2014

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

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.

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

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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