DALLAS, Oct. 19, 2011 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported third quarter 2011 net income of $98 million, an increase of $2 million compared to $96 million for the second quarter 2011. Third quarter 2011 included merger and restructuring charges of $33 million ($21 million, after tax; $0.11 per diluted share) associated with the acquisition of Sterling, completed on July 28, 2011, compared to $5 million ($3 million, after tax; $0.02 per diluted share) in the second quarter 2011.
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(dollar amounts in
millions, except per 3rd Qtr 2nd Qtr 3rd Qtr
share data) '11 '11 '10
--------------------- ------- ------- -------
Net interest income $423 $391 $404
Provision for loan losses 38 47 122
Noninterest income 201 202 186
Noninterest expenses (a) 460 409 402
Provision for income
taxes 28 41 7
Net income 98 96 59
Net income attributable
to common shares 97 95 59
Diluted income per common
share 0.51 0.53 0.33
Average diluted shares
(in millions) 192 178 178
Tier 1 common capital
ratio (c) 10.57% (b) 10.53% 9.96%
Tangible common equity
ratio (c) 10.43 10.90 10.39
Net interest margin (d) 3.18 3.14 3.23
(a) Included restructuring expenses of $33 million and $5
million in the third and second quarters of 2011,
respectively, associated with the acquisition of
Sterling on July 28, 2011.
---------------------------------------------------------
(b) September 30, 2011 ratio is estimated.
------------------------------------------
(c) See Reconciliation of Non-GAAP Financial Measures.
------------------------------------------------------
(d) Excess liquidity reduced the net interest margin by
29 basis points, 21 basis points and 19 basis points in
the 3rd quarter 2011, 2nd quarter 2011 and 3rd quarter
2010, respectively.
--------------------------------------------------------
"Our third quarter results reflect our acquisition of Sterling, which expands our growth in Texas, a state expected to outperform the national economy again this year," said Ralph W. Babb Jr., chairman and chief executive officer. "Systems integrations are on track and expected to be completed by year-end. We plan to capitalize on revenue synergies, including opportunities to leverage distribution channels to increase commercial lending and cross-sales of cash management and other services, as well as wealth management products. In short, the Sterling acquisition provides an exceptional growth opportunity in one of the most attractive markets in the U.S.
"The Sterling acquisition primarily drove our $2 billion increase in period-end loans in the third quarter. Comerica legacy loans reflected increases in Texas, as well as in commercial loans, primarily in Specialty Businesses, including Mortgage Banker Finance, Technology and Life Sciences and Energy Lending; offset by decreases in National Dealer Services, Global Corporate Banking and Small Business Banking."
"With the uncertain national and global economies, we have heightened our focus on revenue generating initiatives and expense controls," said Babb. "In addition to delivering the revenue and expense synergies from the Sterling acquisition, we plan to reallocate resources to faster growing businesses, leverage opportunities to lower deposit pricing and continue to utilize technology to produce efficiencies, among many other action items. By continuing to strengthen our franchise, we believe we will be able to drive growth in this challenging economic environment."
Third Quarter 2011 Highlights Compared to Second Quarter 2011
-- Period-end total loans increased $2.0 billion, primarily due to the
addition of Sterling. Comerica legacy period-end loans primarily
reflected an increase in Specialty Businesses ($1.0 billion; 20
percent), offset by decreases in the National Dealer Services ($290
million; 9 percent), Global Corporate Banking ($194 million; 4 percent),
Commercial Real Estate ($152 million; 4 percent) and Small Business
Banking ($125 million; 4 percent) business lines. The increase in
period-end Comerica legacy loans in Specialty Businesses primarily
reflected increases in Mortgage Banker Finance ($450 million),
Technology and Life Sciences ($264 million) and Energy Lending ($208
million). Specialty Businesses, along with $393 million from Sterling,
were the primary contributors to the $1.1 billion increase in period-end
commercial loans. Comerica legacy commercial loans increased $668
million, or three percent. In the Texas market, Comerica legacy
period-end total loans increased $113 million, or two percent.
-- Average core deposits increased $3.5 billion in the third quarter 2011,
with increases in all major markets, led by the Texas market, which
reflected average Sterling core deposits of $2.5 billion.
-- The net interest margin of 3.18 percent increased four basis points
compared to the second quarter 2011, primarily resulting from the
acquisition of the Sterling loan portfolio. Accretion of the purchase
discount on the acquired Sterling loan portfolio increased the net
interest margin by 20 basis points, partially offset by the impact of an
increase in excess liquidity (-8 basis points) and accelerated premium
amortization due to increased prepayment activity on mortgage-backed
investment securities (-6 basis points).
-- Credit quality continued to improve in the third quarter 2011. Net
credit-related charge-offs decreased $13 million to $77 million. Watch
list loans and nonperforming loans continued to trend downward for both
Comerica legacy loans and the acquired Sterling loan portfolio.
-- Noninterest expenses increased $51 million to $460 million in the third
quarter 2011, compared to the second quarter 2011. Third quarter 2011
noninterest expenses included $18 million of noninterest expenses from
Sterling operations and $33 million of merger and restructuring charges
related to the Sterling acquisition, up from $5 million in the second
quarter 2011.
-- Comerica repurchased 2.1 million shares of common stock under the share
repurchase program in the third quarter 2011, compared to 400,000 shares
repurchased in the first half of 2011.
Net Interest Income and Net Interest Margin
(dollar amounts in 3rd Qtr 2nd Qtr 3rd Qtr
millions) '11 '11 '10
------------------ ------- ------- -------
Net interest income $423 $391 $404
Net interest margin 3.18% 3.14% 3.23%
Selected average balances
(a):
Total earning assets $53,243 $50,136 $50,189
Total investment
securities 8,158 7,407 6,906
Federal Reserve Bank
deposits (excess
liquidity) 4,800 3,382 2,983
Total loans 40,098 39,174 40,102
Total core deposits
(b) 44,643 41,067 38,786
Total noninterest-
bearing deposits 17,511 15,786 14,920
(a) Average balances in 3rd quarter 2011 include
Sterling balances from July 28 through September 30,
2011.
-----------------------------------------------------
(b) Core deposits exclude other time deposits and
foreign office time deposits.
-------------------------------------------------
-- The $32 million increase in net interest income in the third quarter
2011, when compared to the second quarter 2011, resulted primarily from
an increase in average earning assets and the accretion of the purchase
discount on the acquired Sterling loan portfolio of $27 million,
partially offset by accelerated premium amortization of $8 million due
to increased prepayment activity on mortgage-backed investment
securities.
-- The net interest margin of 3.18 percent increased four basis points
compared to the second quarter 2011. The increase in the net interest
margin resulted primarily from the acquisition of the Sterling loan
portfolio, partially offset by the impact of an increase in excess
liquidity (-8 basis points) and accelerated premium amortization on
mortgage-backed investment securities (-6 basis points). Accretion of
the purchase discount on the acquired Sterling loan portfolio increased
the net interest margin by 20 basis points.
-- Average earning assets increased $3.1 billion, primarily due to
increases of $924 million in average loans, $751 million in average
investment securities available-for-sale and $1.4 billion in excess
liquidity. Sterling contributed $1.4 billion and $700 million,
respectively, to the increases in average loans and average investment
securities available-for-sale.
-- Third quarter 2011 average core deposits increased $3.5 billion compared
to second quarter 2011. Noninterest-bearing deposits increased $1.7
billion, money market and interest-bearing checking deposits increased
$1.4 billion and customer certificates of deposit increased $269
million. Sterling provided $2.5 billion of the total increase in average
core deposits.
Noninterest Income
Noninterest income was $201 million for the third quarter 2011, compared to $202 million for the second quarter 2011. The $1 million decrease primarily resulted from decreases in fiduciary income ($2 million) and other noninterest income ($14 million), partially offset by increases in net securities gains ($8 million) and several fee categories. The decrease in other noninterest income primarily resulted from decreases in deferred compensation asset returns ($7 million) (offset by a decrease in deferred compensation plan costs in noninterest expense) and principal investing and warrants ($4 million). Noninterest income included $16 million from Sterling in the third quarter 2011, which included net securities gains of $11 million, primarily due to the repositioning of the acquired Sterling investment securities portfolio.
Noninterest Expenses
Noninterest expenses totaled $460 million in the third quarter 2011, an increase of $51 million from the second quarter 2011. The increase in non-interest expenses primarily reflected an increase in merger and restructuring charges of $28 million and $18 million of noninterest expenses from Sterling operations. Merger and restructuring charges include the incremental costs to integrate the operations of Sterling. Such expenses include costs related to terminations of certain existing Sterling leases and other contracts, systems integration and related charges, estimated severance and other employee-related charges, and other transaction costs.
Provision for Income Taxes
The provision for income taxes was $28 million, a decrease of $13 million from the previous quarter. The second quarter 2011 provision for income taxes included net after-tax charges of $8 million for various tax items.
Credit Quality
"We continue to be very pleased with our broad-based, steady improvement in credit quality," said Babb. "This was the ninth consecutive quarter of decline in net charge-offs, with a $13 million decrease. Internal watch list loans and nonperforming loans continued to trend downward for both Comerica legacy loans and the Sterling loan portfolio. We continued to see reductions in inflows to nonaccrual loans and positive migration in other credit metrics. Our customers, generally, are in a stronger position today, with higher liquidity, lower leverage and increased efficiency. These positive attributes will assist them in whatever economic scenario emerges in the coming months. As a result of the overall improvements in credit quality we have seen, the provision for loan losses declined to $38 million."
(dollar amounts in 3rd Qtr 2nd Qtr 3rd Qtr
millions) '11 '11 '10
------------------ ------- ------- -------
Net credit-related
charge-offs $77 $90 $132
Net credit-related
charge-offs/Average
total loans 0.77% 0.92% 1.32%
Provision for loan
losses $38 $47 $122
Provision for credit
losses on lending-
related commitments (3) (2) (6)
--- --- ---
Total provision for
credit losses 35 45 116
Nonperforming loans (a) 958 974 1,191
Nonperforming assets
(NPAs) (a) 1,045 1,044 1,311
NPAs/Total loans and
foreclosed property 2.53% 2.66% 3.24%
Loans past due 90 days
or more and still
accruing $81 $64 $104
Allowance for loan
losses 767 806 957
Allowance for credit
losses on lending-
related commitments (b) 27 30 38
--- --- ---
Total allowance for
credit losses 794 836 995
Allowance for loan
losses/Total loans (c) 1.86% 2.06% 2.38%
Allowance for loan
losses/Nonperforming
loans 80 83 80
(a) Excludes loans acquired with credit impairment.
---------------------------------------------------
(b) Included in "Accrued expenses and other
liabilities" on the consolidated balance sheets.
-------------------------------------------------
(c) Reflects the impact of acquired loans, which were
initially recorded at fair value, with no related
allowance for loan losses.
-----------------------------------------------------
Credit Quality (continued)
-- Net credit-related charge-offs decreased $13 million to $77 million in
the third quarter 2011, from $90 million in the second quarter 2011. The
decrease in net credit-related charge-offs primarily reflected a
decrease of $18 million in the Middle Market business line, partially
offset by an increase of $8 million in the Commercial Real Estate
business line.
-- Watch list loans and nonperforming loans continued to trend downward for
both Comerica legacy loans and the acquired Sterling loan portfolio.
Internal watch list loans increased $142 million to $5.0 billion from
June 30, 2011 to September 30, 2011, due to the inclusion of $405
million of Sterling watch list loans at September 30, 2011.
-- During the third quarter 2011, $130 million of borrower relationships
greater than $2 million were transferred to nonaccrual status, a
decrease of $20 million from the second quarter 2011. Of the transfers
of borrower relationships greater than $2 million to nonaccrual in the
third quarter 2011, $63 million were from the Middle Market business
line, primarily in the Western and Midwest markets, and $48 million were
from the Commercial Real Estate business line, primarily in the Western
market.
-- Nonperforming loans decreased $16 million, compared to June 30, 2011, to
$958 million, or 2.32 percent of total loans, at September 30, 2011.
Nonperforming assets included $24 million of Sterling foreclosed
property at September 30, 2011.
-- The allowance for loan losses to total loans ratio was 1.86 percent and
2.06 percent at September 30, 2011 and June 30, 2011, respectively. The
decrease in the ratio primarily reflected the impact of the Sterling
loans recorded at fair value at acquisition without a corresponding
allowance for loan losses. The remaining fair value discount on
Sterling acquired loans was $236 million at September 30, 2011.
Balance Sheet and Capital Management
Total assets and common shareholders' equity were $60.9 billion and $7.0 billion, respectively, at September 30, 2011, compared to $54.1 billion and $6.0 billion, respectively, at June 30, 2011. There were approximately 199 million common shares outstanding at September 30, 2011. Comerica repurchased 2.1 million shares of common stock in the open market during the third quarter 2011 under the share repurchase program.
As previously announced, Comerica completed the acquisition of Sterling on July 28, 2011. In connection with the acquisition, Comerica issued approximately 24 million shares of common stock. The fair value of assets acquired included $2.1 billion of loans and $1.5 billion of investment securities, and liabilities assumed included $4.0 billion of deposits. Goodwill resulting from the acquisition totaled $485 million.
Comerica's tangible common equity ratio was 10.43 percent at September 30, 2011, a decrease of 47 basis points from June 30, 2011. The estimated Tier 1 common capital ratio increased four basis points, to 10.57 percent at September 30, 2011, from June 30, 2011.
Fourth Quarter 2011 Outlook
For the fourth quarter 2011, compared to the third quarter 2011, management expects the following, assuming a continuation of the current economic environment:
-- A low-single digit increase in average total loans, largely reflecting
the impact of one additional month of Sterling. Period-end loans are
expected to be relatively stable. In the fourth quarter 2011, loans in
the National Dealer Services business line are expected to grow,
Mortgage Banker Finance loan growth is expected to moderate, and loans
in the Commercial Real Estate business line are expected to continue to
decrease.
-- Average earning assets of approximately $54.5 billion, reflecting
increases, primarily related to Sterling, in average loans and average
investment securities available-for-sale.
-- An average net interest margin of about 3.15 percent, reflecting the
benefit from an increase in mortgage-backed investment securities, one
additional month of Sterling and lower excess liquidity, offset by a
reduction in the accretion of the purchase discount on the acquired
Sterling loan portfolio ($15 million to $20 million, compared to $27
million in the third quarter 2011).
-- Net credit-related charge-offs between $65 million and $75 million for
the fourth quarter 2011. The provision for credit losses is expected to
trend modestly lower from the third quarter 2011.
-- A mid-single digit decline in noninterest income in the fourth quarter
2011 compared to the third quarter 2011, primarily due to the impact of
regulatory changes and no significant net securities gains expected in
the fourth quarter 2011, partially offset by one additional month of
Sterling noninterest income in the fourth quarter 2011.
-- Excluding merger and restructuring charges, a low- to mid-single digit
increase in noninterest expenses in the fourth quarter 2011 compared to
the third quarter 2011, primarily due to one additional month of
Sterling expenses in the fourth quarter 2011.
-- Merger and restructuring charges of approximately $25 million,
after-tax, ($40 million, pre-tax) recognized in the fourth quarter 2011.
-- Total acquisition synergies of approximately 35 percent of Sterling
expenses, or about $56 million, with the majority realized in 2012.
-- For fourth quarter 2011, income tax expense to approximate 36 percent of
income before income taxes less approximately $17 million in tax
benefits.
-- Continue share repurchase program that, combined with dividend payments,
results in a payout up to 50 percent of full-year earnings.
Business Segments
Comerica's operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank, and Wealth Management. The Finance Division is also included as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at September 30, 2011 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses third quarter 2011 results compared to second quarter 2011.
The following table presents net income (loss) by business segment.
(dollar
amounts
in
millions) 3rd Qtr '11 2nd Qtr '11 3rd Qtr '10
---------- ----------- ----------- -----------
Business
Bank $179 86% $176 95% $133 114%
Retail
Bank 19 9 (3) (2) (7) (6)
Wealth
Management 11 5 12 7 (10) (8)
----------- --- --- --- --- --- ---
209 100% 185 100% 116 100%
Finance (91) (87) (58)
Other (a) (20) (2) 1
--------- --- --- ---
Total $98 $96 $59
----- --- --- ---
(a) Includes discontinued operations and items not
directly associated with the three major business
segments or the Finance Division.
--------------------------------------------------
Business Bank
(dollar amounts in 3rd Qtr 2nd Qtr 3rd Qtr
millions) '11 '11 '10
------------------ ------- ------- -------
Net interest income
(FTE) $363 $342 $336
Provision for loan
losses 20 6 57
Noninterest income 77 79 69
Noninterest expenses 162 158 155
Net income 179 176 133
Net credit-related
charge-offs 40 54 99
Selected average
balances:
Assets 30,602 29,893 30,309
Loans 29,949 29,380 29,940
Deposits 21,754 20,396 19,266
Net interest margin 4.81% 4.65% 4.45%
------------------- ---- ---- ----
-- Average loans increased $569 million, primarily due to the addition of
Sterling and increases in Mortgage Banker Finance, Technology and Life
Sciences and Global Corporate Banking, partially offset by decreases in
National Dealer Services, Commercial Real Estate and Middle Market.
-- Average deposits increased $1.4 billion, primarily due to the addition
of Sterling and increases in Global Corporate Banking, the Financial
Services Division and Technology and Life Sciences, partially offset by
a decrease in Mortgage Banker Finance.
-- The net interest margin of 4.81 percent increased 16 basis points,
primarily due to the benefit from the accretion of the purchase discount
on the acquired Sterling loan portfolio.
-- The provision for loan losses increased $14 million, primarily
reflecting increases in Commercial Real Estate and Leasing, partially
offset by declines in Middle Market and Global Corporate Banking.
-- Noninterest expenses increased $4 million, reflecting expenses from
Sterling operations of $5 million and increases in net allocated
corporate overhead expenses, legal fees and the provision for credit
losses on lending-related commitments, partially offset by decreases in
incentive compensation and FDIC insurance expense.
Retail Bank
(dollar amounts in 3rd Qtr 2nd Qtr 3rd Qtr
millions) '11 '11 '10
------------------ ------- ------- -------
Net interest income
(FTE) $173 $141 $133
Provision for loan
losses 17 24 24
Noninterest income 47 46 45
Noninterest expenses 174 162 165
Net income ( loss ) 19 (3) (7)
Net credit-related
charge-offs 28 22 19
Selected average
balances:
Assets 5,991 5,453 5,777
Loans 5,489 4,999 5,314
Deposits 19,797 17,737 16,972
Net interest margin 3.46% 3.22% 3.10%
------------------- ---- ---- ----
-- Average loans increased $490 million, primarily due to the addition of
Sterling, partially offset by decreases in Small Business Banking and
Personal Banking.
-- Average deposits increased $2.1 billion. Sterling contributed $1.9
billion of the increase in average deposits.
-- The net interest margin of 3.46 percent increased 24 basis points,
primarily reflecting the benefit from the accretion of the purchase
discount on the acquired Sterling loan portfolio.
-- The provision for loan losses decreased $7 million, reflecting declines
in both Small Business Banking and Personal Banking.
-- Noninterest expenses increased $12 million, primarily due to the
Sterling acquisition, partially offset by a decrease in FDIC insurance
expense.
Wealth Management
(dollar amounts in 3rd Qtr 2nd Qtr 3rd Qtr
millions) '11 '11 '10
------------------ ------- ------- -------
Net interest income
(FTE) $45 $48 $41
Provision for loan
losses 6 14 37
Noninterest income 56 63 59
Noninterest expenses 78 76 78
Net income ( loss ) 11 12 (10)
Net credit-related
charge-offs 9 14 14
Selected average
balances:
Assets 4,674 4,728 4,855
Loans 4,652 4,742 4,824
Deposits 3,198 2,978 2,606
Net interest margin 3.85% 4.07% 3.42%
------------------- ---- ---- ----
-- Average loans decreased $90 million.
-- Average deposits increased $220 million, primarily reflecting an
increase in the Western market.
-- The net interest margin of 3.85 percent decreased 22 basis points,
primarily due to a decrease in loan spreads, partially offset by an
increase in deposit balances.
-- The provision for loan losses decreased $8 million, primarily reflecting
decreases in the Midwest and Florida markets.
-- Noninterest income decreased $7 million, primarily due to a decrease in
fiduciary income.
Geographic Market Segments
Comerica also provides market segment results for four primary geographic markets: Midwest, Western, Texas and Florida. In addition to the four primary geographic markets, Other Markets and International are also reported as market segments. The financial results below are based on methodologies in effect at September 30, 2011 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses third quarter 2011 results compared to second quarter 2011.
The following table presents net income (loss) by market segment.
(dollar
amounts
in
millions) 3rd Qtr '11 2nd Qtr '11 3rd Qtr '10
---------- ----------- ----------- -----------
Midwest $59 28% $62 34% $48 42%
Western 49 23 50 27 14 12
Texas 65 31 33 18 14 12
Florida 1 1 (5) (3) (6) (5)
Other
Markets 23 11 30 16 33 28
International 12 6 15 8 13 11
------------- --- --- --- --- --- ---
209 100% 185 100% 116 100%
Finance &
Other
Businesses
(a) (111) (89) (57)
----------- ---- --- ---
Total $98 $96 $59
----- --- --- ---
(a) Includes discontinued operations and items not
directly associated with the geographic markets.
--------------------------------------------------
Midwest Market
(dollar amounts in 3rd Qtr 2nd Qtr 3rd Qtr
millions) '11 '11 '10
------------------ ------- ------- -------
Net interest income
(FTE) $199 $204 $200
Provision for loan
losses 21 15 38
Noninterest income 96 100 99
Noninterest expenses 183 183 186
Net income 59 62 48
Net credit-related
charge-offs 33 37 61
Selected average
balances:
Assets 14,123 14,267 14,445
Loans 13,873 14,051 14,276
Deposits 18,511 18,319 17,777
Net interest margin 4.27% 4.46% 4.45%
------------------- ---- ---- ----
-- Average loans decreased $178 million, with an increase in Global
Corporate Banking more than offset by declines in most other business
lines.
-- Average deposits increased $192 million, primarily due to an increase in
Global Corporate Banking.
-- The net interest margin of 4.27 percent decreased 19 basis points,
primarily due to decreases in loan and deposit spreads and a decline in
loan balances.
-- The provision for loan losses increased $6 million, primarily reflecting
an increase in Middle Market, partially offset by a decline in Global
Corporate Banking.
-- Noninterest income decreased $4 million, primarily due to decreases in
fiduciary income and investment banking fees.
Western Market
(dollar amounts in 3rd Qtr 2nd Qtr 3rd Qtr
millions) '11 '11 '10
------------------ ------- ------- -------
Net interest income
(FTE) $166 $166 $157
Provision for loan
losses 14 20 51
Noninterest income 32 37 31
Noninterest expenses 106 108 107
Net income 49 50 14
Net credit-related
charge-offs 32 26 58
Selected average
balances:
Assets 12,110 12,329 12,746
Loans 11,889 12,121 12,556
Deposits 12,975 12,458 11,793
Net interest margin 5.06% 5.35% 4.96%
------------------- ---- ---- ----
-- Average loans decreased $232 million, primarily due to a decrease in
National Dealer Services.
-- Average deposits increased $517 million, reflecting increases in most
business lines.
-- The net interest margin of 5.06 percent decreased 29 basis points,
primarily due to decreases in loan and deposit spreads and a decline in
loan balances.
-- The provision for loan losses decreased $6 million, primarily reflecting
a decrease in Middle Market, partially offset by an increase in
Commercial Real Estate.
-- Noninterest income decreased $5 million, primarily due to a decrease in
warrant income.
Texas Market
(dollar amounts in 3rd Qtr 2nd Qtr 3rd Qtr
millions) '11 '11 '10
------------------ ------- ------- -------
Net interest income
(FTE) $143 $89 $78
Provision for loan
losses (7) (2) 17
Noninterest income 29 25 21
Noninterest expenses 79 63 61
Net income 65 33 14
Total net credit-
related charge-offs 2 3 5
Selected average
balances:
Assets 8,510 7,081 6,556
Loans 8,145 6,871 6,357
Deposits 8,865 6,175 5,443
Net interest margin 6.40% 5.19% 4.87%
------------------- ---- ---- ----
-- Average loans increased $1.3 billion, primarily due to the addition of
Sterling.
-- Average deposits increased $2.7 billion, primarily reflecting the
addition of Sterling and an increase in Global Corporate Banking.
-- The net interest margin of 6.40 percent increased 121 basis points,
primarily reflecting the benefit from the accretion of the purchase
discount on the acquired Sterling loan portfolio and higher loan
spreads, partially offset by a decline in deposit spreads.
-- The provision for loan losses decreased $5 million, primarily reflecting
a decrease in Middle Market.
-- Noninterest income increased $4 million, primarily due to increases in
warrant income and service charges on deposit accounts related to the
Sterling acquisition.
-- Noninterest expenses increased $16 million, primarily due to the
Sterling acquisition.
Florida Market
(dollar amounts in 3rd Qtr 2nd Qtr 3rd Qtr
millions) '11 '11 '10
------------------ ------- ------- -------
Net interest income
(FTE) $11 $12 $10
Provision for loan
losses 2 11 10
Noninterest income 4 4 4
Noninterest expenses 11 12 13
Net income (loss) 1 (5) (6)
Net credit-related
charge-offs 5 15 6
Selected average
balances:
Assets 1,450 1,534 1,528
Loans 1,477 1,565 1,549
Deposits 404 396 364
Net interest margin 2.94% 3.14% 2.61%
------------------- ---- ---- ----
-- Average loans decreased $88 million, primarily due to decreases in
National Dealer Services and Commercial Real Estate.
-- The net interest margin of 2.94 percent decreased 20 basis points,
primarily due to decreases in loan and deposits spreads.
-- The provision for loan losses decreased $9 million, primarily reflecting
decreases in Commercial Real Estate, Middle Market and Private Banking.
Conference Call and Webcast
Comerica will host a conference call to review third quarter 2011 financial results at 7 a.m. CT Wednesday, October 19, 2011. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 11574116). The call and supplemental financial information can also be accessed on the Internet at www.comerica.com. A telephone replay will be available approximately two hours following the conference call through October 31, 2011. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 11574116). 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 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," "opportunity," "initiative," "outcome," "continue," "remain," "maintain," "trend," "objective," "pending," "looks forward" and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "might," "can," "may" or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica's management based on information known to Comerica's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica's management for future or past operations, products or services, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries, estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in general economic, political or industry conditions and related credit and market conditions; changes in trade, monetary and fiscal policies, including the interest rate policies of the Federal Reserve Board; adverse conditions in the capital markets; the interdependence of financial service companies; changes in regulation or oversight, including the effects of recently enacted legislation, actions taken by or proposed by the U.S. 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; unfavorable developments concerning credit quality; the acquisition of Sterling Bancshares, Inc., or any future acquisitions; the effects of more stringent capital or liquidity requirements; 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 implementation of Comerica's strategies and business models, including the anticipated performance of any new banking centers and the implementation of revenue enhancements and efficiency improvements; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; operational difficulties or information security problems; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; the entry of new competitors in Comerica's markets; changes in customer borrowing, repayment, investment and deposit practices; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings; the effectiveness of methods of reducing risk exposures; the effects of war and other armed conflicts or acts of terrorism and the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods. 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 16 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2010, "Item 1A. Risk Factors" beginning on page 65 of Comerica's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 and "Item 1A. Risk Factors" beginning on page 74 of Comerica's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011. 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 Nine Months Ended
------------------ -----------------
September September
30, June 30, 30, September 30,
(in millions,
except per
share data) 2011 2011 2010 2011 2010
------------- ---- ---- ---- ---- ----
PER COMMON SHARE AND
COMMON STOCK DATA
Diluted net
income $0.51 $0.53 $0.33 $1.61 $0.34
Cash
dividends
declared 0.10 0.10 0.05 0.30 0.15
Common
shareholders'
equity (at
period end) 34.94 34.15 33.19
Average
diluted
shares (in
thousands) 191,634 177,602 177,686 182,602 171,260
----------- ------- ------- ------- ------- -------
KEY RATIOS
Return on
average
common
shareholders'
equity 5.91% 6.41% 4.07% 6.44% 1.40%
Return on
average
assets 0.67 0.70 0.43 0.71 0.43
Tier 1 common
capital
ratio (a)
(b) 10.57 10.53 9.96
Tier 1 risk-
based
capital
ratio (b) 10.65 10.53 9.96
Total risk-
based
capital
ratio (b) 14.84 14.80 14.37
Leverage
ratio (b) 11.41 11.40 10.91
Tangible
common
equity ratio
(a) 10.43 10.90 10.39
------------- ----- ----- -----
AVERAGE BALANCES
Commercial
loans $22,127 $21,677 $20,967 $21,769 $20,963
Real estate
construction loans:
Commercial
Real Estate
business
line (c) 1,269 1,486 2,203 1,501 2,559
Other
business
lines (d) 430 395 422 417 438
Total real
estate
construction
loans 1,699 1,881 2,625 1,918 2,997
Commercial mortgage
loans:
Commercial
Real Estate
business
line (c) 2,244 1,912 2,065 2,046 2,005
Other
business
lines (d) 8,031 7,724 8,192 7,856 8,333
Total
commercial
mortgage
loans 10,275 9,636 10,257 9,902 10,338
Residential
mortgage
loans 1,606 1,525 1,590 1,577 1,610
Consumer
loans 2,292 2,243 2,421 2,272 2,450
Lease
financing 936 958 1,064 960 1,100
International
loans 1,163 1,254 1,178 1,212 1,233
----- ----- ----- ----- -----
Total loans 40,098 39,174 40,102 39,610 40,691
Earning
assets 53,243 50,136 50,189 50,923 51,645
Total assets 58,238 54,517 54,729 55,526 56,158
Noninterest-
bearing
deposits 17,511 15,786 14,920 16,259 14,922
Interest-
bearing core
deposits 27,132 25,281 23,866 25,721 23,400
Total core
deposits 44,643 41,067 38,786 41,980 38,322
Common
shareholders'
equity 6,633 5,972 5,842 6,150 5,543
Total
shareholders'
equity 6,633 5,972 5,842 6,150 6,134
-------------- ----- ----- ----- ----- -----
NET INTEREST INCOME
Net interest
income
(fully
taxable
equivalent
basis) $424 $392 $405 $1,212 $1,245
Fully taxable
equivalent
adjustment 1 1 1 3 4
Net interest
margin
(fully
taxable
equivalent
basis) 3.18% 3.14% 3.23% 3.19% 3.23%
------------ ---- ---- ---- ---- ----
CREDIT QUALITY
Nonaccrual
loans $929 $941 $1,163
Reduced-rate
loans 29 33 28
--- --- ---
Total
nonperforming
loans (e) 958 974 1,191
Foreclosed
property (f) 87 70 120
--- --- ---
Total
nonperforming
assets (e) 1,045 1,044 1,311
Loans past
due 90 days
or more and
still
accruing 81 64 104
Gross loan
charge-offs 90 125 145 $338 $487
Loan
recoveries 13 35 13 70 36
--- --- --- --- ---
Net loan
charge-offs 77 90 132 268 451
Lending-
related
commitment
charge-offs - - - - -
--- --- --- --- ---
Total net
credit-
related
charge-offs 77 90 132 268 451
Allowance for
loan losses 767 806 957
Allowance for
credit
losses on
lending-
related
commitments 27 30 38
--- --- ---
Total
allowance
for credit
losses 794 836 995
Allowance for
loan losses
as a
percentage
of total
loans (g) 1.86% 2.06% 2.38%
Net loan
charge-offs
as a
percentage
of average
total loans 0.77 0.92 1.32 0.90% 1.48%
Net credit-
related
charge-offs
as a
percentage
of average
total loans 0.77 0.92 1.32 0.90 1.48
Nonperforming
assets as a
percentage of
total loans
and
foreclosed
property (e) 2.53 2.66 3.24
Allowance for
loan losses
as a
percentage
of total
nonperforming
loans 80 83 80
-------------- --- --- ---
(a) See Reconciliation of Non-GAAP Financial Measures.
(b) September 30, 2011 ratios are estimated.
(c) Primarily loans to real estate investors and developers.
(d) Primarily loans secured by owner-occupied real estate.
(e) Excludes loans acquired with credit-impairment.
(f) Included Sterling foreclosed property of $24 million at
September 30, 2011.
(g) Reflects the impact of acquired loans, which were initially
recorded at fair value with no related allowance for loan losses.
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
September 30, June 30, December 31, September 30,
(in
millions,
except
share
data) 2011 2011 2010 2010
---------- ---- ---- ---- ----
(unaudited) (unaudited) (unaudited)
ASSETS
Cash and
due from
banks $981 $987 $668 $863
Federal
funds
sold and
securities
purchased
under
agreements
to
resell - - - 100
Interest-
bearing
deposits
with
banks 4,217 2,479 1,415 3,031
Other
short-
term
investments 137 124 141 115
Investment
securities
available-
for-
sale 9,732 7,537 7,560 6,816
Commercial
loans 23,113 22,052 22,145 21,432
Real
estate
construction
loans 1,648 1,728 2,253 2,444
Commercial
mortgage
loans 10,539 9,579 9,767 10,180
Residential
mortgage
loans 1,643 1,491 1,619 1,586
Consumer
loans 2,309 2,232 2,311 2,403
Lease
financing 927 949 1,009 1,053
International
loans 1,046 1,162 1,132 1,182
------------- ----- ----- ----- -----
Total loans 41,225 39,193 40,236 40,280
Less
allowance
for loan
losses (767) (806) (901) (957)
---------- ---- ---- ---- ----
Net loans 40,458 38,387 39,335 39,323
Premises
and
equipment 685 641 630 639
Customers'
liability
on
acceptances
outstanding 8 10 9 13
Accrued
income
and
other
assets 4,670 3,976 3,909 4,104
------- ----- ----- ----- -----
Total assets $60,888 $54,141 $53,667 $55,004
------------ ------- ------- ------- -------
LIABILITIES
AND
SHAREHOLDERS'
EQUITY
Noninterest-
bearing
deposits $19,116 $16,344 $15,538 $15,763
Money
market
and NOW
deposits 20,237 18,033 17,622 17,288
Savings
deposits 1,771 1,462 1,397 1,363
Customer
certificates
of
deposit 5,980 5,551 5,482 5,723
Other
time
deposits 45 - - -
Foreign
office
time
deposits 303 368 432 494
--------- --- --- --- ---
Total interest-bearing
deposits 28,336 25,414 24,933 24,868
----------------------- ------ ------ ------ ------
Total deposits 47,452 41,758 40,471 40,631
Short-
term
borrowings 164 67 130 179
Acceptances
outstanding 8 10 9 13
Accrued
expenses
and
other
liabilities 1,304 1,062 1,126 1,085
Medium-
and
long-
term
debt 5,009 5,206 6,138 7,239
------- ----- ----- ----- -----
Total liabilities 53,937 48,103 47,874 49,147
Common
stock -
$5 par
value:
Authorized
-
325,000,000
shares
Issued -
228,164,824
shares
at
9/30/11
and
203,878,110
shares
at
6/30/11,
12/31/10
and
9/30/10 1,141 1,019 1,019 1,019
Capital
surplus 2,162 1,472 1,481 1,473
Accumulated
other
comprehensive
loss (230) (308) (389) (238)
Retained
earnings 5,471 5,395 5,247 5,171
Less cost
of
common
stock in
treasury
-
29,238,425
shares
at
9/30/11,
27,092,427
shares
at
6/30/11,
27,342,518
shares
at
12/31/10,
and
27,394,831
shares
at
9/30/10 (1,593) (1,540) (1,565) (1,568)
----------- ------ ------ ------ ------
Total shareholders'
equity 6,951 6,038 5,793 5,857
-------------------- ----- ----- ----- -----
Total liabilities and
shareholders' equity $60,888 $54,141 $53,667 $55,004
--------------------- ------- ------- ------- -------
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Comerica Incorporated and Subsidiaries
Three
Months Nine Months
Ended Ended
September September
30, 30,
---------- ----------
(in millions,
except per
share data) 2011 2010 2011 2010
------------- ---- ---- ---- ----
INTEREST INCOME
Interest and
fees on loans $405 $399 $1,149 $1,223
Interest on
investment
securities 54 55 170 177
Interest on
short-term
investments 4 2 9 8
------------ --- --- --- ---
Total interest income 463 456 1,328 1,408
INTEREST EXPENSE
Interest on
deposits 24 27 69 91
Interest on
medium- and
long-term debt 16 25 50 76
--------------- ---
Total interest expense 40 52 119 167
---------------------- --- --- --- ---
Net interest income 423 404 1,209 1,241
Provision for
loan losses 38 122 134 423
------------- --- --- --- ---
Net interest income after
provision for loan
losses 385 282 1,075 818
NONINTEREST
INCOME
Service charges
on deposit
accounts 53 51 156 159
Fiduciary income 37 38 115 115
Commercial
lending fees 22 22 64 66
Letter of credit
fees 19 19 55 56
Card fees 17 15 47 43
Foreign exchange
income 11 8 30 28
Bank-owned life
insurance 10 9 27 26
Brokerage fees 5 6 17 18
Net securities
gains 12 - 18 3
Other
noninterest
income 15 18 81 60
------------ --- --- --- ---
Total noninterest income 201 186 610 574
NONINTEREST
EXPENSES
Salaries 192 187 565 535
Employee
benefits 53 47 153 136
--------- --- --- --- ---
Total salaries
and employee
benefits 245 234 718 671
Net occupancy
expense 44 40 122 120
Equipment
expense 17 15 49 47
Outside
processing fee
expense 25 23 74 69
Software expense 22 22 65 66
Merger and
restructuring
charges 33 - 38 -
FDIC insurance
expense 8 14 35 47
Legal fees 12 9 29 26
Advertising
expense 7 7 21 23
Other real
estate expense 5 7 19 24
Litigation and
operational
losses 8 2 16 5
Provision for
credit losses
on lending-
related
commitments (3) (6) (8) 1
Other
noninterest
expenses 37 35 106 104
------------ --- --- --- ---
Total noninterest
expenses 460 402 1,284 1,203
------------------ --- --- ----- -----
Income from
continuing
operations
before income
taxes 126 66 401 189
Provision for
income taxes 28 7 104 25
------------- --- --- --- ---
Income from
continuing
operations 98 59 297 164
Income from
discontinued
operations, net
of tax - - - 17
---------------- --- --- --- ---
NET INCOME 98 59 297 181
Less:
Preferred stock
dividends - - - 123
Income allocated
to
participating
securities 1 - 3 -
---------------- --- --- --- ---
Net income
attributable to
common shares $97 $59 $294 $58
---------------- --- --- ---- ---
Basic earnings
per common
share:
Income from
continuing
operations $0.51 $0.34 $1.63 $0.24
Net income 0.51 0.34 1.63 0.34
Diluted earnings
per common
share:
Income from
continuing
operations 0.51 0.33 1.61 0.24
Net income 0.51 0.33 1.61 0.34
Cash dividends
declared on
common stock 20 9 55 26
Cash dividends
declared per
common share 0.10 0.05 0.30 0.15
-------------- ---- ---- ---- ----
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Third Second First Fourth Third Third Quarter 2011 Compared To:
-------------------------------
Second Quarter Third Quarter
Quarter Quarter Quarter Quarter Quarter 2011 2010
(in
millions,
except per
share data) 2011 2011 2011 2010 2010 Amount Percent Amount Percent
---------------- ---- ---- ---- ---- ---- ------ ------- ------ -------
INTEREST
INCOME
Interest and
fees on
loans $405 $369 $375 $394 $399 $36 9% $6 1%
Interest on
investment
securities 54 59 57 49 55 (5) (7) (1) -
Interest on
short-term
investments 4 3 2 2 2 1 41 2 49
------------ --- --- --- --- --- --- --- --- ---
Total interest
income 463 431 434 445 456 32 7 7 1
INTEREST
EXPENSE
Interest on
deposits 24 23 22 24 27 1 3 (3) (13)
Interest on
short-term
borrowings - - - 1 - - 3 - (78)
Interest on
medium-
and long-
term debt 16 17 17 15 25 (1) (8) (9) (36)
----------- --- --- --- --- --- --- --- --- ---
Total interest
expense 40 40 39 40 52 - (2) (12) (24)
--------------- --- --- --- --- --- --- --- --- ---
Net interest income 423 391 395 405 404 32 8 19 5
Provision
for loan
losses 38 47 49 57 122 (9) (19) (84) (69)
--------- --- --- --- --- --- --- --- --- ---
Net interest income
after provision
for loan losses 385 344 346 348 282 41 12 103 36
NONINTEREST
INCOME
Service
charges on
deposit
accounts 53 51 52 49 51 2 5 2 3
Fiduciary
income 37 39 39 39 38 (2) (7) (1) (2)
Commercial
lending
fees 22 21 21 29 22 1 1 - (1)
Letter of
credit fees 19 18 18 20 19 1 2 - (1)
Card fees 17 15 15 15 15 2 6 2 12
Foreign
exchange
income 11 10 9 11 8 1 14 3 30
Bank-owned
life
insurance 10 9 8 14 9 1 14 1 10
Brokerage
fees 5 6 6 7 6 (1) (4) (1) (8)
Net
securities
gains 12 4 2 - - 8 N/M 12 N/M
Other
noninterest
income 15 29 37 31 18 (14) (47) (3) (18)
------------ --- --- --- --- --- --- --- --- ---
Total noninterest
income 201 202 207 215 186 (1) (1) 15 7
NONINTEREST
EXPENSES
Salaries 192 185 188 205 187 7 4 5 3
Employee
benefits 53 50 50 43 47 3 6 6 13
--------- --- --- --- --- --- --- --- --- ---
Total
salaries
and
employee
benefits 245 235 238 248 234 10 4 11 5
Net
occupancy
expense 44 38 40 42 40 6 12 4 9
Equipment
expense 17 17 15 16 15 - 3 2 9
Outside
processing
fee expense 25 25 24 27 23 - 2 2 10
Software
expense 22 20 23 23 22 2 5 - -
Merger and
restructuring
charges 33 5 - - - 28 N/M 33 N/M
FDIC
insurance
expense 8 12 15 15 14 (4) (42) (6) (49)
Legal fees 12 8 9 9 9 4 39 3 32
Advertising
expense 7 7 7 8 7 - - - (5)
Other real
estate
expense 5 6 8 5 7 (1) (2) (2) (28)
Litigation
and
operational
losses 8 5 3 6 2 3 83 6 N/M
Provision
for credit
losses on
lending-
related
commitments (3) (2) (3) (3) (6) (1) (52) 3 49
Other
noninterest
expenses 37 33 36 41 35 4 18 2 10
------------ --- --- --- --- --- --- --- --- ---
Total noninterest
expenses 460 409 415 437 402 51 12 58 14
------------------ --- --- --- --- --- --- --- --- ---
Income
before
income
taxes 126 137 138 126 66 (11) (8) 60 88
Provision
for income
taxes 28 41 35 30 7 (13) (33) 21 N/M
----------- --- --- --- --- --- --- --- --- ---
NET INCOME 98 96 103 96 59 2 2 39 65
Less:
Income
allocated
to
participating
securities 1 1 1 1 - - (9) 1 65
--- ---
Net income
attributable
to common
shares $97 $95 $102 $95 $59 $2 2% $38 65%
------------- --- --- ---- --- --- --- --- --- ---
Earnings per
common
share:
Basic $0.51 $0.54 $0.58 $0.54 $0.34 $(0.03) (6)% $0.17 50%
Diluted 0.51 0.53 0.57 0.53 0.33 (0.02) (4) 0.18 55
Cash
dividends
declared on
common
stock 20 18 17 18 9 2 11 11 N/M
Cash
dividends
declared
per common
share 0.10 0.10 0.10 0.10 0.05 - - 0.05 N/M
----------- ---- ---- ---- ---- ---- --- --- ---- ---
N/M - Not meaningful
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)
Comerica Incorporated and Subsidiaries
2011 2010
---- ----
(in
millions) 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr
------- ------- ------- ------- -------
Balance
at
beginning
of
period $806 $849 $901 $957 $967
Loan
charge-
offs:
Commercial 33 66 65 43 38
Real
estate
construction:
Commercial
Real
Estate
business
line
(a) 11 12 8 34 40
Other
business
lines
(b) - - 1 - 1
Total
real
estate
construction 11 12 9 34 41
Commercial
mortgage:
Commercial
Real
Estate
business
line
(a) 12 8 9 9 16
Other
business
lines
(b) 21 23 25 34 40
Total
commercial
mortgage 33 31 34 43 56
Residential
mortgage 4 7 2 5 2
Consumer 9 9 8 15 7
Lease
financing - - - - -
International - - 5 - 1
-------------
Total
loan
charge-
offs 90 125 123 140 145
Recoveries
on
loans
previously
charged-
off:
Commercial 5 13 4 7 7
Real
estate
construction 3 5 2 3 1
Commercial
mortgage 3 5 9 10 2
Residential
mortgage 1 1 - 1 -
Consumer 1 1 1 2 1
Lease
financing - 6 5 4 1
International - 4 1 - 1
Total
recoveries 13 35 22 27 13
Net
loan
charge-
offs 77 90 101 113 132
Provision
for
loan
losses 38 47 49 57 122
Balance
at
end
of
period $767 $806 $849 $901 $957
------- ---- ---- ---- ---- ----
Allowance
for
loan
losses
as
a
percentage
of
total
loans
(c) 1.86% 2.06% 2.17% 2.24% 2.38%
Net
loan
charge-
offs
as
a
percentage
of
average
total
loans 0.77 0.92 1.03 1.13 1.32
Net
credit-
related
charge-
offs
as
a
percentage
of
average
total
loans 0.77 0.92 1.03 1.13 1.32
---------- ---- ---- ---- ---- ----
(a) Primarily charge-offs of loans to real estate
investors and developers.
(b) Primarily charge-offs of loans secured by owner-
occupied real estate.
(c) Reflects the impact of acquired loans, which were
initially recorded at fair value with no related
allowance for loan losses.
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-
RELATED COMMITMENTS (unaudited)
Comerica Incorporated and Subsidiaries
2011 2010
---- ----
(in
millions) 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr
------- ------- ------- ------- -------
Balance
at
beginning
of
period $30 $32 $35 $38 $44
Add:
Provision
for
credit
losses
on
lending-
related
commitments (3) (2) (3) (3) (6)
Balance
at end
of
period $27 $30 $32 $35 $38
------- --- --- --- --- ---
Unfunded
lending-
related
commitments
sold $- $3 $2 $- $-
------------ --- --- --- --- ---
NONPERFORMING ASSETS (unaudited)
Comerica Incorporated and Subsidiaries
2011 2010
---- ----
2nd 1st
(in millions) 3rd Qtr Qtr Qtr 4th Qtr 3rd Qtr
------------- ------- ---- ---- ------- -------
SUMMARY OF
NONPERFORMING ASSETS
AND PAST DUE LOANS
Nonaccrual loans:
Business loans:
Commercial $258 $261 $226 $252 $258
Real estate
construction:
Commercial Real
Estate business
line (a) 109 137 195 259 362
Other business
lines (b) 3 2 3 4 4
Total real
estate
construction 112 139 198 263 366
Commercial mortgage:
Commercial Real
Estate business
line (a) 198 186 197 181 153
Other business
lines (b) 275 269 293 302 304
Total commercial
mortgage 473 455 490 483 457
Lease financing 5 6 7 7 10
International 7 7 4 2 2
------------- --- --- --- --- ---
Total nonaccrual
business loans 855 868 925 1,007 1,093
Retail loans:
Residential
mortgage 65 60 58 55 59
Consumer:
Home equity 4 4 6 5 5
Other consumer 5 9 7 13 6
-------------- --- --- --- --- ---
Total consumer 9 13 13 18 11
-------------- --- --- --- --- ---
Total nonaccrual
retail loans 74 73 71 73 70
---------------- --- --- --- --- ---
Total nonaccrual
loans 929 941 996 1,080 1,163
Reduced-rate
loans 29 33 34 43 28
Total
nonperforming
loans (c) 958 974 1,030 1,123 1,191
Foreclosed
property (d) 87 70 74 112 120
Total
nonperforming
assets (c) $1,045 $1,044 $1,104 $1,235 $1,311
-------------- ------ ------ ------ ------ ------
Nonperforming
loans as a
percentage of
total loans 2.32% 2.49% 2.63% 2.79% 2.96%
Nonperforming
assets as a
percentage of
total loans and
foreclosed
property 2.53 2.66 2.81 3.06 3.24
Allowance for
loan losses as
a percentage of
total
nonperforming
loans 80 83 82 80 80
Loans past due
90 days or more
and still
accruing $81 $64 $72 $62 $104
ANALYSIS OF NONACCRUAL
LOANS
Nonaccrual loans
at beginning of
period $941 $996 $1,080 $1,163 $1,098
Loans
transferred to
nonaccrual (e) 130 150 149 173 290
Nonaccrual
business loan
gross charge-
offs (f) (76) (109) (111) (120) (136)
Loans
transferred to
accrual status
(e) (15) - (4) (4) (10)
Nonaccrual
business loans
sold (g) (15) (9) (60) (41) (12)
Payments/Other
(h) (36) (87) (58) (91) (67)
Nonaccrual loans
at end of
period $929 $941 $996 $1,080 $1,163
---------------- ---- ---- ---- ------ ------
(a) Primarily loans to real estate investors and developers.
(b) Primarily loans secured by owner-occupied real estate.
(c) Excludes loans acquired with credit impairment.
(d) Included Sterling foreclosed property of $24 million at
September 30, 2011.
(e) Based on an analysis of nonaccrual loans with book balances
greater than $2 million.
(f) Analysis of gross loan charge-offs:
Nonaccrual
business loans $76 $109 $111 $120 $136
Performing watch
list loans 1 - 2 - -
Consumer and
residential
mortgage loans 13 16 10 20 9
--- --- --- --- ---
Total gross loan
charge-offs $90 $125 $123 $140 $145
-----------
(g) Analysis of loans
sold:
Nonaccrual
business loans $15 $9 $60 $41 $12
Performing watch
list loans 16 6 35 29 7
--- --- --- --- ---
Total loans sold $31 $15 $95 $70 $19
---
(h) 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)
Comerica Incorporated and Subsidiaries
Nine Months Ended
-----------------
September 30, 2011 September 30, 2010
------------------ ------------------
Average Average Average Average
(dollar
amounts
in
millions) Balance Interest Rate Balance Interest Rate
---------- ------- -------- ---- ------- -------- ----
Commercial
loans $21,769 $603 3.70% $20,963 $614 3.92%
Real
estate
construction
loans 1,918 59 4.12 2,997 69 3.08
Commercial
mortgage
loans 9,902 306 4.12 10,338 321 4.15
Residential
mortgage
loans 1,577 63 5.34 1,610 65 5.37
Consumer
loans 2,272 59 3.47 2,450 65 3.55
Lease
financing 960 25 3.53 1,100 31 3.72
International
loans 1,212 35 3.89 1,233 37 3.96
Business
loan
swap
income - 1 - - 24 -
--- --- --- --- --- ---
Total loans (a) 39,610 1,151 3.88 40,691 1,226 4.02
Auction-
rate
securities
available-
for-
sale 497 3 0.75 789 6 1.04
Other
investment
securities
available-
for-
sale 7,131 168 3.20 6,393 172 3.66
----- --- ---- ----- --- ----
Total investment
securities
available-for-
sale 7,628 171 3.03 7,182 178 3.36
Federal
funds
sold
and
securities
purchased
under
agreements
to
resell 2 - 0.33 5 - 0.38
Interest-
bearing
deposits
with
banks
(b) 3,555 7 0.24 3,641 7 0.25
Other
short-
term
investments 128 2 2.14 126 1 1.64
--- --- ---- --- --- ----
Total earning
assets 50,923 1,331 3.50 51,645 1,412 3.66
Cash
and
due
from
banks 908 809
Allowance
for
loan
losses (860) (1,033)
Accrued
income
and
other
assets 4,555 4,737
----- -----
Total assets $55,526 $56,158
-------
Money
market
and
NOW
deposits $18,539 36 0.26 $16,035 38 0.32
Savings
deposits 1,516 1 0.11 1,397 1 0.07
Customer
certificates
of
deposit 5,666 30 0.70 5,968 42 0.94
----- --- ---- ----- --- ----
Total interest-
bearing core
deposits 25,721 67 0.35 23,400 81 0.46
Other
time
deposits 26 - 0.38 409 9 3.04
Foreign
office
time
deposits 402 2 0.51 462 1 0.27
--- --- ---- --- --- ----
Total interest-
bearing deposits 26,149 69 0.35 24,271 91 0.50
Short-
term
borrowings 137 - 0.15 230 - 0.24
Medium-
and
long-
term
debt 5,702 50 1.17 9,521 76 1.06
----- --- ---- ----- --- ----
Total interest-
bearing sources 31,988 119 0.50 34,022 167 0.65
Noninterest-
bearing
deposits 16,259 14,922
Accrued
expenses
and
other
liabilities 1,129 1,080
Total
shareholders'
equity 6,150 6,134
----- -----
Total liabilities
and
shareholders'
equity $55,526 $56,158
----------
Net interest income/rate spread (FTE) $1,212 3.00 $1,245 3.01
------ ------
FTE adjustment $3 $4
--- ---
Impact of net noninterest-bearing sources of funds 0.19 0.22
-------------------------------------------------- ---- ----
Net interest margin (as a percentage
of average earning assets) (FTE) (a) (b) 3.19% 3.23%
---------------------------------------- ---- ----
(a) Accretion of the purchase discount on
the acquired loan portfolio of $27
million increased the net interest
margin by seven basis points year-to-
date 2011.
(b) Excess liquidity, represented by
average balances deposited with the
Federal Reserve Bank, reduced the net
interest margin by 22 basis points both
year-to-date 2011 and 2010.
ANALYSIS OF NET INTEREST INCOME (FTE)
Comerica Incorporated and Subsidiaries
Three Months Ended
------------------
September 30, 2011 June 30, 2011 September 30, 2010
------------------ ------------- ------------------
Average Average Average Average Average Average
(dollar
amounts
in
millions) Balance Interest Rate Balance Interest Rate Balance Interest Rate
---------- ------- -------- ---- ------- -------- ---- ------- -------- ----
Commercial
loans $22,127 $207 3.70% $21,677 $196 3.65% $20,967 $203 3.84%
Real
estate
construction
loans 1,699 23 5.28 1,881 17 3.75 2,625 21 3.19
Commercial
mortgage
loans 10,275 115 4.42 9,636 96 3.98 10,257 105 4.06
Residential
mortgage
loans 1,606 21 5.30 1,525 21 5.50 1,590 21 5.25
Consumer
loans 2,292 20 3.56 2,243 20 3.42 2,421 21 3.53
Lease
financing 936 8 3.46 958 8 3.50 1,064 10 3.69
International
loans 1,163 11 4.01 1,254 12 3.80 1,178 12 3.89
Business
loan
swap
income - - - - - - - 7 -
--- --- --- --- --- --- --- --- ---
Total
loans
(a) 40,098 405 4.01 39,174 370 3.79 40,102 400 3.96
Auction-
rate
securities
available-
for-
sale 437 1 0.63 500 1 0.71 673 1 0.99
Other
investment
securities
available-
for-
sale 7,721 54 2.87 6,907 58 3.40 6,233 54 3.54
----- --- ---- ----- --- ---- ----- --- ----
Total
investment
securities
available-
for-
sale 8,158 55 2.74 7,407 59 3.20 6,906 55 3.27
Federal
funds
sold and
securities
purchased
under
agreements
to
resell - - 0.44 2 - 0.33 13 - 0.31
Interest-
bearing
deposits
with
banks (b) 4,851 3 0.23 3,433 3 0.25 3,047 2 0.25
Other
short-
term
investments 136 1 2.30 120 - 1.39 121 - 1.53
--- --- ---- --- --- ---- --- --- ----
Total
earning
assets 53,243 464 3.47 50,136 432 3.46 50,189 457 3.64
Cash and
due from
banks 969 872 843
Allowance
for loan
losses (814) (859) (1,003)
Accrued
income
and
other
assets 4,840 4,368 4,700
----- ----- -----
Total
assets $58,238 $54,517 $54,729
------- ------- -------
Money
market
and NOW
deposits $19,595 $13 0.25 $18,207 $11 0.26 $16,681 $13 0.31
Savings
deposits 1,659 - 0.14 1,465 1 0.09 1,377 1 0.08
Customer
certificates
of
deposit 5,878 10 0.66 5,609 10 0.70 5,808 12 0.87
----- --- ---- ----- --- ---- ----- --- ----
Total
interest-
bearing
core
deposits 27,132 23 0.33 25,281 22 0.35 23,866 26 0.43
Other
time
deposits 76 - 0.38 - - - 65 - 0.51
Foreign
office
time
deposits 379 1 0.52 413 1 0.52 479 1 0.36
--- --- ---- --- --- ---- --- --- ----
Total
interest-
bearing
deposits 27,587 24 0.33 25,694 23 0.35 24,410 27 0.43
Short-
term
borrowings 204 - 0.08 112 - 0.14 208 - 0.35
Medium-
and
long-
term
debt 5,168 16 1.23 5,821 17 1.20 8,245 25 1.21
----- --- ---- ----- --- ---- ----- --- ----
Total
interest-
bearing
sources 32,959 40 0.47 31,627 40 0.51 32,863 52 0.63
Noninterest-
bearing
deposits 17,511 15,786 14,920
Accrued
expenses
and
other
liabilities 1,135 1,132 1,104
Total
shareholders'
equity 6,633 5,972 5,842
----- ----- -----
Total
liabilities
and
shareholders'
equity $58,238 $54,517 $54,729
------- ------- -------
Net interest
income/rate
spread (FTE) $424 3.00 $392 2.95 $405 3.01
---- ---- ----
FTE adjustment $1 $1 $1
--- --- ---
Impact of net
noninterest-
bearing sources
of funds 0.18 0.19 0.22
---------------- ---- ---- ----
Net interest
margin (as a
percentage of
average earning
assets) (FTE)
(a) (b) 3.18% 3.14% 3.23%
---------------- ---- ---- ----
(a) Accretion of the purchase discount on the acquired loan portfolio of $27 million
increased the net interest margin by 20 basis points in the third quarter 2011.
(b) Excess liquidity, represented by average balances deposited with the Federal
Reserve Bank, reduced the net interest margin by 29 basis points and by 21 points in
the third and second quarters of 2011, respectively, and by 19 basis points in the
third quarter of 2010.
CONSOLIDATED STATISTICAL DATA (unaudited)
Comerica Incorporated and Subsidiaries
September 30, June 30, March 31, December 31, September 30,
(in millions,
except per share
data) 2011 2011 2011 2010 2010
----------------- ---- ---- ---- ---- ----
Commercial loans:
Floor plan $1,209 $1,478 $1,893 $2,017 $1,693
Other 21,904 20,574 19,467 20,128 19,739
----- ------ ------ ------ ------ ------
Total commercial loans 23,113 22,052 21,360 22,145 21,432
Real estate construction loans:
Commercial Real
Estate business
line (a) 1,164 1,343 1,606 1,826 2,023
Other business
lines (b) 484 385 417 427 421
-------------- --- --- --- --- ---
Total real estate
construction loans 1,648 1,728 2,023 2,253 2,444
Commercial mortgage loans:
Commercial Real
Estate business
line (a) 2,271 1,930 1,918 1,937 2,091
Other business
lines (b) 8,268 7,649 7,779 7,830 8,089
-------------- ----- ----- ----- ----- -----
Total commercial mortgage
loans 10,539 9,579 9,697 9,767 10,180
Residential
mortgage loans 1,643 1,491 1,550 1,619 1,586
Consumer loans:
Home equity 1,683 1,622 1,661 1,704 1,736
Other consumer 626 610 601 607 667
-------------- --- --- --- --- ---
Total consumer loans 2,309 2,232 2,262 2,311 2,403
Lease financing 927 949 958 1,009 1,053
International loans 1,046 1,162 1,326 1,132 1,182
------------------- ----- ----- ----- ----- -----
Total loans $41,225 $39,193 $39,176 $40,236 $40,280
----------- ------- ------- ------- ------- -------
Goodwill $635 $150 $150 $150 $150
Core deposit
intangible 32 - - - -
Loan servicing
rights 3 4 4 5 5
Tier 1 common
capital ratio (c)
(d) 10.57% 10.53% 10.35% 10.13% 9.96%
Tier 1 risk-based
capital ratio (d) 10.65 10.53 10.35 10.13 9.96
Total risk-based
capital ratio (d) 14.84 14.80 14.80 14.54 14.37
Leverage ratio (d) 11.41 11.40 11.37 11.26 10.91
Tangible common
equity ratio (c) 10.43 10.90 10.43 10.54 10.39
Book value per
common share $34.94 $34.15 $33.25 $32.82 $33.19
Market value per share for the
quarter:
High 35.79 39.00 43.53 43.44 40.21
Low 21.48 33.08 36.20 34.43 33.11
Close 22.97 34.57 36.72 42.24 37.15
Quarterly ratios:
Return on average
common
shareholders'
equity 5.91% 6.41% 7.08% 6.53% 4.07%
Return on average
assets 0.67 0.70 0.77 0.71 0.43
Efficiency ratio 75.11 69.33 69.05 70.38 67.88
Number of banking
centers 502 446 445 444 441
Number of employees
-full time
equivalent (e) 9,701 8,915 8,955 9,001 9,075
(a) Primarily loans to real estate investors and developers.
(b) Primarily loans secured by owner-occupied real estate.
(c) See Reconciliation of Non-GAAP Financial Measures.
(d) September 30, 2011 ratios are estimated.
(e) Included 749 Sterling employees at September 30, 2011.
PARENT COMPANY ONLY BALANCE SHEETS (unaudited)
Comerica Incorporated
September 30, December 31, September 30,
(in millions,
except share
data) 2011 2010 2010
------------- ---- ---- ----
ASSETS
Cash and due from
subsidiary bank $3 $- $10
Short-term
investments with
subsidiary bank 440 327 793
Other short-term
investments 86 86 82
Investment in
subsidiaries,
principally
banks 7,098 5,957 6,039
Premises and
equipment 3 4 3
Other assets 189 181 202
Total assets $7,819 $6,555 $7,129
------------ ------ ------ ------
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Medium- and
long-term debt $722 $635 $1,155
Other liabilities 146 127 117
Total liabilities 868 762 1,272
Common stock -$5
par value:
Authorized -
325,000,000
shares
Issued -
228,164,824
shares at
9/30/2011 and
203,878,110
shares at
12/31/2010 and
9/30/2010 1,141 1,019 1,019
Capital surplus 2,162 1,481 1,473
Accumulated other
comprehensive
loss (230) (389) (238)
Retained earnings 5,471 5,247 5,171
Less cost of
common stock in
treasury -
29,238,425
shares at
9/30/11,
27,342,518
shares at
12/31/10, and
27,394,831
shares at
9/30/10 (1,593) (1,565) (1,568)
Total
shareholders'
equity 6,951 5,793 5,857
Total liabilities
and
shareholders'
equity $7,819 $6,555 $7,129
----------------- ------ ------ ------
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)
Comerica Incorporated and Subsidiaries
Accumulated
Common Stock Other Total
------------
Preferred Shares Capital Comprehensive Retained Treasury Shareholders'
(in
millions,
except
per
share
data) Stock Outstanding Amount Surplus Loss Earnings Stock Equity
---------- ----- ----------- ------ ------- ---- -------- ----- ------
BALANCE
AT
DECEMBER
31,
2009 $2,151 151.2 $894 $740 $(336) $5,161 $(1,581) $7,029
Net
income - - - - - 181 - 181
Other
comprehensive
income,
net of
tax - - - - 98 - - 98
---
Total
comprehensive
income 279
Cash
dividends
declared
on
preferred
stock - - - - - (38) - (38)
Cash
dividends
declared
on
common
stock
($0.15
per
share) - - - - - (26) - (26)
Purchase
of
common
stock - (0.1) - - - - (4) (4)
Issuance
of
common
stock - 25.1 125 724 - - - 849
Redemption
of
preferred
stock (2,250) - - - - - - (2,250)
Redemption
discount
accretion
on
preferred
stock 94 - - - - (94) - -
Accretion
of
discount
on
preferred
stock 5 - - - - (5) - -
Net
issuance
of
common
stock
under
employee
stock
plans - 0.3 - (11) - (8) 16 (3)
Share-
based
compensation - - - 24 - - - 24
Other - - - (4) - - 1 (3)
----- --- --- --- --- --- ---
BALANCE
AT
SEPTEMBER
30,
2010 $- 176.5 $1,019 $1,473 $(238) $5,171 $(1,568) $5,857
---------- --- ----- ------ ------ ----- ------ ------- ------
BALANCE
AT
DECEMBER
31,
2010 $- 176.5 $1,019 $1,481 $(389) $5,247 $(1,565) $5,793
Net
income - - - - - 297 - 297
Other
comprehensive
income,
net of
tax - - - - 159 - - 159
---
Total
comprehensive
income 456
Cash
dividends
declared
on
common
stock
($0.30
per
share) - - - - - (55) - (55)
Purchase
of
common
stock - (2.7) - - - - (75) (75)
Acquisition
of
Sterling
Bancshares,
Inc. - 24.3 122 681 - - - 803
Net
issuance
of
common
stock
under
employee
stock
plans - 0.8 - (29) - (18) 47 -
Share-
based
compensation - - - 29 - - - 29
BALANCE
AT
SEPTEMBER
30,
2011 $- 198.9 $1,141 $2,162 $(230) $5,471 $(1,593) $6,951
---------- --- ----- ------ ------ ----- ------ ------- ------
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries
--------------------------------------
(dollar amounts
in millions) Business Retail Wealth Finance Other Total
--------------- -------- ------ ------ ------- ----- -----
Three Months
Ended September
30, 2011 Bank Bank Management
---------------- ---- ---- ----------
Earnings summary:
Net interest
income
(expense) (FTE) $363 $173 $45 $(167) $10 $424
Provision for
loan losses 20 17 6 - (5) 38
Noninterest
income 77 47 56 25 (4) 201
Noninterest
expenses 162 174 78 3 43 460
Provision
(benefit) for
income taxes
(FTE) 79 10 6 (54) (12) 29
Net income
(loss) $179 $19 $11 $(91) $(20) $98
---- --- --- ---- ---- ---
Net credit-
related charge-
offs $40 $28 $9 $- $- $77
Selected average balances:
Assets $30,602 $5,991 $4,674 $10,176 $6,795 $58,238
Loans 29,949 5,489 4,652 2 6 40,098
Deposits 21,754 19,797 3,198 236 113 45,098
Statistical data:
Return on
average assets
(a) 2.34% 0.38% 0.95% N/M N/M 0.67%
Net interest
margin (b) 4.81 3.46 3.85 N/M N/M 3.18
Efficiency ratio 36.70 78.97 78.00 N/M N/M 75.11
---------------- ----- ----- ----- -- -- -----
Three Months
Ended June 30,
2011 Business Retail Wealth Finance Other Total
--------------- -------- ------ ------ ------- ----- -----
Bank Bank Management
---- ---- ----------
Earnings summary:
Net interest
income
(expense) (FTE) $342 $141 $48 $(147) $8 $392
Provision for
loan losses 6 24 14 - 3 47
Noninterest
income 79 46 63 11 3 202
Noninterest
expenses 158 162 76 3 10 409
Provision
(benefit) for
income taxes
(FTE) 81 4 9 (52) - 42
Net income
(loss) $176 $(3) $12 $(87) $(2) $96
---- --- --- ---- --- ---
Net credit-
related charge-
offs $54 $22 $14 $- $- $90
Selected average balances:
Assets $29,893 $5,453 $4,728 $9,406 $5,037 $54,517
Loans 29,380 4,999 4,742 48 5 39,174
Deposits 20,396 17,737 2,978 239 130 41,480
Statistical data:
Return on
average assets
(a) 2.35% (0.06)% 1.03% N/M N/M 0.70%
Net interest
margin (b) 4.65 3.22 4.07 N/M N/M 3.14
Efficiency ratio 37.41 86.48 71.40 N/M N/M 69.33
---------------- ----- ----- ----- -- -- -----
Three Months
Ended September
30, 2010 Business Retail Wealth Finance Other Total
---------------- -------- ------ ------ ------- ----- -----
Bank Bank Management
---- ---- ----------
Earnings summary:
Net interest
income
(expense) (FTE) $336 $133 $41 $(104) $(1) $405
Provision for
loan losses 57 24 37 - 4 122
Noninterest
income 69 45 59 12 1 186
Noninterest
expenses 155 165 78 2 2 402
Provision
(benefit) for
income taxes
(FTE) 60 (4) (5) (36) (7) 8
Net income
(loss) $133 $(7) $(10) $(58) $1 $59
---- --- ---- ---- --- ---
Net credit-
related charge-
offs $99 $19 $14 $- $- $132
Selected average balances:
Assets $30,309 $5,777 $4,855 $9,044 $4,744 $54,729
Loans 29,940 5,314 4,824 30 (6) 40,102
Deposits 19,266 16,972 2,606 386 100 39,330
Statistical data:
Return on
average assets
(a) 1.75% (0.16)% (0.79)% N/M N/M 0.43%
Net interest
margin (b) 4.45 3.10 3.42 N/M N/M 3.23
Efficiency ratio 38.16 92.26 78.49 N/M N/M 67.88
---------------- ----- ----- ----- -- -- -----
(a) Return on average assets is calculated based on the greater of average assets or average
liabilities and attributed equity.
--------------------------------------------------------------------------------------------
(b) Net interest margin is calculated based on the greater of average earning assets or average
deposits and purchased funds.
-----------------------------------------------------------------------------------------------
FTE - Fully Taxable Equivalent
------------------------------
N/M - Not Meaningful
--------------------
MARKET SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries
(dollar amounts
in millions) Midwest Western Texas Florida Other International Finance Total
--------------- ------- ------- ----- ------- ----- ------------- ------- -----
Three Months Ended
September 30, 2011 Markets & Other
------------------- ------- -------
Businesses
----------
Earnings summary:
Net interest
income
(expense) (FTE) $199 $166 $143 $11 $41 $21 $(157) $424
Provision for
loan losses 21 14 (7) 2 11 2 (5) 38
Noninterest
income 96 32 29 4 10 9 21 201
Noninterest
expenses 183 106 79 11 25 10 46 460
Provision
(benefit) for
income taxes
(FTE) 32 29 35 1 (8) 6 (66) 29
Net income
(loss) $59 $49 $65 $1 $23 $12 $(111) $98
--- --- --- --- --- --- ----- ---
Net credit-
related charge-
offs $33 $32 $2 $5 $5 $- $- $77
Selected average
balances:
Assets $14,123 $12,110 $8,510 $1,450 $3,369 $1,705 $16,971 $58,238
Loans 13,873 11,889 8,145 1,477 3,075 1,631 8 40,098
Deposits 18,511 12,975 8,865 404 2,391 1,603 349 45,098
Statistical data:
Return on
average assets
(a) 1.21% 1.42% 2.70% 0.29% 2.78% 2.76% N/M 0.67%
Net interest
margin (b) 4.27 5.06 6.40 2.94 5.36 5.00 N/M 3.18
Efficiency ratio 61.73 53.15 46.18 78.07 50.15 31.23 N/M 75.11
---------------- ----- ----- ----- ----- ----- ----- -- -----
Three Months
Ended June 30,
2011 Midwest Western Texas Florida Other International Finance Total
--------------- ------- ------- ----- ------- ----- ------------- ------- -----
Markets & Other
------- -------
Businesses
----------
Earnings summary:
Net interest
income
(expense) (FTE) $204 $166 $89 $12 $41 $19 $(139) $392
Provision for
loan losses 15 20 (2) 11 5 (5) 3 47
Noninterest
income 100 37 25 4 13 9 14 202
Noninterest
expenses 183 108 63 12 21 9 13 409
Provision
(benefit) for
income taxes
(FTE) 44 25 20 (2) (2) 9 (52) 42
Net income
(loss) $62 $50 $33 $(5) $30 $15 $(89) $96
--- --- --- --- --- --- ---- ---
Net credit-
related charge-
offs
(recoveries) $37 $26 $3 $15 $11 $(2) $- $90
Selected average
balances:
Assets $14,267 $12,329 $7,081 $1,534 $3,101 $1,762 $14,443 $54,517
Loans 14,051 12,121 6,871 1,565 2,823 1,690 53 39,174
Deposits 18,319 12,458 6,175 396 2,451 1,312 369 41,480
Statistical data:
Return on
average assets
(a) 1.28% 1.48% 1.84% (1.29)% 3.89% 3.33% N/M 0.70%
Net interest
margin (b) 4.46 5.35 5.19 3.14 5.88 4.40 N/M 3.14
Efficiency ratio 60.31 53.17 55.16 77.62 40.47 33.16 N/M 69.33
---------------- ----- ----- ----- ----- ----- ----- -- -----
Three Months
Ended September
30, 2010 Midwest Western Texas Florida Other International Finance Total
---------------- ------- ------- ----- ------- ----- ------------- ------- -----
Markets & Other
------- -------
Businesses
----------
Earnings summary:
Net interest
income
(expense) (FTE) $200 $157 $78 $10 $47 $18 $(105) $405
Provision for
loan losses 38 51 17 10 4 (2) 4 122
Noninterest
income 99 31 21 4 10 8 13 186
Noninterest
expenses 186 107 61 13 23 8 4 402
Provision
(benefit) for
income taxes
(FTE) 27 16 7 (3) (3) 7 (43) 8
Net income
(loss) $48 $14 $14 $(6) $33 $13 $(57) $59
--- --- --- --- --- --- ---- ---
Net credit-
related charge-
offs $61 $58 $5 $6 $2 $- $- $132
Selected average
balances:
Assets $14,445 $12,746 $6,556 $1,528 $4,058 $1,608 $13,788 $54,729
Loans 14,276 12,556 6,357 1,549 3,802 1,538 24 40,102
Deposits 17,777 11,793 5,443 364 2,198 1,269 486 39,330
Statistical data:
Return on
average assets
(a) 1.04% 0.42% 0.83% (1.58)% 3.20% 3.25% N/M 0.43%
Net interest
margin (b) 4.45 4.96 4.87 2.61 4.99 4.51 N/M 3.23
Efficiency ratio 61.47 57.12 62.01 94.50 41.39 30.65 N/M 67.88
---------------- ----- ----- ----- ----- ----- ----- -- -----
(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
September 30, June 30, March 31, December 31, September 30,
(dollar
amounts
in
millions) 2011 2011 2011 2010 2010
--------- ---- ---- ---- ---- ----
Tier 1 Common
Capital Ratio:
Tier 1
capital
(a)
(b) $6,560 $6,193 $6,107 $6,027 $5,940
Less:
Trust
preferred
securities 49 - - - -
-----------
Tier 1
common
capital
(b) $6,511 $6,193 $6,107 $6,027 $5,940
-------- ------ ------ ------ ------ ------
Risk-
weighted
assets
(a)
(b) $61,604 $58,795 $58,998 $59,506 $59,608
Tier 1
capital
ratio
(b) 10.65% 10.53% 10.35% 10.13% 9.96%
Tier 1
common
capital
ratio
(b) 10.57 10.53 10.35 10.13 9.96
-------- ----- ----- ----- ----- ----
Tangible Common
Equity Ratio:
Total
common
shareholders'
equity $6,951 $6,038 $5,877 $5,793 $5,857
Less:
Goodwill 635 150 150 150 150
Other
intangible
assets 35 4 5 6 6
-----------
Tangible
common
equity $6,281 $5,884 $5,722 $5,637 $5,701
-------- ------ ------ ------ ------ ------
Total
assets $60,888 $54,141 $55,017 $53,667 $55,004
Less:
Goodwill 635 150 150 150 150
Other
intangible
assets 35 4 5 6 6
-----------
Tangible
assets $60,218 $53,987 $54,862 $53,511 $54,848
-------- ------- ------- ------- ------- -------
Common
equity
ratio 11.42% 11.15% 10.68% 10.80% 10.65%
Tangible
common
equity
ratio 10.43 10.90 10.43 10.54 10.39
-------- ----- ----- ----- ----- -----
(a) Tier 1 capital and risk-weighted assets as defined by regulation.
(b) September 30, 2011 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
