in the third
quarter 2010 and a change in the deposit mix, as balances moved from
lower-cost transaction accounts to higher-cost money market accounts.
-- The provision for loan losses decreased $26 million, primarily due to a
decrease in Middle Market.
-- Noninterest income decreased $9 million, primarily due to decreases in
foreign exchange income and customer derivative income.
-- Noninterest expenses decreased $2 million, primarily due to a decrease
in the provision for credit losses on lending-related commitments,
partially offset by an increase in allocated corporate overhead
expenses.
Retail Bank
(dollar amounts in 3rd Qtr 2nd Qtr 3rd Qtr
millions) '10 '10 '09
------------------ ------- ------- -------
Earnings summary:
Net interest income (FTE) $133 $134 $127
Provision for loan losses 24 20 42
Noninterest income 45 42 50
Noninterest expenses 165 160 154
Net loss (7) (3) (11)
Net credit-related charge-
offs 19 22 34
Selected average balances:
Assets 5,777 5,937 6,445
Loans 5,314 5,446 5,904
Deposits 16,972 16,930 17,563
Net interest margin 3.10% 3.17% 2.87%
------------------- ---- ---- ----
-- Average loans decreased $132 million, reflecting declines across all
markets and business lines.
-- Average deposits increased $42 million, primarily due to increases in
noninterest-bearing and money market deposits, partially offset by a
decline in customer certificates of deposit.
-- The provision for loan losses increased $4 million, reflecting increases
in Personal Banking and Small Business Banking.
-- Noninterest expenses increased $5 million, primarily due to increases in
net occupancy expense and allocated corporate overhead expenses.
Wealth and Institutional Management
(dollar amounts in 3rd Qtr 2nd Qtr 3rd Qtr
millions) '10 '10 '09
------------------ ------- ------- -------
Earnings summary:
Net interest income (FTE) $41 $45 $42
Provision for loan losses 37 19 20
Noninterest income 59 61 66
Noninterest expenses 78 79 73
Net income (10) 5 10
Net credit-related charge-
offs 14 11 10
Selected average balances:
Assets 4,855 4,903 4,856
Loans 4,824 4,840 4,760
Deposits 2,606 2,924 2,735
Net interest margin 3.42% 3.73% 3.48%
------------------- ---- ---- ----
-- Average loans decreased $16 million.
-- Average deposits decreased $318 million, primarily due to a decline in
transaction deposit accounts.
-- The net interest margin of 3.42 percent decreased 31 basis points,
primarily due to a decrease in lower-cost transaction deposit accounts.
-- The provision for loan losses increased $18 million primarily due to an
increase in reserves for investor-owned real estate in the Western
market.
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, 2010 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses third quarter 2010 results compared to second quarter 2010.
The following table presents net income (loss) by market segment.
3rd Qtr
(dollar amounts in millions) 3rd Qtr '10 2nd Qtr '10 '09
---------------------------- ----------- ----------- -------
Midwest $48 $60 $(10)
Western 14 39 (7)
Texas 14 26 7
Florida (6) (9) (12)
Other Markets 33 5 33
International 13 16 10
------------- --- --- ---
116 137 21
Finance & Other Businesses (a) (57) (67) (2)
------------------------------ --- --- ---
Total $59 $70 $19
----- --- --- ---
(a) Includes discontinued operations and items not directly
associated with the geographic markets.
Midwest Market
(dollar amounts in 2nd Qtr
millions) 3rd Qtr '10 '10 3rd Qtr '09
------------------ ----------- ------- -----------
Net interest income (FTE) $200 $210 $207
Provision for loan losses 38 34 148
Noninterest income 99 97 107
Noninterest expenses 186 181 188
Net income (loss) 48 60 (10)
Net credit-related
charge-offs 61 44 102
Selected average
balances:
Assets 14,445 14,626 16,623
Loans 14,276 14,592 16,020
Deposits 17,777 17,988 17,384
Net interest margin 4.45% 4.66% 4.69%
------------------- ---- ---- ----
-- Average loans decreased $316 million, with declines in nearly all
business lines, partially offset by an increase in National Dealer
Services. The decline in loans continued to slow in the third quarter
2010.
-- Average deposits decreased $211 million, primarily due to decreases in
Global Corporate Banking and Personal Banking, partially offset by
increases in the Financial Services Division, Small Business Banking and
Middle Market.
-- The net interest margin of 4.45 percent decreased 21 basis points, due
in part to a reduction in deferred loan fees recognized in the third
quarter 2010 and a change in the deposit mix.
-- The provision for loan losses increased $4 million, primarily due to
increases in Middle Market, Private Banking and Personal Banking,
partially offset by decreases in Commercial Real Estate and Small
Business Banking.
-- Noninterest income increased $2 million, primarily due to an increase in
investment banking fees.
-- Noninterest expenses increased $5 million, primarily due to an increase
in allocated corporate overhead expense.
Western Market
(dollar amounts in 2nd Qtr
millions) 3rd Qtr '10 '10 3rd Qtr '09
------------------ ----------- ------- -----------
Net interest income (FTE) $157 $164 $159
Provision for loan losses 51 27 101
Noninterest income 31 33 33
Noninterest expenses 107 110 106
Net income (loss) 14 39 (7)
Net credit-related
charge-offs 58 47 95
Selected average balances:
Assets 12,746 13,006 14,114
Loans 12,556 12,792 13,923
Deposits 11,793 11,951 11,146
Net interest margin 4.96% 5.13% 4.53%
------------------- ---- ---- ----
-- Average loans decreased $236 million, with declines in nearly all
business lines, partially offset by an increase in National Dealer
Services.
-- Average deposits decreased $158 million, primarily due to decreases in
Private Banking and Technology and Life Sciences, partially offset by
increases in Middle Market, Small Business Banking and Global Corporate
Banking.
-- The net interest margin of 4.96 percent declined 17 basis points, due in
part to a reduction in deferred loan fees recognized in the third
quarter 2010, a decrease in average deposits and a change in the deposit
mix.
-- The provision for loan losses increased $24 million, primarily due to
increases in Private Banking and Commercial Real Estate.
-- Noninterest expenses decreased $3 million, primarily due to a decrease
in the provision for credit losses on lending-related commitments,
partially offset by an increase in allocated corporate overhead expense.
Texas Market
(dollar amounts in 2nd Qtr
millions) 3rd Qtr '10 '10 3rd Qtr '09
------------------ ----------- ------- -----------
Net interest income (FTE) $78 $81 $77
Provision for loan losses 17 (1) 29
Noninterest income 21 23 22
Noninterest expenses 61 65 58
Net income 14 26 7
Total net credit-related
charge-offs 5 8 22
Selected average balances:
Assets 6,556 6,652 7,444
Loans 6,357 6,428 7,221
Deposits 5,443 5,316 4,609
Net interest margin 4.87% 5.05% 4.22%
------------------- ---- ---- ----
-- Average loans decreased $71 million, primarily due to decreases in
Commercial Real Estate, Middle Market and Technology and Life Sciences,
partially offset by an increase in Energy Lending.
-- Average deposits increased $127 million, primarily due to increases in
Energy Lending and Small Business Banking, partially offset by decreases
in Global Corporate Banking and Private Banking.
-- The net interest margin of 4.87 percent decreased 18 basis points, due
in part to a reduction in deferred loan fees recognized in the third
quarter 2010 and a change in the deposit mix.
-- The provision for loan losses increased $18 million, primarily due to an
increase in Commercial Real Estate.
-- Noninterest expenses decreased $4 million primarily due to a decrease in
the provision for credit losses on lending-related commitments,
partially offset by an increase in allocated corporate overhead
expenses.
Florida Market
(dollar amounts in 2nd Qtr
millions) 3rd Qtr '10 '10 3rd Qtr '09
------------------ ----------- ------- -----------
Net interest income (FTE) $10 $12 $11
Provision for loan losses 10 17 24
Noninterest income 4 4 3
Noninterest expenses 13 12 10
Net income (loss) (6) (9) (12)
Net credit-related
charge-offs 6 7 9
Selected average balances:
Assets 1,528 1,576 1,673
Loans 1,549 1,575 1,674
Deposits 364 404 327
Net interest margin 2.61% 2.94% 2.70%
------------------- ---- ---- ----
-- Average loans decreased $26 million, primarily due to decreases in
Middle Market and Commercial Real Estate, partially offset by an
increase in Global Corporate Banking.
-- Average deposits decreased $40 million, primarily due to decreases in
Global Corporate Banking and the Financial Services Division.
-- The net interest margin of 2.61 percent decreased 33 basis points, due
in part to a reduction in deferred loan fees recognized in the third
quarter 2010 and a change in the deposit mix.
-- The provision for loan losses decreased $7 million primarily due to
decreases in Private Banking and Commercial Real Estate.
Conference Call and Webcast
Comerica will host a conference call to review third quarter 2010 financial results at 7 a.m. CT Wednesday, October 20, 2010. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 11806039). The call and supplemental financial information can also be accessed on the Internet at www.comerica.com. A replay will be available approximately two hours following the conference call through October 31, 2010. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 11806039). 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 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, the effects of recently enacted legislation, actions taken by or proposed 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, legislation or regulations enacted in the future, and the impact and expiration of such legislation and regulatory actions, 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. In particular, please refer to "Item 1A. Risk Factors" beginning on page 11 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2009, "Item 1A. Risk Factors" beginning on page 67 of Comerica's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 and "Item 1A. Risk Factors" beginning on page 71 of Comerica's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010. 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.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
Comerica Incorporated and Subsidiaries
Three Months Ended
------------------
September September
30, June 30, 30,
(in millions, except per share
data) 2010 2010 2009
------------------------------ ---- ---- ----
PER COMMON SHARE AND COMMON STOCK
DATA
Diluted net income (loss) $0.33 $0.39 $(0.10)
Cash dividends declared 0.05 0.05 0.05
Common shareholders' equity (at
period end) 33.19 32.85 32.36
Average diluted shares (in
thousands) 177,686 178,432 149,431
-------------------------- ------- ------- -------
KEY RATIOS
Return on average common
shareholders' equity 4.07% 4.89% (1.27)%
Return on average assets 0.43 0.50 0.12
Tier 1 common capital ratio (a)
(b) 9.97 9.81 8.04
Tier 1 risk-based capital ratio
(b) 9.97 10.64 12.21
Total risk-based capital ratio (b) 14.38 15.03 16.79
Leverage ratio (b) 10.90 11.36 12.46
Tangible common equity ratio (a) 10.39 10.11 7.96
-------------------------------- ----- ----- ----
AVERAGE BALANCES
Commercial loans $20,967 $20,910 $23,401
Real estate construction loans 2,625 2,987 4,033
Commercial mortgage loans 10,257 10,372 10,359
Residential mortgage loans 1,590 1,607 1,720
Consumer loans 2,421 2,448 2,550
Lease financing 1,064 1,108 1,218
International loans 1,178 1,240 1,501
----- ----- -----
Total loans 40,102 40,672 44,782
Earning assets 50,189 51,835 57,513
Total assets 54,729 56,258 61,948
Noninterest-bearing deposits 14,920 15,218 13,225
Interest-bearing core deposits 23,866 23,710 22,582
Total core deposits 38,786 38,928 35,807
Common shareholders' equity 5,842 5,708 4,923
Total shareholders' equity 5,842 5,708 7,065
-------------------------- ----- ----- -----
NET INTEREST INCOME
Net interest income (fully taxable
equivalent basis) $405 $424 $387
Fully taxable equivalent
adjustment 1 2 2
Net interest margin 3.23% 3.28% 2.68%
------------------- ---- ---- ----
CREDIT QUALITY
Nonaccrual loans $1,163 $1,098 $1,194
Reduced-rate loans 28 23 2
--- --- ---
Total nonperforming loans 1,191 1,121 1,196
Foreclosed property 120 93 109
--- --- ---
Total nonperforming assets 1,311 1,214 1,305
Loans past due 90 days or more and
still accruing 104 115 161
Gross loan charge-offs 145 158 245
Loan recoveries 13 12 6
--- --- ---
Net loan charge-offs 132 146 239
Lending-related commitment
charge-offs - - -
--- --- ---
Total net credit-related charge-
offs 132 146 239
Allowance for loan losses 957 967 953
Allowance for credit losses on
lending-related commitments 38 44 35
--- --- ---
Total allowance for credit losses 995 1,011 988
Allowance for loan losses as a
percentage of total loans 2.38% 2.38% 2.19%
Net loan charge-offs as a
percentage of average total loans 1.32 1.44 2.14
Net credit-related charge-offs
as a percentage of average total
loans 1.32 1.44 2.14
Nonperforming assets as a
percentage of total loans and
foreclosed property 3.24 2.98 2.99
Allowance for loan losses as a
percentage of total nonperforming
loans 80 86 80
---------------------------------- --- --- ---
Nine Months Ended
September 30,
-------------
(in millions, except per share
data) 2010 2009
------------------------------ ---- ----
PER COMMON SHARE AND COMMON STOCK
DATA
Diluted net income (loss) $0.34 $(0.37)
Cash dividends declared 0.15 0.15
Common shareholders' equity (at
period end)
Average diluted shares (in
thousands) 171,260 149,367
-------------------------- ------- -------
KEY RATIOS
Return on average common
shareholders' equity 1.40% (1.48)%
Return on average assets 0.43 0.09
Tier 1 common capital ratio (a)
(b)
Tier 1 risk-based capital ratio
(b)
Total risk-based capital ratio (b)
Leverage ratio (b)
Tangible common equity ratio (a)
--------------------------------
AVERAGE BALANCES
Commercial loans $20,963 $25,399
Real estate construction loans 2,997 4,287
Commercial mortgage loans 10,338 10,422
Residential mortgage loans 1,610 1,787
Consumer loans 2,450 2,565
Lease financing 1,100 1,248
International loans 1,233 1,603
----- -----
Total loans 40,691 47,311
Earning assets 51,645 59,580
Total assets 56,158 64,296
Noninterest-bearing deposits 14,922 12,385
Interest-bearing core deposits 23,400 22,476
Total core deposits 38,322 34,861
Common shareholders' equity 5,543 4,987
Total shareholders' equity 6,134 7,124
-------------------------- ----- -----
NET INTEREST INCOME
Net interest income (fully taxable
equivalent basis) $1,245 $1,177
Fully taxable equivalent
adjustment 4 6
Net interest margin 3.23% 2.65%
------------------- ---- ----
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 $487 $663
Loan recoveries 36 19
--- ---
Net loan charge-offs 451 644
Lending-related commitment
charge-offs - -
--- ---
Total net credit-related charge-
offs 451 644
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 1.48% 1.82%
Net credit-related charge-offs
as a percentage of average total
loans 1.48 1.82
Nonperforming assets as a
percentage of total loans and
foreclosed property
Allowance for loan losses as a
percentage of total nonperforming
loans
----------------------------------
(a) See Reconciliation of Non-GAAP Financial Measures.
(b) September 30, 2010 ratios are estimated.
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
September
(in millions, except share data) 30, June 30,
-------------------------------- ---------- --------
2010 2010
---- ----
(unaudited) (unaudited)
ASSETS
Cash and due from banks $863 $816
Federal funds sold and securities
purchased under agreements to resell 100 -
Interest-bearing deposits with banks 3,031 3,409
Other short-term investments 115 134
Investment securities available-for-
sale 6,816 7,188
Commercial loans 21,432 21,151
Real estate construction loans 2,444 2,774
Commercial mortgage loans 10,180 10,318
Residential mortgage loans 1,586 1,606
Consumer loans 2,403 2,443
Lease financing 1,053 1,084
International loans 1,182 1,226
------------------- ----- -----
Total loans 40,280 40,602
Less allowance for loan losses (957) (967)
------------------------------ ---- ----
Net loans 39,323 39,635
Premises and equipment 639 634
Customers' liability on acceptances
outstanding 13 24
Accrued income and other assets 4,104 4,045
------------------------------- ----- -----
Total assets $55,004 $55,885
------------ ------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits $15,763 $15,769
Money market and NOW deposits 17,288 16,062
Savings deposits 1,363 1,407
Customer certificates of deposit 5,723 5,893
Other time deposits - 165
Foreign office time deposits 494 484
---------------------------- --- ---
Total interest-bearing deposits 24,868 24,011
------------------------------- ------ ------
Total deposits 40,631 39,780
Short-term borrowings 179 200
Acceptances outstanding 13 24
Accrued expenses and other liabilities 1,085 1,048
Medium- and long-term debt 7,239 9,041
-------------------------- ----- -----
Total liabilities 49,147 50,093
Fixed rate cumulative perpetual
preferred stock, series F, no par
value, $1,000 liquidation value per
share:
Authorized -2,250,000 shares at
12/31/09 and 9/30/09
Issued -2,250,000 shares at 12/31/09
and 9/30/09 - -
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued -203,878,110 shares at 9/30/10
and 6/30/10, 178,735,252 shares at
12/31/09 and 9/30/09 1,019 1,019
Capital surplus 1,473 1,467
Accumulated other comprehensive loss (238) (240)
Retained earnings 5,171 5,124
Less cost of common stock in treasury
-27,394,831 shares at 9/30/10,
27,561,412 shares at 6/30/10,
27,555,623 shares at 12/31/09 and
27,620,576 shares at 9/30/09 (1,568) (1,578)
------------------------------------- ------ ------
Total shareholders' equity 5,857 5,792
-------------------------- ----- -----
Total liabilities and shareholders'
equity $55,004 $55,885
----------------------------------- ------- -------
December September
(in millions, except share data) 31, 30,
-------------------------------- --------- ----------
2009 2009
---- ----
(unaudited)
ASSETS
Cash and due from banks $774 $799
Federal funds sold and securities
purchased under agreements to resell - -
Interest-bearing deposits with banks 4,843 2,219
Other short-term investments 138 142
Investment securities available-for-
sale 7,416 8,882
Commercial loans 21,690 22,546
Real estate construction loans 3,461 3,870
Commercial mortgage loans 10,457 10,380
Residential mortgage loans 1,651 1,679
Consumer loans 2,511 2,544
Lease financing 1,139 1,197
International loans 1,252 1,355
------------------- ----- -----
Total loans 42,161 43,571
Less allowance for loan losses (985) (953)
------------------------------ ---- ----
Net loans 41,176 42,618
Premises and equipment 644 657
Customers' liability on acceptances
outstanding 11 12
Accrued income and other assets 4,247 4,261
------------------------------- ----- -----
Total assets $59,249 $59,590
------------ ------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits $15,871 $13,888
Money market and NOW deposits 14,450 13,556
Savings deposits 1,342 1,331
Customer certificates of deposit 6,413 7,466
Other time deposits 1,047 2,801
Foreign office time deposits 542 572
---------------------------- --- ---
Total interest-bearing deposits 23,794 25,726
------------------------------- ------ ------
Total deposits 39,665 39,614
Short-term borrowings 462 425
Acceptances outstanding 11 12
Accrued expenses and other liabilities 1,022 1,252
Medium- and long-term debt 11,060 11,252
-------------------------- ------ ------
Total liabilities 52,220 52,555
Fixed rate cumulative perpetual
preferred stock, series F, no par
value, $1,000 liquidation value per
share:
Authorized -2,250,000 shares at
12/31/09 and 9/30/09
Issued -2,250,000 shares at 12/31/09
and 9/30/09 2,151 2,145
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued -203,878,110 shares at 9/30/10
and 6/30/10, 178,735,252 shares at
12/31/09 and 9/30/09 894 894
Capital surplus 740 738
Accumulated other comprehensive loss (336) (361)
Retained earnings 5,161 5,205
Less cost of common stock in treasury
-27,394,831 shares at 9/30/10,
27,561,412 shares at 6/30/10,
27,555,623 shares at 12/31/09 and
27,620,576 shares at 9/30/09 (1,581) (1,586)
------------------------------------- ------ ------
Total shareholders' equity 7,029 7,035
-------------------------- ----- -----
Total liabilities and shareholders'
equity $59,249 $59,590
----------------------------------- ------- -------
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Three Months
Ended
September 30,
-------------
(in millions, except per share data) 2010 2009
------------------------------------ ---- ----
INTEREST INCOME
Interest and fees on loans $399 $444
Interest on investment securities 55 64
Interest on short-term investments 2 3
---------------------------------- --- ---
Total interest income 456 511
INTEREST EXPENSE
Interest on deposits 27 89
Interest on short-term borrowings - -
Interest on medium- and long-term debt 25 37
-------------------------------------- --- ---
Total interest expense 52 126
---------------------- --- ---
Net interest income 404 385
Provision for loan losses 122 311
------------------------- --- ---
Net interest income after provision for
loan losses 282 74
NONINTEREST INCOME
Service charges on deposit accounts 51 59
Fiduciary income 38 40
Commercial lending fees 22 21
Letter of credit fees 19 18
Card fees 15 13
Foreign exchange income 8 10
Bank-owned life insurance 9 8
Brokerage fees 6 7
Net securities gains - 107
Other noninterest income 18 32
------------------------ --- ---
Total noninterest income 186 315
NONINTEREST EXPENSES
Salaries 187 171
Employee benefits 47 51
----------------- --- ---
Total salaries and employee benefits 234 222
Net occupancy expense 40 40
Equipment expense 15 15
Outside processing fee expense 23 24
Software expense 22 21
FDIC insurance expense 14 15
Legal fees 9 8
Other real estate expense 7 10
Litigation and operational losses 2 3
Provision for credit losses on lending-
related commitments (6) 2
Other noninterest expenses 42 39
-------------------------- --- ---
Total noninterest expenses 402 399
-------------------------- --- ---
Income (loss) from continuing operations
before income taxes 66 (10)
Provision (benefit) for income taxes 7 (29)
------------------------------------ --- ---
Income from continuing operations 59 19
Income from discontinued operations, net
of tax - -
---------------------------------------- --- ---
NET INCOME 59 19
Less:
Preferred stock dividends - 34
Income allocated to participating
securities - 1
Net income (loss) attributable to common
shares $59 $(16)
---------------------------------------- --- ----
Basic earnings per common share:
Income (loss) from continuing operations $0.34 $(0.10)
Net income (loss) 0.34 (0.10)
Diluted earnings per common share:
Income (loss) from continuing operations 0.33 (0.10)
Net income (loss) 0.33 (0.10)
Cash dividends declared on common stock 9 7
Cash dividends declared per common share 0.05 0.05
---------------------------------------- ---- ----
Nine Months
Ended
September
30,
----------
(in millions, except per share data) 2010 2009
------------------------------------ ---- ----
INTEREST INCOME
Interest and fees on loans $1,223 $1,343
Interest on investment securities 177 276
Interest on short-term investments 8 7
---------------------------------- --- ---
Total interest income 1,408 1,626
INTEREST EXPENSE
Interest on deposits 91 320
Interest on short-term borrowings - 2
Interest on medium- and long-term debt 76 133
-------------------------------------- --- ---
Total interest expense 167 455
---------------------- --- ---
Net interest income 1,241 1,171
Provision for loan losses 423 826
------------------------- --- ---
Net interest income after provision for
loan losses 818 345
NONINTEREST INCOME
Service charges on deposit accounts 159 172
Fiduciary income 115 123
Commercial lending fees 66 58
Letter of credit fees 56 50
Card fees 43 37
Foreign exchange income 28 30
Bank-owned life insurance 26 26
Brokerage fees 18 24
Net securities gains 3 233
Other noninterest income 60 83
------------------------ --- ---
Total noninterest income 574 836
NONINTEREST EXPENSES
Salaries 535 513
Employee benefits 136 159
----------------- --- ---
Total salaries and employee benefits 671 672
Net occupancy expense 120 119
Equipment expense 47 46
Outside processing fee expense 69 74
Software expense 66 61
FDIC insurance expense 47 75
Legal fees 26 25
Other real estate expense 24 26
Litigation and operational losses 5 7
Provision for credit losses on lending-
related commitments 1 (3)
Other noninterest expenses 127 123
-------------------------- --- ---
Total noninterest expenses 1,203 1,225
-------------------------- ----- -----
Income (loss) from continuing operations
before income taxes 189 (44)
Provision (benefit) for income taxes 25 (89)
------------------------------------ --- ---
Income from continuing operations 164 45
Income from discontinued operations, net
of tax 17 1
---------------------------------------- --- ---
NET INCOME 181 46
Less:
Preferred stock dividends 123 101
Income allocated to participating
securities - 1
Net income (loss) attributable to common
shares $58 $(56)
---------------------------------------- --- ----
Basic earnings per common share:
Income (loss) from continuing operations $0.24 $(0.38)
Net income (loss) 0.34 (0.37)
Diluted earnings per common share:
Income (loss) from continuing operations 0.24 (0.38)
Net income (loss) 0.34 (0.37)
Cash dividends declared on common stock 26 22
Cash dividends declared per common share 0.15 0.15
---------------------------------------- ---- ----
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Third Second First
Quarter Quarter Quarter
(in millions, except per share
data) 2010 2010 2010
------------------------------ ---- ---- ----
INTEREST INCOME
Interest and fees on loans $399 $412 $412
Interest on investment securities 55 61 61
Interest on short-term investments 2 3 3
---------------------------------- --- --- ---
Total interest income 456 476 476
INTEREST EXPENSE
Interest on deposits 27 29 35
Interest on short-term borrowings - - -
Interest on medium- and long-
term debt 25 25 26
----------------------------- --- --- ---
Total interest expense 52 54 61
---------------------- --- --- ---
Net interest income 404 422 415
Provision for loan losses 122 126 175
------------------------- --- --- ---
Net interest income after
provision for loan losses 282 296 240
NONINTEREST INCOME
Service charges on deposit
accounts 51 52 56
Fiduciary income 38 38 39
Commercial lending fees 22 22 22
Letter of credit fees 19 19 18
Card fees 15 15 13
Foreign exchange income 8 10 10
Bank-owned life insurance 9 9 8
Brokerage fees 6 6 6
Net securities gains - 1 2
Other noninterest income 18 22 20
------------------------ --- --- ---
Total noninterest income 186 194 194
NONINTEREST EXPENSES
Salaries 187 179 169
Employee benefits 47 45 44
----------------- --- --- ---
Total salaries and employee
benefits 234 224 213
Net occupancy expense 40 39 41
Equipment expense 15 15 17
Outside processing fee expense 23 23 23
Software expense 22 22 22
FDIC insurance expense 14 16 17
Legal fees 9 9 8
Other real estate expense 7 5 12
Litigation and operational losses 2 2 1
Provision for credit losses on
lending-related commitments (6) - 7
Other noninterest expenses 42 42 43
-------------------------- --- --- ---
Total noninterest expenses 402 397 404
-------------------------- --- --- ---
Income (loss) from continuing
operations before income taxes 66 93 30
Provision (benefit) for income
taxes 7 23 (5)
------------------------------ --- --- ---
Income (loss) from continuing
operations 59 70 35
Income from discontinued
operations, net of tax - - 17
------------------------ --- --- ---
NET INCOME (LOSS) 59 70 52
Less:
Preferred stock dividends - - 123
Income allocated to participating
securities - 1 -
Net income (loss) attributable to
common shares $59 $69 $(71)
--------------------------------- --- --- ----
Basic earnings per common share:
Income (loss) from continuing
operations $0.34 $0.40 $(0.57)
Net income (loss) 0.34 0.40 (0.46)
Diluted earnings per common share:
Income (loss) from continuing
operations 0.33 0.39 (0.57)
Net income (loss) 0.33 0.39 (0.46)
Cash dividends declared on common
stock 9 8 9
Cash dividends declared per common
share 0.05 0.05 0.05
---------------------------------- ---- ---- ----
Fourth Third
Quarter Quarter
(in millions, except per share
data) 2009 2009
------------------------------ ---- ----
INTEREST INCOME
Interest and fees on loans $424 $444
Interest on investment securities 53 64
Interest on short-term investments 2 3
---------------------------------- --- ---
Total interest income 479 511
INTEREST EXPENSE
Interest on deposits 52 89
Interest on short-term borrowings - -
Interest on medium- and long-
term debt 31 37
----------------------------- --- ---
Total interest expense 83 126
---------------------- --- ---
Net interest income 396 385
Provision for loan losses 256 311
------------------------- --- ---
Net interest income after
provision for loan losses 140 74
NONINTEREST INCOME
Service charges on deposit
accounts 56 59
Fiduciary income 38 40
Commercial lending fees 21 21
Letter of credit fees 19 18
Card fees 14 13
Foreign exchange income 11 10
Bank-owned life insurance 9 8
Brokerage fees 7 7
Net securities gains 10 107
Other noninterest income 29 32
------------------------ --- ---
Total noninterest income 214 315
NONINTEREST EXPENSES
Salaries 174 171
Employee benefits 51 51
----------------- --- ---
Total salaries and employee
benefits 225 222
Net occupancy expense 43 40
Equipment expense 16 15
Outside processing fee expense 23 24
Software expense 23 21
FDIC insurance expense 15 15
Legal fees 12 8
Other real estate expense 22 10
Litigation and operational losses 3 3
Provision for credit losses on
lending-related commitments 3 2
Other noninterest expenses 40 39
-------------------------- --- ---
Total noninterest expenses 425 399
-------------------------- --- ---
Income (loss) from continuing
operations before income taxes (71) (10)
Provision (benefit) for income
taxes (42) (29)
------------------------------ --- ---
Income (loss) from continuing
operations (29) 19
Income from discontinued
operations, net of tax - -
------------------------ --- ---
NET INCOME (LOSS) (29) 19
Less:
Preferred stock dividends 33 34
Income allocated to participating
securities - 1
Net income (loss) attributable to
common shares $(62) $(16)
--------------------------------- ---- ----
Basic earnings per common share:
Income (loss) from continuing
operations $(0.42) $(0.10)
Net income (loss) (0.42) (0.10)
Diluted earnings per common share:
Income (loss) from continuing
operations (0.42) (0.10)
Net income (loss) (0.42) (0.10)
Cash dividends declared on common
stock 8 7
Cash dividends declared per common
share 0.05 0.05
---------------------------------- ---- ----
Third Quarter 2010 Compared To:
-------------------------------
Second Quarter
2010
(in millions, except per share
data) Amount Percent
------------------------------ ------ -------
INTEREST INCOME
Interest and fees on loans $(13) (3)%
Interest on investment securities (6) (10)
Interest on short-term investments (1) (17)
---------------------------------- --- ---
Total interest income (20) (4)
INTEREST EXPENSE
Interest on deposits (2) (8)
Interest on short-term borrowings - 9
Interest on medium- and long-
term debt - 1
----------------------------- --- ---
Total interest expense (2) (4)
---------------------- --- ---
Net interest income (18) (4)
Provision for loan losses (4) (3)
------------------------- --- ---
Net interest income after
provision for loan losses (14) (4)
NONINTEREST INCOME
Service charges on deposit
accounts (1) (1)
Fiduciary income - (2)
Commercial lending fees - (2)
Letter of credit fees - 3
Card fees - -
Foreign exchange income (2) (16)
Bank-owned life insurance - 6
Brokerage fees - (4)
Net securities gains (1) N/M
Other noninterest income (4) (15)
------------------------ --- ---
Total noninterest income (8) (4)
NONINTEREST EXPENSES
Salaries 8 4
Employee benefits 2 3
----------------- --- ---
Total salaries and employee
benefits 10 4
Net occupancy expense 1 2
Equipment expense - -
Outside processing fee expense - -
Software expense - 1
FDIC insurance expense (2) (13)
Legal fees - 4
Other real estate expense 2 47
Litigation and operational losses - 48
Provision for credit losses on
lending-related commitments (6) N/M
Other noninterest expenses - (1)
-------------------------- --- ---
Total noninterest expenses 5 1
-------------------------- --- ---
Income (loss) from continuing
operations before income taxes (27) (28)
Provision (benefit) for income
taxes (16) (68)
------------------------------ --- ---
Income (loss) from continuing
operations (11) (15)
Income from discontinued
operations, net of tax - N/M
------------------------ --- ---
NET INCOME (LOSS) (11) (15)
Less:
Preferred stock dividends - -
Income allocated to participating
securities (1) N/M
---
Net income (loss) attributable to
common shares $(10) (15)%
--------------------------------- ---- ----
Basic earnings per common share:
Income (loss) from continuing
operations $(0.06) (15)%
Net income (loss) (0.06) (15)
Diluted earnings per common share:
Income (loss) from continuing
operations (0.06) (15)
Net income (loss) (0.06) (15)
Cash dividends declared on common
stock 1 1
Cash dividends declared per common
share - -
---------------------------------- --- ---
Third Quarter 2010 Compared To:
-------------------------------
Third Quarter
2009
(in millions, except per share
data) Amount Percent
------------------------------ ------ -------
INTEREST INCOME
Interest and fees on loans $(45) (10)%
Interest on investment securities (9) (15)
Interest on short-term investments (1) (13)
---------------------------------- --- ---
Total interest income (55) (11)
INTEREST EXPENSE
Interest on deposits (62) (70)
Interest on short-term borrowings - 29
Interest on medium- and long-
term debt (12) (32)
----------------------------- --- ---
Total interest expense (74) (59)
---------------------- --- ---
Net interest income 19 5
Provision for loan losses (189) (61)
------------------------- ---- ---
Net interest income after
provision for loan losses 208 N/M
NONINTEREST INCOME
Service charges on deposit
accounts (8) (13)
Fiduciary income (2) (4)
Commercial lending fees 1 5
Letter of credit fees 1 7
Card fees 2 13
Foreign exchange income (2) (19)
Bank-owned life insurance 1 7
Brokerage fees (1) (19)
Net securities gains (107) N/M
Other noninterest income (14) (41)
------------------------ --- ---
Total noninterest income (129) (41)
NONINTEREST EXPENSES
Salaries 16 9
Employee benefits (4) (7)
----------------- --- ---
Total salaries and employee
benefits 12 5
Net occupancy expense - (1)
Equipment expense - 1
Outside processing fee expense (1) (4)
Software expense 1 4
FDIC insurance expense (1) (5)
Legal fees 1 7
Other real estate expense (3) (28)
Litigation and operational losses (1) (24)
Provision for credit losses on
lending-related commitments (8) N/M
Other noninterest expenses 3 10
-------------------------- --- ---
Total noninterest expenses 3 1
-------------------------- --- ---
Income (loss) from continuing
operations before income taxes 76 N/M
Provision (benefit) for income
taxes 36 N/M
------------------------------ --- ---
Income (loss) from continuing
operations 40 N/M
Income from discontinued
operations, net of tax - N/M
------------------------ --- ---
NET INCOME (LOSS) 40 N/M
Less:
Preferred stock dividends (34) N/M
Income allocated to participating
securities (1) N/M
---
Net income (loss) attributable to
common shares $75 N/M %
--------------------------------- --- --- ---
Basic earnings per common share:
Income (loss) from continuing
operations $0.44 N/M %
Net income (loss) 0.44 N/M
Diluted earnings per common share:
Income (loss) from continuing
operations 0.43 N/M
Net income (loss) 0.43 N/M
Cash dividends declared on common
stock 2 19
Cash dividends declared per common
share - -
---------------------------------- --- ---
N/M - Not meaningful
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)
Comerica Incorporated and Subsidiaries
2010
----
3rd 2nd 1st
(in millions) Qtr Qtr Qtr
---- ---- ----
Balance at beginning of period $967 $987 $985
Loan charge-offs:
Commercial 38 65 49
Real estate construction:
Commercial Real Estate business
line (a) 40 30 71
Other business lines (b) 1 - 3
Total real estate construction 41 30 74
Commercial mortgage:
Commercial Real Estate business
line (a) 16 12 16
Other business lines (b) 40 36 28
Total commercial mortgage 56 48 44
Residential mortgage 2 5 2
Consumer 7 9 8
Lease financing - 1 -
International 1 - 7
------------- --- --- ---
Total loan charge-offs 145 158 184
Recoveries on loans previously
charged-off:
Commercial 7 4 7
Real estate construction 1 6 1
Commercial mortgage 2 1 3
Residential mortgage - - -
Consumer 1 1 -
Lease financing 1 - -
International 1 - -
Total recoveries 13 12 11
Net loan charge-offs 132 146 173
Provision for loan losses 122 126 175
Foreign currency translation
adjustment - - -
Balance at end of period $957 $967 $987
------------------------ ---- ---- ----
Allowance for loan losses as a
percentage of total loans 2.38% 2.38% 2.42%
Net loan charge-offs as a
percentage of average total
loans 1.32 1.44 1.68
Net credit-related charge-
offs as a percentage of
average total loans 1.32 1.44 1.68
-------------------------- ---- ---- ----
2009
----
4th 3rd
(in millions) Qtr Qtr
---- ----
Balance at beginning of period $953 $880
Loan charge-offs:
Commercial 113 113
Real estate construction:
Commercial Real Estate business
line (a) 33 63
Other business lines (b) - 1
Total real estate construction 33 64
Commercial mortgage:
Commercial Real Estate business
line (a) 27 24
Other business lines (b) 25 15
Total commercial mortgage 52 39
Residential mortgage 6 11
Consumer 9 7
Lease financing 6 6
International 13 5
------------- --- ---
Total loan charge-offs 232 245
Recoveries on loans previously
charged-off:
Commercial 7 3
Real estate construction - 1
Commercial mortgage 1 -
Residential mortgage - -
Consumer - 1
Lease financing - -
International - 1
Total recoveries 8 6
Net loan charge-offs 224 239
Provision for loan losses 256 311
Foreign currency translation
adjustment - 1
Balance at end of period $985 $953
------------------------ ---- ----
Allowance for loan losses as a
percentage of total loans 2.34% 2.19%
Net loan charge-offs as a
percentage of average total
loans 2.09 2.14
Net credit-related charge-
offs as a percentage of
average total loans 2.10 2.14
-------------------------- ---- ----
(a) Primarily charge-offs of loans to real estate investors and
developers.
(b) Primarily charge-offs of loans secured by owner-occupied real
estate.
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED
COMMITMENTS (unaudited)
Comerica Incorporated and Subsidiaries
2010
----
3rd 2nd 1st
(in millions) Qtr Qtr Qtr
---- ---- ----
Balance at beginning of period $44 $44 $37
Less: Charge-offs on lending-
related commitments (a) - - -
Add: Provision for credit
losses on lending-related
commitments (6) - 7
Balance at end of period $38 $44 $44
------------------------ --- --- ---
Unfunded lending-related
commitments sold $- $2 $-
------------------------ --- --- ---
2009
----
4th 3rd
(in millions) Qtr Qtr
---- ----
Balance at beginning of period $35 $33
Less: Charge-offs on lending-
related commitments (a) 1 -
Add: Provision for credit
losses on lending-related
commitments 3 2
Balance at end of period $37 $35
------------------------ --- ---
Unfunded lending-related
commitments sold $3 $1
------------------------ --- ---
(a) Charge-offs result from the sale of unfunded lending-related
commitments.
NONPERFORMING ASSETS (unaudited)
Comerica Incorporated and Subsidiaries
2010
----
(in millions) 3rd Qtr 2nd Qtr 1st Qtr
------------- ------- ------- -------
SUMMARY OF NONPERFORMING ASSETS
AND PAST DUE LOANS
Nonaccrual loans:
Commercial $258 $239 $209
Real estate construction:
Commercial Real Estate business
line (a) 362 385 516
Other business lines (b) 4 4 3
Total real estate construction 366 389 519
Commercial mortgage:
Commercial Real Estate business
line (a) 153 135 105
Other business lines (b) 304 257 226
Total commercial mortgage 457 392 331
Residential mortgage 59 53 58
Consumer 11 11 13
Lease financing 10 11 11
International 2 3 4
Total nonaccrual loans 1,163 1,098 1,145
Reduced-rate loans 28 23 17
Total nonperforming loans 1,191 1,121 1,162
Foreclosed property 120 93 89
Total nonperforming assets $1,311 $1,214 $1,251
-------------------------- ------ ------ ------
Nonperforming loans as a
percentage of total loans 2.96% 2.76% 2.85%
Nonperforming assets as a
percentage of total loans and
foreclosed property 3.24 2.98 3.06
Allowance for loan losses as a
percentage of total
nonperforming loans 80 86 85
Loans past due 90 days or more
and still accruing $104 $115 $83
ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans at beginning
of period $1,098 $1,145 $1,165
Loans transferred to nonaccrual
(c) 294 199 245
Nonaccrual business loan gross
charge-offs (d) (136) (143) (174)
Loans transferred to accrual
status (c) (10) - -
Nonaccrual business loans sold
(e) (12) (47) (44)
Payments/Other (f) (71) (56) (47)
Nonaccrual loans at end of
period $1,163 $1,098 $1,145
-------------------------- ------ ------ ------
(a) Primarily loans to real
estate investors and
developers.
(b) Primarily loans secured by
owner-occupied real estate.
(c) Based on an analysis of
nonaccrual loans with book
balances greater than $2
million.
(d) Analysis of gross loan
charge-offs:
Nonaccrual business loans $136 $143 $174
Performing watch list loans - 1 -
Consumer and residential
mortgage loans 9 14 10
--- --- ---
Total gross loan charge-offs $145 $158 $184
---- ---- ----
(e) Analysis of loans sold:
Nonaccrual business loans $12 $47 $44
Performing watch list loans 7 15 12
--- --- ---
Total loans sold $19 $62 $56
--- --- ---
2009
----
(in millions) 4th Qtr 3rd Qtr
------------- ------- -------
SUMMARY OF NONPERFORMING ASSETS
AND PAST DUE LOANS
Nonaccrual loans:
Commercial $238 $290
Real estate construction:
Commercial Real Estate business
line (a) 507 542
Other business lines (b) 4 4
Total real estate construction 511 546
Commercial mortgage:
Commercial Real Estate business
line (a) 127 137
Other business lines (b) 192 161
Total commercial mortgage 319 298
Residential mortgage 50 27
Consumer 12 8
Lease financing 13 18
International 22 7
Total nonaccrual loans 1,165 1,194
Reduced-rate loans 16 2
Total nonperforming loans 1,181 1,196
Foreclosed property 111 109
Total nonperforming assets $1,292 $1,305
-------------------------- ------ ------
Nonperforming loans as a
percentage of total loans 2.80% 2.74%
Nonperforming assets as a
percentage of total loans and
foreclosed property 3.06 2.99
Allowance for loan losses as a
percentage of total
nonperforming loans 83 80
Loans past due 90 days or more
and still accruing $101 $161
ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans at beginning
of period $1,194 $1,130
Loans transferred to nonaccrual
(c) 266 361
Nonaccrual business loan gross
charge-offs (d) (217) (226)
Loans transferred to accrual
status (c) - (4)
Nonaccrual business loans sold
(e) (10) (41)
Payments/Other (f) (68) (26)
Nonaccrual loans at end of
period $1,165 $1,194
-------------------------- ------ ------
(a) Primarily loans to real
estate investors and
developers.
(b) Primarily loans secured by
owner-occupied real estate.
(c) Based on an analysis of
nonaccrual loans with book
balances greater than $2
million.
(d) Analysis of gross loan
charge-offs:
Nonaccrual business loans $217 $226
Performing watch list loans - 1
Consumer and residential
mortgage loans 15 18
--- ---
Total gross loan charge-offs $232 $245
---- ----
(e) Analysis of loans sold:
Nonaccrual business loans $10 $41
Performing watch list loans 1 24
--- ---
Total loans sold $11 $65
--- ---
(f) Includes net changes related to nonaccrual loans with balances
less than $2 million, payments on nonaccrual loans with book
balances greater than $2 million and transfers of nonaccrual loans
to foreclosed property. Excludes business loan gross charge-offs
and business nonaccrual loans sold.
ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)
Comerica Incorporated and Subsidiaries
Nine Months Ended
-----------------
September 30, 2010
------------------
(dollar amounts in millions) Average Interest Average
---------------------------- ------- -------- -------
Balance Rate
------- ----
Commercial loans $20,963 $614 3.92%
Real estate construction loans 2,997 69 3.08
Commercial mortgage loans 10,338 321 4.15
Residential mortgage loans 1,610 65 5.37
Consumer loans 2,450 65 3.55
Lease financing 1,100 31 3.72
International loans 1,233 37 3.96
Business loan swap income - 24 -
--- --- ---
Total loans 40,691 1,226 4.02
Auction-rate securities
available-for-sale 789 6 1.04
Other investment securities
available-for-sale 6,393 172 3.66
----- --- ----
Total investment securities
available-for-sale 7,182 178 3.36
Federal funds sold and
securities purchased under
agreements to resell 5 - 0.38
Interest-bearing deposits with
banks (a) 3,641 7 0.25
Other short-term investments 126 1 1.64
--- --- ----
Total earning assets 51,645 1,412 3.66
Cash and due from banks 809
Allowance for loan losses (1,033)
Accrued income and other assets 4,737
-----
Total assets $56,158
-------
Money market and NOW deposits $16,035 38 0.32
Savings deposits 1,397 1 0.07
Customer certificates of
deposit 5,968 42 0.94
----- --- ----
Total interest-bearing core
deposits 23,400 81 0.46
Other time deposits 409 9 3.04
Foreign office time deposits 462 1 0.27
--- --- ----
Total interest-bearing
deposits 24,271 91 0.50
Short-term borrowings 230 - 0.24
Medium- and long-term debt 9,521 76 1.06
----- --- ----
Total interest-bearing sources 34,022 167 0.65
--- ----
Noninterest-bearing deposits 14,922
Accrued expenses and other
liabilities 1,080
Total shareholders' equity 6,134
-----
Total liabilities and
shareholders' equity $56,158
-------
Net interest income/rate
spread (FTE) $1,245 3.01
------
FTE adjustment $4
---
Impact of net noninterest-
bearing sources of funds 0.22
-------------------------- ----
Net interest margin (as a
percentage of average earning
assets) (FTE) (a) 3.23%
------------------------------ ----
Nine Months Ended
-----------------
September 30, 2009
------------------
(dollar amounts in millions) Average Interest Average
---------------------------- ------- -------- -------
Balance Rate
------- ----
Commercial loans $25,399 $678 3.57%
Real estate construction loans 4,287 94 2.92
Commercial mortgage loans 10,422 327 4.20
Residential mortgage loans 1,787 76 5.69
Consumer loans 2,565 71 3.71
Lease financing 1,248 29 3.08
International loans 1,603 46 3.80
Business loan swap income - 25 -
--- --- ---
Total loans 47,311 1,346 3.80
Auction-rate securities
available-for-sale 1,040 12 1.50
Other investment securities
available-for-sale 8,617 267 4.24
----- --- ----
Total investment securities
available-for-sale 9,657 279 3.93
Federal funds sold and
securities purchased under
agreements to resell 24 - 0.32
Interest-bearing deposits with
banks (a) 2,426 5 0.25
Other short-term investments 162 2 1.79
--- --- ----
Total earning assets 59,580 1,632 3.67
Cash and due from banks 901
Allowance for loan losses (913)
Accrued income and other assets 4,728
-----
Total assets $64,296
-------
Money market and NOW deposits $12,579 49 0.52
Savings deposits 1,326 1 0.12
Customer certificates of
deposit 8,571 159 2.48
----- --- ----
Total interest-bearing core
deposits 22,476 209 1.25
Other time deposits 4,983 109 2.93
Foreign office time deposits 688 2 0.31
--- --- ----
Total interest-bearing
deposits 28,147 320 1.52
Short-term borrowings 1,262 2 0.25
Medium- and long-term debt 14,073 133 1.26
------ --- ----
Total interest-bearing sources 43,482 455 1.40
--- ----
Noninterest-bearing deposits 12,385
Accrued expenses and other
liabilities 1,305
Total shareholders' equity 7,124
-----
Total liabilities and
shareholders' equity $64,296
-------
Net interest income/rate
spread (FTE) $1,177 2.27
------
FTE adjustment $6
---
Impact of net noninterest-
bearing sources of funds 0.38
-------------------------- ----
Net interest margin (as a
percentage of average earning
assets) (FTE) (a) 2.65%
------------------------------ ----
(a) Excess liquidity, represented by average balances deposited with
the Federal Reserve Bank, reduced the net interest margin by 22
basis points and 10 basis points year-to-date in 2010 and 2009,
respectively. Excluding excess liquidity, the net interest margin
would have been 3.45% in 2010 and 2.75% in 2009. See
Reconciliation of Non-GAAP Financial Measures.
ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)
Comerica Incorporated and Subsidiaries
Three Months Ended
------------------
September 30, 2010
------------------
(dollar amounts in millions) Average Interest Average
---------------------------- ------- -------- -------
Balance Rate
------- ----
Commercial loans $20,967 $203 3.84%
Real estate construction loans 2,625 21 3.19
Commercial mortgage loans 10,257 105 4.06
Residential mortgage loans 1,590 21 5.25
Consumer loans 2,421 21 3.53
Lease financing 1,064 10 3.69
International loans 1,178 12 3.89
Business loan swap income - 7 -
--- --- ---
Total loans 40,102 400 3.96
Auction-rate securities
available-for-sale 673 1 0.99
Other investment securities
available-for-sale 6,233 54 3.54
----- --- ----
Total investment securities
available-for-sale 6,906 55 3.27
Federal funds sold and
securities purchased under
agreements to resell 13 - 0.31
Interest-bearing deposits with
banks (a) 3,047 2 0.25
Other short-term investments 121 - 1.53
--- --- ----
Total earning assets 50,189 457 3.64
Cash and due from banks 843
Allowance for loan losses (1,003)
Accrued income and other assets 4,700
-----
Total assets $54,729
-------
Money market and NOW deposits $16,681 13 0.31
Savings deposits 1,377 1 0.08
Customer certificates of
deposit 5,808 12 0.87
----- --- ----
Total interest-bearing core
deposits 23,866 26 0.43
Other time deposits 65 - 0.51
Foreign office time deposits 479 1 0.36
--- --- ----
Total interest-bearing
deposits 24,410 27 0.43
Short-term borrowings 208 - 0.35
Medium- and long-term debt 8,245 25 1.21
----- --- ----
Total interest-bearing sources 32,863 52 0.63
--- ----
Noninterest-bearing deposits 14,920
Accrued expenses and other
liabilities 1,104
Total shareholders' equity 5,842
-----
Total liabilities and
shareholders' equity $54,729
-------
Net interest income/rate
spread (FTE) $405 3.01
----
FTE adjustment $1
---
Impact of net noninterest-
bearing sources of funds 0.22
-------------------------- ----
Net interest margin (as a
percentage of average earning
assets) (FTE) (a) 3.23%
------------------------------ ----
Three Months Ended
------------------
June 30, 2010
-------------
(dollar amounts in millions) Average Interest Average
---------------------------- ------- -------- -------
Balance Rate
------- ----
Commercial loans $20,910 $206 3.95%
Real estate construction loans 2,987 23 3.13
Commercial mortgage loans 10,372 109 4.20
Residential mortgage loans 1,607 22 5.44
Consumer loans 2,448 22 3.56
Lease financing 1,108 10 3.72
International loans 1,240 13 4.07
Business loan swap income - 9 -
--- --- ---
Total loans 40,672 414 4.07
Auction-rate securities
available-for-sale 816 3 1.19
Other investment securities
available-for-sale 6,446 58 3.71
----- --- ----
Total investment securities
available-for-sale 7,262 61 3.41
Federal funds sold and
securities purchased under
agreements to resell 1 - 1.35
Interest-bearing deposits with
banks (a) 3,768 3 0.25
Other short-term investments 132 - 1.65
--- --- ----
Total earning assets 51,835 478 3.70
Cash and due from banks 795
Allowance for loan losses (1,037)
Accrued income and other assets 4,665
-----
Total assets $56,258
-------
Money market and NOW deposits $16,354 13 0.32
Savings deposits 1,429 - 0.07
Customer certificates of
deposit 5,927 15 0.92
----- --- ----
Total interest-bearing core
deposits 23,710 28 0.45
Other time deposits 295 1 2.14
Foreign office time deposits 448 - 0.23
--- --- ----
Total interest-bearing
deposits 24,453 29 0.47
Short-term borrowings 248 - 0.27
Medium- and long-term debt 9,571 25 1.04
----- --- ----
Total interest-bearing sources 34,272 54 0.63
--- ----
Noninterest-bearing deposits 15,218
Accrued expenses and other
liabilities 1,060
Total shareholders' equity 5,708
-----
Total liabilities and
shareholders' equity $56,258
-------
Net interest income/rate
spread (FTE) $424 3.07
----
FTE adjustment $2
---
Impact of net noninterest-
bearing sources of funds 0.21
-------------------------- ----
Net interest margin (as a
percentage of average earning
assets) (FTE) (a) 3.28%
------------------------------ ----
Three Months Ended
------------------
September 30, 2009
------------------
(dollar amounts in millions) Average Interest Average
---------------------------- ------- -------- -------
Balance Rate
------- ----
Commercial loans $23,401 $223 3.79%
Real estate construction loans 4,033 29 2.83
Commercial mortgage loans 10,359 110 4.21
Residential mortgage loans 1,720 24 5.66
Consumer loans 2,550 24 3.68
Lease financing 1,218 12 3.96
International loans 1,501 14 3.65
Business loan swap income - 9 -
--- --- ---
Total loans 44,782 445 3.94
Auction-rate securities
available-for-sale 962 3 1.29
Other investment securities
available-for-sale 8,108 62 3.10
----- --- ----
Total investment securities
available-for-sale 9,070 65 2.91
Federal funds sold and
securities purchased under
agreements to resell 2 - 0.29
Interest-bearing deposits with
banks (a) 3,538 2 0.25
Other short-term investments 121 1 1.80
--- --- ----
Total earning assets 57,513 513 3.55
Cash and due from banks 873
Allowance for loan losses (992)
Accrued income and other assets 4,554
-----
Total assets $61,948
-------
Money market and NOW deposits $13,090 15 0.46
Savings deposits 1,347 - 0.09
Customer certificates of
deposit 8,145 46 2.23
----- --- ----
Total interest-bearing core
deposits 22,582 61 1.07
Other time deposits 3,573 28 3.05
Foreign office time deposits 660 - 0.24
--- --- ----
Total interest-bearing
deposits 26,815 89 1.32
Short-term borrowings 434 - 0.13
Medium- and long-term debt 13,311 37 1.10
------ --- ----
Total interest-bearing sources 40,560 126 1.23
--- ----
Noninterest-bearing deposits 13,225
Accrued expenses and other
liabilities 1,098
Total shareholders' equity 7,065
-----
Total liabilities and
shareholders' equity $61,948
-------
Net interest income/rate
spread (FTE) $387 2.32
----
FTE adjustment $2
---
Impact of net noninterest-
bearing sources of funds 0.36
-------------------------- ----
Net interest margin (as a
percentage of average earning
assets) (FTE) (a) 2.68%
------------------------------ ----
(a) Excess liquidity, represented by average balances deposited with
the Federal Reserve Bank, reduced the net interest margin by 19
basis points and 23 basis points in the third and second quarters of
2010, respectively, and by 16 basis points in the third quarter of
2009. Excluding excess liquidity, the net interest margin would
have been 3.42%, 3.51% and 2.84% in each respective period. See
Reconciliation of Non-GAAP Financial Measures.
CONSOLIDATED STATISTICAL DATA (unaudited)
Comerica Incorporated and Subsidiaries
(in millions, except per share
data) September 30, June 30, March 31,
------------------------------ ------------- -------- ---------
2010 2010 2010
---- ---- ----
Commercial loans:
Floor plan $1,693 $1,586 $1,351
Other 19,739 19,565 19,405
----- ------ ------ ------
Total commercial loans 21,432 21,151 20,756
Real estate construction loans:
Commercial Real Estate business
line (a) 2,023 2,345 2,754
Other business lines (b) 421 429 448
------------------------ --- --- ---
Total real estate
construction loans 2,444 2,774 3,202
Commercial mortgage loans:
Commercial Real Estate business
line (a) 2,091 2,035 1,944
Other business lines (b) 8,089 8,283 8,414
------------------------ ----- ----- -----
Total commercial
mortgage loans 10,180 10,318 10,358
Residential mortgage loans 1,586 1,606 1,631
Consumer loans:
Home equity 1,736 1,761 1,782
Other consumer 667 682 690
-------------- --- --- ---
Total consumer loans 2,403 2,443 2,472
Lease financing 1,053 1,084 1,120
International loans 1,182 1,226 1,306
------------------- ----- ----- -----
Total loans $40,280 $40,602 $40,845
----------- ------- ------- -------
Goodwill $150 $150 $150
Loan servicing rights 5 6 6
Tier 1 common capital ratio (c)
(d) 9.97% 9.81% 9.57%
Tier 1 risk-based capital
ratio (d) 9.97 10.64 10.38
Total risk-based capital ratio
(d) 14.38 15.03 14.91
Leverage ratio (d) 10.90 11.36 11.00
Tangible common equity ratio
(c) 10.39 10.11 9.68
Book value per common share $33.19 $32.85 $32.15
Market value per share for the
quarter:
High 40.21 45.85 39.36
Low 33.11 35.44 29.68
Close 37.15 36.83 38.04
Quarterly ratios:
Return on average common
shareholders' equity 4.07% 4.89% (5.61)%
Return on average assets 0.43 0.50 0.36
Efficiency ratio 67.88 64.47 66.45
Number of banking centers 441 437 449
Number of employees -full time
equivalent 9,075 9,107 9,215
(in millions, except per share
data) December 31, September 30,
------------------------------ ------------ -------------
2009 2009
---- ----
Commercial loans:
Floor plan $1,367 $857
Other 20,323 21,689
----- ------ ------
Total commercial loans 21,690 22,546
Real estate construction loans:
Commercial Real Estate business
line (a) 3,002 3,342
Other business lines (b) 459 528
------------------------ --- ---
Total real estate
construction loans 3,461 3,870
Commercial mortgage loans:
Commercial Real Estate business
line (a) 1,889 1,751
Other business lines (b) 8,568 8,629
------------------------ ----- -----
Total commercial
mortgage loans 10,457 10,380
Residential mortgage loans 1,651 1,679
Consumer loans:
Home equity 1,817 1,818
Other consumer 694 726
-------------- --- ---
Total consumer loans 2,511 2,544
Lease financing 1,139 1,197
International loans 1,252 1,355
------------------- ----- -----
Total loans $42,161 $43,571
----------- ------- -------
Goodwill $150 $150
Loan servicing rights 7 8
Tier 1 common capital ratio (c)
(d) 8.18% 8.04%
Tier 1 risk-based capital
ratio (d) 12.46 12.21
Total risk-based capital ratio
(d) 16.93 16.79
Leverage ratio (d) 13.25 12.46
Tangible common equity ratio
(c) 7.99 7.96
Book value per common share $32.27 $32.36
Market value per share for the
quarter:
High 32.30 31.83
Low 26.49 19.94
Close 29.57 29.67
Quarterly ratios:
Return on average common
shareholders' equity (5.10)% (1.27)%
Return on average assets (0.19) 0.12
Efficiency ratio 70.68 67.14
Number of banking centers 447 444
Number of employees -full time
equivalent 9,330 9,384
(a) Primarily loans to real estate investors and developers.
(b) Primarily loans secured by owner-occupied real estate.
(c) See Reconciliation of Non-GAAP Financial Measures.
(d) September 30, 2010 ratios are estimated.
PARENT COMPANY ONLY BALANCE SHEETS (unaudited)
Comerica Incorporated
(in millions, except
share data) September 30, December 31, September 30,
-------------------- ------------- ------------ -------------
2010 2009 2009
---- ---- ----
ASSETS
Cash and due from
subsidiary bank $10 $5 $7
Short-term
investments with
subsidiary bank 793 2,150 2,169
Other short-term
investments 82 86 84
Investment in
subsidiaries,
principally banks 6,039 5,710 5,711
Premises and
equipment 3 4 4
Other assets 202 186 197
Total assets $7,129 $8,141 $8,172
------------ ------ ------ ------
LIABILITIES AND
SHAREHOLDERS' EQUITY
Medium- and long-
term debt $1,155 $986 $992
Other liabilities 117 126 145
Total liabilities 1,272 1,112 1,137
Fixed rate cumulative
perpetual preferred
stock, series F, no
par value, $1,000
liquidation
preference per
share:
Authorized -
2,250,000 shares at
12/31/09 and 9/30/09
Issued -2,250,000
shares at 12/31/09
and 9/30/09 - 2,151 2,145
Common stock -$5 par
value:
Authorized -
325,000,000 shares
Issued -203,878,110
shares at 9/30/10
and 178,735,252
shares at 12/31/09
and 9/30/09 1,019 894 894
Capital surplus 1,473 740 738
Accumulated other
comprehensive loss (238) (336) (361)
Retained earnings 5,171 5,161 5,205
Less cost of common
stock in treasury -
27,394,831 shares at
9/30/10, 27,555,623
shares at 12/31/09
and 27,620,576
shares at 9/30/09 (1,568) (1,581) (1,586)
Total shareholders'
equity 5,857 7,029 7,035
Total liabilities and
shareholders' equity $7,129 $8,141 $8,172
--------------------- ------ ------ ------
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)
Comerica Incorporated and Subsidiaries
Common Stock
------------
(in millions, except per share
data) Preferred Shares Amount
------------------------------ --------- ------ ------
Stock Outstanding
----- -----------
BALANCE AT DECEMBER 31, 2008 $2,129 150.5 $894
Net income - - -
Other comprehensive loss, net
of tax - - -
Total comprehensive loss
Cash dividends declared on
preferred stock - - -
Cash dividends declared on
common stock ($0.15 per share) - - -
Purchase of common stock - (0.1) -
Accretion of discount on
preferred stock 16 - -
Net issuance of common stock
under employee stock plans - 0.7 -
Share-based compensation - - -
Other - - -
----- --- --- ---
BALANCE AT SEPTEMBER 30, 2009 $2,145 151.1 $894
----------------------------- ------ ----- ----
BALANCE AT DECEMBER 31, 2009 $2,151 151.2 $894
Net income - - -
Other comprehensive income, net
of tax - - -
Total comprehensive income
Cash dividends declared on
preferred stock - - -
Cash dividends declared on
common stock ($0.10 per share) - - -
Purchase of common stock - (0.1) -
Issuance of common stock - 25.1 125
Redemption of preferred stock (2,250) - -
Redemption discount accretion
on preferred stock 94 - -
Accretion of discount on
preferred stock 5 - -
Net issuance of common stock
under employee stock plans - 0.3 -
Share-based compensation - - -
Other - - -
BALANCE AT SEPTEMBER 30, 2010 $- 176.5 $1,019
----------------------------- --- ----- ------
(in millions, except per share
data) Capital Accumulated Retained
------------------------------ ------- ----------- --------
Surplus Other Earnings
------- ----- --------
Comprehensive
-------------
Loss
----
BALANCE AT DECEMBER 31, 2008 $722 $(309) $5,345
Net income - - 46
Other comprehensive loss, net
of tax - (52) -
Total comprehensive loss
Cash dividends declared on
preferred stock - - (114)
Cash dividends declared on
common stock ($0.15 per share) - - (22)
Purchase of common stock - - -
Accretion of discount on
preferred stock - - (16)
Net issuance of common stock
under employee stock plans (13) - (34)
Share-based compensation 25 - -
Other 4 - -
----- --- --- ---
BALANCE AT SEPTEMBER 30, 2009 $738 $(361) $5,205
----------------------------- ---- ----- ------
BALANCE AT DECEMBER 31, 2009 $740 $(336) $5,161
Net income - - 181
Other comprehensive income, net
of tax - 98 -
Total comprehensive income
Cash dividends declared on
preferred stock - - (38)
Cash dividends declared on
common stock ($0.10 per share) - - (26)
Purchase of common stock - - -
Issuance of common stock 724 - -
Redemption of preferred stock - - -
Redemption discount accretion
on preferred stock - - (94)
Accretion of discount on
preferred stock - - (5)
Net issuance of common stock
under employee stock plans (11) - (8)
Share-based compensation 24 - -
Other (4) - -
BALANCE AT SEPTEMBER 30, 2010 $1,473 $(238) $5,171
----------------------------- ------ ----- ------
(in millions, except per share
data) Treasury Total
------------------------------ -------- -----
Stock Shareholders'
----- -------------
Equity
------
BALANCE AT DECEMBER 31, 2008 $(1,629) $7,152
Net income - 46
Other comprehensive loss, net
of tax - (52)
---
Total comprehensive loss (6)
Cash dividends declared on
preferred stock - (114)
Cash dividends declared on
common stock ($0.15 per share) - (22)
Purchase of common stock (1) (1)
Accretion of discount on
preferred stock - -
Net issuance of common stock
under employee stock plans 43 (4)
Share-based compensation - 25
Other 1 5
----- ---
BALANCE AT SEPTEMBER 30, 2009 $(1,586) $7,035
----------------------------- ------- ------
BALANCE AT DECEMBER 31, 2009 $(1,581) $7,029
Net income - 181
Other comprehensive income, net
of tax - 98
---
Total comprehensive income 279
Cash dividends declared on
preferred stock - (38)
Cash dividends declared on
common stock ($0.10 per share) - (26)
Purchase of common stock (4) (4)
Issuance of common stock - 849
Redemption of preferred stock - (2,250)
Redemption discount accretion
on preferred stock - -
Accretion of discount on
preferred stock - -
Net issuance of common stock
under employee stock plans 16 (3)
Share-based compensation - 24
Other 1 (3)
BALANCE AT SEPTEMBER 30, 2010 $(1,568) $5,857
----------------------------- ------- ------
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries
(dollar amounts in millions) Business Retail Wealth &
---------------------------- -------- ------ --------
Three Months Ended September 30,
2010 Bank Bank Institutional
-------------------------------- ---- ---- -------------
Management
----------
Earnings summary:
Net interest income (expense)
(FTE) $336 $133 $41
Provision for loan losses 57 24 37
Noninterest income 69 45 59
Noninterest expenses 155 165 78
Provision (benefit) for income
taxes (FTE) 60 (4) (5)
Net income (loss) $133 $(7) $(10)
---- --- ----
Net credit-related charge-offs $99 $19 $14
Selected average balances:
Assets $30,309 $5,777 $4,855
Loans 29,940 5,314 4,824
Deposits 19,266 16,972 2,606
Liabilities 19,230 16,940 2,587
Attributed equity 2,968 624 412
Statistical data:
Return on average assets (a) 1.75% (0.16)% (0.79)%
Return on average attributed
equity 17.91 (4.43) (9.34)
Net interest margin (b) 4.45 3.10 3.42
Efficiency ratio 38.16 92.26 78.49
---------------- ----- ----- -----
(dollar amounts in millions) Finance Other Total
---------------------------- ------- ----- -----
Three Months Ended September 30,
2010
--------------------------------
Earnings summary:
Net interest income (expense)
(FTE) $(104) $(1) $405
Provision for loan losses - 4 122
Noninterest income 12 1 186
Noninterest expenses 2 2 402
Provision (benefit) for income
taxes (FTE) (36) (7) 8
Net income (loss) $(58) $1 $59
---- --- ---
Net credit-related charge-offs $- $- $132
Selected average balances:
Assets $9,044 $4,744 $54,729
Loans 30 (6) 40,102
Deposits 386 100 39,330
Liabilities 9,224 906 48,887
Attributed equity 1,065 773 5,842
Statistical data:
Return on average assets (a) N/M N/M 0.43%
Return on average attributed
equity N/M N/M 4.07
Net interest margin (b) N/M N/M 3.23
Efficiency ratio N/M N/M 67.88
---------------- --- --- -----
Three Months Ended June 30, 2010 Business Retail Wealth &
-------------------------------- -------- ------ --------
Bank Bank Institutional
---- ---- -------------
Management
----------
Earnings summary:
Net interest income (expense)
(FTE) $351 $134 $45
Provision for loan losses 83 20 19
Noninterest income 78 42 61
Noninterest expenses 157 160 79
Provision (benefit) for income
taxes (FTE) 54 (1) 3
Net income (loss) $135 $(3) $5
---- --- ---
Net credit-related charge-offs $113 $22 $11
Selected average balances:
Assets $30,609 $5,937 $4,903
Loans 30,353 5,446 4,840
Deposits 19,069 16,930 2,924
Liabilities 19,040 16,895 2,909
Attributed equity 3,110 646 408
Statistical data:
Return on average assets (a) 1.75% (0.06)% 0.43%
Return on average attributed
equity 17.21 (1.66) 5.19
Net interest margin (b) 4.63 3.17 3.73
Efficiency ratio 36.92 89.14 77.57
---------------- ----- ----- -----
Three Months Ended June 30, 2010 Finance Other Total
-------------------------------- ------- ----- -----
Earnings summary:
Net interest income (expense)
(FTE) $(103) $(3) $424
Provision for loan losses - 4 126
Noninterest income 13 - 194
Noninterest expenses 2 (1) 397
Provision (benefit) for income
taxes (FTE) (35) 4 25
Net income (loss) $(57) $(10) $70
---- ---- ---
Net credit-related charge-offs $- $- $146
Selected average balances:
Assets $9,343 $5,466 $56,258
Loans 36 (3) 40,672
Deposits 653 95 39,671
Liabilities 10,838 868 50,550
Attributed equity 1,005 539 5,708
Statistical data:
Return on average assets (a) N/M N/M 0.50%
Return on average attributed
equity N/M N/M 4.89
Net interest margin (b) N/M N/M 3.28
Efficiency ratio N/M N/M 64.47
---------------- --- --- -----
Three Months Ended September 30,
2009 Business Retail Wealth &
-------------------------------- -------- ------ --------
Bank Bank Institutional
---- ---- -------------
Management
----------
Earnings summary:
Net interest income (expense)
(FTE) $346 $127 $42
Provision for loan losses 252 42 20
Noninterest income 72 50 66
Noninterest expenses 160 154 73
Provision (benefit) for income
taxes (FTE) (16) (8) 5
Net income (loss) $22 $(11) $10
--- ---- ---
Net credit-related charge-offs $195 $34 $10
Selected average balances:
Assets $34,822 $6,445 $4,856
Loans 34,116 5,904 4,760
Deposits 15,735 17,563 2,735
Liabilities 16,002 17,532 2,725
Attributed equity 3,464 629 373
Statistical data:
Return on average assets (a) 0.24% (0.24)% 0.80%
Return on average attributed
equity 2.42 (6.92) 10.40
Net interest margin (b) 4.01 2.87 3.48
Efficiency ratio 38.41 86.86 70.84
---------------- ----- ----- -----
Three Months Ended September 30,
2009 Finance Other Total
-------------------------------- ------- ----- -----
Earnings summary:
Net interest income (expense)
(FTE) $(136) $8 $387
Provision for loan losses - (3) 311
Noninterest income 121 6 315
Noninterest expenses 3 9 399
Provision (benefit) for income
taxes (FTE) (11) 3 (27)
Net income (loss) $(7) $5 $19
--- --- ---
Net credit-related charge-offs $- $- $239
Selected average balances:
Assets $11,426 $4,399 $61,948
Loans 2 - 44,782
Deposits 3,969 38 40,040
Liabilities 18,361 263 54,883
Attributed equity 959 1,640 7,065
Statistical data:
Return on average assets (a) N/M N/M 0.12%
Return on average attributed
equity N/M N/M (1.27)
Net interest margin (b) N/M N/M 2.68
Efficiency ratio N/M N/M 67.14
---------------- --- --- -----
(a) Return on average assets is calculated based on the greater of
average assets or average liabilities and attributed equity.
(b) 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 (unaudited)
Comerica Incorporated and Subsidiaries
(dollar amounts in millions) Midwest Western Texas
---------------------------- ------- ------- -----
Three Months Ended September
30, 2010
----------------------------
Earnings summary:
Net interest income (expense)
(FTE) $200 $157 $78
Provision for loan losses 38 51 17
Noninterest income 99 31 21
Noninterest expenses 186 107 61
Provision (benefit) for income
taxes (FTE) 27 16 7
Net income (loss) $48 $14 $14
--- --- ---
Net credit-related charge-offs $61 $58 $5
Selected average balances:
Assets $14,445 $12,746 $6,556
Loans 14,276 12,556 6,357
Deposits 17,777 11,793 5,443
Liabilities 17,755 11,724 5,434
Attributed equity 1,390 1,304 663
Statistical data:
Return on average assets (a) 1.02% 0.43% 0.83%
Return on average attributed
equity 14.06 4.31 8.20
Net interest margin (b) 4.45 4.96 4.87
Efficiency ratio 61.77 56.88 61.94
---------------- ----- ----- -----
(dollar amounts in millions) Florida Other International
---------------------------- ------- ----- -------------
Three Months Ended September
30, 2010 Markets
---------------------------- -------
Earnings summary:
Net interest income (expense)
(FTE) $10 $47 $18
Provision for loan losses 10 4 (2)
Noninterest income 4 10 8
Noninterest expenses 13 23 8
Provision (benefit) for income
taxes (FTE) (3) (3) 7
Net income (loss) $(6) $33 $13
--- --- ---
Net credit-related charge-offs $6 $2 $-
Selected average balances:
Assets $1,528 $4,058 $1,608
Loans 1,549 3,802 1,538
Deposits 364 2,198 1,269
Liabilities 350 2,225 1,269
Attributed equity 166 340 141
Statistical data:
Return on average assets (a) (1.58)% 3.24% 3.25%
Return on average attributed
equity (14.56) 38.63 37.03
Net interest margin (b) 2.61 4.99 4.51
Efficiency ratio 94.50 40.72 30.65
---------------- ----- ----- -----
(dollar amounts in millions) Finance Total
---------------------------- ------- -----
Three Months Ended September
30, 2010 & Other
---------------------------- -------
Businesses
----------
Earnings summary:
Net interest income (expense)
(FTE) $(105) $405
Provision for loan losses 4 122
Noninterest income 13 186
Noninterest expenses 4 402
Provision (benefit) for income
taxes (FTE) (43) 8
Net income (loss) $(57) $59
---- ---
Net credit-related charge-offs $- $132
Selected average balances:
Assets $13,788 $54,729
Loans 24 40,102
Deposits 486 39,330
Liabilities 10,130 48,887
Attributed equity 1,838 5,842
Statistical data:
Return on average assets (a) N/M 0.43%
Return on average attributed
equity N/M 4.07
Net interest margin (b) N/M 3.23
Efficiency ratio N/M 67.88
---------------- -- -----
Three Months Ended June 30,
2010 Midwest Western Texas
--------------------------- ------- ------- -----
Earnings summary:
Net interest income (expense)
(FTE) $210 $164 $81
Provision for loan losses 34 27 (1)
Noninterest income 97 33 23
Noninterest expenses 181 110 65
Provision (benefit) for income
taxes (FTE) 32 21 14
Net income (loss) $60 $39 $26
--- --- ---
Net credit-related charge-offs $44 $47 $8
Selected average balances:
Assets $14,626 $13,006 $6,652
Loans 14,592 12,792 6,428
Deposits 17,988 11,951 5,316
Liabilities 17,966 11,876 5,308
Attributed equity 1,459 1,358 672
Statistical data:
Return on average assets (a) 1.23% 1.17% 1.54%
Return on average attributed
equity 16.36 11.38 15.29
Net interest margin (b) 4.66 5.13 5.05
Efficiency ratio 58.45 55.91 62.32
---------------- ----- ----- -----
Three Months Ended June 30,
2010 Florida Other International
--------------------------- ------- ----- -------------
Markets
-------
Earnings summary:
Net interest income (expense)
(FTE) $12 $44 $19
Provision for loan losses 17 50 (5)
Noninterest income 4 15 9
Noninterest expenses 12 20 8
Provision (benefit) for income
taxes (FTE) (4) (16) 9
Net income (loss) $(9) $5 $16
--- --- ---
Net credit-related charge-offs $7 $40 $-
Selected average balances:
Assets $1,576 $3,934 $1,655
Loans 1,575 3,661 1,591
Deposits 404 2,212 1,052
Liabilities 392 2,243 1,059
Attributed equity 161 352 162
Statistical data:
Return on average assets (a) (2.18)% 0.49% 3.90%
Return on average attributed
equity (21.31) 5.52 39.95
Net interest margin (b) 2.94 4.91 4.62
Efficiency ratio 76.90 37.58 30.48
---------------- ----- ----- -----
Three Months Ended June 30,
2010 Finance Total
--------------------------- ------- -----
& Other
-------
Businesses
----------
Earnings summary:
Net interest income (expense)
(FTE) $(106) $424
Provision for loan losses 4 126
Noninterest income 13 194
Noninterest expenses 1 397
Provision (benefit) for income
taxes (FTE) (31) 25
Net income (loss) $(67) $70
---- ---
Net credit-related charge-offs $- $146
Selected average balances:
Assets $14,809 $56,258
Loans 33 40,672
Deposits 748 39,671
Liabilities 11,706 50,550
Attributed equity 1,544 5,708
Statistical data:
Return on average assets (a) N/M 0.50%
Return on average attributed
equity N/M 4.89
Net interest margin (b) N/M 3.28
Efficiency ratio N/M 64.47
---------------- -- -----
Three Months Ended September
30, 2009 Midwest Western Texas
---------------------------- ------- ------- -----
Earnings summary:
Net interest income (expense)
(FTE) $207 $159 $77
Provision for loan losses 148 101 29
Noninterest income 107 33 22
Noninterest expenses 188 106 58
Provision (benefit) for income
taxes (FTE) (12) (8) 5
Net income (loss) $(10) $(7) $7
---- --- ---
Net credit-related charge-offs $102 $95 $22
Selected average balances:
Assets $16,623 $14,114 $7,444
Loans 16,020 13,923 7,221
Deposits 17,384 11,146 4,609
Liabilities 17,658 11,060 4,618
Attributed equity 1,563 1,393 722
Statistical data:
Return on average assets (a) (0.22)% (0.20)% 0.39%
Return on average attributed
equity (2.67) (1.99) 3.99
Net interest margin (b) 4.69 4.53 4.22
Efficiency ratio 59.96 54.96 59.16
---------------- ----- ----- -----
Three Months Ended September
30, 2009 Florida Other International
---------------------------- ------- ----- -------------
Markets
-------
Earnings summary:
Net interest income (expense)
(FTE) $11 $41 $20
Provision for loan losses 24 6 6
Noninterest income 3 14 9
Noninterest expenses 10 17 8
Provision (benefit) for income
taxes (FTE) (8) (1) 5
Net income (loss) $(12) $33 $10
---- --- ---
Net credit-related charge-offs $9 $10 $1
Selected average balances:
Assets $1,673 $4,361 $1,908
Loans 1,674 4,050 1,892
Deposits 327 1,707 860
Liabilities 316 1,758 849
Attributed equity 180 432 176
Statistical data:
Return on average assets (a) (2.81)% 2.98% 1.94%
Return on average attributed
equity (26.20) 30.10 21.01
Net interest margin (b) 2.70 4.00 4.08
Efficiency ratio 70.34 33.54 28.39
---------------- ----- ----- -----
Three Months Ended September
30, 2009 Finance Total
---------------------------- ------- -----
& Other
-------
Businesses
----------
Earnings summary:
Net interest income (expense)
(FTE) $(128) $387
Provision for loan losses (3) 311
Noninterest income 127 315
Noninterest expenses 12 399
Provision (benefit) for income
taxes (FTE) (8) (27)
Net income (loss) $(2) $19
--- ---
Net credit-related charge-offs $- $239
Selected average balances:
Assets $15,825 $61,948
Loans 2 44,782
Deposits 4,007 40,040
Liabilities 18,624 54,883
Attributed equity 2,599 7,065
Statistical data:
Return on average assets (a) N/M 0.12%
Return on average attributed
equity N/M (1.27)
Net interest margin (b) N/M 2.68
Efficiency ratio N/M 67.14
---------------- -- -----
(a) Return on average assets is calculated based on the greater of
average assets or average liabilities and attributed equity.
(b) 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
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
Comerica Incorporated and Subsidiaries
Nine Months Ended September 30,
-------------------------------
(dollar amounts in millions) 2010 2009
---------------------------- ---- ----
Net interest income (FTE) $1,245 $1,177
Less:
Interest earned on excess
liquidity (a) 7 4
------------------------- --- ---
Net interest income (FTE),
excluding excess liquidity $1,238 $1,173
--------------------------- ------ ------
Average earning assets $51,645 $59,580
Less:
Average net unrealized gains on
investment securities
available-for-sale 108 184
------------------------------- --- ---
Average earning assets for net
interest margin (FTE) 51,537 59,396
Less:
Excess liquidity (a) 3,594 2,385
-------------------- ----- -----
Average earning assets for net
interest margin (FTE),
excluding excess liquidity $47,943 $57,011
------------------------------ ------- -------
Net interest margin (FTE) 3.23% 2.65%
Net interest margin (FTE),
excluding excess liquidity 3.45 2.75
Impact of excess liquidity on
net interest margin (FTE) (0.22) (0.10)
----------------------------- ----- -----
2010
----
3rd Qtr 2nd Qtr 1st Qtr
------- ------- -------
Net interest income (FTE) $405 $424 $416
Less:
Interest earned on excess
liquidity (a) 2 2 3
------------------------- --- --- ---
Net interest income (FTE),
excluding excess liquidity $403 $422 $413
--------------------------- ---- ---- ----
Average earning assets $50,189 $51,835 $52,941
Less:
Average net unrealized gains on
investment securities
available-for-sale 180 80 62
------------------------------- --- --- ---
Average earning assets for net
interest margin (FTE) 50,009 51,755 52,879
Less:
Excess liquidity (a) 2,983 3,719 4,092
-------------------- ----- ----- -----
Average earning assets for net
interest margin (FTE),
excluding excess liquidity $47,026 $48,036 $48,787
------------------------------ ------- ------- -------
Net interest margin (FTE) 3.23% 3.28% 3.18%
Net interest margin (FTE),
excluding excess liquidity 3.42 3.51 3.42
Impact of excess liquidity on
net interest margin (FTE) (0.19) (0.23) (0.24)
----------------------------- ----- ----- -----
2009
----
4th Qtr 3rd Qtr
------- -------
Net interest income (FTE) $398 $387
Less:
Interest earned on excess
liquidity (a) 1 2
------------------------- --- ---
Net interest income (FTE),
excluding excess liquidity $397 $385
--------------------------- ---- ----
Average earning assets $53,953 $57,513
Less:
Average net unrealized gains on
investment securities
available-for-sale 107 102
------------------------------- --- ---
Average earning assets for net
interest margin (FTE) 53,846 57,411
Less:
Excess liquidity (a) 2,453 3,492
-------------------- ----- -----
Average earning assets for net
interest margin (FTE),
excluding excess liquidity $51,393 $53,919
------------------------------ ------- -------
Net interest margin (FTE) 2.94% 2.68%
Net interest margin (FTE),
excluding excess liquidity 3.07 2.84
Impact of excess liquidity on
net interest margin (FTE) (0.13) (0.16)
----------------------------- ----- -----
(a) Excess liquidity represented by interest earned on and average
balances deposited with the Federal Reserve Bank (FRB).
The net interest margin (FTE), excluding excess liquidity, removes
interest earned on balances deposited with the FRB from net interest
income (FTE) and average balances deposited with the FRB from
average earning assets from the numerator and denominator of the
net interest margin (FTE) ratio, respectively. Comerica believes
this measurement provides meaningful information to investors,
regulators, management and others of the impact on net interest
income and net interest margin resulting from Comerica's short-term
investment in low yielding instruments.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
Comerica Incorporated and Subsidiaries
September
30, June 30, March 31,
2010 2010 2010
---- ---- ----
Tier 1 capital
(a) (b) $5,939 $6,371 $6,311
Less:
Fixed rate
cumulative
perpetual
preferred stock - - -
Trust preferred
securities - 495 495
---------------
Tier 1 common
capital (b) $5,939 $5,876 $5,816
------------- ------ ------ ------
Risk-weighted
assets (a) (b) $59,550 $59,877 $60,792
Tier 1 common
capital ratio
(b) 9.97% 9.81% 9.57%
-------------- ---- ---- ----
Total
shareholders'
equity $5,857 $5,792 $5,668
Less:
Fixed rate
cumulative
perpetual
preferred stock - - -
Goodwill 150 150 150
Other intangible
assets 6 6 7
----------------
Tangible common
equity $5,701 $5,636 $5,511
--------------- ------ ------ ------
Total assets $55,004 $55,885 $57,106
Less:
Goodwill 150 150 150
Other intangible
assets 6 6 7
----------------
Tangible assets $54,848 $55,729 $56,949
--------------- ------- ------- -------
Tangible common
equity ratio 10.39% 10.11% 9.68%
--------------- ----- ----- ----
December 31, September 30,
2009 2009
---- ----
Tier 1 capital (a) (b) $7,704 $7,735
Less:
Fixed rate cumulative perpetual
preferred stock 2,151 2,145
Trust preferred securities 495 495
--------------------------
Tier 1 common capital (b) $5,058 $5,095
------------------------- ------ ------
Risk-weighted assets (a) (b) $61,815 $63,355
Tier 1 common capital ratio (b) 8.18% 8.04%
------------------------------- ---- ----
Total shareholders' equity $7,029 $7,035
Less:
Fixed rate cumulative perpetual
preferred stock 2,151 2,145
Goodwill 150 150
Other intangible assets 8 8
-----------------------
Tangible common equity $4,720 $4,732
---------------------- ------ ------
Total assets $59,249 $59,590
Less:
Goodwill 150 150
Other intangible assets 8 8
-----------------------
Tangible assets $59,091 $59,432
--------------- ------- -------
Tangible common equity ratio 7.99% 7.96%
---------------------------- ---- ----
(a) Tier 1 capital and risk-weighted assets as defined by regulation.
(b) September 30, 2010 Tier 1 capital and risk-weighted assets are
estimated.
The Tier 1 common capital ratio removes preferred stock and
qualifying trust preferred securities from Tier 1 capital as defined
by and calculated in conformity with bank regulations. The tangible
common equity removes preferred stock and the effect of intangible
assets from capital and the effect of intangible assets from total
assets. Comerica believes these measurements are meaningful
measures of capital adequacy used by investors, regulators,
management and others to evaluate the adequacy of common equity and
to compare against other companies in the industry.
SOURCE Comerica Incorporated
