DALLAS, Jan. 17, 2014 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported fourth quarter 2013 net income of $145 million, compared to $147 million for the third quarter 2013 and $130 million for the fourth quarter 2012. Earnings per diluted share were 77 cents for the fourth quarter 2013, compared to 78 cents for the third quarter 2013 and 68 cents for the fourth quarter 2012.
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Full-year 2013 net income was $569 million, an increase of $48 million, or 9 percent, compared to 2012. Earnings per diluted share were $3.00 for 2013, an increase of 33 cents, or 12 percent, compared to 2012.
(dollar
amounts
in
millions,
except
per
share
data) 4th Qtr '13 3rd Qtr '13 4th Qtr '12
--------- ----------- ----------- -----------
Net
interest
income
(a) $430 $412 $424
Provision
for
credit
losses 9 8 16
Noninterest
income 204 214 204
Noninterest
expenses 429 417 427
Provision
for
income
taxes 51 54 55
Net
income 145 147 130
Net
income
attributable
to
common
shares 143 145 128
Diluted
income
per
common
share 0.77 0.78 0.68
Average
diluted
shares
(in
millions) 186 187 188
Tier
1
common
capital
ratio
(c) 10.60% (b) 10.72% 10.14%
Basel
III
Tier
1
common
capital
ratio
(c)
(d) 10.3 10.4 9.8
Tangible
common
equity
ratio
(c) 10.11 9.87 9.76
-------- ----- ---- ----
(a) Included
accretion of
the purchase
discount on the
acquired loan
portfolio of
$23 million, $8
million and $13
million in the
fourth quarter
2013, third
quarter 2013
and fourth
quarter 2012,
respectively.
(b) December 31, 2013 ratio is estimated.
(c) See Reconciliation of Non-GAAP
Financial Measures.
(d) Estimated ratios based on the
standardized approach in the final rule
and excluding most elements of
accumulated other comprehensive income
(AOCI).
"Our relationship banking focus and our customers' strength in this uncertain national economy drove a 3 percent increase in average loans and a 4 percent increase in average deposits in 2013," said Ralph W. Babb Jr., chairman and chief executive officer. "2013 net income increased 9 percent, primarily as a result of tight expense control and strong credit quality, offsetting the headwinds of the continuing low rate environment.
"Average loans in the fourth quarter 2013 were stable, compared to the prior quarter, while growth trends throughout the quarter were positive, resulting in a broad-based, $1.3 billion increase in period-end loans. Earnings in the fourth quarter of 2013, compared to the prior quarter, reflected greater than expected purchase accounting accretion. This was offset by slightly lower fee income, following strong fee generation in the third quarter and the impact of slower economic activity, as well as additional costs related to regulatory compliance.
"Our solid capital position supports our growth and provides us the ability to return excess capital to our shareholders. We repurchased 7.4 million shares in 2013 under our share repurchase program; together with dividends we returned 73 percent of 2013 net income to shareholders. We recently filed our 2014-2015 capital plan with the Federal Reserve, which is expected to release its summary results in March 2014.
"In this low rate environment, our conservative, consistent approach to banking continues to serve us well, including our credit management, investment strategy, and capital position. We are pleased with our footprint, where there are many opportunities to leverage our relationship banking strategy by providing our customers with the products and services they desire."
Full-Year 2013 and Fourth Quarter Overview
Full-Year 2013 Compared to Full-Year 2012
-- Net income of $569 million for 2013 increased $48 million, or 9 percent,
compared to 2012.
-- Average total loans increased $1.1 billion, or 3 percent, to $44.4
billion, primarily reflecting an increase of $1.7 billion, or 7 percent,
in commercial loans, partially offset by a decrease of $686 million, or
6 percent, in combined commercial mortgage and real estate construction
loans. The increase in commercial loans was primarily driven by
increases in National Dealer Services, general Middle Market and Energy,
partially offset by decreases in Mortgage Banker Finance and Corporate
Banking.
-- Average total deposits increased $2.2 billion, or 4 percent, to $51.7
billion, reflecting increases of $1.4 billion, or 7 percent, in
noninterest-bearing deposits and $803 million, or 3 percent, in
interest-bearing deposits.
-- Net interest income of $1.7 billion decreased by $56 million, or 3
percent, primarily as a result of a decrease in yields and a decrease in
accretion of the purchase discount on the acquired loan portfolio,
partially offset by a decrease in funding costs. Loan yields decreased
primarily as a result of shifts in the average loan portfolio mix and
lower LIBOR rates, while yields on mortgage-backed securities declined
primarily due to prepayments on higher-yielding securities and
reinvestments at lower yields.
-- Credit quality of the loan portfolio remained strong. The provision for
credit losses declined $33 million to $46 million in 2013 compared to
2012. Net credit-related charge-offs decreased $97 million to $73
million.
-- Noninterest income increased $8 million, or 1 percent, to $826 million
in 2013. The increase reflected an increase of $13 million in
customer-driven fee income, partially offset by a decrease of $5 million
in noncustomer-driven categories.
-- Noninterest expenses decreased $79 million, or 4 percent, to $1.7
billion in 2013, primarily reflecting decreases of $35 million in merger
and restructuring charges and $23 million in litigation-related
expenses, as well as declines in several other categories of noninterest
expenses, reflecting tight expense control.
Fourth Quarter 2013 Compared to Third Quarter 2013
-- Average total loans remained stable at $44.1 billion, as increases in
National Dealer Services and Technology and Life Sciences were offset by
a decrease in Mortgage Banker Finance. Period-end total loans increased
$1.3 billion, or 3 percent, to $45.5 billion, reflecting increases in
almost all lines of business.
-- Average total deposits increased $904 million, or 2 percent, to $52.8
billion, reflecting increases in most lines of business and all primary
markets. Period-end deposits increased $383 million, or 1 percent, to
$53.3 billion, primarily reflecting an increase of $404 million in
interest-bearing deposits.
-- Net interest income increased $18 million, or 4 percent, to $430 million
in the fourth quarter 2013, compared to $412 million in the third
quarter 2013, primarily reflecting a $15 million increase in accretion
on the acquired portfolio and a $5 million increase in interest
collected from nonaccrual loans. The increase in accretion resulted from
better than expected collections on the purchased credit-impaired
portfolio due to improvements in the economic environment.
-- The provision for credit losses was $9 million in the fourth quarter
2013, compared to $8 million in the third quarter 2013, reflecting
continued strong credit quality.
-- Noninterest income decreased $10 million to $204 million in the fourth
quarter 2013, reflecting decreases of $5 million in customer-driven fee
income and $5 million in noncustomer-driven income.
-- Noninterest expenses increased $12 million to $429 million in the fourth
quarter 2013, primarily reflecting an increase of $7 million in salaries
expense, of which $6 million was due to an increase in deferred
compensation, and a $5 million increase in litigation-related expenses
from a low third quarter amount.
-- Capital remained solid at December 31, 2013, as evidenced by an
estimated Tier 1 common capital ratio of 10.60 percent and a tangible
common equity ratio of 10.11 percent.
Net Interest Income
(dollar amounts in
millions) 4th Qtr '13 3rd Qtr '13 4th Qtr '12
------------------ ----------- ----------- -----------
Net interest
income $430 $412 $424
Net interest
margin 2.86% 2.79% 2.87%
Selected average
balances:
Total earning
assets $59,924 $58,892 $59,276
Total loans 44,054 44,094 44,119
Total investment
securities 9,365 9,380 10,250
Federal Reserve
Bank deposits
(excess
liquidity) 6,260 5,156 4,638
Total deposits 52,769 51,865 51,282
Total noninterest-
bearing deposits 23,532 22,379 22,758
------------------ ------ ------ ------
-- Net interest income of $430 million in the fourth quarter 2013 increased
$18 million compared to the third quarter 2013.
-- Interest on loans increased $16 million, primarily reflecting an
increase in the accretion of the purchase discount on the acquired
loan portfolio ($15 million) and an increase in interest collected
on nonaccrual loans ($5 million), partially offset by the impact of
loan portfolio dynamics ($4 million), including a decline in LIBOR
and other shifts in portfolio mix.
-- Interest on mortgage-backed investment securities increased net
interest income by $1 million, primarily as a result of improvement
in yields due to slowing prepayment speeds.
-- A decrease in funding costs increased net interest income by $1
million, primarily reflecting lower deposit pricing and a shift in
the deposit mix.
-- The net interest margin of 2.86 percent increased 7 basis points
compared to the third quarter 2013. The increase in net interest margin
was primarily due to an increase in the accretion of the purchase
discount on the acquired loan portfolio (+10 basis points), an increase
in interest collected on nonaccrual loans (+3 basis points), the impact
of yield improvements on mortgage-backed securities (+1 basis point) and
lower funding costs (+1 basis point), partially offset by an increase in
excess liquidity (-5 basis points) and lower loan yields (-3 basis
points).
-- Average earning assets increased $1.0 billion to $59.9 billion in the
fourth quarter 2013, compared to the third quarter 2013, reflecting an
increase of $1.1 billion in excess liquidity due to deposit growth.
Noninterest Income
Noninterest income decreased $10 million to $204 million for the fourth quarter 2013, compared to $214 million for the third quarter 2013. Customer-driven fee income decreased $5 million and noncustomer-driven income decreased $5 million. The decrease in customer-driven fee income reflected a $2 million decrease in letter of credit fees and small decreases in other categories of noninterest income, partially offset by a $2 million increase in fiduciary income. The decrease in noncustomer-driven income was primarily due to a $6 million decrease in warrant income and a $3 million decrease in income on bank-owned life insurance, partially offset by a $6 million increase in deferred compensation plan asset returns, which was offset by an increase in deferred compensation expense as described below.
Noninterest Expenses
Noninterest expenses of $429 million in the fourth quarter 2013 increased $12 million compared to the third quarter 2013. Excluding a $6 million increase in deferred compensation expense, noninterest expenses increased $6 million, primarily reflecting the impact of a $5 million favorable outcome in litigation in the third quarter. The $6 million increase in deferred compensation expense (included in salaries expense) was offset by the increase in deferred compensation asset returns in noninterest income. Incentive compensation remained unchanged from the elevated third quarter level as financial performance relative to peers continued to improve.
Credit Quality
"The provision for credit losses was $9 million in the fourth quarter 2013, compared to $8 million in the third quarter 2013, reflecting continued strong credit quality and an increase in loan commitments and outstandings," said Babb. "Net credit-related charge-offs decreased slightly and remain at a very low level."
(dollar amounts in millions) 4th Qtr '13 3rd Qtr '13 4th Qtr '12
--------------------------- ----------- ----------- -----------
Net credit-related charge-offs $13 $19 $37
Net credit-related charge-offs/
Average total loans 0.12% 0.18% 0.34%
Provision for credit losses $9 $8 $16
Nonperforming loans (a) 374 459 541
Nonperforming assets (NPAs) (a) 383 478 595
NPAs/Total loans and foreclosed
property 0.84% 1.08% 1.29%
Loans past due 90 days or more and
still accruing $16 $25 $23
Allowance for loan losses 598 604 629
Allowance for credit losses on lending-
related commitments (b) 36 34 32
--- --- ---
Total allowance for credit losses 634 638 661
Allowance for loan losses/Period-end
total loans 1.32% 1.37% 1.37%
Allowance for loan losses/
Nonperforming loans 160 131 116
-------------------------- --- --- ---
(a) Excludes loans acquired with credit impairment.
(b) Included in "Accrued expenses and other liabilities" on the consolidated balance sheets.
-- Nonaccrual loans decreased $87 million, to $350 million at December 31,
2013, compared to $437 million at September 30, 2013.
-- Criticized loans decreased $201 million, to $2.3 billion at December 31,
2013, compared to $2.5 billion at September 30, 2013.
-- During the fourth quarter 2013, $23 million of borrower relationships
over $2 million were transferred to nonaccrual status, a decrease of $27
million from the third quarter 2013.
Balance Sheet and Capital Management
Total assets and common shareholders' equity were $65.2 billion and $7.2 billion, respectively, at December 31, 2013, compared to $64.7 billion and $7.0 billion, respectively, at September 30, 2013. The $540 million increase in total assets primarily reflected an increase of $1.3 billion in loans, partially offset by decreases of $437 million in excess liquidity and $181 million in investment securities available-for-sale.
There were approximately 182 million common shares outstanding at December 31, 2013. Combined with the dividend of $0.17 per share, share repurchases under the share repurchase program and dividends returned 71 percent of fourth quarter 2013 net income to shareholders.
Comerica's tangible common equity ratio was 10.11 percent at December 31, 2013, an increase of 24 basis points from September 30, 2013. The estimated Tier 1 common capital ratio decreased 12 basis points, to 10.60 percent at December 31, 2013, from September 30, 2013. The estimated Tier 1 common ratio under fully phased-in Basel III capital rules and excluding most elements of AOCI was 10.3 percent percent at December 31, 2013.
Full-Year 2014 Outlook
Management expectations for full-year 2014 compared to full-year 2013, assuming a continuation of the slow growing economy and low rate environment, are as follows:
-- Average loan growth consistent with 2013, reflecting stabilization in
Mortgage Banker Finance near average fourth quarter 2013 levels,
improving trends in Commercial Real Estate and continued focus on
pricing and structure discipline.
-- Net interest income modestly lower, reflecting a decrease in purchase
accounting accretion, to $10 million to $20 million, and the effect of a
continued low rate environment, partially offset by loan growth.
-- Provision for credit losses stable as a result of continued strong
credit quality.
-- Noninterest income stable, reflecting continued growth in
customer-driven fee income.
-- Noninterest expenses lower, reflecting a more than 50 percent reduction
in pension expense. Increases in merit, healthcare and regulatory costs
mostly offset by continued expense discipline.
-- Income tax expense to approximate 28 percent of pre-tax income.
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 December 31, 2013 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses fourth quarter 2013 results compared to third quarter 2013.
The following table presents net income (loss) by business segment.
(dollar amounts in
millions) 4th Qtr '13 3rd Qtr '13 4th Qtr '12
------------------ ----------- ----------- -----------
Business Bank $200 84% $209 91% $209 90%
Retail Bank 14 6 6 3 8 3
Wealth Management 23 10 15 6 16 7
----------------- --- --- --- --- --- ---
237 100% 230 100% 233 100%
Finance (92) (87) (102)
Other (a) - 4 (1)
-------- --- --- ---
Total $145 $147 $130
----- ---- ---- ----
(a) Includes items not directly
associated with the three
major business segments or
the Finance Division.
Business Bank
(dollar amounts in millions) 4th Qtr 3rd Qtr 4th Qtr
'13 '13 '12
--------------------------- ------- ------- -------
Net interest income (FTE) $387 $368 $387
Provision for credit losses 24 (1) 6
Noninterest income 80 89 79
Noninterest expenses 151 153 149
Net income 200 209 209
Net credit-related charge-offs 6 9 26
Selected average balances:
Assets 35,042 35,298 35,359
Loans 34,020 34,178 34,325
Deposits 26,873 26,284 26,051
-------- ------ ------ ------
-- Average loans decreased $158 million, primarily reflecting decreases in
Mortgage Banker Finance and Energy, partially offset by increases in
National Dealer Services and Technology and Life Sciences. Period-end
loans increased $1.1 billion.
-- Average deposits increased $589 million, primarily reflecting increases
in Corporate Banking, Technology and Life Sciences and Commercial Real
Estate, partially offset by a decline in general Middle Market.
-- Net interest income increased $19 million, primarily due to an increase
in purchase accounting accretion and an increase in funds transfer
pricing credits.
-- The provision for credit losses increased $25 million, primarily
reflecting an increase in period-end loan balances, partially offset by
improved credit quality.
-- Noninterest income decreased $9 million, primarily due to a decrease in
warrant income.
Retail Bank
(dollar amounts in millions) 4th Qtr 3rd Qtr 4th Qtr
'13 '13 '12
--------------------------- ------- ------- -------
Net interest income (FTE) $150 $151 $156
Provision for credit losses (8) 10 7
Noninterest income 43 45 43
Noninterest expenses 180 177 181
Net income 14 6 8
Net credit-related charge-offs 4 7 6
Selected average balances:
Assets 5,997 5,967 5,952
Loans 5,323 5,285 5,255
Deposits 21,438 21,257 20,910
-------- ------ ------ ------
-- Average loans increased $38 million, primarily due to an increase in
Small Business.
-- Average deposits increased $181 million, primarily due to an increase in
Retail Banking.
-- The provision for credit losses decreased $18 million, primarily due to
improved credit quality, partially offset by an increase in period-end
loan balances.
Wealth Management
(dollar amounts in millions) 4th Qtr 3rd Qtr 4th Qtr
'13 '13 '12
--------------------------- ------- ------- -------
Net interest income (FTE) $47 $45 $47
Provision for credit losses (9) 1 2
Noninterest income 61 61 65
Noninterest expenses 82 81 84
Net income 23 15 16
Net credit-related charge-offs 3 3 5
Selected average balances:
Assets 4,873 4,789 4,686
Loans 4,711 4,631 4,539
Deposits 3,933 3,782 3,798
-------- ----- ----- -----
-- Average loans increased $80 million, primarily due to an increase in
Private Banking.
-- Average deposits increased $151 million, primarily due to an increase in
Private Banking.
-- The provision for credit losses decreased $10 million, primarily
reflecting improved credit quality, partially offset by an increase in
period-end loan balances.
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 December 31, 2013 and are presented on a fully taxable equivalent (FTE) basis.
The following table presents net income (loss) by market segment.
(dollar
amounts in
millions) 4th Qtr '13 3rd Qtr '13 4th Qtr '12
----------- ----------- ----------- -----------
Michigan $63 26% $73 32% $74 32%
California 76 32 71 31 62 26
Texas 52 22 35 15 47 20
Other
Markets 46 20 51 22 50 22
-------- --- --- --- --- --- ---
237 100% 230 100% 233 100%
Finance &
Other (a) (92) (83) (103)
---------- --- --- ----
Total $145 $147 $130
----- ---- ---- ----
(a) Includes items not directly
associated with the geographic
markets.
-- Average loans increased $429 million and $47 million in California and
Michigan, respectively, and decreased $176 million in Texas. The
increases in California and Michigan primarily reflected an increase in
National Dealer Services. Technology and Life Sciences also contributed
to the increase in California. The decrease in Texas was primarily due
to a decrease in Energy.
-- Average deposits increased $36 million in Michigan, primarily due to an
increase in Small Business. In California, average deposits increased
$652 million, primarily reflecting increases in Corporate Banking and
Private Banking. The increase in Texas of $238 million was primarily due
to increases in Technology and Life Sciences, Energy and Retail Banking.
-- The provision for credit losses decreased $12 million in Texas and $5
million in California, primarily reflecting improved credit quality,
partially offset by an increase in period-end loan balances. In
Michigan, the provision increased $15 million, primarily due to an
increase in period-end loan balances.
-- Noninterest income in California decreased $5 million, primarily due to
a decrease in warrant income.
Michigan Market
(dollar amounts in millions) 4th Qtr 3rd Qtr 4th Qtr
'13 '13 '12
--------------------------- ------- ------- -------
Net interest income (FTE) $187 $186 $192
Provision for credit losses 7 (8) (8)
Noninterest income 89 88 97
Noninterest expenses 170 167 180
Net income 63 73 74
Net credit-related charge-offs (4) 1 1
Selected average balances:
Assets 13,712 13,744 13,782
Loans 13,323 13,276 13,415
Deposits 20,501 20,465 20,019
-------- ------ ------ ------
California Market
(dollar amounts in millions) 4th Qtr 3rd Qtr 4th Qtr
'13 '13 '12
--------------------------- ------- ------- -------
Net interest income (FTE) $176 $171 $178
Provision for credit losses (8) (3) 7
Noninterest income 37 42 35
Noninterest expenses 100 101 100
Net income 76 71 62
Net credit-related charge-offs (2) 8 12
Selected average balances:
Assets 14,710 14,245 13,549
Loans 14,431 14,002 13,275
Deposits 15,219 14,567 15,457
-------- ------ ------ ------
Texas Market
(dollar amounts in millions) 4th Qtr 3rd Qtr 4th Qtr
'13 '13 '12
--------------------------- ------- ------- -------
Net interest income (FTE) $147 $129 $136
Provision for credit losses 5 17 4
Noninterest income 33 35 31
Noninterest expenses 93 92 90
Net income 52 35 47
Net credit-related charge-offs 13 4 5
Selected average balances:
Assets 10,458 10,642 10,554
Loans 9,766 9,942 9,818
Deposits 10,536 10,298 9,809
-------- ------ ------ -----
Conference Call and Webcast
Comerica will host a conference call to review fourth quarter 2013 financial results at 7 a.m. CT Friday, January 17, 2014. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 23046513). 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 and on page 68 of the Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013. 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 Years Ended
------------------ -----------
December 31, September 30, December 31, December 31,
(in millions, except per share data) 2013 2013 2012 2013 2012
----------------------------------- ---- ---- ---- ---- ----
PER COMMON SHARE AND COMMON STOCK DATA
Diluted net income $0.77 $0.78 $0.68 $3.00 $2.67
Cash dividends declared 0.17 0.17 0.15 0.68 0.55
Common shareholders' equity (at period end) 39.39 37.94 36.87
Tangible common equity (at period end) (a) 35.81 34.38 33.38
Average diluted shares (in thousands) 186,166 187,104 187,954 186,927 192,473
------------------------------------ ------- ------- ------- ------- -------
KEY RATIOS
Return on average common shareholders' equity 8.26% 8.50% 7.36% 8.17% 7.43%
Return on average assets 0.90 0.92 0.81 0.89 0.83
Tier 1 common capital ratio (a) (b) 10.60 10.72 10.14
Tier 1 risk-based capital ratio (b) 10.60 10.72 10.14
Total risk-based capital ratio (b) 13.05 13.42 13.15
Leverage ratio (b) 10.82 10.88 10.57
Tangible common equity ratio (a) 10.11 9.87 9.76
------------------------------- ----- ---- ----
AVERAGE BALANCES
Commercial loans $27,683 $27,759 $27,462 $27,971 $26,224
Real estate construction loans:
Commercial Real Estate business line (c) 1,363 1,263 1,033 1,241 1,031
Other business lines (d) 289 259 266 245 359
--- --- --- --- ---
Total real estate construction loans 1,652 1,522 1,299 1,486 1,390
Commercial mortgage loans:
Commercial Real Estate business line (c) 1,608 1,714 1,939 1,738 2,259
Other business lines (d) 7,106 7,229 7,580 7,322 7,583
----- ----- ----- ----- -----
Total commercial mortgage loans 8,714 8,943 9,519 9,060 9,842
Lease financing 838 839 839 847 864
International loans 1,303 1,252 1,314 1,275 1,272
Residential mortgage loans 1,679 1,642 1,525 1,620 1,505
Consumer loans 2,185 2,137 2,161 2,153 2,209
----- ----- ----- ----- -----
Total loans 44,054 44,094 44,119 44,412 43,306
Earning assets 59,924 58,892 59,276 59,091 57,483
Total assets 64,605 63,660 64,257 63,936 62,572
Noninterest-bearing deposits 23,532 22,379 22,758 22,379 21,004
Interest-bearing deposits 29,237 29,486 28,524 29,332 28,529
------ ------ ------ ------ ------
Total deposits 52,769 51,865 51,282 51,711 49,533
Common shareholders' equity 7,010 6,923 7,062 6,968 7,012
--------------------------- ----- ----- ----- ----- -----
NET INTEREST INCOME
Net interest income (fully taxable equivalent
basis) $431 $413 $425 $1,675 $1,731
Fully taxable equivalent adjustment 1 1 1 3 3
Net interest margin (fully taxable equivalent
basis) 2.86% 2.79% 2.87% 2.84% 3.03%
--------------------------------------------- ---- ---- ---- ---- ----
CREDIT QUALITY
Nonaccrual loans $350 $437 $519
Reduced-rate loans 24 22 22
--- --- ---
Total nonperforming loans (e) 374 459 541
Foreclosed property 9 19 54
--- --- ---
Total nonperforming assets (e) 383 478 595
Loans past due 90 days or more and still
accruing 16 25 23
Gross loan charge-offs 41 39 60 $153 $245
Loan recoveries 28 20 23 80 75
--- --- --- --- ---
Net loan charge-offs 13 19 37 73 170
Allowance for loan losses 598 604 629
Allowance for credit losses on lending-
related commitments 36 34 32
--- --- ---
Total allowance for credit losses 634 638 661
Allowance for loan losses as a percentage of
total loans 1.32% 1.37% 1.37%
Net loan charge-offs as a percentage of
average total loans (f) 0.12 0.18 0.34 0.16% 0.39%
Nonperforming assets as a percentage of total
loans and foreclosed property (e) 0.84 1.08 1.29
Allowance for loan losses as a percentage of
total nonperforming loans 160 131 116
-------------------------------------------- --- --- ---
(a) See Reconciliation of Non-GAAP
Financial Measures.
(b) December 31, 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 insignificant in all
periods presented.
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
December 31, September 30, December 31,
(in millions, except share data) 2013 2013 2012
------------------------------- ---- ---- ----
(unaudited) (unaudited)
ASSETS
Cash and due from banks $1,140 $1,384 $1,395
Federal funds sold - - 100
Interest-bearing deposits with banks 5,311 5,704 3,039
Other short-term investments 112 106 125
Investment securities available-for-
sale 9,307 9,488 10,297
Commercial loans 28,815 27,897 29,513
Real estate construction loans 1,762 1,552 1,240
Commercial mortgage loans 8,787 8,785 9,472
Lease financing 845 829 859
International loans 1,327 1,286 1,293
Residential mortgage loans 1,697 1,650 1,527
Consumer loans 2,237 2,152 2,153
-------------- ----- ----- -----
Total loans 45,470 44,151 46,057
Less allowance for loan losses (598) (604) (629)
------------------------------ ---- ---- ----
Net loans 44,872 43,547 45,428
Premises and equipment 594 604 622
Accrued income and other assets 3,874 3,837 4,063
------------------------------- ----- ----- -----
Total assets $65,210 $64,670 $65,069
------------ ------- ------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits $23,875 $23,896 $23,279
Money market and interest-bearing
checking deposits 22,332 21,697 21,273
Savings deposits 1,673 1,645 1,606
Customer certificates of deposit 5,063 5,180 5,531
Foreign office time deposits 349 491 502
---------------------------- --- --- ---
Total interest-bearing deposits 29,417 29,013 28,912
------------------------------- ------ ------ ------
Total deposits 53,292 52,909 52,191
Short-term borrowings 253 226 110
Accrued expenses and other liabilities 941 1,001 1,106
Medium- and long-term debt 3,543 3,565 4,720
-------------------------- ----- ----- -----
Total liabilities 58,029 57,701 58,127
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 228,164,824 shares 1,141 1,141 1,141
Capital surplus 2,179 2,171 2,162
Accumulated other comprehensive loss (391) (541) (413)
Retained earnings 6,349 6,239 5,931
Less cost of common stock in treasury -
45,860,786 shares at 12/31/13,
44,483,659 shares at 9/30/13 and
39,889,610 shares at 12/31/12 (2,097) (2,041) (1,879)
--------------------------------------- ------ ------ ------
Total shareholders' equity 7,181 6,969 6,942
-------------------------- ----- ----- -----
Total liabilities and shareholders'
equity $65,210 $64,670 $65,069
----------------------------------- ------- ------- -------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and
Subsidiaries
Three Months Ended Years Ended
December 31, December 31,
------------ ------------
(in millions, except per
share data) 2013 2012 2013 2012
------------------------ ---- ---- ---- ----
INTEREST INCOME
Interest and fees on
loans $397 $398 $1,556 $1,617
Interest on investment
securities 55 55 214 234
Interest on short-term
investments 4 3 14 12
---------------------- --- --- --- ---
Total interest income 456 456 1,784 1,863
INTEREST EXPENSE
Interest on deposits 12 16 55 70
Interest on medium- and
long-term debt 14 16 57 65
----------------------- --- --- --- ---
Total interest expense 26 32 112 135
---------------------- --- --- --- ---
Net interest income 430 424 1,672 1,728
Provision for credit
losses 9 16 46 79
-------------------- --- --- --- ---
Net interest income after
provision for credit
losses 421 408 1,626 1,649
NONINTEREST INCOME
Service charges on
deposit accounts 53 52 214 214
Fiduciary income 43 42 171 158
Commercial lending fees 28 25 99 96
Card fees 19 17 74 65
Letter of credit fees 15 17 64 71
Bank-owned life insurance 9 9 40 39
Foreign exchange income 9 9 36 38
Brokerage fees 4 5 17 19
Net securities gains
(losses) - 1 (1) 12
Other noninterest income 24 27 112 106
------------------------ --- --- --- ---
Total noninterest income 204 204 826 818
NONINTEREST EXPENSES
Salaries 203 196 769 778
Employee benefits 61 59 246 240
----------------- --- --- --- ---
Total salaries and
employee benefits 264 255 1,015 1,018
Net occupancy expense 41 42 160 163
Equipment expense 15 15 60 65
Outside processing fee
expense 30 28 119 107
Software expense 24 23 90 90
FDIC insurance expense 7 9 33 38
Advertising expense 3 6 21 27
Other real estate expense (1) 3 2 9
Merger and restructuring
charges - 2 - 35
Other noninterest
expenses 46 44 178 205
----------------- --- --- --- ---
Total noninterest
expenses 429 427 1,678 1,757
----------------- --- --- ----- -----
Income before income
taxes 196 185 774 710
Provision for income
taxes 51 55 205 189
-------------------- --- --- --- ---
NET INCOME 145 130 569 521
Less income allocated to
participating securities 2 2 8 6
------------------------- --- --- --- ---
Net income attributable
to common shares $143 $128 $561 $515
----------------------- ---- ---- ---- ----
Earnings per common
share:
Basic $0.79 $0.68 $3.07 $2.68
Diluted 0.77 0.68 3.00 2.67
Comprehensive income
(loss) 295 (30) 591 464
Cash dividends declared
on common stock 31 28 126 106
Cash dividends declared
per common share 0.17 0.15 0.68 0.55
----------------------- ---- ---- ---- ----
CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Fourth Third Second First Fourth Fourth Quarter 2013 Compared To:
Quarter Quarter Quarter Quarter Quarter Third Quarter 2013 Fourth Quarter 2012
(in millions, except per share data) 2013 2013 2013 2013 2012 Amount Percent Amount Percent
----------------------------------- ---- ---- ---- ---- ---- ------ ------- ------ -------
INTEREST INCOME
Interest and fees on loans $397 $381 $388 $390 $398 $16 4% $(1) - %
Interest on investment securities 55 54 52 53 55 1 2 - -
Interest on short-term investments 4 4 3 3 3 - - 1 27
---------------------------------- --- --- --- --- --- --- --- --- ---
Total interest income 456 439 443 446 456 17 4 - -
INTEREST EXPENSE
Interest on deposits 12 13 15 15 16 (1) (8) (4) (24)
Interest on medium- and long-term debt 14 14 14 15 16 - - (2) (15)
-------------------------------------- --- --- --- --- --- --- --- --- ---
Total interest expense 26 27 29 30 32 (1) (5) (6) (20)
---------------------- --- --- --- --- --- --- --- --- ---
Net interest income 430 412 414 416 424 18 4 6 1
Provision for credit losses 9 8 13 16 16 1 22 (7) (42)
--------------------------- --- --- --- --- --- --- --- --- ---
Net interest income after provision 421 404 401 400 408 17 4 13 3
for credit losses
NONINTEREST INCOME
Service charges on deposit accounts 53 53 53 55 52 - - 1 1
Fiduciary income 43 41 44 43 42 2 2 1 4
Commercial lending fees 28 28 22 21 25 - - 3 6
Card fees 19 20 18 17 17 (1) (1) 2 15
Letter of credit fees 15 17 16 16 17 (2) (9) (2) (13)
Bank-owned life insurance 9 12 10 9 9 (3) (25) - -
Foreign exchange income 9 9 9 9 9 - - - -
Brokerage fees 4 4 4 5 5 - - (1) (14)
Net securities gains (losses) - 1 (2) - 1 (1) (43) (1) (82)
Other noninterest income 24 29 34 25 27 (5) (16) (3) (6)
------------------------ --- --- --- --- --- --- --- --- ---
Total noninterest income 204 214 208 200 204 (10) (5) - -
NONINTEREST EXPENSES
Salaries 203 196 182 188 196 7 4 7 4
Employee benefits 61 59 63 63 59 2 3 2 4
----------------- --- --- --- --- --- --- --- --- ---
Total salaries and employee benefits 264 255 245 251 255 9 3 9 4
Net occupancy expense 41 41 39 39 42 - - (1) (2)
Equipment expense 15 15 15 15 15 - - - -
Outside processing fee expense 30 31 30 28 28 (1) (7) 2 5
Software expense 24 22 22 22 23 2 11 1 6
FDIC insurance expense 7 9 8 9 9 (2) (19) (2) (22)
Advertising expense 3 6 6 6 6 (3) (49) (3) (48)
Other real estate expense (1) 1 1 1 3 (2) N/M (4) N/M
Merger and restructuring charges - - - - 2 - - (2) N/M
Other noninterest expenses 46 37 50 45 44 9 23 2 1
-------------------------- --- --- --- --- --- --- --- --- ---
Total noninterest expenses 429 417 416 416 427 12 3 2 -
-------------------------- --- --- --- --- --- --- --- --- ---
Income before income taxes 196 201 193 184 185 (5) (2) 11 6
Provision for income taxes 51 54 50 50 55 (3) (5) (4) (7)
-------------------------- --- --- --- --- --- --- --- --- ---
NET INCOME 145 147 143 134 130 (2) (2) 15 11
Less income allocated to participating
securities 2 2 2 2 2 - - - -
-------------------------------------- --- --- --- --- --- --- --- --- ---
Net income attributable to common shares $143 $145 $141 $132 $128 $(2) (2)% $15 11%
---------------------------------------- ---- ---- ---- ---- ---- --- --- --- ---
Earnings per common share:
Basic $0.79 $0.80 $0.77 $0.71 $0.68 $(0.01) (1)% $0.11 16%
Diluted 0.77 0.78 0.76 0.70 0.68 (0.01) (1) 0.09 13
Comprehensive income (loss) 295 144 15 137 (30) 151 N/M 325 N/M
Cash dividends declared on common stock 31 31 32 32 28 - - 3 10
Cash dividends declared per common share 0.17 0.17 0.17 0.17 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) 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
------------ ------- ------- ------- ------- -------
Balance at beginning of period $604 $613 $617 $629 $647
Loan charge-offs:
Commercial 31 20 19 21 42
Real estate construction:
Commercial Real Estate business
line (a) - 1 2 - 1
Other business lines (b) - - - - -
----------------------- --- --- --- --- ---
Total real estate construction - 1 2 - 1
Commercial mortgage:
Commercial Real Estate business
line (a) 1 6 2 1 5
Other business lines (b) 4 3 7 12 6
----------------------- --- --- --- --- ---
Total commercial mortgage 5 9 9 13 11
International - - - - -
Residential mortgage 1 1 1 1 2
Consumer 4 8 4 3 4
-------- --- --- --- --- ---
Total loan charge-offs 41 39 35 38 60
Recoveries on loans previously charged-off:
Commercial 17 8 11 6 13
Real estate construction 3 2 1 1 1
Commercial mortgage 5 7 3 5 6
Lease financing - 1 - - -
International - - - - 1
Residential mortgage 1 1 1 1 1
Consumer 2 1 2 1 1
-------- --- --- --- --- ---
Total recoveries 28 20 18 14 23
---------------- --- --- --- --- ---
Net loan charge-offs 13 19 17 24 37
Provision for loan losses 7 10 13 12 19
------------------------- --- --- --- --- ---
Balance at end of period $598 $604 $613 $617 $629
------------------------ ---- ---- ---- ---- ----
Allowance for loan losses as a
percentage of total loans 1.32% 1.37% 1.35% 1.37% 1.37%
Net loan charge-offs as a
percentage of average total loans 0.12 0.18 0.15 0.21 0.34
---------------------------------- ---- ---- ---- ---- ----
(a) Primarily charge-offs of
loans to real estate
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 millions) 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
------------ ------- ------- ------- ------- -------
Balance at beginning
of period $34 $36 $36 $32 $35
Add: Provision for
credit losses on
lending-related
commitments 2 (2) - 4 (3)
------------------ --- --- --- --- ---
Balance at end of
period $36 $34 $36 $36 $32
----------------- --- --- --- --- ---
Unfunded lending-
related commitments
sold $1 $2 $1 $2 $ -
-------------------- --- --- --- --- --- ---
NONPERFORMING ASSETS (unaudited)
Comerica Incorporated and Subsidiaries
2013 2012
---- ----
(in millions) 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
------------ ------- ------- ------- ------- -------
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS
Nonaccrual loans:
Business loans:
Commercial $81 $107 $102 $102 $103
Real estate construction:
Commercial Real Estate business line
(a) 20 24 26 30 30
Other business lines (b) 1 1 2 3 3
----------------------- --- --- --- --- ---
Total real estate construction 21 25 28 33 33
Commercial mortgage:
Commercial Real Estate business line
(a) 51 67 69 86 94
Other business lines (b) 105 139 157 178 181
----------------------- --- --- --- --- ---
Total commercial mortgage 156 206 226 264 275
Lease financing - - - - 3
International 4 - - - -
Total nonaccrual business loans 262 338 356 399 414
Retail loans:
Residential mortgage 53 63 62 65 70
Consumer:
Home equity 33 34 28 28 31
Other consumer 2 2 3 2 4
-------------- --- --- --- --- ---
Total consumer 35 36 31 30 35
-------------- --- --- --- --- ---
Total nonaccrual retail loans 88 99 93 95 105
----------------------------- --- --- --- --- ---
Total nonaccrual loans 350 437 449 494 519
Reduced-rate loans 24 22 22 21 22
------------------ --- --- --- --- ---
Total nonperforming loans (c) 374 459 471 515 541
Foreclosed property 9 19 29 40 54
------------------- --- --- --- --- ---
Total nonperforming assets (c) $383 $478 $500 $555 $595
----------------------------- ---- ---- ---- ---- ----
Nonperforming loans as a percentage
of total loans 0.82% 1.04% 1.04% 1.14% 1.17%
Nonperforming assets as a percentage
of total loans 0.84 1.08 1.10 1.23 1.29
and foreclosed property
Allowance for loan losses as a
percentage of total 160 131 130 120 116
nonperforming loans
Loans past due 90 days or more and
still accruing $16 $25 $20 $25 $23
---------------------------------- --- --- --- --- ---
ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans at beginning of
period $437 $449 $494 $519 $665
Loans transferred to nonaccrual (d) 23 50 37 34 36
Nonaccrual business loan gross
charge-offs (e) (33) (25) (25) (34) (54)
Nonaccrual business loans sold (f) (14) (17) (9) (7) (48)
Payments/Other (g) (63) (20) (48) (18) (80)
------------------ --- --- --- --- ---
Nonaccrual loans at end of period $350 $437 $449 $494 $519
--------------------------------- ---- ---- ---- ---- ----
(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 $33 $25 $25 $34 $54
Performing criticized loans 3 5 5 - -
Consumer and residential mortgage
loans 5 9 5 4 6
--- --- --- --- ---
Total gross loan charge-offs $41 $39 $35 $38 $60
--- --- --- --- ---
(f) Analysis of loans sold:
Nonaccrual business loans $14 $17 $9 $7 $48
Performing criticized loans 22 31 40 12 24
--- --- --- --- ---
Total loans sold $36 $48 $49 $19 $72
--- --- --- --- ---
(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
Years Ended
-----------
December 31, 2013 December 31, 2012
----------------- -----------------
Average Average Average Average
(dollar amounts in millions) Balance Interest Rate Balance Interest Rate
--------------------------- ------- -------- ---- ------- -------- ----
Commercial loans $27,971 $917 3.28% $26,224 $903 3.44%
Real estate construction loans 1,486 57 3.85 1,390 62 4.44
Commercial mortgage loans 9,060 372 4.11 9,842 437 4.44
Lease financing 847 27 3.23 864 26 3.01
International loans 1,275 48 3.74 1,272 47 3.73
Residential mortgage loans 1,620 66 4.09 1,505 68 4.55
Consumer loans 2,153 71 3.30 2,209 76 3.42
-------------- ----- --- ---- ----- --- ----
Total loans (a) 44,412 1,558 3.51 43,306 1,619 3.74
Mortgage-backed securities available-for-sale 9,246 213 2.33 9,446 231 2.52
Other investment securities available-for-sale 391 2 0.48 469 4 0.77
---------------------------------------------- --- --- ---- --- --- ----
Total investment securities available-for-sale 9,637 215 2.25 9,915 235 2.43
Interest-bearing deposits with banks (b) 4,930 13 0.26 4,128 10 0.26
Other short-term investments 112 1 1.22 134 2 1.65
---------------------------- --- --- ---- --- --- ----
Total earning assets 59,091 1,787 3.03 57,483 1,866 3.27
Cash and due from banks 987 983
Allowance for loan losses (622) (693)
Accrued income and other assets 4,480 4,799
----- -----
Total assets $63,936 $62,572
------- -------
Money market and interest-bearing checking
deposits $21,704 28 0.13 $20,622 35 0.17
Savings deposits 1,657 1 0.03 1,593 1 0.06
Customer certificates of deposit 5,471 23 0.42 5,902 31 0.53
Foreign office time deposits 500 3 0.52 412 3 0.63
---------------------------- --- --- ---- --- --- ----
Total interest-bearing deposits 29,332 55 0.19 28,529 70 0.25
Short-term borrowings 211 - 0.07 76 - 0.12
Medium- and long-term debt 3,972 57 1.45 4,818 65 1.36
-------------------------- ----- --- ---- ----- --- ----
Total interest-bearing sources 33,515 112 0.33 33,423 135 0.41
Noninterest-bearing deposits 22,379 21,004
Accrued expenses and other liabilities 1,074 1,133
Total shareholders' equity 6,968 7,012
----- -----
Total liabilities and shareholders' equity $63,936 $62,572
------- -------
Net interest income/rate spread (FTE) $1,675 2.70 $1,731 2.86
------ ------
FTE adjustment $3 $3
Impact of net noninterest-bearing sources of funds 0.14 0.17
-------------------------------------------------- ---- ----
Net interest margin (as a percentage of average earning assets)
(FTE) (a) (b) 2.84% 3.03%
--------------------------------------------------------------- ---- ----
(a) Accretion of the purchase
discount on the acquired loan
portfolio of $49 million and
$71 million in 2013 and 2012,
respectively, increased the net
interest margin by 8 basis
points and 12 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 23 basis points and 21 basis
points in 2013 and 2012,
respectively.
ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)
Comerica Incorporated and Subsidiaries
Three Months Ended
------------------
December 31, 2013 September 30, 2013 December 31, 2012
----------------- ------------------ -----------------
Average Average Average Average Average Average
(dollar amounts in millions) Balance Interest Rate Balance Interest Rate Balance Interest Rate
--------------------------- ------- -------- ---- ------- -------- ---- ------- -------- ----
Commercial loans $27,683 $228 3.26% $27,759 $226 3.25% $27,462 $230 3.33%
Real estate construction loans 1,652 15 3.50 1,522 15 3.78 1,299 15 4.32
Commercial mortgage loans 8,714 101 4.62 8,943 88 3.90 9,519 100 4.22
Lease financing 838 7 3.27 839 7 3.21 839 7 3.27
International loans 1,303 12 3.78 1,252 12 3.76 1,314 12 3.73
Residential mortgage loans 1,679 17 3.97 1,642 17 3.98 1,525 16 4.24
Consumer loans 2,185 18 3.24 2,137 17 3.27 2,161 19 3.38
-------------- ----- --- ---- ----- --- ---- ----- --- ----
Total loans (a) 44,054 398 3.58 44,094 382 3.44 44,119 399 3.60
Mortgage-backed securities available-for-sale 8,969 55 2.46 8,989 54 2.41 9,831 55 2.29
Other investment securities available-for-sale 396 - 0.45 391 - 0.43 419 - 0.76
---------------------------------------------- --- --- ---- --- --- ---- --- --- ----
Total investment securities available-for-sale 9,365 55 2.37 9,380 54 2.32 10,250 55 2.22
Interest-bearing deposits with banks (b) 6,400 4 0.26 5,308 4 0.26 4,785 2 0.25
Other short-term investments 105 - 0.69 110 - 0.77 122 1 1.13
---------------------------- --- --- ---- --- --- ---- --- --- ----
Total earning assets 59,924 457 3.03 58,892 440 2.97 59,276 457 3.08
Cash and due from banks 970 1,027 1,030
Allowance for loan losses (609) (622) (654)
Accrued income and other assets 4,320 4,363 4,605
----- ----- -----
Total assets $64,605 $63,660 $64,257
------- ------- -------
Money market and interest-bearing checking
deposits $22,030 6 0.12 $21,894 7 0.13 $20,760 9 0.16
Savings deposits 1,667 - 0.03 1,680 - 0.04 1,603 - 0.03
Customer certificates of deposit 5,078 5 0.38 5,384 6 0.41 5,634 6 0.49
Foreign office time deposits 462 1 0.47 528 - 0.48 527 1 0.60
---------------------------- --- --- ---- --- --- ---- --- --- ----
Total interest-bearing deposits 29,237 12 0.17 29,486 13 0.18 28,524 16 0.22
Short-term borrowings 279 - 0.06 249 - 0.06 70 - 0.12
Medium- and long-term debt 3,563 14 1.53 3,590 14 1.54 4,735 16 1.35
-------------------------- ----- --- ---- ----- --- ---- ----- --- ----
Total interest-bearing sources 33,079 26 0.31 33,325 27 0.32 33,329 32 0.38
Noninterest-bearing deposits 23,532 22,379 22,758
Accrued expenses and other liabilities 984 1,033 1,108
Total shareholders' equity 7,010 6,923 7,062
----- ----- -----
Total liabilities and shareholders' equity $64,605 $63,660 $64,257
------- ------- -------
Net interest income/rate spread (FTE) $431 2.72 $413 2.65 $425 2.70
---- ---- ----
FTE adjustment $1 $1 $1
Impact of net noninterest-bearing sources of funds 0.14 0.14 0.17
-------------------------------------------------- ---- ---- ----
Net interest margin (as a percentage of average earning assets)
(FTE) (a) (b) 2.86% 2.79% 2.87%
--------------------------------------------------------------- ---- ---- ----
(a) Accretion of the purchase
discount on the acquired loan
portfolio of $23 million, $8
million and $13 million in the
fourth and third quarters of
2013 and the fourth quarter of
2012, respectively, increased
the net interest margin by 15
basis points, 5 basis points
and 9 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 31 basis points and 24 basis
points in the fourth and third
quarters of 2013, respectively,
and by 22 basis points in the
fourth quarter of 2012.
CONSOLIDATED STATISTICAL DATA (unaudited)
Comerica Incorporated and Subsidiaries
December 31, September 30, June 30, March 31, December 31,
(in millions, except per share data) 2013 2013 2013 2013 2012
----------------------------------- ---- ---- ---- ---- ----
Commercial loans:
Floor plan $3,504 $2,869 $3,241 $2,963 $2,939
Other 25,311 25,028 25,945 25,545 26,574
----- ------ ------ ------ ------ ------
Total commercial loans 28,815 27,897 29,186 28,508 29,513
Real estate construction loans:
Commercial Real Estate business line (a) 1,447 1,283 1,223 1,185 1,049
Other business lines (b) 315 269 256 211 191
----------------------- --- --- --- --- ---
Total real estate construction loans 1,762 1,552 1,479 1,396 1,240
Commercial mortgage loans:
Commercial Real Estate business line (a) 1,678 1,592 1,743 1,812 1,873
Other business lines (b) 7,109 7,193 7,264 7,505 7,599
----------------------- ----- ----- ----- ----- -----
Total commercial mortgage loans 8,787 8,785 9,007 9,317 9,472
Lease financing 845 829 843 853 859
International loans 1,327 1,286 1,209 1,269 1,293
Residential mortgage loans 1,697 1,650 1,611 1,568 1,527
Consumer loans:
Home equity 1,517 1,501 1,474 1,498 1,537
Other consumer 720 651 650 658 616
-------------- --- --- --- --- ---
Total consumer loans 2,237 2,152 2,124 2,156 2,153
-------------------- ----- ----- ----- ----- -----
Total loans $45,470 $44,151 $45,459 $45,067 $46,057
----------- ------- ------- ------- ------- -------
Goodwill $635 $635 $635 $635 $635
Core deposit intangible 16 17 18 19 20
Loan servicing rights 1 1 2 2 2
Tier 1 common capital ratio (c) (d) 10.60% 10.72% 10.43% 10.37% 10.14%
Tier 1 risk-based capital ratio (c) 10.60 10.72 10.43 10.37 10.14
Total risk-based capital ratio (c) 13.05 13.42 13.29 13.41 13.15
Leverage ratio (c) 10.82 10.88 10.81 10.75 10.57
Tangible common equity ratio (d) 10.11 9.87 10.04 9.86 9.76
Common shareholders' equity per share of
common stock $39.39 $37.94 $37.32 $37.41 $36.87
Tangible common equity per share of
common stock (d) 35.81 34.38 33.79 33.90 33.38
Market value per share for the quarter:
High 48.69 43.49 40.44 36.99 32.14
Low 38.64 38.56 33.55 30.73 27.72
Close 47.54 39.31 39.83 35.95 30.34
Quarterly ratios:
Return on average common shareholders'
equity 8.26% 8.50% 8.23% 7.68% 7.36%
Return on average assets 0.90 0.92 0.90 0.84 0.81
Efficiency ratio (e) 67.55 66.66 66.43 67.58 68.08
Number of banking centers 483 484 484 487 487
Number of employees -full time
equivalent 8,948 8,918 8,929 9,001 9,035
------------------------------ ----- ----- ----- ----- -----
(a) Primarily loans to real estate
developers.
(b) Primarily loans secured by owner-
occupied real estate.
(c) December 31, 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.
PARENT COMPANY ONLY BALANCE SHEETS (unaudited)
Comerica Incorporated
December 31, September 30, December 31,
(in millions, except share
data) 2013 2013 2012
-------------------------- ---- ---- ----
ASSETS
Cash and due from subsidiary
bank $31 $36 $2
Short-term investments with
subsidiary bank 482 480 431
Other short-term investments 96 92 88
Investment in subsidiaries,
principally banks 7,204 7,008 7,045
Premises and equipment 4 4 4
Other assets 139 134 150
------------ --- --- ---
Total assets $7,956 $7,754 $7,720
------------ ------ ------ ------
LIABILITIES AND SHAREHOLDERS' EQUITY
Medium- and long-term debt $617 $620 $629
Other liabilities 158 165 149
----------------- --- --- ---
Total liabilities 775 785 778
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued -228,164,824 shares 1,141 1,141 1,141
Capital surplus 2,179 2,171 2,162
Accumulated other
comprehensive loss (391) (541) (413)
Retained earnings 6,349 6,239 5,931
Less cost of common stock in
treasury -45,860,786
shares at 12/31/13,
44,483,659 shares at
9/30/13 and 39,889,610
shares at 12/31/12 (2,097) (2,041) (1,879)
---------------------------- ------ ------ ------
Total shareholders' equity 7,181 6,969 6,942
-------------------------- ----- ----- -----
Total liabilities and
shareholders' equity $7,956 $7,754 $7,720
--------------------- ------ ------ ------
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 - - - - 521 - 521
Other comprehensive loss, net of tax - - - (57) - - (57)
Cash dividends declared on common stock ($0.55 per
share) - - - - (106) - (106)
Purchase of common stock (10.2) - - - - (308) (308)
Net issuance of common stock under employee stock
plans 1.2 - (46) - (30) 63 (13)
Share-based compensation - - 37 - - - 37
Other - - 1 - - (1) -
----- --- --- --- --- --- --- ---
BALANCE AT DECEMBER 31, 2012 188.3 $1,141 $2,162 $(413) $5,931 $(1,879) $6,942
Net income - - - - 569 - 569
Other comprehensive income, net of tax - - - 22 - - 22
Cash dividends declared on common stock ($0.68 per
share) - - - - (126) - (126)
Purchase of common stock (7.5) - - - - (291) (291)
Net issuance of common stock under employee stock
plans 1.5 - (17) - (25) 72 30
Share-based compensation - - 35 - - - 35
Other - - (1) - - 1 -
BALANCE AT DECEMBER 31, 2013 182.3 $1,141 $2,179 $(391) $6,349 $(2,097) $7,181
---------------------------- ----- ------ ------ ----- ------ ------- ------
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries
(dollar amounts in millions) Business Retail Wealth
Three Months Ended December 31, 2013 Bank Bank Management Finance Other Total
------------------------------------ ---- ---- ---------- ------- ----- -----
Earnings summary:
Net interest income (expense) (FTE) $387 $150 $47 $(161) $8 $431
Provision for credit losses 24 (8) (9) - 2 9
Noninterest income 80 43 61 14 6 204
Noninterest expenses 151 180 82 2 14 429
Provision (benefit) for income taxes (FTE) 92 7 12 (57) (2) 52
--- --- --- --- ---
Net income (loss) $200 $14 $23 $(92) $ - $145
---- --- --- ---- --- --- ----
Net credit-related charge-offs $6 $4 $3 - - $13
Selected average balances:
Assets $35,042 $5,997 $4,873 $11,032 $7,661 $64,605
Loans 34,020 5,323 4,711 - - 44,054
Deposits 26,873 21,438 3,933 323 202 52,769
Statistical data:
Return on average assets (a) 2.29% 0.25% 1.86% N/M N/M 0.90%
Efficiency ratio (b) 32.23 93.18 75.84 N/M N/M 67.55
------------------- ----- ----- ----- --- --- -----
Business Retail Wealth
Three Months Ended September 30, 2013 Bank Bank Management Finance Other Total
------------------------------------- ---- ---- ---------- ------- ----- -----
Earnings summary:
Net interest income (expense) (FTE) $368 $151 $45 $(159) $8 $413
Provision for credit losses (1) 10 1 - (2) 8
Noninterest income 89 45 61 18 1 214
Noninterest expenses 153 177 81 2 4 417
Provision (benefit) for income taxes (FTE) 96 3 9 (56) 3 55
--- --- --- --- ---
Net income (loss) $209 $6 $15 $(87) $4 $147
---- --- --- ---- --- ----
Net credit-related charge-offs $9 $7 $3 - - $19
Selected average balances:
Assets $35,298 $5,967 $4,789 $11,097 $6,509 $63,660
Loans 34,178 5,285 4,631 - - 44,094
Deposits 26,284 21,257 3,782 319 223 51,865
Statistical data:
Return on average assets (a) 2.38% 0.12% 1.21% N/M N/M 0.92%
Efficiency ratio (b) 33.50 90.27 77.22 N/M N/M 66.66
------------------- ----- ----- ----- --- --- -----
Business Retail Wealth
Three Months Ended December 31, 2012 Bank Bank Management Finance Other Total
------------------------------------ ---- ---- ---------- ------- ----- -----
Earnings summary:
Net interest income (expense) (FTE) $387 $156 $47 $(176) 11 $425
Provision for credit losses 6 7 2 - 1 16
Noninterest income 79 43 65 15 2 204
Noninterest expenses 149 181 84 3 10 427
Provision (benefit) for income taxes (FTE) 102 3 10 (62) 3 56
--- --- --- --- --- ---
Net income (loss) $209 $8 $16 $(102) $(1) $130
---- --- --- ----- --- ----
Net credit-related charge-offs $26 $6 $5 - - $37
Selected average balances:
Assets $35,359 $5,952 $4,686 $12,137 $6,123 $64,257
Loans 34,325 5,255 4,539 - - 44,119
Deposits 26,051 20,910 3,798 310 213 51,282
Statistical data:
Return on average assets (a) 2.37% 0.15% 1.35% N/M N/M 0.81%
Efficiency ratio (b) 31.93 90.36 76.88 N/M N/M 68.08
------------------- ----- ----- ----- --- --- -----
(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 December 31, 2013 Michigan California Texas Markets & Other Total
------------------------------------ -------- ---------- ----- ------- ------- -----
Earnings summary:
Net interest income (expense) (FTE) $187 $176 $147 $74 $(153) $431
Provision for credit losses 7 (8) 5 3 2 9
Noninterest income 89 37 33 25 20 204
Noninterest expenses 170 100 93 50 16 429
Provision (benefit) for income taxes (FTE) 36 45 30 - (59) 52
--- --- --- --- --- ---
Net income (loss) $63 $76 $52 $46 $(92) $145
--- --- --- --- ---- ----
Net credit-related charge-offs (recoveries) $(4) $(2) $13 $6 $ - $13
Selected average balances:
Assets $13,712 $14,710 $10,458 $7,032 $18,693 $64,605
Loans 13,323 14,431 9,766 6,534 - 44,054
Deposits 20,501 15,219 10,536 5,988 525 52,769
Statistical data:
Return on average assets (a) 1.18% 1.87% 1.76% 2.65% N/M 0.90%
Efficiency ratio (b) 61.53 47.00 51.71 49.70 N/M 67.55
------------------- ----- ----- ----- ----- --- -----
Other Finance
Three Months Ended September 30, 2013 Michigan California Texas Markets & Other Total
------------------------------------- -------- ---------- ----- ------- ------- -----
Earnings summary:
Net interest income (expense) (FTE) $186 $171 $129 $78 $(151) $413
Provision for credit losses (8) (3) 17 4 (2) 8
Noninterest income 88 42 35 30 19 214
Noninterest expenses 167 101 92 51 6 417
Provision (benefit) for income taxes (FTE) 42 44 20 2 (53) 55
--- --- --- --- --- ---
Net income (loss) $73 $71 $35 $51 $(83) $147
--- --- --- --- ---- ----
Net credit-related charge-offs $1 $8 $4 $6 $ - $19
Selected average balances:
Assets $13,744 $14,245 $10,642 $7,423 $17,606 $63,660
Loans 13,276 14,002 9,942 6,874 - 44,094
Deposits 20,465 14,567 10,298 5,993 542 51,865
Statistical data:
Return on average assets (a) 1.38% 1.84% 1.21% 2.73% N/M 0.92%
Efficiency ratio (b) 60.89 47.37 56.52 47.65 N/M 66.66
------------------- ----- ----- ----- ----- --- -----
Other Finance
Three Months Ended December 31, 2012 Michigan California Texas Markets & Other Total
------------------------------------ -------- ---------- ----- ------- ------- -----
Earnings summary:
Net interest income (expense) (FTE) $192 $178 $136 $84 $(165) $425
Provision for credit losses (8) 7 4 12 1 16
Noninterest income 97 35 31 24 17 204
Noninterest expenses 180 100 90 44 13 427
Provision (benefit) for income taxes (FTE) 43 44 26 2 (59) 56
--- --- --- --- --- ---
Net income (loss) $74 $62 $47 $50 $(103) $130
--- --- --- --- ----- ----
Net credit-related charge-offs $1 $12 $5 $19 $ - $37
Selected average balances:
Assets $13,782 $13,549 $10,554 $8,112 $18,260 $64,257
Loans 13,415 13,275 9,818 7,611 - 44,119
Deposits 20,019 15,457 9,809 5,474 523 51,282
Statistical data:
Return on average assets (a) 1.42% 1.50% 1.71% 2.48% N/M 0.81%
Efficiency ratio (b) 62.14 47.04 53.87 41.38 N/M 68.08
------------------- ----- ----- ----- ----- --- -----
(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
December 31, September 30, June 30, March 31, December 31,
(dollar amounts in
millions) 2013 2013 2013 2013 2012
------------------ ---- ---- ---- ---- ----
Tier 1 Common Capital Ratio:
Tier 1 and Tier 1
common capital (a)
(b) $6,924 $6,862 $6,800 $6,748 $6,705
------------------- ------ ------ ------ ------ ------
Risk-weighted
assets (a) (b) $65,301 $64,027 $65,220 $65,099 $66,115
--------------- ------- ------- ------- ------- -------
Tier 1 and Tier 1
common risk-based
capital ratio (b) 10.60% 10.72% 10.43% 10.37% 10.14%
Basel III Tier 1 Common Capital Ratio:
Tier 1 common
capital (b) $6,924 $6,862 $6,800 $6,748 $6,705
Basel III
adjustments (c) (6) (4) - (1) (39)
---------------- --- --- --- --- ---
Basel III Tier 1
common capital (c) 6,918 6,858 6,800 6,747 6,666
------------------- ----- ----- ----- ----- -----
Risk-weighted
assets (a) (b) $65,301 $64,027 $65,220 $65,099 $66,115
Basel III
adjustments (c) 1,735 1,726 2,091 1,996 1,854
----- ----- ----- ----- -----
Basel III risk-
weighted assets (c) $67,036 $65,753 $67,311 $67,095 $67,969
-------------------- ------- ------- ------- ------- -------
Tier 1 common
capital ratio (b) 10.6% 10.7% 10.4% 10.4% 10.1%
Basel III Tier 1
common capital
ratio (c) 10.3 10.4 10.1 10.1 9.8
---------------- ---- ---- ---- ---- ---
Tangible Common Equity Ratio:
Common shareholders'
equity $7,181 $6,969 $6,911 $6,988 $6,942
Less:
Goodwill 635 635 635 635 635
Other intangible
assets 17 18 20 21 22
--- --- --- --- ---
Tangible common
equity $6,529 $6,316 $6,256 $6,332 $6,285
--------------- ------ ------ ------ ------ ------
Total assets $65,210 $64,670 $62,947 $64,885 $65,069
Less:
Goodwill 635 635 635 635 635
Other intangible
assets 17 18 20 21 22
--- --- --- --- ---
Tangible assets $64,558 $64,017 $62,292 $64,229 $64,412
--------------- ------- ------- ------- ------- -------
Common equity ratio 11.01% 10.78% 10.98% 10.77% 10.67%
Tangible common
equity ratio 10.11 9.87 10.04 9.86 9.76
--------------- ----- ---- ----- ---- ----
Tangible Common Equity per Share of
Common Stock:
Common shareholders'
equity $7,181 $6,969 $6,911 $6,988 $6,942
Tangible common
equity 6,529 6,316 6,256 6,332 6,285
--------------- ----- ----- ----- ----- -----
Shares of common
stock outstanding
(in millions) 182 184 185 187 188
------------------ --- --- --- --- ---
Common shareholders'
equity per share of
common stock $39.39 $37.94 $37.32 $37.41 $36.87
Tangible common
equity per share of
common stock 35.81 34.38 33.79 33.90 33.38
-------------------- ----- ----- ----- ----- -----
(a) Tier 1 capital and risk-weighted
assets as defined by regulation.
(b) December 31, 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 excluding
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
