DALLAS, Oct. 16, 2015 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported third quarter 2015 net income of $136 million, compared to $135 million for the second quarter 2015 and $154 million for the third quarter 2014. Earnings per diluted share were 74 cents for third quarter 2015 compared to 73 cents for second quarter 2015 and 82 cents for third quarter 2014.
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(dollar
amounts
in
millions,
except
per
share
data) 3rd Qtr '15 2nd Qtr '15 3rd Qtr '14
--------- ----------- ----------- -----------
Net
interest
income $422 $421 $414
Provision
for
credit
losses 26 47 5
Noninterest
income
(a) 264 261 215
Noninterest
expenses
(a)
(b) 461 436 397 (c)
Provision
for
income
taxes 63 64 73
Net
income 136 135 154
Net
income
attributable
to
common
shares 134 134 152
Diluted
income
per
common
share 0.74 0.73 0.82
Average
diluted
shares
(in
millions) 181 182 185
Basel
III
common
equity
Tier
1
capital
ratio
(d)
(e) 10.58% 10.40% n/a
Tier
1
common
capital
ratio
(d)
(f) n/a n/a 10.59%
Tangible
common
equity
ratio
(f) 9.91 9.92 9.94
-------- ---- ---- ----
(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
$48 million
and $44
million to
both
noninterest
income and
noninterest
expenses in
both the third
and second
quarters of
2015,
respectively.
(b) Included net releases of litigation
reserves of $3 million, $30 million
and $2 million in the third quarter
2015, second quarter 2015 and third
quarter 2014, respectively.
(c) Reflected a net benefit of $8 million
from certain third quarter 2014
actions, including a $32 million gain
on the early redemption of debt, a $9
million contribution to the Comerica
Charitable Foundation and other
charges totaling $15 million.
(d) 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.
(e) September 30, 2015 ratio is estimated.
(f) See Reconciliation of Non-GAAP
Financial Measures.
n/a - not applicable.
---------------------
"Our third quarter results demonstrate the benefits of our geographic and business line diversity. " said Ralph W. Babb, Jr., chairman and chief executive officer. "Average loans grew $1.8 billion, or 4 percent, and deposits were up $4.0 billion, or 7 percent, compared to a year ago.
"Net interest income remained stable compared to the second quarter and noninterest income increased $3 million, or 1 percent, including growth in card fees, an area of increased focus for us. We continued to tightly manage expenses in the third quarter, even while faced with rising technology and regulatory costs. Overall credit quality remained strong. As far as loans related to energy((a)), we saw negative migration; however, as expected, net charge-offs continued to be low and nonaccruals increased a modest $7 million.
"Our capital position is solid," said Babb. "Stock repurchases under our equity repurchase program, combined with dividends, returned $96 million to shareholders in the third quarter. Our Trusted Advisor approach to relationship banking continues to make a positive difference as we remain focused on the long term."
Third Quarter 2015 Compared to Second Quarter 2015
-- Average total loans increased $139 million to $49.0 billion, with
increases in Technology and Life Sciences and Commercial Real Estate
offset by decreases in Corporate Banking, general Middle Market and
Energy. Period-end total loans decreased $799 million, to $48.9 billion,
largely driven by seasonal decreases in Mortgage Banker Finance and
general Middle Market.
-- Average total deposits increased $1.7 billion, or 3 percent, to $59.1
billion, primarily driven by a $1.3 billion increase in
noninterest-bearing deposits. Average total deposits increased in almost
all lines of business. Period-end total deposits increased $508 million
to $58.8 billion.
-- Net interest income increased $1 million to $422 million compared to
second quarter 2015. The benefits from one additional day in the quarter
and increases in average earning assets were largely offset by an
increase in interest expense on debt and lower loan yields.
-- The allowance for loan losses increased $4 million compared to June 30,
2015, primarily due to increases in reserves related to Technology and
Life Sciences and energy exposure, partially offset by lower loan
balances and improved credit quality in the remainder of the portfolio.
Net charge-offs were $23 million, or 0.19 percent of average loans, in
the third quarter 2015, compared to $18 million, or 0.15 percent, in the
second quarter 2015. As a result, the provision for credit losses was
$26 million for the third quarter 2015.
-- Noninterest income increased $3 million in the third quarter 2015,
including a $3 million increase in card fees.
-- Noninterest expenses increased $25 million in the third quarter 2015,
primarily reflecting a $3 million net release of litigation reserves in
the third quarter 2015, compared to a net release of $30 million in the
second quarter 2015.
-- Capital remained solid at September 30, 2015, as evidenced by an
estimated common equity Tier 1 capital ratio of 10.58 percent and a
tangible common equity ratio of 9.91 percent.
-- Comerica repurchased approximately 1.2 million shares of common stock
under the equity repurchase program, which, together with dividends,
returned $96 million to shareholders.
Third Quarter 2015 Compared to Third Quarter 2014
-- Average total loans increased $1.8 billion, or 4 percent, primarily
reflecting increases in almost all lines of business, partially offset
by a $400 million decrease in Corporate Banking.
-- Average total deposits increased $4.0 billion, or 7 percent, primarily
driven by increases of $3.3 billion in noninterest-bearing deposits and
$1.2 billion in money market and NOW deposits, partially offset by a
decrease of $592 million in customer certificates of deposit. Average
deposits increased in almost all lines of business and across all
markets.
-- Net interest income increased $8 million, largely due to earning asset
growth, partially offset by a $4 million increase in interest expense on
debt.
-- The provision for credit losses increased $21 million, primarily due to
increases in reserves related to Technology and Life Sciences and 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 $48 million in the third quarter 2015, noninterest income
increased $1 million.
-- Noninterest expenses increased $8 million, excluding the above-described
change in accounting presentation for a card program and the net benefit
of $8 million in the third quarter 2014 from certain cost-saving
actions, primarily due to an increase in technology-related contract
labor expenses and higher outside processing expenses related to revenue
generating activities.
((a) )Loans related to energy at September 30, 2015 included approximately $3.2 billion of outstanding loans in our Energy business line as well as approximately $615 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.
Net Interest Income
-------------------
(dollar amounts in
millions) 3rd Qtr '15 2nd Qtr '15 3rd Qtr '14
------------------ ----------- ----------- -----------
Net interest
income $422 $421 $414
Net interest
margin 2.54% 2.65% 2.67%
Selected average
balances:
Total earning
assets $66,191 $63,981 $61,672
Total loans 48,972 48,833 47,159
Total investment
securities 10,232 9,936 9,388
Federal Reserve
Bank deposits 6,710 4,968 4,877
Total deposits 59,140 57,398 55,163
Total noninterest-
bearing deposits 28,623 27,365 25,275
------------------ ------ ------ ------
-- Net interest income increased $1 million to $422 million in the third
quarter 2015, compared to the second quarter 2015.
-- Interest on loans increased $2 million, reflecting the impact of one
additional day in the third quarter (+$4 million) and the benefit
from an increase in average loan balances (+$1 million), partially
offset by a decrease in yields (-$3 million). The decrease in loan
yields primarily reflected the impact of growth in high quality,
lower yielding loans as well as a decrease in fee income due to the
summer slowdown, partially offset by the benefit from an increase in
LIBOR and the favorable impact from higher yields on loans related
to energy due to negative credit migration.
-- Interest on investment securities and Federal Reserve Bank deposits
each increased $1 million, primarily reflecting increased average
balances.
-- Interest expense on debt increased $3 million, primarily reflecting
the impact of debt issued in June and July 2015.
-- The net interest margin of 2.54 percent decreased 11 basis points
compared to the second quarter 2015, primarily due to the impact of the
increase in Federal Reserve Bank deposit balances (-6 basis points),
lower loan yields (-2 basis points) and the impact of increased debt (-2
basis points).
Noninterest Income
Noninterest income increased $3 million in the third quarter 2015, compared to $261 million for the second quarter 2015. The increase primarily reflected increases of $4 million in hedge ineffectiveness income, $3 million in card fees and $3 million in warrant-related income, partially offset by decreases of $5 million in deferred compensation asset returns and $4 million in investment banking income. The decrease in deferred compensation asset returns was offset by a decrease in deferred compensation plan expense in noninterest expenses.
Noninterest Expenses
Noninterest expenses increased $25 million in the third quarter 2015, compared to $436 million for the second quarter 2015, primarily reflecting a $3 million net release of litigation reserves in the third quarter 2015, compared to a net release of $30 million in the second quarter 2015, as well as increases of $2 million each in occupancy and software expense, partially offset by an $8 million decrease in salaries and benefits expense. The decrease in salaries and benefits expense primarily reflected a decrease in deferred compensation plan expense, lower share-based compensation expense as a result of forfeitures, and lower benefits expense, partially offset by an increase in technology-related contract labor expenses and the impact of one additional day in the quarter.
Credit Quality
"At 19 basis points, net charge-offs remain well below the historical normal level. Gross charge-offs declined slightly, while recoveries were down, primarily due to timing," said Babb. "The provision for credit losses was $26 million and the allowance increased $4 million. This reflects modestly higher reserves for both Technology and Life Sciences and loans related to energy. This marks the fourth consecutive quarter that we have prudently increased our reserves for energy, a result of increasing criticized loans and sustained low energy prices. While negative credit migration is anticipated, any losses are expected to be manageable. We continue to feel comfortable with our energy portfolio."
(dollar amounts in millions) 3rd Qtr '15 2nd Qtr '15 3rd Qtr '14
--------------------------- ----------- ----------- -----------
Loan charge-offs $34 $35 $24
Loan recoveries 11 17 21
--- --- ---
Net loan charge-offs 23 18 3
Net loan charge-offs/Average total
loans 0.19% 0.15% 0.03%
Provision for credit losses $26 $47 $5
Nonperforming loans (a) 369 361 346
Nonperforming assets (NPAs) (a) 381 370 357
NPAs/Total loans and foreclosed
property 0.78% 0.74% 0.75%
Loans past due 90 days or more and
still accruing $5 $18 $13
Allowance for loan losses 622 618 592
Allowance for credit losses on lending-
related commitments (b) 48 50 43
--- --- ---
Total allowance for credit losses 670 668 635
Allowance for loan losses/Period-end
total loans 1.27% 1.24% 1.24%
Allowance for loan losses/
Nonperforming loans 169 171 171
-------------------------- --- --- ---
(a) Excludes loans acquired with credit
impairment.
(b) Included in "Accrued expenses and
other liabilities" on the
consolidated balance sheets.
--- ---------------------------------
-- Net charge-offs increased $5 million to $23 million, or 0.19 percent of
average loans, in the third quarter 2015, compared to $18 million, or
0.15 percent, in the second quarter 2015.
-- During the third quarter 2015, $69 million of borrower relationships
over $2 million were transferred to nonaccrual status, of which $25
million were loans related to energy.
-- Criticized loans increased $537 million to $2.9 billion at September 30,
2015, compared to $2.4 billion at June 30, 2015, reflecting an increase
of approximately $480 million in criticized loans related to energy.
Balance Sheet and Capital Management
Total assets and common shareholders' equity were $71.0 billion and $7.6 billion, respectively, at September 30, 2015, compared to $69.9 billion and $7.5 billion, respectively, at June 30, 2015.
There were approximately 177 million common shares outstanding at September 30, 2015. Share repurchases of $59 million (1.2 million shares) under the equity repurchase program, combined with dividends of 21 cents per share, returned 71 percent of third quarter 2015 net income to shareholders. Diluted average shares decreased 2 million to 181 million for the third quarter 2015.
The estimated common equity Tier 1 capital ratio, reflective of transition provisions and excluding accumulated other comprehensive income ("AOCI"), was 10.58 percent at September 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 largely the same as the transitional ratio. Comerica's tangible common equity ratio was 9.91 percent at September 30, 2015, a decrease of 1 basis point from June 30, 2015.
Full-Year and Fourth Quarter 2015 Outlook
Management expectations for full-year 2015 compared to full-year 2014 have not changed from the previously provided outlook.
For fourth quarter 2015 compared to third quarter 2015, management expects the following, assuming a continuation of the current economic and low-rate environment:
-- Average loans relatively stable, reflecting a seasonal decline in
Mortgage Banker Finance, a continued decline in Energy and small
increases in other lines of business.
-- Net interest income relatively stable, with a contribution from earning
asset growth approximately offset by continued pressure on yields from
the low rate environment.
-- Provision for credit losses remains low, with fourth quarter provision
at a level similar to the third quarter. Continued negative migration of
loans related to energy is possible, which may be offset by lower
exposure balances.
-- Noninterest income slightly higher, with growth in card fees, along with
fiduciary income and investment banking fees should markets improve. The
levels of warrant income, hedge ineffectiveness income and deferred
compensation asset losses experienced in the third quarter 2015 are not
expected to repeat, but are difficult to predict.
-- Noninterest expenses moderately higher, reflecting seasonal increases in
benefits expense, outside processing, marketing and occupancy expenses.
The levels of litigation-related expense, share-based compensation and
deferred compensation plan expense experienced in the third quarter 2015
are not expected to repeat, but are difficult to predict.
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 September 30, 2015 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses third quarter 2015 results compared to second quarter 2015.
The following table presents net income (loss) by business segment.
(dollar amounts in
millions) 3rd Qtr '15 2nd Qtr '15 3rd Qtr '14
------------------ ----------- ----------- -----------
Business Bank $194 85% $182 81% $211 92%
Retail Bank 13 6 18 8 7 3
Wealth Management 21 9 26 11 12 5
----------------- --- --- --- --- --- ---
228 100% 226 100% 230 100%
Finance (93) (90) (73)
Other (a) 1 (1) (3)
-------- --- --- ---
Total $136 $135 $154
----- ---- ---- ----
(a) Includes items not directly
associated with the three
major business segments or
the Finance Division.
Business Bank
(dollar amounts in millions) 3rd Qtr 2nd Qtr 3rd Qtr
'15 '15 '14
--------------------------- ------- ------- -------
Net interest income (FTE) $380 $375 $376
Provision for credit losses 30 61 (4)
Noninterest income 145 140 97
Noninterest expenses 202 176 152
Net income 194 182 211
Net loan charge-offs 23 22 (2)
Selected average balances:
Assets 39,210 39,135 37,751
Loans 38,113 38,109 36,746
Deposits 31,397 30,229 28,815
-------- ------ ------ ------
-- Average loans increased $4 million, primarily reflecting increases in
Technology and Life Sciences, Commercial Real Estate and Entertainment,
largely offset by decreases in Corporate Banking, general Middle Market
and Energy.
-- Average deposits increased $1.2 billion, primarily reflecting increases
in general Middle Market, Technology and Life Sciences and Corporate
Banking, partially offset by a decrease in Commercial Real Estate.
-- Net interest income increased $5 million, primarily reflecting the
impact of one additional day in the quarter and an increase in net funds
transfer pricing (FTP) credits, largely due to the increase in average
deposits, partially offset by lower loan yields.
-- The allowance for loan losses increased $5 million compared to June 30,
2015, primarily due to increases in reserves related to Technology and
Life Sciences and energy exposure, partially offset by lower loan
balances and improvements in credit quality in the remainder of the
portfolio. As a result, the provision for credit losses was $30 million
for the third quarter 2015.
-- Noninterest income increased $5 million, primarily due to increases in
customer derivative income and warrant-related income, partially offset
by a decrease in investment banking fees.
-- Noninterest expenses increased $26 million, primarily reflecting the
impact of a net release in litigation reserves in the second quarter
2015, partially offset by a decrease in salaries and benefits expense.
Retail Bank
(dollar amounts in millions) 3rd Qtr 2nd Qtr 3rd Qtr
'15 '15 '14
--------------------------- ------- ------- -------
Net interest income (FTE) $158 $155 $153
Provision for credit losses 2 (8) -
Noninterest income 49 46 42
Noninterest expenses 185 182 185
Net income 13 18 7
Net loan charge-offs 1 1 -
Selected average balances:
Assets 6,518 6,459 6,273
Loans 5,835 5,770 5,605
Deposits 23,079 22,747 22,042
-------- ------ ------ ------
-- Average loans increased $65 million, reflecting increases in Small
Business and consumer loans in Retail Banking.
-- Average deposits increased $332 million, primarily reflecting an
increase in noninterest-bearing deposits.
-- Net interest income increased $3 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.
-- The provision for credit losses was $2 million, compared to a negative
provision of $8 million in the second quarter 2015.
-- Noninterest income increased $3 million, primarily reflecting an
increase in card fees.
-- Noninterest expenses increased $3 million, primarily reflecting
increases in occupancy and outside processing expenses.
Wealth Management
(dollar amounts in millions) 3rd Qtr 2nd Qtr 3rd Qtr
'15 '15 '14
--------------------------- -------- -------- --------
Net interest income (FTE) $45 $45 $45
Provision for credit losses (3) (9) 7
Noninterest income 59 60 59
Noninterest expenses 74 74 78
Net income 21 26 12
Net loan charge-offs
(recoveries) (1) (5) 5
Selected average balances:
Assets 5,228 5,153 4,998
Loans 5,024 4,954 4,808
Deposits 4,188 4,060 3,924
-------- ----- ----- -----
-- Average loans increased $70 million.
-- Average deposits increased $128 million, primarily reflecting increases
in money market and checking deposits.
-- Net interest income remained stable quarter over quarter. The benefits
from loan and deposit growth and the impact of one additional day in the
quarter were offset by lower yields and a decrease in the FTP crediting
rate.
-- The provision for credit losses increased $6 million, from a negative
provision of $9 million in the second quarter 2015 to a negative
provision of $3 million in the third quarter 2015, primarily reflecting
lower net recoveries in the third quarter 2015.
-- Noninterest income decreased $1 million, primarily due to lower
fiduciary income.
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 September 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) 3rd Qtr '15 2nd Qtr '15 3rd Qtr '14
----------- ----------- ----------- -----------
Michigan $71 31% $98 44% $66 29%
California 62 27 71 31 63 27
Texas 36 16 14 6 42 18
Other
Markets 59 26 43 19 59 26
-------- --- --- --- --- --- ---
228 100% 226 100% 230 100%
Finance &
Other (a) (92) (91) (76)
---------- --- --- ---
Total $136 $135 $154
----- ---- ---- ----
(a) Includes items not directly
associated with the geographic
markets.
-- Average loans increased $360 million in California and decreased $257
million in Texas and $67 million in Michigan (primarily general Middle
Market). The increase in California was led by Technology and Life
Sciences, Entertainment and Private Banking, partially offset by a
decrease in general Middle Market. In Texas, average loans decreased in
almost all lines of business.
-- Average deposits increased $1.1 billion and $240 million in California
and Michigan, respectively, and decreased $206 million in Texas. The
increases in California and Michigan reflected increases in almost all
lines of business, partially offset by decreases in Commercial Real
Estate (in both markets) and Corporate Banking (in Michigan). The
decrease in Texas primarily reflected decreases in general Middle
Market, Technology and Life Sciences, and Energy, partially offset by an
increase in Small Business.
-- Net interest income increased $6 million and $1 million in California
and Michigan, respectively, and decreased $1 million in Texas. The
increase in California primarily reflected the benefit from an increase
in net FTP credits, largely due to the increase in average deposits, and
the impact of one additional day in the quarter.
-- The provision for credit losses decreased $33 million in Texas and
increased $20 million and $19 million in California and Michigan,
respectively. The decrease in Texas primarily reflected a smaller
reserve build for Energy in the third quarter 2015, compared to the
second quarter 2015. In California, the provision increased primarily as
a result of increased reserves for Technology and Life Sciences, while
the increase in Michigan was primarily the result of increased
provisions in general Middle Market, Retail Banking and Corporate
Banking.
-- Noninterest income increased $3 million and $1 million in Texas and
California, respectively, and was unchanged in Michigan. The increase in
Texas was primarily due to increases in customer derivative income,
foreign exchange income and small increases in several categories,
partially offset by a decrease in investment banking income.
-- Noninterest expenses increased $24 million in Michigan, primarily
reflecting the impact of a net release in litigation reserves in the
second quarter 2015, partially offset by small decreases in several
categories, and increased $3 million and $2 million in Texas and
California, respectively.
Michigan Market
(dollar amounts in 3rd Qtr 2nd Qtr 3rd Qtr
millions) '15 '15 '14
------------------ -------- -------- --------
Net interest income (FTE) $180 $179 $179
Provision for credit
losses 6 (13) (8)
Noninterest income 85 85 83
Noninterest expenses 152 128 166
Net income 71 98 66
Net loan charge-offs
(recoveries) 9 (2) 3
Selected average balances:
Assets 13,856 13,852 13,724
Loans 13,223 13,290 13,248
Deposits 21,946 21,706 21,214
-------- ------ ------ ------
California Market
(dollar amounts in 3rd Qtr 2nd Qtr 3rd Qtr
millions) '15 '15 '14
------------------ -------- -------- --------
Net interest income (FTE) $187 $181 $182
Provision for credit
losses 24 4 14
Noninterest income 38 37 37
Noninterest expenses 102 100 102
Net income 62 71 63
Net loan charge-offs 10 6 6
Selected average balances:
Assets 17,060 16,696 15,768
Loans 16,789 16,429 15,509
Deposits 18,372 17,275 16,350
-------- ------ ------ ------
Texas Market
(dollar amounts in 3rd Qtr 2nd Qtr 3rd Qtr
millions) '15 '15 '14
------------------ -------- -------- --------
Net interest income (FTE) $129 $130 $130
Provision for credit
losses 10 43 3
Noninterest income 34 31 36
Noninterest expenses 97 94 96
Net income 36 14 42
Net loan charge-offs 4 5 -
Selected average balances:
Assets 11,578 11,878 11,835
Loans 10,997 11,254 11,147
Deposits 10,753 10,959 10,633
-------- ------ ------ ------
Conference Call and Webcast
Comerica will host a conference call to review third quarter 2015 financial results at 7 a.m. CT Friday, October 16, 2015. Interested parties may access the conference call by calling (877) 523-5249 or (210) 591-1147 (event ID No. 28321461). 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 Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30,
(in millions, except
per share data) 2015 2015 2014 2015 2014
---
PER COMMON SHARE AND
COMMON STOCK DATA
Diluted net income $0.74 $0.73 $0.82 $2.20 $2.35
Cash dividends declared 0.21 0.21 0.20 0.62 0.59
Average diluted shares
(in thousands) 180,714 182,422 185,401 181,807 186,064
---------------------- ------- ------- ------- ------- -------
KEY RATIOS
Return on average
common shareholders'
equity 7.19% 7.21% 8.29% 7.20% 8.08%
Return on average
assets 0.76 0.79 0.93 0.78 0.91
Common equity tier 1
risk-based capital
ratio (a) (b) 10.58 10.40 n/a
Tier 1 common risk-
based capital ratio
(c) n/a n/a 10.59
Tier 1 risk-based
capital ratio (a) (b) 10.58 10.40 10.59
Total risk-based
capital ratio (a) (b) 12.91 12.38 12.83
Leverage ratio (a) (b) 10.29 10.56 10.79
Tangible common equity
ratio (c) 9.91 9.92 9.94
---------------------- ---- ---- ----
AVERAGE BALANCES
Commercial loans $31,900 $31,788 $30,188 $31,596 $29,487
Real estate
construction loans 1,833 1,807 1,973 1,859 1,905
Commercial mortgage
loans 8,691 8,672 8,698 8,648 8,739
Lease financing 788 795 823 793 840
International loans 1,401 1,453 1,417 1,455 1,349
Residential mortgage
loans 1,882 1,877 1,792 1,872 1,763
Consumer loans 2,477 2,441 2,268 2,432 2,244
----- ----- ----- ----- -----
Total loans 48,972 48,833 47,159 48,655 46,327
Earning assets 66,191 63,981 61,672 64,561 60,585
Total assets 71,333 68,963 66,398 69,688 65,335
Noninterest-bearing
deposits 28,623 27,365 25,275 27,569 24,182
Interest-bearing
deposits 30,517 30,033 29,888 30,282 29,599
------ ------ ------ ------ ------
Total deposits 59,140 57,398 55,163 57,851 53,781
Common shareholders'
equity 7,559 7,512 7,411 7,508 7,324
-------------------- ----- ----- ----- ----- -----
NET INTEREST INCOME
(fully taxable
equivalent basis)
Net interest income $423 $422 $415 $1,259 $1,243
Net interest margin 2.54% 2.65% 2.67% 2.61% 2.74%
------------------- ---- ---- ---- ---- ----
CREDIT QUALITY
Total nonperforming
assets $381 $370 $357
Loans past due 90 days
or more and still
accruing 5 18 13
Net loan charge-offs 23 18 3 $49 $24
Allowance for loan
losses 622 618 592
Allowance for credit
losses on lending-
related commitments 48 50 43
--- --- ---
Total allowance for
credit losses 670 668 635
Allowance for loan
losses as a percentage
of total loans 1.27% 1.24% 1.24%
Net loan charge-offs
as a percentage of
average total loans 0.19 0.15 0.03 0.14% 0.07%
Nonperforming assets as
a percentage of total
loans and foreclosed
property 0.78 0.74 0.75
Allowance for loan
losses as a percentage
of total nonperforming
loans 169 171 171
----------------------- --- --- ---
(a) Basel III
rules became
effective on
January 1,
2015, with
transitional
provisions.
All prior
period data
is based on
Basel I
rules.
(b) September 30, 2015 ratios are
estimated.
(c) See Reconciliation of Non-GAAP
Financial Measures.
n/a - not applicable.
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
September 30, June 30, December 31, September 30,
(in millions, except share data) 2015 2015 2014 2014
------------------------------- ---- ---- ---- ----
(unaudited) (unaudited) (unaudited)
ASSETS
Cash and due from banks $1,101 $1,148 $1,026 $1,039
Interest-bearing deposits with banks 6,099 4,817 5,045 6,748
Other short-term investments 107 119 99 112
Investment securities available-for-
sale 8,749 8,267 8,116 9,468
Investment securities held-to-maturity 1,863 1,952 1,935 -
Commercial loans 31,777 32,723 31,520 30,759
Real estate construction loans 1,874 1,795 1,955 1,992
Commercial mortgage loans 8,787 8,674 8,604 8,603
Lease financing 751 786 805 805
International loans 1,382 1,420 1,496 1,429
Residential mortgage loans 1,880 1,865 1,831 1,797
Consumer loans 2,491 2,478 2,382 2,323
-------------- ----- ----- ----- -----
Total loans 48,942 49,741 48,593 47,708
Less allowance for loan losses (622) (618) (594) (592)
------------------------------ ---- ---- ---- ----
Net loans 48,320 49,123 47,999 47,116
Premises and equipment 541 541 532 524
Accrued income and other assets 4,232 3,978 4,434 3,876
------------------------------- ----- ----- ----- -----
Total assets $71,012 $69,945 $69,186 $68,883
------------ ------- ------- ------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits $28,697 $28,167 $27,224 $27,490
Money market and interest-bearing
checking deposits 23,948 23,786 23,954 23,523
Savings deposits 1,853 1,841 1,752 1,753
Customer certificates of deposit 4,126 4,367 4,421 4,698
Foreign office time deposits 144 99 135 117
---------------------------- --- --- --- ---
Total interest-bearing deposits 30,071 30,093 30,262 30,091
------------------------------- ------ ------ ------ ------
Total deposits 58,768 58,260 57,486 57,581
Short-term borrowings 109 56 116 202
Accrued expenses and other liabilities 1,413 1,265 1,507 1,002
Medium- and long-term debt 3,100 2,841 2,675 2,665
-------------------------- ----- ----- ----- -----
Total liabilities 63,390 62,422 61,784 61,450
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 2,165 2,158 2,188 2,183
Accumulated other comprehensive loss (345) (396) (412) (317)
Retained earnings 7,007 6,908 6,744 6,631
Less cost of common stock in treasury
-51,010,418 shares at 9/30/15,
49,803,515 shares at 6/30/15,
49,146,225 shares at 12/31/14, and
47,992,721 shares at 9/30/14 (2,346) (2,288) (2,259) (2,205)
------------------------------------- ------ ------ ------ ------
Total shareholders' equity 7,622 7,523 7,402 7,433
-------------------------- ----- ----- ----- -----
Total liabilities and shareholders'
equity $71,012 $69,945 $69,186 $68,883
----------------------------------- ------- ------- ------- -------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and
Subsidiaries
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
(in millions, except per
share data) 2015 2014 2015 2014
------------------------ ---- ---- ---- ----
INTEREST INCOME
Interest and fees on
loans $390 $381 $1,156 $1,142
Interest on investment
securities 54 52 160 160
Interest on short-term
investments 4 3 11 10
---------------------- --- --- --- ---
Total interest income 448 436 1,327 1,312
INTEREST EXPENSE
Interest on deposits 11 11 33 33
Interest on medium- and
long-term debt 15 11 38 39
----------------------- --- --- --- ---
Total interest expense 26 22 71 72
---------------------- --- --- --- ---
Net interest income 422 414 1,256 1,240
Provision for credit
losses 26 5 87 25
-------------------- --- --- --- ---
Net interest income after
provision for credit
losses 396 409 1,169 1,215
NONINTEREST INCOME
Service charges on
deposit accounts 56 54 167 162
Fiduciary income 47 44 142 133
Commercial lending fees 22 26 69 69
Card fees 75 23 214 68
Letter of credit fees 13 14 39 43
Bank-owned life insurance 10 11 29 31
Foreign exchange income 10 9 29 30
Brokerage fees 5 4 13 13
Net securities losses - (1) (2) -
Other noninterest income 26 31 80 94
------------------------ --- --- --- ---
Total noninterest income 264 215 780 643
NONINTEREST EXPENSES
Salaries and benefits
expense 243 248 747 735
Net occupancy expense 41 46 118 125
Equipment expense 14 14 40 43
Outside processing fee
expense 86 31 249 89
Software expense 26 25 73 72
Litigation-related
expense (3) (2) (32) 4
FDIC insurance expense 9 9 27 25
Advertising expense 6 5 17 16
Gain on debt redemption - (32) - (32)
Other noninterest
expenses 39 53 117 130
----------------- --- --- --- ---
Total noninterest
expenses 461 397 1,356 1,207
----------------- --- --- ----- -----
Income before income
taxes 199 227 593 651
Provision for income
taxes 63 73 188 207
-------------------- --- --- --- ---
NET INCOME 136 154 405 444
Less income allocated to
participating securities 2 2 5 6
------------------------- --- --- --- ---
Net income attributable
to common shares $134 $152 $400 $438
----------------------- ---- ---- ---- ----
Earnings per common
share:
Basic $0.76 $0.85 $2.27 $2.44
Diluted 0.74 0.82 2.20 2.35
Comprehensive income 187 141 472 518
Cash dividends declared
on common stock 37 36 110 107
Cash dividends declared
per common share 0.21 0.20 0.62 0.59
----------------------- ---- ---- ---- ----
CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Third Second First Fourth Third Third Quarter 2015 Compared To:
-------------------------------
Quarter Quarter Quarter Quarter Quarter Second Quarter 2015 Third Quarter 2014
(in millions, except per
share data) 2015 2015 2015 2014 2014 Amount Percent Amount Percent
------------------------ ---- ---- ---- ---- ---- ------ ------- ------ -------
INTEREST INCOME
Interest and fees on
loans $390 $388 $378 $383 $381 $2 - % $9 2%
Interest on investment
securities 54 53 53 51 52 1 2 2 3
Interest on short-term
investments 4 3 4 4 3 1 39 1 38
---------------------- --- --- --- --- --- --- --- --- ---
Total interest income 448 444 435 438 436 4 1 12 3
INTEREST EXPENSE
Interest on deposits 11 11 11 12 11 - - - -
Interest on medium- and
long-term debt 15 12 11 11 11 3 22 4 27
----------------------- --- --- --- --- --- --- --- --- ---
Total interest expense 26 23 22 23 22 3 12 4 12
---------------------- --- --- --- --- --- --- --- --- ---
Net interest income 422 421 413 415 414 $1 - $8 2
Provision for credit
losses 26 47 14 2 5 (21) (44) 21 n/m
-------------------- --- --- --- --- --- --- --- --- ---
Net interest income after
provision 396 374 399 413 409 22 6 (13) (3)
for credit losses
NONINTEREST INCOME
Service charges on
deposit accounts 56 56 55 53 54 - - 2 4
Fiduciary income 47 48 47 47 44 (1) (3) 3 5
Commercial lending fees 22 22 25 29 26 - - (4) (13)
Card fees 75 72 67 24 23 3 4 52 n/m
Letter of credit fees 13 13 13 14 14 - - (1) (8)
Bank-owned life insurance 10 10 9 8 11 - - (1) -
Foreign exchange income 10 9 10 10 9 1 10 1 8
Brokerage fees 5 4 4 4 4 1 6 1 20
Net securities losses - - (2) - (1) - - 1 n/m
Other noninterest income 26 27 27 36 31 (1) - (5) (17)
------------------------ --- --- --- --- --- --- --- --- ---
Total noninterest income 264 261 255 225 215 3 1 49 23
NONINTEREST EXPENSES
Salaries and benefits
expense 243 251 253 245 248 (8) (3) (5) (2)
Net occupancy expense 41 39 38 46 46 2 5 (5) (11)
Equipment expense 14 13 13 14 14 1 4 - -
Outside processing fee
expense 86 86 77 33 31 - - 55 n/m
Software expense 26 24 23 23 25 2 8 1 4
Litigation-related
expense (3) (30) 1 - (2) 27 88 (1) n/m
FDIC insurance expense 9 9 9 8 9 - - - -
Advertising expense 6 5 6 7 5 1 10 1 8
Gain on debt redemption - - - - (32) - - 32 n/m
Other noninterest
expenses 39 39 39 43 53 - - (14) (25)
----------------- --- --- --- --- --- --- --- --- ---
Total noninterest
expenses 461 436 459 419 397 25 6 64 16
----------------- --- --- --- --- --- --- --- --- ---
Income before income
taxes 199 199 195 219 227 - - (28) (12)
Provision for income
taxes 63 64 61 70 73 (1) (2) (10) (14)
-------------------- --- --- --- --- --- --- --- --- ---
NET INCOME 136 135 134 149 154 1 - (18) (12)
Less income allocated to
participating securities 2 1 2 1 2 1 - - -
------------------------- --- --- --- --- --- --- --- --- ---
Net income attributable
to common shares $134 $134 $132 $148 $152 $ - - % $(18) (11)%
----------------------- ---- ---- ---- ---- ---- --- --- --- --- ---- ----
Earnings per common
share:
Basic $0.76 $0.76 $0.75 $0.83 $0.85 $ - - % $(0.09) (11)%
Diluted 0.74 0.73 0.73 0.80 0.82 0.01 1 (0.08) (10)
Comprehensive income 187 109 176 54 141 78 72 46 33
Cash dividends declared
on common stock 37 37 36 36 36 - - 1 3
Cash dividends declared
per common share 0.21 0.21 0.20 0.20 0.20 - - 0.01 5
----------------------- ---- ---- ---- ---- ---- --- --- ---- ---
n/m - not meaningful
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)
Comerica Incorporated and
Subsidiaries
2015 2014
---- ----
(in millions) 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr
------------ ------- ------- ------- ------- -------
Balance at beginning of
period $618 $601 $594 $592 $591
Loan charge-offs:
Commercial 30 17 19 8 13
Commercial mortgage - 2 - 2 7
Lease financing - 1 - - -
International 1 11 2 6 -
Residential mortgage - 1 - 1 1
Consumer 3 3 2 3 3
-------- --- --- --- --- ---
Total loan charge-offs 34 35 23 20 24
Recoveries on loans
previously charged-off:
Commercial 8 10 9 6 6
Real estate construction - 1 - 2 1
Commercial mortgage 2 5 3 10 12
Residential mortgage - - 1 - 1
Consumer 1 1 2 1 1
-------- --- --- --- --- ---
Total recoveries 11 17 15 19 21
---------------- --- --- --- --- ---
Net loan charge-offs 23 18 8 1 3
Provision for loan losses 28 35 16 4 4
Foreign currency
translation adjustment (1) - (1) (1) -
----------------------- --- --- --- --- ---
Balance at end of period $622 $618 $601 $594 $592
------------------------ ---- ---- ---- ---- ----
Allowance for loan losses
as a percentage of total
loans 1.27% 1.24% 1.22% 1.22% 1.24%
Net loan charge-offs as
a percentage of average
total loans 0.19 0.15 0.07 0.01 0.03
------------------------ ---- ---- ---- ---- ----
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited)
Comerica
Incorporated and
Subsidiaries
2015 2014
---- ----
(in millions) 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr
------------ ------- ------- ------- ------- -------
Balance at beginning
of period $50 $39 $41 $43 $42
Less: Charge-offs
on lending-related
commitments (a) - 1 - - -
Add: Provision for
credit losses on
lending-related
commitments (2) 12 (2) (2) 1
------------------ --- --- --- --- ---
Balance at end of
period $48 $50 $39 $41 $43
----------------- --- --- --- --- ---
Unfunded lending-
related commitments
sold $ - $12 $1 $ - $9
-------------------- --- --- --- --- --- --- ---
(a) Charge-offs result from the sale of
unfunded lending-related
commitments.
NONPERFORMING ASSETS (unaudited)
Comerica Incorporated and Subsidiaries
2015 2014
---- ----
(in millions) 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr
------------ ------- ------- ------- ------- -------
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS
Nonaccrual loans:
Business loans:
Commercial $214 $186 $113 $109 $93
Real estate construction 1 1 1 2 18
Commercial mortgage 66 77 82 95 144
Lease financing 8 11 - - -
International 8 9 1 - -
Total nonaccrual business
loans 297 284 197 206 255
Retail loans:
Residential mortgage 31 35 37 36 42
Consumer:
Home equity 28 29 31 30 31
Other consumer 1 1 1 1 1
-------------- --- --- --- --- ---
Total consumer 29 30 32 31 32
-------------- --- --- --- --- ---
Total nonaccrual retail loans 60 65 69 67 74
----------------------------- --- --- --- --- ---
Total nonaccrual loans 357 349 266 273 329
Reduced-rate loans 12 12 13 17 17
------------------ --- --- --- --- ---
Total nonperforming loans (a) 369 361 279 290 346
Foreclosed property 12 9 9 10 11
------------------- --- --- --- --- ---
Total nonperforming assets (a) $381 $370 $288 $300 $357
----------------------------- ---- ---- ---- ---- ----
Nonperforming loans as a
percentage of total loans 0.75% 0.72% 0.57% 0.60% 0.73%
Nonperforming assets as a
percentage of total loans 0.78 0.74 0.59 0.62 0.75
and foreclosed property
Allowance for loan losses as a
percentage of total 169 171 216 205 171
nonperforming loans
Loans past due 90 days or more
and still accruing $5 $18 $12 $5 $13
------------------------------ --- --- --- --- ---
ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans at beginning
of period $349 $266 $273 $329 $326
Loans transferred to
nonaccrual (b) 69 145 39 41 54
Nonaccrual business loan gross
charge-offs (c) (31) (31) (21) (16) (20)
Loans transferred to accrual
status (b) - - (4) (18) -
Nonaccrual business loans sold
(d) - (1) (2) (24) (3)
Payments/Other (e) (30) (30) (19) (39) (28)
------------------ --- --- --- --- ---
Nonaccrual loans at end of
period $357 $349 $266 $273 $329
-------------------------- ---- ---- ---- ---- ----
(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 $31 $21 $16 $20
Consumer and residential
mortgage loans 3 4 2 4 4
--- --- --- --- ---
Total gross loan charge-offs $34 $35 $23 $20 $24
--- --- --- --- ---
(d) Analysis of loans sold:
Nonaccrual business loans $ - $1 $2 $24 $3
Performing criticized loans - - 7 5 -
--- --- --- --- ---
Total criticized loans sold $ - $1 $9 $29 $3
--- --- --- --- --- ---
(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
Nine Months Ended
-----------------
September 30, 2015 September 30, 2014
------------------ ------------------
Average Average Average Average
(dollar amounts in
millions) Balance Interest Rate Balance Interest Rate
------------------ ------- -------- ---- ------- -------- ----
Commercial loans $31,596 $721 3.05% $29,487 $689 3.12%
Real estate construction
loans 1,859 48 3.44 1,905 49 3.42
Commercial mortgage loans 8,648 220 3.40 8,739 246 3.77
Lease financing 793 19 3.13 840 20 3.23
International loans 1,455 39 3.63 1,349 37 3.64
Residential mortgage
loans 1,872 53 3.78 1,763 50 3.81
Consumer loans 2,432 59 3.23 2,244 54 3.21
-------------- ----- --- ---- ----- --- ----
Total loans (a) 48,655 1,159 3.19 46,327 1,145 3.30
Mortgage-backed
securities (b) 9,076 151 2.23 8,976 159 2.36
Other investment
securities 950 9 1.18 369 1 0.44
---------------- --- --- ---- --- --- ----
Total investment
securities (b) 10,026 160 2.13 9,345 160 2.28
Interest-bearing
deposits with banks 5,774 11 0.25 4,803 10 0.25
Other short-term
investments 106 - 0.78 110 - 0.60
---------------- --- --- ---- --- --- ----
Total earning assets 64,561 1,330 2.76 60,585 1,315 2.90
Cash and due from banks 1,054 932
Allowance for loan losses (614) (602)
Accrued income and other
assets 4,687 4,420
----- -----
Total assets $69,688 $65,335
------- -------
Money market and
interest-bearing
checking deposits $23,973 20 0.11 $22,571 18 0.11
Savings deposits 1,827 - 0.02 1,734 - 0.03
Customer certificates of
deposit 4,359 12 0.37 4,990 13 0.36
Foreign office time
deposits 123 1 1.13 304 2 0.68
------------------- --- --- ---- --- --- ----
Total interest-bearing
deposits 30,282 33 0.14 29,599 33 0.15
Short-term borrowings 93 - 0.05 209 - 0.03
Medium- and long-term
debt 2,843 38 1.80 3,061 39 1.67
--------------------- ----- --- ---- ----- --- ----
Total interest-bearing
sources 33,218 71 0.28 32,869 72 0.29
Noninterest-bearing
deposits 27,569 24,182
Accrued expenses and
other liabilities 1,393 960
Total shareholders'
equity 7,508 7,324
----- -----
Total liabilities and
shareholders' equity $69,688 $65,335
------- -------
Net interest income/rate
spread (FTE) $1,259 2.48 $1,243 2.61
------ ------
FTE adjustment $3 $3
Impact of net
noninterest-bearing
sources of funds 0.13 0.13
-------------------- ---- ----
Net interest margin (as a
percentage of average
earning assets) (FTE)
(a) 2.61% 2.74%
------------------------- ---- ----
(a) Accretion of the purchase
discount on the acquired loan
portfolio of $6 million and $25
million in the nine months
ended September 30, 2015 and
2014, respectively, increased
the net interest margin by 1
basis point and 6 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
------------------
September 30, 2015 June 30, 2015 September 30, 2014
------------------ ------------- ------------------
Average Average Average Average Average Average
(dollar amounts in
millions) Balance Interest Rate Balance Interest Rate Balance Interest Rate
------------------ ------- -------- ---- ------- -------- ---- ------- -------- ----
Commercial loans $31,900 $244 3.04% $31,788 $243 3.07% $30,188 $236 3.11%
Real estate construction
loans 1,833 16 3.47 1,807 16 3.51 1,973 17 3.41
Commercial mortgage loans 8,691 74 3.39 8,672 73 3.38 8,698 76 3.45
Lease financing 788 6 3.16 795 6 3.19 823 4 2.33
International loans 1,401 13 3.51 1,453 13 3.68 1,417 13 3.59
Residential mortgage
loans 1,882 18 3.79 1,877 18 3.78 1,792 17 3.76
Consumer loans 2,477 20 3.21 2,441 20 3.25 2,268 19 3.24
-------------- ----- --- ---- ----- --- ---- ----- --- ----
Total loans (a) 48,972 391 3.17 48,833 389 3.20 47,159 382 3.22
Mortgage-backed
securities (b) 9,099 50 2.21 9,057 50 2.23 9,020 52 2.29
Other investment
securities 1,133 4 1.26 879 3 1.16 368 - 0.43
---------------- ----- --- ---- --- --- ---- --- --- ----
Total investment
securities (b) 10,232 54 2.11 9,936 53 2.13 9,388 52 2.22
Interest-bearing
deposits with banks 6,869 4 0.25 5,110 3 0.25 5,015 3 0.25
Other short-term
investments 118 - 0.82 102 - 0.42 110 - 0.54
---------------- --- --- ---- --- --- ---- --- --- ----
Total earning assets 66,191 449 2.70 63,981 445 2.79 61,672 437 2.82
Cash and due from banks 1,095 1,041 963
Allowance for loan losses (628) (613) (601)
Accrued income and other
assets 4,675 4,554 4,364
----- ----- -----
Total assets $71,333 $68,963 $66,398
------- ------- -------
Money market and
interest-bearing
checking deposits $24,298 7 0.11 $23,659 6 0.11 $23,146 6 0.11
Savings deposits 1,860 - 0.02 1,834 - 0.02 1,759 - 0.03
Customer certificates of
deposit 4,232 4 0.37 4,422 4 0.37 4,824 4 0.36
Foreign office time
deposits 127 - 0.70 118 1 1.26 159 1 1.43
------------------- --- --- ---- --- --- ---- --- --- ----
Total interest-bearing
deposits 30,517 11 0.14 30,033 11 0.14 29,888 11 0.15
Short-term borrowings 91 - 0.04 78 - 0.04 231 - 0.03
Medium- and long-term
debt 3,175 15 1.85 2,661 12 1.83 2,649 11 1.75
--------------------- ----- --- ---- ----- --- ---- ----- --- ----
Total interest-bearing
sources 33,783 26 0.30 32,772 23 0.28 32,768 22 0.28
Noninterest-bearing
deposits 28,623 27,365 25,275
Accrued expenses and
other liabilities 1,368 1,314 944
Total shareholders'
equity 7,559 7,512 7,411
----- ----- -----
Total liabilities and
shareholders' equity $71,333 $68,963 $66,398
------- ------- -------
Net interest income/rate
spread (FTE) $423 2.40 $422 2.51 $415 2.54
---- ---- ----
FTE adjustment $1 $1 $1
Impact of net
noninterest-bearing
sources of funds 0.14 0.14 0.13
-------------------- ---- ---- ----
Net interest margin (as a
percentage of average
earning assets) (FTE)
(a) 2.54% 2.65% 2.67%
------------------------- ---- ---- ----
(a) Accretion of the purchase
discount on the acquired loan
portfolio of $2 million, $2
million and $3 million in the
third quarter 2015, the second
quarter 2015 and the third
quarter 2014, respectively,
increased the net interest
margin by 1 basis point, 1
basis point and 2 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
September 30, June 30, March 31, December 31, September 30,
(in millions, except per
share data) 2015 2015 2015 2014 2014
------------------------ ---- ---- ---- ---- ----
Commercial loans:
Floor plan $3,538 $3,840 $3,544 $3,790 $3,183
Other 28,239 28,883 28,547 27,730 27,576
----- ------ ------ ------ ------ ------
Total commercial loans 31,777 32,723 32,091 31,520 30,759
Real estate construction
loans 1,874 1,795 1,917 1,955 1,992
Commercial mortgage loans 8,787 8,674 8,558 8,604 8,603
Lease financing 751 786 792 805 805
International loans 1,382 1,420 1,433 1,496 1,429
Residential mortgage loans 1,880 1,865 1,859 1,831 1,797
Consumer loans:
Home equity 1,714 1,682 1,678 1,658 1,634
Other consumer 777 796 744 724 689
-------------- --- --- --- --- ---
Total consumer loans 2,491 2,478 2,422 2,382 2,323
-------------------- ----- ----- ----- ----- -----
Total loans $48,942 $49,741 $49,072 $48,593 $47,708
----------- ------- ------- ------- ------- -------
Goodwill $635 $635 $635 $635 $635
Core deposit intangible 10 11 12 13 14
Other intangibles 4 4 3 2 1
Common equity tier 1
capital (a) (b) 7,327 7,280 7,230 n/a n/a
Tier 1 common capital (c) n/a n/a n/a 7,169 7,105
Risk-weighted assets (a)
(b) 69,232 69,967 69,514 68,273 67,106
Common equity tier 1 risk-
based capital ratio (a)
(b) 10.58% 10.40% 10.40% n/a n/a
Tier 1 common risk-based
capital ratio (c) n/a n/a n/a 10.50% 10.59%
Tier 1 risk-based capital
ratio (a) (b) 10.58 10.40 10.40 10.50 10.59
Total risk-based capital
ratio (a) (b) 12.91 12.38 12.35 12.51 12.83
Leverage ratio (a) (b) 10.29 10.56 10.53 10.35 10.79
Tangible common equity
ratio (c) 9.91 9.92 9.97 9.85 9.94
Common shareholders' equity
per share of common stock $43.02 $42.18 $42.12 $41.35 $41.26
Tangible common equity per
share of common stock (c) 39.36 38.53 38.47 37.72 37.65
Market value per share for
the quarter:
High 52.93 53.45 47.94 50.14 52.72
Low 40.01 44.38 40.09 42.73 48.33
Close 41.10 51.32 45.13 46.84 49.86
Quarterly ratios:
Return on average common
shareholders' equity 7.19% 7.21% 7.20% 7.96% 8.29%
Return on average assets 0.76 0.79 0.78 0.86 0.93
Efficiency ratio (d) 67.08 63.68 68.50 65.26 62.87
Number of banking centers 477 477 482 481 481
Number of employees -full
time equivalent 8,941 8,901 8,831 8,876 8,913
------------------------- ----- ----- ----- ----- -----
(a) Basel III
rules became
effective
January 1,
2015, with
transitional
provisions.
All prior
period data
is based on
Basel I
rules.
(b) September 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
September 30, December 31, September 30,
(in millions, except share
data) 2015 2014 2014
-------------------------- ---- ---- ----
ASSETS
Cash and due from subsidiary
bank $5 $ - $5
Short-term investments with
subsidiary bank 563 1,133 1,136
Other short-term investments 89 94 97
Investment in subsidiaries,
principally banks 7,596 7,411 7,433
Premises and equipment 2 2 2
Other assets 138 138 130
------------ --- --- ---
Total assets $8,393 $8,778 $8,803
------------ ------ ------ ------
LIABILITIES AND
SHAREHOLDERS' EQUITY
Medium- and long-term debt $618 $1,208 $1,198
Other liabilities 153 168 172
----------------- --- --- ---
Total liabilities 771 1,376 1,370
Common stock - $5 par value:
Authorized -325,000,000
shares
Issued - 228,164,824 shares 1,141 1,141 1,141
Capital surplus 2,165 2,188 2,183
Accumulated other
comprehensive loss (345) (412) (317)
Retained earnings 7,007 6,744 6,631
Less cost of common stock in
treasury -51,010,418
shares at 9/30/15,
49,146,225 shares at
12/31/14 and 47,992,721
shares at 9/30/14 (2,346) (2,259) (2,205)
---------------------------- ------ ------ ------
Total shareholders' equity 7,622 7,402 7,433
-------------------------- ----- ----- -----
Total liabilities and
shareholders' equity $8,393 $8,778 $8,803
--------------------- ------ ------ ------
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 - - - - 444 - 444
Other comprehensive
income, net of tax - - - 74 - - 74
Cash dividends declared
on common stock ($0.59
per share) - - - - (107) - (107)
Purchase of common
stock (4.1) - - - - (200) (200)
Net issuance of common
stock under employee
stock plans 2.0 - (26) - (24) 91 41
Share-based
compensation - - 31 - - - 31
Other - - (1) - - 1 -
BALANCE AT SEPTEMBER
30, 2014 180.2 $1,141 $2,183 $(317) $6,631 $(2,205) $7,433
-------------------- ----- ------ ------ ----- ------ ------- ------
BALANCE AT DECEMBER 31,
2014 179.0 $1,141 $2,188 $(412) $6,744 $(2,259) $7,402
Net income - - - - 405 - 405
Other comprehensive
income, net of tax - - - 67 - - 67
Cash dividends declared
on common stock ($0.62
per share) - - - - (110) - (110)
Purchase of common
stock (3.8) - - - - (175) (175)
Purchase and retirement
of warrants - - (10) - - - (10)
Net issuance of common
stock under employee
stock plans 1.0 - (21) - (10) 45 14
Net issuance of common
stock for warrants 1.0 - (21) - (22) 43 -
Share-based
compensation - - 29 - - - 29
BALANCE AT SEPTEMBER
30, 2015 177.2 $1,141 $2,165 $(345) $7,007 $(2,346) $7,622
-------------------- ----- ------ ------ ----- ------ ------- ------
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)
Comerica
Incorporated and
Subsidiaries
(dollar amounts in
millions) Business Retail Wealth
Three Months Ended
September 30, 2015 Bank Bank Management Finance Other Total
------------------- ---- ---- ---------- ------- ----- -----
Earnings summary:
Net interest income
(expense) (FTE) $380 $158 $45 $(162) $2 $423
Provision for
credit losses 30 2 (3) - (3) 26
Noninterest income 145 49 59 15 (4) 264
Noninterest
expenses 202 185 74 2 (2) 461
Provision (benefit)
for income taxes
(FTE) 99 7 12 (56) 2 64
--- --- --- --- ---
Net income (loss) $194 $13 $21 $(93) $1 $136
---- --- --- ---- --- ----
Net loan charge-
offs (recoveries) $23 $1 $(1) $ - $ - $23
Selected average
balances:
Assets $39,210 $6,518 $5,228 $12,177 $8,200 $71,333
Loans 38,113 5,835 5,024 - - 48,972
Deposits 31,397 23,079 4,188 212 264 59,140
Statistical data:
Return on average
assets (a) 1.98% 0.23% 1.62% N/M N/M 0.76%
Efficiency ratio
(b) 38.41 89.33 71.11 N/M N/M 67.08
----- ----- ----- --- --- -----
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
September 30, 2014 Bank Bank Management Finance Other Total
------------------- ---- ---- ---------- ------- ----- -----
Earnings summary:
Net interest income
(expense) (FTE) $376 $153 $45 $(166) 7 $415
Provision for
credit losses (4) - 7 - 2 5
Noninterest income 97 42 59 15 2 215
Noninterest
expenses 152 185 78 (29) 11 397
Provision (benefit)
for income taxes
(FTE) 114 3 7 (49) (1) 74
--- --- --- --- --- ---
Net income (loss) $211 $7 $12 $(73) $(3) $154
---- --- --- ---- --- ----
Net loan charge-
offs (recoveries) $(2) $ - $5 $ - $ - $3
Selected average
balances:
Assets $37,751 $6,273 $4,998 $11,023 $6,353 $66,398
Loans 36,746 5,605 4,808 - - 47,159
Deposits 28,815 22,042 3,924 128 254 55,163
Statistical data:
Return on average
assets (a) 2.24% 0.12% 0.98% N/M N/M 0.93%
Efficiency ratio
(b) 32.12 94.64 75.00 N/M N/M 62.87
---------------- ----- ----- ----- --- --- -----
(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 September
30, 2015 Michigan California Texas Markets & Other Total
---------------- -------- ---------- ----- ------- ------- -----
Earnings
summary:
Net interest
income
(expense) (FTE) $180 $187 $129 $87 $(160) $423
Provision for
credit losses 6 24 10 (11) (3) 26
Noninterest
income 85 38 34 96 11 264
Noninterest
expenses 152 102 97 110 - 461
Provision
(benefit) for
income taxes
(FTE) 36 37 20 25 (54) 64
--- --- --- --- --- ---
Net income
(loss) $71 $62 $36 $59 $(92) $136
--- --- --- --- ---- ----
Net loan charge-
offs $9 $10 $4 $ - $ - $23
Selected average
balances:
Assets $13,856 $17,060 $11,578 $8,462 $20,377 $71,333
Loans 13,223 16,789 10,997 7,963 - 48,972
Deposits 21,946 18,372 10,753 7,593 476 59,140
Statistical
data:
Return on
average assets
(a) 1.23% 1.27% 1.16% 2.82% N/M 0.76%
Efficiency ratio
(b) 57.49 45.28 59.54 59.86 N/M 67.08
---------------- ----- ----- ----- ----- --- -----
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 September
30, 2014 Michigan California Texas Markets & Other Total
---------------- -------- ---------- ----- ------- ------- -----
Earnings
summary:
Net interest
income
(expense) (FTE) $179 $182 $130 $83 $(159) $415
Provision for
credit losses (8) 14 3 (6) 2 5
Noninterest
income 83 37 36 42 17 215
Noninterest
expenses 166 102 96 51 (18) 397
Provision
(benefit) for
income taxes
(FTE) 38 40 25 21 (50) 74
--- --- --- --- --- ---
Net income
(loss) $66 $63 $42 $59 $(76) $154
--- --- --- --- ---- ----
Net loan charge-
offs
(recoveries) $3 $6 $ - $(6) $ - $3
Selected average
balances:
Assets $13,724 $15,768 $11,835 $7,695 $17,376 $66,398
Loans 13,248 15,509 11,147 7,255 - 47,159
Deposits 21,214 16,350 10,633 6,584 382 55,163
Statistical
data:
Return on
average assets
(a) 1.19% 1.47% 1.40% 3.07% N/M 0.93%
Efficiency ratio
(b) 62.91 46.49 57.91 41.46 N/M 62.87
---------------- ----- ----- ----- ----- --- -----
(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
September 30, June 30, March 31, December 31, September 30,
(dollar amounts in
millions) 2015 2015 2015 2014 2014
------------------ ---- ---- ---- ---- ----
Tier 1 Common
Capital Ratio:
Tier 1 and Tier 1
common capital (a) n/a n/a n/a $7,169 $7,105
Risk-weighted
assets (a) n/a n/a n/a 68,269 67,102
------------- --- --- --- ------ ------
Tier 1 and Tier 1
common risk-based
capital ratio n/a n/a n/a 10.50% 10.59%
------------------ --- --- --- ----- -----
Tangible Common
Equity Ratio:
Common shareholders'
equity $7,622 $7,523 $7,500 $7,402 $7,433
Less:
Goodwill 635 635 635 635 635
Other intangible
assets 14 15 15 15 15
--- --- --- --- ---
Tangible common
equity $6,973 $6,873 $6,850 $6,752 $6,783
--------------- ------ ------ ------ ------ ------
Total assets $71,012 $69,945 $69,333 $69,186 $68,883
Less:
Goodwill 635 635 635 635 635
Other intangible
assets 14 15 15 15 15
--- --- --- --- ---
Tangible assets $70,363 $69,295 $68,683 $68,536 $68,233
--------------- ------- ------- ------- ------- -------
Common equity ratio 10.73% 10.76% 10.82% 10.70% 10.79%
Tangible common
equity ratio 9.91 9.92 9.97 9.85 9.94
--------------- ---- ---- ---- ---- ----
Tangible Common
Equity per Share of
Common Stock:
Common shareholders'
equity $7,622 $7,523 $7,500 $7,402 $7,433
Tangible common
equity 6,973 6,873 6,850 6,752 6,783
--------------- ----- ----- ----- ----- -----
Shares of common
stock outstanding
(in millions) 177 178 178 179 180
------------------ --- --- --- --- ---
Common shareholders'
equity per share of
common stock $43.02 $42.18 $42.12 $41.35 $41.26
Tangible common
equity per share of
common stock 39.36 38.53 38.47 37.72 37.65
-------------------- ----- ----- ----- ----- -----
(a) Tier 1 capital and risk-
weighted assets as
defined by Basel I risk-
based capital 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
