Comerica Reports Third Quarter 2012 Net Income Of $117 Million

Customer Relationship Focus Supports Loan and Deposit Growth

Average Total Loan Growth Continues - Driven by a $717 Million, 3 Percent Increase in Commercial Loans

Average Deposits Increase to Record Level of $50 Billion

Strong Capital Supports Shareholder Return of $119 Million

Oct 17, 2012, 06:40 ET from Comerica Incorporated

DALLAS, Oct. 17, 2012 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported third quarter 2012 net income of $117 million, compared to $144 million for the second quarter 2012. Earnings per fully diluted share was 61 cents compared to 73 cents for the second quarter 2012. Third quarter 2012 earnings per fully diluted share included restructuring expenses of 8 cents associated with the acquisition of Sterling Bancshares, Inc. (Sterling) compared to 2 cents for the second quarter 2012.

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(dollar amounts in millions, except per share data)

3rd Qtr '12

2nd Qtr '12

3rd Qtr '11

Net interest income (a)

$

427

$

435

$

423

Provision for credit losses

22

19

35

Noninterest income

197

211

201

Noninterest expenses (b)

449

433

463

Provision for income taxes

36

50

28

Net income

117

144

98

Net income attributable to common shares

116

142

97

Diluted income per common share

0.61

0.73

0.51

Average diluted shares (in millions)

191

194

192

Tier 1 common capital ratio (d)

10.32

%

(c)

10.38

%

10.57

%

Tangible common equity ratio (d)

10.25

10.27

10.43

(a)

Included accretion of the purchase discount on the acquired Sterling loan portfolio of $15 million ($9 million, after tax), $18 million ($11 million, after tax) and $27 million ($17 million, after tax) in the third and second quarter 2012 and the third quarter 2011, respectively.

(b)

Included restructuring expenses of $25 million ($16 million, after tax), $8 million ($5 million, after tax) and $33 million ($21 million, after tax) in the third and second quarter 2012 and the third quarter 2011, respectively, associated with the acquisition of Sterling.

(c)

September 30, 2012 ratio is estimated.

(d)

See Reconciliation of Non-GAAP Financial Measures.

"Our customer relationship focus supported loan and deposit growth in the third quarter, despite a slow growing national economy," said Ralph W. Babb Jr., chairman and chief executive officer. "Average loans were up $369 million, or 1 percent, compared to the second quarter, primarily reflecting an increase of $717 million, or 3 percent, in commercial loans. This was the ninth consecutive quarter of average commercial loan growth, resulting in more than a 20 percent year-over-year increase, including our acquisition of Sterling in July 2011. The increase in average commercial loans in the third quarter was primarily driven by increases in Mortgage Banker Finance, Technology and Life Sciences, and Energy.

"Net interest income declined slightly, reflecting the expected continued shift in loan portfolio mix and decline in accretion, as well as a decline in nonaccrual interest received and a leasing residual value adjustment. Lower loan and securities portfolio yields were partially offset by increased loan volume.''

"Strong noninterest-bearing deposit growth continued in the third quarter. We had record average deposits of $50 billion in the third quarter 2012, with an increase of $1 billion, primarily driven by the increase in noninterest-bearing deposits.

"Our capital position remained a source of strength. We repurchased 2.9 million shares in the third quarter under our share repurchase program. Combined with our dividend, we returned $119 million to shareholders in the third quarter."

Third Quarter 2012 Compared to Second Quarter 2012

  • Average total loans increased $369 million, or 1 percent, primarily reflecting an increase of $717 million, or 3 percent, in commercial loans, partially offset by a decrease of $344 million, or 3 percent, in commercial real estate loans (commercial mortgage and real estate construction loans). The increase in commercial loans was primarily driven by increases in Mortgage Banker Finance, Technology and Life Sciences and Energy.
  • Average total deposits increased $1.2 billion, to $49.9 billion, primarily reflecting an increase of $1.3 billion, or 7 percent, in noninterest-bearing deposits.
  • Strong credit quality continued in the third quarter 2012. Nonaccrual loans decreased $54 million, to $665 million at September 30, 2012. Net credit-related charge-offs decreased $2 million to $43 million, or 0.39 percent of average loans, in the third quarter 2012. The provision for credit losses was $22 million in the third quarter 2012 compared to $19 million in the second quarter 2012.
  • Net interest income was $427 million in the third quarter 2012 compared to $435 million in the second quarter 2012. The $8 million decrease in net interest income was primarily due to a decline in nonaccrual interest received($4 million) and a leasing residual value adjustment ($2 million), as well as the expected continued shift in the mix of the loan portfolio ($6 million), a decrease in the accretion of the purchase discount on the acquired Sterling loan portfolio ($3 million) and lower reinvestment yields on mortgage-backed investment securities ($2 million), partially offset by lower funding costs ($2 million), an increase in loan volumes ($3 million) and one more day in the third quarter ($4 million).
  • Noninterest income was $197 million in the third quarter 2012 compared to $211 million for the second quarter 2012. The $14 million decrease was primarily due to decreases in certain non-customer driven income categories. Net securities gains of $6 million and a $5 million annual incentive bonus received in the second quarter 2012 were not repeated in the third quarter, and net income from principal investing and warrants declined $3 million.
  • Noninterest expenses were $449 million in the third quarter 2012, compared to $433 million in the second quarter 2012. The $16 million increase primarily reflected a $17 million increase in restructuring expenses related to the Sterling acquisition.
  • Comerica repurchased 2.9 million shares of common stock under the share repurchase program in the third quarter 2012. Combined with the dividend, and in accordance with the capital plan approved earlier this year, $119 million, or 101 percent of net income, was returned to shareholders in the third quarter (89 percent, excluding the third quarter restructuring charge).

Net Interest Income

(dollar amounts in millions)

3rd Qtr '12

2nd Qtr '12

3rd Qtr '11

Net interest income

$

427

$

435

$

423

Net interest margin

2.96

%

3.10

%

3.18

%

Selected average balances (a):

Total earning assets

$

57,801

$

56,653

$

53,243

Total loans

43,597

43,228

40,098

Total investment securities

9,791

9,728

8,158

Federal Reserve Bank deposits (excess liquidity)

4,160

3,463

4,800

Total deposits

49,857

48,679

45,098

Total noninterest-bearing deposits

21,469

20,128

17,511

a)

Average balances in 3rd quarter 2011 included Sterling balances from July 28 through September 30, 2011.

  • Net interest income of $427 million in the third quarter 2012 decreased $8 million compared to the second quarter 2012.
    • Second quarter 2012 included an unusually high amount of interest received on nonaccrual loans, which declined by $4 million in the third quarter. In addition, third quarter 2012 included a $2 million negative residual value adjustment to assets in the leasing portfolio.
    • The continued shift in the loan portfolio mix reduced net interest income $6 million, primarily due to the decrease in higher-yielding commercial real estate loans, the increase in lower-yielding commercial loans, the maturity of higher-yielding fixed-rate loans and positive credit quality migration throughout the loan portfolio.
    • Accretion of the purchase discount on the acquired Sterling loan portfolio decreased $3 million, to $15 million in the third quarter 2012, compared to $18 million in the second quarter 2012. For the fourth quarter of 2012, $7 million to $9 million of accretion is expected to be recognized.
    • Interest earned on investment securities available-for-sale decreased $2 million, as a result of lower reinvestment yields on mortgage-backed investment securities.
    • An increase in loan volumes ($3 million), one more day in the third quarter ($4 million) and lower funding costs ($2 million) partially offset the items noted above.
  • Average earning assets increased $1.1 billion in the third quarter 2012, compared to the second quarter 2012, primarily reflecting a $697 million increase in excess liquidity and a $369 million increase in average loans.
  • Average deposits increased $1.2 billion in the third quarter 2012, compared to the second quarter 2012, primarily due to a $1.3 billion increase in average noninterest-bearing deposits, partially offset by a decrease in customer certificates of deposit. The rate paid on total average interest-bearing deposits decreased 1 basis point, to 24 basis points.
  • Net interest margin of 2.96 percent decreased 14 basis points compared to the second quarter 2012. In addition to the decrease from the unusually high amount of nonaccrual interest received in the second quarter (3 basis points) and the negative leasing residual value adjustment in the third quarter (2 basis points), net interest margin was negatively impacted by lower accretion on the acquired Sterling loan portfolio (2 basis points), continued shift in mix in the loan portfolio (3 basis points), lower reinvestment yields on mortgage-backed securities (2 basis points) and the increase in excess liquidity (3 basis points). Lower funding costs partially offset the decline (1 basis point).

Noninterest Income

Noninterest income totaled $197 million for the third quarter 2012 compared to $211 million for the second quarter 2012. The $14 million decrease was primarily due to decreases in certain non-customer driven income categories. Net securities gains of $6 million and a $5 million annual incentive bonus received from Comerica's third-party credit card provider in the second quarter 2012 were not repeated in the third quarter, and net income from principal investing and warrants declined $3 million. Additionally, customer derivative income decreased $3 million in the third quarter 2012. These declines were partially offset by a $5 million increase in deferred compensation asset returns. The increase in deferred compensation asset returns is offset by an increase in deferred compensation expense in noninterest expenses.

Noninterest Expenses

Noninterest expenses totaled $449 million in the third quarter 2012 compared to $433 million in the second quarter 2012. The $16 million increase was primarily due to increases of $17 million in restructuring expenses and $3 million in salaries expense, partially offset by a decrease of $5 million in legal expenses. Additionally, noninterest expenses were reduced by $6 million in the third quarter 2012 and $3 million in the second quarter due to gains on sales of assets. Restructuring charges related to the Sterling acquisition are substantially complete. The increase in salaries expense was primarily due to a $5 million increase in deferred compensation expense, partially offset by a $3 million decrease in executive incentive compensation.

Credit Quality

"Credit quality continued to be strong," said Babb. "With 39 basis points of net charge-offs and watch list loans at 8.3 percent of the total loan portfolio, we are well within our historical normal range."

(dollar amounts in millions)

3rd Qtr '12

2nd Qtr '12

3rd Qtr '11

Net credit-related charge-offs

$

43

$

45

$

77

Net credit-related charge-offs/Average total loans

0.39

%

0.42

%

0.77

%

Provision for credit losses

$

22

$

19

$

35

Nonperforming loans (a)

692

747

958

Nonperforming assets (NPAs) (a)

755

814

1,045

NPAs/Total loans and foreclosed property

1.71

%

1.85

%

2.53

%

Loans past due 90 days or more and still accruing

$

36

$

43

$

81

Allowance for loan losses

647

667

767

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

35

36

27

Total allowance for credit losses

682

703

794

Allowance for loan losses/Total loans

1.46

%

1.52

%

1.86

%

Allowance for loan losses/Nonperforming loans

94

89

80

(a)

Excludes loans acquired with credit impairment.

(b)

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

  • Internal watch list loans continued the downward trend, declining $182 million in the third quarter 2012, to $3.7 billion at September 30, 2012. Nonperforming assets decreased $59 million to $755 million at September 30, 2012.
  • During the third quarter 2012, $35 million of borrower relationships over $2 million were transferred to nonaccrual status, a decrease of $12 million from the second quarter 2012.

Balance Sheet and Capital Management

Total assets and common shareholders' equity were $63.3 billion and $7.1 billion, respectively, at September 30, 2012, compared to $62.7 billion and 7.0 billion, respectively, at June 30, 2012. There were approximately 191 million common shares outstanding at September 30, 2012. Comerica repurchased $90 million of common stock (2.9 million shares) under the share repurchase program during the third quarter 2012. Combined with the dividend of $0.15 per share in the third quarter 2012, and in accordance with the capital plan approved earlier this year, share repurchases and dividends returned 101 percent of third quarter 2012 net income to shareholders (89 percent, excluding the third quarter restructuring charge).

Comerica's tangible common equity ratio was 10.25% at September 30, 2012, a decrease of 2 basis points from June 30, 2012. The estimated Tier 1 common capital ratio decreased 6 basis points, to 10.32% at September 30, 2012, from June 30, 2012.

Full-Year 2012 Outlook Compared to Full-Year 2011

For 2012, management expects the following, assuming a continuation of the current economic environment:

  • Average loans increasing 7 percent to 8 percent.
  • Net interest income increasing 4 percent to 5 percent.
  • Net credit-related charge-offs and provision for credit losses declining.
  • Noninterest income increasing 1 percent to 2 percent.
  • Noninterest expenses increasing or decreasing 1 percent.
  • Effective tax rate of approximately 26 percent.

Business Segments

Comerica's operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank and Wealth Management. The Finance Division is also reported as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at September 30, 2012 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses third quarter 2012 results compared to second quarter 2012.

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

(dollar amounts in millions)

3rd Qtr '12

2nd Qtr '12

3rd Qtr '11

Business Bank

$

211

88

%

$

210

84

%

$

179

86

%

Retail Bank

10

4

19

8

19

9

Wealth Management

18

8

20

8

11

5

239

100

%

249

100

%

209

100

%

Finance

(103)

(95)

(91)

Other (a)

(19)

(10)

(20)

Total

$

117

$

144

$

98

(a)

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

Business Bank

(dollar amounts in millions)

3rd Qtr '12

2nd Qtr '12

3rd Qtr '11

Net interest income (FTE)

$

386

$

385

$

363

Provision for credit losses

15

12

18

Noninterest income

76

83

77

Noninterest expenses

144

151

164

Net income

211

210

179

Net credit-related charge-offs

27

26

40

Selected average balances:

Assets

34,863

34,376

30,608

Loans

33,856

33,449

29,957

Deposits

25,142

24,145

21,759

  • Average loans increased $407 million, primarily due to increases in Mortgage Banker Finance and Middle Market, partially offset by a decrease in Commercial Real Estate. The increase in Middle Market primarily reflected increases in Energy and Technology and Life Sciences.
  • Average deposits increased $997 million. The increase was broad-based, reflecting increases in Middle Market, Corporate, Commercial Real Estate and Mortgage Banker Finance.
  • Net interest income increased $1 million, primarily due to higher loan volumes, increased net funds transfer pricing (FTP) credits, as a result of higher deposit balances, and one more day in the third quarter, partially offset by decreases in loan yields and accretion on the acquired Sterling loan portfolio.
  • The provision for credit losses increased $3 million, primarily reflecting increases in Middle Market and Mortgage Banker Finance, partially offset by a decrease in Commercial Real Estate. The increase in Middle Market primarily reflected increases in Technology and Life Sciences, National Dealer Services and Energy, partially offset by a decrease in general Middle Market.
  • Noninterest income decreased $7 million, primarily due to decreases in commercial lending fees and warrant income.
  • Noninterest expenses decreased $7 million, primarily due to decreases in net allocated corporate overhead expense and processing charges, and a third quarter gain on sale of assets; partially offset by an increase in legal expenses.

Retail Bank

(dollar amounts in millions)

3rd Qtr '12

2nd Qtr '12

3rd Qtr '11

Net interest income (FTE)

$

161

$

161

$

173

Provision for credit losses

6

3

16

Noninterest income

41

47

47

Noninterest expenses

181

177

175

Net income (loss)

10

19

19

Net credit-related charge-offs

13

9

28

Selected average balances:

Assets

5,964

5,946

5,985

Loans

5,265

5,250

5,483

Deposits

20,682

20,525

19,792

  • Average deposits increased $157 million, primarily due to an increase in Small Business.|
  • The provision for credit losses increased $3 million, primarily due to an increase in Small Business.
  • Noninterest income decreased $6 million, primarily due to a $5 million annual incentive bonus received in the second quarter 2012 from Comerica's third-party credit card provider.
  • Noninterest expenses increased $4 million, primarily due to small increases in several noninterest expense categories.

Wealth Management

(dollar amounts in millions)

3rd Qtr '12

2nd Qtr '12

3rd Qtr '11

Net interest income (FTE)

$

47

$

46

$

45

Provision for credit losses

3

2

7

Noninterest income

62

66

56

Noninterest expenses

78

79

77

Net income

18

20

11

Net credit-related charge-offs

3

10

9

Selected average balances:

Assets

4,566

4,604

4,674

Loans

4,476

4,529

4,658

Deposits

3,667

3,640

3,198

  • Average loans decreased $53 million, primarily due to a decrease in Private Banking. |
  • Average deposits increased $27 million, primarily due to an increase in Private Banking.
  • Noninterest income decreased $4 million, primarily due a decrease in gains on the sale of auction-rate securities.

Geographic Market Segments

Comerica also provides market segment results for four primary geographic markets: Midwest, Western, Texas and Florida. In addition to the four primary geographic markets, Other Markets and International are also reported as market segments. The financial results below are based on methodologies in effect at September 30, 2012 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses third quarter 2012 results compared to second quarter 2012.

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

(dollar amounts in millions)

3rd Qtr '12

2nd Qtr '12

3rd Qtr '11

Midwest

$

71

30

%

$

75

31

%

$

60

28

%

Western

70

29

69

27

50

23

Texas

45

19

51

20

64

31

Florida

(1)

(5)

(2)

1

1

Other Markets

41

17

47

19

22

11

International

13

5

12

5

12

6

239

100

%

249

100

%

209

100

%

Finance & Other (a)

(122)

(105)

(111)

Total

$

117

$

144

$

98

(a)

Includes items not directly associated with the geographic markets.

Midwest Market

(dollar amounts in millions)

3rd Qtr '12

2nd Qtr '12

3rd Qtr '11

Net interest income (FTE)

$

194

$

196

$

199

Provision for credit losses

2

1

20

Noninterest income

95

96

96

Noninterest expenses

175

177

183

Net income

71

75

60

Net credit-related charge-offs

12

10

33

Selected average balances:

Assets

13,784

14,028

14,118

Loans

13,468

13,766

13,873

Deposits

19,628

19,227

18,510

  • Average loans decreased $298 million, primarily due to decreases in Middle Market, Commercial Real Estate, Corporate, and Private Banking.
  • Average deposits increased $401 million, primarily due to increases in Corporate, Middle Market and Small Business, partially offset by a decrease in Personal Banking.
  • Net interest income decreased $2 million, primarily due to decreases in loan volumes and yields, partially offset by one more day in the third quarter 2012 and an increase in net FTP credits, primarily as a result of higher deposit balances and lower loan balances.

Western Market

(dollar amounts in millions)

3rd Qtr '12

2nd Qtr '12

3rd Qtr '11

Net interest income (FTE)

$

181

$

177

$

166

Provision for credit losses

1

13

Noninterest income

34

37

32

Noninterest expenses

105

104

106

Net income

70

69

50

Net credit-related charge-offs

10

12

32

Selected average balances:

Assets

13,442

13,170

12,110

Loans

13,163

12,920

11,889

Deposits

15,192

14,371

12,975

  • Average loans increased $243 million, primarily due to increases in Middle Market and Corporate. The increase in Middle Market primarily reflected increases in Technology and Life Sciences and National Dealer Services.
  • Average deposits increased $821 million, primarily due to increases in Middle Market, Commercial Real Estate and Small Business. The increase in Middle Market was broad-based.
  • Net interest income increased $4 million, primarily due to an increase in loan volumes, one more day in the third quarter 2012, and an increase in net FTP credits as a result of higher deposit balances.
  • Noninterest income decreased $3 million, primarily due to a decrease in warrant income.

Texas Market

(dollar amounts in millions)

3rd Qtr '12

2nd Qtr '12

3rd Qtr '11

Net interest income (FTE)

$

139

$

143

$

143

Provision for credit losses

10

7

(8)

Noninterest income

30

31

29

Noninterest expenses

89

88

81

Net income

45

51

64

Net credit-related charge-offs

7

4

2

Selected average balances:

Assets

10,327

10,270

8,510

Loans

9,585

9,506

8,145

Deposits

9,941

10,185

8,865

  • Average loans increased $79 million, primarily due to an increase in Middle Market, partially offset by a decrease in Commercial Real Estate. The increase in Middle Market was primarily due to an increase in Energy.
  • Average deposits decreased $244 million, primarily reflecting decreases in Middle Market, Small Business and Private Banking. The decrease in Middle Market primarily reflected decreases in Technology and Life Sciences and Energy.
  • Net interest income decreased $4 million, primarily due to a decrease in accretion on the acquired Sterling loan portfolio and lower loan yields, partially offset by an increase in loan volumes and one more day in the third quarter 2012.
  • The provision for credit losses increased $3 million, primarily due to an increase in Private Banking.

Florida Market

(dollar amounts in millions)

3rd Qtr '12

2nd Qtr '12

3rd Qtr '11

Net interest income (FTE)

$

10

$

11

$

11

Provision for credit losses

5

11

2

Noninterest income

3

4

4

Noninterest expenses

10

11

11

Net income

(1)

(5)

1

Net credit-related charge-offs

9

10

5

Selected average balances:

Assets

1,309

1,407

1,450

Loans

1,328

1,429

1,477

Deposits

512

446

404

  • Average loans decreased $101 million, primarily due to decreases in Commercial Real Estate and Private Banking.
  • Average deposits increased $66 million, primarily due to an increase in Private Banking.
  • The provision for credit losses decreased $6 million, primarily due to decreases in Private Banking and Middle Market.

Conference Call and Webcast

Comerica will host a conference call to review third quarter 2012 financial results at 7 a.m. CT Wednesday, October 17, 2012. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 31764718). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A telephone replay will be available approximately two hours following the conference call through October 31, 2012. The conference call replay can be accessed by calling (855) 859-2056 or (404) 537-3406 (event ID No. 31764718). A replay of the Webcast can also be accessed via Comerica's "Investor Relations" page at www.comerica.com.

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

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

Forward-looking Statements

Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "anticipates," "believes," "contemplates," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "opportunity," "initiative," "outcome," "continue," "remain," "maintain," "on course," "trend," "objective," "looks forward" and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "might," "can," "may" or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica's management based on information known to Comerica's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica's management for future or past operations, products or services, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries, estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in general economic, political or industry conditions; changes in monetary and fiscal policies, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; changes in Comerica's credit rating; the interdependence of financial service companies; changes in regulation or oversight; unfavorable developments concerning credit quality; the acquisition of Sterling Bancshares, Inc., or any future acquisitions; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers; the implementation of Comerica's strategies and business models, including the implementation of revenue enhancements and efficiency improvements; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; operational difficulties, failure of technology infrastructure or information security incidents; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; changes in accounting standards and the critical nature of Comerica's accounting policies. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. In particular, please refer to "Item 1A. Risk Factors" beginning on page 12 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2011. 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

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

(in millions, except per share data)

2012

2012

2011

2012

2011

PER COMMON SHARE AND COMMON STOCK DATA

Diluted net income

$

0.61

$

0.73

$

0.51

$

2.00

$

1.61

Cash dividends declared

0.15

0.15

0.10

0.40

0.30

Common shareholders' equity (at period end)

37.01

36.18

34.94

Tangible common equity (at period end) (a)

33.56

32.76

31.57

Average diluted shares (in thousands)

191,492

194,487

191,634

193,991

182,602

KEY RATIOS

Return on average common shareholders' equity

6.67

%

8.22

%

5.91

%

7.46

%

6.44

%

Return on average assets

0.74

0.93

0.67

0.84

0.71

Tier 1 common capital ratio (a) (b)

10.32

10.38

10.57

Tier 1 risk-based capital ratio (b)

10.32

10.38

10.65

Total risk-based capital ratio (b)

13.63

13.90

14.84

Leverage ratio (b)

10.71

10.92

11.41

Tangible common equity ratio (a)

10.25

10.27

10.43

AVERAGE BALANCES

Commercial loans

$

26,700

$

25,983

$

22,127

$

25,810

$

21,769

Real estate construction loans:

Commercial Real Estate business line (c)

999

1,035

1,269

1,029

1,501

Other business lines (d)

390

385

430

391

417

Total real estate construction loans

1,389

1,420

1,699

1,420

1,918

Commercial mortgage loans:

Commercial Real Estate business line (c)

2,140

2,443

2,244

2,367

2,046

Other business lines (d)

7,530

7,540

8,031

7,584

7,856

Total commercial mortgage loans

9,670

9,983

10,275

9,951

9,902

Lease financing

852

869

936

873

960

International loans

1,302

1,265

1,163

1,257

1,212

Residential mortgage loans

1,488

1,487

1,606

1,498

1,577

Consumer loans

2,196

2,221

2,292

2,225

2,272

Total loans

43,597

43,228

40,098

43,034

39,610

Earning assets

57,801

56,653

53,243

56,884

50,923

Total assets

63,276

61,950

58,238

62,284

55,526

Noninterest-bearing deposits

21,469

20,128

17,511

20,415

16,259

Interest-bearing deposits

28,388

28,551

27,587

28,538

26,149

Total deposits

49,857

48,679

45,098

48,953

42,408

Common shareholders' equity

7,045

7,002

6,633

6,996

6,150

NET INTEREST INCOME

Net interest income (fully taxable equivalent basis)

$

428

$

435

$

424

$

1,306

$

1,212

Fully taxable equivalent adjustment

1

1

2

3

Net interest margin (fully taxable equivalent basis)

2.96

%

3.10

%

3.18

%

3.08

%

3.19

%

CREDIT QUALITY

Nonaccrual loans

$

665

$

719

$

929

Reduced-rate loans

27

28

29

Total nonperforming loans (e)

692

747

958

Foreclosed property

63

67

87

Total nonperforming assets (e)

755

814

1,045

Loans past due 90 days or more and still accruing

36

43

81

Gross loan charge-offs

59

64

90

$

185

$

338

Loan recoveries

16

19

13

52

70

Net loan charge-offs

43

45

77

133

268

Allowance for loan losses

647

667

767

Allowance for credit losses on lending-related commitments

35

36

27

Total allowance for credit losses

682

703

794

Allowance for loan losses as a percentage of total loans

1.46

%

1.52

%

1.86

%

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

0.39

0.42

0.77

0.41

%

0.90

%

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

1.71

1.85

2.53

Allowance for loan losses as a percentage of total nonperforming loans

94

89

80

(a)

See Reconciliation of Non-GAAP Financial Measures.

(b)

September 30, 2012 ratios are estimated.

(c)

Primarily loans to real estate investors and developers.

(d)

Primarily loans secured by owner-occupied real estate.

(e)

Excludes loans acquired with credit-impairment.

(f)

Lending-related commitment charge-offs were zero in all periods presented.

CONSOLIDATED BALANCE SHEETS

Comerica Incorporated and Subsidiaries

September 30,

June 30,

December 31,

September 30,

(in millions, except share data)

2012

2012

2011

2011

(unaudited)

(unaudited)

(unaudited)

ASSETS

Cash and due from banks

$

933

$

1,076

$

982

$

981

Interest-bearing deposits with banks

3,005

3,065

2,574

4,217

Other short-term investments

146

170

149

137

Investment securities available-for-sale

10,569

9,940

10,104

9,732

Commercial loans

27,460

27,016

24,996

23,113

Real estate construction loans

1,392

1,377

1,533

1,648

Commercial mortgage loans

9,559

9,830

10,264

10,539

Lease financing

837

858

905

927

International loans

1,277

1,224

1,170

1,046

Residential mortgage loans

1,495

1,469

1,526

1,643

Consumer loans

2,174

2,218

2,285

2,309

Total loans

44,194

43,992

42,679

41,225

Less allowance for loan losses

(647)

(667)

(726)

(767)

Net loans

43,547

43,325

41,953

40,458

Premises and equipment

625

667

675

685

Accrued income and other assets

4,489

4,407

4,571

4,678

Total assets

$

63,314

$

62,650

$

61,008

$

60,888

LIABILITIES AND SHAREHOLDERS' EQUITY

Noninterest-bearing deposits

$

21,753

$

21,330

$

19,764

$

19,116

Money market and interest-bearing checking deposits

20,407

20,008

20,311

20,237

Savings deposits

1,589

1,629

1,524

1,771

Customer certificates of deposit

5,742

6,045

5,808

5,980

Other time deposits

45

Foreign office time deposits

486

376

348

303

Total interest-bearing deposits

28,224

28,058

27,991

28,336

Total deposits

49,977

49,388

47,755

47,452

Short-term borrowings

63

83

70

164

Accrued expenses and other liabilities

1,450

1,409

1,371

1,312

Medium- and long-term debt

4,740

4,742

4,944

5,009

Total liabilities

56,230

55,622

54,140

53,937

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

2,153

2,144

2,170

2,162

Accumulated other comprehensive loss

(253)

(301)

(356)

(230)

Retained earnings

5,831

5,744

5,546

5,471

Less cost of common stock in treasury - 36,790,174 shares at 9/30/12, 33,889,392 shares at 6/30/12, 30,831,076 shares at 12/31/11 and 29,238,425 shares at 9/30/11

(1,788)

(1,700)

(1,633)

(1,593)

Total shareholders' equity

7,084

7,028

6,868

6,951

Total liabilities and shareholders' equity

$

63,314

$

62,650

$

61,008

$

60,888

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in millions, except per share data)

2012

2011

2012

2011

INTEREST INCOME

Interest and fees on loans

$

400

$

405

$

1,219

$

1,149

Interest on investment securities

57

54

179

170

Interest on short-term investments

3

4

9

9

Total interest income

460

463

1,407

1,328

INTEREST EXPENSE

Interest on deposits

17

24

54

69

Interest on medium- and long-term debt

16

16

49

50

Total interest expense

33

40

103

119

Net interest income

427

423

1,304

1,209

Provision for credit losses

22

35

63

126

Net interest income after provision for credit losses

405

388

1,241

1,083

NONINTEREST INCOME

Service charges on deposit accounts

53

53

162

156

Fiduciary income

39

37

116

115

Commercial lending fees

22

22

71

64

Letter of credit fees

19

19

54

55

Card fees

12

17

35

47

Foreign exchange income

9

11

29

30

Bank-owned life insurance

10

10

30

27

Brokerage fees

5

5

14

17

Net securities gains

12

11

18

Other noninterest income

28

15

92

81

Total noninterest income

197

201

614

610

NONINTEREST EXPENSES

Salaries

192

192

582

565

Employee benefits

61

53

181

153

Total salaries and employee benefits

253

245

763

718

Net occupancy expense

40

44

121

122

Equipment expense

17

17

50

49

Outside processing fee expense

27

25

79

74

Software expense

23

22

67

65

Merger and restructuring charges

25

33

33

38

FDIC insurance expense

9

8

29

35

Advertising expense

7

7

21

21

Other real estate expense

2

5

6

19

Other noninterest expenses

46

57

161

151

Total noninterest expenses

449

463

1,330

1,292

Income before income taxes

153

126

525

401

Provision for income taxes

36

28

134

104

NET INCOME

117

98

391

297

Less income allocated to participating securities

1

1

4

3

Net income attributable to common shares

$

116

$

97

$

387

$

294

Earnings per common share:

Basic

$

0.61

$

0.51

$

2.00

$

1.63

Diluted

0.61

0.51

2.00

1.61

Comprehensive income

165

176

494

456

Cash dividends declared on common stock

29

20

78

55

Cash dividends declared per common share

0.15

0.10

0.40

0.30

CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries

Third

Second

First

Fourth

Third

Third Quarter 2012 Compared To:

Quarter

Quarter

Quarter

Quarter

Quarter

Second Quarter 2012

Third Quarter 2011

(in millions, except per share data)

2012

2012

2012

2011

2011

Amount

Percent

Amount

Percent

INTEREST INCOME

Interest and fees on loans

$

400

$

408

$

411

$

415

$

405

$

(8)

(2)

%

$

(5)

(1)

%

Interest on investment securities

57

59

63

63

54

(2)

(4)

3

4

Interest on short-term investments

3

3

3

3

4

(1)

(5)

Total interest income

460

470

477

481

463

(10)

(2)

(3)

(1)

INTEREST EXPENSE

Interest on deposits

17

18

19

21

24

(1)

(4)

(7)

(26)

Interest on medium- and long-term debt

16

17

16

16

16

(1)

(5)

Total interest expense

33

35

35

37

40

(2)

(5)

(7)

(15)

Net interest income

427

435

442

444

423

(8)

(2)

4

1

Provision for credit losses

22

19

22

18

35

3

14

(13)

(38)

Net interest income after provision

for credit losses

405

416

420

426

388

(11)

(2)

17

4

NONINTEREST INCOME

Service charges on deposit accounts

53

53

56

52

53

Fiduciary income

39

39

38

36

37

2

7

Commercial lending fees

22

24

25

23

22

(2)

(10)

Letter of credit fees

19

18

17

18

19

1

8

Card fees

12

12

11

11

17

(5)

(30)

Foreign exchange income

9

10

10

10

11

(1)

(3)

(2)

(15)

Bank-owned life insurance

10

10

10

10

10

Brokerage fees

5

4

5

5

5

1

2

Net securities gains (losses)

6

5

(4)

12

(6)

N/M

(12)

N/M

Other noninterest income

28

35

29

21

15

(7)

(18)

13

89

Total noninterest income

197

211

206

182

201

(14)

(7)

(4)

(2)

NONINTEREST EXPENSES

Salaries

192

189

201

205

192

3

1

Employee benefits

61

61

59

52

53

8

16

Total salaries and employee benefits

253

250

260

257

245

3

1

8

3

Net occupancy expense

40

40

41

47

44

(4)

(7)

Equipment expense

17

16

17

17

17

1

2

Outside processing fee expense

27

26

26

27

25

1

2

4

Software expense

23

21

23

23

22

2

6

1

5

Merger and restructuring charges

25

8

37

33

17

N/M

(8)

(22)

FDIC insurance expense

9

10

10

8

8

(1)

1

28

Advertising expense

7

7

7

7

7

Other real estate expense

2

4

3

5

2

N/M

(3)

(65)

Other noninterest expenses

46

55

60

53

57

(9)

(15)

(11)

(21)

Total noninterest expenses

449

433

448

479

463

16

4

(14)

(3)

Income before income taxes

153

194

178

129

126

(41)

(21)

27

23

Provision for income taxes

36

50

48

33

28

(14)

(27)

8

33

NET INCOME

117

144

130

96

98

(27)

(18)

19

20

Less income allocated to participating securities

1

2

1

1

1

(1)

(12)

Net income attributable to common shares

$

116

$

142

$

129

$

95

$

97

$

(26)

(18)

%

$

19

20

%

Earnings per common share:

Basic

$

0.61

$

0.73

$

0.66

$

0.48

$

0.51

$

(0.12)

(16)

%

$

0.10

20

%

Diluted

0.61

0.73

0.66

0.48

0.51

(0.12)

(16)

0.10

20

Comprehensive income (loss)

165

169

160

(30)

176

(4)

(2)

(11)

(6)

Cash dividends declared on common stock

29

29

20

20

20

9

45

Cash dividends declared per common share

0.15

0.15

0.10

0.10

0.10

0.05

50

N/M - Not Meaningful

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)

Comerica Incorporated and Subsidiaries

2012

2011

(in millions)

3rd Qtr

2nd Qtr

1st Qtr

4th Qtr

3rd Qtr

Balance at beginning of period

$

667

$

704

$

726

$

767

$

806

Loan charge-offs:

Commercial

19

26

25

28

33

Real estate construction:

Commercial Real Estate business line (a)

2

2

2

4

11

Other business lines (b)

1

1

Total real estate construction

2

3

2

5

11

Commercial mortgage:

Commercial Real Estate business line (a)

12

16

13

17

12

Other business lines (b)

13

11

13

24

21

Total commercial mortgage

25

27

26

41

33

International

1

2

2

Residential mortgage

6

3

2

2

4

Consumer

6

5

5

7

9

Total loan charge-offs

59

64

62

85

90

Recoveries on loans previously charged-off:

Commercial

7

10

9

11

5

Real estate construction

3

1

1

4

3

Commercial mortgage

5

4

3

9

3

International

1

Residential mortgage

1

1

Consumer

1

4

2

1

1

Total recoveries

16

19

17

25

13

Net loan charge-offs

43

45

45

60

77

Provision for loan losses

23

8

23

19

38

Balance at end of period

$

647

$

667

$

704

$

726

$

767

Allowance for loan losses as a percentage of total loans

1.46

%

1.52

%

1.64

%

1.70

%

1.86

%

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

0.39

0.42

0.43

0.57

0.77

(a)

Primarily charge-offs of loans to real estate investors and developers.

(b)

Primarily charge-offs of loans secured by owner-occupied real estate.

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

Comerica Incorporated and Subsidiaries

2012

2011

(in millions)

3rd Qtr

2nd Qtr

1st Qtr

4th Qtr

3rd Qtr

Balance at beginning of period

$

36

$

25

$

26

$

27

$

30

Add: Provision for credit losses on lending-related commitments

(1)

11

(1)

(1)

(3)

Balance at end of period

$

35

$

36

$

25

$

26

$

27

Unfunded lending-related commitments sold

$

$

$

$

$

NONPERFORMING ASSETS (unaudited)

Comerica Incorporated and Subsidiaries

2012

2011

(in millions)

3rd Qtr

2nd Qtr

1st Qtr

4th Qtr

3rd Qtr

SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS

Nonaccrual loans:

Business loans:

Commercial

$

154

$

175

$

205

$

237

$

258

Real estate construction:

Commercial Real Estate business line (a)

45

60

77

93

109

Other business lines (b)

6

9

8

8

3

Total real estate construction

51

69

85

101

112

Commercial mortgage:

Commercial Real Estate business line (a)

137

155

174

159

198

Other business lines (b)

219

220

275

268

275

Total commercial mortgage

356

375

449

427

473

Lease financing

3

4

4

5

5

International

4

8

7

Total nonaccrual business loans

564

623

747

778

855

Retail loans:

Residential mortgage

69

76

69

71

65

Consumer:

Home equity

28

16

9

5

4

Other consumer

4

4

5

6

5

Total consumer

32

20

14

11

9

Total nonaccrual retail loans

101

96

83

82

74

Total nonaccrual loans

665

719

830

860

929

Reduced-rate loans

27

28

26

27

29

Total nonperforming loans (c)

692

747

856

887

958

Foreclosed property

63

67

67

94

87

Total nonperforming assets (c)

$

755

$

814

$

923

$

981

$

1,045

Nonperforming loans as a percentage of total loans

1.57

%

1.70

%

1.99

%

2.08

%

2.32

%

Nonperforming assets as a percentage of total loans

and foreclosed property

1.71

1.85

2.14

2.29

2.53

Allowance for loan losses as a percentage of total

nonperforming loans

94

89

82

82

80

Loans past due 90 days or more and still accruing

$

36

$

43

$

50

$

58

$

81

ANALYSIS OF NONACCRUAL LOANS

Nonaccrual loans at beginning of period

$

719

$

830

$

860

$

929

$

941

Loans transferred to nonaccrual (d)

35

47

69

99

130

Nonaccrual business loan gross charge-offs (e)

(46)

(56)

(55)

(76)

(76)

Loans transferred to accrual status (d)

(41)

(15)

Nonaccrual business loans sold (f)

(20)

(16)

(7)

(19)

(15)

Payments/Other (g)

(23)

(45)

(37)

(73)

(36)

Nonaccrual loans at end of period

$

665

$

719

$

830

$

860

$

929

(a) Primarily loans to real estate investors and developers.

(b) Primarily loans secured by owner-occupied real estate.

(c) Excludes loans acquired with credit impairment.

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

(e) Analysis of gross loan charge-offs:

Nonaccrual business loans

$

46

$

56

$

55

$

76

$

76

Performing watch list loans

1

1

Consumer and residential mortgage loans

12

8

7

9

13

Total gross loan charge-offs

$

59

$

64

$

62

$

85

$

90

(f) Analysis of loans sold:

Nonaccrual business loans

$

20

$

16

$

7

$

19

$

15

Performing watch list loans

42

7

11

16

Total loans sold

$

62

$

23

$

18

$

19

$

31

(g)

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

ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)

Comerica Incorporated and Subsidiaries

Nine Months Ended

September 30, 2012

September 30, 2011

Average

Average

Average

Average

(dollar amounts in millions)

Balance

Interest

Rate

Balance

Interest

Rate

Commercial loans

$

25,810

$

673

3.48

%

$

21,769

$

604

3.70

%

Real estate construction loans

1,420

47

4.48

1,918

59

4.12

Commercial mortgage loans

9,951

337

4.51

9,902

306

4.12

Lease financing

873

19

2.92

960

25

3.53

International loans

1,257

35

3.73

1,212

35

3.89

Residential mortgage loans

1,498

52

4.66

1,577

63

5.34

Consumer loans

2,225

57

3.44

2,272

59

3.47

Total loans (a)

43,034

1,220

3.79

39,610

1,151

3.88

Auction-rate securities available-for-sale

294

2

0.78

497

3

0.75

Other investment securities available-for-sale

9,509

178

2.57

7,131

168

3.20

Total investment securities available-for-sale

9,803

180

2.51

7,628

171

3.03

Interest-bearing deposits with banks (b)

3,909

8

0.26

3,557

7

0.24

Other short-term investments

138

1

1.80

128

2

2.14

Total earning assets

56,884

1,409

3.32

50,923

1,331

3.50

Cash and due from banks

967

908

Allowance for loan losses

(707)

(860)

Accrued income and other assets

5,140

4,555

Total assets

$

62,284

$

55,526

Money market and interest-bearing checking deposits

$

20,583

26

0.18

$

18,539

36

0.26

Savings deposits

1,589

1

0.06

1,516

1

0.11

Customer certificates of deposit

5,993

25

0.54

5,666

30

0.70

Foreign office and other time deposits

373

2

0.64

428

2

0.50

Total interest-bearing deposits

28,538

54

0.25

26,149

69

0.35

Short-term borrowings

78

0.12

137

0.15

Medium- and long-term debt

4,846

49

1.36

5,702

50

1.17

Total interest-bearing sources

33,462

103

0.41

31,988

119

0.50

Noninterest-bearing deposits

20,415

16,259

Accrued expenses and other liabilities

1,411

1,129

Total shareholders' equity

6,996

6,150

Total liabilities and shareholders' equity

$

62,284

$

55,526

Net interest income/rate spread (FTE)

$

1,306

2.91

$

1,212

3.00

FTE adjustment

$

2

$

3

Impact of net noninterest-bearing sources of funds

0.17

0.19

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

3.08

%

3.19

%

(a)

Accretion of the purchase discount on the acquired loan portfolio of $58 million and $27 million in the nine months ended September 30, 2012 and 2011, respectively, increased the net interest margin by 14 basis points and 7 basis points in the nine months ended September 30, 2012 and 2011, respectively.

(b)

Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 20 basis points and 22 basis points in the nine months ended September 30, 2012 and 2011, respectively.

ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)

Comerica Incorporated and Subsidiaries

Three Months Ended

September 30, 2012

June 30, 2012

September 30, 2011

Average

Average

Average

Average

Average

Average

(dollar amounts in millions)

Balance

Interest

Rate

Balance

Interest

Rate

Balance

Interest

Rate

Commercial loans

$

26,700

$

227

3.38

%

$

25,983

$

227

3.52

%

$

22,127

$

207

3.70

%

Real estate construction loans

1,389

15

4.36

1,420

15

4.50

1,699

23

5.28

Commercial mortgage loans

9,670

106

4.34

9,983

112

4.46

10,275

115

4.42

Lease financing

852

4

2.04

869

7

3.28

936

8

3.46

International loans

1,302

12

3.77

1,265

12

3.66

1,163

11

4.01

Residential mortgage loans

1,488

17

4.67

1,487

17

4.53

1,606

21

5.30

Consumer loans

2,196

19

3.44

2,221

18

3.37

2,292

20

3.56

Total loans (a)

43,597

400

3.66

43,228

408

3.79

40,098

405

4.01

Auction-rate securities available-for-sale

234

1

0.97

296

0.82

437

1

0.63

Other investment securities available-for-sale

9,557

57

2.42

9,432

59

2.55

7,721

54

2.87

Total investment securities available-for-sale

9,791

58

2.38

9,728

59

2.49

8,158

55

2.74

Interest-bearing deposits with banks (b)

4,276

3

0.26

3,556

3

0.26

4,851

3

0.23

Other short-term investments

137

1.88

141

1.55

136

1

2.30

Total earning assets

57,801

461

3.19

56,653

470

3.35

53,243

464

3.47

Cash and due from banks

971

931

969

Allowance for loan losses

(673)

(710)

(814)

Accrued income and other assets

5,177

5,076

4,840

Total assets

$

63,276

$

61,950

$

58,238

Money market and interest-bearing checking deposits

$

20,495

8

0.17

$

20,458

8

0.18

$

19,595

13

0.25

Savings deposits

1,618

0.04

1,607

1

0.07

1,659

0.14

Customer certificates of deposit

5,894

8

0.52

6,107

9

0.53

5,878

10

0.66

Foreign office and other time deposits

381

1

0.71

379

0.64

455

1

0.49

Total interest-bearing deposits

28,388

17

0.24

28,551

18

0.25

27,587

24

0.33

Short-term borrowings

89

0.12

68

0.12

204

0.08

Medium- and long-term debt

4,745

16

1.35

4,854

17

1.40

5,168

16

1.23

Total interest-bearing sources

33,222

33

0.40

33,473

35

0.42

32,959

40

0.47

Noninterest-bearing deposits

21,469

20,128

17,511

Accrued expenses and other liabilities

1,540

1,347

1,135

Total shareholders' equity

7,045

7,002

6,633

Total liabilities and shareholders' equity

$

63,276

$

61,950

$

58,238

Net interest income/rate spread (FTE)

$

428

2.79

$

435

2.93

$

424

3.00

FTE adjustment

$

1

$

$

1

Impact of net noninterest-bearing sources of funds

0.17

0.17

0.18

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

2.96

%

3.10

%

3.18

%

(a)

Accretion of the purchase discount on the acquired loan portfolio of $15 million, $18 million and $27 million in the third and second quarters of 2012 and the third quarter of 2011, respectively, increased the net interest margin by 10 basis points, 13 basis points and 20 basis points in the third and second quarters of 2012 and the third quarter of 2011, respectively.

(b)

Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 21 basis points and by 18 basis points in the third and second quarters of 2012, respectively, and by 29 basis points in the third quarter of 2011.

CONSOLIDATED STATISTICAL DATA (unaudited)

Comerica Incorporated and Subsidiaries

September 30,

June 30,

March 31,

December 31,

September 30,

(in millions, except per share data)

2012

2012

2012

2011

2011

Commercial loans:

Floor plan

$

2,276

$

2,406

$

2,152

$

1,822

$

1,209

Other

25,184

24,610

23,488

23,174

21,904

Total commercial loans

27,460

27,016

25,640

24,996

23,113

Real estate construction loans:

Commercial Real Estate business line (a)

1,003

991

1,055

1,103

1,226

Other business lines (b)

389

386

387

430

422

Total real estate construction loans

1,392

1,377

1,442

1,533

1,648

Commercial mortgage loans:

Commercial Real Estate business line (a)

2,020

2,315

2,501

2,507

2,602

Other business lines (b)

7,539

7,515

7,578

7,757

7,937

Total commercial mortgage loans

9,559

9,830

10,079

10,264

10,539

Lease financing

837

858

872

905

927

International loans

1,277

1,224

1,256

1,170

1,046

Residential mortgage loans

1,495

1,469

1,485

1,526

1,643

Consumer loans:

Home equity

1,570

1,584

1,612

1,655

1,683

Other consumer

604

634

626

630

626

Total consumer loans

2,174

2,218

2,238

2,285

2,309

Total loans

$

44,194

$

43,992

$

43,012

$

42,679

$

41,225

Goodwill

$

635

$

635

$

635

$

635

$

635

Core deposit intangible

23

25

27

29

32

Loan servicing rights

2

3

3

3

3

Tier 1 common capital ratio (c) (d)

10.32

%

10.38

%

10.27

%

10.37

%

10.57

%

Tier 1 risk-based capital ratio (d)

10.32

10.38

10.27

10.41

10.65

Total risk-based capital ratio (d)

13.63

13.90

13.99

14.25

14.84

Leverage ratio (d)

10.71

10.92

10.94

10.92

11.41

Tangible common equity ratio (c)

10.25

10.27

10.21

10.27

10.43

Common shareholders' equity per share of common stock

$

37.01

$

36.18

$

35.44

$

34.80

$

34.94

Tangible common equity per share of common stock (c)

33.56

32.76

32.06

31.42

31.57

Market value per share for the quarter:

High

33.38

32.88

34.00

27.37

35.79

Low

29.32

27.88

26.25

21.53

21.48

Close

31.05

30.71

32.36

25.80

22.97

Quarterly ratios:

Return on average common shareholders' equity

6.67

%

8.22

%

7.50

%

5.51

%

5.91

%

Return on average assets

0.74

0.93

0.84

0.63

0.67

Efficiency ratio

71.68

67.53

69.70

75.97

75.59

Number of banking centers

490

493

495

494

502

Number of employees - full time equivalent

9,008

9,014

9,195

9,397

9,701

(a)

Primarily loans to real estate investors and developers.

(b)

Primarily loans secured by owner-occupied real estate.

(c)

See Reconciliation of Non-GAAP Financial Measures.

(d)

September 30, 2012 ratios are estimated.

PARENT COMPANY ONLY BALANCE SHEETS (unaudited)

Comerica Incorporated

September 30,

December 31,

September 30,

(in millions, except share data)

2012

2011

2011

ASSETS

Cash and due from subsidiary bank

$

13

$

7

3

Short-term investments with subsidiary bank

418

411

440

Other short-term investments

88

90

86

Investment in subsidiaries, principally banks

7,200

7,011

7,098

Premises and equipment

4

4

3

Other assets

150

177

189

Total assets

$

7,873

$

7,700

$

7,819

LIABILITIES AND SHAREHOLDERS' EQUITY

Medium- and long-term debt

$

632

$

666

$

722

Other liabilities

157

166

146

Total liabilities

789

832

868

Common stock - $5 par value:

Authorized - 325,000,000 shares

Issued - 228,164,824 shares

1,141

1,141

1,141

Capital surplus

2,153

2,170

2,162

Accumulated other comprehensive loss

(253)

(356)

(230)

Retained earnings

5,831

5,546

5,471

Less cost of common stock in treasury - 36,790,174 shares at 9/30/12, 30,831,076 shares at 12/31/11, and 29,238,425 shares at 9/30/11

(1,788)

(1,633)

(1,593)

Total shareholders' equity

7,084

6,868

6,951

Total liabilities and shareholders' equity

$

7,873

$

7,700

$

7,819

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, 2010

176.5

$

1,019

$

1,481

$

(389)

$

5,247

$

(1,565)

$

5,793

Net income

297

297

Other comprehensive income, net of tax

159

159

Cash dividends declared on common stock ($0.30 per share)

(55)

(55)

Purchase of common stock

(2.7)

(75)

(75)

Acquisition of Sterling Bancshares, Inc.

24.3

122

681

803

Net issuance of common stock under employee stock plans

0.8

(29)

(18)

47

Share-based compensation

29

29

BALANCE AT SEPTEMBER 30, 2011

198.9

$

1,141

$

2,162

$

(230)

$

5,471

$

(1,593)

$

6,951

BALANCE AT DECEMBER 31, 2011

197.3

$

1,141

$

2,170

$

(356)

$

5,546

$

(1,633)

$

6,868

Net income

391

391

Other comprehensive income, net of tax

103

103

Cash dividends declared on common stock ($0.40 per share)

(78)

(78)

Purchase of common stock

(7.1)

(215)

(215)

Net issuance of common stock under employee stock plans

1.2

(48)

(28)

62

(14)

Share-based compensation

29

29

Other

2

(2)

BALANCE AT SEPTEMBER 30, 2012

191.4

$

1,141

$

2,153

$

(253)

$

5,831

$

(1,788)

$

7,084

BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)

Comerica Incorporated and Subsidiaries

(dollar amounts in millions)

Business

Retail

Wealth

Three Months Ended September 30, 2012

Bank

Bank

Management

Finance

Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

386

$

161

$

47

$

(176)

$

10

$

428

Provision for credit losses

15

6

3

(2)

22

Noninterest income

76

41

62

14

4

197

Noninterest expenses

144

181

78

3

43

449

Provision (benefit) for income taxes (FTE)

92

5

10

(62)

(8)

37

Net income (loss)

$

211

$

10

$

18

$

(103)

$

(19)

$

117

Net credit-related charge-offs

$

27

$

13

$

3

$

43

Selected average balances:

Assets

$

34,863

$

5,964

$

4,566

$

12,166

$

5,717

$

63,276

Loans

33,856

5,265

4,476

43,597

Deposits

25,142

20,682

3,667

193

173

49,857

Statistical data:

Return on average assets (a)

2.42

%

0.18

%

1.61

%

N/M

N/M

0.74

%

Efficiency ratio

31.23

89.39

71.14

N/M

N/M

71.68

Business

Retail

Wealth

Three Months Ended June 30, 2012

Bank

Bank

Management

Finance

Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

385

$

161

$

46

$

(166)

$

9

$

435

Provision for credit losses

12

3

2

2

19

Noninterest income

83

47

66

17

(2)

211

Noninterest expenses

151

177

79

2

24

433

Provision (benefit) for income taxes (FTE)

95

9

11

(56)

(9)

50

Net income (loss)

$

210

$

19

$

20

$

(95)

$

(10)

$

144

Net credit-related charge-offs

$

26

$

9

$

10

$

45

Selected average balances:

Assets

$

34,376

$

5,946

$

4,604

$

11,953

$

5,071

$

61,950

Loans

33,449

5,250

4,529

43,228

Deposits

24,145

20,525

3,640

177

192

48,679

Statistical data:

Return on average assets (a)

2.44

%

0.35

%

1.76

%

N/M

N/M

0.93

%

Efficiency ratio

32.30

85.17

73.98

N/M

N/M

67.53

Business

Retail

Wealth

Three Months Ended September 30, 2011

Bank

Bank

Management

Finance

Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

363

$

173

$

45

$

(168)

11

$

424

Provision for credit losses

18

16

7

(6)

35

Noninterest income

77

47

56

26

(5)

201

Noninterest expenses

164

175

77

3

44

463

Provision (benefit) for income taxes (FTE)

79

10

6

(54)

(12)

29

Net income (loss)

$

179

$

19

$

11

$

(91)

$

(20)

$

98

Net credit-related charge-offs

$

40

$

28

$

9

$

77

Selected average balances:

Assets

$

30,608

$

5,985

$

4,674

$

10,210

$

6,761

$

58,238

Loans

29,957

5,483

4,658

40,098

Deposits

21,759

19,792

3,198

236

113

45,098

Statistical data:

Return on average assets (a)

2.33

%

0.38

%

0.95

%

N/M

N/M

0.67

%

Efficiency ratio

37.38

79.17

78.06

N/M

N/M

75.59

(a)

Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.

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 September 30, 2012

Midwest

Western

Texas

Florida

Markets

International

& Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

194

$

181

$

139

$

10

$

51

$

19

$

(166)

$

428

Provision for credit losses

2

10

5

6

1

(2)

22

Noninterest income

95

34

30

3

7

10

18

197

Noninterest expenses

175

105

89

10

16

8

46

449

Provision (benefit) for income taxes (FTE)

41

40

25

(1)

(5)

7

(70)

37

Net income (loss)

$

71

$

70

$

45

$

(1)

$

41

$

13

$

(122)

$

117

Net credit-related charge-offs

$

12

$

10

$

7

$

9

$

4

1

$

43

Selected average balances:

Assets

$

13,784

$

13,442

$

10,327

$

1,309

$

4,621

$

1,910

$

17,883

$

63,276

Loans

13,468

13,163

9,585

1,328

4,266

1,787

43,597

Deposits

19,628

15,192

9,941

512

2,823

1,395

366

49,857

Statistical data:

Return on average assets (a)

1.38

%

1.74

%

1.61

%

(0.29)

%

3.54

%

2.65

%

N/M

0.74

%

Efficiency ratio

60.40

48.63

52.50

76.90

27.38

28.28

N/M

71.68

Other

Finance

Three Months Ended June 30, 2012

Midwest

Western

Texas

Florida

Markets

International

& Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

196

$

177

$

143

$

11

$

46

$

19

$

(157)

$

435

Provision for credit losses

1

1

7

11

(4)

1

2

19

Noninterest income

96

37

31

4

19

9

15

211

Noninterest expenses

177

104

88

11

18

9

26

433

Provision (benefit) for income taxes (FTE)

39

40

28

(2)

4

6

(65)

50

Net income (loss)

$

75

$

69

$

51

$

(5)

$

47

$

12

$

(105)

$

144

Net credit-related charge-offs

$

10

$

12

$

4

$

10

$

9

$

$

45

Selected average balances:

Assets

$

14,028

$

13,170

$

10,270

$

1,407

$

4,183

$

1,868

$

17,024

$

61,950

Loans

13,766

12,920

9,506

1,429

3,837

1,770

43,228

Deposits

19,227

14,371

10,185

446

2,728

1,353

369

48,679

Statistical data:

Return on average assets (a)

1.48

%

1.78

%

1.78

%

(1.35)

%

4.53

%

2.54

%

N/M

0.93

%

Efficiency ratio

60.51

48.44

50.96

77.45

30.43

29.78

N/M

67.53

Other

Finance

Three Months Ended September 30, 2011

Midwest

Western

Texas

Florida

Markets

International

& Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

199

$

166

$

143

$

11

$

41

$

21

$

(157)

$

424

Provision for credit losses

20

13

(8)

2

12

2

(6)

35

Noninterest income

96

32

29

4

10

9

21

201

Noninterest expenses

183

106

81

11

25

10

47

463

Provision (benefit) for income taxes (FTE)

32

29

35

1

(8)

6

(66)

29

Net income (loss)

$

60

$

50

$

64

$

1

$

22

$

12

$

(111)

$

98

Net credit-related charge-offs

$

33

$

32

$

2

$

5

$

5

$

$

77

Selected average balances:

Assets

$

14,118

$

12,110

$

8,510

$

1,450

$

3,374

$

1,705

$

16,971

$

58,238

Loans

13,873

11,889

8,145

1,477

3,082

1,632

40,098

Deposits

18,510

12,975

8,865

404

2,392

1,603

349

45,098

Statistical data:

Return on average assets (a)

1.22

%

1.42

%

2.66

%

0.29

%

2.66

%

2.76

%

N/M

0.67

%

Efficiency ratio

62.08

53.68

46.83

78.39

50.21

31.22

N/M

75.59

(a)

Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.

FTE - Fully Taxable Equivalent

N/M - Not Meaningful

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

Comerica Incorporated and Subsidiaries

September 30,

June 30,

March 31,

December 31,

September 30,

(dollar amounts in millions)

2012

2012

2012

2011

2011

Tier 1 Common Capital Ratio:

Tier 1 capital (a) (b)

$

6,685

$

6,676

$

6,647

$

6,582

$

6,560

Less:

Trust preferred securities

25

49

Tier 1 common capital (b)

$

6,685

$

6,676

$

6,647

$

6,557

$

6,511

Risk-weighted assets (a) (b)

$

64,772

$

64,312

$

64,742

$

63,244

$

61,593

Tier 1 risk-based capital ratio (b)

10.32

%

10.38

%

10.27

%

10.41

%

10.65

%

Tier 1 common capital ratio (b)

10.32

10.38

10.27

10.37

10.57

Tangible Common Equity Ratio:

Common shareholders' equity

$

7,084

$

7,028

$

6,985

$

6,868

$

6,951

Less:

Goodwill

635

635

635

635

635

Other intangible assets

25

28

30

32

35

Tangible common equity

$

6,424

$

6,365

$

6,320

$

6,201

$

6,281

Total assets

$

63,314

$

62,650

$

62,593

$

61,008

$

60,888

Less:

Goodwill

635

635

635

635

635

Other intangible assets

25

28

30

32

35

Tangible assets

$

62,654

$

61,987

$

61,928

$

60,341

$

60,218

Common equity ratio

11.19

%

11.22

%

11.16

%

11.26

%

11.42

%

Tangible common equity ratio

10.25

10.27

10.21

10.27

10.43

Tangible Common Equity per Share of Common Stock:

Common shareholders' equity

$

7,084

$

7,028

$

6,985

$

6,868

$

6,951

Tangible common equity

6,424

6,365

6,320

6,201

6,281

Shares of common stock outstanding (in millions)

191

194

197

197

199

Common shareholders' equity per share of common stock

$

37.01

$

36.18

$

35.44

$

34.80

$

34.94

Tangible common equity per share of common stock

33.56

32.76

32.06

31.42

31.57

(a)

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

(b)

September 30, 2012 Tier 1 capital and risk-weighted assets are estimated.

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 tangible common equity ratio removes preferred stock and the effect of intangible assets from capital and the effect of intangible assets from total assets. Tangible common equity per share of common stock removes the effect of intangible assets from common shareholders equity per share of common stock. Comerica believes these measurements are meaningful measures of capital adequacy used by investors, regulators, management and others to evaluate the adequacy of common equity and to compare against other companies in the industry.

SOURCE Comerica Incorporated



RELATED LINKS

http://www.comerica.com