COMERICA REPORTS SECOND QUARTER 2015 NET INCOME OF $135 MILLION,
OR 73 CENTS PER SHARE
Average Loan Growth of $682 Million, or 1 Percent, Compared to First Quarter 2015
and $2.1 Billion, or 5 Percent, Compared to Second Quarter 2014
Revenue Increased 2 Percent Compared to First Quarter 2015
Returned $96 Million to Shareholders Through Equity Buybacks and Increased Dividend
DALLAS/July 17, 2015 -- Comerica Incorporated (NYSE: CMA) today reported second quarter 2015 net income of $135 million, compared to $134 million for the first quarter 2015 and $151 million for the second quarter 2014. Earnings per diluted share were 73 cents for both the second and first quarters of 2015 and 80 cents for the second quarter 2014.
(dollar amounts in millions, except per share data) | 2nd Qtr '15 | 1st Qtr '15 | 2nd Qtr '14 | |||||||||
Net interest income | $ | 421 | $ | 413 | $ | 416 | ||||||
Provision for credit losses | 47 | 14 | 11 | |||||||||
Noninterest income (a) | 261 | 255 | 220 | |||||||||
Noninterest expenses (a) | 436 | (b) | 459 | 404 | ||||||||
Provision for income taxes | 64 | 61 | 70 | |||||||||
Net income | 135 | 134 | 151 | |||||||||
Net income attributable to common shares | 134 | 132 | 149 | |||||||||
Diluted income per common share | 0.73 | 0.73 | 0.80 | |||||||||
Average diluted shares (in millions) | 182 | 182 | 186 | |||||||||
Basel III common equity Tier 1 capital ratio (c) (d) | 10.53 | % | 10.40 | % | n/a | |||||||
Tier 1 common capital ratio (c) (e) | n/a | n/a | 10.50 | % | ||||||||
Tangible common equity ratio (e) | 9.92 | 9.97 | 10.39 | |||||||||
(a) | Effective January 1, 2015, contractual changes to a card program resulted in a change to the accounting presentation of the related revenues and expenses. The effect of this change was increases of $44 million to both noninterest income and noninterest expenses in both the second and first quarters of 2015. |
(b) | Reflects a $31 million reduction in litigation-related expense. |
(c) | Basel III capital rules (standardized approach) became effective for Comerica on January 1, 2015. The ratio reflects transitional treatment for certain regulatory deductions and adjustments. For further information, see "Balance Sheet and Capital Management". Capital ratios for prior periods are based on Basel I rules. |
(d) | June 30, 2015 ratio is estimated. |
(e) | See Reconciliation of Non-GAAP Financial Measures. |
n/a - not applicable.
"Our second quarter results reflect the advantages of our diverse geographic footprint and industry expertise,” said Ralph W. Babb, Jr., chairman and chief executive officer. "Average loans were up $2.1 billion, or 5 percent, compared to a year ago and were up $682 million, or 1 percent, relative to the first quarter, with increases in most markets and business lines. Relative to the first quarter, average deposits increased $408 million, or 1 percent, with noninterest-bearing deposits up $668 million.
"Revenue was up 2 percent, with growth in both net interest income and fee income in the second quarter. Charge-offs, nonaccruals and criticized loans remained well below normal historical levels. The provision for credit losses increased, primarily as a result of an increase in reserves for energy exposure. Noninterest expenses decreased $23 million to $436 million, primarily due to a decrease in litigation-related expense.
"Our balance sheet is well positioned to benefit as rates rise. We remain focused on the long term with a relationship banking strategy that continues to serve us well."
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COMERICA REPORTS SECOND QUARTER 2015 NET INCOME OF $135 MILLION - 2
Second Quarter 2015 Compared to First Quarter 2015
• | Average total loans increased $682 million, or 1 percent, to $48.8 billion, primarily driven by a $690 million increase in Mortgage Banker Finance, as well as increases in general Middle Market, Private Banking and National Dealer Services, partially offset by decreases of $276 million in Energy and $151 million in Corporate Banking. Average loans increased across all markets except Texas, which decreased as a result of Energy. Period-end total loans increased $669 million, to $49.7 billion. |
• | Average total deposits increased $408 million, or 1 percent, to $57.4 billion, primarily driven by an increase in noninterest-bearing deposits of $668 million, across all markets. Period-end total deposits increased $690 million, to $58.3 billion. |
• | Net interest income increased $8 million, or 2 percent, to $421 million in the second quarter 2015, compared to $413 million in the first quarter 2015, primarily due to an increase in loan volume and one additional day in the quarter. |
• | Net charge-offs were $18 million, or 0.15 percent of average loans, in the second quarter 2015, compared to $8 million, or 0.07 percent, in the first quarter 2015. The provision for credit losses increased to $47 million in the second quarter 2015, primarily as a result of an increase in reserves for energy exposure. |
• | Noninterest income increased $6 million in the second quarter 2015, primarily due to an increase in card fees, as well as small increases in several other fee categories, partially offset by a decrease in commercial lending fees. |
• | Noninterest expenses decreased $23 million in the second quarter 2015, primarily reflecting a $31 million decrease in litigation-related expense and a seasonal decrease in salaries and benefits expense, partially offset by an increase in outside processing fees. |
• | Capital remained solid at June 30, 2015, as evidenced by an estimated common equity Tier 1 capital ratio of 10.53 percent and a tangible common equity ratio of 9.92 percent. |
• | The quarterly dividend increased 5 percent, to $0.21 per share in the second quarter 2015, and Comerica repurchased approximately 1.0 million shares of common stock and 500,000 warrants under the equity repurchase program. These equity repurchases, together with dividends, returned $96 million to shareholders. |
Second Quarter 2015 Compared to Second Quarter 2014
• | Average total loans increased $2.1 billion, or 5 percent, reflecting increases in almost all lines of business. |
• | Average total deposits increased $4.0 billion, or 8 percent, driven by increases in noninterest-bearing deposits of $3.4 billion, or 14 percent, and money market and NOW deposits of $1.4 billion, or 6 percent, partially offset by decreases in other deposit categories. Average deposits increased in all major lines of business and markets. |
• | Net interest income increased $5 million, largely due to loan growth, partially offset by an $8 million decrease in accretion on the purchased loan portfolio. |
• | The provision for credit losses increased $36 million, primarily as a result of an increase in reserves for energy exposure. |
• | Excluding the impact of a change to the accounting presentation for a card program, which increased both noninterest income and noninterest expenses by $44 million in the second quarter 2015, noninterest income decreased $3 million, primarily reflecting increases in fiduciary income, service charges and card fees, which were more than offset by declines in foreign exchange income and several non-fee categories; and noninterest expenses decreased $12 million, largely reflecting a $33 million reduction in litigation-related expenses, partially offset by higher outside processing expenses related to revenue generating activities and an increase in technology-related contract labor expenses. |
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COMERICA REPORTS SECOND QUARTER 2015 NET INCOME OF $135 MILLION - 3
Net Interest Income
(dollar amounts in millions) | 2nd Qtr '15 | 1st Qtr '15 | 2nd Qtr '14 | ||||||||
Net interest income | $ | 421 | $ | 413 | $ | 416 | |||||
Net interest margin | 2.65 | % | 2.64 | % | 2.78 | % | |||||
Selected average balances: | |||||||||||
Total earning assets | $ | 63,981 | $ | 63,480 | $ | 60,148 | |||||
Total loans | 48,833 | 48,151 | 46,725 | ||||||||
Total investment securities | 9,936 | 9,907 | 9,364 | ||||||||
Federal Reserve Bank deposits | 4,968 | 5,176 | 3,801 | ||||||||
Total deposits | 57,398 | 56,990 | 53,384 | ||||||||
Total noninterest-bearing deposits | 27,365 | 26,697 | 24,011 | ||||||||
• | Net interest income increased $8 million to $421 million in the second quarter 2015, compared to the first quarter 2015. |
◦ | Interest on loans increased $11 million, primarily reflecting the benefit from an increase in average loan balances (+$5 million), the impact of one additional day in the second quarter (+$4 million) and an increase in yields (+$2 million), in part reflecting an increase in LIBOR rates. |
◦ | The increase in interest on loans was partially offset by decreases totaling $3 million resulting primarily from lower yields on investment securities, a decrease in average Federal Reserve Bank deposit balances and an increase in interest expense on debt. |
• | The net interest margin of 2.65 percent increased 1 basis point compared to the first quarter 2015, primarily due to higher loan yields. |
Noninterest Income
Noninterest income increased $6 million in the second quarter 2015, compared to $255 million for the first quarter 2015. The increase primarily reflected a $5 million increase in card fees as well as small increases in service charges on deposit accounts, fiduciary income and brokerage fees, partially offset by a $3 million decrease in commercial lending fees. The increase in card fees primarily reflected increased revenue from merchant payment processing services and interchange. The decrease in commercial lending fees was primarily due to decreases in unused commitment fees and syndication agent fees.
Noninterest Expenses
Noninterest expenses decreased $23 million in the second quarter 2015, compared to $459 million for the first quarter 2015, primarily reflecting a $31 million decrease in litigation-related expenses and a $2 million decrease in salaries and benefits expense, partially offset by an $8 million increase in outside processing fees associated with revenue-generating activities. Related to litigation expense, on July 1, 2015, the Montana Supreme Court issued a ruling favorable to Comerica on a lender liability case, which reversed a jury verdict and sent the case back for a new trial. The decrease in salaries and benefits expense primarily reflected seasonal decreases in payroll taxes and share-based compensation expense, partially offset by an increase in technology-related contract labor expense and the impact on salaries of merit increases and one additional day in the second quarter.
Credit Quality
"Overall, credit quality remained solid. Net charge-offs continued to be well below normal levels at 15 basis points, or $18 million," said Babb." Net charge-offs related to our energy exposure were nominal. The provision for credit losses increased from a very low level due to an increase in criticized loans related to energy, as well as uncertainty due to continued volatility and the sustained low oil and gas prices. The reserve to total loans ratio increased to 1.24 percent, and the reserve covered nonperforming loans 1.7 times.
"Our Energy customers are generally decreasing their loan commitments and outstandings as they take the necessary actions to adjust to lower energy prices, such as reducing their expenses, disposing of assets, and tapping the capital markets. On average, loan to values remained stable from the last redetermination.
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COMERICA REPORTS SECOND QUARTER 2015 NET INCOME OF $135 MILLION - 4
Over the past 30 years, we have built our energy business with a strategy to withstand the ups and downs of the cycles."
(dollar amounts in millions) | 2nd Qtr '15 | 1st Qtr '15 | 2nd Qtr '14 | ||||||||
Net loan charge-offs | $ | 18 | $ | 8 | $ | 9 | |||||
Net loan charge-offs/Average total loans | 0.15 | % | 0.07 | % | 0.08 | % | |||||
Provision for credit losses | $ | 47 | $ | 14 | $ | 11 | |||||
Nonperforming loans (a) | 361 | 279 | 347 | ||||||||
Nonperforming assets (NPAs) (a) | 370 | 288 | 360 | ||||||||
NPAs/Total loans and foreclosed property | 0.74 | % | 0.59 | % | 0.75 | % | |||||
Loans past due 90 days or more and still accruing | $ | 18 | $ | 12 | $ | 7 | |||||
Allowance for loan losses | 618 | 601 | 591 | ||||||||
Allowance for credit losses on lending-related commitments (b) | 50 | 39 | 42 | ||||||||
Total allowance for credit losses | 668 | 640 | 633 | ||||||||
Allowance for loan losses/Period-end total loans | 1.24 | % | 1.22 | % | 1.23 | % | |||||
Allowance for loan losses/Nonperforming loans | 171 | 216 | 170 | ||||||||
(a) | Excludes loans acquired with credit impairment. |
(b) | Included in "Accrued expenses and other liabilities" on the consolidated balance sheets. |
• | The provision for credit losses increased to $47 million in the second quarter 2015, primarily reflecting higher reserves for loans related to energy(a) as a result of an increase in criticized loans and the impact of continued volatility and sustained low energy prices. To a lesser extent, Technology and Life Sciences as well as Corporate Banking contributed to the increase in the provision, largely as a result of charge-offs and variability. These increases were partially offset by credit quality improvements in the remainder of the portfolio. |
• | Net charge-offs increased $10 million to $18 million, or 0.15 percent of average loans, in the second quarter 2015, compared to $8 million, or 0.07 percent, in the first quarter 2015. |
• | During the second quarter 2015, $145 million of borrower relationships over $2 million were transferred to nonaccrual status, of which $100 million were loans related to energy. |
• | Criticized loans increased $294 million to $2.4 billion at June 30, 2015, compared to $2.1 billion at March 31, 2015, reflecting an increase of approximately $329 million in criticized loans related to energy. |
(a) Loans related to energy at June 30, 2015 included approximately $3.3 billion of outstanding loans in our Energy business line as well as approximately $725 million of loans in other lines of business to companies that have a sizable portion of their revenue related to energy or could be otherwise disproportionately negatively impacted by prolonged low oil and gas prices.
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COMERICA REPORTS SECOND QUARTER 2015 NET INCOME OF $135 MILLION - 5
Balance Sheet and Capital Management
Total assets and common shareholders' equity were $69.9 billion and $7.5 billion, respectively, at June 30, 2015, compared to $69.3 billion and $7.5 billion, respectively, at March 31, 2015.
There were approximately 178 million common shares outstanding at June 30, 2015. Share repurchases of $49 million (1.0 million shares) and warrant repurchases of $10 million (500,000 warrants) under the equity repurchase program, combined with dividends of 21 cents per share, returned 71 percent of second quarter 2015 net income to shareholders. Diluted average shares remained stable at 182 million for the second quarter 2015, as an increase in share dilution from options and warrants due to an increase in Comerica's average stock price offset the impact of equity repurchases.
The estimated common equity Tier 1 capital ratio, reflective of transition provisions and excluding accumulated other comprehensive income ("AOCI"), was 10.53 percent at June 30, 2015. Certain deductions and adjustments to regulatory capital began phasing in on January 1, 2015 and will be fully implemented on January 1, 2018. The estimated ratio under fully phased-in Basel III capital rules is not significantly different from the transitional ratio. Comerica's tangible common equity ratio was 9.92 percent at June 30, 2015, a decrease of 5 basis points from March 31, 2015.
Full-Year 2015 Outlook
Management expectations for full-year 2015 compared to full-year 2014, assuming a continuation of the current economic and low-rate environment, are as follows:
• | Average full-year loan growth consistent with 2014, reflecting seasonal declines in Mortgage Banker Finance and National Dealer Services in the second half of the year, a continued decline in Energy, and a sustained focus on pricing and structure discipline. |
• | Net interest income relatively stable, assuming no rise in interest rates, reflecting a decrease of about $30 million in purchase accounting accretion, to about $6 million, and the impact of a continuing low rate environment on asset yields, offset by earning asset growth. |
• | Provision for credit losses higher, with third and fourth quarter net charge-offs each at levels similar to the second quarter. If energy prices remain low, continued negative migration is possible, which may be offset by lower exposure balances. |
• | Noninterest income relatively stable, excluding the impact of the change in accounting presentation for a card program. Stable noninterest income reflects growth in fee income, particularly card fees and fiduciary income, mostly offset by a decline in warrant income and regulatory impacts on letter of credit and derivative income. |
• | Noninterest expenses higher, excluding the impact of the change in accounting presentation for a card program, with continued focus on driving efficiencies for the long term. Expenses for the second half of 2015 are expected to be higher than the first half, reflecting three more days in the second half, the impact of merit increases, a ramp-up in the second half of technology and regulatory expenses, as well as higher pension, outside processing and occupancy expenses. |
• | Income tax expense to approximate 32 percent of pre-tax income. |
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COMERICA REPORTS SECOND QUARTER 2015 NET INCOME OF $135 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 June 30, 2015 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses second quarter 2015 results compared to first quarter 2015.
The following table presents net income (loss) by business segment.
(dollar amounts in millions) | 2nd Qtr '15 | 1st Qtr '15 | 2nd Qtr '14 | ||||||||||||||
Business Bank | $ | 182 | 81 | % | $ | 189 | 85 | % | $ | 197 | 82 | % | |||||
Retail Bank | 18 | 8 | 17 | 8 | 16 | 7 | |||||||||||
Wealth Management | 26 | 11 | 16 | 7 | 25 | 11 | |||||||||||
226 | 100 | % | 222 | 100 | % | 238 | 100 | % | |||||||||
Finance | (90 | ) | (89 | ) | (91 | ) | |||||||||||
Other (a) | (1 | ) | 1 | 4 | |||||||||||||
Total | $ | 135 | $ | 134 | $ | 151 | |||||||||||
(a) Includes items not directly associated with the three major business segments or the Finance Division.
Business Bank
(dollar amounts in millions) | 2nd Qtr '15 | 1st Qtr '15 | 2nd Qtr '14 | ||||||||
Net interest income (FTE) | $ | 375 | $ | 370 | $ | 375 | |||||
Provision for credit losses | 61 | 25 | 35 | ||||||||
Noninterest income | 140 | 142 | 100 | ||||||||
Noninterest expenses | 176 | 200 | 143 | ||||||||
Net income | 182 | 189 | 197 | ||||||||
Net credit-related charge-offs | 22 | 9 | 9 | ||||||||
Selected average balances: | |||||||||||
Assets | 39,135 | 38,654 | 37,305 | ||||||||
Loans | 38,109 | 37,623 | 36,367 | ||||||||
Deposits | 30,229 | 30,143 | 27,351 | ||||||||
• | Average loans increased $486 million, primarily reflecting increases in Mortgage Banker Finance, general Middle Market and National Dealer Services, partially offset by decreases in Energy and Corporate Banking. |
• | Average deposits increased $86 million, primarily reflecting increases in Technology and Life Sciences, general Middle Market and Corporate Banking, partially offset by a decrease in Commercial Real Estate. |
• | Net interest income increased $5 million, primarily due to the benefit from an increase in average loan balances and one more day in the quarter, partially offset by a lower funds transfer pricing (FTP) crediting rate. |
• | The provision for credit losses increased $36 million, reflecting higher reserves for loans related to energy as a result of an increase in criticized loans and the impact of continued volatility and sustained low energy prices. To a lesser extent, Technology and Life Sciences as well as Corporate Banking contributed to the increase in the provision, largely as a result of charge-offs and variability. These increases were partially offset by credit quality improvements in the remainder of the portfolio. |
• | Noninterest income decreased $2 million, primarily due to decreases in customer derivative income and commercial lending fees, partially offset by an increase in card fees. |
• | Noninterest expenses decreased $24 million, primarily driven by a reduction in litigation-related expense, partially offset by an increase in outside processing fees. |
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COMERICA REPORTS SECOND QUARTER 2015 NET INCOME OF $135 MILLION - 7
Retail Bank
(dollar amounts in millions) | 2nd Qtr '15 | 1st Qtr '15 | 2nd Qtr '14 | ||||||||
Net interest income (FTE) | $ | 155 | $ | 151 | $ | 152 | |||||
Provision for credit losses | (8 | ) | (8 | ) | (6 | ) | |||||
Noninterest income | 46 | 42 | 41 | ||||||||
Noninterest expenses | 182 | 175 | 174 | ||||||||
Net income | 18 | 17 | 16 | ||||||||
Net credit-related charge-offs | 1 | — | 3 | ||||||||
Selected average balances: | |||||||||||
Assets | 6,459 | 6,368 | 6,222 | ||||||||
Loans | 5,770 | 5,694 | 5,554 | ||||||||
Deposits | 22,747 | 22,404 | 21,890 | ||||||||
• | Average loans increased $76 million, largely due to an increase in Small Business. |
• | Average deposits increased $343 million, primarily reflecting an increase in noninterest-bearing deposits. |
• | Net interest income increased $4 million, primarily due to an increase in net FTP credits, largely due to the increase in average deposits and the impact of one additional day in the quarter. |
• | Noninterest income increased $4 million, due to small increases in several fee categories. |
• | Noninterest expenses increased $7 million, primarily reflecting an increase in outside processing fees and salaries expense. Salaries expense increased primarily due to the impact of merit increases and one additional day in the quarter. |
Wealth Management
(dollar amounts in millions) | 2nd Qtr '15 | 1st Qtr '15 | 2nd Qtr '14 | ||||||||
Net interest income (FTE) | $ | 45 | $ | 43 | $ | 44 | |||||
Provision for credit losses | (9 | ) | (1 | ) | (10 | ) | |||||
Noninterest income | 60 | 58 | 62 | ||||||||
Noninterest expenses | 74 | 77 | 76 | ||||||||
Net income | 26 | 16 | 25 | ||||||||
Net credit-related charge-offs (recoveries) | (5 | ) | (1 | ) | (3 | ) | |||||
Selected average balances: | |||||||||||
Assets | 5,153 | 5,029 | 4,987 | ||||||||
Loans | 4,954 | 4,834 | 4,804 | ||||||||
Deposits | 4,060 | 3,996 | 3,616 | ||||||||
• | Average loans increased $120 million. |
• | Average deposits increased $64 million, primarily reflecting an increase in noninterest-bearing deposits. |
• | Net interest income increased $2 million, largely driven by the increase in average loan balances and one additional day in the quarter. |
• | The provision for credit losses decreased $8 million, primarily reflecting credit quality improvement. |
• | Noninterest income increased $2 million, primarily reflecting the impact of a securities loss in the first quarter which was not repeated. |
• | Noninterest expenses decreased $3 million, reflecting small decreases in several categories. |
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COMERICA REPORTS SECOND QUARTER 2015 NET INCOME OF $135 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 June 30, 2015 and are presented on a fully taxable equivalent (FTE) basis.
The following table presents net income (loss) by market segment.
(dollar amounts in millions) | 2nd Qtr '15 | 1st Qtr '15 | 2nd Qtr '14 | ||||||||||||||
Michigan | $ | 98 | 44 | % | $ | 73 | 33 | % | $ | 77 | 32 | % | |||||
California | 71 | 31 | 73 | 33 | 63 | 27 | |||||||||||
Texas | 14 | 6 | 32 | 14 | 39 | 16 | |||||||||||
Other Markets | 43 | 19 | 44 | 20 | 59 | 25 | |||||||||||
226 | 100 | % | 222 | 100 | % | 238 | 100 | % | |||||||||
Finance & Other (a) | (91 | ) | (88 | ) | (87 | ) | |||||||||||
Total | $ | 135 | $ | 134 | $ | 151 | |||||||||||
(a) Includes items not directly associated with the geographic markets.
• | Average loans increased $236 million in California and $67 million in Michigan (primarily general Middle Market), and decreased $281 million in Texas (primarily Energy). The increase in California was led by Technology and Life Sciences, National Dealer Services and Private Banking. |
• | Average deposits increased $438 million in California and decreased $51 million and $4 million in Texas and Michigan, respectively. The increase in California was primarily due to increases in Technology and Life Sciences and general Middle Market, partially offset by a decrease in Commercial Real Estate. |
• | Net interest income increased $5 million and $2 million in California and Michigan, respectively, and decreased $1 million in Texas. The increase in California primarily reflected the benefit from an increase in loan balances, while the decrease in Texas was primarily the result of decreased loan balances. Net interest income in all three markets reflected the benefit from one additional day in the quarter. |
• | Net charge-offs decreased $5 million in Michigan, and increased $5 million in California and $2 million in Texas. The provision for credit losses decreased $5 million in Michigan and increased $7 million in California and $22 million in Texas. The decrease in Michigan primarily reflected improved credit quality throughout the portfolio. The increase in Texas was driven by higher reserves due to an increase in criticized loans related to energy and the impact of continued volatility and sustained low energy prices, while the increase in California primarily reflected higher reserves in Technology and Life Sciences. |
• | Noninterest income increased $5 million in Michigan, remained unchanged in California and decreased $5 million in Texas. The increase in Michigan primarily reflected small increases in several fee categories. The decrease in Texas was primarily due to decreases in commercial lending fees, customer derivative income and foreign exchange income. |
• | Noninterest expenses decreased $26 million in Michigan, primarily reflecting a decrease in litigation-related expense, decreased $2 million in Texas and increased $1 million in California. |
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COMERICA REPORTS SECOND QUARTER 2015 NET INCOME OF $135 MILLION - 9
Michigan Market
(dollar amounts in millions) | 2nd Qtr '15 | 1st Qtr '15 | 2nd Qtr '14 | ||||||||
Net interest income (FTE) | $ | 179 | $ | 177 | $ | 182 | |||||
Provision for credit losses | (13 | ) | (8 | ) | (9 | ) | |||||
Noninterest income | 85 | 80 | 89 | ||||||||
Noninterest expenses | 128 | 154 | 159 | ||||||||
Net income | 98 | 73 | 77 | ||||||||
Net credit-related charge-offs (recoveries) | (2 | ) | 3 | 10 | |||||||
Selected average balances: | |||||||||||
Assets | 13,852 | 13,736 | 13,851 | ||||||||
Loans | 13,290 | 13,223 | 13,482 | ||||||||
Deposits | 21,706 | 21,710 | 20,694 | ||||||||
California Market
(dollar amounts in millions) | 2nd Qtr '15 | 1st Qtr '15 | 2nd Qtr '14 | ||||||||
Net interest income (FTE) | $ | 181 | $ | 176 | $ | 176 | |||||
Provision for credit losses | 4 | (3 | ) | 14 | |||||||
Noninterest income | 37 | 37 | 38 | ||||||||
Noninterest expenses | 100 | 99 | 100 | ||||||||
Net income | 71 | 73 | 63 | ||||||||
Net credit-related charge-offs | 6 | 1 | 5 | ||||||||
Selected average balances: | |||||||||||
Assets | 16,696 | 16,461 | 15,721 | ||||||||
Loans | 16,429 | 16,193 | 15,439 | ||||||||
Deposits | 17,275 | 16,837 | 15,370 | ||||||||
Texas Market
(dollar amounts in millions) | 2nd Qtr '15 | 1st Qtr '15 | 2nd Qtr '14 | ||||||||
Net interest income (FTE) | $ | 130 | $ | 131 | $ | 137 | |||||
Provision for credit losses | 43 | 21 | 22 | ||||||||
Noninterest income | 31 | 36 | 35 | ||||||||
Noninterest expenses | 94 | 96 | 89 | ||||||||
Net income | 14 | 32 | 39 | ||||||||
Net credit-related charge-offs | 5 | 3 | 2 | ||||||||
Selected average balances: | |||||||||||
Assets | 11,878 | 12,192 | 11,661 | ||||||||
Loans | 11,254 | 11,535 | 10,966 | ||||||||
Deposits | 10,959 | 11,010 | 10,724 | ||||||||
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COMERICA REPORTS SECOND QUARTER 2015 NET INCOME OF $135 MILLION - 10
Conference Call and Webcast
Comerica will host a conference call to review second quarter 2015 financial results at 8 a.m. CT Friday, July 17, 2015. Interested parties may access the conference call by calling (877) 523-5249 or (210) 591-1147 (event ID No. 61399381). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A replay of the Webcast can be accessed via Comerica's “Investor Relations” page at www.comerica.com.
Comerica Incorporated is a financial services company headquartered in Dallas, Texas, and strategically aligned by three major business segments: The Business Bank, The Retail Bank and Wealth Management. Comerica focuses on relationships and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico.
This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Comerica's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as a reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
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COMERICA REPORTS SECOND QUARTER 2015 NET INCOME OF $135 MILLION - 11
Forward-looking Statements
Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “believes,” “contemplates,” “feels,” “expects,” “estimates,” “seeks,” “strives,” “plans,” “intends,” “outlook,” “forecast,” “position,” “target,” “mission,” “assume,” “achievable,” “potential,” “strategy,” “goal,” “aspiration,” “opportunity,” “initiative,” “outcome,” “continue,” “remain,” “maintain,” “on course,” “trend,” “objective,” “looks forward,” “projects,” “models” and variations of such words and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica's management based on information known to Comerica's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica's management for future or past operations, products or services, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries, estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in general economic, political or industry conditions; changes in monetary and fiscal policies, including changes in interest rates; changes in regulation or oversight; Comerica's ability to maintain adequate sources of funding and liquidity; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers, including the energy industry; operational difficulties, failure of technology infrastructure or information security incidents; reliance on other companies to provide certain key components of business infrastructure; factors impacting noninterest expenses which are beyond Comerica's control; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; changes in Comerica's credit rating; unfavorable developments concerning credit quality; the interdependence of financial service companies; the implementation of Comerica's strategies and business initiatives; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; any future strategic acquisitions or divestitures; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; changes in accounting standards and the critical nature of Comerica's accounting policies. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. In particular, please refer to “Item 1A. Risk Factors” beginning on page 12 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2014. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Media Contact: | Investor Contacts: |
Wayne J. Mielke | Darlene P. Persons |
(214) 462-4463 | (214) 462-6831 |
Chelsea R. Smith | |
(214) 462-6834 | |
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited) | ||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||
(in millions, except per share data) | 2015 | 2015 | 2014 | 2015 | 2014 | |||||||||||
PER COMMON SHARE AND COMMON STOCK DATA | ||||||||||||||||
Diluted net income | $ | 0.73 | $ | 0.73 | $ | 0.80 | $ | 1.46 | $ | 1.54 | ||||||
Cash dividends declared | 0.21 | 0.20 | 0.20 | 0.41 | 0.39 | |||||||||||
Average diluted shares (in thousands) | 182,422 | 182,268 | 186,108 | 182,281 | 186,402 | |||||||||||
KEY RATIOS | ||||||||||||||||
Return on average common shareholders' equity | 7.21 | % | 7.20 | % | 8.27 | % | 7.20 | % | 7.97 | % | ||||||
Return on average assets | 0.79 | 0.78 | 0.93 | 0.78 | 0.90 | |||||||||||
Common equity tier 1 risk-based capital ratio (a) (b) | 10.53 | 10.40 | n/a | |||||||||||||
Tier 1 common risk-based capital ratio (c) | n/a | n/a | 10.50 | |||||||||||||
Tier 1 risk-based capital ratio (a) (b) | 10.53 | 10.40 | 10.50 | |||||||||||||
Total risk-based capital ratio (a) (b) | 12.53 | 12.35 | 12.52 | |||||||||||||
Leverage ratio (a) (b) | 10.57 | 10.53 | 10.93 | |||||||||||||
Tangible common equity ratio (c) | 9.92 | 9.97 | 10.39 | |||||||||||||
AVERAGE BALANCES | ||||||||||||||||
Commercial loans | $ | 31,788 | $ | 31,090 | $ | 29,890 | $ | 31,442 | $ | 29,130 | ||||||
Real estate construction loans | 1,807 | 1,938 | 1,913 | 1,872 | 1,871 | |||||||||||
Commercial mortgage loans | 8,672 | 8,581 | 8,749 | 8,627 | 8,759 | |||||||||||
Lease financing | 795 | 797 | 850 | 796 | 849 | |||||||||||
International loans | 1,453 | 1,512 | 1,328 | 1,482 | 1,315 | |||||||||||
Residential mortgage loans | 1,877 | 1,856 | 1,773 | 1,866 | 1,749 | |||||||||||
Consumer loans | 2,441 | 2,377 | 2,222 | 2,409 | 2,232 | |||||||||||
Total loans | 48,833 | 48,151 | 46,725 | 48,494 | 45,905 | |||||||||||
Earning assets | 63,981 | 63,480 | 60,148 | 63,732 | 60,033 | |||||||||||
Total assets | 68,963 | 68,735 | 64,878 | 68,852 | 64,794 | |||||||||||
Noninterest-bearing deposits | 27,365 | 26,697 | 24,011 | 27,033 | 23,626 | |||||||||||
Interest-bearing deposits | 30,033 | 30,293 | 29,373 | 30,163 | 29,453 | |||||||||||
Total deposits | 57,398 | 56,990 | 53,384 | 57,196 | 53,079 | |||||||||||
Common shareholders' equity | 7,512 | 7,453 | 7,331 | 7,482 | 7,280 | |||||||||||
NET INTEREST INCOME (fully taxable equivalent basis) | ||||||||||||||||
Net interest income | $ | 422 | $ | 414 | $ | 417 | $ | 836 | $ | 828 | ||||||
Net interest margin | 2.65 | % | 2.64 | % | 2.78 | % | 2.65 | % | 2.78 | % | ||||||
CREDIT QUALITY | ||||||||||||||||
Total nonperforming assets | $ | 370 | $ | 288 | $ | 360 | ||||||||||
Loans past due 90 days or more and still accruing | 18 | 12 | 7 | |||||||||||||
Net loan charge-offs | 18 | 8 | 9 | $ | 26 | $ | 21 | |||||||||
Allowance for loan losses | 618 | 601 | 591 | |||||||||||||
Allowance for credit losses on lending-related commitments | 50 | 39 | 42 | |||||||||||||
Total allowance for credit losses | 668 | 640 | 633 | |||||||||||||
Allowance for loan losses as a percentage of total loans | 1.24 | % | 1.22 | % | 1.23 | % | ||||||||||
Net loan charge-offs as a percentage of average total loans | 0.15 | 0.07 | 0.08 | 0.11 | % | 0.09 | % | |||||||||
Nonperforming assets as a percentage of total loans and foreclosed property | 0.74 | 0.59 | 0.75 | |||||||||||||
Allowance for loan losses as a percentage of total nonperforming loans | 171 | 216 | 170 | |||||||||||||
(a) | Basel III rules became effective on January 1, 2015, with transitional provisions. All prior period data is based on Basel I rules. |
(b) | June 30, 2015 ratios are estimated. |
(c) | See Reconciliation of Non-GAAP Financial Measures. |
n/a - not applicable.
12
CONSOLIDATED BALANCE SHEETS | ||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||
June 30, | March 31, | December 31, | June 30, | |||||||||
(in millions, except share data) | 2015 | 2015 | 2014 | 2014 | ||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||
ASSETS | ||||||||||||
Cash and due from banks | $ | 1,148 | $ | 1,170 | $ | 1,026 | $ | 1,226 | ||||
Interest-bearing deposits with banks | 4,817 | 4,792 | 5,045 | 2,668 | ||||||||
Other short-term investments | 119 | 101 | 99 | 109 | ||||||||
Investment securities available-for-sale | 8,267 | 8,214 | 8,116 | 9,534 | ||||||||
Investment securities held-to-maturity | 1,952 | 1,871 | 1,935 | — | ||||||||
Commercial loans | 32,723 | 32,091 | 31,520 | 30,986 | ||||||||
Real estate construction loans | 1,795 | 1,917 | 1,955 | 1,939 | ||||||||
Commercial mortgage loans | 8,674 | 8,558 | 8,604 | 8,747 | ||||||||
Lease financing | 786 | 792 | 805 | 822 | ||||||||
International loans | 1,420 | 1,433 | 1,496 | 1,352 | ||||||||
Residential mortgage loans | 1,865 | 1,859 | 1,831 | 1,775 | ||||||||
Consumer loans | 2,478 | 2,422 | 2,382 | 2,261 | ||||||||
Total loans | 49,741 | 49,072 | 48,593 | 47,882 | ||||||||
Less allowance for loan losses | (618 | ) | (601 | ) | (594 | ) | (591 | ) | ||||
Net loans | 49,123 | 48,471 | 47,999 | 47,291 | ||||||||
Premises and equipment | 541 | 531 | 532 | 562 | ||||||||
Accrued income and other assets | 3,978 | 4,183 | 4,434 | 3,933 | ||||||||
Total assets | $ | 69,945 | $ | 69,333 | $ | 69,186 | $ | 65,323 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
Noninterest-bearing deposits | $ | 28,167 | $ | 27,394 | $ | 27,224 | $ | 24,774 | ||||
Money market and interest-bearing checking deposits | 23,786 | 23,727 | 23,954 | 22,555 | ||||||||
Savings deposits | 1,841 | 1,817 | 1,752 | 1,731 | ||||||||
Customer certificates of deposit | 4,367 | 4,497 | 4,421 | 4,962 | ||||||||
Foreign office time deposits | 99 | 135 | 135 | 148 | ||||||||
Total interest-bearing deposits | 30,093 | 30,176 | 30,262 | 29,396 | ||||||||
Total deposits | 58,260 | 57,570 | 57,486 | 54,170 | ||||||||
Short-term borrowings | 56 | 80 | 116 | 176 | ||||||||
Accrued expenses and other liabilities | 1,265 | 1,500 | 1,507 | 990 | ||||||||
Medium- and long-term debt | 2,841 | 2,683 | 2,675 | 2,618 | ||||||||
Total liabilities | 62,422 | 61,833 | 61,784 | 57,954 | ||||||||
Common stock - $5 par value: | ||||||||||||
Authorized - 325,000,000 shares | ||||||||||||
Issued - 228,164,824 shares | 1,141 | 1,141 | 1,141 | 1,141 | ||||||||
Capital surplus | 2,158 | 2,188 | 2,188 | 2,175 | ||||||||
Accumulated other comprehensive loss | (396 | ) | (370 | ) | (412 | ) | (304 | ) | ||||
Retained earnings | 6,908 | 6,841 | 6,744 | 6,520 | ||||||||
Less cost of common stock in treasury - 49,803,515 shares at 6/30/15, 50,114,399 shares at March 31, 2015, 49,146,225 shares at 12/31/14, and 47,194,492 shares at 6/30/14 | (2,288 | ) | (2,300 | ) | (2,259 | ) | (2,163 | ) | ||||
Total shareholders' equity | 7,523 | 7,500 | 7,402 | 7,369 | ||||||||
Total liabilities and shareholders' equity | $ | 69,945 | $ | 69,333 | $ | 69,186 | $ | 65,323 | ||||
13
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) | |||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
(in millions, except per share data) | 2015 | 2014 | 2015 | 2014 | |||||||||
INTEREST INCOME | |||||||||||||
Interest and fees on loans | $ | 389 | $ | 385 | $ | 767 | $ | 761 | |||||
Interest on investment securities | 52 | 53 | 105 | 108 | |||||||||
Interest on short-term investments | 3 | 3 | 7 | 7 | |||||||||
Total interest income | 444 | 441 | 879 | 876 | |||||||||
INTEREST EXPENSE | |||||||||||||
Interest on deposits | 11 | 11 | 22 | 22 | |||||||||
Interest on medium- and long-term debt | 12 | 14 | 23 | 28 | |||||||||
Total interest expense | 23 | 25 | 45 | 50 | |||||||||
Net interest income | 421 | 416 | 834 | 826 | |||||||||
Provision for credit losses | 47 | 11 | 61 | 20 | |||||||||
Net interest income after provision for credit losses | 374 | 405 | 773 | 806 | |||||||||
NONINTEREST INCOME | |||||||||||||
Service charges on deposit accounts | 56 | 54 | 111 | 108 | |||||||||
Fiduciary income | 48 | 45 | 95 | 89 | |||||||||
Commercial lending fees | 22 | 23 | 47 | 43 | |||||||||
Card fees | 72 | 22 | 139 | 45 | |||||||||
Letter of credit fees | 13 | 15 | 26 | 29 | |||||||||
Bank-owned life insurance | 10 | 11 | 19 | 20 | |||||||||
Foreign exchange income | 9 | 12 | 19 | 21 | |||||||||
Brokerage fees | 5 | 4 | 9 | 9 | |||||||||
Net securities (losses) gains | — | — | (2 | ) | 1 | ||||||||
Other noninterest income | 26 | 34 | 53 | 63 | |||||||||
Total noninterest income | 261 | 220 | 516 | 428 | |||||||||
NONINTEREST EXPENSES | |||||||||||||
Salaries and benefits expense | 251 | 240 | 504 | 487 | |||||||||
Net occupancy expense | 39 | 39 | 77 | 79 | |||||||||
Equipment expense | 13 | 15 | 26 | 29 | |||||||||
Outside processing fee expense | 85 | 30 | 162 | 58 | |||||||||
Software expense | 24 | 25 | 47 | 47 | |||||||||
Litigation-related expense | (30 | ) | 3 | (29 | ) | 6 | |||||||
FDIC insurance expense | 9 | 8 | 18 | 16 | |||||||||
Advertising expense | 6 | 5 | 12 | 11 | |||||||||
Other noninterest expenses | 39 | 39 | 78 | 77 | |||||||||
Total noninterest expenses | 436 | 404 | 895 | 810 | |||||||||
Income before income taxes | 199 | 221 | 394 | 424 | |||||||||
Provision for income taxes | 64 | 70 | 125 | 134 | |||||||||
NET INCOME | 135 | 151 | 269 | 290 | |||||||||
Less income allocated to participating securities | 1 | 2 | 3 | 4 | |||||||||
Net income attributable to common shares | $ | 134 | $ | 149 | $ | 266 | $ | 286 | |||||
Earnings per common share: | |||||||||||||
Basic | $ | 0.76 | $ | 0.83 | $ | 1.51 | $ | 1.59 | |||||
Diluted | 0.73 | 0.80 | 1.46 | 1.54 | |||||||||
Comprehensive income | 109 | 172 | 285 | 377 | |||||||||
Cash dividends declared on common stock | 37 | 36 | 73 | 71 | |||||||||
Cash dividends declared per common share | 0.21 | 0.20 | 0.41 | 0.39 | |||||||||
14
CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited) | |||||||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||||||
Second | First | Fourth | Third | Second | Second Quarter 2015 Compared To: | ||||||||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Quarter | First Quarter 2015 | Second Quarter 2014 | |||||||||||||||||||||
(in millions, except per share data) | 2015 | 2015 | 2014 | 2014 | 2014 | Amount | Percent | Amount | Percent | ||||||||||||||||||
INTEREST INCOME | |||||||||||||||||||||||||||
Interest and fees on loans | $ | 389 | $ | 378 | $ | 383 | $ | 381 | $ | 385 | $ | 11 | 3 | % | $ | 4 | 1 | % | |||||||||
Interest on investment securities | 52 | 53 | 51 | 52 | 53 | (1 | ) | (1 | ) | (1 | ) | (2 | ) | ||||||||||||||
Interest on short-term investments | 3 | 4 | 4 | 3 | 3 | (1 | ) | (9 | ) | — | — | ||||||||||||||||
Total interest income | 444 | 435 | 438 | 436 | 441 | 9 | 2 | 3 | 1 | ||||||||||||||||||
INTEREST EXPENSE | |||||||||||||||||||||||||||
Interest on deposits | 11 | 11 | 12 | 11 | 11 | — | — | — | — | ||||||||||||||||||
Interest on medium- and long-term debt | 12 | 11 | 11 | 11 | 14 | 1 | 5 | (2 | ) | (8 | ) | ||||||||||||||||
Total interest expense | 23 | 22 | 23 | 22 | 25 | 1 | 2 | (2 | ) | (5 | ) | ||||||||||||||||
Net interest income | 421 | 413 | 415 | 414 | 416 | 8 | 2 | 5 | 1 | ||||||||||||||||||
Provision for credit losses | 47 | 14 | 2 | 5 | 11 | 33 | n/m | 36 | n/m | ||||||||||||||||||
Net interest income after provision for credit losses | 374 | 399 | 413 | 409 | 405 | (25 | ) | (6 | ) | (31 | ) | (8 | ) | ||||||||||||||
NONINTEREST INCOME | |||||||||||||||||||||||||||
Service charges on deposit accounts | 56 | 55 | 53 | 54 | 54 | 1 | 3 | 2 | 4 | ||||||||||||||||||
Fiduciary income | 48 | 47 | 47 | 44 | 45 | 1 | 1 | 3 | 6 | ||||||||||||||||||
Commercial lending fees | 22 | 25 | 29 | 26 | 23 | (3 | ) | (9 | ) | (1 | ) | (3 | ) | ||||||||||||||
Card fees | 72 | 67 | 24 | 23 | 22 | 5 | 7 | 50 | n/m | ||||||||||||||||||
Letter of credit fees | 13 | 13 | 14 | 14 | 15 | — | — | (2 | ) | (8 | ) | ||||||||||||||||
Bank-owned life insurance | 10 | 9 | 8 | 11 | 11 | 1 | 5 | (1 | ) | (10 | ) | ||||||||||||||||
Foreign exchange income | 9 | 10 | 10 | 9 | 12 | (1 | ) | (11 | ) | (3 | ) | (24 | ) | ||||||||||||||
Brokerage fees | 5 | 4 | 4 | 4 | 4 | 1 | 5 | 1 | 9 | ||||||||||||||||||
Net securities (losses) gains | — | (2 | ) | — | (1 | ) | — | 2 | 66 | — | — | ||||||||||||||||
Other noninterest income | 26 | 27 | 36 | 31 | 34 | (1 | ) | (4 | ) | (8 | ) | (24 | ) | ||||||||||||||
Total noninterest income | 261 | 255 | 225 | 215 | 220 | 6 | 2 | 41 | 18 | ||||||||||||||||||
NONINTEREST EXPENSES | |||||||||||||||||||||||||||
Salaries and benefits expense | 251 | 253 | 245 | 248 | 240 | (2 | ) | (1 | ) | 11 | 5 | ||||||||||||||||
Net occupancy expense | 39 | 38 | 46 | 46 | 39 | 1 | 3 | — | — | ||||||||||||||||||
Equipment expense | 13 | 13 | 14 | 14 | 15 | — | — | (2 | ) | (12 | ) | ||||||||||||||||
Outside processing fee expense | 85 | 77 | 33 | 31 | 30 | 8 | 12 | 55 | n/m | ||||||||||||||||||
Software expense | 24 | 23 | 23 | 25 | 25 | 1 | 1 | (1 | ) | (3 | ) | ||||||||||||||||
Litigation-related expense | (30 | ) | 1 | — | (2 | ) | 3 | (31 | ) | n/m | (33 | ) | n/m | ||||||||||||||
FDIC insurance expense | 9 | 9 | 8 | 9 | 8 | — | — | 1 | 7 | ||||||||||||||||||
Advertising expense | 6 | 6 | 7 | 5 | 5 | — | — | 1 | — | ||||||||||||||||||
Gain on debt redemption | — | — | — | (32 | ) | — | — | — | — | — | |||||||||||||||||
Other noninterest expenses | 39 | 39 | 43 | 53 | 39 | — | — | — | — | ||||||||||||||||||
Total noninterest expenses | 436 | 459 | 419 | 397 | 404 | (23 | ) | (5 | ) | 32 | 8 | ||||||||||||||||
Income before income taxes | 199 | 195 | 219 | 227 | 221 | 4 | 3 | (22 | ) | (10 | ) | ||||||||||||||||
Provision for income taxes | 64 | 61 | 70 | 73 | 70 | 3 | 6 | (6 | ) | (8 | ) | ||||||||||||||||
NET INCOME | 135 | 134 | 149 | 154 | 151 | 1 | 1 | (16 | ) | (11 | ) | ||||||||||||||||
Less income allocated to participating securities | 1 | 2 | 1 | 2 | 2 | (1 | ) | — | (1 | ) | — | ||||||||||||||||
Net income attributable to common shares | $ | 134 | $ | 132 | $ | 148 | $ | 152 | $ | 149 | $ | 2 | 1 | % | $ | (15 | ) | (11 | )% | ||||||||
Earnings per common share: | |||||||||||||||||||||||||||
Basic | $ | 0.76 | $ | 0.75 | $ | 0.83 | $ | 0.85 | $ | 0.83 | $ | 0.01 | 1 | % | $ | (0.07 | ) | (8 | )% | ||||||||
Diluted | 0.73 | 0.73 | 0.80 | 0.82 | 0.80 | — | — | (0.07 | ) | (9 | ) | ||||||||||||||||
Comprehensive income | 109 | 176 | 54 | 141 | 172 | (67 | ) | (38 | ) | (63 | ) | (37 | ) | ||||||||||||||
Cash dividends declared on common stock | 37 | 36 | 36 | 36 | 36 | 1 | 5 | 1 | 3 | ||||||||||||||||||
Cash dividends declared per common share | 0.21 | 0.20 | 0.20 | 0.20 | 0.20 | 0.01 | 5 | 0.01 | 5 | ||||||||||||||||||
n/m - not meaningful
15
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited) | ||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||
2015 | 2014 | |||||||||||||||
(in millions) | 2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | |||||||||||
Balance at beginning of period | $ | 601 | $ | 594 | $ | 592 | $ | 591 | $ | 594 | ||||||
Loan charge-offs: | ||||||||||||||||
Commercial | 22 | 19 | 8 | 13 | 19 | |||||||||||
Commercial mortgage | 2 | — | 2 | 7 | 5 | |||||||||||
Lease financing | 1 | — | — | — | — | |||||||||||
International | 6 | 2 | 6 | — | — | |||||||||||
Residential mortgage | 1 | — | 1 | 1 | — | |||||||||||
Consumer | 3 | 2 | 3 | 3 | 4 | |||||||||||
Total loan charge-offs | 35 | 23 | 20 | 24 | 28 | |||||||||||
Recoveries on loans previously charged-off: | ||||||||||||||||
Commercial | 10 | 9 | 6 | 6 | 11 | |||||||||||
Real estate construction | 1 | — | 2 | 1 | 1 | |||||||||||
Commercial mortgage | 5 | 3 | 10 | 12 | 3 | |||||||||||
Residential mortgage | — | 1 | — | 1 | 3 | |||||||||||
Consumer | 1 | 2 | 1 | 1 | 1 | |||||||||||
Total recoveries | 17 | 15 | 19 | 21 | 19 | |||||||||||
Net loan charge-offs | 18 | 8 | 1 | 3 | 9 | |||||||||||
Provision for loan losses | 35 | 16 | 4 | 4 | 6 | |||||||||||
Foreign currency translation adjustment | — | (1 | ) | (1 | ) | — | — | |||||||||
Balance at end of period | $ | 618 | $ | 601 | $ | 594 | $ | 592 | $ | 591 | ||||||
Allowance for loan losses as a percentage of total loans | 1.24 | % | 1.22 | % | 1.22 | % | 1.24 | % | 1.23 | % | ||||||
Net loan charge-offs as a percentage of average total loans | 0.15 | 0.07 | 0.01 | 0.03 | 0.08 | |||||||||||
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited) | ||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||
2015 | 2014 | |||||||||||||||
(in millions) | 2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | |||||||||||
Balance at beginning of period | $ | 39 | $ | 41 | $ | 43 | $ | 42 | $ | 37 | ||||||
Less: Charge-offs on lending-related commitments (a) | 1 | — | — | — | — | |||||||||||
Add: Provision for credit losses on lending-related commitments | 12 | (2 | ) | (2 | ) | 1 | 5 | |||||||||
Balance at end of period | $ | 50 | $ | 39 | $ | 41 | $ | 43 | $ | 42 | ||||||
Unfunded lending-related commitments sold | $ | 12 | $ | 1 | $ | — | $ | 9 | $ | — | ||||||
(a) | Charge-offs result from the sale of unfunded lending-related commitments. |
16
NONPERFORMING ASSETS (unaudited) | ||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||
2015 | 2014 | |||||||||||||||
(in millions) | 2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | |||||||||||
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS | ||||||||||||||||
Nonaccrual loans: | ||||||||||||||||
Business loans: | ||||||||||||||||
Commercial | $ | 186 | $ | 113 | $ | 109 | $ | 93 | $ | 72 | ||||||
Real estate construction | 1 | 1 | 2 | 18 | 19 | |||||||||||
Commercial mortgage | 77 | 82 | 95 | 144 | 156 | |||||||||||
Lease financing | 11 | — | — | — | — | |||||||||||
International | 9 | 1 | — | — | — | |||||||||||
Total nonaccrual business loans | 284 | 197 | 206 | 255 | 247 | |||||||||||
Retail loans: | ||||||||||||||||
Residential mortgage | 35 | 37 | 36 | 42 | 45 | |||||||||||
Consumer: | ||||||||||||||||
Home equity | 29 | 31 | 30 | 31 | 32 | |||||||||||
Other consumer | 1 | 1 | 1 | 1 | 2 | |||||||||||
Total consumer | 30 | 32 | 31 | 32 | 34 | |||||||||||
Total nonaccrual retail loans | 65 | 69 | 67 | 74 | 79 | |||||||||||
Total nonaccrual loans | 349 | 266 | 273 | 329 | 326 | |||||||||||
Reduced-rate loans | 12 | 13 | 17 | 17 | 21 | |||||||||||
Total nonperforming loans (a) | 361 | 279 | 290 | 346 | 347 | |||||||||||
Foreclosed property | 9 | 9 | 10 | 11 | 13 | |||||||||||
Total nonperforming assets (a) | $ | 370 | $ | 288 | $ | 300 | $ | 357 | $ | 360 | ||||||
Nonperforming loans as a percentage of total loans | 0.72 | % | 0.57 | % | 0.60 | % | 0.73 | % | 0.73 | % | ||||||
Nonperforming assets as a percentage of total loans and foreclosed property | 0.74 | 0.59 | 0.62 | 0.75 | 0.75 | |||||||||||
Allowance for loan losses as a percentage of total nonperforming loans | 171 | 216 | 205 | 171 | 170 | |||||||||||
Loans past due 90 days or more and still accruing | $ | 18 | $ | 12 | $ | 5 | $ | 13 | $ | 7 | ||||||
ANALYSIS OF NONACCRUAL LOANS | ||||||||||||||||
Nonaccrual loans at beginning of period | $ | 266 | $ | 273 | $ | 329 | $ | 326 | $ | 317 | ||||||
Loans transferred to nonaccrual (b) | 145 | 39 | 41 | 54 | 53 | |||||||||||
Nonaccrual business loan gross charge-offs (c) | (31 | ) | (21 | ) | (16 | ) | (20 | ) | (24 | ) | ||||||
Loans transferred to accrual status (b) | — | (4 | ) | (18 | ) | — | — | |||||||||
Nonaccrual business loans sold (d) | (1 | ) | (2 | ) | (24 | ) | (3 | ) | (6 | ) | ||||||
Payments/Other (e) | (30 | ) | (19 | ) | (39 | ) | (28 | ) | (14 | ) | ||||||
Nonaccrual loans at end of period | $ | 349 | $ | 266 | $ | 273 | $ | 329 | $ | 326 | ||||||
(a) Excludes loans acquired with credit impairment. | ||||||||||||||||
(b) Based on an analysis of nonaccrual loans with book balances greater than $2 million. | ||||||||||||||||
(c) Analysis of gross loan charge-offs: | ||||||||||||||||
Nonaccrual business loans | $ | 31 | $ | 21 | $ | 16 | $ | 20 | $ | 24 | ||||||
Consumer and residential mortgage loans | 4 | 2 | 4 | 4 | 4 | |||||||||||
Total gross loan charge-offs | $ | 35 | $ | 23 | $ | 20 | $ | 24 | $ | 28 | ||||||
(d) Analysis of loans sold: | ||||||||||||||||
Nonaccrual business loans | $ | 1 | $ | 2 | $ | 24 | $ | 3 | $ | 6 | ||||||
Performing criticized loans | — | 7 | 5 | — | 8 | |||||||||||
Total criticized loans sold | $ | 1 | $ | 9 | $ | 29 | $ | 3 | $ | 14 | ||||||
(e) Includes net changes related to nonaccrual loans with balances less than $2 million, payments on nonaccrual loans with book balances greater than $2 million and transfers of nonaccrual loans to foreclosed property. Excludes business loan gross charge-offs and business nonaccrual loans sold. | ||||||||||||||||
17
ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited) | |||||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||||
Six Months Ended | |||||||||||||||||
June 30, 2015 | June 30, 2014 | ||||||||||||||||
Average | Average | Average | Average | ||||||||||||||
(dollar amounts in millions) | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||
Commercial loans | $ | 31,442 | $ | 478 | 3.06 | % | $ | 29,130 | $ | 453 | 3.13 | % | |||||
Real estate construction loans | 1,872 | 32 | 3.43 | 1,871 | 32 | 3.42 | |||||||||||
Commercial mortgage loans | 8,627 | 146 | 3.41 | 8,759 | 170 | 3.92 | |||||||||||
Lease financing | 796 | 12 | 3.12 | 849 | 16 | 3.66 | |||||||||||
International loans | 1,482 | 27 | 3.69 | 1,315 | 24 | 3.66 | |||||||||||
Residential mortgage loans | 1,866 | 35 | 3.77 | 1,749 | 33 | 3.84 | |||||||||||
Consumer loans | 2,409 | 39 | 3.23 | 2,232 | 35 | 3.19 | |||||||||||
Total loans (a) | 48,494 | 769 | 3.19 | 45,905 | 763 | 3.35 | |||||||||||
Mortgage-backed securities (b) | 9,064 | 100 | 2.24 | 8,954 | 107 | 2.39 | |||||||||||
Other investment securities | 858 | 5 | 1.13 | 369 | 1 | 0.44 | |||||||||||
Total investment securities (b) | 9,922 | 105 | 2.15 | 9,323 | 108 | 2.31 | |||||||||||
Interest-bearing deposits with banks | 5,216 | 7 | 0.25 | 4,695 | 7 | 0.26 | |||||||||||
Other short-term investments | 100 | — | 0.75 | 110 | — | 0.63 | |||||||||||
Total earning assets | 63,732 | 881 | 2.79 | 60,033 | 878 | 2.94 | |||||||||||
Cash and due from banks | 1,034 | 917 | |||||||||||||||
Allowance for loan losses | (607 | ) | (602 | ) | |||||||||||||
Accrued income and other assets | 4,693 | 4,446 | |||||||||||||||
Total assets | $ | 68,852 | $ | 64,794 | |||||||||||||
Money market and interest-bearing checking deposits | $ | 23,809 | 13 | 0.11 | $ | 22,279 | 12 | 0.11 | |||||||||
Savings deposits | 1,810 | — | 0.02 | 1,721 | — | 0.03 | |||||||||||
Customer certificates of deposit | 4,423 | 8 | 0.37 | 5,075 | 9 | 0.36 | |||||||||||
Foreign office time deposits | 121 | 1 | 1.36 | 378 | 1 | 0.52 | |||||||||||
Total interest-bearing deposits | 30,163 | 22 | 0.14 | 29,453 | 22 | 0.15 | |||||||||||
Short-term borrowings | 94 | — | 0.05 | 198 | — | 0.03 | |||||||||||
Medium- and long-term debt | 2,675 | 23 | 1.78 | 3,270 | 28 | 1.64 | |||||||||||
Total interest-bearing sources | 32,932 | 45 | 0.28 | 32,921 | 50 | 0.30 | |||||||||||
Noninterest-bearing deposits | 27,033 | 23,626 | |||||||||||||||
Accrued expenses and other liabilities | 1,405 | 967 | |||||||||||||||
Total shareholders' equity | 7,482 | 7,280 | |||||||||||||||
Total liabilities and shareholders' equity | $ | 68,852 | $ | 64,794 | |||||||||||||
Net interest income/rate spread (FTE) | $ | 836 | 2.51 | $ | 828 | 2.64 | |||||||||||
FTE adjustment | $ | 2 | $ | 2 | |||||||||||||
Impact of net noninterest-bearing sources of funds | 0.14 | 0.14 | |||||||||||||||
Net interest margin (as a percentage of average earning assets) (FTE) (a) | 2.65 | % | 2.78 | % | |||||||||||||
(a) Accretion of the purchase discount on the acquired loan portfolio of $4 million and $22 million in the six months ended June 30, 2015 and 2014, respectively, increased the net interest margin by 1 basis point and 7 basis points in each respective period.
(b) Includes investment securities available-for-sale and investment securities held-to-maturity.
18
ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited) | ||||||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||
June 30, 2015 | March 31, 2015 | June 30, 2014 | ||||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | |||||||||||||||||||||
(dollar amounts in millions) | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||
Commercial loans | $ | 31,788 | $ | 244 | 3.07 | % | $ | 31,090 | $ | 234 | 3.06 | % | $ | 29,890 | $ | 231 | 3.10 | % | ||||||||
Real estate construction loans | 1,807 | 16 | 3.51 | 1,938 | 16 | 3.36 | 1,913 | 16 | 3.44 | |||||||||||||||||
Commercial mortgage loans | 8,672 | 73 | 3.38 | 8,581 | 73 | 3.44 | 8,749 | 85 | 3.88 | |||||||||||||||||
Lease financing | 795 | 6 | 3.19 | 797 | 6 | 3.05 | 850 | 7 | 3.26 | |||||||||||||||||
International loans | 1,453 | 13 | 3.68 | 1,512 | 14 | 3.71 | 1,328 | 12 | 3.64 | |||||||||||||||||
Residential mortgage loans | 1,877 | 18 | 3.78 | 1,856 | 17 | 3.76 | 1,773 | 17 | 3.82 | |||||||||||||||||
Consumer loans | 2,441 | 20 | 3.25 | 2,377 | 19 | 3.21 | 2,222 | 18 | 3.22 | |||||||||||||||||
Total loans (a) | 48,833 | 390 | 3.20 | 48,151 | 379 | 3.19 | 46,725 | 386 | 3.31 | |||||||||||||||||
Mortgage-backed securities (b) | 9,057 | 49 | 2.23 | 9,071 | 51 | 2.26 | 8,996 | 53 | 2.35 | |||||||||||||||||
Other investment securities | 879 | 3 | 1.16 | 836 | 2 | 1.10 | 368 | — | 0.46 | |||||||||||||||||
Total investment securities (b) | 9,936 | 52 | 2.13 | 9,907 | 53 | 2.16 | 9,364 | 53 | 2.28 | |||||||||||||||||
Interest-bearing deposits with banks | 5,110 | 3 | 0.25 | 5,323 | 4 | 0.26 | 3,949 | 3 | 0.25 | |||||||||||||||||
Other short-term investments | 102 | — | 0.42 | 99 | — | 1.11 | 110 | — | 0.61 | |||||||||||||||||
Total earning assets | 63,981 | 445 | 2.79 | 63,480 | 436 | 2.78 | 60,148 | 442 | 2.95 | |||||||||||||||||
Cash and due from banks | 1,041 | 1,027 | 921 | |||||||||||||||||||||||
Allowance for loan losses | (613 | ) | (601 | ) | (602 | ) | ||||||||||||||||||||
Accrued income and other assets | 4,554 | 4,829 | 4,411 | |||||||||||||||||||||||
Total assets | $ | 68,963 | $ | 68,735 | $ | 64,878 | ||||||||||||||||||||
Money market and interest-bearing checking deposits | $ | 23,659 | 6 | 0.11 | $ | 23,960 | 6 | 0.11 | $ | 22,296 | 6 | 0.10 | ||||||||||||||
Savings deposits | 1,834 | — | 0.02 | 1,786 | — | 0.03 | 1,742 | — | 0.03 | |||||||||||||||||
Customer certificates of deposit | 4,422 | 4 | 0.37 | 4,423 | 4 | 0.37 | 5,041 | 5 | 0.36 | |||||||||||||||||
Foreign office time deposits | 118 | 1 | 1.26 | 124 | 1 | 1.46 | 294 | — | 0.68 | |||||||||||||||||
Total interest-bearing deposits | 30,033 | 11 | 0.14 | 30,293 | 11 | 0.15 | 29,373 | 11 | 0.15 | |||||||||||||||||
Short-term borrowings | 78 | — | 0.04 | 110 | — | 0.06 | 210 | — | 0.03 | |||||||||||||||||
Medium- and long-term debt | 2,661 | 12 | 1.83 | 2,686 | 11 | 1.73 | 2,998 | 14 | 1.77 | |||||||||||||||||
Total interest-bearing sources | 32,772 | 23 | 0.28 | 33,089 | 22 | 0.27 | 32,581 | 25 | 0.30 | |||||||||||||||||
Noninterest-bearing deposits | 27,365 | 26,697 | 24,011 | |||||||||||||||||||||||
Accrued expenses and other liabilities | 1,314 | 1,496 | 955 | |||||||||||||||||||||||
Total shareholders' equity | 7,512 | 7,453 | 7,331 | |||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 68,963 | $ | 68,735 | $ | 64,878 | ||||||||||||||||||||
Net interest income/rate spread (FTE) | $ | 422 | 2.51 | $ | 414 | 2.51 | $ | 417 | 2.65 | |||||||||||||||||
FTE adjustment | $ | 1 | $ | 1 | $ | 1 | ||||||||||||||||||||
Impact of net noninterest-bearing sources of funds | 0.14 | 0.13 | 0.13 | |||||||||||||||||||||||
Net interest margin (as a percentage of average earning assets) (FTE) (a) | 2.65 | % | 2.64 | % | 2.78 | % | ||||||||||||||||||||
(a) Accretion of the purchase discount on the acquired loan portfolio of $2 million, $2 million and $10 million in the second quarter 2015, the first quarter 2015 and the second quarter 2014, respectively, increased the net interest margin by 1 basis point, 2 basis points and 7 basis points in each respective period.
(b) Includes investment securities available-for-sale and investment securities held-to-maturity.
19
CONSOLIDATED STATISTICAL DATA (unaudited) | |||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
(in millions, except per share data) | 2015 | 2015 | 2014 | 2014 | 2014 | ||||||||||
Commercial loans: | |||||||||||||||
Floor plan | $ | 3,840 | $ | 3,544 | $ | 3,790 | $ | 3,183 | $ | 3,576 | |||||
Other | 28,883 | 28,547 | 27,730 | 27,576 | 27,410 | ||||||||||
Total commercial loans | 32,723 | 32,091 | 31,520 | 30,759 | 30,986 | ||||||||||
Real estate construction loans | 1,795 | 1,917 | 1,955 | 1,992 | 1,939 | ||||||||||
Commercial mortgage loans | 8,674 | 8,558 | 8,604 | 8,603 | 8,747 | ||||||||||
Lease financing | 786 | 792 | 805 | 805 | 822 | ||||||||||
International loans | 1,420 | 1,433 | 1,496 | 1,429 | 1,352 | ||||||||||
Residential mortgage loans | 1,865 | 1,859 | 1,831 | 1,797 | 1,775 | ||||||||||
Consumer loans: | |||||||||||||||
Home equity | 1,682 | 1,678 | 1,658 | 1,634 | 1,574 | ||||||||||
Other consumer | 796 | 744 | 724 | 689 | 687 | ||||||||||
Total consumer loans | 2,478 | 2,422 | 2,382 | 2,323 | 2,261 | ||||||||||
Total loans | $ | 49,741 | $ | 49,072 | $ | 48,593 | $ | 47,708 | $ | 47,882 | |||||
Goodwill | $ | 635 | $ | 635 | $ | 635 | $ | 635 | $ | 635 | |||||
Core deposit intangible | 11 | 12 | 13 | 14 | 14 | ||||||||||
Other intangibles | 4 | 3 | 2 | 1 | 1 | ||||||||||
Common equity tier 1 capital (a) (b) | 7,280 | 7,230 | n/a | n/a | n/a | ||||||||||
Tier 1 common capital (c) | n/a | n/a | 7,169 | 7,105 | 7,027 | ||||||||||
Risk-weighted assets (a) (b) | 69,145 | 69,514 | 68,273 | 67,106 | 66,911 | ||||||||||
Common equity tier 1 risk-based capital ratio (a) (b) | 10.53 | % | 10.40 | % | n/a | n/a | n/a | ||||||||
Tier 1 common risk-based capital ratio (c) | n/a | n/a | 10.50 | % | 10.59 | % | 10.50 | % | |||||||
Tier 1 risk-based capital ratio (a) (b) | 10.53 | 10.40 | 10.50 | 10.59 | 10.50 | ||||||||||
Total risk-based capital ratio (a) (b) | 12.53 | 12.35 | 12.51 | 12.83 | 12.52 | ||||||||||
Leverage ratio (a) (b) | 10.57 | 10.53 | 10.35 | 10.79 | 10.93 | ||||||||||
Tangible common equity ratio (c) | 9.92 | 9.97 | 9.85 | 9.94 | 10.39 | ||||||||||
Common shareholders' equity per share of common stock | $ | 42.18 | $ | 42.12 | $ | 41.35 | $ | 41.26 | $ | 40.72 | |||||
Tangible common equity per share of common stock (c) | 38.53 | 38.47 | 37.72 | 37.65 | 37.12 | ||||||||||
Market value per share for the quarter: | |||||||||||||||
High | 53.45 | 47.94 | 50.14 | 52.72 | 52.60 | ||||||||||
Low | 44.38 | 40.09 | 42.73 | 48.33 | 45.34 | ||||||||||
Close | 51.32 | 45.13 | 46.84 | 49.86 | 50.16 | ||||||||||
Quarterly ratios: | |||||||||||||||
Return on average common shareholders' equity | 7.21 | % | 7.20 | % | 7.96 | % | 8.29 | % | 8.27 | % | |||||
Return on average assets | 0.79 | 0.78 | 0.86 | 0.93 | 0.93 | ||||||||||
Efficiency ratio (d) | 63.68 | 68.50 | 65.26 | 62.87 | 63.35 | ||||||||||
Number of banking centers | 477 | 482 | 481 | 481 | 481 | ||||||||||
Number of employees - full time equivalent | 8,901 | 8,831 | 8,876 | 8,913 | 8,901 | ||||||||||
(a) | Basel III rules became effective January 1, 2015, with transitional provisions. All prior period data is based on Basel I rules. |
(b) | June 30, 2015 amounts and ratios are estimated. |
(c) | See Reconciliation of Non-GAAP Financial Measures. |
(d) | Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains (losses). |
n/a - not applicable.
20
PARENT COMPANY ONLY BALANCE SHEETS (unaudited) | |||||||||
Comerica Incorporated | |||||||||
June 30, | December 31, | June 30, | |||||||
(in millions, except share data) | 2015 | 2014 | 2014 | ||||||
ASSETS | |||||||||
Cash and due from subsidiary bank | $ | 7 | $ | — | $ | 5 | |||
Short-term investments with subsidiary bank | 861 | 1,133 | 796 | ||||||
Other short-term investments | 94 | 94 | 96 | ||||||
Investment in subsidiaries, principally banks | 7,500 | 7,411 | 7,369 | ||||||
Premises and equipment | 2 | 2 | 2 | ||||||
Other assets | 122 | 138 | 217 | ||||||
Total assets | $ | 8,586 | $ | 8,778 | $ | 8,485 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Medium- and long-term debt | $ | 903 | $ | 1,208 | $ | 958 | |||
Other liabilities | 160 | 168 | 158 | ||||||
Total liabilities | 1,063 | 1,376 | 1,116 | ||||||
Common stock - $5 par value: | |||||||||
Authorized - 325,000,000 shares | |||||||||
Issued - 228,164,824 shares | 1,141 | 1,141 | 1,141 | ||||||
Capital surplus | 2,158 | 2,188 | 2,175 | ||||||
Accumulated other comprehensive loss | (396 | ) | (412 | ) | (304 | ) | |||
Retained earnings | 6,908 | 6,744 | 6,520 | ||||||
Less cost of common stock in treasury - 49,803,515 shares at 6/30/15, 49,146,225 shares at 12/31/14 and 47,194,492 shares at 6/30/14 | (2,288 | ) | (2,259 | ) | (2,163 | ) | |||
Total shareholders' equity | 7,523 | 7,402 | 7,369 | ||||||
Total liabilities and shareholders' equity | $ | 8,586 | $ | 8,778 | $ | 8,485 | |||
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) | ||||||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||||||
Accumulated | ||||||||||||||||||||
Common Stock | Other | Total | ||||||||||||||||||
Shares | Capital | Comprehensive | Retained | Treasury | Shareholders' | |||||||||||||||
(in millions, except per share data) | Outstanding | Amount | Surplus | Loss | Earnings | Stock | Equity | |||||||||||||
BALANCE AT DECEMBER 31, 2013 | 182.3 | $ | 1,141 | $ | 2,179 | $ | (391 | ) | $ | 6,318 | $ | (2,097 | ) | $ | 7,150 | |||||
Net income | — | — | — | — | 290 | — | 290 | |||||||||||||
Other comprehensive income, net of tax | — | — | — | 87 | — | — | 87 | |||||||||||||
Cash dividends declared on common stock ($0.39 per share) | — | — | — | — | (71 | ) | — | (71 | ) | |||||||||||
Purchase of common stock | (3.0 | ) | — | — | — | — | (141 | ) | (141 | ) | ||||||||||
Net issuance of common stock under employee stock plans | 1.6 | — | (25 | ) | — | (17 | ) | 74 | 32 | |||||||||||
Share-based compensation | — | — | 22 | — | — | — | 22 | |||||||||||||
Other | — | — | (1 | ) | — | — | 1 | — | ||||||||||||
BALANCE AT JUNE 30, 2014 | 180.9 | $ | 1,141 | $ | 2,175 | $ | (304 | ) | $ | 6,520 | $ | (2,163 | ) | $ | 7,369 | |||||
BALANCE AT DECEMBER 31, 2014 | 179.0 | $ | 1,141 | $ | 2,188 | $ | (412 | ) | $ | 6,744 | $ | (2,259 | ) | $ | 7,402 | |||||
Net income | — | — | — | — | 269 | — | 269 | |||||||||||||
Other comprehensive income, net of tax | — | — | — | 16 | — | — | 16 | |||||||||||||
Cash dividends declared on common stock ($0.41 per share) | — | — | — | — | (73 | ) | — | (73 | ) | |||||||||||
Purchase of common stock | (2.5 | ) | — | — | — | — | (115 | ) | (115 | ) | ||||||||||
Purchase and retirement of warrants | — | — | (10 | ) | — | — | — | (10 | ) | |||||||||||
Net issuance of common stock under employee stock plans | 0.9 | — | (23 | ) | — | (10 | ) | 43 | 10 | |||||||||||
Net issuance of common stock for warrants | 1.0 | — | (21 | ) | — | (22 | ) | 43 | — | |||||||||||
Share-based compensation | — | — | 24 | — | — | — | 24 | |||||||||||||
BALANCE AT JUNE 30, 2015 | 178.4 | $ | 1,141 | $ | 2,158 | $ | (396 | ) | $ | 6,908 | $ | (2,288 | ) | $ | 7,523 | |||||
21
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited) | |||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||
(dollar amounts in millions) | Business | Retail | Wealth | ||||||||||||||||||||
Three Months Ended June 30, 2015 | Bank | Bank | Management | Finance | Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 375 | $ | 155 | $ | 45 | $ | (155 | ) | $ | 2 | $ | 422 | ||||||||||
Provision for credit losses | 61 | (8 | ) | (9 | ) | — | 3 | 47 | |||||||||||||||
Noninterest income | 140 | 46 | 60 | 14 | 1 | 261 | |||||||||||||||||
Noninterest expenses | 176 | 182 | 74 | 3 | 1 | 436 | |||||||||||||||||
Provision (benefit) for income taxes (FTE) | 96 | 9 | 14 | (54 | ) | — | 65 | ||||||||||||||||
Net income (loss) | $ | 182 | $ | 18 | $ | 26 | $ | (90 | ) | $ | (1 | ) | $ | 135 | |||||||||
Net loan charge-offs (recoveries) | $ | 22 | $ | 1 | $ | (5 | ) | $ | — | $ | — | $ | 18 | ||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 39,135 | $ | 6,459 | $ | 5,153 | $ | 11,721 | $ | 6,495 | $ | 68,963 | |||||||||||
Loans | 38,109 | 5,770 | 4,954 | — | — | 48,833 | |||||||||||||||||
Deposits | 30,229 | 22,747 | 4,060 | 93 | 269 | 57,398 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.87 | % | 0.30 | % | 2.01 | % | N/M | N/M | 0.79 | % | |||||||||||||
Efficiency ratio (b) | 34.19 | 89.88 | 70.27 | N/M | N/M | 63.68 | |||||||||||||||||
Business | Retail | Wealth | |||||||||||||||||||||
Three Months Ended March 31, 2015 | Bank | Bank | Management | Finance | Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 370 | $ | 151 | $ | 43 | $ | (152 | ) | $ | 2 | $ | 414 | ||||||||||
Provision for credit losses | 25 | (8 | ) | (1 | ) | — | (2 | ) | 14 | ||||||||||||||
Noninterest income | 142 | 42 | 58 | 12 | 1 | 255 | |||||||||||||||||
Noninterest expenses | 200 | 175 | 77 | 2 | 5 | 459 | |||||||||||||||||
Provision (benefit) for income taxes (FTE) | 98 | 9 | 9 | (53 | ) | (1 | ) | 62 | |||||||||||||||
Net income (loss) | $ | 189 | $ | 17 | $ | 16 | $ | (89 | ) | $ | 1 | $ | 134 | ||||||||||
Net loan charge-offs (recoveries) | $ | 9 | $ | — | $ | (1 | ) | $ | — | $ | — | $ | 8 | ||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 38,654 | $ | 6,368 | $ | 5,029 | $ | 12,137 | $ | 6,547 | $ | 68,735 | |||||||||||
Loans | 37,623 | 5,694 | 4,834 | — | — | 48,151 | |||||||||||||||||
Deposits | 30,143 | 22,404 | 3,996 | 170 | 277 | 56,990 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.95 | % | 0.30 | % | 1.29 | % | N/M | N/M | 0.78 | % | |||||||||||||
Efficiency ratio (b) | 39.20 | 90.57 | 74.58 | N/M | N/M | 68.55 | |||||||||||||||||
Business | Retail | Wealth | |||||||||||||||||||||
Three Months Ended June 30, 2014 | Bank | Bank | Management | Finance | Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 375 | $ | 152 | $ | 44 | $ | (160 | ) | 6 | $ | 417 | |||||||||||
Provision for credit losses | 35 | (6 | ) | (10 | ) | — | (8 | ) | 11 | ||||||||||||||
Noninterest income | 100 | 41 | 62 | 15 | 2 | 220 | |||||||||||||||||
Noninterest expenses | 143 | 174 | 76 | 2 | 9 | 404 | |||||||||||||||||
Provision (benefit) for income taxes (FTE) | 100 | 9 | 15 | (56 | ) | 3 | 71 | ||||||||||||||||
Net income (loss) | $ | 197 | $ | 16 | $ | 25 | $ | (91 | ) | $ | 4 | $ | 151 | ||||||||||
Net loan charge-offs (recoveries) | $ | 9 | $ | 3 | $ | (3 | ) | $ | — | $ | — | $ | 9 | ||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 37,305 | $ | 6,222 | $ | 4,987 | $ | 11,055 | $ | 5,309 | $ | 64,878 | |||||||||||
Loans | 36,367 | 5,554 | 4,804 | — | — | 46,725 | |||||||||||||||||
Deposits | 27,351 | 21,890 | 3,616 | 258 | 269 | 53,384 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 2.11 | % | 0.29 | % | 2.02 | % | N/M | N/M | 0.93 | % | |||||||||||||
Efficiency ratio (b) | 30.07 | 90.06 | 72.11 | N/M | N/M | 63.35 | |||||||||||||||||
(a) Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b) Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains.
FTE - Fully Taxable Equivalent
N/M - Not Meaningful
22
MARKET SEGMENT FINANCIAL RESULTS (unaudited) | |||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||
(dollar amounts in millions) | Other | Finance | |||||||||||||||||||||
Three Months Ended June 30, 2015 | Michigan | California | Texas | Markets | & Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 179 | $ | 181 | $ | 130 | $ | 85 | $ | (153 | ) | $ | 422 | ||||||||||
Provision for credit losses | (13 | ) | 4 | 43 | 10 | 3 | 47 | ||||||||||||||||
Noninterest income | 85 | 37 | 31 | 93 | 15 | 261 | |||||||||||||||||
Noninterest expenses | 128 | 100 | 94 | 110 | 4 | 436 | |||||||||||||||||
Provision (benefit) for income taxes (FTE) | 51 | 43 | 10 | 15 | (54 | ) | 65 | ||||||||||||||||
Net income (loss) | $ | 98 | $ | 71 | $ | 14 | $ | 43 | $ | (91 | ) | $ | 135 | ||||||||||
Net loan charge-offs (recoveries) | $ | (2 | ) | $ | 6 | $ | 5 | $ | 9 | $ | — | $ | 18 | ||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 13,852 | $ | 16,696 | $ | 11,878 | $ | 8,321 | $ | 18,216 | $ | 68,963 | |||||||||||
Loans | 13,290 | 16,429 | 11,254 | 7,860 | — | 48,833 | |||||||||||||||||
Deposits | 21,706 | 17,275 | 10,959 | 7,096 | 362 | 57,398 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.73 | % | 1.54 | % | 0.46 | % | 2.05 | % | N/M | 0.79 | % | ||||||||||||
Efficiency ratio (b) | 48.21 | 46.04 | 58.20 | 61.45 | N/M | 63.68 | |||||||||||||||||
Other | Finance | ||||||||||||||||||||||
Three Months Ended March 31, 2015 | Michigan | California | Texas | Markets | & Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 177 | $ | 176 | $ | 131 | $ | 80 | $ | (150 | ) | $ | 414 | ||||||||||
Provision for credit losses | (8 | ) | (3 | ) | 21 | 6 | (2 | ) | 14 | ||||||||||||||
Noninterest income | 80 | 37 | 36 | 89 | 13 | 255 | |||||||||||||||||
Noninterest expenses | 154 | 99 | 96 | 103 | 7 | 459 | |||||||||||||||||
Provision (benefit) for income taxes (FTE) | 38 | 44 | 18 | 16 | (54 | ) | 62 | ||||||||||||||||
Net income (loss) | $ | 73 | $ | 73 | $ | 32 | $ | 44 | $ | (88 | ) | $ | 134 | ||||||||||
Net loan charge-offs | $ | 3 | $ | 1 | $ | 3 | $ | 1 | $ | — | $ | 8 | |||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 13,736 | $ | 16,461 | $ | 12,192 | $ | 7,662 | $ | 18,684 | $ | 68,735 | |||||||||||
Loans | 13,223 | 16,193 | 11,535 | 7,200 | — | 48,151 | |||||||||||||||||
Deposits | 21,710 | 16,837 | 11,010 | 6,986 | 447 | 56,990 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.30 | % | 1.63 | % | 1.01 | % | 2.26 | % | N/M | 0.78 | % | ||||||||||||
Efficiency ratio (b) | 60.23 | 46.36 | 57.43 | 61.45 | N/M | 68.55 | |||||||||||||||||
Other | Finance | ||||||||||||||||||||||
Three Months Ended June 30, 2014 | Michigan | California | Texas | Markets | & Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 182 | $ | 176 | $ | 137 | $ | 76 | $ | (154 | ) | $ | 417 | ||||||||||
Provision for credit losses | (9 | ) | 14 | 22 | (8 | ) | (8 | ) | 11 | ||||||||||||||
Noninterest income | 89 | 38 | 35 | 41 | 17 | 220 | |||||||||||||||||
Noninterest expenses | 159 | 100 | 89 | 45 | 11 | 404 | |||||||||||||||||
Provision (benefit) for income taxes (FTE) | 44 | 37 | 22 | 21 | (53 | ) | 71 | ||||||||||||||||
Net income (loss) | $ | 77 | $ | 63 | $ | 39 | $ | 59 | $ | (87 | ) | $ | 151 | ||||||||||
Net loan charge-offs (recoveries) | $ | 10 | $ | 5 | $ | 2 | $ | (8 | ) | $ | — | $ | 9 | ||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 13,851 | $ | 15,721 | $ | 11,661 | $ | 7,281 | $ | 16,364 | $ | 64,878 | |||||||||||
Loans | 13,482 | 15,439 | 10,966 | 6,838 | — | 46,725 | |||||||||||||||||
Deposits | 20,694 | 15,370 | 10,724 | 6,069 | 527 | 53,384 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.42 | % | 1.54 | % | 1.30 | % | 3.28 | % | N/M | 0.93 | % | ||||||||||||
Efficiency ratio (b) | 58.67 | 46.64 | 51.67 | 38.73 | N/M | 63.35 | |||||||||||||||||
(a) Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b) Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains.
FTE - Fully Taxable Equivalent
N/M - Not Meaningful
23
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited) | |||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
(dollar amounts in millions) | 2015 | 2015 | 2014 | 2014 | 2014 | ||||||||||
Tier 1 Common Capital Ratio: | |||||||||||||||
Tier 1 and Tier 1 common capital (a) | n/a | n/a | $ | 7,169 | $ | 7,105 | $ | 7,027 | |||||||
Risk-weighted assets (a) | n/a | n/a | 68,269 | 67,102 | 66,909 | ||||||||||
Tier 1 and Tier 1 common risk-based capital ratio | n/a | n/a | 10.50 | % | 10.59 | % | 10.50 | % | |||||||
Tangible Common Equity Ratio: | |||||||||||||||
Common shareholders' equity | $ | 7,523 | $ | 7,500 | $ | 7,402 | $ | 7,433 | $ | 7,369 | |||||
Less: | |||||||||||||||
Goodwill | 635 | 635 | 635 | 635 | 635 | ||||||||||
Other intangible assets | 15 | 15 | 15 | 15 | 15 | ||||||||||
Tangible common equity | $ | 6,873 | $ | 6,850 | $ | 6,752 | $ | 6,783 | $ | 6,719 | |||||
Total assets | $ | 69,945 | $ | 69,333 | $ | 69,186 | $ | 68,883 | $ | 65,323 | |||||
Less: | |||||||||||||||
Goodwill | 635 | 635 | 635 | 635 | 635 | ||||||||||
Other intangible assets | 15 | 15 | 15 | 15 | 15 | ||||||||||
Tangible assets | $ | 69,295 | $ | 68,683 | $ | 68,536 | $ | 68,233 | $ | 64,673 | |||||
Common equity ratio | 10.76 | % | 10.82 | % | 10.70 | % | 10.79 | % | 11.28 | % | |||||
Tangible common equity ratio | 9.92 | 9.97 | 9.85 | 9.94 | 10.39 | ||||||||||
Tangible Common Equity per Share of Common Stock: | |||||||||||||||
Common shareholders' equity | $ | 7,523 | $ | 7,500 | $ | 7,402 | $ | 7,433 | $ | 7,369 | |||||
Tangible common equity | 6,873 | 6,850 | 6,752 | 6,783 | 6,719 | ||||||||||
Shares of common stock outstanding (in millions) | 178 | 178 | 179 | 180 | 181 | ||||||||||
Common shareholders' equity per share of common stock | $ | 42.18 | $ | 42.12 | $ | 41.35 | $ | 41.26 | $ | 40.72 | |||||
Tangible common equity per share of common stock | 38.53 | 38.47 | 37.72 | 37.65 | 37.12 | ||||||||||
(a) Tier 1 capital and risk-weighted assets as defined by Basel I risk-based capital rules.
n/a - not applicable.
The Tier 1 common capital ratio removes preferred stock and qualifying trust preferred securities from Tier 1 capital as defined by and calculated in conformity with Basel I risk-based capital rules in effect through December 31, 2014. Effective January 1, 2015, regulatory capital components and risk-weighted assets are defined by and calculated in conformity with Basel III risk-based capital rules. The tangible common equity ratio removes preferred stock and the effect of intangible assets from capital and the effect of intangible assets from total assets. Tangible common equity per share of common stock removes the effect of intangible assets from common shareholders equity per share of common stock. Comerica believes these measurements are meaningful measures of capital adequacy used by investors, regulators, management and others to evaluate the adequacy of common equity and to compare against other companies in the industry.
24
