DALLAS, July 16, 2013 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported second quarter 2013 net income of $143 million, compared to $134 million for the first quarter 2013. Earnings per diluted share were 76 cents for the second quarter 2013, compared to 70 cents for the first quarter 2013.
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(dollar amounts in 2nd 1st 2nd
millions, except per Qtr Qtr Qtr
share data) '13 '13 '12
--------------------- ---- ---- ----
Net interest income (a) $414 $416 $435
Provision for credit
losses 13 16 19
Noninterest income 208 200 211
Noninterest expenses 416 416 434 (b)
Provision for income
taxes 50 50 50
Net income 143 134 143
Net income attributable
to common shares 141 132 141
Diluted income per
common share 0.76 0.70 0.73
Average diluted shares
(in millions) 187 187 194
Tier 1 common capital
ratio (d) 10.41% (c) 10.37% 10.39%
Basel III Tier 1 common
capital ratio (d) (e) 10.1 10.1 10.0
Tangible common equity
ratio (d) 10.04 9.86 10.31
---------------------- ----- ---- -----
(a) Included
accretion of
the purchase
discount on
the acquired
loan
portfolio of
$7 million
($4 million,
after tax),
$11 million
($7 million,
after tax)
and $18
million ($11
million,
after tax)
in the
second
quarter
2013, first
quarter 2013
and second
quarter
2012,
respectively.
(b) Included restructuring expenses
of $8 million ($5 million, after
tax), associated with the 2011
acquisition of Sterling
Bancshares, Inc.
(c) June 30, 2013 ratio is
estimated.
(d) See Reconciliation of Non-GAAP
Financial Measures.
(e) Estimated ratios based on the
standardized approach in the
final rule and assuming the
election to exclude most
elements of accumulated other
comprehensive income (AOCI).
--- ------------------------------
"Average loan growth and fee growth, expense control and continued solid credit quality, contributed to our 9 percent increase in earnings per share in the second quarter," said Ralph W. Babb Jr., chairman and chief executive officer. "Average total loans grew $276 million compared to the first quarter, and reflected an increase of $337 million, or 1 percent, in commercial loans. Our Middle Market business lines across all three of our major geographies were a key contributor to our loan growth in the second quarter. Overall, customers remain cautious, but relatively more positive, in this slow growing economy.
"Economic indicators in Texas and California are positive, with job growth in both markets above the U.S. average, while increased auto production and sales have strengthened the Michigan economy. We are well positioned in our primary markets, where our relationship-based approach and experience combine to make a positive difference for our customers.
"Our capital position continues to be a source of strength to support our growth. We repurchased 1.9 million shares in the second quarter under the share repurchase program and combined with dividends, returned 72 percent of second quarter net income to shareholders."
Second Quarter 2013 Compared to First Quarter 2013
-- Average total loans increased $276 million, or 1 percent, to $44.9
billion, primarily reflecting an increase of $337 million, or 1 percent,
in commercial loans, partially offset by a decrease of $67 million, or 1
percent, in combined commercial mortgage and real estate construction
loans. The increase in commercial loans was primarily driven by
increases in general Middle Market and National Dealer Services,
partially offset by a decrease in Corporate Banking. Period-end total
loans increased $392 million to $45.5 billion, primarily reflecting a
$678 million increase in commercial loans, partially offset by a $227
million decrease in combined commercial mortgage and real estate
construction loans.
-- Average investment securities available-for-sale decreased $228 million,
or 2 percent, to $9.8 billion, primarily reflecting a slowing of
reinvestments related to paydowns on mortgage-backed investment
securities. Period-end investment securities decreased $655 million, or
6 percent, to $9.6 billion, primarily reflecting both a slowing of
reinvestments related to paydowns and a $219 million decrease in net
unrealized gains on mortgage-backed investment securities due to rising
interest rates during the period.
-- Average total deposits increased $756 million, or 1 percent, to $51.4
billion, primarily reflecting increases of $570 million, or 3 percent,
in noninterest-bearing deposits and $250 million, or 1 percent, in money
market and interest-bearing checking accounts. The increase in average
noninterest-bearing deposits primarily reflected increases in Corporate
Banking and the Financial Services Division. Period-end total deposits
decreased $862 million to $51.3 billion, reflecting a decrease of $907
million in noninterest-bearing deposits.
-- Net interest income remained relatively stable at $414 million in the
second quarter 2013, compared to $416 million in the first quarter 2013,
as one additional day in the second quarter and loan growth partially
offset a decrease in accretion and lower loan yields due to shifts in
the loan portfolio mix.
-- The provision for credit losses decreased $3 million to $13 million in
the second quarter 2013, compared to $16 million in the first quarter
2013, reflecting strong credit quality.
-- Noninterest income increased $8 million to $208 million in the second
quarter 2013, compared to $200 million in the first quarter 2013,
reflecting broad-based growth in several categories as well as an annual
incentive received from our third-party credit card provider.
-- Noninterest expenses of $416 million in the second quarter 2013 were
unchanged compared to the first quarter 2013, primarily reflecting a $6
million decrease in salaries expense, offset by a $4 million write-down
on other foreclosed assets and a $2 million increase in outside
processing fee expense.
-- The provision for income taxes was stable at $50 million for the second
quarter 2013. The effective tax rate decreased to 25.8 percent for the
second quarter 2013, compared to 27.1 percent in the first quarter 2013,
primarily reflecting a $2 million net benefit in the second quarter 2013
from certain discrete tax items.
-- Comerica repurchased 1.9 million shares of common stock ($72 million) in
the second quarter 2013 under the share repurchase program. Combined
with dividends, 72 percent of net income was returned to shareholders in
the second quarter 2013.
-- Capital remained solid at June 30, 2013, as evidenced by an estimated
Tier 1 common capital ratio of 10.41 percent and a tangible common
equity ratio of 10.04 percent.
Net Interest Income
-------------------
(dollar amounts in 2nd Qtr 1st Qtr 2nd Qtr
millions) '13 '13 '12
------------------ -------- -------- --------
Net interest
income $414 $416 $435
Net interest
margin 2.83% 2.88% 3.10%
Selected average
balances:
Total earning
assets $58,928 $58,607 $56,652
Total loans 44,893 44,617 43,228
Total investment
securities 9,793 10,021 9,728
Federal Reserve
Bank deposits
(excess
liquidity) 3,968 3,669 3,463
Total deposits 51,448 50,692 48,672
Total noninterest-
bearing deposits 22,076 21,506 20,128
------------------ ------ ------ ------
-- Net interest income of $414 million in the second quarter 2013 decreased
$2 million compared to the first quarter 2013.
-- One additional day in the second quarter 2013 increased net interest
income by $4 million.
-- An increase in loan volumes increased net interest income by $2
million.
-- A decrease in funding costs increased net interest income by $1
million, primarily reflecting the maturity of debt in the second
quarter 2013 and a decline in the rate paid on total average
interest-bearing deposits of 2 basis points.
-- A decrease in the accretion of the purchase discount on the acquired
loan portfolio decreased net interest income by $4 million.
-- Lower loan yields due to shifts in the loan portfolio mix decreased
net interest income by $4 million.
-- Lower reinvestment yields on mortgage-backed investment securities
and a decrease in average balances decreased net interest income by
$1 million.
-- Average earning assets increased $321 million in the second quarter
2013, compared to the first quarter 2013, primarily reflecting increases
of $299 million in excess liquidity and $276 million in average loans,
partially offset by a $228 million decrease in average investment
securities available-for-sale.
-- The net interest margin of 2.83 percent decreased 5 basis points
compared to the first quarter 2013. The decrease in net interest margin
was primarily due to lower accretion on the acquired loan portfolio (3
basis points), lower loan yields (2 basis points) and an increase in
excess liquidity (1 basis point), partially offset by lower funding
costs (1 basis point).
Noninterest Income
Noninterest income increased $8 million to $208 million for the second quarter 2013, compared to $200 million for the first quarter 2013. Customer-driven fee income increased $4 million and noncustomer-driven income increased $4 million. The increase in customer-driven fee income was primarily due to a $3 million increase in customer derivative income and broad-based increases across most customer-driven fee income categories, partially offset by a $2 million decrease in service charges on deposit accounts from high first quarter 2013 levels. The increase in noncustomer-driven income was primarily due to a $6 million annual incentive received in the second quarter 2013 from Comerica's third-party credit card provider, partially offset by a second quarter 2013 securities loss of $2 million.
Noninterest Expenses
Noninterest expenses of $416 million in the second quarter 2013 were unchanged compared to the first quarter 2013, as a $6 million decrease in salaries expense was offset by a $4 million write-down on other foreclosed assets and a $2 million increase in outside processing fee expense. The decrease in salaries expense was primarily due to decreases in incentive and stock based compensation and lower staffing levels, partially offset by the impact of merit increases and one additional day in the quarter.
Credit Quality
"Credit quality was solid in the second quarter, with net charge-offs of 15 basis points, which is the lowest level since the first quarter of 2007," said Babb. "Nonaccrual loans also decreased, as did watch list loans. These positive metrics are indicative of our strong credit culture and have resulted in a $3 million decrease in the provision for credit losses."
(dollar amounts in 2nd 1st 2nd
millions) Qtr Qtr Qtr
'13 '13 '12
------------------ ---- ---- ----
Net credit-related
charge-offs $17 $24 $45
Net credit-related
charge-offs/
Average total
loans 0.15% 0.21% 0.42%
Provision for
credit losses $13 $16 $19
Nonperforming loans
(a) 471 515 747
Nonperforming
assets (NPAs) (a) 500 555 814
NPAs/Total loans
and foreclosed
property 1.10% 1.23% 1.85%
Loans past due 90
days or more and
still accruing $20 $25 $43
Allowance for loan
losses 613 617 667
Allowance for
credit losses on
lending-related
commitments (b) 36 36 36
--- --- ---
Total allowance for
credit losses 649 653 703
Allowance for loan
losses/Period-
end total loans 1.35% 1.37% 1.52%
Allowance for loan
losses/
Nonperforming
loans 130 120 89
------------------ --- --- ---
(a) Excludes loans acquired with credit impairment.
(b) Included in "Accrued expenses and other liabilities" on
the consolidated balance sheets.
-----------------------------------------------------------
-- Nonaccrual loans decreased $45 million, to $449 million at June 30,
2013, compared to $494 million at March 31, 2013.
-- Internal watch list loans decreased $224 million, to $2.9 billion at
June 30, 2013, compared to $3.1 billion at March 31, 2013.
-- During the second quarter 2013, $37 million of borrower relationships
over $2 million were transferred to nonaccrual status, an increase of $3
million from the first quarter 2013.
Balance Sheet and Capital Management
Total assets and common shareholders' equity were $62.9 billion and $6.9 billion, respectively, at June 30, 2013, compared to $64.9 billion and $7.0 billion, respectively, at March 31, 2013. The $2.0 billion decrease in total assets primarily reflected decreases of $1.9 billion in excess liquidity and $655 million in investment securities available-for-sale, partially offset by a $392 million increase in loans. Common shareholders' equity included a $128 million increase in accumulated other comprehensive loss, primarily reflecting a temporary unrealized loss on investment securities available-for-sale of $142 million, net of tax, largely due to the impact of rising rates on the fair value of mortgage-backed investment securities.
There were approximately 185 million common shares outstanding at June 30, 2013. Diluted weighted average shares of 187 million at June 30, 2013 were unchanged compared to March 31, 2013, as the impact of the repurchase of $72 million of common stock (1.9 million shares) under the share repurchase program during the second quarter 2013 was offset by the impact of an increase in share dilution from options and warrants due to an increase in Comerica's stock price. Combined with the dividend of $0.17 per share, share repurchases under the share repurchase program and dividends returned 72 percent of second quarter 2013 net income to shareholders.
Comerica's tangible common equity ratio was 10.04 percent at June 30, 2013, an increase of 18 basis points from March 31, 2013. The estimated Tier 1 common capital ratio increased 4 basis points, to 10.41 percent at June 30, 2013, from March 31, 2013. The estimated Tier 1 common ratio under fully phased-in Basel III capital rules was 10.1 percent percent at June 30, 2013, assuming the election to exclude most elements of AOCI. If the option to exclude most elements of AOCI is not elected, the estimated ratio would be 9.3 percent.
Full-Year 2013 Outlook
For full-year 2013, management expects the following compared to full-year 2012, assuming a continuation of the current slow growing economic environment:
-- Continued growth in average loans at a slower pace, with economic
uncertainty impacting demand and a continued focus on maintaining
pricing and structure discipline in a competitive environment.
-- Lower net interest income, reflecting both a decline in purchase
accounting accretion and the effect of continued low rates. Loan growth
should partially offset the impact of low rates on loans and securities.
Purchase accounting accretion is expected to be $25 million to $30
million for full-year 2013, compared to $71 million in full-year 2012.
-- Provision for credit losses declining, reflecting lower nonperforming
loans and net charge-offs, partially offset by loan growth. The
provision for credit losses for the second half of 2013 is expected to
be similar to the provision for the first six months of 2013.
-- Customer-driven noninterest income relatively stable, reflecting
cross-sell initiatives partially offset by regulatory pressures on
certain fees. Outlook does not include expectations for non-customer
driven income.
-- Lower noninterest expense, reflecting further cost savings due to tight
expense control and no restructuring expenses. Full-year 2012 included
restructuring expenses of $35 million.
-- Effective tax rate of approximately 27.5 percent.
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 reported as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at June 30, 2013 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses second quarter 2013 results compared to first quarter 2013.
The following table presents net income (loss) by business segment.
(dollar 2nd Qtr 1st Qtr 2nd Qtr
amounts '13 '13 '12
in
millions)
---------- -------- -------- --------
Business
Bank $207 85% $198 85% $206 84%
Retail
Bank 11 5 10 4 19 8
Wealth
Management 24 10 25 11 20 8
---------- --- --- --- --- --- ---
242 100% 233 100% 245 100%
Finance (98) (98) (92)
Other
(a) (1) (1) (10)
----- --- --- ---
Total $143 $134 $143
----- --- --- ---
(a) Includes items not directly associated with the three major
business segments or the Finance Division.
Business Bank
(dollar amounts in 2nd 1st 2nd
millions) Qtr Qtr Qtr
'13 '13 '12
------------------ ---- ---- ----
Net interest income
(FTE) $372 $375 $379
Provision for credit
losses 10 20 12
Noninterest income 80 77 83
Noninterest expenses 147 146 151
Net income 207 198 206
Net credit-related
charge-offs 11 16 26
Selected average
balances:
Assets 36,017 35,780 34,373
Loans 34,955 34,753 33,449
Deposits 25,987 25,514 24,143
-------- ------ ------ ------
-- Average loans increased $202 million, primarily reflecting increases in
National Dealer Services and general Middle Market, partially offset by
a decrease in Corporate Banking.
-- Average deposits increased $473 million, primarily reflecting increases
in Corporate Banking and Commercial Real Estate.
-- Net interest income decreased $3 million, primarily due to a decrease in
accretion of the purchase discount on the acquired loan portfolio, lower
loan yields and a decrease in funds transfer pricing (FTP) credits,
partially offset by the benefit provided by an increase in average loans
and one additional day in the quarter.
-- The provision for credit losses decreased $10 million, primarily
reflecting a decrease in Middle Market, partially offset by an increase
in Mortgage Banker Finance. The decrease in Middle Market primarily
reflected decreases in Technology and Life Sciences, Environmental
Services and Energy.
-- Noninterest income increased $3 million, primarily due to an increase in
income from principal investing and warrants and small increases in
several other noninterest income categories, partially offset by a
decrease in service charges on deposit accounts from high first quarter
2013 levels.
-- Noninterest expenses increased $1 million, primarily due to a $4 million
write-down on other foreclosed assets and an increase in outside
processing fee expense, partially offset by a decrease in salaries
expense.
Retail Bank
(dollar amounts in 2nd 1st 2nd
millions) Qtr Qtr Qtr
'13 '13 '12
------------------ ---- ---- ----
Net interest income
(FTE) $154 $155 $161
Provision for credit
losses 5 6 3
Noninterest income 46 41 47
Noninterest expenses 178 175 177
Net income 11 10 19
Net credit-related
charge-offs 4 8 9
Selected average
balances:
Assets 5,962 5,973 5,945
Loans 5,271 5,276 5,250
Deposits 21,241 21,049 20,524
-------- ------ ------ ------
-- Average loans decreased $5 million, primarily due to a decrease in
Retail Banking, partially offset by an increase in Small Business.
-- Average deposits increased $192 million, primarily due to increases in
Retail Banking and Small Business.
-- Noninterest income increased $5 million, primarily due to a $6 million
annual incentive received in the second quarter 2013 from Comerica's
third-party credit card provider, partially offset by a second quarter
2013 securities loss of $2 million.
-- Noninterest expense increased $3 million, primarily due to small
increases in several categories.
Wealth Management
(dollar amounts in 2nd 1st 2nd
millions) Qtr Qtr Qtr
'13 '13 '12
------------------ ---- ---- ----
Net interest income
(FTE) $46 $46 $46
Provision for credit
losses (3) (6) 2
Noninterest income 65 65 66
Noninterest expenses 77 79 79
Net income 24 25 20
Net credit-related
charge-offs 2 - 10
Selected average
balances:
Assets 4,828 4,738 4,604
Loans 4,667 4,588 4,529
Deposits 3,701 3,682 3,640
-------- ----- ----- -----
-- Average loans increased $79 million, primarily due to an increase in
Private Banking.
-- Noninterest expenses decreased $2 million, primarily due to small
decreases in several categories.
Geographic Market Segments
Comerica also provides market segment results for three primary geographic markets: Michigan, California and Texas. In addition to the three primary geographic markets, Other Markets is also reported as a market segment. Other Markets includes Florida, Arizona, the International Finance division and businesses that have a significant presence outside of the three primary geographic markets. The tables below present the geographic market results based on the methodologies in effect at June 30, 2013 and are presented on a fully taxable equivalent (FTE) basis.
The following table presents net income (loss) by market segment.
(dollar amounts in 2nd Qtr 1st Qtr 2nd Qtr
millions) '13 '13 '12
------------------ -------- -------- --------
Michigan $77 32% $77 34% $81 33%
California 65 27 56 24 66 27
Texas 46 19 44 18 49 20
Other Markets 54 22 56 24 49 20
------------- --- --- --- --- --- ---
242 100% 233 100% 245 100%
Finance & Other (a) (99) (99) (102)
------------------- --- --- ----
Total $143 $134 $143
----- --- --- ---
(a) Includes items not directly associated with the geographic
markets.
-- Average loans increased $370 million and $108 million in California and
Texas, respectively, and decreased $52 million in Michigan. The increase
in California primarily reflected increases in National Dealer Services
and Commercial Real Estate. In Texas, the increase was primarily due to
an increase in general Middle Market.
-- Average deposits increased $315 million and $228 million in California
and Texas, respectively, and decreased $96 million in Michigan. The
increase in California primarily reflected increases in general Middle
Market and Corporate Banking. In Texas, the increase was primarily due
to increases in Corporate Banking, Technology and Life Sciences, and
Energy.
-- The provision for credit losses in California decreased $14 million,
primarily reflecting decreases in Technology and Life Sciences and
general Middle Market.
Michigan Market
(dollar amounts in 2nd 1st 2nd
millions) Qtr Qtr Qtr
'13 '13 '12
------------------ ---- ---- ----
Net interest income
(FTE) $187 $189 $196
Provision for credit
losses (4) (8) (6)
Noninterest income 88 92 96
Noninterest expenses 161 168 175
Net income 77 77 81
Net credit-related
charge-offs 4 5 10
Selected average
balances:
Assets 14,022 14,042 14,028
Loans 13,598 13,650 13,759
Deposits 20,159 20,255 19,224
-------- ------ ------ ------
California Market
(dollar amounts in 2nd 1st 2nd
millions) Qtr Qtr Qtr
'13 '13 '12
------------------ ---- ---- ----
Net interest income
(FTE) $173 $171 $171
Provision for credit
losses 7 21 6
Noninterest income 36 35 37
Noninterest expenses 100 97 97
Net income 65 56 66
Net credit-related
charge-offs 12 10 12
Selected average
balances:
Assets 14,155 13,795 12,870
Loans 13,912 13,542 12,647
Deposits 14,671 14,356 14,149
-------- ------ ------ ------
Texas Market
(dollar amounts in 2nd 1st 2nd
millions) Qtr Qtr Qtr
'13 '13 '12
------------------ ---- ---- ----
Net interest income
(FTE) $131 $135 $143
Provision for credit
losses 6 8 9
Noninterest income 34 31 31
Noninterest expenses 89 91 88
Net income 46 44 49
Net credit-related
charge-offs (3) 6 4
Selected average
balances:
Assets 10,886 10,795 10,268
Loans 10,179 10,071 9,506
Deposits 10,187 9,959 10,185
-------- ------ ----- ------
Conference Call and Webcast
Comerica will host a conference call to review second quarter 2013 financial results at 7 a.m. CT Tuesday, July 16, 2013. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 96351362). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A replay of the Webcast can 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 a reconciliation 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," "contemplates," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "opportunity," "initiative," "outcome," "continue," "remain," "maintain," "on course," "trend," "objective," "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; changes in monetary and fiscal policies, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; changes in Comerica's credit rating; the interdependence of financial service companies; changes in regulation or oversight; unfavorable developments concerning credit quality; any future acquisitions or divestitures; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers; the implementation of Comerica's strategies and business models; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; operational difficulties, failure of technology infrastructure or information security incidents; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; 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 or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; changes in accounting standards and the critical nature of Comerica's accounting policies. 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 13 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2012. 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 Six Months Ended
------------------ ----------------
June 30, March
31, June 30, June 30,
(in millions, except per share data) 2013 2013 2012 2013 2012
----------------------------------- ---- ---- ---- ---- ----
PER COMMON SHARE AND COMMON STOCK DATA
Diluted net income $0.76 $0.70 $0.73 $1.46 $1.39
Cash dividends declared 0.17 0.17 0.15 0.34 0.25
Common shareholders' equity (at period end) 37.32 37.41 36.18
Tangible common equity (at period end) (a) 33.79 33.90 32.76
Average diluted shares (in thousands) 186,998 187,442 194,487 187,219 195,254
------------------------------------ ------- ------- ------- ------- -------
KEY RATIOS
Return on average common shareholders'
equity 8.23% 7.68% 8.22% 7.95% 7.86%
Return on average assets 0.90 0.84 0.93 0.87 0.89
Tier 1 common capital ratio (a) (b) 10.41 10.37 10.39
Tier 1 risk-based capital ratio (b) 10.41 10.37 10.39
Total risk-based capital ratio (b) 13.27 13.41 13.91
Leverage ratio (b) 10.81 10.75 10.97
Tangible common equity ratio (a) 10.04 9.86 10.31
------------------------------- ----- ---- -----
AVERAGE BALANCES
Commercial loans $28,393 $28,056 $25,983 $28,225 $25,359
Real estate construction loans:
Commercial Real Estate business line (c) 1,218 1,116 1,035 1,167 1,046
Other business lines (d) 235 198 385 217 391
--- --- --- --- ---
Total real estate construction loans 1,453 1,314 1,420 1,384 1,437
Commercial mortgage loans:
Commercial Real Estate business line (c) 1,798 1,836 2,443 1,817 2,482
Other business lines (d) 7,394 7,562 7,540 7,478 7,611
----- ----- ----- ----- -----
Total commercial mortgage loans 9,192 9,398 9,983 9,295 10,093
Lease financing 855 857 869 856 883
International loans 1,262 1,282 1,265 1,272 1,235
Residential mortgage loans 1,602 1,556 1,487 1,579 1,503
Consumer loans 2,136 2,154 2,221 2,145 2,239
----- ----- ----- ----- -----
Total loans 44,893 44,617 43,228 44,756 42,749
Earning assets 58,928 58,607 56,652 58,769 56,418
Total assets 63,709 63,451 61,681 63,736 61,513
Noninterest-bearing deposits 22,076 21,506 20,128 21,793 19,882
Interest-bearing deposits 29,372 29,186 28,544 29,302 28,609
------ ------ ------ ------ ------
Total deposits 51,448 50,692 48,672 51,095 48,491
Common shareholders' equity 6,982 6,956 7,002 6,969 6,971
--------------------------- ----- ----- ----- ----- -----
NET INTEREST INCOME
Net interest income (fully taxable
equivalent basis) $415 $416 $435 $831 $878
Fully taxable equivalent adjustment 1 - - 1 1
Net interest margin (fully taxable
equivalent basis) 2.83% 2.88% 3.10% 2.86% 3.14%
---------------------------------- ---- ---- ---- ---- ----
CREDIT QUALITY
Nonaccrual loans $449 $494 $719
Reduced-rate loans 22 21 28
--- --- ---
Total nonperforming loans (e) 471 515 747
Foreclosed property 29 40 67
--- --- ---
Total nonperforming assets (e) 500 555 814
Loans past due 90 days or more and still
accruing 20 25 43
Gross loan charge-offs 35 38 64 $73 $126
Loan recoveries 18 14 19 32 36
--- --- --- --- ---
Net loan charge-offs 17 24 45 41 90
Allowance for loan losses 613 617 667
Allowance for credit losses on lending-
related commitments 36 36 36
--- --- ---
Total allowance for credit losses 649 653 703
Allowance for loan losses as a percentage
of total loans 1.35% 1.37% 1.52%
Net loan charge-offs as a percentage of
average total loans (f) 0.15 0.21 0.42 0.18% 0.42%
Nonperforming assets as a percentage of
total loans and foreclosed property (e) 1.10 1.23 1.85
Allowance for loan losses as a percentage
of total nonperforming loans 130 120 89
----------------------------------------- --- --- ---
See
Reconciliation
of Non-
GAAP
Financial
(a) Measures.
(b) June 30, 2013 ratios are
estimated.
(c) Primarily loans to real
estate developers.
(d) Primarily loans secured by
owner-occupied real
estate.
(e) Excludes loans acquired
with credit-impairment.
(f) Lending-related commitment
charge-offs were zero in
all periods presented.
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
June 30, March 31, December
31, June 30,
(in millions, except
share data) 2013 2013 2012 2012
-------------------- ---- ---- ---- ----
(unaudited) (unaudited) (unaudited)
ASSETS
Cash and due from banks $1,016 $877 $1,395 $1,076
Federal funds sold 31 - 100 -
Interest-bearing
deposits with banks 2,878 4,720 3,039 3,064
Other short-term
investments 119 115 125 170
Investment securities
available-for-sale 9,631 10,286 10,297 9,940
Commercial loans 29,186 28,508 29,513 27,016
Real estate construction
loans 1,479 1,396 1,240 1,377
Commercial mortgage
loans 9,007 9,317 9,472 9,830
Lease financing 843 853 859 858
International loans 1,209 1,269 1,293 1,224
Residential mortgage
loans 1,611 1,568 1,527 1,469
Consumer loans 2,124 2,156 2,153 2,218
-------------- ----- ----- ----- -----
Total loans 45,459 45,067 46,057 43,992
Less allowance for loan
losses (613) (617) (629) (667)
----------------------- ---- ---- ---- ----
Net loans 44,846 44,450 45,428 43,325
Premises and equipment 604 618 622 667
Accrued income and other
assets 3,822 3,819 4,063 4,138
------------------------ ----- ----- ----- -----
Total assets $62,947 $64,885 $65,069 $62,380
------------ ------- ------- ------- -------
LIABILITIES AND
SHAREHOLDERS' EQUITY
Noninterest-bearing
deposits $21,870 $22,777 $23,279 $21,330
Money market and
interest-bearing
checking deposits 21,677 21,540 21,273 19,993
Savings deposits 1,677 1,652 1,606 1,629
Customer certificates of
deposit 5,594 5,753 5,531 6,045
Foreign office time
deposits 437 395 502 376
------------------- --- --- --- ---
Total interest-bearing
deposits 29,385 29,340 28,912 28,043
---------------------- ------ ------ ------ ------
Total deposits 51,255 52,117 52,191 49,373
Short-term borrowings 131 58 110 83
Accrued expenses and
other liabilities 1,049 1,023 1,106 1,154
Medium- and long-term
debt 3,601 4,699 4,720 4,742
--------------------- ----- ----- ----- -----
Total liabilities 56,036 57,897 58,127 55,352
Common stock -$5 par
value:
Authorized -325,000,000
shares
Issued -228,164,824
shares 1,141 1,141 1,141 1,141
Capital surplus 2,160 2,157 2,162 2,144
Accumulated other
comprehensive loss (538) (410) (413) (301)
Retained earnings 6,127 6,020 5,931 5,744
Less cost of common
stock in treasury -
42,999,083 shares at
6/30/13, 41,361,612
shares at 3/31/13,
39,889,610 shares at
12/31/12 and 33,889,392
shares at 6/30/12 (1,979) (1,920) (1,879) (1,700)
------------------------ ------ ------ ------ ------
Total shareholders'
equity 6,911 6,988 6,942 7,028
------------------- ----- ----- ----- -----
Total liabilities and
shareholders' equity $62,947 $64,885 $65,069 $62,380
--------------------- ------- ------- ------- -------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Three Six
Months Months
Ended Ended
June 30, June 30,
-------- --------
(in
millions,
except per
share data) 2013 2012 2013 2012
------------ ---- ---- ---- ----
INTEREST
INCOME
Interest and
fees on
loans $388 $408 $778 $819
Interest on
investment
securities 52 59 105 122
Interest on
short-term
investments 3 3 6 6
------------ --- --- --- ---
Total
interest
income 443 470 889 947
INTEREST
EXPENSE
Interest on
deposits 15 18 30 37
Interest on
medium-
and long-
term debt 14 17 29 33
----------- --- --- --- ---
Total
interest
expense 29 35 59 70
--------- --- --- --- ---
Net interest
income 414 435 830 877
Provision
for credit
losses 13 19 29 41
----------- --- --- --- ---
Net interest
income
after
provision
for credit
losses 401 416 801 836
NONINTEREST
INCOME
Service
charges on
deposit
accounts 53 53 108 109
Fiduciary
income 44 39 87 77
Commercial
lending
fees 22 24 43 49
Letter of
credit fees 16 18 32 35
Card fees 13 12 25 23
Foreign
exchange
income 9 10 18 20
Bank-owned
life
insurance 10 10 19 20
Brokerage
fees 4 4 9 9
Net
securities
(losses)
gains (2) 6 (2) 11
Other
noninterest
income 39 35 69 64
------------ --- --- --- ---
Total
noninterest
income 208 211 408 417
NONINTEREST
EXPENSES
Salaries 182 189 370 390
Employee
benefits 63 61 126 120
--------- --- --- --- ---
Total
salaries
and
employee
benefits 245 250 496 510
Net
occupancy
expense 39 40 78 81
Equipment
expense 15 16 30 33
Outside
processing
fee expense 30 26 58 52
Software
expense 22 21 44 44
Merger and
restructuring
charges - 8 - 8
FDIC
insurance
expense 8 10 17 20
Advertising
expense 6 7 12 14
Other real
estate
expense 1 1 2 4
Other
noninterest
expenses 50 55 95 115
------------ --- --- --- ---
Total
noninterest
expenses 416 434 832 881
------------ --- --- --- ---
Income
before
income
taxes 193 193 377 372
Provision
for income
taxes 50 50 100 98
----------- --- --- --- ---
NET INCOME 143 143 277 274
Less income
allocated
to
participating
securities 2 2 4 3
-------------- --- --- --- ---
Net income
attributable
to common
shares $141 $141 $273 $271
------------- --- --- --- ---
Earnings per
common
share:
Basic $0.77 $0.73 $1.48 $1.39
Diluted 0.76 0.73 1.46 1.39
Comprehensive
income 15 169 152 329
Cash
dividends
declared on
common
stock 32 29 64 49
Cash
dividends
declared
per common
share 0.17 0.15 0.34 0.25
----------- ---- ---- ---- ----
CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Second First Fourth Third Second Second Quarter 2013 Compared
To:
Quarter Quarter Quarter Quarter Quarter First Quarter Second Quarter
2013 2012
(in millions, except per
share data) 2013 2013 2012 2012 2012 Amount Percent Amount Percent
------------------------ ---- ---- ---- ---- ---- ------ ------- ------ -------
INTEREST INCOME
Interest and fees on loans $388 $390 $398 $400 $408 $(2) - % $(20) (5)%
Interest on investment
securities 52 53 55 57 59 (1) (3) (7) (13)
Interest on short-term
investments 3 3 3 3 3 - - - -
---------------------- --- --- --- --- --- --- --- --- ---
Total interest income 443 446 456 460 470 (3) (1) (27) (6)
INTEREST EXPENSE
Interest on deposits 15 15 16 17 18 - - (3) (21)
Interest on medium- and
long-term debt 14 15 16 16 17 (1) (7) (3) (15)
----------------------- --- --- --- --- --- --- --- --- ---
Total interest expense 29 30 32 33 35 (1) (6) (6) (18)
---------------------- --- --- --- --- --- --- --- --- ---
Net interest income 414 416 424 427 435 (2) - (21) (5)
Provision for credit
losses 13 16 16 22 19 (3) (15) (6) (30)
-------------------- --- --- --- --- --- --- --- --- ---
Net interest income after
provision 401 400 408 405 416 1 - (15) (3)
for credit losses
NONINTEREST INCOME
Service charges on deposit
accounts 53 55 52 53 53 (2) (3) - -
Fiduciary income 44 43 42 39 39 1 2 5 10
Commercial lending fees 22 21 25 22 24 1 5 (2) (7)
Letter of credit fees 16 16 17 19 18 - - (2) (7)
Card fees 13 12 12 12 12 1 7 1 9
Foreign exchange income 9 9 9 9 10 - - (1) (4)
Bank-owned life insurance 10 9 9 10 10 1 15 - -
Brokerage fees 4 5 5 5 4 (1) (7) - -
Net securities (losses)
gains (2) - 1 - 6 (2) N/M (8) N/M
Other noninterest income 39 30 32 28 35 9 28 4 11
------------------------ --- --- --- --- --- --- --- --- ---
Total noninterest income 208 200 204 197 211 8 5 (3) (1)
NONINTEREST EXPENSES
Salaries 182 188 196 192 189 (6) (3) (7) (4)
Employee benefits 63 63 59 61 61 - - 2 3
----------------- --- --- --- --- --- --- --- --- ---
Total salaries and
employee benefits 245 251 255 253 250 (6) (2) (5) (2)
Net occupancy expense 39 39 42 40 40 - - (1) -
Equipment expense 15 15 15 17 16 - - (1) (5)
Outside processing fee
expense 30 28 28 27 26 2 7 4 12
Software expense 22 22 23 23 21 - - 1 2
Merger and restructuring
charges - - 2 25 8 - - (8) N/M
FDIC insurance expense 8 9 9 9 10 (1) (13) (2) (14)
Advertising expense 6 6 6 7 7 - - (1) (15)
Other real estate expense 1 1 3 2 1 - - - -
Other noninterest expenses 50 45 44 46 55 5 10 (5) (9)
-------------------------- --- --- --- --- --- --- --- --- ---
Total noninterest expenses 416 416 427 449 434 - - (18) (4)
-------------------------- --- --- --- --- --- --- --- --- ---
Income before income taxes 193 184 185 153 193 9 6 - -
Provision for income taxes 50 50 55 36 50 - - - -
-------------------------- --- --- --- --- --- --- --- --- ---
NET INCOME 143 134 130 117 143 9 8 - -
Less income allocated to
participating securities 2 2 2 1 2 - - - -
------------------------- --- --- --- --- --- --- --- --- ---
Net income attributable to
common shares $141 $132 $128 $116 $141 $9 8% $ - - %
-------------------------- ---- ---- ---- ---- ---- --- --- --- --- --- ---
Earnings per common share:
Basic $0.77 $0.71 $0.68 $0.61 $0.73 $0.06 8% $0.04 5%
Diluted 0.76 0.70 0.68 0.61 0.73 0.06 9 0.03 4
Comprehensive income
(loss) 15 137 (30) 165 169 (122) (89) (154) (91)
Cash dividends declared on
common stock 32 32 28 29 29 - - 3 8
Cash dividends declared
per common share 0.17 0.17 0.15 0.15 0.15 - - 0.02 13
----------------------- ---- ---- ---- ---- ---- --- --- ---- ---
N/M - Not Meaningful
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)
Comerica Incorporated and Subsidiaries
2013 2012
---- ----
(in millions) 2nd 1st 4th 3rd 2nd
Qtr Qtr Qtr Qtr Qtr
------------ ---- ---- ---- ---- ----
Balance at beginning of
period $617 $629 $647 $667 $704
Loan charge-offs:
Commercial 19 21 42 19 26
Real estate
construction:
Commercial Real Estate
business line (a) 2 - 1 2 2
Other business lines
(b) - - - - 1
-------------------- --- --- --- --- ---
Total real estate
construction 2 - 1 2 3
Commercial mortgage:
Commercial Real Estate
business line (a) 2 1 5 12 16
Other business lines
(b) 7 12 6 13 11
-------------------- --- --- --- --- ---
Total commercial
mortgage 9 13 11 25 27
International - - - 1 -
Residential mortgage 1 1 2 6 3
Consumer 4 3 4 6 5
-------- --- --- --- --- ---
Total loan charge-offs 35 38 60 59 64
Recoveries on loans
previously charged-
off:
Commercial 11 6 13 7 10
Real estate
construction 1 1 1 3 1
Commercial mortgage 3 5 6 5 4
International - - 1 - -
Residential mortgage 1 1 1 - -
Consumer 2 1 1 1 4
-------- --- --- --- --- ---
Total recoveries 18 14 23 16 19
---------------- --- --- --- --- ---
Net loan charge-offs 17 24 37 43 45
Provision for loan
losses 13 12 19 23 8
------------------ --- --- --- --- ---
Balance at end of
period $613 $617 $629 $647 $667
----------------- --- --- --- --- ---
Allowance for loan
losses as a percentage
of total loans 1.35% 1.37% 1.37% 1.46% 1.52%
Net loan charge-offs
as a percentage of
average total loans 0.15 0.21 0.34 0.39 0.42
-------------------- ---- ---- ---- ---- ----
Primarily
charge-
offs of
loans to
real
estate
(a) 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
2013 2012
---- ----
(in 2nd 1st 4th 3rd 2nd
millions) Qtr Qtr Qtr Qtr Qtr
---------- --- --- --- --- ---
Balance at
beginning
of period $36 $32 $35 $36 $25
Add:
Provision
for
credit
losses on
lending-
related
commitments - 4 (3) (1) 11
------------ --- --- --- --- ---
Balance at
end of
period $36 $36 $32 $35 $36
---------- -- -- -- -- --
Unfunded
lending-
related
commitments
sold $1 $2 $ - $ - $ -
------------ -- -- -- --- -- --- -- ---
NONPERFORMING ASSETS (unaudited)
Comerica Incorporated and Subsidiaries
2013 2012
---- ----
(in millions) 2nd 1st 4th 3rd 2nd
Qtr Qtr Qtr Qtr Qtr
------------ ---- ---- ---- ---- ----
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS
Nonaccrual loans:
Business loans:
Commercial $102 $102 $103 $154 $175
Real estate construction:
Commercial Real Estate business
line (a) 26 30 30 45 60
Other business lines (b) 2 3 3 6 9
----------------------- --- --- --- --- ---
Total real estate construction 28 33 33 51 69
Commercial mortgage:
Commercial Real Estate business
line (a) 69 86 94 137 155
Other business lines (b) 157 178 181 219 220
----------------------- --- --- --- --- ---
Total commercial mortgage 226 264 275 356 375
Lease financing - - 3 3 4
Total nonaccrual business loans 356 399 414 564 623
Retail loans:
Residential mortgage 62 65 70 69 76
Consumer:
Home equity 28 28 31 28 16
Other consumer 3 2 4 4 4
-------------- --- --- --- --- ---
Total consumer 31 30 35 32 20
-------------- --- --- --- --- ---
Total nonaccrual retail loans 93 95 105 101 96
----------------------------- --- --- --- --- ---
Total nonaccrual loans 449 494 519 665 719
Reduced-rate loans 22 21 22 27 28
------------------ --- --- --- --- ---
Total nonperforming loans (c) 471 515 541 692 747
Foreclosed property 29 40 54 63 67
------------------- --- --- --- --- ---
Total nonperforming assets (c) $500 $555 $595 $755 $814
----------------------------- --- --- --- --- ---
Nonperforming loans as a
percentage of total loans 1.04% 1.14% 1.17% 1.57% 1.70%
Nonperforming assets as a
percentage of total loans 1.10 1.23 1.29 1.71 1.85
and foreclosed property
Allowance for loan losses as a
percentage of total 130 120 116 94 89
nonperforming loans
Loans past due 90 days or more and
still accruing $20 $25 $23 $36 $43
---------------------------------- --- --- --- --- ---
ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans at beginning of
period $494 $519 $665 $719 $830
Loans transferred to nonaccrual
(d) 37 34 36 35 47
Nonaccrual business loan gross
charge-offs (e) (25) (34) (54) (46) (56)
Loans transferred to accrual
status (d) - - - - (41)
Nonaccrual business loans sold (f) (9) (7) (48) (20) (16)
Payments/Other (g) (48) (18) (80) (23) (45)
---------------------------- --- --- --- --- ---
Nonaccrual loans at end of period $449 $494 $519 $665 $719
--------------------------------- --- --- --- --- ---
(a) Primarily loans to real estate developers.
(b) Primarily loans secured by owner-occupied real estate.
(c) Excludes loans acquired with credit impairment.
(d) Based on an analysis of nonaccrual loans with book balances greater than $2 million.
(e) Analysis of gross loan charge-offs:
Nonaccrual business loans $25 $34 $54 $46 $56
Performing watch list loans 5 - - 1 -
Consumer and residential mortgage
loans 5 4 6 12 8
--- --- --- --- ---
Total gross loan charge-offs $35 $38 $60 $59 $64
--- --- --- --- ---
(f) Analysis of loans sold:
Nonaccrual business loans $9 $7 $48 $20 $16
Performing watch list loans 40 12 24 42 7
--- --- --- --- ---
Total loans sold $49 $19 $72 $62 $23
--- --- --- --- ---
(g) 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
Six Months Ended
----------------
June 30, 2013 June 30, 2012
------------- -------------
Average Average Average Average
(dollar amounts in millions) Balance Interest Rate Balance Interest Rate
--------------------------- ------- ------- ---- ------- ------- ----
Commercial loans $28,225 $462 3.30% $25,359 $446 3.54%
Real estate construction loans 1,384 28 4.10 1,437 32 4.54
Commercial mortgage loans 9,295 183 3.97 10,093 231 4.59
Lease financing 856 14 3.23 883 15 3.35
International loans 1,272 23 3.72 1,235 23 3.71
Residential mortgage loans 1,579 33 4.21 1,503 35 4.65
Consumer loans 2,145 36 3.33 2,239 38 3.43
-------------- ----- --- ---- ----- --- ----
Total loans (a) 44,756 779 3.51 42,749 820 3.86
Mortgage-backed securities available-for-
sale 9,532 104 2.18 9,312 120 2.60
Other investment securities available-for-
sale 374 1 0.55 496 2 0.79
------------------------------------------ --- --- ---- --- --- ----
Total investment securities available-for-
sale 9,906 105 2.16 9,808 122 2.57
Interest-bearing deposits with banks (b) 3,990 5 0.26 3,723 5 0.26
Other short-term investments 117 1 1.67 138 1 1.76
---------------------------- --- --- ---- --- --- ----
Total earning assets 58,769 890 3.06 56,418 948 3.39
Cash and due from banks 975 965
Allowance for loan losses (629) (723)
Accrued income and other assets 4,621 4,853
----- -----
Total assets $63,736 $61,513
------- -------
Money market and interest-bearing checking
deposits $21,442 15 0.14 $20,623 18 0.18
Savings deposits 1,640 - 0.03 1,575 1 0.08
Customer certificates of deposit 5,715 13 0.45 6,042 17 0.55
Foreign office time deposits 505 2 0.57 369 1 0.61
---------------------------- --- --- ---- --- --- ----
Total interest-bearing deposits 29,302 30 0.20 28,609 37 0.26
Short-term borrowings 158 - 0.09 73 - 0.11
Medium- and long-term debt 4,374 29 1.37 4,897 33 1.37
-------------------------- ----- --- ---- ----- --- ----
Total interest-bearing sources 33,834 59 0.35 33,579 70 0.42
Noninterest-bearing deposits 21,793 19,882
Accrued expenses and other liabilities 1,140 1,081
Total shareholders' equity 6,969 6,971
----- -----
Total liabilities and shareholders' equity $63,736 $61,513
------- -------
Net interest income/rate spread (FTE) $831 2.71 $878 2.97
---- ----
FTE adjustment $1 $1
Impact of net noninterest-bearing sources
of funds 0.15 0.17
----------------------------------------- ---- ----
Net interest margin (as a percentage of
average earning assets) (FTE) (a) (b) 2.86% 3.14%
--------------------------------------- ---- ----
(a) Accretion of the purchase
discount on the acquired
loan portfolio of $18
million and $43 million in
the six months ended June
30, 2013 and 2012,
respectively, increased
the net interest margin by
6 basis points and 15
basis points in each
respective period.
(b) Excess liquidity,
represented by average
balances deposited with
the Federal Reserve Bank,
reduced the net interest
margin by 18 basis points
and 20 basis points in the
six months ended June 30,
2013 and 2012,
respectively.
ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)
Comerica Incorporated and Subsidiaries
Three Months Ended
------------------
June 30, 2013 March 31, 2013 June 30, 2012
------------- -------------- -------------
Average Average Average Average Average Average
(dollar amounts in millions) Balance Interest Rate Balance Interest Rate Balance Interest Rate
--------------------------- ------- ------- ---- ------- ------- ---- ------- ------- ----
Commercial loans $28,393 $233 3.29% $28,056 $229 3.31% $25,983 $227 3.52%
Real estate construction loans 1,453 15 4.04 1,314 13 4.15 1,420 15 4.50
Commercial mortgage loans 9,192 88 3.86 9,398 95 4.08 9,983 112 4.46
Lease financing 855 7 3.22 857 7 3.23 869 7 3.28
International loans 1,262 12 3.81 1,282 11 3.62 1,265 12 3.66
Residential mortgage loans 1,602 16 4.04 1,556 17 4.39 1,487 17 4.53
Consumer loans 2,136 18 3.30 2,154 18 3.36 2,221 18 3.37
-------------- ----- --- ---- ----- --- ---- ----- --- ----
Total loans (a) 44,893 389 3.47 44,617 390 3.54 43,228 408 3.79
Mortgage-backed securities available-for-
sale 9,415 51 2.17 9,650 53 2.19 9,262 58 2.51
Other investment securities available-for-
sale 378 1 0.56 371 - 0.54 466 1 0.85
------------------------------------------ --- --- ---- --- --- ---- --- --- ----
Total investment securities available-for-
sale 9,793 52 2.15 10,021 53 2.17 9,728 59 2.49
Interest-bearing deposits with banks (b) 4,125 3 0.26 3,852 2 0.27 3,555 3 0.26
Other short-term investments 117 - 1.05 117 1 2.30 141 - 1.55
---------------------------- --- --- ---- --- --- ---- --- --- ----
Total earning assets 58,928 444 3.02 58,607 446 3.09 56,652 470 3.35
Cash and due from banks 972 979 931
Allowance for loan losses (625) (633) (710)
Accrued income and other assets 4,434 4,498 4,808
----- ----- -----
Total assets $63,709 $63,451 $61,681
------- ------- -------
Money market and interest-bearing checking
deposits $21,544 8 0.13 $21,294 7 0.14 $20,451 8 0.18
Savings deposits 1,658 - 0.03 1,623 - 0.03 1,607 1 0.07
Customer certificates of deposit 5,685 6 0.43 5,744 7 0.47 6,107 9 0.53
Foreign office time deposits 485 1 0.60 525 1 0.55 379 - 0.64
---------------------------- --- --- ---- --- --- ---- --- --- ----
Total interest-bearing deposits 29,372 15 0.19 29,186 15 0.21 28,544 18 0.25
Short-term borrowings 193 - 0.07 123 - 0.11 68 - 0.12
Medium- and long-term debt 4,044 14 1.43 4,707 15 1.32 4,854 17 1.40
-------------------------- ----- --- ---- ----- --- ---- ----- --- ----
Total interest-bearing sources 33,609 29 0.34 34,016 30 0.36 33,466 35 0.42
Noninterest-bearing deposits 22,076 21,506 20,128
Accrued expenses and other liabilities 1,042 973 1,085
Total shareholders' equity 6,982 6,956 7,002
----- ----- -----
Total liabilities and shareholders' equity $63,709 $63,451 $61,681
------- ------- -------
Net interest income/rate spread (FTE) $415 2.68 $416 2.73 $435 2.93
---- ---- ----
FTE adjustment $1 $ - $ -
Impact of net noninterest-bearing sources
of funds 0.15 0.15 0.17
----------------------------------------- ---- ---- ----
Net interest margin (as a percentage of
average earning assets) (FTE) (a) (b) 2.83% 2.88% 3.10%
--------------------------------------- ---- ---- ----
(a) Accretion of the purchase
discount on the acquired
loan portfolio of $7
million, $11 million and
$18 million in the second
and first quarters of 2013
and the second quarter of
2012, respectively,
increased the net interest
margin by 5 basis points,
8 basis points and 13
basis points in each
respective period.
(b) Excess liquidity,
represented by average
balances deposited with
the Federal Reserve Bank,
reduced the net interest
margin by 18 basis points
and 17 basis points in the
second and first quarters
of 2013 and 18 basis
points in the second
quarter of 2012,
respectively.
CONSOLIDATED STATISTICAL DATA (unaudited)
Comerica Incorporated and Subsidiaries
June 30, March December September
31, 31, 30, June 30,
(in millions, except per share
data) 2013 2013 2012 2012 2012
------------------------------ ---- ---- ---- ---- ----
Commercial loans:
Floor plan $3,241 $2,963 $2,939 $2,276 $2,406
Other 25,945 25,545 26,574 25,184 24,610
----- ------ ------ ------ ------ ------
Total commercial loans 29,186 28,508 29,513 27,460 27,016
Real estate construction loans:
Commercial Real Estate business
line (a) 1,223 1,185 1,049 1,003 991
Other business lines (b) 256 211 191 389 386
----------------------- --- --- --- --- ---
Total real estate construction
loans 1,479 1,396 1,240 1,392 1,377
Commercial mortgage loans:
Commercial Real Estate business
line (a) 1,743 1,812 1,873 2,020 2,315
Other business lines (b) 7,264 7,505 7,599 7,539 7,515
----------------------- ----- ----- ----- ----- -----
Total commercial mortgage loans 9,007 9,317 9,472 9,559 9,830
Lease financing 843 853 859 837 858
International loans 1,209 1,269 1,293 1,277 1,224
Residential mortgage loans 1,611 1,568 1,527 1,495 1,469
Consumer loans:
Home equity 1,474 1,498 1,537 1,570 1,584
Other consumer 650 658 616 604 634
-------------- --- --- --- --- ---
Total consumer loans 2,124 2,156 2,153 2,174 2,218
-------------------- ----- ----- ----- ----- -----
Total loans $45,459 $45,067 $46,057 $44,194 $43,992
----------- ----- ----- ------- ------- -----
Goodwill $635 $635 $635 $635 $635
Core deposit intangible 18 19 20 23 25
Loan servicing rights 2 2 2 2 3
Tier 1 common capital ratio (c)
(d) 10.41% 10.37% 10.14% 10.37% 10.39%
Tier 1 risk-based capital ratio
(c) 10.41 10.37 10.14 10.37 10.39
Total risk-based capital ratio
(c) 13.27 13.41 13.15 13.69 13.91
Leverage ratio (c) 10.81 10.75 10.57 10.78 10.97
Tangible common equity ratio (d) 10.04 9.86 9.76 10.30 10.31
Common shareholders' equity per
share of common stock $37.32 $37.41 $36.87 $37.01 $36.18
Tangible common equity per share
of common stock (d) 33.79 33.90 33.38 33.56 32.76
Market value per share for the
quarter:
High 40.44 36.99 32.14 33.38 32.88
Low 33.55 30.73 27.72 29.32 27.88
Close 39.83 35.95 30.34 31.05 30.71
Quarterly ratios:
Return on average common
shareholders' equity 8.23% 7.68% 7.36% 6.67% 8.22%
Return on average assets 0.90 0.84 0.81 0.75 0.93
Efficiency ratio (e) 66.43 67.58 68.08 71.68 67.53
Number of banking centers 484 487 487 490 493
Number of employees -full time
equivalent 8,929 9,001 9,035 9,079 9,083
------------------------------ ----- ----- ----- ----- -----
(a) Primarily
loans to
real
estate
developers.
(b) Primarily loans secured by
owner-occupied real
estate.
(c) June 30, 2013 ratios are
estimated.
(d) See Reconciliation of Non-
GAAP Financial Measures.
(e) Noninterest expenses as a
percentage of the sum of
net interest income (FTE)
and noninterest income
excluding net securities
gains.
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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)
Comerica Incorporated and Subsidiaries
Accumulated
Common Stock Other Total
------------
Shares Capital Comprehensive Retained Treasury Shareholders'
(in millions, except per share data) Outstanding Amount Surplus Loss Earnings Stock Equity
----------------------------------- ----------- ------ ------- ---- -------- ----- ------
BALANCE AT DECEMBER 31, 2011 197.3 $1,141 $2,170 $(356) $5,546 $(1,633) $6,868
Net income - - - - 274 - 274
Other comprehensive income, net of tax - - - 55 - - 55
Cash dividends declared on common stock
($0.25 per share) - - - - (49) - (49)
Purchase of common stock (4.1) - - - - (125) (125)
Net issuance of common stock under
employee stock plans 1.1 - (49) - (27) 60 (16)
Share-based compensation - - 21 - - - 21
Other - - 2 - - (2) -
----- --- --- --- --- --- --- ---
BALANCE AT JUNE 30, 2012 194.3 $1,141 $2,144 $(301) $5,744 $(1,700) $7,028
------------------------ ----- ------ ------ ----- ------ ------ ------
BALANCE AT DECEMBER 31, 2012 188.3 $1,141 $2,162 $(413) $5,931 $(1,879) $6,942
Net income - - - - 277 - 277
Other comprehensive loss, net of tax - - - (125) - - (125)
Cash dividends declared on common stock
($0.34 per share) - - - - (64) - (64)
Purchase of common stock (4.1) - - - - (146) (146)
Net issuance of common stock under
employee stock plans 1 - (19) - (17) 45 9
Share-based compensation - - 18 - - - 18
Other - - (1) - - 1 -
BALANCE AT JUNE 30, 2013 185.2 $1,141 $2,160 $(538) $6,127 $(1,979) $6,911
------------------------ ----- ------ ------ ----- ------ ------ ------
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries
(dollar amounts in millions) Business Retail Wealth
Three Months Ended June 30, 2013 Bank Bank Management Finance Other Total
-------------------------------- ---- ---- ---------- ------- ----- -----
Earnings summary:
Net interest income (expense) (FTE) $372 $154 $46 $(165) $8 $415
Provision for credit losses 10 5 (3) - 1 13
Noninterest income 80 46 65 15 2 208
Noninterest expenses 147 178 77 3 11 416
Provision (benefit) for income taxes
(FTE) 88 6 13 (55) (1) 51
--- --- --- --- ---
Net income (loss) $207 $11 $24 $(98) $(1) $143
---- --- --- ---- --- ----
Net credit-related charge-offs $11 $4 $2 - - $17
Selected average balances:
Assets $36,017 $5,962 $4,828 $11,514 $5,388 $63,709
Loans 34,955 5,271 4,667 - - 44,893
Deposits 25,987 21,241 3,701 283 236 51,448
Statistical data:
Return on average assets (a) 2.30% 0.20% 2.00% N/M N/M 0.90%
Efficiency ratio (b) 32.41 87.98 69.86 N/M N/M 66.43
------------------- ----- ----- ----- --- --- -----
Business Retail Wealth
Three Months Ended March 31, 2013 Bank Bank Management Finance Other Total
--------------------------------- ---- ---- ---------- ------- ----- -----
Earnings summary:
Net interest income (expense) (FTE) $375 $155 $46 $(167) $7 $416
Provision for credit losses 20 6 (6) - (4) 16
Noninterest income 77 41 65 14 3 200
Noninterest expenses 146 175 79 3 13 416
Provision (benefit) for income taxes
(FTE) 88 5 13 (58) 2 50
--- --- --- --- ---
Net income (loss) $198 $10 $25 $(98) $(1) $134
---- --- --- ---- --- ----
Net credit-related charge-offs $16 $8 $ - - - $24
Selected average balances:
Assets $35,780 $5,973 $4,738 $11,747 $5,213 $63,451
Loans 34,753 5,276 4,588 - - 44,617
Deposits 25,514 21,049 3,682 275 172 50,692
Statistical data:
Return on average assets (a) 2.21% 0.18% 2.12% N/M N/M 0.84%
Efficiency ratio (b) 32.30 89.37 71.09 N/M N/M 67.58
------------------- ----- ----- ----- --- --- -----
Business Retail Wealth
Three Months Ended June 30, 2012 Bank Bank Management Finance Other Total
-------------------------------- ---- ---- ---------- ------- ----- -----
Earnings summary:
Net interest income (expense) (FTE) $379 $161 $46 $(160) 9 $435
Provision for credit losses 12 3 2 - 2 19
Noninterest income 83 47 66 17 (2) 211
Noninterest expenses 151 177 79 3 24 434
Provision (benefit) for income taxes
(FTE) 93 9 11 (54) (9) 50
--- --- --- --- --- ---
Net income (loss) $206 $19 $20 $(92) $(10) $143
---- --- --- ---- ---- ----
Net credit-related charge-offs $26 $9 $10 - - $45
Selected average balances:
Assets $34,373 $5,945 $4,604 $11,684 $5,075 $61,681
Loans 33,449 5,250 4,529 - - 43,228
Deposits 24,143 20,524 3,640 171 194 48,672
Statistical data:
Return on average assets (a) 2.40% 0.35% 1.80% N/M N/M 0.93%
Efficiency ratio (b) 32.73 84.87 73.87 N/M N/M 67.53
------------------- ----- ----- ----- --- --- -----
(a) Return on average
assets is calculated
based on the greater of
average assets or
average liabilities and
attributed equity.
(b) Noninterest expenses
as a percentage of the
sum of net interest
income (FTE) and
noninterest income
excluding net securities
gains.
FTE -Fully Taxable
Equivalent
N/M - Not Meaningful
MARKET SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries
(dollar amounts in millions) Other Finance
Three Months Ended June 30, 2013 Michigan California Texas Markets & Other Total
-------------------------------- -------- -------- ----- ------- ------- -----
Earnings summary:
Net interest income (expense) (FTE) $187 $173 $131 $81 $(157) $415
Provision for credit losses (4) 7 6 3 1 13
Noninterest income 88 36 34 33 17 208
Noninterest expenses 161 100 89 52 14 416
Provision (benefit) for income taxes
(FTE) 41 37 24 5 (56) 51
--- --- --- --- --- ---
Net income (loss) $77 $65 $46 $54 $(99) $143
--- --- --- --- ---- ----
Net credit-related charge-offs $4 $12 $(3) $4 $ - $17
Selected average balances:
Assets $14,022 $14,155 $10,886 $7,744 $16,902 $63,709
Loans 13,598 13,912 10,179 7,204 - 44,893
Deposits 20,159 14,671 10,187 5,912 519 51,448
Statistical data:
Return on average assets (a) 1.47% 1.65% 1.62% 2.79% N/M 0.90%
Efficiency ratio (b) 58.17 47.73 53.39 46.04 N/M 66.43
------------------- ----- ----- ----- ----- --- -----
Other Finance
Three Months Ended March 31, 2013 Michigan California Texas Markets & Other Total
--------------------------------- -------- -------- ----- ------- ------- -----
Earnings summary:
Net interest income (expense) (FTE) $189 $171 $135 $81 $(160) $416
Provision for credit losses (8) 21 8 (1) (4) 16
Noninterest income 92 35 31 25 17 200
Noninterest expenses 168 97 91 44 16 416
Provision (benefit) for income taxes
(FTE) 44 32 23 7 (56) 50
--- --- --- --- --- ---
Net income (loss) $77 $56 $44 $56 $(99) $134
--- --- --- --- ---- ----
Net credit-related charge-offs $5 $10 $6 $3 $ - $24
Selected average balances:
Assets $14,042 $13,795 $10,795 $7,859 $16,960 $63,451
Loans 13,650 13,542 10,071 7,354 - 44,617
Deposits 20,255 14,356 9,959 5,675 447 50,692
Statistical data:
Return on average assets (a) 1.47% 1.45% 1.54% 2.86% N/M 0.84%
Efficiency ratio (b) 59.53 47.04 54.99 42.11 N/M 67.58
------------------- ----- ----- ----- ----- --- -----
Other Finance
Three Months Ended June 30, 2012 Michigan California Texas Markets & Other Total
-------------------------------- -------- -------- ----- ------- ------- -----
Earnings summary:
Net interest income (expense) (FTE) $196 $171 $143 $76 $(151) $435
Provision for credit losses (6) 6 9 8 2 19
Noninterest income 96 37 31 32 15 211
Noninterest expenses 175 97 88 47 27 434
Provision (benefit) for income taxes
(FTE) 42 39 28 4 (63) 50
--- --- --- --- --- ---
Net income (loss) $81 $66 $49 $49 $(102) $143
--- --- --- --- ----- ----
Net credit-related charge-offs $10 $12 $4 $19 $ - $45
Selected average balances:
Assets $14,028 $12,870 $10,268 $7,756 $16,759 $61,681
Loans 13,759 12,647 9,506 7,316 - 43,228
Deposits 19,224 14,149 10,185 4,749 365 48,672
Statistical data:
Return on average assets (a) 1.60% 1.74% 1.71% 2.57% N/M 0.93%
Efficiency ratio (b) 59.96 46.54 51.33 44.63 N/M 67.53
------------------- ----- ----- ----- ----- --- -----
(a) Return on average
assets is calculated
based on the greater of
average assets or
average liabilities and
attributed equity.
(b) Noninterest expenses
as a percentage of the
sum of net interest
income (FTE) and
noninterest income
excluding net securities
gains.
FTE -Fully Taxable
Equivalent
N/M - Not Meaningful
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
Comerica Incorporated and Subsidiaries
June 30, March
31, December 31, September 30, June 30,
(dollar amounts in millions) 2013 2013 2012 2012 2012
--------------------------- ---- ---- ---- ---- ----
Tier 1 Common Capital Ratio:
Tier 1 and Tier 1 common capital (a)
(b) $6,800 $6,748 $6,705 $6,685 $6,676
------------------------------------ ------ ------ ------ ------ ------
Risk-weighted assets (a) (b) $65,312 $65,099 $66,115 $64,486 $64,244
--------------------------- ----- ----- ------- ------- -----
Tier 1 and Tier 1 common risk-based
capital ratio (b) 10.41% 10.37% 10.14% 10.37% 10.39%
Basel III Tier 1 Common Capital
Ratio:
Tier 1 common capital (b) $6,800 $6,748 $6,705 $6,685 $6,676
Basel III adjustments (c) - (1) (39) (17) (35)
------------------------ --- --- --- --- ---
Basel III Tier 1 common capital (c) 6,800 6,747 6,666 6,668 6,641
Basel III adjustments (d) (537) (409) (413) (253) (301)
---- ---- ---- ---- ----
Basel III Tier 1 common capital (d) $6,263 $6,338 $6,253 $6,415 $6,340
---------------------------------- ------ ------ ------ ------ ------
Risk-weighted assets (a) (b) $65,312 $65,099 $66,115 $64,486 $64,244
Basel III adjustments (c) 2,165 1,996 1,854 2,313 2,329
----- ----- ----- ----- -----
Basel III risk-weighted assets (c) $67,477 $67,095 $67,969 $66,799 $66,573
--------------------------------- ----- ----- ------- ------- -----
Tier 1 common capital ratio (b) 10.4% 10.4% 10.1% 10.4% 10.4%
Basel III Tier 1 common capital
ratio (c) 10.1 10.1 9.8 10.0 10.0
Basel III Tier 1 common capital
ratio (d) 9.3 9.4 9.2 9.6 9.5
------------------------------- --- --- --- --- ---
Tangible Common Equity Ratio:
Common shareholders' equity $6,911 $6,988 $6,942 $7,084 $7,028
Less:
Goodwill 635 635 635 635 635
Other intangible assets 20 21 22 25 28
--- --- --- --- ---
Tangible common equity $6,256 $6,332 $6,285 $6,424 $6,365
---------------------- ------ ------ ------ ------ ------
Total assets $62,947 $64,885 $65,069 $63,000 $62,380
Less:
Goodwill 635 635 635 635 635
Other intangible assets 20 21 22 25 28
--- --- --- --- ---
Tangible assets $62,292 $64,229 $64,412 $62,340 $61,717
--------------- ----- ----- ------- ------- -----
Common equity ratio 10.98% 10.77% 10.67% 11.24% 11.27%
Tangible common equity ratio 10.04 9.86 9.76 10.30 10.31
---------------------------- ----- ---- ---- ----- -----
Tangible Common Equity per Share of
Common Stock:
Common shareholders' equity $6,911 $6,988 $6,942 $7,084 $7,028
Tangible common equity 6,256 6,332 6,285 6,424 6,365
---------------------- ----- ----- ----- ----- -----
Shares of common stock outstanding
(in millions) 185 187 188 191 194
---------------------------------- --- --- --- --- ---
Common shareholders' equity per
share of common stock $37.32 $37.41 $36.87 $37.01 $36.18
Tangible common equity per share of
common stock 33.79 33.90 33.38 33.56 32.76
----------------------------------- ----- ----- ----- ----- -----
(a) Tier 1 capital and
risk-weighted assets as
defined by regulation.
(b) June 30, 2013 Tier 1
capital and risk-
weighted assets are
estimated.
(c) Estimated ratios based
on the standardized
approach in the final
rule for the U.S.
adoption of the Basel III
regulatory capital
framework and assuming
the election to exclude
most elements of AOCI.
(d) Estimated ratios based
on the standardized
approach in the final
Basel III capital rules,
assuming no election to
exclude most elements of
AOCI.
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 Basel III Tier 1 common capital ratio further adjusts Tier 1 common capital and risk-weighted assets to account for the final rule approved by U.S. banking regulators in July 2013 for the U.S. adoption of the Basel III regulatory capital framework. The final Basel III capital rules are effective January 1, 2015 for banking organizations subject to the standardized approach. The tangible common equity ratio removes preferred stock and the effect of intangible assets from capital and the effect of intangible assets from total assets. Tangible common equity per share of common stock removes the effect of intangible assets from common shareholders equity per share of common stock. 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
