COMERICA REPORTS FIRST QUARTER 2014 NET INCOME OF $139 MILLION,
OR 73 CENTS PER SHARE, UP 4 PERCENT FROM FIRST QUARTER 2013
$1 Billion Loan Growth Over Fourth Quarter 2013;
Increases in Nearly All Business Lines
Drive for Efficiency Demonstrated in Well-Controlled Expenses
Continued to Maintain Strong Capital Ratios
While Returning $107 Million to Shareholders
DALLAS/April 15, 2014 -- Comerica Incorporated (NYSE: CMA) today reported first quarter 2014 net income of $139 million, compared to $117 million for the fourth quarter 2013 and $134 million for the first quarter 2013. Earnings per diluted share were 73 cents for the first quarter 2014, compared to 62 cents for the fourth quarter 2013 and 70 cents for the first quarter 2013.
(dollar amounts in millions, except per share data) | 1st Qtr '14 | 4th Qtr '13 | 1st Qtr '13 | |||||||||
Net interest income (a) | $ | 410 | $ | 430 | $ | 416 | ||||||
Provision for credit losses | 9 | 9 | 16 | |||||||||
Noninterest income | 208 | 219 | 213 | |||||||||
Noninterest expenses (b) | 406 | 473 | 416 | |||||||||
Provision for income taxes | 64 | 50 | 63 | |||||||||
Net income | 139 | 117 | 134 | |||||||||
Net income attributable to common shares | 137 | 115 | 132 | |||||||||
Diluted income per common share | 0.73 | 0.62 | 0.70 | |||||||||
Average diluted shares (in millions) | 187 | 186 | 187 | |||||||||
Tier 1 common capital ratio (d) | 10.54 | % | (c) | 10.64 | % | 10.37 | % | |||||
Basel III common equity Tier 1 capital ratio (d) (e) | 10.3 | 10.3 | 10.1 | |||||||||
Tangible common equity ratio (d) | 10.20 | 10.07 | 9.86 | |||||||||
(a) | Included accretion of the purchase discount on the acquired loan portfolio of $12 million, $23 million and $11 million in the first quarter 2014, fourth quarter 2013 and first quarter 2013, respectively. |
(b) | Included litigation-related expense of $3 million, $52 million and $3 million in the first quarter 2014, fourth quarter 2013 and first quarter 2013, respectively. |
(c) | March 31, 2014 ratio is estimated. |
(d) | See Reconciliation of Non-GAAP Financial Measures. |
(e) | Estimated ratios based on the standardized approach in the final rule and excluding most elements of accumulated other comprehensive income (AOCI). |
"Comerica's first quarter 2014 financial results reflect solid loan growth across our footprint and nearly all of our business lines," said Ralph W. Babb Jr., chairman and chief executive officer. "The more than $1 billion, or 2 percent, increase in average total loans, compared to the fourth quarter 2013, was led by increases in general Middle Market, Commercial Real Estate, Energy, Technology & Life Sciences, and Corporate Banking, partially offset by a decrease in Mortgage Banker Finance. Other highlights in the first quarter included an increase of $458 million in period-end deposits, to $53.8 billion. We also had continued strong credit quality and well-controlled expenses. The deep and enduring relationships we have with our customers are making a positive difference in our bottom line.
"Our capital position remains a source of strength to support our growth. We repurchased 6.9 million shares under our 2013 capital plan, including 1.5 million shares in the first quarter of 2014. Combined with dividends, we returned $107 million, or 77 percent of first quarter net income, to shareholders. We were pleased the Federal Reserve did not object to our 2014 capital plan and contemplated capital distributions, including up
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COMERICA REPORTS FIRST QUARTER 2014 NET INCOME OF $139 MILLION - 2
to $236 million in share repurchases for the four-quarter period that ends in the first quarter of 2015. We remain focused on providing a good return to shareholders while maintaining our strong capital ratios."
First Quarter 2014 Compared to Fourth Quarter 2013
• | Average total loans increased $1.0 billion, or 2 percent, to $45.1 billion, primarily reflecting increases of $679 million, or 2 percent, in commercial loans and $231 million, or 2 percent, in combined commercial mortgage and real estate construction loans. The increase in commercial loans was reflected in almost all lines of business. Period-end total loans increased $1.0 billion, or 2 percent, to $46.5 billion, primarily reflecting a $959 million, or 3 percent, increase in commercial loans. The increase in commercial loans was primarily driven by increases in general Middle Market, Energy, Corporate Banking and Technology and Life Sciences. |
• | Average total deposits were stable at $52.8 billion, primarily reflecting a decrease in noninterest-bearing deposits of $296 million, partially offset by an increase in money market and interest-bearing checking deposits of $231 million. Period-end deposits increased $458 million, to $53.8 billion. |
• | Net interest income decreased $20 million to $410 million in the first quarter 2014, compared to $430 million in the fourth quarter 2013, and reflected decreases in both the accretion of the purchase discount on the acquired loan portfolio from an unusually high fourth quarter amount and interest collected on nonaccrual loans, as well as the impact of two fewer days in the first quarter 2014. The benefit from an increase in loan balances largely offset the impact of lower loan yields. |
• | The provision for credit losses was stable at $9 million in the first quarter 2014, reflecting continued strong credit quality. Net charge-offs were $12 million, or 0.10 percent of average loans, in the first quarter 2014. |
• | Noninterest income decreased $11 million to $208 million in the first quarter 2014, reflecting decreases of $6 million in customer-driven income and $5 million in noncustomer-driven income. |
• | Noninterest expenses decreased $67 million to $406 million in the first quarter 2014, primarily reflecting a $49 million decrease in litigation-related expenses and an $11 million decrease in salaries and benefits expense, largely due to a decrease in pension expense. |
• | As previously announced, the Federal Reserve completed its 2014 Comprehensive Capital Analysis and Review (CCAR) in March 2014 and did not object to the capital distributions contemplated in Comerica's capital plan, including up to $236 million in share repurchases for the four-quarter period ending first quarter 2015. |
• | Capital remained solid at March 31, 2014, as evidenced by an estimated Tier 1 common capital ratio of 10.54 percent and a tangible common equity ratio of 10.20 percent. |
First Quarter 2014 Compared to First Quarter 2013
• | Average total loans increased $458 million, or 1 percent, primarily reflecting an increase of $306 million, or 1 percent, in commercial loans, partially offset by a decrease of $115 million, or 1 percent, in combined commercial mortgage and real estate construction loans. The increase in commercial loans was primarily driven by increases in National Dealer Services, Technology and Life Sciences, and general Middle Market, partially offset by a decrease in Mortgage Banker Finance. |
• | Average total deposits increased $2.1 billion, or 4 percent, primarily reflecting increases of $1.7 billion, or 8 percent, in noninterest-bearing deposits and $348 million, or 1 percent, in interest-bearing deposits. |
• | Net income increased $5 million, or 4 percent, primarily the result of lower noninterest expenses and a decrease in the provision for credit losses, partially offset by decreases in net interest income and noncustomer-driven noninterest income. |
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COMERICA REPORTS FIRST QUARTER 2014 NET INCOME OF $139 MILLION - 3
Net Interest Income
(dollar amounts in millions) | 1st Qtr '14 | 4th Qtr '13 | 1st Qtr '13 | ||||||||
Net interest income | $ | 410 | $ | 430 | $ | 416 | |||||
Net interest margin | 2.77 | % | 2.86 | % | 2.88 | % | |||||
Selected average balances: | |||||||||||
Total earning assets | $ | 59,916 | $ | 59,924 | $ | 58,607 | |||||
Total loans | 45,075 | 44,054 | 44,617 | ||||||||
Total investment securities | 9,282 | 9,365 | 10,021 | ||||||||
Federal Reserve Bank deposits (excess liquidity) | 5,311 | 6,260 | 3,669 | ||||||||
Total deposits | 52,770 | 52,769 | 50,692 | ||||||||
Total noninterest-bearing deposits | 23,236 | 23,532 | 21,506 | ||||||||
• | Net interest income of $410 million in the first quarter 2014 decreased $20 million compared to the fourth quarter 2013. |
◦ | Interest on loans decreased by $21 million, including decreases in both the accretion of the purchase discount on the acquired loan portfolio from an unusually high fourth quarter 2013 amount (-$11 million) and interest collected on nonaccrual loans (-$2 million), as well as the impact of two fewer days in the first quarter (-$7 million). The benefit from an increase in loan balances (+$8 million) largely offset the impact of lower loan yields (-$9 million). |
• | The net interest margin of 2.77 percent decreased 9 basis points compared to the fourth quarter 2013. The decrease in net interest margin was primarily due to decreases in both the accretion of the purchase discount on the acquired loan portfolio from an unusually high fourth quarter 2013 amount (-8 basis points) and interest collected on nonaccrual loans (-1 basis point), as well as lower loan yields (-4 basis points), partially offset by the impact of a decrease in excess liquidity (+4 basis points). |
• | Average earning assets remained stable at $59.9 billion in the first quarter 2014, compared to the fourth quarter 2013, as an increase of $1.0 billion in average loans offset a decrease of $949 million in excess liquidity. |
Noninterest Income
Noninterest income decreased $11 million to $208 million for the first quarter 2014, compared to $219 million for the fourth quarter 2013. Customer-driven fee income decreased $6 million and noncustomer-driven income decreased $5 million. The decrease in customer-driven fee income was primarily due to a $7 million decrease in syndication agent fees, a component of commercial lending fees. The decrease in noncustomer-driven income was primarily due to a $4 million decrease in deferred compensation plan asset returns, which was offset by a decrease in deferred compensation expense in noninterest expenses.
Comerica early adopted an amendment to U.S. generally accepted accounting principles in the first quarter 2014 related to the accounting for affordable housing projects that qualify for the low-income housing tax credit. Amortization of the initial investment cost of qualifying projects is now recorded in the provision for income taxes together with the tax credits and benefits received. Previously, the amortization was recorded as a reduction to other noncustomer-driven noninterest income. All prior period amounts have been restated to reflect the adoption of the amendment, which resulted in offsetting increases to other noninterest income and the provision for income taxes of $14 million, $15 million and $13 million in the first quarter 2014, fourth quarter 2013 and first quarter 2013, respectively.
Noninterest Expenses
Noninterest expenses decreased $67 million to $406 million for the first quarter 2014, compared to $473 million for the fourth quarter 2013, primarily reflecting a $49 million decrease in litigation-related expenses, an $11 million decrease in salaries and benefits expense and small decreases in several other categories of noninterest expense. The decrease in litigation-related expenses reflected the impact of high fourth quarter 2013 expense due to an unfavorable jury verdict in a lender liability case. The decrease in salaries and benefits expense primarily reflected a $13 million decrease in pension expense.
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COMERICA REPORTS FIRST QUARTER 2014 NET INCOME OF $139 MILLION - 4
Credit Quality
(dollar amounts in millions) | 1st Qtr '14 | 4th Qtr '13 | 1st Qtr '13 | ||||||||
Net credit-related charge-offs | $ | 12 | $ | 13 | $ | 24 | |||||
Net credit-related charge-offs/Average total loans | 0.10 | % | 0.12 | % | 0.21 | % | |||||
Provision for credit losses | $ | 9 | $ | 9 | $ | 16 | |||||
Nonperforming loans (a) | 338 | 374 | 515 | ||||||||
Nonperforming assets (NPAs) (a) | 352 | 383 | 555 | ||||||||
NPAs/Total loans and foreclosed property | 0.76 | % | 0.84 | % | 1.23 | % | |||||
Loans past due 90 days or more and still accruing | $ | 10 | $ | 16 | $ | 25 | |||||
Allowance for loan losses | 594 | 598 | 617 | ||||||||
Allowance for credit losses on lending-related commitments (b) | 37 | 36 | 36 | ||||||||
Total allowance for credit losses | 631 | 634 | 653 | ||||||||
Allowance for loan losses/Period-end total loans | 1.28 | % | 1.32 | % | 1.37 | % | |||||
Allowance for loan losses/Nonperforming loans | 176 | 160 | 120 | ||||||||
(a) | Excludes loans acquired with credit impairment. |
(b) | Included in "Accrued expenses and other liabilities" on the consolidated balance sheets. |
• | Nonaccrual loans decreased $33 million, to $317 million at March 31, 2014, compared to $350 million at December 31, 2013. |
• | Criticized loans decreased $121 million, to $2.1 billion at March 31, 2014, compared to $2.3 billion at December 31, 2013. |
• | During the first quarter 2014, $19 million of borrower relationships over $2 million were transferred to nonaccrual status, a decrease of $4 million from the fourth quarter 2013. |
Balance Sheet and Capital Management
Total assets and common shareholders' equity were $65.7 billion and $7.3 billion, respectively, at March 31, 2014, compared to $65.2 billion and $7.2 billion, respectively, at December 31, 2013.
There were approximately 182 million common shares outstanding at March 31, 2014. Diluted weighted-average shares increased to 187 million in the first quarter 2014 as an increase in share dilution from options and warrants due to an increase in Comerica's stock price outpaced the impact of the repurchase of 1.5 million shares of common stock under the share repurchase program. Combined with the dividend of $0.19 per share, share repurchases of $72 million and dividends returned 77 percent of first quarter 2014 net income to shareholders.
The Federal Reserve completed its 2014 CCAR review in March 2014 and did not object to Comerica's capital plan and capital distributions contemplated in the plan. Comerica's capital plan provides for up to $236 million in share repurchases for the four-quarter period ending March 31, 2015, as well as the authority to fully redeem $150 million par value of subordinated notes due 2024. The notes are callable at par on or after July 15, 2014 and were recorded at a carrying value of $183 million at March 31, 2014. Due to the lack of certainty about the possible execution and timing of the call, the impact of the call is not reflected in the outlook for 2014. Comerica's capital plan further contemplates a 1-cent increase in the quarterly dividend to $0.20 per common share. The dividend proposal will be considered by Comerica's Board of Directors at its next scheduled meeting on April 22, 2014.
Comerica's tangible common equity ratio was 10.20 percent at March 31, 2014, an increase of 13 basis points from December 31, 2013. The estimated Tier 1 common capital ratio decreased 10 basis points, to 10.54 percent at March 31, 2014, from December 31, 2013. The estimated common equity Tier 1 ratio under fully phased-in Basel III capital rules and excluding most elements of AOCI was 10.3 percent percent at March 31, 2014.
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COMERICA REPORTS FIRST QUARTER 2014 NET INCOME OF $139 MILLION - 5
Full-Year 2014 Outlook
Management expectations for full-year 2014, compared to 2013, assuming a continuation of the current economic and low rate environment, are as follows:
• | Average loan growth consistent with 3 percent growth achieved in 2013, reflecting stabilization in Mortgage Banker Finance near average fourth quarter 2013 level and continued focus on pricing and structure discipline. |
• | Net interest income modestly lower, reflecting a decline in purchase accounting accretion, to $20 million to $30 million, and the effect of continued pressure from the low rate environment, partially offset by loan growth. |
• | Provision for credit losses and net charge-offs stable. Increases to the allowance for credit losses due to loan growth offset by continued strong credit quality. |
• | Noninterest income modestly lower, reflecting stable customer-driven fee income and lower noncustomer-driven income. Growth in fiduciary income and card fees offset by lower capital market activity. |
• | Noninterest expenses lower, reflecting lower litigation-related expenses and a more than 50 percent decrease in pension expense, to $35 million to $40 million. |
• | Income tax expense to approximate 32 percent of pre-tax income, reflecting the change in accounting for affordable housing projects that qualify for the low-income tax credit. |
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COMERICA REPORTS FIRST QUARTER 2014 NET INCOME OF $139 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 March 31, 2014 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses first quarter 2014 results compared to fourth quarter 2013.
The following table presents net income (loss) by business segment.
(dollar amounts in millions) | 1st Qtr '14 | 4th Qtr '13 | 1st Qtr '13 | ||||||||||||||
Business Bank | $ | 198 | 85 | % | $ | 170 | 82 | % | $ | 198 | 85 | % | |||||
Retail Bank | 9 | 4 | 15 | 7 | 10 | 4 | |||||||||||
Wealth Management | 26 | 11 | 24 | 11 | 25 | 11 | |||||||||||
233 | 100 | % | 209 | 100 | % | 233 | 100 | % | |||||||||
Finance | (92 | ) | (92 | ) | (98 | ) | |||||||||||
Other (a) | (2 | ) | — | (1 | ) | ||||||||||||
Total | $ | 139 | $ | 117 | $ | 134 | |||||||||||
(a) Includes items not directly associated with the three major business segments or the Finance Division.
Business Bank
(dollar amounts in millions) | 1st Qtr '14 | 4th Qtr '13 | 1st Qtr '13 | ||||||||
Net interest income (FTE) | $ | 371 | $ | 387 | $ | 375 | |||||
Provision for credit losses | 16 | 24 | 20 | ||||||||
Noninterest income | 87 | 95 | 90 | ||||||||
Noninterest expenses | 146 | 198 | 146 | ||||||||
Net income | 198 | 170 | 198 | ||||||||
Net credit-related charge-offs | 11 | 6 | 16 | ||||||||
Selected average balances: | |||||||||||
Assets | 35,896 | 35,042 | 35,780 | ||||||||
Loans | 34,927 | 34,020 | 34,753 | ||||||||
Deposits | 27,023 | 26,873 | 25,514 | ||||||||
• | Average loans increased $907 million, primarily reflecting increases in general Middle Market, Commercial Real Estate, Energy, Technology and Life Sciences, and Corporate Banking, partially offset by decreases in Mortgage Banker Finance and Entertainment. |
• | Average deposits increased $150 million, primarily reflecting increases in Technology and Life Sciences and general Middle Market, partially offset by declines in Corporate Banking and Energy. |
• | Net interest income decreased $16 million, primarily due to a decrease in purchase accounting accretion, two fewer days in the first quarter and lower loan yields, partially offset by the benefit provided by an increase in average loans. |
• | The provision for credit losses decreased $8 million, primarily reflecting decreases in Corporate Banking and general Middle Market, partially offset by increases in Technology and Life Sciences and Commercial Real Estate. |
• | Noninterest income decreased $8 million, primarily due to decreases in commercial lending fees and securities trading income. |
• | Noninterest expenses decreased $52 million, primarily due to a decrease in litigation-related expenses from high fourth quarter expense due to an unfavorable jury verdict in a lender liability case. |
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COMERICA REPORTS FIRST QUARTER 2014 NET INCOME OF $139 MILLION - 7
Retail Bank
(dollar amounts in millions) | 1st Qtr '14 | 4th Qtr '13 | 1st Qtr '13 | ||||||||
Net interest income (FTE) | $ | 146 | $ | 150 | $ | 155 | |||||
Provision for credit losses | 2 | (8 | ) | 6 | |||||||
Noninterest income | 41 | 43 | 41 | ||||||||
Noninterest expenses | 171 | 178 | 175 | ||||||||
Net income | 9 | 15 | 10 | ||||||||
Net credit-related charge-offs | 4 | 4 | 8 | ||||||||
Selected average balances: | |||||||||||
Assets | 6,052 | 5,997 | 5,973 | ||||||||
Loans | 5,381 | 5,323 | 5,276 | ||||||||
Deposits | 21,361 | 21,438 | 21,049 | ||||||||
• | Average loans increased $58 million, primarily due to an increase in Retail Banking. |
• | Average deposits decreased $77 million, primarily due to a decrease in Small Business, partially offset by an increase in Retail Banking. |
• | Net interest income decreased $4 million, primarily due to lower loan yields and two fewer days in the first quarter. |
• | The provision for credit losses of $2 million increased $10 million, primarily reflecting an increase in Small Business. |
• | Noninterest expenses decreased $7 million, primarily due to a decrease in salaries and benefits expense. |
Wealth Management
(dollar amounts in millions) | 1st Qtr '14 | 4th Qtr '13 | 1st Qtr '13 | ||||||||
Net interest income (FTE) | $ | 46 | $ | 47 | $ | 46 | |||||
Provision for credit losses | (8 | ) | (9 | ) | (6 | ) | |||||
Noninterest income | 64 | 61 | 65 | ||||||||
Noninterest expenses | 78 | 80 | 79 | ||||||||
Net income | 26 | 24 | 25 | ||||||||
Net credit-related (recoveries) charge-offs | (3 | ) | 3 | — | |||||||
Selected average balances: | |||||||||||
Assets | 4,939 | 4,873 | 4,738 | ||||||||
Loans | 4,767 | 4,711 | 4,588 | ||||||||
Deposits | 3,816 | 3,933 | 3,682 | ||||||||
• | Average loans increased $56 million, primarily due to an increase in Private Banking. |
• | Average deposits decreased $117 million, primarily due to a decrease in Private Banking. |
• | Noninterest income increased $3 million, primarily due to an increase in fiduciary income and small increases in several other categories of noninterest income. |
• | Noninterest expenses decreased $2 million, primarily due to a decrease in salaries and benefits expense. |
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COMERICA REPORTS FIRST QUARTER 2014 NET INCOME OF $139 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 March 31, 2014 and are presented on a fully taxable equivalent (FTE) basis.
The following table presents net income (loss) by market segment.
(dollar amounts in millions) | 1st Qtr '14 | 4th Qtr '13 | 1st Qtr '13 | ||||||||||||||
Michigan | $ | 68 | 29 | % | $ | 32 | 15 | % | $ | 78 | 34 | % | |||||
California | 63 | 27 | 77 | 37 | 56 | 24 | |||||||||||
Texas | 46 | 20 | 53 | 25 | 43 | 18 | |||||||||||
Other Markets | 56 | 24 | 47 | 23 | 56 | 24 | |||||||||||
233 | 100 | % | 209 | 100 | % | 233 | 100 | % | |||||||||
Finance & Other (a) | (94 | ) | (92 | ) | (99 | ) | |||||||||||
Total | $ | 139 | $ | 117 | $ | 134 | |||||||||||
(a) Includes items not directly associated with the geographic markets.
• | Average loans increased $150 million, $393 million and $598 million in Michigan, California and Texas, respectively. The increase in average loans was broad-based with increases in nearly all business lines. |
• | Average deposits increased $141 million in Michigan primarily due to an increase in Corporate Banking, partially offset by a decrease in general Middle Market. In California, average deposits decreased $437 million, primarily due to decreases in Corporate Banking and Private Banking, partially offset by an increase in Technology and Life Sciences. The increase in Texas of $339 million was primarily due to increases in Technology and Life Sciences and general Middle Market, partially offset by a decrease in Energy. |
• | Net interest income decreased in all markets, primarily reflecting the impact of two fewer days in the first quarter 2014 and, in Texas, a decrease in accretion on the acquired loan portfolio from an unusually high fourth quarter 2013 amount. The benefit from an increase in loan balances largely offset the impact of lower loan yields. |
• | The provision for credit losses increased $19 million in California, primarily due to increases in general Middle Market, Commercial Real Estate and Technology and Life Sciences. In Other Markets, the provision declined $13 million, primarily due to decreases in Private Banking and Corporate Banking. |
• | Noninterest expenses in Michigan decreased $57 million, primarily due to a decrease in litigation-related expenses from high fourth quarter expense due to an unfavorable jury verdict in a lender liability case. |
Michigan Market
(dollar amounts in millions) | 1st Qtr '14 | 4th Qtr '13 | 1st Qtr '13 | ||||||||
Net interest income (FTE) | $ | 183 | $ | 187 | $ | 190 | |||||
Provision for credit losses | 3 | 7 | (7 | ) | |||||||
Noninterest income | 87 | 89 | 92 | ||||||||
Noninterest expenses | 161 | 218 | 168 | ||||||||
Net income | 68 | 32 | 78 | ||||||||
Net credit-related charge-offs (recoveries) | — | (4 | ) | 5 | |||||||
Selected average balances: | |||||||||||
Assets | 13,819 | 13,712 | 14,042 | ||||||||
Loans | 13,473 | 13,323 | 13,650 | ||||||||
Deposits | 20,642 | 20,501 | 20,254 | ||||||||
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COMERICA REPORTS FIRST QUARTER 2014 NET INCOME OF $139 MILLION - 9
California Market
(dollar amounts in millions) | 1st Qtr '14 | 4th Qtr '13 | 1st Qtr '13 | ||||||||
Net interest income (FTE) | $ | 172 | $ | 176 | $ | 171 | |||||
Provision for credit losses | 11 | (8 | ) | 21 | |||||||
Noninterest income | 34 | 37 | 35 | ||||||||
Noninterest expenses | 96 | 98 | 97 | ||||||||
Net income | 63 | 77 | 56 | ||||||||
Net credit-related charge-offs (recoveries) | 10 | (2 | ) | 10 | |||||||
Selected average balances: | |||||||||||
Assets | 15,133 | 14,710 | 13,795 | ||||||||
Loans | 14,824 | 14,431 | 13,542 | ||||||||
Deposits | 14,782 | 15,219 | 14,356 | ||||||||
Texas Market
(dollar amounts in millions) | 1st Qtr '14 | 4th Qtr '13 | 1st Qtr '13 | ||||||||
Net interest income (FTE) | $ | 136 | $ | 147 | $ | 134 | |||||
Provision for credit losses | 6 | 5 | 8 | ||||||||
Noninterest income | 31 | 33 | 31 | ||||||||
Noninterest expenses | 90 | 91 | 91 | ||||||||
Net income | 46 | 53 | 43 | ||||||||
Net credit-related charge-offs | 6 | 13 | 6 | ||||||||
Selected average balances: | |||||||||||
Assets | 11,070 | 10,458 | 10,795 | ||||||||
Loans | 10,364 | 9,766 | 10,071 | ||||||||
Deposits | 10,875 | 10,536 | 9,959 | ||||||||
Conference Call and Webcast
Comerica will host a conference call to review first quarter 2014 financial results at 7 a.m. CT Tuesday, April 15, 2014. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 10261396). 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 FIRST QUARTER 2014 NET INCOME OF $139 MILLION - 10
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; volatility and disruptions in global capital and credit markets; changes in Comerica's credit rating; the interdependence of financial service companies; changes in regulation or oversight; unfavorable developments concerning credit quality; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers; operational difficulties, failure of technology infrastructure or information security incidents; 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; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; 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 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, 2013. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Media Contact: | Investor Contacts: |
Wayne J. Mielke | Darlene P. Persons |
(214) 462-4463 | (214) 462-6831 |
Brittany L. Butler | |
(214) 462-6834 | |
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited) | |||||||||
Comerica Incorporated and Subsidiaries | |||||||||
Three Months Ended | |||||||||
March 31, | December 31, | March 31, | |||||||
(in millions, except per share data) | 2014 | 2013 | 2013 | ||||||
PER COMMON SHARE AND COMMON STOCK DATA | |||||||||
Diluted net income | $ | 0.73 | $ | 0.62 | $ | 0.70 | |||
Cash dividends declared | 0.19 | 0.17 | 0.17 | ||||||
Common shareholders' equity (at period end) | 40.09 | 39.23 | 37.41 | ||||||
Tangible common equity (at period end) (a) | 36.50 | 35.65 | 33.90 | ||||||
Average diluted shares (in thousands) | 186,701 | 186,166 | 187,442 | ||||||
KEY RATIOS | |||||||||
Return on average common shareholders' equity | 7.68 | % | 6.66 | % | 7.68 | % | |||
Return on average assets | 0.86 | 0.72 | 0.84 | ||||||
Tier 1 common capital ratio (a) (b) | 10.54 | 10.64 | 10.37 | ||||||
Tier 1 risk-based capital ratio (b) | 10.54 | 10.64 | 10.37 | ||||||
Total risk-based capital ratio (b) | 12.95 | 13.10 | 13.41 | ||||||
Leverage ratio (b) | 10.85 | 10.77 | 10.75 | ||||||
Tangible common equity ratio (a) | 10.20 | 10.07 | 9.86 | ||||||
AVERAGE BALANCES | |||||||||
Commercial loans | $ | 28,362 | $ | 27,683 | $ | 28,056 | |||
Real estate construction loans: | |||||||||
Commercial Real Estate business line (c) | 1,505 | 1,363 | 1,116 | ||||||
Other business lines (d) | 322 | 289 | 198 | ||||||
Total real estate construction loans | 1,827 | 1,652 | 1,314 | ||||||
Commercial mortgage loans: | |||||||||
Commercial Real Estate business line (c) | 1,734 | 1,608 | 1,836 | ||||||
Other business lines (d) | 7,036 | 7,106 | 7,562 | ||||||
Total commercial mortgage loans | 8,770 | 8,714 | 9,398 | ||||||
Lease financing | 848 | 838 | 857 | ||||||
International loans | 1,301 | 1,303 | 1,282 | ||||||
Residential mortgage loans | 1,724 | 1,679 | 1,556 | ||||||
Consumer loans | 2,243 | 2,185 | 2,154 | ||||||
Total loans | 45,075 | 44,054 | 44,617 | ||||||
Earning assets | 59,916 | 59,924 | 58,607 | ||||||
Total assets | 64,708 | 64,605 | 63,451 | ||||||
Noninterest-bearing deposits | 23,236 | 23,532 | 21,506 | ||||||
Interest-bearing deposits | 29,534 | 29,237 | 29,186 | ||||||
Total deposits | 52,770 | 52,769 | 50,692 | ||||||
Common shareholders' equity | 7,229 | 7,010 | 6,956 | ||||||
NET INTEREST INCOME | |||||||||
Net interest income (fully taxable equivalent basis) | $ | 411 | $ | 431 | $ | 416 | |||
Fully taxable equivalent adjustment | 1 | 1 | — | ||||||
Net interest margin (fully taxable equivalent basis) | 2.77 | % | 2.86 | % | 2.88 | % | |||
CREDIT QUALITY | |||||||||
Nonaccrual loans | $ | 317 | $ | 350 | $ | 494 | |||
Reduced-rate loans | 21 | 24 | 21 | ||||||
Total nonperforming loans (e) | 338 | 374 | 515 | ||||||
Foreclosed property | 14 | 9 | 40 | ||||||
Total nonperforming assets (e) | 352 | 383 | 555 | ||||||
Loans past due 90 days or more and still accruing | 10 | 16 | 25 | ||||||
Gross loan charge-offs | 30 | 41 | 38 | ||||||
Loan recoveries | 18 | 28 | 14 | ||||||
Net loan charge-offs | 12 | 13 | 24 | ||||||
Allowance for loan losses | 594 | 598 | 617 | ||||||
Allowance for credit losses on lending-related commitments | 37 | 36 | 36 | ||||||
Total allowance for credit losses | 631 | 634 | 653 | ||||||
Allowance for loan losses as a percentage of total loans | 1.28 | % | 1.32 | % | 1.37 | % | |||
Net loan charge-offs as a percentage of average total loans (f) | 0.10 | 0.12 | 0.21 | ||||||
Nonperforming assets as a percentage of total loans and foreclosed property (e) | 0.76 | 0.84 | 1.23 | ||||||
Allowance for loan losses as a percentage of total nonperforming loans | 176 | 160 | 120 | ||||||
(a) | See Reconciliation of Non-GAAP Financial Measures. |
(b) | March 31, 2014 ratios are estimated. |
(c) | Primarily loans to real estate developers. |
(d) | Primarily loans secured by owner-occupied real estate. |
(e) | Excludes loans acquired with credit-impairment. |
(f) | Lending-related commitment charge-offs were zero in all periods presented. |
11
CONSOLIDATED BALANCE SHEETS | |||||||||
Comerica Incorporated and Subsidiaries | |||||||||
March 31, | December 31, | March 31, | |||||||
(in millions, except share data) | 2014 | 2013 | 2013 | ||||||
(unaudited) | (unaudited) | ||||||||
ASSETS | |||||||||
Cash and due from banks | $ | 1,186 | $ | 1,140 | $ | 877 | |||
Interest-bearing deposits with banks | 4,434 | 5,311 | 4,720 | ||||||
Other short-term investments | 105 | 112 | 115 | ||||||
Investment securities available-for-sale | 9,487 | 9,307 | 10,286 | ||||||
Commercial loans | 29,774 | 28,815 | 28,508 | ||||||
Real estate construction loans | 1,847 | 1,762 | 1,396 | ||||||
Commercial mortgage loans | 8,801 | 8,787 | 9,317 | ||||||
Lease financing | 849 | 845 | 853 | ||||||
International loans | 1,250 | 1,327 | 1,269 | ||||||
Residential mortgage loans | 1,751 | 1,697 | 1,568 | ||||||
Consumer loans | 2,217 | 2,237 | 2,156 | ||||||
Total loans | 46,489 | 45,470 | 45,067 | ||||||
Less allowance for loan losses | (594 | ) | (598 | ) | (617 | ) | |||
Net loans | 45,895 | 44,872 | 44,450 | ||||||
Premises and equipment | 583 | 594 | 618 | ||||||
Accrued income and other assets | 3,991 | 3,891 | 3,819 | ||||||
Total assets | $ | 65,681 | $ | 65,227 | $ | 64,885 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Noninterest-bearing deposits | $ | 23,955 | $ | 23,875 | $ | 22,777 | |||
Money market and interest-bearing checking deposits | 22,485 | 22,332 | 21,540 | ||||||
Savings deposits | 1,742 | 1,673 | 1,652 | ||||||
Customer certificates of deposit | 5,099 | 5,063 | 5,753 | ||||||
Foreign office time deposits | 469 | 349 | 395 | ||||||
Total interest-bearing deposits | 29,795 | 29,417 | 29,340 | ||||||
Total deposits | 53,750 | 53,292 | 52,117 | ||||||
Short-term borrowings | 160 | 253 | 58 | ||||||
Accrued expenses and other liabilities | 954 | 986 | 1,023 | ||||||
Medium- and long-term debt | 3,534 | 3,543 | 4,699 | ||||||
Total liabilities | 58,398 | 58,074 | 57,897 | ||||||
Common stock - $5 par value: | |||||||||
Authorized - 325,000,000 shares | |||||||||
Issued - 228,164,824 shares | 1,141 | 1,141 | 1,141 | ||||||
Capital surplus | 2,182 | 2,179 | 2,157 | ||||||
Accumulated other comprehensive loss | (325 | ) | (391 | ) | (410 | ) | |||
Retained earnings | 6,414 | 6,321 | 6,020 | ||||||
Less cost of common stock in treasury - 46,492,524 shares at 3/31/14, 45,860,786 shares at 12/31/13 and 41,361,612 shares at 3/31/13 | (2,129 | ) | (2,097 | ) | (1,920 | ) | |||
Total shareholders' equity | 7,283 | 7,153 | 6,988 | ||||||
Total liabilities and shareholders' equity | $ | 65,681 | $ | 65,227 | $ | 64,885 | |||
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CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited) | |||||||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||||||
First | Fourth | Third | Second | First | First Quarter 2014 Compared To: | ||||||||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Quarter | Fourth Quarter 2013 | First Quarter 2013 | |||||||||||||||||||||
(in millions, except per share data) | 2014 | 2013 | 2013 | 2013 | 2013 | Amount | Percent | Amount | Percent | ||||||||||||||||||
INTEREST INCOME | |||||||||||||||||||||||||||
Interest and fees on loans | $ | 376 | $ | 397 | $ | 381 | $ | 388 | $ | 390 | $ | (21 | ) | (5 | )% | $ | (14 | ) | (3 | )% | |||||||
Interest on investment securities | 55 | 55 | 54 | 52 | 53 | — | — | 2 | 2 | ||||||||||||||||||
Interest on short-term investments | 4 | 4 | 4 | 3 | 3 | — | — | 1 | 15 | ||||||||||||||||||
Total interest income | 435 | 456 | 439 | 443 | 446 | (21 | ) | (5 | ) | (11 | ) | (3 | ) | ||||||||||||||
INTEREST EXPENSE | |||||||||||||||||||||||||||
Interest on deposits | 11 | 12 | 13 | 15 | 15 | (1 | ) | (8 | ) | (4 | ) | (25 | ) | ||||||||||||||
Interest on medium- and long-term debt | 14 | 14 | 14 | 14 | 15 | — | — | (1 | ) | (13 | ) | ||||||||||||||||
Total interest expense | 25 | 26 | 27 | 29 | 30 | (1 | ) | (4 | ) | (5 | ) | (19 | ) | ||||||||||||||
Net interest income | 410 | 430 | 412 | 414 | 416 | (20 | ) | (5 | ) | (6 | ) | (1 | ) | ||||||||||||||
Provision for credit losses | 9 | 9 | 8 | 13 | 16 | — | — | (7 | ) | (43 | ) | ||||||||||||||||
Net interest income after provision for credit losses | 401 | 421 | 404 | 401 | 400 | (20 | ) | (5 | ) | 1 | — | ||||||||||||||||
NONINTEREST INCOME | |||||||||||||||||||||||||||
Service charges on deposit accounts | 54 | 53 | 53 | 53 | 55 | 1 | 2 | (1 | ) | (2 | ) | ||||||||||||||||
Fiduciary income | 44 | 43 | 41 | 44 | 43 | 1 | 4 | 1 | 4 | ||||||||||||||||||
Commercial lending fees | 20 | 28 | 28 | 22 | 21 | (8 | ) | (27 | ) | (1 | ) | (7 | ) | ||||||||||||||
Card fees | 19 | 19 | 20 | 18 | 17 | — | — | 2 | 15 | ||||||||||||||||||
Letter of credit fees | 14 | 15 | 17 | 16 | 16 | (1 | ) | (6 | ) | (2 | ) | (12 | ) | ||||||||||||||
Bank-owned life insurance | 9 | 9 | 12 | 10 | 9 | — | — | — | — | ||||||||||||||||||
Foreign exchange income | 9 | 9 | 9 | 9 | 9 | — | — | — | — | ||||||||||||||||||
Brokerage fees | 5 | 4 | 4 | 4 | 5 | 1 | 11 | — | — | ||||||||||||||||||
Net securities gains (losses) | 1 | — | 1 | (2 | ) | — | 1 | N/M | 1 | N/M | |||||||||||||||||
Other noninterest income | 33 | 39 | 43 | 48 | 38 | (6 | ) | (19 | ) | (5 | ) | (16 | ) | ||||||||||||||
Total noninterest income | 208 | 219 | 228 | 222 | 213 | (11 | ) | (5 | ) | (5 | ) | (2 | ) | ||||||||||||||
NONINTEREST EXPENSES | |||||||||||||||||||||||||||
Salaries and benefits expense | 247 | 258 | 255 | 245 | 251 | (11 | ) | (4 | ) | (4 | ) | (2 | ) | ||||||||||||||
Net occupancy expense | 40 | 41 | 41 | 39 | 39 | (1 | ) | (2 | ) | 1 | 3 | ||||||||||||||||
Equipment expense | 14 | 15 | 15 | 15 | 15 | (1 | ) | (5 | ) | (1 | ) | (5 | ) | ||||||||||||||
Outside processing fee expense | 28 | 30 | 31 | 30 | 28 | (2 | ) | (4 | ) | — | — | ||||||||||||||||
Software expense | 22 | 24 | 22 | 22 | 22 | (2 | ) | (7 | ) | — | — | ||||||||||||||||
Litigation-related expense | 3 | 52 | (4 | ) | 1 | 3 | (49 | ) | (94 | ) | — | — | |||||||||||||||
FDIC insurance expense | 8 | 7 | 9 | 8 | 9 | 1 | 10 | (1 | ) | (14 | ) | ||||||||||||||||
Advertising expense | 6 | 3 | 6 | 6 | 6 | 3 | 77 | — | — | ||||||||||||||||||
Other noninterest expenses | 38 | 43 | 42 | 50 | 43 | (5 | ) | (13 | ) | (5 | ) | (13 | ) | ||||||||||||||
Total noninterest expenses | 406 | 473 | 417 | 416 | 416 | (67 | ) | (14 | ) | (10 | ) | (2 | ) | ||||||||||||||
Income before income taxes | 203 | 167 | 215 | 207 | 197 | 36 | 21 | 6 | 3 | ||||||||||||||||||
Provision for income taxes | 64 | 50 | 68 | 64 | 63 | 14 | 27 | 1 | 1 | ||||||||||||||||||
NET INCOME | 139 | 117 | 147 | 143 | 134 | 22 | 19 | 5 | 4 | ||||||||||||||||||
Less income allocated to participating securities | 2 | 2 | 2 | 2 | 2 | — | — | — | — | ||||||||||||||||||
Net income attributable to common shares | $ | 137 | $ | 115 | $ | 145 | $ | 141 | $ | 132 | $ | 22 | 19 | % | $ | 5 | 4 | % | |||||||||
Earnings per common share: | |||||||||||||||||||||||||||
Basic | $ | 0.76 | $ | 0.64 | $ | 0.80 | $ | 0.77 | $ | 0.71 | $ | 0.12 | 19 | % | $ | 0.05 | 7 | % | |||||||||
Diluted | 0.73 | 0.62 | 0.78 | 0.76 | 0.70 | 0.11 | 18 | 0.03 | 4 | ||||||||||||||||||
Comprehensive income | 205 | 267 | 144 | 15 | 137 | (62 | ) | (23 | ) | 68 | 49 | ||||||||||||||||
Cash dividends declared on common stock | 35 | 31 | 31 | 32 | 32 | 4 | 11 | 3 | 9 | ||||||||||||||||||
Cash dividends declared per common share | 0.19 | 0.17 | 0.17 | 0.17 | 0.17 | 0.02 | 12 | 0.02 | 12 | ||||||||||||||||||
N/M - Not Meaningful
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ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited) | ||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||
2014 | 2013 | |||||||||||||||
(in millions) | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | |||||||||||
Balance at beginning of period | $ | 598 | $ | 604 | $ | 613 | $ | 617 | $ | 629 | ||||||
Loan charge-offs: | ||||||||||||||||
Commercial | 19 | 31 | 20 | 19 | 21 | |||||||||||
Real estate construction: | ||||||||||||||||
Commercial Real Estate business line (a) | — | — | 1 | 2 | — | |||||||||||
Commercial mortgage: | ||||||||||||||||
Commercial Real Estate business line (a) | 5 | 1 | 6 | 2 | 1 | |||||||||||
Other business lines (b) | 3 | 4 | 3 | 7 | 12 | |||||||||||
Total commercial mortgage | 8 | 5 | 9 | 9 | 13 | |||||||||||
Residential mortgage | — | 1 | 1 | 1 | 1 | |||||||||||
Consumer | 3 | 4 | 8 | 4 | 3 | |||||||||||
Total loan charge-offs | 30 | 41 | 39 | 35 | 38 | |||||||||||
Recoveries on loans previously charged-off: | ||||||||||||||||
Commercial | 11 | 17 | 8 | 11 | 6 | |||||||||||
Real estate construction | — | 3 | 2 | 1 | 1 | |||||||||||
Commercial mortgage | 3 | 5 | 7 | 3 | 5 | |||||||||||
Lease financing | 2 | — | 1 | — | — | |||||||||||
Residential mortgage | — | 1 | 1 | 1 | 1 | |||||||||||
Consumer | 2 | 2 | 1 | 2 | 1 | |||||||||||
Total recoveries | 18 | 28 | 20 | 18 | 14 | |||||||||||
Net loan charge-offs | 12 | 13 | 19 | 17 | 24 | |||||||||||
Provision for loan losses | 8 | 7 | 10 | 13 | 12 | |||||||||||
Balance at end of period | $ | 594 | $ | 598 | $ | 604 | $ | 613 | $ | 617 | ||||||
Allowance for loan losses as a percentage of total loans | 1.28 | % | 1.32 | % | 1.37 | % | 1.35 | % | 1.37 | % | ||||||
Net loan charge-offs as a percentage of average total loans | 0.10 | 0.12 | 0.18 | 0.15 | 0.21 | |||||||||||
(a) | Primarily charge-offs of loans to real estate developers. |
(b) | Primarily charge-offs of loans secured by owner-occupied real estate. |
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited) | ||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||
2014 | 2013 | |||||||||||||||
(in millions) | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | |||||||||||
Balance at beginning of period | $ | 36 | $ | 34 | $ | 36 | $ | 36 | $ | 32 | ||||||
Add: Provision for credit losses on lending-related commitments | 1 | 2 | (2 | ) | — | 4 | ||||||||||
Balance at end of period | $ | 37 | $ | 36 | $ | 34 | $ | 36 | $ | 36 | ||||||
Unfunded lending-related commitments sold | $ | — | $ | 1 | $ | 2 | $ | 1 | $ | 2 | ||||||
14
NONPERFORMING ASSETS (unaudited) | ||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||
2014 | 2013 | |||||||||||||||
(in millions) | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | |||||||||||
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS | ||||||||||||||||
Nonaccrual loans: | ||||||||||||||||
Business loans: | ||||||||||||||||
Commercial | $ | 54 | $ | 81 | $ | 107 | $ | 102 | $ | 102 | ||||||
Real estate construction: | ||||||||||||||||
Commercial Real Estate business line (a) | 18 | 20 | 24 | 26 | 30 | |||||||||||
Other business lines (b) | 1 | 1 | 1 | 2 | 3 | |||||||||||
Total real estate construction | 19 | 21 | 25 | 28 | 33 | |||||||||||
Commercial mortgage: | ||||||||||||||||
Commercial Real Estate business line (a) | 58 | 51 | 67 | 69 | 86 | |||||||||||
Other business lines (b) | 104 | 105 | 139 | 157 | 178 | |||||||||||
Total commercial mortgage | 162 | 156 | 206 | 226 | 264 | |||||||||||
International | — | 4 | — | — | — | |||||||||||
Total nonaccrual business loans | 235 | 262 | 338 | 356 | 399 | |||||||||||
Retail loans: | ||||||||||||||||
Residential mortgage | 48 | 53 | 63 | 62 | 65 | |||||||||||
Consumer: | ||||||||||||||||
Home equity | 32 | 33 | 34 | 28 | 28 | |||||||||||
Other consumer | 2 | 2 | 2 | 3 | 2 | |||||||||||
Total consumer | 34 | 35 | 36 | 31 | 30 | |||||||||||
Total nonaccrual retail loans | 82 | 88 | 99 | 93 | 95 | |||||||||||
Total nonaccrual loans | 317 | 350 | 437 | 449 | 494 | |||||||||||
Reduced-rate loans | 21 | 24 | 22 | 22 | 21 | |||||||||||
Total nonperforming loans (c) | 338 | 374 | 459 | 471 | 515 | |||||||||||
Foreclosed property | 14 | 9 | 19 | 29 | 40 | |||||||||||
Total nonperforming assets (c) | $ | 352 | $ | 383 | $ | 478 | $ | 500 | $ | 555 | ||||||
Nonperforming loans as a percentage of total loans | 0.73 | % | 0.82 | % | 1.04 | % | 1.04 | % | 1.14 | % | ||||||
Nonperforming assets as a percentage of total loans and foreclosed property | 0.76 | 0.84 | 1.08 | 1.10 | 1.23 | |||||||||||
Allowance for loan losses as a percentage of total nonperforming loans | 176 | 160 | 131 | 130 | 120 | |||||||||||
Loans past due 90 days or more and still accruing | $ | 10 | $ | 16 | $ | 25 | $ | 20 | $ | 25 | ||||||
ANALYSIS OF NONACCRUAL LOANS | ||||||||||||||||
Nonaccrual loans at beginning of period | $ | 350 | $ | 437 | $ | 449 | $ | 494 | $ | 519 | ||||||
Loans transferred to nonaccrual (d) | 19 | 23 | 50 | 37 | 34 | |||||||||||
Nonaccrual business loan gross charge-offs (e) | (27 | ) | (33 | ) | (25 | ) | (25 | ) | (34 | ) | ||||||
Nonaccrual business loans sold (f) | (3 | ) | (14 | ) | (17 | ) | (9 | ) | (7 | ) | ||||||
Payments/Other (g) | (22 | ) | (63 | ) | (20 | ) | (48 | ) | (18 | ) | ||||||
Nonaccrual loans at end of period | $ | 317 | $ | 350 | $ | 437 | $ | 449 | $ | 494 | ||||||
(a) Primarily loans to real estate developers. | ||||||||||||||||
(b) Primarily loans secured by owner-occupied real estate. | ||||||||||||||||
(c) Excludes loans acquired with credit impairment. | ||||||||||||||||
(d) Based on an analysis of nonaccrual loans with book balances greater than $2 million. | ||||||||||||||||
(e) Analysis of gross loan charge-offs: | ||||||||||||||||
Nonaccrual business loans | $ | 27 | $ | 33 | $ | 25 | $ | 25 | $ | 34 | ||||||
Performing criticized loans | — | 3 | 5 | 5 | — | |||||||||||
Consumer and residential mortgage loans | 3 | 5 | 9 | 5 | 4 | |||||||||||
Total gross loan charge-offs | $ | 30 | $ | 41 | $ | 39 | $ | 35 | $ | 38 | ||||||
(f) Analysis of loans sold: | ||||||||||||||||
Nonaccrual business loans | $ | 3 | $ | 14 | $ | 17 | $ | 9 | $ | 7 | ||||||
Performing criticized loans | 6 | 22 | 31 | 40 | 12 | |||||||||||
Total criticized loans sold | $ | 9 | $ | 36 | $ | 48 | $ | 49 | $ | 19 | ||||||
(g) Includes net changes related to nonaccrual loans with balances less than $2 million, payments on nonaccrual loans with book balances greater than $2 million and transfers of nonaccrual loans to foreclosed property. Excludes business loan gross charge-offs and business nonaccrual loans sold. | ||||||||||||||||
15
ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited) | ||||||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||
March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | |||||||||||||||||||||
(dollar amounts in millions) | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||
Commercial loans | $ | 28,362 | $ | 221 | 3.17 | % | $ | 27,683 | $ | 228 | 3.26 | % | $ | 28,056 | $ | 229 | 3.31 | % | ||||||||
Real estate construction loans | 1,827 | 15 | 3.40 | 1,652 | 15 | 3.50 | 1,314 | 13 | 4.15 | |||||||||||||||||
Commercial mortgage loans | 8,770 | 86 | 3.97 | 8,714 | 101 | 4.62 | 9,398 | 95 | 4.08 | |||||||||||||||||
Lease financing | 848 | 9 | 4.07 | 838 | 7 | 3.27 | 857 | 7 | 3.23 | |||||||||||||||||
International loans | 1,301 | 12 | 3.68 | 1,303 | 12 | 3.78 | 1,282 | 11 | 3.62 | |||||||||||||||||
Residential mortgage loans | 1,724 | 17 | 3.86 | 1,679 | 17 | 3.97 | 1,556 | 17 | 4.39 | |||||||||||||||||
Consumer loans | 2,243 | 17 | 3.16 | 2,185 | 18 | 3.24 | 2,154 | 18 | 3.36 | |||||||||||||||||
Total loans (a) | 45,075 | 377 | 3.39 | 44,054 | 398 | 3.58 | 44,617 | 390 | 3.54 | |||||||||||||||||
Mortgage-backed securities available-for-sale | 8,911 | 55 | 2.42 | 8,969 | 55 | 2.46 | 9,635 | 53 | 2.25 | |||||||||||||||||
Other investment securities available-for-sale | 371 | — | 0.43 | 396 | — | 0.45 | 386 | — | 0.50 | |||||||||||||||||
Total investment securities available-for-sale | 9,282 | 55 | 2.34 | 9,365 | 55 | 2.37 | 10,021 | 53 | 2.17 | |||||||||||||||||
Interest-bearing deposits with banks (b) | 5,448 | 4 | 0.26 | 6,400 | 4 | 0.26 | 3,852 | 2 | 0.27 | |||||||||||||||||
Other short-term investments | 111 | — | 0.66 | 105 | — | 0.69 | 117 | 1 | 2.30 | |||||||||||||||||
Total earning assets | 59,916 | 436 | 2.94 | 59,924 | 457 | 3.03 | 58,607 | 446 | 3.09 | |||||||||||||||||
Cash and due from banks | 913 | 970 | 979 | |||||||||||||||||||||||
Allowance for loan losses | (603 | ) | (609 | ) | (633 | ) | ||||||||||||||||||||
Accrued income and other assets | 4,482 | 4,320 | 4,498 | |||||||||||||||||||||||
Total assets | $ | 64,708 | $ | 64,605 | $ | 63,451 | ||||||||||||||||||||
Money market and interest-bearing checking deposits | $ | 22,261 | 6 | 0.11 | $ | 22,030 | 6 | 0.12 | $ | 21,294 | 7 | 0.14 | ||||||||||||||
Savings deposits | 1,700 | — | 0.03 | 1,667 | — | 0.03 | 1,623 | — | 0.03 | |||||||||||||||||
Customer certificates of deposit | 5,109 | 5 | 0.36 | 5,078 | 5 | 0.38 | 5,744 | 7 | 0.47 | |||||||||||||||||
Foreign office time deposits | 464 | — | 0.42 | 462 | 1 | 0.47 | 525 | 1 | 0.55 | |||||||||||||||||
Total interest-bearing deposits | 29,534 | 11 | 0.15 | 29,237 | 12 | 0.17 | 29,186 | 15 | 0.21 | |||||||||||||||||
Short-term borrowings | 185 | — | 0.03 | 279 | — | 0.06 | 123 | — | 0.11 | |||||||||||||||||
Medium- and long-term debt | 3,545 | 14 | 1.53 | 3,563 | 14 | 1.53 | 4,707 | 15 | 1.32 | |||||||||||||||||
Total interest-bearing sources | 33,264 | 25 | 0.30 | 33,079 | 26 | 0.31 | 34,016 | 30 | 0.36 | |||||||||||||||||
Noninterest-bearing deposits | 23,236 | 23,532 | 21,506 | |||||||||||||||||||||||
Accrued expenses and other liabilities | 979 | 984 | 973 | |||||||||||||||||||||||
Total shareholders' equity | 7,229 | 7,010 | 6,956 | |||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 64,708 | $ | 64,605 | $ | 63,451 | ||||||||||||||||||||
Net interest income/rate spread (FTE) | $ | 411 | 2.64 | $ | 431 | 2.72 | $ | 416 | 2.73 | |||||||||||||||||
FTE adjustment | $ | 1 | $ | 1 | $ | — | ||||||||||||||||||||
Impact of net noninterest-bearing sources of funds | 0.13 | 0.14 | 0.15 | |||||||||||||||||||||||
Net interest margin (as a percentage of average earning assets) (FTE) (a) (b) | 2.77 | % | 2.86 | % | 2.88 | % | ||||||||||||||||||||
(a) Accretion of the purchase discount on the acquired loan portfolio of $12 million, $23 million and $11 million in the first quarter of 2014 and the fourth and first quarters of 2013, respectively, increased the net interest margin by 8 basis points, 15 basis points and 8 basis points in each respective period.
(b) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 24 basis points, 31 basis points and 17 basis points in the first quarter of 2014 and the fourth and first quarters of 2013, respectively.
16
CONSOLIDATED STATISTICAL DATA (unaudited) | |||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||
(in millions, except per share data) | 2014 | 2013 | 2013 | 2013 | 2013 | ||||||||||
Commercial loans: | |||||||||||||||
Floor plan | $ | 3,437 | $ | 3,504 | $ | 2,869 | $ | 3,241 | $ | 2,963 | |||||
Other | 26,337 | 25,311 | 25,028 | 25,945 | 25,545 | ||||||||||
Total commercial loans | 29,774 | 28,815 | 27,897 | 29,186 | 28,508 | ||||||||||
Real estate construction loans: | |||||||||||||||
Commercial Real Estate business line (a) | 1,507 | 1,447 | 1,283 | 1,223 | 1,185 | ||||||||||
Other business lines (b) | 340 | 315 | 269 | 256 | 211 | ||||||||||
Total real estate construction loans | 1,847 | 1,762 | 1,552 | 1,479 | 1,396 | ||||||||||
Commercial mortgage loans: | |||||||||||||||
Commercial Real Estate business line (a) | 1,820 | 1,678 | 1,592 | 1,743 | 1,812 | ||||||||||
Other business lines (b) | 6,981 | 7,109 | 7,193 | 7,264 | 7,505 | ||||||||||
Total commercial mortgage loans | 8,801 | 8,787 | 8,785 | 9,007 | 9,317 | ||||||||||
Lease financing | 849 | 845 | 829 | 843 | 853 | ||||||||||
International loans | 1,250 | 1,327 | 1,286 | 1,209 | 1,269 | ||||||||||
Residential mortgage loans | 1,751 | 1,697 | 1,650 | 1,611 | 1,568 | ||||||||||
Consumer loans: | |||||||||||||||
Home equity | 1,533 | 1,517 | 1,501 | 1,474 | 1,498 | ||||||||||
Other consumer | 684 | 720 | 651 | 650 | 658 | ||||||||||
Total consumer loans | 2,217 | 2,237 | 2,152 | 2,124 | 2,156 | ||||||||||
Total loans | $ | 46,489 | $ | 45,470 | $ | 44,151 | $ | 45,459 | $ | 45,067 | |||||
Goodwill | $ | 635 | $ | 635 | $ | 635 | $ | 635 | $ | 635 | |||||
Core deposit intangible | 15 | 16 | 17 | 18 | 19 | ||||||||||
Loan servicing rights | 1 | 1 | 1 | 2 | 2 | ||||||||||
Tier 1 common capital ratio (c) (d) | 10.54 | % | 10.64 | % | 10.72 | % | 10.43 | % | 10.37 | % | |||||
Tier 1 risk-based capital ratio (c) | 10.54 | 10.64 | 10.72 | 10.43 | 10.37 | ||||||||||
Total risk-based capital ratio (c) | 12.95 | 13.10 | 13.42 | 13.29 | 13.41 | ||||||||||
Leverage ratio (c) | 10.85 | 10.77 | 10.88 | 10.81 | 10.75 | ||||||||||
Tangible common equity ratio (d) | 10.20 | 10.07 | 9.87 | 10.04 | 9.86 | ||||||||||
Common shareholders' equity per share of common stock | $ | 40.09 | $ | 39.23 | $ | 37.94 | $ | 37.32 | $ | 37.41 | |||||
Tangible common equity per share of common stock (d) | 36.50 | 35.65 | 34.38 | 33.79 | 33.90 | ||||||||||
Market value per share for the quarter: | |||||||||||||||
High | 53.50 | 48.69 | 43.49 | 40.44 | 36.99 | ||||||||||
Low | 43.96 | 38.64 | 38.56 | 33.55 | 30.73 | ||||||||||
Close | 51.80 | 47.54 | 39.31 | 39.83 | 35.95 | ||||||||||
Quarterly ratios: | |||||||||||||||
Return on average common shareholders' equity | 7.68 | % | 6.66 | % | 8.50 | % | 8.23 | % | 7.68 | % | |||||
Return on average assets | 0.86 | 0.72 | 0.92 | 0.90 | 0.84 | ||||||||||
Efficiency ratio (e) | 65.79 | 72.81 | 65.18 | 65.03 | 66.15 | ||||||||||
Number of banking centers | 483 | 483 | 484 | 484 | 487 | ||||||||||
Number of employees - full time equivalent | 8,907 | 8,948 | 8,918 | 8,929 | 9,001 | ||||||||||
(a) | Primarily loans to real estate developers. |
(b) | Primarily loans secured by owner-occupied real estate. |
(c) | March 31, 2014 ratios are estimated. |
(d) | See Reconciliation of Non-GAAP Financial Measures. |
(e) | Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains. |
17
PARENT COMPANY ONLY BALANCE SHEETS (unaudited) | |||||||||
Comerica Incorporated | |||||||||
March 31, | December 31, | March 31, | |||||||
(in millions, except share data) | 2014 | 2013 | 2013 | ||||||
ASSETS | |||||||||
Cash and due from subsidiary bank | $ | 5 | $ | 31 | $ | 23 | |||
Short-term investments with subsidiary bank | 531 | 482 | 450 | ||||||
Other short-term investments | 97 | 96 | 91 | ||||||
Investment in subsidiaries, principally banks | 7,276 | 7,174 | 7,054 | ||||||
Premises and equipment | 3 | 4 | 4 | ||||||
Other assets | 156 | 139 | 156 | ||||||
Total assets | $ | 8,068 | $ | 7,926 | $ | 7,778 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Medium- and long-term debt | $ | 614 | $ | 617 | $ | 626 | |||
Other liabilities | 171 | 156 | 164 | ||||||
Total liabilities | 785 | 773 | 790 | ||||||
Common stock - $5 par value: | |||||||||
Authorized - 325,000,000 shares | |||||||||
Issued - 228,164,824 shares | 1,141 | 1,141 | 1,141 | ||||||
Capital surplus | 2,182 | 2,179 | 2,157 | ||||||
Accumulated other comprehensive loss | (325 | ) | (391 | ) | (410 | ) | |||
Retained earnings | 6,414 | 6,321 | 6,020 | ||||||
Less cost of common stock in treasury - 46,492,524 shares at 3/31/14, 45,860,786 shares at 12/31/13 and 41,361,612 shares at 3/31/13 | (2,129 | ) | (2,097 | ) | (1,920 | ) | |||
Total shareholders' equity | 7,283 | 7,153 | 6,988 | ||||||
Total liabilities and shareholders' equity | $ | 8,068 | $ | 7,926 | $ | 7,778 | |||
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, 2012 | 188.3 | $ | 1,141 | $ | 2,162 | $ | (413 | ) | $ | 5,931 | $ | (1,879 | ) | $ | 6,942 | |||||
Net income | — | — | — | — | 134 | — | 134 | |||||||||||||
Other comprehensive income, net of tax | — | — | — | 3 | — | — | 3 | |||||||||||||
Cash dividends declared on common stock ($0.17 per share) | — | — | — | — | (32 | ) | — | (32 | ) | |||||||||||
Purchase of common stock | (2.2 | ) | — | — | — | — | (74 | ) | (74 | ) | ||||||||||
Net issuance of common stock under employee stock plans | 0.7 | — | (15 | ) | — | (13 | ) | 33 | 5 | |||||||||||
Share-based compensation | — | — | 10 | — | — | — | 10 | |||||||||||||
BALANCE AT MARCH 31, 2013 | 186.8 | $ | 1,141 | $ | 2,157 | $ | (410 | ) | $ | 6,020 | $ | (1,920 | ) | $ | 6,988 | |||||
BALANCE AT DECEMBER 31, 2013 | 182.3 | $ | 1,141 | $ | 2,179 | $ | (391 | ) | $ | 6,321 | $ | (2,097 | ) | $ | 7,153 | |||||
Cumulative effect of adoption of new accounting principle | — | — | — | — | (3 | ) | — | (3 | ) | |||||||||||
Net income | — | — | — | — | 139 | — | 139 | |||||||||||||
Other comprehensive income, net of tax | — | — | — | 66 | — | — | 66 | |||||||||||||
Cash dividends declared on common stock ($0.19 per share) | — | — | — | — | (35 | ) | — | (35 | ) | |||||||||||
Purchase of common stock | (1.7 | ) | — | — | — | — | (80 | ) | (80 | ) | ||||||||||
Net issuance of common stock under employee stock plans | 1.1 | — | (11 | ) | — | (8 | ) | 48 | 29 | |||||||||||
Share-based compensation | — | — | 14 | — | — | — | 14 | |||||||||||||
BALANCE AT MARCH 31, 2014 | 181.7 | $ | 1,141 | $ | 2,182 | $ | (325 | ) | $ | 6,414 | $ | (2,129 | ) | $ | 7,283 | |||||
18
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited) | |||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||
(dollar amounts in millions) | Business | Retail | Wealth | ||||||||||||||||||||
Three Months Ended March 31, 2014 | Bank | Bank | Management | Finance | Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 371 | $ | 146 | $ | 46 | $ | (158 | ) | $ | 6 | $ | 411 | ||||||||||
Provision for credit losses | 16 | 2 | (8 | ) | — | (1 | ) | 9 | |||||||||||||||
Noninterest income | 87 | 41 | 64 | 14 | 2 | 208 | |||||||||||||||||
Noninterest expenses | 146 | 171 | 78 | 3 | 8 | 406 | |||||||||||||||||
Provision (benefit) for income taxes (FTE) | 98 | 5 | 14 | (55 | ) | 3 | 65 | ||||||||||||||||
Net income (loss) | $ | 198 | $ | 9 | $ | 26 | $ | (92 | ) | $ | (2 | ) | $ | 139 | |||||||||
Net credit-related charge-offs (recoveries) | $ | 11 | $ | 4 | $ | (3 | ) | $ | — | $ | — | $ | 12 | ||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 35,896 | $ | 6,052 | $ | 4,939 | $ | 11,129 | $ | 6,692 | $ | 64,708 | |||||||||||
Loans | 34,927 | 5,381 | 4,767 | — | — | 45,075 | |||||||||||||||||
Deposits | 27,023 | 21,361 | 3,816 | 353 | 217 | 52,770 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 2.20 | % | 0.16 | % | 2.15 | % | N/M | N/M | 0.86 | % | |||||||||||||
Efficiency ratio (b) | 31.96 | 91.44 | 71.31 | N/M | N/M | 65.79 | |||||||||||||||||
Business | Retail | Wealth | |||||||||||||||||||||
Three Months Ended December 31, 2013 | Bank | Bank | Management | Finance | Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 387 | $ | 150 | $ | 47 | $ | (161 | ) | $ | 8 | $ | 431 | ||||||||||
Provision for credit losses | 24 | (8 | ) | (9 | ) | — | 2 | 9 | |||||||||||||||
Noninterest income | 95 | 43 | 61 | 14 | 6 | 219 | |||||||||||||||||
Noninterest expenses | 198 | 178 | 80 | 2 | 15 | 473 | |||||||||||||||||
Provision (benefit) for income taxes (FTE) | 90 | 8 | 13 | (57 | ) | (3 | ) | 51 | |||||||||||||||
Net income (loss) | $ | 170 | $ | 15 | $ | 24 | $ | (92 | ) | $ | — | $ | 117 | ||||||||||
Net credit-related charge-offs | $ | 6 | $ | 4 | $ | 3 | $ | — | $ | — | $ | 13 | |||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 35,042 | $ | 5,997 | $ | 4,873 | $ | 11,032 | $ | 7,661 | $ | 64,605 | |||||||||||
Loans | 34,020 | 5,323 | 4,711 | — | — | 44,054 | |||||||||||||||||
Deposits | 26,873 | 21,438 | 3,933 | 323 | 202 | 52,769 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.94 | % | 0.27 | % | 1.93 | % | N/M | N/M | 0.72 | % | |||||||||||||
Efficiency ratio (b) | 40.97 | 92.27 | 74.64 | N/M | N/M | 72.81 | |||||||||||||||||
Business | Retail | Wealth | |||||||||||||||||||||
Three Months Ended March 31, 2013 | Bank | Bank | Management | Finance | Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 375 | $ | 155 | $ | 46 | $ | (167 | ) | 7 | $ | 416 | |||||||||||
Provision for credit losses | 20 | 6 | (6 | ) | — | (4 | ) | 16 | |||||||||||||||
Noninterest income | 90 | 41 | 65 | 14 | 3 | 213 | |||||||||||||||||
Noninterest expenses | 146 | 175 | 79 | 3 | 13 | 416 | |||||||||||||||||
Provision (benefit) for income taxes (FTE) | 101 | 5 | 13 | (58 | ) | 2 | 63 | ||||||||||||||||
Net income (loss) | $ | 198 | $ | 10 | $ | 25 | $ | (98 | ) | $ | (1 | ) | $ | 134 | |||||||||
Net credit-related charge-offs | $ | 16 | $ | 8 | $ | — | $ | — | $ | — | $ | 24 | |||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 35,780 | $ | 5,973 | $ | 4,738 | $ | 11,747 | $ | 5,213 | $ | 63,451 | |||||||||||
Loans | 34,753 | 5,276 | 4,588 | — | — | 44,617 | |||||||||||||||||
Deposits | 25,514 | 21,049 | 3,682 | 275 | 172 | 50,692 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 2.21 | % | 0.18 | % | 2.12 | % | N/M | N/M | 0.84 | % | |||||||||||||
Efficiency ratio (b) | 31.38 | 89.37 | 71.09 | N/M | N/M | 66.15 | |||||||||||||||||
(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
19
MARKET SEGMENT FINANCIAL RESULTS (unaudited) | |||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||
(dollar amounts in millions) | Other | Finance | |||||||||||||||||||||
Three Months Ended March 31, 2014 | Michigan | California | Texas | Markets | & Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 183 | $ | 172 | $ | 136 | $ | 72 | $ | (152 | ) | $ | 411 | ||||||||||
Provision for credit losses | 3 | 11 | 6 | (10 | ) | (1 | ) | 9 | |||||||||||||||
Noninterest income | 87 | 34 | 31 | 40 | 16 | 208 | |||||||||||||||||
Noninterest expenses | 161 | 96 | 90 | 48 | 11 | 406 | |||||||||||||||||
Provision (benefit) for income taxes (FTE) | 38 | 36 | 25 | 18 | (52 | ) | 65 | ||||||||||||||||
Net income (loss) | $ | 68 | $ | 63 | $ | 46 | $ | 56 | $ | (94 | ) | $ | 139 | ||||||||||
Net credit-related charge-offs (recoveries) | $ | — | $ | 10 | $ | 6 | $ | (4 | ) | $ | — | $ | 12 | ||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 13,819 | $ | 15,133 | $ | 11,070 | $ | 6,865 | $ | 17,821 | $ | 64,708 | |||||||||||
Loans | 13,473 | 14,824 | 10,364 | 6,414 | — | 45,075 | |||||||||||||||||
Deposits | 20,642 | 14,782 | 10,875 | 5,901 | 570 | 52,770 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.26 | % | 1.59 | % | 1.50 | % | 3.28 | % | N/M | 0.86 | % | ||||||||||||
Efficiency ratio (b) | 59.71 | 46.72 | 53.83 | 43.39 | N/M | 65.79 | |||||||||||||||||
Other | Finance | ||||||||||||||||||||||
Three Months Ended December 31, 2013 | Michigan | California | Texas | Markets | & Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 187 | $ | 176 | $ | 147 | $ | 74 | $ | (153 | ) | $ | 431 | ||||||||||
Provision for credit losses | 7 | (8 | ) | 5 | 3 | 2 | 9 | ||||||||||||||||
Noninterest income | 89 | 37 | 33 | 40 | 20 | 219 | |||||||||||||||||
Noninterest expenses | 218 | 98 | 91 | 49 | 17 | 473 | |||||||||||||||||
Provision (benefit) for income taxes (FTE) | 19 | 46 | 31 | 15 | (60 | ) | 51 | ||||||||||||||||
Net income (loss) | $ | 32 | $ | 77 | $ | 53 | $ | 47 | $ | (92 | ) | $ | 117 | ||||||||||
Net credit-related charge-offs (recoveries) | $ | (4 | ) | $ | (2 | ) | $ | 13 | $ | 6 | $ | — | $ | 13 | |||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 13,712 | $ | 14,710 | $ | 10,458 | $ | 7,032 | $ | 18,693 | $ | 64,605 | |||||||||||
Loans | 13,323 | 14,431 | 9,766 | 6,534 | — | 44,054 | |||||||||||||||||
Deposits | 20,501 | 15,219 | 10,536 | 5,988 | 525 | 52,769 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 0.59 | % | 1.90 | % | 1.80 | % | 2.68 | % | N/M | 0.72 | % | ||||||||||||
Efficiency ratio (b) | 79.04 | 46.11 | 50.84 | 42.34 | N/M | 72.81 | |||||||||||||||||
Other | Finance | ||||||||||||||||||||||
Three Months Ended March 31, 2013 | Michigan | California | Texas | Markets | & Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 190 | $ | 171 | $ | 134 | $ | 81 | $ | (160 | ) | $ | 416 | ||||||||||
Provision for credit losses | (7 | ) | 21 | 8 | (2 | ) | (4 | ) | 16 | ||||||||||||||
Noninterest income | 92 | 35 | 31 | 38 | 17 | 213 | |||||||||||||||||
Noninterest expenses | 168 | 97 | 91 | 44 | 16 | 416 | |||||||||||||||||
Provision (benefit) for income taxes (FTE) | 43 | 32 | 23 | 21 | (56 | ) | 63 | ||||||||||||||||
Net income (loss) | $ | 78 | $ | 56 | $ | 43 | $ | 56 | $ | (99 | ) | $ | 134 | ||||||||||
Net credit-related charge-offs | $ | 5 | $ | 10 | $ | 6 | $ | 3 | $ | — | $ | 24 | |||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 14,042 | $ | 13,795 | $ | 10,795 | $ | 7,859 | $ | 16,960 | $ | 63,451 | |||||||||||
Loans | 13,650 | 13,542 | 10,071 | 7,354 | — | 44,617 | |||||||||||||||||
Deposits | 20,254 | 14,356 | 9,959 | 5,676 | 447 | 50,692 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.47 | % | 1.45 | % | 1.54 | % | 2.86 | % | N/M | 0.84 | % | ||||||||||||
Efficiency ratio (b) | 59.53 | 47.04 | 54.99 | 37.41 | N/M | 66.15 | |||||||||||||||||
(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
20
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited) | |||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||
(dollar amounts in millions) | 2014 | 2013 | 2013 | 2013 | 2013 | ||||||||||
Tier 1 Common Capital Ratio: | |||||||||||||||
Tier 1 and Tier 1 common capital (a) (b) | $ | 6,961 | $ | 6,895 | $ | 6,862 | $ | 6,800 | $ | 6,748 | |||||
Risk-weighted assets (a) (b) | 66,051 | 64,825 | 64,027 | 65,220 | 65,099 | ||||||||||
Tier 1 and Tier 1 common risk-based capital ratio (b) | 10.54 | % | 10.64 | % | 10.72 | % | 10.43 | % | 10.37 | % | |||||
Basel III Common Equity Tier 1 Capital Ratio: | |||||||||||||||
Tier 1 common capital (b) | $ | 6,961 | $ | 6,895 | $ | 6,862 | $ | 6,800 | $ | 6,748 | |||||
Basel III adjustments (c) | (3 | ) | (6 | ) | (4 | ) | — | (1 | ) | ||||||
Basel III common equity Tier 1 capital (c) | 6,958 | 6,889 | 6,858 | 6,800 | 6,747 | ||||||||||
Risk-weighted assets (a) (b) | $ | 66,051 | $ | 64,825 | $ | 64,027 | $ | 65,220 | $ | 65,099 | |||||
Basel III adjustments (c) | 1,603 | 1,754 | 1,726 | 2,091 | 1,996 | ||||||||||
Basel III risk-weighted assets (c) | $ | 67,654 | $ | 66,579 | $ | 65,753 | $ | 67,311 | $ | 67,095 | |||||
Tier 1 common capital ratio (b) | 10.5 | % | 10.6 | % | 10.7 | % | 10.4 | % | 10.4 | % | |||||
Basel III common equity Tier 1 capital ratio (c) | 10.3 | 10.3 | 10.4 | 10.1 | 10.1 | ||||||||||
Tangible Common Equity Ratio: | |||||||||||||||
Common shareholders' equity | $ | 7,283 | $ | 7,153 | $ | 6,969 | $ | 6,911 | $ | 6,988 | |||||
Less: | |||||||||||||||
Goodwill | 635 | 635 | 635 | 635 | 635 | ||||||||||
Other intangible assets | 16 | 17 | 18 | 20 | 21 | ||||||||||
Tangible common equity | $ | 6,632 | $ | 6,501 | $ | 6,316 | $ | 6,256 | $ | 6,332 | |||||
Total assets | $ | 65,681 | $ | 65,227 | $ | 64,670 | $ | 62,947 | $ | 64,885 | |||||
Less: | |||||||||||||||
Goodwill | 635 | 635 | 635 | 635 | 635 | ||||||||||
Other intangible assets | 16 | 17 | 18 | 20 | 21 | ||||||||||
Tangible assets | $ | 65,030 | $ | 64,575 | $ | 64,017 | $ | 62,292 | $ | 64,229 | |||||
Common equity ratio | 11.09 | % | 10.97 | % | 10.78 | % | 10.98 | % | 10.77 | % | |||||
Tangible common equity ratio | 10.20 | 10.07 | 9.87 | 10.04 | 9.86 | ||||||||||
Tangible Common Equity per Share of Common Stock: | |||||||||||||||
Common shareholders' equity | $ | 7,283 | $ | 7,153 | $ | 6,969 | $ | 6,911 | $ | 6,988 | |||||
Tangible common equity | 6,632 | 6,501 | 6,316 | 6,256 | 6,332 | ||||||||||
Shares of common stock outstanding (in millions) | 182 | 182 | 184 | 185 | 187 | ||||||||||
Common shareholders' equity per share of common stock | $ | 40.09 | $ | 39.23 | $ | 37.94 | $ | 37.32 | $ | 37.41 | |||||
Tangible common equity per share of common stock | 36.50 | 35.65 | 34.38 | 33.79 | 33.90 | ||||||||||
(a) Tier 1 capital and risk-weighted assets as defined by regulation.
(b) March 31, 2014 Tier 1 capital and risk-weighted assets are estimated.
(c) Estimated ratios based on the standardized approach in the final rule for the U.S. adoption of the Basel III regulatory capital framework and excluding most elements of AOCI.
The Tier 1 common capital ratio removes preferred stock and qualifying trust preferred securities from Tier 1 capital as defined by and calculated in conformity with bank regulations. The Basel III common equity Tier 1 capital ratio further adjusts Tier 1 common capital and risk-weighted assets to account for the final rule approved by U.S. banking regulators in July 2013 for the U.S. adoption of the Basel III regulatory capital framework. The final Basel III capital rules are effective January 1, 2015 for banking organizations subject to the standardized approach. The tangible common equity ratio removes preferred stock and the effect of intangible assets from capital and the effect of intangible assets from total assets. Tangible common equity per share of common stock removes the effect of intangible assets from common shareholders equity per share of common stock. Comerica believes these measurements are meaningful measures of capital adequacy used by investors, regulators, management and others to evaluate the adequacy of common equity and to compare against other companies in the industry.
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