DALLAS, Jan. 18, 2011 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported fourth quarter 2010 net income of $96 million, compared to $59 million for the third quarter 2010. Fourth quarter 2010 net income included a provision for loan losses of $57 million, compared to $122 million for the third quarter 2010.
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(dollar amounts in millions, except per 4th Qtr 3rd Qtr 4th Qtr share data) '10 '10 '09 ----------- ------- ------- ------- Net interest income $405 $404 $396 Provision for loan losses 57 122 256 Noninterest income 215 186 214 Noninterest expenses 437 402 425 Net income (loss) 96 59 (29) Preferred stock dividends to U.S. Treasury - - 33 Net income (loss) attributable to common shares 95 59 (62) Diluted income (loss) per common share 0.53 0.33 (0.42) Tier 1 capital ratio 10.08% (a) 9.96% 12.46% Tangible common equity ratio (b) 10.54 10.39 7.99 Net interest margin 3.29 3.23 2.94
(a) December 31, 2010 ratio is estimated. (b) See Reconciliation of Non-GAAP Financial Measures.
"We saw many encouraging and positive signs in the fourth quarter," said Ralph W. Babb Jr., chairman and chief executive officer. "Period-end loan outstandings were stable, with commercial loans up more than $700 million, or about three percent. We were pleased to see growth in loan outstandings across multiple business lines, particularly Middle Market loans in Texas, as well as growth in National Dealer Services, Mortgage Banker Finance, Energy Lending, and Technology and Life Sciences. These increases were muted by the planned and continued reduction of loans in our Commercial Real Estate business line. We also saw broad-based improvement in credit quality, strong deposit growth and fee income generation. Continued balance sheet strength through careful management of liquidity and capital has positioned Comerica for growth as the economic environment improves.
"Our customers are conveying a more positive and confident tone. Generally, they are feeling much better about the economy. Throughout our geographic footprint, our relationship managers report a growing sense of optimism among customers and prospects. This can be seen in our strong loan pipeline. Given the many positive signs we have seen, as well as our strategy for success, which is focused on growth and balance, we believe we are uniquely positioned for the future."
Fourth Quarter and Full-Year 2010 Overview
Fourth Quarter 2010 Highlights Compared to Third Quarter 2010
-- Credit quality improvement accelerated in the fourth quarter 2010. Net credit-related charge-offs decreased $19 million to $113 million. Internal watch list loans declined $629 million to $5.5 billion. Nonaccrual loans decreased $83 million and loans past due 90 days or more declined $42 million. As a result, the provision for loan losses decreased $65 million to $57 million. -- Period-end total loan outstandings were stable, with growth in commercial loans of $713 million muted by runoff in the Commercial Real Estate business line. Average loans increased $229 million in the fourth quarter 2010, excluding a decrease of $332 million in the Commercial Real Estate business line. In total, average loans decreased $103 million, compared to declines of $570 million and $641 million in the third and second quarters of 2010, respectively. -- Average core deposits increased $1.1 billion in the fourth quarter 2010, reflecting increases in noninterest-bearing deposits and money market and NOW deposits, partially offset by a decrease in customer certificates of deposit. Average core deposits increased across all markets and in most business lines. -- Total revenue increased five percent in the fourth quarter 2010, driven by an increase in noninterest income of $29 million, reflecting increases in numerous fee categories. -- The net interest margin of 3.29 percent increased six basis points. Average earning assets decreased $1.1 billion in the fourth quarter 2010, compared to the third quarter 2010, primarily due to a $1.2 billion decrease in excess liquidity, to $1.8 billion in the fourth quarter 2010. -- Noninterest expenses totaled $437 million in the fourth quarter 2010, an increase of $35 million from the third quarter 2010, in part the result of an increase in salaries expense of $18 million. The increase in salaries expense was largely driven by an increase in incentive compensation, reflecting improved overall performance and final 2010 peer rankings, and an increase in deferred compensation plan costs, which was offset by an increase in deferred compensation asset returns in noninterest income. -- In October 2010, Comerica redeemed $515 million of 6.576% subordinated notes due 2037 at par and recognized a pre-tax charge of $5 million in noninterest expenses resulting from the accelerated accretion of the original issuance discount. The notes related to trust preferred securities issued by an unconsolidated subsidiary, which were concurrently redeemed. -- Capital ratios remained strong. The tangible common equity ratio increased 15 basis points to 10.54 percent at December 31, 2010 and the estimated Tier 1 ratio increased 12 basis points, to 10.08 percent at December 31, 2010, from September 30, 2010. -- In the fourth quarter 2010, Comerica doubled the quarterly dividend to 10 cents per share, authorized the repurchase of up to 12.6 million shares of common stock in the open market and authorized the purchase of outstanding warrants to purchase up to 11.5 million shares of common stock.
Full-Year 2010 Compared to Full-Year 2009
-- Credit quality improved significantly. Net credit-related charge-offs decreased $305 million to $564 million. Internal watch list loans declined $2.2 billion to $5.5 billion. Nonaccrual loans decreased $85 million and loans past due 90 days or more declined $39 million. As a result, the provision for loan losses decreased $602 million to $480 million. -- Average earning assets were $51.0 billion in 2010, a decrease of $7.2 billion from 2009. Average loans decreased $5.6 billion in 2010 to $40.5 billion, reflecting subdued loan demand from customers in a modestly recovering economic environment. -- Average core deposits increased $3.4 billion to $38.7 billion, primarily reflecting increases of $3.4 billion in money market and NOW deposits and $2.2 billion in noninterest-bearing deposits, partially offset by a $2.3 billion decrease in customer certificates of deposit.
Full-Year 2010 Compared to Full-Year 2009 (continued)
-- The net interest margin was 3.24 percent for 2010, compared to 2.72 percent for 2009. The increase in the net interest margin was primarily due to changes in the funding mix, including a continued shift in funding sources toward lower-cost funds, and improved loan spreads. -- Noninterest income decreased $261 million compared to 2009. Increases in commercial lending fees ($16 million), card fees ($7 million) and letter of credit fees ($7 million) were partially offset by decreases in service charges on deposit accounts ($20 million) and fiduciary income ($7 million). Additionally, 2009 included net securities gains ($243 million), gains related to the repurchase of debt ($15 million) and net gains on the termination of leveraged leases ($8 million). -- Noninterest expenses decreased $10 million, compared to 2009, primarily reflecting decreases in FDIC insurance expense ($28 million), pension expense ($27 million) and other real estate expense ($19 million), partially offset by an increase in salaries expense ($53 million). The increase in salaries expense was largely driven by an increase in incentive compensation, reflecting improved overall performance and final 2010 peer rankings. Full-time equivalent staff decreased by approximately 330 employees, or four percent, from December 31, 2009. -- In March 2010, Comerica fully redeemed $2.25 billion of preferred stock issued to the U.S. Treasury. The redemption was funded by the net proceeds from an $880 million common stock offering also completed in March 2010 and from excess liquidity at the parent company. The redemption resulted in a one-time charge of $94 million, included in preferred stock dividends, reflecting the accelerated accretion of the remaining discount. In addition, in October 2010, Comerica redeemed $515 million of subordinated notes related to trust preferred securities.
Net Interest Income and Net Interest Margin
(dollar amounts in millions) 4th Qtr '10 3rd Qtr '10 4th Qtr '09 ------------------ ----------- ----------- ----------- Net interest income $405 $404 $396 Net interest margin 3.29% 3.23% 2.94% Selected average balances: Total earning assets $49,102 $50,189 $53,953 Total investment securities 7,112 6,906 8,587 Federal Reserve Bank deposits (excess liquidity) (a) 1,793 2,983 2,453 Total loans 39,999 40,102 42,753 Total core deposits (b) 39,896 38,786 36,742 Total noninterest- bearing deposits 15,607 14,920 14,430
(a) See Reconciliation of Non-GAAP Financial Measures. (b) Core deposits exclude other time deposits and foreign office time deposits.
-- Net interest income was stable, as the impact of a decline in average earning assets was offset by an increase in the net interest margin. -- Average earning assets decreased $1.1 billion, primarily due to a decrease of $1.2 billion in excess liquidity, represented by average Federal Reserve Bank deposits. Excluding a decrease of $332 million in the Commercial Real Estate business line, average loans increased $229 million in the fourth quarter 2010, including increases across all markets in the National Dealer Services, Mortgage Banker Finance and Energy Lending business lines. Additionally, average loans increased in the Middle Market business line in the Texas market. -- The net interest margin of 3.29 percent increased six basis points compared to third quarter 2010. The increase in the net interest margin reflected the benefit from the decrease in excess liquidity and the redemption of higher-cost trust preferred securities discussed above, partially offset by a decrease in yields on investment securities, primarily resulting from elevated prepayment activity in higher-yielding, mortgage-backed investment securities. -- Fourth quarter 2010 average core deposits increased $1.1 billion compared to third quarter 2010, reflecting increases of $687 million in noninterest-bearing deposits and $621 million in money market and NOW deposits, partially offset by a decrease of $206 million in customer certificates of deposit. Average core deposits increased across all markets and in most business lines.
Noninterest Income
Noninterest income was $215 million for the fourth quarter 2010, compared to $186 million for the third quarter 2010. The $29 million increase resulted largely from increases in commercial lending fees ($7 million), deferred compensation asset returns ($6 million), bank-owned life insurance ($5 million), customer derivative income ($4 million), and a $4 million insurance recovery in the fourth quarter 2010, as well as smaller increases across several fee categories. As expected, service charges on deposit accounts declined $2 million, largely the result of the impact of Regulation E on overdraft fees.
Noninterest Expenses
Noninterest expenses were $437 million for the fourth quarter 2010, compared to $402 million for the third quarter 2010. The $35 million increase in noninterest expenses was primarily due to an increase in salaries expense ($18 million), a $5 million one-time charge related to the redemption of subordinated notes previously discussed, and increases in outside processing fees ($4 million) and litigation and operational losses ($4 million). The increase in salaries expense was primarily due to increases in executive and business unit incentives ($10 million), deferred compensation plan costs ($6 million) (offset by an increase in deferred compensation asset returns in noninterest income) and severance expense ($3 million), partially offset by a decrease in share-based compensation expense ($5 million). Full-time equivalent staff decreased by approximately 330 employees, or four percent, from December 31, 2009.
Credit Quality
"All of the key credit metrics are moving in the right direction, with decreases in net charge-offs, watch list loans and nonaccrual loans, all leading to a significant decline in the provision for loan losses," said Babb. "Comerica's credit performance throughout this cycle has been among the best in our peer group. We believe it is a reflection of our strong credit culture and the diligent credit quality review processes we employ. We expect to see continued improvement given the moderate pace of the economic recovery."
-- Net credit-related charge-offs decreased $19 million to $113 million in the fourth quarter 2010, from $132 million in the third quarter 2010. The decrease in net credit-related charge-offs primarily resulted from decreases of $19 million in the Commercial Real Estate business line and $9 million in the Middle Market business line, partially offset by increases of $6 million in the Global Corporate Banking business line and $4 million in Private Banking. -- Internal watch list loans declined $629 million to $5.5 billion from September 30, 2010 to December 31, 2010. -- During the fourth quarter 2010, $180 million of loan relationships greater than $2 million were transferred to nonaccrual status, a decrease of $114 million from the third quarter 2010, primarily due to a $61 million decrease in transfers from the Commercial Real Estate business line and a $54 million decrease in transfers from the Middle Market business line. Of the transfers of loan relationships greater than $2 million to nonaccrual in the fourth quarter 2010, $71 million were from the Commercial Real Estate business line, primarily in the Midwest and Florida markets, and $71 million were from the Middle Market business line, in the Midwest and Western markets. -- Nonperforming assets decreased $76 million to $1.2 billion, or 3.06 percent of total loans and foreclosed property, at December 31, 2010. -- Nonaccrual loans were charged down 46 percent at December 31, 2010. -- Foreclosed property decreased $8 million to $112 million at December 31, 2010, from $120 million at September 30, 2010. -- Loans past due 90 days or more and still accruing were $62 million at December 31, 2010, a decrease of $42 million compared to September 30, 2010. -- The provision for loan losses decreased $65 million, primarily due to reductions in the Middle Market, Private Banking, Commercial Real Estate and Leasing business lines, partially offset by increases in the Global Corporate Banking and Personal Banking business lines. -- The allowance for loan losses to total loans ratio was 2.24 percent and 2.38 percent at December 31, 2010 and September 30, 2010, respectively.
(dollar amounts in 4th Qtr 3rd Qtr 4th Qtr millions) '10 '10 '09 ------------------ ------- ------- ------- Net credit-related charge-offs $113 $132 $225 Net credit-related charge-offs/ Average total loans 1.13% 1.32% 2.10% Provision for loan losses $57 $122 $256 Provision for credit losses on lending- related commitments (3) (6) 3 --- --- --- Total provision for credit losses 54 116 259 Nonperforming loans 1,123 1,191 1,181 Nonperforming assets (NPAs) 1,235 1,311 1,292 NPAs/Total loans and foreclosed property 3.06% 3.24% 3.06% Loans past due 90 days or more and still accruing $62 $104 $101 Allowance for loan losses 901 957 985 Allowance for credit losses on lending- related commitments (a) 35 38 37 --- --- --- Total allowance for credit losses 936 995 1,022 Allowance for loan losses/Total loans 2.24% 2.38% 2.34% Allowance for loan losses/ Nonperforming loans 80 80 83
(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 $53.7 billion and $5.8 billion, respectively, at December 31, 2010, compared to $55.0 billion and $5.9 billion, respectively, at September 30, 2010. There were approximately 177 million common shares outstanding at December 31, 2010.
Comerica's tangible common equity ratio was 10.54 percent at December 31, 2010, an increase of 15 basis points from September 30, 2010. The estimated Tier 1 ratio increased 12 basis points, to 10.08 percent at December 31, 2010, from September 30, 2010.
Full-Year 2011 Outlook
For full-year 2011, management expects the following, compared to full-year 2010, based on a continuation of modest growth in the economy. NOTE: This outlook does not include any impact from the acquisition of Sterling Bancshares, Inc.
-- A low single-digit decrease in average loans. Excluding the Commercial Real Estate business line, a low single-digit increase in average loans. -- Average earning assets of approximately $48 billion, reflecting lower excess liquidity in addition to a decrease in average loans. -- An average net interest margin similar to full-year 2010, based on no increase in the Federal Funds rate. -- Net credit-related charge-offs between $350 million and $400 million. The provision for credit losses is expected to be between $150 million and $200 million. -- A low single-digit decline in noninterest income, primarily due to the impact of regulatory changes. -- A low single-digit increase in noninterest expenses, primarily due to an increase in employee benefits expense. -- Income tax expense to approximate 36 percent of income before income taxes less approximately $60 million of permanent differences related to low-income housing and bank-owned life insurance. -- Commence a share repurchase program that, combined with dividend payments, results in a payout of less than 50 percent of earnings.
Business Segments
Comerica's continuing operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank, and Wealth & Institutional Management. The Finance Division also is included as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at December 31, 2010 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses fourth quarter 2010 results compared to third quarter 2010.
The following table presents net income (loss) by business segment.
4th 4th Qtr 3rd Qtr Qtr (dollar amounts in millions) '10 '10 '09 ---------------------------- ------- ------- --- Business Bank $174 $133 $64 Retail Bank (14) (7) (12) Wealth & Institutional Management (10) (10) 5 ---------------------- --- --- --- 150 116 57 Finance (60) (58) (62) Other (a) 6 1 (24) --------- --- --- --- Total $96 $59 $(29) ----- --- --- ----
(a) Includes discontinued operations and items not directly associated with the three major business segments or the Finance Division.
Business Bank
(dollar amounts in 4th Qtr 3rd Qtr 4th Qtr millions) '10 '10 '09 ------------------ ------- ------- ------- Net interest income (FTE) $341 $336 $343 Provision for loan losses 8 57 180 Noninterest income 81 69 77 Noninterest expenses 158 155 165 Net income 174 133 64 Net credit-related charge- offs 73 99 183 Selected average balances: Assets 30,489 30,309 32,655 Loans 29,947 29,940 32,289 Deposits 19,892 19,266 16,944 Net interest margin 4.51% 4.45% 4.21% ------------------- ---- ---- ----
-- Average loans increased $7 million, reflecting increases in National Dealer Services, Mortgage Banker Finance and Energy Lending largely offset by decreases in Commercial Real Estate, Middle Market and Global Corporate Banking. -- Average deposits increased $626 million, primarily due to increases in Middle Market and Technology and Life Sciences. -- The net interest margin of 4.51 percent increased six basis points, primarily due to increases in loan spreads and deposit balances, partially offset by a decrease in deposit spreads. -- The provision for loan losses decreased $49 million, primarily due to a decrease in Middle Market. -- Noninterest income increased $12 million, primarily due to an increase in commercial lending fees. -- Noninterest expenses increased $3 million, primarily due to increases in incentive compensation included in corporate overhead and the provision for credit losses on lending-related commitments, partially offset by a decrease in other real estate expense.
Retail Bank
(dollar amounts in 4th Qtr 3rd Qtr 4th Qtr millions) '10 '10 '09 ------------------ ------- ------- ------- Net interest income (FTE) $134 $133 $129 Provision for loan losses 29 24 36 Noninterest income 43 45 48 Noninterest expenses 169 165 161 Net loss (14) (7) (12) Net credit-related charge-offs 22 19 30 Selected average balances: Assets 5,647 5,777 6,257 Loans 5,192 5,314 5,733 Deposits 17,271 16,972 17,020 Net interest margin 3.07% 3.10% 3.02% ------------------- ---- ---- ----
-- Average loans decreased $122 million, reflecting declines across all markets and business lines. -- Average deposits increased $299 million, primarily due to increases in transaction and money market deposits, partially offset by a decline in customer certificates of deposit. -- The net interest margin of 3.07 percent decreased three basis points, primarily due to decreases in deposit spreads and loan balances. -- The provision for loan losses increased $5 million, primarily due to an increase in Personal Banking in the Midwest market. -- Noninterest income decreased $2 million, primarily due to a decrease in service charges on deposit accounts, largely the result of the impact of Regulation E on overdraft fees. -- Noninterest expenses increased $4 million, primarily due to an increase in incentive compensation included in corporate overhead.
Wealth and Institutional Management
(dollar amounts 4th Qtr 3rd Qtr 4th Qtr in millions) '10 '10 '09 --------------- ------- ------- ------- Net interest income (FTE) $42 $41 $42 Provision for loan losses 23 37 19 Noninterest income 59 59 60 Noninterest expenses 93 78 76 Net income (loss) (10) (10) 5 Net credit- related charge- offs 18 14 12 Selected average balances: Assets 4,834 4,855 4,841 Loans 4,820 4,824 4,746 Deposits 2,730 2,606 2,849 Net interest margin 3.43% 3.42% 3.50% ------------ ---- ---- ----
-- Average loans decreased $4 million. -- Average deposits increased $124 million, primarily due to increases in transaction and money market deposits. -- The net interest margin of 3.43 percent increased one basis point. -- The provision for loan losses decreased $14 million, primarily due to a decrease in the Western market. -- Noninterest expenses increased $15 million, primarily due to increases in salaries expense, outside processing fees, litigation and operational losses, and incentive compensation included in corporate overhead.
Geographic Market Segments
Comerica also provides market segment results for four primary geographic markets: Midwest, Western, Texas and Florida. In addition to the four primary geographic markets, Other Markets and International are also reported as market segments. The financial results below are based on methodologies in effect at December 31, 2010 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses fourth quarter 2010 results compared to third quarter 2010.
The following table presents net income (loss) by market segment.
4th 4th Qtr 3rd Qtr Qtr (dollar amounts in millions) '10 '10 '09 ---------------------------- ------- ------- --- Midwest $35 $49 $12 Western 41 13 6 Texas 16 14 13 Florida 1 (6) 3 Other Markets 48 33 23 International 9 13 - ------------- --- --- --- 150 116 57 Finance & Other Businesses (a) (54) (57) (86) ------------------------------ --- --- --- Total $96 $59 $(29) ----- --- --- ----
(a) Includes discontinued operations and items not directly associated with the geographic markets.
Midwest Market
(dollar amounts in 4th Qtr 3rd Qtr 4th Qtr millions) '10 '10 '09 ------------------ ------- ------- ------- Net interest income (FTE) $202 $200 $204 Provision for loan losses 46 38 102 Noninterest income 99 99 106 Noninterest expenses 201 185 193 Net income 35 49 12 Net credit-related charge- offs 52 61 97 Selected average balances: Assets 14,506 14,445 15,729 Loans 14,219 14,276 15,449 Deposits 17,959 17,777 17,186 Net interest margin 4.45% 4.45% 4.70% ------------------- ---- ---- ----
-- Average loans decreased $57 million, with declines in most business lines, partially offset by increases in National Dealer Services and Global Corporate Banking. -- Average deposits increased $182 million, primarily due to increases in Small Business Banking and Middle Market, partially offset by a decrease in Global Corporate Banking. -- The provision for loan losses increased $8 million, primarily due to increases in Global Corporate Banking, Commercial Real Estate and Personal Banking, partially offset by a decrease in Middle Market. -- Noninterest expenses increased $16 million, primarily due to increases in incentive compensation included in corporate overhead, litigation and operational losses and outside processing fees.
Western Market
(dollar amounts in 4th Qtr 3rd Qtr 4th Qtr millions) '10 '10 '09 ------------------ ------- ------- ------- Net interest income (FTE) $158 $157 $163 Provision for loan losses 11 51 79 Noninterest income 35 31 33 Noninterest expenses 109 108 110 Net income 41 13 6 Net credit-related charge- offs 43 58 85 Selected average balances: Assets 12,698 12,746 13,484 Loans 12,497 12,556 13,289 Deposits 12,448 11,793 11,900 Net interest margin 5.01% 4.96% 4.85% ------------------- ---- ---- ----
-- Average loans decreased $59 million, primarily due to decreases in Commercial Real Estate and Middle Market, partially offset by an increase in National Dealer Services. -- Average deposits increased $655 million, primarily due to increases in Middle Market, the Financial Services Division and Technology and Life Sciences. -- The net interest margin of 5.01 percent increased five basis points, primarily due to increases in loan spreads and deposit balances. -- The provision for loan losses decreased $40 million, primarily due to decreases in Private Banking, Middle Market and Commercial Real Estate. -- Noninterest income increased $4 million, primarily due to an increase in commercial lending fees.
Texas Market
4th Qtr 3rd Qtr 4th Qtr (dollar amounts in millions) '10 '10 '09 ---------------------------- ------- ------- ------- Net interest income (FTE) $80 $78 $78 Provision for loan losses 15 17 20 Noninterest income 27 21 23 Noninterest expenses 67 61 61 Net income 16 14 13 Total net credit-related charge-offs 9 5 13 Selected average balances: Assets 6,653 6,556 7,118 Loans 6,435 6,357 6,934 Deposits 5,557 5,443 4,737 Net interest margin 4.91% 4.87% 4.46% ------------------- ---- ---- ----
-- Average loans increased $78 million, primarily due to increases in Middle Market and Energy Lending, partially offset by a decrease in Commercial Real Estate. -- Average deposits increased $114 million, primarily due to increases in Small Business Banking and Technology and Life Sciences. -- The net interest margin of 4.91 percent increased four basis points, primarily due to increases in loan spreads and deposit balances. -- The provision for loan losses decreased $2 million, primarily due to a decrease in Commercial Real Estate, partially offset by an increase in Energy Lending. -- Noninterest income increased $6 million, primarily due to an increase in commercial lending fees. -- Noninterest expenses increased $6 million, primarily due to increases in the provision for credit losses on lending-related commitments and incentive compensation included in corporate overhead.
Florida Market
(dollar amounts in 4th Qtr 3rd Qtr 4th Qtr millions) '10 '10 '09 ------------------ ------- ------- ------- Net interest income (FTE) $11 $10 $10 Provision for loan losses 4 10 - Noninterest income 3 4 3 Noninterest expenses 9 13 9 Net income (loss) 1 (6) 3 Net credit-related charge- offs 7 6 4 Selected average balances: Assets 1,587 1,528 1,608 Loans 1,612 1,549 1,613 Deposits 375 364 333 Net interest margin 2.64% 2.61% 2.57% ------------------- ---- ---- ----
-- Average loans increased $63 million, primarily due to an increase in National Dealer Services. -- Average deposits increased $11 million, primarily due to an increase in Private Banking, partially offset by a decrease in Global Corporate Banking. -- The net interest margin of 2.64 percent increased three basis points, primarily due to an increase in deposit spreads. -- The provision for loan losses decreased $6 million, reflecting decreases in most business lines.
Conference Call and Webcast
Comerica will host a conference call to review fourth quarter and full-year 2010 financial results at 7 a.m. CT Tuesday, January 18, 2011. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 38040930). 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 January 31, 2011. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 38040930). 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, "Item 1A. Risk Factors" beginning on page 71 of Comerica's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 and "Item 1A. Risk Factors" beginning on page 72 of Comerica's Quarterly Report on Form 10-Q for the quarter ended September 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 ------------------ December September December 31, 30, 31, (in millions, except per share data) 2010 2010 2009 ------------------------ ---- ---- ---- PER COMMON SHARE AND COMMON STOCK DATA Diluted net income (loss) $0.53 $0.33 $(0.42) Cash dividends declared 0.10 0.05 0.05 Common shareholders' equity (at period end) 32.82 33.19 32.27 Average diluted shares (in thousands) 178,266 177,686 149,445 ---------------------- ------- ------- ------- KEY RATIOS Return on average common shareholders' equity 6.53% 4.07% (5.10)% Return on average assets 0.71 0.43 (0.19) Tier 1 common capital ratio (a) (b) 10.08 9.96 8.18 Tier 1 risk-based capital ratio (b) 10.08 9.96 12.46 Total risk-based capital ratio (b) 14.47 14.37 16.93 Leverage ratio (b) 11.25 10.91 13.25 Tangible common equity ratio (a) 10.54 10.39 7.99 ---------------------- ----- ----- ---- AVERAGE BALANCES Commercial loans $21,464 $20,967 $21,971 Real estate construction loans 2,371 2,625 3,703 Commercial mortgage loans 9,965 10,257 10,393 Residential mortgage loans 1,600 1,590 1,664 Consumer loans 2,367 2,421 2,517 Lease financing 1,044 1,064 1,181 International loans 1,188 1,178 1,324 ----- ----- ----- Total loans 39,999 40,102 42,753 Earning assets 49,102 50,189 53,953 Total assets 53,756 54,729 58,396 Noninterest-bearing deposits 15,607 14,920 14,430 Interest-bearing core deposits 24,289 23,866 22,312 Total core deposits 39,896 38,786 36,742 Common shareholders' equity 5,870 5,842 4,876 Total shareholders' equity 5,870 5,842 7,024 ------------------- ----- ----- ----- NET INTEREST INCOME Net interest income (fully taxable equivalent basis) $406 $405 $398 Fully taxable equivalent adjustment 1 1 2 Net interest margin 3.29% 3.23% 2.94% ------------------- ---- ---- ---- CREDIT QUALITY Nonaccrual loans $1,080 $1,163 $1,165 Reduced-rate loans 43 28 16 --- --- --- Total nonperforming loans 1,123 1,191 1,181 Foreclosed property 112 120 111 --- --- --- Total nonperforming assets 1,235 1,311 1,292 Loans past due 90 days or more and still accruing 62 104 101 Gross loan charge-offs 140 145 232 Loan recoveries 27 13 8 --- --- --- Net loan charge-offs 113 132 224 Lending-related commitment charge-offs - - 1 --- --- --- Total net credit- related charge-offs 113 132 225 Allowance for loan losses 901 957 985 Allowance for credit losses on lending- related commitments 35 38 37 --- --- --- Total allowance for credit losses 936 995 1,022 Allowance for loan losses as a percentage of total loans 2.24% 2.38% 2.34% Net loan charge-offs as a percentage of average total loans 1.13 1.32 2.09 Net credit-related charge-offs as a percentage of average total loans 1.13 1.32 2.10 Nonperforming assets as a percentage of total loans and foreclosed property 3.06 3.24 3.06 Allowance for loan losses as a percentage of total nonperforming loans 80 80 83 ----------------------- --- --- ---
Years Ended December 31, ------------ (in millions, except per share data) 2010 2009 ------------------------ ---- ---- PER COMMON SHARE AND COMMON STOCK DATA Diluted net income (loss) $0.88 $(0.79) Cash dividends declared 0.25 0.20 Common shareholders' equity (at period end) Average diluted shares (in thousands) 173,026 149,386 ---------------------- ------- ------- KEY RATIOS Return on average common shareholders' equity 2.74% (2.37)% Return on average assets 0.50 0.03 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 $21,090 $24,534 Real estate construction loans 2,839 4,140 Commercial mortgage loans 10,244 10,415 Residential mortgage loans 1,607 1,756 Consumer loans 2,429 2,553 Lease financing 1,086 1,231 International loans 1,222 1,533 ----- ----- Total loans 40,517 46,162 Earning assets 51,004 58,162 Total assets 55,553 62,809 Noninterest-bearing deposits 15,094 12,900 Interest-bearing core deposits 23,624 22,435 Total core deposits 38,718 35,335 Common shareholders' equity 5,625 4,959 Total shareholders' equity 6,068 7,099 ------------------- ----- ----- NET INTEREST INCOME Net interest income (fully taxable equivalent basis) $1,651 $1,575 Fully taxable equivalent adjustment 5 8 Net interest margin 3.24% 2.72% ------------------- ---- ---- 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 $627 $895 Loan recoveries 63 27 --- --- Net loan charge-offs 564 868 Lending-related commitment charge-offs - 1 --- --- Total net credit- related charge-offs 564 869 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 1.39% 1.88% Net credit-related charge-offs as a percentage of average total loans 1.39 1.88 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) December 31, 2010 ratios are estimated.
CONSOLIDATED BALANCE SHEETS Comerica Incorporated and Subsidiaries December September December 31, 30, 31, (in millions, except share data) 2010 2010 2009 -------------------- ---- ---- ---- (unaudited) (unaudited) ASSETS Cash and due from banks $668 $863 $774 Federal funds sold and securities purchased under agreements to resell - 100 - Interest-bearing deposits with banks 1,415 3,031 4,843 Other short-term investments 141 115 138 Investment securities available-for-sale 7,560 6,816 7,416 Commercial loans 22,145 21,432 21,690 Real estate construction loans 2,253 2,444 3,461 Commercial mortgage loans 9,767 10,180 10,457 Residential mortgage loans 1,619 1,586 1,651 Consumer loans 2,311 2,403 2,511 Lease financing 1,009 1,053 1,139 International loans 1,132 1,182 1,252 ------------------- ----- ----- ----- Total loans 40,236 40,280 42,161 Less allowance for loan losses (901) (957) (985) ------------------ ---- ---- ---- Net loans 39,335 39,323 41,176 Premises and equipment 630 639 644 Customers' liability on acceptances outstanding 9 13 11 Accrued income and other assets 3,909 4,104 4,247 ------------------ ----- ----- ----- Total assets $53,667 $55,004 $59,249 ------------ ------- ------- ------- LIABILITIES AND SHAREHOLDERS' EQUITY Noninterest-bearing deposits $15,538 $15,763 $15,871 Money market and NOW deposits 17,622 17,288 14,450 Savings deposits 1,397 1,363 1,342 Customer certificates of deposit 5,482 5,723 6,413 Other time deposits - - 1,047 Foreign office time deposits 432 494 542 ------------------- --- --- --- Total interest- bearing deposits 24,933 24,868 23,794 ---------- ------ ------ ------ Total deposits 40,471 40,631 39,665 Short-term borrowings 130 179 462 Acceptances outstanding 9 13 11 Accrued expenses and other liabilities 1,126 1,085 1,022 Medium- and long- term debt 6,138 7,239 11,060 ----------------- ----- ----- ------ Total liabilities 47,874 49,147 52,220 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 Issued -2,250,000 shares at 12/31/09 - - 2,151 Common stock -$5 par value: Authorized - 325,000,000 shares Issued -203,878,110 shares at 12/31/10 and 9/30/10, and 178,735,252 shares at 12/31/09 1,019 1,019 894 Capital surplus 1,481 1,473 740 Accumulated other comprehensive loss (389) (238) (336) Retained earnings 5,247 5,171 5,161 Less cost of common stock in treasury - 27,342,518 shares at 12/31/10, 27,394,831 shares at 9/30/10, and 27,555,623 shares at 12/31/09 (1,565) (1,568) (1,581) Total shareholders' equity 5,793 5,857 7,029 ------------- ----- ----- ----- Total liabilities and shareholders' equity $53,667 $55,004 $59,249 ------------- ------- ------- -------
CONSOLIDATED STATEMENTS OF INCOME (unaudited) Comerica Incorporated and Subsidiaries
Three Months Ended December 31, ------------ (in millions, except per share data) 2010 2009 ------------------------------------ ---- ---- INTEREST INCOME Interest and fees on loans $394 $424 Interest on investment securities 49 53 Interest on short-term investments 2 2 ---------------------------------- --- --- Total interest income 445 479 INTEREST EXPENSE Interest on deposits 24 52 Interest on short-term borrowings 1 - Interest on medium- and long-term debt 15 31 -------------------------------------- --- --- Total interest expense 40 83 ---------------------- --- --- Net interest income 405 396 Provision for loan losses 57 256 ------------------------- --- --- Net interest income after provision for loan losses 348 140 NONINTEREST INCOME Service charges on deposit accounts 49 56 Fiduciary income 39 38 Commercial lending fees 29 21 Letter of credit fees 20 19 Card fees 15 14 Foreign exchange income 11 11 Bank-owned life insurance 14 9 Brokerage fees 7 7 Net securities gains - 10 Other noninterest income 31 29 ------------------------ --- --- Total noninterest income 215 214 NONINTEREST EXPENSES Salaries 205 174 Employee benefits 43 51 ----------------- --- --- Total salaries and employee benefits 248 225 Net occupancy expense 42 43 Equipment expense 16 16 Outside processing fee expense 27 23 Software expense 23 23 FDIC insurance expense 15 15 Legal fees 9 12 Advertising expense 8 7 Other real estate expense 5 22 Litigation and operational losses 6 3 Provision for credit losses on lending- related commitments (3) 3 Other noninterest expenses 41 33 -------------------------- --- --- Total noninterest expenses 437 425 -------------------------- --- --- Income (loss) from continuing operations before income taxes 126 (71) Provision (benefit) for income taxes 30 (42) ------------------------------------ --- --- Income (loss) from continuing operations 96 (29) Income from discontinued operations, net of tax - - ---------------------------------------- --- --- NET INCOME (LOSS) 96 (29) Less: Preferred stock dividends - 33 Income allocated to participating securities 1 - Net income (loss) attributable to common shares $95 $(62) ---------------------------------------- --- ---- Basic earnings per common share: Income (loss) from continuing operations $0.54 $(0.42) Net income (loss) 0.54 (0.42) Diluted earnings per common share: Income (loss) from continuing operations 0.53 (0.42) Net income (loss) 0.53 (0.42) Cash dividends declared on common stock 18 8 Cash dividends declared per common share 0.10 0.05 ---------------------------------------- ---- ----
Years Ended December 31, --------- (in millions, except per share data) 2010 2009 ------------------------------------ ---- ---- INTEREST INCOME Interest and fees on loans $1,617 $1,767 Interest on investment securities 226 329 Interest on short-term investments 10 9 ---------------------------------- --- --- Total interest income 1,853 2,105 INTEREST EXPENSE Interest on deposits 115 372 Interest on short-term borrowings 1 2 Interest on medium- and long-term debt 91 164 -------------------------------------- --- --- Total interest expense 207 538 ---------------------- --- --- Net interest income 1,646 1,567 Provision for loan losses 480 1,082 ------------------------- --- ----- Net interest income after provision for loan losses 1,166 485 NONINTEREST INCOME Service charges on deposit accounts 208 228 Fiduciary income 154 161 Commercial lending fees 95 79 Letter of credit fees 76 69 Card fees 58 51 Foreign exchange income 39 41 Bank-owned life insurance 40 35 Brokerage fees 25 31 Net securities gains 3 243 Other noninterest income 91 112 ------------------------ --- --- Total noninterest income 789 1,050 NONINTEREST EXPENSES Salaries 740 687 Employee benefits 179 210 ----------------- --- --- Total salaries and employee benefits 919 897 Net occupancy expense 162 162 Equipment expense 63 62 Outside processing fee expense 96 97 Software expense 89 84 FDIC insurance expense 62 90 Legal fees 35 37 Advertising expense 30 29 Other real estate expense 29 48 Litigation and operational losses 11 10 Provision for credit losses on lending- related commitments (2) - Other noninterest expenses 146 134 -------------------------- --- --- Total noninterest expenses 1,640 1,650 -------------------------- ----- ----- Income (loss) from continuing operations before income taxes 315 (115) Provision (benefit) for income taxes 55 (131) ------------------------------------ --- ---- Income (loss) from continuing operations 260 16 Income from discontinued operations, net of tax 17 1 ---------------------------------------- --- --- NET INCOME (LOSS) 277 17 Less: Preferred stock dividends 123 134 Income allocated to participating securities 1 1 Net income (loss) attributable to common shares $153 $(118) ---------------------------------------- ---- ----- Basic earnings per common share: Income (loss) from continuing operations $0.79 $(0.80) Net income (loss) 0.90 (0.79) Diluted earnings per common share: Income (loss) from continuing operations 0.78 (0.80) Net income (loss) 0.88 (0.79) Cash dividends declared on common stock 44 30 Cash dividends declared per common share 0.25 0.20 ---------------------------------------- ---- ----
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (unaudited) Comerica Incorporated and Subsidiaries
Fourth Third Second Quarter Quarter Quarter (in millions, except per share data) 2010 2010 2010 ------------------------------------ ---- ---- ---- INTEREST INCOME Interest and fees on loans $394 $399 $412 Interest on investment securities 49 55 61 Interest on short-term investments 2 2 3 ---------------------------------- --- --- --- Total interest income 445 456 476 INTEREST EXPENSE Interest on deposits 24 27 29 Interest on short-term borrowings 1 - - Interest on medium- and long-term debt 15 25 25 -------------------------------------- --- --- --- Total interest expense 40 52 54 ---------------------- --- --- --- Net interest income 405 404 422 Provision for loan losses 57 122 126 ------------------------- --- --- --- Net interest income after provision for loan losses 348 282 296 NONINTEREST INCOME Service charges on deposit accounts 49 51 52 Fiduciary income 39 38 38 Commercial lending fees 29 22 22 Letter of credit fees 20 19 19 Card fees 15 15 15 Foreign exchange income 11 8 10 Bank-owned life insurance 14 9 9 Brokerage fees 7 6 6 Net securities gains - - 1 Other noninterest income 31 18 22 ------------------------ --- --- --- Total noninterest income 215 186 194 NONINTEREST EXPENSES Salaries 205 187 179 Employee benefits 43 47 45 ----------------- --- --- --- Total salaries and employee benefits 248 234 224 Net occupancy expense 42 40 39 Equipment expense 16 15 15 Outside processing fee expense 27 23 23 Software expense 23 22 22 FDIC insurance expense 15 14 16 Legal fees 9 9 9 Advertising expense 8 7 7 Other real estate expense 5 7 5 Litigation and operational losses 6 2 2 Provision for credit losses on lending-related commitments (3) (6) - Other noninterest expenses 41 35 35 -------------------------- --- --- --- Total noninterest expenses 437 402 397 -------------------------- --- --- --- Income (loss) from continuing operations before income taxes 126 66 93 Provision (benefit) for income taxes 30 7 23 ------------------------------------ --- --- --- Income (loss) from continuing operations 96 59 70 Income from discontinued operations, net of tax - - - ----------------------------------------------- --- --- --- NET INCOME (LOSS) 96 59 70 Less: Preferred stock dividends - - - Income allocated to participating securities 1 - 1 Net income (loss) attributable to common shares $95 $59 $69 ----------------------------------------------- --- --- --- Basic earnings per common share: Income (loss) from continuing operations $0.54 $0.34 $0.40 Net income (loss) 0.54 0.34 0.40 Diluted earnings per common share: Income (loss) from continuing operations 0.53 0.33 0.39 Net income (loss) 0.53 0.33 0.39 Cash dividends declared on common stock 18 9 8 Cash dividends declared per common share 0.10 0.05 0.05 ---------------------------------------- ---- ---- ----
First Fourth Quarter Quarter (in millions, except per share data) 2010 2009 ------------------------------------ ---- ---- INTEREST INCOME Interest and fees on loans $412 $424 Interest on investment securities 61 53 Interest on short-term investments 3 2 ---------------------------------- --- --- Total interest income 476 479 INTEREST EXPENSE Interest on deposits 35 52 Interest on short-term borrowings - - Interest on medium- and long-term debt 26 31 -------------------------------------- --- --- Total interest expense 61 83 ---------------------- --- --- Net interest income 415 396 Provision for loan losses 175 256 ------------------------- --- --- Net interest income after provision for loan losses 240 140 NONINTEREST INCOME Service charges on deposit accounts 56 56 Fiduciary income 39 38 Commercial lending fees 22 21 Letter of credit fees 18 19 Card fees 13 14 Foreign exchange income 10 11 Bank-owned life insurance 8 9 Brokerage fees 6 7 Net securities gains 2 10 Other noninterest income 20 29 ------------------------ --- --- Total noninterest income 194 214 NONINTEREST EXPENSES Salaries 169 174 Employee benefits 44 51 ----------------- --- --- Total salaries and employee benefits 213 225 Net occupancy expense 41 43 Equipment expense 17 16 Outside processing fee expense 23 23 Software expense 22 23 FDIC insurance expense 17 15 Legal fees 8 12 Advertising expense 8 7 Other real estate expense 12 22 Litigation and operational losses 1 3 Provision for credit losses on lending-related commitments 7 3 Other noninterest expenses 35 33 -------------------------- --- --- Total noninterest expenses 404 425 -------------------------- --- --- Income (loss) from continuing operations before income taxes 30 (71) Provision (benefit) for income taxes (5) (42) ------------------------------------ --- --- Income (loss) from continuing operations 35 (29) Income from discontinued operations, net of tax 17 - ----------------------------------------------- --- --- NET INCOME (LOSS) 52 (29) Less: Preferred stock dividends 123 33 Income allocated to participating securities - - Net income (loss) attributable to common shares $(71) $(62) ----------------------------------------------- ---- ---- Basic earnings per common share: Income (loss) from continuing operations $(0.57) $(0.42) Net income (loss) (0.46) (0.42) Diluted earnings per common share: Income (loss) from continuing operations (0.57) (0.42) Net income (loss) (0.46) (0.42) Cash dividends declared on common stock 9 8 Cash dividends declared per common share 0.05 0.05 ---------------------------------------- ---- ----
Fourth Quarter 2010 Compared To: ---------------------------- Third Quarter 2010 (in millions, except per share data) Amount Percent ------------------------------ ------ ------- INTEREST INCOME Interest and fees on loans $(5) (1)% Interest on investment securities (6) (9) Interest on short-term investments - (33) ---------------------------------- --- --- Total interest income (11) (2) INTEREST EXPENSE Interest on deposits (3) (7) Interest on short-term borrowings 1 (35) Interest on medium- and long- term debt (10) (36) ----------------------------- --- --- Total interest expense (12) (21) ---------------------- --- --- Net interest income 1 - Provision for loan losses (65) (53) ------------------------- --- --- Net interest income after provision for loan losses 66 23 NONINTEREST INCOME Service charges on deposit accounts (2) (6) Fiduciary income 1 3 Commercial lending fees 7 37 Letter of credit fees 1 3 Card fees - 4 Foreign exchange income 3 28 Bank-owned life insurance 5 63 Brokerage fees 1 13 Net securities gains - N/M Other noninterest income 13 64 ------------------------ --- --- Total noninterest income 29 15 NONINTEREST EXPENSES Salaries 18 10 Employee benefits (4) (6) ----------------- --- --- Total salaries and employee benefits 14 7 Net occupancy expense 2 4 Equipment expense 1 6 Outside processing fee expense 4 17 Software expense 1 11 FDIC insurance expense 1 1 Legal fees - (3) Advertising expense 1 3 Other real estate expense (2) (40) Litigation and operational losses 4 N/M Provision for credit losses on lending-related commitments 3 35 Other noninterest expenses 6 22 -------------------------- --- --- Total noninterest expenses 35 9 -------------------------- --- --- Income (loss) from continuing operations before income taxes 60 88 Provision (benefit) for income taxes 23 N/M ------------------------------ --- --- Income (loss) from continuing operations 37 61 Income from discontinued operations, net of tax - - ------------------------ --- --- NET INCOME (LOSS) 37 61 Less: Preferred stock dividends - - Income allocated to participating securities 1 62 --- Net income (loss) attributable to common shares $36 61% --------------------------------- --- --- Basic earnings per common share: Income (loss) from continuing operations $0.20 59% Net income (loss) 0.20 59 Diluted earnings per common share: Income (loss) from continuing operations 0.20 61 Net income (loss) 0.20 61 Cash dividends declared on common stock 9 N/M Cash dividends declared per common share 0.05 N/M ---------------------------------- ---- ---
Fourth Quarter 2010 Compared To: ---------------------------- Fourth Quarter 2009 (in millions, except per share data) Amount Percent ------------------------ ------ ------- INTEREST INCOME Interest and fees on loans $(30) (7)% Interest on investment securities (4) (6) Interest on short-term investments - (22) ---------------------- --- --- Total interest income (34) (7) INTEREST EXPENSE Interest on deposits (28) (52) Interest on short-term borrowings 1 N/M Interest on medium- and long-term debt (16) (49) ----------------------- --- --- Total interest expense (43) (51) ---------------------- --- --- Net interest income 9 2 Provision for loan losses (199) (78) ------------------------- ---- --- Net interest income after provision for loan losses 208 N/M NONINTEREST INCOME Service charges on deposit accounts (7) (13) Fiduciary income 1 1 Commercial lending fees 8 38 Letter of credit fees 1 4 Card fees 1 14 Foreign exchange income - 3 Bank-owned life insurance 5 57 Brokerage fees - (1) Net securities gains (10) (99) Other noninterest income 2 4 ------------------------ --- --- Total noninterest income 1 - NONINTEREST EXPENSES Salaries 31 17 Employee benefits (8) (15) ----------------- --- --- Total salaries and employee benefits 23 10 Net occupancy expense (1) (3) Equipment expense - 4 Outside processing fee expense 4 20 Software expense - 7 FDIC insurance expense - (5) Legal fees (3) (26) Advertising expense 1 5 Other real estate expense (17) (79) Litigation and operational losses 3 N/M Provision for credit losses on lending-related commitments (6) N/M Other noninterest expenses 8 17 -------------------------- --- --- Total noninterest expenses 12 3 -------------------------- --- --- Income (loss) from continuing operations before income taxes 197 N/M Provision (benefit) for income taxes 72 N/M ----------------------- --- --- Income (loss) from continuing operations 125 N/M Income from discontinued operations, net of tax - - ------------------------ --- --- NET INCOME (LOSS) 125 N/M Less: Preferred stock dividends (33) N/M Income allocated to participating securities 1 N/M --- Net income (loss) attributable to common shares $157 N/M % ----------------------- ---- --- Basic earnings per common share: Income (loss) from continuing operations $0.96 N/M % Net income (loss) 0.96 N/M Diluted earnings per common share: Income (loss) from continuing operations 0.95 N/M Net income (loss) 0.95 N/M Cash dividends declared on common stock 10 N/M Cash dividends declared per common share 0.05 N/M --------------------------- ---- ---
N/M - Not meaningful
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited) Comerica Incorporated and Subsidiaries
2010 ---- 4th 3rd (in millions) Qtr Qtr ---- ---- Balance at beginning of period $957 $967 Loan charge-offs: Commercial 43 38 Real estate construction: Commercial Real Estate business line (a) 34 40 Other business lines (b) - 1 Total real estate construction 34 41 Commercial mortgage: Commercial Real Estate business line (a) 9 16 Other business lines (b) 34 40 Total commercial mortgage 43 56 Residential mortgage 5 2 Consumer 15 7 Lease financing - - International - 1 ------------- --- --- Total loan charge-offs 140 145 Recoveries on loans previously charged-off: Commercial 7 7 Real estate construction 3 1 Commercial mortgage 10 2 Residential mortgage 1 - Consumer 2 1 Lease financing 4 1 International - 1 Total recoveries 27 13 Net loan charge-offs 113 132 Provision for loan losses 57 122 Balance at end of period $901 $957 ------------------------ ---- ---- Allowance for loan losses as a percentage of total loans 2.24% 2.38% Net loan charge-offs as a percentage of average total loans 1.13 1.32 Net credit-related charge-offs as a percentage of average total loans 1.13 1.32 ------------------------------------------------- ---- ----
2010 ---- 2nd 1st (in millions) Qtr Qtr ---- ---- Balance at beginning of period $987 $985 Loan charge-offs: Commercial 65 49 Real estate construction: Commercial Real Estate business line (a) 30 71 Other business lines (b) - 3 Total real estate construction 30 74 Commercial mortgage: Commercial Real Estate business line (a) 12 16 Other business lines (b) 36 28 Total commercial mortgage 48 44 Residential mortgage 5 2 Consumer 9 8 Lease financing 1 - International - 7 ------------- --- --- Total loan charge-offs 158 184 Recoveries on loans previously charged-off: Commercial 4 7 Real estate construction 6 1 Commercial mortgage 1 3 Residential mortgage - - Consumer 1 - Lease financing - - International - - Total recoveries 12 11 Net loan charge-offs 146 173 Provision for loan losses 126 175 Balance at end of period $967 $987 ------------------------ ---- ---- Allowance for loan losses as a percentage of total loans 2.38% 2.42% Net loan charge-offs as a percentage of average total loans 1.44 1.68 Net credit-related charge-offs as a percentage of average total loans 1.44 1.68 ------------------------------------------------- ---- ----
2009 ---- 4th (in millions) Qtr ---- Balance at beginning of period $953 Loan charge-offs: Commercial 113 Real estate construction: Commercial Real Estate business line (a) 33 Other business lines (b) - Total real estate construction 33 Commercial mortgage: Commercial Real Estate business line (a) 27 Other business lines (b) 25 Total commercial mortgage 52 Residential mortgage 6 Consumer 9 Lease financing 6 International 13 ------------- --- Total loan charge-offs 232 Recoveries on loans previously charged-off: Commercial 7 Real estate construction - Commercial mortgage 1 Residential mortgage - Consumer - Lease financing - International - Total recoveries 8 Net loan charge-offs 224 Provision for loan losses 256 Balance at end of period $985 ------------------------ ---- Allowance for loan losses as a percentage of total loans 2.34% Net loan charge-offs as a percentage of average total loans 2.09 Net credit-related charge-offs as a percentage of average total loans 2.10 ------------------------------------------------- ----
(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 ---- 4th 3rd (in millions) Qtr Qtr ---- ---- Balance at beginning of period $38 $44 Less: Charge-offs on lending-related commitments (a) - - Add: Provision for credit losses on lending-related commitments (3) (6) Balance at end of period $35 $38 ------------------------ --- --- Unfunded lending-related commitments sold $- $- ----------------------------------------- --- ---
2010 ---- 2nd 1st (in millions) Qtr Qtr ---- ---- Balance at beginning of period $44 $37 Less: Charge-offs on lending-related commitments (a) - - Add: Provision for credit losses on lending-related commitments - 7 Balance at end of period $44 $44 ------------------------ --- --- Unfunded lending-related commitments sold $2 $- ----------------------------------------- --- ---
2009 ---- 4th (in millions) Qtr ---- Balance at beginning of period $35 Less: Charge-offs on lending-related commitments (a) 1 Add: Provision for credit losses on lending-related commitments 3 Balance at end of period $37 ------------------------ --- Unfunded lending-related commitments sold $3 ----------------------------------------- ---
(a) Charge-offs result from the sale of unfunded lending-related commitments.
NONPERFORMING ASSETS (unaudited) Comerica Incorporated and Subsidiaries
2010 ---- (in millions) 4th Qtr 3rd Qtr ------------- ------- ------- SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS Nonaccrual loans: Business loans: Commercial $252 $258 Real estate construction: Commercial Real Estate business line (a) 259 362 Other business lines (b) 4 4 Total real estate construction 263 366 Commercial mortgage: Commercial Real Estate business line (a) 181 153 Other business lines (b) 302 304 Total commercial mortgage 483 457 Lease financing 7 10 International 2 2 ------------- --- --- Total nonaccrual business loans 1,007 1,093 Retail loans: Residential mortgage 55 59 Consumer: Home equity 5 5 Other consumer 13 6 -------------- --- --- Total consumer 18 11 -------------- --- --- Total nonaccrual retail loans 73 70 ----------------------------- --- --- Total nonaccrual loans 1,080 1,163 Reduced-rate loans 43 28 Total nonperforming loans 1,123 1,191 Foreclosed property 112 120 Total nonperforming assets $1,235 $1,311 -------------------------- ------ ------ Nonperforming loans as a percentage of total loans 2.79% 2.96% Nonperforming assets as a percentage of total loans and foreclosed property 3.06 3.24 Allowance for loan losses as a percentage of total nonperforming loans 80 80 Loans past due 90 days or more and still accruing $62 $104 ANALYSIS OF NONACCRUAL LOANS Nonaccrual loans at beginning of period $1,163 $1,098 Loans transferred to nonaccrual (c) 180 294 Nonaccrual business loan gross charge-offs (d) (120) (136) Loans transferred to accrual status (c) (4) (10) Nonaccrual business loans sold (e) (41) (12) Payments/Other (f) (98) (71) Nonaccrual loans at end of period $1,080 $1,163 --------------------------------- ------ ------ (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 $120 $136 Performing watch list loans - - Consumer and residential mortgage loans 20 9 --- --- Total gross loan charge-offs $140 $145 --------- (e) Analysis of loans sold: Nonaccrual business loans $41 $12 Performing watch list loans 29 7 --- --- Total loans sold $70 $19 ---------------- --- ---
2010 ---- 1st (in millions) 2nd Qtr Qtr -------------------------- ------- ---- SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS Nonaccrual loans: Business loans: Commercial $239 $209 Real estate construction: Commercial Real Estate business line (a) 385 516 Other business lines (b) 4 3 Total real estate construction 389 519 Commercial mortgage: Commercial Real Estate business line (a) 135 105 Other business lines (b) 257 226 Total commercial mortgage 392 331 Lease financing 11 11 International 3 4 ------------- --- --- Total nonaccrual business loans 1,034 1,074 Retail loans: Residential mortgage 53 58 Consumer: Home equity 7 8 Other consumer 4 5 -------------- --- --- Total consumer 11 13 -------------- --- --- Total nonaccrual retail loans 64 71 ----------------------- --- --- Total nonaccrual loans 1,098 1,145 Reduced-rate loans 23 17 Total nonperforming loans 1,121 1,162 Foreclosed property 93 89 Total nonperforming assets $1,214 $1,251 -------------------------- ------ ------ Nonperforming loans as a percentage of total loans 2.76% 2.85% Nonperforming assets as a percentage of total loans and foreclosed property 2.98 3.06 Allowance for loan losses as a percentage of total nonperforming loans 86 85 Loans past due 90 days or more and still accruing $115 $83 ANALYSIS OF NONACCRUAL LOANS Nonaccrual loans at beginning of period $1,145 $1,165 Loans transferred to nonaccrual (c) 199 245 Nonaccrual business loan gross charge-offs (d) (143) (174) Loans transferred to accrual status (c) - - Nonaccrual business loans sold (e) (47) (44) Payments/Other (f) (56) (47) Nonaccrual loans at end of period $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 $143 $174 Performing watch list loans 1 - Consumer and residential mortgage loans 14 10 --- --- Total gross loan charge-offs $158 $184 ---------- (e) Analysis of loans sold: Nonaccrual business loans $47 $44 Performing watch list loans 15 12 --- --- Total loans sold $62 $56 ---------------- --- ---
2009 ---- 4th (in millions) Qtr -------------------------- ---- SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS Nonaccrual loans: Business loans: Commercial $238 Real estate construction: Commercial Real Estate business line (a) 507 Other business lines (b) 4 Total real estate construction 511 Commercial mortgage: Commercial Real Estate business line (a) 127 Other business lines (b) 192 Total commercial mortgage 319 Lease financing 13 International 22 ------------- --- Total nonaccrual business loans 1,103 Retail loans: Residential mortgage 50 Consumer: Home equity 8 Other consumer 4 -------------- --- Total consumer 12 -------------- --- Total nonaccrual retail loans 62 ----------------------------- --- Total nonaccrual loans 1,165 Reduced-rate loans 16 Total nonperforming loans 1,181 Foreclosed property 111 Total nonperforming assets $1,292 -------------------------- ------ Nonperforming loans as a percentage of total loans 2.80% Nonperforming assets as a percentage of total loans and foreclosed property 3.06 Allowance for loan losses as a percentage of total nonperforming loans 83 Loans past due 90 days or more and still accruing $101 ANALYSIS OF NONACCRUAL LOANS Nonaccrual loans at beginning of period $1,194 Loans transferred to nonaccrual (c) 266 Nonaccrual business loan gross charge-offs (d) (217) Loans transferred to accrual status (c) - Nonaccrual business loans sold (e) (10) Payments/Other (f) (68) Nonaccrual loans at end of period $1,165 --------------------------------- ------ (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 Performing watch list loans - Consumer and residential mortgage loans 15 --- Total gross loan charge-offs $232 -------- (e) Analysis of loans sold: Nonaccrual business loans $10 Performing watch list loans 1 --- Total loans sold $11 ---------------- ---
(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
Years Ended ----------- December 31, 2010 ----------------- Average Average (dollar amounts in millions) Balance Interest Rate ---------------------------- ------- -------- ---- Commercial loans $21,090 $820 3.89% Real estate construction loans 2,839 90 3.17 Commercial mortgage loans 10,244 421 4.10 Residential mortgage loans 1,607 85 5.30 Consumer loans 2,429 86 3.54 Lease financing 1,086 42 3.88 International loans 1,222 48 3.94 Business loan swap income - 28 - --- --- --- Total loans 40,517 1,620 4.00 Auction-rate securities available- for-sale 745 8 1.01 Other investment securities available- for-sale 6,419 220 3.51 ----- --- ---- Total investment securities available- for-sale 7,164 228 3.24 Federal funds sold and securities purchased under agreements to resell 6 - 0.36 Interest-bearing deposits with banks (a) 3,191 8 0.25 Other short-term investments 126 2 1.58 --- --- ---- Total earning assets 51,004 1,858 3.65 Cash and due from banks 825 Allowance for loan losses (1,019) Accrued income and other assets 4,743 ----- Total assets $55,553 ------- Money market and NOW deposits $16,355 51 0.31 Savings deposits 1,394 1 0.08 Customer certificates of deposit 5,875 53 0.90 ----- --- ---- Total interest-bearing core deposits 23,624 105 0.44 Other time deposits 306 9 3.04 Foreign office time deposits 462 1 0.31 --- --- ---- Total interest-bearing deposits 24,392 115 0.47 Short-term borrowings 216 1 0.25 Medium- and long-term debt 8,684 91 1.05 ----- --- ---- Total interest-bearing sources 33,292 207 0.62 Noninterest-bearing deposits 15,094 Accrued expenses and other liabilities 1,099 Total shareholders' equity 6,068 ----- Total liabilities and shareholders' equity $55,553 ------- Net interest income/rate spread (FTE) $1,651 3.03 ------ FTE adjustment $5 --- Impact of net noninterest-bearing sources of funds 0.21 Net interest margin (as a percentage of average earning assets) (FTE) (a) 3.24% ------------------------------------- ----
Years Ended ----------- December 31, 2009 ----------------- Average Average (dollar amounts in millions) Balance Interest Rate ---------------------------- ------- -------- ---- Commercial loans $24,534 $890 3.63% Real estate construction loans 4,140 121 2.92 Commercial mortgage loans 10,415 437 4.20 Residential mortgage loans 1,756 97 5.53 Consumer loans 2,553 94 3.68 Lease financing 1,231 40 3.25 International loans 1,533 58 3.79 Business loan swap income - 34 - --- --- --- Total loans 46,162 1,771 3.84 Auction-rate securities available- for-sale 1,010 15 1.47 Other investment securities available- for-sale 8,378 318 3.88 ----- --- ---- Total investment securities available- for-sale 9,388 333 3.61 Federal funds sold and securities purchased under agreements to resell 18 - 0.32 Interest-bearing deposits with banks (a) 2,440 6 0.25 Other short-term investments 154 3 1.74 --- --- ---- Total earning assets 58,162 2,113 3.64 Cash and due from banks 883 Allowance for loan losses (947) Accrued income and other assets 4,711 ----- Total assets $62,809 ------- Money market and NOW deposits $12,965 63 0.49 Savings deposits 1,339 2 0.11 Customer certificates of deposit 8,131 183 2.26 ----- --- ---- Total interest-bearing core deposits 22,435 248 1.11 Other time deposits 4,103 121 2.96 Foreign office time deposits 653 2 0.29 --- --- ---- Total interest-bearing deposits 27,191 371 1.37 Short-term borrowings 1,000 2 0.24 Medium- and long-term debt 13,334 165 1.23 ------ --- ---- Total interest-bearing sources 41,525 538 1.29 Noninterest-bearing deposits 12,900 Accrued expenses and other liabilities 1,285 Total shareholders' equity 7,099 ----- Total liabilities and shareholders' equity $62,809 ------- Net interest income/rate spread (FTE) $1,575 2.35 ------ FTE adjustment $8 --- Impact of net noninterest-bearing sources of funds 0.37 Net interest margin (as a percentage of average earning assets) (FTE) (a) 2.72% ------------------------------------- ----
(a) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 20 basis points and 11 basis points in 2010 and 2009, respectively. Excluding excess liquidity, the net interest margin would have been 3.44% in 2010 and 2.83% in 2009. See Reconciliation of Non-GAAP Financial Measures.
ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited) Comerica Incorporated and Subsidiaries
Three Months Ended ------------------ December 31, 2010 ----------------- Average Average (dollar amounts in millions) Balance Interest Rate ---------------------------- ------- -------- ---- Commercial loans $21,464 $206 3.80% Real estate construction loans 2,371 21 3.50 Commercial mortgage loans 9,965 100 3.97 Residential mortgage loans 1,600 20 5.11 Consumer loans 2,367 21 3.50 Lease financing 1,044 11 4.36 International loans 1,188 11 3.86 Business loan swap income - 4 - --- --- --- Total loans 39,999 394 3.92 Auction-rate securities available- for-sale 617 2 0.92 Other investment securities available- for-sale 6,495 48 3.07 ----- --- ---- Total investment securities available- for-sale 7,112 50 2.87 Federal funds sold and securities purchased under agreements to resell 8 - 0.32 Interest-bearing deposits with banks (a) 1,856 1 0.25 Other short-term investments 127 1 1.40 --- --- ---- Total earning assets 49,102 446 3.62 Cash and due from banks 871 Allowance for loan losses (979) Accrued income and other assets 4,762 ----- Total assets $53,756 ------- Money market and NOW deposits $17,302 13 0.29 Savings deposits 1,385 - 0.09 Customer certificates of deposit 5,602 11 0.80 ----- --- ---- Total interest-bearing core deposits 24,289 24 0.39 Other time deposits - - - Foreign office time deposits 460 - 0.45 --- --- ---- Total interest-bearing deposits 24,749 24 0.40 Short-term borrowings 174 1 0.27 Medium- and long-term debt 6,201 15 1.02 ----- --- ---- Total interest-bearing sources 31,124 40 0.52 Noninterest-bearing deposits 15,607 Accrued expenses and other liabilities 1,155 Total shareholders' equity 5,870 ----- Total liabilities and shareholders' equity $53,756 ------- Net interest income/rate spread (FTE) $406 3.10 ---- FTE adjustment $1 --- Impact of net noninterest-bearing sources of funds 0.19 Net interest margin (as a percentage of average earning assets) (FTE) (a) 3.29% ------------------------------------- ----
Three Months Ended ------------------ September 30, 2010 ------------------ Average Average (dollar amounts in millions) Balance Interest 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 ------------------ December 31, 2009 ----------------- Average Average (dollar amounts in millions) Balance Interest Rate ---------------------------- ------- -------- ---- Commercial loans $21,971 $212 3.84% Real estate construction loans 3,703 27 2.90 Commercial mortgage loans 10,393 110 4.19 Residential mortgage loans 1,664 21 5.01 Consumer loans 2,517 23 3.59 Lease financing 1,181 11 3.80 International loans 1,324 12 3.73 Business loan swap income - 9 - --- --- --- Total loans 42,753 425 3.95 Auction-rate securities available- for-sale 923 3 1.37 Other investment securities available- for-sale 7,664 51 2.67 ----- --- ---- Total investment securities available- for-sale 8,587 54 2.53 Federal funds sold and securities purchased under agreements to resell 1 - 0.29 Interest-bearing deposits with banks (a) 2,480 1 0.25 Other short-term investments 132 1 1.55 --- --- ---- Total earning assets 53,953 481 3.55 Cash and due from banks 831 Allowance for loan losses (1,048) Accrued income and other assets 4,660 ----- Total assets $58,396 ------- Money market and NOW deposits $14,113 14 0.39 Savings deposits 1,376 - 0.08 Customer certificates of deposit 6,823 25 1.42 ----- --- ---- Total interest-bearing core deposits 22,312 39 0.69 Other time deposits 1,493 12 3.22 Foreign office time deposits 550 - 0.22 --- --- ---- Total interest-bearing deposits 24,355 51 0.83 Short-term borrowings 222 - 0.09 Medium- and long-term debt 11,140 32 1.12 ------ --- ---- Total interest-bearing sources 35,717 83 0.92 Noninterest-bearing deposits 14,430 Accrued expenses and other liabilities 1,225 Total shareholders' equity 7,024 ----- Total liabilities and shareholders' equity $58,396 ------- Net interest income/rate spread (FTE) $398 2.63 ---- FTE adjustment $2 --- Impact of net noninterest-bearing sources of funds 0.31 Net interest margin (as a percentage of average earning assets) (FTE) (a) 2.94% ------------------------------------- ----
(a) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 12 basis points and 19 basis points in the fourth and third quarters of 2010, respectively, and by 13 basis points in the fourth quarter of 2009. Excluding excess liquidity, the net interest margin would have been 3.41%, 3.42% and 3.07% in each respective period. See Reconciliation of Non-GAAP Financial Measures.
CONSOLIDATED STATISTICAL DATA (unaudited) Comerica Incorporated and Subsidiaries
December 31, September 30, June 30, (in millions, except per share data) 2010 2010 2010 ------------------------ ---- ---- ---- Commercial loans: Floor plan $2,017 $1,693 $1,586 Other 20,128 19,739 19,565 ----- ------ ------ ------ Total commercial loans 22,145 21,432 21,151 Real estate construction loans: Commercial Real Estate business line (a) 1,826 2,023 2,345 Other business lines (b) 427 421 429 ------------------------ --- --- --- Total real estate construction loans 2,253 2,444 2,774 Commercial mortgage loans: Commercial Real Estate business line (a) 1,937 2,091 2,035 Other business lines (b) 7,830 8,089 8,283 ------------------------ ----- ----- ----- Total commercial mortgage loans 9,767 10,180 10,318 Residential mortgage loans 1,619 1,586 1,606 Consumer loans: Home equity 1,704 1,736 1,761 Other consumer 607 667 682 -------------- --- --- --- Total consumer loans 2,311 2,403 2,443 Lease financing 1,009 1,053 1,084 International loans 1,132 1,182 1,226 ------------------- ----- ----- ----- Total loans $40,236 $40,280 $40,602 ----------- ------- ------- ------- Goodwill $150 $150 $150 Loan servicing rights 5 5 6 Tier 1 common capital ratio (c) (d) 10.08% 9.96% 9.81% Tier 1 risk-based capital ratio (d) 10.08 9.96 10.64 Total risk-based capital ratio (d) 14.47 14.37 15.03 Leverage ratio (d) 11.25 10.91 11.36 Tangible common equity ratio (c) 10.54 10.39 10.11 Book value per common share $32.82 $33.19 $32.85 Market value per share for the quarter: High 43.44 40.21 45.85 Low 34.43 33.11 35.44 Close 42.24 37.15 36.83 Quarterly ratios: Return on average common shareholders' equity 6.53% 4.07% 4.89% Return on average assets 0.71 0.43 0.50 Efficiency ratio 70.38 67.88 64.47 Number of banking centers 444 441 437 Number of employees -full time equivalent 9,001 9,075 9,107
March 31, December 31, (in millions, except per share data) 2010 2009 ------------------------------ ---- ---- Commercial loans: Floor plan $1,351 $1,367 Other 19,405 20,323 ----- ------ ------ Total commercial loans 20,756 21,690 Real estate construction loans: Commercial Real Estate business line (a) 2,754 3,002 Other business lines (b) 448 459 ------------------------ --- --- Total real estate construction loans 3,202 3,461 Commercial mortgage loans: Commercial Real Estate business line (a) 1,944 1,889 Other business lines (b) 8,414 8,568 ------------------------ ----- ----- Total commercial mortgage loans 10,358 10,457 Residential mortgage loans 1,631 1,651 Consumer loans: Home equity 1,782 1,817 Other consumer 690 694 -------------- --- --- Total consumer loans 2,472 2,511 Lease financing 1,120 1,139 International loans 1,306 1,252 ------------------- ----- ----- Total loans $40,845 $42,161 ----------- ------- ------- Goodwill $150 $150 Loan servicing rights 6 7 Tier 1 common capital ratio (c) (d) 9.57% 8.18% Tier 1 risk-based capital ratio (d) 10.38 12.46 Total risk-based capital ratio (d) 14.91 16.93 Leverage ratio (d) 11.00 13.25 Tangible common equity ratio (c) 9.68 7.99 Book value per common share $32.15 $32.27 Market value per share for the quarter: High 39.36 32.30 Low 29.68 26.49 Close 38.04 29.57 Quarterly ratios: Return on average common shareholders' equity (5.61)% (5.10)% Return on average assets 0.36 (0.19) Efficiency ratio 66.45 70.68 Number of banking centers 449 447 Number of employees -full time equivalent 9,215 9,330
(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) December 31, 2010 ratios are estimated.
PARENT COMPANY ONLY BALANCE SHEETS (unaudited) Comerica Incorporated
December 31, September 30, December 31, (in millions, except share data) 2010 2010 2009 ------------- ---- ---- ---- ASSETS Cash and due from subsidiary bank $- $10 $5 Short-term investments with subsidiary bank 327 793 2,150 Other short-term investments 86 82 86 Investment in subsidiaries, principally banks 5,957 6,039 5,710 Premises and equipment 4 3 4 Other assets 181 202 186 Total assets $6,555 $7,129 $8,141 ------------ ------ ------ ------ LIABILITIES AND SHAREHOLDERS' EQUITY Medium- and long- term debt $635 $1,155 $986 Other liabilities 127 117 126 Total liabilities 762 1,272 1,112 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 Issued - 2,250,000 shares at 12/31/09 - - 2,151 Common stock -$5 par value: Authorized - 325,000,000 shares Issued - 203,878,110 shares at 12/31/10 and 9/30/10, and 178,735,252 shares at 12/31/09 1,019 1,019 894 Capital surplus 1,481 1,473 740 Accumulated other comprehensive loss (389) (238) (336) Retained earnings 5,247 5,171 5,161 Less cost of common stock in treasury - 27,342,518 shares at 12/31/10, 27,394,831 shares at 9/30/10, and 27,555,623 shares at 12/31/09 (1,565) (1,568) (1,581) Total shareholders' equity 5,793 5,857 7,029 Total liabilities and shareholders' equity $6,555 $7,129 $8,141 ------------------ ------ ------ ------
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) Comerica Incorporated and Subsidiaries
Common Stock ------------ Preferred Shares (in millions, except per share data) Stock Outstanding Amount ------------------------------------ ----- ----------- ------ 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 ($0.20 per share) - - - Purchase of common stock - (0.1) - Accretion of discount on preferred stock 22 - - Net issuance of common stock under employee stock plans - 0.8 - Share-based compensation - - - Other - - - ----- --- --- --- BALANCE AT DECEMBER 31, 2009 $2,151 151.2 $894 ---------------------------- ------ ----- ---- Net income - - - Other comprehensive loss, net of tax - - - Total comprehensive income Cash dividends declared on preferred stock - - - Cash dividends declared on common stock ($0.25 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 DECEMBER 31, 2010 $- 176.5 $1,019 ---------------------------- --- ----- ------
Accumulated Other Capital Comprehensive Retained (in millions, except per share data) Surplus Loss Earnings ------------------------------ ------- ---- -------- BALANCE AT DECEMBER 31, 2008 $722 $(309) $5,345 Net income - - 17 Other comprehensive loss, net of tax - (27) - Total comprehensive loss Cash dividends declared on preferred stock - - (113) Cash dividends declared on common stock ($0.20 per share) - - (30) Purchase of common stock - - - Accretion of discount on preferred stock - - (22) Net issuance of common stock under employee stock plans (15) - (36) Share-based compensation 32 - - Other 1 - - ----- --- --- --- BALANCE AT DECEMBER 31, 2009 $740 $(336) $5,161 ---------------------------- ---- ----- ------ Net income - - 277 Other comprehensive loss, net of tax - (53) - Total comprehensive income Cash dividends declared on preferred stock - - (38) Cash dividends declared on common stock ($0.25 per share) - - (44) 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) - (10) Share-based compensation 32 - - Other (4) - - BALANCE AT DECEMBER 31, 2010 $1,481 $(389) $5,247 ---------------------------- ------ ----- ------
Total Treasury Shareholders' (in millions, except per share data) Stock Equity ------------------------------------ ----- ------ BALANCE AT DECEMBER 31, 2008 $(1,629) $7,152 Net income - 17 Other comprehensive loss, net of tax - (27) --- Total comprehensive loss (10) Cash dividends declared on preferred stock - (113) Cash dividends declared on common stock ($0.20 per share) - (30) Purchase of common stock (1) (1) Accretion of discount on preferred stock - - Net issuance of common stock under employee stock plans 48 (3) Share-based compensation - 32 Other 1 2 ----- --- --- BALANCE AT DECEMBER 31, 2009 $(1,581) $7,029 ---------------------------- ------- ------ Net income - 277 Other comprehensive loss, net of tax - (53) --- Total comprehensive income 224 Cash dividends declared on preferred stock - (38) Cash dividends declared on common stock ($0.25 per share) - (44) 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 19 (2) Share-based compensation - 32 Other 1 (3) BALANCE AT DECEMBER 31, 2010 $(1,565) $5,793 ---------------------------- ------- ------
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited) Comerica Incorporated and Subsidiaries
Wealth & (dollar amounts in millions) Business Retail Institutional Three Months Ended December 31, 2010 Bank Bank Management ------------------------------- ---- ---- ---------- Earnings summary: Net interest income (expense) (FTE) $341 $134 $42 Provision for loan losses 8 29 23 Noninterest income 81 43 59 Noninterest expenses 158 169 93 Provision (benefit) for income taxes (FTE) 82 (7) (5) Net income (loss) $174 $(14) $(10) ---- ---- ---- Net credit-related charge-offs $73 $22 $18 Selected average balances: Assets $30,489 $5,647 $4,834 Loans 29,947 5,192 4,820 Deposits 19,892 17,271 2,730 Liabilities 19,905 17,232 2,705 Attributed equity 2,955 620 418 Statistical data: Return on average assets (a) 2.29% (0.32)% (0.82)% Return on average attributed equity 23.59 (9.28) (9.47) Net interest margin (b) 4.51 3.07 3.43 Efficiency ratio 37.25 95.17 92.86 ---------------- ----- ----- -----
(dollar amounts in millions) Three Months Ended December 31, 2010 Finance Other Total ------------------------------- ------- ----- ----- Earnings summary: Net interest income (expense) (FTE) $(111) $- $406 Provision for loan losses - (3) 57 Noninterest income 23 9 215 Noninterest expenses 12 5 437 Provision (benefit) for income taxes (FTE) (40) 1 31 Net income (loss) $(60) $6 $96 ---- --- --- Net credit-related charge-offs $- $- $113 Selected average balances: Assets $9,228 $3,558 $53,756 Loans 28 12 39,999 Deposits 310 153 40,356 Liabilities 7,077 967 47,886 Attributed equity 1,047 830 5,870 Statistical data: Return on average assets (a) N/M N/M 0.71% Return on average attributed equity N/M N/M 6.53 Net interest margin (b) N/M N/M 3.29 Efficiency ratio N/M N/M 70.38 ---------------- --- --- -----
Wealth & Business Retail Institutional Three Months Ended September 30, 2010 Bank Bank 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 ---------------- ----- ----- -----
Three Months Ended September 30, 2010 Finance Other Total -------------------------------- ------- ----- ----- 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 ---------------- --- --- -----
Wealth & Business Retail Institutional Three Months Ended December 31, 2009 Bank Bank Management ------------------------------- ---- ---- ---------- Earnings summary: Net interest income (expense) (FTE) $343 $129 $42 Provision for loan losses 180 36 19 Noninterest income 77 48 60 Noninterest expenses 165 161 76 Provision (benefit) for income taxes (FTE) 11 (8) 2 Net income (loss) $64 $(12) $5 --- ---- --- Net credit-related charge-offs $183 $30 $12 Selected average balances: Assets $32,655 $6,257 $4,841 Loans 32,289 5,733 4,746 Deposits 16,944 17,020 2,849 Liabilities 16,903 16,978 2,837 Attributed equity 3,376 606 373 Statistical data: Return on average assets (a) 0.79% (0.27)% 0.38% Return on average attributed equity 7.67 (7.76) 4.91 Net interest margin (b) 4.21 3.02 3.50 Efficiency ratio 39.03 90.98 75.98 ---------------- ----- ----- -----
Three Months Ended December 31, 2009 Finance Other Total ------------------------------- ------- ----- ----- Earnings summary: Net interest income (expense) (FTE) $(126) $10 $398 Provision for loan losses - 21 256 Noninterest income 26 3 214 Noninterest expenses 2 21 425 Provision (benefit) for income taxes (FTE) (40) (5) (40) Net income (loss) $(62) $(24) $(29) ---- ---- ---- Net credit-related charge-offs $- $- $225 Selected average balances: Assets $10,683 $3,960 $58,396 Loans - (15) 42,753 Deposits 1,892 80 38,785 Liabilities 13,722 932 51,372 Attributed equity 899 1,770 7,024 Statistical data: Return on average assets (a) N/M N/M (0.19)% Return on average attributed equity N/M N/M (5.10) Net interest margin (b) N/M N/M 2.94 Efficiency ratio N/M N/M 70.68 ---------------- --- --- -----
(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) Three Months Ended December 31, 2010 Midwest Western Texas ------------------------------- ------- ------- ----- Earnings summary: Net interest income (expense) (FTE) $202 $158 $80 Provision for loan losses 46 11 15 Noninterest income 99 35 27 Noninterest expenses 201 109 67 Provision (benefit) for income taxes (FTE) 19 32 9 Net income (loss) $35 $41 $16 --- --- --- Net credit-related charge-offs $52 $43 $9 Selected average balances: Assets $14,506 $12,698 $6,653 Loans 14,219 12,497 6,435 Deposits 17,959 12,448 5,557 Liabilities 17,956 12,388 5,542 Attributed equity 1,428 1,301 664 Statistical data: Return on average assets (a) 0.72% 1.21% 0.96% Return on average attributed equity 9.79 12.69 9.67 Net interest margin (b) 4.45 5.01 4.91 Efficiency ratio 66.63 56.46 62.62 ---------------- ----- ----- -----
(dollar amounts in millions) Other Three Months Ended December 31, 2010 Florida Markets International ------------------------------- ------- ------- ------------- Earnings summary: Net interest income (expense) (FTE) $11 $48 $18 Provision for loan losses 4 (19) 3 Noninterest income 3 10 9 Noninterest expenses 9 24 10 Provision (benefit) for income taxes (FTE) - 5 5 Net income (loss) $1 $48 $9 --- --- --- Net credit-related charge-offs $7 $2 $- Selected average balances: Assets $1,587 $3,911 $1,615 Loans 1,612 3,651 1,545 Deposits 375 2,242 1,312 Liabilities 361 2,281 1,314 Attributed equity 165 304 131 Statistical data: Return on average assets (a) 0.13% 4.93% 2.24% Return on average attributed equity 1.25 63.46 27.57 Net interest margin (b) 2.64 5.32 4.38 Efficiency ratio 68.68 40.07 36.08 ---------------- ----- ----- -----
Finance (dollar amounts in millions) & Other Three Months Ended December 31, 2010 Businesses Total ------------------------------- ---------- ----- Earnings summary: Net interest income (expense) (FTE) $(111) $406 Provision for loan losses (3) 57 Noninterest income 32 215 Noninterest expenses 17 437 Provision (benefit) for income taxes (FTE) (39) 31 Net income (loss) $(54) $96 ---- --- Net credit-related charge-offs $- $113 Selected average balances: Assets $12,786 $53,756 Loans 40 39,999 Deposits 463 40,356 Liabilities 8,044 47,886 Attributed equity 1,877 5,870 Statistical data: Return on average assets (a) N/M 0.71% Return on average attributed equity N/M 6.53 Net interest margin (b) N/M 3.29 Efficiency ratio N/M 70.38 ---------------- -- -----
Three Months Ended September 30, 2010 Midwest Western Texas -------------------------------- ------- ------- ----- Earnings summary: Net interest income (expense) (FTE) $200 $157 $78 Provision for loan losses 38 51 17 Noninterest income 99 31 21 Noninterest expenses 185 108 61 Provision (benefit) for income taxes (FTE) 27 16 7 Net income (loss) $49 $13 $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) 1.04% 0.42% 0.83% Return on average attributed equity 14.33 4.16 8.16 Net interest margin (b) 4.45 4.96 4.87 Efficiency ratio 61.46 57.13 62.01 ---------------- ----- ----- -----
Other Three Months Ended September 30, 2010 Florida Markets International -------------------------------- ------- ------- ------------- 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)% 3.20% 3.25% Return on average attributed equity (14.56) 38.18 37.03 Net interest margin (b) 2.61 4.99 4.51 Efficiency ratio 94.50 41.39 30.65 ---------------- ----- ----- -----
Finance & Other Three Months Ended September 30, 2010 Businesses Total -------------------------------- ---------- ----- 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 December 31, 2009 Midwest Western Texas ------------------------------- ------- ------- ----- Earnings summary: Net interest income (expense) (FTE) $204 $163 $78 Provision for loan losses 102 79 20 Noninterest income 106 33 23 Noninterest expenses 193 110 61 Provision (benefit) for income taxes (FTE) 3 1 7 Net income (loss) $12 $6 $13 --- --- --- Net credit-related charge-offs $97 $85 $13 Selected average balances: Assets $15,729 $13,484 $7,118 Loans 15,449 13,289 6,934 Deposits 17,186 11,900 4,737 Liabilities 17,173 11,817 4,723 Attributed equity 1,515 1,386 691 Statistical data: Return on average assets (a) 0.26% 0.19% 0.74% Return on average attributed equity 3.21 1.86 7.67 Net interest margin (b) 4.70 4.85 4.46 Efficiency ratio 62.21 56.33 60.32 ---------------- ----- ----- -----
Other Three Months Ended December 31, 2009 Florida Markets International ------------------------------- ------- ------- ------------- Earnings summary: Net interest income (expense) (FTE) $10 $41 $18 Provision for loan losses - 15 19 Noninterest income 3 11 9 Noninterest expenses 9 21 8 Provision (benefit) for income taxes (FTE) 1 (7) - Net income (loss) $3 $23 $- --- --- --- Net credit-related charge-offs $4 $13 $13 Selected average balances: Assets $1,608 $4,126 $1,688 Loans 1,613 3,820 1,663 Deposits 333 1,718 939 Liabilities 318 1,759 928 Attributed equity 176 415 172 Statistical data: Return on average assets (a) 0.63% 2.23% 0.06% Return on average attributed equity 5.72 22.14 0.58 Net interest margin (b) 2.57 4.28 4.22 Efficiency ratio 69.94 41.02 28.74 ---------------- ----- ----- -----
Finance & Other Three Months Ended December 31, 2009 Businesses Total ------------------------------- ---------- ----- Earnings summary: Net interest income (expense) (FTE) $(116) $398 Provision for loan losses 21 256 Noninterest income 29 214 Noninterest expenses 23 425 Provision (benefit) for income taxes (FTE) (45) (40) Net income (loss) $(86) $(29) ---- ---- Net credit-related charge-offs $- $225 Selected average balances: Assets $14,643 $58,396 Loans (15) 42,753 Deposits 1,972 38,785 Liabilities 14,654 51,372 Attributed equity 2,669 7,024 Statistical data: Return on average assets (a) N/M (0.19)% Return on average attributed equity N/M (5.10) Net interest margin (b) N/M 2.94 Efficiency ratio N/M 70.68 ---------------- -- -----
(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
Years Ended December 31, ------------------------ (dollar amounts in millions) 2010 2009 ---------------------------- ---- ---- Net interest income (FTE) $1,651 $1,575 Less: Interest earned on excess liquidity (a) 8 6 ----------------------------------- --- --- Net interest income (FTE), excluding excess liquidity $1,643 $1,569 --------------------------- ------ ------ Average earning assets $51,004 $58,162 Less: Average net unrealized gains on investment securities available- for-sale 115 165 -------------------------------- --- --- Average earning assets for net interest margin (FTE) 50,889 57,997 Less: Excess liquidity (a) 3,140 2,402 -------------------- ----- ----- Average earning assets for net interest margin (FTE), excluding excess liquidity $47,749 $55,595 -------------------------- ------- ------- Net interest margin (FTE) 3.24% 2.72% Net interest margin (FTE), excluding excess liquidity 3.44 2.83 Impact of excess liquidity on net interest margin (FTE) (0.20) (0.11) --------------------------------- ----- -----
2010 ---- 4th Qtr 3rd Qtr ------- ------- Net interest income (FTE) $406 $405 Less: Interest earned on excess liquidity (a) 1 2 ------------------------- --- --- Net interest income (FTE), excluding excess liquidity $405 $403 -------------------------- ---- ---- Average earning assets $49,102 $50,189 Less: Average net unrealized gains on investment securities available-for-sale 139 180 --------------------- --- --- Average earning assets for net interest margin (FTE) 48,963 50,009 Less: Excess liquidity (a) 1,793 2,983 -------------------- ----- ----- Average earning assets for net interest margin (FTE), excluding excess liquidity $47,170 $47,026 -------------------------- ------- ------- Net interest margin (FTE) 3.29% 3.23% Net interest margin (FTE), excluding excess liquidity 3.41 3.42 Impact of excess liquidity on net interest margin (FTE) (0.12) (0.19) -------------------------- ----- -----
2010 ---- 2nd Qtr 1st Qtr ------- ------- Net interest income (FTE) $424 $416 Less: Interest earned on excess liquidity (a) 2 3 ------------------------- --- --- Net interest income (FTE), excluding excess liquidity $422 $413 -------------------------- ---- ---- Average earning assets $51,835 $52,941 Less: Average net unrealized gains on investment securities available-for-sale 80 62 --------------------- --- --- Average earning assets for net interest margin (FTE) 51,755 52,879 Less: Excess liquidity (a) 3,719 4,092 -------------------- ----- ----- Average earning assets for net interest margin (FTE), excluding excess liquidity $48,036 $48,787 -------------------------- ------- ------- Net interest margin (FTE) 3.28% 3.18% Net interest margin (FTE), excluding excess liquidity 3.51 3.42 Impact of excess liquidity on net interest margin (FTE) (0.23) (0.24) -------------------------- ----- -----
2009 ---- 4th Qtr ------- Net interest income (FTE) $398 Less: Interest earned on excess liquidity (a) 1 ------------------------- --- Net interest income (FTE), excluding excess liquidity $397 -------------------------- ---- Average earning assets $53,953 Less: Average net unrealized gains on investment securities available-for-sale 107 --------------------- --- Average earning assets for net interest margin (FTE) 53,846 Less: Excess liquidity (a) 2,453 -------------------- ----- Average earning assets for net interest margin (FTE), excluding excess liquidity $51,393 -------------------------- ------- Net interest margin (FTE) 2.94% Net interest margin (FTE), excluding excess liquidity 3.07 Impact of excess liquidity on net interest margin (FTE) (0.13) -------------------------- -----
(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
December 31, September 30, 2010 2010 ---- ---- Tier 1 capital (a) (b) $6,027 $5,940 Less: Fixed rate cumulative perpetual preferred stock - - Trust preferred securities - - -------------------------- --- --- Tier 1 common capital (b) $6,027 $5,940 ------------------------- ------ ------ Risk-weighted assets (a) (b) $59,806 $59,608 Tier 1 common capital ratio (b) 10.08% 9.96% ------------------------------- ----- ---- Total shareholders' equity $5,793 $5,857 Less: Fixed rate cumulative perpetual preferred stock - - Goodwill 150 150 Other intangible assets 6 6 ----------------------- --- --- Tangible common equity $5,637 $5,701 ---------------------- ------ ------ Total assets $53,667 $55,004 Less: Goodwill 150 150 Other intangible assets 6 6 ----------------------- --- --- Tangible assets $53,511 $54,848 --------------- ------- ------- Tangible common equity ratio 10.54% 10.39% ---------------------------- ----- -----
June 30, March 31, 2010 2010 ---- ---- Tier 1 capital (a) (b) $6,371 $6,311 Less: Fixed rate cumulative perpetual preferred stock - - Trust preferred securities 495 495 -------------------------- --- --- Tier 1 common capital (b) $5,876 $5,816 ------------------------- ------ ------ Risk-weighted assets (a) (b) $59,877 $60,792 Tier 1 common capital ratio (b) 9.81% 9.57% ------------------------------- ---- ---- Total shareholders' equity $5,792 $5,668 Less: Fixed rate cumulative perpetual preferred stock - - Goodwill 150 150 Other intangible assets 6 7 ----------------------- --- --- Tangible common equity $5,636 $5,511 ---------------------- ------ ------ Total assets $55,885 $57,106 Less: Goodwill 150 150 Other intangible assets 6 7 ----------------------- --- --- Tangible assets $55,729 $56,949 --------------- ------- ------- Tangible common equity ratio 10.11% 9.68% ---------------------------- ----- ----
December 31, 2009 ---- Tier 1 capital (a) (b) $7,704 Less: Fixed rate cumulative perpetual preferred stock 2,151 Trust preferred securities 495 -------------------------- Tier 1 common capital (b) $5,058 ------------------------- ------ Risk-weighted assets (a) (b) $61,815 Tier 1 common capital ratio (b) 8.18% ------------------------------- ---- Total shareholders' equity $7,029 Less: Fixed rate cumulative perpetual preferred stock 2,151 Goodwill 150 Other intangible assets 8 ----------------------- Tangible common equity $4,720 ---------------------- ------ Total assets $59,249 Less: Goodwill 150 Other intangible assets 8 ----------------------- Tangible assets $59,091 --------------- ------- Tangible common equity ratio 7.99% ---------------------------- ----
(a) Tier 1 capital and risk-weighted assets as defined by regulation. (b) December 31, 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