Comerica Reports Fourth Quarter 2015 Net Income Of $130 Million, Or 71 Cents Per Share

Full-Year 2015 Net Income of $535 Million, or $2.92 Per Share

Broad-Based Loan and Deposit Growth Compared to Full-Year 2014

Average Loans Up $2.0 Billion, or 4 Percent

Average Deposit Growth of $3.5 Billion, or 6 Percent

$389 Million or 73 Percent of 2015 Net Income Returned to Shareholders Through Equity Repurchases and Dividends

Jan 19, 2016, 06:40 ET from Comerica Incorporated

DALLAS, Jan. 19, 2016 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported full-year 2015 net income of $535 million, or $2.92 per diluted share, compared to $593 million, or $3.16 per diluted share for full-year 2014. Fourth quarter 2015 net income was $130 million, compared to $136 million for the third quarter 2015 and $149 million for the fourth quarter 2014. Earnings per diluted share were 71 cents for fourth quarter 2015 compared to 74 cents for third quarter 2015 and 80 cents for fourth quarter 2014.

 

(dollar amounts in millions, except per share data)

4th Qtr '15

3rd Qtr '15

4th Qtr '14

Net interest income

$

433

$

422

$

415

Provision for credit losses

35

26

2

Noninterest income (a)

270

264

225

Noninterest expenses (a)

489

461

419

Provision for income taxes

49

63

70

Net income

130

136

149

Net income attributable to common shares

129

134

148

Diluted income per common share

0.71

0.74

0.80

Average diluted shares (in millions)

179

181

184

Basel III common equity Tier 1 capital ratio (b) (c)

10.53

%

10.51

%

n/a

Tier 1 common capital ratio (b) (d)

n/a

n/a

10.50

%

Tangible common equity ratio (d)

9.72

9.91

9.85

Tangible common equity per share of common stock (d)

$

39.41

$

39.36

$

37.72

(a)

Effective January 1, 2015, contractual changes to a card program resulted in a change to the accounting presentation of the related revenues and expenses. The effect of this change was increases of $45 million and $48 million to both noninterest income and noninterest expenses in the fourth and third quarters of 2015, respectively.

(b)

Basel III capital rules (standardized approach) became effective for Comerica on January 1, 2015. The ratio reflects transitional treatment for certain regulatory deductions and adjustments. For further information, see "Balance Sheet and Capital Management". Capital ratios for prior periods are based on Basel I rules.

(c)

December 31, 2015 ratio is estimated.

(d)

See Reconciliation of Non-GAAP Financial Measures.

n/a - not applicable.

 

"In 2015 we had good balance sheet growth as average loans topped $48 billion and average deposits grew to a record $58 billion," said Ralph W. Babb, Jr., chairman and chief executive officer. "All the while, we are navigating our way through a modestly growing U.S. economy, as well as increased regulatory and technology demands. Credit quality continued to be solid, and while net charge-offs and the provision increased, they remain below normal historical levels. Through buybacks and dividends we returned $389 million or 73 percent of 2015 net income to shareholders. Both our book value and tangible book value per share increased 4 percent over the past year, as we continue to focus on creating long-term shareholder value.

"With respect to the fourth quarter, revenue increased more than 2 percent.  This was a result of growth in net interest income, which benefited from higher nonaccrual interest and the rise in rates late in the quarter, as well as an increase in fee generation, particularly commercial lending and card fees. Technology and regulatory costs drove noninterest expenses higher, as anticipated. Negative credit migration in our energy exposure continued as expected, while overall our customers have been acting prudently as evidenced by declining loan balances. The remainder of the loan book continues to perform well. We increased our share buyback to $65 million from the $59 million that was repurchased in each of the past six quarters.

"As we look forward to the year ahead, we remain keenly focused on growing loans and deposits along with managing expenses as we make necessary investments.  With the Federal Reserve increasing its benchmark rate 25 basis points in December, our revenue picture looks better, as our balance sheet remains well positioned to benefit from rising rates.  With oil prices at a cyclical low, we have been closely monitoring our energy customers. In each quarter of 2015, we increased our reserves for energy and related loans(a). Well into the cycle, we continue to feel comfortable with our energy portfolio.  In summary, we are committed to providing high quality financial services and building lasting customer relationships, which combined with our diverse geographic footprint, will continue to assist us in building long-term shareholder value."

(a) Loans related to energy at December 31, 2015 included approximately $3.1 billion of outstanding loans in our Energy business line as well as approximately $625 million of loans in other lines of business to companies that have a sizable portion of their revenue related to energy or could be otherwise disproportionately negatively impacted by prolonged low oil and gas prices.

Full-Year 2015 and Fourth Quarter Overview

Full-Year 2015 Compared to Full-Year 2014

  • Average total loans increased $2.0 billion, or 4 percent, to $48.6 billion in 2015, reflecting increases in almost all lines of business, with the largest increases in Technology and Life Sciences, Mortgage Banker Finance, National Dealer Services and Commercial Real Estate, partially offset by a decrease in Corporate Banking. Period-end loans increased $516 million, or 1 percent, to $49.1 billion, primarily reflecting increases in Mortgage Banker Finance, Technology and Life Sciences, Commercial Real Estate and National Dealer Services, partially offset by decreases in general Middle Market, Corporate Banking and Energy.
  • Average total deposits increased $3.5 billion, or 6 percent, to $58.3 billion in 2015, reflecting increases of $3.1 billion, or 12 percent, in noninterest-bearing deposits and $474 million, or 2 percent, in interest-bearing deposits. Period-end deposits increased $2.4 billion, or 4 percent, to $59.9 billion, reflecting an increase of $3.6 billion, or 13 percent, in noninterest-bearing deposits, partially offset by a decrease of $1.2 billion, or 4 percent, in interest-bearing deposits.
  • Net interest income of $1.7 billion for 2015 increased by $34 million, or 2 percent, primarily as a result of higher earning asset volume, partially offset by lower loan yields, in part due to a decrease in accretion of the purchase discount on the acquired loan portfolio and continued pressure on yields from the low-rate environment and loan portfolio dynamics.
  • The allowance for loan losses increased $40 million compared to 2014, primarily due to increases in reserves related to energy and Technology and Life Sciences, partially offset by improvements in credit quality in the remainder of the portfolio. Net charge-offs were $75 million, or 0.15 percent of average loans, for 2015, compared to $25 million, or 0.05 percent of average loans, for 2014. The provision for credit losses increased $95 million to $122 million in 2015, compared to 2014.
  • Noninterest income increased $182 million to $1.1 billion in 2015. Excluding the $181 million impact of a change to the accounting presentation for a card program, noninterest income was stable. Increases in card fees, service charges on deposit accounts and fiduciary income were largely offset by lower investment banking income, lower fee income on certain categories impacted by regulatory changes and decreases in several non-fee categories.
  • Noninterest expenses increased $219 million to $1.8 billion in 2015. Excluding the $181 million impact of a change to the accounting presentation for a card program, noninterest expenses increased $38 million, or 2 percent, primarily due to increases in technology and regulatory expenses, outside processing fees and pension expense, partially offset by a $36 million decrease in litigation-related expenses, reflecting the release of $33 million of litigation reserves in the second and third quarters of 2015, and cost savings realized in 2015 from certain actions taken in the second half of 2014.
  • Comerica repurchased approximately 5.1 million shares of common stock and 500,000 warrants during 2015 under the equity repurchase program. Together with dividends of $0.83 per share, $389 million was returned to shareholders.

Fourth Quarter 2015 Compared to Third Quarter 2015 

  • Average total loans decreased $424 million to $48.5 billion, primarily reflecting decreases in Mortgage Banker Finance, general Middle Market, Energy and Corporate Banking, partially offset by increases in Commercial Real Estate and National Dealer Services. Period-end total loans increased $167 million, to $49.1 billion, largely driven by increases in National Dealer Services, Mortgage Banker Finance and Commercial Real Estate, partially offset by decreases in general Middle Market and Energy.
  • Average total deposits increased $596 million, or 1 percent, to $59.7 billion, primarily driven by a $1.0 billion increase in noninterest-bearing deposits. The increase in average total deposits was primarily due to increases in Corporate Banking and Private Banking, partially offset by decreases in Technology and Life Sciences and general Middle Market. Average deposits increased in all major geographic markets. Period-end total deposits increased $1.1 billion to $59.9 billion.
  • Net interest income increased $11 million to $433 million compared to third quarter 2015, primarily reflecting an increase in loan yields, largely due to higher interest recognized on nonaccrual loans and the increase in short-term rates, and a larger securities portfolio, partially offset by a decrease in average loans.
  • The allowance for loan losses increased $12 million in the fourth quarter 2015, primarily due to an increase in reserves related to energy. Net charge-offs were $26 million, or 0.21 percent of average loans, in the fourth quarter 2015, compared to $23 million, or 0.19 percent, in the third quarter 2015. As a result, the provision for credit losses was $35 million for the fourth quarter 2015.
  • Noninterest income increased $6 million in the fourth quarter 2015, primarily the result of an increase in commercial lending fees.
  • Noninterest expenses increased $28 million in the fourth quarter 2015, primarily due to increases in technology and regulatory-related contract labor and consulting expenses, as well as seasonally higher staff insurance expense. Additionally, the third quarter 2015 benefited from a release of $3 million of litigation reserves, low deferred compensation expense and lower share-based compensation expense as a result of forfeitures, which were not repeated in the fourth quarter.
  • The provision for income taxes decreased $14 million in the fourth quarter 2015. The effective tax rate was 28 percent for the fourth quarter 2015, compared to 32 percent in the third quarter 2015, primarily reflecting a $5 million tax benefit from the early termination of certain leveraged lease transactions.
  • Capital remained solid at December 31, 2015, as evidenced by an estimated common equity Tier 1 capital ratio of 10.53 percent and a tangible common equity ratio of 9.72 percent.
  • Comerica repurchased approximately 1.5 million shares of common stock under the equity repurchase program, which, together with dividends, returned $102 million to shareholders.

 

Net Interest Income

(dollar amounts in millions)

4th Qtr '15

3rd Qtr '15

4th Qtr '14

Net interest income

$

433

$

422

$

415

Net interest margin

2.58

%

2.54

%

2.57

%

Selected average balances:

Total earning assets

$

66,818

$

66,191

$

64,453

Total loans

48,548

48,972

47,361

Total investment securities

10,864

10,232

9,365

Federal Reserve Bank deposits

7,073

6,710

7,463

Total deposits

59,736

59,140

57,760

Total noninterest-bearing deposits

29,627

28,623

27,504

 

  • Net interest income increased $11 million to $433 million in the fourth quarter 2015, compared to the third quarter 2015.
    • Interest on loans increased $5 million, reflecting higher interest recognized on nonaccrual loans (+$6 million) and higher loan yields (+$3 million), partially offset by the impact of lower average loan balances (-$3 million) and a decrease in accretion of the purchase discount on the acquired loan portfolio (-$1 million).
    • Interest on investment securities increased $2 million, primarily reflecting the reinvestment of excess Federal Reserve Bank deposits into higher yielding Treasury securities in the fourth quarter 2015.
    • Interest on short-term investments increased $2 million, primarily reflecting an increase in average Federal Reserve Bank deposit balances.
  • The net interest margin of 2.58 percent increased 4 basis points compared to the third quarter 2015, primarily due to the impact of higher interest recognized on nonaccrual loans (+3 basis points) and higher loan yields (+2 basis points), partially offset by the impact of an increase in Federal Reserve Bank deposit balances (-1 basis point).

Noninterest Income

Noninterest income increased $6 million to $270 million in the fourth quarter 2015, compared to $264 million for the third quarter 2015. The increase primarily reflected increases of $8 million in commercial lending fees (primarily syndication agent fees) and $6 million in deferred compensation asset returns, partially offset by decreases of $4 million in warrant-related income and $3 million in hedge ineffectiveness income. The increase in deferred compensation asset returns was offset by an increase in deferred compensation plan expense in noninterest expenses.

Noninterest Expenses

Noninterest expenses increased $28 million to $489 million in the fourth quarter 2015, compared to $461 million for the third quarter 2015, primarily reflecting a $22 million increase in salaries and benefits expense, a $3 million increase in litigation-related expense, reflecting the release of reserves in the third quarter 2015, and smaller increases in several other categories, partially offset by a $3 million decrease in outside processing fees. The increase in salaries and benefits expense primarily reflected an increase in technology-related contract labor expense and higher staff insurance expense. Additionally, benefits in the third quarter 2015 from low deferred compensation expense and lower share-based compensation expense as a result of forfeitures were not repeated in the fourth quarter.

Credit Quality

"Net charge-offs were 21 basis points of average loans in the fourth quarter, remaining below historical normal levels," said Babb. "Given persistently low oil and gas prices, we continue to see negative migration in the energy book, which has resulted in an increase in criticized loans, nonaccrual loans and charge-offs.  We have appropriately increased our reserves for energy and related loans in each quarter of 2015, and as of quarter end, our reserve allocation for energy and related loans was more than 4 percent of our total of these loans. Loans in our Energy line of business have declined by approximately $700 million from the February peak and, as of year-end, totaled about $3.1 billion, or about 6.25 percent of our total loans. Well into the cycle, we continue to feel comfortable with our energy and related exposure, and the remainder of the portfolio continues to perform well."

(dollar amounts in millions)

4th Qtr '15

3rd Qtr '15

4th Qtr '14

Loan charge-offs

$

51

$

34

$

20

Loan recoveries

25

11

19

Net loan charge-offs

26

23

1

Net loan charge-offs/Average total loans

0.21

%

0.19

%

0.01

%

Provision for credit losses

$

35

$

26

$

2

Nonperforming loans (a)

379

369

290

Nonperforming assets (NPAs) (a)

391

381

300

NPAs/Total loans and foreclosed property

0.80

%

0.78

%

0.62

%

Loans past due 90 days or more and still accruing

$

17

$

5

$

5

Allowance for loan losses

634

622

594

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

45

48

41

Total allowance for credit losses

679

670

635

Allowance for loan losses/Period-end total loans

1.29

%

1.27

%

1.22

%

Allowance for loan losses/Nonperforming loans

167

169

205

(a)

Excludes loans acquired with credit impairment.

(b)

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

 

  • Net charge-offs increased $3 million to $26 million, or 0.21 percent of average loans, in the fourth quarter 2015, compared to $23 million, or 0.19 percent, in the third quarter 2015.
  • During the fourth quarter 2015, $105 million of borrower relationships over $2 million were transferred to nonaccrual status, of which $93 million were loans related to energy.
  • Criticized loans increased $295 million to $3.2 billion at December 31, 2015, compared to $2.9 billion at September 30, 2015, reflecting an increase of approximately $370 million in criticized loans related to energy.

Balance Sheet and Capital Management

Total assets and common shareholders' equity were $71.9 billion and $7.6 billion, respectively, at December 31, 2015, compared to $71.0 billion and $7.6 billion, respectively, at September 30, 2015.

There were approximately 176 million common shares outstanding at December 31, 2015. Share repurchases of $65 million (1.5 million shares) under the equity repurchase program, combined with dividends of 21 cents per share, returned 79 percent of fourth quarter 2015 net income to shareholders. Diluted average shares decreased 2 million to 179 million for the fourth quarter 2015.

The estimated common equity Tier 1 capital ratio, reflective of transition provisions and excluding accumulated other comprehensive income ("AOCI"), was 10.53 percent at December 31, 2015. Certain deductions and adjustments to regulatory capital began phasing in on January 1, 2015 and will be fully implemented on January 1, 2018. The estimated ratio under fully phased-in Basel III capital rules is largely the same as the transitional ratio. Comerica's tangible common equity ratio was 9.72 percent at December 31, 2015, a decrease of 19 basis points from September 30, 2015.

Full-Year 2016 Outlook

For full-year 2016 compared to full-year 2015, management expects the following, assuming a continuation of the current economic and low-rate environment:

  • Average loans modestly higher in line with Gross Domestic Product growth, reflecting a continued decline in Energy more than offset by increases in most other lines of business.
  • Net interest income higher, reflecting the benefit from the December 2015 short-term rate increase, loan growth and a larger securities portfolio, more than offsetting higher funding costs.
  • Provision for credit losses higher, with net charge-offs expected to increase but remain below historical normal levels.
  • Noninterest income modestly higher, primarily due to growth in card fees from merchant processing services, government card and commercial card. Continued focus on cross-sell opportunities, including wealth management products such as fiduciary and brokerage services.
  • Noninterest expenses higher, reflecting continued increases in technology costs and regulatory expenses, increased outside processing in line with growing revenue, higher FDIC insurance expense due to recent regulatory proposal, and typical inflationary pressures. Additionally, 2015 benefited from a $33 million legal reserve release which is offset by lower pension expense in 2016.
  • Income tax expense to approximate 32 percent of pre-tax income.

Business Segments

Comerica's operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank and Wealth Management. The Finance Division is also reported as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at December 31, 2015 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses fourth quarter 2015 results compared to third quarter 2015.

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

(dollar amounts in millions)

4th Qtr '15

3rd Qtr '15

4th Qtr '14

Business Bank

$

199

85

%

$

194

85

%

$

216

87

%

Retail Bank

14

6

13

6

11

4

Wealth Management

21

9

21

9

22

9

234

100

%

228

100

%

249

100

%

Finance

(102)

(93)

(100)

Other (a)

(2)

1

     Total

$

130

$

136

$

149

(a)

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

 

Business Bank

(dollar amounts in millions)

4th Qtr '15

3rd Qtr '15

4th Qtr '14

Net interest income (FTE)

$

387

$

380

$

387

Provision for credit losses

41

30

8

Noninterest income

147

145

104

Noninterest expenses

210

202

148

Net income

199

194

216

Net loan charge-offs (recoveries)

35

23

(1)

Selected average balances:

Assets

38,765

39,210

37,896

Loans

37,682

38,113

36,890

Deposits

31,738

31,397

30,897

 

  • Average loans decreased $431 million, primarily reflecting decreases in Mortgage Banker Finance, general Middle Market, Energy and Corporate Banking, partially offset by increases in Commercial Real Estate and National Dealer Services.
  • Average deposits increased $341 million, primarily reflecting an increase in Corporate Banking, partially offset by decreases in Technology and Life Sciences and general Middle Market.
  • Net interest income increased $7 million, primarily reflecting higher interest recognized on nonaccrual loans and higher loan yields, as well as an increase in net funds transfer pricing (FTP) credits, largely due to the increase in average deposits and an increase in the deposit crediting rate, partially offset by the impact of a decrease in average loan balances.
  • The allowance for loan losses increased $8 million, primarily due to an increase in reserves related to Energy, partially offset by decreases in reserves related to general Middle Market and Technology and Life Sciences. Net charge-offs increased $12 million, primarily reflecting an increase in Energy, partially offset by a decrease in general Middle Market. As a result, the provision for credit losses was $41 million for the fourth quarter 2015.
  • Noninterest income increased $2 million, primarily due to increases in commercial lending fees (primarily syndication agent fees), and card fees, partially offset by decreases in warrant-related income and customer derivative income.
  • Noninterest expenses increased $8 million, primarily due to increases in corporate overhead expenses and salaries and benefits expense, partially offset by a decrease in outside processing fees. The increase in corporate overhead expense was largely the result of increases in technology costs, regulatory expenses and staff insurance expenses in the fourth quarter that were allocated to the segments. Additionally, third quarter 2015 corporate overhead benefited from a release of litigation reserves.

 

Retail Bank

(dollar amounts in millions)

4th Qtr '15

3rd Qtr '15

4th Qtr '14

Net interest income (FTE)

$

160

$

158

$

152

Provision for credit losses

(2)

2

(2)

Noninterest income

49

49

45

Noninterest expenses

192

185

182

Net income

14

13

11

Net loan charge-offs

1

4

Selected average balances:

Assets

6,549

6,518

6,298

Loans

5,868

5,835

5,626

Deposits

23,262

23,079

22,301

 

  • Average loans increased $33 million, reflecting an increase in Retail Banking, partially offset by a decrease in Small Business.
  • Average deposits increased $183 million, primarily reflecting increases in money market and checking deposits, partially offset by a decrease in time deposits.
  • Net interest income increased $2 million, primarily due to an increase in loan yields and an increase in net FTP credits, largely due to the increase in average deposits.
  • The provision for credit losses decreased $4 million, primarily reflecting a decrease in Personal Banking.
  • Noninterest expenses increased $7 million, primarily reflecting an increase in corporate overhead expenses. See the Business Bank discussion for an explanation of the increase in corporate overhead expense.

 

Wealth Management

(dollar amounts in millions)

4th Qtr '15

3rd Qtr '15

4th Qtr '14

Net interest income (FTE)

$

47

$

45

$

47

Provision for credit losses

(7)

(3)

(9)

Noninterest income

57

59

60

Noninterest expenses

81

74

80

Net income

21

21

22

Net loan charge-offs (recoveries)

(9)

(1)

(2)

Selected average balances:

Assets

5,199

5,228

5,034

Loans

4,998

5,024

4,845

Deposits

4,355

4,188

4,094

 

  • Average loans decreased $26 million.
  • Average deposits increased $167 million, primarily reflecting increases in money market and checking deposits, partially offset by a decrease in time deposits.
  • Net interest income increased $2 million, primarily due to an increase in net FTP credits, largely due to the increase in average deposits, and an increase in loan yields.
  • The provision for credit losses decreased $4 million, from a negative provision of $3 million in the third quarter 2015 to a negative provision of $7 million in the fourth quarter 2015, primarily reflecting a high level of recoveries in the fourth quarter 2015.
  • Noninterest income decreased $2 million, primarily due to lower fiduciary income.
  • Noninterest expenses increased $7 million, primarily due to an increase in corporate overhead expenses, for the reasons previously described in the Business Bank discussion, as well as an increase in operational losses.

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, 2015 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 '15

3rd Qtr '15

4th Qtr '14

Michigan

$

83

35

%

$

71

31

%

$

79

32

%

California

90

38

62

27

84

34

Texas

(4)

(1)

36

16

40

16

Other Markets

65

28

59

26

46

18

234

100

%

228

100

%

249

100

%

Finance & Other (a)

(104)

(92)

(100)

     Total

$

130

$

136

$

149

(a)

Includes items not directly associated with the geographic markets.

 

  • Average loans decreased $237 million in Michigan, primarily reflecting a decrease in general Middle Market, and $104 million in Texas, primarily reflecting a decrease in Energy. Average loans increased $244 million in California, primarily reflecting increases in National Dealer Services and smaller increases in almost all other lines of business, partially offset by decreases in general Middle Market and Private Banking.
  • Average deposits increased $177 million in Michigan, $173 million in California and $54 million in Texas. The increase in Michigan primarily reflected an increase in general Middle Market. The increase in California primarily reflected increases in Corporate Banking and Private Banking, partially offset by decreases in Technology and Life Sciences and general Middle Market. The increase in Texas primarily reflected increases in Energy, Retail Banking and Small Business, partially offset by a decrease in general Middle Market.
  • Net interest income increased $6 million, $3 million and $2 million in California, Michigan and Texas, respectively. The increase in California primarily reflected the benefit from an increase in net FTP credits, largely due to increases in average deposits as well as the deposit crediting rate, an increase in loan yields and the impact higher average loan balances. The increases in Michigan and Texas primarily reflects an increase in loan yields, partially offset by a decrease in average loan balances. Loan yields in all markets benefited from increased interest recognized on nonaccrual loans.
  • The provision for credit losses increased $47 million in Texas and decreased $31 million and $18 million in California and Michigan, respectively. The increase in Texas primarily reflected an increase in reserves for Energy. In California, the provision decreased primarily as a result of decreased reserves for Technology and Life Sciences, while the decrease in Michigan was primarily the result of a decreased provision in general Middle Market.
  • Noninterest income decreased $3 million and $2 million in Michigan and Texas, respectively, and increased $3 million in California. The decrease in Michigan was primarily due to decreases in fiduciary income, customer derivative income and small decreases in several other categories. The decrease in Texas reflected small variances in several categories, partially offset by an increase syndication agent fees, and the increase in California primarily reflected an increase in syndication agent fees.
  • Noninterest expenses increased $10 million in Michigan, $7 million in Texas and $6 million in California, primarily reflecting increased corporate overhead expenses, for the same reasons discussed previously, in the Business Bank section.

Michigan Market

(dollar amounts in millions)

4th Qtr '15

3rd Qtr '15

4th Qtr '14

Net interest income (FTE)

$

183

$

180

$

173

Provision for credit losses

(12)

6

(19)

Noninterest income

82

85

89

Noninterest expenses

162

152

157

Net income

83

71

79

Net loan charge-offs (recoveries)

(2)

9

(5)

Selected average balances:

Assets

13,601

13,856

13,605

Loans

12,986

13,223

13,142

Deposits

22,123

21,946

21,530

 

California Market

(dollar amounts in millions)

4th Qtr '15

3rd Qtr '15

4th Qtr '14

Net interest income (FTE)

$

193

$

187

$

192

Provision for credit losses

(7)

24

(10)

Noninterest income

41

38

37

Noninterest expenses

108

102

100

Net income

90

62

84

Net loan charge-offs

1

10

1

Selected average balances:

Assets

17,297

17,060

16,035

Loans

17,033

16,789

15,777

Deposits

18,545

18,372

18,028

 

Texas Market

(dollar amounts in millions)

4th Qtr '15

3rd Qtr '15

4th Qtr '14

Net interest income (FTE)

$

131

$

129

$

139

Provision for credit losses

57

10

18

Noninterest income

32

34

38

Noninterest expenses

104

97

95

Net (loss) income

(4)

36

40

Net loan charge-offs

33

4

2

Selected average balances:

Assets

11,474

11,578

12,003

Loans

10,893

10,997

11,327

Deposits

10,807

10,753

10,825

 

Conference Call and Webcast

Comerica will host a conference call to review fourth quarter 2015 financial results at 7 a.m. CT Tuesday January 19, 2016. Interested parties may access the conference call by calling (877) 523-5249 or (210) 591-1147 (event ID No. 93937227). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A replay of the Webcast can be accessed via Comerica's "Investor Relations" page at www.comerica.com.

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

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

Forward-looking Statements

Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "anticipates," "believes," "contemplates," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "opportunity," "initiative," "outcome," "continue," "remain," "maintain," "on course," "trend," "objective," "looks forward," "projects," "models" and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "might," "can," "may" or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica's management based on information known to Comerica's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica's management for future or past operations, products or services, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries, estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in general economic, political or industry conditions; changes in monetary and fiscal policies, including changes in interest rates; changes in regulation or oversight; Comerica's ability to maintain adequate sources of funding and liquidity; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers, including the energy industry; operational difficulties, failure of technology infrastructure or information security incidents; reliance on other companies to provide certain key components of business infrastructure; factors impacting noninterest expenses which are beyond Comerica's control; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; changes in Comerica's credit rating; unfavorable developments concerning credit quality; the interdependence of financial service companies; the implementation of Comerica's strategies and business initiatives; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; any future strategic acquisitions or divestitures; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; changes in accounting standards and the critical nature of Comerica's accounting policies. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. In particular, please refer to "Item 1A. Risk Factors" beginning on page 12 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2014. 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)

2015

2015

2014

2015

2014

PER COMMON SHARE AND COMMON STOCK DATA

Diluted net income

$

0.71

$

0.74

$

0.80

$

2.92

$

3.16

Cash dividends declared

0.21

0.21

0.20

0.83

0.79

Average diluted shares (in thousands)

179,197

180,714

183,728

181,104

185,474

KEY RATIOS

Return on average common shareholders' equity

6.81

%

7.19

%

7.96

%

7.10

%

8.05

%

Return on average assets

0.72

0.76

0.86

0.76

0.89

Common equity tier 1 risk-based capital ratio (a) (b)

10.53

10.51

n/a

Tier 1 common risk-based capital ratio (c)

n/a

n/a

10.50

Tier 1 risk-based capital ratio (a) (b)

10.53

10.51

10.50

Total risk-based capital ratio (a) (b)

12.68

12.82

12.51

Leverage ratio (a) (b)

10.24

10.28

10.35

Tangible common equity ratio (c)

9.72

9.91

9.85

AVERAGE BALANCES

Commercial loans

31,219

31,900

30,391

31,501

29,715

Real estate construction loans

1,961

1,833

1,920

1,884

1,909

Commercial mortgage loans

8,842

8,691

8,609

8,697

8,706

Lease financing

750

788

818

783

834

International loans

1,402

1,401

1,455

1,441

1,376

Residential mortgage loans

1,896

1,882

1,821

1,878

1,778

Consumer loans

2,478

2,477

2,347

2,444

2,270

Total loans

48,548

48,972

47,361

48,628

46,588

Earning assets

66,818

66,191

64,453

65,129

61,560

Total assets

71,907

71,333

69,307

70,247

66,336

Noninterest-bearing deposits

29,627

28,623

27,504

28,087

25,019

Interest-bearing deposits

30,109

30,517

30,256

30,239

29,765

Total deposits

59,736

59,140

57,760

58,326

54,784

Common shareholders' equity

7,613

7,559

7,518

7,534

7,373

NET INTEREST INCOME (fully taxable equivalent basis)

Net interest income

$

434

$

423

$

416

$

1,693

$

1,659

Net interest margin

2.58

%

2.54

%

2.57

%

2.60

%

2.70

%

CREDIT QUALITY

Total nonperforming assets

$

391

$

381

$

300

Loans past due 90 days or more and still accruing

17

5

5

Net loan charge-offs

26

23

1

$

75

$

25

Allowance for loan losses

634

622

594

Allowance for credit losses on lending-related commitments

45

48

41

Total allowance for credit losses

679

670

635

Allowance for loan losses as a percentage of total loans

1.29

%

1.27

%

1.22

%

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

0.21

0.19

0.01

0.15

%

0.05

%

Nonperforming assets as a percentage of total loans and foreclosed property

0.80

0.78

0.62

Allowance for loan losses as a percentage of total nonperforming loans

167

169

205

(a)

Basel III rules became effective on January 1, 2015, with transitional provisions. All prior period data is based on Basel I rules.

(b)

December 31, 2015 ratios are estimated.

(c)

See Reconciliation of Non-GAAP Financial Measures.

n/a - not applicable.

 

 CONSOLIDATED BALANCE SHEETS

 Comerica Incorporated and Subsidiaries

December 31,

September 30,

December 31,

(in millions, except share data)

2015

2015

2014

(unaudited)

(unaudited)

ASSETS

Cash and due from banks

$

1,157

$

1,101

$

1,026

Interest-bearing deposits with banks

4,990

6,099

5,045

Other short-term investments

113

107

99

Investment securities available-for-sale

10,519

8,749

8,116

Investment securities held-to-maturity

1,981

1,863

1,935

Commercial loans

31,684

31,777

31,520

Real estate construction loans

2,001

1,874

1,955

Commercial mortgage loans

8,977

8,787

8,604

Lease financing

724

751

805

International loans

1,368

1,382

1,496

Residential mortgage loans

1,870

1,880

1,831

Consumer loans

2,485

2,491

2,382

Total loans

49,109

48,942

48,593

Less allowance for loan losses

(634)

(622)

(594)

Net loans

48,475

48,320

47,999

Premises and equipment

550

541

532

Accrued income and other assets

4,110

4,232

4,434

Total assets

$

71,895

$

71,012

$

69,186

LIABILITIES AND SHAREHOLDERS' EQUITY

Noninterest-bearing deposits

$

30,839

$

28,697

$

27,224

Money market and interest-bearing checking deposits

23,532

23,948

23,954

Savings deposits

1,898

1,853

1,752

Customer certificates of deposit

3,552

4,126

4,421

Foreign office time deposits

32

144

135

Total interest-bearing deposits

29,014

30,071

30,262

Total deposits

59,853

58,768

57,486

Short-term borrowings

23

109

116

Accrued expenses and other liabilities

1,387

1,413

1,507

Medium- and long-term debt

3,058

3,100

2,675

Total liabilities

64,321

63,390

61,784

Common stock - $5 par value:

Authorized - 325,000,000 shares

Issued - 228,164,824 shares

1,141

1,141

1,141

Capital surplus

2,173

2,165

2,188

Accumulated other comprehensive loss

(429)

(345)

(412)

Retained earnings

7,098

7,007

6,744

Less cost of common stock in treasury - 52,457,113 shares at 12/31/15; 51,010,418 shares at 9/30/15 and 49,146,225 shares at 12/31/14

(2,409)

(2,346)

(2,259)

Total shareholders' equity

7,574

7,622

7,402

Total liabilities and shareholders' equity

$

71,895

$

71,012

$

69,186

 

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)

2015

2014

2015

2014

INTEREST INCOME

Interest and fees on loans

$

395

$

383

$

1,551

$

1,525

Interest on investment securities

56

51

216

211

Interest on short-term investments

6

4

17

14

Total interest income

457

438

1,784

1,750

INTEREST EXPENSE

Interest on deposits

10

12

43

45

Interest on medium- and long-term debt

14

11

52

50

Total interest expense

24

23

95

95

Net interest income

433

415

1,689

1,655

Provision for credit losses

35

2

122

27

Net interest income after provision for credit losses

398

413

1,567

1,628

NONINTEREST INCOME

Card fees

77

24

290

92

Service charges on deposit accounts

55

53

223

215

Fiduciary income

45

47

187

180

Commercial lending fees

30

29

99

98

Letter of credit fees

14

14

53

57

Bank-owned life insurance

11

8

40

39

Foreign exchange income

11

10

40

40

Brokerage fees

4

4

17

17

Net securities losses

(2)

Other noninterest income

23

36

103

130

Total noninterest income

270

225

1,050

868

NONINTEREST EXPENSES

Salaries and benefits expense

265

245

1,012

980

Outside processing fee expense

83

33

332

122

Net occupancy expense

41

46

159

171

Equipment expense

14

14

53

57

Software expense

26

23

99

95

FDIC insurance expense

10

8

37

33

Advertising expense

7

7

24

23

Litigation-related expense

(32)

4

Gain on debt redemption

(32)

Other noninterest expenses

43

43

161

173

Total noninterest expenses

489

419

1,845

1,626

Income before income taxes

179

219

772

870

Provision for income taxes

49

70

237

277

NET INCOME

130

149

535

593

Less income allocated to participating securities

1

1

6

7

Net income attributable to common shares

$

129

$

148

$

529

$

586

Earnings per common share:

Basic

$

0.73

$

0.83

$

3.01

$

3.28

Diluted

0.71

0.80

2.92

3.16

Comprehensive income

45

54

518

572

Cash dividends declared on common stock

37

36

147

143

Cash dividends declared per common share

0.21

0.20

0.83

0.79

 

CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries

Fourth

Third

Second

First

Fourth

Fourth Quarter 2015 Compared To:

Quarter

Quarter

Quarter

Quarter

Quarter

Third Quarter 2015

Fourth Quarter 2014

(in millions, except per share data)

2015

2015

2015

2015

2014

 Amount

  Percent

Amount

  Percent

INTEREST INCOME

Interest and fees on loans

$

395

$

390

$

388

$

378

$

383

$

5

1

%

$

12

3

%

Interest on investment securities

56

54

53

53

51

2

6

5

12

Interest on short-term investments

6

4

3

4

4

2

19

2

8

Total interest income

457

448

444

435

438

9

2

19

4

INTEREST EXPENSE

Interest on deposits

10

11

11

11

12

(1)

(3)

(2)

(7)

Interest on medium- and long-term debt

14

15

12

11

11

(1)

(6)

3

21

Total interest expense

24

26

23

22

23

(2)

(4)

1

7

Net interest income

433

422

421

413

415

$

11

3

$

18

4

Provision for credit losses

35

26

47

14

2

9

32

33

N/M

Net interest income after provision for credit losses

398

396

374

399

413

2

1

(15)

(4)

NONINTEREST INCOME

Card fees

77

74

72

67

24

3

3

53

N/M

Service charges on deposit accounts

55

57

56

55

53

(2)

(3)

2

4

Fiduciary income

45

47

48

47

47

(2)

(4)

(2)

(4)

Commercial lending fees

30

22

22

25

29

8

35

1

5

Letter of credit fees

14

13

13

13

14

1

2

Bank-owned life insurance

11

10

10

9

8

1

1

3

18

Foreign exchange income

11

10

9

10

10

1

5

1

11

Brokerage fees

4

5

4

4

4

(1)

(12)

Net securities losses

(2)

N/M

Other noninterest income

23

26

27

27

36

(3)

(7)

(13)

(33)

Total noninterest income

270

264

261

255

225

6

2

45

20

NONINTEREST EXPENSES

Salaries and benefits expense

265

243

251

253

245

22

9

20

8

Outside processing fee expense

83

86

86

77

33

(3)

(5)

50

N/M

Net occupancy expense

41

41

39

38

46

(5)

(10)

Equipment expense

14

13

13

13

14

1

1

Software expense

26

26

24

23

23

3

9

FDIC insurance expense

10

9

9

9

8

1

24

2

31

Advertising expense

7

6

5

6

7

1

13

Litigation-related expense

(3)

(30)

1

3

N/M

Other noninterest expenses

43

40

39

39

43

3

8

Total noninterest expenses

489

461

436

459

419

28

6

70

17

Income before income taxes

179

199

199

195

219

(20)

(10)

(40)

(19)

Provision for income taxes

49

63

64

61

70

(14)

(22)

(21)

(30)

NET INCOME

130

136

135

134

149

(6)

(5)

(19)

(13)

Less income allocated to participating securities

1

2

1

2

1

(1)

(3)

Net income attributable to common shares

$

129

$

134

$

134

$

132

$

148

$

(5)

(5)

%

$

(19)

(13)

%

Earnings per common share:

Basic

$

0.73

$

0.76

$

0.76

$

0.75

$

0.83

$

(0.03)

(4)

%

$

(0.10)

(12)

%

Diluted

0.71

0.74

0.73

0.73

0.80

(0.03)

(4)

(0.09)

(11)

Comprehensive income

45

187

109

176

54

(142)

(76)

(9)

(18)

Cash dividends declared on common stock

37

37

37

36

36

1

3

Cash dividends declared per common share

0.21

0.21

0.21

0.20

0.20

0.01

5

N/M - not meaningful

 

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)

Comerica Incorporated and Subsidiaries

2015

2014

(in millions)

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr

4th Qtr

Balance at beginning of period

$

622

$

618

$

601

$

594

$

592

Loan charge-offs:

Commercial

48

30

17

19

8

Commercial mortgage

1

2

2

Lease financing

1

International

1

11

2

6

Residential mortgage

1

1

Consumer

2

3

3

2

3

Total loan charge-offs

51

34

35

23

20

Recoveries on loans previously charged-off:

Commercial

6

8

10

9

6

Real estate construction

1

2

Commercial mortgage

11

2

5

3

10

Residential mortgage

1

1

Consumer

7

1

1

2

1

Total recoveries

25

11

17

15

19

Net loan charge-offs

26

23

18

8

1

Provision for loan losses

38

28

35

16

4

Foreign currency translation adjustment

(1)

(1)

(1)

Balance at end of period

$

634

$

622

$

618

$

601

$

594

Allowance for loan losses as a percentage of total loans

1.29

%

1.27

%

1.24

%

1.22

%

1.22

%

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

0.21

0.19

0.15

0.07

0.01

 

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

Comerica Incorporated and Subsidiaries

2015

2014

(in millions)

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr

4th Qtr

Balance at beginning of period

$

48

$

50

$

39

$

41

$

43

Less: Charge-offs on lending-related commitments (a)

1

Add: Provision for credit losses on lending-related commitments

(3)

(2)

12

(2)

(2)

Balance at end of period

$

45

$

48

$

50

$

39

$

41

Unfunded lending-related commitments sold

$

$

$

12

$

1

$

(a)

Charge-offs result from the sale of unfunded lending-related commitments.

 

NONPERFORMING ASSETS (unaudited)

Comerica Incorporated and Subsidiaries

2015

2014

(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

$

238

$

214

$

186

$

113

$

109

  Real estate construction

1

1

1

1

2

  Commercial mortgage

60

66

77

82

95

  Lease financing

6

8

11

  International

8

8

9

1

  Total nonaccrual business loans

313

297

284

197

206

Retail loans:

  Residential mortgage

27

31

35

37

36

  Consumer:

  Home equity

27

28

29

31

30

  Other consumer

1

1

1

1

    Total consumer

27

29

30

32

31

  Total nonaccrual retail loans

54

60

65

69

67

Total nonaccrual loans

367

357

349

266

273

Reduced-rate loans

12

12

12

13

17

Total nonperforming loans (a)

379

369

361

279

290

Foreclosed property

12

12

9

9

10

Total nonperforming assets (a)

$

391

$

381

$

370

$

288

$

300

Nonperforming loans as a percentage of total loans

0.77

%

0.75

%

0.72

%

0.57

%

0.60

%

Nonperforming assets as a percentage of total loans and foreclosed property

0.80

0.78

0.74

0.59

0.62

Allowance for loan losses as a percentage of total nonperforming loans

167

169

171

216

205

Loans past due 90 days or more and still accruing

$

17

$

5

$

18

$

12

$

5

ANALYSIS OF NONACCRUAL LOANS

Nonaccrual loans at beginning of period

$

357

$

349

$

266

$

273

$

329

Loans transferred to nonaccrual (b)

105

69

145

39

41

Nonaccrual business loan gross charge-offs (c)

(49)

(31)

(31)

(21)

(16)

Loans transferred to accrual status (b)

(4)

(18)

Nonaccrual business loans sold (d)

(1)

(2)

(24)

Payments/Other (e)

(46)

(30)

(30)

(19)

(39)

Nonaccrual loans at end of period

$

367

$

357

$

349

$

266

$

273

(a) Excludes loans acquired with credit impairment.

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

(c) Analysis of gross loan charge-offs:

Nonaccrual business loans

$

49

$

31

$

31

$

21

$

16

Consumer and residential mortgage loans

2

3

4

2

4

    Total gross loan charge-offs

$

51

$

34

$

35

$

23

$

20

(d) Analysis of loans sold:

      Nonaccrual business loans

$

$

$

1

$

2

$

24

      Performing criticized loans

3

7

5

    Total criticized loans sold

$

3

$

$

1

$

9

$

29

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

 

ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)

Comerica Incorporated and Subsidiaries

Years Ended

December 31, 2015

December 31, 2014

Average

Average

Average

Average

(dollar amounts in millions)

Balance

Interest

Rate

Balance

Interest

Rate

Commercial loans

$

31,501

$

966

3.07

%

$

29,715

$

927

3.12

%

Real estate construction loans

1,884

66

3.48

1,909

65

3.41

Commercial mortgage loans

8,697

296

3.41

8,706

327

3.75

Lease financing

783

25

3.17

834

19

2.33

International loans

1,441

51

3.58

1,376

50

3.65

Residential mortgage loans

1,878

71

3.77

1,778

68

3.82

Consumer loans

2,444

80

3.26

2,270

73

3.20

Total loans (a)

48,628

1,555

3.20

46,588

1,529

3.28

Mortgage-backed securities (b)

9,113

202

2.24

8,970

209

2.33

Other investment securities

1,124

14

1.25

380

2

0.45

Total investment securities (b)

10,237

216

2.13

9,350

211

2.26

Interest-bearing deposits with banks

6,158

16

0.26

5,513

14

0.26

Other short-term investments

106

1

0.81

109

0.57

Total earning assets

65,129

1,788

2.75

61,560

1,754

2.85

Cash and due from banks

1,059

934

Allowance for loan losses

(621)

(601)

Accrued income and other assets

4,680

4,443

Total assets

$

70,247

$

66,336

Money market and interest-bearing checking deposits

$

24,073

26

0.11

$

22,891

24

0.11

Savings deposits

1,841

0.02

1,744

1

0.03

Customer certificates of deposit

4,209

16

0.37

4,869

18

0.36

Foreign office time deposits

116

1

1.02

261

2

0.82

Total interest-bearing deposits

30,239

43

0.14

29,765

45

0.15

Short-term borrowings

93

0.05

200

0.04

Medium- and long-term debt

2,905

52

1.80

2,963

50

1.68

Total interest-bearing sources

33,237

95

0.29

32,928

95

0.29

Noninterest-bearing deposits

28,087

25,019

Accrued expenses and other liabilities

1,389

1,016

Total shareholders' equity

7,534

7,373

Total liabilities and shareholders' equity

$

70,247

$

66,336

Net interest income/rate spread (FTE)

$

1,693

2.46

$

1,659

2.56

FTE adjustment

$

4

$

4

Impact of net noninterest-bearing sources of funds

0.14

0.14

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

2.60

%

2.70

%

(a)

Accretion of the purchase discount on the acquired loan portfolio of $7 million and $34 million in the years ended December 31, 2015 and 2014, respectively, increased the net interest margin by 1 basis point and 6 basis points in each respective period.

(b)

Includes investment securities available-for-sale and investment securities held-to-maturity.

 

ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)

Comerica Incorporated and Subsidiaries

Three Months Ended

December 31, 2015

September 30, 2015

December 31, 2014

Average

Average

Average

Average

Average

Average

(dollar amounts in millions)

Balance

Interest

Rate

Balance

Interest

Rate

Balance

Interest

Rate

Commercial loans

$

31,219

$

245

3.11

%

$

31,900

$

244

3.04

%

$

30,391

$

238

3.11

%

Real estate construction loans

1,961

18

3.58

1,833

16

3.47

1,920

16

3.40

Commercial mortgage loans

8,842

76

3.43

8,691

74

3.39

8,609

81

3.70

Lease financing

750

6

3.29

788

6

3.16

818

(1)

(0.43)

International loans

1,402

12

3.40

1,401

13

3.51

1,455

13

3.68

Residential mortgage loans

1,896

18

3.75

1,882

18

3.79

1,821

18

3.86

Consumer loans

2,478

21

3.38

2,477

20

3.21

2,347

19

3.20

Total loans (a)

48,548

396

3.24

48,972

391

3.17

47,361

384

3.22

Mortgage-backed securities (b)

9,226

51

2.25

9,099

50

2.21

8,954

50

2.27

Other investment securities

1,638

5

1.37

1,133

4

1.26

411

1

0.49

Total investment securities (b)

10,864

56

2.11

10,232

54

2.11

9,365

51

2.19

Interest-bearing deposits with banks

7,300

5

0.28

6,869

4

0.25

7,622

4

0.26

Other short-term investments

106

1

0.91

118

0.82

105

0.48

Total earning assets

66,818

458

2.73

66,191

449

2.70

64,453

439

2.71

Cash and due from banks

1,071

1,095

937

Allowance for loan losses

(641)

(628)

(597)

Accrued income and other assets

4,659

4,675

4,514

Total assets

$

71,907

$

71,333

$

69,307

Money market and interest-bearing checking deposits

$

24,368

6

0.11

$

24,298

7

0.11

$

23,841

7

0.11

Savings deposits

1,883

0.02

1,860

0.02

1,771

0.03

Customer certificates of deposit

3,763

4

0.39

4,232

4

0.37

4,510

4

0.37

Foreign office time deposits

95

0.59

127

0.70

134

1

1.74

Total interest-bearing deposits

30,109

10

0.14

30,517

11

0.14

30,256

12

0.15

Short-term borrowings

92

0.06

91

0.04

172

0.04

Medium- and long-term debt

3,089

14

1.79

3,175

15

1.85

2,674

11

1.72

Total interest-bearing sources

33,290

24

0.29

33,783

26

0.30

33,102

23

0.27

Noninterest-bearing deposits

29,627

28,623

27,504

Accrued expenses and other liabilities

1,377

1,368

1,183

Total shareholders' equity

7,613

7,559

7,518

Total liabilities and shareholders' equity

$

71,907

$

71,333

$

69,307

Net interest income/rate spread (FTE)

$

434

2.44

$

423

2.40

$

416

2.44

FTE adjustment

$

1

$

1

$

1

Impact of net noninterest-bearing sources of funds

0.14

0.14

0.13

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

2.58

%

2.54

%

2.57

%

(a)

Accretion of the purchase discount on the acquired loan portfolio of $1 million, $2 million and $9 million in the fourth quarter 2015, the third quarter 2015 and the fourth quarter 2014, respectively, increased the net interest margin by 1 basis point, 1 basis point and 5 basis points in each respective period.

(b)

Includes investment securities available-for-sale and investment securities held-to-maturity.

 

CONSOLIDATED STATISTICAL DATA (unaudited)

Comerica Incorporated and Subsidiaries

December 31,

September 30,

June 30,

March 31,

December 31,

(in millions, except per share data)

2015

2015

2015

2015

2014

Commercial loans:

Floor plan

$

3,939

$

3,538

$

3,840

$

3,544

$

3,790

Other

27,745

28,239

28,883

28,547

27,730

Total commercial loans

31,684

31,777

32,723

32,091

31,520

Real estate construction loans

2,001

1,874

1,795

1,917

1,955

Commercial mortgage loans

8,977

8,787

8,674

8,558

8,604

Lease financing

724

751

786

792

805

International loans

1,368

1,382

1,420

1,433

1,496

Residential mortgage loans

1,870

1,880

1,865

1,859

1,831

Consumer loans:

Home equity

1,720

1,714

1,682

1,678

1,658

Other consumer

765

777

796

744

724

Total consumer loans

2,485

2,491

2,478

2,422

2,382

Total loans

$

49,109

$

48,942

$

49,741

$

49,072

$

48,593

Goodwill

$

635

$

635

$

635

$

635

$

635

Core deposit intangible

10

10

11

12

13

Other intangibles

4

4

4

3

2

Common equity tier 1 capital (a) (b)

7,364

7,327

7,280

7,230

n/a

Tier 1 common capital (c)

n/a

n/a

n/a

n/a

7,169

Risk-weighted assets (a) (b)

69,919

69,718

69,967

69,514

68,273

Common equity tier 1 risk-based capital ratio (a) (b)

10.53

%

10.51

%

10.40

%

10.40

%

n/a

Tier 1 common risk-based capital ratio (c)

n/a

n/a

n/a

n/a

10.50

%

Tier 1 risk-based capital ratio (a) (b)

10.53

10.51

10.40

10.40

10.50

Total risk-based capital ratio (a) (b)

12.68

12.82

12.38

12.35

12.51

Leverage ratio (a) (b)

10.24

10.28

10.56

10.53

10.35

Tangible common equity ratio (c)

9.72

9.91

9.92

9.97

9.85

Common shareholders' equity per share of common stock

$

43.11

$

43.02

$

42.18

$

42.12

$

41.35

Tangible common equity per share of common stock (c)

39.41

39.36

38.53

38.47

37.72

Market value per share for the quarter:

High

47.44

52.93

53.45

47.94

50.14

Low

39.52

40.01

44.38

40.09

42.73

Close

41.83

41.10

51.32

45.13

46.84

Quarterly ratios:

Return on average common shareholders' equity

6.81

%

7.19

%

7.21

%

7.20

%

7.96

%

Return on average assets

0.72

0.76

0.79

0.78

0.86

Efficiency ratio (d)

69.53

67.08

63.68

68.50

65.26

Number of banking centers

477

477

477

482

481

Number of employees - full time equivalent

8,880

8,941

8,901

8,831

8,876

(a)

Basel III rules became effective January 1, 2015, with transitional provisions. All prior period data is based on Basel I rules.

(b)

December 31, 2015 amounts and ratios are estimated.

(c)

See Reconciliation of Non-GAAP Financial Measures.

(d)

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

n/a - not applicable.

 

PARENT COMPANY ONLY BALANCE SHEETS (unaudited)

Comerica Incorporated

December 31,

September 30,

December 31,

(in millions, except share data)

2015

2015

2014

ASSETS

Cash and due from subsidiary bank

$

4

$

5

$

Short-term investments with subsidiary bank

569

563

1,133

Other short-term investments

89

89

94

Investment in subsidiaries, principally banks

7,538

7,596

7,411

Premises and equipment

3

2

2

Other assets

137

138

138

      Total assets

$

8,340

$

8,393

$

8,778

LIABILITIES AND SHAREHOLDERS' EQUITY

Medium- and long-term debt

$

608

$

618

$

1,208

Other liabilities

158

153

168

      Total liabilities

766

771

1,376

Common stock - $5 par value:

    Authorized - 325,000,000 shares

    Issued - 228,164,824 shares

1,141

1,141

1,141

Capital surplus

2,173

2,165

2,188

Accumulated other comprehensive loss

(429)

(345)

(412)

Retained earnings

7,098

7,007

6,744

Less cost of common stock in treasury - 52,457,113 shares at 12/31/15; 51,010,418 shares at 9/30/15 and 49,146,225 shares at 12/31/14

(2,409)

(2,346)

(2,259)

      Total shareholders' equity

7,574

7,622

7,402

      Total liabilities and shareholders' equity

$

8,340

$

8,393

$

8,778

 

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, 2013

182.3

$

1,141

$

2,179

$

(391)

$

6,318

$

(2,097)

$

7,150

Net income

593

593

Other comprehensive loss, net of tax

(21)

(21)

Cash dividends declared on common stock ($0.79 per share)

(143)

(143)

Purchase of common stock

(5.4)

(260)

(260)

Net issuance of common stock under employee stock plans

2.1

(27)

(24)

96

45

Share-based compensation

38

38

Other

(2)

2

BALANCE AT DECEMBER 31, 2014

179.0

$

1,141

$

2,188

$

(412)

$

6,744

$

(2,259)

$

7,402

Net income

535

535

Other comprehensive loss, net of tax

(17)

(17)

Cash dividends declared on common stock ($0.83 per share)

(148)

(148)

Purchase of common stock

(5.3)

(240)

(240)

Purchase and retirement of warrants

(10)

(10)

Net issuance of common stock under employee stock plans

1.0

(22)

(11)

47

14

Net issuance of common stock for warrants

1.0

(21)

(22)

43

Share-based compensation

38

38

BALANCE AT DECEMBER 31, 2015

175.7

$

1,141

$

2,173

$

(429)

$

7,098

$

(2,409)

$

7,574

 

 BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)

 Comerica Incorporated and Subsidiaries

(dollar amounts in millions)

Business

Retail

Wealth

Three Months Ended December 31, 2015

Bank

Bank

Management

Finance

Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

387

$

160

$

47

$

(162)

$

2

$

434

Provision for credit losses

41

(2)

(7)

3

35

Noninterest income

147

49

57

15

2

270

Noninterest expenses

210

192

81

2

4

489

Provision (benefit) for income taxes (FTE)

84

5

9

(47)

(1)

50

Net income (loss)

$

199

$

14

$

21

$

(102)

$

(2)

$

130

Net loan charge-offs (recoveries)

$

35

$

$

(9)

$

$

$

26

Selected average balances:

Assets

$

38,765

$

6,549

$

5,199

$

12,678

$

8,716

$

71,907

Loans

37,682

5,868

4,998

48,548

Deposits

31,738

23,262

4,355

120

261

59,736

Statistical data:

Return on average assets (a)

2.05

%

0.23

%

1.65

%

N/M

N/M

0.72

%

Efficiency ratio (b)

39.32

92.03

77.56

N/M

N/M

69.53

Business

Retail

Wealth

Three Months Ended September 30, 2015

Bank

Bank

Management

Finance

Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

380

$

158

$

45

$

(162)

$

2

$

423

Provision for credit losses

30

2

(3)

(3)

26

Noninterest income

145

49

59

15

(4)

264

Noninterest expenses

202

185

74

2

(2)

461

Provision (benefit) for income taxes (FTE)

99

7

12

(56)

2

64

Net income (loss)

$

194

$

13

$

21

$

(93)

$

1

$

136

Net loan charge-offs (recoveries)

$

23

$

1

$

(1)

$

$

$

23

Selected average balances:

Assets

$

39,210

$

6,518

$

5,228

$

12,177

$

8,200

$

71,333

Loans

38,113

5,835

5,024

48,972

Deposits

31,397

23,079

4,188

212

264

59,140

Statistical data:

Return on average assets (a)

1.98

%

0.23

%

1.62

%

N/M

N/M

0.76

%

Efficiency ratio (b)

38.41

89.33

71.11

N/M

N/M

67.08

Business

Retail

Wealth

Three Months Ended December 31, 2014

Bank

Bank

Management

Finance

Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

387

$

152

$

47

$

(177)

7

$

416

Provision for credit losses

8

(2)

(9)

5

2

Noninterest income

104

45

60

16

225

Noninterest expenses

148

182

80

3

6

419

Provision (benefit) for income taxes (FTE)

119

6

14

(64)

(4)

71

Net income (loss)

$

216

$

11

$

22

$

(100)

$

$

149

Net loan charge-offs (recoveries)

$

(1)

$

4

$

(2)

$

$

$

1

Selected average balances:

Assets

$

37,896

$

6,298

$

5,034

$

12,218

$

7,861

$

69,307

Loans

36,890

5,626

4,845

47,361

Deposits

30,897

22,301

4,094

195

273

57,760

Statistical data:

Return on average assets (a)

2.28

%

0.19

%

1.79

%

N/M

N/M

0.86

%

Efficiency ratio (b)

30.09

92.33

74.48

N/M

N/M

65.26

(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, 2015

Michigan

California

Texas

Markets

& Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

183

$

193

$

131

$

87

$

(160)

$

434

Provision for credit losses

(12)

(7)

57

(6)

3

35

Noninterest income

82

41

32

98

17

270

Noninterest expenses

162

108

104

109

6

489

Provision (benefit) for income taxes (FTE)

32

43

6

17

(48)

50

Net income (loss)

$

83

$

90

$

(4)

$

65

$

(104)

$

130

Net loan charge-offs

$

(2)

$

1

$

33

$

(6)

$

$

26

Selected average balances:

Assets

$

13,601

$

17,297

$

11,474

$

8,141

$

21,394

$

71,907

Loans

12,986

17,033

10,893

7,636

48,548

Deposits

22,123

18,545

10,807

7,880

381

59,736

Statistical data:

Return on average assets (a)

1.43

%

1.82

%

(0.11)%

3.07

%

N/M

0.72

%

Efficiency ratio (b)

61.26

46.43

63.28

58.79

N/M

69.53

Other

Finance

Three Months Ended September 30, 2015

Michigan

California

Texas

Markets

& Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

180

$

187

$

129

$

87

$

(160)

$

423

Provision for credit losses

6

24

10

(11)

(3)

26

Noninterest income

85

38

34

96

11

264

Noninterest expenses

152

102

97

110

461

Provision (benefit) for income taxes (FTE)

36

37

20

25

(54)

64

Net income (loss)

$

71

$

62

$

36

$

59

$

(92)

$

136

Net loan charge-offs (recoveries)

$

9

$

10

$

4

$

$

$

23

Selected average balances:

Assets

$

13,856

$

17,060

$

11,578

$

8,462

$

20,377

$

71,333

Loans

13,223

16,789

10,997

7,963

48,972

Deposits

21,946

18,372

10,753

7,593

476

59,140

Statistical data:

Return on average assets (a)

1.23

%

1.27

%

1.16

%

2.82

%

N/M

0.76

%

Efficiency ratio (b)

57.49

45.28

59.54

59.86

N/M

67.08

Other

Finance

Three Months Ended December 31, 2014

Michigan

California

Texas

Markets

& Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

173

$

192

$

139

$

82

$

(170)

$

416

Provision for credit losses

(19)

(10)

18

8

5

2

Noninterest income

89

37

38

45

16

225

Noninterest expenses

157

100

95

58

9

419

Provision (benefit) for income taxes (FTE)

45

55

24

15

(68)

71

Net income (loss)

$

79

$

84

$

40

$

46

$

(100)

$

149

Net loan charge-offs (recoveries)

$

(5)

$

1

$

2

$

3

$

$

1

Selected average balances:

Assets

$

13,605

$

16,035

$

12,003

$

7,585

$

20,079

$

69,307

Loans

13,142

15,777

11,327

7,115

47,361

Deposits

21,530

18,028

10,825

6,909

468

57,760

Statistical data:

Return on average assets (a)

1.41

%

1.77

%

1.32

%

2.42

%

N/M

0.86

%

Efficiency ratio (b)

59.92

43.61

53.62

45.47

N/M

65.26

(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)

2015

2015

2015

2015

2014

Tier 1 Common Capital Ratio:

Tier 1 and Tier 1 common capital (a)

n/a

n/a

n/a

n/a

$

7,169

Risk-weighted assets (a)

n/a

n/a

n/a

n/a

68,269

Tier 1 and Tier 1 common risk-based capital ratio

n/a

n/a

n/a

n/a

10.50

%

Tangible Common Equity Ratio:

Common shareholders' equity

$

7,574

$

7,622

$

7,523

$

7,500

$

7,402

Less:

Goodwill

635

635

635

635

635

Other intangible assets

14

14

15

15

15

Tangible common equity

$

6,925

$

6,973

$

6,873

$

6,850

$

6,752

Total assets

$

71,895

$

71,012

$

69,945

$

69,333

$

69,186

Less:

Goodwill

635

635

635

635

635

Other intangible assets

14

14

15

15

15

Tangible assets

$

71,246

$

70,363

$

69,295

$

68,683

$

68,536

Common equity ratio

10.54

%

10.73

%

10.76

%

10.82

%

10.70

%

Tangible common equity ratio

9.72

9.91

9.92

9.97

9.85

Tangible Common Equity per Share of Common Stock:

Common shareholders' equity

$

7,574

$

7,622

$

7,523

$

7,500

$

7,402

Tangible common equity

6,925

6,973

6,873

6,850

6,752

Shares of common stock outstanding (in millions)

176

177

178

178

179

Common shareholders' equity per share of common stock

$

43.11

$

43.02

$

42.18

$

42.12

$

41.35

Tangible common equity per share of common stock

39.41

39.36

38.53

38.47

37.72

(a)

Tier 1 capital and risk-weighted assets as defined by Basel I risk-based capital rules.

n/a - not applicable.

 

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 Basel I risk-based capital rules in effect through December 31, 2014. Effective January 1, 2015, regulatory capital components and risk-weighted assets are defined by and calculated in conformity with Basel III risk-based capital rules. 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.

Logo - http://photos.prnewswire.com/prnh/20010807/CMALOGO

 

SOURCE Comerica Incorporated



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