Comerica Reports Second Quarter 2015 Net Income Of $135 Million, OR 73 Cents Per Share

Average Loan Growth of $682 Million, or 1 Percent, Compared to First Quarter 2015 and $2.1 Billion, or 5 Percent, Compared to Second Quarter 2014

Revenue Increased 2 Percent Compared to First Quarter 2015

Returned $96 Million to Shareholders Through Equity Buybacks and Increased Dividend

Jul 17, 2015, 06:40 ET from Comerica Incorporated

DALLAS, July 17, 2015 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported second quarter 2015 net income of $135 million, compared to $134 million for the first quarter 2015 and $151 million for the second quarter 2014. Earnings per diluted share were 73 cents for both the second and first quarters of 2015 and 80 cents for the second quarter 2014.

 

(dollar amounts in millions, except per share data)

2nd Qtr '15

1st Qtr '15

2nd Qtr '14

Net interest income

$

421

$

413

$

416

Provision for credit losses

47

14

11

Noninterest income (a)

261

255

220

Noninterest expenses (a)

436

(b)

459

404

Provision for income taxes

64

61

70

Net income

135

134

151

Net income attributable to common shares

134

132

149

Diluted income per common share

0.73

0.73

0.80

Average diluted shares (in millions)

182

182

186

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

10.53

%

10.40

%

n/a

Tier 1 common capital ratio (c) (e)

n/a

n/a

10.50

%

Tangible common equity ratio (e)

9.92

9.97

10.39

(a)

Effective January 1, 2015, contractual changes to a card program resulted in a change to the accounting presentation of the related revenues and expenses. The effect of this change was increases of $44 million to both noninterest income and noninterest expenses in both the second and first quarters of 2015.

(b)

Reflects a $31 million reduction in litigation-related expense.

(c)

Basel III capital rules (standardized approach) became effective for Comerica on January 1, 2015. The ratio reflects transitional treatment for certain regulatory deductions and adjustments. For further information, see "Balance Sheet and Capital Management". Capital ratios for prior periods are based on Basel I rules.

(d)

June 30, 2015 ratio is estimated.

(e)

See Reconciliation of Non-GAAP Financial Measures.

n/a - not applicable.

 

"Our second quarter results reflect the advantages of our diverse geographic footprint and industry expertise," said Ralph W. Babb, Jr., chairman and chief executive officer. "Average loans were up $2.1 billion, or 5 percent, compared to a year ago and were up $682 million, or 1 percent, relative to the first quarter, with increases in most markets and business lines. Relative to the first quarter, average deposits increased $408 million, or 1 percent, with noninterest-bearing deposits up $668 million.

"Revenue was up 2 percent, with growth in both net interest income and fee income in the second quarter. Charge-offs, nonaccruals and criticized loans remained well below normal historical levels. The provision for credit losses increased, primarily as a result of an increase in reserves for energy exposure. Noninterest expenses decreased $23 million to $436 million, primarily due to a decrease in litigation-related expense.

"Our balance sheet is well positioned to benefit as rates rise. We remain focused on the long term with a relationship banking strategy that continues to serve us well."

Second Quarter 2015 Compared to First Quarter 2015

  • Average total loans increased $682 million, or 1 percent, to $48.8 billion, primarily driven by a $690 million increase in Mortgage Banker Finance, as well as increases in general Middle Market, Private Banking and National Dealer Services, partially offset by decreases of $276 million in Energy and $151 million in Corporate Banking. Average loans increased across all markets except Texas, which decreased as a result of Energy. Period-end total loans increased $669 million, to $49.7 billion.
  • Average total deposits increased $408 million, or 1 percent, to $57.4 billion, primarily driven by an increase in noninterest-bearing deposits of $668 million, across all markets. Period-end total deposits increased $690 million, to $58.3 billion.
  • Net interest income increased $8 million, or 2 percent, to $421 million in the second quarter 2015, compared to $413 million in the first quarter 2015, primarily due to an increase in loan volume and one additional day in the quarter.
  • Net charge-offs were $18 million, or 0.15 percent of average loans, in the second quarter 2015, compared to $8 million, or 0.07 percent, in the first quarter 2015. The provision for credit losses increased to $47 million in the second quarter 2015, primarily as a result of an increase in reserves for energy exposure.
  • Noninterest income increased $6 million in the second quarter 2015, primarily due to an increase in card fees, as well as small increases in several other fee categories, partially offset by a decrease in commercial lending fees.
  • Noninterest expenses decreased $23 million in the second quarter 2015, primarily reflecting a $31 million decrease in litigation-related expense and a seasonal decrease in salaries and benefits expense, partially offset by an increase in outside processing fees.
  • Capital remained solid at June 30, 2015, as evidenced by an estimated common equity Tier 1 capital ratio of 10.53 percent and a tangible common equity ratio of 9.92 percent.
  • The quarterly dividend increased 5 percent, to $0.21 per share in the second quarter 2015, and Comerica repurchased approximately 1.0 million shares of common stock and 500,000 warrants under the equity repurchase program. These equity repurchases, together with dividends, returned $96 million to shareholders.

Second Quarter 2015 Compared to Second Quarter 2014

  • Average total loans increased $2.1 billion, or 5 percent, reflecting increases in almost all lines of business.
  • Average total deposits increased $4.0 billion, or 8 percent, driven by increases in noninterest-bearing deposits of $3.4 billion, or 14 percent, and money market and NOW deposits of $1.4 billion, or 6 percent, partially offset by decreases in other deposit categories. Average deposits increased in all major lines of business and markets.
  • Net interest income increased $5 million, largely due to loan growth, partially offset by an $8 million decrease in accretion on the purchased loan portfolio.
  • The provision for credit losses increased $36 million, primarily as a result of an increase in reserves for energy exposure.
  • Excluding the impact of a change to the accounting presentation for a card program, which increased both noninterest income and noninterest expenses by $44 million in the second quarter 2015, noninterest income decreased $3 million, primarily reflecting increases in fiduciary income, service charges and card fees, which were more than offset by declines in foreign exchange income and several non-fee categories; and noninterest expenses decreased $12 million, largely reflecting a $33 million reduction in litigation-related expenses, partially offset by higher outside processing expenses related to revenue generating activities and an increase in technology-related contract labor expenses.

 

Net Interest Income

(dollar amounts in millions)

2nd Qtr '15

1st Qtr '15

2nd Qtr '14

Net interest income

$

421

$

413

$

416

Net interest margin

2.65

%

2.64

%

2.78

%

Selected average balances:

Total earning assets

$

63,981

$

63,480

$

60,148

Total loans

48,833

48,151

46,725

Total investment securities

9,936

9,907

9,364

Federal Reserve Bank deposits

4,968

5,176

3,801

Total deposits

57,398

56,990

53,384

Total noninterest-bearing deposits

27,365

26,697

24,011

 

  • Net interest income increased $8 million to $421 million in the second quarter 2015, compared to the first quarter 2015.
    • Interest on loans increased $11 million, primarily reflecting the benefit from an increase in average loan balances (+$5 million), the impact of one additional day in the second quarter (+$4 million) and an increase in yields (+$2 million), in part reflecting an increase in LIBOR rates.
    • The increase in interest on loans was partially offset by decreases totaling $3 million resulting primarily from lower yields on investment securities, a decrease in average Federal Reserve Bank deposit balances and an increase in interest expense on debt.
  • The net interest margin of 2.65 percent increased 1 basis point compared to the first quarter 2015, primarily due to higher loan yields.

Noninterest Income Noninterest income increased $6 million in the second quarter 2015, compared to $255 million for the first quarter 2015. The increase primarily reflected a $5 million increase in card fees as well as small increases in service charges on deposit accounts, fiduciary income and brokerage fees, partially offset by a $3 million decrease in commercial lending fees. The increase in card fees primarily reflected increased revenue from merchant payment processing services and interchange. The decrease in commercial lending fees was primarily due to decreases in unused commitment fees and syndication agent fees.

Noninterest Expenses Noninterest expenses decreased $23 million in the second quarter 2015, compared to $459 million for the first quarter 2015, primarily reflecting a $31 million decrease in litigation-related expenses and a $2 million decrease in salaries and benefits expense, partially offset by an $8 million increase in outside processing fees associated with revenue-generating activities. Related to litigation expense, on July 1, 2015, the Montana Supreme Court issued a ruling favorable to Comerica on a lender liability case, which reversed a jury verdict and sent the case back for a new trial. The decrease in salaries and benefits expense primarily reflected seasonal decreases in payroll taxes and share-based compensation expense, partially offset by an increase in technology-related contract labor expense and the impact on salaries of merit increases and one additional day in the second quarter.

Credit Quality "Overall, credit quality remained solid. Net charge-offs continued to be well below normal levels at 15 basis points, or $18 million," said Babb." Net charge-offs related to our energy exposure were nominal. The provision for credit losses increased from a very low level due to an increase in criticized loans related to energy, as well as uncertainty due to continued volatility and the sustained low oil and gas prices. The reserve to total loans ratio increased to 1.24 percent, and the reserve covered nonperforming loans 1.7 times.

"Our Energy customers are generally decreasing their loan commitments and outstandings as they take the necessary actions to adjust to lower energy prices, such as reducing their expenses, disposing of assets, and tapping the capital markets. On average, loan to values remained stable from the last redetermination.

Over the past 30 years, we have built our energy business with a strategy to withstand the ups and downs of the cycles."

 

(dollar amounts in millions)

2nd Qtr '15

1st Qtr '15

2nd Qtr '14

Net loan charge-offs

$

18

$

8

$

9

Net loan charge-offs/Average total loans

0.15

%

0.07

%

0.08

%

Provision for credit losses

$

47

$

14

$

11

Nonperforming loans (a)

361

279

347

Nonperforming assets (NPAs) (a)

370

288

360

NPAs/Total loans and foreclosed property

0.74

%

0.59

%

0.75

%

Loans past due 90 days or more and still accruing

$

18

$

12

$

7

Allowance for loan losses

618

601

591

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

50

39

42

Total allowance for credit losses

668

640

633

Allowance for loan losses/Period-end total loans

1.24

%

1.22

%

1.23

%

Allowance for loan losses/Nonperforming loans

171

216

170

(a)

Excludes loans acquired with credit impairment.

(b)

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

 

  • The provision for credit losses increased to $47 million in the second quarter 2015, primarily reflecting higher reserves for loans related to energy(a) as a result of an increase in criticized loans and the impact of continued volatility and sustained low energy prices. To a lesser extent, Technology and Life Sciences as well as Corporate Banking contributed to the increase in the provision, largely as a result of charge-offs and variability. These increases were partially offset by credit quality improvements in the remainder of the portfolio.
  • Net charge-offs increased $10 million to $18 million, or 0.15 percent of average loans, in the second quarter 2015, compared to $8 million, or 0.07 percent, in the first quarter 2015.
  • During the second quarter 2015, $145 million of borrower relationships over $2 million were transferred to nonaccrual status, of which $100 million were loans related to energy.
  • Criticized loans increased $294 million to $2.4 billion at June 30, 2015, compared to $2.1 billion at March 31, 2015, reflecting an increase of approximately $329 million in criticized loans related to energy.

(a)  Loans related to energy at June 30, 2015 included approximately $3.3 billion of outstanding loans in our Energy business line as well as approximately $725 million of loans in other lines of business to companies that have a sizable portion of their revenue related to energy or could be otherwise disproportionately negatively impacted by prolonged low oil and gas prices.

Balance Sheet and Capital Management Total assets and common shareholders' equity were $69.9 billion and $7.5 billion, respectively, at June 30, 2015, compared to $69.3 billion and $7.5 billion, respectively, at March 31, 2015.

There were approximately 178 million common shares outstanding at June 30, 2015. Share repurchases of $49 million (1.0 million shares) and warrant repurchases of $10 million (500,000 warrants) under the equity repurchase program, combined with dividends of 21 cents per share, returned 71 percent of second quarter 2015 net income to shareholders. Diluted average shares remained stable at 182 million for the second quarter 2015, as an increase in share dilution from options and warrants due to an increase in Comerica's average stock price offset the impact of equity repurchases.

The estimated common equity Tier 1 capital ratio, reflective of transition provisions and excluding accumulated other comprehensive income ("AOCI"), was 10.53 percent at June 30, 2015. Certain deductions and adjustments to regulatory capital began phasing in on January 1, 2015 and will be fully implemented on January 1, 2018. The estimated ratio under fully phased-in Basel III capital rules is not significantly different from the transitional ratio. Comerica's tangible common equity ratio was 9.92 percent at June 30, 2015, a decrease of 5 basis points from March 31, 2015.

Full-Year 2015 Outlook Management expectations for full-year 2015 compared to full-year 2014, assuming a continuation of the current economic and low-rate environment, are as follows:

  • Average full-year loan growth consistent with 2014, reflecting seasonal declines in Mortgage Banker Finance and National Dealer Services in the second half of the year, a continued decline in Energy, and a sustained focus on pricing and structure discipline.
  • Net interest income relatively stable, assuming no rise in interest rates, reflecting a decrease of about $30 million in purchase accounting accretion, to about $6 million, and the impact of a continuing low rate environment on asset yields, offset by earning asset growth.
  • Provision for credit losses higher, with third and fourth quarter net charge-offs each at levels similar to the second quarter. If energy prices remain low, continued negative migration is possible, which may be offset by lower exposure balances.
  • Noninterest income relatively stable, excluding the impact of the change in accounting presentation for a card program. Stable noninterest income reflects growth in fee income, particularly card fees and fiduciary income, mostly offset by a decline in warrant income and regulatory impacts on letter of credit and derivative income.
  • Noninterest expenses higher, excluding the impact of the change in accounting presentation for a card program, with continued focus on driving efficiencies for the long term. Expenses for the second half of 2015 are expected to be higher than the first half, reflecting three more days in the second half, the impact of merit increases, a ramp-up in the second half of technology and regulatory expenses, as well as higher pension, outside processing and occupancy expenses.
  • Income tax expense to approximate 32 percent of pre-tax income.

Business Segments Comerica's operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank and Wealth Management. The Finance Division is also reported as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at June 30, 2015 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses second quarter 2015 results compared to first quarter 2015.

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

(dollar amounts in millions)

2nd Qtr '15

1st Qtr '15

2nd Qtr '14

Business Bank

$

182

81

%

$

189

85

%

$

197

82

%

Retail Bank

18

8

17

8

16

7

Wealth Management

26

11

16

7

25

11

226

100

%

222

100

%

238

100

%

Finance

(90)

(89)

(91)

Other (a)

(1)

1

4

    Total

$

135

$

134

$

151

(a)

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

 

Business Bank

(dollar amounts in millions)

2nd Qtr '15

1st Qtr '15

2nd Qtr '14

Net interest income (FTE)

$

375

$

370

$

375

Provision for credit losses

61

25

35

Noninterest income

140

142

100

Noninterest expenses

176

200

143

Net income

182

189

197

Net credit-related charge-offs

22

9

9

Selected average balances:

Assets

39,135

38,654

37,305

Loans

38,109

37,623

36,367

Deposits

30,229

30,143

27,351

 

  • Average loans increased $486 million, primarily reflecting increases in Mortgage Banker Finance, general Middle Market and National Dealer Services, partially offset by decreases in Energy and Corporate Banking.
  • Average deposits increased $86 million, primarily reflecting increases in Technology and Life Sciences, general Middle Market and Corporate Banking, partially offset by a decrease in Commercial Real Estate.
  • Net interest income increased $5 million, primarily due to the benefit from an increase in average loan balances and one more day in the quarter, partially offset by a lower funds transfer pricing (FTP) crediting rate.
  • The provision for credit losses increased $36 million, reflecting higher reserves for loans related to energy as a result of an increase in criticized loans and the impact of continued volatility and sustained low energy prices. To a lesser extent, Technology and Life Sciences as well as Corporate Banking contributed to the increase in the provision, largely as a result of charge-offs and variability. These increases were partially offset by credit quality improvements in the remainder of the portfolio.
  • Noninterest income decreased $2 million, primarily due to decreases in customer derivative income and commercial lending fees, partially offset by an increase in card fees.
  • Noninterest expenses decreased $24 million, primarily driven by a reduction in litigation-related expense, partially offset by an increase in outside processing fees.

 

Retail Bank

(dollar amounts in millions)

2nd Qtr '15

1st Qtr '15

2nd Qtr '14

Net interest income (FTE)

$

155

$

151

$

152

Provision for credit losses

(8)

(8)

(6)

Noninterest income

46

42

41

Noninterest expenses

182

175

174

Net income

18

17

16

Net credit-related charge-offs

1

3

Selected average balances:

Assets

6,459

6,368

6,222

Loans

5,770

5,694

5,554

Deposits

22,747

22,404

21,890

 

  • Average loans increased $76 million, largely due to an increase in Small Business.
  • Average deposits increased $343 million, primarily reflecting an increase in noninterest-bearing deposits.
  • Net interest income increased $4 million, primarily due to an increase in net FTP credits, largely due to the increase in average deposits and the impact of one additional day in the quarter.
  • Noninterest income increased $4 million, due to small increases in several fee categories.
  • Noninterest expenses increased $7 million, primarily reflecting an increase in outside processing fees and salaries expense. Salaries expense increased primarily due to the impact of merit increases and one additional day in the quarter.

 

Wealth Management

(dollar amounts in millions)

2nd Qtr '15

1st Qtr '15

2nd Qtr '14

Net interest income (FTE)

$

45

$

43

$

44

Provision for credit losses

(9)

(1)

(10)

Noninterest income

60

58

62

Noninterest expenses

74

77

76

Net income

26

16

25

Net credit-related charge-offs (recoveries)

(5)

(1)

(3)

Selected average balances:

Assets

5,153

5,029

4,987

Loans

4,954

4,834

4,804

Deposits

4,060

3,996

3,616

 

  • Average loans increased $120 million.
  • Average deposits increased $64 million, primarily reflecting an increase in noninterest-bearing deposits.
  • Net interest income increased $2 million, largely driven by the increase in average loan balances and one additional day in the quarter.
  • The provision for credit losses decreased $8 million, primarily reflecting credit quality improvement.
  • Noninterest income increased $2 million, primarily reflecting the impact of a securities loss in the first quarter which was not repeated.
  • Noninterest expenses decreased $3 million, reflecting small decreases in several categories.

 

Geographic Market Segments Comerica also provides market segment results for three primary geographic markets: Michigan, California and Texas. In addition to the three primary geographic markets, Other Markets is also reported as a market segment. Other Markets includes Florida, Arizona, the International Finance division and businesses that have a significant presence outside of the three primary geographic markets. The tables below present the geographic market results based on the methodologies in effect at June 30, 2015 and are presented on a fully taxable equivalent (FTE) basis.

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

(dollar amounts in millions)

2nd Qtr '15

1st Qtr '15

2nd Qtr '14

Michigan

$

98

44

%

$

73

33

%

$

77

32

%

California

71

31

73

33

63

27

Texas

14

6

32

14

39

16

Other Markets

43

19

44

20

59

25

226

100

%

222

100

%

238

100

%

Finance & Other (a)

(91)

(88)

(87)

   Total

$

135

$

134

$

151

(a)

 Includes items not directly associated with the geographic markets.

 

  • Average loans increased $236 million in California and $67 million in Michigan (primarily general Middle Market), and decreased $281 million in Texas (primarily Energy). The increase in California was led by Technology and Life Sciences, National Dealer Services and Private Banking.
  • Average deposits increased $438 million in California and decreased $51 million and $4 million in Texas and Michigan, respectively. The increase in California was primarily due to increases in Technology and Life Sciences and general Middle Market, partially offset by a decrease in Commercial Real Estate.
  • Net interest income increased $5 million and $2 million in California and Michigan, respectively, and decreased $1 million in Texas. The increase in California primarily reflected the benefit from an increase in loan balances, while the decrease in Texas was primarily the result of decreased loan balances. Net interest income in all three markets reflected the benefit from one additional day in the quarter.
  • Net charge-offs decreased $5 million in Michigan, and increased $5 million in California and $2 million in Texas. The provision for credit losses decreased $5 million in Michigan and increased $7 million in California and $22 million in Texas. The decrease in Michigan primarily reflected improved credit quality throughout the portfolio. The increase in Texas was driven by higher reserves due to an increase in criticized loans related to energy and the impact of continued volatility and sustained low energy prices, while the increase in California primarily reflected higher reserves in Technology and Life Sciences.
  • Noninterest income increased $5 million in Michigan, remained unchanged in California and decreased $5 million in Texas. The increase in Michigan primarily reflected small increases in several fee categories. The decrease in Texas was primarily due to decreases in commercial lending fees, customer derivative income and foreign exchange income.
  • Noninterest expenses decreased $26 million in Michigan, primarily reflecting a decrease in litigation-related expense, decreased $2 million in Texas and increased $1 million in California.

 

Michigan Market

(dollar amounts in millions)

2nd Qtr '15

1st Qtr '15

2nd Qtr '14

Net interest income (FTE)

$

179

$

177

$

182

Provision for credit losses

(13)

(8)

(9)

Noninterest income

85

80

89

Noninterest expenses

128

154

159

Net income

98

73

77

Net credit-related charge-offs (recoveries)

(2)

3

10

Selected average balances:

Assets

13,852

13,736

13,851

Loans

13,290

13,223

13,482

Deposits

21,706

21,710

20,694

California Market

(dollar amounts in millions)

2nd Qtr '15

1st Qtr '15

2nd Qtr '14

Net interest income (FTE)

$

181

$

176

$

176

Provision for credit losses

4

(3)

14

Noninterest income

37

37

38

Noninterest expenses

100

99

100

Net income

71

73

63

Net credit-related charge-offs

6

1

5

Selected average balances:

Assets

16,696

16,461

15,721

Loans

16,429

16,193

15,439

Deposits

17,275

16,837

15,370

Texas Market

(dollar amounts in millions)

2nd Qtr '15

1st Qtr '15

2nd Qtr '14

Net interest income (FTE)

$

130

$

131

$

137

Provision for credit losses

43

21

22

Noninterest income

31

36

35

Noninterest expenses

94

96

89

Net income

14

32

39

Net credit-related charge-offs

5

3

2

Selected average balances:

Assets

11,878

12,192

11,661

Loans

11,254

11,535

10,966

Deposits

10,959

11,010

10,724

 

Conference Call and Webcast Comerica will host a conference call to review second quarter 2015 financial results at 8 a.m. CT Friday, July 17, 2015. Interested parties may access the conference call by calling (877) 523-5249 or (210) 591-1147 (event ID No. 61399381). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A replay of the Webcast can be accessed via Comerica's "Investor Relations" page at www.comerica.com.

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

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

Forward-looking Statements Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "anticipates," "believes," "contemplates," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "opportunity," "initiative," "outcome," "continue," "remain," "maintain," "on course," "trend," "objective," "looks forward," "projects," "models" and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "might," "can," "may" or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica's management based on information known to Comerica's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica's management for future or past operations, products or services, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries, estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in general economic, political or industry conditions; changes in monetary and fiscal policies, including changes in interest rates; changes in regulation or oversight; Comerica's ability to maintain adequate sources of funding and liquidity; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers, including the energy industry; operational difficulties, failure of technology infrastructure or information security incidents; reliance on other companies to provide certain key components of business infrastructure; factors impacting noninterest expenses which are beyond Comerica's control; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; changes in Comerica's credit rating; unfavorable developments concerning credit quality; the interdependence of financial service companies; the implementation of Comerica's strategies and business initiatives; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; any future strategic acquisitions or divestitures; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, 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, 2014. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

Comerica Incorporated and Subsidiaries

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

(in millions, except per share data)

2015

2015

2014

2015

2014

PER COMMON SHARE AND COMMON STOCK DATA

Diluted net income

$

0.73

$

0.73

$

0.80

$

1.46

$

1.54

Cash dividends declared

0.21

0.20

0.20

0.41

0.39

Average diluted shares (in thousands)

182,422

182,268

186,108

182,281

186,402

KEY RATIOS

Return on average common shareholders' equity

7.21

%

7.20

%

8.27

%

7.20

%

7.97

%

Return on average assets

0.79

0.78

0.93

0.78

0.90

Common equity tier 1 risk-based capital ratio (a) (b)

10.53

10.40

n/a

Tier 1 common risk-based capital ratio (c)

n/a

n/a

10.50

Tier 1 risk-based capital ratio (a) (b)

10.53

10.40

10.50

Total risk-based capital ratio (a) (b)

12.53

12.35

12.52

Leverage ratio (a) (b)

10.57

10.53

10.93

Tangible common equity ratio (c)

9.92

9.97

10.39

AVERAGE BALANCES

Commercial loans

$

31,788

$

31,090

$

29,890

$

31,442

$

29,130

Real estate construction loans

1,807

1,938

1,913

1,872

1,871

Commercial mortgage loans

8,672

8,581

8,749

8,627

8,759

Lease financing

795

797

850

796

849

International loans

1,453

1,512

1,328

1,482

1,315

Residential mortgage loans

1,877

1,856

1,773

1,866

1,749

Consumer loans

2,441

2,377

2,222

2,409

2,232

Total loans

48,833

48,151

46,725

48,494

45,905

Earning assets

63,981

63,480

60,148

63,732

60,033

Total assets

68,963

68,735

64,878

68,852

64,794

Noninterest-bearing deposits

27,365

26,697

24,011

27,033

23,626

Interest-bearing deposits

30,033

30,293

29,373

30,163

29,453

Total deposits

57,398

56,990

53,384

57,196

53,079

Common shareholders' equity

7,512

7,453

7,331

7,482

7,280

NET INTEREST INCOME (fully taxable equivalent basis)

Net interest income

$

422

$

414

$

417

$

836

$

828

Net interest margin

2.65

%

2.64

%

2.78

%

2.65

%

2.78

%

CREDIT QUALITY

Total nonperforming assets

$

370

$

288

$

360

Loans past due 90 days or more and still accruing

18

12

7

Net loan charge-offs

18

8

9

$

26

$

21

Allowance for loan losses

618

601

591

Allowance for credit losses on lending-related commitments

50

39

42

Total allowance for credit losses

668

640

633

Allowance for loan losses as a percentage of total loans

1.24

%

1.22

%

1.23

%

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

0.15

0.07

0.08

0.11

%

0.09

%

Nonperforming assets as a percentage of total loans and foreclosed property

0.74

0.59

0.75

Allowance for loan losses as a percentage of total nonperforming loans

171

216

170

(a)

Basel III rules became effective on January 1, 2015, with transitional provisions. All prior period data is based on Basel I rules.

(b)

June 30, 2015 ratios are estimated.

(c)

See Reconciliation of Non-GAAP Financial Measures.

n/a - not applicable.

 

 

CONSOLIDATED BALANCE SHEETS

Comerica Incorporated and Subsidiaries

June 30,

March 31,

December 31,

June 30,

(in millions, except share data)

2015

2015

2014

2014

(unaudited)

(unaudited)

(unaudited)

ASSETS

Cash and due from banks

$

1,148

$

1,170

$

1,026

$

1,226

Interest-bearing deposits with banks

4,817

4,792

5,045

2,668

Other short-term investments

119

101

99

109

Investment securities available-for-sale

8,267

8,214

8,116

9,534

Investment securities held-to-maturity

1,952

1,871

1,935

Commercial loans

32,723

32,091

31,520

30,986

Real estate construction loans

1,795

1,917

1,955

1,939

Commercial mortgage loans

8,674

8,558

8,604

8,747

Lease financing

786

792

805

822

International loans

1,420

1,433

1,496

1,352

Residential mortgage loans

1,865

1,859

1,831

1,775

Consumer loans

2,478

2,422

2,382

2,261

Total loans

49,741

49,072

48,593

47,882

Less allowance for loan losses

(618)

(601)

(594)

(591)

Net loans

49,123

48,471

47,999

47,291

Premises and equipment

541

531

532

562

Accrued income and other assets

3,978

4,183

4,434

3,933

Total assets

$

69,945

$

69,333

$

69,186

$

65,323

LIABILITIES AND SHAREHOLDERS' EQUITY

Noninterest-bearing deposits

$

28,167

$

27,394

$

27,224

$

24,774

Money market and interest-bearing checking deposits

23,786

23,727

23,954

22,555

Savings deposits

1,841

1,817

1,752

1,731

Customer certificates of deposit

4,367

4,497

4,421

4,962

Foreign office time deposits

99

135

135

148

Total interest-bearing deposits

30,093

30,176

30,262

29,396

Total deposits

58,260

57,570

57,486

54,170

Short-term borrowings

56

80

116

176

Accrued expenses and other liabilities

1,265

1,500

1,507

990

Medium- and long-term debt

2,841

2,683

2,675

2,618

Total liabilities

62,422

61,833

61,784

57,954

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

2,158

2,188

2,188

2,175

Accumulated other comprehensive loss

(396)

(370)

(412)

(304)

Retained earnings

6,908

6,841

6,744

6,520

Less cost of common stock in treasury - 49,803,515 shares at 6/30/15, 50,114,399 shares at March 31, 2015, 49,146,225 shares at 12/31/14, and 47,194,492 shares at 6/30/14

(2,288)

(2,300)

(2,259)

(2,163)

Total shareholders' equity

7,523

7,500

7,402

7,369

Total liabilities and shareholders' equity

$

69,945

$

69,333

$

69,186

$

65,323

 

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries

Three Months Ended

Six Months Ended

June 30,

June 30,

(in millions, except per share data)

2015

2014

2015

2014

INTEREST INCOME

Interest and fees on loans

$

389

$

385

$

767

$

761

Interest on investment securities

52

53

105

108

Interest on short-term investments

3

3

7

7

Total interest income

444

441

879

876

INTEREST EXPENSE

Interest on deposits

11

11

22

22

Interest on medium- and long-term debt

12

14

23

28

Total interest expense

23

25

45

50

Net interest income

421

416

834

826

Provision for credit losses

47

11

61

20

Net interest income after provision for credit losses

374

405

773

806

NONINTEREST INCOME

Service charges on deposit accounts

56

54

111

108

Fiduciary income

48

45

95

89

Commercial lending fees

22

23

47

43

Card fees

72

22

139

45

Letter of credit fees

13

15

26

29

Bank-owned life insurance

10

11

19

20

Foreign exchange income

9

12

19

21

Brokerage fees

5

4

9

9

Net securities (losses) gains

(2)

1

Other noninterest income

26

34

53

63

Total noninterest income

261

220

516

428

NONINTEREST EXPENSES

Salaries and benefits expense

251

240

504

487

Net occupancy expense

39

39

77

79

Equipment expense

13

15

26

29

Outside processing fee expense

85

30

162

58

Software expense

24

25

47

47

Litigation-related expense

(30)

3

(29)

6

FDIC insurance expense

9

8

18

16

Advertising expense

6

5

12

11

Other noninterest expenses

39

39

78

77

Total noninterest expenses

436

404

895

810

Income before income taxes

199

221

394

424

Provision for income taxes

64

70

125

134

NET INCOME

135

151

269

290

Less income allocated to participating securities

1

2

3

4

Net income attributable to common shares

$

134

$

149

$

266

$

286

Earnings per common share:

Basic

$

0.76

$

0.83

$

1.51

$

1.59

Diluted

0.73

0.80

1.46

1.54

Comprehensive income

109

172

285

377

Cash dividends declared on common stock

37

36

73

71

Cash dividends declared per common share

0.21

0.20

0.41

0.39

 

 

CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries

Second

First

Fourth

Third

Second

Second Quarter 2015 Compared To:

Quarter

Quarter

Quarter

Quarter

Quarter

First Quarter 2015

Second Quarter 2014

(in millions, except per share data)

2015

2015

2014

2014

2014

Amount

Percent

Amount

Percent

INTEREST INCOME

Interest and fees on loans

$

389

$

378

$

383

$

381

$

385

$

11

3

%

$

4

1

%

Interest on investment securities

52

53

51

52

53

(1)

(1)

(1)

(2)

Interest on short-term investments

3

4

4

3

3

(1)

(9)

Total interest income

444

435

438

436

441

9

2

3

1

INTEREST EXPENSE

Interest on deposits

11

11

12

11

11

Interest on medium- and long-term debt

12

11

11

11

14

1

5

(2)

(8)

Total interest expense

23

22

23

22

25

1

2

(2)

(5)

Net interest income

421

413

415

414

416

8

2

5

1

Provision for credit losses

47

14

2

5

11

33

n/m

36

n/m

Net interest income after provision for credit losses

374

399

413

409

405

(25)

(6)

(31)

(8)

NONINTEREST INCOME

Service charges on deposit accounts

56

55

53

54

54

1

3

2

4

Fiduciary income

48

47

47

44

45

1

1

3

6

Commercial lending fees

22

25

29

26

23

(3)

(9)

(1)

(3)

Card fees

72

67

24

23

22

5

7

50

n/m

Letter of credit fees

13

13

14

14

15

(2)

(8)

Bank-owned life insurance

10

9

8

11

11

1

5

(1)

(10)

Foreign exchange income

9

10

10

9

12

(1)

(11)

(3)

(24)

Brokerage fees

5

4

4

4

4

1

5

1

9

Net securities (losses) gains

(2)

(1)

2

66

Other noninterest income

26

27

36

31

34

(1)

(4)

(8)

(24)

Total noninterest income

261

255

225

215

220

6

2

41

18

NONINTEREST EXPENSES

Salaries and benefits expense

251

253

245

248

240

(2)

(1)

11

5

Net occupancy expense

39

38

46

46

39

1

3

Equipment expense

13

13

14

14

15

(2)

(12)

Outside processing fee expense

85

77

33

31

30

8

12

55

n/m

Software expense

24

23

23

25

25

1

1

(1)

(3)

Litigation-related expense

(30)

1

(2)

3

(31)

n/m

(33)

n/m

FDIC insurance expense

9

9

8

9

8

1

7

Advertising expense

6

6

7

5

5

1

Gain on debt redemption

(32)

Other noninterest expenses

39

39

43

53

39

Total noninterest expenses

436

459

419

397

404

(23)

(5)

32

8

Income before income taxes

199

195

219

227

221

4

3

(22)

(10)

Provision for income taxes

64

61

70

73

70

3

6

(6)

(8)

NET INCOME

135

134

149

154

151

1

1

(16)

(11)

Less income allocated to participating securities

1

2

1

2

2

(1)

(1)

Net income attributable to common shares

$

134

$

132

$

148

$

152

$

149

$

2

1

%

$

(15)

(11)%

Earnings per common share:

Basic

$

0.76

$

0.75

$

0.83

$

0.85

$

0.83

$

0.01

1

%

$

(0.07)

(8)%

Diluted

0.73

0.73

0.80

0.82

0.80

(0.07)

(9)

Comprehensive income

109

176

54

141

172

(67)

(38)

(63)

(37)

Cash dividends declared on common stock

37

36

36

36

36

1

5

1

3

Cash dividends declared per common share

0.21

0.20

0.20

0.20

0.20

0.01

5

0.01

5

n/m - not meaningful

 

 

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)

Comerica Incorporated and Subsidiaries

2015

2014

(in millions)

2nd Qtr

1st Qtr

4th Qtr

3rd Qtr

2nd Qtr

Balance at beginning of period

$

601

$

594

$

592

$

591

$

594

Loan charge-offs:

Commercial

22

19

8

13

19

Commercial mortgage

2

2

7

5

Lease financing

1

International

6

2

6

Residential mortgage

1

1

1

Consumer

3

2

3

3

4

Total loan charge-offs

35

23

20

24

28

Recoveries on loans previously charged-off:

Commercial

10

9

6

6

11

Real estate construction

1

2

1

1

Commercial mortgage

5

3

10

12

3

Residential mortgage

1

1

3

Consumer

1

2

1

1

1

Total recoveries

17

15

19

21

19

Net loan charge-offs

18

8

1

3

9

Provision for loan losses

35

16

4

4

6

Foreign currency translation adjustment

(1)

(1)

Balance at end of period

$

618

$

601

$

594

$

592

$

591

Allowance for loan losses as a percentage of total loans

1.24

%

1.22

%

1.22

%

1.24

%

1.23

%

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

0.15

0.07

0.01

0.03

0.08

 

 

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

Comerica Incorporated and Subsidiaries

2015

2014

(in millions)

2nd Qtr

1st Qtr

4th Qtr

3rd Qtr

2nd Qtr

Balance at beginning of period

$

39

$

41

$

43

$

42

$

37

Less: Charge-offs on lending-related commitments (a)

1

Add: Provision for credit losses on lending-related commitments

12

(2)

(2)

1

5

Balance at end of period

$

50

$

39

$

41

$

43

$

42

Unfunded lending-related commitments sold

$

12

$

1

$

$

9

$

(a)

Charge-offs result from the sale of unfunded lending-related commitments.

 

 

NONPERFORMING ASSETS (unaudited)

Comerica Incorporated and Subsidiaries

2015

2014

(in millions)

2nd Qtr

1st Qtr

4th Qtr

3rd Qtr

2nd Qtr

SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS

Nonaccrual loans:

Business loans:

  Commercial

$

186

$

113

$

109

$

93

$

72

  Real estate construction

1

1

2

18

19

  Commercial mortgage

77

82

95

144

156

  Lease financing

11

  International

9

1

  Total nonaccrual business loans

284

197

206

255

247

Retail loans:

  Residential mortgage

35

37

36

42

45

  Consumer:

  Home equity

29

31

30

31

32

  Other consumer

1

1

1

1

2

    Total consumer

30

32

31

32

34

  Total nonaccrual retail loans

65

69

67

74

79

Total nonaccrual loans

349

266

273

329

326

Reduced-rate loans

12

13

17

17

21

Total nonperforming loans (a)

361

279

290

346

347

Foreclosed property

9

9

10

11

13

Total nonperforming assets (a)

$

370

$

288

$

300

$

357

$

360

Nonperforming loans as a percentage of total loans

0.72

%

0.57

%

0.60

%

0.73

%

0.73

%

Nonperforming assets as a percentage of total loans and foreclosed property

0.74

0.59

0.62

0.75

0.75

Allowance for loan losses as a percentage of total nonperforming loans

171

216

205

171

170

Loans past due 90 days or more and still accruing

$

18

$

12

$

5

$

13

$

7

ANALYSIS OF NONACCRUAL LOANS

Nonaccrual loans at beginning of period

$

266

$

273

$

329

$

326

$

317

Loans transferred to nonaccrual (b)

145

39

41

54

53

Nonaccrual business loan gross charge-offs (c)

(31)

(21)

(16)

(20)

(24)

Loans transferred to accrual status (b)

(4)

(18)

Nonaccrual business loans sold (d)

(1)

(2)

(24)

(3)

(6)

Payments/Other (e)

(30)

(19)

(39)

(28)

(14)

Nonaccrual loans at end of period

$

349

$

266

$

273

$

329

$

326

(a) Excludes loans acquired with credit impairment.

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

(c) Analysis of gross loan charge-offs:

    Nonaccrual business loans

$

31

$

21

$

16

$

20

$

24

    Consumer and residential mortgage loans

4

2

4

4

4

  Total gross loan charge-offs

$

35

$

23

$

20

$

24

$

28

(d) Analysis of loans sold:

      Nonaccrual business loans

$

1

$

2

$

24

$

3

$

6

      Performing criticized loans

7

5

8

   Total criticized loans sold

$

1

$

9

$

29

$

3

$

14

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

 

 

ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)

Comerica Incorporated and Subsidiaries

Six Months Ended

June 30, 2015

June 30, 2014

Average

Average

Average

Average

(dollar amounts in millions)

Balance

Interest

Rate

Balance

Interest

Rate

Commercial loans

$

31,442

$

478

3.06

%

$

29,130

$

453

3.13

%

Real estate construction loans

1,872

32

3.43

1,871

32

3.42

Commercial mortgage loans

8,627

146

3.41

8,759

170

3.92

Lease financing

796

12

3.12

849

16

3.66

International loans

1,482

27

3.69

1,315

24

3.66

Residential mortgage loans

1,866

35

3.77

1,749

33

3.84

Consumer loans

2,409

39

3.23

2,232

35

3.19

Total loans (a)

48,494

769

3.19

45,905

763

3.35

Mortgage-backed securities (b)

9,064

100

2.24

8,954

107

2.39

Other investment securities

858

5

1.13

369

1

0.44

Total investment securities (b)

9,922

105

2.15

9,323

108

2.31

Interest-bearing deposits with banks

5,216

7

0.25

4,695

7

0.26

Other short-term investments

100

0.75

110

0.63

Total earning assets

63,732

881

2.79

60,033

878

2.94

Cash and due from banks

1,034

917

Allowance for loan losses

(607)

(602)

Accrued income and other assets

4,693

4,446

Total assets

$

68,852

$

64,794

Money market and interest-bearing checking deposits

$

23,809

13

0.11

$

22,279

12

0.11

Savings deposits

1,810

0.02

1,721

0.03

Customer certificates of deposit

4,423

8

0.37

5,075

9

0.36

Foreign office time deposits

121

1

1.36

378

1

0.52

Total interest-bearing deposits

30,163

22

0.14

29,453

22

0.15

Short-term borrowings

94

0.05

198

0.03

Medium- and long-term debt

2,675

23

1.78

3,270

28

1.64

Total interest-bearing sources

32,932

45

0.28

32,921

50

0.30

Noninterest-bearing deposits

27,033

23,626

Accrued expenses and other liabilities

1,405

967

Total shareholders' equity

7,482

7,280

Total liabilities and shareholders' equity

$

68,852

$

64,794

Net interest income/rate spread (FTE)

$

836

2.51

$

828

2.64

FTE adjustment

$

2

$

2

Impact of net noninterest-bearing sources of funds

0.14

0.14

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

2.65

%

2.78

%

(a)

Accretion of the purchase discount on the acquired loan portfolio of $4 million and $22 million in the six months ended June 30, 2015 and 2014, respectively, increased the net interest margin by 1 basis point and 7 basis points in each respective period.

(b)

Includes investment securities available-for-sale and investment securities held-to-maturity.

 

 

ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)

Comerica Incorporated and Subsidiaries

Three Months Ended

June 30, 2015

March 31, 2015

June 30, 2014

Average

Average

Average

Average

Average

Average

(dollar amounts in millions)

Balance

Interest

Rate

Balance

Interest

Rate

Balance

Interest

Rate

Commercial loans

$

31,788

$

244

3.07

%

$

31,090

$

234

3.06

%

$

29,890

$

231

3.10

%

Real estate construction loans

1,807

16

3.51

1,938

16

3.36

1,913

16

3.44

Commercial mortgage loans

8,672

73

3.38

8,581

73

3.44

8,749

85

3.88

Lease financing

795

6

3.19

797

6

3.05

850

7

3.26

International loans

1,453

13

3.68

1,512

14

3.71

1,328

12

3.64

Residential mortgage loans

1,877

18

3.78

1,856

17

3.76

1,773

17

3.82

Consumer loans

2,441

20

3.25

2,377

19

3.21

2,222

18

3.22

Total loans (a)

48,833

390

3.20

48,151

379

3.19

46,725

386

3.31

Mortgage-backed securities (b)

9,057

49

2.23

9,071

51

2.26

8,996

53

2.35

Other investment securities

879

3

1.16

836

2

1.10

368

0.46

Total investment securities (b)

9,936

52

2.13

9,907

53

2.16

9,364

53

2.28

Interest-bearing deposits with banks

5,110

3

0.25

5,323

4

0.26

3,949

3

0.25

Other short-term investments

102

0.42

99

1.11

110

0.61

Total earning assets

63,981

445

2.79

63,480

436

2.78

60,148

442

2.95

Cash and due from banks

1,041

1,027

921

Allowance for loan losses

(613)

(601)

(602)

Accrued income and other assets

4,554

4,829

4,411

Total assets

$

68,963

$

68,735

$

64,878

Money market and interest-bearing checking deposits

$

23,659

6

0.11

$

23,960

6

0.11

$

22,296

6

0.10

Savings deposits

1,834

0.02

1,786

0.03

1,742

0.03

Customer certificates of deposit

4,422

4

0.37

4,423

4

0.37

5,041

5

0.36

Foreign office time deposits

118

1

1.26

124

1

1.46

294

0.68

Total interest-bearing deposits

30,033

11

0.14

30,293

11

0.15

29,373

11

0.15

Short-term borrowings

78

0.04

110

0.06

210

0.03

Medium- and long-term debt

2,661

12

1.83

2,686

11

1.73

2,998

14

1.77

Total interest-bearing sources

32,772

23

0.28

33,089

22

0.27

32,581

25

0.30

Noninterest-bearing deposits

27,365

26,697

24,011

Accrued expenses and other liabilities

1,314

1,496

955

Total shareholders' equity

7,512

7,453

7,331

Total liabilities and shareholders' equity

$

68,963

$

68,735

$

64,878

Net interest income/rate spread (FTE)

$

422

2.51

$

414

2.51

$

417

2.65

FTE adjustment

$

1

$

1

$

1

Impact of net noninterest-bearing sources of funds

0.14

0.13

0.13

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

2.65

%

2.64

%

2.78

%

(a)

Accretion of the purchase discount on the acquired loan portfolio of $2 million, $2 million and $10 million in the second quarter 2015, the first quarter 2015 and the second quarter 2014, respectively, increased the net interest margin by 1 basis point, 2 basis points and 7 basis points in each respective period.

(b)

Includes investment securities available-for-sale and investment securities held-to-maturity.

 

 

CONSOLIDATED STATISTICAL DATA (unaudited)

Comerica Incorporated and Subsidiaries

June 30,

March 31,

December 31,

September 30,

June 30,

(in millions, except per share data)

2015

2015

2014

2014

2014

Commercial loans:

Floor plan

$

3,840

$

3,544

$

3,790

$

3,183

$

3,576

Other

28,883

28,547

27,730

27,576

27,410

Total commercial loans

32,723

32,091

31,520

30,759

30,986

Real estate construction loans

1,795

1,917

1,955

1,992

1,939

Commercial mortgage loans

8,674

8,558

8,604

8,603

8,747

Lease financing

786

792

805

805

822

International loans

1,420

1,433

1,496

1,429

1,352

Residential mortgage loans

1,865

1,859

1,831

1,797

1,775

Consumer loans:

Home equity

1,682

1,678

1,658

1,634

1,574

Other consumer

796

744

724

689

687

Total consumer loans

2,478

2,422

2,382

2,323

2,261

Total loans

$

49,741

$

49,072

$

48,593

$

47,708

$

47,882

Goodwill

$

635

$

635

$

635

$

635

$

635

Core deposit intangible

11

12

13

14

14

Other intangibles

4

3

2

1

1

Common equity tier 1 capital (a) (b)

7,280

7,230

n/a

n/a

n/a

Tier 1 common capital (c)

n/a

n/a

7,169

7,105

7,027

Risk-weighted assets (a) (b)

69,145

69,514

68,273

67,106

66,911

Common equity tier 1 risk-based capital ratio (a) (b)

10.53

%

10.40

%

n/a

n/a

n/a

Tier 1 common risk-based capital ratio (c)

n/a

n/a

10.50

%

10.59

%

10.50

%

Tier 1 risk-based capital ratio (a) (b)

10.53

10.40

10.50

10.59

10.50

Total risk-based capital ratio (a) (b)

12.53

12.35

12.51

12.83

12.52

Leverage ratio (a) (b)

10.57

10.53

10.35

10.79

10.93

Tangible common equity ratio (c)

9.92

9.97

9.85

9.94

10.39

Common shareholders' equity per share of common stock

$

42.18

$

42.12

$

41.35

$

41.26

$

40.72

Tangible common equity per share of common stock (c)

38.53

38.47

37.72

37.65

37.12

Market value per share for the quarter:

High

53.45

47.94

50.14

52.72

52.60

Low

44.38

40.09

42.73

48.33

45.34

Close

51.32

45.13

46.84

49.86

50.16

Quarterly ratios:

Return on average common shareholders' equity

7.21

%

7.20

%

7.96

%

8.29

%

8.27

%

Return on average assets

0.79

0.78

0.86

0.93

0.93

Efficiency ratio (d)

63.68

68.50

65.26

62.87

63.35

Number of banking centers

477

482

481

481

481

Number of employees - full time equivalent

8,901

8,831

8,876

8,913

8,901

(a)

Basel III rules became effective January 1, 2015, with transitional provisions. All prior period data is based on Basel I rules.

(b)

June 30, 2015 amounts and ratios are estimated.

(c)

See Reconciliation of Non-GAAP Financial Measures.

(d)

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

n/a - not applicable.

 

 

PARENT COMPANY ONLY BALANCE SHEETS (unaudited)

Comerica Incorporated

June 30,

December 31,

June 30,

(in millions, except share data)

2015

2014

2014

ASSETS

Cash and due from subsidiary bank

$

7

$

$

5

Short-term investments with subsidiary bank

861

1,133

796

Other short-term investments

94

94

96

Investment in subsidiaries, principally banks

7,500

7,411

7,369

Premises and equipment

2

2

2

Other assets

122

138

217

  Total assets

$

8,586

$

8,778

$

8,485

LIABILITIES AND SHAREHOLDERS' EQUITY

Medium- and long-term debt

$

903

$

1,208

$

958

Other liabilities

160

168

158

  Total liabilities

1,063

1,376

1,116

Common stock - $5 par value:

Authorized - 325,000,000 shares

Issued - 228,164,824 shares

1,141

1,141

1,141

Capital surplus

2,158

2,188

2,175

Accumulated other comprehensive loss

(396)

(412)

(304)

Retained earnings

6,908

6,744

6,520

Less cost of common stock in treasury - 49,803,515 shares at 6/30/15, 49,146,225 shares at 12/31/14 and 47,194,492 shares at 6/30/14

(2,288)

(2,259)

(2,163)

  Total shareholders' equity

7,523

7,402

7,369

  Total liabilities and shareholders' equity

$

8,586

$

8,778

$

8,485

 

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, 2013

182.3

$

1,141

$

2,179

$

(391)

$

6,318

$

(2,097)

$

7,150

Net income

290

290

Other comprehensive income, net of tax

87

87

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

(71)

(71)

Purchase of common stock

(3.0)

(141)

(141)

Net issuance of common stock under employee stock plans

1.6

(25)

(17)

74

32

Share-based compensation

22

22

Other

(1)

1

BALANCE AT JUNE 30, 2014

180.9

$

1,141

$

2,175

$

(304)

$

6,520

$

(2,163)

$

7,369

BALANCE AT DECEMBER 31, 2014

179.0

$

1,141

$

2,188

$

(412)

$

6,744

$

(2,259)

$

7,402

Net income

269

269

Other comprehensive income, net of tax

16

16

Cash dividends declared on common stock ($0.41 per share)

(73)

(73)

Purchase of common stock

(2.5)

(115)

(115)

Purchase and retirement of warrants

(10)

(10)

Net issuance of common stock under employee stock plans

0.9

(23)

(10)

43

10

Net issuance of common stock for warrants

1.0

(21)

(22)

43

Share-based compensation

24

24

BALANCE AT JUNE 30, 2015

178.4

$

1,141

$

2,158

$

(396)

$

6,908

$

(2,288)

$

7,523

 

 

BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)

Comerica Incorporated and Subsidiaries

(dollar amounts in millions)

Business

Retail

Wealth

Three Months Ended June 30, 2015

Bank

Bank

Management

Finance

Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

375

$

155

$

45

$

(155)

$

2

$

422

Provision for credit losses

61

(8)

(9)

3

47

Noninterest income

140

46

60

14

1

261

Noninterest expenses

176

182

74

3

1

436

Provision (benefit) for income taxes (FTE)

96

9

14

(54)

65

Net income (loss)

$

182

$

18

$

26

$

(90)

$

(1)

$

135

Net loan charge-offs (recoveries)

$

22

$

1

$

(5)

$

$

$

18

Selected average balances:

Assets

$

39,135

$

6,459

$

5,153

$

11,721

$

6,495

$

68,963

Loans

38,109

5,770

4,954

48,833

Deposits

30,229

22,747

4,060

93

269

57,398

Statistical data:

Return on average assets (a)

1.87

%

0.30

%

2.01

%

N/M

N/M

0.79

%

Efficiency ratio (b)

34.19

89.88

70.27

N/M

N/M

63.68

Business

Retail

Wealth

Three Months Ended March 31, 2015

Bank

Bank

Management

Finance

Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

370

$

151

$

43

$

(152)

$

2

$

414

Provision for credit losses

25

(8)

(1)

(2)

14

Noninterest income

142

42

58

12

1

255

Noninterest expenses

200

175

77

2

5

459

Provision (benefit) for income taxes (FTE)

98

9

9

(53)

(1)

62

Net income (loss)

$

189

$

17

$

16

$

(89)

$

1

$

134

Net loan charge-offs (recoveries)

$

9

$

$

(1)

$

$

$

8

Selected average balances:

Assets

$

38,654

$

6,368

$

5,029

$

12,137

$

6,547

$

68,735

Loans

37,623

5,694

4,834

48,151

Deposits

30,143

22,404

3,996

170

277

56,990

Statistical data:

Return on average assets (a)

1.95

%

0.30

%

1.29

%

N/M

N/M

0.78

%

Efficiency ratio (b)

39.20

90.57

74.58

N/M

N/M

68.55

Business

Retail

Wealth

Three Months Ended June 30, 2014

Bank

Bank

Management

Finance

Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

375

$

152

$

44

$

(160)

6

$

417

Provision for credit losses

35

(6)

(10)

(8)

11

Noninterest income

100

41

62

15

2

220

Noninterest expenses

143

174

76

2

9

404

Provision (benefit) for income taxes (FTE)

100

9

15

(56)

3

71

Net income (loss)

$

197

$

16

$

25

$

(91)

$

4

$

151

Net loan charge-offs (recoveries)

$

9

$

3

$

(3)

$

$

$

9

Selected average balances:

Assets

$

37,305

$

6,222

$

4,987

$

11,055

$

5,309

$

64,878

Loans

36,367

5,554

4,804

46,725

Deposits

27,351

21,890

3,616

258

269

53,384

Statistical data:

Return on average assets (a)

2.11

%

0.29

%

2.02

%

N/M

N/M

0.93

%

Efficiency ratio (b)

30.07

90.06

72.11

N/M

N/M

63.35

(a)

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

(b)

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

FTE - Fully Taxable Equivalent

N/M - Not Meaningful

 

 

MARKET SEGMENT FINANCIAL RESULTS (unaudited)

Comerica Incorporated and Subsidiaries

(dollar amounts in millions)

Other

Finance

Three Months Ended June 30, 2015

Michigan

California

Texas

Markets

& Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

179

$

181

$

130

$

85

$

(153)

$

422

Provision for credit losses

(13)

4

43

10

3

47

Noninterest income

85

37

31

93

15

261

Noninterest expenses

128

100

94

110

4

436

Provision (benefit) for income taxes (FTE)

51

43

10

15

(54)

65

Net income (loss)

$

98

$

71

$

14

$

43

$

(91)

$

135

Net loan charge-offs (recoveries)

$

(2)

$

6

$

5

$

9

$

$

18

Selected average balances:

Assets

$

13,852

$

16,696

$

11,878

$

8,321

$

18,216

$

68,963

Loans

13,290

16,429

11,254

7,860

48,833

Deposits

21,706

17,275

10,959

7,096

362

57,398

Statistical data:

Return on average assets (a)

1.73

%

1.54

%

0.46

%

2.05

%

N/M

0.79

%

Efficiency ratio (b)

48.21

46.04

58.20

61.45

N/M

63.68

Other

Finance

Three Months Ended March 31, 2015

Michigan

California

Texas

Markets

& Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

177

$

176

$

131

$

80

$

(150)

$

414

Provision for credit losses

(8)

(3)

21

6

(2)

14

Noninterest income

80

37

36

89

13

255

Noninterest expenses

154

99

96

103

7

459

Provision (benefit) for income taxes (FTE)

38

44

18

16

(54)

62

Net income (loss)

$

73

$

73

$

32

$

44

$

(88)

$

134

Net loan charge-offs

$

3

$

1

$

3

$

1

$

$

8

Selected average balances:

Assets

$

13,736

$

16,461

$

12,192

$

7,662

$

18,684

$

68,735

Loans

13,223

16,193

11,535

7,200

48,151

Deposits

21,710

16,837

11,010

6,986

447

56,990

Statistical data:

Return on average assets (a)

1.30

%

1.63

%

1.01

%

2.26

%

N/M

0.78

%

Efficiency ratio (b)

60.23

46.36

57.43

61.45

N/M

68.55

Other

Finance

Three Months Ended June 30, 2014

Michigan

California

Texas

Markets

& Other

Total

Earnings summary:

Net interest income (expense) (FTE)

$

182

$

176

$

137

$

76

$

(154)

$

417

Provision for credit losses

(9)

14

22

(8)

(8)

11

Noninterest income

89

38

35

41

17

220

Noninterest expenses

159

100

89

45

11

404

Provision (benefit) for income taxes (FTE)

44

37

22

21

(53)

71

Net income (loss)

$

77

$

63

$

39

$

59

$

(87)

$

151

Net loan charge-offs (recoveries)

$

10

$

5

$

2

$

(8)

$

$

9

Selected average balances:

Assets

$

13,851

$

15,721

$

11,661

$

7,281

$

16,364

$

64,878

Loans

13,482

15,439

10,966

6,838

46,725

Deposits

20,694

15,370

10,724

6,069

527

53,384

Statistical data:

Return on average assets (a)

1.42

%

1.54

%

1.30

%

3.28

%

N/M

0.93

%

Efficiency ratio (b)

58.67

46.64

51.67

38.73

N/M

63.35

(a)

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

(b)

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

FTE - Fully Taxable Equivalent

N/M - Not Meaningful

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

Comerica Incorporated and Subsidiaries

June 30,

March 31,

December 31,

September 30,

June 30,

(dollar amounts in millions)

2015

2015

2014

2014

2014

Tier 1 Common Capital Ratio:

Tier 1 and Tier 1 common capital (a)

n/a

n/a

$

7,169

$

7,105

$

7,027

Risk-weighted assets (a)

n/a

n/a

68,269

67,102

66,909

Tier 1 and Tier 1 common risk-based capital ratio

n/a

n/a

10.50

%

10.59

%

10.50

%

Tangible Common Equity Ratio:

Common shareholders' equity

$

7,523

$

7,500

$

7,402

$

7,433

$

7,369

Less:

Goodwill

635

635

635

635

635

Other intangible assets

15

15

15

15

15

Tangible common equity

$

6,873

$

6,850

$

6,752

$

6,783

$

6,719

Total assets

$

69,945

$

69,333

$

69,186

$

68,883

$

65,323

Less:

Goodwill

635

635

635

635

635

Other intangible assets

15

15

15

15

15

Tangible assets

$

69,295

$

68,683

$

68,536

$

68,233

$

64,673

Common equity ratio

10.76

%

10.82

%

10.70

%

10.79

%

11.28

%

Tangible common equity ratio

9.92

9.97

9.85

9.94

10.39

Tangible Common Equity per Share of Common Stock:

Common shareholders' equity

$

7,523

$

7,500

$

7,402

$

7,433

$

7,369

Tangible common equity

6,873

6,850

6,752

6,783

6,719

Shares of common stock outstanding (in millions)

178

178

179

180

181

Common shareholders' equity per share of common stock

$

42.18

$

42.12

$

41.35

$

41.26

$

40.72

Tangible common equity per share of common stock

38.53

38.47

37.72

37.65

37.12

(a)

Tier 1 capital and risk-weighted assets as defined by Basel I risk-based capital rules.

n/a - not applicable.

 

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 Basel I risk-based capital rules in effect through December 31, 2014. Effective January 1, 2015, regulatory capital components and risk-weighted assets are defined by and calculated in conformity with Basel III risk-based capital rules. The tangible common equity ratio removes preferred stock and the effect of intangible assets from capital and the effect of intangible assets from total assets. Tangible common equity per share of common stock removes the effect of intangible assets from common shareholders equity per share of common stock. Comerica believes these measurements are meaningful measures of capital adequacy used by investors, regulators, management and others to evaluate the adequacy of common equity and to compare against other companies in the industry.

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SOURCE Comerica Incorporated



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