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| 8-K - 8-K - COMERICA INC /NEW/ | cma-20150930xform8xk.htm |
| EX-99.2 - EXHIBIT 99.2 - COMERICA INC /NEW/ | cma-20150930ex992.htm |
COMERICA REPORTS THIRD QUARTER 2015 NET INCOME OF $136 MILLION,
OR 74 CENTS PER SHARE
Average Loan Growth of $1.8 Billion, or 4 Percent, and
Average Deposit Growth of $4.0 Billion, or 7 Percent, Compared to Third Quarter 2014
Returned $96 Million to Shareholders Through Share Repurchases and Dividends
Credit Quality Remained Strong
DALLAS/October 16, 2015 -- Comerica Incorporated (NYSE: CMA) today reported third quarter 2015 net income of $136 million, compared to $135 million for the second quarter 2015 and $154 million for the third quarter 2014. Earnings per diluted share were 74 cents for third quarter 2015 compared to 73 cents for second quarter 2015 and 82 cents for third quarter 2014.
(dollar amounts in millions, except per share data) | 3rd Qtr '15 | 2nd Qtr '15 | 3rd Qtr '14 | |||||||||
Net interest income | $ | 422 | $ | 421 | $ | 414 | ||||||
Provision for credit losses | 26 | 47 | 5 | |||||||||
Noninterest income (a) | 264 | 261 | 215 | |||||||||
Noninterest expenses (a) (b) | 461 | 436 | 397 | (c) | ||||||||
Provision for income taxes | 63 | 64 | 73 | |||||||||
Net income | 136 | 135 | 154 | |||||||||
Net income attributable to common shares | 134 | 134 | 152 | |||||||||
Diluted income per common share | 0.74 | 0.73 | 0.82 | |||||||||
Average diluted shares (in millions) | 181 | 182 | 185 | |||||||||
Basel III common equity Tier 1 capital ratio (d) (e) | 10.58 | % | 10.40 | % | n/a | |||||||
Tier 1 common capital ratio (d) (f) | n/a | n/a | 10.59 | % | ||||||||
Tangible common equity ratio (f) | 9.91 | 9.92 | 9.94 | |||||||||
(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 $48 million and $44 million to both noninterest income and noninterest expenses in both the third and second quarters of 2015, respectively. |
(b) | Included net releases of litigation reserves of $3 million, $30 million and $2 million in the third quarter 2015, second quarter 2015 and third quarter 2014, respectively. |
(c) | Reflected a net benefit of $8 million from certain third quarter 2014 actions, including a $32 million gain on the early redemption of debt, a $9 million contribution to the Comerica Charitable Foundation and other charges totaling $15 million. |
(d) | 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. |
(e) | September 30, 2015 ratio is estimated. |
(f) | See Reconciliation of Non-GAAP Financial Measures. |
n/a - not applicable.
"Our third quarter results demonstrate the benefits of our geographic and business line diversity. ” said Ralph W. Babb, Jr., chairman and chief executive officer. "Average loans grew $1.8 billion, or 4 percent, and deposits were up $4.0 billion, or 7 percent, compared to a year ago.
"Net interest income remained stable compared to the second quarter and noninterest income increased $3 million, or 1 percent, including growth in card fees, an area of increased focus for us. We continued to tightly manage expenses in the third quarter, even while faced with rising technology and regulatory costs. Overall
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COMERICA REPORTS THIRD QUARTER 2015 NET INCOME OF $136 MILLION - 2
credit quality remained strong. As far as loans related to energy(a), we saw negative migration; however, as expected, net charge-offs continued to be low and nonaccruals increased a modest $7 million.
"Our capital position is solid,” said Babb. "Stock repurchases under our equity repurchase program, combined with dividends, returned $96 million to shareholders in the third quarter. Our Trusted Advisor approach to relationship banking continues to make a positive difference as we remain focused on the long term."
Third Quarter 2015 Compared to Second Quarter 2015
• | Average total loans increased $139 million to $49.0 billion, with increases in Technology and Life Sciences and Commercial Real Estate offset by decreases in Corporate Banking, general Middle Market and Energy. Period-end total loans decreased $799 million, to $48.9 billion, largely driven by seasonal decreases in Mortgage Banker Finance and general Middle Market. |
• | Average total deposits increased $1.7 billion, or 3 percent, to $59.1 billion, primarily driven by a $1.3 billion increase in noninterest-bearing deposits. Average total deposits increased in almost all lines of business. Period-end total deposits increased $508 million to $58.8 billion. |
• | Net interest income increased $1 million to $422 million compared to second quarter 2015. The benefits from one additional day in the quarter and increases in average earning assets were largely offset by an increase in interest expense on debt and lower loan yields. |
• | The allowance for loan losses increased $4 million compared to June 30, 2015, primarily due to increases in reserves related to Technology and Life Sciences and energy exposure, partially offset by lower loan balances and improved credit quality in the remainder of the portfolio. Net charge-offs were $23 million, or 0.19 percent of average loans, in the third quarter 2015, compared to $18 million, or 0.15 percent, in the second quarter 2015. As a result, the provision for credit losses was $26 million for the third quarter 2015. |
• | Noninterest income increased $3 million in the third quarter 2015, including a $3 million increase in card fees. |
• | Noninterest expenses increased $25 million in the third quarter 2015, primarily reflecting a $3 million net release of litigation reserves in the third quarter 2015, compared to a net release of $30 million in the second quarter 2015. |
• | Capital remained solid at September 30, 2015, as evidenced by an estimated common equity Tier 1 capital ratio of 10.58 percent and a tangible common equity ratio of 9.91 percent. |
• | Comerica repurchased approximately 1.2 million shares of common stock under the equity repurchase program, which, together with dividends, returned $96 million to shareholders. |
Third Quarter 2015 Compared to Third Quarter 2014
• | Average total loans increased $1.8 billion, or 4 percent, primarily reflecting increases in almost all lines of business, partially offset by a $400 million decrease in Corporate Banking. |
• | Average total deposits increased $4.0 billion, or 7 percent, primarily driven by increases of $3.3 billion in noninterest-bearing deposits and $1.2 billion in money market and NOW deposits, partially offset by a decrease of $592 million in customer certificates of deposit. Average deposits increased in almost all lines of business and across all markets. |
• | Net interest income increased $8 million, largely due to earning asset growth, partially offset by a $4 million increase in interest expense on debt. |
• | The provision for credit losses increased $21 million, primarily due to increases in reserves related to Technology and Life Sciences and 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 $48 million in the third quarter 2015, noninterest income increased $1 million. |
• | Noninterest expenses increased $8 million, excluding the above-described change in accounting presentation for a card program and the net benefit of $8 million in the third quarter 2014 from certain cost-saving actions, primarily due to an increase in technology-related contract labor expenses and higher outside processing expenses related to revenue generating activities. |
(a) Loans related to energy at September 30, 2015 included approximately $3.2 billion of outstanding loans in our Energy business line as well as approximately $615 million of loans in other lines of business to companies that have a sizable
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COMERICA REPORTS THIRD QUARTER 2015 NET INCOME OF $136 MILLION - 3
portion of their revenue related to energy or could be otherwise disproportionately negatively impacted by prolonged low oil and gas prices.
Net Interest Income
(dollar amounts in millions) | 3rd Qtr '15 | 2nd Qtr '15 | 3rd Qtr '14 | ||||||||
Net interest income | $ | 422 | $ | 421 | $ | 414 | |||||
Net interest margin | 2.54 | % | 2.65 | % | 2.67 | % | |||||
Selected average balances: | |||||||||||
Total earning assets | $ | 66,191 | $ | 63,981 | $ | 61,672 | |||||
Total loans | 48,972 | 48,833 | 47,159 | ||||||||
Total investment securities | 10,232 | 9,936 | 9,388 | ||||||||
Federal Reserve Bank deposits | 6,710 | 4,968 | 4,877 | ||||||||
Total deposits | 59,140 | 57,398 | 55,163 | ||||||||
Total noninterest-bearing deposits | 28,623 | 27,365 | 25,275 | ||||||||
• | Net interest income increased $1 million to $422 million in the third quarter 2015, compared to the second quarter 2015. |
◦ | Interest on loans increased $2 million, reflecting the impact of one additional day in the third quarter (+$4 million) and the benefit from an increase in average loan balances (+$1 million), partially offset by a decrease in yields (-$3 million). The decrease in loan yields primarily reflected the impact of growth in high quality, lower yielding loans as well as a decrease in fee income due to the summer slowdown, partially offset by the benefit from an increase in LIBOR and the favorable impact from higher yields on loans related to energy due to negative credit migration. |
◦ | Interest on investment securities and Federal Reserve Bank deposits each increased $1 million, primarily reflecting increased average balances. |
◦ | Interest expense on debt increased $3 million, primarily reflecting the impact of debt issued in June and July 2015. |
• | The net interest margin of 2.54 percent decreased 11 basis points compared to the second quarter 2015, primarily due to the impact of the increase in Federal Reserve Bank deposit balances (-6 basis points), lower loan yields (-2 basis points) and the impact of increased debt (-2 basis points). |
Noninterest Income
Noninterest income increased $3 million in the third quarter 2015, compared to $261 million for the second quarter 2015. The increase primarily reflected increases of $4 million in hedge ineffectiveness income, $3 million in card fees and $3 million in warrant-related income, partially offset by decreases of $5 million in deferred compensation asset returns and $4 million in investment banking income. The decrease in deferred compensation asset returns was offset by a decrease in deferred compensation plan expense in noninterest expenses.
Noninterest Expenses
Noninterest expenses increased $25 million in the third quarter 2015, compared to $436 million for the second quarter 2015, primarily reflecting a $3 million net release of litigation reserves in the third quarter 2015, compared to a net release of $30 million in the second quarter 2015, as well as increases of $2 million each in occupancy and software expense, partially offset by an $8 million decrease in salaries and benefits expense. The decrease in salaries and benefits expense primarily reflected a decrease in deferred compensation plan expense, lower share-based compensation expense as a result of forfeitures, and lower benefits expense, partially offset by an increase in technology-related contract labor expenses and the impact of one additional day in the quarter.
Credit Quality
“At 19 basis points, net charge-offs remain well below the historical normal level. Gross charge-offs declined slightly, while recoveries were down, primarily due to timing,” said Babb. “The provision for credit losses was $26 million and the allowance increased $4 million. This reflects modestly higher reserves for both
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COMERICA REPORTS THIRD QUARTER 2015 NET INCOME OF $136 MILLION - 4
Technology and Life Sciences and loans related to energy. This marks the fourth consecutive quarter that we have prudently increased our reserves for energy, a result of increasing criticized loans and sustained low energy prices. While negative credit migration is anticipated, any losses are expected to be manageable. We continue to feel comfortable with our energy portfolio.”
(dollar amounts in millions) | 3rd Qtr '15 | 2nd Qtr '15 | 3rd Qtr '14 | ||||||||
Loan charge-offs | $ | 34 | $ | 35 | $ | 24 | |||||
Loan recoveries | 11 | 17 | 21 | ||||||||
Net loan charge-offs | 23 | 18 | 3 | ||||||||
Net loan charge-offs/Average total loans | 0.19 | % | 0.15 | % | 0.03 | % | |||||
Provision for credit losses | $ | 26 | $ | 47 | $ | 5 | |||||
Nonperforming loans (a) | 369 | 361 | 346 | ||||||||
Nonperforming assets (NPAs) (a) | 381 | 370 | 357 | ||||||||
NPAs/Total loans and foreclosed property | 0.78 | % | 0.74 | % | 0.75 | % | |||||
Loans past due 90 days or more and still accruing | $ | 5 | $ | 18 | $ | 13 | |||||
Allowance for loan losses | 622 | 618 | 592 | ||||||||
Allowance for credit losses on lending-related commitments (b) | 48 | 50 | 43 | ||||||||
Total allowance for credit losses | 670 | 668 | 635 | ||||||||
Allowance for loan losses/Period-end total loans | 1.27 | % | 1.24 | % | 1.24 | % | |||||
Allowance for loan losses/Nonperforming loans | 169 | 171 | 171 | ||||||||
(a) | Excludes loans acquired with credit impairment. |
(b) | Included in "Accrued expenses and other liabilities" on the consolidated balance sheets. |
• | Net charge-offs increased $5 million to $23 million, or 0.19 percent of average loans, in the third quarter 2015, compared to $18 million, or 0.15 percent, in the second quarter 2015. |
• | During the third quarter 2015, $69 million of borrower relationships over $2 million were transferred to nonaccrual status, of which $25 million were loans related to energy. |
• | Criticized loans increased $537 million to $2.9 billion at September 30, 2015, compared to $2.4 billion at June 30, 2015, reflecting an increase of approximately $480 million in criticized loans related to energy. |
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COMERICA REPORTS THIRD QUARTER 2015 NET INCOME OF $136 MILLION - 5
Balance Sheet and Capital Management
Total assets and common shareholders' equity were $71.0 billion and $7.6 billion, respectively, at September 30, 2015, compared to $69.9 billion and $7.5 billion, respectively, at June 30, 2015.
There were approximately 177 million common shares outstanding at September 30, 2015. Share repurchases of $59 million (1.2 million shares) under the equity repurchase program, combined with dividends of 21 cents per share, returned 71 percent of third quarter 2015 net income to shareholders. Diluted average shares decreased 2 million to 181 million for the third quarter 2015.
The estimated common equity Tier 1 capital ratio, reflective of transition provisions and excluding accumulated other comprehensive income ("AOCI"), was 10.58 percent at September 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 largely the same as the transitional ratio. Comerica's tangible common equity ratio was 9.91 percent at September 30, 2015, a decrease of 1 basis point from June 30, 2015.
Full-Year and Fourth Quarter 2015 Outlook
Management expectations for full-year 2015 compared to full-year 2014 have not changed from the previously provided outlook.
For fourth quarter 2015 compared to third quarter 2015, management expects the following, assuming a continuation of the current economic and low-rate environment:
• | Average loans relatively stable, reflecting a seasonal decline in Mortgage Banker Finance, a continued decline in Energy and small increases in other lines of business. |
• | Net interest income relatively stable, with a contribution from earning asset growth approximately offset by continued pressure on yields from the low rate environment. |
• | Provision for credit losses remains low, with fourth quarter provision at a level similar to the third quarter. Continued negative migration of loans related to energy is possible, which may be offset by lower exposure balances. |
• | Noninterest income slightly higher, with growth in card fees, along with fiduciary income and investment banking fees should markets improve. The levels of warrant income, hedge ineffectiveness income and deferred compensation asset losses experienced in the third quarter 2015 are not expected to repeat, but are difficult to predict. |
• | Noninterest expenses moderately higher, reflecting seasonal increases in benefits expense, outside processing, marketing and occupancy expenses. The levels of litigation-related expense, share-based compensation and deferred compensation plan expense experienced in the third quarter 2015 are not expected to repeat, but are difficult to predict. |
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COMERICA REPORTS THIRD QUARTER 2015 NET INCOME OF $136 MILLION - 6
Business Segments
Comerica's operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank and Wealth Management. The Finance Division is also reported as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at September 30, 2015 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses third quarter 2015 results compared to second quarter 2015.
The following table presents net income (loss) by business segment.
(dollar amounts in millions) | 3rd Qtr '15 | 2nd Qtr '15 | 3rd Qtr '14 | ||||||||||||||
Business Bank | $ | 194 | 85 | % | $ | 182 | 81 | % | $ | 211 | 92 | % | |||||
Retail Bank | 13 | 6 | 18 | 8 | 7 | 3 | |||||||||||
Wealth Management | 21 | 9 | 26 | 11 | 12 | 5 | |||||||||||
228 | 100 | % | 226 | 100 | % | 230 | 100 | % | |||||||||
Finance | (93 | ) | (90 | ) | (73 | ) | |||||||||||
Other (a) | 1 | (1 | ) | (3 | ) | ||||||||||||
Total | $ | 136 | $ | 135 | $ | 154 | |||||||||||
(a) Includes items not directly associated with the three major business segments or the Finance Division.
Business Bank
(dollar amounts in millions) | 3rd Qtr '15 | 2nd Qtr '15 | 3rd Qtr '14 | ||||||||
Net interest income (FTE) | $ | 380 | $ | 375 | $ | 376 | |||||
Provision for credit losses | 30 | 61 | (4 | ) | |||||||
Noninterest income | 145 | 140 | 97 | ||||||||
Noninterest expenses | 202 | 176 | 152 | ||||||||
Net income | 194 | 182 | 211 | ||||||||
Net loan charge-offs | 23 | 22 | (2 | ) | |||||||
Selected average balances: | |||||||||||
Assets | 39,210 | 39,135 | 37,751 | ||||||||
Loans | 38,113 | 38,109 | 36,746 | ||||||||
Deposits | 31,397 | 30,229 | 28,815 | ||||||||
• | Average loans increased $4 million, primarily reflecting increases in Technology and Life Sciences, Commercial Real Estate and Entertainment, largely offset by decreases in Corporate Banking, general Middle Market and Energy. |
• | Average deposits increased $1.2 billion, primarily reflecting increases in general Middle Market, Technology and Life Sciences and Corporate Banking, partially offset by a decrease in Commercial Real Estate. |
• | Net interest income increased $5 million, primarily reflecting the impact of one additional day in the quarter and an increase in net funds transfer pricing (FTP) credits, largely due to the increase in average deposits, partially offset by lower loan yields. |
• | The allowance for loan losses increased $5 million compared to June 30, 2015, primarily due to increases in reserves related to Technology and Life Sciences and energy exposure, partially offset by lower loan balances and improvements in credit quality in the remainder of the portfolio. As a result, the provision for credit losses was $30 million for the third quarter 2015. |
• | Noninterest income increased $5 million, primarily due to increases in customer derivative income and warrant-related income, partially offset by a decrease in investment banking fees. |
• | Noninterest expenses increased $26 million, primarily reflecting the impact of a net release in litigation reserves in the second quarter 2015, partially offset by a decrease in salaries and benefits expense. |
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COMERICA REPORTS THIRD QUARTER 2015 NET INCOME OF $136 MILLION - 7
Retail Bank
(dollar amounts in millions) | 3rd Qtr '15 | 2nd Qtr '15 | 3rd Qtr '14 | ||||||||
Net interest income (FTE) | $ | 158 | $ | 155 | $ | 153 | |||||
Provision for credit losses | 2 | (8 | ) | — | |||||||
Noninterest income | 49 | 46 | 42 | ||||||||
Noninterest expenses | 185 | 182 | 185 | ||||||||
Net income | 13 | 18 | 7 | ||||||||
Net loan charge-offs | 1 | 1 | — | ||||||||
Selected average balances: | |||||||||||
Assets | 6,518 | 6,459 | 6,273 | ||||||||
Loans | 5,835 | 5,770 | 5,605 | ||||||||
Deposits | 23,079 | 22,747 | 22,042 | ||||||||
• | Average loans increased $65 million, reflecting increases in Small Business and consumer loans in Retail Banking. |
• | Average deposits increased $332 million, primarily reflecting an increase in noninterest-bearing deposits. |
• | Net interest income increased $3 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. |
• | The provision for credit losses was $2 million, compared to a negative provision of $8 million in the second quarter 2015. |
• | Noninterest income increased $3 million, primarily reflecting an increase in card fees. |
• | Noninterest expenses increased $3 million, primarily reflecting increases in occupancy and outside processing expenses. |
Wealth Management
(dollar amounts in millions) | 3rd Qtr '15 | 2nd Qtr '15 | 3rd Qtr '14 | ||||||||
Net interest income (FTE) | $ | 45 | $ | 45 | $ | 45 | |||||
Provision for credit losses | (3 | ) | (9 | ) | 7 | ||||||
Noninterest income | 59 | 60 | 59 | ||||||||
Noninterest expenses | 74 | 74 | 78 | ||||||||
Net income | 21 | 26 | 12 | ||||||||
Net loan charge-offs (recoveries) | (1 | ) | (5 | ) | 5 | ||||||
Selected average balances: | |||||||||||
Assets | 5,228 | 5,153 | 4,998 | ||||||||
Loans | 5,024 | 4,954 | 4,808 | ||||||||
Deposits | 4,188 | 4,060 | 3,924 | ||||||||
• | Average loans increased $70 million. |
• | Average deposits increased $128 million, primarily reflecting increases in money market and checking deposits. |
• | Net interest income remained stable quarter over quarter. The benefits from loan and deposit growth and the impact of one additional day in the quarter were offset by lower yields and a decrease in the FTP crediting rate. |
• | The provision for credit losses increased $6 million, from a negative provision of $9 million in the second quarter 2015 to a negative provision of $3 million in the third quarter 2015, primarily reflecting lower net recoveries in the third quarter 2015. |
• | Noninterest income decreased $1 million, primarily due to lower fiduciary income. |
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COMERICA REPORTS THIRD QUARTER 2015 NET INCOME OF $136 MILLION - 8
Geographic Market Segments
Comerica also provides market segment results for three primary geographic markets: Michigan, California and Texas. In addition to the three primary geographic markets, Other Markets is also reported as a market segment. Other Markets includes Florida, Arizona, the International Finance division and businesses that have a significant presence outside of the three primary geographic markets. The tables below present the geographic market results based on the methodologies in effect at September 30, 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) | 3rd Qtr '15 | 2nd Qtr '15 | 3rd Qtr '14 | ||||||||||||||
Michigan | $ | 71 | 31 | % | $ | 98 | 44 | % | $ | 66 | 29 | % | |||||
California | 62 | 27 | 71 | 31 | 63 | 27 | |||||||||||
Texas | 36 | 16 | 14 | 6 | 42 | 18 | |||||||||||
Other Markets | 59 | 26 | 43 | 19 | 59 | 26 | |||||||||||
228 | 100 | % | 226 | 100 | % | 230 | 100 | % | |||||||||
Finance & Other (a) | (92 | ) | (91 | ) | (76 | ) | |||||||||||
Total | $ | 136 | $ | 135 | $ | 154 | |||||||||||
(a) Includes items not directly associated with the geographic markets.
• | Average loans increased $360 million in California and decreased $257 million in Texas and $67 million in Michigan (primarily general Middle Market). The increase in California was led by Technology and Life Sciences, Entertainment and Private Banking, partially offset by a decrease in general Middle Market. In Texas, average loans decreased in almost all lines of business. |
• | Average deposits increased $1.1 billion and $240 million in California and Michigan, respectively, and decreased $206 million in Texas. The increases in California and Michigan reflected increases in almost all lines of business, partially offset by decreases in Commercial Real Estate (in both markets) and Corporate Banking (in Michigan). The decrease in Texas primarily reflected decreases in general Middle Market, Technology and Life Sciences, and Energy, partially offset by an increase in Small Business. |
• | Net interest income increased $6 million and $1 million in California and Michigan, respectively, and decreased $1 million in Texas. The increase in California primarily reflected the benefit from an increase in net FTP credits, largely due to the increase in average deposits, and the impact of one additional day in the quarter. |
• | The provision for credit losses decreased $33 million in Texas and increased $20 million and $19 million in California and Michigan, respectively. The decrease in Texas primarily reflected a smaller reserve build for Energy in the third quarter 2015, compared to the second quarter 2015. In California, the provision increased primarily as a result of increased reserves for Technology and Life Sciences, while the increase in Michigan was primarily the result of increased provisions in general Middle Market, Retail Banking and Corporate Banking. |
• | Noninterest income increased $3 million and $1 million in Texas and California, respectively, and was unchanged in Michigan. The increase in Texas was primarily due to increases in customer derivative income, foreign exchange income and small increases in several categories, partially offset by a decrease in investment banking income. |
• | Noninterest expenses increased $24 million in Michigan, primarily reflecting the impact of a net release in litigation reserves in the second quarter 2015, partially offset by small decreases in several categories, and increased $3 million and $2 million in Texas and California, respectively. |
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COMERICA REPORTS THIRD QUARTER 2015 NET INCOME OF $136 MILLION - 9
Michigan Market
(dollar amounts in millions) | 3rd Qtr '15 | 2nd Qtr '15 | 3rd Qtr '14 | ||||||||
Net interest income (FTE) | $ | 180 | $ | 179 | $ | 179 | |||||
Provision for credit losses | 6 | (13 | ) | (8 | ) | ||||||
Noninterest income | 85 | 85 | 83 | ||||||||
Noninterest expenses | 152 | 128 | 166 | ||||||||
Net income | 71 | 98 | 66 | ||||||||
Net loan charge-offs (recoveries) | 9 | (2 | ) | 3 | |||||||
Selected average balances: | |||||||||||
Assets | 13,856 | 13,852 | 13,724 | ||||||||
Loans | 13,223 | 13,290 | 13,248 | ||||||||
Deposits | 21,946 | 21,706 | 21,214 | ||||||||
California Market
(dollar amounts in millions) | 3rd Qtr '15 | 2nd Qtr '15 | 3rd Qtr '14 | ||||||||
Net interest income (FTE) | $ | 187 | $ | 181 | $ | 182 | |||||
Provision for credit losses | 24 | 4 | 14 | ||||||||
Noninterest income | 38 | 37 | 37 | ||||||||
Noninterest expenses | 102 | 100 | 102 | ||||||||
Net income | 62 | 71 | 63 | ||||||||
Net loan charge-offs | 10 | 6 | 6 | ||||||||
Selected average balances: | |||||||||||
Assets | 17,060 | 16,696 | 15,768 | ||||||||
Loans | 16,789 | 16,429 | 15,509 | ||||||||
Deposits | 18,372 | 17,275 | 16,350 | ||||||||
Texas Market
(dollar amounts in millions) | 3rd Qtr '15 | 2nd Qtr '15 | 3rd Qtr '14 | ||||||||
Net interest income (FTE) | $ | 129 | $ | 130 | $ | 130 | |||||
Provision for credit losses | 10 | 43 | 3 | ||||||||
Noninterest income | 34 | 31 | 36 | ||||||||
Noninterest expenses | 97 | 94 | 96 | ||||||||
Net income | 36 | 14 | 42 | ||||||||
Net loan charge-offs | 4 | 5 | — | ||||||||
Selected average balances: | |||||||||||
Assets | 11,578 | 11,878 | 11,835 | ||||||||
Loans | 10,997 | 11,254 | 11,147 | ||||||||
Deposits | 10,753 | 10,959 | 10,633 | ||||||||
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COMERICA REPORTS THIRD QUARTER 2015 NET INCOME OF $136 MILLION - 10
Conference Call and Webcast
Comerica will host a conference call to review third quarter 2015 financial results at 7 a.m. CT Friday, October 16, 2015. Interested parties may access the conference call by calling (877) 523-5249 or (210) 591-1147 (event ID No. 28321461). 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.
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COMERICA REPORTS THIRD QUARTER 2015 NET INCOME OF $136 MILLION - 11
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.
Media Contact: | Investor Contacts: |
Wayne J. Mielke | Darlene P. Persons |
(214) 462-4463 | (214) 462-6831 |
Chelsea R. Smith | |
(214) 462-6834 | |
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) | 2015 | 2015 | 2014 | 2015 | 2014 | |||||||||||
PER COMMON SHARE AND COMMON STOCK DATA | ||||||||||||||||
Diluted net income | $ | 0.74 | $ | 0.73 | $ | 0.82 | $ | 2.20 | $ | 2.35 | ||||||
Cash dividends declared | 0.21 | 0.21 | 0.20 | 0.62 | 0.59 | |||||||||||
Average diluted shares (in thousands) | 180,714 | 182,422 | 185,401 | 181,807 | 186,064 | |||||||||||
KEY RATIOS | ||||||||||||||||
Return on average common shareholders' equity | 7.19 | % | 7.21 | % | 8.29 | % | 7.20 | % | 8.08 | % | ||||||
Return on average assets | 0.76 | 0.79 | 0.93 | 0.78 | 0.91 | |||||||||||
Common equity tier 1 risk-based capital ratio (a) (b) | 10.58 | 10.40 | n/a | |||||||||||||
Tier 1 common risk-based capital ratio (c) | n/a | n/a | 10.59 | |||||||||||||
Tier 1 risk-based capital ratio (a) (b) | 10.58 | 10.40 | 10.59 | |||||||||||||
Total risk-based capital ratio (a) (b) | 12.91 | 12.38 | 12.83 | |||||||||||||
Leverage ratio (a) (b) | 10.29 | 10.56 | 10.79 | |||||||||||||
Tangible common equity ratio (c) | 9.91 | 9.92 | 9.94 | |||||||||||||
AVERAGE BALANCES | ||||||||||||||||
Commercial loans | $ | 31,900 | $ | 31,788 | $ | 30,188 | $ | 31,596 | $ | 29,487 | ||||||
Real estate construction loans | 1,833 | 1,807 | 1,973 | 1,859 | 1,905 | |||||||||||
Commercial mortgage loans | 8,691 | 8,672 | 8,698 | 8,648 | 8,739 | |||||||||||
Lease financing | 788 | 795 | 823 | 793 | 840 | |||||||||||
International loans | 1,401 | 1,453 | 1,417 | 1,455 | 1,349 | |||||||||||
Residential mortgage loans | 1,882 | 1,877 | 1,792 | 1,872 | 1,763 | |||||||||||
Consumer loans | 2,477 | 2,441 | 2,268 | 2,432 | 2,244 | |||||||||||
Total loans | 48,972 | 48,833 | 47,159 | 48,655 | 46,327 | |||||||||||
Earning assets | 66,191 | 63,981 | 61,672 | 64,561 | 60,585 | |||||||||||
Total assets | 71,333 | 68,963 | 66,398 | 69,688 | 65,335 | |||||||||||
Noninterest-bearing deposits | 28,623 | 27,365 | 25,275 | 27,569 | 24,182 | |||||||||||
Interest-bearing deposits | 30,517 | 30,033 | 29,888 | 30,282 | 29,599 | |||||||||||
Total deposits | 59,140 | 57,398 | 55,163 | 57,851 | 53,781 | |||||||||||
Common shareholders' equity | 7,559 | 7,512 | 7,411 | 7,508 | 7,324 | |||||||||||
NET INTEREST INCOME (fully taxable equivalent basis) | ||||||||||||||||
Net interest income | $ | 423 | $ | 422 | $ | 415 | $ | 1,259 | $ | 1,243 | ||||||
Net interest margin | 2.54 | % | 2.65 | % | 2.67 | % | 2.61 | % | 2.74 | % | ||||||
CREDIT QUALITY | ||||||||||||||||
Total nonperforming assets | $ | 381 | $ | 370 | $ | 357 | ||||||||||
Loans past due 90 days or more and still accruing | 5 | 18 | 13 | |||||||||||||
Net loan charge-offs | 23 | 18 | 3 | $ | 49 | $ | 24 | |||||||||
Allowance for loan losses | 622 | 618 | 592 | |||||||||||||
Allowance for credit losses on lending-related commitments | 48 | 50 | 43 | |||||||||||||
Total allowance for credit losses | 670 | 668 | 635 | |||||||||||||
Allowance for loan losses as a percentage of total loans | 1.27 | % | 1.24 | % | 1.24 | % | ||||||||||
Net loan charge-offs as a percentage of average total loans | 0.19 | 0.15 | 0.03 | 0.14 | % | 0.07 | % | |||||||||
Nonperforming assets as a percentage of total loans and foreclosed property | 0.78 | 0.74 | 0.75 | |||||||||||||
Allowance for loan losses as a percentage of total nonperforming loans | 169 | 171 | 171 | |||||||||||||
(a) | Basel III rules became effective on January 1, 2015, with transitional provisions. All prior period data is based on Basel I rules. |
(b) | September 30, 2015 ratios are estimated. |
(c) | See Reconciliation of Non-GAAP Financial Measures. |
n/a - not applicable.
12
CONSOLIDATED BALANCE SHEETS | ||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||
September 30, | June 30, | December 31, | September 30, | |||||||||
(in millions, except share data) | 2015 | 2015 | 2014 | 2014 | ||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||
ASSETS | ||||||||||||
Cash and due from banks | $ | 1,101 | $ | 1,148 | $ | 1,026 | $ | 1,039 | ||||
Interest-bearing deposits with banks | 6,099 | 4,817 | 5,045 | 6,748 | ||||||||
Other short-term investments | 107 | 119 | 99 | 112 | ||||||||
Investment securities available-for-sale | 8,749 | 8,267 | 8,116 | 9,468 | ||||||||
Investment securities held-to-maturity | 1,863 | 1,952 | 1,935 | — | ||||||||
Commercial loans | 31,777 | 32,723 | 31,520 | 30,759 | ||||||||
Real estate construction loans | 1,874 | 1,795 | 1,955 | 1,992 | ||||||||
Commercial mortgage loans | 8,787 | 8,674 | 8,604 | 8,603 | ||||||||
Lease financing | 751 | 786 | 805 | 805 | ||||||||
International loans | 1,382 | 1,420 | 1,496 | 1,429 | ||||||||
Residential mortgage loans | 1,880 | 1,865 | 1,831 | 1,797 | ||||||||
Consumer loans | 2,491 | 2,478 | 2,382 | 2,323 | ||||||||
Total loans | 48,942 | 49,741 | 48,593 | 47,708 | ||||||||
Less allowance for loan losses | (622 | ) | (618 | ) | (594 | ) | (592 | ) | ||||
Net loans | 48,320 | 49,123 | 47,999 | 47,116 | ||||||||
Premises and equipment | 541 | 541 | 532 | 524 | ||||||||
Accrued income and other assets | 4,232 | 3,978 | 4,434 | 3,876 | ||||||||
Total assets | $ | 71,012 | $ | 69,945 | $ | 69,186 | $ | 68,883 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
Noninterest-bearing deposits | $ | 28,697 | $ | 28,167 | $ | 27,224 | $ | 27,490 | ||||
Money market and interest-bearing checking deposits | 23,948 | 23,786 | 23,954 | 23,523 | ||||||||
Savings deposits | 1,853 | 1,841 | 1,752 | 1,753 | ||||||||
Customer certificates of deposit | 4,126 | 4,367 | 4,421 | 4,698 | ||||||||
Foreign office time deposits | 144 | 99 | 135 | 117 | ||||||||
Total interest-bearing deposits | 30,071 | 30,093 | 30,262 | 30,091 | ||||||||
Total deposits | 58,768 | 58,260 | 57,486 | 57,581 | ||||||||
Short-term borrowings | 109 | 56 | 116 | 202 | ||||||||
Accrued expenses and other liabilities | 1,413 | 1,265 | 1,507 | 1,002 | ||||||||
Medium- and long-term debt | 3,100 | 2,841 | 2,675 | 2,665 | ||||||||
Total liabilities | 63,390 | 62,422 | 61,784 | 61,450 | ||||||||
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 | 2,165 | 2,158 | 2,188 | 2,183 | ||||||||
Accumulated other comprehensive loss | (345 | ) | (396 | ) | (412 | ) | (317 | ) | ||||
Retained earnings | 7,007 | 6,908 | 6,744 | 6,631 | ||||||||
Less cost of common stock in treasury - 51,010,418 shares at 9/30/15, 49,803,515 shares at 6/30/15, 49,146,225 shares at 12/31/14, and 47,992,721 shares at 9/30/14 | (2,346 | ) | (2,288 | ) | (2,259 | ) | (2,205 | ) | ||||
Total shareholders' equity | 7,622 | 7,523 | 7,402 | 7,433 | ||||||||
Total liabilities and shareholders' equity | $ | 71,012 | $ | 69,945 | $ | 69,186 | $ | 68,883 | ||||
13
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) | |||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
(in millions, except per share data) | 2015 | 2014 | 2015 | 2014 | |||||||||
INTEREST INCOME | |||||||||||||
Interest and fees on loans | $ | 390 | $ | 381 | $ | 1,156 | $ | 1,142 | |||||
Interest on investment securities | 54 | 52 | 160 | 160 | |||||||||
Interest on short-term investments | 4 | 3 | 11 | 10 | |||||||||
Total interest income | 448 | 436 | 1,327 | 1,312 | |||||||||
INTEREST EXPENSE | |||||||||||||
Interest on deposits | 11 | 11 | 33 | 33 | |||||||||
Interest on medium- and long-term debt | 15 | 11 | 38 | 39 | |||||||||
Total interest expense | 26 | 22 | 71 | 72 | |||||||||
Net interest income | 422 | 414 | 1,256 | 1,240 | |||||||||
Provision for credit losses | 26 | 5 | 87 | 25 | |||||||||
Net interest income after provision for credit losses | 396 | 409 | 1,169 | 1,215 | |||||||||
NONINTEREST INCOME | |||||||||||||
Service charges on deposit accounts | 56 | 54 | 167 | 162 | |||||||||
Fiduciary income | 47 | 44 | 142 | 133 | |||||||||
Commercial lending fees | 22 | 26 | 69 | 69 | |||||||||
Card fees | 75 | 23 | 214 | 68 | |||||||||
Letter of credit fees | 13 | 14 | 39 | 43 | |||||||||
Bank-owned life insurance | 10 | 11 | 29 | 31 | |||||||||
Foreign exchange income | 10 | 9 | 29 | 30 | |||||||||
Brokerage fees | 5 | 4 | 13 | 13 | |||||||||
Net securities losses | — | (1 | ) | (2 | ) | — | |||||||
Other noninterest income | 26 | 31 | 80 | 94 | |||||||||
Total noninterest income | 264 | 215 | 780 | 643 | |||||||||
NONINTEREST EXPENSES | |||||||||||||
Salaries and benefits expense | 243 | 248 | 747 | 735 | |||||||||
Net occupancy expense | 41 | 46 | 118 | 125 | |||||||||
Equipment expense | 14 | 14 | 40 | 43 | |||||||||
Outside processing fee expense | 86 | 31 | 249 | 89 | |||||||||
Software expense | 26 | 25 | 73 | 72 | |||||||||
Litigation-related expense | (3 | ) | (2 | ) | (32 | ) | 4 | ||||||
FDIC insurance expense | 9 | 9 | 27 | 25 | |||||||||
Advertising expense | 6 | 5 | 17 | 16 | |||||||||
Gain on debt redemption | — | (32 | ) | — | (32 | ) | |||||||
Other noninterest expenses | 39 | 53 | 117 | 130 | |||||||||
Total noninterest expenses | 461 | 397 | 1,356 | 1,207 | |||||||||
Income before income taxes | 199 | 227 | 593 | 651 | |||||||||
Provision for income taxes | 63 | 73 | 188 | 207 | |||||||||
NET INCOME | 136 | 154 | 405 | 444 | |||||||||
Less income allocated to participating securities | 2 | 2 | 5 | 6 | |||||||||
Net income attributable to common shares | $ | 134 | $ | 152 | $ | 400 | $ | 438 | |||||
Earnings per common share: | |||||||||||||
Basic | $ | 0.76 | $ | 0.85 | $ | 2.27 | $ | 2.44 | |||||
Diluted | 0.74 | 0.82 | 2.20 | 2.35 | |||||||||
Comprehensive income | 187 | 141 | 472 | 518 | |||||||||
Cash dividends declared on common stock | 37 | 36 | 110 | 107 | |||||||||
Cash dividends declared per common share | 0.21 | 0.20 | 0.62 | 0.59 | |||||||||
14
CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited) | |||||||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||||||
Third | Second | First | Fourth | Third | Third Quarter 2015 Compared To: | ||||||||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Quarter | Second Quarter 2015 | Third Quarter 2014 | |||||||||||||||||||||
(in millions, except per share data) | 2015 | 2015 | 2015 | 2014 | 2014 | Amount | Percent | Amount | Percent | ||||||||||||||||||
INTEREST INCOME | |||||||||||||||||||||||||||
Interest and fees on loans | $ | 390 | $ | 388 | $ | 378 | $ | 383 | $ | 381 | $ | 2 | — | % | $ | 9 | 2 | % | |||||||||
Interest on investment securities | 54 | 53 | 53 | 51 | 52 | 1 | 2 | 2 | 3 | ||||||||||||||||||
Interest on short-term investments | 4 | 3 | 4 | 4 | 3 | 1 | 39 | 1 | 38 | ||||||||||||||||||
Total interest income | 448 | 444 | 435 | 438 | 436 | 4 | 1 | 12 | 3 | ||||||||||||||||||
INTEREST EXPENSE | |||||||||||||||||||||||||||
Interest on deposits | 11 | 11 | 11 | 12 | 11 | — | — | — | — | ||||||||||||||||||
Interest on medium- and long-term debt | 15 | 12 | 11 | 11 | 11 | 3 | 22 | 4 | 27 | ||||||||||||||||||
Total interest expense | 26 | 23 | 22 | 23 | 22 | 3 | 12 | 4 | 12 | ||||||||||||||||||
Net interest income | 422 | 421 | 413 | 415 | 414 | $ | 1 | — | $ | 8 | 2 | ||||||||||||||||
Provision for credit losses | 26 | 47 | 14 | 2 | 5 | (21 | ) | (44 | ) | 21 | n/m | ||||||||||||||||
Net interest income after provision for credit losses | 396 | 374 | 399 | 413 | 409 | 22 | 6 | (13 | ) | (3 | ) | ||||||||||||||||
NONINTEREST INCOME | |||||||||||||||||||||||||||
Service charges on deposit accounts | 56 | 56 | 55 | 53 | 54 | — | — | 2 | 4 | ||||||||||||||||||
Fiduciary income | 47 | 48 | 47 | 47 | 44 | (1 | ) | (3 | ) | 3 | 5 | ||||||||||||||||
Commercial lending fees | 22 | 22 | 25 | 29 | 26 | — | — | (4 | ) | (13 | ) | ||||||||||||||||
Card fees | 75 | 72 | 67 | 24 | 23 | 3 | 4 | 52 | n/m | ||||||||||||||||||
Letter of credit fees | 13 | 13 | 13 | 14 | 14 | — | — | (1 | ) | (8 | ) | ||||||||||||||||
Bank-owned life insurance | 10 | 10 | 9 | 8 | 11 | — | — | (1 | ) | — | |||||||||||||||||
Foreign exchange income | 10 | 9 | 10 | 10 | 9 | 1 | 10 | 1 | 8 | ||||||||||||||||||
Brokerage fees | 5 | 4 | 4 | 4 | 4 | 1 | 6 | 1 | 20 | ||||||||||||||||||
Net securities losses | — | — | (2 | ) | — | (1 | ) | — | — | 1 | n/m | ||||||||||||||||
Other noninterest income | 26 | 27 | 27 | 36 | 31 | (1 | ) | — | (5 | ) | (17 | ) | |||||||||||||||
Total noninterest income | 264 | 261 | 255 | 225 | 215 | 3 | 1 | 49 | 23 | ||||||||||||||||||
NONINTEREST EXPENSES | |||||||||||||||||||||||||||
Salaries and benefits expense | 243 | 251 | 253 | 245 | 248 | (8 | ) | (3 | ) | (5 | ) | (2 | ) | ||||||||||||||
Net occupancy expense | 41 | 39 | 38 | 46 | 46 | 2 | 5 | (5 | ) | (11 | ) | ||||||||||||||||
Equipment expense | 14 | 13 | 13 | 14 | 14 | 1 | 4 | — | — | ||||||||||||||||||
Outside processing fee expense | 86 | 86 | 77 | 33 | 31 | — | — | 55 | n/m | ||||||||||||||||||
Software expense | 26 | 24 | 23 | 23 | 25 | 2 | 8 | 1 | 4 | ||||||||||||||||||
Litigation-related expense | (3 | ) | (30 | ) | 1 | — | (2 | ) | 27 | 88 | (1 | ) | n/m | ||||||||||||||
FDIC insurance expense | 9 | 9 | 9 | 8 | 9 | — | — | — | — | ||||||||||||||||||
Advertising expense | 6 | 5 | 6 | 7 | 5 | 1 | 10 | 1 | 8 | ||||||||||||||||||
Gain on debt redemption | — | — | — | — | (32 | ) | — | — | 32 | n/m | |||||||||||||||||
Other noninterest expenses | 39 | 39 | 39 | 43 | 53 | — | — | (14 | ) | (25 | ) | ||||||||||||||||
Total noninterest expenses | 461 | 436 | 459 | 419 | 397 | 25 | 6 | 64 | 16 | ||||||||||||||||||
Income before income taxes | 199 | 199 | 195 | 219 | 227 | — | — | (28 | ) | (12 | ) | ||||||||||||||||
Provision for income taxes | 63 | 64 | 61 | 70 | 73 | (1 | ) | (2 | ) | (10 | ) | (14 | ) | ||||||||||||||
NET INCOME | 136 | 135 | 134 | 149 | 154 | 1 | — | (18 | ) | (12 | ) | ||||||||||||||||
Less income allocated to participating securities | 2 | 1 | 2 | 1 | 2 | 1 | — | — | — | ||||||||||||||||||
Net income attributable to common shares | $ | 134 | $ | 134 | $ | 132 | $ | 148 | $ | 152 | $ | — | — | % | $ | (18 | ) | (11 | )% | ||||||||
Earnings per common share: | |||||||||||||||||||||||||||
Basic | $ | 0.76 | $ | 0.76 | $ | 0.75 | $ | 0.83 | $ | 0.85 | $ | — | — | % | $ | (0.09 | ) | (11 | )% | ||||||||
Diluted | 0.74 | 0.73 | 0.73 | 0.80 | 0.82 | 0.01 | 1 | (0.08 | ) | (10 | ) | ||||||||||||||||
Comprehensive income | 187 | 109 | 176 | 54 | 141 | 78 | 72 | 46 | 33 | ||||||||||||||||||
Cash dividends declared on common stock | 37 | 37 | 36 | 36 | 36 | — | — | 1 | 3 | ||||||||||||||||||
Cash dividends declared per common share | 0.21 | 0.21 | 0.20 | 0.20 | 0.20 | — | — | 0.01 | 5 | ||||||||||||||||||
n/m - not meaningful
15
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited) | ||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||
2015 | 2014 | |||||||||||||||
(in millions) | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | |||||||||||
Balance at beginning of period | $ | 618 | $ | 601 | $ | 594 | $ | 592 | $ | 591 | ||||||
Loan charge-offs: | ||||||||||||||||
Commercial | 30 | 17 | 19 | 8 | 13 | |||||||||||
Commercial mortgage | — | 2 | — | 2 | 7 | |||||||||||
Lease financing | — | 1 | — | — | — | |||||||||||
International | 1 | 11 | 2 | 6 | — | |||||||||||
Residential mortgage | — | 1 | — | 1 | 1 | |||||||||||
Consumer | 3 | 3 | 2 | 3 | 3 | |||||||||||
Total loan charge-offs | 34 | 35 | 23 | 20 | 24 | |||||||||||
Recoveries on loans previously charged-off: | ||||||||||||||||
Commercial | 8 | 10 | 9 | 6 | 6 | |||||||||||
Real estate construction | — | 1 | — | 2 | 1 | |||||||||||
Commercial mortgage | 2 | 5 | 3 | 10 | 12 | |||||||||||
Residential mortgage | — | — | 1 | — | 1 | |||||||||||
Consumer | 1 | 1 | 2 | 1 | 1 | |||||||||||
Total recoveries | 11 | 17 | 15 | 19 | 21 | |||||||||||
Net loan charge-offs | 23 | 18 | 8 | 1 | 3 | |||||||||||
Provision for loan losses | 28 | 35 | 16 | 4 | 4 | |||||||||||
Foreign currency translation adjustment | (1 | ) | — | (1 | ) | (1 | ) | — | ||||||||
Balance at end of period | $ | 622 | $ | 618 | $ | 601 | $ | 594 | $ | 592 | ||||||
Allowance for loan losses as a percentage of total loans | 1.27 | % | 1.24 | % | 1.22 | % | 1.22 | % | 1.24 | % | ||||||
Net loan charge-offs as a percentage of average total loans | 0.19 | 0.15 | 0.07 | 0.01 | 0.03 | |||||||||||
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited) | ||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||
2015 | 2014 | |||||||||||||||
(in millions) | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | |||||||||||
Balance at beginning of period | $ | 50 | $ | 39 | $ | 41 | $ | 43 | $ | 42 | ||||||
Less: Charge-offs on lending-related commitments (a) | — | 1 | — | — | — | |||||||||||
Add: Provision for credit losses on lending-related commitments | (2 | ) | 12 | (2 | ) | (2 | ) | 1 | ||||||||
Balance at end of period | $ | 48 | $ | 50 | $ | 39 | $ | 41 | $ | 43 | ||||||
Unfunded lending-related commitments sold | $ | — | $ | 12 | $ | 1 | $ | — | $ | 9 | ||||||
(a) | Charge-offs result from the sale of unfunded lending-related commitments. |
16
NONPERFORMING ASSETS (unaudited) | ||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||
2015 | 2014 | |||||||||||||||
(in millions) | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | |||||||||||
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS | ||||||||||||||||
Nonaccrual loans: | ||||||||||||||||
Business loans: | ||||||||||||||||
Commercial | $ | 214 | $ | 186 | $ | 113 | $ | 109 | $ | 93 | ||||||
Real estate construction | 1 | 1 | 1 | 2 | 18 | |||||||||||
Commercial mortgage | 66 | 77 | 82 | 95 | 144 | |||||||||||
Lease financing | 8 | 11 | — | — | — | |||||||||||
International | 8 | 9 | 1 | — | — | |||||||||||
Total nonaccrual business loans | 297 | 284 | 197 | 206 | 255 | |||||||||||
Retail loans: | ||||||||||||||||
Residential mortgage | 31 | 35 | 37 | 36 | 42 | |||||||||||
Consumer: | ||||||||||||||||
Home equity | 28 | 29 | 31 | 30 | 31 | |||||||||||
Other consumer | 1 | 1 | 1 | 1 | 1 | |||||||||||
Total consumer | 29 | 30 | 32 | 31 | 32 | |||||||||||
Total nonaccrual retail loans | 60 | 65 | 69 | 67 | 74 | |||||||||||
Total nonaccrual loans | 357 | 349 | 266 | 273 | 329 | |||||||||||
Reduced-rate loans | 12 | 12 | 13 | 17 | 17 | |||||||||||
Total nonperforming loans (a) | 369 | 361 | 279 | 290 | 346 | |||||||||||
Foreclosed property | 12 | 9 | 9 | 10 | 11 | |||||||||||
Total nonperforming assets (a) | $ | 381 | $ | 370 | $ | 288 | $ | 300 | $ | 357 | ||||||
Nonperforming loans as a percentage of total loans | 0.75 | % | 0.72 | % | 0.57 | % | 0.60 | % | 0.73 | % | ||||||
Nonperforming assets as a percentage of total loans and foreclosed property | 0.78 | 0.74 | 0.59 | 0.62 | 0.75 | |||||||||||
Allowance for loan losses as a percentage of total nonperforming loans | 169 | 171 | 216 | 205 | 171 | |||||||||||
Loans past due 90 days or more and still accruing | $ | 5 | $ | 18 | $ | 12 | $ | 5 | $ | 13 | ||||||
ANALYSIS OF NONACCRUAL LOANS | ||||||||||||||||
Nonaccrual loans at beginning of period | $ | 349 | $ | 266 | $ | 273 | $ | 329 | $ | 326 | ||||||
Loans transferred to nonaccrual (b) | 69 | 145 | 39 | 41 | 54 | |||||||||||
Nonaccrual business loan gross charge-offs (c) | (31 | ) | (31 | ) | (21 | ) | (16 | ) | (20 | ) | ||||||
Loans transferred to accrual status (b) | — | — | (4 | ) | (18 | ) | — | |||||||||
Nonaccrual business loans sold (d) | — | (1 | ) | (2 | ) | (24 | ) | (3 | ) | |||||||
Payments/Other (e) | (30 | ) | (30 | ) | (19 | ) | (39 | ) | (28 | ) | ||||||
Nonaccrual loans at end of period | $ | 357 | $ | 349 | $ | 266 | $ | 273 | $ | 329 | ||||||
(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 | $ | 31 | $ | 21 | $ | 16 | $ | 20 | ||||||
Consumer and residential mortgage loans | 3 | 4 | 2 | 4 | 4 | |||||||||||
Total gross loan charge-offs | $ | 34 | $ | 35 | $ | 23 | $ | 20 | $ | 24 | ||||||
(d) Analysis of loans sold: | ||||||||||||||||
Nonaccrual business loans | $ | — | $ | 1 | $ | 2 | $ | 24 | $ | 3 | ||||||
Performing criticized loans | — | — | 7 | 5 | — | |||||||||||
Total criticized loans sold | $ | — | $ | 1 | $ | 9 | $ | 29 | $ | 3 | ||||||
(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. | ||||||||||||||||
17
ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited) | |||||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||||
Nine Months Ended | |||||||||||||||||
September 30, 2015 | September 30, 2014 | ||||||||||||||||
Average | Average | Average | Average | ||||||||||||||
(dollar amounts in millions) | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||
Commercial loans | $ | 31,596 | $ | 721 | 3.05 | % | $ | 29,487 | $ | 689 | 3.12 | % | |||||
Real estate construction loans | 1,859 | 48 | 3.44 | 1,905 | 49 | 3.42 | |||||||||||
Commercial mortgage loans | 8,648 | 220 | 3.40 | 8,739 | 246 | 3.77 | |||||||||||
Lease financing | 793 | 19 | 3.13 | 840 | 20 | 3.23 | |||||||||||
International loans | 1,455 | 39 | 3.63 | 1,349 | 37 | 3.64 | |||||||||||
Residential mortgage loans | 1,872 | 53 | 3.78 | 1,763 | 50 | 3.81 | |||||||||||
Consumer loans | 2,432 | 59 | 3.23 | 2,244 | 54 | 3.21 | |||||||||||
Total loans (a) | 48,655 | 1,159 | 3.19 | 46,327 | 1,145 | 3.30 | |||||||||||
Mortgage-backed securities (b) | 9,076 | 151 | 2.23 | 8,976 | 159 | 2.36 | |||||||||||
Other investment securities | 950 | 9 | 1.18 | 369 | 1 | 0.44 | |||||||||||
Total investment securities (b) | 10,026 | 160 | 2.13 | 9,345 | 160 | 2.28 | |||||||||||
Interest-bearing deposits with banks | 5,774 | 11 | 0.25 | 4,803 | 10 | 0.25 | |||||||||||
Other short-term investments | 106 | — | 0.78 | 110 | — | 0.60 | |||||||||||
Total earning assets | 64,561 | 1,330 | 2.76 | 60,585 | 1,315 | 2.90 | |||||||||||
Cash and due from banks | 1,054 | 932 | |||||||||||||||
Allowance for loan losses | (614 | ) | (602 | ) | |||||||||||||
Accrued income and other assets | 4,687 | 4,420 | |||||||||||||||
Total assets | $ | 69,688 | $ | 65,335 | |||||||||||||
Money market and interest-bearing checking deposits | $ | 23,973 | 20 | 0.11 | $ | 22,571 | 18 | 0.11 | |||||||||
Savings deposits | 1,827 | — | 0.02 | 1,734 | — | 0.03 | |||||||||||
Customer certificates of deposit | 4,359 | 12 | 0.37 | 4,990 | 13 | 0.36 | |||||||||||
Foreign office time deposits | 123 | 1 | 1.13 | 304 | 2 | 0.68 | |||||||||||
Total interest-bearing deposits | 30,282 | 33 | 0.14 | 29,599 | 33 | 0.15 | |||||||||||
Short-term borrowings | 93 | — | 0.05 | 209 | — | 0.03 | |||||||||||
Medium- and long-term debt | 2,843 | 38 | 1.80 | 3,061 | 39 | 1.67 | |||||||||||
Total interest-bearing sources | 33,218 | 71 | 0.28 | 32,869 | 72 | 0.29 | |||||||||||
Noninterest-bearing deposits | 27,569 | 24,182 | |||||||||||||||
Accrued expenses and other liabilities | 1,393 | 960 | |||||||||||||||
Total shareholders' equity | 7,508 | 7,324 | |||||||||||||||
Total liabilities and shareholders' equity | $ | 69,688 | $ | 65,335 | |||||||||||||
Net interest income/rate spread (FTE) | $ | 1,259 | 2.48 | $ | 1,243 | 2.61 | |||||||||||
FTE adjustment | $ | 3 | $ | 3 | |||||||||||||
Impact of net noninterest-bearing sources of funds | 0.13 | 0.13 | |||||||||||||||
Net interest margin (as a percentage of average earning assets) (FTE) (a) | 2.61 | % | 2.74 | % | |||||||||||||
(a) Accretion of the purchase discount on the acquired loan portfolio of $6 million and $25 million in the nine months ended September 30, 2015 and 2014, respectively, increased the net interest margin by 1 basis point and 6 basis points in each respective period.
(b) Includes investment securities available-for-sale and investment securities held-to-maturity.
18
ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited) | ||||||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||
September 30, 2015 | June 30, 2015 | September 30, 2014 | ||||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | |||||||||||||||||||||
(dollar amounts in millions) | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||
Commercial loans | $ | 31,900 | $ | 244 | 3.04 | % | $ | 31,788 | $ | 243 | 3.07 | % | $ | 30,188 | $ | 236 | 3.11 | % | ||||||||
Real estate construction loans | 1,833 | 16 | 3.47 | 1,807 | 16 | 3.51 | 1,973 | 17 | 3.41 | |||||||||||||||||
Commercial mortgage loans | 8,691 | 74 | 3.39 | 8,672 | 73 | 3.38 | 8,698 | 76 | 3.45 | |||||||||||||||||
Lease financing | 788 | 6 | 3.16 | 795 | 6 | 3.19 | 823 | 4 | 2.33 | |||||||||||||||||
International loans | 1,401 | 13 | 3.51 | 1,453 | 13 | 3.68 | 1,417 | 13 | 3.59 | |||||||||||||||||
Residential mortgage loans | 1,882 | 18 | 3.79 | 1,877 | 18 | 3.78 | 1,792 | 17 | 3.76 | |||||||||||||||||
Consumer loans | 2,477 | 20 | 3.21 | 2,441 | 20 | 3.25 | 2,268 | 19 | 3.24 | |||||||||||||||||
Total loans (a) | 48,972 | 391 | 3.17 | 48,833 | 389 | 3.20 | 47,159 | 382 | 3.22 | |||||||||||||||||
Mortgage-backed securities (b) | 9,099 | 50 | 2.21 | 9,057 | 50 | 2.23 | 9,020 | 52 | 2.29 | |||||||||||||||||
Other investment securities | 1,133 | 4 | 1.26 | 879 | 3 | 1.16 | 368 | — | 0.43 | |||||||||||||||||
Total investment securities (b) | 10,232 | 54 | 2.11 | 9,936 | 53 | 2.13 | 9,388 | 52 | 2.22 | |||||||||||||||||
Interest-bearing deposits with banks | 6,869 | 4 | 0.25 | 5,110 | 3 | 0.25 | 5,015 | 3 | 0.25 | |||||||||||||||||
Other short-term investments | 118 | — | 0.82 | 102 | — | 0.42 | 110 | — | 0.54 | |||||||||||||||||
Total earning assets | 66,191 | 449 | 2.70 | 63,981 | 445 | 2.79 | 61,672 | 437 | 2.82 | |||||||||||||||||
Cash and due from banks | 1,095 | 1,041 | 963 | |||||||||||||||||||||||
Allowance for loan losses | (628 | ) | (613 | ) | (601 | ) | ||||||||||||||||||||
Accrued income and other assets | 4,675 | 4,554 | 4,364 | |||||||||||||||||||||||
Total assets | $ | 71,333 | $ | 68,963 | $ | 66,398 | ||||||||||||||||||||
Money market and interest-bearing checking deposits | $ | 24,298 | 7 | 0.11 | $ | 23,659 | 6 | 0.11 | $ | 23,146 | 6 | 0.11 | ||||||||||||||
Savings deposits | 1,860 | — | 0.02 | 1,834 | — | 0.02 | 1,759 | — | 0.03 | |||||||||||||||||
Customer certificates of deposit | 4,232 | 4 | 0.37 | 4,422 | 4 | 0.37 | 4,824 | 4 | 0.36 | |||||||||||||||||
Foreign office time deposits | 127 | — | 0.70 | 118 | 1 | 1.26 | 159 | 1 | 1.43 | |||||||||||||||||
Total interest-bearing deposits | 30,517 | 11 | 0.14 | 30,033 | 11 | 0.14 | 29,888 | 11 | 0.15 | |||||||||||||||||
Short-term borrowings | 91 | — | 0.04 | 78 | — | 0.04 | 231 | — | 0.03 | |||||||||||||||||
Medium- and long-term debt | 3,175 | 15 | 1.85 | 2,661 | 12 | 1.83 | 2,649 | 11 | 1.75 | |||||||||||||||||
Total interest-bearing sources | 33,783 | 26 | 0.30 | 32,772 | 23 | 0.28 | 32,768 | 22 | 0.28 | |||||||||||||||||
Noninterest-bearing deposits | 28,623 | 27,365 | 25,275 | |||||||||||||||||||||||
Accrued expenses and other liabilities | 1,368 | 1,314 | 944 | |||||||||||||||||||||||
Total shareholders' equity | 7,559 | 7,512 | 7,411 | |||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 71,333 | $ | 68,963 | $ | 66,398 | ||||||||||||||||||||
Net interest income/rate spread (FTE) | $ | 423 | 2.40 | $ | 422 | 2.51 | $ | 415 | 2.54 | |||||||||||||||||
FTE adjustment | $ | 1 | $ | 1 | $ | 1 | ||||||||||||||||||||
Impact of net noninterest-bearing sources of funds | 0.14 | 0.14 | 0.13 | |||||||||||||||||||||||
Net interest margin (as a percentage of average earning assets) (FTE) (a) | 2.54 | % | 2.65 | % | 2.67 | % | ||||||||||||||||||||
(a) Accretion of the purchase discount on the acquired loan portfolio of $2 million, $2 million and $3 million in the third quarter 2015, the second quarter 2015 and the third quarter 2014, respectively, increased the net interest margin by 1 basis point, 1 basis point and 2 basis points in each respective period.
(b) Includes investment securities available-for-sale and investment securities held-to-maturity.
19
CONSOLIDATED STATISTICAL DATA (unaudited) | |||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||
(in millions, except per share data) | 2015 | 2015 | 2015 | 2014 | 2014 | ||||||||||
Commercial loans: | |||||||||||||||
Floor plan | $ | 3,538 | $ | 3,840 | $ | 3,544 | $ | 3,790 | $ | 3,183 | |||||
Other | 28,239 | 28,883 | 28,547 | 27,730 | 27,576 | ||||||||||
Total commercial loans | 31,777 | 32,723 | 32,091 | 31,520 | 30,759 | ||||||||||
Real estate construction loans | 1,874 | 1,795 | 1,917 | 1,955 | 1,992 | ||||||||||
Commercial mortgage loans | 8,787 | 8,674 | 8,558 | 8,604 | 8,603 | ||||||||||
Lease financing | 751 | 786 | 792 | 805 | 805 | ||||||||||
International loans | 1,382 | 1,420 | 1,433 | 1,496 | 1,429 | ||||||||||
Residential mortgage loans | 1,880 | 1,865 | 1,859 | 1,831 | 1,797 | ||||||||||
Consumer loans: | |||||||||||||||
Home equity | 1,714 | 1,682 | 1,678 | 1,658 | 1,634 | ||||||||||
Other consumer | 777 | 796 | 744 | 724 | 689 | ||||||||||
Total consumer loans | 2,491 | 2,478 | 2,422 | 2,382 | 2,323 | ||||||||||
Total loans | $ | 48,942 | $ | 49,741 | $ | 49,072 | $ | 48,593 | $ | 47,708 | |||||
Goodwill | $ | 635 | $ | 635 | $ | 635 | $ | 635 | $ | 635 | |||||
Core deposit intangible | 10 | 11 | 12 | 13 | 14 | ||||||||||
Other intangibles | 4 | 4 | 3 | 2 | 1 | ||||||||||
Common equity tier 1 capital (a) (b) | 7,327 | 7,280 | 7,230 | n/a | n/a | ||||||||||
Tier 1 common capital (c) | n/a | n/a | n/a | 7,169 | 7,105 | ||||||||||
Risk-weighted assets (a) (b) | 69,232 | 69,967 | 69,514 | 68,273 | 67,106 | ||||||||||
Common equity tier 1 risk-based capital ratio (a) (b) | 10.58 | % | 10.40 | % | 10.40 | % | n/a | n/a | |||||||
Tier 1 common risk-based capital ratio (c) | n/a | n/a | n/a | 10.50 | % | 10.59 | % | ||||||||
Tier 1 risk-based capital ratio (a) (b) | 10.58 | 10.40 | 10.40 | 10.50 | 10.59 | ||||||||||
Total risk-based capital ratio (a) (b) | 12.91 | 12.38 | 12.35 | 12.51 | 12.83 | ||||||||||
Leverage ratio (a) (b) | 10.29 | 10.56 | 10.53 | 10.35 | 10.79 | ||||||||||
Tangible common equity ratio (c) | 9.91 | 9.92 | 9.97 | 9.85 | 9.94 | ||||||||||
Common shareholders' equity per share of common stock | $ | 43.02 | $ | 42.18 | $ | 42.12 | $ | 41.35 | $ | 41.26 | |||||
Tangible common equity per share of common stock (c) | 39.36 | 38.53 | 38.47 | 37.72 | 37.65 | ||||||||||
Market value per share for the quarter: | |||||||||||||||
High | 52.93 | 53.45 | 47.94 | 50.14 | 52.72 | ||||||||||
Low | 40.01 | 44.38 | 40.09 | 42.73 | 48.33 | ||||||||||
Close | 41.10 | 51.32 | 45.13 | 46.84 | 49.86 | ||||||||||
Quarterly ratios: | |||||||||||||||
Return on average common shareholders' equity | 7.19 | % | 7.21 | % | 7.20 | % | 7.96 | % | 8.29 | % | |||||
Return on average assets | 0.76 | 0.79 | 0.78 | 0.86 | 0.93 | ||||||||||
Efficiency ratio (d) | 67.08 | 63.68 | 68.50 | 65.26 | 62.87 | ||||||||||
Number of banking centers | 477 | 477 | 482 | 481 | 481 | ||||||||||
Number of employees - full time equivalent | 8,941 | 8,901 | 8,831 | 8,876 | 8,913 | ||||||||||
(a) | Basel III rules became effective January 1, 2015, with transitional provisions. All prior period data is based on Basel I rules. |
(b) | September 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.
20
PARENT COMPANY ONLY BALANCE SHEETS (unaudited) | |||||||||
Comerica Incorporated | |||||||||
September 30, | December 31, | September 30, | |||||||
(in millions, except share data) | 2015 | 2014 | 2014 | ||||||
ASSETS | |||||||||
Cash and due from subsidiary bank | $ | 5 | $ | — | $ | 5 | |||
Short-term investments with subsidiary bank | 563 | 1,133 | 1,136 | ||||||
Other short-term investments | 89 | 94 | 97 | ||||||
Investment in subsidiaries, principally banks | 7,596 | 7,411 | 7,433 | ||||||
Premises and equipment | 2 | 2 | 2 | ||||||
Other assets | 138 | 138 | 130 | ||||||
Total assets | $ | 8,393 | $ | 8,778 | $ | 8,803 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Medium- and long-term debt | $ | 618 | $ | 1,208 | $ | 1,198 | |||
Other liabilities | 153 | 168 | 172 | ||||||
Total liabilities | 771 | 1,376 | 1,370 | ||||||
Common stock - $5 par value: | |||||||||
Authorized - 325,000,000 shares | |||||||||
Issued - 228,164,824 shares | 1,141 | 1,141 | 1,141 | ||||||
Capital surplus | 2,165 | 2,188 | 2,183 | ||||||
Accumulated other comprehensive loss | (345 | ) | (412 | ) | (317 | ) | |||
Retained earnings | 7,007 | 6,744 | 6,631 | ||||||
Less cost of common stock in treasury - 51,010,418 shares at 9/30/15, 49,146,225 shares at 12/31/14 and 47,992,721 shares at 9/30/14 | (2,346 | ) | (2,259 | ) | (2,205 | ) | |||
Total shareholders' equity | 7,622 | 7,402 | 7,433 | ||||||
Total liabilities and shareholders' equity | $ | 8,393 | $ | 8,778 | $ | 8,803 | |||
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 | — | — | — | — | 444 | — | 444 | |||||||||||||
Other comprehensive income, net of tax | — | — | — | 74 | — | — | 74 | |||||||||||||
Cash dividends declared on common stock ($0.59 per share) | — | — | — | — | (107 | ) | — | (107 | ) | |||||||||||
Purchase of common stock | (4.1 | ) | — | — | — | — | (200 | ) | (200 | ) | ||||||||||
Net issuance of common stock under employee stock plans | 2.0 | — | (26 | ) | — | (24 | ) | 91 | 41 | |||||||||||
Share-based compensation | — | — | 31 | — | — | — | 31 | |||||||||||||
Other | — | — | (1 | ) | — | — | 1 | — | ||||||||||||
BALANCE AT SEPTEMBER 30, 2014 | 180.2 | $ | 1,141 | $ | 2,183 | $ | (317 | ) | $ | 6,631 | $ | (2,205 | ) | $ | 7,433 | |||||
BALANCE AT DECEMBER 31, 2014 | 179.0 | $ | 1,141 | $ | 2,188 | $ | (412 | ) | $ | 6,744 | $ | (2,259 | ) | $ | 7,402 | |||||
Net income | — | — | — | — | 405 | — | 405 | |||||||||||||
Other comprehensive income, net of tax | — | — | — | 67 | — | — | 67 | |||||||||||||
Cash dividends declared on common stock ($0.62 per share) | — | — | — | — | (110 | ) | — | (110 | ) | |||||||||||
Purchase of common stock | (3.8 | ) | — | — | — | — | (175 | ) | (175 | ) | ||||||||||
Purchase and retirement of warrants | — | — | (10 | ) | — | — | — | (10 | ) | |||||||||||
Net issuance of common stock under employee stock plans | 1.0 | — | (21 | ) | — | (10 | ) | 45 | 14 | |||||||||||
Net issuance of common stock for warrants | 1.0 | — | (21 | ) | — | (22 | ) | 43 | — | |||||||||||
Share-based compensation | — | — | 29 | — | — | — | 29 | |||||||||||||
BALANCE AT SEPTEMBER 30, 2015 | 177.2 | $ | 1,141 | $ | 2,165 | $ | (345 | ) | $ | 7,007 | $ | (2,346 | ) | $ | 7,622 | |||||
21
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited) | |||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||
(dollar amounts in millions) | Business | Retail | Wealth | ||||||||||||||||||||
Three Months Ended September 30, 2015 | Bank | Bank | Management | Finance | Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 380 | $ | 158 | $ | 45 | $ | (162 | ) | $ | 2 | $ | 423 | ||||||||||
Provision for credit losses | 30 | 2 | (3 | ) | — | (3 | ) | 26 | |||||||||||||||
Noninterest income | 145 | 49 | 59 | 15 | (4 | ) | 264 | ||||||||||||||||
Noninterest expenses | 202 | 185 | 74 | 2 | (2 | ) | 461 | ||||||||||||||||
Provision (benefit) for income taxes (FTE) | 99 | 7 | 12 | (56 | ) | 2 | 64 | ||||||||||||||||
Net income (loss) | $ | 194 | $ | 13 | $ | 21 | $ | (93 | ) | $ | 1 | $ | 136 | ||||||||||
Net loan charge-offs (recoveries) | $ | 23 | $ | 1 | $ | (1 | ) | $ | — | $ | — | $ | 23 | ||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 39,210 | $ | 6,518 | $ | 5,228 | $ | 12,177 | $ | 8,200 | $ | 71,333 | |||||||||||
Loans | 38,113 | 5,835 | 5,024 | — | — | 48,972 | |||||||||||||||||
Deposits | 31,397 | 23,079 | 4,188 | 212 | 264 | 59,140 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.98 | % | 0.23 | % | 1.62 | % | N/M | N/M | 0.76 | % | |||||||||||||
Efficiency ratio (b) | 38.41 | 89.33 | 71.11 | N/M | N/M | 67.08 | |||||||||||||||||
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 September 30, 2014 | Bank | Bank | Management | Finance | Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 376 | $ | 153 | $ | 45 | $ | (166 | ) | 7 | $ | 415 | |||||||||||
Provision for credit losses | (4 | ) | — | 7 | — | 2 | 5 | ||||||||||||||||
Noninterest income | 97 | 42 | 59 | 15 | 2 | 215 | |||||||||||||||||
Noninterest expenses | 152 | 185 | 78 | (29 | ) | 11 | 397 | ||||||||||||||||
Provision (benefit) for income taxes (FTE) | 114 | 3 | 7 | (49 | ) | (1 | ) | 74 | |||||||||||||||
Net income (loss) | $ | 211 | $ | 7 | $ | 12 | $ | (73 | ) | $ | (3 | ) | $ | 154 | |||||||||
Net loan charge-offs (recoveries) | $ | (2 | ) | $ | — | $ | 5 | $ | — | $ | — | $ | 3 | ||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 37,751 | $ | 6,273 | $ | 4,998 | $ | 11,023 | $ | 6,353 | $ | 66,398 | |||||||||||
Loans | 36,746 | 5,605 | 4,808 | — | — | 47,159 | |||||||||||||||||
Deposits | 28,815 | 22,042 | 3,924 | 128 | 254 | 55,163 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 2.24 | % | 0.12 | % | 0.98 | % | N/M | N/M | 0.93 | % | |||||||||||||
Efficiency ratio (b) | 32.12 | 94.64 | 75.00 | N/M | N/M | 62.87 | |||||||||||||||||
(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
22
MARKET SEGMENT FINANCIAL RESULTS (unaudited) | |||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||
(dollar amounts in millions) | Other | Finance | |||||||||||||||||||||
Three Months Ended September 30, 2015 | Michigan | California | Texas | Markets | & Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 180 | $ | 187 | $ | 129 | $ | 87 | $ | (160 | ) | $ | 423 | ||||||||||
Provision for credit losses | 6 | 24 | 10 | (11 | ) | (3 | ) | 26 | |||||||||||||||
Noninterest income | 85 | 38 | 34 | 96 | 11 | 264 | |||||||||||||||||
Noninterest expenses | 152 | 102 | 97 | 110 | — | 461 | |||||||||||||||||
Provision (benefit) for income taxes (FTE) | 36 | 37 | 20 | 25 | (54 | ) | 64 | ||||||||||||||||
Net income (loss) | $ | 71 | $ | 62 | $ | 36 | $ | 59 | $ | (92 | ) | $ | 136 | ||||||||||
Net loan charge-offs | $ | 9 | $ | 10 | $ | 4 | $ | — | $ | — | $ | 23 | |||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 13,856 | $ | 17,060 | $ | 11,578 | $ | 8,462 | $ | 20,377 | $ | 71,333 | |||||||||||
Loans | 13,223 | 16,789 | 10,997 | 7,963 | — | 48,972 | |||||||||||||||||
Deposits | 21,946 | 18,372 | 10,753 | 7,593 | 476 | 59,140 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.23 | % | 1.27 | % | 1.16 | % | 2.82 | % | N/M | 0.76 | % | ||||||||||||
Efficiency ratio (b) | 57.49 | 45.28 | 59.54 | 59.86 | N/M | 67.08 | |||||||||||||||||
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 September 30, 2014 | Michigan | California | Texas | Markets | & Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 179 | $ | 182 | $ | 130 | $ | 83 | $ | (159 | ) | $ | 415 | ||||||||||
Provision for credit losses | (8 | ) | 14 | 3 | (6 | ) | 2 | 5 | |||||||||||||||
Noninterest income | 83 | 37 | 36 | 42 | 17 | 215 | |||||||||||||||||
Noninterest expenses | 166 | 102 | 96 | 51 | (18 | ) | 397 | ||||||||||||||||
Provision (benefit) for income taxes (FTE) | 38 | 40 | 25 | 21 | (50 | ) | 74 | ||||||||||||||||
Net income (loss) | $ | 66 | $ | 63 | $ | 42 | $ | 59 | $ | (76 | ) | $ | 154 | ||||||||||
Net loan charge-offs (recoveries) | $ | 3 | $ | 6 | $ | — | $ | (6 | ) | $ | — | $ | 3 | ||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 13,724 | $ | 15,768 | $ | 11,835 | $ | 7,695 | $ | 17,376 | $ | 66,398 | |||||||||||
Loans | 13,248 | 15,509 | 11,147 | 7,255 | — | 47,159 | |||||||||||||||||
Deposits | 21,214 | 16,350 | 10,633 | 6,584 | 382 | 55,163 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.19 | % | 1.47 | % | 1.40 | % | 3.07 | % | N/M | 0.93 | % | ||||||||||||
Efficiency ratio (b) | 62.91 | 46.49 | 57.91 | 41.46 | N/M | 62.87 | |||||||||||||||||
(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
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited) | |||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||
(dollar amounts in millions) | 2015 | 2015 | 2015 | 2014 | 2014 | ||||||||||
Tier 1 Common Capital Ratio: | |||||||||||||||
Tier 1 and Tier 1 common capital (a) | n/a | n/a | n/a | $ | 7,169 | $ | 7,105 | ||||||||
Risk-weighted assets (a) | n/a | n/a | n/a | 68,269 | 67,102 | ||||||||||
Tier 1 and Tier 1 common risk-based capital ratio | n/a | n/a | n/a | 10.50 | % | 10.59 | % | ||||||||
Tangible Common Equity Ratio: | |||||||||||||||
Common shareholders' equity | $ | 7,622 | $ | 7,523 | $ | 7,500 | $ | 7,402 | $ | 7,433 | |||||
Less: | |||||||||||||||
Goodwill | 635 | 635 | 635 | 635 | 635 | ||||||||||
Other intangible assets | 14 | 15 | 15 | 15 | 15 | ||||||||||
Tangible common equity | $ | 6,973 | $ | 6,873 | $ | 6,850 | $ | 6,752 | $ | 6,783 | |||||
Total assets | $ | 71,012 | $ | 69,945 | $ | 69,333 | $ | 69,186 | $ | 68,883 | |||||
Less: | |||||||||||||||
Goodwill | 635 | 635 | 635 | 635 | 635 | ||||||||||
Other intangible assets | 14 | 15 | 15 | 15 | 15 | ||||||||||
Tangible assets | $ | 70,363 | $ | 69,295 | $ | 68,683 | $ | 68,536 | $ | 68,233 | |||||
Common equity ratio | 10.73 | % | 10.76 | % | 10.82 | % | 10.70 | % | 10.79 | % | |||||
Tangible common equity ratio | 9.91 | 9.92 | 9.97 | 9.85 | 9.94 | ||||||||||
Tangible Common Equity per Share of Common Stock: | |||||||||||||||
Common shareholders' equity | $ | 7,622 | $ | 7,523 | $ | 7,500 | $ | 7,402 | $ | 7,433 | |||||
Tangible common equity | 6,973 | 6,873 | 6,850 | 6,752 | 6,783 | ||||||||||
Shares of common stock outstanding (in millions) | 177 | 178 | 178 | 179 | 180 | ||||||||||
Common shareholders' equity per share of common stock | $ | 43.02 | $ | 42.18 | $ | 42.12 | $ | 41.35 | $ | 41.26 | |||||
Tangible common equity per share of common stock | 39.36 | 38.53 | 38.47 | 37.72 | 37.65 | ||||||||||
(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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