Comerica Reports First Quarter 2012 Results Net Income of $130 Million Up 36 Percent From Fourth Quarter 2011

Average Total Loans Increased - Driven by a $1.2 Billion, 5 Percent Increase in Commercial Loans

Customer-Driven Fee Income Increased 6 Percent

DALLAS, April 17, 2012 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported first quarter 2012 net income of $130 million, an increase of $34 million compared to $96 million for the fourth quarter 2011.

(Logo: http://photos.prnewswire.com/prnh/20010807/CMALOGO)














(dollar amounts in millions, except per share data)

1st Qtr '12


4th Qtr '11


1st Qtr '11

Net interest income

$

443



$

444



$

395


Provision for loan losses

23



19



49


Noninterest income

206



182



207


Noninterest expenses

448



478


(a)

415


Provision for income taxes

48



33



35








Net income

130



96



103








Net income attributable to common shares

129



95



102








Diluted income per common share

0.66



0.48


(a)

0.57








Average diluted shares (in millions)

196



197



178








Tier 1 common capital ratio (c)

10.33

%

(b)

10.37

%


10.35

%

Tangible common equity ratio (c)

10.21



10.27



10.43




(a)

Included restructuring expenses of $37 million ($23 million, after tax; $0.12 per diluted share) in fourth quarter 2011, associated with the acquisition of Sterling on July 28, 2011.

(b)

March 31, 2012 ratio is estimated.

(c)

See Reconciliation of Non-GAAP Financial Measures.

"We were pleased by the continued growth in average total loans in the first quarter, driven by a $1.2 billion, or 5 percent, increase in average commercial loans," said Ralph W. Babb Jr., chairman and chief executive officer. "The increase in average commercial loans, when compared to the fourth quarter of 2011, was broad-based, across a majority of business lines and all major markets.

"Noninterest income increased $24 million, driven by a $10 million, or 6 percent, increase in customer-driven fees, offsetting the headwinds of regulatory reform.

"We continue to approach capital management from a position of strength," said Babb. "As we announced on March 14, 2012, the Federal Reserve did not object to our capital plan and the capital distributions contemplated in the plan. The capital plan, which was approved by our board of directors, provides for up to $375 million in equity repurchases from the first quarter 2012 through the first quarter 2013. We had $33 million in equity repurchases under the share repurchase program in the first quarter 2012. A dividend proposal that would increase the quarterly dividend 50 percent, from 10 cents per share to 15 cents per share, will be considered by our board at its next meeting on April 24, 2012."

First Quarter 2012 Highlights Compared to Fourth Quarter 2011

  • Net income of $130 million, or $0.66 per fully diluted share, increased 36 percent compared to fourth quarter 2011.
  • Average total loans increased $815 million, or 2 percent, primarily reflecting an increase of $1.2 billion, or 5 percent, in commercial loans, partially offset by a decrease of $352 million, or 3 percent, in commercial real estate loans (commercial mortgage and real estate construction loans). The increase in commercial loans was broad-based, primarily driven by increases in National Dealer Services, Energy, Global Corporate Banking, Middle Market Banking, and Technology and Life Sciences.
  • Period-end loans increased $333 million, or 1 percent, from December 31, 2011 to March 31, 2012, primarily reflecting an increase of $644 million, or 3 percent, in commercial loans, partially offset by a $276 million, or 2 percent, decrease in commercial real estate loans. The increase in period-end commercial loans was primarily driven by increases in National Dealer Services, Middle Market Banking, Global Corporate Banking and Energy, partially offset by decreases in Mortgage Banker Finance and Small Business Banking.
  • Average deposits increased $532 million, or 1 percent, primarily reflecting an increase of $461 million in noninterest-bearing deposits. Period end deposits increased $1.5 billion from December 31, 2011 to a record $49.3 billion at March 31, 2012, while funding costs continued to decline. The increase in average deposits primarily reflected increases in Global Corporate Banking, the Financial Services Division, Technology and Life Sciences, and Private Banking, partially offset by decreases in Small Business Banking and Energy.
  • Credit quality continued to improve in the first quarter 2012. Net credit-related charge-offs of $45 million decreased for the eleventh consecutive quarter. The provision for loan losses was $23 million in the first quarter 2012, compared to $19 million in the fourth quarter 2011.
  • Noninterest income increased to $206 million in the first quarter 2012, compared to $182 million for the fourth quarter 2011. The $24 million increase in large part resulted from increases in customer-driven fee income categories.
  • Noninterest expenses decreased $30 million to $448 million in the first quarter 2012, compared to the fourth quarter 2011. The decrease was primarily due to a $37 million decrease in merger and restructuring charges related to the Sterling acquisition.
  • As previously announced, the Federal Reserve completed its review of Comerica's 2012 Capital Plan in the first quarter 2012 and did not object to the capital distributions contemplated in the plan, including up to $375 million of equity repurchases in the five-quarter period ending March 31, 2013 and a 50 percent increase in the quarterly dividend. Comerica repurchased 1.1 million shares of common stock under the share repurchase program in the first quarter 2012.

Net Interest Income














(dollar amounts in millions)

1st Qtr '12


4th Qtr '11


1st Qtr '11

Net interest income

$

443



$

444



$

395








Net interest margin

3.19

%


3.19

%


3.25

%







Selected average balances:






Total earning assets

$

56,186



$

55,676



$

49,347


Total investment securities

9,889



9,781



7,311


Total loans

42,269



41,454



39,551








Total deposits

48,311



47,779



40,598


Total noninterest-bearing deposits

19,637



19,176



15,459


  • Net interest income of $443 million in the first quarter 2012 decreased $1 million compared to the fourth quarter 2011, as the benefit from a $510 million increase in average earning assets ($7 million) and lower funding costs ($2 million) was offset by lower loan yields ($5 million) and one less day in the quarter ($5 million). The lower loan yields reflected a shift in the average loan portfolio mix, largely due to the decrease in average commercial real estate loans and the increase in average commercial loans. Accretion of the purchase discount on the acquired Sterling loan portfolio was $25 million in the first quarter 2012, compared to $26 million in the fourth quarter 2011. For the remainder of 2012, $35 million to $45 million of accretion is expected to be recognized.
  • Average earning assets increased $510 million in the first quarter 2012 compared to the fourth quarter 2011, primarily reflecting increases of $815 million in average loans and $108 million in average investment securities available-for-sale, partially offset by a $417 million decrease in average Federal Reserve Bank deposits.
  • Average deposits increased $532 million in the first quarter 2012, compared to the fourth quarter 2011, primarily due to a $461 million increase in average noninterest-bearing deposits.

Noninterest Income

Noninterest income was $206 million for the first quarter 2012, compared to $182 million for the fourth quarter 2011. The $24 million increase primarily resulted from a $10 million, or 6 percent, increase in customer-driven fee income and a $9 million increase in net securities gains. The increase in customer-driven fee income included increases in service charges on deposit accounts ($4 million), investment banking fees ($3 million), fiduciary income ($2 million) and commercial lending fees ($2 million). The increase in net securities gains reflected an increase of $4 million in gains from redemptions of auction-rate securities in the first quarter 2012, when compared to fourth quarter 2011, and $5 million in charges in the fourth quarter 2011 related to a derivative contract tied to the conversion rate of Visa Class B shares.

Noninterest Expenses

Noninterest expenses totaled $448 million in the first quarter 2012, a decrease of $30 million compared to $478 million in the fourth quarter 2011. The decrease in noninterest expenses was primarily due to decreases in merger and restructuring charges ($37 million), net occupancy expense ($6 million), and salaries expense ($4 million), partially offset by increases in employee benefits expense ($8 million), primarily due to an increase in pension expense, and litigation and legal expenses ($5 million), included in other noninterest expenses. The decrease in net occupancy expense in part reflected savings related to increased efficiency in space utilization. Restructuring charges of approximately $40 million are expected to be incurred for the remainder of 2012, with $5 million to $10 million expected in second quarter 2012.

Credit Quality














(dollar amounts in millions)

1st Qtr '12


4th Qtr '11


1st Qtr '11

Net credit-related charge-offs

$

45



$

60



$

101


Net credit-related charge-offs/Average total loans

0.43

%


0.57

%


1.03

%







Provision for loan losses

$

23



$

19



$

49


Provision for credit losses on lending-related commitments

(1)



(1)



(3)


Total provision for credit losses

22



18



46








Nonperforming loans (a)

856



887



1,030


Nonperforming assets (NPAs) (a)

923



981



1,104


NPAs/Total loans and foreclosed property

2.14

%


2.29

%


2.81

%







Loans past due 90 days or more and still accruing

$

50



$

58



$

72








Allowance for loan losses

704



726



849


Allowance for credit losses on lending-related commitments (b)

25



26



32


Total allowance for credit losses

729



752



881








Allowance for loan losses/Total loans (c)

1.64

%


1.70

%


2.17

%

Allowance for loan losses/Nonperforming loans

82



82



82




(a)

Excludes loans acquired with credit impairment.

(b)

Included in "Accrued expenses and other liabilities" on the consolidated balance sheets.

(c)

Reflects the impact of acquired loans, which were initially recorded at fair value, with no related allowance for loan losses.

"Credit quality continued to improve in the first quarter," said Babb. "Net charge-offs, which decreased $15 million to $45 million in the first quarter, are at the lowest level since the third quarter of 2007. The provision for loan losses was relatively stable. Our expectation is that we will continue to see the provision and net-charge offs at these levels for the remainder of the year assuming the current level of economic growth is sustained."

  • Net credit-related charge-offs decreased $15 million to $45 million in the first quarter 2012, from $60 million in the fourth quarter 2011. The decrease in net credit-related charge-offs was broad-based, spread across many business lines.
  • The provision for loan losses was $23 million in the first quarter 2012, compared to $19 million in the fourth quarter 2011. The change in the provision for loan losses reflects increased loan volumes.
  • Internal watch list loans continued the downward trend, declining $261 million in the first quarter 2012, to $4.2 billion at March 31, 2012. Nonperforming assets decreased $58 million to $923 million at March 31, 2012.
  • During the first quarter 2012, $69 million of borrower relationships over $2 million were transferred to nonaccrual status, a decrease of $30 million from the fourth quarter 2011.
  • The allowance for loan losses to total loans ratio was 1.64 percent and 1.70 percent at March 31, 2012 and December 31, 2011, respectively.

Balance Sheet and Capital Management

Total assets and common shareholders' equity were $62.6 billion and $7.0 billion, respectively, at March 31, 2012, compared to $61.0 billion and $6.9 billion, respectively, at December 31, 2011. There were approximately 197 million common shares outstanding at March 31, 2012. Comerica repurchased $33 million of common stock (1.1 million shares) under the share repurchase program during the first quarter 2012.

The Federal Reserve completed its review of Comerica's 2012 Capital Plan in March 2012 and did not object to the capital distributions contemplated in the plan. The capital plan provides for up to $375 million in equity repurchases for the five-quarter period ending March 31, 2013. The capital plan, which was approved by Comerica's Board of Directors, further contemplates a 50 percent increase in Comerica's quarterly dividend, from 10 cents per share to 15 cents per share. The dividend proposal will be considered by the Board at its April 24, 2012 meeting. In addition, the capital plan includes the authority to redeem the remaining $25 million of trust preferred securities outstanding as of March 31, 2012.

Comerica's tangible common equity ratio was 10.21% at March 31, 2012, a decrease of 6 basis points from December 31, 2011. The estimated Tier 1 common capital ratio decreased 4 basis points, to 10.33% at March 31, 2012, from December 31, 2011.

Full-Year 2012 Outlook Compared to Full-Year 2011

For 2012, management expects the following, assuming a continuation of the current economic environment:

  • Average loans increasing moderately.
  • Net interest income increasing moderately.
  • Net credit-related charge-offs and provision for credit losses declining.
  • Noninterest income relatively stable.
  • Noninterest expenses relatively stable.
  • Effective tax rate of approximately 27 percent.

Business Segments

Comerica's operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank and Wealth Management. The Finance Division is also reported as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at March 31, 2012 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses first quarter 2012 results compared to fourth quarter 2011.

The following table presents net income (loss) by business segment.




















(dollar amounts in millions)

1st Qtr '12


4th Qtr '11


1st Qtr '11

Business Bank

$

206


89

%


$

201


94

%


$

167


93

%

Retail Bank

14


6



10


4



(2)


(1)


Wealth Management

11


5



5


2



14


8



231


100

%


216


100

%


179


100

%

Finance

(92)




(94)




(75)



Other (a)

(9)




(26)




(1)



    Total

130




$

96




$

103



(a)

Includes discontinued operations and items not directly associated with the three major business segments or the Finance Division.

Business Bank














(dollar amounts in millions)

1st Qtr '12



4th Qtr '11



1st Qtr '11


Net interest income (FTE)

$

379



$

383



$

341


Provision for loan losses

1



(4)



18


Noninterest income

81



73



77


Noninterest expenses

159



161



160


Net income

206



201



167








Net credit-related charge-offs

28



32



73








Selected average balances:






Assets

33,184



32,151



30,092


Loans

32,240



31,257



29,609


Deposits

23,997



23,296



20,084


  • Average loans increased $983 million, primarily due to increases in National Dealer Services, Energy, Global Corporate Banking, Technology and Life Sciences, and Middle Market, partially offset by a decline in Commercial Real Estate.
  • Average deposits increased $701 million, primarily due to increases in the Financial Services Division, Global Corporate Banking, and Technology and Life Sciences, partially offset by a decline in Energy.
  • Net interest income decreased $4 million, primarily due to one less day in the quarter. The benefit from increases in average loan balances and lower deposit rates was offset by an increase in net funds transfer pricing (FTP) funding costs and lower loan yields.
  • The provision for loan losses increased $5 million, primarily reflecting increases in Middle Market and Commercial Real Estate, partially offset by a decrease in Technology and Life Sciences.
  • Noninterest income increased $8 million, primarily reflecting increases in service charges on deposit accounts, commercial lending fees, warrant income and customer derivative income.

Retail Bank














(dollar amounts in millions)

1st Qtr '12



4th Qtr '11



1st Qtr '11


Net interest income (FTE)

$

167



$

176



$

139


Provision for loan losses

4



15



23


Noninterest income

42



35



42


Noninterest expenses

184



182



162


Net income (loss)

14



10



(2)








Net credit-related charge-offs

12



16



23








Selected average balances:






Assets

6,173



6,250



5,558


Loans

5,462



5,571



5,106


Deposits

20,373



20,715



17,360


  • Average loans declined $109 million, primarily due to decreases in Personal Banking and Small Business Banking.
  • Average deposits decreased $342 million, primarily due to a decrease in Small Business Banking.
  • Net interest income decreased $9 million, primarily due to a decrease in FTP funding credits, one less day in the quarter and lower loan yields, partially offset by lower deposit rates.
  • The provision for loan losses decreased $11 million, reflecting declines in both Personal Banking and Small Business Banking.
  • Noninterest income increased $7 million, primarily due to a fourth quarter 2011 charge of $5 million related to a derivative contract tied to the conversion rate of Visa Class B shares.

Wealth Management














(dollar amounts in millions)

1st Qtr '12



4th Qtr '11



1st Qtr '11


Net interest income (FTE)

$

47



$

46



$

44


Provision for loan losses

14



10



8


Noninterest income

65



55



64


Noninterest expenses

81



83



78


Net income

11



5



14








Net credit-related charge-offs

5



12



5








Selected average balances:






Assets

4,636



4,672



4,809


Loans

4,565



4,618



4,807


Deposits

3,611



3,400



2,800


  • Average loans decreased $53 million.
  • Average deposits increased $211 million, primarily reflecting an increase in Private Banking.
  • Net interest income increased $1 million, primarily due to an increase in average deposit balances.
  • The provision for loan losses increased $4 million, primarily due to an increase in the Florida market.
  • Noninterest income increased $10 million, primarily due to increases in gains on the redemption of auction-rate securities, investment banking fees and fiduciary income.

Geographic Market Segments

Comerica also provides market segment results for four primary geographic markets: Midwest, Western, Texas and Florida. In addition to the four primary geographic markets, Other Markets and International are also reported as market segments. The financial results below are based on methodologies in effect at March 31, 2012 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses first quarter 2012 results compared to fourth quarter 2011.

The following table presents net income (loss) by market segment.




















(dollar amounts in millions)

1st Qtr '12


4th Qtr '11


1st Qtr '11

Midwest

$

68


30

%


$

53


25

%


$

53


29

%

Western

65


28



65


30



51


28


Texas

49


21



55


26



29


16


Florida

(1)




(1)


(1)



(4)


(2)


Other Markets

38


16



32


15



38


22


International

12


5



12


5



12


7



231


100

%


216


100

%


179


100

%

Finance & Other Businesses (a)

(101)




(120)




(76)



    Total

$

130




$

96




$

103



(a)

Includes discontinued operations and items not directly associated with the geographic markets.

Midwest Market














(dollar amounts in millions)

1st Qtr '12



4th Qtr '11



1st Qtr '11


Net interest income (FTE)

$

198



$

202



$

203


Provision for loan losses

10



20



34


Noninterest income

98



85



100


Noninterest expenses

183



185



188


Net income

68



53



53








Net credit-related charge-offs

18



32



46








Selected average balances:






Assets

14,095



13,976



14,303


Loans

13,829



13,725



14,104


Deposits

19,415



19,076



18,230


  • Average loans increased $104 million, primarily due to an increase in National Dealer Services.
  • Average deposits increased $339 million, primarily due to increases in Personal Banking and the Financial Services Division.
  • Net interest income decreased $4 million, primarily due one less day in the quarter, lower loan yields, and lower net FTP funding credits, partially offset by an increase in average loan balances and lower deposit rates.
  • The provision for loan losses decreased $10 million, primarily reflecting decreases in Small Business Banking, Commercial Real Estate, Personal Banking and Global Corporate Banking, partially offset by an increase in Middle Market.
  • Noninterest income increased $13 million, primarily due to fourth quarter 2011 charges of $5 million related to a derivative contract tied to the conversion rate of Visa Class B shares and increases in investment banking fees, commercial lending fees, service charges on deposit accounts and fiduciary income.

Western Market














(dollar amounts in millions)

1st Qtr '12



4th Qtr '11



1st Qtr '11


Net interest income (FTE)

$

171



$

170



$

164


Provision for loan losses

(7)



(12)



11


Noninterest income

33



33



37


Noninterest expenses

107



109



109


Net income

65



65



51








Net credit-related charge-offs

11



5



26








Selected average balances:






Assets

12,623



12,266



12,590


Loans

12,383



12,026



12,383


Deposits

13,897



13,671



12,235


  • Average loans increased $357 million, primarily due to increases in National Dealer Services and Technology and Life Sciences.
  • Average deposits increased $226 million, primarily due to an increase in the Financial Services Division.
  • Net interest income increased $1 million, primarily due to an increase in average loan balances, partially offset by lower loan yields and one less day in the quarter.
  • The provision for loan losses increased $5 million, primarily reflecting increases in Commercial Real Estate, Small Business Banking and Middle Market, partially offset by a decrease in Technology and Life Sciences.

Texas Market














(dollar amounts in millions)

1st Qtr '12



4th Qtr '11



1st Qtr '11


Net interest income (FTE)

$

151



$

158



$

87


Provision for loan losses

14



8



4


Noninterest income

31



26



23


Noninterest expenses

92



89



61


Net income

49



55



29








Net credit-related charge-offs

7



4



8








Selected average balances:






Assets

10,082



9,712



7,031


Loans

9,295



8,952



6,824


Deposits

10,229



10,333



5,786


  • Average loans increased $343 million, led by an increase in Energy, as well as increases in Middle Market and Global Corporate Banking, partially offset by a decrease in Commercial Real Estate.
  • Average deposits decreased $104 million, primarily reflecting a decrease in Energy.
  • Net interest income decreased $7 million, primarily due to lower loan yields, an increase in net FTP funding costs, and one less day in the quarter, partially offset by an increase in average loan balances and lower deposit rates.
  • The provision for loan losses increased $6 million, primarily due to increases in Commercial Real Estate and Middle Market, partially offset by a decrease in Technology and Life Sciences.
  • Noninterest income increased $5 million, primarily due to increases across numerous categories.

Florida Market














(dollar amounts in millions)

1st Qtr '12



4th Qtr '11



1st Qtr '11


Net interest income (FTE)

$

10



$

11



$

11


Provision for loan losses

6



4



8


Noninterest income

4



4



4


Noninterest expenses

9



13



12


Net income

(1)



(1)



(4)








Net credit-related charge-offs

2



7



8








Selected average balances:






Assets

1,416



1,435



1,553


Loans

1,418



1,457



1,580


Deposits

424



435



367


  • Average loans decreased $39 million.
  • The provision for loan losses increased $2 million, primarily due to an increase in Private Banking, partially offset by a decrease in Commercial Real Estate.
  • Noninterest expenses decreased $4 million, due to decreases across numerous categories.

Conference Call and Webcast

Comerica will host a conference call to review first quarter 2012 financial results at 7 a.m. CT Tuesday, April 17, 2012. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 62064995). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A telephone replay will be available approximately two hours following the conference call through April 30, 2012. The conference call replay can be accessed by calling (855) 859-2056 or (404) 537-3406 (event ID No. 62064995). A replay of the Webcast can also be accessed via Comerica's "Investor Relations" page at www.comerica.com.

Comerica Incorporated is a financial services company headquartered in Dallas, Texas, and strategically aligned by three major business segments: The Business Bank, The Retail Bank and Wealth Management. Comerica focuses on relationships and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico.

This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Comerica's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as a reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Forward-looking Statements

Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "anticipates," "believes," "contemplates," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "opportunity," "initiative," "outcome," "continue," "remain," "maintain," "on course," "trend," "objective," "looks forward" and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "might," "can," "may" or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica's management based on information known to Comerica's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica's management for future or past operations, products or services, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries, estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in general economic, political or industry conditions; changes in monetary and fiscal policies, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; changes in Comerica's credit rating; the interdependence of financial service companies; changes in regulation or oversight; unfavorable developments concerning credit quality; the acquisition of Sterling Bancshares, Inc., or any future acquisitions; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers; the implementation of Comerica's strategies and business models, including the implementation of revenue enhancements and efficiency improvements; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; operational difficulties, failure of technology infrastructure or information security incidents; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings; 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, 2011. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.











CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

Comerica Incorporated and Subsidiaries






Three Months Ended


March 31,

December 31,

March 31,

(in millions, except per share data)

2012

2011

2011

PER COMMON SHARE AND COMMON STOCK DATA




Diluted net income

$

0.66


$

0.48


$

0.57


Cash dividends declared

0.10


0.10


0.10


Common shareholders' equity (at period end)

35.44


34.80


33.25


Tangible common equity (at period end) (a)

32.06


31.42


32.37






Average diluted shares (in thousands)

196,021


196,729


178,425


KEY RATIOS




Return on average common shareholders' equity

7.50

%

5.51

%

7.08

%

Return on average assets

0.84


0.63


0.77


Tier 1 common capital ratio (a) (b)

10.33


10.37


10.35


Tier 1 risk-based capital ratio (b)

10.37


10.41


10.35


Total risk-based capital ratio (b)

14.11


14.25


14.80


Leverage ratio (b)

10.97


10.92


11.37


Tangible common equity ratio (a)

10.21


10.27


10.43


AVERAGE BALANCES




Commercial loans

$

24,736


$

23,515


$

21,496


Real estate construction loans:




Commercial Real Estate business line (c)

1,056


1,189


1,754


Other business lines (d)

397


430


425


Total real estate construction loans

1,453


1,619


2,179


Commercial mortgage loans:




Commercial Real Estate business line (c)

2,520


2,552


1,978


Other business lines (d)

7,682


7,836


7,812


Total commercial mortgage loans

10,202


10,388


9,790


Lease financing

897


919


987


International loans

1,205


1,128


1,219


Residential mortgage loans

1,519


1,591


1,599


Consumer loans

2,257


2,294


2,281


Total loans

42,269


41,454


39,551






Earning assets

56,186


55,676


49,347


Total assets

61,613


61,045


53,775


Noninterest-bearing deposits

19,637


19,176


15,459


Interest-bearing deposits

28,674


28,603


25,139


Total deposits

48,311


47,779


40,598






Common shareholders' equity

6,939


6,947


5,835


NET INTEREST INCOME




Net interest income (fully taxable equivalent basis)

$

444


$

445


$

396


Fully taxable equivalent adjustment

1


1


1


Net interest margin (fully taxable equivalent basis)

3.19

%

3.19

%

3.25

%

CREDIT QUALITY




Nonaccrual loans

$

830


$

860


$

996


Reduced-rate loans

26


27


34


Total nonperforming loans (e)

856


887


1,030


Foreclosed property

67


94


74


Total nonperforming assets (e)

923


981


1,104






Loans past due 90 days or more and still accruing

50


58


72






Gross loan charge-offs

62


85


123


Loan recoveries

17


25


22


Net loan charge-offs

45


60


101






Allowance for loan losses

704


726


849


Allowance for credit losses on lending-related commitments

25


26


32


Total allowance for credit losses

729


752


881






Allowance for loan losses as a percentage of total loans (f)

1.64

%

1.70

%

2.17

%

Net loan charge-offs as a percentage of average total loans (g)

0.43


0.57


1.03


Nonperforming assets as a percentage of total loans and foreclosed property (e)

2.14


2.29


2.81


Allowance for loan losses as a percentage of total nonperforming loans

82


82


82




(a)

See Reconciliation of Non-GAAP Financial Measures.

(b)

March 31, 2012 ratios are estimated.

(c)

Primarily loans to real estate investors and developers.

(d)

Primarily loans secured by owner-occupied real estate.

(e)

Excludes loans acquired with credit-impairment.

(f)

Reflects the impact of acquired loans, which were initially recorded at fair value with no related allowance for loan losses.

(g)

Lending-related commitment charge-offs were zero in all periods presented.












CONSOLIDATED BALANCE SHEETS

Comerica Incorporated and Subsidiaries






March 31,

December 31,

March 31,

(in millions, except share data)

2012

2011

2011


(unaudited)


(unaudited)

ASSETS




Cash and due from banks

$

984


$

982


$

875






Federal funds sold

10




Interest-bearing deposits with banks

2,966


2,574


3,570


Other short-term investments

180


149


154






Investment securities available-for-sale

10,061


10,104


7,406






Commercial loans

25,640


24,996


21,360


Real estate construction loans

1,442


1,533


2,023


Commercial mortgage loans

10,079


10,264


9,697


Lease financing

872


905


958


International loans

1,256


1,170


1,326


Residential mortgage loans

1,485


1,526


1,550


Consumer loans

2,238


2,285


2,262


Total loans

43,012


42,679


39,176


Less allowance for loan losses

(704)


(726)


(849)


Net loans

42,308


41,953


38,327






Premises and equipment

670


675


637


Accrued income and other assets

5,414


4,571


4,048


Total assets

$

62,593


$

61,008


$

55,017






LIABILITIES AND SHAREHOLDERS' EQUITY




Noninterest-bearing deposits

$

20,741


$

19,764


$

16,357






Money market and NOW deposits

20,502


20,311


17,888


Savings deposits

1,586


1,524


1,457


Customer certificates of deposit

6,145


5,808


5,672


Foreign office time deposits

332


348


499


Total interest-bearing deposits

28,565


27,991


25,516


Total deposits

49,306


47,755


41,873






Short-term borrowings

82


70


61


Accrued expenses and other liabilities

1,301


1,371


1,090


Medium- and long-term debt

4,919


4,944


6,116


Total liabilities

55,608


54,140


49,140






Common stock - $5 par value:




Authorized - 325,000,000 shares




Issued - 228,164,824 shares at 3/31/12 and 12/31/11 




and 203,878,110 shares at 3/31/11

1,141


1,141


1,019


Capital surplus

2,154


2,170


1,464


Accumulated other comprehensive loss

(326)


(356)


(382)


Retained earnings

5,630


5,546


5,317


Less cost of common stock in treasury - 31,032,920 shares at 3/31/12,




30,831,076 shares at 12/31/11 and 27,103,941 shares at 3/31/11

(1,614)


(1,633)


(1,541)


Total shareholders' equity

6,985


6,868


5,877


Total liabilities and shareholders' equity

$

62,593


$

61,008


$

55,017










CONSOLIDATED STATEMENTS OF INCOME (unaudited)

Comerica Incorporated and Subsidiaries





Three Months Ended


March 31,

(in millions, except per share data)

2012

2011

INTEREST INCOME



Interest and fees on loans

$

411


$

375


Interest on investment securities

64


57


Interest on short-term investments

3


2


Total interest income

478


434


INTEREST EXPENSE



Interest on deposits

19


22


Interest on medium- and long-term debt

16


17


Total interest expense

35


39


Net interest income

443


395


Provision for loan losses

23


49


Net interest income after provision for loan losses

420


346


NONINTEREST INCOME



Service charges on deposit accounts

56


52


Fiduciary income

38


39


Commercial lending fees

25


21


Letter of credit fees

17


18


Card fees

11


15


Foreign exchange income

9


9


Bank-owned life insurance

10


8


Brokerage fees

6


6


Net securities gains

5


2


Other noninterest income

29


37


Total noninterest income

206


207


NONINTEREST EXPENSES



Salaries

201


188


Employee benefits

60


50


Total salaries and employee benefits

261


238


Net occupancy expense

41


40


Equipment expense

17


15


Outside processing fee expense

26


24


Software expense

23


23


FDIC insurance expense

10


15


Advertising expense

7


7


Other real estate expense

4


8


Other noninterest expenses

59


45


Total noninterest expenses

448


415


Income before income taxes

178


138


Provision for income taxes

48


35


NET INCOME

130


103


Less income allocated to participating securities

1


1


Net income attributable to common shares

$

129


$

102


Earnings per common share:



Basic

$

0.66


$

0.58


Diluted

0.66


0.57





Comprehensive income

160


110





Cash dividends declared on common stock

20


17


Cash dividends declared per common share

0.10


0.10































CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (unaudited)

Comerica Incorporated and Subsidiaries













(in millions, except per share data)

First

Fourth

Third

Second

First


First Quarter 2012 Compared To:

Quarter

Quarter

Quarter

Quarter

Quarter


Fourth Quarter 2011


First Quarter 2011

2012

2011

2011

2011

2011


Amount

Percent


Amount

Percent

INTEREST INCOME












Interest and fees on loans

$

411


$

415


$

405


$

369


$

375



$

(4)


(1)

%


$

36


10

%

Interest on investment securities

64


63


54


59


57



1


1



7


11


Interest on short-term investments

3


3


4


3


2




(6)



1


34


Total interest income

478


481


463


431


434



(3)


(1)



44


10


INTEREST EXPENSE












Interest on deposits

19


21


24


23


22



(2)


(10)



(3)


(17)


Interest on medium- and long-term debt

16


16


16


17


17




1



(1)


(1)


Total interest expense

35


37


40


40


39



(2)


(5)



(4)


(11)


Net interest income

443


444


423


391


395



(1)




48


12


Provision for loan losses

23


19


38


47


49



4


21



(26)


(53)


Net interest income after provision for loan losses

420


425


385


344


346



(5)


(1)



74


21


NONINTEREST INCOME












Service charges on deposit accounts

56


52


53


51


52



4


8



4


6


Fiduciary income

38


36


37


39


39



2


7



(1)


(1)


Commercial lending fees

25


23


22


21


21



2


5



4


20


Letter of credit fees

17


18


19


18


18



(1)


(3)



(1)


(6)


Card fees

11


11


17


15


15




(2)



(4)


(24)


Foreign exchange income

9


10


11


10


9



(1)


(11)




6


Bank-owned life insurance

10


10


10


9


8




(2)



2


15


Brokerage fees

6


5


5


6


6



1


15




(10)


Net securities gains (losses)

5


(4)


12


4


2



9


N/M



3


N/M


Other noninterest income

29


21


15


29


37



8


38



(8)


(19)


Total noninterest income

206


182


201


202


207



24


13



(1)



NONINTEREST EXPENSES












Salaries

201


205


192


185


188



(4)


(2)



13


7


Employee benefits

60


52


53


50


50



8


14



10


18


Total salaries and employee benefits

261


257


245


235


238



4


1



23


10


Net occupancy expense

41


47


44


38


40



(6)


(11)



1


4


Equipment expense

17


17


17


17


15




(4)



2


8


Outside processing fee expense

26


27


25


25


24



(1)


(3)



2


10


Software expense

23


23


22


20


23




1




1


Merger and restructuring charges


37


33


5




(37)


(98)




N/M


FDIC insurance expense

10


8


8


12


15



2


19



(5)


(31)


Advertising expense

7


7


7


7


7




2





Other real estate expense

4


3


5


6


8



1


21



(4)


(57)


Other noninterest expenses

59


52


54


44


45



7


13



14


31


Total noninterest expenses

448


478


460


409


415



(30)


(6)



33


8


Income before income taxes

178


129


126


137


138



49


38



40


29


Provision for income taxes

48


33


28


41


35



15


43



13


37


NET INCOME

130


96


98


96


103



34


36



27


26


Less income allocated to participating securities

1


1


1


1


1




72




33


Net income attributable to common shares

$

129


$

95


$

97


$

95


$

102



$

34


36

%


$

27


26

%

Earnings per common share:












Basic

$

0.66


$

0.48


$

0.51


$

0.54


$

0.58



$

0.18


38

%


$

0.08


14

%

Diluted

0.66


0.48


0.51


0.53


0.57



0.18


38



0.09


16














Comprehensive income (loss)

160


(30)


176


170


110



190


N/M



50


46














Cash dividends declared on common stock

20


20


20


18


17




(1)



3


11


Cash dividends declared per common share

0.10


0.10


0.10


0.10


0.10








N/M - Not Meaningful



















ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)

Comerica Incorporated and Subsidiaries









2012


2011

(in millions)

1st Qtr


4th Qtr

3rd Qtr

2nd Qtr

1st Qtr








Balance at beginning of period

$

726



$

767


$

806


$

849


$

901









Loan charge-offs:







Commercial

25



28


33


66


65


Real estate construction:







Commercial Real Estate business line (a)

2



4


11


12


8


Other business lines (b)



1


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