DALLAS, July 17, 2015 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported second quarter 2015 net income of $135 million, compared to $134 million for the first quarter 2015 and $151 million for the second quarter 2014. Earnings per diluted share were 73 cents for both the second and first quarters of 2015 and 80 cents for the second quarter 2014.
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(dollar
amounts
in
millions,
except
per
share
data) 2nd Qtr '15 1st Qtr '15 2nd Qtr '14
--------- ----------- ----------- -----------
Net
interest
income $421 $413 $416
Provision
for
credit
losses 47 14 11
Noninterest
income
(a) 261 255 220
Noninterest
expenses
(a) 436 (b) 459 404
Provision
for
income
taxes 64 61 70
Net
income 135 134 151
Net
income
attributable
to
common
shares 134 132 149
Diluted
income
per
common
share 0.73 0.73 0.80
Average
diluted
shares
(in
millions) 182 182 186
Basel
III
common
equity
Tier
1
capital
ratio
(c)
(d) 10.53% 10.40% n/a
Tier
1
common
capital
ratio
(c)
(e) n/a n/a 10.50%
Tangible
common
equity
ratio
(e) 9.92 9.97 10.39
-------- ---- ---- -----
(a) Effective
January 1,
2015,
contractual
changes to a
card program
resulted in a
change to the
accounting
presentation
of the
related
revenues and
expenses. The
effect of
this change
was increases
of $44
million to
both
noninterest
income and
noninterest
expenses in
both the
second and
first
quarters of
2015.
(b) Reflects a $31 million reduction in
litigation-related expense.
(c) Basel III capital rules
(standardized approach) became
effective for Comerica on January
1, 2015. The ratio reflects
transitional treatment for certain
regulatory deductions and
adjustments. For further
information, see "Balance Sheet and
Capital Management". Capital ratios
for prior periods are based on
Basel I rules.
(d) June 30, 2015 ratio is estimated.
(e) See Reconciliation of Non-GAAP
Financial Measures.
n/a - not applicable.
"Our second quarter results reflect the advantages of our diverse geographic footprint and industry expertise," said Ralph W. Babb, Jr., chairman and chief executive officer. "Average loans were up $2.1 billion, or 5 percent, compared to a year ago and were up $682 million, or 1 percent, relative to the first quarter, with increases in most markets and business lines. Relative to the first quarter, average deposits increased $408 million, or 1 percent, with noninterest-bearing deposits up $668 million.
"Revenue was up 2 percent, with growth in both net interest income and fee income in the second quarter. Charge-offs, nonaccruals and criticized loans remained well below normal historical levels. The provision for credit losses increased, primarily as a result of an increase in reserves for energy exposure. Noninterest expenses decreased $23 million to $436 million, primarily due to a decrease in litigation-related expense.
"Our balance sheet is well positioned to benefit as rates rise. We remain focused on the long term with a relationship banking strategy that continues to serve us well."
Second Quarter 2015 Compared to First Quarter 2015
-- Average total loans increased $682 million, or 1 percent, to $48.8
billion, primarily driven by a $690 million increase in Mortgage Banker
Finance, as well as increases in general Middle Market, Private Banking
and National Dealer Services, partially offset by decreases of $276
million in Energy and $151 million in Corporate Banking. Average loans
increased across all markets except Texas, which decreased as a result
of Energy. Period-end total loans increased $669 million, to $49.7
billion.
-- Average total deposits increased $408 million, or 1 percent, to $57.4
billion, primarily driven by an increase in noninterest-bearing deposits
of $668 million, across all markets. Period-end total deposits increased
$690 million, to $58.3 billion.
-- Net interest income increased $8 million, or 2 percent, to $421 million
in the second quarter 2015, compared to $413 million in the first
quarter 2015, primarily due to an increase in loan volume and one
additional day in the quarter.
-- Net charge-offs were $18 million, or 0.15 percent of average loans, in
the second quarter 2015, compared to $8 million, or 0.07 percent, in the
first quarter 2015. The provision for credit losses increased to $47
million in the second quarter 2015, primarily as a result of an increase
in reserves for energy exposure.
-- Noninterest income increased $6 million in the second quarter 2015,
primarily due to an increase in card fees, as well as small increases in
several other fee categories, partially offset by a decrease in
commercial lending fees.
-- Noninterest expenses decreased $23 million in the second quarter 2015,
primarily reflecting a $31 million decrease in litigation-related
expense and a seasonal decrease in salaries and benefits expense,
partially offset by an increase in outside processing fees.
-- Capital remained solid at June 30, 2015, as evidenced by an estimated
common equity Tier 1 capital ratio of 10.53 percent and a tangible
common equity ratio of 9.92 percent.
-- The quarterly dividend increased 5 percent, to $0.21 per share in the
second quarter 2015, and Comerica repurchased approximately 1.0 million
shares of common stock and 500,000 warrants under the equity repurchase
program. These equity repurchases, together with dividends, returned $96
million to shareholders.
Second Quarter 2015 Compared to Second Quarter 2014
-- Average total loans increased $2.1 billion, or 5 percent, reflecting
increases in almost all lines of business.
-- Average total deposits increased $4.0 billion, or 8 percent, driven by
increases in noninterest-bearing deposits of $3.4 billion, or 14
percent, and money market and NOW deposits of $1.4 billion, or 6
percent, partially offset by decreases in other deposit categories.
Average deposits increased in all major lines of business and markets.
-- Net interest income increased $5 million, largely due to loan growth,
partially offset by an $8 million decrease in accretion on the purchased
loan portfolio.
-- The provision for credit losses increased $36 million, primarily as a
result of an increase in reserves for energy exposure.
-- Excluding the impact of a change to the accounting presentation for a
card program, which increased both noninterest income and noninterest
expenses by $44 million in the second quarter 2015, noninterest income
decreased $3 million, primarily reflecting increases in fiduciary
income, service charges and card fees, which were more than offset by
declines in foreign exchange income and several non-fee categories; and
noninterest expenses decreased $12 million, largely reflecting a $33
million reduction in litigation-related expenses, partially offset by
higher outside processing expenses related to revenue generating
activities and an increase in technology-related contract labor
expenses.
Net Interest Income
-------------------
(dollar amounts
in millions) 2nd Qtr '15 1st Qtr '15 2nd Qtr '14
--------------- ----------- ----------- -----------
Net interest
income $421 $413 $416
Net interest
margin 2.65% 2.64% 2.78%
Selected average
balances:
Total earning
assets $63,981 $63,480 $60,148
Total loans 48,833 48,151 46,725
Total investment
securities 9,936 9,907 9,364
Federal Reserve
Bank deposits 4,968 5,176 3,801
Total deposits 57,398 56,990 53,384
Total
noninterest-
bearing
deposits 27,365 26,697 24,011
------------- ------ ------ ------
-- Net interest income increased $8 million to $421 million in the second
quarter 2015, compared to the first quarter 2015.
-- Interest on loans increased $11 million, primarily reflecting the
benefit from an increase in average loan balances (+$5 million), the
impact of one additional day in the second quarter (+$4 million) and
an increase in yields (+$2 million), in part reflecting an increase
in LIBOR rates.
-- The increase in interest on loans was partially offset by decreases
totaling $3 million resulting primarily from lower yields on
investment securities, a decrease in average Federal Reserve Bank
deposit balances and an increase in interest expense on debt.
-- The net interest margin of 2.65 percent increased 1 basis point compared
to the first quarter 2015, primarily due to higher loan yields.
Noninterest Income
Noninterest income increased $6 million in the second quarter 2015, compared to $255 million for the first quarter 2015. The increase primarily reflected a $5 million increase in card fees as well as small increases in service charges on deposit accounts, fiduciary income and brokerage fees, partially offset by a $3 million decrease in commercial lending fees. The increase in card fees primarily reflected increased revenue from merchant payment processing services and interchange. The decrease in commercial lending fees was primarily due to decreases in unused commitment fees and syndication agent fees.
Noninterest Expenses
Noninterest expenses decreased $23 million in the second quarter 2015, compared to $459 million for the first quarter 2015, primarily reflecting a $31 million decrease in litigation-related expenses and a $2 million decrease in salaries and benefits expense, partially offset by an $8 million increase in outside processing fees associated with revenue-generating activities. Related to litigation expense, on July 1, 2015, the Montana Supreme Court issued a ruling favorable to Comerica on a lender liability case, which reversed a jury verdict and sent the case back for a new trial. The decrease in salaries and benefits expense primarily reflected seasonal decreases in payroll taxes and share-based compensation expense, partially offset by an increase in technology-related contract labor expense and the impact on salaries of merit increases and one additional day in the second quarter.
Credit Quality
"Overall, credit quality remained solid. Net charge-offs continued to be well below normal levels at 15 basis points, or $18 million," said Babb." Net charge-offs related to our energy exposure were nominal. The provision for credit losses increased from a very low level due to an increase in criticized loans related to energy, as well as uncertainty due to continued volatility and the sustained low oil and gas prices. The reserve to total loans ratio increased to 1.24 percent, and the reserve covered nonperforming loans 1.7 times.
"Our Energy customers are generally decreasing their loan commitments and outstandings as they take the necessary actions to adjust to lower energy prices, such as reducing their expenses, disposing of assets, and tapping the capital markets. On average, loan to values remained stable from the last redetermination.
Over the past 30 years, we have built our energy business with a strategy to withstand the ups and downs of the cycles."
(dollar amounts in millions) 2nd Qtr '15 1st Qtr '15 2nd Qtr '14
--------------------------- ----------- ----------- -----------
Net loan charge-offs $18 $8 $9
Net loan charge-offs/Average
total loans 0.15% 0.07% 0.08%
Provision for credit losses $47 $14 $11
Nonperforming loans (a) 361 279 347
Nonperforming assets (NPAs) (a) 370 288 360
NPAs/Total loans and foreclosed
property 0.74% 0.59% 0.75%
Loans past due 90 days or more and
still accruing $18 $12 $7
Allowance for loan losses 618 601 591
Allowance for credit losses on
lending-related commitments (b) 50 39 42
--- --- ---
Total allowance for credit losses 668 640 633
Allowance for loan losses/Period-
end total loans 1.24% 1.22% 1.23%
Allowance for loan losses/
Nonperforming loans 171 216 170
-------------------------- --- --- ---
(a) Excludes loans acquired with
credit impairment.
(b) Included in "Accrued expenses and
other liabilities" on the
consolidated balance sheets.
--- ---------------------------------
-- The provision for credit losses increased to $47 million in the second
quarter 2015, primarily reflecting higher reserves for loans related to
energy((a)) as a result of an increase in criticized loans and the
impact of continued volatility and sustained low energy prices. To a
lesser extent, Technology and Life Sciences as well as Corporate Banking
contributed to the increase in the provision, largely as a result of
charge-offs and variability. These increases were partially offset by
credit quality improvements in the remainder of the portfolio.
-- Net charge-offs increased $10 million to $18 million, or 0.15 percent of
average loans, in the second quarter 2015, compared to $8 million, or
0.07 percent, in the first quarter 2015.
-- During the second quarter 2015, $145 million of borrower relationships
over $2 million were transferred to nonaccrual status, of which $100
million were loans related to energy.
-- Criticized loans increased $294 million to $2.4 billion at June 30,
2015, compared to $2.1 billion at March 31, 2015, reflecting an increase
of approximately $329 million in criticized loans related to energy.
(a) Loans related to energy at June 30,
2015 included approximately $3.3 billion
of outstanding loans in our Energy
business line as well as approximately
$725 million of loans in other lines of
business to companies that have a
sizable portion of their revenue related
to energy or could be otherwise
disproportionately negatively impacted
by prolonged low oil and gas prices.
Balance Sheet and Capital Management
Total assets and common shareholders' equity were $69.9 billion and $7.5 billion, respectively, at June 30, 2015, compared to $69.3 billion and $7.5 billion, respectively, at March 31, 2015.
There were approximately 178 million common shares outstanding at June 30, 2015. Share repurchases of $49 million (1.0 million shares) and warrant repurchases of $10 million (500,000 warrants) under the equity repurchase program, combined with dividends of 21 cents per share, returned 71 percent of second quarter 2015 net income to shareholders. Diluted average shares remained stable at 182 million for the second quarter 2015, as an increase in share dilution from options and warrants due to an increase in Comerica's average stock price offset the impact of equity repurchases.
The estimated common equity Tier 1 capital ratio, reflective of transition provisions and excluding accumulated other comprehensive income ("AOCI"), was 10.53 percent at June 30, 2015. Certain deductions and adjustments to regulatory capital began phasing in on January 1, 2015 and will be fully implemented on January 1, 2018. The estimated ratio under fully phased-in Basel III capital rules is not significantly different from the transitional ratio. Comerica's tangible common equity ratio was 9.92 percent at June 30, 2015, a decrease of 5 basis points from March 31, 2015.
Full-Year 2015 Outlook
Management expectations for full-year 2015 compared to full-year 2014, assuming a continuation of the current economic and low-rate environment, are as follows:
-- Average full-year loan growth consistent with 2014, reflecting seasonal
declines in Mortgage Banker Finance and National Dealer Services in the
second half of the year, a continued decline in Energy, and a sustained
focus on pricing and structure discipline.
-- Net interest income relatively stable, assuming no rise in interest
rates, reflecting a decrease of about $30 million in purchase accounting
accretion, to about $6 million, and the impact of a continuing low rate
environment on asset yields, offset by earning asset growth.
-- Provision for credit losses higher, with third and fourth quarter net
charge-offs each at levels similar to the second quarter. If energy
prices remain low, continued negative migration is possible, which may
be offset by lower exposure balances.
-- Noninterest income relatively stable, excluding the impact of the change
in accounting presentation for a card program. Stable noninterest income
reflects growth in fee income, particularly card fees and fiduciary
income, mostly offset by a decline in warrant income and regulatory
impacts on letter of credit and derivative income.
-- Noninterest expenses higher, excluding the impact of the change in
accounting presentation for a card program, with continued focus on
driving efficiencies for the long term. Expenses for the second half of
2015 are expected to be higher than the first half, reflecting three
more days in the second half, the impact of merit increases, a ramp-up
in the second half of technology and regulatory expenses, as well as
higher pension, outside processing and occupancy expenses.
-- Income tax expense to approximate 32 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 June 30, 2015 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses second quarter 2015 results compared to first quarter 2015.
The following table presents net income (loss) by business segment.
(dollar amounts
in millions) 2nd Qtr '15 1st Qtr '15 2nd Qtr '14
--------------- ----------- ----------- -----------
Business Bank $182 81% $189 85% $197 82%
Retail Bank 18 8 17 8 16 7
Wealth
Management 26 11 16 7 25 11
----------- --- --- --- --- --- ---
226 100% 222 100% 238 100%
Finance (90) (89) (91)
Other (a) (1) 1 4
-------- --- --- ---
Total $135 $134 $151
----- ---- ---- ----
(a) Includes items not directly
associated with the three
major business segments or
the Finance Division.
Business Bank
(dollar amounts in millions) 2nd Qtr 1st Qtr 2nd Qtr
'15 '15 '14
--------------------------- -------- -------- --------
Net interest income (FTE) $375 $370 $375
Provision for credit losses 61 25 35
Noninterest income 140 142 100
Noninterest expenses 176 200 143
Net income 182 189 197
Net credit-related charge-
offs 22 9 9
Selected average balances:
Assets 39,135 38,654 37,305
Loans 38,109 37,623 36,367
Deposits 30,229 30,143 27,351
-------- ------ ------ ------
-- Average loans increased $486 million, primarily reflecting increases in
Mortgage Banker Finance, general Middle Market and National Dealer
Services, partially offset by decreases in Energy and Corporate Banking.
-- Average deposits increased $86 million, primarily reflecting increases
in Technology and Life Sciences, general Middle Market and Corporate
Banking, partially offset by a decrease in Commercial Real Estate.
-- Net interest income increased $5 million, primarily due to the benefit
from an increase in average loan balances and one more day in the
quarter, partially offset by a lower funds transfer pricing (FTP)
crediting rate.
-- The provision for credit losses increased $36 million, reflecting higher
reserves for loans related to energy as a result of an increase in
criticized loans and the impact of continued volatility and sustained
low energy prices. To a lesser extent, Technology and Life Sciences as
well as Corporate Banking contributed to the increase in the provision,
largely as a result of charge-offs and variability. These increases were
partially offset by credit quality improvements in the remainder of the
portfolio.
-- Noninterest income decreased $2 million, primarily due to decreases in
customer derivative income and commercial lending fees, partially offset
by an increase in card fees.
-- Noninterest expenses decreased $24 million, primarily driven by a
reduction in litigation-related expense, partially offset by an increase
in outside processing fees.
Retail Bank
(dollar amounts in 2nd Qtr 1st Qtr 2nd Qtr
millions) '15 '15 '14
------------------ -------- -------- --------
Net interest income
(FTE) $155 $151 $152
Provision for credit
losses (8) (8) (6)
Noninterest income 46 42 41
Noninterest expenses 182 175 174
Net income 18 17 16
Net credit-related
charge-offs 1 - 3
Selected average
balances:
Assets 6,459 6,368 6,222
Loans 5,770 5,694 5,554
Deposits 22,747 22,404 21,890
-------- ------ ------ ------
-- Average loans increased $76 million, largely due to an increase in Small
Business.
-- Average deposits increased $343 million, primarily reflecting an
increase in noninterest-bearing deposits.
-- Net interest income increased $4 million, primarily due to an increase
in net FTP credits, largely due to the increase in average deposits and
the impact of one additional day in the quarter.
-- Noninterest income increased $4 million, due to small increases in
several fee categories.
-- Noninterest expenses increased $7 million, primarily reflecting an
increase in outside processing fees and salaries expense. Salaries
expense increased primarily due to the impact of merit increases and one
additional day in the quarter.
Wealth Management
(dollar amounts in millions) 2nd Qtr 1st Qtr 2nd Qtr
'15 '15 '14
--------------------------- -------- -------- --------
Net interest income (FTE) $45 $43 $44
Provision for credit losses (9) (1) (10)
Noninterest income 60 58 62
Noninterest expenses 74 77 76
Net income 26 16 25
Net credit-related charge-
offs (recoveries) (5) (1) (3)
Selected average balances:
Assets 5,153 5,029 4,987
Loans 4,954 4,834 4,804
Deposits 4,060 3,996 3,616
-------- ----- ----- -----
-- Average loans increased $120 million.
-- Average deposits increased $64 million, primarily reflecting an increase
in noninterest-bearing deposits.
-- Net interest income increased $2 million, largely driven by the increase
in average loan balances and one additional day in the quarter.
-- The provision for credit losses decreased $8 million, primarily
reflecting credit quality improvement.
-- Noninterest income increased $2 million, primarily reflecting the impact
of a securities loss in the first quarter which was not repeated.
-- Noninterest expenses decreased $3 million, reflecting small decreases in
several categories.
Geographic Market Segments
Comerica also provides market segment results for three primary geographic markets: Michigan, California and Texas. In addition to the three primary geographic markets, Other Markets is also reported as a market segment. Other Markets includes Florida, Arizona, the International Finance division and businesses that have a significant presence outside of the three primary geographic markets. The tables below present the geographic market results based on the methodologies in effect at June 30, 2015 and are presented on a fully taxable equivalent (FTE) basis.
The following table presents net income (loss) by market segment.
(dollar
amounts
in
millions) 2nd Qtr '15 1st Qtr '15 2nd Qtr '14
---------- ----------- ----------- -----------
Michigan $98 44% $73 33% $77 32%
California 71 31 73 33 63 27
Texas 14 6 32 14 39 16
Other
Markets 43 19 44 20 59 25
-------- --- --- --- --- --- ---
226 100% 222 100% 238 100%
Finance &
Other
(a) (91) (88) (87)
--------- --- --- ---
Total $135 $134 $151
----- ---- ---- ----
(a) Includes items not directly
associated with the
geographic markets.
-- Average loans increased $236 million in California and $67 million in
Michigan (primarily general Middle Market), and decreased $281 million
in Texas (primarily Energy). The increase in California was led by
Technology and Life Sciences, National Dealer Services and Private
Banking.
-- Average deposits increased $438 million in California and decreased $51
million and $4 million in Texas and Michigan, respectively. The increase
in California was primarily due to increases in Technology and Life
Sciences and general Middle Market, partially offset by a decrease in
Commercial Real Estate.
-- Net interest income increased $5 million and $2 million in California
and Michigan, respectively, and decreased $1 million in Texas. The
increase in California primarily reflected the benefit from an increase
in loan balances, while the decrease in Texas was primarily the result
of decreased loan balances. Net interest income in all three markets
reflected the benefit from one additional day in the quarter.
-- Net charge-offs decreased $5 million in Michigan, and increased $5
million in California and $2 million in Texas. The provision for credit
losses decreased $5 million in Michigan and increased $7 million in
California and $22 million in Texas. The decrease in Michigan primarily
reflected improved credit quality throughout the portfolio. The increase
in Texas was driven by higher reserves due to an increase in criticized
loans related to energy and the impact of continued volatility and
sustained low energy prices, while the increase in California primarily
reflected higher reserves in Technology and Life Sciences.
-- Noninterest income increased $5 million in Michigan, remained unchanged
in California and decreased $5 million in Texas. The increase in
Michigan primarily reflected small increases in several fee categories.
The decrease in Texas was primarily due to decreases in commercial
lending fees, customer derivative income and foreign exchange income.
-- Noninterest expenses decreased $26 million in Michigan, primarily
reflecting a decrease in litigation-related expense, decreased $2
million in Texas and increased $1 million in California.
Michigan Market
(dollar amounts in 2nd Qtr 1st Qtr 2nd Qtr
millions) '15 '15 '14
------------------ -------- -------- --------
Net interest income
(FTE) $179 $177 $182
Provision for credit
losses (13) (8) (9)
Noninterest income 85 80 89
Noninterest expenses 128 154 159
Net income 98 73 77
Net credit-related
charge-offs
(recoveries) (2) 3 10
Selected average balances:
Assets 13,852 13,736 13,851
Loans 13,290 13,223 13,482
Deposits 21,706 21,710 20,694
-------- ------ ------ ------
California Market
(dollar amounts in 2nd Qtr 1st Qtr 2nd Qtr
millions) '15 '15 '14
------------------ -------- -------- --------
Net interest income
(FTE) $181 $176 $176
Provision for credit
losses 4 (3) 14
Noninterest income 37 37 38
Noninterest expenses 100 99 100
Net income 71 73 63
Net credit-related
charge-offs 6 1 5
Selected average balances:
Assets 16,696 16,461 15,721
Loans 16,429 16,193 15,439
Deposits 17,275 16,837 15,370
-------- ------ ------ ------
Texas Market
(dollar amounts in 2nd Qtr 1st Qtr 2nd Qtr
millions) '15 '15 '14
------------------ -------- -------- --------
Net interest income
(FTE) $130 $131 $137
Provision for credit
losses 43 21 22
Noninterest income 31 36 35
Noninterest expenses 94 96 89
Net income 14 32 39
Net credit-related
charge-offs 5 3 2
Selected average balances:
Assets 11,878 12,192 11,661
Loans 11,254 11,535 10,966
Deposits 10,959 11,010 10,724
-------- ------ ------ ------
Conference Call and Webcast
Comerica will host a conference call to review second quarter 2015 financial results at 8 a.m. CT Friday, July 17, 2015. Interested parties may access the conference call by calling (877) 523-5249 or (210) 591-1147 (event ID No. 61399381). 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; changes in regulation or oversight; Comerica's ability to maintain adequate sources of funding and liquidity; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers, including the energy industry; operational difficulties, failure of technology infrastructure or information security incidents; reliance on other companies to provide certain key components of business infrastructure; factors impacting noninterest expenses which are beyond Comerica's control; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; changes in Comerica's credit rating; unfavorable developments concerning credit quality; the interdependence of financial service companies; 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; 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, 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 12 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2014. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
Comerica
Incorporated and
Subsidiaries
Three Months Ended Six Months Ended
------------------ ----------------
June 30, March 31, June 30, June 30,
(in millions, except
per share data) 2015 2015 2014 2015 2014
-------------------- ---- ---- ---- ---- ----
PER COMMON SHARE AND
COMMON STOCK DATA
Diluted net income $0.73 $0.73 $0.80 $1.46 $1.54
Cash dividends
declared 0.21 0.20 0.20 0.41 0.39
Average diluted
shares (in
thousands) 182,422 182,268 186,108 182,281 186,402
--------------- ------- ------- ------- ------- -------
KEY RATIOS
Return on average
common
shareholders'
equity 7.21% 7.20% 8.27% 7.20% 7.97%
Return on average
assets 0.79 0.78 0.93 0.78 0.90
Common equity tier 1
risk-based capital
ratio (a) (b) 10.53 10.40 n/a
Tier 1 common risk-
based capital ratio
(c) n/a n/a 10.50
Tier 1 risk-based
capital ratio (a)
(b) 10.53 10.40 10.50
Total risk-based
capital ratio (a)
(b) 12.53 12.35 12.52
Leverage ratio (a)
(b) 10.57 10.53 10.93
Tangible common
equity ratio (c) 9.92 9.97 10.39
----------------- ---- ---- -----
AVERAGE BALANCES
Commercial loans $31,788 $31,090 $29,890 $31,442 $29,130
Real estate
construction loans 1,807 1,938 1,913 1,872 1,871
Commercial mortgage
loans 8,672 8,581 8,749 8,627 8,759
Lease financing 795 797 850 796 849
International loans 1,453 1,512 1,328 1,482 1,315
Residential mortgage
loans 1,877 1,856 1,773 1,866 1,749
Consumer loans 2,441 2,377 2,222 2,409 2,232
----- ----- ----- ----- -----
Total loans 48,833 48,151 46,725 48,494 45,905
Earning assets 63,981 63,480 60,148 63,732 60,033
Total assets 68,963 68,735 64,878 68,852 64,794
Noninterest-bearing
deposits 27,365 26,697 24,011 27,033 23,626
Interest-bearing
deposits 30,033 30,293 29,373 30,163 29,453
------ ------ ------ ------ ------
Total deposits 57,398 56,990 53,384 57,196 53,079
Common shareholders'
equity 7,512 7,453 7,331 7,482 7,280
-------------------- ----- ----- ----- ----- -----
NET INTEREST INCOME
(fully taxable
equivalent basis)
Net interest income $422 $414 $417 $836 $828
Net interest margin 2.65% 2.64% 2.78% 2.65% 2.78%
------------------- ---- ---- ---- ---- ----
CREDIT QUALITY
Total nonperforming
assets $370 $288 $360
Loans past due 90
days or more and
still accruing 18 12 7
Net loan charge-offs 18 8 9 $26 $21
Allowance for loan
losses 618 601 591
Allowance for credit
losses on lending-
related commitments 50 39 42
--- --- ---
Total allowance for
credit losses 668 640 633
Allowance for loan
losses as a
percentage of total
loans 1.24% 1.22% 1.23%
Net loan charge-
offs as a
percentage of
average total loans 0.15 0.07 0.08 0.11% 0.09%
Nonperforming assets
as a percentage of
total loans and
foreclosed property 0.74 0.59 0.75
Allowance for loan
losses as a
percentage of total
nonperforming loans 171 216 170
-------------------- --- --- ---
(a) Basel III
rules became
effective on
January 1,
2015, with
transitional
provisions.
All prior
period data
is based on
Basel I
rules.
(b) June 30, 2015 ratios are
estimated.
(c) See Reconciliation of Non-GAAP
Financial Measures.
n/a - not applicable.
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and
Subsidiaries
June 30, March 31, December 31, June 30,
(in millions, except share data) 2015 2015 2014 2014
------------------------------- ---- ---- ---- ----
(unaudited) (unaudited) (unaudited)
ASSETS
Cash and due from banks $1,148 $1,170 $1,026 $1,226
Interest-bearing deposits with banks 4,817 4,792 5,045 2,668
Other short-term investments 119 101 99 109
Investment securities available-
for-sale 8,267 8,214 8,116 9,534
Investment securities held-to-
maturity 1,952 1,871 1,935 -
Commercial loans 32,723 32,091 31,520 30,986
Real estate construction loans 1,795 1,917 1,955 1,939
Commercial mortgage loans 8,674 8,558 8,604 8,747
Lease financing 786 792 805 822
International loans 1,420 1,433 1,496 1,352
Residential mortgage loans 1,865 1,859 1,831 1,775
Consumer loans 2,478 2,422 2,382 2,261
-------------- ----- ----- ----- -----
Total loans 49,741 49,072 48,593 47,882
Less allowance for loan losses (618) (601) (594) (591)
------------------------------ ---- ---- ---- ----
Net loans 49,123 48,471 47,999 47,291
Premises and equipment 541 531 532 562
Accrued income and other assets 3,978 4,183 4,434 3,933
------------------------------- ----- ----- ----- -----
Total assets $69,945 $69,333 $69,186 $65,323
------------ ------- ------- ------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits $28,167 $27,394 $27,224 $24,774
Money market and interest-bearing
checking deposits 23,786 23,727 23,954 22,555
Savings deposits 1,841 1,817 1,752 1,731
Customer certificates of deposit 4,367 4,497 4,421 4,962
Foreign office time deposits 99 135 135 148
---------------------------- --- --- --- ---
Total interest-bearing deposits 30,093 30,176 30,262 29,396
------------------------------- ------ ------ ------ ------
Total deposits 58,260 57,570 57,486 54,170
Short-term borrowings 56 80 116 176
Accrued expenses and other
liabilities 1,265 1,500 1,507 990
Medium- and long-term debt 2,841 2,683 2,675 2,618
-------------------------- ----- ----- ----- -----
Total liabilities 62,422 61,833 61,784 57,954
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 228,164,824 shares 1,141 1,141 1,141 1,141
Capital surplus 2,158 2,188 2,188 2,175
Accumulated other comprehensive loss (396) (370) (412) (304)
Retained earnings 6,908 6,841 6,744 6,520
Less cost of common stock in
treasury -49,803,515 shares at
6/30/15, 50,114,399 shares at March
31, 2015, 49,146,225 shares at
12/31/14, and 47,194,492 shares at
6/30/14 (2,288) (2,300) (2,259) (2,163)
------------------------------------ ------ ------ ------ ------
Total shareholders' equity 7,523 7,500 7,402 7,369
-------------------------- ----- ----- ----- -----
Total liabilities and shareholders'
equity $69,945 $69,333 $69,186 $65,323
----------------------------------- ------- ------- ------- -------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated
and Subsidiaries
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
(in millions, except
per share data) 2015 2014 2015 2014
-------------------- ---- ---- ---- ----
INTEREST INCOME
Interest and fees on
loans $389 $385 $767 $761
Interest on
investment
securities 52 53 105 108
Interest on short-
term investments 3 3 7 7
------------------ --- --- --- ---
Total interest income 444 441 879 876
INTEREST EXPENSE
Interest on deposits 11 11 22 22
Interest on medium-
and long-term debt 12 14 23 28
------------------- --- --- --- ---
Total interest
expense 23 25 45 50
-------------- --- --- --- ---
Net interest income 421 416 834 826
Provision for credit
losses 47 11 61 20
-------------------- --- --- --- ---
Net interest income
after provision for
credit losses 374 405 773 806
NONINTEREST INCOME
Service charges on
deposit accounts 56 54 111 108
Fiduciary income 48 45 95 89
Commercial lending
fees 22 23 47 43
Card fees 72 22 139 45
Letter of credit fees 13 15 26 29
Bank-owned life
insurance 10 11 19 20
Foreign exchange
income 9 12 19 21
Brokerage fees 5 4 9 9
Net securities
(losses) gains - - (2) 1
Other noninterest
income 26 34 53 63
----------------- --- --- --- ---
Total noninterest
income 261 220 516 428
NONINTEREST EXPENSES
Salaries and benefits
expense 251 240 504 487
Net occupancy expense 39 39 77 79
Equipment expense 13 15 26 29
Outside processing
fee expense 85 30 162 58
Software expense 24 25 47 47
Litigation-related
expense (30) 3 (29) 6
FDIC insurance
expense 9 8 18 16
Advertising expense 6 5 12 11
Other noninterest
expenses 39 39 78 77
----------------- --- --- --- ---
Total noninterest
expenses 436 404 895 810
----------------- --- --- --- ---
Income before income
taxes 199 221 394 424
Provision for income
taxes 64 70 125 134
-------------------- --- --- --- ---
NET INCOME 135 151 269 290
Less income allocated
to participating
securities 1 2 3 4
--------------------- --- --- --- ---
Net income
attributable to
common shares $134 $149 $266 $286
---------------- ---- ---- ---- ----
Earnings per common
share:
Basic $0.76 $0.83 $1.51 $1.59
Diluted 0.73 0.80 1.46 1.54
Comprehensive income 109 172 285 377
Cash dividends
declared on common
stock 37 36 73 71
Cash dividends
declared per common
share 0.21 0.20 0.41 0.39
-------------------- ---- ---- ---- ----
CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Second First Fourth Third Second Second Quarter 2015 Compared To:
Quarter Quarter Quarter Quarter Quarter First Quarter 2015 Second Quarter 2014
(in millions, except
per share data) 2015 2015 2014 2014 2014 Amount Percent Amount Percent
-------------------- ---- ---- ---- ---- ---- ------ ------- ------ -------
INTEREST INCOME
Interest and fees on
loans $389 $378 $383 $381 $385 $11 3% $4 1%
Interest on
investment
securities 52 53 51 52 53 (1) (1) (1) (2)
Interest on short-
term investments 3 4 4 3 3 (1) (9) - -
------------------ --- --- --- --- --- --- --- --- ---
Total interest income 444 435 438 436 441 9 2 3 1
INTEREST EXPENSE
Interest on deposits 11 11 12 11 11 - - - -
Interest on medium-
and long-term debt 12 11 11 11 14 1 5 (2) (8)
------------------- --- --- --- --- --- --- --- --- ---
Total interest
expense 23 22 23 22 25 1 2 (2) (5)
-------------- --- --- --- --- --- --- --- --- ---
Net interest income 421 413 415 414 416 8 2 5 1
Provision for credit
losses 47 14 2 5 11 33 n/m 36 n/m
-------------------- --- --- --- --- --- --- --- --- ---
Net interest income
after provision for
credit losses 374 399 413 409 405 (25) (6) (31) (8)
NONINTEREST INCOME
Service charges on
deposit accounts 56 55 53 54 54 1 3 2 4
Fiduciary income 48 47 47 44 45 1 1 3 6
Commercial lending
fees 22 25 29 26 23 (3) (9) (1) (3)
Card fees 72 67 24 23 22 5 7 50 n/m
Letter of credit fees 13 13 14 14 15 - - (2) (8)
Bank-owned life
insurance 10 9 8 11 11 1 5 (1) (10)
Foreign exchange
income 9 10 10 9 12 (1) (11) (3) (24)
Brokerage fees 5 4 4 4 4 1 5 1 9
Net securities
(losses) gains - (2) - (1) - 2 66 - -
Other noninterest
income 26 27 36 31 34 (1) (4) (8) (24)
----------------- --- --- --- --- --- --- --- --- ---
Total noninterest
income 261 255 225 215 220 6 2 41 18
NONINTEREST EXPENSES
Salaries and benefits
expense 251 253 245 248 240 (2) (1) 11 5
Net occupancy expense 39 38 46 46 39 1 3 - -
Equipment expense 13 13 14 14 15 - - (2) (12)
Outside processing
fee expense 85 77 33 31 30 8 12 55 n/m
Software expense 24 23 23 25 25 1 1 (1) (3)
Litigation-related
expense (30) 1 - (2) 3 (31) n/m (33) n/m
FDIC insurance
expense 9 9 8 9 8 - - 1 7
Advertising expense 6 6 7 5 5 - - 1 -
Gain on debt
redemption - - - (32) - - - - -
Other noninterest
expenses 39 39 43 53 39 - - - -
----------------- --- --- --- --- --- --- --- --- ---
Total noninterest
expenses 436 459 419 397 404 (23) (5) 32 8
----------------- --- --- --- --- --- --- --- --- ---
Income before income
taxes 199 195 219 227 221 4 3 (22) (10)
Provision for income
taxes 64 61 70 73 70 3 6 (6) (8)
-------------------- --- --- --- --- --- --- --- --- ---
NET INCOME 135 134 149 154 151 1 1 (16) (11)
Less income allocated
to participating
securities 1 2 1 2 2 (1) - (1) -
--------------------- --- --- --- --- --- --- --- --- ---
Net income
attributable to
common shares $134 $132 $148 $152 $149 $2 1% $(15) (11)%
---------------- ---- ---- ---- ---- ---- --- --- ---- ----
Earnings per common share:
Basic $0.76 $0.75 $0.83 $0.85 $0.83 $0.01 1% $(0.07) (8)%
Diluted 0.73 0.73 0.80 0.82 0.80 - - (0.07) (9)
Comprehensive income 109 176 54 141 172 (67) (38) (63) (37)
Cash dividends
declared on common
stock 37 36 36 36 36 1 5 1 3
Cash dividends
declared per common
share 0.21 0.20 0.20 0.20 0.20 0.01 5 0.01 5
-------------------- ---- ---- ---- ---- ---- ---- --- ---- ---
n/m - not meaningful
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)
Comerica Incorporated
and Subsidiaries
2015 2014
---- ----
(in millions) 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr
------------ ------- ------- ------- ------- -------
Balance at beginning of
period $601 $594 $592 $591 $594
Loan charge-offs:
Commercial 22 19 8 13 19
Commercial mortgage 2 - 2 7 5
Lease financing 1 - - - -
International 6 2 6 - -
Residential mortgage 1 - 1 1 -
Consumer 3 2 3 3 4
-------- --- --- --- --- ---
Total loan charge-offs 35 23 20 24 28
Recoveries on loans
previously charged-
off:
Commercial 10 9 6 6 11
Real estate construction 1 - 2 1 1
Commercial mortgage 5 3 10 12 3
Residential mortgage - 1 - 1 3
Consumer 1 2 1 1 1
-------- --- --- --- --- ---
Total recoveries 17 15 19 21 19
---------------- --- --- --- --- ---
Net loan charge-offs 18 8 1 3 9
Provision for loan
losses 35 16 4 4 6
Foreign currency
translation adjustment - (1) (1) - -
----------------------- --- --- --- --- ---
Balance at end of period $618 $601 $594 $592 $591
------------------------ ---- ---- ---- ---- ----
Allowance for loan
losses as a percentage
of total loans 1.24% 1.22% 1.22% 1.24% 1.23%
Net loan charge-offs as
a percentage of average
total loans 0.15 0.07 0.01 0.03 0.08
------------------------ ---- ---- ---- ---- ----
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited)
Comerica
Incorporated and
Subsidiaries
2015 2014
---- ----
(in millions) 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr
------------ ------- ------- ------- ------- -------
Balance at
beginning of
period $39 $41 $43 $42 $37
Less: Charge-offs
on lending-
related
commitments (a) 1 - - - -
Add: Provision for
credit losses on
lending-related
commitments 12 (2) (2) 1 5
------------------ --- --- --- --- ---
Balance at end of
period $50 $39 $41 $43 $42
----------------- --- --- --- --- ---
Unfunded lending-
related
commitments sold $12 $1 $ - $9 $ -
----------------- --- --- --- --- --- --- ---
Charge-offs
result from
the sale of
unfunded
lending-
related
(a) commitments.
NONPERFORMING ASSETS (unaudited)
Comerica Incorporated and Subsidiaries
2015 2014
---- ----
(in millions) 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr
------------ ------- ------- ------- ------- -------
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS
Nonaccrual loans:
Business loans:
Commercial $186 $113 $109 $93 $72
Real estate construction 1 1 2 18 19
Commercial mortgage 77 82 95 144 156
Lease financing 11 - - - -
International 9 1 - - -
Total nonaccrual business
loans 284 197 206 255 247
Retail loans:
Residential mortgage 35 37 36 42 45
Consumer:
Home equity 29 31 30 31 32
Other consumer 1 1 1 1 2
-------------- --- --- --- --- ---
Total consumer 30 32 31 32 34
-------------- --- --- --- --- ---
Total nonaccrual retail
loans 65 69 67 74 79
----------------------- --- --- --- --- ---
Total nonaccrual loans 349 266 273 329 326
Reduced-rate loans 12 13 17 17 21
------------------ --- --- --- --- ---
Total nonperforming loans
(a) 361 279 290 346 347
Foreclosed property 9 9 10 11 13
------------------- --- --- --- --- ---
Total nonperforming assets
(a) $370 $288 $300 $357 $360
-------------------------- ---- ---- ---- ---- ----
Nonperforming loans as a
percentage of total loans 0.72% 0.57% 0.60% 0.73% 0.73%
Nonperforming assets as a
percentage of total loans
and foreclosed property 0.74 0.59 0.62 0.75 0.75
Allowance for loan losses
as a percentage of total
nonperforming loans 171 216 205 171 170
Loans past due 90 days or
more and still accruing $18 $12 $5 $13 $7
------------------------- --- --- --- --- ---
ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans at
beginning of period $266 $273 $329 $326 $317
Loans transferred to
nonaccrual (b) 145 39 41 54 53
Nonaccrual business loan
gross charge-offs (c) (31) (21) (16) (20) (24)
Loans transferred to
accrual status (b) - (4) (18) - -
Nonaccrual business loans
sold (d) (1) (2) (24) (3) (6)
Payments/Other (e) (30) (19) (39) (28) (14)
------------------ --- --- --- --- ---
Nonaccrual loans at end of
period $349 $266 $273 $329 $326
-------------------------- ---- ---- ---- ---- ----
(a) Excludes loans acquired with credit impairment.
(b) Based on an analysis of nonaccrual loans with book balances greater than $2 million.
(c) Analysis of gross loan charge-offs:
Nonaccrual business loans $31 $21 $16 $20 $24
Consumer and residential
mortgage loans 4 2 4 4 4
--- --- --- --- ---
Total gross loan charge-
offs $35 $23 $20 $24 $28
--- --- --- --- ---
(d) Analysis of loans sold:
Nonaccrual business loans $1 $2 $24 $3 $6
Performing criticized loans - 7 5 - 8
--- --- --- --- ---
Total criticized loans sold $1 $9 $29 $3 $14
--- --- --- --- ---
(e) Includes net changes related to nonaccrual loans with balances less than $2 million, payments on nonaccrual loans with book balances greater than $2 million and transfers of nonaccrual loans to foreclosed
property. Excludes business loan gross charge-offs and business nonaccrual loans sold.
ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)
Comerica Incorporated
and Subsidiaries
Six Months Ended
----------------
June 30, 2015 June 30, 2014
------------- -------------
Average Average Average Average
(dollar amounts in
millions) Balance Interest Rate Balance Interest Rate
------------------ ------- -------- ---- ------- -------- ----
Commercial loans $31,442 $478 3.06% $29,130 $453 3.13%
Real estate
construction loans 1,872 32 3.43 1,871 32 3.42
Commercial mortgage
loans 8,627 146 3.41 8,759 170 3.92
Lease financing 796 12 3.12 849 16 3.66
International loans 1,482 27 3.69 1,315 24 3.66
Residential mortgage
loans 1,866 35 3.77 1,749 33 3.84
Consumer loans 2,409 39 3.23 2,232 35 3.19
-------------- ----- --- ---- ----- --- ----
Total loans (a) 48,494 769 3.19 45,905 763 3.35
Mortgage-backed
securities (b) 9,064 100 2.24 8,954 107 2.39
Other investment
securities 858 5 1.13 369 1 0.44
---------------- --- --- ---- --- --- ----
Total investment
securities (b) 9,922 105 2.15 9,323 108 2.31
Interest-bearing
deposits with banks 5,216 7 0.25 4,695 7 0.26
Other short-term
investments 100 - 0.75 110 - 0.63
---------------- --- --- ---- --- --- ----
Total earning assets 63,732 881 2.79 60,033 878 2.94
Cash and due from
banks 1,034 917
Allowance for loan
losses (607) (602)
Accrued income and
other assets 4,693 4,446
----- -----
Total assets $68,852 $64,794
------- -------
Money market and
interest-bearing
checking deposits $23,809 13 0.11 $22,279 12 0.11
Savings deposits 1,810 - 0.02 1,721 - 0.03
Customer certificates
of deposit 4,423 8 0.37 5,075 9 0.36
Foreign office time
deposits 121 1 1.36 378 1 0.52
------------------- --- --- ---- --- --- ----
Total interest-
bearing deposits 30,163 22 0.14 29,453 22 0.15
Short-term borrowings 94 - 0.05 198 - 0.03
Medium- and long-
term debt 2,675 23 1.78 3,270 28 1.64
----------------- ----- --- ---- ----- --- ----
Total interest-
bearing sources 32,932 45 0.28 32,921 50 0.30
Noninterest-bearing
deposits 27,033 23,626
Accrued expenses and
other liabilities 1,405 967
Total shareholders'
equity 7,482 7,280
----- -----
Total liabilities and
shareholders' equity $68,852 $64,794
------- -------
Net interest income/
rate spread (FTE) $836 2.51 $828 2.64
---- ----
FTE adjustment $2 $2
Impact of net
noninterest-bearing
sources of funds 0.14 0.14
-------------------- ---- ----
Net interest margin
(as a percentage of
average earning
assets) (FTE) (a) 2.65% 2.78%
-------------------- ---- ----
(a) Accretion of the purchase
discount on the acquired loan
portfolio of $4 million and
$22 million in the six months
ended June 30, 2015 and 2014,
respectively, increased the
net interest margin by 1 basis
point and 7 basis points in
each respective period.
(b) Includes investment securities
available-for-sale and
investment securities held-
to-maturity.
ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)
Comerica Incorporated
and Subsidiaries
Three Months Ended
------------------
June 30, 2015 March 31, 2015 June 30, 2014
------------- -------------- -------------
Average Average Average Average Average Average
(dollar amounts in
millions) Balance Interest Rate Balance Interest Rate Balance Interest Rate
------------------ ------- -------- ---- ------- -------- ---- ------- -------- ----
Commercial loans $31,788 $244 3.07% $31,090 $234 3.06% $29,890 $231 3.10%
Real estate
construction loans 1,807 16 3.51 1,938 16 3.36 1,913 16 3.44
Commercial mortgage
loans 8,672 73 3.38 8,581 73 3.44 8,749 85 3.88
Lease financing 795 6 3.19 797 6 3.05 850 7 3.26
International loans 1,453 13 3.68 1,512 14 3.71 1,328 12 3.64
Residential mortgage
loans 1,877 18 3.78 1,856 17 3.76 1,773 17 3.82
Consumer loans 2,441 20 3.25 2,377 19 3.21 2,222 18 3.22
-------------- ----- --- ---- ----- --- ---- ----- --- ----
Total loans (a) 48,833 390 3.20 48,151 379 3.19 46,725 386 3.31
Mortgage-backed
securities (b) 9,057 49 2.23 9,071 51 2.26 8,996 53 2.35
Other investment
securities 879 3 1.16 836 2 1.10 368 - 0.46
---------------- --- --- ---- --- --- ---- --- --- ----
Total investment
securities (b) 9,936 52 2.13 9,907 53 2.16 9,364 53 2.28
Interest-bearing
deposits with banks 5,110 3 0.25 5,323 4 0.26 3,949 3 0.25
Other short-term
investments 102 - 0.42 99 - 1.11 110 - 0.61
---------------- --- --- ---- --- --- ---- --- --- ----
Total earning assets 63,981 445 2.79 63,480 436 2.78 60,148 442 2.95
Cash and due from
banks 1,041 1,027 921
Allowance for loan
losses (613) (601) (602)
Accrued income and
other assets 4,554 4,829 4,411
----- ----- -----
Total assets $68,963 $68,735 $64,878
------- ------- -------
Money market and
interest-bearing
checking deposits $23,659 6 0.11 $23,960 6 0.11 $22,296 6 0.10
Savings deposits 1,834 - 0.02 1,786 - 0.03 1,742 - 0.03
Customer certificates
of deposit 4,422 4 0.37 4,423 4 0.37 5,041 5 0.36
Foreign office time
deposits 118 1 1.26 124 1 1.46 294 - 0.68
------------------- --- --- ---- --- --- ---- --- --- ----
Total interest-
bearing deposits 30,033 11 0.14 30,293 11 0.15 29,373 11 0.15
Short-term borrowings 78 - 0.04 110 - 0.06 210 - 0.03
Medium- and long-
term debt 2,661 12 1.83 2,686 11 1.73 2,998 14 1.77
----------------- ----- --- ---- ----- --- ---- ----- --- ----
Total interest-
bearing sources 32,772 23 0.28 33,089 22 0.27 32,581 25 0.30
Noninterest-bearing
deposits 27,365 26,697 24,011
Accrued expenses and
other liabilities 1,314 1,496 955
Total shareholders'
equity 7,512 7,453 7,331
----- ----- -----
Total liabilities and
shareholders' equity $68,963 $68,735 $64,878
------- ------- -------
Net interest income/
rate spread (FTE) $422 2.51 $414 2.51 $417 2.65
---- ---- ----
FTE adjustment $1 $1 $1
Impact of net
noninterest-bearing
sources of funds 0.14 0.13 0.13
-------------------- ---- ---- ----
Net interest margin
(as a percentage of
average earning
assets) (FTE) (a) 2.65% 2.64% 2.78%
-------------------- ---- ---- ----
(a) Accretion of the purchase
discount on the acquired loan
portfolio of $2 million, $2
million and $10 million in the
second quarter 2015, the first
quarter 2015 and the second
quarter 2014, respectively,
increased the net interest
margin by 1 basis point, 2
basis points and 7 basis
points in each respective
period.
(b) Includes investment securities
available-for-sale and
investment securities held-
to-maturity.
CONSOLIDATED STATISTICAL DATA (unaudited)
Comerica Incorporated and
Subsidiaries
June 30, March 31, December 31, September 30, June 30,
(in millions, except per
share data) 2015 2015 2014 2014 2014
------------------------ ---- ---- ---- ---- ----
Commercial loans:
Floor plan $3,840 $3,544 $3,790 $3,183 $3,576
Other 28,883 28,547 27,730 27,576 27,410
----- ------ ------ ------ ------ ------
Total commercial loans 32,723 32,091 31,520 30,759 30,986
Real estate construction
loans 1,795 1,917 1,955 1,992 1,939
Commercial mortgage loans 8,674 8,558 8,604 8,603 8,747
Lease financing 786 792 805 805 822
International loans 1,420 1,433 1,496 1,429 1,352
Residential mortgage
loans 1,865 1,859 1,831 1,797 1,775
Consumer loans:
Home equity 1,682 1,678 1,658 1,634 1,574
Other consumer 796 744 724 689 687
-------------- --- --- --- --- ---
Total consumer loans 2,478 2,422 2,382 2,323 2,261
-------------------- ----- ----- ----- ----- -----
Total loans $49,741 $49,072 $48,593 $47,708 $47,882
----------- ------- ------- ------- ------- -------
Goodwill $635 $635 $635 $635 $635
Core deposit intangible 11 12 13 14 14
Other intangibles 4 3 2 1 1
Common equity tier 1
capital (a) (b) 7,280 7,230 n/a n/a n/a
Tier 1 common capital (c) n/a n/a 7,169 7,105 7,027
Risk-weighted assets (a)
(b) 69,145 69,514 68,273 67,106 66,911
Common equity tier 1
risk-based capital
ratio (a) (b) 10.53% 10.40% n/a n/a n/a
Tier 1 common risk-based
capital ratio (c) n/a n/a 10.50% 10.59% 10.50%
Tier 1 risk-based
capital ratio (a) (b) 10.53 10.40 10.50 10.59 10.50
Total risk-based capital
ratio (a) (b) 12.53 12.35 12.51 12.83 12.52
Leverage ratio (a) (b) 10.57 10.53 10.35 10.79 10.93
Tangible common equity
ratio (c) 9.92 9.97 9.85 9.94 10.39
Common shareholders'
equity per share of
common stock $42.18 $42.12 $41.35 $41.26 $40.72
Tangible common equity
per share of common
stock (c) 38.53 38.47 37.72 37.65 37.12
Market value per share
for the quarter:
High 53.45 47.94 50.14 52.72 52.60
Low 44.38 40.09 42.73 48.33 45.34
Close 51.32 45.13 46.84 49.86 50.16
Quarterly ratios:
Return on average common
shareholders' equity 7.21% 7.20% 7.96% 8.29% 8.27%
Return on average assets 0.79 0.78 0.86 0.93 0.93
Efficiency ratio (d) 63.68 68.50 65.26 62.87 63.35
Number of banking centers 477 482 481 481 481
Number of employees -
full time equivalent 8,901 8,831 8,876 8,913 8,901
--------------------- ----- ----- ----- ----- -----
(a) Basel III
rules became
effective
January 1,
2015, with
transitional
provisions.
All prior
period data
is based on
Basel I
rules.
(b) June 30, 2015 amounts and ratios
are estimated.
(c) See Reconciliation of Non-GAAP
Financial Measures.
(d) Noninterest expenses as a
percentage of the sum of net
interest income (FTE) and
noninterest income excluding
net securities gains (losses).
n/a - not applicable.
PARENT COMPANY ONLY BALANCE SHEETS (unaudited)
Comerica
Incorporated
June 30, December 31, June 30,
(in
millions,
except
share
data) 2015 2014 2014
---------- ---- ---- ----
ASSETS
Cash and
due from
subsidiary
bank $7 $ - $5
Short-
term
investments
with
subsidiary
bank 861 1,133 796
Other
short-
term
investments 94 94 96
Investment
in
subsidiaries,
principally
banks 7,500 7,411 7,369
Premises
and
equipment 2 2 2
Other
assets 122 138 217
------- --- --- ---
Total
assets $8,586 $8,778 $8,485
------- ------ ------ ------
LIABILITIES
AND
SHAREHOLDERS'
EQUITY
Medium-
and long-
term debt $903 $1,208 $958
Other
liabilities 160 168 158
------------ --- --- ---
Total
liabilities 1,063 1,376 1,116
Common
stock -
$5 par
value:
Authorized
-
325,000,000
shares
Issued -
228,164,824
shares 1,141 1,141 1,141
Capital
surplus 2,158 2,188 2,175
Accumulated
other
comprehensive
loss (396) (412) (304)
Retained
earnings 6,908 6,744 6,520
Less cost
of common and
stock in 47,194,492
treasury shares at
- 6/30/14
49,803,515
shares at
6/30/15,
49,146,225
shares at
12/31/14 (2,288) (2,259) (2,163)
----------- ------ ------ ------
Total
shareholders'
equity 7,523 7,402 7,369
-------------- ----- ----- -----
Total
liabilities
and
shareholders'
equity $8,586 $8,778 $8,485
-------------- ------ ------ ------
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, 2013 182.3 $1,141 $2,179 $(391) $6,318 $(2,097) $7,150
Net income - - - - 290 - 290
Other comprehensive
income, net of tax - - - 87 - - 87
Cash dividends
declared on common
stock ($0.39 per
share) - - - - (71) - (71)
Purchase of common
stock (3.0) - - - - (141) (141)
Net issuance of
common stock under
employee stock plans 1.6 - (25) - (17) 74 32
Share-based
compensation - - 22 - - - 22
Other - - (1) - - 1 -
BALANCE AT JUNE 30,
2014 180.9 $1,141 $2,175 $(304) $6,520 $(2,163) $7,369
------------------- ----- ------ ------ ----- ------ ------- ------
BALANCE AT DECEMBER
31, 2014 179.0 $1,141 $2,188 $(412) $6,744 $(2,259) $7,402
Net income - - - - 269 - 269
Other comprehensive
income, net of tax - - - 16 - - 16
Cash dividends
declared on common
stock ($0.41 per
share) - - - - (73) - (73)
Purchase of common
stock (2.5) - - - - (115) (115)
Purchase and
retirement of
warrants - - (10) - - - (10)
Net issuance of
common stock under
employee stock plans 0.9 - (23) - (10) 43 10
Net issuance of
common stock for
warrants 1.0 - (21) - (22) 43 -
Share-based
compensation - - 24 - - - 24
BALANCE AT JUNE 30,
2015 178.4 $1,141 $2,158 $(396) $6,908 $(2,288) $7,523
------------------- ----- ------ ------ ----- ------ ------- ------
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)
Comerica
Incorporated and
Subsidiaries
(dollar amounts
in millions) Business Retail Wealth
Three Months
Ended June 30,
2015 Bank Bank Management Finance Other Total
--------------- ---- ---- ---------- ------- ----- -----
Earnings summary:
Net interest
income (expense)
(FTE) $375 $155 $45 $(155) $2 $422
Provision for
credit losses 61 (8) (9) - 3 47
Noninterest
income 140 46 60 14 1 261
Noninterest
expenses 176 182 74 3 1 436
Provision
(benefit) for
income taxes
(FTE) 96 9 14 (54) - 65
--- --- --- --- ---
Net income (loss) $182 $18 $26 $(90) $(1) $135
---- --- --- ---- --- ----
Net loan charge-
offs
(recoveries) $22 $1 $(5) $ - $ - $18
Selected average
balances:
Assets $39,135 $6,459 $5,153 $11,721 $6,495 $68,963
Loans 38,109 5,770 4,954 - - 48,833
Deposits 30,229 22,747 4,060 93 269 57,398
Statistical data:
Return on average
assets (a) 1.87% 0.30% 2.01% N/M N/M 0.79%
Efficiency ratio
(b) 34.19 89.88 70.27 N/M N/M 63.68
----- ----- ----- --- --- -----
Business Retail Wealth
Three Months
Ended March 31,
2015 Bank Bank Management Finance Other Total
---------------- ---- ---- ---------- ------- ----- -----
Earnings summary:
Net interest
income (expense)
(FTE) $370 $151 $43 $(152) $2 $414
Provision for
credit losses 25 (8) (1) - (2) 14
Noninterest
income 142 42 58 12 1 255
Noninterest
expenses 200 175 77 2 5 459
Provision
(benefit) for
income taxes
(FTE) 98 9 9 (53) (1) 62
--- --- --- --- ---
Net income (loss) $189 $17 $16 $(89) $1 $134
---- --- --- ---- --- ----
Net loan charge-
offs
(recoveries) $9 $ - $(1) $ - $ - $8
Selected average
balances:
Assets $38,654 $6,368 $5,029 $12,137 $6,547 $68,735
Loans 37,623 5,694 4,834 - - 48,151
Deposits 30,143 22,404 3,996 170 277 56,990
Statistical data:
Return on average
assets (a) 1.95% 0.30% 1.29% N/M N/M 0.78%
Efficiency ratio
(b) 39.20 90.57 74.58 N/M N/M 68.55
---------------- ----- ----- ----- --- --- -----
Business Retail Wealth
Three Months
Ended June 30,
2014 Bank Bank Management Finance Other Total
--------------- ---- ---- ---------- ------- ----- -----
Earnings summary:
Net interest
income (expense)
(FTE) $375 $152 $44 $(160) 6 $417
Provision for
credit losses 35 (6) (10) - (8) 11
Noninterest
income 100 41 62 15 2 220
Noninterest
expenses 143 174 76 2 9 404
Provision
(benefit) for
income taxes
(FTE) 100 9 15 (56) 3 71
--- --- --- --- --- ---
Net income (loss) $197 $16 $25 $(91) $4 $151
---- --- --- ---- --- ----
Net loan charge-
offs
(recoveries) $9 $3 $(3) $ - $ - $9
Selected average
balances:
Assets $37,305 $6,222 $4,987 $11,055 $5,309 $64,878
Loans 36,367 5,554 4,804 - - 46,725
Deposits 27,351 21,890 3,616 258 269 53,384
Statistical data:
Return on average
assets (a) 2.11% 0.29% 2.02% N/M N/M 0.93%
Efficiency ratio
(b) 30.07 90.06 72.11 N/M N/M 63.35
---------------- ----- ----- ----- --- --- -----
(a) Return on average assets is
calculated based on the
greater of average assets
or average liabilities and
attributed equity.
(b) Noninterest expenses as a
percentage of the sum of
net interest income (FTE)
and noninterest income
excluding net securities
gains.
FTE - Fully Taxable Equivalent
N/M - Not Meaningful
MARKET SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries
(dollar amounts
in millions) Other Finance
Three Months
Ended June 30,
2015 Michigan California Texas Markets & Other Total
--------------- -------- ---------- ----- ------- ------- -----
Earnings
summary:
Net interest
income
(expense)
(FTE) $179 $181 $130 $85 $(153) $422
Provision for
credit losses (13) 4 43 10 3 47
Noninterest
income 85 37 31 93 15 261
Noninterest
expenses 128 100 94 110 4 436
Provision
(benefit) for
income taxes
(FTE) 51 43 10 15 (54) 65
--- --- --- --- --- ---
Net income
(loss) $98 $71 $14 $43 $(91) $135
--- --- --- --- ---- ----
Net loan
charge-offs
(recoveries) $(2) $6 $5 $9 $ - $18
Selected
average
balances:
Assets $13,852 $16,696 $11,878 $8,321 $18,216 $68,963
Loans 13,290 16,429 11,254 7,860 - 48,833
Deposits 21,706 17,275 10,959 7,096 362 57,398
Statistical
data:
Return on
average assets
(a) 1.73% 1.54% 0.46% 2.05% N/M 0.79%
Efficiency
ratio (b) 48.21 46.04 58.20 61.45 N/M 63.68
---------- ----- ----- ----- ----- --- -----
Other Finance
Three Months
Ended March
31, 2015 Michigan California Texas Markets & Other Total
------------ -------- ---------- ----- ------- ------- -----
Earnings
summary:
Net interest
income
(expense)
(FTE) $177 $176 $131 $80 $(150) $414
Provision for
credit losses (8) (3) 21 6 (2) 14
Noninterest
income 80 37 36 89 13 255
Noninterest
expenses 154 99 96 103 7 459
Provision
(benefit) for
income taxes
(FTE) 38 44 18 16 (54) 62
--- --- --- --- --- ---
Net income
(loss) $73 $73 $32 $44 $(88) $134
--- --- --- --- ---- ----
Net loan
charge-offs $3 $1 $3 $1 $ - $8
Selected
average
balances:
Assets $13,736 $16,461 $12,192 $7,662 $18,684 $68,735
Loans 13,223 16,193 11,535 7,200 - 48,151
Deposits 21,710 16,837 11,010 6,986 447 56,990
Statistical
data:
Return on
average assets
(a) 1.30% 1.63% 1.01% 2.26% N/M 0.78%
Efficiency
ratio (b) 60.23 46.36 57.43 61.45 N/M 68.55
---------- ----- ----- ----- ----- --- -----
Other Finance
Three Months
Ended June 30,
2014 Michigan California Texas Markets & Other Total
--------------- -------- ---------- ----- ------- ------- -----
Earnings
summary:
Net interest
income
(expense)
(FTE) $182 $176 $137 $76 $(154) $417
Provision for
credit losses (9) 14 22 (8) (8) 11
Noninterest
income 89 38 35 41 17 220
Noninterest
expenses 159 100 89 45 11 404
Provision
(benefit) for
income taxes
(FTE) 44 37 22 21 (53) 71
--- --- --- --- --- ---
Net income
(loss) $77 $63 $39 $59 $(87) $151
--- --- --- --- ---- ----
Net loan
charge-offs
(recoveries) $10 $5 $2 $(8) $ - $9
Selected
average
balances:
Assets $13,851 $15,721 $11,661 $7,281 $16,364 $64,878
Loans 13,482 15,439 10,966 6,838 - 46,725
Deposits 20,694 15,370 10,724 6,069 527 53,384
Statistical
data:
Return on
average assets
(a) 1.42% 1.54% 1.30% 3.28% N/M 0.93%
Efficiency
ratio (b) 58.67 46.64 51.67 38.73 N/M 63.35
---------- ----- ----- ----- ----- --- -----
(a) Return on average assets is
calculated based on the
greater of average assets
or average liabilities and
attributed equity.
(b) Noninterest expenses as a
percentage of the sum of
net interest income (FTE)
and noninterest income
excluding net securities
gains.
FTE - Fully Taxable Equivalent
N/M - Not Meaningful
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
Comerica
Incorporated and
Subsidiaries
June 30, March 31, December 31, September 30, June 30,
(dollar amounts in
millions) 2015 2015 2014 2014 2014
------------------ ---- ---- ---- ---- ----
Tier 1 Common
Capital Ratio:
Tier 1 and Tier 1
common capital
(a) n/a n/a $7,169 $7,105 $7,027
Risk-weighted
assets (a) n/a n/a 68,269 67,102 66,909
------------- --- --- ------ ------ ------
Tier 1 and Tier 1
common risk-
based capital
ratio n/a n/a 10.50% 10.59% 10.50%
----------------- --- --- ----- ----- -----
Tangible Common
Equity Ratio:
Common
shareholders'
equity $7,523 $7,500 $7,402 $7,433 $7,369
Less:
Goodwill 635 635 635 635 635
Other intangible
assets 15 15 15 15 15
--- --- --- --- ---
Tangible common
equity $6,873 $6,850 $6,752 $6,783 $6,719
--------------- ------ ------ ------ ------ ------
Total assets $69,945 $69,333 $69,186 $68,883 $65,323
Less:
Goodwill 635 635 635 635 635
Other intangible
assets 15 15 15 15 15
--- --- --- --- ---
Tangible assets $69,295 $68,683 $68,536 $68,233 $64,673
--------------- ------- ------- ------- ------- -------
Common equity
ratio 10.76% 10.82% 10.70% 10.79% 11.28%
Tangible common
equity ratio 9.92 9.97 9.85 9.94 10.39
--------------- ---- ---- ---- ---- -----
Tangible Common
Equity per Share
of Common Stock:
Common
shareholders'
equity $7,523 $7,500 $7,402 $7,433 $7,369
Tangible common
equity 6,873 6,850 6,752 6,783 6,719
--------------- ----- ----- ----- ----- -----
Shares of common
stock outstanding
(in millions) 178 178 179 180 181
------------------ --- --- --- --- ---
Common
shareholders'
equity per share
of common stock $42.18 $42.12 $41.35 $41.26 $40.72
Tangible common
equity per share
of common stock 38.53 38.47 37.72 37.65 37.12
----------------- ----- ----- ----- ----- -----
Tier 1 capital and risk-
weighted assets as
defined by Basel I
risk-based capital
(a) rules.
n/a - not applicable.
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 Basel I risk-based capital rules in effect through December 31, 2014. Effective January 1, 2015, regulatory capital components and risk-weighted assets are defined by and calculated in conformity with Basel III risk-based capital rules. 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
