Attached files
| file | filename |
|---|---|
| 8-K - 8-K - COMERICA INC /NEW/ | a2018mspresentation_8k.htm |
Comerica Incorporated Morgan Stanley Financials Conference June 13, 2018 Curt Farmer President Muneera Carr Chief Financial Officer Safe Harbor Statement Any statements in this presentation 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 track,” “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 presentation 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, including the Growth in Efficiency and Revenue initiative (“GEAR Up”), and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries as well as estimates of the economic benefits of the GEAR Up initiative, 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; whether Comerica may achieve opportunities for revenue enhancements and efficiency improvements under the GEAR Up initiative, or changes in the scope or assumptions underlying the GEAR Up initiative; operational difficulties, failure of technology infrastructure or information security incidents; reliance on other companies to provide certain key components of business infrastructure; 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; unfavorable developments concerning credit quality; changes in regulation or oversight; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; transitions away from LIBOR towards new interest rate benchmarks; reductions in Comerica's credit rating; damage to Comerica's reputation; 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; the interdependence of financial service companies; the implementation of Comerica's strategies and business initiatives; changes in customer behavior; management's ability to maintain and expand customer relationships; the effectiveness of methods of reducing risk exposures; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; the effects of recent tax reform and potential legislative, administrative or judicial changes or interpretations related to these and other tax regulations; any future strategic acquisitions or divestitures; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effects of terrorist activities and other hostilities; changes in accounting standards; the critical nature of Comerica's accounting policies and the volatility of Comerica’s stock price. Comerica cautions that the foregoing list of factors is not all-inclusive. 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, 2017. 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 presentation 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. 2
Comerica: Key Strengths Diverse Geography LONG HISTORY Founded 169 years ago ($ in billons; 1Q18 average) California LONG HISTORY $18.3 Texas NIMBLE SIZE Products & services of a large bank 38% $9.8 20% $72B IN ASSETS with the culture of a community bank NIMBLE SIZE Loans $74B IN ASSETS $48.4 ATTRACTIVE Strong presence in Texas, Other Michigan ATTRACTIVEFOOTPRINT California, & Michigan Markets $12.6 $7.6 FOOTPRINT 26% 16% PRIMARILY A Complemented by Retail Bank & BUSINESSPRIMARILY BANK A Wealth Management BUSINESS BANK California Texas $17.1 $9.2 31% 16% RELATIONSHIP BANKING Trusted Advisor approach Deposits STRATEGY STRATEGY $56.1 Other1 $8.6 Michigan 15% CONSERVATIVE Strong capital position, CONSERVATIVE $21.2 Prudent credit underwriting 38% 3/31/18 ● 1Consists of Other Markets ($7.7B) & Finance/ Other ($0.9B) ● Totals shown above may not foot due to rounding 3 Second Quarter Update Loan growth returns & deposit balances have recently stabilized Average Loans & Deposits: April & May Trends1 ($ in billions) 57.8 57.6 49.3 57.1 56.5 56.1 48.7 48.7 48.9 55.5 47.9 48.4 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 thru 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 thru 5/31 5/31 QTD broad-based average loan growth, led by: QTD deposit activity inline with normal seasonality: . Technology & Life Sciences (Equity Fund Services) . Seasonal decline in Municipal deposits . General Middle Market in all three major markets . Modest declines in other businesses offset by . Seasonal increases in National Dealer Services & increase in retail deposits Mortgage Banker 2Q18 average balances 5/31/18 are preliminary & subject to change ● 1Comparisons of 2Q18 through 5/31/18 vs. 1Q18 4
Benefit from Rise in Interest Rates Drives significant revenue growth Estimated Additional Net Interest Income Loans Predominantly Floating Rate FY18 Total $270MM1 ($ in billions; 1Q18 Average) Fixed Rate Impact from FY18 rate FY18 vs. FY17 ~10% increases 1Q18 rate increase ~$70MM Prime-Based Total 30-day LIBOR ~15% $48.4 ~60% 2Q18 rate increase ~$35-40MM 60-day+ LIBOR Outcomes may vary due to many variables, ~15% including balance sheet movements (loan & deposit levels), pace that LIBOR rises, deposit Deposits Primarily Noninterest-bearing betas as well as incremental funding needs ($ in billions; 1Q18 Average) Retail Commercial Noninterest- Noninterest- bearing bearing . Prudent management of loan & deposit pricing 7% Total 46% $56.1 . Greatest net interest margin expansion among Retail Commercial peers (1Q18 vs. 1Q17) Interest- Interest- bearing bearing 29% 18% 3/31/18 ● Outlook as of 6/11/18 ● 1Assumes increases in Fed Funds, Prime & LIBOR. For methodology see the Company’s Form 10-Q, as filed with the SEC. Estimates are based on simulation modeling analysis. 5 GEAR Up: Growth in Efficiency And Revenue Helping drive revenue growth & productivity improvements . GEAR Up helped drive a 5% increase in fee Incremental Total income & 4% decrease in expenses in FY17 . FY18 plans include migration of apps to cloud Expense 2016 ~$ 25MM+ ~$ 25MM+ as well as streamlining of credit process Benefits 2017 ~$125MM ~$150MM Efficiency 72% 1 ratio 56% 2018 ~$ 50MM ~$200MM In progress ≤60% by FYE18 2019 ~$ 15MM ~$215MM 2Q16 1Q18 Revenue 2017 ~$ 30MM ~$ 30MM Driving to 14.37% Benefits a double- digit ROE 2018 ~$ 40MM ~$ 70MM In progress 5.44% 2019 ~$ 20MM ~$ 90MM 2Q16 1Q18 Pre-tax $ ● Estimates and outlook as of 6/11/18 ● GEAR Up initiative launched post 2Q16 ● 1Noninterest expenses, including restructuring charges, as a percentage of the sum of net interest income (FTE) & noninterest income excluding net securities gains (losses) 6
TechVision 2020: Preparing for a New Age in Banking Expense manageable as GEAR Up positioned us well Increase Efficiency & Reduce Risk Enhance Customer Experience . New consumer loans & mortgages platform . TM Connect Mobile & Information Reporting . Behavioral monitoring to reduce wire fraud . Customer Migration to Soft Tokens . Integrated Cloud security & resiliency . Retail Mobile App with Integrated Alerts . Dealer Floorplan Upgrade . Marketing Analytics Program 2017 . New EMV-enabled Debit Cards . Comerica Central Upgrade . New End User Colleague Technologies . Same Day ACH Debits . Cloud Platform and Migrations . End-to-end Credit Platform . Customer Relationship Platform . Treasury Management Connect Payments . Business Process and Robotics Platforms . Zelle Real Time Payments . Wire Transfer System Upgrade . Contact Center Transformation 2018 . FX Sales System Upgrade . Comerica Business Connect Portal Upgrade . Data Lake Platform . Treasury Information Reporting Uplifts . Fraud Prevention Platform . New Teller Platform Experience . Data Loss Prevention . Frictionless Security Capabilities . Wholesale Lockbox Upgrade . Upgrade Business Deposit Capture 7 Active Capital Management Continue to return excess capital to shareholders 2017 CCAR Capital Plan (3Q17-2Q18) Book Value Per Share . Equity repurchases up to $605MM1 • Fully executed plan $46.07 $46.38 $43.03 $44.47 • 2Q18 shares repurchased 1.8MM $41.35 $39.22 . Increased dividend effective October 2017 & July 2018 2018 CCAR Capital Plan . Announcement expected in late June . Awaiting guidance from regulators on positive impact 2013 2014 2015 2016 2017 1Q18 from Crapo Bill Shareholder Payout Dividends Per Share ($ in millions) Dividends Equity Repurchases1 Total Payout 2 $1.36 96% 97% $1.09 76% $0.83 $0.89 75% 193 $0.79 66% $0.68 154 126 143 148 531 287 249 242 303 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2Q18 Annualized 3 1Equity repurchased under equity repurchase program ● 2Total Payout as a percentage of earnings ● 3Based on 2Q18 dividend declared of $0.34/share payable 7/1/18 8
Comerica: Well Positioned for the Future Focused on enhancing shareholder value Driving Internal Factors Encouraged by External Factors GROWING Positioned in faster growing TAX Benefits Comerica & our customers REVENUE markets & industries REFORM LONG HISTORY Executing GEAR Up initiative, NIMBLE SIZE INCREASING ECONOMIC U.S. economy remains solid in including technology investments, $74B IN ASSETS EFFICIENCY GROWTH early 2018 to increase capacity & productivity MANAGING RISING Balance sheet well positioned Strong, conservative credit culture RISK RATES for rising rates CAPITAL Increased share buyback by 75% REGULATORY Positive developments on MANAGEMENT & dividend 30% in FY171 RELIEF legislative & supervisory fronts 14Q17 dividend of $0.30 compared to 4Q16 dividend of $0.23 9 Appendix
Financial Summary 1Q18 4Q17 1Q17 Earnings per share1 $1.59 $0.63 $1.11 Adjusted earnings per share1,2 1.54 1.28 1.02 Net interest income $549 $545 $470 Net interest margin 3.41% 3.27% 2.85% Provision for credit losses $12 $17 $16 Noninterest income $244 $285 $271 Adjusted noninterest income2 244 251 245 Noninterest expenses 446 483 457 Adjusted noninterest expenses2 430 431 420 Net income 281 112 202 Adjusted net income2 271 226 185 Efficiency ratio3 56.33% 58.14% 61.71% Return on average common shareholders’ equity 14.37 5.58 10.42 Return on average assets 1.62 0.62 1.14 Common equity Tier 1 capital ratio 11.98% 11.68% 11.55% Average diluted shares (millions) 175 176 180 $ in millions, except per share data ● 1Diluted earnings per common share ● 2See Reconciliation of Non-GAAP Financial Measures located in Appendix ● 3Noninterest expenses, including restructuring charges, as a percentage of the sum of net interest income (FTE) & noninterest income excluding net securities gains (losses) 11 1Q18 Financial Accomplishments 39% increase in net income & ROE increased to 14% GROWING Prudent management of loan & deposit pricing drove 17% increase in net interest income REVENUE Execution of GEAR Up continued to drive growth in Card Fees1, Fiduciary & Brokerage Focus on Relationships Maintained strong credit metrics MANAGING• % RISK Net charge-offs remain low at 23 bps INCREASING Efficiency ratio improves to 56%, from 62% EFFICIENCY CAPITAL $201MM returned to shareholders, a 37% increase MANAGEMENT Average diluted shares declined 5MM 3/31/18; 1Q18 compared to 1Q17 ● 1Growth in Card Fees excludes accounting change 12
Reconciliation of Adjusted Net Income 1Q18 4Q17 1Q17 Per Per Per ($ in millions, except per share data) $ Share1 $ Share1 $ Share1 Net income $281 $1.59 $112 $0.63 $202 $1.11 Restructuring charges2 12 0.07 8 0.04 7 0.04 Deferred tax adjustment (3) (0.01) 107 0.61 — — One-time employee bonus2 —— 30.02 — — Tax benefits from employee stock transactions (19) (0.11) (4) (0.02) (24) (0.13) Adjusted net income $271 $1.54 $226 $1.28 $185 $1.02 ROA 1.62% 0.62% 1.14% Adjusted ROA3 1.56 1.26 1.05 ROE 14.37 5.58 10.42 Adjusted ROE3 13.85 11.24 9.56 Efficiency Ratio 56.33 58.14 61.71 Adjusted Efficiency3 54.32 54.23 58.79 1Based on diluted average common shares ● 2Net of tax ● 3See Reconciliation of Non-GAAP Financial Measures located in Appendix 13 First Quarter 2018 Results Reflect continued drive for greater efficiency & higher returns Change From Key QoQ Performance Drivers 1Q18 4Q17 1Q17 . Loans reflect seasonality in Mortgage Average loans $48,421 $(512) $521 Banker & decline in Corporate Banking Average deposits 56,090 (1,551) (1,689) . Deposits show typical 1Q decline Net interest income $549 $4 $79 . Net interest income benefitted from rate Provision for credit losses 12 (5) (4) increase partly offset by 2 fewer days Noninterest income 244 (41) (27) . Credit metrics remain strong Adjusted noninterest income1 244 (7) (1) . Noninterest income decreased with lower Noninterest expenses 446 (37) (11) syndication fees & BOLI Adjusted noninterest expenses1 430 (1) 10 Provision for income tax 54 (164) (12) . Noninterest expenses declined with lower outside processing, advertising & Net income 281 169 79 business tax refund, partly offset by annual stock comp Earnings per share2 $1.59 $0.96 $0.48 Adjusted earnings per share1,2 1.54 0.26 0.52 . Lower tax due to lower tax rate, large 4Q17 adjustment to deferred taxes & Equity repurchases3 $149 $1 $44 benefits from employee stock transactions See slide 35 for detail on adoption of revenue & pension accounting standards . Active capital management continued $ in millions, except per share data ● 1Q18 compared to 4Q17 ● 1See Reconciliation of Non-GAAP Financial Measures located in Appendix ● 2Diluted earnings per common share ● 31Q18 repurchases under the equity repurchase program 14
1Q18 Seasonality Impacts Loans Loan yield increased 22 basis points Total Loans Average loans ($ in billions) - $427MM Mortgage Banker Finance Loan Yields - $413MM Corporate Banking - $127MM Energy 48.9 49.2 49.2 48.7 48.7 48.4 + $197MM National Dealer Services 47.9 + $ 86MM General Middle Market Period-end loans stable Loan yield +22 bps + 27 bps due to increase in rates - 3 bps other dynamics 4.26 - 2 bps nonaccrual interest 4.08 4.04 3.73 Loans increased $521MM 1Q18 v. 1Q17 3.56 ($ in billions; Average) National Dealer Services 561 Technology & Life Sciences 361 US Banking 115 International (197) 1Q17 2Q17 3Q17 4Q17 1Q18 4Q17 1Q18 Average Balances Period-end Energy (272) 1Q18 compared to 4Q17 15 Average Loans by Business and Market By Line of Business 1Q18 4Q17 1Q17 By Market 1Q18 4Q17 1Q17 Middle Market Michigan $12.6 $12.8 $12.6 General $11.8 $11.7 $11.9 Energy 1.9 2.0 2.1 California 18.3 18.2 17.7 National Dealer Services 7.3 7.1 6.8 Texas 9.8 9.8 10.1 Entertainment 0.7 0.7 0.7 1 Tech. & Life Sciences 3.5 3.5 3.2 Other Markets 7.6 8.1 7.5 Environmental Services 1.0 1.0 0.9 TOTAL $48.4 $48.9 $47.9 Total Middle Market $26.2 $26.0 $25.4 Corporate Banking US Banking 3.2 3.4 3.0 International 1.3 1.4 1.5 . Middle Market: Serving companies with Mortgage Banker Finance 1.4 1.9 1.5 revenues generally between $20-$500MM Commercial Real Estate 5.3 5.2 5.3 . Corporate Banking: Serving companies (and BUSINESS BANK $37.4 $37.9 $36.8 their U.S. based subsidiaries) with revenues Small Business 3.7 3.8 3.8 generally over $500MM Retail Banking 2.1 2.1 2.1 RETAIL BANK $5.8 $5.8 $5.9 . Small Business: Serving companies with revenues generally under $20MM Private Banking 5.2 5.2 5.2 WEALTH MANAGEMENT $5.2 $5.2 $5.3 TOTAL $48.4 $48.9 $47.9 $ in billions ● Totals shown above may not foot due to rounding ● 1Other Markets includes Florida, Arizona, the International Finance Division and businesses that have a significant presence outside of the three primary geographic markets. 16
1Q18 Deposits Decline with Seasonality Deposits rates remain low Total Deposits ($ in billions; Average) Average deposits Deposit Rates1 . Noninterest-bearing declined $1.9B 57.8 57.6 57.9 57.6 . Interest-bearing increased $360MM 57.1 56.5 56.1 . March deposits grew $745MM over February Loan to deposit ratio2 of 85% Continued prudent management of rates Deposit Seasonality (Average) 1Q18 / 4Q17 -2.7% 0.25 0.19 0.14 0.15 0.16 1Q17 / 4Q16 -3.1% 1Q16 / 4Q15 -5.1% 1Q17 2Q17 3Q17 4Q17 1Q18 4Q17 1Q18 Average Balances Period-end 1Q18 compared to 4Q17 ● 1Interest costs on interest-bearing deposits ● 2At 3/31/18 17 Average Deposits by Business and Market By Line of Business 1Q18 4Q17 1Q17 By Market 1Q18 4Q17 1Q17 Middle Market Michigan $21.2 $21.8 $22.1 General $14.0 $14.6 $15.0 Energy 0.6 0.6 1.0 California 17.1 18.2 17.2 National Dealer Services 0.3 0.3 0.3 Texas 9.2 9.4 10.1 Entertainment 0.1 0.1 0.1 Tech. & Life Sciences 5.9 5.7 5.7 Other Markets1 7.7 7.7 7.9 Environmental Services 0.2 0.2 0.1 Finance/ Other2 0.9 0.5 0.4 Total Middle Market $21.1 $21.5 $22.3 TOTAL $56.1 $57.6 $57.8 Corporate Banking US Banking 2.0 2.4 $2.4 International 2.0 2.1 2.2 Mortgage Banker Finance 0.6 0.6 0.7 . Middle Market: Serving companies with Commercial Real Estate 1.6 2.1 2.1 revenues generally between $20-$500MM BUSINESS BANK $27.3 $28.7 $29.6 . Corporate Banking: Serving companies (and Small Business 3.2 3.3 3.2 their U.S. based subsidiaries) with revenues Retail Banking 20.9 20.9 20.6 generally over $500MM RETAIL BANK $24.1 $24.2 $23.8 . Small Business: Serving companies with Private Banking 3.6 4.0 3.7 revenues generally under $20MM WEALTH MANAGEMENT $3.8 $4.2 $4.0 Finance/ Other2 0.9 0.5 0.4 TOTAL $56.1 $57.6 $57.8 $ in billions ● Totals shown above may not foot due to rounding ● 1Other Markets includes Florida, Arizona, the International Finance Division and businesses that have a significant presence outside of the three primary geographic markets. ● 2Finance/ Other includes items not directly associated with the geographic markets or the three major business segments 18
Commercial Real Estate Line of Business Long history of working with well established, proven developers CRE by Property Type1 CRE by Market1 ($ in millions; Period-end) ($ in millions; Period-end, based on location of property) Single Office Michigan Family Multi use 8% 5% Commercial 7% 4% 11% Other Land Carry 16% 5% California Retail Other Total Total 44% 11% 5% $4,665 $4,665 Texas Multifamily 35% 49% Period-end Loans2 Criticized Loans3 Net Charge-offs (Recoveries) ($ in billions) ($ in millions) ($ in millions) % CRE Criticized 5.3 5.3 5.2 5.2 5.1 120 96 73 2.3% 66 64 - - - - 1.9% 1.4% 1.3% 1.2% (2) 1Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 3/31/18 ● 1Excludes CRE line of business loans not secured by real estate ● 2Includes CRE line of business loans not secured by real estate ● 3Criticized loans are consistent with regulatory defined Special Mention, Substandard & Doubtful categories 19 Energy Line of Business Credit quality continues to improve; balances stable Energy Line of Business Loans . Focus on full relationships with larger, ($ in millions; Period-end) sophisticated E&P companies (access to a Midstream Services Exploration & Production variety of capital sources, hedging & diverse 2,047 2,077 1,955 1,836 1,848 geographic footprint) . Expect to maintain portfolio at ~4% of total loans 1,360 1,443 1,530 1,346 1,395 . Robust analysis of Mixedcollateral (97% of loans have security at 12/31) 18% 258 268 239 195 152 327 346 308 295 301 Energy Line of Business Criticized Loans1 1Q17 2Q17 3Q17 4Q17 1Q18 ($ in millions) Total Commitments Utilization Rate NALs 871 769 4,151 4,175 4,095 627 3,802 3,608 508 468 45% 47% 48% 47% 48% 266 225 167 108 102 1Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 3/31/18 ● 1Criticized loans are consistent with regulatory defined Special Mention, Substandard & Doubtful categories 20
recreational vehicles, non-floor planloans) and 3/31/18 3/31/18 . . . . . . Other Asian Other 11% 65+ years of floor plan lending of floorplan years 65+ National DealerServices 50+ years experiencewith reputati Finance Mortgage Banker ● ● Toyota/Lexus 12% As of 1Q18: Strong credit qualityStrong credit purchases as opposed to refinances Underlying mortgages related toare typically home Granular portfolio100+ with relationships banking Focus onfull relationships service and customer Extensive backroomprovides collateral monitoring market end toresidential mortgagesale origination to Provide warehouse financ 1 1 Other includes primary franchisei obligations is a where Source: MortgageBankersAssociation5/18/18 MortgageFinanceof (MBA) Forecastas • • • 16% 1 ihgn2%Other 10% Texas 8% 21% Michigan 61% California No charge-offsNo since2010 Industry: ~60% purchase Comerica: ~80%purchase (Based onperiod-endloanoutstandings) Franchise Distribution Geographic Dispersion Other European 11% $7.4B Total Total Honda/Acura ing: bridge from ing: bridge 14% 1 Nissan/ Infiniti Ford 6% 9% ndeterminableand leasingcompanies, car heavy truck, (rental Mercedes on for consistent, reliable approach reliable on forconsistent, Fiat/Chrysler 3% 11% GM 7% 4Q12 2.5 4.6 . . . . MBA Mortgage Originations Forecast 4Q12 2,094 Q831 Q811 2Q19 1Q19 4Q18 3Q18 2Q18 FloorPlan 1Q13 2.8 4.9 447 ● 1Q13 1,737 performance Robust monitoring of company inventory and qualityStrong credit group) dealerships in more or Focus on“MegaDealer”(five Top tierstrategy 2 2Q13 3.1 5.1 billions $ in 2Q13 1,815 3Q13 2.9 4.9 3Q13 1,605 Actual MBA Mortgage Origination Volumes 4Q13 3.2 5.3 4Q13 1,109 1Q14 3.2 5.3 1Q14 886 2Q14 3.5 5.7 450 2Q14 1,319 3Q14 1,595 Average Loans 3Q14 3.2 5.5 Average Loans Purchase 4Q14 1,397 4Q14 3.4 5.7 ($ in millions) ($ in ($ in billions) ($ in ($ in billions) ($ in 1Q15 1,399 1Q15 3.5 5.9 2Q15 2,089 2Q15 3.6 6.0 370 3Q15 2,136 3Q15 3.5 6.0 4Q15 1,742 Refinance 4Q15 3.7 6.2 1Q16 1,674 1Q16 3.8 6.2 2Q16 2,145 3Q16 2,544 2Q16 4.0 6.5 355 4Q16 2,352 3Q16 3.8 6.3 1,2 4Q16 4.0 6.6 1Q17 1,450 2Q17 1,780 1Q17 4.1 6.8 3Q17 1,974 2Q17 4.3 7.1 465 4Q17 1,861 3Q17 3.9 6.9 1Q18 1,435 1 4Q17 4.1 7.1 200 300 400 500 600 700 800 900 22 1Q18 4.2 7.3 21
Technology and Life Sciences 20+ years experience provides competitive advantage Technology & Life Sciences Avg. Loans ($ in billions) . Strong relationships with top-tier investors Equity Fund Services 3.5 3.5 3.2 3.2 3.3 . Granular portfolio: ~800 customers (including ~225 customers in Equity Fund Services) . Manage concentration to numerous verticals to ensure widely diversified portfolio 2.1 1.6 1.7 1.9 2.0 . Closely monitor cash balances and maintain robust backroom operation 1Q17 2Q17 3Q17 4Q17 1Q18 . 11 offices throughout US & Canada Customer Segment Overview (based on period-end loans) . Recent growth driven by Equity Fund Services Growth • Commercial banking services for venture 19% capital & private equity firms Leveraged Finance Equity Fund 8% Total • Bridge financing for capital calls Services $3.7B Early Stage 60% • Strong credit profile 8% Late Stage 5% 3/31/18 23 1Q18 Net Interest Income Benefits from Higher Rates NIM increased 14 basis points Net Interest Income ($ in millions) $545MM 4Q17 3.27% NIM + 11MM Loan impacts: +0.17 +$32MM Higher rates (+20 bps) 546 545 549 - $10MM Two fewer days - $ 5MM Lower average loans 500 - $ 4MM Other dynamics (-2 bps) 470 - $ 2MM Nonaccrual interest (-1 bp) Balances at Fed: + 1MM + 0.03 3.41 + Higher rates & lower balance 3.28 3.27 Deposit costs: -3MM -0.03 3.03 - Higher rates & higher balance 2.85 Wholesale funding: -5MM -0.03 - Higher rates & higher balance $549MM 1Q18 3.41% Net Impact due to rates: $27MM & 17 bps on the NIM 1Q17 2Q17 3Q17 4Q17 1Q18 1Q18 compared to 4Q17 24
Interest Rate Sensitivity Remain well positioned for rising rates 0.1 Standard Model Assumptions Estimated Net Interest Income: Annual (12 month) Sensitivities 200 bps gradual, Interest Rates Based on Various Assumptions non-parallel rise Additional Scenarios are Relative to 1Q18 Standard Model ($ in millions) Loan Balances Modest increase Deposit Balances Moderate decrease Historical price movements ~215 Deposit Pricing (Beta) with short-term rates ~185 Held flat with prepayment ~165 Securities Portfolio reinvestment ~125 Held at current levels Loan Spreads ~75 Third-party projections and MBS Prepayments historical experience No additions Hedging (Swaps) modeled Up 100 bps Addl. $2B Addl. 20% Standard Addl. ~3% Deposit Increase in Model Loan Growth Decline Beta 3/31/18 ● For methodology see the Company’s Form 10-Q, as filed with the SEC. Estimates are based on simulation modeling analysis. 25 Benefit from Rise in Interest Rates Greatest NIM expansion relative to peers Interest-bearing Deposit Cost1 1Q18 . Relationship banking approach (In basis points) 64 57 51 55 . Prudent management of loan & deposit pricing 43 45 46 33 36 . Balance sheet well-positioned 25 28 28 • 90% of loans are floating rate • 62% of interest-bearing deposits are retail RF STI CFR BBT FHN KEY MTB FITB CMA ZION BOKF HBAN Change in Loan Yields2 Change in Net Interest Margin1 1Q18 vs. 1Q17 1Q18 vs. 1Q17 (In basis points) 56 (In basis points) 70 51 57 57 37 50 46 42 21 37 37 33 18 18 16 15 26 25 24 2 - (2) (12) RF STI FHN CFR BBT KEY RF MTB FITB CMA STI ZION KEY BBT CFR FHN BOKF HBAN MTB FITB CMA ZION BOKF HBAN 3/31/18 ● 1Source: S&P Global Market Intelligence ● 2Source: 1Q18 press releases or financial supplements; CFR data per S&P Global Market Intelligence 26
1Q18 Securities Portfolio Stable Replaced prepays at slightly higher yield Securities Portfolio ($ in billions) Treasury Securities & Other Mortgage-backed Securities (MBS) Securities Yields 12.2 12.2 12.2 12.2 12.0 12.2 12.0 Duration of 3.3 years1 . Extends to 3.9 years under a 200 bps instantaneous rate increase1 9.3 9.3 9.4 9.3 9.2 9.4 9.3 Net unrealized pre-tax loss of $270MM2 Net unamortized premium of $18MM3 GNMA ~61% of MBS portfolio 2.07 2.09 2.01 2.05 2.05 1Q17 2Q17 3Q17 4Q17 1Q18 4Q17 1Q18 Average Balances Period-end 3/31/18 ● 1Estimated as of 3/31/18 ● 2Net unrealized pre-tax gain/loss on the available-for-sale (AFS) portfolio ● 3Net unamortized premium on the MBS portfolio 27 1Q18 Credit Quality Strong Positive credit migration continued with declines in criticized & nonaccrual loans Allowance for Credit Losses Portfolio Credit Metrics ($ in millions) Allowance for Loan Losses as a % of Total Loans $ in millions Energy Ex-Energy Total 754 753 753 754 738 Total loans $1,848 $47,392 $49,240 % of total CMA 4% 96% 100% 1.47 1.43 1.45 1.45 1.42 Criticized1 $468 $1,652 $2,120 Ratio 25.3% 3.5% 4.3% Q/Q change $(40) $(71) $(111) 1Q17 2Q17 3Q17 4Q17 1Q18 1 Nonaccrual $102 $224 $326 Criticized Loans Ratio 5.5% 0.5% 0.7% ($ in millions) NALs Criticized as a % of Total Loans Q/Q change $(6) $(70) $(76) 2,636 2 2,492 2,434 Net charge-offs -2828 2,231 2,120 Ratio3 - 0.23% 0.23% Q/Q change $(1) $13 $12 5.5 5.0 5.0 4.5 4.3 Allowance4/NPLs 209% 4 521 493 444 402 326 Allowance /LTM NCOs 8.0x 1Q17 2Q17 3Q17 4Q17 1Q18 3/31/18 ●1Criticized loans are consistent with regulatory defined Special Mention, Substandard, & Doubtful categories ● 2Net credit-related charge-offs ● 3Net credit-related charge-offs (annualized) to average loans ● 4Allowance for loan losses 28
1Q18 Noninterest Income Decreased Following Strong 4Q17 Decreased $7MM, ex. accounting change Noninterest Income - $32MM Card (+$1MM ex. accounting change) ($ in millions) - $ 4MM Commercial lending (syndication) Impact of accounting change 1 - $ 3MM Bank-owned life insurance 285 276 - $ 2MM Customer Derivatives (other) 271 275 34 + $ 2MM Fiduciary 28 30 26 244 + $ 1MM Brokerage 251 245 248 245 GEAR Up Remained on Track YoY ($ in millions) Card Fees +15% Fiduciary +5% Brokerage +27% (ex. accounting change1) 77 52 49 - 25 59 - 7 5 - 52 1Q17 2Q17 3Q17 4Q17 1Q18 1Q17 1Q18 1Q17 1Q18 1Q17 1Q18 1Q18 compared to 4Q17 ● 1Effective 1/1/18, adopted new revenue recognition standard: noninterest income for certain products will be presented net of costs, effectively lowering both noninterest income and expense (see 10-Q). See Reconciliation of Non-GAAP Financial Measures located in Appendix 29 1Q18 Noninterest Expense Control: Efficiency ratio 56%1 Declined $1MM, ex. accounting change, restructuring & one-time employee bonus Noninterest Expenses3 - $38MM Outside processing fees (-$4MM ex. ($ in millions) accounting change) Impact of accounting change 2 Restructuring - $ 5MM Business tax refund (other) One-time employee bonus - $ 3MM Advertising 483 - $ 2MM Occupancy + $ 7MM Salaries & benefits 463 34 + Annual stock comp & higher payroll taxes 457 457 - Two fewer days in 1Q18 446 - 4Q17 one-time employee bonus 30 26 28 13 + $ 3MM Restructuring 16 5 7 GEAR Up Remained on Track YoY 11 431 430 14 426 (In percentage points) 420 1 3 415 Efficiency Ratio Adj. Efficiency Ratio 62 59 56 54 1Q17 2Q17 3Q17 4Q17 1Q18 1Q17 1Q18 1Q17 1Q18 1Q18 compared to 4Q17 ● 1Noninterest expenses, including restructuring charges, as a percentage of the sum of net interest income (FTE) & noninterest income excluding net securities gains (losses) ● 2Effective 1/1/18, adopted new revenue recognition standard: noninterest income for certain products are presented net of costs, effectively lowering both noninterest income & expense (see 10-Q) ● 3See Reconciliation of Non-GAAP Financial Measures located in Appendix 30
1Q18 Performance Tops Peers Continue to post best in class total shareholder returns Net Interest Income1 Efficiency Ratio1 Return on Equity1 Return on Assets1 (Growth; 1Q18 vs. 1Q17) (1Q18) (1Q18) (1Q18) 62.93% 17% 1.62% 14.37% 11% 56.33% 11.54% 1.36% CMA Peer Average CMA Peer Average CMA Peer Average CMA Peer Average Highest 1 Year Highest 3 Year Highest 5 Year YTD Stock Price Total Return2 Total Return2 Total Return2 vs. Peers1 (12/31/17) (12/31/17) (12/31/17) (5/31/18) 27% 95% 9% 212% 58% 11% 129% 4% CMA Peer Average CMA Peer Average CMA Peer Average CMA Peer Average 1Source for Peer Average: S&P Global Market Intelligence; Efficiency Ratio for CFR not available; Return on Assets for RF per 1Q18 Press Release; See slide 32 for list of peer banks ● 2Source: Bloomberg 31 Top Tier Returns Return on Assets1 1Q18 (In percentage points) 2.02 1.62 1.36 1.45 1.45 1.22 1.24 1.27 1.27 1.28 1.32 0.95 FHN MTB KEY BOKF HBAN STI RF CFR BBT ZION CMA FITB Return on Equity2 1Q18 (In percentage points) 18.60 14.37 12.39 13.00 13.30 13.62 10.75 11.23 11.43 11.82 8.79 9.15 FHN MTB RF STI BBT KEY BOKF HBAN ZION CFR CMA FITB 3/31/18 ● 1Source: S&P Global Market Intelligence; RF data per 1Q18 financial supplement ● 2Source: 1Q18 press releases or financial supplements 32
Holding Company Debt Rating Senior Unsecured/Long-Term Issuer Rating Moody’s S&P Fitch BB&T A2 A- A+ Cullen Frost A3 A- -- M&T Bank A3 A- A Comerica A3 BBB+ A BOK Financial Corporation A3 BBB+ A Huntington Baa1 BBB+ A- Fifth Third Baa1 BBB+ A- Peer Banks KeyCorp Baa1 BBB+ A- SunTrust Baa1 BBB+ A- Regions Financial Baa2 BBB+ BBB+ First Horizon National Corp Baa3 BBB- BBB- Zions Bancorporation Baa3 BBB -- U.S. Bancorp A1 A+ AA- Wells Fargo & Company A2 A- A+ PNC Financial Services Group A3 A- A+ JP Morgan A3 A- A+ Large Banks Bank of America A3 A- A As of 6/6/18 ● Source: S&P Global Market Intelligence ● Debt Ratings are not a recommendation to buy, sell, or hold securities 33 Funding & Maturity Profile Multiple Funding Sources Funding Profile At March 31, 2018 . Wholesale debt markets ($ in billions) . Federal Home Loan Bank of Dallas Interest-Bearing Noninterest- • $3.8B outstanding Deposits Bearing Deposits $26.7 $31.0 • $4.4B remaining borrowing capacity 37% 44% . Brokered deposits . Fed funds/Repo markets Debt Profile by Maturity1 ($ in millions) Subordinated Notes Senior Notes1 FHLB Advance 3,200 Equity Wholesale Debt 1,000 $8.0 $5.6 675 350 350 11% 8% 2019 2020 2025 2026 2028 3/31/18 ● 1Face value at maturity 34
Adoption of Accounting Standards1 Reclassifications due to change in revenue recognition and pension accounting Certain revenue items reported net of related costs Revenue Recognition Prior Qtrs Not Restated 2 (Prospective ) 1Q18 4Q17 3Q17 2Q17 1Q17 . Adoption of new accounting standard for revenue recognition resulted in change in presentation which Noninterest income records certain costs in same category as associated Card fees (34) (33) (29) (26) (25) revenues Deposit service charges (1) (1) (1) (2) (1) . Improves efficiency ratio Noninterest expenses . No impact to bottom line Outside processing fees (35) (34) (30) (28) (26) . Net presentation started 1Q182 Certain components of pension benefit reported in other expenses Pension Accounting All Qtrs Restated Adoption of a new accounting standard for pension (Retrospective) . 1Q18 4Q17 3Q17 2Q17 1Q17 costs pertaining to actuarial estimates, other than Noninterest expenses employee service costs, resulted in reclassification Salaries & benefits 13 13 12 12 12 . Total annual pension costs unchanged at $19MM credit per annum Other noninterest expenses (13) (13) (12) (12) (12) . No impact to bottom line . Retrospective application to prior quarters 1Effective 1/1/18, adopted new revenue recognition standard & pension accounting standard (see 10-Q) ● 2Effective 1/18, adopted modified retrospective approach. Prior quarter impacts in chart presented for comparability purposes. 35 Reconciliation of Non-GAAP Financial Measures (dollar amounts in millions, except per share data) 1Q18 4Q17 1Q17 (dollar amounts in millions, except per share data) 1Q18 4Q17 1Q17 Adjusted Earnings per Common Share: Adjusted Net Income, ROA and ROE: Net income available to common shareholders $279 $112 $200 Net income $281 $112 $202 Restructuring charges, net of tax 12 8 7 Restructuring charges, net of tax 12 8 7 Deferred tax adjustment (3) 107 — Deferred tax adjustment (3) 107 — One-time employee bonus, net of tax — 3 — One-time employee bonus, net of tax — 3 — Tax benefits from employee stock transactions (19) (4) (24) Tax benefits from employee stock transactions (19) (4) (24) Adjusted net income available to common Adjusted net income $271 $226 $185 shareholders $269 $226 $183 Average assets $70,326 $71,398 $71,819 Diluted average common shares (in millions) 175 176 180 Reported ROA 1.62% 0.62% 1.14% Reported diluted earnings per common share $1.59 $0.63 $1.11 Adjusted ROA 1.56 1.26 1.05 Adjusted diluted earnings per common share 1.54 1.28 1.02 Average common shareholder's equity $7,927 $7,987 $7,865 Adjusted Noninterest Income, Noninterest Reported ROE 14.37% 5.58% 10.42% Expenses and Efficiency Ratio: Adjusted ROE 13.85 11.24 9.56 Noninterest income $244 $285 $271 Proforma effect of adopting new accounting standard — (34) (26) Adjusted noninterest income $244 $251 $245 Noninterest Expenses $446 $483 $457 Proforma effect of adopting new accounting standard — (34) (26) Restructuring charges (16) (13) (11) One-time employee bonus — (5) — Adjusted noninterest expenses $430 $431 $420 Net interest income $549 $545 $470 Efficiency ratio: Reported 56.33% 58.14% 61.71% Adjusted 54.32 54.23 58.79 Comerica believes these non-GAAP measures are meaningful because they reflect adjustments commonly made by management, investors, regulators and analysts to evaluate the adequacy of common equity and performance trends. Comerica believes the adjusted data shown above provides a greater understanding of ongoing operations and enhances comparability of results with prior periods. 36