Comerica Reports Fourth Quarter 2012 Net Income Of $130 Million

11 Percent Increase in Net Income From Third Quarter 2012 Reflects Loan and Fee Income Growth, Expense Control

Full-Year 2012 Net Income of $521 Million Up 33 Percent From 2011

10 Million Shares Repurchased in 2012 Under the Share Repurchase Program

79 Percent of 2012 Net Income Returned to Shareholders

Jan 16, 2013, 06:40 ET from Comerica Incorporated

DALLAS, Jan. 16, 2013 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported fourth quarter 2012 net income of $130 million, compared to $117 million for the third quarter 2012. Earnings per fully diluted share were 68 cents for the fourth quarter 2012, compared to 61 cents for the third quarter 2012.

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Full-year 2012 net income was $521 million, an increase of $128 million, or 33 percent, compared to 2011. 2012 net income included restructuring expenses associated with the acquisition of Sterling Bancshares, Inc. (Sterling) of $35 million ($22 million, after tax), compared to $75 million ($47 million, after tax) for 2011. Earnings per fully diluted share were $2.67 for 2012, compared to $2.09 for 2011.

(dollar amounts in millions, except per share data)

4th Qtr '12

3rd Qtr '12

4th Qtr '11

Net interest income (a)

$

424

$

427

$

444

Provision for credit losses

16

22

18

Noninterest income

204

197

182

Noninterest expenses (b)

427

449

479

Provision for income taxes

55

36

33

Net income

130

117

96

Net income attributable to common shares

128

116

95

Diluted income per common share

0.68

0.61

0.48

Average diluted shares (in millions)

188

191

197

Tier 1 common capital ratio (d)

10.11

%

(c)

10.35

%

10.37

%

Tangible common equity ratio (d)

9.71

10.25

10.27

(a)

Included accretion of the purchase discount on the acquired Sterling loan portfolio of $13 million ($8 million, after tax), $15 million ($9 million, after tax) and $26 million ($16 million, after tax) in the fourth quarter 2012, third quarter 2012 and fourth quarter 2011, respectively.

(b)

Included restructuring expenses of $2 million ($1 million, after tax), $25 million ($16 million, after tax) and $37 million ($23 million, after tax) in the fourth quarter 2012, third quarter 2012 and fourth quarter 2011, respectively, associated with the acquisition of Sterling.

(c)

December 31, 2012 ratio is estimated.

(d)

See Reconciliation of Non-GAAP Financial Measures.

"Loan and fee income growth combined with expense control contributed to our 11 percent increase in net income, when compared to the third quarter," said Ralph W. Babb Jr., chairman and chief executive officer. "In this slow growing national economy, we continue to benefit from our position in growth markets and industry expertise, which helped drive an increase in average total loans of $522 million, primarily reflecting an increase of $762 million, or 3 percent, in commercial loans. We continue to capitalize on opportunities by allocating resources to faster growing markets and segments.

"Average total deposits increased $1.4 billion in the fourth quarter to a record $51.3 billion, primarily reflecting an increase of $1.3 billion, or 6 percent, in noninterest-bearing deposits."

"Excluding accretion, net interest income was stable in the fourth quarter, and noninterest income increased $7 million to $204 million, primarily due to increases in customer-driven categories. Credit quality continued to be strong and our capital position remains a source of strength to support our growth. We repurchased 3.1 million shares in the fourth quarter and 10.1 million shares for the full-year 2012 under our share repurchase program. Combined with dividends, we returned 79 percent of 2012 net income to shareholders.

"Looking ahead, we believe our focus on relationships, growth markets, industry expertise and expense management should assist us in increasing returns to shareholders and provide us the momentum that will not only carry us through an extended low-rate environment, but enable us to succeed in it, too."

Fourth Quarter and Full-Year 2012 Overview

Fourth Quarter 2012 Compared to Third Quarter 2012

  • Average total loans increased $522 million, or 1 percent, to $44.1 billion, primarily reflecting an increase of $762 million, or 3 percent, in commercial loans, partially offset by a decrease of $241 million, or 2 percent, in commercial real estate loans (commercial mortgage and real estate construction loans). The increase in commercial loans was primarily driven by increases in National Dealer Services, Energy, general Middle Market and Mortgage Banker Finance, partially offset by a decrease in Corporate. Period-end loans increased $1.9 billion, or 4 percent, to $46.1 billion, primarily reflecting an increase of $2.1 billion, or 7 percent, in commercial loans, partially offset by a decrease of $239 million, or 2 percent, in commercial real estate loans.
  • Average total deposits increased $1.4 billion, to $51.3 billion, primarily reflecting an increase of $1.3 billion, or 6 percent, in noninterest-bearing deposits. Period-end deposits increased $2.2 billion, to $52.2 billion.
  • Net interest income was $424 million in the fourth quarter 2012 compared to $427 million in the third quarter 2012. Excluding the $2 million decrease in the accretion of the purchase discount on the acquired Sterling loan portfolio, net interest income was stable.
  • Strong credit quality continued in the fourth quarter 2012. Nonaccrual loans decreased $146 million, to $519 million at December 31, 2012. Net credit-related charge-offs decreased $6 million to $37 million, or 0.34 percent of average loans, in the fourth quarter 2012. The provision for credit losses was $16 million in the fourth quarter 2012 compared to $22 million in the third quarter 2012.
  • Noninterest income increased $7 million to $204 million in the fourth quarter 2012 compared to $197 million for the third quarter 2012. The increase was primarily due to increases in customer driven categories.
  • Noninterest expenses decreased $22 million to $427 million in the fourth quarter 2012, compared to $449 million in the third quarter 2012. Fourth quarter 2012 included final restructuring expenses of $2 million related to the Sterling acquisition, a decrease of $23 million compared to the third quarter 2012.
  • Comerica repurchased 3.1 million shares of common stock under the share repurchase program in the fourth quarter 2012. Combined with the dividend, $121 million, or 93 percent of net income, was returned to shareholders in the fourth quarter.

Full-Year 2012 Compared to Full-Year 2011

  • Net income of $521 million for 2012 increased $128 million, or 33 percent, compared to 2011.
  • Average total loans increased $3.2 billion, or 8 percent, to $43.3 billion in 2012, in part due to the acquisition of Sterling and reflecting an increase of $4.0 billion, or 18 percent, in commercial loans, partially offset by a decrease of $636 million in commercial real estate loans. The increase in commercial loans was primarily driven by increases in Energy, Mortgage Banker Finance, National Dealer Services, general Middle Market, Technology and Life Sciences, and Corporate. Period-end total loans increased $3.4 billion, or 8 percent, to $46.1 billion from year-end 2011 to year-end 2012.
  • Average total deposits increased $5.8 billion, or 13 percent, to $49.5 billion in 2012, in part due to the acquisition of Sterling. Period-end total deposits increased $4.4 billion, or 9 percent.
  • Net interest income increased $75 million, or 5 percent, primarily due to an increase in average earning assets of $5.4 billion and an $18 million increase in the accretion of the purchase discount on the acquired Sterling loan portfolio, partially offset by a decrease in yields.
  • Credit quality improved significantly. The provision for credit losses declined $65 million to $79 million in 2012, compared to 2011. Net credit-related charge-offs decreased $158 million to $170 million.
  • Noninterest income increased $26 million compared to 2011, primarily in customer-driven categories.
  • Noninterest expenses decreased $14 million. 2012 included Sterling-related merger and restructuring charges of $35 million, compared to $75 million in 2011. Salaries and employee benefits expense increased $43 million, primarily due to increased pension expense and the impact of Sterling.
  • 10.1 million shares were repurchased in 2012, which, combined with dividends, returned 79 percent of 2012 net income to shareholders.

Net Interest Income

(dollar amounts in millions)

4th Qtr '12

3rd Qtr '12

4th Qtr '11

Net interest income

$

424

$

427

$

444

Net interest margin

2.87

%

2.96

%

3.19

%

Selected average balances:

Total earning assets

$

59,276

$

57,801

$

55,676

Total loans

44,119

43,597

41,454

Total investment securities

10,250

9,791

9,781

Federal Reserve Bank deposits (excess liquidity)

4,638

4,160

4,216

Total deposits

51,292

49,857

47,779

Total noninterest-bearing deposits

22,758

21,469

19,176

  • Net interest income of $424 million in the fourth quarter 2012 decreased $3 million compared to the third quarter 2012.
    • An increase in loan volumes increased net interest income by $4 million.
    • The continued shift in the loan portfolio mix reduced net interest income $4 million. The change in loan portfolio mix primarily reflected a decrease in higher-yielding commercial real estate loans, an increase in lower-yielding commercial loans, the maturity of higher-yielding fixed-rate loans and positive credit quality migration throughout the loan portfolio.
    • A decline in LIBOR reduced net interest income $2 million.
    • Accretion of the purchase discount on the acquired Sterling loan portfolio decreased $2 million to $13 million in the fourth quarter 2012, compared to $15 million in the third quarter 2012.
    • Interest earned on investment securities available-for-sale decreased $2 million, primarily as a result of lower reinvestment yields on mortgage-backed investment securities, partially offset by an increase in volume.
    • Funding costs decreased $1 million due to lower deposit rates. In addition, third quarter 2012 included a $2 million negative residual value adjustment to assets in the leasing portfolio.
  • Average earning assets increased $1.5 billion in the fourth quarter 2012, compared to the third quarter 2012, primarily reflecting a $522 million increase in average loans, a $478 million increase in excess liquidity and a $459 million increase in average investment securities available-for-sale.
  • Average deposits increased $1.4 billion in the fourth quarter 2012, compared to the third quarter 2012, primarily due to a $1.3 billion increase in average noninterest-bearing deposits. The rate paid on total average interest-bearing deposits decreased 2 basis points, to 22 basis points.
  • The net interest margin of 2.87 percent decreased 9 basis points compared to the third quarter 2012. The net interest margin was negatively impacted by the continued shift in mix in the loan portfolio (4 basis points), lower yields on mortgage-backed securities (3 basis points), the decline in LIBOR (2 basis points), the increase in excess liquidity (2 basis points), and lower accretion on the acquired Sterling loan portfolio (1 basis point). The third quarter negative residual value adjustment (2 basis points) and lower funding costs (1 basis point) partially offset the decline.

Noninterest Income

Noninterest income increased $7 million to $204 million for the fourth quarter 2012 compared to $197 million for the third quarter 2012. The increase was primarily due to increases in customer driven categories, including increases in commercial lending fees of $3 million, customer derivative income of $3 million and fiduciary income of $3 million, partially offset by a decrease in letter of credit fees of $2 million.

Noninterest Expenses

Noninterest expenses decreased $22 million to $427 million in the fourth quarter 2012, compared to $449 million in the third quarter 2012. The decrease was primarily due to decreases of $23 million in restructuring expenses, $4 million in legal fees and $2 million in employee benefits expense, partially offset by an increase of $4 million in severance expense. In addition, noninterest expenses were reduced by $6 million in the third quarter 2012 due to gains on sales of assets. Restructuring charges related to the Sterling acquisition are complete.

Provision for Income Taxes

The provision for income taxes was $55 million in the fourth quarter 2012, compared to $36 million in the third quarter 2012. The $19 million increase in the provision for income taxes reflected the increase in income before income taxes, as well as adjustments for certain discrete state tax items totaling $5 million in the fourth quarter 2012. In addition, the third quarter 2012 provision for income taxes included a benefit of $4 million from interest on tax refunds, net of tax.

Credit Quality

"Credit quality continued to be strong in the fourth quarter, with lower nonaccrual loans, watch list loans and provision for credit losses," said Babb. "With net charge-offs of 34 basis points, we are well within our historically normal range. We have demonstrated throughout the cycle that we can effectively manage credit."

(dollar amounts in millions)

4th Qtr '12

3rd Qtr '12

4th Qtr '11

Net credit-related charge-offs

$

37

$

43

$

60

Net credit-related charge-offs/Average total loans

0.34

%

0.39

%

0.57

%

Provision for credit losses

$

16

$

22

$

18

Nonperforming loans (a)

541

692

887

Nonperforming assets (NPAs) (a)

587

755

981

NPAs/Total loans and foreclosed property

1.27

%

1.71

%

2.29

%

Loans past due 90 days or more and still accruing

$

23

$

36

$

58

Allowance for loan losses

629

647

726

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

32

35

26

Total allowance for credit losses

661

682

752

Allowance for loan losses/Period-end total loans

1.37

%

1.46

%

1.70

%

Allowance for loan losses/Average total loans

1.43

1.48

1.75

Allowance for loan losses/Nonperforming loans

116

94

82

(a)

Excludes loans acquired with credit impairment.

(b)

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

  • Internal watch list loans continued the downward trend, declining $565 million in the fourth quarter 2012, to $3.1 billion at December 31, 2012. Nonperforming assets decreased $168 million to $587 million at December 31, 2012.
  • During the fourth quarter 2012, $36 million of borrower relationships over $2 million were transferred to nonaccrual status, an increase of $1 million from the third quarter 2012.

Balance Sheet and Capital Management

Total assets and common shareholders' equity were $65.4 billion and $6.9 billion, respectively, at December 31, 2012, compared to $63.3 billion and $7.1 billion, respectively, at September 30, 2012. There were approximately 188 million common shares outstanding at December 31, 2012. Comerica repurchased $93 million of common stock (3.1 million shares) under the share repurchase program during the fourth quarter 2012. Combined with the dividend of $0.15 per share in the fourth quarter 2012, share repurchases and dividends returned 93 percent of fourth quarter 2012 net income to shareholders. Common shareholders' equity also reflected a $160 million decline in accumulated other comprehensive income, net of tax, including temporary unrealized losses on investment securities available-for-sale of $49 million and a net decline of $111 million due to actuarial losses as a result of changes in defined benefit plan assumptions, net of amortization. For full-year 2012, share repurchases totaled $304 million (10.1 million shares), which, combined with dividends, returned 79 percent of 2012 net income to shareholders.

Comerica's tangible common equity ratio was 9.71 percent at December 31, 2012, a decrease of 54 basis points from September 30, 2012. The estimated Tier 1 common capital ratio decreased 24 basis points, to 10.11 percent at December 31, 2012, from September 30, 2012. The estimated Tier 1 common ratio under fully phased-in Basel III (as proposed) was 9.1 percent at December 31, 2012.

Full-Year 2013 Outlook

For 2013, management expects the following compared to 2012, assuming a continuation of the current slow growing economic environment:

  • Continued growth in average loans at a slower pace, with economic uncertainty impacting demand and a continued focus on maintaining pricing and structure discipline in a competitive environment.
  • Lower net interest income, reflecting both a decline of $40 million to $50 million in purchase accounting accretion and the effect of continued low rates. Loan growth should partially offset the impact of low rates on loans and securities.
  • Provision for credit losses stable, reflecting loan growth offset by a decline in nonperforming loans and net charge-offs.
  • Increase in customer-driven noninterest income, reflecting continued cross-sell initiatives and selective pricing adjustments. (Outlook does not include expectations for non-customer driven income).
  • Lower noninterest expense, reflecting further cost savings due to tight expense control and no restructuring expenses.
  • Income tax expense to approximate 36.5 percent of pre-tax income less approximately $66 million in tax benefits.

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 December 31, 2012 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses fourth quarter 2012 results compared to third quarter 2012.

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

(dollar amounts in millions)

4th Qtr '12

3rd Qtr '12

4th Qtr '11

Business Bank

$

212

90

%

$

211

84

%

$

201

94

%

Retail Bank

8

3

10

8

10

4

Wealth Management

16

7

18

8

5

2

236

100

%

239

100

%

216

100

%

Finance

(105)

(103)

(94)

Other (a)

(1)

(19)

(26)

Total

$

130

$

117

$

96

(a)

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

Business Bank

(dollar amounts in millions)

4th Qtr '12

3rd Qtr '12

4th Qtr '11

Net interest income (FTE)

$

393

$

386

$

381

Provision for credit losses

8

15

(6)

Noninterest income

79

76

73

Noninterest expenses

149

144

162

Net income

212

211

201

Net credit-related charge-offs

26

27

32

Selected average balances:

Assets

35,362

34,863

32,151

Loans

34,325

33,856

31,260

Deposits

26,051

25,143

23,296

  • Average loans increased $469 million, primarily reflecting increases in Middle Market and Mortgage Banker Finance, partially offset by decreases in Corporate and Commercial Real Estate. The increase in Middle Market was primarily due to increases in National Dealer Services, Energy and general Middle Market.
  • Average deposits increased $908 million, primarily reflecting increases in Corporate, Middle Market and Mortgage Banker Finance. The increase in Middle Market was primarily due to an increase in the Financial Services Division.
  • Net interest income increased $7 million, primarily due to a decrease in net funds transfer pricing (FTP) charges on loans and an increase in loan volume, partially offset by a decrease in accretion on the acquired Sterling loan portfolio.
  • The provision for credit losses decreased $7 million, primarily reflecting decreases in Corporate and Commercial Real Estate, partially offset by an increase in Middle Market. The increase in Middle Market primarily reflected increases in the Environmental Services Group and general Middle Market.
  • Noninterest income increased $3 million, primarily due to increases in commercial lending fees and customer derivative income, partially offset by a decrease in letter of credit fees.
  • Noninterest expenses increased $5 million, primarily due to increases in salaries expenses and net allocated corporate overhead expenses, partially offset by a decrease in legal expenses. The increase in salaries primarily reflected increases in severance and business unit incentives. In addition, noninterest expenses were reduced in the third quarter due to gains on sales of assets.

Retail Bank

(dollar amounts in millions)

4th Qtr '12

3rd Qtr '12

4th Qtr '11

Net interest income (FTE)

$

156

$

161

$

176

Provision for credit losses

7

6

15

Noninterest income

43

41

35

Noninterest expenses

181

181

182

Net income (loss)

8

10

10

Net credit-related charge-offs

6

13

16

Selected average balances:

Assets

5,952

5,964

6,250

Loans

5,255

5,265

5,571

Deposits

20,910

20,682

20,715

  • Average loans decreased $10 million, primarily due to a decrease in Personal Banking.|
  • Average deposits increased $228 million, primarily due to an increase in Small Business.
  • Net interest income decreased $5 million, primarily due to a decrease in net FTP funding credits on deposits and lower accretion on the acquired Sterling loan portfolio.
  • Noninterest income increased $2 million, primarily due to an increase in customer derivative income.

Wealth Management

(dollar amounts in millions)

4th Qtr '12

3rd Qtr '12

4th Qtr '11

Net interest income (FTE)

$

47

$

47

$

47

Provision for credit losses

2

3

11

Noninterest income

65

62

55

Noninterest expenses

84

78

83

Net income

16

18

5

Net credit-related charge-offs

5

3

12

Selected average balances:

Assets

4,686

4,566

4,672

Loans

4,539

4,476

4,623

Deposits

3,798

3,667

3,400

  • Average loans increased $63 million, primarily due to an increase in Private Banking. |
  • Average deposits increased $131 million, primarily due to increases in Private Banking.
  • Noninterest income increased $3 million, primarily the result of increases in fiduciary income and net securities gains.
  • Noninterest expenses increased $6 million, primarily as a result of an operational loss.

The decrease in the net loss of $18 million in the Other segment primarily reflected the after-tax impact of the decrease in restructuring expenses in the fourth quarter 2012, compared to the third quarter 2012.

Geographic Market Segments

The geographic market segments were realigned in the fourth quarter 2012 to reflect Comerica's three largest geographic markets: Michigan, California and Texas. 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 December 31, 2012 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses fourth quarter 2012 results compared to third quarter 2012.

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

(dollar amounts in millions)

4th Qtr '12

3rd Qtr '12

4th Qtr '11

Michigan

$

74

31

%

$

71

30

%

$

54

25

%

California

64

27

70

29

67

31

Texas

45

19

45

19

55

26

Other Markets

53

23

53

22

40

18

236

100

%

239

100

%

216

100

%

Finance & Other (a)

(106)

(122)

(120)

Total

$

130

$

117

$

96

(a)

Includes items not directly associated with the geographic markets.

Michigan Market

(dollar amounts in millions)

4th Qtr '12

3rd Qtr '12

4th Qtr '11

Net interest income (FTE)

$

193

$

194

$

202

Provision for credit losses

(9)

2

20

Noninterest income

98

95

85

Noninterest expenses

183

175

185

Net income

74

71

54

Net credit-related charge-offs

1

12

32

Selected average balances:

Assets

13,782

13,784

13,976

Loans

13,415

13,475

13,725

Deposits

20,019

19,628

19,076

  • Average loans decreased $60 million, primarily due to decreases in Corporate, Personal Banking and Commercial Real Estate, partially offset by an increase in Middle Market, primarily in National Dealer Services.
  • Average deposits increased $391 million, primarily due to increases in Corporate, Middle Market and Small Business.
  • The provision for credit losses decreased $11 million, primarily due to a decrease in general Middle Market.
  • Noninterest income increased $3 million, primarily reflecting increases in customer derivative income and commercial lending fees.
  • Noninterest expenses increased $8 million, primarily due to an operational loss and third quarter 2012 gains on sales of assets that reduced noninterest expenses.

California Market

(dollar amounts in millions)

4th Qtr '12

3rd Qtr '12

4th Qtr '11

Net interest income (FTE)

$

180

$

178

$

166

Provision for credit losses

6

5

(12)

Noninterest income

35

34

32

Noninterest expenses

100

98

101

Net income

64

70

67

Net credit-related charge-offs

12

11

5

Selected average balances:

Assets

13,551

13,173

11,959

Loans

13,275

12,915

11,743

Deposits

15,457

14,965

13,472

  • Average loans increased $360 million, primarily due to an increase in Middle Market, primarily reflecting an increase in National Dealer Services.
  • Average deposits increased $492 million, primarily due to increases in Middle Market and Private Banking. The increase in Middle Market was primarily due to an increase in general Middle Market.
  • Net interest income increased $2 million, primarily due to an increase in average loan balances and a decrease in net FTP funding charges.
  • The provision for loan losses increased $1 million, primarily due to an increase in Middle Market, partially offset by decreases in Commercial Real Estate and Corporate.
  • Noninterest expenses increased $2 million, primarily due to nominal increases in several categories, partially offset by a decrease in legal expenses.

Texas Market

(dollar amounts in millions)

4th Qtr '12

3rd Qtr '12

4th Qtr '11

Net interest income (FTE)

$

138

$

139

$

158

Provision for credit losses

9

10

8

Noninterest income

31

30

26

Noninterest expenses

90

89

89

Net income

45

45

55

Net credit-related charge-offs

5

7

4

Selected average balances:

Assets

10,555

10,327

9,712

Loans

9,818

9,585

8,952

Deposits

9,809

9,941

10,333

  • Average loans increased $233 million, primarily due to an increase in Middle Market. The increase in Middle Market was primarily due to an increase in Energy.
  • Average deposits decreased $132 million, primarily reflecting decreases in Middle Market and Corporate, partially offset by increases in Small Business and Personal Banking.
  • Net interest income decreased $1 million, primarily due to a decrease in accretion on the acquired Sterling loan portfolio.
  • The provision for credit losses decreased $1 million, primarily due to a decrease in Private Banking.

Conference Call and Webcast

Comerica will host a conference call to review fourth quarter 2012 financial results at 7 a.m. CT Wednesday, January 16, 2013. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 80972031). 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 January 31, 2013. The conference call replay can be accessed by calling (855) 859-2056 or (404) 537-3406 (event ID No. 80972031). 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 or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; changes in accounting standards and the critical nature of Comerica's accounting policies. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. In particular, please refer to "Item 1A. Risk Factors" beginning on page 12 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2011 and "Item 1A. Risk Factors" beginning on page 73 of Comerica's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012. 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

Years Ended

December 31,

September 30,

December 31,

December 31,

(in millions, except per share data)

2012

2012

2011

2012

2011

PER COMMON SHARE AND COMMON STOCK DATA

Diluted net income

$

0.68

$

0.61

$

0.48

$

2.67

$

2.09

Cash dividends declared

0.15

0.15

0.10

0.55

0.40

Common shareholders' equity (at period end)

36.87

37.01

34.80

Tangible common equity (at period end) (a)

33.38

33.56

31.42

Average diluted shares (in thousands)

187,954

191,492

196,729

192,473

186,168

KEY RATIOS

Return on average common shareholders' equity

7.36

%

6.67

%

5.51

%

7.43

%

6.18

%

Return on average assets

0.81

0.74

0.63

0.83

0.69

Tier 1 common capital ratio (a) (b)

10.11

10.35

10.37

Tier 1 risk-based capital ratio (b)

10.11

10.35

10.41

Total risk-based capital ratio (b)

13.11

13.67

14.25

Leverage ratio (b)

10.52

10.73

10.92

Tangible common equity ratio (a)

9.71

10.25

10.27

AVERAGE BALANCES

Commercial loans

$

27,462

$

26,700

$

23,515

$

26,224

$

22,208

Real estate construction loans:

Commercial Real Estate business line (c)

1,033

999

1,189

1,031

1,429

Other business lines (d)

266

390

430

359

414

Total real estate construction loans

1,299

1,389

1,619

1,390

1,843

Commercial mortgage loans:

Commercial Real Estate business line (c)

1,939

2,140

2,552

2,259

2,217

Other business lines (d)

7,580

7,530

7,836

7,583

7,808

Total commercial mortgage loans

9,519

9,670

10,388

9,842

10,025

Lease financing

839

852

919

864

950

International loans

1,314

1,302

1,128

1,272

1,191

Residential mortgage loans

1,525

1,488

1,591

1,505

1,580

Consumer loans

2,161

2,196

2,294

2,209

2,278

Total loans

44,119

43,597

41,454

43,306

40,075

Earning assets

59,276

57,801

55,676

57,484

52,121

Total assets

64,559

63,276

61,045

62,855

56,917

Noninterest-bearing deposits

22,758

21,469

19,176

21,004

16,994

Interest-bearing deposits

28,534

28,388

28,603

28,536

26,768

Total deposits

51,292

49,857

47,779

49,540

43,762

Common shareholders' equity

7,062

7,045

6,947

7,012

6,351

NET INTEREST INCOME

Net interest income (fully taxable equivalent basis)

$

425

$

428

$

445

$

1,731

$

1,657

Fully taxable equivalent adjustment

1

1

1

3

4

Net interest margin (fully taxable equivalent basis)

2.87

%

2.96

%

3.19

%

3.03

%

3.19

%

CREDIT QUALITY

Nonaccrual loans

$

519

$

665

$

860

Reduced-rate loans

22

27

27

Total nonperforming loans (e)

541

692

887

Foreclosed property

46

63

94

Total nonperforming assets (e)

587

755

981

Loans past due 90 days or more and still accruing

23

36

58

Gross loan charge-offs

60

59

85

$

245

$

423

Loan recoveries

23

16

25

75

95

Net loan charge-offs

37

43

60

170

328

Allowance for loan losses

629

647

726

Allowance for credit losses on lending-related commitments

32

35

26

Total allowance for credit losses

661

682

752

Allowance for loan losses as a percentage of total loans

1.37

%

1.46

%

1.70

%

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

0.34

0.39

0.57

0.39

%

0.82

%

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

1.27

1.71

2.29

Allowance for loan losses as a percentage of total nonperforming loans

116

94

82

(a)

See Reconciliation of Non-GAAP Financial Measures.

(b)

December 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)

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

CONSOLIDATED BALANCE SHEETS

Comerica Incorporated and Subsidiaries

December 31,

September 30,

December 31,

(in millions, except share data)

2012

2012

2011

(unaudited)

(unaudited)

ASSETS

Cash and due from banks

$

1,395

$

933

$

982

Federal funds sold

100

Interest-bearing deposits with banks

3,039

3,005

2,574

Other short-term investments

125

146

149

Investment securities available-for-sale

10,297

10,569

10,104

Commercial loans

29,513

27,460

24,996

Real estate construction loans

1,240

1,392

1,533

Commercial mortgage loans

9,472

9,559

10,264

Lease financing

859

837

905

International loans

1,293

1,277

1,170

Residential mortgage loans

1,527

1,495

1,526

Consumer loans

2,153

2,174

2,285

Total loans

46,057

44,194

42,679

Less allowance for loan losses

(629)

(647)

(726)

Net loans

45,428

43,547

41,953

Premises and equipment

622

625

675

Accrued income and other assets

4,353

4,489

4,571

Total assets

$

65,359

$

63,314

$

61,008

LIABILITIES AND SHAREHOLDERS' EQUITY

Noninterest-bearing deposits

$

23,279

$

21,753

$

19,764

Money market and interest-bearing checking deposits

21,284

20,407

20,311

Savings deposits

1,606

1,589

1,524

Customer certificates of deposit

5,531

5,742

5,808

Foreign office time deposits

502

486

348

Total interest-bearing deposits

28,923

28,224

27,991

Total deposits

52,202

49,977

47,755

Short-term borrowings

110

63

70

Accrued expenses and other liabilities

1,385

1,450

1,371

Medium- and long-term debt

4,720

4,740

4,944

Total liabilities

58,417

56,230

54,140

Common stock - $5 par value:

Authorized - 325,000,000 shares

Issued - 228,164,824 shares

1,141

1,141

1,141

Capital surplus

2,162

2,153

2,170

Accumulated other comprehensive loss

(413)

(253)

(356)

Retained earnings

5,931

5,831

5,546

Less cost of common stock in treasury - 39,889,610 shares at 12/31/12, 36,790,174 shares at 9/30/12 and 30,831,076 shares at 12/31/11

(1,879)

(1,788)

(1,633)

Total shareholders' equity

6,942

7,084

6,868

Total liabilities and shareholders' equity

$

65,359

$

63,314

$

61,008

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries

Three Months Ended

Years Ended

December 31,

December 31,

(in millions, except per share data)

2012

2011

2012

2011

INTEREST INCOME

Interest and fees on loans

$

398

$

415

$

1,617

$

1,564

Interest on investment securities

55

63

234

233

Interest on short-term investments

3

3

12

12

Total interest income

456

481

1,863

1,809

INTEREST EXPENSE

Interest on deposits

16

21

70

90

Interest on medium- and long-term debt

16

16

65

66

Total interest expense

32

37

135

156

Net interest income

424

444

1,728

1,653

Provision for credit losses

16

18

79

144

Net interest income after provision for credit losses

408

426

1,649

1,509

NONINTEREST INCOME

Service charges on deposit accounts

52

52

214

208

Fiduciary income

42

36

158

151

Commercial lending fees

25

23

96

87

Letter of credit fees

17

18

71

73

Card fees

12

11

47

58

Foreign exchange income

9

10

38

40

Bank-owned life insurance

9

10

39

37

Brokerage fees

5

5

19

22

Net securities gains (losses)

1

(4)

12

14

Other noninterest income

32

21

124

102

Total noninterest income

204

182

818

792

NONINTEREST EXPENSES

Salaries

196

205

778

770

Employee benefits

59

52

240

205

Total salaries and employee benefits

255

257

1,018

975

Net occupancy expense

42

47

163

169

Equipment expense

15

17

65

66

Outside processing fee expense

28

27

107

101

Software expense

23

23

90

88

Merger and restructuring charges

2

37

35

75

FDIC insurance expense

9

8

38

43

Advertising expense

6

7

27

28

Other real estate expense

3

3

9

22

Other noninterest expenses

44

53

205

204

Total noninterest expenses

427

479

1,757

1,771

Income before income taxes

185

129

710

530

Provision for income taxes

55

33

189

137

NET INCOME

130

96

521

393

Less income allocated to participating securities

2

1

6

4

Net income attributable to common shares

$

128

$

95

$

515

$

389

Earnings per common share:

Basic

$

0.68

$

0.48

$

2.68

$

2.11

Diluted

0.68

0.48

2.67

2.09

Comprehensive income (loss)

(30)

(30)

464

426

Cash dividends declared on common stock

28

20

106

75

Cash dividends declared per common share

0.15

0.10

0.55

0.40

CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries

Fourth

Third

Second

First

Fourth

Fourth Quarter 2012 Compared To:

Quarter

Quarter

Quarter

Quarter

Quarter

Third Quarter 2012

Fourth Quarter 2011

(in millions, except per share data)

2012

2012

2012

2012

2011

Amount

Percent

Amount

Percent

INTEREST INCOME

Interest and fees on loans

$

398

$

400

$

408

$

411

$

415

$

(2)

%

$

(17)

(4)

%

Interest on investment securities

55

57

59

63

63

(2)

(2)

(8)

(12)

Interest on short-term investments

3

3

3

3

3

Total interest income

456

460

470

477

481

(4)

(1)

(25)

(5)

INTEREST EXPENSE

Interest on deposits

16

17

18

19

21

(1)

(6)

(5)

(23)

Interest on medium- and long-term debt

16

16

17

16

16

Total interest expense

32

33

35

35

37

(1)

(3)

(5)

(13)

Net interest income

424

427

435

442

444

(3)

(20)

(4)

Provision for credit losses

16

22

19

22

18

(6)

(25)

(2)

(7)

Net interest income after provision

for credit losses

408

405

416

420

426

3

1

(18)

(4)

NONINTEREST INCOME

Service charges on deposit accounts

52

53

53

56

52

(1)

(2)

Fiduciary income

42

39

39

38

36

3

4

6

14

Commercial lending fees

25

22

24

25

23

3

19

2

8

Letter of credit fees

17

19

18

17

18

(2)

(8)

(1)

(10)

Card fees

12

12

12

11

11

1

10

Foreign exchange income

9

9

10

10

10

(1)

(13)

Bank-owned life insurance

9

10

10

10

10

(1)

(7)

(1)

(8)

Brokerage fees

5

5

4

5

5

Net securities gains (losses)

1

6

5

(4)

1

N/M

5

N/M

Other noninterest income

32

28

35

29

21

4

5

11

55

Total noninterest income

204

197

211

206

182

7

4

22

12

NONINTEREST EXPENSES

Salaries

196

192

189

201

205

4

3

(9)

(5)

Employee benefits

59

61

61

59

52

(2)

(4)

7

13

Total salaries and employee benefits

255

253

250

260

257

2

1

(2)

(1)

Net occupancy expense

42

40

40

41

47

2

4

(5)

(10)

Equipment expense

15

17

16

17

17

(2)

(6)

(2)

(11)

Outside processing fee expense

28

27

26

26

27

1

7

1

6

Software expense

23

23

21

23

23

Merger and restructuring charges

2

25

8

37

(23)

(94)

(35)

(95)

FDIC insurance expense

9

9

10

10

8

1

6

Advertising expense

6

7

7

7

7

(1)

(16)

(1)

(15)

Other real estate expense

3

2

4

3

1

36

Other noninterest expenses

44

46

55

60

53

(2)

(2)

(9)

(16)

Total noninterest expenses

427

449

433

448

479

(22)

(5)

(52)

(11)

Income before income taxes

185

153

194

178

129

32

20

56

43

Provision for income taxes

55

36

50

48

33

19

50

22

64

NET INCOME

130

117

144

130

96

13

11

34

36

Less income allocated to participating securities

2

1

2

1

1

1

12

1

82

Net income attributable to common shares

$

128

$

116

$

142

$

129

$

95

$

12

11

%

$

33

36

%

Earnings per common share:

Basic

$

0.68

$

0.61

$

0.73

$

0.66

$

0.48

$

0.07

11

%

$

0.20

42

%

Diluted

0.68

0.61

0.73

0.66

0.48

0.07

11

0.20

42

Comprehensive income (loss)

(30)

165

169

160

(30)

(195)

N/M

Cash dividends declared on common stock

28

29

29

20

20

(1)

(1)

8

43

Cash dividends declared per common share

0.15

0.15

0.15

0.10

0.10

0.05

50

N/M - Not Meaningful

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)

Comerica Incorporated and Subsidiaries

2012

2011

(in millions)

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr

4th Qtr

Balance at beginning of period

$

647

$

667

$

704

$

726

$

767

Loan charge-offs:

Commercial

42

19

26

25

28

Real estate construction:

Commercial Real Estate business line (a)

1

2

2

2

4

Other business lines (b)

1

1

Total real estate construction

1

2

3

2

5

Commercial mortgage:

Commercial Real Estate business line (a)

5

12

16

13

17

Other business lines (b)

6

13

11

13

24

Total commercial mortgage

11

25

27

26

41

International

1

2

2

Residential mortgage

2

6

3

2

2

Consumer

4

6

5

5

7

Total loan charge-offs

60

59

64

62

85

Recoveries on loans previously charged-off:

Commercial

13

7

10

9

11

Real estate construction

1

3

1

1

4

Commercial mortgage

6

5

4

3

9

International

1

1

Residential mortgage

1

1

Consumer

1

1

4

2

1

Total recoveries

23

16

19

17

25

Net loan charge-offs

37

43

45

45

60

Provision for loan losses

19

23

8

23

19

Balance at end of period

$

629

$

647

$

667

$

704

$

726

Allowance for loan losses as a percentage of total loans

1.37

%

1.46

%

1.52

%

1.64

%

1.70

%

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

0.34

0.39

0.42

0.43

0.57

(a)

Primarily charge-offs of loans to real estate investors and developers.

(b)

Primarily charge-offs of loans secured by owner-occupied real estate.

ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited)

Comerica Incorporated and Subsidiaries

2012

2011

(in millions)

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr

4th Qtr

Balance at beginning of period

$

35

$

36

$

25

$

26

$

27

Add: Provision for credit losses on lending-related commitments

(3)

(1)

11

(1)

(1)

Balance at end of period

$

32

$

35

$

36

$

25

$

26

NONPERFORMING ASSETS (unaudited)

Comerica Incorporated and Subsidiaries

2012

2011

(in millions)

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr

4th Qtr

SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS

Nonaccrual loans:

Business loans:

Commercial

$

103

$

154

$

175

$

205

$

237

Real estate construction:

Commercial Real Estate business line (a)

30

45

60

77

93

Other business lines (b)

3

6

9

8

8

Total real estate construction

33

51

69

85

101

Commercial mortgage:

Commercial Real Estate business line (a)

94

137

155

174

159

Other business lines (b)

181

219

220

275

268

Total commercial mortgage

275

356

375

449

427

Lease financing

3

3

4

4

5

International

4

8

Total nonaccrual business loans

414

564

623

747

778

Retail loans:

Residential mortgage

70

69

76

69

71

Consumer:

Home equity

31

28

16

9

5

Other consumer

4

4

4

5

6

Total consumer

35

32

20

14

11

Total nonaccrual retail loans

105

101

96

83

82

Total nonaccrual loans

519

665

719

830

860

Reduced-rate loans

22

27

28

26

27

Total nonperforming loans (c)

541

692

747

856

887

Foreclosed property

46

63

67

67

94

Total nonperforming assets (c)

$

587

$

755

$

814

$

923

$

981

Nonperforming loans as a percentage of total loans

1.17

%

1.57

%

1.70

%

1.99

%

2.08

%

Nonperforming assets as a percentage of total loans

and foreclosed property

1.27

1.71

1.85

2.14

2.29

Allowance for loan losses as a percentage of total

nonperforming loans

116

94

89

82

82

Loans past due 90 days or more and still accruing

$

23

$

36

$

43

$

50

$

58

ANALYSIS OF NONACCRUAL LOANS

Nonaccrual loans at beginning of period

$

665

$

719

$

830

$

860

$

929

Loans transferred to nonaccrual (d)

36

35

47

69

99

Nonaccrual business loan gross charge-offs (e)

(54)

(46)

(56)

(55)

(76)

Loans transferred to accrual status (d)

(41)

Nonaccrual business loans sold (f)

(48)

(20)

(16)

(7)

(19)

Payments/Other (g)

(80)

(23)

(45)

(37)

(73)

Nonaccrual loans at end of period

$

519

$

665

$

719

$

830

$

860

(a) Primarily loans to real estate investors and developers.

(b) Primarily loans secured by owner-occupied real estate.

(c) Excludes loans acquired with credit impairment.

(d) Based on an analysis of nonaccrual loans with book balances greater than $2 million.

(e) Analysis of gross loan charge-offs:

Nonaccrual business loans

$

54

$

46

$

56

$

55

$

76

Performing watch list loans

1

Consumer and residential mortgage loans

6

12

8

7

9

Total gross loan charge-offs

$

60

$

59

$

64

$

62

$

85

(f) Analysis of loans sold:

Nonaccrual business loans

$

48

$

20

$

16

$

7

$

19

Performing watch list loans

24

42

7

11

Total loans sold

$

72

$

62

$

23

$

18

$

19

(g) Includes net changes related to nonaccrual loans with balances less than $2 million, payments on nonaccrual loans with book balances greater than $2 million and transfers of nonaccrual loans to foreclosed property. Excludes business loan gross charge-offs and business nonaccrual loans sold.

ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)

Comerica Incorporated and Subsidiaries

Years Ended

December 31, 2012

December 31, 2011

Average

Average

Average

Average

(dollar amounts in millions)

Balance

Interest

Rate

Balance

Interest

Rate

Commercial loans

$

26,224

$

903

3.44

%

$

22,208

$

820

3.69

%

Real estate construction loans

1,390

62

4.44

1,843

80

4.37

Commercial mortgage loans

9,842

437

4.44

10,025

424

4.23

Lease financing

864

26

3.01

950

33

3.51

International loans

1,272

47

3.73

1,191

46

3.83

Residential mortgage loans

1,505

68

4.55

1,580

83

5.27

Consumer loans

2,209

76

3.42

2,278

80

3.50

Total loans (a)

43,306

1,619

3.74

40,075

1,566

3.91

Auction-rate securities available-for-sale

275

2

0.79

479

4

0.72

Other investment securities available-for-sale

9,640

233

2.48

7,692

231

3.06

Total investment securities available-for-sale

9,915

235

2.43

8,171

235

2.91

Interest-bearing deposits with banks (b)

4,129

10

0.26

3,746

9

0.24

Other short-term investments

134

2

1.65

129

3

2.17

Total earning assets

57,484

1,866

3.27

52,121

1,813

3.49

Cash and due from banks

983

921

Allowance for loan losses

(693)

(838)

Accrued income and other assets

5,081

4,713

Total assets

$

62,855

$

56,917

Money market and interest-bearing checking deposits

$

20,629

35

0.17

$

19,088

47

0.25

Savings deposits

1,593

1

0.06

1,550

2

0.11

Customer certificates of deposit

5,902

31

0.53

5,719

39

0.68

Foreign office and other time deposits

412

3

0.63

411

2

0.48

Total interest-bearing deposits

28,536

70

0.25

26,768

90

0.33

Short-term borrowings

76

0.12

138

0.13

Medium- and long-term debt

4,818

65

1.36

5,519

66

1.20

Total interest-bearing sources

33,430

135

0.41

32,425

156

0.48

Noninterest-bearing deposits

21,004

16,994

Accrued expenses and other liabilities

1,409

1,147

Total shareholders' equity

7,012

6,351

Total liabilities and shareholders' equity

$

62,855

$

56,917

Net interest income/rate spread (FTE)

$

1,731

2.86

$

1,657

3.01

FTE adjustment

$

3

$

4

Impact of net noninterest-bearing sources of funds

0.17

0.18

Net interest margin (as a percentage of average earning assets) (FTE) (a) (b)

3.03

%

3.19

%

(a)

Accretion of the purchase discount on the acquired loan portfolio of $71 million and $53 million in the 2012 and 2011, respectively, increased the net interest margin by 12 basis points and 10 basis points in the 2012 and 2011, respectively.

(b)

Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 21 basis points and 22 basis points in the 2012 and 2011, respectively.

ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)

Comerica Incorporated and Subsidiaries

Three Months Ended

December 31, 2012

September 30, 2012

December 31, 2011

Average

Average

Average

Average

Average

Average

(dollar amounts in millions)

Balance

Interest

Rate

Balance

Interest

Rate

Balance

Interest

Rate

Commercial loans

$

27,462

$

230

3.33

%

$

26,700

$

227

3.38

%

$

23,515

$

216

3.64

%

Real estate construction loans

1,299

15

4.32

1,389

15

4.36

1,619

21

5.26

Commercial mortgage loans

9,519

100

4.22

9,670

106

4.34

10,388

119

4.54

Lease financing

839

7

3.27

852

4

2.04

919

8

3.44

International loans

1,314

12

3.73

1,302

12

3.77

1,128

10

3.63

Residential mortgage loans

1,525

16

4.24

1,488

17

4.67

1,591

20

5.06

Consumer loans

2,161

19

3.38

2,196

19

3.44

2,294

21

3.58

Total loans (a)

44,119

399

3.60

43,597

400

3.66

41,454

415

3.98

Auction-rate securities available-for-sale

216

0.81

234

1

0.97

426

1

0.64

Other investment securities available-for-sale

10,034

55

2.25

9,557

57

2.42

9,355

62

2.74

Total investment securities available-for-sale

10,250

55

2.22

9,791

58

2.38

9,781

63

2.64

Interest-bearing deposits with banks (b)

4,785

2

0.25

4,276

3

0.26

4,308

3

0.24

Other short-term investments

122

1

1.13

137

1.88

133

1

2.26

Total earning assets

59,276

457

3.08

57,801

461

3.19

55,676

482

3.45

Cash and due from banks

1,030

971

959

Allowance for loan losses

(654)

(673)

(773)

Accrued income and other assets

4,907

5,177

5,183

Total assets

$

64,559

$

63,276

$

61,045

Money market and interest-bearing checking deposits

$

20,770

9

0.16

$

20,495

8

0.17

$

20,716

12

0.21

Savings deposits

1,603

0.03

1,618

0.04

1,652

0.12

Customer certificates of deposit

5,634

6

0.49

5,894

8

0.52

5,872

9

0.60

Foreign office and other time deposits

527

1

0.60

381

1

0.71

363

0.40

Total interest-bearing deposits

28,534

16

0.22

28,388

17

0.24

28,603

21

0.29

Short-term borrowings

70

0.12

89

0.12

142

0.07

Medium- and long-term debt

4,735

16

1.35

4,745

16

1.35

4,976

16

1.30

Total interest-bearing sources

33,339

32

0.38

33,222

33

0.40

33,721

37

0.44

Noninterest-bearing deposits

22,758

21,469

19,176

Accrued expenses and other liabilities

1,400

1,540

1,201

Total shareholders' equity

7,062

7,045

6,947

Total liabilities and shareholders' equity

$

64,559

$

63,276

$

61,045

Net interest income/rate spread (FTE)

$

425

2.70

$

428

2.79

$

445

3.01

FTE adjustment

$

1

$

1

$

1

Impact of net noninterest-bearing sources of funds

0.17

0.17

0.18

Net interest margin (as a percentage of average earning assets) (FTE) (a) (b)

2.87

%

2.96

%

3.19

%

(a)

Accretion of the purchase discount on the acquired loan portfolio of $13 million, $15 million and $26 million in the fourth and third quarters of 2012 and the fourth quarter of 2011, respectively, increased the net interest margin by 9 basis points, 10 basis points and 19 basis points in the fourth and third quarters of 2012 and the fourth quarter of 2011, respectively.

(b)

Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 22 basis points and by 21 basis points in the fourth and third quarters of 2012, respectively, and by 24 basis points in the fourth quarter of 2011.

CONSOLIDATED STATISTICAL DATA (unaudited)

Comerica Incorporated and Subsidiaries

December 31,

September 30,

June 30,

March 31,

December 31,

(in millions, except per share data)

2012

2012

2012

2012

2011

Commercial loans:

Floor plan

$

2,939

$

2,276

$

2,406

$

2,152

$

1,822

Other

26,574

25,184

24,610

23,488

23,174

Total commercial loans

29,513

27,460

27,016

25,640

24,996

Real estate construction loans:

Commercial Real Estate business line (a)

1,049

1,003

991

1,055

1,103

Other business lines (b)

191

389

386

387

430

Total real estate construction loans

1,240

1,392

1,377

1,442

1,533

Commercial mortgage loans:

Commercial Real Estate business line (a)

1,873

2,020

2,315

2,501

2,507

Other business lines (b)

7,599

7,539

7,515

7,578

7,757

Total commercial mortgage loans

9,472

9,559

9,830

10,079

10,264

Lease financing

859

837

858

872

905

International loans

1,293

1,277

1,224

1,256

1,170

Residential mortgage loans

1,527

1,495

1,469

1,485

1,526

Consumer loans:

Home equity

1,537

1,570

1,584

1,612

1,655

Other consumer

616

604

634

626

630

Total consumer loans

2,153

2,174

2,218

2,238

2,285

Total loans

$

46,057

$

44,194

$

43,992

$

43,012

$

42,679

Goodwill

$

635

$

635

$

635

$

635

$

635

Core deposit intangible

20

23

25

27

29

Loan servicing rights

2

2

3

3

3

Tier 1 common capital ratio (c) (d)

10.11

%

10.35

%

10.38

%

10.27

%

10.37

%

Tier 1 risk-based capital ratio (d)

10.11

10.35

10.38

10.27

10.41

Total risk-based capital ratio (d)

13.11

13.67

13.90

13.99

14.25

Leverage ratio (d)

10.52

10.73

10.92

10.94

10.92

Tangible common equity ratio (c)

9.71

10.25

10.27

10.21

10.27

Common shareholders' equity per share of common stock

$

36.87

$

37.01

$

36.18

$

35.44

$

34.80

Tangible common equity per share of common stock (c)

33.38

33.56

32.76

32.06

31.42

Market value per share for the quarter:

High

32.14

33.38

32.88

34.00

27.37

Low

27.72

29.32

27.88

26.25

21.53

Close

30.34

31.05

30.71

32.36

25.80

Quarterly ratios:

Return on average common shareholders' equity

7.36

%

6.67

%

8.22

%

7.50

%

5.51

%

Return on average assets

0.81

0.74

0.93

0.84

0.63

Efficiency ratio

68.08

71.68

67.53

69.70

75.97

Number of banking centers

489

490

493

495

494

Number of employees - full time equivalent

8,967

9,008

9,014

9,195

9,397

(a)

Primarily loans to real estate investors and developers.

(b)

Primarily loans secured by owner-occupied real estate.

(c)

See Reconciliation of Non-GAAP Financial Measures.

(d)

December 31, 2012 ratios are estimated.

PARENT COMPANY ONLY BALANCE SHEETS (unaudited)

Comerica Incorporated

December 31,

September 30,

December 31,

(in millions, except share data)

2012

2012

2011

ASSETS

Cash and due from subsidiary bank

$

2

$

13

7

Short-term investments with subsidiary bank

431

418

411

Other short-term investments

88

88

90

Investment in subsidiaries, principally banks

7,045

7,200

7,011

Premises and equipment

4

4

4

Other assets

150

150

177

Total assets

$

7,720

$

7,873

$

7,700

LIABILITIES AND SHAREHOLDERS' EQUITY

Medium- and long-term debt

$

629

$

632

$

666

Other liabilities

149

157

166

Total liabilities

778

789

832

Common stock - $5 par value:

Authorized - 325,000,000 shares

Issued - 228,164,824 shares

1,141

1,141

1,141

Capital surplus

2,162

2,153

2,170

Accumulated other comprehensive loss

(413)

(253)

(356)

Retained earnings

5,931

5,831

5,546

Less cost of common stock in treasury - 39,889,610 shares at 12/31/12, 36,790,174 shares at 9/30/12 and 30,831,076 shares at 12/31/11

(1,879)

(1,788)

(1,633)

Total shareholders' equity

6,942

7,084

6,868

Total liabilities and shareholders' equity

$

7,720

$

7,873

$

7,700

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, 2010

176.5

$

1,019

$

1,481

$

(389)

$

5,247

$

(1,565)

$

5,793

Net income

393

393

Other comprehensive income, net of tax

33

33

Cash dividends declared on common stock ($0.40 per share)

(75)

(75)

Purchase of common stock

(4.3)

(116)

(116)

Acquisition of Sterling Bancshares, Inc.

24.3

122

681

803

Net issuance of common stock under employee stock plans

0.8

(29)

(19)

48

Share-based compensation

37

37

BALANCE AT DECEMBER 31, 2011

197.3

$

1,141

$

2,170

$

(356)

$

5,546

$

(1,633)

$

6,868

Net income

521

521

Other comprehensive loss, net of tax

(57)

(57)

Cash dividends declared on common stock ($0.55 per share)

(106)

(106)

Purchase of common stock

(10.2)

(308)

(308)

Net issuance of common stock under employee stock plans

1.2

(46)

(30)

63

(13)

Share-based compensation

37

37

Other

1

(1)

BALANCE AT DECEMBER 31, 2012

188.3

$

1,141

$

2,162

$

(413)

$

5,931

$

(1,879)

$

6,942

BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)

Comerica Incorporated and Subsidiaries

(dollar amounts in millions)

Business

Retail

Wealth

Three Months Ended December 31, 2012

Bank

Bank

Management

Finance

Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

393

$

156

$

47

$

(181)

$

10

$

425

Provision for credit losses

8

7

2

(1)

16

Noninterest income

79

43

65

15

2

204

Noninterest expenses

149

181

84

3

10

427

Provision (benefit) for income taxes (FTE)

103

3

10

(64)

4

56

Net income (loss)

$

212

$

8

$

16

$

(105)

$

(1)

$

130

Net credit-related charge-offs

$

26

$

6

$

5

$

37

Selected average balances:

Assets

$

35,362

$

5,952

$

4,686

$

12,439

$

6,120

$

64,559

Loans

34,325

5,255

4,539

44,119

Deposits

26,051

20,910

3,798

320

213

51,292

Statistical data:

Return on average assets (a)

2.41

%

0.14

%

1.35

%

N/M

N/M

0.81

%

Efficiency ratio

31.49

90.68

76.96

N/M

N/M

68.08

Business

Retail

Wealth

Three Months Ended September 30, 2012

Bank

Bank

Management

Finance

Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

386

$

161

$

47

$

(176)

$

10

$

428

Provision for credit losses

15

6

3

(2)

22

Noninterest income

76

41

62

14

4

197

Noninterest expenses

144

181

78

3

43

449

Provision (benefit) for income taxes (FTE)

92

5

10

(62)

(8)

37

Net income (loss)

$

211

$

10

$

18

$

(103)

$

(19)

$

117

Net credit-related charge-offs

$

27

$

13

$

3

$

43

Selected average balances:

Assets

$

34,863

$

5,964

$

4,566

$

12,166

$

5,717

$

63,276

Loans

33,856

5,265

4,476

43,597

Deposits

25,143

20,682

3,667

193

172

49,857

Statistical data:

Return on average assets (a)

2.42

%

0.18

%

1.61

%

N/M

N/M

0.74

%

Efficiency ratio

31.23

89.39

71.14

N/M

N/M

71.68

Business

Retail

Wealth

Three Months Ended December 31, 2011

Bank

Bank

Management

Finance

Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

381

$

176

$

47

$

(169)

10

$

445

Provision for credit losses

(6)

15

11

(1)

19

Noninterest income

73

35

55

18

1

182

Noninterest expenses

162

182

83

3

48

478

Provision (benefit) for income taxes (FTE)

97

4

3

(60)

(10)

34

Net income (loss)

$

201

$

10

$

5

$

(94)

$

(26)

$

96

Net credit-related charge-offs

$

32

$

16

$

12

$

60

Selected average balances:

Assets

$

32,151

$

6,250

$

4,672

$

11,959

$

6,013

$

61,045

Loans

31,260

5,571

4,623

41,454

Deposits

23,296

20,715

3,400

200

168

47,779

Statistical data:

Return on average assets (a)

2.50

%

0.18

%

0.45

%

N/M

N/M

0.63

%

Efficiency ratio

35.87

84.52

82.18

N/M

N/M

75.97

(a)

Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.

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 December 31, 2012

Michigan

California

Texas

Markets

& Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

193

$

180

$

138

$

85

$

(171)

$

425

Provision for credit losses

(9)

6

9

11

(1)

16

Noninterest income

98

35

31

23

17

204

Noninterest expenses

183

100

90

41

13

427

Provision (benefit) for income taxes (FTE)

43

45

25

3

(60)

56

Net income (loss)

$

74

$

64

$

45

$

53

$

(106)

$

130

Net credit-related charge-offs

$

1

$

12

$

5

$

19

$

37

Selected average balances:

Assets

$

13,782

$

13,551

$

10,555

$

8,112

$

18,559

$

64,559

Loans

13,415

13,275

9,818

7,611

44,119

Deposits

20,019

15,457

9,809

5,474

533

51,292

Statistical data:

Return on average assets (a)

1.40

%

1.56

%

1.63

%

2.65

%

N/M

0.81

%

Efficiency ratio

62.77

46.47

53.38

38.84

N/M

68.08

Other

Finance

Three Months Ended September 30, 2012

Michigan

California

Texas

Markets

& Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

194

$

178

$

139

$

83

$

(166)

$

428

Provision for credit losses

2

5

10

7

(2)

22

Noninterest income

95

34

30

20

18

197

Noninterest expenses

175

98

89

41

46

449

Provision (benefit) for income taxes (FTE)

41

39

25

2

(70)

37

Net income (loss)

$

71

$

70

$

45

$

53

$

(122)

$

117

Net credit-related charge-offs

$

12

$

11

$

7

$

13

$

43

Selected average balances:

Assets

$

13,784

$

13,173

$

10,327

$

8,109

$

17,883

$

63,276

Loans

13,475

12,915

9,585

7,622

43,597

Deposits

19,628

14,965

9,941

4,958

365

49,857

Statistical data:

Return on average assets (a)

1.38

%

1.75

%

1.61

%

2.64

%

N/M

0.74

%

Efficiency ratio

60.40

46.13

52.50

40.00

N/M

71.68

Other

Finance

Three Months Ended December 31, 2011

Michigan

California

Texas

Markets

& Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

202

$

166

$

158

$

78

$

(159)

$

445

Provision for credit losses

20

(12)

8

4

(1)

19

Noninterest income

85

32

26

20

19

182

Noninterest expenses

185

101

89

52

51

478

Provision (benefit) for income taxes (FTE)

28

42

32

2

(70)

34

Net income (loss)

$

54

$

67

$

55

$

40

$

(120)

$

96

Net credit-related charge-offs

$

32

$

5

$

4

$

19

$

60

Selected average balances:

Assets

$

13,976

$

11,959

$

9,712

$

7,426

$

17,972

$

61,045

Loans

13,725

11,743

8,952

7,034

41,454

Deposits

19,076

13,472

10,333

4,530

368

47,779

Statistical data:

Return on average assets (a)

1.07

%

1.86

%

1.92

%

2.14

%

N/M

0.63

%

Efficiency ratio

63.84

51.18

48.23

53.73

N/M

75.97

(a)

Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.

FTE - Fully Taxable Equivalent

N/M - Not Meaningful

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

Comerica Incorporated and Subsidiaries

December 31,

September 30,

June 30,

March 31,

December 31,

(dollar amounts in millions)

2012

2012

2012

2012

2011

Tier 1 Common Capital Ratio:

Tier 1 capital (a) (b)

$

6,705

$

6,685

$

6,676

$

6,647

$

6,582

Less:

Trust preferred securities

25

Tier 1 common capital (b)

$

6,705

$

6,685

$

6,676

$

6,647

$

6,557

Risk-weighted assets (a) (b)

$

66,312

$

64,568

$

64,312

$

64,742

$

63,244

Tier 1 risk-based capital ratio (b)

10.11

%

10.35

%

10.38

%

10.27

%

10.41

%

Tier 1 common capital ratio (b)

10.11

10.35

10.38

10.27

10.37

Basel III Tier 1 Common Capital Ratio:

Tier 1 common capital (b)

$

6,705

Basel III proposed adjustments (c)

(452)

Basel III Tier 1 common capital (c)

$

6,253

Risk-weighted assets (a) (b)

$

66,312

Basel III proposed adjustments (c)

2,410

Basel III risk-weighted assets (c)

$

68,722

Tier 1 common capital ratio (b)

10.1

%

Basel III Tier 1 common capital ratio (c)

9.1

Tangible Common Equity Ratio:

Common shareholders' equity

$

6,942

$

7,084

$

7,028

$

6,985

$

6,868

Less:

Goodwill

635

635

635

635

635

Other intangible assets

22

25

28

30

32

Tangible common equity

$

6,285

$

6,424

$

6,365

$

6,320

$

6,201

Total assets

$

65,359

$

63,314

$

62,650

$

62,593

$

61,008

Less:

Goodwill

635

635

635

635

635

Other intangible assets

22

25

28

30

32

Tangible assets

$

64,702

$

62,654

$

61,987

$

61,928

$

60,341

Common equity ratio

10.62

%

11.19

%

11.22

%

11.16

%

11.26

%

Tangible common equity ratio

9.71

10.25

10.27

10.21

10.27

Tangible Common Equity per Share of Common Stock:

Common shareholders' equity

$

6,942

$

7,084

$

7,028

$

6,985

$

6,868

Tangible common equity

6,285

6,424

6,365

6,320

6,201

Shares of common stock outstanding (in millions)

188

191

194

197

197

Common shareholders' equity per share of common stock

$

36.87

$

37.01

$

36.18

$

35.44

$

34.80

Tangible common equity per share of common stock

33.38

33.56

32.76

32.06

31.42

(a)

Tier 1 capital and risk-weighted assets as defined by regulation.

(b)

December 31, 2012 Tier 1 capital and risk-weighted assets are estimated.

(c)

December 31, 2012 Basel III Tier 1 common capital and risk-weighted assets are estimated based on the proposed rules for the U.S. adoption of the Basel III regulatory capital framework issued in June 2012.

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 Tier 1 common capital ratio further adjusts Tier 1 common capital and risk-weighted assets to account for the proposed changes issued in the U.S. banking regulators proposed rules for the U.S. adoption of the Basel III regulatory capital framework issued in June 2012. 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.

SOURCE Comerica Incorporated



RELATED LINKS

http://www.comerica.com