Comerica Reports Second Quarter 2013 Net Income Of $143 Million

Earnings Per Share 76 Cents, Up 9 Percent from First Quarter 2013

Average Total Loan Growth Continues - Driven by a $337 Million Increase in Commercial Loans

Noninterest Income Up $8 Million, or 5 Percent, from First Quarter 2013

Share Repurchases, Combined with Dividends, Returned 72 Percent of Second Quarter 2013 Net Income to Shareholders

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

DALLAS, July 16, 2013 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported second quarter 2013 net income of $143 million, compared to $134 million for the first quarter 2013. Earnings per diluted share were 76 cents for the second quarter 2013, compared to 70 cents for the first quarter 2013.

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(dollar amounts in millions, except per share data)

2nd Qtr '13

1st Qtr '13

2nd Qtr '12

Net interest income (a)

$

414

$

416

$

435

Provision for credit losses

13

16

19

Noninterest income

208

200

211

Noninterest expenses

416

416

434

(b)

Provision for income taxes

50

50

50

Net income

143

134

143

Net income attributable to common shares

141

132

141

Diluted income per common share

0.76

0.70

0.73

Average diluted shares (in millions)

187

187

194

Tier 1 common capital ratio (d)

10.41

%

(c)

10.37

%

10.39

%

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

10.1

10.1

10.0

Tangible common equity ratio (d)

10.04

9.86

10.31

(a)

Included accretion of the purchase discount on the acquired loan portfolio of $7 million ($4 million, after tax), $11 million ($7 million, after tax) and $18 million ($11 million, after tax) in the second quarter 2013, first quarter 2013 and second quarter 2012, respectively.

(b)

Included restructuring expenses of $8 million ($5 million, after tax), associated with the 2011 acquisition of Sterling Bancshares, Inc.

(c)

June 30, 2013 ratio is estimated.

(d)

See Reconciliation of Non-GAAP Financial Measures.

(e)

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

 

"Average loan growth and fee growth, expense control and continued solid credit quality, contributed to our 9 percent increase in earnings per share in the second quarter," said Ralph W. Babb Jr., chairman and chief executive officer. "Average total loans grew $276 million compared to the first quarter, and reflected an increase of $337 million, or 1 percent, in commercial loans. Our Middle Market business lines across all three of our major geographies were a key contributor to our loan growth in the second quarter. Overall, customers remain cautious, but relatively more positive, in this slow growing economy.

"Economic indicators in Texas and California are positive, with job growth in both markets above the U.S. average, while increased auto production and sales have strengthened the Michigan economy. We are well positioned in our primary markets, where our relationship-based approach and experience combine to make a positive difference for our customers.

"Our capital position continues to be a source of strength to support our growth. We repurchased 1.9 million shares in the second quarter under the share repurchase program and combined with dividends, returned 72 percent of second quarter net income to shareholders."

Second Quarter 2013 Compared to First Quarter 2013

  • Average total loans increased $276 million, or 1 percent, to $44.9 billion, primarily reflecting an increase of $337 million, or 1 percent, in commercial loans, partially offset by a decrease of $67 million, or 1 percent, in combined commercial mortgage and real estate construction loans. The increase in commercial loans was primarily driven by increases in general Middle Market and National Dealer Services, partially offset by a decrease in Corporate Banking. Period-end total loans increased $392 million to $45.5 billion, primarily reflecting a $678 million increase in commercial loans, partially offset by a $227 million decrease in combined commercial mortgage and real estate construction loans.
  • Average investment securities available-for-sale decreased $228 million, or 2 percent, to $9.8 billion, primarily reflecting a slowing of reinvestments related to paydowns on mortgage-backed investment securities. Period-end investment securities decreased $655 million, or 6 percent, to $9.6 billion, primarily reflecting both a slowing of reinvestments related to paydowns and a $219 million decrease in net unrealized gains on mortgage-backed investment securities due to rising interest rates during the period.
  • Average total deposits increased $756 million, or 1 percent, to $51.4 billion, primarily reflecting increases of $570 million, or 3 percent, in noninterest-bearing deposits and $250 million, or 1 percent, in money market and interest-bearing checking accounts. The increase in average noninterest-bearing deposits primarily reflected increases in Corporate Banking and the Financial Services Division. Period-end total deposits decreased $862 million to $51.3 billion, reflecting a decrease of $907 million in noninterest-bearing deposits.
  • Net interest income remained relatively stable at $414 million in the second quarter 2013, compared to $416 million in the first quarter 2013, as one additional day in the second quarter and loan growth partially offset a decrease in accretion and lower loan yields due to shifts in the loan portfolio mix.
  • The provision for credit losses decreased $3 million to $13 million in the second quarter 2013, compared to $16 million in the first quarter 2013, reflecting strong credit quality.
  • Noninterest income increased $8 million to $208 million in the second quarter 2013, compared to $200 million in the first quarter 2013, reflecting broad-based growth in several categories as well as an annual incentive received from our third-party credit card provider.
  • Noninterest expenses of $416 million in the second quarter 2013 were unchanged compared to the first quarter 2013, primarily reflecting a $6 million decrease in salaries expense, offset by a $4 million write-down on other foreclosed assets and a $2 million increase in outside processing fee expense.
  • The provision for income taxes was stable at $50 million for the second quarter 2013. The effective tax rate decreased to 25.8 percent for the second quarter 2013, compared to 27.1 percent in the first quarter 2013, primarily reflecting a $2 million net benefit in the second quarter 2013 from certain discrete tax items.
  • Comerica repurchased 1.9 million shares of common stock ($72 million) in the second quarter 2013 under the share repurchase program. Combined with dividends, 72 percent of net income was returned to shareholders in the second quarter 2013.
  • Capital remained solid at June 30, 2013, as evidenced by an estimated Tier 1 common capital ratio of 10.41 percent and a tangible common equity ratio of 10.04 percent.

Net Interest Income

(dollar amounts in millions)

2nd Qtr '13

1st Qtr '13

2nd Qtr '12

Net interest income

$

414

$

416

$

435

Net interest margin

2.83

%

2.88

%

3.10

%

Selected average balances:

Total earning assets

$

58,928

$

58,607

$

56,652

Total loans

44,893

44,617

43,228

Total investment securities

9,793

10,021

9,728

Federal Reserve Bank deposits (excess liquidity)

3,968

3,669

3,463

Total deposits

51,448

50,692

48,672

Total noninterest-bearing deposits

22,076

21,506

20,128

  • Net interest income of $414 million in the second quarter 2013 decreased $2 million compared to the first quarter 2013.
    • One additional day in the second quarter 2013 increased net interest income by $4 million.
    • An increase in loan volumes increased net interest income by $2 million.
    • A decrease in funding costs increased net interest income by $1 million, primarily reflecting the maturity of debt in the second quarter 2013 and a decline in the rate paid on total average interest-bearing deposits of 2 basis points.
    • A decrease in the accretion of the purchase discount on the acquired loan portfolio decreased net interest income by $4 million.
    • Lower loan yields due to shifts in the loan portfolio mix decreased net interest income by $4 million.
    • Lower reinvestment yields on mortgage-backed investment securities and a decrease in average balances decreased net interest income by $1 million.
  • Average earning assets increased $321 million in the second quarter 2013, compared to the first quarter 2013, primarily reflecting increases of $299 million in excess liquidity and $276 million in average loans, partially offset by a $228 million decrease in average investment securities available-for-sale.
  • The net interest margin of 2.83 percent decreased 5 basis points compared to the first quarter 2013. The decrease in net interest margin was primarily due to lower accretion on the acquired loan portfolio (3 basis points), lower loan yields (2 basis points) and an increase in excess liquidity (1 basis point), partially offset by lower funding costs (1 basis point).

Noninterest Income Noninterest income increased $8 million to $208 million for the second quarter 2013, compared to $200 million for the first quarter 2013. Customer-driven fee income increased $4 million and noncustomer-driven income increased $4 million. The increase in customer-driven fee income was primarily due to a $3 million increase in customer derivative income and broad-based increases across most customer-driven fee income categories, partially offset by a $2 million decrease in service charges on deposit accounts from high first quarter 2013 levels. The increase in noncustomer-driven income was primarily due to a $6 million annual incentive received in the second quarter 2013 from Comerica's third-party credit card provider, partially offset by a second quarter 2013 securities loss of $2 million.

Noninterest Expenses Noninterest expenses of $416 million in the second quarter 2013 were unchanged compared to the first quarter 2013, as a $6 million decrease in salaries expense was offset by a $4 million write-down on other foreclosed assets and a $2 million increase in outside processing fee expense. The decrease in salaries expense was primarily due to decreases in incentive and stock based compensation and lower staffing levels, partially offset by the impact of merit increases and one additional day in the quarter.

Credit Quality "Credit quality was solid in the second quarter, with net charge-offs of 15 basis points, which is the lowest level since the first quarter of 2007," said Babb. "Nonaccrual loans also decreased, as did watch list loans. These positive metrics are indicative of our strong credit culture and have resulted in a $3 million decrease in the provision for credit losses."

(dollar amounts in millions)

2nd Qtr '13

1st Qtr '13

2nd Qtr '12

Net credit-related charge-offs

$

17

$

24

$

45

Net credit-related charge-offs/Average total loans

0.15

%

0.21

%

0.42

%

Provision for credit losses

$

13

$

16

$

19

Nonperforming loans (a)

471

515

747

Nonperforming assets (NPAs) (a)

500

555

814

NPAs/Total loans and foreclosed property

1.10

%

1.23

%

1.85

%

Loans past due 90 days or more and still accruing

$

20

$

25

$

43

Allowance for loan losses

613

617

667

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

36

36

36

Total allowance for credit losses

649

653

703

Allowance for loan losses/Period-end total loans

1.35

%

1.37

%

1.52

%

Allowance for loan losses/Nonperforming loans

130

120

89

(a) Excludes loans acquired with credit impairment.

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

  • Nonaccrual loans decreased $45 million, to $449 million at June 30, 2013, compared to $494 million at March 31, 2013.
  • Internal watch list loans decreased $224 million, to $2.9 billion at June 30, 2013, compared to $3.1 billion at March 31, 2013.
  • During the second quarter 2013, $37 million of borrower relationships over $2 million were transferred to nonaccrual status, an increase of $3 million from the first quarter 2013.

Balance Sheet and Capital Management Total assets and common shareholders' equity were $62.9 billion and $6.9 billion, respectively, at June 30, 2013, compared to $64.9 billion and $7.0 billion, respectively, at March 31, 2013. The $2.0 billion decrease in total assets primarily reflected decreases of $1.9 billion in excess liquidity and $655 million in investment securities available-for-sale, partially offset by a $392 million increase in loans. Common shareholders' equity included a $128 million increase in accumulated other comprehensive loss, primarily reflecting a temporary unrealized loss on investment securities available-for-sale of $142 million, net of tax, largely due to the impact of rising rates on the fair value of mortgage-backed investment securities.

There were approximately 185 million common shares outstanding at June 30, 2013. Diluted weighted average shares of 187 million at June 30, 2013 were unchanged compared to March 31, 2013, as the impact of the repurchase of $72 million of common stock (1.9 million shares) under the share repurchase program during the second quarter 2013 was offset by the impact of an increase in share dilution from options and warrants due to an increase in Comerica's stock price. Combined with the dividend of $0.17 per share, share repurchases under the share repurchase program and dividends returned 72 percent of second quarter 2013 net income to shareholders.

Comerica's tangible common equity ratio was 10.04 percent at June 30, 2013, an increase of 18 basis points from March 31, 2013. The estimated Tier 1 common capital ratio increased 4 basis points, to 10.41 percent at June 30, 2013, from March 31, 2013. The estimated Tier 1 common ratio under fully phased-in Basel III capital rules was 10.1 percent percent at June 30, 2013, assuming the election to exclude most elements of AOCI. If the option to exclude most elements of AOCI is not elected, the estimated ratio would be 9.3 percent.

Full-Year 2013 Outlook For full-year 2013, management expects the following compared to full-year 2012, assuming a continuation of the current slow growing economic environment:

  • Continued growth in average loans at a slower pace, with economic uncertainty impacting demand and a continued focus on maintaining pricing and structure discipline in a competitive environment.
  • Lower net interest income, reflecting both a decline in purchase accounting accretion and the effect of continued low rates. Loan growth should partially offset the impact of low rates on loans and securities. Purchase accounting accretion is expected to be $25 million to $30 million for full-year 2013, compared to $71 million in full-year 2012.
  • Provision for credit losses declining, reflecting lower nonperforming loans and net charge-offs, partially offset by loan growth. The provision for credit losses for the second half of 2013 is expected to be similar to the provision for the first six months of 2013.
  • Customer-driven noninterest income relatively stable, reflecting cross-sell initiatives partially offset by regulatory pressures on certain fees. Outlook does not include expectations for non-customer driven income.
  • Lower noninterest expense, reflecting further cost savings due to tight expense control and no restructuring expenses. Full-year 2012 included restructuring expenses of $35 million.
  • Effective tax rate of approximately 27.5 percent.

Business Segments Comerica's operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank and Wealth Management. The Finance Division is also reported as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at June 30, 2013 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses second quarter 2013 results compared to first quarter 2013.

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

(dollar amounts in millions)

2nd Qtr '13

1st Qtr '13

2nd Qtr '12

Business Bank

$

207

85

%

$

198

85

%

$

206

84

%

Retail Bank

11

5

10

4

19

8

Wealth Management

24

10

25

11

20

8

242

100

%

233

100

%

245

100

%

Finance

(98)

(98)

(92)

Other (a)

(1)

(1)

(10)

     Total

$

143

$

134

$

143

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

 

Business Bank

(dollar amounts in millions)

2nd Qtr '13

1st Qtr '13

2nd Qtr '12

Net interest income (FTE)

$

372

$

375

$

379

Provision for credit losses

10

20

12

Noninterest income

80

77

83

Noninterest expenses

147

146

151

Net income

207

198

206

Net credit-related charge-offs

11

16

26

Selected average balances:

Assets

36,017

35,780

34,373

Loans

34,955

34,753

33,449

Deposits

25,987

25,514

24,143

  • Average loans increased $202 million, primarily reflecting increases in National Dealer Services and general Middle Market, partially offset by a decrease in Corporate Banking.
  • Average deposits increased $473 million, primarily reflecting increases in Corporate Banking and Commercial Real Estate.
  • Net interest income decreased $3 million, primarily due to a decrease in accretion of the purchase discount on the acquired loan portfolio, lower loan yields and a decrease in funds transfer pricing (FTP) credits, partially offset by the benefit provided by an increase in average loans and one additional day in the quarter.
  • The provision for credit losses decreased $10 million, primarily reflecting a decrease in Middle Market, partially offset by an increase in Mortgage Banker Finance. The decrease in Middle Market primarily reflected decreases in Technology and Life Sciences, Environmental Services and Energy.
  • Noninterest income increased $3 million, primarily due to an increase in income from principal investing and warrants and small increases in several other noninterest income categories, partially offset by a decrease in service charges on deposit accounts from high first quarter 2013 levels.
  • Noninterest expenses increased $1 million, primarily due to a $4 million write-down on other foreclosed assets and an increase in outside processing fee expense, partially offset by a decrease in salaries expense.

Retail Bank

(dollar amounts in millions)

2nd Qtr '13

1st Qtr '13

2nd Qtr '12

Net interest income (FTE)

$

154

$

155

$

161

Provision for credit losses

5

6

3

Noninterest income

46

41

47

Noninterest expenses

178

175

177

Net income

11

10

19

Net credit-related charge-offs

4

8

9

Selected average balances:

Assets

5,962

5,973

5,945

Loans

5,271

5,276

5,250

Deposits

21,241

21,049

20,524

  • Average loans decreased $5 million, primarily due to a decrease in Retail Banking, partially offset by an increase in Small Business.
  • Average deposits increased $192 million, primarily due to increases in Retail Banking and Small Business.
  • Noninterest income increased $5 million, primarily due to a $6 million annual incentive received in the second quarter 2013 from Comerica's third-party credit card provider, partially offset by a second quarter 2013 securities loss of $2 million.
  • Noninterest expense increased $3 million, primarily due to small increases in several categories.

Wealth Management

(dollar amounts in millions)

2nd Qtr '13

1st Qtr '13

2nd Qtr '12

Net interest income (FTE)

$

46

$

46

$

46

Provision for credit losses

(3)

(6)

2

Noninterest income

65

65

66

Noninterest expenses

77

79

79

Net income

24

25

20

Net credit-related charge-offs

2

10

Selected average balances:

Assets

4,828

4,738

4,604

Loans

4,667

4,588

4,529

Deposits

3,701

3,682

3,640

  • Average loans increased $79 million, primarily due to an increase in Private Banking.
  • Noninterest expenses decreased $2 million, primarily due to small decreases in several categories.

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 June 30, 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)

2nd Qtr '13

1st Qtr '13

2nd Qtr '12

Michigan

$

77

32

%

$

77

34

%

$

81

33

%

California

65

27

56

24

66

27

Texas

46

19

44

18

49

20

Other Markets

54

22

56

24

49

20

242

100

%

233

100

%

245

100

%

Finance & Other (a)

(99)

(99)

(102)

     Total

$

143

$

134

$

143

(a) Includes items not directly associated with the geographic markets.

  • Average loans increased $370 million and $108 million in California and Texas, respectively, and decreased $52 million in Michigan. The increase in California primarily reflected increases in National Dealer Services and Commercial Real Estate. In Texas, the increase was primarily due to an increase in general Middle Market.
  • Average deposits increased $315 million and $228 million in California and Texas, respectively, and decreased $96 million in Michigan. The increase in California primarily reflected increases in general Middle Market and Corporate Banking. In Texas, the increase was primarily due to increases in Corporate Banking, Technology and Life Sciences, and Energy.
  • The provision for credit losses in California decreased $14 million, primarily reflecting decreases in Technology and Life Sciences and general Middle Market.

Michigan Market

(dollar amounts in millions)

2nd Qtr '13

1st Qtr '13

2nd Qtr '12

Net interest income (FTE)

$

187

$

189

$

196

Provision for credit losses

(4)

(8)

(6)

Noninterest income

88

92

96

Noninterest expenses

161

168

175

Net income

77

77

81

Net credit-related charge-offs

4

5

10

Selected average balances:

Assets

14,022

14,042

14,028

Loans

13,598

13,650

13,759

Deposits

20,159

20,255

19,224

 

California Market

(dollar amounts in millions)

2nd Qtr '13

1st Qtr '13

2nd Qtr '12

Net interest income (FTE)

$

173

$

171

$

171

Provision for credit losses

7

21

6

Noninterest income

36

35

37

Noninterest expenses

100

97

97

Net income

65

56

66

Net credit-related charge-offs

12

10

12

Selected average balances:

Assets

14,155

13,795

12,870

Loans

13,912

13,542

12,647

Deposits

14,671

14,356

14,149

 

Texas Market

(dollar amounts in millions)

2nd Qtr '13

1st Qtr '13

2nd Qtr '12

Net interest income (FTE)

$

131

$

135

$

143

Provision for credit losses

6

8

9

Noninterest income

34

31

31

Noninterest expenses

89

91

88

Net income

46

44

49

Net credit-related charge-offs

(3)

6

4

Selected average balances:

Assets

10,886

10,795

10,268

Loans

10,179

10,071

9,506

Deposits

10,187

9,959

10,185

 

Conference Call and Webcast Comerica will host a conference call to review second quarter 2013 financial results at 7 a.m. CT Tuesday, July 16, 2013. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 96351362). 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. 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

Six Months Ended

June 30,

March 31,

June 30,

June 30,

(in millions, except per share data)

2013

2013

2012

2013

2012

PER COMMON SHARE AND COMMON STOCK DATA

Diluted net income

$

0.76

$

0.70

$

0.73

$

1.46

$

1.39

Cash dividends declared

0.17

0.17

0.15

0.34

0.25

Common shareholders' equity (at period end)

37.32

37.41

36.18

Tangible common equity (at period end) (a)

33.79

33.90

32.76

Average diluted shares (in thousands)

186,998

187,442

194,487

187,219

195,254

KEY RATIOS

Return on average common shareholders' equity

8.23

%

7.68

%

8.22

%

7.95

%

7.86

%

Return on average assets

0.90

0.84

0.93

0.87

0.89

Tier 1 common capital ratio (a) (b)

10.41

10.37

10.39

Tier 1 risk-based capital ratio (b)

10.41

10.37

10.39

Total risk-based capital ratio (b)

13.27

13.41

13.91

Leverage ratio (b)

10.81

10.75

10.97

Tangible common equity ratio (a)

10.04

9.86

10.31

AVERAGE BALANCES

Commercial loans

$

28,393

$

28,056

$

25,983

$

28,225

$

25,359

Real estate construction loans:

Commercial Real Estate business line (c)

1,218

1,116

1,035

1,167

1,046

Other business lines (d)

235

198

385

217

391

     Total real estate construction loans

1,453

1,314

1,420

1,384

1,437

Commercial mortgage loans:

Commercial Real Estate business line (c)

1,798

1,836

2,443

1,817

2,482

Other business lines (d)

7,394

7,562

7,540

7,478

7,611

     Total commercial mortgage loans

9,192

9,398

9,983

9,295

10,093

Lease financing

855

857

869

856

883

International loans

1,262

1,282

1,265

1,272

1,235

Residential mortgage loans

1,602

1,556

1,487

1,579

1,503

Consumer loans

2,136

2,154

2,221

2,145

2,239

Total loans

44,893

44,617

43,228

44,756

42,749

Earning assets

58,928

58,607

56,652

58,769

56,418

Total assets

63,709

63,451

61,681

63,736

61,513

Noninterest-bearing deposits

22,076

21,506

20,128

21,793

19,882

Interest-bearing deposits

29,372

29,186

28,544

29,302

28,609

Total deposits

51,448

50,692

48,672

51,095

48,491

Common shareholders' equity

6,982

6,956

7,002

6,969

6,971

NET INTEREST INCOME

Net interest income (fully taxable equivalent basis)

$

415

$

416

$

435

$

831

$

878

Fully taxable equivalent adjustment

1

1

1

Net interest margin (fully taxable equivalent basis)

2.83

%

2.88

%

3.10

%

2.86

%

3.14

%

CREDIT QUALITY

Nonaccrual loans

$

449

$

494

$

719

Reduced-rate loans

22

21

28

Total nonperforming loans (e)

471

515

747

Foreclosed property

29

40

67

Total nonperforming assets (e)

500

555

814

Loans past due 90 days or more and still accruing

20

25

43

Gross loan charge-offs

35

38

64

$

73

$

126

Loan recoveries

18

14

19

32

36

Net loan charge-offs

17

24

45

41

90

Allowance for loan losses

613

617

667

Allowance for credit losses on lending-related commitments

36

36

36

Total allowance for credit losses

649

653

703

Allowance for loan losses as a percentage of total loans

1.35

%

1.37

%

1.52

%

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

0.15

0.21

0.42

0.18

%

0.42

%

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

1.10

1.23

1.85

Allowance for loan losses as a percentage of total nonperforming loans

130

120

89

(a)

See Reconciliation of Non-GAAP Financial Measures.

(b)

June 30, 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 zero in all periods presented.

 

CONSOLIDATED BALANCE SHEETS

Comerica Incorporated and Subsidiaries

June 30,

March 31,

December 31,

June 30,

(in millions, except share data)

2013

2013

2012

2012

(unaudited)

(unaudited)

(unaudited)

ASSETS

Cash and due from banks

$

1,016

$

877

$

1,395

$

1,076

Federal funds sold

31

100

Interest-bearing deposits with banks

2,878

4,720

3,039

3,064

Other short-term investments

119

115

125

170

Investment securities available-for-sale

9,631

10,286

10,297

9,940

Commercial loans

29,186

28,508

29,513

27,016

Real estate construction loans

1,479

1,396

1,240

1,377

Commercial mortgage loans

9,007

9,317

9,472

9,830

Lease financing

843

853

859

858

International loans

1,209

1,269

1,293

1,224

Residential mortgage loans

1,611

1,568

1,527

1,469

Consumer loans

2,124

2,156

2,153

2,218

          Total loans

45,459

45,067

46,057

43,992

Less allowance for loan losses

(613)

(617)

(629)

(667)

          Net loans

44,846

44,450

45,428

43,325

Premises and equipment

604

618

622

667

Accrued income and other assets

3,822

3,819

4,063

4,138

          Total assets

$

62,947

$

64,885

$

65,069

$

62,380

LIABILITIES AND SHAREHOLDERS' EQUITY

Noninterest-bearing deposits

$

21,870

$

22,777

$

23,279

$

21,330

Money market and interest-bearing checking deposits

21,677

21,540

21,273

19,993

Savings deposits

1,677

1,652

1,606

1,629

Customer certificates of deposit

5,594

5,753

5,531

6,045

Foreign office time deposits

437

395

502

376

          Total interest-bearing deposits

29,385

29,340

28,912

28,043

          Total deposits

51,255

52,117

52,191

49,373

Short-term borrowings

131

58

110

83

Accrued expenses and other liabilities

1,049

1,023

1,106

1,154

Medium- and long-term debt

3,601

4,699

4,720

4,742

          Total liabilities

56,036

57,897

58,127

55,352

Common stock - $5 par value:

     Authorized - 325,000,000 shares

     Issued - 228,164,824 shares

1,141

1,141

1,141

1,141

Capital surplus

2,160

2,157

2,162

2,144

Accumulated other comprehensive loss

(538)

(410)

(413)

(301)

Retained earnings

6,127

6,020

5,931

5,744

Less cost of common stock in treasury - 42,999,083 shares at 6/30/13, 41,361,612 shares at 3/31/13, 39,889,610 shares at 12/31/12 and 33,889,392 shares at 6/30/12

(1,979)

(1,920)

(1,879)

(1,700)

          Total shareholders' equity

6,911

6,988

6,942

7,028

          Total liabilities and shareholders' equity

$

62,947

$

64,885

$

65,069

$

62,380

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries

Three Months Ended

Six Months Ended

June 30,

June 30,

(in millions, except per share data)

2013

2012

2013

2012

INTEREST INCOME

Interest and fees on loans

$

388

$

408

$

778

$

819

Interest on investment securities

52

59

105

122

Interest on short-term investments

3

3

6

6

Total interest income

443

470

889

947

INTEREST EXPENSE

Interest on deposits

15

18

30

37

Interest on medium- and long-term debt

14

17

29

33

Total interest expense

29

35

59

70

Net interest income

414

435

830

877

Provision for credit losses

13

19

29

41

Net interest income after provision for credit losses

401

416

801

836

NONINTEREST INCOME

Service charges on deposit accounts

53

53

108

109

Fiduciary income

44

39

87

77

Commercial lending fees

22

24

43

49

Letter of credit fees

16

18

32

35

Card fees

13

12

25

23

Foreign exchange income

9

10

18

20

Bank-owned life insurance

10

10

19

20

Brokerage fees

4

4

9

9

Net securities (losses) gains

(2)

6

(2)

11

Other noninterest income

39

35

69

64

Total noninterest income

208

211

408

417

NONINTEREST EXPENSES

Salaries

182

189

370

390

Employee benefits

63

61

126

120

Total salaries and employee benefits

245

250

496

510

Net occupancy expense

39

40

78

81

Equipment expense

15

16

30

33

Outside processing fee expense

30

26

58

52

Software expense

22

21

44

44

Merger and restructuring charges

8

8

FDIC insurance expense

8

10

17

20

Advertising expense

6

7

12

14

Other real estate expense

1

1

2

4

Other noninterest expenses

50

55

95

115

Total noninterest expenses

416

434

832

881

Income before income taxes

193

193

377

372

Provision for income taxes

50

50

100

98

NET INCOME

143

143

277

274

Less income allocated to participating securities

2

2

4

3

Net income attributable to common shares

$

141

$

141

$

273

$

271

Earnings per common share:

Basic

$

0.77

$

0.73

$

1.48

$

1.39

Diluted

0.76

0.73

1.46

1.39

Comprehensive income

15

169

152

329

Cash dividends declared on common stock

32

29

64

49

Cash dividends declared per common share

0.17

0.15

0.34

0.25

 

CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries

Second

First

Fourth

Third

Second

Second Quarter 2013 Compared To:

Quarter

Quarter

Quarter

Quarter

Quarter

First Quarter 2013

Second Quarter 2012

(in millions, except per share data)

2013

2013

2012

2012

2012

Amount

Percent

Amount

Percent

INTEREST INCOME

Interest and fees on loans

$

388

$

390

$

398

$

400

$

408

$

(2)

%

$

(20)

(5)%

Interest on investment securities

52

53

55

57

59

(1)

(3)

(7)

(13)

Interest on short-term investments

3

3

3

3

3

Total interest income

443

446

456

460

470

(3)

(1)

(27)

(6)

INTEREST EXPENSE

Interest on deposits

15

15

16

17

18

(3)

(21)

Interest on medium- and long-term debt

14

15

16

16

17

(1)

(7)

(3)

(15)

Total interest expense

29

30

32

33

35

(1)

(6)

(6)

(18)

Net interest income

414

416

424

427

435

(2)

(21)

(5)

Provision for credit losses

13

16

16

22

19

(3)

(15)

(6)

(30)

Net interest income after provision

for credit losses

401

400

408

405

416

1

(15)

(3)

NONINTEREST INCOME

Service charges on deposit accounts

53

55

52

53

53

(2)

(3)

Fiduciary income

44

43

42

39

39

1

2

5

10

Commercial lending fees

22

21

25

22

24

1

5

(2)

(7)

Letter of credit fees

16

16

17

19

18

(2)

(7)

Card fees

13

12

12

12

12

1

7

1

9

Foreign exchange income

9

9

9

9

10

(1)

(4)

Bank-owned life insurance

10

9

9

10

10

1

15

Brokerage fees

4

5

5

5

4

(1)

(7)

Net securities (losses) gains

(2)

1

6

(2)

N/M

(8)

N/M

Other noninterest income

39

30

32

28

35

9

28

4

11

Total noninterest income

208

200

204

197

211

8

5

(3)

(1)

NONINTEREST EXPENSES

Salaries

182

188

196

192

189

(6)

(3)

(7)

(4)

Employee benefits

63

63

59

61

61

2

3

Total salaries and employee benefits

245

251

255

253

250

(6)

(2)

(5)

(2)

Net occupancy expense

39

39

42

40

40

(1)

Equipment expense

15

15

15

17

16

(1)

(5)

Outside processing fee expense

30

28

28

27

26

2

7

4

12

Software expense

22

22

23

23

21

1

2

Merger and restructuring charges

2

25

8

(8)

N/M

FDIC insurance expense

8

9

9

9

10

(1)

(13)

(2)

(14)

Advertising expense

6

6

6

7

7

(1)

(15)

Other real estate expense

1

1

3

2

1

Other noninterest expenses

50

45

44

46

55

5

10

(5)

(9)

Total noninterest expenses

416

416

427

449

434

(18)

(4)

Income before income taxes

193

184

185

153

193

9

6

Provision for income taxes

50

50

55

36

50

NET INCOME

143

134

130

117

143

9

8

Less income allocated to participating securities

2

2

2

1

2

Net income attributable to common shares

$

141

$

132

$

128

$

116

$

141

$

9

8

%

$

%

Earnings per common share:

Basic

$

0.77

$

0.71

$

0.68

$

0.61

$

0.73

$

0.06

8

%

$

0.04

5

%

Diluted

0.76

0.70

0.68

0.61

0.73

0.06

9

0.03

4

Comprehensive income (loss)

15

137

(30)

165

169

(122)

(89)

(154)

(91)

Cash dividends declared on common stock

32

32

28

29

29

3

8

Cash dividends declared per common share

0.17

0.17

0.15

0.15

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)

2nd Qtr

1st Qtr

4th Qtr

3rd Qtr

2nd Qtr

Balance at beginning of period

$

617

$

629

$

647

$

667

$

704

Loan charge-offs:

     Commercial

19

21

42

19

26

     Real estate construction:

          Commercial Real Estate business line (a)

2

1

2

2

          Other business lines (b)

1

               Total real estate construction

2

1

2

3

     Commercial mortgage:

          Commercial Real Estate business line (a)

2

1

5

12

16

          Other business lines (b)

7

12

6

13

11

               Total commercial mortgage

9

13

11

25

27

     International

1

     Residential mortgage

1

1

2

6

3

     Consumer

4

3

4

6

5

          Total loan charge-offs

35

38

60

59

64

Recoveries on loans previously charged-off:

     Commercial

11

6

13

7

10

     Real estate construction

1

1

1

3

1

     Commercial mortgage

3

5

6

5

4

     International

1

     Residential mortgage

1

1

1

     Consumer

2

1

1

1

4

          Total recoveries

18

14

23

16

19

Net loan charge-offs

17

24

37

43

45

Provision for loan losses

13

12

19

23

8

Balance at end of period

$

613

$

617

$

629

$

647

$

667

Allowance for loan losses as a percentage of total loans

1.35

%

1.37

%

1.37

%

1.46

%

1.52

%

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

0.15

0.21

0.34

0.39

0.42

(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)

2nd Qtr

1st Qtr

4th Qtr

3rd Qtr

2nd Qtr

Balance at beginning of period

$

36

$

32

$

35

$

36

$

25

Add: Provision for credit losses on lending-related commitments

4

(3)

(1)

11

Balance at end of period

$

36

$

36

$

32

$

35

$

36

Unfunded lending-related commitments sold

$

1

$

2

$

$

$

 

NONPERFORMING ASSETS (unaudited)

Comerica Incorporated and Subsidiaries

2013

2012

(in millions)

2nd Qtr

1st Qtr

4th Qtr

3rd Qtr

2nd Qtr

SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS

Nonaccrual loans:

     Business loans:

          Commercial

$

102

$

102

$

103

$

154

$

175

          Real estate construction:

               Commercial Real Estate business line (a)

26

30

30

45

60

               Other business lines (b)

2

3

3

6

9

                    Total real estate construction

28

33

33

51

69

          Commercial mortgage:

               Commercial Real Estate business line (a)

69

86

94

137

155

               Other business lines (b)

157

178

181

219

220

                    Total commercial mortgage

226

264

275

356

375

          Lease financing

3

3

4

          Total nonaccrual business loans

356

399

414

564

623

     Retail loans:

          Residential mortgage

62

65

70

69

76

          Consumer:

               Home equity

28

28

31

28

16

               Other consumer

3

2

4

4

4

                    Total consumer

31

30

35

32

20

          Total nonaccrual retail loans

93

95

105

101

96

     Total nonaccrual loans

449

494

519

665

719

Reduced-rate loans

22

21

22

27

28

Total nonperforming loans (c)

471

515

541

692

747

Foreclosed property

29

40

54

63

67

Total nonperforming assets (c)

$

500

$

555

$

595

$

755

$

814

Nonperforming loans as a percentage of total loans

1.04

%

1.14

%

1.17

%

1.57

%

1.70

%

Nonperforming assets as a percentage of total loans

and foreclosed property

1.10

1.23

1.29

1.71

1.85

Allowance for loan losses as a percentage of total

nonperforming loans

130

120

116

94

89

Loans past due 90 days or more and still accruing

$

20

$

25

$

23

$

36

$

43

ANALYSIS OF NONACCRUAL LOANS

Nonaccrual loans at beginning of period

$

494

$

519

$

665

$

719

$

830

          Loans transferred to nonaccrual (d)

37

34

36

35

47

          Nonaccrual business loan gross charge-offs (e)

(25)

(34)

(54)

(46)

(56)

          Loans transferred to accrual status (d)

(41)

          Nonaccrual business loans sold (f)

(9)

(7)

(48)

(20)

(16)

          Payments/Other (g)

(48)

(18)

(80)

(23)

(45)

Nonaccrual loans at end of period

$

449

$

494

$

519

$

665

$

719

(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

$

25

$

34

$

54

$

46

$

56

          Performing watch list loans

5

1

          Consumer and residential mortgage loans

5

4

6

12

8

               Total gross loan charge-offs

$

35

$

38

$

60

$

59

$

64

(f) Analysis of loans sold:

          Nonaccrual business loans

$

9

$

7

$

48

$

20

$

16

          Performing watch list loans

40

12

24

42

7

               Total loans sold

$

49

$

19

$

72

$

62

$

23

(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

Six Months Ended

June 30, 2013

June 30, 2012

Average

Average

Average

Average

(dollar amounts in millions)

Balance

Interest

Rate

Balance

Interest

Rate

Commercial loans

$

28,225

$

462

3.30

%

$

25,359

$

446

3.54

%

Real estate construction loans

1,384

28

4.10

1,437

32

4.54

Commercial mortgage loans

9,295

183

3.97

10,093

231

4.59

Lease financing

856

14

3.23

883

15

3.35

International loans

1,272

23

3.72

1,235

23

3.71

Residential mortgage loans

1,579

33

4.21

1,503

35

4.65

Consumer loans

2,145

36

3.33

2,239

38

3.43

Total loans (a)

44,756

779

3.51

42,749

820

3.86

Mortgage-backed securities available-for-sale

9,532

104

2.18

9,312

120

2.60

Other investment securities available-for-sale

374

1

0.55

496

2

0.79

Total investment securities available-for-sale

9,906

105

2.16

9,808

122

2.57

Interest-bearing deposits with banks (b)

3,990

5

0.26

3,723

5

0.26

Other short-term investments

117

1

1.67

138

1

1.76

Total earning assets

58,769

890

3.06

56,418

948

3.39

Cash and due from banks

975

965

Allowance for loan losses

(629)

(723)

Accrued income and other assets

4,621

4,853

Total assets

$

63,736

$

61,513

Money market and interest-bearing checking deposits

$

21,442

15

0.14

$

20,623

18

0.18

Savings deposits

1,640

0.03

1,575

1

0.08

Customer certificates of deposit

5,715

13

0.45

6,042

17

0.55

Foreign office time deposits

505

2

0.57

369

1

0.61

Total interest-bearing deposits

29,302

30

0.20

28,609

37

0.26

Short-term borrowings

158

0.09

73

0.11

Medium- and long-term debt

4,374

29

1.37

4,897

33

1.37

Total interest-bearing sources

33,834

59

0.35

33,579

70

0.42

Noninterest-bearing deposits

21,793

19,882

Accrued expenses and other liabilities

1,140

1,081

Total shareholders' equity

6,969

6,971

Total liabilities and shareholders' equity

$

63,736

$

61,513

Net interest income/rate spread (FTE)

$

831

2.71

$

878

2.97

FTE adjustment

$

1

$

1

Impact of net noninterest-bearing sources of funds

0.15

0.17

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

2.86

%

3.14

%

(a)

Accretion of the purchase discount on the acquired loan portfolio of $18 million and $43 million in the six months ended June 30, 2013 and 2012, respectively, increased the net interest margin by 6 basis points and 15 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 18 basis points and 20 basis points in the six months ended June 30, 2013 and 2012, respectively.

 

ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)

Comerica Incorporated and Subsidiaries

Three Months Ended

June 30, 2013

March 31, 2013

June 30, 2012

Average

Average

Average

Average

Average

Average

(dollar amounts in millions)

Balance

Interest

Rate

Balance

Interest

Rate

Balance

Interest

Rate

Commercial loans

$

28,393

$

233

3.29

%

$

28,056

$

229

3.31

%

$

25,983

$

227

3.52

%

Real estate construction loans

1,453

15

4.04

1,314

13

4.15

1,420

15

4.50

Commercial mortgage loans

9,192

88

3.86

9,398

95

4.08

9,983

112

4.46

Lease financing

855

7

3.22

857

7

3.23

869

7

3.28

International loans

1,262

12

3.81

1,282

11

3.62

1,265

12

3.66

Residential mortgage loans

1,602

16

4.04

1,556

17

4.39

1,487

17

4.53

Consumer loans

2,136

18

3.30

2,154

18

3.36

2,221

18

3.37

Total loans (a)

44,893

389

3.47

44,617

390

3.54

43,228

408

3.79

Mortgage-backed securities available-for-sale

9,415

51

2.17

9,650

53

2.19

9,262

58

2.51

Other investment securities available-for-sale

378

1

0.56

371

0.54

466

1

0.85

Total investment securities available-for-sale

9,793

52

2.15

10,021

53

2.17

9,728

59

2.49

Interest-bearing deposits with banks (b)

4,125

3

0.26

3,852

2

0.27

3,555

3

0.26

Other short-term investments

117

1.05

117

1

2.30

141

1.55

Total earning assets

58,928

444

3.02

58,607

446

3.09

56,652

470

3.35

Cash and due from banks

972

979

931

Allowance for loan losses

(625)

(633)

(710)

Accrued income and other assets

4,434

4,498

4,808

Total assets

$

63,709

$

63,451

$

61,681

Money market and interest-bearing checking deposits

$

21,544

8

0.13

$

21,294

7

0.14

$

20,451

8

0.18

Savings deposits

1,658

0.03

1,623

0.03

1,607

1

0.07

Customer certificates of deposit

5,685

6

0.43

5,744

7

0.47

6,107

9

0.53

Foreign office time deposits

485

1

0.60

525

1

0.55

379

0.64

Total interest-bearing deposits

29,372

15

0.19

29,186

15

0.21

28,544

18

0.25

Short-term borrowings

193

0.07

123

0.11

68

0.12

Medium- and long-term debt

4,044

14

1.43

4,707

15

1.32

4,854

17

1.40

Total interest-bearing sources

33,609

29

0.34

34,016

30

0.36

33,466

35

0.42

Noninterest-bearing deposits

22,076

21,506

20,128

Accrued expenses and other liabilities

1,042

973

1,085

Total shareholders' equity

6,982

6,956

7,002

Total liabilities and shareholders' equity

$

63,709

$

63,451

$

61,681

Net interest income/rate spread (FTE)

$

415

2.68

$

416

2.73

$

435

2.93

FTE adjustment

$

1

$

$

Impact of net noninterest-bearing sources of funds

0.15

0.15

0.17

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

2.83

%

2.88

%

3.10

%

(a)

Accretion of the purchase discount on the acquired loan portfolio of $7 million, $11 million and $18 million in the second and first quarters of 2013 and the second quarter of 2012, respectively, increased the net interest margin by 5 basis points, 8 basis points and 13 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 18 basis points and 17 basis points in the second and first quarters of 2013 and 18 basis points in the second quarter of 2012, respectively.

 

CONSOLIDATED STATISTICAL DATA (unaudited)

Comerica Incorporated and Subsidiaries

June 30,

March 31,

December 31,

September 30,

June 30,

(in millions, except per share data)

2013

2013

2012

2012

2012

Commercial loans:

     Floor plan

$

3,241

$

2,963

$

2,939

$

2,276

$

2,406

     Other

25,945

25,545

26,574

25,184

24,610

          Total commercial loans

29,186

28,508

29,513

27,460

27,016

Real estate construction loans:

     Commercial Real Estate business line (a)

1,223

1,185

1,049

1,003

991

     Other business lines (b)

256

211

191

389

386

          Total real estate construction loans

1,479

1,396

1,240

1,392

1,377

Commercial mortgage loans:

     Commercial Real Estate business line (a)

1,743

1,812

1,873

2,020

2,315

     Other business lines (b)

7,264

7,505

7,599

7,539

7,515

          Total commercial mortgage loans

9,007

9,317

9,472

9,559

9,830

Lease financing

843

853

859

837

858

International loans

1,209

1,269

1,293

1,277

1,224

Residential mortgage loans

1,611

1,568

1,527

1,495

1,469

Consumer loans:

     Home equity

1,474

1,498

1,537

1,570

1,584

     Other consumer

650

658

616

604

634

          Total consumer loans

2,124

2,156

2,153

2,174

2,218

          Total loans

$

45,459

$

45,067

$

46,057

$

44,194

$

43,992

Goodwill

$

635

$

635

$

635

$

635

$

635

Core deposit intangible

18

19

20

23

25

Loan servicing rights

2

2

2

2

3

Tier 1 common capital ratio (c) (d)

10.41

%

10.37

%

10.14

%

10.37

%

10.39

%

Tier 1 risk-based capital ratio (c)

10.41

10.37

10.14

10.37

10.39

Total risk-based capital ratio (c)

13.27

13.41

13.15

13.69

13.91

Leverage ratio (c)

10.81

10.75

10.57

10.78

10.97

Tangible common equity ratio (d)

10.04

9.86

9.76

10.30

10.31

Common shareholders' equity per share of common stock

$

37.32

$

37.41

$

36.87

$

37.01

$

36.18

Tangible common equity per share of common stock (d)

33.79

33.90

33.38

33.56

32.76

Market value per share for the quarter:

     High

40.44

36.99

32.14

33.38

32.88

     Low

33.55

30.73

27.72

29.32

27.88

     Close

39.83

35.95

30.34

31.05

30.71

Quarterly ratios:

     Return on average common shareholders' equity

8.23

%

7.68

%

7.36

%

6.67

%

8.22

%

     Return on average assets

0.90

0.84

0.81

0.75

0.93

     Efficiency ratio (e)

66.43

67.58

68.08

71.68

67.53

Number of banking centers

484

487

487

490

493

Number of employees - full time equivalent

8,929

9,001

9,035

9,079

9,083

(a)

Primarily loans to real estate developers.

(b)

Primarily loans secured by owner-occupied real estate.

(c)

June 30, 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

June 30,

December 31,

June 30,

(in millions, except share data)

2013

2012

2012

ASSETS

Cash and due from subsidiary bank

$

3

$

2

$

2

Short-term investments with subsidiary bank

473

431

442

Other short-term investments

92

88

86

Investment in subsidiaries, principally banks

6,979

7,045

7,130

Premises and equipment

4

4

4

Other assets

137

150

146

     Total assets

$

7,688

$

7,720

$

7,810

LIABILITIES AND SHAREHOLDERS' EQUITY

Medium- and long-term debt

$

622

$

629

$

633

Other liabilities

155

149

149

     Total liabilities

777

778

782

Common stock - $5 par value:

     Authorized - 325,000,000 shares

     Issued - 228,164,824 shares

1,141

1,141

1,141

Capital surplus

2,160

2,162

2,144

Accumulated other comprehensive loss

(538)

(413)

(301)

Retained earnings

6,127

5,931

5,744

Less cost of common stock in treasury - 42,999,083 shares at 6/30/13, 39,889,610 shares at 12/31/12 and 33,889,392 shares at 6/30/12

(1,979)

(1,879)

(1,700)

     Total shareholders' equity

6,911

6,942

7,028

     Total liabilities and shareholders' equity

$

7,688

$

7,720

$

7,810

 

 

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

274

274

Other comprehensive income, net of tax

55

55

Cash dividends declared on common stock ($0.25 per share)

(49)

(49)

Purchase of common stock

(4.1)

(125)

(125)

Net issuance of common stock under employee stock plans

1.1

(49)

(27)

60

(16)

Share-based compensation

21

21

Other

2

(2)

BALANCE AT JUNE 30, 2012

194.3

$

1,141

$

2,144

$

(301)

$

5,744

$

(1,700)

$

7,028

BALANCE AT DECEMBER 31, 2012

188.3

$

1,141

$

2,162

$

(413)

$

5,931

$

(1,879)

$

6,942

Net income

277

277

Other comprehensive loss, net of tax

(125)

(125)

Cash dividends declared on common stock ($0.34 per share)

(64)

(64)

Purchase of common stock

(4.1)

(146)

(146)

Net issuance of common stock under employee stock plans

1

(19)

(17)

45

9

Share-based compensation

18

18

Other

(1)

1

BALANCE AT JUNE 30, 2013

185.2

$

1,141

$

2,160

$

(538)

$

6,127

$

(1,979)

$

6,911

 

BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)

Comerica Incorporated and Subsidiaries

(dollar amounts in millions)

Business

Retail

Wealth

Three Months Ended June 30, 2013

Bank

Bank

Management

Finance

Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

372

$

154

$

46

$

(165)

$

8

$

415

Provision for credit losses

10

5

(3)

1

13

Noninterest income

80

46

65

15

2

208

Noninterest expenses

147

178

77

3

11

416

Provision (benefit) for income taxes (FTE)

88

6

13

(55)

(1)

51

Net income (loss)

$

207

$

11

$

24

$

(98)

$

(1)

$

143

Net credit-related charge-offs

$

11

$

4

$

2

$

17

Selected average balances:

Assets

$

36,017

$

5,962

$

4,828

$

11,514

$

5,388

$

63,709

Loans

34,955

5,271

4,667

44,893

Deposits

25,987

21,241

3,701

283

236

51,448

Statistical data:

Return on average assets (a)

2.30

%

0.20

%

2.00

%

N/M

N/M

0.90

%

Efficiency ratio (b)

32.41

87.98

69.86

N/M

N/M

66.43

Business

Retail

Wealth

Three Months Ended March 31, 2013

Bank

Bank

Management

Finance

Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

375

$

155

$

46

$

(167)

$

7

$

416

Provision for credit losses

20

6

(6)

(4)

16

Noninterest income

77

41

65

14

3

200

Noninterest expenses

146

175

79

3

13

416

Provision (benefit) for income taxes (FTE)

88

5

13

(58)

2

50

Net income (loss)

$

198

$

10

$

25

$

(98)

$

(1)

$

134

Net credit-related charge-offs

$

16

$

8

$

$

24

Selected average balances:

Assets

$

35,780

$

5,973

$

4,738

$

11,747

$

5,213

$

63,451

Loans

34,753

5,276

4,588

44,617

Deposits

25,514

21,049

3,682

275

172

50,692

Statistical data:

Return on average assets (a)

2.21

%

0.18

%

2.12

%

N/M

N/M

0.84

%

Efficiency ratio (b)

32.30

89.37

71.09

N/M

N/M

67.58

Business

Retail

Wealth

Three Months Ended June 30, 2012

Bank

Bank

Management

Finance

Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

379

$

161

$

46

$

(160)

9

$

435

Provision for credit losses

12

3

2

2

19

Noninterest income

83

47

66

17

(2)

211

Noninterest expenses

151

177

79

3

24

434

Provision (benefit) for income taxes (FTE)

93

9

11

(54)

(9)

50

Net income (loss)

$

206

$

19

$

20

$

(92)

$

(10)

$

143

Net credit-related charge-offs

$

26

$

9

$

10

$

45

Selected average balances:

Assets

$

34,373

$

5,945

$

4,604

$

11,684

$

5,075

$

61,681

Loans

33,449

5,250

4,529

43,228

Deposits

24,143

20,524

3,640

171

194

48,672

Statistical data:

Return on average assets (a)

2.40

%

0.35

%

1.80

%

N/M

N/M

0.93

%

Efficiency ratio (b)

32.73

84.87

73.87

N/M

N/M

67.53

(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 June 30, 2013

Michigan

California

Texas

Markets

& Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

187

$

173

$

131

$

81

$

(157)

$

415

Provision for credit losses

(4)

7

6

3

1

13

Noninterest income

88

36

34

33

17

208

Noninterest expenses

161

100

89

52

14

416

Provision (benefit) for income taxes (FTE)

41

37

24

5

(56)

51

Net income (loss)

$

77

$

65

$

46

$

54

$

(99)

$

143

Net credit-related charge-offs

$

4

$

12

$

(3)

$

4

$

$

17

Selected average balances:

Assets

$

14,022

$

14,155

$

10,886

$

7,744

$

16,902

$

63,709

Loans

13,598

13,912

10,179

7,204

44,893

Deposits

20,159

14,671

10,187

5,912

519

51,448

Statistical data:

Return on average assets (a)

1.47

%

1.65

%

1.62

%

2.79

%

N/M

0.90

%

Efficiency ratio (b)

58.17

47.73

53.39

46.04

N/M

66.43

Other

Finance

Three Months Ended March 31, 2013

Michigan

California

Texas

Markets

& Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

189

$

171

$

135

$

81

$

(160)

$

416

Provision for credit losses

(8)

21

8

(1)

(4)

16

Noninterest income

92

35

31

25

17

200

Noninterest expenses

168

97

91

44

16

416

Provision (benefit) for income taxes (FTE)

44

32

23

7

(56)

50

Net income (loss)

$

77

$

56

$

44

$

56

$

(99)

$

134

Net credit-related charge-offs

$

5

$

10

$

6

$

3

$

$

24

Selected average balances:

Assets

$

14,042

$

13,795

$

10,795

$

7,859

$

16,960

$

63,451

Loans

13,650

13,542

10,071

7,354

44,617

Deposits

20,255

14,356

9,959

5,675

447

50,692

Statistical data:

Return on average assets (a)

1.47

%

1.45

%

1.54

%

2.86

%

N/M

0.84

%

Efficiency ratio (b)

59.53

47.04

54.99

42.11

N/M

67.58

Other

Finance

Three Months Ended June 30, 2012

Michigan

California

Texas

Markets

& Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

196

$

171

$

143

$

76

$

(151)

$

435

Provision for credit losses

(6)

6

9

8

2

19

Noninterest income

96

37

31

32

15

211

Noninterest expenses

175

97

88

47

27

434

Provision (benefit) for income taxes (FTE)

42

39

28

4

(63)

50

Net income (loss)

$

81

$

66

$

49

$

49

$

(102)

$

143

Net credit-related charge-offs

$

10

$

12

$

4

$

19

$

$

45

Selected average balances:

Assets

$

14,028

$

12,870

$

10,268

$

7,756

$

16,759

$

61,681

Loans

13,759

12,647

9,506

7,316

43,228

Deposits

19,224

14,149

10,185

4,749

365

48,672

Statistical data:

Return on average assets (a)

1.60

%

1.74

%

1.71

%

2.57

%

N/M

0.93

%

Efficiency ratio (b)

59.96

46.54

51.33

44.63

N/M

67.53

(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

June 30,

March 31,

December 31,

September 30,

June 30,

(dollar amounts in millions)

2013

2013

2012

2012

2012

Tier 1 Common Capital Ratio:

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

$

6,800

$

6,748

$

6,705

$

6,685

$

6,676

Risk-weighted assets (a) (b)

$

65,312

$

65,099

$

66,115

$

64,486

$

64,244

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

10.41

%

10.37

%

10.14

%

10.37

%

10.39

%

Basel III Tier 1 Common Capital Ratio:

Tier 1 common capital (b)

$

6,800

$

6,748

$

6,705

$

6,685

$

6,676

Basel III adjustments (c)

(1)

(39)

(17)

(35)

Basel III Tier 1 common capital (c)

6,800

6,747

6,666

6,668

6,641

Basel III adjustments (d)

(537)

(409)

(413)

(253)

(301)

Basel III Tier 1 common capital (d)

$

6,263

$

6,338

$

6,253

$

6,415

$

6,340

Risk-weighted assets (a) (b)

$

65,312

$

65,099

$

66,115

$

64,486

$

64,244

Basel III adjustments (c)

2,165

1,996

1,854

2,313

2,329

Basel III risk-weighted assets (c)

$

67,477

$

67,095

$

67,969

$

66,799

$

66,573

Tier 1 common capital ratio (b)

10.4

%

10.4

%

10.1

%

10.4

%

10.4

%

Basel III Tier 1 common capital ratio (c)

10.1

10.1

9.8

10.0

10.0

Basel III Tier 1 common capital ratio (d)

9.3

9.4

9.2

9.6

9.5

Tangible Common Equity Ratio:

Common shareholders' equity

$

6,911

$

6,988

$

6,942

$

7,084

$

7,028

Less:

Goodwill

635

635

635

635

635

Other intangible assets

20

21

22

25

28

Tangible common equity

$

6,256

$

6,332

$

6,285

$

6,424

$

6,365

Total assets

$

62,947

$

64,885

$

65,069

$

63,000

$

62,380

Less:

Goodwill

635

635

635

635

635

Other intangible assets

20

21

22

25

28

Tangible assets

$

62,292

$

64,229

$

64,412

$

62,340

$

61,717

Common equity ratio

10.98

%

10.77

%

10.67

%

11.24

%

11.27

%

Tangible common equity ratio

10.04

9.86

9.76

10.30

10.31

Tangible Common Equity per Share of Common Stock:

Common shareholders' equity

$

6,911

$

6,988

$

6,942

$

7,084

$

7,028

Tangible common equity

6,256

6,332

6,285

6,424

6,365

Shares of common stock outstanding (in millions)

185

187

188

191

194

Common shareholders' equity per share of common stock

$

37.32

$

37.41

$

36.87

$

37.01

$

36.18

Tangible common equity per share of common stock

33.79

33.90

33.38

33.56

32.76

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

(b) June 30, 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 assuming the election to exclude most elements of AOCI.

(d) Estimated ratios based on the standardized approach in the final Basel III capital rules, assuming no election to exclude 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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