2014

Comerica Reports Third Quarter 2013 Net Income Of $147 Million, Or 78 Cents Per Share EPS Up 3 Percent from Second Quarter 2013 and 28 Percent Over Third Quarter 2012

Net Interest Income Stable; Loan Volume Impacted by Economic Uncertainty and Seasonality

Noninterest Income Up $6 Million, or 3 Percent

Continued Discipline Reflected in Noninterest Expenses

DALLAS, Oct. 16, 2013 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported third quarter 2013 net income of $147 million, compared to $143 million for the second quarter 2013 and $117 million for the third quarter 2012. Earnings per diluted share were 78 cents for the third quarter 2013, compared to 76 cents for the second quarter 2013 and 61 cents for the third quarter 2012.

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(dollar amounts in millions, except per share data)

3rd Qtr '13


2nd Qtr '13


3rd Qtr '12


Net interest income (a)

$

412



$

414



$

427



Provision for credit losses

8



13



22



Noninterest income

214



208



197



Noninterest expenses

417



416



449


(b)

Provision for income taxes

54



50



36










Net income

147



143



117










Net income attributable to common shares

145



141



116










Diluted income per common share

0.78



0.76



0.61










Average diluted shares (in millions)

187



187



191










Tier 1 common capital ratio (d)

10.74

%

(c)

10.43

%


10.37

%


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

10.4



10.1



10.0



Tangible common equity ratio (d)

9.87



10.04



10.30





(a)

Included accretion of the purchase discount on the acquired loan portfolio of $8 million, $7 million and $15 million in the third quarter 2013, second quarter 2013 and third quarter 2012, respectively.

(b)

Included restructuring expenses of $25 million associated with the 2011 acquisition of Sterling Bancshares, Inc.

(c)

September 30, 2013 ratio is estimated.

(d)

See Reconciliation of Non-GAAP Financial Measures.

(e)

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



"Fee income growth, expense control and continued solid credit quality contributed to our 28 percent year-over-year increase in earnings per share," said Ralph W. Babb Jr., chairman and chief executive officer. "Average total loans were up $497 million, or 1 percent, on a year-over-year basis, but decreased $799 million, or 2 percent, compared to the second quarter. Loan volume in the third quarter compared to the second quarter was impacted by the continued economic uncertainty and the understandable caution of our customers, as well as seasonality in auto-dealer floor plan loans and a decline in refinance volumes impacting our mortgage warehouse business.

"Average total deposits increased $2 billion, or 4 percent, year-over-year, and $417 million, or 1 percent over second quarter, to $51.9 billion. Net interest income remained relatively stable, credit quality continued to be strong, and noninterest income grew quarter over quarter, reflecting an increase in customer-driven fee income. Our capital position continued to be a source of strength to support our growth.

"We believe our footprint is well situated in Texas, California and Michigan, and that our relationship banking strategy contributes to our continued success."

Third Quarter 2013 Compared to Third Quarter 2012 

  • Average total loans increased $497 million, or 1 percent, primarily reflecting an increase of $1.1 billion, or 4 percent, in commercial loans, partially offset by a decrease of $594 million, or 5 percent, in combined commercial mortgage and real estate construction loans. The increase in commercial loans was primarily driven by increases in National Dealer Services, general Middle Market and Energy, partially offset by a decrease in Corporate Banking.
  • Average total deposits increased $2.0 billion, or 4 percent, primarily reflecting increases of $1.1 billion, or 4 percent, in interest-bearing deposits and $910 million, or 4 percent, in noninterest-bearing deposits.
  • Net income increased by $30 million, or 25 percent, primarily as a result of improving credit quality reflected in lower provision for credit losses, higher customer-driven fees and lower noninterest expenses, partially offset by a decrease in net interest income. The decrease in net interest income was primarily due to a decrease in loan yields and a decrease in accretion on the acquired loan portfolio, partially offset by loan growth and a decrease in funding costs.

Third Quarter 2013 Compared to Second Quarter 2013

  • Average total loans decreased $799 million, or 2 percent, to $44.1 billion, primarily reflecting decreases of $634 million, or 2 percent, in commercial loans and $180 million, or 2 percent, in combined commercial mortgage and real estate construction loans. The decrease in commercial loans was primarily driven by decreases in general Middle Market, National Dealer Services and Mortgage Banker Finance, partially offset by an increase in Technology and Life Sciences. The declines generally reflected subdued demand due to economic uncertainty, a seasonal decline in auto dealer floor plan loans and a decrease in mortgage refinancing activity. Period-end total loans decreased $1.3 billion to $44.2 billion, primarily reflecting a $1.3 billion decrease in commercial loans. The decrease in commercial loans was primarily driven by decreases in Mortgage Banker Finance and National Dealer Services.
  • Investment securities available-for-sale decreased $413 million, or 4 percent, to $9.4 billion on an average basis and decreased $143 million, or 1 percent, to $9.5 billion on period-end basis as a result of a full quarter impact of the decline in the fair value of the portfolio due to the rise in long-term rates and a slowdown in the pace of purchases to replace repayments.
  • Average total deposits increased $417 million, or 1 percent, to $51.9 billion, reflecting increases in most lines of business. Period-end deposits increased $1.7 billion, primarily reflecting an increase of $2.0 billion in noninterest-bearing deposits.
  • Net interest income remained relatively stable at $412 million in the third quarter 2013, compared to $414 million in the second quarter 2013, as the benefit from one additional day in the third quarter and improved yields in the securities portfolio was more than offset by the impact of a decline in loan balances and lower loan yields.
  • The provision for credit losses decreased $5 million to $8 million in the third quarter 2013, compared to $13 million in the second quarter 2013, reflecting continued strong credit quality and decreases in loan balances.
  • Noninterest income increased $6 million to $214 million in the third quarter 2013 primarily reflecting an increase in customer-driven income of $4 million.
  • Noninterest expenses increased $1 million to $417 million in the third quarter 2013, primarily reflecting a $10 million increase in salaries and employee benefits expense, partially offset by a $6 million decrease in litigation-related expenses and a $4 million decrease in write-downs on other foreclosed assets.
  • Comerica repurchased 1.7 million shares of common stock ($72 million) in the third quarter 2013 under the share repurchase program. Combined with dividends, 70 percent of net income was returned to shareholders in the third quarter 2013.
  • Capital remained solid at September 30, 2013, as evidenced by an estimated Tier 1 common capital ratio of 10.74 percent and a tangible common equity ratio of 9.87 percent.

 

Net Interest Income














(dollar amounts in millions)

3rd Qtr '13


2nd Qtr '13


3rd Qtr '12

Net interest income

$

412



$

414



$

427








Net interest margin

2.79

%


2.83

%


2.96

%







Selected average balances:






Total earning assets

$

58,892



$

58,928



$

57,801


Total loans

44,094



44,893



43,597


Total investment securities

9,380



9,793



9,791


Federal Reserve Bank deposits (excess liquidity)

5,156



3,968



4,160














Total deposits

51,865



51,448



49,845


Total noninterest-bearing deposits

22,379



22,076



21,469


  • Net interest income of $412 million in the third quarter 2013 decreased $2 million compared to the second quarter 2013.
    • Interest on loans decreased by $7 million, primarily reflecting a decrease in loan volumes, including volume shifts in business mix ($6 million); lower loan yields due to a decline in LIBOR ($1 million); and other loan portfolio dynamics, reflecting positive credit migration and other shifts in portfolio mix ($5 million); partially offset by one additional day in the third quarter ($4 million) and an increase in the accretion of the purchase discount on the acquired loan portfolio ($1 million).
    • Interest on mortgage-backed investment securities increased net interest income by $2 million, primarily as a result of improvement in yields due to slowing prepayment speeds ($4 million), partially offset by a decrease in average balances ($2 million).
    • Interest on other short-term investments increased net interest income by $1 million as a result of an increase in balances deposited with the Federal Reserve Bank.
    • A decrease in funding costs increased net interest income by $2 million, primarily reflecting lower deposit pricing and a shift in the deposit mix, as well as a lower interest expense as a result of a full-quarter impact from the maturity of debt in the second quarter 2013.
  • The net interest margin of 2.79 percent decreased 4 basis points compared to the second quarter 2013. The decrease in net interest margin was primarily due to an increase in excess liquidity (-5 basis points) and lower loan yields (-3 basis points), partially offset by the impact of yield improvements on mortgage-backed securities (+3 basis points) and lower funding costs (+1 basis point).
  • Average earning assets remained stable at $58.9 billion in the third quarter 2013, compared to the second quarter 2013, as an increase of $1.2 billion in excess liquidity offset decreases of $799 million in average loans and $413 million in average investment securities available-for-sale.

Noninterest Income

Noninterest income increased $6 million to $214 million for the third quarter 2013, compared to $208 million for the second quarter 2013. Customer-driven fee income increased $4 million and noncustomer-driven income increased $2 million. The increase in customer-driven fee income was primarily due to an increase in commercial lending fees of $6 million. The increase in noncustomer-driven income was primarily due to a $5 million increase in warrant income, partially offset by a decrease in income recognized from our third-party credit card provider reflecting a change in the timing of the recognition of incentives from annually to quarterly in the third quarter.

Noninterest Expenses

Noninterest expenses of $417 million in the third quarter 2013 remained relatively stable compared to the second quarter 2013, as a $10 million increase in salaries and employee benefits expense was largely offset by a $6 million decrease in litigation-related expenses as well as a $4 million decrease in write-downs on other foreclosed assets. The increase in salaries and employee benefits reflected one additional day in the third quarter 2013 and year-to-date adjustments to incentive compensation based on favorable performance relative to peers.

Credit Quality

"Credit quality continued to be strong resulting in an $8 million provision," said Babb. "Net charge-offs increased slightly from their low level, while nonperforming assets and watch list loans declined."














(dollar amounts in millions)

3rd Qtr '13


2nd Qtr '13


3rd Qtr '12

Net credit-related charge-offs

$

19



$

17



$

43


Net credit-related charge-offs/Average total loans

0.18

%


0.15

%


0.39

%







Provision for credit losses

$

8



$

13



$

22








Nonperforming loans (a)

459



471



692


Nonperforming assets (NPAs) (a)

478



500



755


NPAs/Total loans and foreclosed property

1.08

%


1.10

%


1.71

%







Loans past due 90 days or more and still accruing

$

25



$

20



$

36








Allowance for loan losses

604



613



647


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

34



36



35


Total allowance for credit losses

638



649



682








Allowance for loan losses/Period-end total loans

1.37

%


1.35

%


1.46

%

Allowance for loan losses/Nonperforming loans

131



130



94


(a)

Excludes loans acquired with credit impairment.

(b)

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

  • Nonaccrual loans decreased $12 million, to $437 million at September 30, 2013, compared to $449 million at June 30, 2013.
  • Internal watch list loans decreased $210 million, to $2.7 billion at September 30, 2013, compared to $2.9 billion at June 30, 2013.
  • During the third quarter 2013, $50 million of borrower relationships over $2 million were transferred to nonaccrual status, an increase of $13 million from the second quarter 2013.

Balance Sheet and Capital Management

Total assets and common shareholders' equity were $64.7 billion and $7.0 billion, respectively, at September 30, 2013, compared to $62.9 billion and $6.9 billion, respectively, at June 30, 2013. The $1.8 billion increase in total assets primarily reflected an increase of $2.9 billion in excess liquidity, partially offset by a decrease in loans of $1.3 billion.

There were approximately 184 million common shares outstanding at September 30, 2013. Diluted weighted average shares of 187 million at September 30, 2013 were unchanged compared to June 30, 2013, as the impact of the repurchase of $72 million of common stock (1.7 million shares) under the share repurchase program during the third quarter 2013 was offset by the impact of an increase in share dilution from options and warrants due to an increase in Comerica's stock price. Combined with the dividend of $0.17 per share, share repurchases under the share repurchase program and dividends returned 70 percent of third quarter 2013 net income to shareholders.

Comerica's tangible common equity ratio was 9.87 percent at September 30, 2013, a decrease of 17 basis points from June 30, 2013. The estimated Tier 1 common capital ratio increased 31 basis points, to 10.74 percent at September 30, 2013, from June 30, 2013. The estimated Tier 1 common ratio under fully phased-in Basel III capital rules and excluding most elements of AOCI was 10.4 percent percent at September 30, 2013.

Full-Year and Fourth Quarter 2013 Outlook

Management expectations for full-year 2013 compared to full-year 2012 have not changed from the previously provided outlook, with the exception of customer-driven fees, which are expected to be modestly higher based on strong third quarter results.

For fourth quarter 2013, management expects the following, assuming a continuation of the current slow growing economic environment:

  • Average loans for the fourth quarter 2013 are expected to be stable compared to third quarter 2013, reflecting auto-dealer floor plan loans rebounding from seasonal low along with continued decline in mortgage warehouse lending and economic uncertainty impacting demand.
  • Net interest income is expected to be lower for the fourth quarter 2013, compared to third quarter 2013, due to the continued impact from the low rate environment and a decrease in purchase accounting accretion.
  • The provision for credit losses for the fourth quarter 2013 is expected to remain low, similar to the levels in previous 2013 quarters.
  • Customer-driven noninterest income for the fourth quarter 2013 is expected to be relatively stable compared to third quarter 2013, while noncustomer-driven noninterest income is expected to be lower.
  • Fourth quarter 2013 noninterest expense is expected to be slightly lower compared to third quarter 2013, reflecting continued tight expense control.

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, 2013 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses third quarter 2013 results compared to second quarter 2013.

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



(dollar amounts in millions)

3rd Qtr '13


2nd Qtr '13


3rd Qtr '12

Business Bank

$

209


91

%


$

207


85

%


$

207


88

%

Retail Bank

6


3



11


5



10


4


Wealth Management

15


6



24


10



18


8



230


100

%


242


100

%


235


100

%

Finance

(87)




(98)




(100)



Other (a)

4




(1)




(18)



     Total

$

147




$

143




$

117



(a)

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








Business Bank













(dollar amounts in millions)

3rd Qtr '13



2nd Qtr '13



3rd Qtr '12


Net interest income (FTE)

$

368



$

372



$

380


Provision for credit losses

(1)



10



15


Noninterest income

89



80



76


Noninterest expenses

153



147



145


Net income

209



207



207








Net credit-related charge-offs

9



11



27








Selected average balances:






Assets

35,298



36,017



34,861


Loans

34,178



34,955



33,856


Deposits

26,284



25,987



25,142


  • Average loans decreased $777 million, primarily reflecting decreases in general Middle Market, National Dealer Services and Mortgage Banker Finance, partially offset by an increase in Technology and Life Sciences.
  • Average deposits increased $297 million, primarily reflecting increases in general Middle Market and Commercial Real Estate.
  • Net interest income decreased $4 million, primarily due to a decrease in average loans and lower loan yields, partially offset by the benefit provided by one additional day in the quarter and higher purchase accounting accretion.
  • The provision for credit losses decreased $11 million, primarily reflecting improved credit quality and decreases in loan balances.
  • Noninterest income increased $9 million, primarily due to an increase in commercial lending fees and income from principal investments and warrants.
  • Noninterest expenses increased $6 million, primarily due to an increase in salaries expense and corporate overhead expenses, partially offset by a decrease in write-downs on other foreclosed assets.

Retail Bank













(dollar amounts in millions)

3rd Qtr '13



2nd Qtr '13



3rd Qtr '12


Net interest income (FTE)

$

151



$

154



$

161


Provision for credit losses

10



5



6


Noninterest income

45



46



41


Noninterest expenses

177



178



181


Net income

6



11



10








Net credit-related charge-offs

7



4



13








Selected average balances:






Assets

5,967



5,962



5,964


Loans

5,285



5,271



5,265


Deposits

21,257



21,241



20,682


  • Average loans increased $14 million, primarily due to an increase in Small Business, partially offset by a decrease in Retail Banking.
  • Average deposits increased $16 million, primarily due to an increase in Small Business, largely offset by a decrease in Retail Banking.
  • Net interest income decreased $3 million, primarily due to decreases in funds transfer pricing (FTP) credits and purchase accounting accretion, partially offset by the benefit provided by one additional day in the quarter.
  • The provision for credit losses increased $5 million, primarily due to an increase in specific reserves for individually evaluated loans.
  • Noninterest income remained relatively stable, primarily due to a decrease in incentive payments received from Comerica's third-party credit card provider, partially offset by a decrease in net securities losses.

Wealth Management













(dollar amounts in millions)

3rd Qtr '13



2nd Qtr '13



3rd Qtr '12


Net interest income (FTE)

$

45



$

46



$

47


Provision for credit losses

1



(3)



4


Noninterest income

61



65



62


Noninterest expenses

81



77



77


Net income

15



24



18








Net credit-related charge-offs

3



2



3








Selected average balances:






Assets

4,789



4,828



4,566


Loans

4,631



4,667



4,476


Deposits

3,782



3,701



3,667


  • Average loans decreased $36 million, primarily due to a decrease in Private Banking.
  • Average deposits increased $81 million, primarily due to an increase in Private Banking.
  • The provision for credit losses increased $4 million, primarily due to an increase in specific reserves pertaining to a small number of individually evaluated loans.
  • Noninterest income decreased $4 million, primarily reflecting decreases in fiduciary income, investment banking fees and other small decreases in several categories.
  • Noninterest expenses increased $4 million, primarily due to an increase in salaries expense and 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 September 30, 2013 and are presented on a fully taxable equivalent (FTE) basis.

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




















(dollar amounts in millions)

3rd Qtr '13


2nd Qtr '13


3rd Qtr '12

Michigan

$

73


32

%


$

77


32

%


$

71


30

%

California

71


31



65


27



67


29


Texas

35


15



46


19



44


19


Other Markets

51


22



54


22



53


22



230


100

%


242


100

%


235


100

%

Finance & Other (a)

(83)




(99)




(118)



     Total

$

147




$

143




$

117



(a)

Includes items not directly associated with the geographic markets.









  • Average loans decreased $322 million and $237 million in Michigan and Texas, respectively, and increased $90 million in California. Decreases in Michigan and Texas primarily reflected decreases in Middle Market loans. The increase in California was primarily due to increases in Commercial Real Estate and Private Banking.
  • Average deposits increased $306 million in Michigan primarily due to an increase in general Middle Market, partially offset by a decrease in Retail Banking. In California, average deposits decreased $111 million primarily reflecting a decrease in Corporate Banking, partially offset by an increase in Commercial Real Estate. The increase in Texas of $104 million was primarily due to an increase in Corporate Banking, partially offset by a decrease in general Middle Market.
  • Credit quality improved in all geographic markets resulting in decreases to the provision for credit losses in Michigan and California. The increase in the provision for credit losses in Texas was primarily due to an increase in specific reserves pertaining to a small number of individually evaluated loans.

Michigan Market













(dollar amounts in millions)

3rd Qtr '13



2nd Qtr '13



3rd Qtr '12


Net interest income (FTE)

$

186



$

187



$

193


Provision for credit losses

(8)



(4)



2


Noninterest income

88



88



95


Noninterest expenses

167



161



175


Net income

73



77



71








Net credit-related charge-offs

1



4



12








Selected average balances:






Assets

13,744



14,022



13,785


Loans

13,276



13,598



13,475


Deposits

20,465



20,159



19,628


 

California Market













(dollar amounts in millions)

3rd Qtr '13



2nd Qtr '13



3rd Qtr '12


Net interest income (FTE)

$

171



$

173



$

176


Provision for credit losses

(3)



7



6


Noninterest income

42



36



33


Noninterest expenses

101



100



98


Net income

71



65



67








Net credit-related charge-offs

8



12



11








Selected average balances:






Assets

14,245



14,155



13,171


Loans

14,002



13,912



12,915


Deposits

14,567



14,671



14,964


 

Texas Market













(dollar amounts in millions)

3rd Qtr '13



2nd Qtr '13



3rd Qtr '12


Net interest income (FTE)

$

129



$

131



$

138


Provision for credit losses

17



6



10


Noninterest income

35



34



30


Noninterest expenses

92



89



89


Net income

35



46



44








Net credit-related charge-offs

4



(3)



7








Selected average balances:






Assets

10,642



10,886



10,324


Loans

9,942



10,179



9,585


Deposits

10,298



10,187



9,941


Conference Call and Webcast

Comerica will host a conference call to review third quarter 2013 financial results at 7 a.m. CT Wednesday, October 16, 2013. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 60015337). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A replay of the Webcast can be accessed via Comerica's "Investor Relations" page at www.comerica.com.

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

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

Forward-looking Statements

Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "anticipates," "believes," "contemplates," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "opportunity," "initiative," "outcome," "continue," "remain," "maintain," "on course," "trend," "objective," "looks forward" and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "might," "can," "may" or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica's management based on information known to Comerica's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica's management for future or past operations, products or services, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries, estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in general economic, political or industry conditions; changes in monetary and fiscal policies, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; changes in Comerica's credit rating; the interdependence of financial service companies; changes in regulation or oversight; unfavorable developments concerning credit quality; any future acquisitions or divestitures; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers; the implementation of Comerica's strategies and business models; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; operational difficulties, failure of technology infrastructure or information security incidents; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; changes in accounting standards and the critical nature of Comerica's accounting policies. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. In particular, please refer to "Item 1A. Risk Factors" beginning on page 13 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2012 and on page 68 of the Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 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


Nine Months Ended


September 30,

June 30,

September 30,


September 30,

(in millions, except per share data)

2013

2013

2012


2013

2012

PER COMMON SHARE AND COMMON STOCK DATA







Diluted net income

$

0.78


$

0.76


$

0.61



$

2.23


$

2.00


Cash dividends declared

0.17


0.17


0.15



0.51


0.40


Common shareholders' equity (at period end)

37.94


37.32


37.01





Tangible common equity (at period end) (a)

34.38


33.79


33.56












Average diluted shares (in thousands)

187,104


186,998


191,492



187,180


193,991


KEY RATIOS







Return on average common shareholders' equity

8.50

%

8.23

%

6.67

%


8.14

%

7.46

%

Return on average assets

0.92


0.90


0.75



0.89


0.84


Tier 1 common capital ratio (a) (b)

10.74


10.43


10.37





Tier 1 risk-based capital ratio (b)

10.74


10.43


10.37





Total risk-based capital ratio (b)

13.44


13.29


13.69





Leverage ratio (b)

10.88


10.81


10.78





Tangible common equity ratio (a)

9.87


10.04


10.30





AVERAGE BALANCES







Commercial loans

$

27,759


$

28,393


$

26,700



$

28,069


$

25,810


Real estate construction loans:







Commercial Real Estate business line (c)

1,263


1,218


999



1,199


1,029


Other business lines (d)

259


235


390



231


391


     Total real estate construction loans

1,522


1,453


1,389



1,430


1,420


Commercial mortgage loans:







Commercial Real Estate business line (c)

1,714


1,798


2,140



1,782


2,367


Other business lines (d)

7,229


7,394


7,530



7,395


7,584


     Total commercial mortgage loans

8,943


9,192


9,670



9,177


9,951


Lease financing

839


855


852



850


873


International loans

1,252


1,262


1,302



1,265


1,257


Residential mortgage loans

1,642


1,602


1,488



1,600


1,498


Consumer loans

2,137


2,136


2,196



2,142


2,225


Total loans

44,094


44,893


43,597



44,533


43,034









Earning assets

58,892


58,928


57,801



58,810


56,883


Total assets

63,660


63,709


62,984



63,710


62,008









Noninterest-bearing deposits

22,379


22,076


21,469



21,991


20,415


Interest-bearing deposits

29,486


29,372


28,376



29,364


28,532


Total deposits

51,865


51,448


49,845



51,355


48,947









Common shareholders' equity

6,923


6,982


7,045



6,953


6,996


NET INTEREST INCOME







Net interest income (fully taxable equivalent basis)

$

413


$

415


$

428



$

1,244


$

1,306


Fully taxable equivalent adjustment

1


1


1



2


2


Net interest margin (fully taxable equivalent basis)

2.79

%

2.83

%

2.96

%


2.83

%

3.08

%

CREDIT QUALITY







Nonaccrual loans

$

437


$

449


$

665





Reduced-rate loans

22


22


27





Total nonperforming loans (e)

459


471


692





Foreclosed property

19


29


63





Total nonperforming assets (e)

478


500


755












Loans past due 90 days or more and still accruing

25


20


36












Gross loan charge-offs

39


35


59



$

112


$

185


Loan recoveries

20


18


16



52


52


Net loan charge-offs

19


17


43



60


133









Allowance for loan losses

604


613


647





Allowance for credit losses on lending-related commitments

34


36


35





Total allowance for credit losses

638


649


682












Allowance for loan losses as a percentage of total loans

1.37

%

1.35

%

1.46

%




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

0.18


0.15


0.39



0.18

%

0.41

%

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

1.08


1.10


1.71





Allowance for loan losses as a percentage of total nonperforming loans

131


130


94





(a)

See Reconciliation of Non-GAAP Financial Measures.

(b)

September 30, 2013 ratios are estimated.

(c)

Primarily loans to real estate developers.

(d)

Primarily loans secured by owner-occupied real estate.

(e)

Excludes loans acquired with credit-impairment.

(f)

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

 















 CONSOLIDATED BALANCE SHEETS

 Comerica Incorporated and Subsidiaries








September 30,

June 30,

December 31,

September 30,

(in millions, except share data)

2013

2013

2012

2012


(unaudited)

(unaudited)


(unaudited)

ASSETS





Cash and due from banks

$

1,384


$

1,016


$

1,395


$

933







Federal funds sold


31


100



Interest-bearing deposits with banks

5,704


2,878


3,039


3,005


Other short-term investments

106


119


125


146







Investment securities available-for-sale

9,488


9,631


10,297


10,569







Commercial loans

27,897


29,186


29,513


27,460


Real estate construction loans

1,552


1,479


1,240


1,392


Commercial mortgage loans

8,785


9,007


9,472


9,559


Lease financing

829


843


859


837


International loans

1,286


1,209


1,293


1,277


Residential mortgage loans

1,650


1,611


1,527


1,495


Consumer loans

2,152


2,124


2,153


2,174


     Total loans

44,151


45,459


46,057


44,194


Less allowance for loan losses

(604)


(613)


(629)


(647)


     Net loans

43,547


44,846


45,428


43,547







Premises and equipment

604


604


622


625


Accrued income and other assets

3,837


3,822


4,063


4,175


     Total assets

$

64,670


$

62,947


$

65,069


$

63,000







LIABILITIES AND SHAREHOLDERS' EQUITY





Noninterest-bearing deposits

$

23,896


$

21,870


$

23,279


$

21,753







Money market and interest-bearing checking deposits

21,697


21,677


21,273


20,397


Savings deposits

1,645


1,677


1,606


1,589


Customer certificates of deposit

5,180


5,594


5,531


5,742


Foreign office time deposits

491


437


502


486


     Total interest-bearing deposits

29,013


29,385


28,912


28,214


     Total deposits

52,909


51,255


52,191


49,967







Short-term borrowings

226


131


110


63


Accrued expenses and other liabilities

1,001


1,049


1,106


1,146


Medium- and long-term debt

3,565


3,601


4,720


4,740


     Total liabilities

57,701


56,036


58,127


55,916







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

2,171


2,160


2,162


2,153


Accumulated other comprehensive loss

(541)


(538)


(413)


(253)


Retained earnings

6,239


6,127


5,931


5,831


Less cost of common stock in treasury - 44,483,659 shares at 9/30/13, 42,999,083 shares at 6/30/13, 39,889,610 shares at 12/31/12 and 36,790,174 shares at 9/30/12

(2,041)


(1,979)


(1,879)


(1,788)


     Total shareholders' equity

6,969


6,911


6,942


7,084


     Total liabilities and shareholders' equity

$

64,670


$

62,947


$

65,069


$

63,000


 
















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)

2013

2012


2013

2012

INTEREST INCOME






Interest and fees on loans

$

381


$

400



$

1,159


$

1,219


Interest on investment securities

54


57



159


179


Interest on short-term investments

4


3



10


9


Total interest income

439


460



1,328


1,407


INTEREST EXPENSE






Interest on deposits

13


17



43


54


Interest on medium- and long-term debt

14


16



43


49


Total interest expense

27


33



86


103


Net interest income

412


427



1,242


1,304


Provision for credit losses

8


22



37


63


Net interest income after provision for credit losses

404


405



1,205


1,241


NONINTEREST INCOME






Service charges on deposit accounts

53


53



161


162


Fiduciary income

41


39



128


116


Commercial lending fees

28


22



71


71


Letter of credit fees

17


19



49


54


Card fees

20


16



55


48


Foreign exchange income

9


9



27


29


Bank-owned life insurance

12


10



31


30


Brokerage fees

5


5



14


14


Net securities gains (losses)

1




(1)


11


Other noninterest income

28


24



87


79


Total noninterest income

214


197



622


614


NONINTEREST EXPENSES






Salaries

196


192



566


582


Employee benefits

59


61



185


181


Total salaries and employee benefits

255


253



751


763


Net occupancy expense

41


40



119


121


Equipment expense

15


17



45


50


Outside processing fee expense

31


27



89


79


Software expense

22


23



66


67


Merger and restructuring charges


25




33


FDIC insurance expense

9


9



26


29


Advertising expense

6


7



18


21


Other real estate expense

1


2



3


6


Other noninterest expenses

37


46



132


161


Total noninterest expenses

417


449



1,249


1,330


Income before income taxes

201


153



578


525


Provision for income taxes

54


36



154


134


NET INCOME

147


117



424


391


Less income allocated to participating securities

2


1



6


4


Net income attributable to common shares

$

145


$

116



$

418


$

387


Earnings per common share:






Basic

$

0.80


$

0.61



$

2.28


$

2.00


Diluted

0.78


0.61



2.23


2.00








Comprehensive income

144


165



296


494








Cash dividends declared on common stock

31


29



95


78


Cash dividends declared per common share

0.17


0.15



0.51


0.40


 






























CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries






















Third

Second

First

Fourth

Third


Third Quarter 2013 Compared To:


Quarter

Quarter

Quarter

Quarter

Quarter


Second Quarter 2013


Third Quarter 2012

(in millions, except per share data)

2013

2013

2013

2012

2012


Amount

Percent


Amount

Percent

INTEREST INCOME












Interest and fees on loans

$

381


$

388


$

390


$

398


$

400



$

(7)


(2)%



$

(19)


(5)%


Interest on investment securities

54


52


53


55


57



2


6



(3)


(3)


Interest on short-term investments

4


3


3


3


3



1


25



1


9


Total interest income

439


443


446


456


460



(4)


(1)



(21)


(4)


INTEREST EXPENSE












Interest on deposits

13


15


15


16


17



(2)


(7)



(4)


(23)


Interest on medium- and long-term debt

14


14


15


16


16






(2)


(13)


Total interest expense

27


29


30


32


33



(2)


(5)



(6)


(18)


Net interest income

412


414


416


424


427



(2)




(15)


(3)


Provision for credit losses

8


13


16


16


22



(5)


(42)



(14)


(64)


Net interest income after provision for credit losses

404


401


400


408


405



3


1



(1)



NONINTEREST INCOME












Service charges on deposit accounts

53


53


55


52


53








Fiduciary income

41


44


43


42


39



(3)


(4)



2


6


Commercial lending fees

28


22


21


25


22



6


24



6


27


Letter of credit fees

17


16


16


17


19



1


1



(2)


(12)


Card fees

20


18


17


17


16



2


4



4


20


Foreign exchange income

9


9


9


9


9








Bank-owned life insurance

12


10


9


9


10



2


22



2


23


Brokerage fees

5


4


5


5


5



1






Net securities gains (losses)

1


(2)



1




3


N/M



1


N/M


Other noninterest income

28


34


25


27


24



(6)


(10)



4


20


Total noninterest income

214


208


200


204


197



6


3



17


9


NONINTEREST EXPENSES












Salaries

196


182


188


196


192



14


8



4


3


Employee benefits

59


63


63


59


61



(4)


(5)



(2)


(3)


Total salaries and employee benefits

255


245


251


255


253



10


5



2


2


Net occupancy expense

41


39


39


42


40



2


2



1



Equipment expense

15


15


15


15


17






(2)


(8)


Outside processing fee expense

31


30


28


28


27



1


10



4


22


Software expense

22


22


22


23


23






(1)


(5)


Merger and restructuring charges




2


25






(25)


N/M


FDIC insurance expense

9


8


9


9


9



1


10





Advertising expense

6


6


6


6


7






(1)


(15)


Other real estate expense

1


1


1


3


2






(1)


(49)


Other noninterest expenses

37


50


45


44


46



(13)


(26)



(9)


(20)


Total noninterest expenses

417


416


416


427


449



1


1



(32)


(7)


Income before income taxes

201


193


184


185


153



8


4



48


31


Provision for income taxes

54


50


50


55


36



4


7



18


47


NET INCOME

147


143


134


130


117



4


2



30


25


Less income allocated to participating securities

2


2


2


2


1






1


45


Net income attributable to common shares

$

145


$

141


$

132


$

128


$

116



$

4


2

%


$

29


25

%

Earnings per common share:












Basic

$

0.80


$

0.77


$

0.71


$

0.68


$

0.61



$

0.03


4

%


$

0.19


31

%

Diluted

0.78


0.76


0.70


0.68


0.61



0.02


3



0.17


28














Comprehensive income (loss)

144


15


137


(30)


165



129


N/M



(21)


(13)














Cash dividends declared on common stock

31


32


32


28


29



(1)


(1)



2


9


Cash dividends declared per common share

0.17


0.17


0.17


0.15


0.15






0.02


13


N/M - Not Meaningful

 

 



















ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)


Comerica Incorporated and Subsidiaries











2013


2012

(in millions)

3rd Qtr

2nd Qtr

1st Qtr


4th Qtr

3rd Qtr








Balance at beginning of period

$

613


$

617


$

629



$

647


$

667









Loan charge-offs:







Commercial

20


19


21



42


19


Real estate construction:







     Commercial Real Estate business line (a)

1


2




1


2


     Other business lines (b)







          Total real estate construction

1


2




1


2


Commercial mortgage:







     Commercial Real Estate business line (a)

6


2


1



5


12


     Other business lines (b)

3


7


12



6


13


          Total commercial mortgage

9


9


13



11


25


International






1


Residential mortgage

1


1


1



2


6


Consumer

8


4


3



4


6


     Total loan charge-offs

39


35


38



60


59









Recoveries on loans previously charged-off:







Commercial

8


11


6



13


7


Real estate construction

2


1


1



1


3


Commercial mortgage

7


3


5



6


5


Lease financing

1







International





1



Residential mortgage

1


1


1



1



Consumer

1


2


1



1


1


     Total recoveries

20


18


14



23


16


Net loan charge-offs

19


17


24



37


43


Provision for loan losses

10


13


12



19


23


Balance at end of period

$

604


$

613


$

617



$

629


$

647









Allowance for loan losses as a percentage of total loans

1.37

%

1.35

%

1.37

%


1.37

%

1.46

%








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

0.18


0.15


0.21



0.34


0.39


(a)

Primarily charge-offs of loans to real estate developers.

(b)

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

 



















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

Comerica Incorporated and Subsidiaries











2013


2012

(in millions)

3rd Qtr

2nd Qtr

1st Qtr


4th Qtr

3rd Qtr








Balance at beginning of period

$

36


$

36


$

32



$

35


$

36


Add: Provision for credit losses on lending-related commitments

(2)



4



(3)


(1)


Balance at end of period

$

34


$

36


$

36



$

32


$

35









Unfunded lending-related commitments sold

$

2


$

1


$

2



$


$


 



















NONPERFORMING ASSETS (unaudited)

Comerica Incorporated and Subsidiaries











2013


2012

(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

$

107


$

102


$

102



$

103


$

154


     Real estate construction:







     Commercial Real Estate business line (a)

24


26


30



30


45


          Other business lines (b)

1


2


3



3


6


               Total real estate construction

25


28


33



33


51


     Commercial mortgage:







          Commercial Real Estate business line (a)

67


69


86



94


137


     Other business lines (b)

139


157


178



181


219


               Total commercial mortgage

206


226


264



275


356


     Lease financing





3


3


     Total nonaccrual business loans

338


356


399



414


564


Retail loans:







     Residential mortgage

63


62


65



70


69


     Consumer:







          Home equity

34


28


28



31


28


          Other consumer

2


3


2



4


4


               Total consumer

36


31


30



35


32


     Total nonaccrual retail loans

99


93


95



105


101


Total nonaccrual loans

437


449


494



519


665


Reduced-rate loans

22


22


21



22


27


Total nonperforming loans (c)

459


471


515



541


692


Foreclosed property

19


29


40



54


63


Total nonperforming assets (c)

$

478


$

500


$

555



$

595


$

755









Nonperforming loans as a percentage of total loans

1.04

%

1.04

%

1.14

%


1.17

%

1.57

%

Nonperforming assets as a percentage of total loans and foreclosed property

1.08


1.10


1.23



1.29


1.71


Allowance for loan losses as a percentage of total nonperforming loans

131


130


120



116


94


Loans past due 90 days or more and still accruing

$

25


$

20


$

25



$

23


$

36









ANALYSIS OF NONACCRUAL LOANS







Nonaccrual loans at beginning of period

$

449


$

494


$

519



$

665


$

719


Loans transferred to nonaccrual (d)

50


37


34



36


35


Nonaccrual business loan gross charge-offs (e)

(25)


(25)


(34)



(54)


(46)


Nonaccrual business loans sold (f)

(17)


(9)


(7)



(48)


(20)


Payments/Other (g)

(20)


(48)


(18)



(80)


(23)


Nonaccrual loans at end of period

$

437


$

449


$

494



$

519


$

665


(a) Primarily loans to real estate developers.

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

(c) Excludes loans acquired with credit impairment.

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

(e) Analysis of gross loan charge-offs:

Nonaccrual business loans

$

25


$

25


$

34



$

54


$

46


Performing watch list loans

5


5





1


Consumer and residential mortgage loans

9


5


4



6


12


     Total gross loan charge-offs

$

39


$

35


$

38



$

60


$

59


(f) Analysis of loans sold:






      Nonaccrual business loans

$

17


$

9


$

7



$

48


$

20


      Performing watch list loans

31


40


12



24


42


     Total loans sold

$

48


$

49


$

19



$

72


$

62


(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, 2013


September 30, 2012


Average


Average


Average


Average

(dollar amounts in millions)

Balance

Interest

Rate


Balance

Interest

Rate









Commercial loans

$

28,069


$

688


3.28

%


$

25,810


$

673


3.48

%

Real estate construction loans

1,430


43


3.98



1,420


47


4.48


Commercial mortgage loans

9,177


271


3.95



9,951


337


4.51


Lease financing

850


21


3.22



873


19


2.92


International loans

1,265


35


3.73



1,257


35


3.73


Residential mortgage loans

1,600


50


4.13



1,498


52


4.66


Consumer loans

2,142


53


3.32



2,225


57


3.44


Total loans (a)

44,533


1,161


3.49



43,034


1,220


3.79










Mortgage-backed securities available-for-sale

9,339


158


2.29



9,317


177


2.60


Other investment securities available-for-sale

390


1


0.48



486


3


0.78


Total investment securities available-for-sale

9,729


159


2.21



9,803


180


2.51










Interest-bearing deposits with banks (b)

4,433


9


0.26



3,908


8


0.26


Other short-term investments

115


1


1.38



138


1


1.80


Total earning assets

58,810


1,330


3.03



56,883


1,409


3.32










Cash and due from banks

993





967




Allowance for loan losses

(627)





(707)




Accrued income and other assets

4,534





4,865




Total assets

$

63,710





$

62,008












Money market and interest-bearing checking deposits

$

21,594


22


0.13



$

20,577


26


0.18


Savings deposits

1,654



0.03



1,589


1


0.06


Customer certificates of deposit

5,603


19


0.44



5,993


25


0.54


Foreign office time deposits

513


2


0.54



373


2


0.64


Total interest-bearing deposits

29,364


43


0.19



28,532


54


0.25










Short-term borrowings

189



0.07



78



0.12


Medium- and long-term debt

4,109


43


1.42



4,846


49


1.36


Total interest-bearing sources

33,662


86


0.34



33,456


103


0.41










Noninterest-bearing deposits

21,991





20,415




Accrued expenses and other liabilities

1,104





1,141




Total shareholders' equity

6,953





6,996




Total liabilities and shareholders' equity

$

63,710





$

62,008












Net interest income/rate spread (FTE)


$

1,244


2.69




$

1,306


2.91










FTE adjustment


$

2





$

2











Impact of net noninterest-bearing sources of funds



0.14





0.17


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



2.83

%




3.08

%

(a)

Accretion of the purchase discount on the acquired loan portfolio of $26 million and $58 million in the nine months ended September 30, 2013 and 2012, respectively, increased the net interest margin by 6 basis points and 14 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 in both the nine months ended September 30, 2013 and 2012.































ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)

Comerica Incorporated and Subsidiaries




















Three Months Ended


September 30, 2013


June 30, 2013


September 30, 2012


Average


Average


Average


Average


Average


Average

(dollar amounts in millions)

Balance

Interest

Rate


Balance

Interest

Rate


Balance

Interest

Rate













Commercial loans

$

27,759


$

226


3.25

%


$

28,393


$

233


3.29

%


$

26,700


$

227


3.38

%

Real estate construction loans

1,522


15


3.78



1,453


15


4.04



1,389


15


4.36


Commercial mortgage loans

8,943


88


3.90



9,192


88


3.86



9,670


106


4.34


Lease financing

839


7


3.21



855


7


3.22



852


4


2.04


International loans

1,252


12


3.76



1,262


12


3.81



1,302


12


3.77


Residential mortgage loans

1,642


17


3.98



1,602


16


4.04



1,488


17


4.67


Consumer loans

2,137


17


3.27



2,136


18


3.30



2,196


19


3.44


Total loans (a)

44,094


382


3.44



44,893


389


3.47



43,597


400


3.66














Mortgage-backed securities available-for-sale

8,989


54


2.41



9,400


51


2.22



9,360


57


2.46


Other investment securities available-for-sale

391



0.43



393


1


0.52



431


1


0.86


Total investment securities available-for-sale

9,380


54


2.32



9,793


52


2.15



9,791


58


2.38














Interest-bearing deposits with banks (b)

5,308


4


0.26



4,125


3


0.26



4,276


3


0.26


Other short-term investments

110



0.77



117



1.05



137



1.88


Total earning assets

58,892


440


2.97



58,928


444


3.02



57,801


461


3.19














Cash and due from banks

1,027





972





971




Allowance for loan losses

(622)





(625)





(673)




Accrued income and other assets

4,363





4,434





4,885




Total assets

$

63,660





$

63,709





$

62,984
















Money market and interest-bearing checking deposits

$

21,894


7


0.13



$

21,544


8


0.13



$

20,483


8


0.17


Savings deposits

1,680



0.04



1,658



0.03



1,618



0.04


Customer certificates of deposit

5,384


6


0.41



5,685


6


0.43



5,894


8


0.52


Foreign office time deposits

528



0.48



485


1


0.60



381


1


0.71


Total interest-bearing deposits

29,486


13


0.18



29,372


15


0.19



28,376


17


0.24














Short-term borrowings

249



0.06



193



0.07



89



0.12


Medium- and long-term debt

3,590


14


1.54



4,044


14


1.43



4,745


16


1.35


Total interest-bearing sources

33,325


27


0.32



33,609


29


0.34



33,210


33


0.40














Noninterest-bearing deposits

22,379





22,076





21,469




Accrued expenses and other liabilities

1,033





1,042





1,260




Total shareholders' equity

6,923





6,982





7,045




Total liabilities and shareholders' equity

$

63,660





$

63,709





$

62,984
















Net interest income/rate spread (FTE)


$

413


2.65




$

415


2.68




$

428


2.79














FTE adjustment


$

1





$

1





$

1















Impact of net noninterest-bearing sources of funds



0.14





0.15





0.17


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



2.79

%




2.83

%




2.96

%

(a)

Accretion of the purchase discount on the acquired loan portfolio of $8 million, $7 million and $15 million in the third and second quarters of 2013 and the third quarter of 2012, respectively, increased the net interest margin by 5 basis points, 5 basis points and 10 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 24 basis points and 18 basis points in the third and second quarters of 2013 and 21 basis points in the third quarter of 2012, respectively.


















CONSOLIDATED STATISTICAL DATA (unaudited)

Comerica Incorporated and Subsidiaries









September 30,

June 30,

March 31,

December 31,

September 30,

(in millions, except per share data)

2013

2013

2013

2012

2012







Commercial loans:






Floor plan

$

2,869


$

3,241


$

2,963


$

2,939


$

2,276


Other

25,028


25,945


25,545


26,574


25,184


     Total commercial loans

27,897


29,186


28,508


29,513


27,460


Real estate construction loans:






Commercial Real Estate business line (a)

1,283


1,223


1,185


1,049


1,003


Other business lines (b)

269


256


211


191


389


     Total real estate construction loans

1,552


1,479


1,396


1,240


1,392


Commercial mortgage loans:






Commercial Real Estate business line (a)

1,592


1,743


1,812


1,873


2,020


Other business lines (b)

7,193


7,264


7,505


7,599


7,539


     Total commercial mortgage loans

8,785


9,007


9,317


9,472


9,559


Lease financing

829


843


853


859


837


International loans

1,286


1,209


1,269


1,293


1,277


Residential mortgage loans

1,650


1,611


1,568


1,527


1,495


Consumer loans:






Home equity

1,501


1,474


1,498


1,537


1,570


Other consumer

651


650


658


616


604


     Total consumer loans

2,152


2,124


2,156


2,153


2,174


     Total loans

$

44,151


$

45,459


$

45,067


$

46,057


$

44,194








Goodwill

$

635


$

635


$

635


$

635


$

635


Core deposit intangible

17


18


19


20


23


Loan servicing rights

1


2


2


2


2








Tier 1 common capital ratio (c) (d)

10.74

%

10.43

%

10.37

%

10.14

%

10.37

%

Tier 1 risk-based capital ratio (c)

10.74


10.43


10.37


10.14


10.37


Total risk-based capital ratio (c)

13.44


13.29


13.41


13.15


13.69


Leverage ratio (c)

10.88


10.81


10.75


10.57


10.78


Tangible common equity ratio (d)

9.87


10.04


9.86


9.76


10.30








Common shareholders' equity per share of common stock

$

37.94


$

37.32


$

37.41


$

36.87


$

37.01


Tangible common equity per share of common stock (d)

34.38


33.79


33.90


33.38


33.56


Market value per share for the quarter:






High

43.49


40.44


36.99


32.14


33.38


Low

38.56


33.55


30.73


27.72


29.32


Close

39.31


39.83


35.95


30.34


31.05








Quarterly ratios:






Return on average common shareholders' equity

8.50

%

8.23

%

7.68

%

7.36

%

6.67

%

Return on average assets

0.92


0.90


0.84


0.81


0.75


Efficiency ratio (e)

66.66


66.43


67.58


68.08


71.68








Number of banking centers

484


484


487


487


490








Number of employees - full time equivalent

8,918


8,929


9,001


9,035


9,079


(a)

Primarily loans to real estate developers.

(b)

Primarily loans secured by owner-occupied real estate.

(c)

September 30, 2013 ratios are estimated.

(d)

See Reconciliation of Non-GAAP Financial Measures.

(e)

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

 












PARENT COMPANY ONLY BALANCE SHEETS (unaudited)

Comerica Incorporated









September 30,

December 31,

September 30,

(in millions, except SHARE data)

2013

2012

2012





ASSETS




Cash and due from subsidiary bank

$

36


$

2


$

13


Short-term investments with subsidiary bank

480


431


418


Other short-term investments

92


88


88


Investment in subsidiaries, principally banks

7,008


7,045


7,200


Premises and equipment

4


4


4


Other assets

134


150


150


      Total assets

$

7,754


$

7,720


$

7,873






LIABILITIES AND SHAREHOLDERS' EQUITY




Medium- and long-term debt

$

620


$

629


$

632


Other liabilities

165


149


157


      Total liabilities

785


778


789






Common stock - $5 par value:




    Authorized - 325,000,000 shares




    Issued - 228,164,824 shares

1,141


1,141


1,141


Capital surplus

2,171


2,162


2,153


Accumulated other comprehensive loss

(541)


(413)


(253)


Retained earnings

6,239


5,931


5,831


Less cost of common stock in treasury - 44,483,659 shares at 9/30/13, 39,889,610 shares at 12/31/12 and 36,790,174 shares at 9/30/12

(2,041)


(1,879)


(1,788)


      Total shareholders' equity

6,969


6,942


7,084


      Total liabilities and shareholders' equity

$

7,754


$

7,720


$

7,873


 























CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)

Comerica Incorporated and Subsidiaries


















Accumulated





Common Stock


Other



Total


Shares


Capital

Comprehensive

Retained

Treasury

Shareholders'

(in millions, except per share data)

 Outstanding

Amount

Surplus

Loss

Earnings

Stock

Equity









BALANCE AT DECEMBER 31, 2011

197.3


$

1,141


$

2,170


$

(356)


$

5,546


$

(1,633)


$

6,868


Net income





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










BALANCE AT DECEMBER 31, 2012

188.3


$

1,141


$

2,162


$

(413)


$

5,931


$

(1,879)


$

6,942


Net income





424



424


Other comprehensive loss, net of tax




(128)




(128)


Cash dividends declared on common stock ($0.51 per share)





(95)



(95)


Purchase of common stock

(5.8)






(218)


(218)


Net issuance of common stock under employee stock plans

1.2



(18)



(21)


56


17


Share-based compensation



27





27


BALANCE AT SEPTEMBER 30, 2013

183.7


$

1,141


$

2,171


$

(541)


$

6,239


$

(2,041)


$

6,969


 


























 BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)

 Comerica Incorporated and Subsidiaries
































(dollar amounts in millions)

Business


Retail


Wealth







Three Months Ended September 30, 2013

Bank


Bank


Management


Finance


Other


Total

Earnings summary:












Net interest income (expense) (FTE)

$

368



$

151



$

45



$

(159)



$

8



$

413


Provision for credit losses

(1)



10



1





(2)



8


Noninterest income

89



45



61



18



1



214


Noninterest expenses

153



177



81



2



4



417


Provision (benefit) for income taxes (FTE)

96



3



9



(56)



3



55


Net income (loss)

$

209



$

6



$

15



$

(87)



$

4



$

147


Net credit-related charge-offs

$

9



$

7



$

3







$

19














Selected average balances:












Assets

$

35,298



$

5,967



$

4,789



$

11,097



$

6,509



$

63,660


Loans

34,178



5,285



4,631







44,094


Deposits

26,284



21,257



3,782



319



223



51,865














Statistical data:












Return on average assets (a)

2.38

%


0.12

%


1.21

%


N/M



N/M



0.92

%

Efficiency ratio (b)

33.50



90.27



77.22



N/M



N/M



66.66















Business


Retail


Wealth







Three Months Ended June 30, 2013

Bank


Bank


Management


Finance


Other


Total

Earnings summary:












Net interest income (expense) (FTE)

$

372



$

154



$

46



$

(165)



$

8



$

415


Provision for credit losses

10



5



(3)





1



13


Noninterest income

80



46



65



15



2



208


Noninterest expenses

147



178



77



3



11



416


Provision (benefit) for income taxes (FTE)

88



6



13



(55)



(1)



51


Net income (loss)

$

207



$

11



$

24



$

(98)



$

(1)



$

143


Net credit-related charge-offs

$

11



$

4



$

2







$

17














Selected average balances:












Assets

$

36,017



$

5,962



$

4,828



$

11,514



$

5,388



$

63,709


Loans

34,955



5,271



4,667







44,893


Deposits

25,987



21,241



3,701



283



236



51,448














Statistical data:












Return on average assets (a)

2.30

%


0.20

%


2.00

%


N/M



N/M



0.90

%

Efficiency ratio (b)

32.41



87.98



69.86



N/M



N/M



66.43















Business


Retail


Wealth







Three Months Ended September 30, 2012

Bank


Bank


Management


Finance


Other


Total

Earnings summary:












Net interest income (expense) (FTE)

$

380



$

161



$

47



$

(170)



10



$

428


Provision for credit losses

15



6



4





(3)



22


Noninterest income

76



41



62



14



4



197


Noninterest expenses

145



181



77



3



43



449


Provision (benefit) for income taxes (FTE)

89



5



10



(59)



(8)



37


Net income (loss)

$

207



$

10



$

18



$

(100)



$

(18)



$

117


Net credit-related charge-offs

$

27



$

13



$

3







$

43














Selected average balances:












Assets

$

34,861



$

5,964



$

4,566



$

11,873



$

5,720



$

62,984


Loans

33,856



5,265



4,476







43,597


Deposits

25,142



20,682



3,667



181



173



49,845














Statistical data:












Return on average assets (a)

2.38

%


0.19

%


1.59

%


 N/M



 N/M



0.75

%

Efficiency ratio (b)

31.67



89.07



71.04



 N/M



 N/M



71.68


 

(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 September 30, 2013

Michigan


California


Texas


Markets


&

Other

Total

Earnings summary:












Net interest income (expense) (FTE)

$

186



$

171



$

129



$

78



$

(151)



$

413


Provision for credit losses

(8)



(3)



17



4



(2)



8


Noninterest income

88



42



35



30



19



214


Noninterest expenses

167



101



92



51



6



417


Provision (benefit) for income taxes (FTE)

42



44



20



2



(53)



55


Net income (loss)

$

73



$

71



$

35



$

51



$

(83)



$

147


Net credit-related charge-offs

$

1



$

8



$

4



$

6



$



$

19














Selected average balances:












Assets

$

13,744



$

14,245



$

10,642



$

7,423



$

17,606



$

63,660


Loans

13,276



14,002



9,942



6,874





44,094


Deposits

20,465



14,567



10,298



5,993



542



51,865














Statistical data:












Return on average assets (a)

1.38

%


1.84

%


1.21

%


2.73

%


N/M



0.92

%

Efficiency ratio (b)

60.89



47.37



56.52



47.65



N/M



66.66





















Other


Finance



Three Months Ended June 30, 2013

Michigan


California


Texas


Markets


& Other


Total

Earnings summary:












Net interest income (expense) (FTE)

$

187



$

173



$

131



$

81



$

(157)



$

415


Provision for credit losses

(4)



7



6



3



1



13


Noninterest income

88



36



34



33



17



208


Noninterest expenses

161



100



89



52



14



416


Provision (benefit) for income taxes (FTE)

41



37



24



5



(56)



51


Net income (loss)

$

77



$

65



$

46



$

54



$

(99)



$

143


Net credit-related charge-offs

$

4



$

12



$

(3)



$

4



$



$

17














Selected average balances:












Assets

$

14,022



$

14,155



$

10,886



$

7,744



$

16,902



$

63,709


Loans

13,598



13,912



10,179



7,204





44,893


Deposits

20,159



14,671



10,187



5,912



519



51,448














Statistical data:












Return on average assets (a)

1.47

%


1.65

%


1.62

%


2.79

%


N/M



0.90

%

Efficiency ratio (b)

58.17



47.73



53.39



46.04



N/M



66.43





















Other


Finance



Three Months Ended September 30, 2012

Michigan


California


Texas


 

Markets


& Other


Total

Earnings summary:












Net interest income (expense) (FTE)

$

193



$

176



$

138



$

81



$

(160)



$

428


Provision for credit losses

2



6



10



7



(3)



22


Noninterest income

95



33



30



21



18



197


Noninterest expenses

175



98



89



41



46



449


Provision (benefit) for income taxes (FTE)

40



38



25



1



(67)



37


Net income (loss)

$

71



$

67



$

44



$

53



$

(118)



$

117


Net credit-related charge-offs

$

12



$

11



$

7



$

13



$



$

43














Selected average balances:












Assets

$

13,785



$

13,171



$

10,324



$

8,111



$

17,593



$

62,984


Loans

13,475



12,915



9,585



7,622





43,597


Deposits

19,628



14,964



9,941



4,958



354



49,845














Statistical data:












Return on average assets (a)

1.39

%


1.69

%


1.62

%


2.53

%


N/M



0.75

%

Efficiency ratio (b)

60.06



46.68



52.96



41.78



N/M



71.68


(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








September 30,

June 30,

March 31,

December 31,

September 30,

(dollar amounts in millions)

2013

2013

2013

2012

2012







Tier 1 Common Capital Ratio:






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

$

6,863


$

6,800


$

6,748


$

6,705


$

6,685








Risk-weighted assets (a) (b)

$

63,917


$

65,220


$

65,099


$

66,115


$

64,486








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

10.74

%

10.43

%

10.37

%

10.14

%

10.37

%







Basel III Tier 1 Common Capital Ratio:






Tier 1 common capital (b)

$

6,863


$

6,800


$

6,748


$

6,705


$

6,685


Basel III adjustments (c)



(1)


(39)


(17)


Basel III Tier 1 common capital (c)

6,863


6,800


6,747


6,666


6,668








Risk-weighted assets (a) (b)

$

63,917


$

65,220


$

65,099


$

66,115


$

64,486


Basel III adjustments (c)

2,295


2,091


1,996


1,854


2,313


Basel III risk-weighted assets (c)

$

66,212


$

67,311


$

67,095


$

67,969


$

66,799








Tier 1 common capital ratio (b)

10.7

%

10.4

%

10.4

%

10.1

%

10.4

%

Basel III Tier 1 common capital ratio (c)

10.4


10.1


10.1


9.8


10.0








Tangible Common Equity Ratio:






Common shareholders' equity

$

6,969


$

6,911


$

6,988


$

6,942


$

7,084


Less:






Goodwill

635


635


635


635


635


Other intangible assets

18


20


21


22


25


Tangible common equity

$

6,316


$

6,256


$

6,332


$

6,285


$

6,424








Total assets

$

64,670


$

62,947


$

64,885


$

65,069


$

63,000


Less:






Goodwill

635


635


635


635


635


Other intangible assets

18


20


21


22


25


Tangible assets

$

64,017


$

62,292


$

64,229


$

64,412


$

62,340








Common equity ratio

10.78

%

10.98

%

10.77

%

10.67

%

11.24

%

Tangible common equity ratio

9.87


10.04


9.86


9.76


10.30








Tangible Common Equity per Share of Common Stock:






Common shareholders' equity

$

6,969


$

6,911


$

6,988


$

6,942


$

7,084


Tangible common equity

6,316


6,256


6,332


6,285


6,424








Shares of common stock outstanding (in millions)

184


185


187


188


191








Common shareholders' equity per share of common stock

$

37.94


$

37.32


$

37.41


$

36.87


$

37.01


Tangible common equity per share of common stock

34.38


33.79


33.90


33.38


33.56


(a)

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

(b)

September 30, 2013 Tier 1 capital and risk-weighted assets are estimated.

(c)

Estimated ratios based on the standardized approach in the final rule for the U.S. adoption of the Basel III regulatory capital framework and 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 Tier 1 common capital ratio further adjusts Tier 1 common capital and risk-weighted assets to account for the final rule approved by U.S. banking regulators in July 2013 for the U.S. adoption of the Basel III regulatory capital framework. The final Basel III capital rules are effective January 1, 2015 for banking organizations subject to the standardized approach. The tangible common equity ratio removes preferred stock and the effect of intangible assets from capital and the effect of intangible assets from total assets. Tangible common equity per share of common stock removes the effect of intangible assets from common shareholders equity per share of common stock. Comerica believes these measurements are meaningful measures of capital adequacy used by investors, regulators, management and others to evaluate the adequacy of common equity and to compare against other companies in the industry.

 

 

SOURCE Comerica Incorporated



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