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

Jul 15, 2014, 06:40 ET from Comerica Incorporated

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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