DALLAS, April 15, 2014 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported first quarter 2014 net income of $139 million, compared to $117 million for the fourth quarter 2013 and $134 million for the first quarter 2013. Earnings per diluted share were 73 cents for the first quarter 2014, compared to 62 cents for the fourth quarter 2013 and 70 cents for the first quarter 2013.
http://photos.prnewswire.com/prnvar/20010807/CMALOGO
(dollar amounts in 1st 4th 1st
millions, except per Qtr Qtr Qtr
share data) '14 '13 '13
--------------------- ---- ---- ----
Net interest income (a) $410 $430 $416
Provision for credit
losses 9 9 16
Noninterest income 208 219 213
Noninterest expenses
(b) 406 473 416
Provision for income
taxes 64 50 63
Net income 139 117 134
Net income attributable
to common shares 137 115 132
Diluted income per
common share 0.73 0.62 0.70
Average diluted shares
(in millions) 187 186 187
Tier 1 common capital
ratio (d) 10.54% (c) 10.64% 10.37%
Basel III common equity
Tier 1 capital ratio
(d) (e) 10.3 10.3 10.1
Tangible common equity
ratio (d) 10.20 10.07 9.86
---------------------- ----- ----- ----
(a) Included accretion of the
purchase discount on the
acquired loan portfolio of $12
million, $23 million and $11
million in the first quarter
2014, fourth quarter 2013 and
first quarter 2013,
respectively.
(b) Included litigation-related
expense of $3 million, $52
million and $3 million in the
first quarter 2014, fourth
quarter 2013 and first quarter
2013, respectively.
(c) March 31, 2014 ratio is
estimated.
(d) See Reconciliation of Non-GAAP
Financial Measures.
(e) Estimated ratios based on the
standardized approach in the
final rule and excluding most
elements of accumulated other
comprehensive income (AOCI).
"Comerica's first quarter 2014 financial results reflect solid loan growth across our footprint and nearly all of our business lines," said Ralph W. Babb Jr., chairman and chief executive officer. "The more than $1 billion, or 2 percent, increase in average total loans, compared to the fourth quarter 2013, was led by increases in general Middle Market, Commercial Real Estate, Energy, Technology & Life Sciences, and Corporate Banking, partially offset by a decrease in Mortgage Banker Finance. Other highlights in the first quarter included an increase of $458 million in period-end deposits, to $53.8 billion. We also had continued strong credit quality and well-controlled expenses. The deep and enduring relationships we have with our customers are making a positive difference in our bottom line.
"Our capital position remains a source of strength to support our growth. We repurchased 6.9 million shares under our 2013 capital plan, including 1.5 million shares in the first quarter of 2014. Combined with dividends, we returned $107 million, or 77 percent of first quarter net income, to shareholders. We were pleased the Federal Reserve did not object to our 2014 capital plan and contemplated capital distributions, including up to $236 million in share repurchases for the four-quarter period that ends in the first quarter of 2015. We remain focused on providing a good return to shareholders while maintaining our strong capital ratios."
First Quarter 2014 Compared to Fourth Quarter 2013
-- Average total loans increased $1.0 billion, or 2 percent, to $45.1
billion, primarily reflecting increases of $679 million, or 2 percent,
in commercial loans and $231 million, or 2 percent, in combined
commercial mortgage and real estate construction loans. The increase in
commercial loans was reflected in almost all lines of business.
Period-end total loans increased $1.0 billion, or 2 percent, to $46.5
billion, primarily reflecting a $959 million, or 3 percent, increase in
commercial loans. The increase in commercial loans was primarily driven
by increases in general Middle Market, Energy, Corporate Banking and
Technology and Life Sciences.
-- Average total deposits were stable at $52.8 billion, primarily
reflecting a decrease in noninterest-bearing deposits of $296 million,
partially offset by an increase in money market and interest-bearing
checking deposits of $231 million. Period-end deposits increased $458
million, to $53.8 billion.
-- Net interest income decreased $20 million to $410 million in the first
quarter 2014, compared to $430 million in the fourth quarter 2013, and
reflected decreases in both the accretion of the purchase discount on
the acquired loan portfolio from an unusually high fourth quarter amount
and interest collected on nonaccrual loans, as well as the impact of two
fewer days in the first quarter 2014. The benefit from an increase in
loan balances largely offset the impact of lower loan yields.
-- The provision for credit losses was stable at $9 million in the first
quarter 2014, reflecting continued strong credit quality. Net
charge-offs were $12 million, or 0.10 percent of average loans, in the
first quarter 2014.
-- Noninterest income decreased $11 million to $208 million in the first
quarter 2014, reflecting decreases of $6 million in customer-driven
income and $5 million in noncustomer-driven income.
-- Noninterest expenses decreased $67 million to $406 million in the first
quarter 2014, primarily reflecting a $49 million decrease in
litigation-related expenses and an $11 million decrease in salaries and
benefits expense, largely due to a decrease in pension expense.
-- As previously announced, the Federal Reserve completed its 2014
Comprehensive Capital Analysis and Review (CCAR) in March 2014 and did
not object to the capital distributions contemplated in Comerica's
capital plan, including up to $236 million in share repurchases for the
four-quarter period ending first quarter 2015.
-- Capital remained solid at March 31, 2014, as evidenced by an estimated
Tier 1 common capital ratio of 10.54 percent and a tangible common
equity ratio of 10.20 percent.
First Quarter 2014 Compared to First Quarter 2013
-- Average total loans increased $458 million, or 1 percent, primarily
reflecting an increase of $306 million, or 1 percent, in commercial
loans, partially offset by a decrease of $115 million, or 1 percent, in
combined commercial mortgage and real estate construction loans. The
increase in commercial loans was primarily driven by increases in
National Dealer Services, Technology and Life Sciences, and general
Middle Market, partially offset by a decrease in Mortgage Banker
Finance.
-- Average total deposits increased $2.1 billion, or 4 percent, primarily
reflecting increases of $1.7 billion, or 8 percent, in
noninterest-bearing deposits and $348 million, or 1 percent, in
interest-bearing deposits.
-- Net income increased $5 million, or 4 percent, primarily the result of
lower noninterest expenses and a decrease in the provision for credit
losses, partially offset by decreases in net interest income and
noncustomer-driven noninterest income.
Net Interest Income
(dollar amounts 1st Qtr 4th Qtr 1st Qtr
in millions) '14 '13 '13
--------------- -------- -------- --------
Net interest
income $410 $430 $416
Net interest
margin 2.77% 2.86% 2.88%
Selected average
balances:
Total earning
assets $59,916 $59,924 $58,607
Total loans 45,075 44,054 44,617
Total investment
securities 9,282 9,365 10,021
Federal Reserve
Bank deposits
(excess
liquidity) 5,311 6,260 3,669
Total deposits 52,770 52,769 50,692
Total
noninterest-
bearing deposits 23,236 23,532 21,506
----------------- ------ ------ ------
-- Net interest income of $410 million in the first quarter 2014 decreased
$20 million compared to the fourth quarter 2013.
-- Interest on loans decreased by $21 million, including decreases in
both the accretion of the purchase discount on the acquired loan
portfolio from an unusually high fourth quarter 2013 amount (-$11
million) and interest collected on nonaccrual loans (-$2 million),
as well as the impact of two fewer days in the first quarter (-$7
million). The benefit from an increase in loan balances (+$8
million) largely offset the impact of lower loan yields (-$9
million).
-- The net interest margin of 2.77 percent decreased 9 basis points
compared to the fourth quarter 2013. The decrease in net interest margin
was primarily due to decreases in both the accretion of the purchase
discount on the acquired loan portfolio from an unusually high fourth
quarter 2013 amount (-8 basis points) and interest collected on
nonaccrual loans (-1 basis point), as well as lower loan yields (-4
basis points), partially offset by the impact of a decrease in excess
liquidity (+4 basis points).
-- Average earning assets remained stable at $59.9 billion in the first
quarter 2014, compared to the fourth quarter 2013, as an increase of
$1.0 billion in average loans offset a decrease of $949 million in
excess liquidity.
Noninterest Income
Noninterest income decreased $11 million to $208 million for the first quarter 2014, compared to $219 million for the fourth quarter 2013. Customer-driven fee income decreased $6 million and noncustomer-driven income decreased $5 million. The decrease in customer-driven fee income was primarily due to a $7 million decrease in syndication agent fees, a component of commercial lending fees. The decrease in noncustomer-driven income was primarily due to a $4 million decrease in deferred compensation plan asset returns, which was offset by a decrease in deferred compensation expense in noninterest expenses.
Comerica early adopted an amendment to U.S. generally accepted accounting principles in the first quarter 2014 related to the accounting for affordable housing projects that qualify for the low-income housing tax credit. Amortization of the initial investment cost of qualifying projects is now recorded in the provision for income taxes together with the tax credits and benefits received. Previously, the amortization was recorded as a reduction to other noncustomer-driven noninterest income. All prior period amounts have been restated to reflect the adoption of the amendment, which resulted in offsetting increases to other noninterest income and the provision for income taxes of $14 million, $15 million and $13 million in the first quarter 2014, fourth quarter 2013 and first quarter 2013, respectively.
Noninterest Expenses
Noninterest expenses decreased $67 million to $406 million for the first quarter 2014, compared to $473 million for the fourth quarter 2013, primarily reflecting a $49 million decrease in litigation-related expenses, an $11 million decrease in salaries and benefits expense and small decreases in several other categories of noninterest expense. The decrease in litigation-related expenses reflected the impact of high fourth quarter 2013 expense due to an unfavorable jury verdict in a lender liability case. The decrease in salaries and benefits expense primarily reflected a $13 million decrease in pension expense.
Credit Quality
(dollar amounts in millions) 1st 4th 1st
Qtr Qtr Qtr
'14 '13 '13
--------------------------- ---- ---- ----
Net credit-related charge-offs $12 $13 $24
Net credit-related charge-offs/
Average total loans 0.10% 0.12% 0.21%
Provision for credit losses $9 $9 $16
Nonperforming loans (a) 338 374 515
Nonperforming assets (NPAs) (a) 352 383 555
NPAs/Total loans and foreclosed
property 0.76% 0.84% 1.23%
Loans past due 90 days or more and
still accruing $10 $16 $25
Allowance for loan losses 594 598 617
Allowance for credit losses on
lending-related commitments (b) 37 36 36
--- --- ---
Total allowance for credit losses 631 634 653
Allowance for loan losses/Period-
end total loans 1.28% 1.32% 1.37%
Allowance for loan losses/
Nonperforming loans 176 160 120
-------------------------- --- --- ---
(a) Excludes loans acquired
with credit impairment.
Included in "Accrued
expenses and other
liabilities" on the
consolidated balance
(b) sheets.
-- Nonaccrual loans decreased $33 million, to $317 million at March 31,
2014, compared to $350 million at December 31, 2013.
-- Criticized loans decreased $121 million, to $2.1 billion at March 31,
2014, compared to $2.3 billion at December 31, 2013.
-- During the first quarter 2014, $19 million of borrower relationships
over $2 million were transferred to nonaccrual status, a decrease of $4
million from the fourth quarter 2013.
Balance Sheet and Capital Management
Total assets and common shareholders' equity were $65.7 billion and $7.3 billion, respectively, at March 31, 2014, compared to $65.2 billion and $7.2 billion, respectively, at December 31, 2013.
There were approximately 182 million common shares outstanding at March 31, 2014. Diluted weighted-average shares increased to 187 million in the first quarter 2014 as an increase in share dilution from options and warrants due to an increase in Comerica's stock price outpaced the impact of the repurchase of 1.5 million shares of common stock under the share repurchase program. Combined with the dividend of $0.19 per share, share repurchases of $72 million and dividends returned 77 percent of first quarter 2014 net income to shareholders.
The Federal Reserve completed its 2014 CCAR review in March 2014 and did not object to Comerica's capital plan and capital distributions contemplated in the plan. Comerica's capital plan provides for up to $236 million in share repurchases for the four-quarter period ending March 31, 2015, as well as the authority to fully redeem $150 million par value of subordinated notes due, 2024. The notes are callable at par on or after July 15, 2014 and were recorded at a carrying value of $183 million at March 31, 2014. Due to the lack of certainty about the possible execution and timing of the call, the impact of the call is not reflected in the outlook for 2014. Comerica's capital plan further contemplates a 1-cent increase in the quarterly dividend to $0.20 per common share. The dividend proposal will be considered by Comerica's Board of Directors at its next scheduled meeting on April 22, 2014.
Comerica's tangible common equity ratio was 10.20 percent at March 31, 2014, an increase of 13 basis points from December 31, 2013. The estimated Tier 1 common capital ratio decreased 10 basis points, to 10.54 percent at March 31, 2014, from December 31, 2013. The estimated common equity Tier 1 ratio under fully phased-in Basel III capital rules and excluding most elements of AOCI was 10.3 percent percent at March 31, 2014.
Full-Year 2014 Outlook
Management expectations for full-year 2014, compared to 2013, assuming a continuation of the current economic and low rate environment, are as follows:
-- Average loan growth consistent with 3 percent growth achieved in 2013,
reflecting stabilization in Mortgage Banker Finance near average fourth
quarter 2013 level and continued focus on pricing and structure
discipline.
-- Net interest income modestly lower, reflecting a decline in purchase
accounting accretion, to $20 million to $30 million, and the effect of
continued pressure from the low rate environment, partially offset by
loan growth.
-- Provision for credit losses and net charge-offs stable. Increases to the
allowance for credit losses due to loan growth offset by continued
strong credit quality.
-- Noninterest income modestly lower, reflecting stable customer-driven fee
income and lower noncustomer-driven income. Growth in fiduciary income
and card fees offset by lower capital market activity.
-- Noninterest expenses lower, reflecting lower litigation-related expenses
and a more than 50 percent decrease in pension expense, to $35 million
to $40 million.
-- Income tax expense to approximate 32 percent of pre-tax income,
reflecting the change in accounting for affordable housing projects that
qualify for the low-income tax credit.
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 March 31, 2014 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses first quarter 2014 results compared to fourth quarter 2013.
The following table presents net income (loss) by business segment.
(dollar 1st Qtr 4th Qtr 1st Qtr
amounts '14 '13 '13
in
millions)
---------- -------- -------- --------
Business
Bank $198 85% $170 82% $198 85%
Retail
Bank 9 4 15 7 10 4
Wealth
Management 26 11 24 11 25 11
---------- --- --- --- --- --- ---
233 100% 209 100% 233 100%
Finance (92) (92) (98)
Other
(a) (2) - (1)
----- --- --- ---
Total $139 $117 $134
----- --- --- ---
Includes items not
directly associated
with the three major
business segments or
(a) the Finance Division.
Business Bank
(dollar amounts in 1st 4th 1st
millions) Qtr Qtr Qtr
'14 '13 '13
------------------ ---- ---- ----
Net interest income
(FTE) $371 $387 $375
Provision for credit
losses 16 24 20
Noninterest income 87 95 90
Noninterest expenses 146 198 146
Net income 198 170 198
Net credit-related
charge-offs 11 6 16
Selected average
balances:
Assets 35,896 35,042 35,780
Loans 34,927 34,020 34,753
Deposits 27,023 26,873 25,514
-------- ------ ------ ------
-- Average loans increased $907 million, primarily reflecting increases in
general Middle Market, Commercial Real Estate, Energy, Technology and
Life Sciences, and Corporate Banking, partially offset by decreases in
Mortgage Banker Finance and Entertainment.
-- Average deposits increased $150 million, primarily reflecting increases
in Technology and Life Sciences and general Middle Market, partially
offset by declines in Corporate Banking and Energy.
-- Net interest income decreased $16 million, primarily due to a decrease
in purchase accounting accretion, two fewer days in the first quarter
and lower loan yields, partially offset by the benefit provided by an
increase in average loans.
-- The provision for credit losses decreased $8 million, primarily
reflecting decreases in Corporate Banking and general Middle Market,
partially offset by increases in Technology and Life Sciences and
Commercial Real Estate.
-- Noninterest income decreased $8 million, primarily due to decreases in
commercial lending fees and securities trading income.
-- Noninterest expenses decreased $52 million, primarily due to a decrease
in litigation-related expenses from high fourth quarter expense due to
an unfavorable jury verdict in a lender liability case.
Retail Bank
(dollar amounts in 1st 4th 1st
millions) Qtr Qtr Qtr
'14 '13 '13
------------------ ---- ---- ----
Net interest income
(FTE) $146 $150 $155
Provision for credit
losses 2 (8) 6
Noninterest income 41 43 41
Noninterest expenses 171 178 175
Net income 9 15 10
Net credit-related
charge-offs 4 4 8
Selected average
balances:
Assets 6,052 5,997 5,973
Loans 5,381 5,323 5,276
Deposits 21,361 21,438 21,049
-------- ------ ------ ------
-- Average loans increased $58 million, primarily due to an increase in
Retail Banking.
-- Average deposits decreased $77 million, primarily due to a decrease in
Small Business, partially offset by an increase in Retail Banking.
-- Net interest income decreased $4 million, primarily due to lower loan
yields and two fewer days in the first quarter.
-- The provision for credit losses of $2 million increased $10 million,
primarily reflecting an increase in Small Business.
-- Noninterest expenses decreased $7 million, primarily due to a decrease
in salaries and benefits expense.
Wealth Management
(dollar amounts in 1st 4th 1st
millions) Qtr Qtr Qtr
'14 '13 '13
------------------ ---- ---- ----
Net interest income (FTE) $46 $47 $46
Provision for credit
losses (8) (9) (6)
Noninterest income 64 61 65
Noninterest expenses 78 80 79
Net income 26 24 25
Net credit-related
(recoveries) charge-
offs (3) 3 -
Selected average
balances:
Assets 4,939 4,873 4,738
Loans 4,767 4,711 4,588
Deposits 3,816 3,933 3,682
-------- ----- ----- -----
-- Average loans increased $56 million, primarily due to an increase in
Private Banking.
-- Average deposits decreased $117 million, primarily due to a decrease in
Private Banking.
-- Noninterest income increased $3 million, primarily due to an increase in
fiduciary income and small increases in several other categories of
noninterest income.
-- Noninterest expenses decreased $2 million, primarily due to a decrease
in salaries and benefits expense.
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 March 31, 2014 and are presented on a fully taxable equivalent (FTE) basis.
The following table presents net income (loss) by market segment.
(dollar amounts in 1st Qtr 4th Qtr 1st Qtr
millions) '14 '13 '13
------------------ -------- -------- --------
Michigan $68 29% $32 15% $78 34%
California 63 27 77 37 56 24
Texas 46 20 53 25 43 18
Other Markets 56 24 47 23 56 24
------------- --- --- --- --- --- ---
233 100% 209 100% 233 100%
Finance & Other
(a) (94) (92) (99)
--------------- --- --- ---
Total $139 $117 $134
----- --- --- ---
(a) Includes items not directly associated with
the geographic markets.
-- Average loans increased $150 million, $393 million and $598 million in
Michigan, California and Texas, respectively. The increase in average
loans was broad-based with increases in nearly all business lines.
-- Average deposits increased $141 million in Michigan primarily due to an
increase in Corporate Banking, partially offset by a decrease in general
Middle Market. In California, average deposits decreased $437 million,
primarily due to decreases in Corporate Banking and Private Banking,
partially offset by an increase in Technology and Life Sciences. The
increase in Texas of $339 million was primarily due to increases in
Technology and Life Sciences and general Middle Market, partially offset
by a decrease in Energy.
-- Net interest income decreased in all markets, primarily reflecting the
impact of two fewer days in the first quarter 2014 and, in Texas, a
decrease in accretion on the acquired loan portfolio from an unusually
high fourth quarter 2013 amount. The benefit from an increase in loan
balances largely offset the impact of lower loan yields.
-- The provision for credit losses increased $19 million in California,
primarily due to increases in general Middle Market, Commercial Real
Estate and Technology and Life Sciences. In Other Markets, the provision
declined $13 million, primarily due to decreases in Private Banking and
Corporate Banking.
-- Noninterest expenses in Michigan decreased $57 million, primarily due to
a decrease in litigation-related expenses from high fourth quarter
expense due to an unfavorable jury verdict in a lender liability case.
Michigan Market
(dollar amounts in 1st 4th 1st
millions) Qtr Qtr Qtr
'14 '13 '13
------------------ ---- ---- ----
Net interest income
(FTE) $183 $187 $190
Provision for credit
losses 3 7 (7)
Noninterest income 87 89 92
Noninterest expenses 161 218 168
Net income 68 32 78
Net credit-related
charge-offs
(recoveries) - (4) 5
Selected average
balances:
Assets 13,819 13,712 14,042
Loans 13,473 13,323 13,650
Deposits 20,642 20,501 20,254
-------- ------ ------ ------
California Market
(dollar amounts in 1st 4th 1st
millions) Qtr Qtr Qtr
'14 '13 '13
------------------ ---- ---- ----
Net interest income
(FTE) $172 $176 $171
Provision for credit
losses 11 (8) 21
Noninterest income 34 37 35
Noninterest expenses 96 98 97
Net income 63 77 56
Net credit-related
charge-offs
(recoveries) 10 (2) 10
Selected average
balances:
Assets 15,133 14,710 13,795
Loans 14,824 14,431 13,542
Deposits 14,782 15,219 14,356
-------- ------ ------ ------
Texas Market
(dollar amounts in 1st 4th 1st
millions) Qtr Qtr Qtr
'14 '13 '13
------------------ ---- ---- ----
Net interest income
(FTE) $136 $147 $134
Provision for credit
losses 6 5 8
Noninterest income 31 33 31
Noninterest expenses 90 91 91
Net income 46 53 43
Net credit-related
charge-offs 6 13 6
Selected average
balances:
Assets 11,070 10,458 10,795
Loans 10,364 9,766 10,071
Deposits 10,875 10,536 9,959
-------- ------ ------ -----
Conference Call and Webcast
Comerica will host a conference call to review first quarter 2014 financial results at 7 a.m. CT Tuesday, April 15, 2014. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 10261396). 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," "projects," "models" 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 changes in interest rates; 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; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers; operational difficulties, failure of technology infrastructure or information security incidents; the implementation of Comerica's strategies and business initiatives; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; 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; any future strategic acquisitions or divestitures; 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 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 12 of Comerica's Annual Report on Form 10-K for the year ended December 31, 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
------------------
March 31, December 31, March 31,
(in
millions,
except
per
share
data) 2014 2013 2013
---------- ---- ---- ----
PER
COMMON
SHARE
AND
COMMON
STOCK
DATA
Diluted
net
income $0.73 $0.62 $0.70
Cash
dividends
declared 0.19 0.17 0.17
Common
shareholders'
equity
(at
period
end) 40.09 39.23 37.41
Tangible
common
equity
(at
period
end)
(a) 36.50 35.65 33.90
Average
diluted
shares
(in
thousands) 186,701 186,166 187,442
---------- ------- ------- -------
KEY
RATIOS
Return
on
average
common
shareholders'
equity 7.68% 6.66% 7.68%
Return
on
average
assets 0.86 0.72 0.84
Tier
1
common
capital
ratio
(a)
(b) 10.54 10.64 10.37
Tier
1
risk-
based
capital
ratio
(b) 10.54 10.64 10.37
Total
risk-
based
capital
ratio
(b) 12.95 13.10 13.41
Leverage
ratio
(b) 10.85 10.77 10.75
Tangible
common
equity
ratio
(a) 10.20 10.07 9.86
-------- ----- ----- ----
AVERAGE
BALANCES
Commercial
loans $28,362 $27,683 $28,056
Real
estate
construction
loans:
Commercial
Real
Estate
business
line
(c) 1,505 1,363 1,116
Other
business
lines
(d) 322 289 198
--- --- ---
Total
real
estate
construction
loans 1,827 1,652 1,314
Commercial
mortgage
loans:
Commercial
Real
Estate
business
line
(c) 1,734 1,608 1,836
Other
business
lines
(d) 7,036 7,106 7,562
----- ----- -----
Total
commercial
mortgage
loans 8,770 8,714 9,398
Lease
financing 848 838 857
International
loans 1,301 1,303 1,282
Residential
mortgage
loans 1,724 1,679 1,556
Consumer
loans 2,243 2,185 2,154
----- ----- -----
Total
loans 45,075 44,054 44,617
Earning
assets 59,916 59,924 58,607
Total
assets 64,708 64,605 63,451
Noninterest-
bearing
deposits 23,236 23,532 21,506
Interest-
bearing
deposits 29,534 29,237 29,186
------ ------ ------
Total
deposits 52,770 52,769 50,692
Common
shareholders'
equity 7,229 7,010 6,956
------------- ----- ----- -----
NET
INTEREST
INCOME
Net
interest
income
(fully
taxable
equivalent
basis) $411 $431 $416
Fully
taxable
equivalent
adjustment 1 1 -
Net
interest
margin
(fully
taxable
equivalent
basis) 2.77% 2.86% 2.88%
----------- ---- ---- ----
CREDIT
QUALITY
Nonaccrual
loans $317 $350 $494
Reduced-
rate
loans 21 24 21
--- --- ---
Total
nonperforming
loans
(e) 338 374 515
Foreclosed
property 14 9 40
--- --- ---
Total
nonperforming
assets
(e) 352 383 555
Loans
past
due
90
days
or
more
and
still
accruing 10 16 25
Gross
loan
charge-
offs 30 41 38
Loan
recoveries 18 28 14
--- --- ---
Net
loan
charge-
offs 12 13 24
Allowance
for
loan
losses 594 598 617
Allowance
for
credit
losses
on
lending-
related
commitments 37 36 36
--- --- ---
Total
allowance
for
credit
losses 631 634 653
Allowance
for
loan
losses
as
a
percentage
of
total
loans 1.28% 1.32% 1.37%
Net
loan (f)
charge-
offs
as
a
percentage
of
average
total
loans 0.10 0.12 0.21
Nonperforming
assets (e)
as
a
percentage
of
total
loans
and
foreclosed
property 0.76 0.84 1.23
Allowance
for
loan
losses
as
a
percentage
of
total
nonperforming
loans 176 160 120
------------- --- --- ---
(a) See Reconciliation of Non-
GAAP Financial Measures.
(b) March 31, 2014 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
March 31, December 31, March 31,
(in millions, except
share data) 2014 2013 2013
-------------------- ---- ---- ----
(unaudited) (unaudited)
ASSETS
Cash and due from
banks $1,186 $1,140 $877
Interest-bearing
deposits with banks 4,434 5,311 4,720
Other short-term
investments 105 112 115
Investment securities
available-for-sale 9,487 9,307 10,286
Commercial loans 29,774 28,815 28,508
Real estate
construction loans 1,847 1,762 1,396
Commercial mortgage
loans 8,801 8,787 9,317
Lease financing 849 845 853
International loans 1,250 1,327 1,269
Residential mortgage
loans 1,751 1,697 1,568
Consumer loans 2,217 2,237 2,156
-------------- ----- ----- -----
Total loans 46,489 45,470 45,067
Less allowance for
loan losses (594) (598) (617)
------------------ ---- ---- ----
Net loans 45,895 44,872 44,450
Premises and equipment 583 594 618
Accrued income and
other assets 3,991 3,891 3,819
------------------ ----- ----- -----
Total assets $65,681 $65,227 $64,885
------------ ------- ------- -------
LIABILITIES AND
SHAREHOLDERS' EQUITY
Noninterest-bearing
deposits $23,955 $23,875 $22,777
Money market and
interest-bearing
checking deposits 22,485 22,332 21,540
Savings deposits 1,742 1,673 1,652
Customer certificates
of deposit 5,099 5,063 5,753
Foreign office time
deposits 469 349 395
------------------- --- --- ---
Total interest-
bearing deposits 29,795 29,417 29,340
----------------- ------ ------ ------
Total deposits 53,750 53,292 52,117
Short-term borrowings 160 253 58
Accrued expenses and
other liabilities 954 986 1,023
Medium- and long-
term debt 3,534 3,543 4,699
----------------- ----- ----- -----
Total liabilities 58,398 58,074 57,897
Common stock -$5 par
value:
Authorized -
325,000,000 shares
Issued -228,164,824
shares 1,141 1,141 1,141
Capital surplus 2,182 2,179 2,157
Accumulated other
comprehensive loss (325) (391) (410)
Retained earnings 6,414 6,321 6,020
Less cost of common
stock in treasury -
46,492,524 shares at
3/31/14, 45,860,786
shares at 12/31/13
and 41,361,612 shares
at 3/31/13 (2,129) (2,097) (1,920)
---------------------- ------ ------ ------
Total shareholders'
equity 7,283 7,153 6,988
------------------- ----- ----- -----
Total liabilities and
shareholders' equity $65,681 $65,227 $64,885
--------------------- ------- ------- -------
CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries
First Fourth Third Second First First Quarter 2014 Compared To:
Quarter Quarter Quarter Quarter Quarter Fourth Quarter First Quarter
2013 2013
(in millions,
except per
share data) 2014 2013 2013 2013 2013 Amount Percent Amount Percent
------------- ---- ---- ---- ---- ---- ------ ------- ------ -------
INTEREST INCOME
Interest and
fees on loans $376 $397 $381 $388 $390 $(21) (5)% $(14) (3)%
Interest on
investment
securities 55 55 54 52 53 - - 2 2
Interest on
short-term
investments 4 4 4 3 3 - - 1 15
------------ --- --- --- --- --- --- --- --- ---
Total interest
income 435 456 439 443 446 (21) (5) (11) (3)
INTEREST EXPENSE
Interest on
deposits 11 12 13 15 15 (1) (8) (4) (25)
Interest on
medium- and
long-term
debt 14 14 14 14 15 - - (1) (13)
------------ --- --- --- --- --- --- --- --- ---
Total interest
expense 25 26 27 29 30 (1) (4) (5) (19)
-------------- --- --- --- --- --- --- --- --- ---
Net interest
income 410 430 412 414 416 (20) (5) (6) (1)
Provision for
credit losses 9 9 8 13 16 - - (7) (43)
-------------- --- --- --- --- --- --- --- --- ---
Net interest
income after
provision 401 421 404 401 400 (20) (5) 1 -
for credit losses
NONINTEREST INCOME
Service charges
on deposit
accounts 54 53 53 53 55 1 2 (1) (2)
Fiduciary
income 44 43 41 44 43 1 4 1 4
Commercial
lending fees 20 28 28 22 21 (8) (27) (1) (7)
Card fees 19 19 20 18 17 - - 2 15
Letter of
credit fees 14 15 17 16 16 (1) (6) (2) (12)
Bank-owned
life insurance 9 9 12 10 9 - - - -
Foreign
exchange
income 9 9 9 9 9 - - - -
Brokerage fees 5 4 4 4 5 1 11 - -
Net securities
gains (losses) 1 - 1 (2) - 1 N/M 1 N/M
Other
noninterest
income 33 39 43 48 38 (6) (19) (5) (16)
------------ --- --- --- --- --- --- --- --- ---
Total
noninterest
income 208 219 228 222 213 (11) (5) (5) (2)
NONINTEREST EXPENSES
Salaries and
benefits
expense 247 258 255 245 251 (11) (4) (4) (2)
Net occupancy
expense 40 41 41 39 39 (1) (2) 1 3
Equipment
expense 14 15 15 15 15 (1) (5) (1) (5)
Outside
processing fee
expense 28 30 31 30 28 (2) (4) - -
Software
expense 22 24 22 22 22 (2) (7) - -
Litigation-
related
expense 3 52 (4) 1 3 (49) (94) - -
FDIC insurance
expense 8 7 9 8 9 1 10 (1) (14)
Advertising
expense 6 3 6 6 6 3 77 - -
Other
noninterest
expenses 38 43 42 50 43 (5) (13) (5) (13)
------------ --- --- --- --- --- --- --- --- ---
Total
noninterest
expenses 406 473 417 416 416 (67) (14) (10) (2)
------------ --- --- --- --- --- --- --- --- ---
Income before
income taxes 203 167 215 207 197 36 21 6 3
Provision for
income taxes 64 50 68 64 63 14 27 1 1
------------- --- --- --- --- --- --- --- --- ---
NET INCOME 139 117 147 143 134 22 19 5 4
Less income
allocated to
participating
securities 2 2 2 2 2 - - - -
-------------- --- --- --- --- --- --- --- --- ---
Net income
attributable
to common
shares $137 $115 $145 $141 $132 $22 19% $5 4%
------------- ---- ---- ---- ---- ---- --- --- --- ---
Earnings per common
share:
Basic $0.76 $0.64 $0.80 $0.77 $0.71 $0.12 19% $0.05 7%
Diluted 0.73 0.62 0.78 0.76 0.70 0.11 18 0.03 4
Comprehensive
income 205 267 144 15 137 (62) (23) 68 49
Cash dividends
declared on
common stock 35 31 31 32 32 4 11 3 9
Cash dividends
declared per
common share 0.19 0.17 0.17 0.17 0.17 0.02 12 0.02 12
-------------- ---- ---- ---- ---- ---- ---- --- ---- ---
N/M - Not Meaningful
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)
Comerica Incorporated and Subsidiaries
2014 2013
---- ----
(in millions) 1st 4th 3rd 2nd 1st
Qtr Qtr Qtr Qtr Qtr
------------ ---- ---- ---- ---- ----
Balance at beginning of period $598 $604 $613 $617 $629
Loan
charge-
offs:
Commercial 19 31 20 19 21
Real estate
construction:
Commercial Real Estate business line (a) - - 1 2 -
Commercial mortgage:
Commercial Real Estate business line (a) 5 1 6 2 1
Other business lines (b) 3 4 3 7 12
------------------------ --- --- --- --- ---
Total commercial mortgage 8 5 9 9 13
Residential mortgage - 1 1 1 1
Consumer 3 4 8 4 3
-------- --- --- --- --- ---
Total loan charge-offs 30 41 39 35 38
Recoveries on loans previously
charged-off:
Commercial 11 17 8 11 6
Real estate construction - 3 2 1 1
Commercial mortgage 3 5 7 3 5
Lease financing 2 - 1 - -
Residential mortgage - 1 1 1 1
Consumer 2 2 1 2 1
-------- --- --- --- --- ---
Total recoveries 18 28 20 18 14
---------------- --- --- --- --- ---
Net loan charge-offs 12 13 19 17 24
Provision for loan losses 8 7 10 13 12
------------------------ --- --- --- --- ---
Balance at end of period $594 $598 $604 $613 $617
------------------------ --- --- --- --- ---
Allowance for loan losses as a percentage of total loans 1.28% 1.32% 1.37% 1.35% 1.37%
Net loan charge-offs as a percentage of average total loans 0.10 0.12 0.18 0.15 0.21
------------------------ ---- ---- ---- ---- ----
(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
2014 2013
---- ----
(in 1st 4th 3rd 2nd 1st
millions) Qtr Qtr Qtr Qtr Qtr
---------- ---- --- --- --- ---
Balance at
beginning
of period $36 $34 $36 $36 $32
Add:
Provision
for credit
losses on
lending-
related
commitments 1 2 (2) - 4
------------ --- --- --- --- ---
Balance at
end of
period $37 $36 $34 $36 $36
---------- --- -- -- -- --
Unfunded
lending-
related
commitments
sold $ - $1 $2 $1 $2
------------ --- --- -- -- -- --
NONPERFORMING ASSETS (unaudited)
Comerica Incorporated and Subsidiaries
2014 2013
---- ----
(in millions) 1st 4th 3rd 2nd 1st
Qtr Qtr Qtr Qtr Qtr
------------ ---- ---- ---- ---- ----
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS
Nonaccrual loans:
Business loans:
Commercial $54 $81 $107 $102 $102
Real estate construction:
Commercial Real
Estate business
line (a) 18 20 24 26 30
Other business
lines (b) 1 1 1 2 3
-------------- --- --- --- --- ---
Total real estate
construction 19 21 25 28 33
Commercial mortgage:
Commercial Real
Estate business
line (a) 58 51 67 69 86
Other business
lines (b) 104 105 139 157 178
-------------- --- --- --- --- ---
Total commercial
mortgage 162 156 206 226 264
International - 4 - - -
Total nonaccrual
business loans 235 262 338 356 399
Retail loans:
Residential
mortgage 48 53 63 62 65
Consumer:
Home equity 32 33 34 28 28
Other consumer 2 2 2 3 2
-------------- --- --- --- --- ---
Total consumer 34 35 36 31 30
-------------- --- --- --- --- ---
Total nonaccrual
retail loans 82 88 99 93 95
---------------- --- --- --- --- ---
Total nonaccrual
loans 317 350 437 449 494
Reduced-rate
loans 21 24 22 22 21
------------ --- --- --- --- ---
Total
nonperforming
loans (c) 338 374 459 471 515
Foreclosed
property 14 9 19 29 40
---------- --- --- --- --- ---
Total
nonperforming
assets (c) $352 $383 $478 $500 $555
-------------- --- --- --- --- ---
Nonperforming
loans as a
percentage of
total loans 0.73% 0.82% 1.04% 1.04% 1.14%
Nonperforming
assets as a
percentage of
total loans 0.76 0.84 1.08 1.10 1.23
and foreclosed
property
Allowance for
loan losses as a
percentage of
total 176 160 131 130 120
nonperforming loans
Loans past due 90
days or more and
still accruing $10 $16 $25 $20 $25
----------------- --- --- --- --- ---
ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans
at beginning of
period $350 $437 $449 $494 $519
Loans transferred
to nonaccrual
(d) 19 23 50 37 34
Nonaccrual
business loan
gross charge-
offs (e) (27) (33) (25) (25) (34)
Nonaccrual
business loans
sold (f) (3) (14) (17) (9) (7)
Payments/Other
(g) (22) (63) (20) (48) (18)
-------------- --- --- --- --- ---
Nonaccrual loans
at end of period $317 $350 $437 $449 $494
----------------- --- --- --- --- ---
(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 $27 $33 $25 $25 $34
Performing
criticized loans - 3 5 5 -
Consumer and
residential
mortgage loans 3 5 9 5 4
--- --- --- --- ---
Total gross loan
charge-offs $30 $41 $39 $35 $38
--- --- --- --- ---
(f) Analysis of loans
sold:
Nonaccrual
business loans $3 $14 $17 $9 $7
Performing
criticized loans 6 22 31 40 12
--- --- --- --- ---
Total criticized
loans sold $9 $36 $48 $49 $19
--- --- --- --- ---
(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
Three Months Ended
------------------
March 31, 2014 December 31, 2013 March 31, 2013
-------------- ----------------- --------------
Average Average Average Average Average Average
(dollar
amounts in
millions) Balance Interest Rate Balance Interest Rate Balance Interest Rate
----------- ------- ------- ---- ------- ------- ---- ------- ------- ----
Commercial
loans $28,362 $221 3.17% $27,683 $228 3.26% $28,056 $229 3.31%
Real estate
construction
loans 1,827 15 3.40 1,652 15 3.50 1,314 13 4.15
Commercial
mortgage
loans 8,770 86 3.97 8,714 101 4.62 9,398 95 4.08
Lease
financing 848 9 4.07 838 7 3.27 857 7 3.23
International
loans 1,301 12 3.68 1,303 12 3.78 1,282 11 3.62
Residential
mortgage
loans 1,724 17 3.86 1,679 17 3.97 1,556 17 4.39
Consumer
loans 2,243 17 3.16 2,185 18 3.24 2,154 18 3.36
-------- ----- --- ---- ----- --- ---- ----- --- ----
Total loans
(a) 45,075 377 3.39 44,054 398 3.58 44,617 390 3.54
Mortgage-
backed
securities
available-
for-sale 8,911 55 2.42 8,969 55 2.46 9,635 53 2.25
Other
investment
securities
available-
for-sale 371 - 0.43 396 - 0.45 386 - 0.50
----------- --- --- ---- --- --- ---- --- --- ----
Total
investment
securities
available-
for-sale 9,282 55 2.34 9,365 55 2.37 10,021 53 2.17
Interest-
bearing
deposits
with banks
(b) 5,448 4 0.26 6,400 4 0.26 3,852 2 0.27
Other
short-
term
investments 111 - 0.66 105 - 0.69 117 1 2.30
------------ --- --- ---- --- --- ---- --- --- ----
Total
earning
assets 59,916 436 2.94 59,924 457 3.03 58,607 446 3.09
Cash and
due from
banks 913 970 979
Allowance
for loan
losses (603) (609) (633)
Accrued
income and
other
assets 4,482 4,320 4,498
----- ----- -----
Total
assets $64,708 $64,605 $63,451
------- ------- -------
Money
market and
interest-
bearing
checking
deposits $22,261 6 0.11 $22,030 6 0.12 $21,294 7 0.14
Savings
deposits 1,700 - 0.03 1,667 - 0.03 1,623 - 0.03
Customer
certificates
of deposit 5,109 5 0.36 5,078 5 0.38 5,744 7 0.47
Foreign
office
time
deposits 464 - 0.42 462 1 0.47 525 1 0.55
--------- --- --- ---- --- --- ---- --- --- ----
Total
interest-
bearing
deposits 29,534 11 0.15 29,237 12 0.17 29,186 15 0.21
Short-term
borrowings 185 - 0.03 279 - 0.06 123 - 0.11
Medium-
and long-
term debt 3,545 14 1.53 3,563 14 1.53 4,707 15 1.32
---------- ----- --- ---- ----- --- ---- ----- --- ----
Total
interest-
bearing
sources 33,264 25 0.30 33,079 26 0.31 34,016 30 0.36
Noninterest-
bearing
deposits 23,236 23,532 21,506
Accrued
expenses
and other
liabilities 979 984 973
Total
shareholders'
equity 7,229 7,010 6,956
----- ----- -----
Total
liabilities
and
shareholders'
equity $64,708 $64,605 $63,451
------- ------- -------
Net interest
income/rate
spread (FTE) $411 2.64 $431 2.72 $416 2.73
---- ---- ----
FTE adjustment $1 $1 $ -
Impact of net
noninterest-
bearing sources of
funds 0.13 0.14 0.15
------------------- ---- ---- ----
Net interest margin
(as a percentage
of average earning
assets) (FTE) (a)
(b) 2.77% 2.86% 2.88%
------------------- ---- ---- ----
(a) Accretion of the purchase
discount on the acquired
loan portfolio of $12
million, $23 million and
$11 million in the first
quarter of 2014 and the
fourth and first quarters
of 2013, respectively,
increased the net
interest margin by 8
basis points, 15 basis
points and 8 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 24 basis
points, 31 basis points
and 17 basis points in
the first quarter of 2014
and the fourth and first
quarters of 2013,
respectively.
CONSOLIDATED STATISTICAL DATA (unaudited)
Comerica Incorporated and Subsidiaries
March 31, December 31, September 30, June 30, March 31,
(in
millions,
except per
share
data) 2014 2013 2013 2013 2013
----------- ---- ---- ---- ---- ----
Commercial loans:
Floor plan $3,437 $3,504 $2,869 $3,241 $2,963
Other 26,337 25,311 25,028 25,945 25,545
----- ------ ------ ------ ------ ------
Total
commercial
loans 29,774 28,815 27,897 29,186 28,508
Real estate
construction loans:
Commercial
Real
Estate
business
line (a) 1,507 1,447 1,283 1,223 1,185
Other
business
lines (b) 340 315 269 256 211
---------- --- --- --- --- ---
Total real
estate
construction
loans 1,847 1,762 1,552 1,479 1,396
Commercial mortgage
loans:
Commercial
Real
Estate
business
line (a) 1,820 1,678 1,592 1,743 1,812
Other
business
lines (b) 6,981 7,109 7,193 7,264 7,505
---------- ----- ----- ----- ----- -----
Total
commercial
mortgage
loans 8,801 8,787 8,785 9,007 9,317
Lease
financing 849 845 829 843 853
International
loans 1,250 1,327 1,286 1,209 1,269
Residential
mortgage
loans 1,751 1,697 1,650 1,611 1,568
Consumer loans:
Home equity 1,533 1,517 1,501 1,474 1,498
Other
consumer 684 720 651 650 658
--------- --- --- --- --- ---
Total
consumer
loans 2,217 2,237 2,152 2,124 2,156
--------- ----- ----- ----- ----- -----
Total loans $46,489 $45,470 $44,151 $45,459 $45,067
----------- ------- ------- ------- ----- -----
Goodwill $635 $635 $635 $635 $635
Core
deposit
intangible 15 16 17 18 19
Loan
servicing
rights 1 1 1 2 2
Tier 1
common
capital
ratio (c)
(d) 10.54% 10.64% 10.72% 10.43% 10.37%
Tier 1
risk-
based
capital
ratio (c) 10.54 10.64 10.72 10.43 10.37
Total risk-
based
capital
ratio (c) 12.95 13.10 13.42 13.29 13.41
Leverage
ratio (c) 10.85 10.77 10.88 10.81 10.75
Tangible
common
equity
ratio (d) 10.20 10.07 9.87 10.04 9.86
Common
shareholders'
equity per
share of
common
stock $40.09 $39.23 $37.94 $37.32 $37.41
Tangible
common
equity per
share of
common
stock (d) 36.50 35.65 34.38 33.79 33.90
Market value per
share for the
quarter:
High 53.50 48.69 43.49 40.44 36.99
Low 43.96 38.64 38.56 33.55 30.73
Close 51.80 47.54 39.31 39.83 35.95
Quarterly ratios:
Return on
average
common
shareholders'
equity 7.68% 6.66% 8.50% 8.23% 7.68%
Return on
average
assets 0.86 0.72 0.92 0.90 0.84
Efficiency
ratio (e) 65.79 72.81 65.18 65.03 66.15
Number of
banking
centers 483 483 484 484 487
Number of
employees
-full
time
equivalent 8,907 8,948 8,918 8,929 9,001
----------- ----- ----- ----- ----- -----
(a) Primarily loans to real
estate developers.
(b) Primarily loans secured by
owner-occupied real
estate.
(c) March 31, 2014 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
March 31, December 31, March 31,
(in
millions,
except
share
data) 2014 2013 2013
---------- ---- ---- ----
ASSETS
Cash
and
due
from
subsidiary
bank $5 $31 $23
Short-
term
investments
with
subsidiary
bank 531 482 450
Other
short-
term
investments 97 96 91
Investment
in
subsidiaries,
principally
banks 7,276 7,174 7,054
Premises
and
equipment 3 4 4
Other
assets 156 139 156
------ --- --- ---
Total
assets $8,068 $7,926 $7,778
------ ------ ------ ------
LIABILITIES
AND
SHAREHOLDERS'
EQUITY
Medium-
and
long-
term
debt $614 $617 $626
Other
liabilities 171 156 164
----------- --- --- ---
Total
liabilities 785 773 790
Common
stock
-
$5
par
value:
Authorized
-
325,000,000
shares
Issued
-
228,164,824
shares 1,141 1,141 1,141
Capital
surplus 2,182 2,179 2,157
Accumulated
other
comprehensive
loss (325) (391) (410)
Retained
earnings 6,414 6,321 6,020
Less
cost 3/31/14,
of 45,860,786
common shares
stock at
in 12/31/13
treasury and
- 41,361,612
46,492,524 shares
shares at
at (2,129) (2,097) (1,920)
-------------- ------ ------ ------
Total
shareholders'
equity 7,283 7,153 6,988
------------- ----- ----- -----
Total
liabilities
and
shareholders'
equity $8,068 $7,926 $7,778
------------- ------ ------ ------
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,
2012 188.3 $1,141 $2,162 $(413) $5,931 $(1,879) $6,942
Net income - - - - 134 - 134
Other
comprehensive
income, net of
tax - - - 3 - - 3
Cash dividends
declared on
common stock
($0.17 per
share) - - - - (32) - (32)
Purchase of
common stock (2.2) - - - - (74) (74)
Net issuance of
common stock
under employee
stock plans 0.7 - (15) - (13) 33 5
Share-based
compensation - - 10 - - - 10
BALANCE AT
MARCH 31, 2013 186.8 $1,141 $2,157 $(410) $6,020 $(1,920) $6,988
--------------- ----- ------ ------ ----- ------ ------- ------
BALANCE AT
DECEMBER 31,
2013 182.3 $1,141 $2,179 $(391) $6,321 $(2,097) $7,153
Cumulative
effect of
adoption of
new accounting
principle - - - - (3) - (3)
Net income - - - - 139 - 139
Other
comprehensive
income, net of
tax - - - 66 - - 66
Cash dividends
declared on
common stock
($0.19 per
share) - - - - (35) - (35)
Purchase of
common stock (1.7) - - - - (80) (80)
Net issuance of
common stock
under employee
stock plans 1.1 - (11) - (8) 48 29
Share-based
compensation - - 14 - - - 14
BALANCE AT
MARCH 31, 2014 181.7 $1,141 $2,182 $(325) $6,414 $(2,129) $7,283
--------------- ----- ------ ------ ----- ------ ------- ------
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries
(dollar
amounts
in
millions) Business Retail Wealth
Three
Months
Ended
March
31, 2014 Bank Bank Management Finance Other Total
--------- ---- ---- ---------- ------- ----- -----
Earnings summary:
Net
interest
income
(expense)
(FTE) $371 $146 $46 $(158) $6 $411
Provision
for
credit
losses 16 2 (8) - (1) 9
Noninterest
income 87 41 64 14 2 208
Noninterest
expenses 146 171 78 3 8 406
Provision
(benefit)
for
income
taxes
(FTE) 98 5 14 (55) 3 65
--- --- --- --- ---
Net
income
(loss) $198 $9 $26 $(92) $(2) $139
---- --- --- ---- --- ----
Net
credit-
related
charge-
offs
(recoveries) $11 $4 $(3) $ - $ - $12
Selected average balances:
Assets $35,896 $6,052 $4,939 $11,129 $6,692 $64,708
Loans 34,927 5,381 4,767 - - 45,075
Deposits 27,023 21,361 3,816 353 217 52,770
Statistical data:
Return on
average
assets
(a) 2.20% 0.16% 2.15% N/M N/M 0.86%
Efficiency
ratio
(b) 31.96 91.44 71.31 N/M N/M 65.79
----- ----- ----- --- --- -----
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 95 43 61 14 6 219
Noninterest
expenses 198 178 80 2 15 473
Provision
(benefit)
for
income
taxes
(FTE) 90 8 13 (57) (3) 51
--- --- --- --- ---
Net
income
(loss) $170 $15 $24 $(92) $ - $117
---- --- --- ---- -- --- ----
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) 1.94% 0.27% 1.93% N/M N/M 0.72%
Efficiency
ratio
(b) 40.97 92.27 74.64 N/M N/M 72.81
---------- ----- ----- ----- --- --- -----
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 90 41 65 14 3 213
Noninterest
expenses 146 175 79 3 13 416
Provision
(benefit)
for
income
taxes
(FTE) 101 5 13 (58) 2 63
--- --- --- --- --- ---
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) 31.38 89.37 71.09 N/M N/M 66.15
---------- ----- ----- ----- --- --- -----
(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
March
31, 2014 Michigan California Texas Markets & Other Total
--------- -------- -------- ----- ------- ------- -----
Earnings summary:
Net
interest
income
(expense)
(FTE) $183 $172 $136 $72 $(152) $411
Provision
for
credit
losses 3 11 6 (10) (1) 9
Noninterest
income 87 34 31 40 16 208
Noninterest
expenses 161 96 90 48 11 406
Provision
(benefit)
for
income
taxes
(FTE) 38 36 25 18 (52) 65
--- --- --- --- --- ---
Net
income
(loss) $68 $63 $46 $56 $(94) $139
--- --- --- --- ---- ----
Net
credit-
related
charge-
offs
(recoveries) $ - $10 $6 $(4) $ - $12
Selected average balances:
Assets $13,819 $15,133 $11,070 $6,865 $17,821 $64,708
Loans 13,473 14,824 10,364 6,414 - 45,075
Deposits 20,642 14,782 10,875 5,901 570 52,770
Statistical data:
Return on
average
assets
(a) 1.26% 1.59% 1.50% 3.28% N/M 0.86%
Efficiency
ratio
(b) 59.71 46.72 53.83 43.39 N/M 65.79
---------- ----- ----- ----- ----- --- -----
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 40 20 219
Noninterest
expenses 218 98 91 49 17 473
Provision
(benefit)
for
income
taxes
(FTE) 19 46 31 15 (60) 51
--- --- --- --- --- ---
Net
income
(loss) $32 $77 $53 $47 $(92) $117
--- --- --- --- ---- ----
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) 0.59% 1.90% 1.80% 2.68% N/M 0.72%
Efficiency
ratio
(b) 79.04 46.11 50.84 42.34 N/M 72.81
---------- ----- ----- ----- ----- --- -----
Other Finance
Three
Months
Ended
March
31, 2013 Michigan California Texas Markets & Other Total
--------- -------- -------- ----- ------- ------- -----
Earnings summary:
Net
interest
income
(expense)
(FTE) $190 $171 $134 $81 $(160) $416
Provision
for
credit
losses (7) 21 8 (2) (4) 16
Noninterest
income 92 35 31 38 17 213
Noninterest
expenses 168 97 91 44 16 416
Provision
(benefit)
for
income
taxes
(FTE) 43 32 23 21 (56) 63
--- --- --- --- --- ---
Net
income
(loss) $78 $56 $43 $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 20,254 14,356 9,959 5,676 447 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 37.41 N/M 66.15
---------- ----- ----- ----- ----- --- -----
(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
March 31, December 31, September 30, June 30, March 31,
(dollar
amounts in
millions) 2014 2013 2013 2013 2013
----------- ---- ---- ---- ---- ----
Tier 1 Common Capital Ratio:
Tier 1 and
Tier 1
common
capital
(a) (b) $6,961 $6,895 $6,862 $6,800 $6,748
Risk-
weighted
assets (a)
(b) 66,051 64,825 64,027 65,220 65,099
----------- ------ ------ ------ ------ ------
Tier 1 and
Tier 1
common
risk-
based
capital
ratio (b) 10.54% 10.64% 10.72% 10.43% 10.37%
Basel III Common Equity Tier 1 Capital Ratio:
Tier 1
common
capital
(b) $6,961 $6,895 $6,862 $6,800 $6,748
Basel III
adjustments
(c) (3) (6) (4) - (1)
------------ --- --- --- --- ---
Basel III
common
equity
Tier 1
capital
(c) 6,958 6,889 6,858 6,800 6,747
--------- ----- ----- ----- ----- -----
Risk-
weighted
assets (a)
(b) $66,051 $64,825 $64,027 $65,220 $65,099
Basel III
adjustments
(c) 1,603 1,754 1,726 2,091 1,996
----- ----- ----- ----- -----
Basel III
risk-
weighted
assets (c) $67,654 $66,579 $65,753 $67,311 $67,095
----------- ------- ------- ------- ----- -------
Tier 1
common
capital
ratio (b) 10.5% 10.6% 10.7% 10.4% 10.4%
Basel III
common
equity
Tier 1
capital
ratio (c) 10.3 10.3 10.4 10.1 10.1
---------- ---- ---- ---- ---- ----
Tangible Common Equity Ratio:
Common
shareholders'
equity $7,283 $7,153 $6,969 $6,911 $6,988
Less:
Goodwill 635 635 635 635 635
Other
intangible
assets 16 17 18 20 21
--- --- --- --- ---
Tangible
common
equity $6,632 $6,501 $6,316 $6,256 $6,332
-------- ------ ------ ------ ------ ------
Total
assets $65,681 $65,227 $64,670 $62,947 $64,885
Less:
Goodwill 635 635 635 635 635
Other
intangible
assets 16 17 18 20 21
--- --- --- --- ---
Tangible
assets $65,030 $64,575 $64,017 $62,292 $64,229
-------- ------- ------- ------- ----- -------
Common
equity
ratio 11.09% 10.97% 10.78% 10.98% 10.77%
Tangible
common
equity
ratio 10.20 10.07 9.87 10.04 9.86
-------- ----- ----- ---- ----- ----
Tangible Common Equity per Share of Common Stock:
Common
shareholders'
equity $7,283 $7,153 $6,969 $6,911 $6,988
Tangible
common
equity 6,632 6,501 6,316 6,256 6,332
-------- ----- ----- ----- ----- -----
Shares of
common
stock
outstanding
(in
millions) 182 182 184 185 187
------------ --- --- --- --- ---
Common
shareholders'
equity per
share of
common
stock $40.09 $39.23 $37.94 $37.32 $37.41
Tangible
common
equity per
share of
common
stock 36.50 35.65 34.38 33.79 33.90
----------- ----- ----- ----- ----- -----
(a) Tier 1 capital and risk-
weighted assets as
defined by regulation.
(b) March 31, 2014 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 common equity Tier 1 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.
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SOURCE Comerica Incorporated
