Comerica Reports Second Quarter 2014 Net Income Of $151 Million, Or 80 Cents Per Share, Up 10 Percent From First Quarter 2014 Average Loan Increase of $1.7 Billion and Fee Income Growth Drive Revenue Increase of $18 Million Over First Quarter 2014

Continued to Maintain Strong Capital Ratios While Returning $95 Million to Shareholders

DALLAS, July 15, 2014 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported second quarter 2014 net income of $151 million, compared to $139 million for the first quarter 2014 and $143 million for the second quarter 2013. Earnings per diluted share were 80 cents for the second quarter 2014, compared to 73 cents for the first quarter 2014 and 76 cents for the second quarter 2013.

 















(dollar amounts in millions, except per share data)

2nd Qtr '14


1st Qtr '14


2nd Qtr '13


Net interest income (a)

$

416



$

410



$

414



Provision for credit losses

11



9



13



Noninterest income

220



208



222



Noninterest expenses

404



406



416



Provision for income taxes

70



64



64










Net income

151



139



143










Net income attributable to common shares

149



137



141










Diluted income per common share

0.80



0.73



0.76










Average diluted shares (in millions)

186



187



187










Tier 1 common capital ratio (c)

10.49

%

(b)

10.58

%


10.43

%


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

10.2



10.3



10.1



Tangible common equity ratio (c)

10.39



10.20



10.04



(a)

Included accretion of the purchase discount on the acquired loan portfolio of $10 million, $12 million and $7 million in the second quarter 2014, first quarter 2014 and second quarter 2013, respectively.

(b)

June 30, 2014 ratio is estimated.

(c)

See Reconciliation of Non-GAAP Financial Measures.

(d)

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

 

"We recorded a 10 percent increase in earnings per share compared to the first quarter, a solid performance given this competitive and persistently low-rate environment," said Ralph W. Babb Jr., chairman and chief executive officer. "We continue to be focused on growing the bottom line by carefully managing the things we can control, such as expanding customer relationships, maintaining expense discipline as well as credit quality, all the while taking a prudent, conservative approach to capital.

"With higher customer-driven fee income and broad-based loan growth, revenue increased more than 3 percent from the first quarter. Average loans were up $1.7 billion, or 4 percent, compared to the first quarter, and period-end loans were up $1.4 billion, or 3 percent, with notable growth in virtually every business line. Average deposits were up $614 million to $53.4 billion. Credit quality continued to be strong, noninterest expenses decreased slightly, and our solid capital position continues to support our growth.

"We attribute these results to continued improvements in the economy, reflected particularly in the loan growth in Texas and California, as well as our expertise in faster growing business lines and consistent focus on relationships. Looking ahead, macro-economic conditions appear to be favorable. The market is competitive, however, we are confident in our ability to add new customer relationships and expand existing ones while maintaining our credit pricing and structure discipline."

Second Quarter 2014 Compared to First Quarter 2014

  • Average total loans increased $1.7 billion, or 4 percent, to $46.7 billion, primarily reflecting an increase of $1.5 billion, or 5 percent in commercial loans. The increase in commercial loans was reflected in almost every line of business, led by increases in Mortgage Banker Finance ($433 million), National Dealer Services ($290 million), Energy ($229 million), and Technology and Life Sciences ($200 million). Period-end total loans increased $1.4 billion, or 3 percent, to $47.9 billion, primarily reflecting a $1.2 billion, or 4 percent, increase in commercial loans. 
  • Average total deposits increased $614 million, or 1 percent, to $53.4 billion, reflecting an increase in noninterest-bearing deposits of $775 million, partially offset by a decrease in total interest-bearing deposits of $161 million. Period-end deposits increased $420 million, to $54.2 billion
  • Net interest income increased $6 million, or 2 percent, to $416 million in the second quarter 2014, compared to $410 million in the first quarter 2014, primarily due to an increase in loan volumes, partially offset by a decrease in yields. 
  • The provision for credit losses increased $2 million to $11 million in the second quarter 2014, primarily reflecting increases in both loan volume and commitments. Net charge-offs were $9 million, or 0.08 percent of average loans, in the second quarter 2014. 
  • Noninterest income increased $12 million to $220 million in the second quarter 2014, primarily as a result of increases in several customer-driven fee categories. 
  • Noninterest expenses decreased $2 million to $404 million in the second quarter 2014, primarily reflecting a $7 million decrease in salaries and benefits expense, partially offset by increases in software expense, operational losses and outside processing fees.  
  • Capital remained solid at June 30, 2014, as evidenced by an estimated Tier 1 common capital ratio of 10.49 percent and a tangible common equity ratio of 10.39 percent.  
  • Comerica repurchased approximately 1.2 million shares of common stock during second quarter 2014 under the repurchase program. Together with dividends of $0.20 per share, $95 million was returned to shareholders. 

Second Quarter 2014 Compared to Second Quarter 2013

  • Average total loans increased $1.8 billion, or 4 percent, primarily reflecting an increase of $1.5 billion, or 5 percent, in commercial loans. The increase in total loans was driven by increases in almost all lines of business, partially offset by a decrease in Mortgage Banker Finance ($496 million).
  • Average total deposits increased $1.9 billion, or 4 percent, driven by an increase in noninterest-bearing deposits of $1.9 billion, or 9 percent.
  • Net income increased $8 million, or 5 percent, primarily reflecting a reduction in pension expense, largely due to changes in actuarial assumptions. Total revenue was stable despite the impact of the prolonged low-rate environment, and expenses were controlled.

Net Interest Income














(dollar amounts in millions)

2nd Qtr '14


1st Qtr '14


2nd Qtr '13

Net interest income

$

416



$

410



$

414








Net interest margin

2.78

%


2.77

%


2.83

%







Selected average balances:






Total earning assets

$

60,148



$

59,916



$

58,928


Total loans

46,725



45,075



44,893


Total investment securities

9,364



9,282



9,793


Federal Reserve Bank deposits (excess liquidity)

3,801



5,311



3,968














Total deposits

53,384



52,770



51,448


Total noninterest-bearing deposits

24,011



23,236



22,076




 

  • Net interest income increased $6 million to $416 million in the second quarter 2014, compared to the first quarter 2014.
    • Interest on loans increased $9 million, primarily reflecting the benefit from an increase in loan balances ($12 million) and one additional day in the quarter ($4 million), partially offset by decreases in interest collected on nonaccrual loans from an elevated first quarter 2014 amount ($2 million) and accretion of the purchase discount on the acquired loan portfolio ($2 million), as well as lower loan yields ($3 million).
    • Interest on investment securities decreased $2 million, primarily reflecting a decrease in the retrospective adjustment to premium amortization on mortgage-backed investment securities due to the slowing of expected future prepayments, compared to the first quarter 2014.
    • Income from short-term investments declined $1 million, largely as a result of a decrease in excess liquidity.
  • The net interest margin of 2.78 percent increased 1 basis point compared to the first quarter 2014. The increase in net interest margin was primarily due to the impact of a decrease in excess liquidity (+6 basis points), partially offset by decreases in interest collected on nonaccrual loans (-1 basis points) and the accretion of the purchase discount on the acquired loan portfolio (-1 basis point), as well as lower loan yields (-2 basis points) and lower yields on mortgage-backed investment securities (-1 basis point).
  • Average earning assets increased $232 million, to $60.1 billion in the second quarter 2014, compared to the first quarter 2014, primarily reflecting an increase of $1.7 billion in average loans, largely offset by a decrease of $1.5 billion in excess liquidity.

Noninterest Income
Noninterest income increased $12 million to $220 million for the second quarter 2014, compared to $208 million for the first quarter 2014, largely due to an increase in customer-driven fees. The $9 million increase in customer-driven fee income was primarily due to increases of $3 million each in commercial lending fees and foreign exchange income, as well as smaller increases in several other customer-driven fee categories. Noncustomer-driven income increased $3 million, primarily due to increases in income from warrants and bank-owned life insurance.

Noninterest Expenses
Noninterest expenses decreased $2 million to $404 million for the second quarter 2014, compared to $406 million for the first quarter 2014, primarily reflecting a $7 million decrease in salaries and benefits expense as well as smaller decreases in several other noninterest expense categories, partially offset by increases of $3 million each in software expense and operational losses, and $2 million in outside processing fees. The $7 million decrease in salaries and benefits expense primarily reflected seasonal decreases in payroll taxes and share-based compensation expense, partially offset by the full quarter impact of merit increases and one more day in the second quarter.

Credit Quality













(dollar amounts in millions)

2nd Qtr '14


1st Qtr '14


2nd Qtr '13

Net credit-related charge-offs

$

9



$

12



$

17


Net credit-related charge-offs/Average total loans

0.08

%


0.10

%


0.15

%







Provision for credit losses

$

11



$

9



$

13








Nonperforming loans (a)

347



338



471


Nonperforming assets (NPAs) (a)

360



352



500


NPAs/Total loans and foreclosed property

0.75

%


0.76

%


1.10

%







Loans past due 90 days or more and still accruing

$

7



$

10



$

20








Allowance for loan losses

591



594



613


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

42



37



36


Total allowance for credit losses

633



631



649








Allowance for loan losses/Period-end total loans

1.23

%


1.28

%


1.35

%

Allowance for loan losses/Nonperforming loans

170



176



130



(a)

Excludes loans acquired with credit impairment.

(b)

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

 

  • Nonaccrual loans increased $9 million, to $326 million at June 30, 2014, compared to $317 million at March 31, 2014.
  • Criticized loans increased $49 million, to $2.2 billion at June 30, 2014, compared to $2.1 billion at March 31, 2014.
  • During the second quarter 2014, $53 million of borrower relationships over $2 million were transferred to nonaccrual status, an increase of $34 million from the first quarter 2014.

Balance Sheet and Capital Management
Total assets and common shareholders' equity were $65.3 billion and $7.4 billion, respectively, at June 30, 2014, compared to $65.7 billion and $7.3 billion, respectively, at March 31, 2014.

There were approximately 181 million common shares outstanding at June 30, 2014. Comerica increased the quarterly dividend by 1 cent, or 5 percent, to $0.20 per share in the second quarter 2014. Share repurchases of $59 million (1.2 million shares), combined with dividends, returned 63 percent of second quarter 2014 net income to shareholders.

In the second quarter 2014, Comerica issued $350 million of 2.125% senior notes due in May 2019 and announced the intention to call $150 million of subordinated notes, at par, on July 15, 2014. The subordinated notes, originally due in July 2024, had a carrying value of $182 million at June 30, 2014, which will result in a gain in the third quarter 2014 of approximately $32 million.

Comerica's tangible common equity ratio was 10.39 percent at June 30, 2014, an increase of 19 basis points from March 31, 2014. The estimated Tier 1 common capital ratio decreased 9 basis points, to 10.49 percent at June 30, 2014, from March 31, 2014. The estimated common equity Tier 1 ratio under fully phased-in Basel III capital rules and excluding most elements of AOCI was 10.2 percent percent at June 30, 2014.

Full-Year 2014 Outlook
Management expectations for full-year 2014, compared to 2013, assumes a continuation of the current economic and low-rate environment and excludes the approximately $32 million gain on the July 2014 early redemption of debt, which is viewed as non-core.

  • Moderate growth of 4 percent to 6 percent in average loans. Range reflects growth in the first half along with possible outcomes in the second half of 2014 in both seasonal declines in National Dealer Services and Mortgage Banker Finance as well as growth in our remaining business lines, which slowed throughout the second quarter.
  • Net interest income modestly lower, reflecting a decline in purchase accounting accretion, to $25 million to $30 million, and the effect of continued pressure from the low-rate environment, approximately offset by loan growth.
  • Provision for credit losses and net charge-offs stable. Increases to the allowance for credit losses due to loan growth offset by continued strong credit quality.
  • Noninterest income modestly lower, reflecting stable customer-driven fee income and lower noncustomer-driven income.
  • Noninterest expenses lower, reflecting lower litigation-related expenses and a more than 50 percent decrease in pension expense, to about $39 million.
  • 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 June 30, 2014 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses second quarter 2014 results compared to first quarter 2014.

In the second quarter 2014, Comerica enhanced the approach used to determine the standard reserve factors used in estimating the allowance for credit losses, which had the effect of capturing certain elements in the quantitative component of the reserve that had formerly been included in the qualitative assessment. The impact of the change was largely neutral to the total allowance for loan losses at June 30, 2014. However, because standard reserves are allocated to the segments at the loan level, while qualitative reserves are allocated at the portfolio level, the impact of the methodology change on the allowance of each segment reflected the characteristics of the individual loans within each segment's portfolio, causing segment reserves to increase or decrease accordingly.

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



















(dollar amounts in millions)

2nd Qtr '14


1st Qtr '14


2nd Qtr '13

Business Bank

$

195


82

%


$

198


85

%


$

207


85

%

Retail Bank

15


6



9


4



11


5


Wealth Management

28


12



26


11



24


10



238


100

%


233


100

%


242


100

%

Finance

(91)




(92)




(98)



Other (a)

4




(2)




(1)



    Total

$

151




$

139




$

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 '14



1st Qtr '14



2nd Qtr '13


Net interest income (FTE)

$

376



$

371



$

372


Provision for credit losses

32



16



10


Noninterest income

95



87



94


Noninterest expenses

143



146



147


Net income

195



198



207








Net credit-related charge-offs

7



11



11








Selected average balances:






Assets

37,467



35,896



36,014


Loans

36,529



34,927



34,955


Deposits

27,382



27,023



25,987




 

  • Average loans increased $1.6 billion, reflecting increases in almost every line of business, led by Mortgage Banker Finance, National Dealer Services, Energy, and Technology and Life Sciences.
  • Average deposits increased $359 million, primarily reflecting increases in general Middle Market and Corporate Banking.
  • Net interest income increased $5 million, primarily due to the benefit provided by an increase in average loans and one additional day in the quarter, partially offset by lower loan yields and a decrease in purchase accounting accretion.
  • The provision for credit losses increased $16 million, primarily due to the enhancements to the approach utilized to determine the allowance for credit losses discussed above, as well as an increase in loan balances.
  • Noninterest income increased $8 million, primarily due to increases in commercial lending fees, warrant income and small increases in several other categories.
  • Noninterest expenses decreased $3 million, primarily due to a decrease in litigation-related expenses.

 

Retail Bank













(dollar amounts in millions)

2nd Qtr '14



1st Qtr '14



2nd Qtr '13


Net interest income (FTE)

$

149



$

146



$

154


Provision for credit losses

(4)



2



5


Noninterest income

41



41



46


Noninterest expenses

171



171



178


Net income

15



9



11








Net credit-related charge-offs

4



4



4








Selected average balances:






Assets

6,051



6,052



5,962


Loans

5,385



5,381



5,271


Deposits

21,648



21,361



21,241




 

  • Average deposits increased $287 million, primarily reflecting an increase in noninterest-bearing deposits.
  • Net interest income increased $3 million, primarily due to an increase in net funds transfer pricing (FTP) credits, largely due to the increase in average deposits, and the impact of one additional day in the quarter.
  • The provision for credit losses decreased $6 million, primarily reflecting a benefit from the enhancements to the approach utilized to determine the allowance for credit losses discussed above and improvements in credit quality.

 

Wealth Management













(dollar amounts in millions)

2nd Qtr '14



1st Qtr '14



2nd Qtr '13


Net interest income (FTE)

$

46



$

46



$

46


Provision for credit losses

(9)



(8)



(3)


Noninterest income

67



64



65


Noninterest expenses

79



78



77


Net income

28



26



24








Net credit-related (recoveries) charge-offs

(2)



(3)



2








Selected average balances:






Assets

4,996



4,939



4,828


Loans

4,811



4,767



4,667


Deposits

3,827



3,816



3,701





 

  • Average loans increased $44 million, primarily due to an increase in Private Banking.
  • Noninterest income increased $3 million, primarily reflecting small increases in several categories.
  • Noninterest expenses increased $1 million, as an increase in litigation-related expenses was partially offset by a decrease in allocated corporate overhead expenses.

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, 2014 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 '14


1st Qtr '14


2nd Qtr '13

Michigan

$

80


34

%


$

68


29

%


$

77


32

%

California

63


26



63


27



65


27


Texas

36


15



46


20



46


19


Other Markets

59


25



56


24



54


22



238


100

%


233


100

%


242


100

%

Finance & Other (a)

(87)




(94)




(99)



    Total

$

151




$

139




$

143



(a)

Includes items not directly associated with the geographic markets.

 

  • Average loans increased $9 million, $615 million and $602 million in Michigan, California and Texas, respectively. The increases in average loans in California and Texas were broad-based, with increases in nearly all business lines. California was led by an increase in National Dealer Services, while the increase in Texas was led by Energy.
  • Average deposits increased $52 million in Michigan, primarily due to an increase in Retail Banking, partially offset by decreases in general Middle Market and Corporate Banking. In California, average deposits increased $588 million, primarily reflecting increases in general Middle Market and Corporate Banking, partially offset by a decrease in Technology and Life Sciences. The decrease in Texas of $151 million was primarily due to a decrease in general Middle Market.
  • Net interest income increased $4 million in California and $1 million in Texas, and decreased $1 million in Michigan. The increases in California and Texas primarily reflected the benefit from an increase in average loans and one additional day in the quarter, partially offset by a decline in loan yields. Texas was also impacted by a decrease in accretion on the acquired loan portfolio.
  • The provision for credit losses increased $16 million in Texas and$3 million in California, and decreased $12 million in Michigan. The impact of the enhancements to the approach utilized to determine the allowance for credit losses, as previously discussed in the Business Segment section, resulted in increased reserves in California, were largely neutral to Texas and reduced reserves in Michigan. The increase in Texas was primarily due to an increase in loan balances and risk rating downgrades on two specific credits. California's increase was primarily due to an increase in loan balances and increased reserves on two credits. Credit quality in Texas and California continues to be very strong. Improved credit quality and a reduction in loan balances contributed to the decline in the Michigan reserve.
  • Noninterest income increased $7 million and $5 million in Michigan and California, respectively, and was stable in Texas. Warrant income increased in California, and there were small increases in several other noninterest income categories in both markets.
  • Noninterest expenses increased $5 million in California, primarily due to increases in litigation-related expenses and operational losses. In Michigan and Texas, noninterest expenses declined $2 million and $1 million, respectively.

 

Michigan Market













(dollar amounts in millions)

2nd Qtr '14



1st Qtr '14



2nd Qtr '13


Net interest income (FTE)

$

182



$

183



$

187


Provision for credit losses

(9)



3



(4)


Noninterest income

94



87



88


Noninterest expenses

159



161



161


Net income

80



68



77








Net credit-related charge-offs (recoveries)

10





4








Selected average balances:






Assets

13,851



13,819



14,022


Loans

13,482



13,473



13,598


Deposits

20,694



20,642



20,159


 

California Market













(dollar amounts in millions)

2nd Qtr '14



1st Qtr '14



2nd Qtr '13


Net interest income (FTE)

$

176



$

172



$

173


Provision for credit losses

14



11



7


Noninterest income

39



34



36


Noninterest expenses

101



96



100


Net income

63



63



65








Net credit-related charge-offs (recoveries)

5



10



12








Selected average balances:






Assets

15,721



15,133



14,155


Loans

15,439



14,824



13,912


Deposits

15,370



14,782



14,671


 

Texas Market













(dollar amounts in millions)

2nd Qtr '14



1st Qtr '14



2nd Qtr '13


Net interest income (FTE)

$

137



$

136



$

131


Provision for credit losses

22



6



6


Noninterest income

31



31



34


Noninterest expenses

89



90



89


Net income

36



46



46








Net credit-related charge-offs

2



6



(3)








Selected average balances:






Assets

11,661



11,070



10,886


Loans

10,966



10,364



10,179


Deposits

10,724



10,875



10,187


 

Conference Call and Webcast
Comerica will host a conference call to review second quarter 2014 financial results at 7 a.m. CT Tuesday, July 15, 2014. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 61649842). 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; volatility and disruptions in global capital and credit markets; changes in Comerica's credit rating; the interdependence of financial service companies; changes in regulation or oversight; unfavorable developments concerning credit quality; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers; operational difficulties, failure of technology infrastructure or information security incidents; 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; 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; 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 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, 2013. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

 



















CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)




Comerica Incorporated and Subsidiaries










Three Months Ended


Six Months Ended


June 30,

March 31,

June 30,


June 30,

(in millions, except per share data)

2014

2014

2013


2014

2013

PER COMMON SHARE AND COMMON STOCK DATA







Diluted net income

$

0.80


$

0.73


$

0.76



$

1.54


$

1.46


Cash dividends declared

0.20


0.19


0.17



0.39


0.34









Average diluted shares (in thousands)

186,108


186,701


186,998



186,402


187,219


KEY RATIOS







Return on average common shareholders' equity

8.27

%

7.68

%

8.23

%


7.97

%

7.95

%

Return on average assets

0.93


0.86


0.90



0.90


0.87


Tier 1 common capital ratio (a) (b)

10.49


10.58


10.43





Tier 1 risk-based capital ratio (b)

10.49


10.58


10.43





Total risk-based capital ratio (b)

12.50


13.00


13.29





Leverage ratio (b)

10.93


10.85


10.81





Tangible common equity ratio (a)

10.39


10.20


10.04





AVERAGE BALANCES







Commercial loans

$

29,890


$

28,362


$

28,393



$

29,130


$

28,225


Real estate construction loans

1,913


1,827


1,453



1,871


1,384


Commercial mortgage loans

8,749


8,770


9,192



8,759


9,295


Lease financing

850


848


855



849


856


International loans

1,328


1,301


1,262



1,315


1,272


Residential mortgage loans

1,773


1,724


1,602



1,749


1,579


Consumer loans

2,222


2,243


2,136



2,232


2,145


Total loans

46,725


45,075


44,893



45,905


44,756









Earning assets

60,148


59,916


58,928



60,033


58,769


Total assets

64,879


64,708


63,706



64,794


63,733









Noninterest-bearing deposits

24,011


23,236


22,076



23,626


21,793


Interest-bearing deposits

29,373


29,534


29,372



29,453


29,302


Total deposits

53,384


52,770


51,448



53,079


51,095









Common shareholders' equity

7,331


7,229


6,979



7,280


6,966


NET INTEREST INCOME (fully taxable equivalent basis)







Net interest income

$

417


$

411


$

415



$

828


$

831


Net interest margin

2.78

%

2.77

%

2.83

%


2.78

%

2.86

%

CREDIT QUALITY







Total nonperforming assets (c)

$

360


$

352


$

500












Loans past due 90 days or more and still accruing

7


10


20












Net loan charge-offs

9


12


17



$

21


$

41









Allowance for loan losses

591


594


613





Allowance for credit losses on lending-related commitments

42


37


36





Total allowance for credit losses

633


631


649












Allowance for loan losses as a percentage of total loans

1.23

%

1.28

%

1.35

%




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

0.08


0.10


0.15



0.09

%

0.18

%

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

0.75


0.76


1.10





Allowance for loan losses as a percentage of total nonperforming loans

170


176


130





(a)

See Reconciliation of Non-GAAP Financial Measures.

(b)

June 30, 2014 ratios are estimated.

(c)

Excludes loans acquired with credit-impairment.

(d)

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)

2014

2014

2013

2013


(unaudited)

(unaudited)


(unaudited)

ASSETS





Cash and due from banks

$

1,226


$

1,186


$

1,140


$

1,016







Interest-bearing deposits with banks

2,668


4,434


5,311


2,909


Other short-term investments

109


105


112


119







Investment securities available-for-sale

9,534


9,487


9,307


9,631







Commercial loans

30,986


29,774


28,815


29,186


Real estate construction loans

1,939


1,847


1,762


1,479


Commercial mortgage loans

8,747


8,801


8,787


9,007


Lease financing

822


849


845


843


International loans

1,352


1,250


1,327


1,209


Residential mortgage loans

1,775


1,751


1,697


1,611


Consumer loans

2,261


2,217


2,237


2,124


Total loans

47,882


46,489


45,470


45,459


Less allowance for loan losses

(591)


(594)


(598)


(613)


Net loans

47,291


45,895


44,872


44,846







Premises and equipment

562


583


594


604


Accrued income and other assets

3,935


3,991


3,888


3,819


Total assets

$

65,325


$

65,681


$

65,224


$

62,944







LIABILITIES AND SHAREHOLDERS' EQUITY





Noninterest-bearing deposits

$

24,774


$

23,955


$

23,875


$

21,870







Money market and interest-bearing checking deposits

22,555


22,485


22,332


21,677


Savings deposits

1,731


1,742


1,673


1,677


Customer certificates of deposit

4,962


5,099


5,063


5,594


Foreign office time deposits

148


469


349


437


Total interest-bearing deposits

29,396


29,795


29,417


29,385


Total deposits

54,170


53,750


53,292


51,255







Short-term borrowings

176


160


253


131


Accrued expenses and other liabilities

990


954


986


1,049


Medium- and long-term debt

2,620


3,534


3,543


3,601


Total liabilities

57,956


58,398


58,074


56,036







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

2,175


2,182


2,179


2,160


Accumulated other comprehensive loss

(304)


(325)


(391)


(538)


Retained earnings

6,520


6,414


6,318


6,124


Less cost of common stock in treasury - 47,194,492 shares at 6/30/14; 46,492,524 shares at 3/31/14; 45,860,786 shares at 12/31/13 and 42,999,083 shares at 6/30/13

(2,163)


(2,129)


(2,097)


(1,979)


Total shareholders' equity

7,369


7,283


7,150


6,908


Total liabilities and shareholders' equity

$

65,325


$

65,681


$

65,224


$

62,944


 

 
















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)

2014

2013


2014

2013

INTEREST INCOME






Interest and fees on loans

$

385


$

388



$

761


$

778


Interest on investment securities

53


52



108


105


Interest on short-term investments

3


3



7


6


Total interest income

441


443



876


889


INTEREST EXPENSE






Interest on deposits

11


15



22


30


Interest on medium- and long-term debt

14


14



28


29


Total interest expense

25


29



50


59


Net interest income

416


414



826


830


Provision for credit losses

11


13



20


29


Net interest income after provision for credit losses

405


401



806


801


NONINTEREST INCOME






Service charges on deposit accounts

54


53



108


108


Fiduciary income

45


44



89


87


Commercial lending fees

23


22



43


43


Card fees

19


18



38


35


Letter of credit fees

15


16



29


32


Bank-owned life insurance

11


10



20


19


Foreign exchange income

12


9



21


18


Brokerage fees

4


4



9


9


Net securities (losses) gains


(2)



1


(2)


Other noninterest income

37


48



70


86


Total noninterest income

220


222



428


435


NONINTEREST EXPENSES






Salaries and employee benefits expense

240


245



487


496


Net occupancy expense

39


39



79


78


Equipment expense

15


15



29


30


Outside processing fee expense

30


30



58


58


Software expense

25


22



47


44


Litigation-related expense

3


1



6


4


FDIC insurance expense

8


8



16


17


Advertising expense

5


6



11


12


Other noninterest expenses

39


50



77


93


Total noninterest expenses

404


416



810


832


Income before income taxes

221


207



424


404


Provision for income taxes

70


64



134


127


NET INCOME

151


143



290


277


Less income allocated to participating securities

2


2



4


4


Net income attributable to common shares

$

149


$

141



$

286


$

273


Earnings per common share:






Basic

$

0.83


$

0.77



$

1.59


$

1.48


Diluted

0.80


0.76



1.54


1.46








Comprehensive income

172


15



377


152








Cash dividends declared on common stock

36


32



71


64


Cash dividends declared per common share

0.20


0.17



0.39


0.34


 

 






























CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries






















Second

First

Fourth

Third

Second


Second Quarter 2014 Compared To:


Quarter

Quarter

Quarter

Quarter

Quarter


First Quarter 2014


Second Quarter 2013

(in millions, except per share data)

2014

2014

2013

2013

2013


Amount

Percent


Amount

Percent

INTEREST INCOME












Interest and fees on loans

$

385


$

376


$

397


$

381


$

388



$

9


2

%


$

(3)


(1)

%

Interest on investment securities

53


55


55


54


52



(2)


(2)



1


3


Interest on short-term investments

3


4


4


4


3



(1)


(27)





Total interest income

441


435


456


439


443



6


2



(2)



INTEREST EXPENSE












Interest on deposits

11


11


12


13


15






(4)


(23)


Interest on medium- and long-term debt

14


14


14


14


14








Total interest expense

25


25


26


27


29






(4)


(16)


Net interest income

416


410


430


412


414



6


2



2


1


Provision for credit losses

11


9


9


8


13



2


26



(2)


(15)


Net interest income after provision

for credit losses

405


401


421


404


401



4


1



4


1


NONINTEREST INCOME












Service charges on deposit accounts

54


54


53


53


53






1


2


Fiduciary income

45


44


43


41


44



1


2



1


4


Commercial lending fees

23


20


28


28


22



3


16



1


3


Card fees

19


19


19


20


18






1


3


Letter of credit fees

15


14


15


17


16



1


2



(1)


(11)


Bank-owned life insurance

11


9


9


12


10



2


13



1


6


Foreign exchange income

12


9


9


9


9



3


31



3


29


Brokerage fees

4


5


4


4


4



(1)


(10)





Net securities gains (losses)


1



1


(2)



(1)


N/M



2


N/M


Other noninterest income

37


33


39


43


48



4


16



(11)


(19)


Total noninterest income

220


208


219


228


222



12


6



(2)


(1)


NONINTEREST EXPENSES












Salaries and benefits expense

240


247


258


255


245



(7)


(3)



(5)


(2)


Net occupancy expense

39


40


41


41


39



(1)


(3)





Equipment expense

15


14


15


15


15



1


3





Outside processing fee expense

30


28


30


31


30



2


6





Software expense

25


22


24


22


22



3


11



3


12


Litigation-related expense

3


3


52


(4)


1






2


N/M


FDIC insurance expense

8


8


7


9


8








Advertising expense

5


6


3


6


6



(1)




(1)


(9)


Other noninterest expenses

39


38


43


42


50



1


5



(11)


(20)


Total noninterest expenses

404


406


473


417


416



(2)




(12)


(3)


Income before income taxes

221


203


167


215


207



18


9



14


7


Provision for income taxes

70


64


50


68


64



6


10



6


10


NET INCOME

151


139


117


147


143



12


9



8


5


Less income allocated to participating securities

2


2


2


2


2








Net income attributable to common shares

$

149


$

137


$

115


$

145


$

141



$

12


9

%


$

8


6

%

Earnings per common share:












Basic

$

0.83


$

0.76


$

0.64


$

0.80


$

0.77



$

0.07


9

%


$

0.06


8

%

Diluted

0.80


0.73


0.62


0.78


0.76



0.07


10



0.04


5














Comprehensive income

172


205


267


144


15



(33)


(16)



157


N/M














Cash dividends declared on common stock

36


35


31


31


32



1


5



4


15


Cash dividends declared per common share

0.20


0.19


0.17


0.17


0.17



0.01


5



0.03


18


N/M - Not Meaningful

 

 



















ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)

Comerica Incorporated and Subsidiaries












2014


2013

(in millions)

2nd Qtr

1st Qtr


4th Qtr

3rd Qtr

2nd Qtr








Balance at beginning of period

$

594


$

598



$

604


$

613


$

617









Loan charge-offs:







Commercial

19


19



31


20


19


Real estate construction





1


2


Commercial mortgage

5


8



5


9


9


Residential mortgage




1


1


1


Consumer

4


3



4


8


4


Total loan charge-offs

28


30



41


39


35









Recoveries on loans previously charged-off:







Commercial

11


11



17


8


11


Real estate construction

1




3


2


1


Commercial mortgage

3


3



5


7


3


Lease financing


2




1



Residential mortgage

3




1


1


1


Consumer

1


2



2


1


2


Total recoveries

19


18



28


20


18


Net loan charge-offs

9


12



13


19


17


Provision for loan losses

6


8



7


10


13


Balance at end of period

$

591


$

594



$

598


$

604


$

613









Allowance for loan losses as a percentage of total loans

1.23

%

1.28

%


1.32

%

1.37

%

1.35

%








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

0.08


0.10



0.12


0.18


0.15


 

 



















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

Comerica Incorporated and Subsidiaries











2014


2013

(in millions)

2nd Qtr

1st Qtr


4th Qtr

3rd Qtr

2nd Qtr








Balance at beginning of period

$

37


$

36



$

34


$

36


$

36


Add: Provision for credit losses on lending-related commitments

5


1



2


(2)



Balance at end of period

$

42


$

37



$

36


$

34


$

36









Unfunded lending-related commitments sold

$


$



$

1


$

2


$

1


 

 



















NONPERFORMING ASSETS (unaudited)

Comerica Incorporated and Subsidiaries











2014


2013

(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

$

72


$

54



$

81


$

107


$

102


   Real estate construction

19


19



21


25


28


   Commercial mortgage

156


162



156


206


226


   International




4




   Total nonaccrual business loans

247


235



262


338


356


Retail loans:







   Residential mortgage

45


48



53


63


62


   Consumer:







   Home equity

32


32



33


34


28


   Other consumer

2


2



2


2


3


   Total consumer

34


34



35


36


31


   Total nonaccrual retail loans

79


82



88


99


93


Total nonaccrual loans

326


317



350


437


449


Reduced-rate loans

21


21



24


22


22


Total nonperforming loans (a)

347


338



374


459


471


Foreclosed property

13


14



9


19


29


Total nonperforming assets (a)

$

360


$

352



$

383


$

478


$

500









Nonperforming loans as a percentage of total loans

0.73

%

0.73

%


0.82

%

1.04

%

1.04

%

Nonperforming assets as a percentage of total loans

and foreclosed property

0.75


0.76



0.84


1.08


1.10


Allowance for loan losses as a percentage of total

nonperforming loans

170


176



160


131


130


Loans past due 90 days or more and still accruing

$

7


$

10



$

16


$

25


$

20









ANALYSIS OF NONACCRUAL LOANS







Nonaccrual loans at beginning of period

$

317


$

350



$

437


$

449


$

494


Loans transferred to nonaccrual (b)

53


19



23


50


37


Nonaccrual business loan gross charge-offs (c)

(24)


(27)



(33)


(25)


(25)


Nonaccrual business loans sold (d)

(6)


(3)



(14)


(17)


(9)


Payments/Other (e)

(14)


(22)



(63)


(20)


(48)


Nonaccrual loans at end of period

$

326


$

317



$

350


$

437


$

449


(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

$

24


$

27



$

33


$

25


$

25


Performing criticized loans




3


5


5


Consumer and residential mortgage loans

4


3



5


9


5


Total gross loan charge-offs

$

28


$

30



$

41


$

39


$

35


(d) Analysis of loans sold:







Nonaccrual business loans

$

6


$

3



$

14


$

17


$

9


Performing criticized loans

8


6



22


31


40


Total criticized loans sold

$

14


$

9



$

36


$

48


$

49


(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














Six Months Ended


June 30, 2014


June 30, 2013


Average


Average


Average


Average

(dollar amounts in millions)

Balance

Interest

Rate


Balance

Interest

Rate









Commercial loans

$

29,130


$

453


3.13

%


$

28,225


$

462


3.30

%

Real estate construction loans

1,871


32


3.42



1,384


28


4.10


Commercial mortgage loans

8,759


170


3.92



9,295


183


3.97


Lease financing

849


16


3.66



856


14


3.23


International loans

1,315


24


3.66



1,272


23


3.72


Residential mortgage loans

1,749


33


3.84



1,579


33


4.21


Consumer loans

2,232


35


3.19



2,145


36


3.33


Total loans (a)

45,905


763


3.35



44,756


779


3.51










Mortgage-backed securities available-for-sale

8,954


107


2.39



9,532


104


2.18


Other investment securities available-for-sale

369


1


0.44



374


1


0.55


Total investment securities available-for-sale

9,323


108


2.31



9,906


105


2.16










Interest-bearing deposits with banks (b)

4,695


7


0.26



3,990


5


0.26


Other short-term investments

110



0.63



117


1


1.67


Total earning assets

60,033


878


2.94



58,769


890


3.06










Cash and due from banks

917





975




Allowance for loan losses

(602)





(629)




Accrued income and other assets

4,446





4,618




Total assets

$

64,794





$

63,733












Money market and interest-bearing checking deposits

$

22,279


12


0.11



$

21,442


15


0.14


Savings deposits

1,721



0.03



1,640



0.03


Customer certificates of deposit

5,075


9


0.36



5,715


13


0.45


Foreign office time deposits

378


1


0.52



505


2


0.57


Total interest-bearing deposits

29,453


22


0.15



29,302


30


0.20










Short-term borrowings

198



0.03



158



0.09


Medium- and long-term debt

3,270


28


1.64



4,374


29


1.37


Total interest-bearing sources

32,921


50


0.30



33,834


59


0.35










Noninterest-bearing deposits

23,626





21,793




Accrued expenses and other liabilities

967





1,140




Total shareholders' equity

7,280





6,966




Total liabilities and shareholders' equity

$

64,794





$

63,733












Net interest income/rate spread (FTE)


$

828


2.64




$

831


2.71










FTE adjustment


$

2





$

1











Impact of net noninterest-bearing sources of funds



0.14





0.15


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



2.78

%




2.86

%

(a)

Accretion of the purchase discount on the acquired loan portfolio of $22 million and $18 million in the six months ended June 30, 2014 and 2013, respectively, increased the net interest margin by 7 basis points and 6 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 20 basis points and 18 basis points in the six months ended June 30, 2014 and 2013, respectively.

 

 





























ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)

Comerica Incorporated and Subsidiaries






















Three Months Ended


June 30, 2014


March 31, 2014


June 30, 2013


Average


Average


Average


Average


Average


Average

(dollar amounts in millions)

Balance

Interest

Rate


Balance

Interest

Rate


Balance

Interest

Rate













Commercial loans

$

29,890


$

231


3.10

%


$

28,362


$

221


3.17

%


$

28,393


$

233


3.29

%

Real estate construction loans

1,913


16


3.44



1,827


15


3.40



1,453


15


4.04


Commercial mortgage loans

8,749


85


3.88



8,770


86


3.97



9,192


88


3.86


Lease financing

850


7


3.26



848


9


4.07



855


7


3.22


International loans

1,328


12


3.64



1,301


12


3.68



1,262


12


3.81


Residential mortgage loans

1,773


17


3.82



1,724


17


3.86



1,602


16


4.04


Consumer loans

2,222


18


3.22



2,243


17


3.16



2,136


18


3.30


Total loans (a)

46,725


386


3.31



45,075


377


3.39



44,893


389


3.47














Mortgage-backed securities available-for-sale

8,996


53


2.35



8,911


55


2.42



9,415


51


2.22


Other investment securities available-for-sale

368



0.46



371



0.43



378


1


0.52


Total investment securities available-for-sale

9,364


53


2.28



9,282


55


2.34



9,793


52


2.15














Interest-bearing deposits with banks (b)

3,949


3


0.25



5,448


4


0.26



4,125


3


0.26


Other short-term investments

110



0.61



111



0.66



117



1.05


Total earning assets

60,148


442


2.95



59,916


436


2.94



58,928


444


3.02














Cash and due from banks

921





913





972




Allowance for loan losses

(602)





(603)





(625)




Accrued income and other assets

4,412





4,482





4,431




Total assets

$

64,879





$

64,708





$

63,706
















Money market and interest-bearing checking deposits

$

22,296


6


0.10



$

22,261


6


0.11



$

21,544


8


0.13


Savings deposits

1,742



0.03



1,700



0.03



1,658



0.03


Customer certificates of deposit

5,041


5


0.36



5,109


5


0.36



5,685


6


0.43


Foreign office time deposits

294



0.68



464



0.42



485


1


0.60


Total interest-bearing deposits

29,373


11


0.15



29,534


11


0.15



29,372


15


0.19














Short-term borrowings

210



0.03



185



0.03



193



0.07


Medium- and long-term debt

2,999


14


1.77



3,545


14


1.53



4,044


14


1.43


Total interest-bearing sources

32,582


25


0.30



33,264


25


0.30



33,609


29


0.34














Noninterest-bearing deposits

24,011





23,236





22,076




Accrued expenses and other liabilities

955





979





1,042




Total shareholders' equity

7,331





7,229





6,979




Total liabilities and shareholders' equity

$

64,879





$

64,708





$

63,706
















Net interest income/rate spread (FTE)


$

417


2.65




$

411


2.64




$

415


2.68














FTE adjustment


$

1





$

1





$

1















Impact of net noninterest-bearing sources of funds



0.13





0.13





0.15


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



2.78

%




2.77

%




2.83

%

(a)

Accretion of the purchase discount on the acquired loan portfolio of $10 million, $12 million and $7 million in the second and first quarters of 2014 and the second quarter of 2013, respectively, increased the net interest margin by 7 basis points, 8 basis points and 5 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 17 basis points, 24 basis points and 18 basis points in the second and first quarters of 2014 and the second quarter of 2013, 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)

2014

2014

2013

2013

2013







Commercial loans:






Floor plan

$

3,576


$

3,437


$

3,504


$

2,869


$

3,241


Other

27,410


26,337


25,311


25,028


25,945


Total commercial loans

30,986


29,774


28,815


27,897


29,186


Real estate construction loans

1,939


1,847


1,762


1,552


1,479


Commercial mortgage loans

8,747


8,801


8,787


8,785


9,007


Lease financing

822


849


845


829


843


International loans

1,352


1,250


1,327


1,286


1,209


Residential mortgage loans

1,775


1,751


1,697


1,650


1,611


Consumer loans:






Home equity

1,574


1,533


1,517


1,501


1,474


Other consumer

687


684


720


651


650


Total consumer loans

2,261


2,217


2,237


2,152


2,124


Total loans

$

47,882


$

46,489


$

45,470


$

44,151


$

45,459








Goodwill

$

635


$

635


$

635


$

635


$

635


Core deposit intangible

14


15


16


17


18


Loan servicing rights

1


1


1


1


2








Tier 1 common capital ratio (a) (b)

10.49

%

10.58

%

10.64

%

10.72

%

10.43

%

Tier 1 risk-based capital ratio (a)

10.49


10.58


10.64


10.72


10.43


Total risk-based capital ratio (a)

12.50


13.00


13.10


13.42


13.29


Leverage ratio (a)

10.93


10.85


10.77


10.88


10.81


Tangible common equity ratio (b)

10.39


10.20


10.07


9.87


10.04








Common shareholders' equity per share of common stock

$

40.72


$

40.09


$

39.22


$

37.93


$

37.31


Tangible common equity per share of common stock (b)

37.12


36.50


35.64


34.37


33.77


Market value per share for the quarter:






High

52.60


53.50


48.69


43.49


40.44


Low

45.34


43.96


38.64


38.56


33.55


Close

50.16


51.80


47.54


39.31


39.83








Quarterly ratios:






Return on average common shareholders' equity

8.27

%

7.68

%

6.66

%

8.50

%

8.23

%

Return on average assets

0.93


0.86


0.72


0.92


0.90


Efficiency ratio (c)

63.35


65.79


72.81


65.18


65.03








Number of banking centers

481


483


483


484


484








Number of employees - full time equivalent

8,901


8,907


8,948


8,918


8,929


(a)

June 30, 2014 ratios are estimated.

(b)

See Reconciliation of Non-GAAP Financial Measures.

(c)

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

 

 












PARENT COMPANY ONLY BALANCE SHEETS (unaudited)

Comerica Incorporated









June 30,

December 31,

June 30,

(in millions, except share data)

2014

2013

2013





ASSETS




Cash and due from subsidiary bank

$

5


$

31


$

3


Short-term investments with subsidiary bank

796


482


473


Other short-term investments

96


96


92


Investment in subsidiaries, principally banks

7,369


7,171


6,976


Premises and equipment

2


4


4


Other assets

219


139


137


  Total assets

$

8,487


$

7,923


$

7,685






LIABILITIES AND SHAREHOLDERS' EQUITY




Medium- and long-term debt

$

960


$

617


$

622


Other liabilities

158


156


155


  Total liabilities

1,118


773


777






Common stock - $5 par value:




Authorized - 325,000,000 shares




Issued - 228,164,824 shares

1,141


1,141


1,141


Capital surplus

2,175


2,179


2,160


Accumulated other comprehensive loss

(304)


(391)


(538)


Retained earnings

6,520


6,318


6,124


Less cost of common stock in treasury - 47,194,492 shares at 6/30/14; 45,860,786 shares at 12/31/13 and 42,999,083 shares at 6/30/13

(2,163)


(2,097)


(1,979)


  Total shareholders' equity

7,369


7,150


6,908


  Total liabilities and shareholders' equity

$

8,487


$

7,923


$

7,685


 

 























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, 2012

188.3


$

1,141


$

2,162


$

(413)


$

5,928


$

(1,879)


$

6,939


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

1.0



(19)



(17)


45


9


Share-based compensation



18





18


Other



(1)




1



BALANCE AT JUNE 30, 2013

185.2


$

1,141


$

2,160


$

(538)


$

6,124


$

(1,979)


$

6,908










BALANCE AT DECEMBER 31, 2013

182.3


$

1,141


$

2,179


$

(391)


$

6,318


$

(2,097)


$

7,150


Net income





290



290


Other comprehensive income, net of tax




87




87


Cash dividends declared on common stock ($0.39 per share)





(71)



(71)


Purchase of common stock

(3.0)






(141)


(141)


Net issuance of common stock under employee stock plans

1.6



(25)



(17)


74


32


Share-based compensation



22





22


Other



(1)




1



BALANCE AT JUNE 30, 2014

180.9


$

1,141


$

2,175


$

(304)


$

6,520


$

(2,163)


$

7,369


 

 


























BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)

Comerica Incorporated and Subsidiaries
































(dollar amounts in millions)

Business


Retail


Wealth







Three Months Ended June 30, 2014

Bank


Bank


Management


Finance


Other


Total

Earnings summary:












Net interest income (expense) (FTE)

$

376



$

149



$

46



$

(160)



$

6



$

417


Provision for credit losses

32



(4)



(9)





(8)



11


Noninterest income

95



41



67



15



2



220


Noninterest expenses

143



171



79



2



9



404


Provision (benefit) for income taxes (FTE)

101



8



15



(56)



3



71


Net income (loss)

$

195



$

15



$

28



$

(91)



$

4



$

151


Net credit-related charge-offs (recoveries)

$

7



$

4



$

(2)



$



$



$

9














Selected average balances:












Assets

$

37,467



$

6,051



$

4,996



$

11,056



$

5,309



$

64,879


Loans

36,529



5,385



4,811







46,725


Deposits

27,382



21,648



3,827



258



269



53,384














Statistical data:












Return on average assets (a)

2.09

%


0.27

%


2.24

%


N/M



N/M



0.93

%

Efficiency ratio (b)

30.43



89.99



69.66



N/M



N/M



63.35















Business


Retail


Wealth







Three Months Ended March 31, 2014

Bank


Bank


Management


Finance


Other


Total

Earnings summary:












Net interest income (expense) (FTE)

$

371



$

146



$

46



$

(158)



$

6



$

411


Provision for credit losses

16



2



(8)





(1)



9


Noninterest income

87



41



64



14



2



208


Noninterest expenses

146



171



78



3



8



406


Provision (benefit) for income taxes (FTE)

98



5



14



(55)



3



65


Net income (loss)

$

198



$

9



$

26



$

(92)



$

(2)



$

139


Net credit-related charge-offs

$

11



$

4



$

(3)



$



$



$

12














Selected average balances:












Assets

$

35,896



$

6,052



$

4,939



$

11,129



$

6,692



$

64,708


Loans

34,927



5,381



4,767







45,075


Deposits

27,023



21,361



3,816



353



217



52,770














Statistical data:












Return on average assets (a)

2.20

%


0.16

%


2.15

%


N/M



N/M



0.86

%

Efficiency ratio (b)

31.96



91.44



71.31



N/M



N/M



65.79















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

94



46



65



15



2



222


Noninterest expenses

147



178



77



3



11



416


Provision (benefit) for income taxes (FTE)

102



6



13



(55)



(1)



65


Net income (loss)

$

207



$

11



$

24



$

(98)



$

(1)



$

143


Net credit-related charge-offs

$

11



$

4



$

2



$



$



$

17














Selected average balances:












Assets

$

36,014



$

5,962



$

4,828



$

11,514



$

5,388



$

63,706


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)

31.48



87.98



69.86



N/M



N/M



65.03


(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, 2014

Michigan


California


Texas


Markets


& Other


Total

Earnings summary:












Net interest income (expense) (FTE)

$

182



$

176



$

137



$

76



$

(154)



$

417


Provision for credit losses

(9)



14



22



(8)



(8)



11


Noninterest income

94



39



31



39



17



220


Noninterest expenses

159



101



89



44



11



404


Provision (benefit) for income taxes (FTE)

46



37



21



20



(53)



71


Net income (loss)

$

80



$

63



$

36



$

59



$

(87)



$

151


Net credit-related charge-offs (recoveries)

$

10



$

5



$

2



$

(8)



$



$

9














Selected average balances:












Assets

$

13,851



$

15,721



$

11,661



$

7,281



$

16,365



$

64,879


Loans

13,482



15,439



10,966



6,838





46,725


Deposits

20,694



15,370



10,724



6,069



527



53,384














Statistical data:












Return on average assets (a)

1.48

%


1.54

%


1.23

%


3.23

%


NM



0.93

%

Efficiency ratio (b)

57.70



46.78



52.61



38.94



NM



63.35





















Other


Finance



Three Months Ended March 31, 2014

Michigan


California


Texas


Markets


& Other


Total

Earnings summary:












Net interest income (expense) (FTE)

$

183



$

172



$

136



$

72



$

(152)



$

411


Provision for credit losses

3



11



6



(10)



(1)



9


Noninterest income

87



34



31



40



16



208


Noninterest expenses

161



96



90



48



11



406


Provision (benefit) for income taxes (FTE)

38



36



25



18



(52)



65


Net income (loss)

$

68



$

63



$

46



$

56



$

(94)



$

139


Net credit-related charge-offs (recoveries)

$



$

10



$

6



$

(4)



$



$

12














Selected average balances:












Assets

$

13,819



$

15,133



$

11,070



$

6,865



$

17,821



$

64,708


Loans

13,473



14,824



10,364



6,414





45,075


Deposits

20,642



14,782



10,875



5,901



570



52,770














Statistical data:












Return on average assets (a)

1.26

%


1.59

%


1.50

%


3.28

%


N/M



0.86

%

Efficiency ratio (b)

59.71



46.72



53.83



43.39



N/M



65.79





















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



47



17



222


Noninterest expenses

161



100



89



52



14



416


Provision (benefit) for income taxes (FTE)

41



37



24



19



(56)



65


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



$

7,741



$

16,902



$

63,706


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



41.16



N/M



65.03


(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)

2014

2014

2013

2013

2013







Tier 1 Common Capital Ratio:






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

$

7,027


$

6,962


$

6,895


$

6,862


$

6,800








Risk-weighted assets (a) (b)

67,009


65,788


64,825


64,027


65,220








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

10.49

%

10.58

%

10.64

%

10.72

%

10.43

%







Basel III Common Equity Tier 1 Capital Ratio:






Tier 1 common capital (b)

$

7,027


$

6,962


$

6,895


$

6,862


$

6,800


Basel III adjustments (c)

(2)


(2)


(6)


(4)



Basel III common equity Tier 1 capital (c)

7,025


6,960


6,889


6,858


6,800








Risk-weighted assets (a) (b)

$

67,009


$

65,788


$

64,825


$

64,027


$

65,220


Basel III adjustments (c)

1,599


1,590


1,754


1,726


2,091


Basel III risk-weighted assets (c)

$

68,608


$

67,378


$

66,579


$

65,753


$

67,311








Tier 1 common capital ratio (b)

10.5

%

10.6

%

10.6

%

10.7

%

10.4

%

Basel III common equity Tier 1 capital ratio (c)

10.2


10.3


10.3


10.4


10.1








Tangible Common Equity Ratio:






Common shareholders' equity

$

7,369


$

7,283


$

7,150


$

6,966


$

6,908


Less:






Goodwill

635


635


635


635


635


Other intangible assets

15


16


17


18


20


Tangible common equity

$

6,719


$

6,632


$

6,498


$

6,313


$

6,253








Total assets

$

65,325


$

65,681


$

65,224


$

64,667


$

62,944


Less:






Goodwill

635


635


635


635


635


Other intangible assets

15


16


17


18


20


Tangible assets

$

64,675


$

65,030


$

64,572


$

64,014


$

62,289








Common equity ratio

11.28

%

11.09

%

10.97

%

10.78

%

10.98

%

Tangible common equity ratio

10.39


10.20


10.07


9.87


10.04








Tangible Common Equity per Share of Common Stock:






Common shareholders' equity

$

7,369


$

7,283


$

7,150


$

6,966


$

6,908


Tangible common equity

6,719


6,632


6,498


6,313


6,253








Shares of common stock outstanding (in millions)

181


182


182


184


185








Common shareholders' equity per share of common stock

$

40.72


$

40.09


$

39.22


$

37.93


$

37.31


Tangible common equity per share of common stock

37.12


36.50


35.64


34.37


33.77


(a)

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

(b)

June 30, 2014 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, as fully phased-in, and excluding most elements of AOCI.

 

The Tier 1 common capital ratio removes preferred stock and qualifying trust preferred securities from Tier 1 capital as defined by and calculated in conformity with bank regulations. The Basel III common equity Tier 1 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, as fully phased-in. 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.

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SOURCE Comerica Incorporated



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