Comerica Reports Third Quarter Net Income of $59 Million

Positive Trends in Credit Quality Continued

Strong Capital and Liquidity for Future Growth

Customers Remain Cautious

Oct 20, 2010, 06:40 ET from Comerica Incorporated

DALLAS, Oct. 20 /PRNewswire-FirstCall/ -- Comerica Incorporated (NYSE: CMA) today reported third quarter 2010 net income of $59 million, compared to $70 million for the second quarter 2010. Third quarter 2010 included a total provision for credit losses of $116 million, compared to $126 million for the second quarter 2010.

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(dollar amounts in millions, except per share data)

3rd Qtr '10

2nd Qtr '10

3rd Qtr '09

Net interest income

$         404

$         422

$         385

Provision for loan losses

122

126

311

Noninterest income

186

194

315

Noninterest expenses

402

397

399

Net income

59

70

19

Net income (loss) attributable to common shares

59

69

(16)

Diluted income (loss) per common share

0.33

0.39

(0.10)

Tier 1 capital ratio

9.97

%

(a)

10.64

%

12.21

%

Tangible common equity ratio (b)

10.39

10.11

7.96

Net interest margin

3.23

3.28

2.68

(a) September 30, 2010 ratio is estimated and excludes trust preferred securities, fully redeemed on October 1, 2010.

(b) See Reconciliation of Non-GAAP Financial Measures.

"In this sluggish and still uncertain economic environment, our customers have remained understandably cautious.  This is reflected in the weak loan demand and continued strong core deposit levels," said Ralph W. Babb Jr., chairman and chief executive officer.  "Our solid capital and liquidity position enabled us to fully redeem our trust preferred securities on October 1, which will reduce interest expense.  This uniquely positions us as the only bank in our peer group to have redeemed TARP and eliminated trust preferred securities.

"Our third quarter financial results reflected the continued improvement in credit quality and careful control of expenses.  Our skill-based, relationship-driven strategy and our prudent, conservative approach to banking continued to serve us well."

Third Quarter 2010 Highlights Compared to Second Quarter 2010

  • Credit quality continued to improve.  Net credit-related charge-offs decreased $14 million to $132 million and the provision for credit losses, which includes both the provision for loan losses and the provision for credit losses on lending-related commitments, decreased $10 million to $116 million. Watch list loans - generally consistent with regulatory defined special mention, substandard and doubtful (nonaccrual) loans – declined $480 million to $6.2 billion.
  • The pace of decline in loans continued to slow in the third quarter 2010.  Average loans decreased $570 million, compared to declines of $641 million and $1.4 billion in the second and first quarters of 2010, respectively.  About one-half of the third quarter 2010 decrease in average loans was in the Commercial Real Estate business line. Average loans increased in the third quarter 2010 in the Mortgage Banker Finance, National Dealer Services and Energy Lending business lines.
  • Average deposit levels remained strong in the third quarter 2010, decreasing only one percent from the second quarter 2010.  Growth in business deposits was offset by reduced Personal and Private Banking deposits.
  • Net interest income decreased $18 million to $404 million for the third quarter 2010, compared to $422 million for the second quarter 2010. Average earning assets decreased $1.6 billion in the third quarter 2010, compared to the second quarter 2010, and the net interest margin of 3.23 percent decreased five basis points, from 3.28 percent in the second quarter 2010.  
  • Expenses remained well controlled in the third quarter 2010.  Noninterest expenses increased one percent from second quarter 2010 to third quarter 2010.  Full-time equivalent staff decreased by approximately 300 employees, or three percent, from September 30, 2009.
  • Capital ratios remained strong. The tangible common equity ratio increased 28 basis points to 10.39 percent at September 30, 2010 and the estimated Tier 1 common ratio increased 16 basis points, to 9.97 percent at September 30, 2010, from June 30, 2010.  The estimated Tier 1 capital ratio was 9.97 percent at September 30, 2010, compared to 10.64 percent at June 30, 2010, reflecting the redemption of trust preferred securities.

Net Interest Income and Net Interest Margin

(dollar amounts in millions)

3rd Qtr '10

2nd Qtr '10

3rd Qtr '09

Net interest income

$             404

$              422

$                385

Net interest margin

3.23

%

3.28

%

2.68

%

Selected average balances:

Total earning assets

$        50,189

$         51,835

$           57,513

Total investment securities

6,906

7,262

9,070

Federal Reserve Bank deposits (excess liquidity) (a)

2,983

3,719

3,492

Total loans

40,102

40,672

44,782

Total core deposits (b)

38,786

38,928

35,807

Total noninterest-bearing deposits

14,920

15,218

13,225

(a) See Reconciliation of Non-GAAP Financial Measures.

(b) Core deposits exclude other time deposits and foreign office time deposits.

  • The $18 million decrease in net interest income in the third quarter 2010, when compared to second quarter 2010, resulted primarily from decreases in earning assets and the net interest margin.
  • Average earning assets decreased $1.6 billion, including decreases of $736 million in average Federal Reserve Bank deposits, $570 million in average loans and $356 million in average investment securities. The decrease in average loans reflected decreases in the Middle Market, Commercial Real Estate and Global Corporate Banking business lines, partially offset by increases in the Mortgage Banker Finance, National Dealer Services and Energy Lending business lines.
  • The net interest margin of 3.23 percent decreased five basis points, compared to second quarter 2010.  The third quarter 2010 was negatively impacted by a reduction in deferred loan fees recognized, compared to the second quarter 2010, resulting from a higher rate of loan prepayments in the first half of 2010, and accelerated prepayments on higher-yielding mortgage-backed investment securities in the third quarter 2010.  A reduction in excess liquidity partially offset these decreases. The net interest margin was reduced by approximately 19 and 23 basis points in the third and second quarters of 2010, respectively, from excess liquidity, which was represented by $3.0 billion of average balances deposited with the Federal Reserve Bank in the third quarter 2010, compared to $3.7 billion of average balances in the second quarter 2010.  
  • Third quarter 2010 average core deposits decreased $142 million compared to second quarter 2010.

Noninterest Income

Noninterest income was $186 million for the third quarter 2010, compared to $194 million for the second quarter 2010.  The $8 million decrease resulted primarily from decreases of $6 million in customer derivative income (included in "other noninterest income") and $2 million in foreign exchange income, partially offset by a $3 million increase in investment banking income (included in "other noninterest income").  

Noninterest Expenses

Noninterest expenses were $402 million for the third quarter 2010, compared to $397 million for the second quarter 2010. The $5 million increase in noninterest expenses in the third quarter 2010, compared to the second quarter 2010, was primarily due to increases in salaries expense ($8 million) and employee benefits expense ($2 million), partially offset by a decrease in the provision for credit losses on lending-related commitments ($6 million).  The increase in salaries expense reflected the impact of one additional day in the third quarter 2010 and included an increase in share-based compensation expense of $6 million as a result of third quarter 2010 stock grants.  Full-time equivalent staff decreased by approximately 300 employees, or three percent, from September 30, 2009.

Credit Quality

"The continued improvement in credit quality is reflected by the decline in net charge-offs for the fifth consecutive quarter, as well as the $10 million decline in the provision for credit losses compared to the second quarter," Babb said.  "The increase in inflows to nonaccrual loans primarily reflected commercial real estate, which we believe will continue to exhibit variability with a downward trend.  Overall, credit migration has actually improved, as evidenced by the $480 million decline in the watch list, which is our best early indicator of future credit quality.  Our early recognition of credit issues and our ability to quickly and proactively work through them remains one of our key strengths."

  • Net credit-related charge-offs decreased $14 million to $132 million in the third quarter 2010, from $146 million in the second quarter 2010. The decrease in net credit-related charge-offs resulted primarily from a $39 million decrease in the Middle Market business line in the third quarter 2010, partially offset by a $24 million increase in the Commercial Real Estate business line, primarily in the Western and Midwest markets.
  • Watch list loans declined $480 million to $6.2 billion from June 30, 2010 to September 30, 2010.
  • The provision for credit losses decreased $10 million, primarily due to declines in the Middle Market,  Energy Lending and Entertainment Lending business lines, partially offset by increases in the Private Banking and Commercial Real Estate business lines.
  • During the third quarter 2010, $294 million of loan relationships greater than $2 million were transferred to nonaccrual status, an increase of $95 million from the second quarter 2010, primarily due to a $100 million increase in transfers from the Commercial Real Estate business line.  Of the transfers of loan relationships greater than $2 million to nonaccrual in the third quarter 2010, $132 million were from the Commercial Real Estate business line, primarily in the Western and Florida markets, $91 million were from the Middle Market business line, primarily in the Midwest market, and $28 million were from Energy Lending in the Texas market.
  • Nonperforming assets increased $97 million to $1.3 billion, or 3.24 percent of total loans and foreclosed property, at September 30, 2010.  
  • Nonaccrual loans were charged down 45 percent as of both September 30, 2010 and June 30, 2010, compared to 41 percent one year ago.
  • Foreclosed property increased $27 million to $120 million at September 30, 2010, from $93 million at June 30, 2010.
  • Loans past due 90 days or more and still accruing were $104 million at September 30, 2010, a decrease of $11 million compared to June 30, 2010.
  • The allowance for loan losses to total loans ratio was 2.38 percent at both September 30, 2010 and June 30, 2010.

(dollar amounts in millions)

3rd Qtr '10

2nd Qtr '10

3rd Qtr '09

Net credit-related charge-offs

$         132

$         146

$         239

Net credit-related charge-offs/Average total loans

1.32

%

1.44

%

2.14

%

Provision for loan losses

$         122

$         126

$         311

Provision for credit losses on lending-related commitments

(6)

-

2

Total provision for credit losses

116

126

313

Nonperforming loans

1,191

1,121

1,196

Nonperforming assets (NPAs)

1,311

1,214

1,305

NPAs/Total loans and foreclosed property

3.24

%

2.98

%

2.99

%

Loans past due 90 days or more and still accruing

$         104

$         115

$         161

Allowance for loan losses

957

967

953

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

38

44

35

Total allowance for credit losses

995

1,011

988

Allowance for loan losses/Total loans

2.38

%

2.38

%

2.19

%

Allowance for loan losses/Nonperforming loans

80

86

80

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

Balance Sheet and Capital Management

Total assets and common shareholders' equity were $55.0 billion and $5.9 billion, respectively, at September 30, 2010, compared to $55.9 billion and $5.8 billion, respectively, at June 30, 2010. There were approximately 176 million common shares outstanding at September 30, 2010.  

On October 1, 2010 Comerica fully redeemed $500 million of trust preferred securities.  Subsequent to the redemption, no additional trust preferred securities remained outstanding.  As previously announced, Comerica will recognize a one-time, pre-tax charge of approximately $5 million in the fourth quarter 2010, reflecting accelerated accretion of the remaining trust preferred original issuance discount.  The $500 million of trust preferred securities outstanding at September 30, 2010 were excluded from Tier 1 and total capital in the computation of estimated risk-based capital ratios as of September 30, 2010.

Comerica's tangible common equity ratio was 10.39 percent at September 30, 2010, an increase of 28 basis points from June 30, 2010. The estimated Tier 1 common ratio increased 16 basis points, to 9.97 percent at September 30, 2010, from June 30, 2010.  The estimated Tier 1 capital ratio was 9.97 percent at September 30, 2010, compared to 10.64 percent at June 30, 2010.  The decrease in the Tier 1 capital ratio reflected the redemption of the trust preferred securities, which accounted for 83 basis points in the June 30, 2010 Tier 1 capital ratio.

Fourth Quarter 2010 Outlook

For the fourth quarter 2010, management expects:

  • Average earning assets of approximately $48 billion in the fourth quarter 2010, largely reflecting a decline in average excess liquidity from $3.0 billion in the third quarter 2010 to approximately $1 billion in the fourth quarter 2010. Excess liquidity is expected to decline primarily due to debt maturities and the redemption of the trust preferred securities.
  • An average net interest margin between 3.30 percent and 3.35 percent primarily based on a decline in excess liquidity.
  • Fourth quarter 2010 net credit-related charge-offs similar to third quarter 2010. The provision for credit losses is expected to be below net credit-related charge-offs.
  • A low single-digit decline in noninterest income compared to the third quarter 2010.  Market-related fees are expected to be lower as customers remain cautious in a sluggish and still uncertain economic environment.
  • A low single-digit increase in noninterest expenses compared to the third quarter 2010.  Included in the outlook is an estimated $5 million negative impact reflecting accelerated accretion of the remaining original issuance discount on the redemption of trust preferred securities.

Business Segments

Comerica's continuing operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank, and Wealth & Institutional Management.  The Finance Division also is included 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, 2010 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses third quarter 2010 results compared to second quarter 2010.

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

(dollar amounts in millions)

3rd Qtr '10

2nd Qtr '10

3rd Qtr '09

Business Bank

$ 133

$ 135

$ 22

Retail Bank

(7)

(3)

(11)

Wealth & Institutional Management

(10)

5

10

116

137

21

Finance

(58)

(57)

(7)

Other (a)

1

(10)

5

    Total

$   59

$   70

$ 19

(a) Includes discontinued operations and items not directly associated with the three major business segments or the Finance Division.

Business Bank

(dollar amounts in millions) 

3rd Qtr '10

2nd Qtr '10

3rd Qtr '09

Net interest income (FTE)

$               336

$               351

$               346

Provision for loan losses

57

83

252

Noninterest income

69

78

72

Noninterest expenses

155

157

160

Net income

133

135

22

Net credit-related charge-offs

99

113

195

Selected average balances:

Assets

30,309

30,609

34,822

Loans

29,940

30,353

34,116

Deposits

19,266

19,069

15,735

Net interest margin

4.45

%

4.63

%

4.01

%

  • Average loans decreased $413 million, reflecting declines in all major markets. The decrease in average loans reflected decreases in Commercial Real Estate, Middle Market and Global Corporate Banking, partially offset by increases in Mortgage Banker Finance, National Dealer Services and Energy Lending. The decline in loans continued to slow in the third quarter 2010.
  • Average deposits increased $197 million, primarily due to increases in Middle Market, Energy Lending and the Financial Services Division, partially offset by a decline in Global Corporate Banking.
  • The net interest margin of 4.45 percent decreased 18 basis points, due in part to a reduction in deferred loan fees recognized in the third quarter 2010 and a change in the deposit mix, as balances moved from lower-cost transaction accounts to higher-cost money market accounts.
  • The provision for loan losses decreased $26 million, primarily due to a decrease in Middle Market.
  • Noninterest income decreased $9 million, primarily due to decreases in foreign exchange income and customer derivative income.
  • Noninterest expenses decreased $2 million, primarily due to a decrease in the provision for credit losses on lending-related commitments, partially offset by an increase in allocated corporate overhead expenses.

Retail Bank

(dollar amounts in millions)

3rd Qtr '10

2nd Qtr '10

3rd Qtr '09

Earnings summary:

Net interest income (FTE)

$               133

$               134

$               127

Provision for loan losses

24

20

42

Noninterest income

45

42

50

Noninterest expenses

165

160

154

Net loss

(7)

(3)

(11)

Net credit-related charge-offs

19

22

34

Selected average balances:

Assets

5,777

5,937

6,445

Loans

5,314

5,446

5,904

Deposits

16,972

16,930

17,563

Net interest margin

3.10

%

3.17

%

2.87

%

  • Average loans decreased $132 million, reflecting declines across all markets and business lines.
  • Average deposits increased $42 million, primarily due to increases in noninterest-bearing and money market deposits, partially offset by a decline in customer certificates of deposit.
  • The provision for loan losses increased $4 million, reflecting increases in Personal Banking and Small Business Banking.
  • Noninterest expenses increased $5 million, primarily due to increases in net occupancy expense and allocated corporate overhead expenses.

Wealth and Institutional Management

(dollar amounts in millions)

3rd Qtr '10

2nd Qtr '10

3rd Qtr '09

Earnings summary:

Net interest income (FTE)

$                 41

$                 45

$                 42

Provision for loan losses

37

19

20

Noninterest income

59

61

66

Noninterest expenses

78

79

73

Net income

(10)

5

10

Net credit-related charge-offs

14

11

10

Selected average balances:

Assets

4,855

4,903

4,856

Loans

4,824

4,840

4,760

Deposits

2,606

2,924

2,735

Net interest margin

3.42

%

3.73

%

3.48

%

  • Average loans decreased $16 million.
  • Average deposits decreased $318 million, primarily due to a decline in transaction deposit accounts.
  • The net interest margin of 3.42 percent decreased 31 basis points, primarily due to a decrease in lower-cost transaction deposit accounts.
  • The provision for loan losses increased $18 million primarily due to an increase in reserves for investor-owned real estate in the Western market.

Geographic Market Segments

Comerica also provides market segment results for four primary geographic markets: Midwest, Western, Texas and Florida.  In addition to the four primary geographic markets, Other Markets and International are also reported as market segments.  The financial results below are based on methodologies in effect at September 30, 2010 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses third quarter 2010 results compared to second quarter 2010.

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

(dollar amounts in millions)

3rd Qtr '10

2nd Qtr '10

3rd Qtr '09

Midwest

$                 48

$                 60

$               (10)

Western

14

39

(7)

Texas

14

26

7

Florida

(6)

(9)

(12)

Other Markets

33

5

33

International

13

16

10

116

137

21

Finance & Other Businesses (a)

(57)

(67)

(2)

    Total

$                 59

$                 70

$                 19

(a) Includes discontinued operations and items not directly associated with the geographic markets.

Midwest Market

(dollar amounts in millions)

3rd Qtr '10

2nd Qtr '10

3rd Qtr '09

Net interest income (FTE)

$                  200

$                210

$                  207

Provision for loan losses

38

34

148

Noninterest income

99

97

107

Noninterest expenses

186

181

188

Net income (loss)

48

60

(10)

Net credit-related charge-offs

61

44

102

Selected average balances:

Assets

14,445

14,626

16,623

Loans

14,276

14,592

16,020

Deposits

17,777

17,988

17,384

Net interest margin

4.45

%

4.66

%

4.69

%

  • Average loans decreased $316 million, with declines in nearly all business lines, partially offset by an increase in National Dealer Services.  The decline in loans continued to slow in the third quarter 2010.
  • Average deposits decreased $211 million, primarily due to decreases in Global Corporate Banking and Personal Banking, partially offset by increases in the Financial Services Division, Small Business Banking and Middle Market.
  • The net interest margin of 4.45 percent decreased 21 basis points, due in part to a reduction in deferred loan fees recognized in the third quarter 2010 and a change in the deposit mix.
  • The provision for loan losses increased $4 million, primarily due to increases in Middle Market, Private Banking and Personal Banking, partially offset by decreases in Commercial Real Estate and Small Business Banking.
  • Noninterest income increased $2 million, primarily due to an increase in investment banking fees.
  • Noninterest expenses increased $5 million, primarily due to an increase in allocated corporate overhead expense.

Western Market

(dollar amounts in millions)

3rd Qtr '10

2nd Qtr '10

3rd Qtr '09

Net interest income (FTE)

$                  157

$                164

$                  159

Provision for loan losses

51

27

101

Noninterest income

31

33

33

Noninterest expenses

107

110

106

Net income (loss)

14

39

(7)

Net credit-related charge-offs

58

47

95

Selected average balances:

Assets

12,746

13,006

14,114

Loans

12,556

12,792

13,923

Deposits

11,793

11,951

11,146

Net interest margin

4.96

%

5.13

%

4.53

%

  • Average loans decreased $236 million, with declines in nearly all business lines, partially offset by an increase in National Dealer Services.
  • Average deposits decreased $158 million, primarily due to decreases in Private Banking and Technology and Life Sciences, partially offset by increases in Middle Market, Small Business Banking and Global Corporate Banking.
  • The net interest margin of 4.96 percent declined 17 basis points, due in part to a reduction in deferred loan fees recognized in the third quarter 2010, a decrease in average deposits and a change in the deposit mix.
  • The provision for loan losses increased $24 million, primarily due to increases in Private Banking and Commercial Real Estate.
  • Noninterest expenses decreased $3 million, primarily due to a decrease in the provision for credit losses on lending-related commitments, partially offset by an increase in allocated corporate overhead expense.

Texas Market

(dollar amounts in millions)

3rd Qtr '10

2nd Qtr '10

3rd Qtr '09

Net interest income (FTE)

$                    78

$                  81

$                    77

Provision for loan losses

17

(1)

29

Noninterest income

21

23

22

Noninterest expenses

61

65

58

Net income

14

26

7

Total net credit-related charge-offs

5

8

22

Selected average balances:

Assets

6,556

6,652

7,444

Loans

6,357

6,428

7,221

Deposits

5,443

5,316

4,609

Net interest margin

4.87

%

5.05

%

4.22

%

  • Average loans decreased $71 million, primarily due to decreases in Commercial Real Estate, Middle Market and Technology and Life Sciences, partially offset by an increase in Energy Lending.
  • Average deposits increased $127 million, primarily due to increases in Energy Lending and Small Business Banking, partially offset by decreases in Global Corporate Banking and Private Banking.
  • The net interest margin of 4.87 percent decreased 18 basis points, due in part to a reduction in deferred loan fees recognized in the third quarter 2010 and a change in the deposit mix.
  • The provision for loan losses increased $18 million, primarily due to an increase in Commercial Real Estate.
  • Noninterest expenses decreased $4 million primarily due to a decrease in the provision for credit losses on lending-related commitments, partially offset by an increase in allocated corporate overhead expenses.

Florida Market

(dollar amounts in millions)

3rd Qtr '10

2nd Qtr '10

3rd Qtr '09

Net interest income (FTE)

$                    10

$                  12

$                    11

Provision for loan losses

10

17

24

Noninterest income

4

4

3

Noninterest expenses

13

12

10

Net income (loss)

(6)

(9)

(12)

Net credit-related charge-offs

6

7

9

Selected average balances:

Assets

1,528

1,576

1,673

Loans

1,549

1,575

1,674

Deposits

364

404

327

Net interest margin

2.61

%

2.94

%

2.70

%

  • Average loans decreased $26 million, primarily due to decreases in Middle Market and Commercial Real Estate, partially offset by an increase in Global Corporate Banking.
  • Average deposits decreased $40 million, primarily due to decreases in Global Corporate Banking and the Financial Services Division.
  • The net interest margin of 2.61 percent decreased 33 basis points, due in part to a reduction in deferred loan fees recognized in the third quarter 2010 and a change in the deposit mix.
  • The provision for loan losses decreased $7 million primarily due to decreases in Private Banking and Commercial Real Estate.

Conference Call and Webcast

Comerica will host a conference call to review third quarter 2010 financial results at 7 a.m. CT Wednesday, October 20, 2010. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 11806039). The call and supplemental financial information can also be accessed on the Internet at www.comerica.com.  A replay will be available approximately two hours following the conference call through October 31, 2010. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 11806039). A replay of the Webcast can also be accessed via Comerica's "Investor Relations" page at www.comerica.com.

Comerica Incorporated is a financial services company headquartered in Dallas, Texas, and strategically aligned by three major business segments: the Business Bank, the Retail Bank, and Wealth & Institutional 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 the reconcilement 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," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "outcome," "continue," "remain," "maintain," "trend," "objective" 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 further economic downturns, changes in the pace of an economic recovery and related changes in employment levels, changes in real estate values, fuel prices, energy costs or other events that could affect customer income levels or general economic conditions, the effects of recently enacted legislation, actions taken by or proposed by the U.S. Department of Treasury, the Board of Governors of the Federal Reserve System, the Texas Department of Banking and the Federal Deposit Insurance Corporation, legislation or regulations enacted in the future, and the impact and expiration of such legislation and regulatory actions, the effects of war and other armed conflicts or acts of terrorism, the effects of natural disasters including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts  and floods, the disruption of private or public utilities, the implementation of Comerica's strategies and business models, management's ability to maintain and expand customer relationships, changes in customer borrowing, repayment, investment and deposit practices, management's ability to retain key officers and employees, changes in the accounting treatment of any particular item, the impact of regulatory examinations, declines or other changes in the businesses or industries in which Comerica has a concentration of loans, including, but not limited to, the automotive production industry and the real estate business lines, the anticipated performance of any new banking centers, the entry of new competitors in Comerica's markets, changes in the level of fee income, changes in applicable laws and regulations, including those concerning taxes, banking, securities and insurance, changes in trade, monetary and fiscal policies, including the interest rate policies of the Board of Governors of the Federal Reserve System, fluctuations in inflation or interest rates, changes in general economic, political or industry conditions and related credit and market conditions, the interdependence of financial service companies and adverse conditions in the stock market. 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 11 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2009, "Item 1A. Risk Factors" beginning on page 67 of Comerica's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 and "Item 1A. Risk Factors" beginning on page 71 of Comerica's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010. 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)

2010

2010

2009

2010

2009

PER COMMON SHARE AND COMMON STOCK DATA

Diluted net income (loss)

$     0.33

$     0.39

$   (0.10)

$     0.34

$   (0.37)

Cash dividends declared

0.05

0.05

0.05

0.15

0.15

Common shareholders' equity (at period end)

33.19

32.85

32.36

Average diluted shares (in thousands)

177,686

178,432

149,431

171,260

149,367

KEY RATIOS

Return on average common shareholders' equity

4.07

%

4.89

%

(1.27)

%

1.40

%

(1.48)

%

Return on average assets

0.43

0.50

0.12

0.43

0.09

Tier 1 common capital ratio (a) (b)

9.97

9.81

8.04

Tier 1 risk-based capital ratio (b)

9.97

10.64

12.21

Total risk-based capital ratio (b)

14.38

15.03

16.79

Leverage ratio (b)

10.90

11.36

12.46

Tangible common equity ratio (a)

10.39

10.11

7.96

AVERAGE BALANCES

Commercial loans

$ 20,967

$ 20,910

$ 23,401

$ 20,963

$ 25,399

Real estate construction loans

2,625

2,987

4,033

2,997

4,287

Commercial mortgage loans

10,257

10,372

10,359

10,338

10,422

Residential mortgage loans

1,590

1,607

1,720

1,610

1,787

Consumer loans

2,421

2,448

2,550

2,450

2,565

Lease financing

1,064

1,108

1,218

1,100

1,248

International loans

1,178

1,240

1,501

1,233

1,603

Total loans

40,102

40,672

44,782

40,691

47,311

Earning assets

50,189

51,835

57,513

51,645

59,580

Total assets

54,729

56,258

61,948

56,158

64,296

Noninterest-bearing deposits

14,920

15,218

13,225

14,922

12,385

Interest-bearing core deposits

23,866

23,710

22,582

23,400

22,476

Total core deposits

38,786

38,928

35,807

38,322

34,861

Common shareholders' equity

5,842

5,708

4,923

5,543

4,987

Total shareholders' equity

5,842

5,708

7,065

6,134

7,124

NET INTEREST INCOME

Net interest income (fully taxable equivalent basis)

$      405

$      424

$      387

$   1,245

$   1,177

Fully taxable equivalent adjustment

1

2

2

4

6

Net interest margin

3.23

%

3.28

%

2.68

%

3.23

%

2.65

%

CREDIT QUALITY

Nonaccrual loans

$   1,163

$   1,098

$   1,194

Reduced-rate loans

28

23

2

Total nonperforming loans

1,191

1,121

1,196

Foreclosed property

120

93

109

Total nonperforming assets

1,311

1,214

1,305

Loans past due 90 days or more and still accruing

104

115

161

Gross loan charge-offs

145

158

245

$      487

$      663

Loan recoveries

13

12

6

36

19

Net loan charge-offs

132

146

239

451

644

Lending-related commitment charge-offs

-

-

-

-

-

Total net credit-related charge-offs

132

146

239

451

644

Allowance for loan losses

957

967

953

Allowance for credit losses on lending-related commitments

38

44

35

Total allowance for credit losses

995

1,011

988

Allowance for loan losses as a percentage of total loans

2.38

%

2.38

%

2.19

%

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

1.32

1.44

2.14

1.48

%

1.82

%

Net credit-related charge-offs as a percentage of average total loans

1.32

1.44

2.14

1.48

1.82

Nonperforming assets as a percentage of total loans and foreclosed property

3.24

2.98

2.99

Allowance for loan losses as a percentage of total nonperforming loans

80

86

80

(a) See Reconciliation of Non-GAAP Financial Measures.

(b) September 30, 2010 ratios are estimated.

CONSOLIDATED BALANCE SHEETS  

Comerica Incorporated and Subsidiaries

(in millions, except share data)

September 30, 2010

June 30, 2010

December 31, 2009

September 30, 2009

(unaudited)

(unaudited)

(unaudited)

ASSETS

Cash and due from banks

$                 863

$         816

$               774

$                 799

Federal funds sold and securities purchased under agreements to resell

100

-

-

-

Interest-bearing deposits with banks

3,031

3,409

4,843

2,219

Other short-term investments

115

134

138

142

Investment securities available-for-sale

6,816

7,188

7,416

8,882

Commercial loans

21,432

21,151

21,690

22,546

Real estate construction loans

2,444

2,774

3,461

3,870

Commercial mortgage loans

10,180

10,318

10,457

10,380

Residential mortgage loans

1,586

1,606

1,651

1,679

Consumer loans

2,403

2,443

2,511

2,544

Lease financing

1,053

1,084

1,139

1,197

International loans

1,182

1,226

1,252

1,355

Total loans

40,280

40,602

42,161

43,571

Less allowance for loan losses

(957)

(967)

(985)

(953)

Net loans

39,323

39,635

41,176

42,618

Premises and equipment

639

634

644

657

Customers' liability on acceptances outstanding

13

24

11

12

Accrued income and other assets

4,104

4,045

4,247

4,261

Total assets

$            55,004

$    55,885

$          59,249

$            59,590

LIABILITIES AND SHAREHOLDERS' EQUITY

Noninterest-bearing deposits

$            15,763

$    15,769

$          15,871

$            13,888

Money market and NOW deposits

17,288

16,062

14,450

13,556

Savings deposits

1,363

1,407

1,342

1,331

Customer certificates of deposit

5,723

5,893

6,413

7,466

Other time deposits

-

165

1,047

2,801

Foreign office time deposits

494

484

542

572

Total interest-bearing deposits

24,868

24,011

23,794

25,726

Total deposits

40,631

39,780

39,665

39,614

Short-term borrowings

179

200

462

425

Acceptances outstanding

13

24

11

12

Accrued expenses and other liabilities

1,085

1,048

1,022

1,252

Medium- and long-term debt

7,239

9,041

11,060

11,252

Total liabilities

49,147

50,093

52,220

52,555

Fixed rate cumulative perpetual preferred stock, series F, no par value, $1,000 liquidation value per share:

    Authorized - 2,250,000 shares at 12/31/09 and 9/30/09

    Issued - 2,250,000 shares at 12/31/09 and 9/30/09

-

-

2,151

2,145

Common stock - $5 par value:

    Authorized - 325,000,000 shares

   Issued - 203,878,110 shares at 9/30/10 and 6/30/10, 178,735,252 shares at 12/31/09 and 9/30/09  

1,019

1,019

894

894

Capital surplus

1,473

1,467

740

738

Accumulated other comprehensive loss

(238)

(240)

(336)

(361)

Retained earnings

5,171

5,124

5,161

5,205

Less cost of common stock in treasury - 27,394,831 shares at 9/30/10, 27,561,412 shares at 6/30/10, 27,555,623 shares at 12/31/09 and 27,620,576 shares at 9/30/09

(1,568)

(1,578)

(1,581)

(1,586)

Total shareholders' equity

5,857

5,792

7,029

7,035

Total liabilities and shareholders' equity

$            55,004

$    55,885

$          59,249

$            59,590

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

Comerica Incorporated and Subsidiaries

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in millions, except per share data)

2010

2009

2010

2009

INTEREST INCOME

Interest and fees on loans

$  399

$   444

$ 1,223

$ 1,343

Interest on investment securities

55

64

177

276

Interest on short-term investments

2

3

8

7

Total interest income

456

511

1,408

1,626

INTEREST EXPENSE

Interest on deposits

27

89

91

320

Interest on short-term borrowings

-

-

-

2

Interest on medium- and long-term debt

25

37

76

133

Total interest expense

52

126

167

455

Net interest income

404

385

1,241

1,171

Provision for loan losses

122

311

423

826

Net interest income after provision for loan losses

282

74

818

345

NONINTEREST INCOME

Service charges on deposit accounts

51

59

159

172

Fiduciary income

38

40

115

123

Commercial lending fees

22

21

66

58

Letter of credit fees

19

18

56

50

Card fees

15

13

43

37

Foreign exchange income

8

10

28

30

Bank-owned life insurance

9

8

26

26

Brokerage fees

6

7

18

24

Net securities gains

-

107

3

233

Other noninterest income

18

32

60

83

Total noninterest income

186

315

574

836

NONINTEREST EXPENSES

Salaries

187

171

535

513

Employee benefits

47

51

136

159

    Total salaries and employee benefits

234

222

671

672

Net occupancy expense

40

40

120

119

Equipment expense

15

15

47

46

Outside processing fee expense

23

24

69

74

Software expense

22

21

66

61

FDIC insurance expense

14

15

47

75

Legal fees

9

8

26

25

Other real estate expense

7

10

24

26

Litigation and operational losses

2

3

5

7

Provision for credit losses on lending-related commitments

(6)

2

1

(3)

Other noninterest expenses

42

39

127

123

Total noninterest expenses

402

399

1,203

1,225

Income (loss) from continuing operations before income taxes

66

(10)

189

(44)

Provision (benefit) for income taxes

7

(29)

25

(89)

Income from continuing operations

59

19

164

45

Income from discontinued operations, net of tax

-

-

17

1

NET INCOME

59

19

181

46

Less:

   Preferred stock dividends

-

34

123

101

   Income allocated to participating securities

-

1

-

1

Net income (loss) attributable to common shares

$    59

$    (16)

$      58

$    (56)

Basic earnings per common share:

     Income (loss) from continuing operations

$ 0.34

$ (0.10)

$   0.24

$ (0.38)

     Net income (loss)

0.34

(0.10)

0.34

(0.37)

Diluted earnings per common share:

    Income (loss) from continuing operations

0.33

(0.10)

0.24

(0.38)

    Net income (loss)

0.33

(0.10)

0.34

(0.37)

Cash dividends declared on common stock

9

7

26

22

Cash dividends declared per common share

0.05

0.05

0.15

0.15

CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (unaudited)

Comerica Incorporated and Subsidiaries

Third

Second

First

Fourth

Third

Third Quarter 2010 Compared To:

Quarter

Quarter

Quarter

Quarter

Quarter

Second Quarter 2010

Third Quarter 2009

(in millions, except per share data)

2010

2010

2010

2009

2009

Amount

Percent

Amount

Percent

INTEREST INCOME

Interest and fees on loans

$    399

$    412

$    412

$    424

$    444

$       (13)

(3)

%

$       (45)

(10)

%

Interest on investment securities

55

61

61

53

64

(6)

(10)

(9)

(15)

Interest on short-term investments

2

3

3

2

3

(1)

(17)

(1)

(13)

Total interest income

456

476

476

479

511

(20)

(4)

(55)

(11)

INTEREST EXPENSE

Interest on deposits

27

29

35

52

89

(2)

(8)

(62)

(70)

Interest on short-term borrowings

-

-

-

-

-

-

9

-

29

Interest on medium- and long-term debt

25

25

26

31

37

-

1

(12)

(32)

Total interest expense

52

54

61

83

126

(2)

(4)

(74)

(59)

Net interest income

404

422

415

396

385

(18)

(4)

19

5

Provision for loan losses

122

126

175

256

311

(4)

(3)

(189)

(61)

Net interest income after provision for loan losses

282

296

240

140

74

(14)

(4)

208

N/M

NONINTEREST INCOME

Service charges on deposit accounts

51

52

56

56

59

(1)

(1)

(8)

(13)

Fiduciary income

38

38

39

38

40

-

(2)

(2)

(4)

Commercial lending fees

22

22

22

21

21

-

(2)

1

5

Letter of credit fees

19

19

18

19

18

-

3

1

7

Card fees

15

15

13

14

13

-

-

2

13

Foreign exchange income

8

10

10

11

10

(2)

(16)

(2)

(19)

Bank-owned life insurance

9

9

8

9

8

-

6

1

7

Brokerage fees

6

6

6

7

7

-

(4)

(1)

(19)

Net securities gains

-

1

2

10

107

(1)

N/M

(107)

N/M

Other noninterest income

18

22

20

29

32

(4)

(15)

(14)

(41)

Total noninterest income

186

194

194

214

315

(8)

(4)

(129)

(41)

NONINTEREST EXPENSES

Salaries

187

179

169

174

171

8

4

16

9

Employee benefits

47

45

44

51

51

2

3

(4)

(7)

    Total salaries and employee benefits

234

224

213

225

222

10

4

12

5

Net occupancy expense

40

39

41

43

40

1

2

-

(1)

Equipment expense

15

15

17

16

15

-

-

-

1

Outside processing fee expense

23

23

23

23

24

-

-

(1)

(4)

Software expense

22

22

22

23

21

-

1

1

4

FDIC insurance expense

14

16

17

15

15

(2)

(13)

(1)

(5)

Legal fees

9

9

8

12

8

-

4

1

7

Other real estate expense

7

5

12

22

10

2

47

(3)

(28)

Litigation and operational losses

2

2

1

3

3

-

48

(1)

(24)

Provision for credit losses on lending-related commitments

(6)

-

7

3

2

(6)

N/M

(8)

N/M

Other noninterest expenses

42

42

43

40

39

-

(1)

3

10

Total noninterest expenses

402

397

404

425

399

5

1

3

1

Income (loss) from continuing operations before income taxes

66

93

30

(71)

(10)

(27)

(28)

76

N/M

Provision (benefit) for income taxes

7

23

(5)

(42)

(29)

(16)

(68)

36

N/M

Income (loss) from continuing operations

59

70

35

(29)

19

(11)

(15)

40

N/M

Income from discontinued operations, net of tax

-

-

17

-

-

-

N/M

-

N/M

NET INCOME (LOSS)  

59

70

52

(29)

19

(11)

(15)

40

N/M

Less:

   Preferred stock dividends

-

-

123

33

34

-

-

(34)

N/M

   Income allocated to participating securities

-

1

-

-

1

(1)

N/M

(1)

N/M

Net income (loss) attributable to common shares

$      59

$      69

$     (71)

$     (62)

$     (16)

$       (10)

(15)

%

$         75

N/M

%

Basic earnings per common share:

     Income (loss) from continuing operations

$   0.34

$   0.40

$  (0.57)

$  (0.42)

$  (0.10)

$    (0.06)

(15)

%

$      0.44

N/M

%

     Net income (loss)

0.34

0.40

(0.46)

(0.42)

(0.10)

(0.06)

(15)

0.44

N/M

Diluted earnings per common share:

    Income (loss) from continuing operations

0.33

0.39

(0.57)

(0.42)

(0.10)

(0.06)

(15)

0.43

N/M

    Net income (loss)

0.33

0.39

(0.46)

(0.42)

(0.10)

(0.06)

(15)

0.43

N/M

Cash dividends declared on common stock

9

8

9

8

7

1

1

2

19

Cash dividends declared per common share

0.05

0.05

0.05

0.05

0.05

-

-

-

-

N/M - Not meaningful

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)

Comerica Incorporated and Subsidiaries

2010

2009

(in millions)

3rd Qtr

2nd Qtr

1st Qtr

4th Qtr

3rd Qtr

Balance at beginning of period

$   967

$    987

$   985

$   953

$   880

Loan charge-offs:

   Commercial

38

65

49

113

113

   Real estate construction:

       Commercial Real Estate business line (a)

40

30

71

33

63

       Other business lines (b)

1

-

3

-

1

         Total real estate construction

41

30

74

33

64

   Commercial mortgage:

       Commercial Real Estate business line (a)

16

12

16

27

24

       Other business lines (b)

40

36

28

25

15

         Total commercial mortgage

56

48

44

52

39

   Residential mortgage

2

5

2

6

11

   Consumer

7

9

8

9

7

   Lease financing

-

1

-

6

6

   International

1

-

7

13

5

       Total loan charge-offs

145

158

184

232

245

Recoveries on loans previously charged-off:

   Commercial

7

4

7

7

3

   Real estate construction

1

6

1

-

1

   Commercial mortgage

2

1

3

1

-

   Residential mortgage

-

-

-

-

-

   Consumer

1

1

-

-

1

   Lease financing

1

-

-

-

-

   International

1

-

-

-

1

       Total recoveries

13

12

11

8

6

Net loan charge-offs

132

146

173

224

239

Provision for loan losses

122

126

175

256

311

Foreign currency translation adjustment

-

-

-

-

1

Balance at end of period

$   957

$    967

$   987

$   985

$   953

Allowance for loan losses as a percentage of total loans

2.38

%

2.38

%

2.42

%

2.34

%

2.19

%

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

1.32

1.44

1.68

2.09

2.14

Net credit-related charge-offs as a percentage of average total loans

1.32

1.44

1.68

2.10

2.14

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

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

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

Comerica Incorporated and Subsidiaries

2010

2009

(in millions)

3rd Qtr

2nd Qtr

1st Qtr

4th Qtr

3rd Qtr

Balance at beginning of period

$     44

$      44

$     37

$     35

$     33

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

-

-

-

1

-

Add: Provision for credit losses on lending-related commitments

(6)

-

7

3

2

Balance at end of period

$     38

$      44

$     44

$     37

$     35

Unfunded lending-related commitments sold

$        -

$        2

$       -

$       3

$       1

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

NONPERFORMING ASSETS (unaudited)

Comerica Incorporated and Subsidiaries

2010

2009

(in millions)

3rd Qtr

2nd Qtr

1st Qtr

4th Qtr

3rd Qtr

SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS

Nonaccrual loans:

   Commercial

$      258

$      239

$     209

$    238

$    290

   Real estate construction:

       Commercial Real Estate business line (a)

362

385

516

507

542

       Other business lines (b)

4

4

3

4

4

           Total real estate construction

366

389

519

511

546

   Commercial mortgage:

       Commercial Real Estate business line (a)

153

135

105

127

137

       Other business lines (b)

304

257

226

192

161

           Total commercial mortgage

457

392

331

319

298

   Residential mortgage

59

53

58

50

27

   Consumer

11

11

13

12

8

   Lease financing

10

11

11

13

18

   International

2

3

4

22

7

           Total nonaccrual loans

1,163

1,098

1,145

1,165

1,194

Reduced-rate loans

28

23

17

16

2

           Total nonperforming loans

1,191

1,121

1,162

1,181

1,196

Foreclosed property

120

93

89

111

109

           Total nonperforming assets

$   1,311

$   1,214

$  1,251

$ 1,292

$ 1,305

Nonperforming loans as a percentage of total loans

2.96

%

2.76

%

2.85

%

2.80

%

2.74

%

Nonperforming assets as a percentage of total loans and foreclosed property

3.24

2.98

3.06

3.06

2.99

Allowance for loan losses as a percentage of total nonperforming loans        

80

86

85

83

80

Loans past due 90 days or more and still accruing

$      104

$      115

$       83

$    101

$    161

ANALYSIS OF NONACCRUAL LOANS

Nonaccrual loans at beginning of period

$   1,098

$   1,145

$  1,165

$ 1,194

$ 1,130

    Loans transferred to nonaccrual (c)

294

199

245

266

361

    Nonaccrual business loan gross charge-offs (d)

(136)

(143)

(174)

(217)

(226)

    Loans transferred to accrual status (c)

(10)

-

-

-

(4)

    Nonaccrual business loans sold (e)

(12)

(47)

(44)

(10)

(41)

    Payments/Other (f)

(71)

(56)

(47)

(68)

(26)

Nonaccrual loans at end of period

$   1,163

$   1,098

$  1,145

$ 1,165

$ 1,194

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

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

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

(d) Analysis of gross loan charge-offs:

     Nonaccrual business loans

$      136

$      143

$     174

$    217

$    226

     Performing watch list loans

-

1

-

-

1

     Consumer and residential mortgage loans

9

14

10

15

18

Total gross loan charge-offs

$      145

$      158

$     184

$    232

$    245

(e) Analysis of loans sold:

     Nonaccrual business loans

$        12

$        47

$       44

$      10

$      41

     Performing watch list loans

7

15

12

1

24

Total loans sold

$        19

$        62

$       56

$      11

$      65

(f) 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, 2010

September 30, 2009

(dollar amounts in millions)

Average

Balance

Interest

Average

Rate

Average

Balance

Interest

Average

Rate

Commercial loans

$ 20,963

$     614

3.92

%

$ 25,399

$     678

3.57

%

Real estate construction loans

2,997

69

3.08

4,287

94

2.92

Commercial mortgage loans

10,338

321

4.15

10,422

327

4.20

Residential mortgage loans

1,610

65

5.37

1,787

76

5.69

Consumer loans

2,450

65

3.55

2,565

71

3.71

Lease financing

1,100

31

3.72

1,248

29

3.08

International loans

1,233

37

3.96

1,603

46

3.80

Business loan swap income

-

24

-

-

25

-

Total loans

40,691

1,226

4.02

47,311

1,346

3.80

Auction-rate securities available-for-sale

789

6

1.04

1,040

12

1.50

Other investment securities available-for-sale

6,393

172

3.66

8,617

267

4.24

Total investment securities available-for-sale

7,182

178

3.36

9,657

279

3.93

Federal funds sold and securities purchased under agreements to resell

5

-

0.38

24

-

0.32

Interest-bearing deposits with banks (a)

3,641

7

0.25

2,426

5

0.25

Other short-term investments

126

1

1.64

162

2

1.79

Total earning assets

51,645

1,412

3.66

59,580

1,632

3.67

Cash and due from banks

809

901

Allowance for loan losses

(1,033)

(913)

Accrued income and other assets

4,737

4,728

Total assets

$ 56,158

$ 64,296

Money market and NOW deposits

$ 16,035

38

0.32

$ 12,579

49

0.52

Savings deposits

1,397

1

0.07

1,326

1

0.12

Customer certificates of deposit

5,968

42

0.94

8,571

159

2.48

Total interest-bearing core deposits

23,400

81

0.46

22,476

209

1.25

Other time deposits

409

9

3.04

4,983

109

2.93

Foreign office time deposits

462

1

0.27

688

2

0.31

Total interest-bearing deposits

24,271

91

0.50

28,147

320

1.52

Short-term borrowings

230

-

0.24

1,262

2

0.25

Medium- and long-term debt

9,521

76

1.06

14,073

133

1.26

Total interest-bearing sources

34,022

167

0.65

43,482

455

1.40

Noninterest-bearing deposits

14,922

12,385

Accrued expenses and other liabilities

1,080

1,305

Total shareholders' equity

6,134

7,124

Total liabilities and shareholders' equity

$ 56,158

$ 64,296

Net interest income/rate spread (FTE)

$  1,245

3.01

$  1,177

2.27

FTE adjustment

$         4

$         6

Impact of net noninterest-bearing sources of funds

0.22

0.38

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

3.23

%

2.65

%

(a) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 22 basis points and 10 basis points year-to-date in 2010 and 2009, respectively.  Excluding excess liquidity, the net interest margin would have been 3.45% in 2010  and 2.75% in 2009.  See Reconciliation of Non-GAAP Financial Measures.

ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)

Comerica Incorporated and Subsidiaries

Three Months Ended

September 30, 2010

June 30, 2010

September 30, 2009

(dollar amounts in millions)

Average

Balance

Interest

Average

Rate

Average

Balance

Interest

Average

Rate

Average

Balance

Interest

Average

Rate

Commercial loans

$     20,967

$        203

3.84

%

$     20,910

$        206

3.95

%

$     23,401

$        223

3.79

%

Real estate construction loans

2,625

21

3.19

2,987

23

3.13

4,033

29

2.83

Commercial mortgage loans

10,257

105

4.06

10,372

109

4.20

10,359

110

4.21

Residential mortgage loans

1,590

21

5.25

1,607

22

5.44

1,720

24

5.66

Consumer loans

2,421

21

3.53

2,448

22

3.56

2,550

24

3.68

Lease financing

1,064

10

3.69

1,108

10

3.72

1,218

12

3.96

International loans

1,178

12

3.89

1,240

13

4.07

1,501

14

3.65

Business loan swap income

-

7

-

-

9

-

-

9

-

Total loans

40,102

400

3.96

40,672

414

4.07

44,782

445

3.94

Auction-rate securities available-for-sale

673

1

0.99

816

3

1.19

962

3

1.29

Other investment securities available-for-sale

6,233

54

3.54

6,446

58

3.71

8,108

62

3.10

Total investment securities available-for-sale

6,906

55

3.27

7,262

61

3.41

9,070

65

2.91

Federal funds sold and securities purchased under agreements to resell

13

-

0.31

1

-

1.35

2

-

0.29

Interest-bearing deposits with banks (a)

3,047

2

0.25

3,768

3

0.25

3,538

2

0.25

Other short-term investments

121

-

1.53

132

-

1.65

121

1

1.80

Total earning assets

50,189

457

3.64

51,835

478

3.70

57,513

513

3.55

Cash and due from banks

843

795

873

Allowance for loan losses

(1,003)

(1,037)

(992)

Accrued income and other assets

4,700

4,665

4,554

Total assets

$     54,729

$     56,258

$     61,948

Money market and NOW deposits

$     16,681

13

0.31

$     16,354

13

0.32

$     13,090

15

0.46

Savings deposits

1,377

1

0.08

1,429

-

0.07

1,347

-

0.09

Customer certificates of deposit

5,808

12

0.87

5,927

15

0.92

8,145

46

2.23

Total interest-bearing core deposits

23,866

26

0.43

23,710

28

0.45

22,582

61

1.07

Other time deposits

65

-

0.51

295

1

2.14

3,573

28

3.05

Foreign office time deposits

479

1

0.36

448

-

0.23

660

-

0.24

Total interest-bearing deposits

24,410

27

0.43

24,453

29

0.47

26,815

89

1.32

Short-term borrowings

208

-

0.35

248

-

0.27

434

-

0.13

Medium- and long-term debt

8,245

25

1.21

9,571

25

1.04

13,311

37

1.10

Total interest-bearing sources

32,863

52

0.63

34,272

54

0.63

40,560

126

1.23

Noninterest-bearing deposits

14,920

15,218

13,225

Accrued expenses and other liabilities

1,104

1,060

1,098

Total shareholders' equity

5,842

5,708

7,065

Total liabilities and shareholders' equity

$     54,729

$     56,258

$     61,948

Net interest income/rate spread (FTE)

$        405

3.01

$        424

3.07

$        387

2.32

FTE adjustment

$            1

$            2

$            2

Impact of net noninterest-bearing sources of funds

0.22

0.21

0.36

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

3.23

%

3.28

%

2.68

%

(a) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 19 basis points and 23 basis points in the third and second quarters of 2010, respectively, and by 16 basis points in the third quarter of 2009.  Excluding excess liquidity, the net interest margin would have been 3.42%, 3.51% and 2.84% in each respective period.  See Reconciliation of Non-GAAP Financial Measures.

CONSOLIDATED STATISTICAL DATA (unaudited)

Comerica Incorporated and Subsidiaries

(in millions, except per share data)

September 30,

2010

June 30,

2010

March 31,

2010

December 31,

2009

September 30,

2009

Commercial loans:

    Floor plan

$                 1,693

$      1,586

$        1,351

$               1,367

$                    857

    Other

19,739

19,565

19,405

20,323

21,689

Total commercial loans

21,432

21,151

20,756

21,690

22,546

Real estate construction loans:

    Commercial Real Estate business line (a)

2,023

2,345

2,754

3,002

3,342

    Other business lines (b)

421

429

448

459

528

Total real estate construction loans

2,444

2,774

3,202

3,461

3,870

Commercial mortgage loans:

    Commercial Real Estate business line (a)

2,091

2,035

1,944

1,889

1,751

    Other business lines (b)

8,089

8,283

8,414

8,568

8,629

Total commercial mortgage loans

10,180

10,318

10,358

10,457

10,380

Residential mortgage loans

1,586

1,606

1,631

1,651

1,679

Consumer loans:

    Home equity

1,736

1,761

1,782

1,817

1,818

    Other consumer

667

682

690