COMERICA INCORPORATED DALLAS, July 15, 2014 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported second quarter 2014 net income of $151 million, compared to $139 million for the first quarter 2014 and $143 million for the second quarter 2013. Earnings per diluted share were 80 cents for the second quarter 2014, compared to 73 cents for the first quarter 2014 and 76 cents for the second quarter 2013.
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(dollar
amounts
in
millions,
except
per
share
data) 2nd Qtr '14 1st Qtr '14 2nd Qtr '13
--------- ----------- ----------- -----------
Net
interest
income
(a) $416 $410 $414
Provision
for
credit
losses 11 9 13
Noninterest
income 220 208 222
Noninterest
expenses 404 406 416
Provision
for
income
taxes 70 64 64
Net
income 151 139 143
Net
income
attributable
to
common
shares 149 137 141
Diluted
income
per
common
share 0.80 0.73 0.76
Average
diluted
shares
(in
millions) 186 187 187
Tier
1
common
capital
ratio
(c) 10.49% (b) 10.58% 10.43%
Basel
III
common
equity
Tier
1
capital
ratio
(c)
(d) 10.2 10.3 10.1
Tangible
common
equity
ratio
(c) 10.39 10.20 10.04
-------- ----- ----- -----
(a) Included
accretion of
the purchase
discount on
the acquired
loan portfolio
of $10
million, $12
million and $7
million in the
second quarter
2014, first
quarter 2014
and second
quarter 2013,
respectively.
(b) June 30, 2014 ratio is estimated.
(c) See Reconciliation of Non-GAAP
Financial Measures.
Estimated ratios based on the
standardized approach in the final
rule, as fully phased-in, and
excluding most elements of accumulated
(d) other comprehensive income (AOCI).
"We recorded a 10 percent increase in earnings per share compared to the first quarter, a solid performance given this competitive and persistently low-rate environment," said Ralph W. Babb Jr., chairman and chief executive officer. "We continue to be focused on growing the bottom line by carefully managing the things we can control, such as expanding customer relationships, maintaining expense discipline as well as credit quality, all the while taking a prudent, conservative approach to capital.
"With higher customer-driven fee income and broad-based loan growth, revenue increased more than 3 percent from the first quarter. Average loans were up $1.7 billion, or 4 percent, compared to the first quarter, and period-end loans were up $1.4 billion, or 3 percent, with notable growth in virtually every business line. Average deposits were up $614 million to $53.4 billion. Credit quality continued to be strong, noninterest expenses decreased slightly, and our solid capital position continues to support our growth.
"We attribute these results to continued improvements in the economy, reflected particularly in the loan growth in Texas and California, as well as our expertise in faster growing business lines and consistent focus on relationships. Looking ahead, macro-economic conditions appear to be favorable. The market is competitive, however, we are confident in our ability to add new customer relationships and expand existing ones while maintaining our credit pricing and structure discipline."
Second Quarter 2014 Compared to First Quarter 2014
-- Average total loans increased $1.7 billion, or 4 percent, to $46.7
billion, primarily reflecting an increase of $1.5 billion, or 5 percent
in commercial loans. The increase in commercial loans was reflected in
almost every line of business, led by increases in Mortgage Banker
Finance ($433 million), National Dealer Services ($290 million), Energy
($229 million), and Technology and Life Sciences ($200 million).
Period-end total loans increased $1.4 billion, or 3 percent, to $47.9
billion, primarily reflecting a $1.2 billion, or 4 percent, increase in
commercial loans.
-- Average total deposits increased $614 million, or 1 percent, to $53.4
billion, reflecting an increase in noninterest-bearing deposits of $775
million, partially offset by a decrease in total interest-bearing
deposits of $161 million. Period-end deposits increased $420 million, to
$54.2 billion.
-- Net interest income increased $6 million, or 2 percent, to $416 million
in the second quarter 2014, compared to $410 million in the first
quarter 2014, primarily due to an increase in loan volumes, partially
offset by a decrease in yields.
-- The provision for credit losses increased $2 million to $11 million in
the second quarter 2014, primarily reflecting increases in both loan
volume and commitments. Net charge-offs were $9 million, or 0.08 percent
of average loans, in the second quarter 2014.
-- Noninterest income increased $12 million to $220 million in the second
quarter 2014, primarily as a result of increases in several
customer-driven fee categories.
-- Noninterest expenses decreased $2 million to $404 million in the second
quarter 2014, primarily reflecting a $7 million decrease in salaries and
benefits expense, partially offset by increases in software expense,
operational losses and outside processing fees.
-- Capital remained solid at June 30, 2014, as evidenced by an estimated
Tier 1 common capital ratio of 10.49 percent and a tangible common
equity ratio of 10.39 percent.
-- Comerica repurchased approximately 1.2 million shares of common stock
during second quarter 2014 under the repurchase program. Together with
dividends of $0.20 per share, $95 million was returned to shareholders.
Second Quarter 2014 Compared to Second Quarter 2013
-- Average total loans increased $1.8 billion, or 4 percent, primarily
reflecting an increase of $1.5 billion, or 5 percent, in commercial
loans. The increase in total loans was driven by increases in almost all
lines of business, partially offset by a decrease in Mortgage Banker
Finance ($496 million).
-- Average total deposits increased $1.9 billion, or 4 percent, driven by
an increase in noninterest-bearing deposits of $1.9 billion, or 9
percent.
-- Net income increased $8 million, or 5 percent, primarily reflecting a
reduction in pension expense, largely due to changes in actuarial
assumptions. Total revenue was stable despite the impact of the
prolonged low-rate environment, and expenses were controlled.
Net Interest Income
(dollar amounts
in millions) 2nd Qtr '14 1st Qtr '14 2nd Qtr '13
--------------- ----------- ----------- -----------
Net interest
income $416 $410 $414
Net interest
margin 2.78% 2.77% 2.83%
Selected average
balances:
Total earning
assets $60,148 $59,916 $58,928
Total loans 46,725 45,075 44,893
Total investment
securities 9,364 9,282 9,793
Federal Reserve
Bank deposits
(excess
liquidity) 3,801 5,311 3,968
Total deposits 53,384 52,770 51,448
Total
noninterest-
bearing deposits 24,011 23,236 22,076
----------------- ------ ------ ------
-- Net interest income increased $6 million to $416 million in the second
quarter 2014, compared to the first quarter 2014.
-- Interest on loans increased $9 million, primarily reflecting the
benefit from an increase in loan balances ($12 million) and one
additional day in the quarter ($4 million), partially offset by
decreases in interest collected on nonaccrual loans from an elevated
first quarter 2014 amount ($2 million) and accretion of the purchase
discount on the acquired loan portfolio ($2 million), as well as
lower loan yields ($3 million).
-- Interest on investment securities decreased $2 million, primarily
reflecting a decrease in the retrospective adjustment to premium
amortization on mortgage-backed investment securities due to the
slowing of expected future prepayments, compared to the first
quarter 2014.
-- Income from short-term investments declined $1 million, largely as a
result of a decrease in excess liquidity.
-- The net interest margin of 2.78 percent increased 1 basis point compared
to the first quarter 2014. The increase in net interest margin was
primarily due to the impact of a decrease in excess liquidity (+6 basis
points), partially offset by decreases in interest collected on
nonaccrual loans (-1 basis points) and the accretion of the purchase
discount on the acquired loan portfolio (-1 basis point), as well as
lower loan yields (-2 basis points) and lower yields on mortgage-backed
investment securities (-1 basis point).
-- Average earning assets increased $232 million, to $60.1 billion in the
second quarter 2014, compared to the first quarter 2014, primarily
reflecting an increase of $1.7 billion in average loans, largely offset
by a decrease of $1.5 billion in excess liquidity.
Noninterest Income
Noninterest income increased $12 million to $220 million for the second quarter 2014, compared to $208 million for the first quarter 2014, largely due to an increase in customer-driven fees. The $9 million increase in customer-driven fee income was primarily due to increases of $3 million each in commercial lending fees and foreign exchange income, as well as smaller increases in several other customer-driven fee categories. Noncustomer-driven income increased $3 million, primarily due to increases in income from warrants and bank-owned life insurance.
Noninterest Expenses
Noninterest expenses decreased $2 million to $404 million for the second quarter 2014, compared to $406 million for the first quarter 2014, primarily reflecting a $7 million decrease in salaries and benefits expense as well as smaller decreases in several other noninterest expense categories, partially offset by increases of $3 million each in software expense and operational losses, and $2 million in outside processing fees. The $7 million decrease in salaries and benefits expense primarily reflected seasonal decreases in payroll taxes and share-based compensation expense, partially offset by the full quarter impact of merit increases and one more day in the second quarter.
Credit Quality
--------------
(dollar amounts in millions) 2nd Qtr '14 1st Qtr '14 2nd Qtr '13
--------------------------- ----------- ----------- -----------
Net credit-related charge-offs $9 $12 $17
Net credit-related charge-offs/
Average total loans 0.08% 0.10% 0.15%
Provision for credit losses $11 $9 $13
Nonperforming loans (a) 347 338 471
Nonperforming assets (NPAs) (a) 360 352 500
NPAs/Total loans and foreclosed
property 0.75% 0.76% 1.10%
Loans past due 90 days or more and
still accruing $7 $10 $20
Allowance for loan losses 591 594 613
Allowance for credit losses on
lending-related commitments (b) 42 37 36
--- --- ---
Total allowance for credit losses 633 631 649
Allowance for loan losses/Period-
end total loans 1.23% 1.28% 1.35%
Allowance for loan losses/
Nonperforming loans 170 176 130
-------------------------- --- --- ---
(a) Excludes loans
acquired with
credit
impairment.
(b) Included in "Accrued expenses and
other liabilities" on the
consolidated balance sheets.
-- Nonaccrual loans increased $9 million, to $326 million at June 30, 2014,
compared to $317 million at March 31, 2014.
-- Criticized loans increased $49 million, to $2.2 billion at June 30,
2014, compared to $2.1 billion at March 31, 2014.
-- During the second quarter 2014, $53 million of borrower relationships
over $2 million were transferred to nonaccrual status, an increase of
$34 million from the first quarter 2014.
Balance Sheet and Capital Management
Total assets and common shareholders' equity were $65.3 billion and $7.4 billion, respectively, at June 30, 2014, compared to $65.7 billion and $7.3 billion, respectively, at March 31, 2014.
There were approximately 181 million common shares outstanding at June 30, 2014. Comerica increased the quarterly dividend by 1 cent, or 5 percent, to $0.20 per share in the second quarter 2014. Share repurchases of $59 million (1.2 million shares), combined with dividends, returned 63 percent of second quarter 2014 net income to shareholders.
In the second quarter 2014, Comerica issued $350 million of 2.125% senior notes due in May 2019 and announced the intention to call $150 million of subordinated notes, at par, on July 15, 2014. The subordinated notes, originally due in July 2024, had a carrying value of $182 million at June 30, 2014, which will result in a gain in the third quarter 2014 of approximately $32 million.
Comerica's tangible common equity ratio was 10.39 percent at June 30, 2014, an increase of 19 basis points from March 31, 2014. The estimated Tier 1 common capital ratio decreased 9 basis points, to 10.49 percent at June 30, 2014, from March 31, 2014. The estimated common equity Tier 1 ratio under fully phased-in Basel III capital rules and excluding most elements of AOCI was 10.2 percent percent at June 30, 2014.
Full-Year 2014 Outlook
Management expectations for full-year 2014, compared to 2013, assumes a continuation of the current economic and low-rate environment and excludes the approximately $32 million gain on the July 2014 early redemption of debt, which is viewed as non-core.
-- Moderate growth of 4 percent to 6 percent in average loans. Range
reflects growth in the first half along with possible outcomes in the
second half of 2014 in both seasonal declines in National Dealer
Services and Mortgage Banker Finance as well as growth in our remaining
business lines, which slowed throughout the second quarter.
-- Net interest income modestly lower, reflecting a decline in purchase
accounting accretion, to $25 million to $30 million, and the effect of
continued pressure from the low-rate environment, approximately offset
by loan growth.
-- Provision for credit losses and net charge-offs stable. Increases to the
allowance for credit losses due to loan growth offset by continued
strong credit quality.
-- Noninterest income modestly lower, reflecting stable customer-driven fee
income and lower noncustomer-driven income.
-- Noninterest expenses lower, reflecting lower litigation-related expenses
and a more than 50 percent decrease in pension expense, to about $39
million.
-- 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, 2014 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses second quarter 2014 results compared to first quarter 2014.
In the second quarter 2014, Comerica enhanced the approach used to determine the standard reserve factors used in estimating the allowance for credit losses, which had the effect of capturing certain elements in the quantitative component of the reserve that had formerly been included in the qualitative assessment. The impact of the change was largely neutral to the total allowance for loan losses at June 30, 2014. However, because standard reserves are allocated to the segments at the loan level, while qualitative reserves are allocated at the portfolio level, the impact of the methodology change on the allowance of each segment reflected the characteristics of the individual loans within each segment's portfolio, causing segment reserves to increase or decrease accordingly.
The following table presents net income (loss) by business segment.
(dollar amounts
in millions) 2nd Qtr '14 1st Qtr '14 2nd Qtr '13
--------------- ----------- ----------- -----------
Business Bank $195 82% $198 85% $207 85%
Retail Bank 15 6 9 4 11 5
Wealth Management 28 12 26 11 24 10
----------------- --- --- --- --- --- ---
238 100% 233 100% 242 100%
Finance (91) (92) (98)
Other (a) 4 (2) (1)
-------- --- --- ---
Total $151 $139 $143
----- ---- ---- ----
(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
'14 '14 '13
--------------------------- -------- -------- --------
Net interest income (FTE) $376 $371 $372
Provision for credit losses 32 16 10
Noninterest income 95 87 94
Noninterest expenses 143 146 147
Net income 195 198 207
Net credit-related charge-
offs 7 11 11
Selected average balances:
Assets 37,467 35,896 36,014
Loans 36,529 34,927 34,955
Deposits 27,382 27,023 25,987
-------- ------ ------ ------
-- Average loans increased $1.6 billion, reflecting increases in almost
every line of business, led by Mortgage Banker Finance, National Dealer
Services, Energy, and Technology and Life Sciences.
-- Average deposits increased $359 million, primarily reflecting increases
in general Middle Market and Corporate Banking.
-- Net interest income increased $5 million, primarily due to the benefit
provided by an increase in average loans and one additional day in the
quarter, partially offset by lower loan yields and a decrease in
purchase accounting accretion.
-- The provision for credit losses increased $16 million, primarily due to
the enhancements to the approach utilized to determine the allowance for
credit losses discussed above, as well as an increase in loan balances.
-- Noninterest income increased $8 million, primarily due to increases in
commercial lending fees, warrant income and small increases in several
other categories.
-- Noninterest expenses decreased $3 million, primarily due to a decrease
in litigation-related expenses.
Retail Bank
(dollar amounts in millions) 2nd Qtr 1st Qtr 2nd Qtr
'14 '14 '13
--------------------------- -------- -------- --------
Net interest income (FTE) $149 $146 $154
Provision for credit losses (4) 2 5
Noninterest income 41 41 46
Noninterest expenses 171 171 178
Net income 15 9 11
Net credit-related charge-
offs 4 4 4
Selected average balances:
Assets 6,051 6,052 5,962
Loans 5,385 5,381 5,271
Deposits 21,648 21,361 21,241
-------- ------ ------ ------
-- Average deposits increased $287 million, primarily reflecting an
increase in noninterest-bearing deposits.
-- Net interest income increased $3 million, primarily due to an increase
in net funds transfer pricing (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 $6 million, primarily
reflecting a benefit from the enhancements to the approach utilized to
determine the allowance for credit losses discussed above and
improvements in credit quality.
Wealth Management
(dollar amounts in millions) 2nd Qtr 1st Qtr 2nd Qtr
'14 '14 '13
--------------------------- -------- -------- --------
Net interest income (FTE) $46 $46 $46
Provision for credit losses (9) (8) (3)
Noninterest income 67 64 65
Noninterest expenses 79 78 77
Net income 28 26 24
Net credit-related
(recoveries) charge-offs (2) (3) 2
Selected average balances:
Assets 4,996 4,939 4,828
Loans 4,811 4,767 4,667
Deposits 3,827 3,816 3,701
-------- ----- ----- -----
-- Average loans increased $44 million, primarily due to an increase in
Private Banking.
-- Noninterest income increased $3 million, primarily reflecting small
increases in several categories.
-- Noninterest expenses increased $1 million, as an increase in
litigation-related expenses was partially offset by a decrease in
allocated corporate overhead expenses.
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, 2014 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 '14 1st Qtr '14 2nd Qtr '13
---------- ----------- ----------- -----------
Michigan $80 34% $68 29% $77 32%
California 63 26 63 27 65 27
Texas 36 15 46 20 46 19
Other
Markets 59 25 56 24 54 22
-------- --- --- --- --- --- ---
238 100% 233 100% 242 100%
Finance &
Other (a) (87) (94) (99)
---------- --- --- ---
Total $151 $139 $143
----- ---- ---- ----
(a) Includes items not directly
associated with the
geographic markets.
-- Average loans increased $9 million, $615 million and $602 million in
Michigan, California and Texas, respectively. The increases in average
loans in California and Texas were broad-based, with increases in nearly
all business lines. California was led by an increase in National Dealer
Services, while the increase in Texas was led by Energy.
-- Average deposits increased $52 million in Michigan, primarily due to an
increase in Retail Banking, partially offset by decreases in general
Middle Market and Corporate Banking. In California, average deposits
increased $588 million, primarily reflecting increases in general Middle
Market and Corporate Banking, partially offset by a decrease in
Technology and Life Sciences. The decrease in Texas of $151 million was
primarily due to a decrease in general Middle Market.
-- Net interest income increased $4 million in California and $1 million in
Texas, and decreased $1 million in Michigan. The increases in California
and Texas primarily reflected the benefit from an increase in average
loans and one additional day in the quarter, partially offset by a
decline in loan yields. Texas was also impacted by a decrease in
accretion on the acquired loan portfolio.
-- The provision for credit losses increased $16 million in Texas and$3
million in California, and decreased $12 million in Michigan. The impact
of the enhancements to the approach utilized to determine the allowance
for credit losses, as previously discussed in the Business Segment
section, resulted in increased reserves in California, were largely
neutral to Texas and reduced reserves in Michigan. The increase in Texas
was primarily due to an increase in loan balances and risk rating
downgrades on two specific credits. California's increase was primarily
due to an increase in loan balances and increased reserves on two
credits. Credit quality in Texas and California continues to be very
strong. Improved credit quality and a reduction in loan balances
contributed to the decline in the Michigan reserve.
-- Noninterest income increased $7 million and $5 million in Michigan and
California, respectively, and was stable in Texas. Warrant income
increased in California, and there were small increases in several other
noninterest income categories in both markets.
-- Noninterest expenses increased $5 million in California, primarily due
to increases in litigation-related expenses and operational losses. In
Michigan and Texas, noninterest expenses declined $2 million and $1
million, respectively.
Michigan Market
(dollar amounts in millions) 2nd Qtr 1st Qtr 2nd Qtr
'14 '14 '13
--------------------------- -------- -------- --------
Net interest income (FTE) $182 $183 $187
Provision for credit losses (9) 3 (4)
Noninterest income 94 87 88
Noninterest expenses 159 161 161
Net income 80 68 77
Net credit-related charge-
offs (recoveries) 10 - 4
Selected average balances:
Assets 13,851 13,819 14,022
Loans 13,482 13,473 13,598
Deposits 20,694 20,642 20,159
-------- ------ ------ ------
California Market
(dollar amounts in millions) 2nd Qtr 1st Qtr 2nd Qtr
'14 '14 '13
--------------------------- -------- -------- --------
Net interest income (FTE) $176 $172 $173
Provision for credit losses 14 11 7
Noninterest income 39 34 36
Noninterest expenses 101 96 100
Net income 63 63 65
Net credit-related charge-
offs (recoveries) 5 10 12
Selected average balances:
Assets 15,721 15,133 14,155
Loans 15,439 14,824 13,912
Deposits 15,370 14,782 14,671
-------- ------ ------ ------
Texas Market
(dollar amounts in millions) 2nd Qtr 1st Qtr 2nd Qtr
'14 '14 '13
--------------------------- -------- -------- --------
Net interest income (FTE) $137 $136 $131
Provision for credit losses 22 6 6
Noninterest income 31 31 34
Noninterest expenses 89 90 89
Net income 36 46 46
Net credit-related charge-
offs 2 6 (3)
Selected average balances:
Assets 11,661 11,070 10,886
Loans 10,966 10,364 10,179
Deposits 10,724 10,875 10,187
-------- ------ ------ ------
Conference Call and Webcast
Comerica will host a conference call to review second quarter 2014 financial results at 7 a.m. CT Tuesday, July 15, 2014. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 61649842). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A replay of the Webcast can be accessed via Comerica's "Investor Relations" page at www.comerica.com.
Comerica Incorporated is a financial services company headquartered in Dallas, Texas, and strategically aligned by three major business segments: The Business Bank, The Retail Bank and Wealth Management. Comerica focuses on relationships and helping people and businesses be successful. In addition to Texas,
Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico.
This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Comerica's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as a reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Forward-looking Statements
Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "anticipates," "believes," "contemplates," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "opportunity," "initiative," "outcome," "continue," "remain," "maintain," "on course," "trend," "objective," "looks forward," "projects," "models" and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "might," "can," "may" or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica's management based on information known to Comerica's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica's management for future or past operations, products or services, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries, estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in general economic, political or industry conditions; changes in monetary and fiscal policies, including changes in interest rates; volatility and disruptions in global capital and credit markets; changes in Comerica's credit rating; the interdependence of financial service companies; changes in regulation or oversight; unfavorable developments concerning credit quality; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers; operational difficulties, failure of technology infrastructure or information security incidents; the implementation of Comerica's strategies and business initiatives; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; any future strategic acquisitions or divestitures; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires and floods; changes in accounting standards and the critical nature of Comerica's accounting policies. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. In particular, please refer to "Item 1A. Risk Factors" beginning on page 12 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2013. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
Comerica Incorporated and Subsidiaries
Three Months Ended Six Months Ended
------------------ ----------------
June 30, March 31, June 30, June 30,
(in millions, except
per share data) 2014 2014 2013 2014 2013
-------------------- ---- ---- ---- ---- ----
PER COMMON SHARE AND COMMON STOCK
DATA
Diluted net income $0.80 $0.73 $0.76 $1.54 $1.46
Cash dividends
declared 0.20 0.19 0.17 0.39 0.34
Average diluted
shares (in
thousands) 186,108 186,701 186,998 186,402 187,219
--------------- ------- ------- ------- ------- -------
KEY RATIOS
Return on average
common shareholders'
equity 8.27% 7.68% 8.23% 7.97% 7.95%
Return on average
assets 0.93 0.86 0.90 0.90 0.87
Tier 1 common capital
ratio (a) (b) 10.49 10.58 10.43
Tier 1 risk-based
capital ratio (b) 10.49 10.58 10.43
Total risk-based
capital ratio (b) 12.50 13.00 13.29
Leverage ratio (b) 10.93 10.85 10.81
Tangible common
equity ratio (a) 10.39 10.20 10.04
----------------- ----- ----- -----
AVERAGE BALANCES
Commercial loans $29,890 $28,362 $28,393 $29,130 $28,225
Real estate
construction loans 1,913 1,827 1,453 1,871 1,384
Commercial mortgage
loans 8,749 8,770 9,192 8,759 9,295
Lease financing 850 848 855 849 856
International loans 1,328 1,301 1,262 1,315 1,272
Residential mortgage
loans 1,773 1,724 1,602 1,749 1,579
Consumer loans 2,222 2,243 2,136 2,232 2,145
----- ----- ----- ----- -----
Total loans 46,725 45,075 44,893 45,905 44,756
Earning assets 60,148 59,916 58,928 60,033 58,769
Total assets 64,879 64,708 63,706 64,794 63,733
Noninterest-bearing
deposits 24,011 23,236 22,076 23,626 21,793
Interest-bearing
deposits 29,373 29,534 29,372 29,453 29,302
------ ------ ------ ------ ------
Total deposits 53,384 52,770 51,448 53,079 51,095
Common shareholders'
equity 7,331 7,229 6,979 7,280 6,966
-------------------- ----- ----- ----- ----- -----
NET INTEREST INCOME (fully taxable
equivalent basis)
Net interest income $417 $411 $415 $828 $831
Net interest margin 2.78% 2.77% 2.83% 2.78% 2.86%
------------------- ---- ---- ---- ---- ----
CREDIT QUALITY
Total nonperforming
assets (c) $360 $352 $500
Loans past due 90
days or more and
still accruing 7 10 20
Net loan charge-offs 9 12 17 $21 $41
Allowance for loan
losses 591 594 613
Allowance for credit
losses on lending-
related commitments 42 37 36
--- --- ---
Total allowance for
credit losses 633 631 649
Allowance for loan
losses as a
percentage of total
loans 1.23% 1.28% 1.35%
Net loan charge-offs
as a percentage of
average total loans
(d) 0.08 0.10 0.15 0.09% 0.18%
Nonperforming assets
as a percentage of
total loans and
foreclosed property
(c) 0.75 0.76 1.10
Allowance for loan
losses as a
percentage of total
nonperforming loans 170 176 130
-------------------- --- --- ---
See
Reconciliation
of Non-GAAP
Financial
(a) Measures.
(b) June 30, 2014 ratios are
estimated.
(c) Excludes loans acquired with
credit-impairment.
(d) Lending-related commitment
charge-offs were zero in all
periods presented.
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
June 30, March 31, December 31, June 30,
(in millions, except share data) 2014 2014 2013 2013
------------------------------- ---- ---- ---- ----
(unaudited) (unaudited) (unaudited)
ASSETS
Cash and due from banks $1,226 $1,186 $1,140 $1,016
Interest-bearing deposits with banks 2,668 4,434 5,311 2,909
Other short-term investments 109 105 112 119
Investment securities available-for-
sale 9,534 9,487 9,307 9,631
Commercial loans 30,986 29,774 28,815 29,186
Real estate construction loans 1,939 1,847 1,762 1,479
Commercial mortgage loans 8,747 8,801 8,787 9,007
Lease financing 822 849 845 843
International loans 1,352 1,250 1,327 1,209
Residential mortgage loans 1,775 1,751 1,697 1,611
Consumer loans 2,261 2,217 2,237 2,124
-------------- ----- ----- ----- -----
Total loans 47,882 46,489 45,470 45,459
Less allowance for loan losses (591) (594) (598) (613)
------------------------------ ---- ---- ---- ----
Net loans 47,291 45,895 44,872 44,846
Premises and equipment 562 583 594 604
Accrued income and other assets 3,935 3,991 3,888 3,819
------------------------------- ----- ----- ----- -----
Total assets $65,325 $65,681 $65,224 $62,944
------------ ------- ------- ------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits $24,774 $23,955 $23,875 $21,870
Money market and interest-bearing
checking deposits 22,555 22,485 22,332 21,677
Savings deposits 1,731 1,742 1,673 1,677
Customer certificates of deposit 4,962 5,099 5,063 5,594
Foreign office time deposits 148 469 349 437
---------------------------- --- --- --- ---
Total interest-bearing deposits 29,396 29,795 29,417 29,385
------------------------------- ------ ------ ------ ------
Total deposits 54,170 53,750 53,292 51,255
Short-term borrowings 176 160 253 131
Accrued expenses and other
liabilities 990 954 986 1,049
Medium- and long-term debt 2,620 3,534 3,543 3,601
-------------------------- ----- ----- ----- -----
Total liabilities 57,956 58,398 58,074 56,036
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 2,175 2,182 2,179 2,160
Accumulated other comprehensive loss (304) (325) (391) (538)
Retained earnings 6,520 6,414 6,318 6,124
Less cost of common stock in treasury
-47,194,492 shares at 6/30/14;
46,492,524 shares at 3/31/14;
45,860,786 shares at 12/31/13 and
42,999,083 shares at 6/30/13 (2,163) (2,129) (2,097) (1,979)
------------------------------------- ------ ------ ------ ------
Total shareholders' equity 7,369 7,283 7,150 6,908
-------------------------- ----- ----- ----- -----
Total liabilities and shareholders'
equity $65,325 $65,681 $65,224 $62,944
----------------------------------- ------- ------- ------- -------
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) 2014 2013 2014 2013
-------------------- ---- ---- ---- ----
INTEREST INCOME
Interest and fees on
loans $385 $388 $761 $778
Interest on investment
securities 53 52 108 105
Interest on short-
term investments 3 3 7 6
------------------ --- --- --- ---
Total interest income 441 443 876 889
INTEREST EXPENSE
Interest on deposits 11 15 22 30
Interest on medium-
and long-term debt 14 14 28 29
------------------- --- --- --- ---
Total interest expense 25 29 50 59
---------------------- --- --- --- ---
Net interest income 416 414 826 830
Provision for credit
losses 11 13 20 29
-------------------- --- --- --- ---
Net interest income
after provision for
credit losses 405 401 806 801
NONINTEREST INCOME
Service charges on
deposit accounts 54 53 108 108
Fiduciary income 45 44 89 87
Commercial lending
fees 23 22 43 43
Card fees 19 18 38 35
Letter of credit fees 15 16 29 32
Bank-owned life
insurance 11 10 20 19
Foreign exchange
income 12 9 21 18
Brokerage fees 4 4 9 9
Net securities
(losses) gains - (2) 1 (2)
Other noninterest
income 37 48 70 86
----------------- --- --- --- ---
Total noninterest
income 220 222 428 435
NONINTEREST EXPENSES
Salaries and employee
benefits expense 240 245 487 496
Net occupancy expense 39 39 79 78
Equipment expense 15 15 29 30
Outside processing fee
expense 30 30 58 58
Software expense 25 22 47 44
Litigation-related
expense 3 1 6 4
FDIC insurance expense 8 8 16 17
Advertising expense 5 6 11 12
Other noninterest
expenses 39 50 77 93
----------------- --- --- --- ---
Total noninterest
expenses 404 416 810 832
----------------- --- --- --- ---
Income before income
taxes 221 207 424 404
Provision for income
taxes 70 64 134 127
-------------------- --- --- --- ---
NET INCOME 151 143 290 277
Less income allocated
to participating
securities 2 2 4 4
--------------------- --- --- --- ---
Net income
attributable to
common shares $149 $141 $286 $273
---------------- ---- ---- ---- ----
Earnings per common share:
Basic $0.83 $0.77 $1.59 $1.48
Diluted 0.80 0.76 1.54 1.46
Comprehensive income 172 15 377 152
Cash dividends
declared on common
stock 36 32 71 64
Cash dividends
declared per common
share 0.20 0.17 0.39 0.34
-------------------- ---- ---- ---- ----
CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Second First Fourth Third Second Second Quarter 2014 Compared To:
Quarter Quarter Quarter Quarter Quarter First Quarter 2014 Second Quarter 2013
(in millions, except
per share data) 2014 2014 2013 2013 2013 Amount Percent Amount Percent
-------------------- ---- ---- ---- ---- ---- ------ ------- ------ -------
INTEREST INCOME
Interest and fees on
loans $385 $376 $397 $381 $388 $9 2% $(3) (1)%
Interest on investment
securities 53 55 55 54 52 (2) (2) 1 3
Interest on short-
term investments 3 4 4 4 3 (1) (27) - -
------------------ --- --- --- --- --- --- --- --- ---
Total interest income 441 435 456 439 443 6 2 (2) -
INTEREST EXPENSE
Interest on deposits 11 11 12 13 15 - - (4) (23)
Interest on medium-
and long-term debt 14 14 14 14 14 - - - -
------------------- --- --- --- --- --- --- --- --- ---
Total interest expense 25 25 26 27 29 - - (4) (16)
---------------------- --- --- --- --- --- --- --- --- ---
Net interest income 416 410 430 412 414 6 2 2 1
Provision for credit
losses 11 9 9 8 13 2 26 (2) (15)
-------------------- --- --- --- --- --- --- --- --- ---
Net interest income
after provision 405 401 421 404 401 4 1 4 1
for credit losses
NONINTEREST INCOME
Service charges on
deposit accounts 54 54 53 53 53 - - 1 2
Fiduciary income 45 44 43 41 44 1 2 1 4
Commercial lending
fees 23 20 28 28 22 3 16 1 3
Card fees 19 19 19 20 18 - - 1 3
Letter of credit fees 15 14 15 17 16 1 2 (1) (11)
Bank-owned life
insurance 11 9 9 12 10 2 13 1 6
Foreign exchange
income 12 9 9 9 9 3 31 3 29
Brokerage fees 4 5 4 4 4 (1) (10) - -
Net securities gains
(losses) - 1 - 1 (2) (1) N/M 2 N/M
Other noninterest
income 37 33 39 43 48 4 16 (11) (19)
----------------- --- --- --- --- --- --- --- --- ---
Total noninterest
income 220 208 219 228 222 12 6 (2) (1)
NONINTEREST EXPENSES
Salaries and benefits
expense 240 247 258 255 245 (7) (3) (5) (2)
Net occupancy expense 39 40 41 41 39 (1) (3) - -
Equipment expense 15 14 15 15 15 1 3 - -
Outside processing fee
expense 30 28 30 31 30 2 6 - -
Software expense 25 22 24 22 22 3 11 3 12
Litigation-related
expense 3 3 52 (4) 1 - - 2 N/M
FDIC insurance expense 8 8 7 9 8 - - - -
Advertising expense 5 6 3 6 6 (1) - (1) (9)
Other noninterest
expenses 39 38 43 42 50 1 5 (11) (20)
----------------- --- --- --- --- --- --- --- --- ---
Total noninterest
expenses 404 406 473 417 416 (2) - (12) (3)
----------------- --- --- --- --- --- --- --- --- ---
Income before income
taxes 221 203 167 215 207 18 9 14 7
Provision for income
taxes 70 64 50 68 64 6 10 6 10
-------------------- --- --- --- --- --- --- --- --- ---
NET INCOME 151 139 117 147 143 12 9 8 5
Less income allocated
to participating
securities 2 2 2 2 2 - - - -
--------------------- --- --- --- --- --- --- --- --- ---
Net income
attributable to
common shares $149 $137 $115 $145 $141 $12 9% $8 6%
---------------- ---- ---- ---- ---- ---- --- --- --- ---
Earnings per common share:
Basic $0.83 $0.76 $0.64 $0.80 $0.77 $0.07 9% $0.06 8%
Diluted 0.80 0.73 0.62 0.78 0.76 0.07 10 0.04 5
Comprehensive income 172 205 267 144 15 (33) (16) 157 N/M
Cash dividends
declared on common
stock 36 35 31 31 32 1 5 4 15
Cash dividends
declared per common
share 0.20 0.19 0.17 0.17 0.17 0.01 5 0.03 18
-------------------- ---- ---- ---- ---- ---- ---- --- ---- ---
N/M - Not Meaningful
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)
Comerica Incorporated and Subsidiaries
2014 2013
---- ----
(in millions) 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr
------------ ------- ------- ------- ------- -------
Balance at beginning of
period $594 $598 $604 $613 $617
Loan charge-offs:
Commercial 19 19 31 20 19
Real estate construction - - - 1 2
Commercial mortgage 5 8 5 9 9
Residential mortgage - - 1 1 1
Consumer 4 3 4 8 4
-------- --- --- --- --- ---
Total loan charge-offs 28 30 41 39 35
Recoveries on loans previously
charged-off:
Commercial 11 11 17 8 11
Real estate construction 1 - 3 2 1
Commercial mortgage 3 3 5 7 3
Lease financing - 2 - 1 -
Residential mortgage 3 - 1 1 1
Consumer 1 2 2 1 2
-------- --- --- --- --- ---
Total recoveries 19 18 28 20 18
---------------- --- --- --- --- ---
Net loan charge-offs 9 12 13 19 17
Provision for loan losses 6 8 7 10 13
------------------------- --- --- --- --- ---
Balance at end of period $591 $594 $598 $604 $613
------------------------ ---- ---- ---- ---- ----
Allowance for loan losses
as a percentage of total
loans 1.23% 1.28% 1.32% 1.37% 1.35%
Net loan charge-offs as
a percentage of average
total loans 0.08 0.10 0.12 0.18 0.15
------------------------ ---- ---- ---- ---- ----
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited)
Comerica Incorporated and Subsidiaries
2014 2013
---- ----
(in millions) 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr
------------ ------- ------- ------- ------- -------
Balance at
beginning of
period $37 $36 $34 $36 $36
Add: Provision
for credit
losses on
lending-related
commitments 5 1 2 (2) -
---------------- --- --- --- --- ---
Balance at end of
period $42 $37 $36 $34 $36
----------------- --- --- --- --- ---
Unfunded lending-
related
commitments sold $ - $ - $1 $2 $1
----------------- --- --- --- --- --- --- ---
NONPERFORMING ASSETS (unaudited)
Comerica Incorporated and Subsidiaries
2014 2013
---- ----
(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 $72 $54 $81 $107 $102
Real estate construction 19 19 21 25 28
Commercial mortgage 156 162 156 206 226
International - - 4 - -
Total nonaccrual business
loans 247 235 262 338 356
Retail loans:
Residential mortgage 45 48 53 63 62
Consumer:
Home equity 32 32 33 34 28
Other consumer 2 2 2 2 3
-------------- --- --- --- --- ---
Total consumer 34 34 35 36 31
-------------- --- --- --- --- ---
Total nonaccrual retail
loans 79 82 88 99 93
----------------------- --- --- --- --- ---
Total nonaccrual loans 326 317 350 437 449
Reduced-rate loans 21 21 24 22 22
------------------ --- --- --- --- ---
Total nonperforming loans
(a) 347 338 374 459 471
Foreclosed property 13 14 9 19 29
------------------- --- --- --- --- ---
Total nonperforming assets
(a) $360 $352 $383 $478 $500
-------------------------- ---- ---- ---- ---- ----
Nonperforming loans as a
percentage of total loans 0.73% 0.73% 0.82% 1.04% 1.04%
Nonperforming assets as a
percentage of total loans 0.75 0.76 0.84 1.08 1.10
and foreclosed property
Allowance for loan losses as
a percentage of total 170 176 160 131 130
nonperforming loans
Loans past due 90 days or
more and still accruing $7 $10 $16 $25 $20
------------------------- --- --- --- --- ---
ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans at
beginning of period $317 $350 $437 $449 $494
Loans transferred to
nonaccrual (b) 53 19 23 50 37
Nonaccrual business loan
gross charge-offs (c) (24) (27) (33) (25) (25)
Nonaccrual business loans
sold (d) (6) (3) (14) (17) (9)
Payments/Other (e) (14) (22) (63) (20) (48)
------------------ --- --- --- --- ---
Nonaccrual loans at end of
period $326 $317 $350 $437 $449
-------------------------- ---- ---- ---- ---- ----
(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 $24 $27 $33 $25 $25
Performing criticized loans - - 3 5 5
Consumer and residential
mortgage loans 4 3 5 9 5
--- --- --- --- ---
Total gross loan charge-offs $28 $30 $41 $39 $35
--- --- --- --- ---
(d) Analysis of loans sold:
Nonaccrual business loans $6 $3 $14 $17 $9
Performing criticized loans 8 6 22 31 40
--- --- --- --- ---
Total criticized loans sold $14 $9 $36 $48 $49
--- --- --- --- ---
(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, 2014 June 30, 2013
------------- -------------
Average Average Average Average
(dollar amounts in
millions) Balance Interest Rate Balance Interest Rate
------------------ ------- -------- ---- ------- -------- ----
Commercial loans $29,130 $453 3.13% $28,225 $462 3.30%
Real estate construction
loans 1,871 32 3.42 1,384 28 4.10
Commercial mortgage
loans 8,759 170 3.92 9,295 183 3.97
Lease financing 849 16 3.66 856 14 3.23
International loans 1,315 24 3.66 1,272 23 3.72
Residential mortgage
loans 1,749 33 3.84 1,579 33 4.21
Consumer loans 2,232 35 3.19 2,145 36 3.33
-------------- ----- --- ---- ----- --- ----
Total loans (a) 45,905 763 3.35 44,756 779 3.51
Mortgage-backed
securities available-
for-sale 8,954 107 2.39 9,532 104 2.18
Other investment
securities available-
for-sale 369 1 0.44 374 1 0.55
---------------------- --- --- ---- --- --- ----
Total investment
securities available-
for-sale 9,323 108 2.31 9,906 105 2.16
Interest-bearing
deposits with banks (b) 4,695 7 0.26 3,990 5 0.26
Other short-term
investments 110 - 0.63 117 1 1.67
---------------- --- --- ---- --- --- ----
Total earning assets 60,033 878 2.94 58,769 890 3.06
Cash and due from banks 917 975
Allowance for loan
losses (602) (629)
Accrued income and other
assets 4,446 4,618
----- -----
Total assets $64,794 $63,733
------- -------
Money market and
interest-bearing
checking deposits $22,279 12 0.11 $21,442 15 0.14
Savings deposits 1,721 - 0.03 1,640 - 0.03
Customer certificates of
deposit 5,075 9 0.36 5,715 13 0.45
Foreign office time
deposits 378 1 0.52 505 2 0.57
------------------- --- --- ---- --- --- ----
Total interest-bearing
deposits 29,453 22 0.15 29,302 30 0.20
Short-term borrowings 198 - 0.03 158 - 0.09
Medium- and long-term
debt 3,270 28 1.64 4,374 29 1.37
--------------------- ----- --- ---- ----- --- ----
Total interest-bearing
sources 32,921 50 0.30 33,834 59 0.35
Noninterest-bearing
deposits 23,626 21,793
Accrued expenses and
other liabilities 967 1,140
Total shareholders'
equity 7,280 6,966
----- -----
Total liabilities and
shareholders' equity $64,794 $63,733
------- -------
Net interest income/rate spread (FTE) $828 2.64 $831 2.71
---- ----
FTE adjustment $2 $1
Impact of net noninterest-bearing
sources of funds 0.14 0.15
--------------------------------- ---- ----
Net interest margin (as a percentage of
average earning assets) (FTE) (a) (b) 2.78% 2.86%
--------------------------------------- ---- ----
(a) Accretion of the purchase
discount on the acquired loan
portfolio of $22 million and
$18 million in the six months
ended June 30, 2014 and 2013,
respectively, increased the net
interest margin by 7 basis
points and 6 basis points in
each respective period.
(b) Excess liquidity, represented by
average balances deposited with
the Federal Reserve Bank,
reduced the net interest margin
by 20 basis points and 18 basis
points in the six months ended
June 30, 2014 and 2013,
respectively.
ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)
Comerica Incorporated and Subsidiaries
Three Months Ended
------------------
June 30, 2014 March 31, 2014 June 30, 2013
------------- -------------- -------------
Average Average Average Average Average Average
(dollar amounts in
millions) Balance Interest Rate Balance Interest Rate Balance Interest Rate
------------------ ------- -------- ---- ------- -------- ---- ------- -------- ----
Commercial loans $29,890 $231 3.10% $28,362 $221 3.17% $28,393 $233 3.29%
Real estate construction
loans 1,913 16 3.44 1,827 15 3.40 1,453 15 4.04
Commercial mortgage
loans 8,749 85 3.88 8,770 86 3.97 9,192 88 3.86
Lease financing 850 7 3.26 848 9 4.07 855 7 3.22
International loans 1,328 12 3.64 1,301 12 3.68 1,262 12 3.81
Residential mortgage
loans 1,773 17 3.82 1,724 17 3.86 1,602 16 4.04
Consumer loans 2,222 18 3.22 2,243 17 3.16 2,136 18 3.30
-------------- ----- --- ---- ----- --- ---- ----- --- ----
Total loans (a) 46,725 386 3.31 45,075 377 3.39 44,893 389 3.47
Mortgage-backed
securities available-
for-sale 8,996 53 2.35 8,911 55 2.42 9,415 51 2.22
Other investment
securities available-
for-sale 368 - 0.46 371 - 0.43 378 1 0.52
---------------------- --- --- ---- --- --- ---- --- --- ----
Total investment
securities available-
for-sale 9,364 53 2.28 9,282 55 2.34 9,793 52 2.15
Interest-bearing
deposits with banks (b) 3,949 3 0.25 5,448 4 0.26 4,125 3 0.26
Other short-term
investments 110 - 0.61 111 - 0.66 117 - 1.05
---------------- --- --- ---- --- --- ---- --- --- ----
Total earning assets 60,148 442 2.95 59,916 436 2.94 58,928 444 3.02
Cash and due from banks 921 913 972
Allowance for loan
losses (602) (603) (625)
Accrued income and other
assets 4,412 4,482 4,431
----- ----- -----
Total assets $64,879 $64,708 $63,706
------- ------- -------
Money market and
interest-bearing
checking deposits $22,296 6 0.10 $22,261 6 0.11 $21,544 8 0.13
Savings deposits 1,742 - 0.03 1,700 - 0.03 1,658 - 0.03
Customer certificates of
deposit 5,041 5 0.36 5,109 5 0.36 5,685 6 0.43
Foreign office time
deposits 294 - 0.68 464 - 0.42 485 1 0.60
------------------- --- --- ---- --- --- ---- --- --- ----
Total interest-bearing
deposits 29,373 11 0.15 29,534 11 0.15 29,372 15 0.19
Short-term borrowings 210 - 0.03 185 - 0.03 193 - 0.07
Medium- and long-term
debt 2,999 14 1.77 3,545 14 1.53 4,044 14 1.43
--------------------- ----- --- ---- ----- --- ---- ----- --- ----
Total interest-bearing
sources 32,582 25 0.30 33,264 25 0.30 33,609 29 0.34
Noninterest-bearing
deposits 24,011 23,236 22,076
Accrued expenses and
other liabilities 955 979 1,042
Total shareholders'
equity 7,331 7,229 6,979
----- ----- -----
Total liabilities and
shareholders' equity $64,879 $64,708 $63,706
------- ------- -------
Net interest income/rate spread (FTE) $417 2.65 $411 2.64 $415 2.68
---- ---- ----
FTE adjustment $1 $1 $1
Impact of net noninterest-bearing
sources of funds 0.13 0.13 0.15
--------------------------------- ---- ---- ----
Net interest margin (as a percentage of
average earning assets) (FTE) (a) (b) 2.78% 2.77% 2.83%
--------------------------------------- ---- ---- ----
(a) Accretion of the purchase
discount on the acquired loan
portfolio of $10 million, $12
million and $7 million in the
second and first quarters of
2014 and the second quarter of
2013, respectively, increased
the net interest margin by 7
basis points, 8 basis points
and 5 basis points in each
respective period.
(b) Excess liquidity, represented by
average balances deposited with
the Federal Reserve Bank,
reduced the net interest margin
by 17 basis points, 24 basis
points and 18 basis points in
the second and first quarters
of 2014 and the second quarter
of 2013, respectively.
CONSOLIDATED STATISTICAL DATA (unaudited)
Comerica Incorporated and Subsidiaries
June 30, March 31, December 31, September 30, June 30,
(in millions, except per
share data) 2014 2014 2013 2013 2013
------------------------ ---- ---- ---- ---- ----
Commercial loans:
Floor plan $3,576 $3,437 $3,504 $2,869 $3,241
Other 27,410 26,337 25,311 25,028 25,945
----- ------ ------ ------ ------ ------
Total commercial loans 30,986 29,774 28,815 27,897 29,186
Real estate construction
loans 1,939 1,847 1,762 1,552 1,479
Commercial mortgage loans 8,747 8,801 8,787 8,785 9,007
Lease financing 822 849 845 829 843
International loans 1,352 1,250 1,327 1,286 1,209
Residential mortgage
loans 1,775 1,751 1,697 1,650 1,611
Consumer loans:
Home equity 1,574 1,533 1,517 1,501 1,474
Other consumer 687 684 720 651 650
-------------- --- --- --- --- ---
Total consumer loans 2,261 2,217 2,237 2,152 2,124
-------------------- ----- ----- ----- ----- -----
Total loans $47,882 $46,489 $45,470 $44,151 $45,459
----------- ------- ------- ------- ------- -------
Goodwill $635 $635 $635 $635 $635
Core deposit intangible 14 15 16 17 18
Loan servicing rights 1 1 1 1 2
Tier 1 common capital
ratio (a) (b) 10.49% 10.58% 10.64% 10.72% 10.43%
Tier 1 risk-based
capital ratio (a) 10.49 10.58 10.64 10.72 10.43
Total risk-based capital
ratio (a) 12.50 13.00 13.10 13.42 13.29
Leverage ratio (a) 10.93 10.85 10.77 10.88 10.81
Tangible common equity
ratio (b) 10.39 10.20 10.07 9.87 10.04
Common shareholders'
equity per share of
common stock $40.72 $40.09 $39.22 $37.93 $37.31
Tangible common equity
per share of common
stock (b) 37.12 36.50 35.64 34.37 33.77
Market value per share for the quarter:
High 52.60 53.50 48.69 43.49 40.44
Low 45.34 43.96 38.64 38.56 33.55
Close 50.16 51.80 47.54 39.31 39.83
Quarterly ratios:
Return on average common
shareholders' equity 8.27% 7.68% 6.66% 8.50% 8.23%
Return on average assets 0.93 0.86 0.72 0.92 0.90
Efficiency ratio (c) 63.35 65.79 72.81 65.18 65.03
Number of banking centers 481 483 483 484 484
Number of employees -
full time equivalent 8,901 8,907 8,948 8,918 8,929
--------------------- ----- ----- ----- ----- -----
(a) June 30, 2014 ratios are
estimated.
(b) See Reconciliation of Non-GAAP
Financial Measures.
Noninterest expenses as a
percentage of the sum of net
interest income (FTE) and
noninterest income excluding net
(c) securities gains (losses).
PARENT COMPANY ONLY BALANCE SHEETS (unaudited)
Comerica
Incorporated
June 30, December 31, June 30,
(in
millions,
except
share
data) 2014 2013 2013
---------- ---- ---- ----
ASSETS
Cash and
due from
subsidiary
bank $5 $31 $3
Short-
term
investments
with
subsidiary
bank 796 482 473
Other
short-
term
investments 96 96 92
Investment
in
subsidiaries,
principally
banks 7,369 7,171 6,976
Premises
and
equipment 2 4 4
Other
assets 219 139 137
------- --- --- ---
Total
assets $8,487 $7,923 $7,685
------- ------ ------ ------
LIABILITIES
AND
SHAREHOLDERS'
EQUITY
Medium-
and
long-
term
debt $960 $617 $622
Other
liabilities 158 156 155
------------ --- --- ---
Total
liabilities 1,118 773 777
Common
stock -
$5 par
value:
Authorized
-
325,000,000
shares
Issued -
228,164,824
shares 1,141 1,141 1,141
Capital
surplus 2,175 2,179 2,160
Accumulated
other
comprehensive
loss (304) (391) (538)
Retained
earnings 6,520 6,318 6,124
Less cost
of shares
common at
stock in 12/31/13
treasury and
- 42,999,083
47,194,492 shares
shares at
at 6/30/13
6/30/14;
45,860,786 (2,163) (2,097) (1,979)
-------------- ------ ------ ------
Total
shareholders'
equity 7,369 7,150 6,908
-------------- ----- ----- -----
Total
liabilities
and
shareholders'
equity $8,487 $7,923 $7,685
-------------- ------ ------ ------
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)
Comerica Incorporated and Subsidiaries
Accumulated
Common Stock Other Total
------------
Shares Capital Comprehensive Retained Treasury Shareholders'
(in millions, except
per share data) Outstanding Amount Surplus Loss Earnings Stock Equity
-------------------- ----------- ------ ------- ---- -------- ----- ------
BALANCE AT DECEMBER
31, 2012 188.3 $1,141 $2,162 $(413) $5,928 $(1,879) $6,939
Net income - - - - 277 - 277
Other comprehensive
loss, net of tax - - - (125) - - (125)
Cash dividends
declared on common
stock ($0.34 per
share) - - - - (64) - (64)
Purchase of common
stock (4.1) - - - - (146) (146)
Net issuance of common
stock under employee
stock plans 1.0 - (19) - (17) 45 9
Share-based
compensation - - 18 - - - 18
Other - - (1) - - 1 -
----- --- --- --- --- --- --- ---
BALANCE AT JUNE 30,
2013 185.2 $1,141 $2,160 $(538) $6,124 $(1,979) $6,908
------------------- ----- ------ ------ ----- ------ ------- ------
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
------------------- ----- ------ ------ ----- ------ ------- ------
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries
(dollar amounts
in millions) Business Retail Wealth
Three Months
Ended June 30,
2014 Bank Bank Management Finance Other Total
--------------- ---- ---- ---------- ------- ----- -----
Earnings summary:
Net interest
income
(expense) (FTE) $376 $149 $46 $(160) $6 $417
Provision for
credit losses 32 (4) (9) - (8) 11
Noninterest
income 95 41 67 15 2 220
Noninterest
expenses 143 171 79 2 9 404
Provision
(benefit) for
income taxes
(FTE) 101 8 15 (56) 3 71
--- --- --- --- ---
Net income
(loss) $195 $15 $28 $(91) $4 $151
---- --- --- ---- --- ----
Net credit-
related charge-
offs
(recoveries) $7 $4 $(2) $ - $ - $9
Selected average balances:
Assets $37,467 $6,051 $4,996 $11,056 $5,309 $64,879
Loans 36,529 5,385 4,811 - - 46,725
Deposits 27,382 21,648 3,827 258 269 53,384
Statistical data:
Return on
average assets
(a) 2.09% 0.27% 2.24% N/M N/M 0.93%
Efficiency ratio
(b) 30.43 89.99 69.66 N/M N/M 63.35
----- ----- ----- --- --- -----
Business Retail Wealth
Three Months
Ended March 31,
2014 Bank Bank Management Finance Other Total
---------------- ---- ---- ---------- ------- ----- -----
Earnings summary:
Net interest
income
(expense) (FTE) $371 $146 $46 $(158) $6 $411
Provision for
credit losses 16 2 (8) - (1) 9
Noninterest
income 87 41 64 14 2 208
Noninterest
expenses 146 171 78 3 8 406
Provision
(benefit) for
income taxes
(FTE) 98 5 14 (55) 3 65
--- --- --- --- ---
Net income
(loss) $198 $9 $26 $(92) $(2) $139
---- --- --- ---- --- ----
Net credit-
related charge-
offs $11 $4 $(3) $ - $ - $12
Selected average balances:
Assets $35,896 $6,052 $4,939 $11,129 $6,692 $64,708
Loans 34,927 5,381 4,767 - - 45,075
Deposits 27,023 21,361 3,816 353 217 52,770
Statistical data:
Return on
average assets
(a) 2.20% 0.16% 2.15% N/M N/M 0.86%
Efficiency ratio
(b) 31.96 91.44 71.31 N/M N/M 65.79
---------------- ----- ----- ----- --- --- -----
Business Retail Wealth
Three Months
Ended June 30,
2013 Bank Bank Management Finance Other Total
--------------- ---- ---- ---------- ------- ----- -----
Earnings summary:
Net interest
income
(expense) (FTE) $372 $154 $46 $(165) 8 $415
Provision for
credit losses 10 5 (3) - 1 13
Noninterest
income 94 46 65 15 2 222
Noninterest
expenses 147 178 77 3 11 416
Provision
(benefit) for
income taxes
(FTE) 102 6 13 (55) (1) 65
--- --- --- --- --- ---
Net income
(loss) $207 $11 $24 $(98) $(1) $143
---- --- --- ---- --- ----
Net credit-
related charge-
offs $11 $4 $2 $ - $ - $17
Selected average balances:
Assets $36,014 $5,962 $4,828 $11,514 $5,388 $63,706
Loans 34,955 5,271 4,667 - - 44,893
Deposits 25,987 21,241 3,701 283 236 51,448
Statistical data:
Return on
average assets
(a) 2.30% 0.20% 2.00% N/M N/M 0.90%
Efficiency ratio
(b) 31.48 87.98 69.86 N/M N/M 65.03
---------------- ----- ----- ----- --- --- -----
(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,
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 94 39 31 39 17 220
Noninterest
expenses 159 101 89 44 11 404
Provision
(benefit) for
income taxes
(FTE) 46 37 21 20 (53) 71
--- --- --- --- --- ---
Net income
(loss) $80 $63 $36 $59 $(87) $151
--- --- --- --- ---- ----
Net credit-
related charge-
offs
(recoveries) $10 $5 $2 $(8) $ - $9
Selected average balances:
Assets $13,851 $15,721 $11,661 $7,281 $16,365 $64,879
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) 1.48% 1.54% 1.23% 3.23% NM 0.93%
Efficiency ratio
(b) 57.70 46.78 52.61 38.94 NM 63.35
---------------- ----- ----- ----- ----- --- -----
Other Finance
Three Months
Ended March 31,
2014 Michigan California Texas Markets & Other Total
---------------- -------- ---------- ----- ------- ------- -----
Earnings summary:
Net interest
income
(expense) (FTE) $183 $172 $136 $72 $(152) $411
Provision for
credit losses 3 11 6 (10) (1) 9
Noninterest
income 87 34 31 40 16 208
Noninterest
expenses 161 96 90 48 11 406
Provision
(benefit) for
income taxes
(FTE) 38 36 25 18 (52) 65
--- --- --- --- --- ---
Net income
(loss) $68 $63 $46 $56 $(94) $139
--- --- --- --- ---- ----
Net credit-
related charge-
offs
(recoveries) $ - $10 $6 $(4) $ - $12
Selected average balances:
Assets $13,819 $15,133 $11,070 $6,865 $17,821 $64,708
Loans 13,473 14,824 10,364 6,414 - 45,075
Deposits 20,642 14,782 10,875 5,901 570 52,770
Statistical data:
Return on
average assets
(a) 1.26% 1.59% 1.50% 3.28% N/M 0.86%
Efficiency ratio
(b) 59.71 46.72 53.83 43.39 N/M 65.79
---------------- ----- ----- ----- ----- --- -----
Other Finance
Three Months
Ended June 30,
2013 Michigan California Texas Markets & Other Total
--------------- -------- ---------- ----- ------- ------- -----
Earnings summary:
Net interest
income
(expense) (FTE) $187 $173 $131 $81 $(157) $415
Provision for
credit losses (4) 7 6 3 1 13
Noninterest
income 88 36 34 47 17 222
Noninterest
expenses 161 100 89 52 14 416
Provision
(benefit) for
income taxes
(FTE) 41 37 24 19 (56) 65
--- --- --- --- --- ---
Net income
(loss) $77 $65 $46 $54 $(99) $143
--- --- --- --- ---- ----
Net credit-
related charge-
offs $4 $12 $(3) $4 $ - $17
Selected average balances:
Assets $14,022 $14,155 $10,886 $7,741 $16,902 $63,706
Loans 13,598 13,912 10,179 7,204 - 44,893
Deposits 20,159 14,671 10,187 5,912 519 51,448
Statistical data:
Return on
average assets
(a) 1.47% 1.65% 1.62% 2.79% N/M 0.90%
Efficiency ratio
(b) 58.17 47.73 53.39 41.16 N/M 65.03
---------------- ----- ----- ----- ----- --- -----
(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) 2014 2014 2013 2013 2013
------------------ ---- ---- ---- ---- ----
Tier 1 Common Capital Ratio:
Tier 1 and Tier 1
common capital (a)
(b) $7,027 $6,962 $6,895 $6,862 $6,800
Risk-weighted
assets (a) (b) 67,009 65,788 64,825 64,027 65,220
--------------- ------ ------ ------ ------ ------
Tier 1 and Tier 1
common risk-based
capital ratio (b) 10.49% 10.58% 10.64% 10.72% 10.43%
Basel III Common Equity Tier 1
Capital Ratio:
Tier 1 common
capital (b) $7,027 $6,962 $6,895 $6,862 $6,800
Basel III
adjustments (c) (2) (2) (6) (4) -
---------------- --- --- --- --- ---
Basel III common
equity Tier 1
capital (c) 7,025 6,960 6,889 6,858 6,800
---------------- ----- ----- ----- ----- -----
Risk-weighted
assets (a) (b) $67,009 $65,788 $64,825 $64,027 $65,220
Basel III
adjustments (c) 1,599 1,590 1,754 1,726 2,091
----- ----- ----- ----- -----
Basel III risk-
weighted assets
(c) $68,608 $67,378 $66,579 $65,753 $67,311
---------------- ------- ------- ------- ------- -------
Tier 1 common
capital ratio (b) 10.5% 10.6% 10.6% 10.7% 10.4%
Basel III common
equity Tier 1
capital ratio (c) 10.2 10.3 10.3 10.4 10.1
------------------ ---- ---- ---- ---- ----
Tangible Common Equity Ratio:
Common
shareholders'
equity $7,369 $7,283 $7,150 $6,966 $6,908
Less:
Goodwill 635 635 635 635 635
Other intangible
assets 15 16 17 18 20
--- --- --- --- ---
Tangible common
equity $6,719 $6,632 $6,498 $6,313 $6,253
--------------- ------ ------ ------ ------ ------
Total assets $65,325 $65,681 $65,224 $64,667 $62,944
Less:
Goodwill 635 635 635 635 635
Other intangible
assets 15 16 17 18 20
--- --- --- --- ---
Tangible assets $64,675 $65,030 $64,572 $64,014 $62,289
--------------- ------- ------- ------- ------- -------
Common equity ratio 11.28% 11.09% 10.97% 10.78% 10.98%
Tangible common
equity ratio 10.39 10.20 10.07 9.87 10.04
--------------- ----- ----- ----- ---- -----
Tangible Common Equity per Share of
Common Stock:
Common
shareholders'
equity $7,369 $7,283 $7,150 $6,966 $6,908
Tangible common
equity 6,719 6,632 6,498 6,313 6,253
--------------- ----- ----- ----- ----- -----
Shares of common
stock outstanding
(in millions) 181 182 182 184 185
------------------ --- --- --- --- ---
Common
shareholders'
equity per share
of common stock $40.72 $40.09 $39.22 $37.93 $37.31
Tangible common
equity per share
of common stock 37.12 36.50 35.64 34.37 33.77
----------------- ----- ----- ----- ----- -----
(a) Tier 1 capital and risk-
weighted assets as defined by
regulation.
(b) June 30, 2014 Tier 1 capital and
risk-weighted assets are
estimated.
(c) Estimated ratios based on the
standardized approach in the
final rule for the U.S.
adoption of the Basel III
regulatory capital framework,
as fully phased-in, and
excluding most elements of
AOCI.
The Tier 1 common capital ratio removes preferred stock and qualifying trust preferred securities from Tier 1 capital as defined by and calculated in conformity with bank regulations. The Basel III common equity Tier 1 capital ratio further adjusts Tier 1 common capital and risk-weighted assets to account for the final rule approved by U.S. banking regulators in July 2013 for the U.S. adoption of the Basel III regulatory capital framework, as fully phased-in. The final Basel III capital rules are effective January 1, 2015 for banking organizations subject to the standardized approach. The tangible common equity ratio removes preferred stock and the effect of intangible assets from capital and the effect of intangible assets from total assets. Tangible common equity per share of common stock removes the effect of intangible assets from common shareholders equity per share of common stock. Comerica believes these measurements are meaningful measures of capital adequacy used by investors, regulators, management and others to evaluate the adequacy of common equity and to compare against other companies in the industry.
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SOURCE Comerica Incorporated
