Comerica Reports Fourth Quarter 2013 Net Income Of $145 Million

Fourth Quarter 2013 EPS of 77 Cents Up 13 Percent from Fourth Quarter 2012

Full-Year 2013 EPS of $3.00 Up 12 Percent from 2012

Period-End Loans Up $1.3 Billion from Third Quarter 2013

7.4 Million Shares Repurchased in 2013 Under the Share Repurchase Program

73 Percent of 2013 Net Income Returned to Shareholders

Jan 17, 2014, 06:40 ET from Comerica Incorporated

DALLAS, Jan. 17, 2014 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported fourth quarter 2013 net income of $145 million, compared to $147 million for the third quarter 2013 and $130 million for the fourth quarter 2012. Earnings per diluted share were 77 cents for the fourth quarter 2013, compared to 78 cents for the third quarter 2013 and 68 cents for the fourth quarter 2012.

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Full-year 2013 net income was $569 million, an increase of $48 million, or 9 percent, compared to 2012. Earnings per diluted share were $3.00 for 2013, an increase of 33 cents, or 12 percent, compared to 2012.

(dollar amounts in millions, except per share data)

4th Qtr '13

3rd Qtr '13

4th Qtr '12

Net interest income (a)

$

430

$

412

$

424

Provision for credit losses

9

8

16

Noninterest income

204

214

204

Noninterest expenses

429

417

427

Provision for income taxes

51

54

55

Net income

145

147

130

Net income attributable to common shares

143

145

128

Diluted income per common share

0.77

0.78

0.68

Average diluted shares (in millions)

186

187

188

Tier 1 common capital ratio (c)

10.60

%

(b)

10.72

%

10.14

%

Basel III Tier 1 common capital ratio (c) (d)

10.3

10.4

9.8

Tangible common equity ratio (c)

10.11

9.87

9.76

(a)

Included accretion of the purchase discount on the acquired loan portfolio of $23 million, $8 million and $13 million in the fourth quarter 2013, third quarter 2013 and fourth quarter 2012, respectively.

(b)

December 31, 2013 ratio is estimated.

(c)

See Reconciliation of Non-GAAP Financial Measures.

(d)

Estimated ratios based on the standardized approach in the final rule and excluding most elements of accumulated other comprehensive income (AOCI).

 

"Our relationship banking focus and our customers' strength in this uncertain national economy drove a 3 percent increase in average loans and a 4 percent increase in average deposits in 2013," said Ralph W. Babb Jr., chairman and chief executive officer. "2013 net income increased 9 percent, primarily as a result of tight expense control and strong credit quality, offsetting the headwinds of the continuing low rate environment.

"Average loans in the fourth quarter 2013 were stable, compared to the prior quarter, while growth trends throughout the quarter were positive, resulting in a broad-based, $1.3 billion increase in period-end loans. Earnings in the fourth quarter of 2013, compared to the prior quarter, reflected greater than expected purchase accounting accretion. This was offset by slightly lower fee income, following strong fee generation in the third quarter and the impact of slower economic activity, as well as additional costs related to regulatory compliance.

"Our solid capital position supports our growth and provides us the ability to return excess capital to our shareholders. We repurchased 7.4 million shares in 2013 under our share repurchase program; together with dividends we returned 73 percent of 2013 net income to shareholders. We recently filed our 2014-2015 capital plan with the Federal Reserve, which is expected to release its summary results in March 2014.

"In this low rate environment, our conservative, consistent approach to banking continues to serve us well, including our credit management, investment strategy, and capital position. We are pleased with our footprint, where there are many opportunities to leverage our relationship banking strategy by providing our customers with the products and services they desire."

Full-Year 2013 and Fourth Quarter Overview

Full-Year 2013 Compared to Full-Year 2012

  • Net income of $569 million for 2013 increased $48 million, or 9 percent, compared to 2012.
  • Average total loans increased $1.1 billion, or 3 percent, to $44.4 billion, primarily reflecting an increase of $1.7 billion, or 7 percent, in commercial loans, partially offset by a decrease of $686 million, or 6 percent, in combined commercial mortgage and real estate construction loans. The increase in commercial loans was primarily driven by increases in National Dealer Services, general Middle Market and Energy, partially offset by decreases in Mortgage Banker Finance and Corporate Banking.
  • Average total deposits increased $2.2 billion, or 4 percent, to $51.7 billion, reflecting increases of $1.4 billion, or 7 percent, in noninterest-bearing deposits and $803 million, or 3 percent, in interest-bearing deposits.
  • Net interest income of $1.7 billion decreased by $56 million, or 3 percent, primarily as a result of a decrease in yields and a decrease in accretion of the purchase discount on the acquired loan portfolio, partially offset by a decrease in funding costs. Loan yields decreased primarily as a result of shifts in the average loan portfolio mix and lower LIBOR rates, while yields on mortgage-backed securities declined primarily due to prepayments on higher-yielding securities and reinvestments at lower yields.
  • Credit quality of the loan portfolio remained strong. The provision for credit losses declined $33 million to $46 million in 2013 compared to 2012. Net credit-related charge-offs decreased $97 million to $73 million.
  • Noninterest income increased $8 million, or 1 percent, to $826 million in 2013. The increase reflected an increase of $13 million in customer-driven fee income, partially offset by a decrease of $5 million in noncustomer-driven categories.
  • Noninterest expenses decreased $79 million, or 4 percent, to $1.7 billion in 2013, primarily reflecting decreases of $35 million in merger and restructuring charges and $23 million in litigation-related expenses, as well as declines in several other categories of noninterest expenses, reflecting tight expense control.

Fourth Quarter 2013 Compared to Third Quarter 2013

  • Average total loans remained stable at $44.1 billion, as increases in National Dealer Services and Technology and Life Sciences were offset by a decrease in Mortgage Banker Finance. Period-end total loans increased $1.3 billion, or 3 percent, to $45.5 billion, reflecting increases in almost all lines of business.
  • Average total deposits increased $904 million, or 2 percent, to $52.8 billion, reflecting increases in most lines of business and all primary markets. Period-end deposits increased $383 million, or 1 percent, to $53.3 billion, primarily reflecting an increase of $404 million in interest-bearing deposits.
  • Net interest income increased $18 million, or 4 percent, to $430 million in the fourth quarter 2013, compared to $412 million in the third quarter 2013, primarily reflecting a $15 million increase in accretion on the acquired portfolio and a $5 million increase in interest collected from nonaccrual loans. The increase in accretion resulted from better than expected collections on the purchased credit-impaired portfolio due to improvements in the economic environment.
  • The provision for credit losses was $9 million in the fourth quarter 2013, compared to $8 million in the third quarter 2013, reflecting continued strong credit quality.
  • Noninterest income decreased $10 million to $204 million in the fourth quarter 2013, reflecting decreases of $5 million in customer-driven fee income and $5 million in noncustomer-driven income.
  • Noninterest expenses increased $12 million to $429 million in the fourth quarter 2013, primarily reflecting an increase of $7 million in salaries expense, of which $6 million was due to an increase in deferred compensation, and a $5 million increase in litigation-related expenses from a low third quarter amount.
  • Capital remained solid at December 31, 2013, as evidenced by an estimated Tier 1 common capital ratio of 10.60 percent and a tangible common equity ratio of 10.11 percent.

Net Interest Income

(dollar amounts in millions)

4th Qtr '13

3rd Qtr '13

4th Qtr '12

Net interest income

$

430

$

412

$

424

Net interest margin

2.86

%

2.79

%

2.87

%

Selected average balances:

Total earning assets

$

59,924

$

58,892

$

59,276

Total loans

44,054

44,094

44,119

Total investment securities

9,365

9,380

10,250

Federal Reserve Bank deposits (excess liquidity)

6,260

5,156

4,638

Total deposits

52,769

51,865

51,282

Total noninterest-bearing deposits

23,532

22,379

22,758

  • Net interest income of $430 million in the fourth quarter 2013 increased $18 million compared to the third quarter 2013.
    • Interest on loans increased $16 million, primarily reflecting an increase in the accretion of the purchase discount on the acquired loan portfolio ($15 million) and an increase in interest collected on nonaccrual loans ($5 million), partially offset by the impact of loan portfolio dynamics ($4 million), including a decline in LIBOR and other shifts in portfolio mix.
    • Interest on mortgage-backed investment securities increased net interest income by $1 million, primarily as a result of improvement in yields due to slowing prepayment speeds.
    • A decrease in funding costs increased net interest income by $1 million, primarily reflecting lower deposit pricing and a shift in the deposit mix.
  • The net interest margin of 2.86 percent increased 7 basis points compared to the third quarter 2013. The increase in net interest margin was primarily due to an increase in the accretion of the purchase discount on the acquired loan portfolio (+10 basis points), an increase in interest collected on nonaccrual loans (+3 basis points), the impact of yield improvements on mortgage-backed securities (+1 basis point) and lower funding costs (+1 basis point), partially offset by an increase in excess liquidity (-5 basis points) and lower loan yields (-3 basis points).
  • Average earning assets increased $1.0 billion to $59.9 billion in the fourth quarter 2013, compared to the third quarter 2013, reflecting an increase of $1.1 billion in excess liquidity due to deposit growth.

Noninterest Income Noninterest income decreased $10 million to $204 million for the fourth quarter 2013, compared to $214 million for the third quarter 2013. Customer-driven fee income decreased $5 million and noncustomer-driven income decreased $5 million. The decrease in customer-driven fee income reflected a $2 million decrease in letter of credit fees and small decreases in other categories of noninterest income, partially offset by a $2 million increase in fiduciary income. The decrease in noncustomer-driven income was primarily due to a $6 million decrease in warrant income and a $3 million decrease in income on bank-owned life insurance, partially offset by a $6 million increase in deferred compensation plan asset returns, which was offset by an increase in deferred compensation expense as described below.

Noninterest Expenses Noninterest expenses of $429 million in the fourth quarter 2013 increased $12 million compared to the third quarter 2013. Excluding a $6 million increase in deferred compensation expense, noninterest expenses increased $6 million, primarily reflecting the impact of a $5 million favorable outcome in litigation in the third quarter. The $6 million increase in deferred compensation expense (included in salaries expense) was offset by the increase in deferred compensation asset returns in noninterest income. Incentive compensation remained unchanged from the elevated third quarter level as financial performance relative to peers continued to improve.

Credit Quality "The provision for credit losses was $9 million in the fourth quarter 2013, compared to $8 million in the third quarter 2013, reflecting continued strong credit quality and an increase in loan commitments and outstandings," said Babb. "Net credit-related charge-offs decreased slightly and remain at a very low level."

(dollar amounts in millions)

4th Qtr '13

3rd Qtr '13

4th Qtr '12

Net credit-related charge-offs

$

13

$

19

$

37

Net credit-related charge-offs/Average total loans

0.12

%

0.18

%

0.34

%

Provision for credit losses

$

9

$

8

$

16

Nonperforming loans (a)

374

459

541

Nonperforming assets (NPAs) (a)

383

478

595

NPAs/Total loans and foreclosed property

0.84

%

1.08

%

1.29

%

Loans past due 90 days or more and still accruing

$

16

$

25

$

23

Allowance for loan losses

598

604

629

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

36

34

32

Total allowance for credit losses

634

638

661

Allowance for loan losses/Period-end total loans

1.32

%

1.37

%

1.37

%

Allowance for loan losses/Nonperforming loans

160

131

116

(a) Excludes loans acquired with credit impairment.

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

  • Nonaccrual loans decreased $87 million, to $350 million at December 31, 2013, compared to $437 million at September 30, 2013.
  • Criticized loans decreased $201 million, to $2.3 billion at December 31, 2013, compared to $2.5 billion at September 30, 2013.
  • During the fourth quarter 2013, $23 million of borrower relationships over $2 million were transferred to nonaccrual status, a decrease of $27 million from the third quarter 2013.

Balance Sheet and Capital Management Total assets and common shareholders' equity were $65.2 billion and $7.2 billion, respectively, at December 31, 2013, compared to $64.7 billion and $7.0 billion, respectively, at September 30, 2013. The $540 million increase in total assets primarily reflected an increase of $1.3 billion in loans, partially offset by decreases of $437 million in excess liquidity and $181 million in investment securities available-for-sale.

There were approximately 182 million common shares outstanding at December 31, 2013. Combined with the dividend of $0.17 per share, share repurchases under the share repurchase program and dividends returned 71 percent of fourth quarter 2013 net income to shareholders.

Comerica's tangible common equity ratio was 10.11 percent at December 31, 2013, an increase of 24 basis points from September 30, 2013. The estimated Tier 1 common capital ratio decreased 12 basis points, to 10.60 percent at December 31, 2013, from September 30, 2013. The estimated Tier 1 common ratio under fully phased-in Basel III capital rules and excluding most elements of AOCI was 10.3 percent percent at December 31, 2013.

Full-Year 2014 Outlook Management expectations for full-year 2014 compared to full-year 2013, assuming a continuation of the slow growing economy and low rate environment, are as follows:

  • Average loan growth consistent with 2013, reflecting stabilization in Mortgage Banker Finance near average fourth quarter 2013 levels, improving trends in Commercial Real Estate and continued focus on pricing and structure discipline.
  • Net interest income modestly lower, reflecting a decrease in purchase accounting accretion, to $10 million to $20 million, and the effect of a continued low rate environment, partially offset by loan growth.
  • Provision for credit losses stable as a result of continued strong credit quality.
  • Noninterest income stable, reflecting continued growth in customer-driven fee income.
  • Noninterest expenses lower, reflecting a more than 50 percent reduction in pension expense. Increases in merit, healthcare and regulatory costs mostly offset by continued expense discipline.
  • Income tax expense to approximate 28 percent of pre-tax income.

Business Segments Comerica's operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank and Wealth Management. The Finance Division is also reported as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at December 31, 2013 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses fourth quarter 2013 results compared to third quarter 2013.

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

(dollar amounts in millions)

4th Qtr '13

3rd Qtr '13

4th Qtr '12

Business Bank

$

200

84

%

$

209

91

%

$

209

90

%

Retail Bank

14

6

6

3

8

3

Wealth Management

23

10

15

6

16

7

237

100

%

230

100

%

233

100

%

Finance

(92)

(87)

(102)

Other (a)

4

(1)

     Total

$

145

$

147

$

130

(a)

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

 

Business Bank

(dollar amounts in millions)

4th Qtr '13

3rd Qtr '13

4th Qtr '12

Net interest income (FTE)

$

387

$

368

$

387

Provision for credit losses

24

(1)

6

Noninterest income

80

89

79

Noninterest expenses

151

153

149

Net income

200

209

209

Net credit-related charge-offs

6

9

26

Selected average balances:

Assets

35,042

35,298

35,359

Loans

34,020

34,178

34,325

Deposits

26,873

26,284

26,051

  • Average loans decreased $158 million, primarily reflecting decreases in Mortgage Banker Finance and Energy, partially offset by increases in National Dealer Services and Technology and Life Sciences. Period-end loans increased $1.1 billion.
  • Average deposits increased $589 million, primarily reflecting increases in Corporate Banking, Technology and Life Sciences and Commercial Real Estate, partially offset by a decline in general Middle Market.
  • Net interest income increased $19 million, primarily due to an increase in purchase accounting accretion and an increase in funds transfer pricing credits.
  • The provision for credit losses increased $25 million, primarily reflecting an increase in period-end loan balances, partially offset by improved credit quality.
  • Noninterest income decreased $9 million, primarily due to a decrease in warrant income.

Retail Bank

(dollar amounts in millions)

4th Qtr '13

3rd Qtr '13

4th Qtr '12

Net interest income (FTE)

$

150

$

151

$

156

Provision for credit losses

(8)

10

7

Noninterest income

43

45

43

Noninterest expenses

180

177

181

Net income

14

6

8

Net credit-related charge-offs

4

7

6

Selected average balances:

Assets

5,997

5,967

5,952

Loans

5,323

5,285

5,255

Deposits

21,438

21,257

20,910

  • Average loans increased $38 million, primarily due to an increase in Small Business.
  • Average deposits increased $181 million, primarily due to an increase in Retail Banking.
  • The provision for credit losses decreased $18 million, primarily due to improved credit quality, partially offset by an increase in period-end loan balances.

Wealth Management

(dollar amounts in millions)

4th Qtr '13

3rd Qtr '13

4th Qtr '12

Net interest income (FTE)

$

47

$

45

$

47

Provision for credit losses

(9)

1

2

Noninterest income

61

61

65

Noninterest expenses

82

81

84

Net income

23

15

16

Net credit-related charge-offs

3

3

5

Selected average balances:

Assets

4,873

4,789

4,686

Loans

4,711

4,631

4,539

Deposits

3,933

3,782

3,798

  • Average loans increased $80 million, primarily due to an increase in Private Banking.
  • Average deposits increased $151 million, primarily due to an increase in Private Banking.
  • The provision for credit losses decreased $10 million, primarily reflecting improved credit quality, partially offset by an increase in period-end loan balances.

Geographic Market Segments Comerica also provides market segment results for three primary geographic markets: Michigan, California and Texas. In addition to the three primary geographic markets, Other Markets is also reported as a market segment. Other Markets includes Florida, Arizona, the International Finance division and businesses that have a significant presence outside of the three primary geographic markets. The tables below present the geographic market results based on the methodologies in effect at December 31, 2013 and are presented on a fully taxable equivalent (FTE) basis.

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

(dollar amounts in millions)

4th Qtr '13

3rd Qtr '13

4th Qtr '12

Michigan

$

63

26

%

$

73

32

%

$

74

32

%

California

76

32

71

31

62

26

Texas

52

22

35

15

47

20

Other Markets

46

20

51

22

50

22

237

100

%

230

100

%

233

100

%

Finance & Other (a)

(92)

(83)

(103)

     Total

$

145

$

147

$

130

(a)

Includes items not directly associated with the geographic markets.

  • Average loans increased $429 million and $47 million in California and Michigan, respectively, and decreased $176 million in Texas. The increases in California and Michigan primarily reflected an increase in National Dealer Services. Technology and Life Sciences also contributed to the increase in California. The decrease in Texas was primarily due to a decrease in Energy.
  • Average deposits increased $36 million in Michigan, primarily due to an increase in Small Business. In California, average deposits increased $652 million, primarily reflecting increases in Corporate Banking and Private Banking. The increase in Texas of $238 million was primarily due to increases in Technology and Life Sciences, Energy and Retail Banking.
  • The provision for credit losses decreased $12 million in Texas and $5 million in California, primarily reflecting improved credit quality, partially offset by an increase in period-end loan balances. In Michigan, the provision increased $15 million, primarily due to an increase in period-end loan balances.
  • Noninterest income in California decreased $5 million, primarily due to a decrease in warrant income.

Michigan Market

(dollar amounts in millions)

4th Qtr '13

3rd Qtr '13

4th Qtr '12

Net interest income (FTE)

$

187

$

186

$

192

Provision for credit losses

7

(8)

(8)

Noninterest income

89

88

97

Noninterest expenses

170

167

180

Net income

63

73

74

Net credit-related charge-offs

(4)

1

1

Selected average balances:

Assets

13,712

13,744

13,782

Loans

13,323

13,276

13,415

Deposits

20,501

20,465

20,019

 

California Market

(dollar amounts in millions)

4th Qtr '13

3rd Qtr '13

4th Qtr '12

Net interest income (FTE)

$

176

$

171

$

178

Provision for credit losses

(8)

(3)

7

Noninterest income

37

42

35

Noninterest expenses

100

101

100

Net income

76

71

62

Net credit-related charge-offs

(2)

8

12

Selected average balances:

Assets

14,710

14,245

13,549

Loans

14,431

14,002

13,275

Deposits

15,219

14,567

15,457

 

Texas Market

(dollar amounts in millions)

4th Qtr '13

3rd Qtr '13

4th Qtr '12

Net interest income (FTE)

$

147

$

129

$

136

Provision for credit losses

5

17

4

Noninterest income

33

35

31

Noninterest expenses

93

92

90

Net income

52

35

47

Net credit-related charge-offs

13

4

5

Selected average balances:

Assets

10,458

10,642

10,554

Loans

9,766

9,942

9,818

Deposits

10,536

10,298

9,809

 

Conference Call and Webcast Comerica will host a conference call to review fourth quarter 2013 financial results at 7 a.m. CT Friday, January 17, 2014. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 23046513). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A replay of the Webcast can be accessed via Comerica's "Investor Relations" page at www.comerica.com.

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

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

Forward-looking Statements Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "anticipates," "believes," "contemplates," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "opportunity," "initiative," "outcome," "continue," "remain," "maintain," "on course," "trend," "objective," "looks forward" 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; any future acquisitions or divestitures; 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; 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 13 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2012 and on page 68 of the Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

Comerica Incorporated and Subsidiaries

Three Months Ended

Years Ended

December 31,

September 30,

December 31,

December 31,

(in millions, except per share data)

2013

2013

2012

2013

2012

PER COMMON SHARE AND COMMON STOCK DATA

Diluted net income

$

0.77

$

0.78

$

0.68

$

3.00

$

2.67

Cash dividends declared

0.17

0.17

0.15

0.68

0.55

Common shareholders' equity (at period end)

39.39

37.94

36.87

Tangible common equity (at period end) (a)

35.81

34.38

33.38

Average diluted shares (in thousands)

186,166

187,104

187,954

186,927

192,473

KEY RATIOS

Return on average common shareholders' equity

8.26

%

8.50

%

7.36

%

8.17

%

7.43

%

Return on average assets

0.90

0.92

0.81

0.89

0.83

Tier 1 common capital ratio (a) (b)

10.60

10.72

10.14

Tier 1 risk-based capital ratio (b)

10.60

10.72

10.14

Total risk-based capital ratio (b)

13.05

13.42

13.15

Leverage ratio (b)

10.82

10.88

10.57

Tangible common equity ratio (a)

10.11

9.87

9.76

AVERAGE BALANCES

Commercial loans

$

27,683

$

27,759

$

27,462

$

27,971

$

26,224

Real estate construction loans:

Commercial Real Estate business line (c)

1,363

1,263

1,033

1,241

1,031

Other business lines (d)

289

259

266

245

359

Total real estate construction loans

1,652

1,522

1,299

1,486

1,390

Commercial mortgage loans:

Commercial Real Estate business line (c)

1,608

1,714

1,939

1,738

2,259

Other business lines (d)

7,106

7,229

7,580

7,322

7,583

Total commercial mortgage loans

8,714

8,943

9,519

9,060

9,842

Lease financing

838

839

839

847

864

International loans

1,303

1,252

1,314

1,275

1,272

Residential mortgage loans

1,679

1,642

1,525

1,620

1,505

Consumer loans

2,185

2,137

2,161

2,153

2,209

Total loans

44,054

44,094

44,119

44,412

43,306

Earning assets

59,924

58,892

59,276

59,091

57,483

Total assets

64,605

63,660

64,257

63,936

62,572

Noninterest-bearing deposits

23,532

22,379

22,758

22,379

21,004

Interest-bearing deposits

29,237

29,486

28,524

29,332

28,529

Total deposits

52,769

51,865

51,282

51,711

49,533

Common shareholders' equity

7,010

6,923

7,062

6,968

7,012

NET INTEREST INCOME

Net interest income (fully taxable equivalent basis)

$

431

$

413

$

425

$

1,675

$

1,731

Fully taxable equivalent adjustment

1

1

1

3

3

Net interest margin (fully taxable equivalent basis)

2.86

%

2.79

%

2.87

%

2.84

%

3.03

%

CREDIT QUALITY

Nonaccrual loans

$

350

$

437

$

519

Reduced-rate loans

24

22

22

Total nonperforming loans (e)

374

459

541

Foreclosed property

9

19

54

Total nonperforming assets (e)

383

478

595

Loans past due 90 days or more and still accruing

16

25

23

Gross loan charge-offs

41

39

60

$

153

$

245

Loan recoveries

28

20

23

80

75

Net loan charge-offs

13

19

37

73

170

Allowance for loan losses

598

604

629

Allowance for credit losses on lending-related commitments

36

34

32

Total allowance for credit losses

634

638

661

Allowance for loan losses as a percentage of total loans

1.32

%

1.37

%

1.37

%

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

0.12

0.18

0.34

0.16

%

0.39

%

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

0.84

1.08

1.29

Allowance for loan losses as a percentage of total nonperforming loans

160

131

116

(a)

See Reconciliation of Non-GAAP Financial Measures.

(b)

December 31, 2013 ratios are estimated.

(c)

Primarily loans to real estate developers.

(d)

Primarily loans secured by owner-occupied real estate.

(e)

Excludes loans acquired with credit-impairment.

(f)

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

 

CONSOLIDATED BALANCE SHEETS

Comerica Incorporated and Subsidiaries

December 31,

September 30,

December 31,

(in millions, except share data)

2013

2013

2012

(unaudited)

(unaudited)

ASSETS

Cash and due from banks

$

1,140

$

1,384

$

1,395

Federal funds sold

100

Interest-bearing deposits with banks

5,311

5,704

3,039

Other short-term investments

112

106

125

Investment securities available-for-sale

9,307

9,488

10,297

Commercial loans

28,815

27,897

29,513

Real estate construction loans

1,762

1,552

1,240

Commercial mortgage loans

8,787

8,785

9,472

Lease financing

845

829

859

International loans

1,327

1,286

1,293

Residential mortgage loans

1,697

1,650

1,527

Consumer loans

2,237

2,152

2,153

Total loans

45,470

44,151

46,057

Less allowance for loan losses

(598)

(604)

(629)

Net loans

44,872

43,547

45,428

Premises and equipment

594

604

622

Accrued income and other assets

3,874

3,837

4,063

Total assets

$

65,210

$

64,670

$

65,069

LIABILITIES AND SHAREHOLDERS' EQUITY

Noninterest-bearing deposits

$

23,875

$

23,896

$

23,279

Money market and interest-bearing checking deposits

22,332

21,697

21,273

Savings deposits

1,673

1,645

1,606

Customer certificates of deposit

5,063

5,180

5,531

Foreign office time deposits

349

491

502

Total interest-bearing deposits

29,417

29,013

28,912

Total deposits

53,292

52,909

52,191

Short-term borrowings

253

226

110

Accrued expenses and other liabilities

941

1,001

1,106

Medium- and long-term debt

3,543

3,565

4,720

Total liabilities

58,029

57,701

58,127

Common stock - $5 par value:

Authorized - 325,000,000 shares

Issued - 228,164,824 shares

1,141

1,141

1,141

Capital surplus

2,179

2,171

2,162

Accumulated other comprehensive loss

(391)

(541)

(413)

Retained earnings

6,349

6,239

5,931

Less cost of common stock in treasury - 45,860,786 shares at 12/31/13, 44,483,659 shares at 9/30/13 and 39,889,610 shares at 12/31/12

(2,097)

(2,041)

(1,879)

Total shareholders' equity

7,181

6,969

6,942

Total liabilities and shareholders' equity

$

65,210

$

64,670

$

65,069

 

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)

2013

2012

2013

2012

INTEREST INCOME

Interest and fees on loans

$

397

$

398

$

1,556

$

1,617

Interest on investment securities

55

55

214

234

Interest on short-term investments

4

3

14

12

Total interest income

456

456

1,784

1,863

INTEREST EXPENSE

Interest on deposits

12

16

55

70

Interest on medium- and long-term debt

14

16

57

65

Total interest expense

26

32

112

135

Net interest income

430

424

1,672

1,728

Provision for credit losses

9

16

46

79

Net interest income after provision for credit losses

421

408

1,626

1,649

NONINTEREST INCOME

Service charges on deposit accounts

53

52

214

214

Fiduciary income

43

42

171

158

Commercial lending fees

28

25

99

96

Card fees

19

17

74

65

Letter of credit fees

15

17

64

71

Bank-owned life insurance

9

9

40

39

Foreign exchange income

9

9

36

38

Brokerage fees

4

5

17

19

Net securities gains (losses)

1

(1)

12

Other noninterest income

24

27

112

106

Total noninterest income

204

204

826

818

NONINTEREST EXPENSES

Salaries

203

196

769

778

Employee benefits

61

59

246

240

Total salaries and employee benefits

264

255

1,015

1,018

Net occupancy expense

41

42

160

163

Equipment expense

15

15

60

65

Outside processing fee expense

30

28

119

107

Software expense

24

23

90

90

FDIC insurance expense

7

9

33

38

Advertising expense

3

6

21

27

Other real estate expense

(1)

3

2

9

Merger and restructuring charges

2

35

Other noninterest expenses

46

44

178

205

Total noninterest expenses

429

427

1,678

1,757

Income before income taxes

196

185

774

710

Provision for income taxes

51

55

205

189

NET INCOME

145

130

569

521

Less income allocated to participating securities

2

2

8

6

Net income attributable to common shares

$

143

$

128

$

561

$

515

Earnings per common share:

Basic

$

0.79

$

0.68

$

3.07

$

2.68

Diluted

0.77

0.68

3.00

2.67

Comprehensive income (loss)

295

(30)

591

464

Cash dividends declared on common stock

31

28

126

106

Cash dividends declared per common share

0.17

0.15

0.68

0.55

 

CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries

Fourth

Third

Second

First

Fourth

Fourth Quarter 2013 Compared To:

Quarter

Quarter

Quarter

Quarter

Quarter

Third Quarter 2013

Fourth Quarter 2012

(in millions, except per share data)

2013

2013

2013

2013

2012

Amount

Percent

Amount

Percent

INTEREST INCOME

Interest and fees on loans

$

397

$

381

$

388

$

390

$

398

$

16

4

%

$

(1)

%

Interest on investment securities

55

54

52

53

55

1

2

Interest on short-term investments

4

4

3

3

3

1

27

Total interest income

456

439

443

446

456

17

4

INTEREST EXPENSE

Interest on deposits

12

13

15

15

16

(1)

(8)

(4)

(24)

Interest on medium- and long-term debt

14

14

14

15

16

(2)

(15)

Total interest expense

26

27

29

30

32

(1)

(5)

(6)

(20)

Net interest income

430

412

414

416

424

18

4

6

1

Provision for credit losses

9

8

13

16

16

1

22

(7)

(42)

Net interest income after provision

for credit losses

421

404

401

400

408

17

4

13

3

NONINTEREST INCOME

Service charges on deposit accounts

53

53

53

55

52

1

1

Fiduciary income

43

41

44

43

42

2

2

1

4

Commercial lending fees

28

28

22

21

25

3

6

Card fees

19

20

18

17

17

(1)

(1)

2

15

Letter of credit fees

15

17

16

16

17

(2)

(9)

(2)

(13)

Bank-owned life insurance

9

12

10

9

9

(3)

(25)

Foreign exchange income

9

9

9

9

9

Brokerage fees

4

4

4

5

5

(1)

(14)

Net securities gains (losses)

1

(2)

1

(1)

(43)

(1)

(82)

Other noninterest income

24

29

34

25

27

(5)

(16)

(3)

(6)

Total noninterest income

204

214

208

200

204

(10)

(5)

NONINTEREST EXPENSES

Salaries

203

196

182

188

196

7

4

7

4

Employee benefits

61

59

63

63

59

2

3

2

4

Total salaries and employee benefits

264

255

245

251

255

9

3

9

4

Net occupancy expense

41

41

39

39

42

(1)

(2)

Equipment expense

15

15

15

15

15

Outside processing fee expense

30

31

30

28

28

(1)

(7)

2

5

Software expense

24

22

22

22

23

2

11

1

6

FDIC insurance expense

7

9

8

9

9

(2)

(19)

(2)

(22)

Advertising expense

3

6

6

6

6

(3)

(49)

(3)

(48)

Other real estate expense

(1)

1

1

1

3

(2)

N/M

(4)

N/M

Merger and restructuring charges

2

(2)

N/M

Other noninterest expenses

46

37

50

45

44

9

23

2

1

Total noninterest expenses

429

417

416

416

427

12

3

2

Income before income taxes

196

201

193

184

185

(5)

(2)

11

6

Provision for income taxes

51

54

50

50

55

(3)

(5)

(4)

(7)

NET INCOME

145

147

143

134

130

(2)

(2)

15

11

Less income allocated to participating securities

2

2

2

2

2

Net income attributable to common shares

$

143

$

145

$

141

$

132

$

128

$

(2)

(2)

%

$

15

11

%

Earnings per common share:

Basic

$

0.79

$

0.80

$

0.77

$

0.71

$

0.68

$

(0.01)

(1)

%

$

0.11

16

%

Diluted

0.77

0.78

0.76

0.70

0.68

(0.01)

(1)

0.09

13

Comprehensive income (loss)

295

144

15

137

(30)

151

N/M

325

N/M

Cash dividends declared on common stock

31

31

32

32

28

3

10

Cash dividends declared per common share

0.17

0.17

0.17

0.17

0.15

0.02

13

N/M - Not Meaningful

 

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)

Comerica Incorporated and Subsidiaries

2013

2012

(in millions)

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr

4th Qtr

Balance at beginning of period

$

604

$

613

$

617

$

629

$

647

Loan charge-offs:

Commercial

31

20

19

21

42

Real estate construction:

Commercial Real Estate business line (a)

1

2

1

Other business lines (b)

Total real estate construction

1

2

1

Commercial mortgage:

Commercial Real Estate business line (a)

1

6

2

1

5

Other business lines (b)

4

3

7

12

6

Total commercial mortgage

5

9

9

13

11

International

Residential mortgage

1

1

1

1

2

Consumer

4

8

4

3

4

Total loan charge-offs

41

39

35

38

60

Recoveries on loans previously charged-off:

Commercial

17

8

11

6

13

Real estate construction

3

2

1

1

1

Commercial mortgage

5

7

3

5

6

Lease financing

1

International

1

Residential mortgage

1

1

1

1

1

Consumer

2

1

2

1

1

Total recoveries

28

20

18

14

23

Net loan charge-offs

13

19

17

24

37

Provision for loan losses

7

10

13

12

19

Balance at end of period

$

598

$

604

$

613

$

617

$

629

Allowance for loan losses as a percentage of total loans

1.32

%

1.37

%

1.35

%

1.37

%

1.37

%

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

0.12

0.18

0.15

0.21

0.34

(a)

Primarily charge-offs of loans to real estate 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

2013

2012

(in millions)

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr

4th Qtr

Balance at beginning of period

$

34

$

36

$

36

$

32

$

35

Add: Provision for credit losses on lending-related commitments

2

(2)

4

(3)

Balance at end of period

$

36

$

34

$

36

$

36

$

32

Unfunded lending-related commitments sold

$

1

$

2

$

1

$

2

$

 

NONPERFORMING ASSETS (unaudited)

Comerica Incorporated and Subsidiaries

2013

2012

(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

$

81

$

107

$

102

$

102

$

103

     Real estate construction:

          Commercial Real Estate business line (a)

20

24

26

30

30

          Other business lines (b)

1

1

2

3

3

               Total real estate construction

21

25

28

33

33

     Commercial mortgage:

          Commercial Real Estate business line (a)

51

67

69

86

94

          Other business lines (b)

105

139

157

178

181

               Total commercial mortgage

156

206

226

264

275

     Lease financing

3

     International

4

     Total nonaccrual business loans

262

338

356

399

414

Retail loans:

     Residential mortgage

53

63

62

65

70

     Consumer:

          Home equity

33

34

28

28

31

          Other consumer

2

2

3

2

4

               Total consumer

35

36

31

30

35

Total nonaccrual retail loans

88

99

93

95

105

Total nonaccrual loans

350

437

449

494

519

Reduced-rate loans

24

22

22

21

22

Total nonperforming loans (c)

374

459

471

515

541

Foreclosed property

9

19

29

40

54

Total nonperforming assets (c)

$

383

$

478

$

500

$

555

$

595

Nonperforming loans as a percentage of total loans

0.82

%

1.04

%

1.04

%

1.14

%

1.17

%

Nonperforming assets as a percentage of total loans

and foreclosed property

0.84

1.08

1.10

1.23

1.29

Allowance for loan losses as a percentage of total

nonperforming loans

160

131

130

120

116

Loans past due 90 days or more and still accruing

$

16

$

25

$

20

$

25

$

23

ANALYSIS OF NONACCRUAL LOANS

Nonaccrual loans at beginning of period

$

437

$

449

$

494

$

519

$

665

Loans transferred to nonaccrual (d)

23

50

37

34

36

Nonaccrual business loan gross charge-offs (e)

(33)

(25)

(25)

(34)

(54)

Nonaccrual business loans sold (f)

(14)

(17)

(9)

(7)

(48)

Payments/Other (g)

(63)

(20)

(48)

(18)

(80)

Nonaccrual loans at end of period

$

350

$

437

$

449

$

494

$

519

(a) Primarily loans to real estate 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

$

33

$

25

$

25

$

34

$

54

Performing criticized loans

3

5

5

Consumer and residential mortgage loans

5

9

5

4

6

Total gross loan charge-offs

$

41

$

39

$

35

$

38

$

60

(f) Analysis of loans sold:

Nonaccrual business loans

$

14

$

17

$

9

$

7

$

48

Performing criticized loans

22

31

40

12

24

Total loans sold

$

36

$

48

$

49

$

19

$

72

(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, 2013

December 31, 2012

Average

Average

Average

Average

(dollar amounts in millions)

Balance

Interest

Rate

Balance

Interest

Rate

Commercial loans

$

27,971

$

917

3.28

%

$

26,224

$

903

3.44

%

Real estate construction loans

1,486

57

3.85

1,390

62

4.44

Commercial mortgage loans

9,060

372

4.11

9,842

437

4.44

Lease financing

847

27

3.23

864

26

3.01

International loans

1,275

48

3.74

1,272

47

3.73

Residential mortgage loans

1,620

66

4.09

1,505

68

4.55

Consumer loans

2,153

71

3.30

2,209

76

3.42

Total loans (a)

44,412

1,558

3.51

43,306

1,619

3.74

Mortgage-backed securities available-for-sale

9,246

213

2.33

9,446

231

2.52

Other investment securities available-for-sale

391

2

0.48

469

4

0.77

Total investment securities available-for-sale

9,637

215

2.25

9,915

235

2.43

Interest-bearing deposits with banks (b)

4,930

13

0.26

4,128

10

0.26

Other short-term investments

112

1

1.22

134

2

1.65

Total earning assets

59,091

1,787

3.03

57,483

1,866

3.27

Cash and due from banks

987

983

Allowance for loan losses

(622)

(693)

Accrued income and other assets

4,480

4,799

Total assets

$

63,936

$

62,572

Money market and interest-bearing checking deposits

$

21,704

28

0.13

$

20,622

35

0.17

Savings deposits

1,657

1

0.03

1,593

1

0.06

Customer certificates of deposit

5,471

23

0.42

5,902

31

0.53

Foreign office time deposits

500

3

0.52

412

3

0.63

Total interest-bearing deposits

29,332

55

0.19

28,529

70

0.25

Short-term borrowings

211

0.07

76

0.12

Medium- and long-term debt

3,972

57

1.45

4,818

65

1.36

Total interest-bearing sources

33,515

112

0.33

33,423

135

0.41

Noninterest-bearing deposits

22,379

21,004

Accrued expenses and other liabilities

1,074

1,133

Total shareholders' equity

6,968

7,012

Total liabilities and shareholders' equity

$

63,936

$

62,572

Net interest income/rate spread (FTE)

$

1,675

2.70

$

1,731

2.86

FTE adjustment

$

3

$

3

Impact of net noninterest-bearing sources of funds

0.14

0.17

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

2.84

%

3.03

%

(a)

Accretion of the purchase discount on the acquired loan portfolio of $49 million and $71 million in 2013 and 2012, respectively, increased the net interest margin by 8 basis points and 12 basis points in each respective period.

(b)

Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 23 basis points and 21 basis points in 2013 and 2012, respectively.

 

ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)

Comerica Incorporated and Subsidiaries

Three Months Ended

December 31, 2013

September 30, 2013

December 31, 2012

Average

Average

Average

Average

Average

Average

(dollar amounts in millions)

Balance

Interest

Rate

Balance

Interest

Rate

Balance

Interest

Rate

Commercial loans

$

27,683

$

228

3.26

%

$

27,759

$

226

3.25

%

$

27,462

$

230

3.33

%

Real estate construction loans

1,652

15

3.50

1,522

15

3.78

1,299

15

4.32

Commercial mortgage loans

8,714

101

4.62

8,943

88

3.90

9,519

100

4.22

Lease financing

838

7

3.27

839

7

3.21

839

7

3.27

International loans

1,303

12

3.78

1,252

12

3.76

1,314

12

3.73

Residential mortgage loans

1,679

17

3.97

1,642

17

3.98

1,525

16

4.24

Consumer loans

2,185

18

3.24

2,137

17

3.27

2,161

19

3.38

Total loans (a)

44,054

398

3.58

44,094

382

3.44

44,119

399

3.60

Mortgage-backed securities available-for-sale

8,969

55

2.46

8,989

54

2.41

9,831

55

2.29

Other investment securities available-for-sale

396

0.45

391

0.43

419

0.76

Total investment securities available-for-sale

9,365

55

2.37

9,380

54

2.32

10,250

55

2.22

Interest-bearing deposits with banks (b)

6,400

4

0.26

5,308

4

0.26

4,785

2

0.25

Other short-term investments

105

0.69

110

0.77

122

1

1.13

Total earning assets

59,924

457

3.03

58,892

440

2.97

59,276

457

3.08

Cash and due from banks

970

1,027

1,030

Allowance for loan losses

(609)

(622)

(654)

Accrued income and other assets

4,320

4,363

4,605

Total assets

$

64,605

$

63,660

$

64,257

Money market and interest-bearing checking deposits

$

22,030

6

0.12

$

21,894

7

0.13

$

20,760

9

0.16

Savings deposits

1,667

0.03

1,680

0.04

1,603

0.03

Customer certificates of deposit

5,078

5

0.38

5,384

6

0.41

5,634

6

0.49

Foreign office time deposits

462

1

0.47

528

0.48

527

1

0.60

Total interest-bearing deposits

29,237

12

0.17

29,486

13

0.18

28,524

16

0.22

Short-term borrowings

279

0.06

249

0.06

70

0.12

Medium- and long-term debt

3,563

14

1.53

3,590

14

1.54

4,735

16

1.35

Total interest-bearing sources

33,079

26

0.31

33,325

27

0.32

33,329

32

0.38

Noninterest-bearing deposits

23,532

22,379

22,758

Accrued expenses and other liabilities

984

1,033

1,108

Total shareholders' equity

7,010

6,923

7,062

Total liabilities and shareholders' equity

$

64,605

$

63,660

$

64,257

Net interest income/rate spread (FTE)

$

431

2.72

$

413

2.65

$

425

2.70

FTE adjustment

$

1

$

1

$

1

Impact of net noninterest-bearing sources of funds

0.14

0.14

0.17

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

2.86

%

2.79

%

2.87

%

(a)

Accretion of the purchase discount on the acquired loan portfolio of $23 million, $8 million and $13 million in the fourth and third quarters of 2013 and the fourth quarter of 2012, respectively, increased the net interest margin by 15 basis points, 5 basis points and 9 basis points in each respective period.

(b)

Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 31 basis points and 24 basis points in the fourth and third quarters of 2013, respectively, and by 22 basis points in the fourth quarter of 2012.

 

CONSOLIDATED STATISTICAL DATA (unaudited)

Comerica Incorporated and Subsidiaries

December 31,

September 30,

June 30,

March 31,

December 31,

(in millions, except per share data)

2013

2013

2013

2013

2012

Commercial loans:

Floor plan

$

3,504

$

2,869

$

3,241

$

2,963

$

2,939

Other

25,311

25,028

25,945

25,545

26,574

Total commercial loans

28,815

27,897

29,186

28,508

29,513

Real estate construction loans:

Commercial Real Estate business line (a)

1,447

1,283

1,223

1,185

1,049

Other business lines (b)

315

269

256

211

191

Total real estate construction loans

1,762

1,552

1,479

1,396

1,240

Commercial mortgage loans:

Commercial Real Estate business line (a)

1,678

1,592

1,743

1,812

1,873

Other business lines (b)

7,109

7,193

7,264

7,505

7,599

Total commercial mortgage loans

8,787

8,785

9,007

9,317

9,472

Lease financing

845

829

843

853

859

International loans

1,327

1,286

1,209

1,269

1,293

Residential mortgage loans

1,697

1,650

1,611

1,568

1,527

Consumer loans:

Home equity

1,517

1,501

1,474

1,498

1,537

Other consumer

720

651

650

658

616

Total consumer loans

2,237

2,152

2,124

2,156

2,153

Total loans

$

45,470

$

44,151

$

45,459

$

45,067

$

46,057

Goodwill

$

635

$

635

$

635

$

635

$

635

Core deposit intangible

16

17

18

19

20

Loan servicing rights

1

1

2

2

2

Tier 1 common capital ratio (c) (d)

10.60

%

10.72

%

10.43

%

10.37

%

10.14

%

Tier 1 risk-based capital ratio (c)

10.60

10.72

10.43

10.37

10.14

Total risk-based capital ratio (c)

13.05

13.42

13.29

13.41

13.15

Leverage ratio (c)

10.82

10.88

10.81

10.75

10.57

Tangible common equity ratio (d)

10.11

9.87

10.04

9.86

9.76

Common shareholders' equity per share of common stock

$

39.39

$

37.94

$

37.32

$

37.41

$

36.87

Tangible common equity per share of common stock (d)

35.81

34.38

33.79

33.90

33.38

Market value per share for the quarter:

High

48.69

43.49

40.44

36.99

32.14

Low

38.64

38.56

33.55

30.73

27.72

Close

47.54

39.31

39.83

35.95

30.34

Quarterly ratios:

Return on average common shareholders' equity

8.26

%

8.50

%

8.23

%

7.68

%

7.36

%

Return on average assets

0.90

0.92

0.90

0.84

0.81

Efficiency ratio (e)

67.55

66.66

66.43

67.58

68.08

Number of banking centers

483

484

484

487

487

Number of employees - full time equivalent

8,948

8,918

8,929

9,001

9,035

(a)

Primarily loans to real estate developers.

(b)

Primarily loans secured by owner-occupied real estate.

(c)

December 31, 2013 ratios are estimated.

(d)

See Reconciliation of Non-GAAP Financial Measures.

(e)

Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains.

 

PARENT COMPANY ONLY BALANCE SHEETS (unaudited)

Comerica Incorporated

December 31,

September 30,

December 31,

(in millions, except share data)

2013

2013

2012

ASSETS

Cash and due from subsidiary bank

$

31

$

36

$

2

Short-term investments with subsidiary bank

482

480

431

Other short-term investments

96

92

88

Investment in subsidiaries, principally banks

7,204

7,008

7,045

Premises and equipment

4

4

4

Other assets

139

134

150

     Total assets

$

7,956

$

7,754

$

7,720

LIABILITIES AND SHAREHOLDERS' EQUITY

Medium- and long-term debt

$

617

$

620

$

629

Other liabilities

158

165

149

     Total liabilities

775

785

778

Common stock - $5 par value:

     Authorized - 325,000,000 shares

     Issued - 228,164,824 shares

1,141

1,141

1,141

Capital surplus

2,179

2,171

2,162

Accumulated other comprehensive loss

(391)

(541)

(413)

Retained earnings

6,349

6,239

5,931

Less cost of common stock in treasury - 45,860,786 shares at 12/31/13, 44,483,659 shares at 9/30/13 and 39,889,610 shares at 12/31/12

(2,097)

(2,041)

(1,879)

     Total shareholders' equity

7,181

6,969

6,942

     Total liabilities and shareholders' equity

$

7,956

$

7,754

$

7,720

 

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, 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

Net income

569

569

Other comprehensive income, net of tax

22

22

Cash dividends declared on common stock ($0.68 per share)

(126)

(126)

Purchase of common stock

(7.5)

(291)

(291)

Net issuance of common stock under employee stock plans

1.5

(17)

(25)

72

30

Share-based compensation

35

35

Other

(1)

1

BALANCE AT DECEMBER 31, 2013

182.3

$

1,141

$

2,179

$

(391)

$

6,349

$

(2,097)

$

7,181

 

BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)

Comerica Incorporated and Subsidiaries

(dollar amounts in millions)

Business

Retail

Wealth

Three Months Ended December 31, 2013

Bank

Bank

Management

Finance

Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

387

$

150

$

47

$

(161)

$

8

$

431

Provision for credit losses

24

(8)

(9)

2

9

Noninterest income

80

43

61

14

6

204

Noninterest expenses

151

180

82

2

14

429

Provision (benefit) for income taxes (FTE)

92

7

12

(57)

(2)

52

Net income (loss)

$

200

$

14

$

23

$

(92)

$

$

145

Net credit-related charge-offs

$

6

$

4

$

3

$

13

Selected average balances:

Assets

$

35,042

$

5,997

$

4,873

$

11,032

$

7,661

$

64,605

Loans

34,020

5,323

4,711

44,054

Deposits

26,873

21,438

3,933

323

202

52,769

Statistical data:

Return on average assets (a)

2.29

%

0.25

%

1.86

%

N/M

N/M

0.90

%

Efficiency ratio (b)

32.23

93.18

75.84

N/M

N/M

67.55

Business

Retail

Wealth

Three Months Ended September 30, 2013

Bank

Bank

Management

Finance

Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

368

$

151

$

45

$

(159)

$

8

$

413

Provision for credit losses

(1)

10

1

(2)

8

Noninterest income

89

45

61

18

1

214

Noninterest expenses

153

177

81

2

4

417

Provision (benefit) for income taxes (FTE)

96

3

9

(56)

3

55

Net income (loss)

$

209

$

6

$

15

$

(87)

$

4

$

147

Net credit-related charge-offs

$

9

$

7

$

3

$

19

Selected average balances:

Assets

$

35,298

$

5,967

$

4,789

$

11,097

$

6,509

$

63,660

Loans

34,178

5,285

4,631

44,094

Deposits

26,284

21,257

3,782

319

223

51,865

Statistical data:

Return on average assets (a)

2.38

%

0.12

%

1.21

%

N/M

N/M

0.92

%

Efficiency ratio (b)

33.50

90.27

77.22

N/M

N/M

66.66

Business

Retail

Wealth

Three Months Ended December 31, 2012

Bank

Bank

Management

Finance

Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

387

$

156

$

47

$

(176)

11

$

425

Provision for credit losses

6

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)

102

3

10

(62)

3

56

Net income (loss)

$

209

$

8

$

16

$

(102)

$

(1)

$

130

Net credit-related charge-offs

$

26

$

6

$

5

$

37

Selected average balances:

Assets

$

35,359

$

5,952

$

4,686

$

12,137

$

6,123

$

64,257

Loans

34,325

5,255

4,539

44,119

Deposits

26,051

20,910

3,798

310

213

51,282

Statistical data:

Return on average assets (a)

2.37

%

0.15

%

1.35

%

N/M

N/M

0.81

%

Efficiency ratio (b)

31.93

90.36

76.88

N/M

N/M

68.08

(a)

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

(b)

Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains.

FTE - Fully Taxable Equivalent

N/M - Not Meaningful

 

MARKET SEGMENT FINANCIAL RESULTS (unaudited)

Comerica Incorporated and Subsidiaries

(dollar amounts in millions)

Other

Finance

Three Months Ended December 31, 2013

Michigan

California

Texas

Markets

& Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

187

$

176

$

147

$

74

$

(153)

$

431

Provision for credit losses

7

(8)

5

3

2

9

Noninterest income

89

37

33

25

20

204

Noninterest expenses

170

100

93

50

16

429

Provision (benefit) for income taxes (FTE)

36

45

30

(59)

52

Net income (loss)

$

63

$

76

$

52

$

46

$

(92)

$

145

Net credit-related charge-offs (recoveries)

$

(4)

$

(2)

$

13

$

6

$

$

13

Selected average balances:

Assets

$

13,712

$

14,710

$

10,458

$

7,032

$

18,693

$

64,605

Loans

13,323

14,431

9,766

6,534

44,054

Deposits

20,501

15,219

10,536

5,988

525

52,769

Statistical data:

Return on average assets (a)

1.18

%

1.87

%

1.76

%

2.65

%

N/M

0.90

%

Efficiency ratio (b)

61.53

47.00

51.71

49.70

N/M

67.55

Other

Finance

Three Months Ended September 30, 2013

Michigan

California

Texas

Markets

& Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

186

$

171

$

129

$

78

$

(151)

$

413

Provision for credit losses

(8)

(3)

17

4

(2)

8

Noninterest income

88

42

35

30

19

214

Noninterest expenses

167

101

92

51

6

417

Provision (benefit) for income taxes (FTE)

42

44

20

2

(53)

55

Net income (loss)

$

73

$

71

$

35

$

51

$

(83)

$

147

Net credit-related charge-offs

$

1

$

8

$

4

$

6

$

$

19

Selected average balances:

Assets

$

13,744

$

14,245

$

10,642

$

7,423

$

17,606

$

63,660

Loans

13,276

14,002

9,942

6,874

44,094

Deposits

20,465

14,567

10,298

5,993

542

51,865

Statistical data:

Return on average assets (a)

1.38

%

1.84

%

1.21

%

2.73

%

N/M

0.92

%

Efficiency ratio (b)

60.89

47.37

56.52

47.65

N/M

66.66

Other

Finance

Three Months Ended December 31, 2012

Michigan

California

Texas

Markets

& Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

192

$

178

$

136

$

84

$

(165)

$

425

Provision for credit losses

(8)

7

4

12

1

16

Noninterest income

97

35

31

24

17

204

Noninterest expenses

180

100

90

44

13

427

Provision (benefit) for income taxes (FTE)

43

44

26

2

(59)

56

Net income (loss)

$

74

$

62

$

47

$

50

$

(103)

$

130

Net credit-related charge-offs

$

1

$

12

$

5

$

19

$

$

37

Selected average balances:

Assets

$

13,782

$

13,549

$

10,554

$

8,112

$

18,260

$

64,257

Loans

13,415

13,275

9,818

7,611

44,119

Deposits

20,019

15,457

9,809

5,474

523

51,282

Statistical data:

Return on average assets (a)

1.42

%

1.50

%

1.71

%

2.48

%

N/M

0.81

%

Efficiency ratio (b)

62.14

47.04

53.87

41.38

N/M

68.08

(a)

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

(b)

Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains.

FTE - Fully Taxable Equivalent

N/M - Not Meaningful

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

Comerica Incorporated and Subsidiaries

December 31,

September 30,

June 30,

March 31,

December 31,

(dollar amounts in millions)

2013

2013

2013

2013

2012

Tier 1 Common Capital Ratio:

Tier 1 and Tier 1 common capital (a) (b)

$

6,924

$

6,862

$

6,800

$

6,748

$

6,705

Risk-weighted assets (a) (b)

$

65,301

$

64,027

$

65,220

$

65,099

$

66,115

Tier 1 and Tier 1 common risk-based capital ratio (b)

10.60

%

10.72

%

10.43

%

10.37

%

10.14

%

Basel III Tier 1 Common Capital Ratio:

Tier 1 common capital (b)

$

6,924

$

6,862

$

6,800

$

6,748

$

6,705

Basel III adjustments (c)

(6)

(4)

(1)

(39)

Basel III Tier 1 common capital (c)

6,918

6,858

6,800

6,747

6,666

Risk-weighted assets (a) (b)

$

65,301

$

64,027

$

65,220

$

65,099

$

66,115

Basel III adjustments (c)

1,735

1,726

2,091

1,996

1,854

Basel III risk-weighted assets (c)

$

67,036

$

65,753

$

67,311

$

67,095

$

67,969

Tier 1 common capital ratio (b)

10.6

%

10.7

%

10.4

%

10.4

%

10.1

%

Basel III Tier 1 common capital ratio (c)

10.3

10.4

10.1

10.1

9.8

Tangible Common Equity Ratio:

Common shareholders' equity

$

7,181

$

6,969

$

6,911

$

6,988

$

6,942

Less:

Goodwill

635

635

635

635

635

Other intangible assets

17

18

20

21

22

Tangible common equity

$

6,529

$

6,316

$

6,256

$

6,332

$

6,285

Total assets

$

65,210

$

64,670

$

62,947

$

64,885

$

65,069

Less:

Goodwill

635

635

635

635

635

Other intangible assets

17

18

20

21

22

Tangible assets

$

64,558

$

64,017

$

62,292

$

64,229

$

64,412

Common equity ratio

11.01

%

10.78

%

10.98

%

10.77

%

10.67

%

Tangible common equity ratio

10.11

9.87

10.04

9.86

9.76

Tangible Common Equity per Share of Common Stock:

Common shareholders' equity

$

7,181

$

6,969

$

6,911

$

6,988

$

6,942

Tangible common equity

6,529

6,316

6,256

6,332

6,285

Shares of common stock outstanding (in millions)

182

184

185

187

188

Common shareholders' equity per share of common stock

$

39.39

$

37.94

$

37.32

$

37.41

$

36.87

Tangible common equity per share of common stock

35.81

34.38

33.79

33.90

33.38

(a)

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

(b)

December 31, 2013 Tier 1 capital and risk-weighted assets are estimated.

(c)

Estimated ratios based on the standardized approach in the final rule for the U.S. adoption of the Basel III regulatory capital framework and excluding most elements of AOCI.

 

The Tier 1 common capital ratio removes preferred stock and qualifying trust preferred securities from Tier 1 capital as defined by and calculated in conformity with bank regulations. The Basel III Tier 1 common capital ratio further adjusts Tier 1 common capital and risk-weighted assets to account for the final rule approved by U.S. banking regulators in July 2013 for the U.S. adoption of the Basel III regulatory capital framework. The final Basel III capital rules are effective January 1, 2015 for banking organizations subject to the standardized approach. The tangible common equity ratio removes preferred stock and the effect of intangible assets from capital and the effect of intangible assets from total assets. Tangible common equity per share of common stock removes the effect of intangible assets from common shareholders equity per share of common stock. Comerica believes these measurements are meaningful measures of capital adequacy used by investors, regulators, management and others to evaluate the adequacy of common equity and to compare against other companies in the industry.

SOURCE Comerica Incorporated



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