0000028412-17-000007.txt : 20170117 0000028412-17-000007.hdr.sgml : 20170117 20170117063220 ACCESSION NUMBER: 0000028412-17-000007 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 19 CONFORMED PERIOD OF REPORT: 20170117 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20170117 DATE AS OF CHANGE: 20170117 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMERICA INC /NEW/ CENTRAL INDEX KEY: 0000028412 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 000006021 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10706 FILM NUMBER: 17529126 BUSINESS ADDRESS: STREET 1: 1717 MAIN STREET MC6404 STREET 2: ATTN: DARLENE PERSONS CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 214-462-6831 MAIL ADDRESS: STREET 1: 1717 MAIN STREET MC6404 STREET 2: ATTN: DARLENE PERSONS CITY: DALLAS STATE: TX ZIP: 75201 FORMER COMPANY: FORMER CONFORMED NAME: DETROITBANK CORP DATE OF NAME CHANGE: 19850311 8-K 1 cma-20161231form8xk.htm 8-K Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

---------------

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 17, 2017

COMERICA INCORPORATED
(Exact name of registrant as specified in its charter)


Delaware
------------
1-10706
----------
38-1998421
---------------
(State or other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification Number)

Comerica Bank Tower
1717 Main Street, MC 6404
Dallas, Texas 75201
------------------------------
(Address of principal executive offices) (zip code)

(214) 462-6831
---------------------------------------------------------------------------
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




ITEMS 2.02 and 7.01
RESULTS OF OPERATIONS AND FINANCIAL CONDITION AND REGULATION FD DISCLOSURE

Comerica Incorporated (“Comerica”) today released its earnings for the quarter ended December 31, 2016. A copy of the press release and the presentation slides which will be discussed in Comerica's webcast earnings call are attached hereto as Exhibits 99.1 and 99.2, respectively.

The information in this report (including Exhibits 99.1 and 99.2 hereto) is being "furnished" and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such a filing.


ITEM 9.01
FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

99.1    Press Release dated January 17, 2017
99.2    Earnings Presentation Slides





SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

COMERICA INCORPORATED

By: /s/ John D. Buchanan        
Name: John D. Buchanan
Title: Executive Vice President - Chief Legal Officer

January 17, 2017








EXHIBIT INDEX

Exhibit No.
Description
99.1
Press Release dated January 17, 2017
99.2
Earnings Presentation Slides






EX-99.1 2 cma-20161231ex991.htm EXHIBIT 99.1 Exhibit

comericalogoa04.jpg
COMERICA REPORTS FOURTH QUARTER 2016 NET INCOME OF $164 MILLION

Net Income of 92 Cents Per Share Increased 10 Percent Compared to Third Quarter 2016
Includes After-Tax Impact of Restructuring Charges of $13 Million, or 7 Cents Per Share

Full-Year 2016 Net Income of $477 Million, or $2.68 Per Share
2016 Includes After-Tax Impact of Restructuring Charges of $59 Million, or 34 Cents Per Share

2016 Net Interest Income Increased $108 million, or 6 Percent, Compared to 2015
Reflects the Benefits of Rising Rates

Growth in Efficiency and Revenue Initiative Implementation Continues
Over $25 Million of Expense Savings Thus Far

DALLAS/January 17, 2017 -- Comerica Incorporated (NYSE: CMA) today reported full-year 2016 net income of $477 million, or $2.68 per diluted share (included restructuring impact of 34 cents per share), compared to $521 million, or $2.84 per diluted share for full-year 2015. Fourth quarter 2016 net income was $164 million, compared to $149 million for the third quarter 2016 and $116 million for the fourth quarter 2015.
The Growth in Efficiency and Revenue ("GEAR Up") initiative continues to execute on the more than 20 work streams previously identified. 2016 progress includes a reduction in workforce, the consolidation of 19 banking centers and a significant reduction in retirement plan expense.
(dollar amounts in millions, except per share data)
4th Qtr '16
 
3rd Qtr '16
 
4th Qtr '15
 
Net interest income
$
455

 
$
450

 
$
433

 
Provision for credit losses
35

 
16

 
60

 
Noninterest income
267

 
272

 
266

 
Noninterest expenses
461

(a)
493

(a)
482

 
Pre-tax income
226


213


157

 
Provision for income taxes
62

 
64

 
41

 
Net income
$
164

 
$
149

 
$
116

 
 
 
 
 
 
 
 
Net income attributable to common shares
$
163

 
$
148

 
$
115

 
 
 
 
 
 
 
 
Diluted income per common share
0.92

 
0.84

 
0.64

 
 
 
 
 
 
 
 
Average diluted shares (in millions)
177

(b)
176

 
179

 
 
 
 
 
 
 
 
Common equity Tier 1 capital ratio (c)
11.07
%
 
10.69
%
 
10.54
%
 
Common equity ratio
10.68

 
10.42

 
10.52

 
Tangible common equity ratio (d)
9.89

 
9.64

 
9.70

 
Efficiency ratio (e)
63.58

 
68.15

 
68.92

 
(a)
Included restructuring charges of $20 million (7 cents per share, after tax) in both the fourth and third quarters of 2016.
(b)
Included an increase of 1 million shares as a result of the impact of increased share price on common stock equivalents.
(c)
December 31, 2016 ratio is 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 (losses).
"2016 was a pivotal year with the development and implementation of our enterprise-wide GEAR Up initiative,” said Ralph W. Babb, Jr., chairman and chief executive officer. “We have made significant progress in executing the expense savings and are fully committed to delivering on the efficiency and revenue opportunities to further enhance our profitability and shareholder value. We also benefited meaningfully from increased interest rates, and our overall credit metrics remained strong.

-more-
COMERICA REPORTS FOURTH QUARTER 2016 NET INCOME OF $164 MILLION - 2

"Our fourth quarter earnings per share increased 10 percent over the third quarter," said Babb. "The benefits of GEAR Up were clearly demonstrated with a reduction in expenses and significant improvement in our efficiency ratio. In addition, the rise in rates late in the quarter boosted our net interest income. While average loan balances were relatively stable, reflecting seasonality in some of our businesses along with the continued reduction of our Energy portfolio, average deposit growth was robust, increasing $1.6 billion over the third quarter. Credit quality continued to be strong with net charge-offs at the low end of our historical norm. Finally, we increased our share buyback to $99 million, in line with our 2016 Capital Plan.
"As we look forward to the year ahead, we remain keenly focused on continued implementation of our GEAR Up initiatives while growing loans and deposits as we make necessary investments over time. Our revenue picture looks brighter as a result of the Federal Reserve increasing its benchmark rate 25 basis points in December. With oil prices stabilizing, we remain very comfortable with our Energy portfolio and the level of reserves we have established. We also believe we are well positioned to benefit from any further improvement in rates, and from favorable changes in the regulatory environment and the economy."
Fourth Quarter and Full-Year 2016 Overview
Fourth Quarter 2016 Compared to Third Quarter 2016
Average total loans decreased $291 million to $48.9 billion.
•
Primarily reflected decreases in Mortgage Banker Finance, Energy, general Middle Market and Environmental Services, partially offset by an increase in National Dealer Services.
Average total deposits increased $1.6 billion, or 3 percent, to $59.6 billion.
•
Driven by a $1.6 billion increase in noninterest-bearing deposits.
•
Growth in average total deposits was broad-based with increases in almost all lines of business and all markets.
Net interest income increased $5 million to $455 million.
•
Primarily reflecting the benefit of an increase in short-term rates and lower funding costs due to the maturity of $650 million of debt in the fourth quarter 2016.
Provision for credit losses increased $19 million to $35 million.
•
Net credit-related charge-offs were $36 million, or 0.29 percent of average loans, compared to $16 million, or 0.13 percent, in the third quarter 2016.
•
The allowance for loan losses was $730 million, or 1.49 percent of total loans.
Noninterest income decreased $5 million to $267 million.
•
Decrease included lower commercial lending fees, largely as a result of a decrease in syndication fees.
Noninterest expenses decreased $32 million to $461 million.
•
Decrease in salaries and benefits expense of $28 million, including an $8 million decrease in pension expense, primarily due to the GEAR Up initiative.
•
Additional decrease due to lower consulting expense and a gain on early termination of certain leveraged lease transactions, partially offset by an increase in outside processing expense.
•
Included restructuring charges of $20 million in both the fourth and third quarters of 2016.
Provision for income taxes decreased $2 million to $62 million.
•
The effective tax rate was 27.5 percent for the fourth quarter 2016, compared to 29.6 percent in the third quarter, primarily reflecting a $5 million tax benefit from the early termination of certain leveraged lease transactions.
Capital position remained solid at December 31, 2016.
•
Repurchased approximately 1.8 million shares of common stock under the equity repurchase program, which was more than offset by 5.1 million shares issued for warrant and employee option exercises.
•
Including dividends, returned a total of $139 million to shareholders.

-more-
COMERICA REPORTS FOURTH QUARTER 2016 NET INCOME OF $164 MILLION - 3

Full-Year 2016 Compared to Full-Year 2015
Average total loans increased $368 million, or 1 percent, to $49.0 billion.
•
Excluding the $641 million decline in Energy, average loans increased $1.0 billion, primarily reflecting increases in Commercial Real Estate, National Dealer Services and Mortgage Banker Finance, partially offset by decreases in general Middle Market and Corporate Banking.
Average total deposits decreased $585 million, or 1 percent, to $57.7 billion.
•
Reflected an increase of $1.7 billion, or 6 percent, in noninterest-bearing deposits, more than offset by a decrease of $2.2 billion, or 7 percent, in interest-bearing deposits.
•
Decrease in average total deposits reflected decreases in general Middle Market and Corporate Banking, partially offset by an increase in Retail Bank.
Net interest income increased $108 million, or 6 percent, to $1.8 billion.
•
Benefits from higher interest rates, loan growth and a larger securities portfolio, partially offset by higher debt costs.
Provision for credit losses increased $101 million to $248 million.
•
Primarily due to the increase in reserves for Energy loans recorded in the first quarter 2016, partially offset by improvements in the remainder of the portfolio.
•
Net credit-related charge-offs were $157 million, or 0.32 percent of average loans, for 2016, compared to $101 million, or 0.21 percent of average loans, for 2015. The increase was primarily due to an increase in charge-offs in the Energy portfolio.
Noninterest income increased $16 million to $1.1 billion in 2016.
•
Customer-driven fees increased $22 million and non-fee categories declined $6 million. An increase in card fees as well as growth in fiduciary, customer derivative and foreign exchange income was partly offset by lower commercial lending fees and investment banking income.
Noninterest expenses increased $103 million to $1.9 billion.
•
Excluding $93 million of restructuring charges related to GEAR Up and $33 million from the net release of litigation reserves in 2015, noninterest expenses decreased $23 million.
◦
Primarily reflected a decrease of $48 million in salaries and benefits, including GEAR Up savings estimated to be in excess of $25 million as well as an additional decrease in pension expense, partially offset by the impact of merit increases and one additional day in 2016.
◦
Additionally, increases in technology expense, outside processing fees and FDIC insurance premiums were partially offset by decreases in state business taxes and gains from the early termination of leveraged lease transactions.
The provision for income taxes decreased $36 million to $193 million.
•
The effective tax rate was 28.8 percent in 2016, compared to 30.5 percent in 2015, primarily reflecting a $10 million increase in tax benefits from the early termination of certain leveraged lease transactions.
Continued execution of the capital plan.
•
Repurchased approximately 6.6 million shares of common stock during 2016 under the equity repurchase program.
•
Together with dividends of $0.89 per share, $458 million was returned to shareholders.

-more-
COMERICA REPORTS FOURTH QUARTER 2016 NET INCOME OF $164 MILLION - 4

Net Interest Income
(dollar amounts in millions)
4th Qtr '16
 
3rd Qtr '16
 
4th Qtr '15
Net interest income
$
455

 
$
450

 
$
433

 
 
 
 
 
 
Net interest margin
2.65
%
 
2.66
%
 
2.58
%
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
Total earning assets
$
68,774

 
$
67,648

 
$
66,818

Total loans
48,915

 
49,206

 
48,548

Total investment securities
12,329

 
12,373

 
10,864

Federal Reserve Bank deposits
7,245

 
5,781

 
7,073

 
 
 
 
 
 
 
 
 
 
 
 
Total deposits
59,645

 
58,065

 
59,736

Total noninterest-bearing deposits
32,091

 
30,454

 
29,627

Medium- and long-term debt
5,578

 
5,907

 
3,089

•
Net interest income increased $5 million to $455 million in the fourth quarter 2016, compared to the third quarter 2016.
◦
Interest on loans increased $1 million, reflecting higher loan yields (+$6 million), partially offset by the impact of lower average loan balances (-$2 million), the impact of a negative residual value adjustment to assets in the leasing portfolio (-$2 million) and other portfolio dynamics (-$1 million).
◦
Interest on investment securities increased $1 million, primarily reflecting the impact of an increase in investment volume.
◦
Interest on short-term investments increased $2 million, primarily reflecting an increase in average Federal Reserve Bank deposit balances.
◦
Interest expense on debt decreased $1 million, primarily due to the maturity of $650 million of debt in the fourth quarter 2016.
•
The net interest margin of 2.65 percent decreased 1 basis point compared to the third quarter 2016, reflecting the impact of an increase in Federal Reserve Bank deposit balances (-4 basis points), partially offset by a benefit from the loan portfolio (+2 basis points), primarily due to higher short term rates, and lower debt expense (+1 basis point).

-more-
COMERICA REPORTS FOURTH QUARTER 2016 NET INCOME OF $164 MILLION - 5

Credit Quality
“Our overall credit picture remains strong,” said Babb. “The provision and net charge-offs increased modestly from the very low levels of the third quarter. Net charge-offs were $36 million, or 29 basis points, which is at the low end of our historical norm, and included $15 million in Energy charge-offs. Total criticized loans declined $405 million and nonaccrual loans were down $49 million. 
“Over the past year, we have reduced our Energy loans by over $800 million, or 27 percent, which now represent less than 5 percent of our total loans. As the performance of this portfolio has improved, including a $319 million decrease in criticized loans in the fourth quarter, we have modestly reduced our reserve allocation, which sits at over 7 percent for energy loans as of December 31st.”
(dollar amounts in millions)
4th Qtr '16
 
3rd Qtr '16
 
4th Qtr '15
Credit-related charge-offs
$
48

 
$
35

 
$
76

Recoveries
12

 
19

 
25

Net credit-related charge-offs
36

 
16

 
51

Net credit-related charge-offs/Average total loans
0.29
%
 
0.13
%
 
0.42
%
 
 
 
 
 
 
Provision for credit losses
$
35

 
$
16

 
$
60

 
 
 
 
 
 
Nonperforming loans
590

 
639

 
379

Nonperforming assets (NPAs)
607

 
660

 
391

NPAs/Total loans and foreclosed property
1.24
%
 
1.34
%
 
0.80
%
 
 
 
 
 
 
Loans past due 90 days or more and still accruing
$
19

 
$
48

 
$
17

 
 
 
 
 
 
Allowance for loan losses
730

 
727

 
634

Allowance for credit losses on lending-related commitments (a)
41

 
45

 
45

Total allowance for credit losses
771

 
772

 
679

 
 
 
 
 
 
Allowance for loan losses/Period-end total loans
1.49
%
 
1.48
%
 
1.29
%
Allowance for loan losses/Nonperforming loans
124

 
114

 
167

(a)
Included in "Accrued expenses and other liabilities" on the consolidated balance sheets.
•
Energy business line loans were $2.3 billion at December 31, 2016 compared to $2.5 billion at September 30, 2016.
◦
Criticized Energy loans decreased $319 million, to $1.2 billion.
◦
Energy net charge-offs were $15 million, compared to $6 million in the third quarter 2016.
◦
The reserve allocation for loans in the Energy business line was over 7 percent at December 31, 2016.
•
Net charge-offs increased $20 million to $36 million, or 0.29 percent of average loans, in the fourth quarter 2016, compared to $16 million, or 0.13 percent, in the third quarter 2016.
•
During the fourth quarter 2016, $60 million of borrower relationships over $2 million were transferred to nonaccrual status, a decrease of $45 million compared to $105 million transferred during the third quarter. Fourth quarter transfers included $6 million from Energy, compared to $63 million in the third quarter.
•
Criticized loans decreased $405 million to $2.9 billion at December 31, 2016, compared to $3.3 billion at September 30, 2016. Criticized loans are generally consistent with the Special Mention, Substandard and Doubtful categories defined by regulatory authorities.



-more-
COMERICA REPORTS FOURTH QUARTER 2016 NET INCOME OF $164 MILLION - 6

Full-Year 2017 Outlook
For full-year 2017 compared to full-year 2016, management expects the following, assuming a continuation of the current economic and low rate environment as well as contributions from the GEAR Up initiative of $30 million in revenue and $125 million in expense savings, are as follows:
•
Average loans higher, in line with Gross Domestic Product growth, reflecting increases in most lines of business and reduced headwinds from a declining Energy portfolio.
•
Net interest income higher, reflecting the benefit from the December 2016 short-term rate increase and loan growth, partially offset by higher funding costs and minor loan yield compression.
◦
Full-year benefit from the December rise in short-term rates expected to be more than $70 million, assuming a 25 percent deposit beta.
•
Provision for credit losses lower, with continued solid performance of the overall portfolio.
◦
Provision and net charge-offs in line with historical normal levels of 30-40 basis points.
•
Noninterest income higher, with the execution of GEAR Up opportunities, modest growth in treasury management and card fees, as well as wealth management products such as fiduciary and brokerage services.
◦
Increase of 4 percent to 6 percent.
•
Noninterest expenses lower, reflecting lower restructuring charges and an additional $125 million in GEAR Up savings, relative to 2016 GEAR Up savings of more than $25 million. Outside processing is expected to increase in line with growing revenue. Headwinds include increased technology costs and higher FDIC insurance expense, as well as typical inflationary pressure. The gains of $13 million in 2016 from early terminations of certain leveraged lease transactions are not expected to repeat.
◦
Restructuring charges of $25 million to $50 million, compared to $93 million in 2016.
◦
Remaining noninterest expenses 1 percent to 2 percent lower.
◦
Decrease of 4 percent to 5 percent including restructuring charges.
•
Income tax expense to approximate 33 percent of pre-tax income.



-more-
COMERICA REPORTS FOURTH QUARTER 2016 NET INCOME OF $164 MILLION - 7

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 December 31, 2016. The accompanying narrative addresses fourth quarter 2016 results compared to third quarter 2016.
The following table presents net income (loss) by business segment.
(dollar amounts in millions)
4th Qtr '16
 
3rd Qtr '16
 
4th Qtr '15
Business Bank
$
205

92
 %
 
$
189

91
%
 
$
198

91
 %
Retail Bank
(4
)
(2
)
 
1

—

 
(1
)
(1
)
Wealth Management
23

10

 
18

9

 
21

10

 
224

100
 %

208

100
%

218

100
 %
Finance
(61
)
 
 
(58
)
 
 
(100
)
 
Other (a)
1

 
 
(1
)
 
 
(2
)
 
     Total
$
164

 
 
$
149

 
 
$
116

 
(a) Includes items not directly associated with the three major business segments or the Finance Division.
Business Bank
(dollar amounts in millions)
4th Qtr '16
 
3rd Qtr '16
 
4th Qtr '15
Net interest income
$
354

 
$
356

 
$
384

Provision for credit losses
17

 
2

 
41

Noninterest income
146

 
145

 
146

Noninterest expenses
196

(a)
215

(a)
207

Net income
205

 
189

 
198

 
 
 
 
 
 
Net credit-related charge-offs
33

 
14

 
35

 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
Assets
39,220

 
39,618

 
39,305

Loans
37,893

 
38,243

 
37,682

Deposits
31,221

 
30,019

 
31,746

(a) Included restructuring charges of $7 million in the fourth quarter 2016 and $10 million in the third quarter 2016.
•
Average loans decreased $350 million, primarily reflecting decreases in Mortgage Banker Finance, Energy, general Middle Market and Environmental Services, partially offset by an increase in National Dealer Services.
•
Average deposits increased $1.2 billion, primarily reflecting increases in Corporate Banking, Energy and general Middle Market, partially offset by a decrease in Technology and Life Sciences. The increase was driven by growth in noninterest-bearing deposits.
•
Net interest income decreased $2 million, primarily due to a negative residual value adjustment to assets in the leasing portfolio, a decrease in net funds transfer pricing (FTP) credits and a decrease in average loan balances. The decrease in net FTP credits primarily reflected higher funding costs, partially offset by the benefit from the increase in average deposits.
•
The provision for credit losses increased $15 million. Net charge-offs increased $19 million, primarily reflecting increases in general Middle Market and Energy, partially offset by a decrease in Corporate Banking.
•
Noninterest income increased $1 million, primarily due to increases in card fees and customer derivative income (largely as a result of a decrease in credit valuation adjustments), partially offset by a decrease in commercial lending fees (primarily syndication agent fees).
•
Noninterest expenses decreased $19 million, primarily reflecting savings related to the GEAR Up initiative, a decrease in restructuring charges and an increase in gains from the early termination of certain leveraged lease transactions, partially offset by an increase in outside processing fees.

-more-
COMERICA REPORTS FOURTH QUARTER 2016 NET INCOME OF $164 MILLION - 8

Retail Bank
(dollar amounts in millions)
4th Qtr '16
 
3rd Qtr '16
 
4th Qtr '15
Net interest income
$
156

 
$
156

 
$
160

Provision for credit losses
22

 
10

 
23

Noninterest income
48

 
50

 
49

Noninterest expenses
188

(a)
195

(a)
191

Net income (loss)
(4
)
 
1

 
(1
)
 
 
 
 
 
 
Net credit-related charge-offs
5

 
3

 
25

 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
Assets
6,559

 
6,544

 
6,549

Loans
5,906

 
5,871

 
5,868

Deposits
23,915

 
23,654

 
23,262

(a) Included restructuring charges of $11 million in the fourth quarter 2016 and $8 million in the third quarter 2016.
•
Average loans increased $35 million, primarily reflecting increases in Retail Banking (primarily consumer loans and residential mortgages) and Small Business (primarily commercial mortgages).
•
Average deposits increased $261 million, primarily reflecting increases in noninterest-bearing, money market and interest-bearing checking deposits, partially offset by a decrease in certificates of deposits.
•
The provision for credit losses increased $12 million, primarily reflecting an increase in reserves for Small Business.
•
Noninterest income decreased $2 million, primarily reflecting a securities loss in the fourth quarter.
•
Noninterest expenses decreased $7 million. Excluding a $3 million increase in restructuring charges, noninterest expenses decreased $10 million, primarily reflecting savings related to the GEAR Up Initiative.
Wealth Management
(dollar amounts in millions)
4th Qtr '16
 
3rd Qtr '16
 
4th Qtr '15
Net interest income
$
42

 
$
41

 
$
47

Provision for credit losses
(1
)
 
(1
)
 
(7
)
Noninterest income
62

 
61

 
57

Noninterest expenses
72

(a)
75

(a)
81

Net income
23

 
18

 
21

 
 
 
 
 
 
Net credit-related charge-offs (recoveries)
(2
)
 
(1
)
 
(9
)
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
Assets
5,268

 
5,283

 
5,199

Loans
5,116

 
5,092

 
4,998

Deposits
4,092

 
4,030

 
4,355

(a) Included restructuring charges of $2 million in both the fourth and third quarters of 2016.
•
Average loans increased $24 million, primarily reflecting an increase in Private Banking.
•
Average deposits increased $62 million, primarily reflecting increases in noninterest-bearing, money market and interest-bearing checking deposits.
•
Noninterest expenses decreased $3 million, primarily due to savings related to the GEAR Up initiative and a decrease in operational losses.

-more-
COMERICA REPORTS FOURTH QUARTER 2016 NET INCOME OF $164 MILLION - 9

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 December 31, 2016.
The following table presents net income (loss) by market segment.
(dollar amounts in millions)
4th Qtr '16
 
3rd Qtr '16
 
4th Qtr '15
Michigan
$
70

31
%
 
$
50

24
%
 
$
82

38
 %
California
74

33

 
74

35

 
89

41

Texas
22

10

 
33

16

 
(3
)
(2
)
Other Markets
58

26

 
51

25

 
50

23

 
224

100
%
 
208

100
%
 
218

100
 %
Finance & Other (a)
(60
)
 
 
(59
)
 
 
(102
)
 
     Total
$
164

 
 
$
149

 
 
$
116

 
(a) Includes items not directly associated with the geographic markets.
•
Average loans decreased $185 million in Texas, primarily reflecting a decrease in Energy, and increased $50 million in Michigan and $29 million in California.
•
Average deposits increased $685 million in California, $526 million in Texas and $86 million in Michigan. The increase in California primarily reflected increases in Corporate Banking and general Middle Market, partially offset by a decrease in Technology and Life Sciences. The increase in Texas primarily reflected an increase in Energy.
•
Net interest income increased $3 million in California and decreased $2 million in Texas and $1 million in Michigan. The changes in net interest income primarily reflected the net FTP impact of changes in loan and deposit balances in each market, including the negative impact of a higher cost of funds rate in the fourth quarter. In addition, Michigan was impacted by a negative residual value adjustment to assets in the leasing portfolio.
•
The provision for credit losses increased $29 million and $16 million in Texas and California, respectively, and decreased $13 million in Michigan.
•
Noninterest income decreased $3 million in California and $1 million in Michigan, and increased $1 million in Texas. The decrease in California was primarily due to a decrease in syndication agent fees.
•
Noninterest expenses decreased $12 million in Michigan, $10 million in Texas and $9 million in California. Much of the decrease in each market was due to the impact of the GEAR Up initiative. In addition, the decrease in Michigan reflected an increase in gains on the early termination of certain leveraged lease transactions and a decrease in operational losses.
Michigan Market
(dollar amounts in millions)
4th Qtr '16
 
3rd Qtr '16
 
4th Qtr '15
Net interest income
$
167

 
$
168

 
$
182

Provision for credit losses
—

 
13

 
(12
)
Noninterest income
81

 
82

 
81

Noninterest expenses
149

(a)
161

(a)
161

Net income
70

 
50

 
82

 
 
 
 
 
 
Net credit-related charge-offs (recoveries)
3

 
1

 
(2
)
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
Assets
13,174

 
13,174

 
13,601

Loans
12,538

 
12,488

 
12,986

Deposits
22,030

 
21,944

 
22,123

(a) Included restructuring charges of $4 million in the fourth quarter 2016 and $5 million in the third quarter 2016.

-more-
COMERICA REPORTS FOURTH QUARTER 2016 NET INCOME OF $164 MILLION - 10

California Market
(dollar amounts in millions)
4th Qtr '16
 
3rd Qtr '16
 
4th Qtr '15
Net interest income
$
182

 
$
179

 
$
192

Provision for credit losses
12

 
(4
)
 
(7
)
Noninterest income
41

 
44

 
40

Noninterest expenses
101

(a)
110

(a)
107

Net income
74

 
74

 
89

 
 
 
 
 
 
Net credit-related charge-offs
1

 
—

 
1

 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
Assets
17,947

 
17,933

 
17,297

Loans
17,666

 
17,637

 
17,033

Deposits
18,359

 
17,674

 
18,545

(a) Included restructuring charges of $4 million in the fourth quarter 2016 and $5 million in the third quarter 2016.
Texas Market
(dollar amounts in millions)
4th Qtr '16
 
3rd Qtr '16
 
4th Qtr '15
Net interest income
$
115

 
$
117

 
$
130

Provision for credit losses
26

 
(3
)
 
57

Noninterest income
34

 
33

 
32

Noninterest expenses
92

(a)
102

(a)
102

Net (loss) income
22

 
33

 
(3
)
 
 
 
 
 
 
Net credit-related charge-offs
30

 
10

 
33

 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
Assets
10,810

 
11,014

 
11,474

Loans
10,381

 
10,566

 
10,893

Deposits
10,386

 
9,860

 
10,807

(a) Included restructuring charges of $6 million in the fourth quarter 2016 and $7 million in the third quarter 2016.

-more-
COMERICA REPORTS FOURTH QUARTER 2016 NET INCOME OF $164 MILLION - 11

Conference Call and Webcast
Comerica will host a conference call to review fourth quarter 2016 financial results at 7 a.m. CT Tuesday January 17, 2017. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 28675280). 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.

-more-
COMERICA REPORTS FOURTH QUARTER 2016 NET INCOME OF $164 MILLION - 12

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, including the GEAR Up initiative, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries as well as estimates of the economic benefits of the GEAR Up initiative, estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in general economic, political or industry conditions; changes in monetary and fiscal policies, 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, in particular the energy industry; unfavorable developments concerning credit quality; 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; reductions in Comerica's credit rating; whether Comerica may achieve opportunities for revenue enhancements and efficiency improvements under the GEAR Up initiative, or changes in the scope or assumptions underlying the GEAR Up initiative; the interdependence of financial service companies; the implementation of Comerica's strategies and business initiatives; damage to Comerica's reputation; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; competitive product and pricing pressures among financial institutions within Comerica's markets; 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, 2015, "Item 1A. Risk Factors” on page 54 of Comerica's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, and "Item 1A. Risk Factors” on page 62 of Comerica's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016. 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
 
Years Ended
 
December 31,
September 30,
December 31,
 
December 31,
(in millions, except per share data)
2016
2016
2015
 
2016
2015
PER COMMON SHARE AND COMMON STOCK DATA
 
 
 
 
 
 
Diluted net income
$
0.92

$
0.84

$
0.64

 
$
2.68

$
2.84

Cash dividends declared
0.23

0.23

0.21

 
0.89

0.83

 
 
 
 
 
 
 
Average diluted shares (in thousands)
177,457

176,184

179,197

 
176,730

181,104

KEY RATIOS
 
 
 
 
 
 
Return on average common shareholders' equity
8.48
%
7.80
%
6.08
%
 
6.22
%
6.91
%
Return on average assets
0.88

0.82

0.64

 
0.67

0.74

Common equity tier 1 and tier 1 risk-based capital ratio (a)
11.07

10.69

10.54

 
 
 
Total risk-based capital ratio (a)
13.24

12.84

12.69

 
 
 
Leverage ratio (a)
10.18

10.14

10.22

 
 
 
Common equity ratio
10.68

10.42

10.52

 
 
 
Tangible common equity ratio (b)
9.89

9.64

9.70

 
 
 
AVERAGE BALANCES
 
 
 
 
 
 
Commercial loans
30,792

31,132

31,219

 
31,062

31,501

Real estate construction loans
2,837

2,646

1,961

 
2,508

1,884

Commercial mortgage loans
8,918

9,012

8,842

 
8,981

8,697

Lease financing
619

662

750

 
684

783

International loans
1,303

1,349

1,402

 
1,367

1,441

Residential mortgage loans
1,923

1,883

1,896

 
1,894

1,878

Consumer loans
2,523

2,522

2,478

 
2,500

2,444

Total loans
48,915

49,206

48,548

 
48,996

48,628

 
 
 
 
 
 
 
Earning assets
68,774

67,648

66,818

 
66,545

65,129

Total assets
74,126

72,909

71,907

 
71,743

70,247

 
 
 
 
 
 
 
Noninterest-bearing deposits
32,091

30,454

29,627

 
29,751

28,087

Interest-bearing deposits
27,554

27,611

30,109

 
27,990

30,239

Total deposits
59,645

58,065

59,736

 
57,741

58,326

 
 
 
 
 
 
 
Common shareholders' equity
7,734

7,677

7,613

 
7,674

7,534

NET INTEREST INCOME
 
 
 
 
 
 
Net interest income
$
455

$
450

$
433

 
$
1,797

$
1,689

Net interest margin (fully taxable equivalent)
2.65
%
2.66
%
2.58
%
 
2.71
%
2.60
%
CREDIT QUALITY
 
 
 
 
 
 
Total nonperforming assets
$
607

$
660

$
391

 
 
 
 
 
 
 
 
 
 
Loans past due 90 days or more and still accruing
19

48

17

 
 
 
 
 
 
 
 
 
 
Net credit-related charge-offs
36

16

51

 
$
157

$
101

 
 
 
 
 
 
 
Allowance for loan losses
730

727

634

 
 
 
Allowance for credit losses on lending-related commitments
41

45

45

 
 
 
Total allowance for credit losses
771

772

679

 
 
 
 
 
 
 
 
 
 
Allowance for loan losses as a percentage of total loans
1.49
%
1.48
%
1.29
%
 
 
 
Net credit-related charge-offs as a percentage of average total loans
0.29

0.13

0.42

 
0.32
%
0.21
%
Nonperforming assets as a percentage of total loans and foreclosed property
1.24

1.34

0.80

 
 
 
Allowance for loan losses as a percentage of total nonperforming loans
124

114

167

 
 
 
(a)
December 31, 2016 ratios are estimated.
(b)
See Reconciliation of Non-GAAP Financial Measures.


13


 CONSOLIDATED BALANCE SHEETS
 Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
December 31,
September 30,
December 31,
(in millions, except share data)
2016
2016
2015
 
(unaudited)
(unaudited)
 
ASSETS
 
 
 
Cash and due from banks
$
1,249

$
1,292

$
1,157

 
 
 
 
Interest-bearing deposits with banks
5,969

6,748

4,990

Other short-term investments
92

92

113

 
 
 
 
Investment securities available-for-sale
10,787

10,789

10,519

Investment securities held-to-maturity
1,582

1,695

1,981

 
 
 
 
Commercial loans
30,994

31,152

31,659

Real estate construction loans
2,869

2,743

2,001

Commercial mortgage loans
8,931

9,013

8,977

Lease financing
572

648

724

International loans
1,258

1,303

1,368

Residential mortgage loans
1,942

1,874

1,870

Consumer loans
2,522

2,541

2,485

Total loans
49,088

49,274

49,084

Less allowance for loan losses
(730
)
(727
)
(634
)
Net loans
48,358

48,547

48,450

 
 
 
 
Premises and equipment
501

528

550

Accrued income and other assets
4,440

4,433

4,117

Total assets
$
72,978

$
74,124

$
71,877

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Noninterest-bearing deposits
$
31,540

$
31,776

$
30,839

 
 
 
 
Money market and interest-bearing checking deposits
22,556

22,436

23,532

Savings deposits
2,064

2,052

1,898

Customer certificates of deposit
2,806

2,967

3,552

Foreign office time deposits
19

30

32

Total interest-bearing deposits
27,445

27,485

29,014

Total deposits
58,985

59,261

59,853

 
 
 
 
Short-term borrowings
25

12

23

Accrued expenses and other liabilities
1,012

1,234

1,383

Medium- and long-term debt
5,160

5,890

3,058

Total liabilities
65,182

66,397

64,317

 
 
 
 
Common stock - $5 par value:
 
 
 
Authorized - 325,000,000 shares
 
 
 
Issued - 228,164,824 shares
1,141

1,141

1,141

Capital surplus
2,135

2,174

2,173

Accumulated other comprehensive loss
(383
)
(292
)
(429
)
Retained earnings
7,331

7,262

7,084

Less cost of common stock in treasury - 52,851,156 shares at 12/31/16; 56,096,416 shares at 9/30/16 and 52,457,113 shares at 12/31/15
(2,428
)
(2,558
)
(2,409
)
Total shareholders' equity
7,796

7,727

7,560

Total liabilities and shareholders' equity
$
72,978

$
74,124

$
71,877



14


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Years Ended
 
December 31,
 
December 31,
(in millions, except per share data)
2016
2015
 
2016
2015
INTEREST INCOME
 
 
 
 
 
Interest and fees on loans
$
412

$
395

 
$
1,635

$
1,551

Interest on investment securities
62

56

 
247

216

Interest on short-term investments
10

6

 
27

17

Total interest income
484

457

 
1,909

1,784

INTEREST EXPENSE
 
 
 
 
 
Interest on deposits
10

10

 
40

43

Interest on medium- and long-term debt
19

14

 
72

52

Total interest expense
29

24

 
112

95

Net interest income
455

433

 
1,797

1,689

Provision for credit losses
35

60

 
248

147

Net interest income after provision for credit losses
420

373

 
1,549

1,542

NONINTEREST INCOME
 
 
 
 
 
Card fees
79

73

 
303

276

Service charges on deposit accounts
54

55

 
219

223

Fiduciary income
48

45

 
190

187

Commercial lending fees
21

30

 
89

99

Letter of credit fees
12

14

 
50

53

Bank-owned life insurance
12

11

 
42

40

Foreign exchange income
11

11

 
42

40

Brokerage fees
5

4

 
19

17

Net securities losses
(2
)
—

 
(5
)
(2
)
Other noninterest income
27

23

 
102

102

Total noninterest income
267

266

 
1,051

1,035

NONINTEREST EXPENSES
 
 
 
 
 
Salaries and benefits expense
219

262

 
961

1,009

Outside processing fee expense
89

79

 
336

318

Net occupancy expense
40

41

 
157

159

Equipment expense
13

14

 
53

53

Restructuring charges
20

—

 
93

—

Software expense
29

26

 
119

99

FDIC insurance expense
15

10

 
54

37

Advertising expense
6

7

 
21

24

Litigation-related expense
1

—

 
1

(32
)
Other noninterest expenses
29

43

 
135

160

Total noninterest expenses
461

482

 
1,930

1,827

Income before income taxes
226

157

 
670

750

Provision for income taxes
62

41

 
193

229

NET INCOME
164

116

 
477

521

Less income allocated to participating securities
1

1

 
4

6

Net income attributable to common shares
$
163

$
115

 
$
473

$
515

Earnings per common share:
 
 
 
 
 
Basic
$
0.95

$
0.65

 
$
2.74

$
2.93

Diluted
0.92

0.64

 
2.68

2.84

 
 
 
 
 
 
Comprehensive income
73

32

 
523

504

 
 
 
 
 
 
Cash dividends declared on common stock
40

37

 
155

148

Cash dividends declared per common share
0.23

0.21

 
0.89

0.83



15


CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth
Third
Second
First
Fourth
 
Fourth Quarter 2016 Compared To:
 
Quarter
Quarter
Quarter
Quarter
Quarter
 
Third Quarter 2016
 
Fourth Quarter 2015
(in millions, except per share data)
2016
2016
2016
2016
2015
 
 Amount
  Percent
 
Amount
  Percent
INTEREST INCOME
 
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans
$
412

$
411

$
406

$
406

$
395

 
$
1

—
 %
 
$
17

4
 %
Interest on investment securities
62

61

62

62

56

 
1

1

 
6

8

Interest on short-term investments
10

8

5

4

6

 
2

29

 
4

82

Total interest income
484

480

473

472

457

 
4

1

 
27

6

INTEREST EXPENSE
 
 
 
 
 
 
 
 
 
 
 
Interest on deposits
10

10

10

10

10

 
—

—

 
—

—

Interest on medium- and long-term debt
19

20

18

15

14

 
(1
)
(10
)
 
5

31

Total interest expense
29

30

28

25

24

 
(1
)
(7
)
 
5

14

Net interest income
455

450

445

447

433

 
$
5

1

 
$
22

5

Provision for credit losses
35

16

49

148

60

 
19

n/m

 
(25
)
(41
)
Net interest income after provision
for credit losses
420

434

396

299

373

 
(14
)
(3
)
 
47

13

NONINTEREST INCOME
 
 
 
 
 
 
 
 
 
 
 
Card fees
79

76

76

72

73

 
3

3

 
6

8

Service charges on deposit accounts
54

55

55

55

55

 
(1
)
(2
)
 
(1
)
(2
)
Fiduciary income
48

47

49

46

45

 
1

1

 
3

6

Commercial lending fees
21

26

22

20

30

 
(5
)
(15
)
 
(9
)
(30
)
Letter of credit fees
12

12

13

13

14

 
—

—

 
(2
)
(10
)
Bank-owned life insurance
12

12

9

9

11

 
—

—

 
1

5

Foreign exchange income
11

10

11

10

11

 
1

6

 
—

—

Brokerage fees
5

5

5

4

4

 
—

—

 
1

35

Net securities losses
(2
)
—

(1
)
(2
)
—

 
(2
)
n/m

 
(2
)
n/m

Other noninterest income
27

29

29

17

23

 
(2
)
(3
)
 
4

13

Total noninterest income
267

272

268

244

266

 
(5
)
(2
)
 
1

—

NONINTEREST EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Salaries and benefits expense
219

247

247

248

262

 
(28
)
(12
)
 
(43
)
(17
)
Outside processing fee expense
89

86

83

78

79

 
3

3

 
10

12

Net occupancy expense
40

40

39

38

41

 
—

—

 
(1
)
(1
)
Equipment expense
13

13

14

13

14

 
—

—

 
(1
)
(4
)
Restructuring charges
20

20

53

—

—

 
—

—

 
20

n/m

Software expense
29

31

30

29

26

 
(2
)
(4
)
 
3

14

FDIC insurance expense
15

14

14

11

10

 
1

6

 
5

38

Advertising expense
6

5

6

4

7

 
1

9

 
(1
)
(16
)
Litigation-related expense
1

—

—

—

—

 
1

n/m

 
1

n/m

Other noninterest expenses
29

37

32

37

43

 
(8
)
(20
)
 
(14
)
(31
)
Total noninterest expenses
461

493

518

458

482

 
(32
)
(6
)
 
(21
)
(4
)
Income before income taxes
226

213

146

85

157

 
13

6

 
69

44

Provision for income taxes
62

64

42

25

41

 
(2
)
(1
)
 
21

52

NET INCOME
164

149

104

60

116

 
15

9

 
48

42

Less income allocated to participating securities
1

1

1

1

1

 
—

—

 
—

—

Net income attributable to common shares
$
163

$
148

$
103

$
59

$
115

 
$
15

10
 %
 
$
48

42
 %
Earnings per common share:
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.95

$
0.87

$
0.60

$
0.34

$
0.65

 
$
0.08

9
 %
 
$
0.30

46
 %
Diluted
0.92

0.84

0.58

0.34

0.64

 
0.08

10

 
0.28

44

 
 
 
 
 
 
 

 
 
 
 
Comprehensive income
73

152

137

161

32

 
(79
)
(52
)
 
41

n/m

 
 
 
 
 
 
 
 
 
 
 
 
Cash dividends declared on common stock
40

40

38

37

37

 
—

—

 
3

9

Cash dividends declared per common share
0.23

0.23

0.22

0.21

0.21

 
—

—

 
0.02

10

n/m - not meaningful

16


ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)
Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
2015
(in millions)
4th Qtr
3rd Qtr
2nd Qtr
1st Qtr
 
4th Qtr
 
 
 
 
 
 
 
Balance at beginning of period
$
727

$
729

$
724

$
634

 
$
622

 
 
 
 
 
 
 
Loan charge-offs:
 
 
 
 
 
 
Commercial
37

24

48

72

 
73

Commercial mortgage
1

2

—

—

 
1

International
8

8

4

3

 
—

Consumer
2

1

2

2

 
2

Total loan charge-offs
48

35

54

77

 
76

 
 
 
 
 
 
 
Recoveries on loans previously charged-off:
 
 
 
 
 
 
Commercial
7

15

9

12

 
6

Commercial mortgage
3

3

2

12

 
11

Residential mortgage
1

—

—

—

 
1

Consumer
1

1

1

1

 
7

Total recoveries
12

19

12

25

 
25

Net loan charge-offs
36

16

42

52

 
51

Provision for loan losses
39

14

47

141

 
63

Foreign currency translation adjustment
—

—

—

1

 
—

Balance at end of period
$
730

$
727

$
729

$
724

 
$
634

 
 
 
 
 
 
 
Allowance for loan losses as a percentage of total loans
1.49
%
1.48
%
1.45
%
1.47
%
 
1.29
%
 
 
 
 
 
 
 
Net loan charge-offs as a percentage of average total loans
0.29

0.13

0.34

0.43

 
0.42



ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited)
Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
2015
(in millions)
4th Qtr
3rd Qtr
2nd Qtr
1st Qtr
 
4th Qtr
 
 
 
 
 
 
 
Balance at beginning of period
$
45

$
43

$
46

$
45

 
$
48

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

—

(5
)
(6
)
 
—

Add: Provision for credit losses on lending-related commitments
(4
)
2

2

7

 
(3
)
Balance at end of period
$
41

$
45

$
43

$
46


$
45

 
 
 
 
 
 
 
Unfunded lending-related commitments sold
$
—

$
—

$
12

$
11

 
$
—

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


17


NONPERFORMING ASSETS (unaudited)
 
 
 
 
 
 
Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
2015
(in millions)
4th Qtr
3rd Qtr
2nd Qtr
1st Qtr
 
4th Qtr
 
 
 
 
 
 
 
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS
 
 
 
Nonaccrual loans:
 
 
 
 
 
 
Business loans:
 
 
 
 
 
 
Commercial
$
445

$
508

$
482

$
547

 
$
238

Real estate construction
—

—

—

—

 
1

Commercial mortgage
46

44

44

47

 
60

Lease financing
6

6

6

6

 
6

International
14

19

18

27

 
8

Total nonaccrual business loans
511

577

550

627

 
313

Retail loans:
 
 
 
 
 
 
Residential mortgage
39

23

26

26

 
27

Consumer:
 
 
 
 
 
 
Home equity
28

27

28

27

 
27

Other consumer
4

4

1

1

 
—

Total consumer
32

31

29

28

 
27

Total nonaccrual retail loans
71

54

55

54

 
54

Total nonaccrual loans
582

631

605

681

 
367

Reduced-rate loans
8

8

8

8

 
12

Total nonperforming loans
590

639

613

689

 
379

Foreclosed property
17

21

22

25

 
12

Total nonperforming assets
$
607

$
660

$
635

$
714

 
$
391

 
 
 
 
 
 
 
Nonperforming loans as a percentage of total loans
1.20
%
1.30
%
1.22
%
1.40
%
 
0.77
%
Nonperforming assets as a percentage of total loans
 and foreclosed property
1.24

1.34

1.26

1.45

 
0.80

Allowance for loan losses as a percentage of total
nonperforming loans
124

114

119

105

 
167

Loans past due 90 days or more and still accruing
$
19

$
48

$
35

$
13

 
$
17

 
 
 
 
 
 
 
ANALYSIS OF NONACCRUAL LOANS
 
 
 
 
 
 
Nonaccrual loans at beginning of period
$
631

$
605

$
681

$
367

 
$
357

Loans transferred to nonaccrual (a)
60

105

107

446

 
105

Nonaccrual business loan gross charge-offs (b)
(46
)
(34
)
(52
)
(75
)
 
(49
)
Nonaccrual business loans sold (c)
(10
)
(2
)
(40
)
(21
)
 
—

Payments/Other (d)
(53
)
(43
)
(91
)
(36
)
 
(46
)
Nonaccrual loans at end of period
$
582

$
631

$
605

$
681

 
$
367

(a) Based on an analysis of nonaccrual loans with book balances greater than $2 million.
(b) Analysis of gross loan charge-offs:
 
 
 
 
 
 
Nonaccrual business loans
$
46

$
34

$
52

$
75

 
$
49

Performing business loans
—

—

—

—

 
25

Consumer and residential mortgage loans
2

1

2

2

 
2

Total gross loan charge-offs
$
48

$
35

$
54

$
77

 
$
76

(c) Analysis of loans sold:
 
 
 
 
 
 
      Nonaccrual business loans
$
10

$
2

$
40

$
21

 
$
—

      Performing criticized loans
—

—

—

—

 
3

Total criticized loans sold
$
10

$
2

$
40

$
21

 
$
3

(d) 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.

18


ANALYSIS OF NET INTEREST INCOME (unaudited)
Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Years Ended
 
December 31, 2016
 
December 31, 2015
 
Average
 
Average
 
Average
 
Average
(dollar amounts in millions)
Balance
Interest
Rate (a)
 
Balance
Interest
Rate (a)
 
 
 
 
 
 
 
 
Commercial loans
$
31,062

$
1,008

3.26
%
 
$
31,501

$
962

3.07
%
Real estate construction loans
2,508

91

3.63

 
1,884

66

3.48

Commercial mortgage loans
8,981

314

3.49

 
8,697

296

3.41

Lease financing
684

18

2.65

 
783

25

3.17

International loans
1,367

50

3.63

 
1,441

51

3.58

Residential mortgage loans
1,894

71

3.76

 
1,878

71

3.77

Consumer loans
2,500

83

3.32

 
2,444

80

3.26

Total loans
48,996

1,635

3.34

 
48,628

1,551

3.20

 
 
 
 
 
 
 
 
Mortgage-backed securities (b)
9,356

203

2.19

 
9,113

202

2.24

Other investment securities
2,992

44

1.51

 
1,124

14

1.25

Total investment securities (b)
12,348

247

2.02

 
10,237

216

2.13

 
 
 
 
 
 
 
 
Interest-bearing deposits with banks
5,099

26

0.51

 
6,158

16

0.26

Other short-term investments
102

1

0.61

 
106

1

0.81

Total earning assets
66,545

1,909

2.88

 
65,129

1,784

2.75

 
 
 
 
 
 
 
 
Cash and due from banks
1,146

 
 
 
1,059

 
 
Allowance for loan losses
(730
)
 
 
 
(621
)
 
 
Accrued income and other assets
4,782

 
 
 
4,680

 
 
Total assets
$
71,743

 
 
 
$
70,247

 
 
 
 
 
 
 
 
 
 
Money market and interest-bearing checking deposits
$
22,744

27

0.11

 
$
24,073

26

0.11

Savings deposits
2,013

—

0.02

 
1,841

—

0.02

Customer certificates of deposit
3,200

13

0.40

 
4,209

16

0.37

Foreign office time deposits
33

—

0.35

 
116

1

1.02

Total interest-bearing deposits
27,990

40

0.14

 
30,239

43

0.14

 
 
 
 
 
 
 
 
Short-term borrowings
138

—

0.45

 
93

—

0.05

Medium- and long-term debt
4,917

72

1.45

 
2,905

52

1.80

Total interest-bearing sources
33,045

112

0.34

 
33,237

95

0.29

 
 
 
 
 
 
 
 
Noninterest-bearing deposits
29,751

 
 
 
28,087

 
 
Accrued expenses and other liabilities
1,273

 
 
 
1,389

 
 
Total shareholders' equity
7,674

 
 
 
7,534

 
 
Total liabilities and shareholders' equity
$
71,743

 
 
 
$
70,247

 
 
 
 
 
 
 
 
 
 
Net interest income/rate spread
 
$
1,797

2.54

 
 
$
1,689

2.46

 
 
 
 
 
 
 
 
Impact of net noninterest-bearing sources of funds
 
 
0.17

 
 
 
0.14

Net interest margin (as a percentage of average earning assets)
 
 
2.71
%
 
 
 
2.60
%
(a) Fully taxable equivalent.
(b) Includes investment securities available-for-sale and investment securities held-to-maturity.


19


ANALYSIS OF NET INTEREST INCOME (unaudited)
Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
December 31, 2016
 
September 30, 2016
 
December 31, 2015
 
Average
 
Average
 
Average
 
Average
 
Average
 
Average
(dollar amounts in millions)
Balance
Interest
Rate (a)
 
Balance
Interest
Rate (a)
 
Balance
Interest
Rate (a)
 
 
 
 
 
 
 
 
 
 
 
 
Commercial loans
$
30,792

$
255

3.30
%
 
$
31,132

$
253

3.25
%
 
$
31,219

$
244

3.11
%
Real estate construction loans
2,837

26

3.65

 
2,646

24

3.57

 
1,961

18

3.58

Commercial mortgage loans
8,918

78

3.49

 
9,012

78

3.43

 
8,842

76

3.43

Lease financing
619

3

1.95

 
662

5

3.30

 
750

6

3.29

International loans
1,303

12

3.70

 
1,349

12

3.56

 
1,402

12

3.40

Residential mortgage loans
1,923

17

3.60

 
1,883

18

3.74

 
1,896

18

3.75

Consumer loans
2,523

21

3.28

 
2,522

21

3.31

 
2,478

21

3.38

Total loans
48,915

412

3.36

 
49,206

411

3.33

 
48,548

395

3.24

 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities (b)
9,386

51

2.16

 
9,359

50

2.17

 
9,226

51

2.25

Other investment securities
2,943

11

1.54

 
3,014

11

1.51

 
1,638

5

1.37

Total investment securities (b)
12,329

62

2.01

 
12,373

61

2.01

 
10,864

56

2.11

 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits with banks
7,438

10

0.52

 
5,967

8

0.51

 
7,300

5

0.28

Other short-term investments
92

—

0.47

 
102

—

0.43

 
106

1

0.91

Total earning assets
68,774

484

2.81

 
67,648

480

2.84

 
66,818

457

2.73

 
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
1,290

 
 
 
1,152

 
 
 
1,071

 
 
Allowance for loan losses
(740
)
 
 
 
(749
)
 
 
 
(641
)
 
 
Accrued income and other assets
4,802

 
 
 
4,858

 
 
 
4,659

 
 
Total assets
$
74,126

 
 
 
$
72,909

 
 
 
$
71,907

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market and interest-bearing checking deposits
$
22,585

7

0.12

 
$
22,415

7

0.12

 
$
24,368

6

0.11

Savings deposits
2,064

—

0.02

 
2,042

—

0.03

 
1,883

—

0.02

Customer certificates of deposit
2,878

3

0.39

 
3,129

3

0.40

 
3,763

4

0.39

Foreign office time deposits
27

—

0.36

 
25

—

0.37

 
95

—

0.59

Total interest-bearing deposits
27,554

10

0.14

 
27,611

10

0.14

 
30,109

10

0.14

 
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
13

—

0.50

 
17

—

0.47

 
92

—

0.06

Medium- and long-term debt
5,578

19

1.30

 
5,907

20

1.36

 
3,089

14

1.79

Total interest-bearing sources
33,145

29

0.33

 
33,535

30

0.36

 
33,290

24

0.29

 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
32,091

 
 
 
30,454

 
 
 
29,627

 
 
Accrued expenses and other liabilities
1,156

 
 
 
1,243

 
 
 
1,377

 
 
Total shareholders' equity
7,734

 
 
 
7,677

 
 
 
7,613

 
 
Total liabilities and shareholders' equity
$
74,126

 
 
 
$
72,909

 
 
 
$
71,907

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income/rate spread
 
$
455

2.48

 
 
$
450

2.48

 
 
$
433

2.44

 
 
 
 
 
 
 
 
 
 
 
 
Impact of net noninterest-bearing sources of funds
 
 
0.17

 
 
 
0.18

 
 
 
0.14

Net interest margin (as a percentage of average earning assets)
 
 
2.65
%
 
 
 
2.66
%
 
 
 
2.58
%
(a) Fully taxable equivalent.
(b) Includes investment securities available-for-sale and investment securities held-to-maturity.

20


CONSOLIDATED STATISTICAL DATA (unaudited)
Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
September 30,
June 30,
March 31,
December 31,
(in millions, except per share data)
2016
2016
2016
2016
2015
 
 
 
 
 
 
Commercial loans:
 
 
 
 
 
Floor plan
$
4,269

$
3,778

$
4,120

$
3,902

$
3,939

Other
26,725

27,374

28,240

27,660

27,720

Total commercial loans
30,994

31,152

32,360

31,562

31,659

Real estate construction loans
2,869

2,743

2,553

2,290

2,001

Commercial mortgage loans
8,931

9,013

9,038

8,982

8,977

Lease financing
572

648

684

731

724

International loans
1,258

1,303

1,365

1,455

1,368

Residential mortgage loans
1,942

1,874

1,856

1,874

1,870

Consumer loans:
 
 
 
 
 
Home equity
1,800

1,792

1,779

1,738

1,720

Other consumer
722

749

745

745

765

Total consumer loans
2,522

2,541

2,524

2,483

2,485

Total loans
$
49,088

$
49,274

$
50,380

$
49,377

$
49,084

 
 
 
 
 
 
Goodwill
$
635

$
635

$
635

$
635

$
635

Core deposit intangible
7

8

9

9

10

Other intangibles
3

3

3

4

4

 
 
 
 
 
 
Common equity tier 1 capital (a)
7,539

7,378

7,346

7,331

7,350

Risk-weighted assets (a)
68,136

69,018

70,056

69,319

69,731

 
 
 
 
 
 
Common equity tier 1 and tier 1 risk-based capital ratio (a)
11.07
%
10.69
%
10.49
%
10.58
%
10.54
%
Total risk-based capital ratio (a)
13.24

12.84

12.74

12.84

12.69

Leverage ratio (a)
10.18

10.14

10.39

10.60

10.22

Common equity ratio
10.68

10.42

10.79

11.08

10.52

Tangible common equity ratio (b)
9.89

9.64

9.98

10.23

9.70

 
 
 
 
 
 
Common shareholders' equity per share of common stock
$
44.47

$
44.91

$
44.24

$
43.66

$
43.03

Tangible common equity per share of common stock (b)
40.79

41.15

40.52

39.96

39.33

Market value per share for the quarter:
 
 
 
 
 
High
70.44

47.81

47.55

41.74

47.44

Low
46.75

38.39

36.27

30.48

39.52

Close
68.11

47.32

41.13

37.87

41.83

 
 
 
 
 
 
Quarterly ratios:
 
 
 
 
 
Return on average common shareholders' equity
8.48
%
7.80
%
5.44
%
3.13
%
6.08
%
Return on average assets
0.88

0.82

0.59

0.34

0.64

Efficiency ratio (c)
63.58

68.15

72.43

65.99

68.92

 
 
 
 
 
 
Number of banking centers
458

473

473

477

477

 
 
 
 
 
 
Number of employees - full time equivalent
7,960

8,476

8,792

8,869

8,880

(a) December 31, 2016 amounts and ratios are estimated.
(b)
See Reconciliation of Non-GAAP Financial Measures.
(c)
Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains (losses).



21


PARENT COMPANY ONLY BALANCE SHEETS (unaudited)
Comerica Incorporated
 
 
 
 
 
 
 
 
December 31,
September 30,
December 31,
(in millions, except share data)
2016
2016
2015
 
 
 
 
ASSETS
 
 
 
Cash and due from subsidiary bank
$
411

$
—

$
4

Short-term investments with subsidiary bank
350

588

569

Other short-term investments
87

88

89

Investment in subsidiaries, principally banks
7,561

7,685

7,523

Premises and equipment
2

2

3

Other assets
150

161

137

      Total assets
$
8,561

$
8,524

$
8,325

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Medium- and long-term debt
$
604

$
626

$
608

Other liabilities
161

171

157

      Total liabilities
765

797

765

 
 
 
 
Common stock - $5 par value:
 
 
 
    Authorized - 325,000,000 shares
 
 
 
    Issued - 228,164,824 shares
1,141

1,141

1,141

Capital surplus
2,135

2,174

2,173

Accumulated other comprehensive loss
(383
)
(292
)
(429
)
Retained earnings
7,331

7,262

7,084

Less cost of common stock in treasury - 52,851,156 shares at 12/31/16; 59,096,416 shares at 9/30/16 and 52,457,113 shares at 12/31/15
(2,428
)
(2,558
)
(2,409
)
      Total shareholders' equity
7,796

7,727

7,560

      Total liabilities and shareholders' equity
$
8,561

$
8,524

$
8,325


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, 2014
179.0

$
1,141

$
2,188

$
(412
)
$
6,744

$
(2,259
)
$
7,402

Net income
—

—

—

—

521

—

521

Other comprehensive loss, net of tax
—

—

—

(17
)
—

—

(17
)
Cash dividends declared on common stock ($0.83 per share)
—

—

—

—

(148
)
—

(148
)
Purchase of common stock
(5.3
)
—

—

—

—

(240
)
(240
)
Purchase and retirement of warrants
—



(10
)
—

—

—

(10
)
Net issuance of common stock under employee stock plans
1.0

—

(22
)
—

(11
)
47

14

Net issuance of common stock for warrants
1.0

—

(21
)


(22
)
43

—

Share-based compensation
—

—

38

—

—

—

38

BALANCE AT DECEMBER 31, 2015
175.7

1,141

2,173

(429
)
7,084

(2,409
)
7,560

Net income
—

—

—

—

477

—

477

Other comprehensive income, net of tax
—

—

—

46

—

—

46

Cash dividends declared on common stock ($0.89 per share)
—

—

—

—

(154
)
—

(154
)
Purchase of common stock
(6.8
)
—

—

—

—

(310
)
(310
)
Net issuance of common stock under employee stock plans
4.1

—

(15
)
—

(27
)
185

143

Net issuance of common stock for warrants
2.3

—

(57
)
—

(49
)
106

—

Share-based compensation
—

—

34

—

—

—

34

BALANCE AT DECEMBER 31, 2016
175.3

$
1,141

$
2,135

$
(383
)
$
7,331

$
(2,428
)
$
7,796





22


 BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)
 Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(dollar amounts in millions)
Business
 
Retail
 
Wealth
 
 
 
 
 
 
Three Months Ended December 31, 2016
Bank
 
Bank
 
Management
 
Finance
 
Other
 
Total
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense)
$
354

 
$
156

 
$
42

 
$
(103
)
 
$
6

 
$
455

Provision for credit losses
17

 
22

 
(1
)
 
—

 
(3
)
 
35

Noninterest income
146

 
48

 
62

 
10

 
1

 
267

Noninterest expenses
196

 
188

 
72

 
(1
)
 
6

 
461

Provision (benefit) for income taxes
82

 
(2
)
 
10

 
(31
)
 
3

 
62

Net income (loss)
$
205

 
$
(4
)
 
$
23

 
$
(61
)
 
$
1

 
$
164

Net credit-related charge-offs (recoveries)
$
33

 
$
5

 
$
(2
)
 
$
—

 
$
—

 
$
36

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
39,220

 
$
6,559

 
$
5,268

 
$
14,109

 
$
8,970

 
$
74,126

Loans
37,893

 
5,906

 
5,116

 
—

 
—

 
48,915

Deposits
31,221

 
23,915

 
4,092

 
107

 
310

 
59,645

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (a)
2.09
%
 
(0.06
)%
 
1.72
%
 
N/M

 
N/M

 
0.88
%
Efficiency ratio (b)
39.12

 
90.98

 
69.52

 
N/M

 
N/M

 
63.58

 
 
 
 
 
 
 
 
 
 
 
 
 
Business
 
Retail
 
Wealth
 
 
 
 
 
 
Three Months Ended September 30, 2016
Bank
 
Bank
 
Management
 
Finance
 
Other
 
Total
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense)
$
356

 
$
156

 
$
41

 
$
(109
)
 
$
6

 
$
450

Provision for credit losses
2

 
10

 
(1
)
 
—

 
5

 
16

Noninterest income
145

 
50

 
61

 
13

 
3

 
272

Noninterest expenses
215

 
195

 
75

 
(1
)
 
9

 
493

Provision (benefit) for income taxes
95

 
—

 
10

 
(37
)
 
(4
)
 
64

Net income (loss)
$
189

 
$
1

 
$
18

 
$
(58
)
 
$
(1
)
 
$
149

Net credit-related charge-offs (recoveries)
$
14

 
$
3

 
$
(1
)
 
$
—

 
$
—

 
$
16

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
39,618

 
$
6,544

 
$
5,283

 
$
14,144

 
$
7,320

 
$
72,909

Loans
38,243

 
5,871

 
5,092

 
—

 
—

 
49,206

Deposits
30,019

 
23,654

 
4,030

 
98

 
264

 
58,065

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (a)
1.92
%
 
0.01
 %
 
1.39
%
 
N/M

 
N/M

 
0.82
%
Efficiency ratio (b)
42.74

 
94.58

 
73.12

 
N/M

 
N/M

 
68.15

 
 
 
 
 
 
 
 
 
 
 
 
 
Business
 
Retail
 
Wealth
 
 
 
 
 
 
Three Months Ended December 31, 2015
Bank
 
Bank
 
Management
 
Finance
 
Other
 
Total
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense)
$
384

 
$
160

 
$
47

 
$
(161
)
 
3

 
$
433

Provision for credit losses
41

 
23

 
(7
)
 
—

 
3

 
60

Noninterest income
146

 
49

 
57

 
12

 
2

 
266

Noninterest expenses
207

 
191

 
81

 
(2
)
 
5

 
482

Provision (benefit) for income taxes
84

 
(4
)
 
9

 
(47
)
 
(1
)
 
41

Net income (loss)
$
198

 
$
(1
)
 
$
21

 
$
(100
)
 
$
(2
)
 
$
116

Net credit-related charge-offs (recoveries)
$
35

 
$
25

 
$
(9
)
 
$
—

 
$
—

 
$
51

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
39,305

 
$
6,549

 
$
5,199

 
$
12,273

 
$
8,581

 
$
71,907

Loans
37,682

 
5,868

 
4,998

 
—

 
—

 
48,548

Deposits
31,746

 
23,262

 
4,355

 
115

 
258

 
59,736

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (a)
2.02
%
 
(0.03
)%
 
1.68
%
 
N/M

 
N/M

 
0.64
%
Efficiency ratio (b)
39.07

 
91.69

 
77.05

 
N/M

 
N/M

 
68.92

(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 (fully taxable equivalent basis) and noninterest income excluding net securities gains.
N/M - Not Meaningful

23


 MARKET SEGMENT FINANCIAL RESULTS (unaudited)
 Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(dollar amounts in millions)
 
 
 
 
 
 
Other
 
Finance
 
 
Three Months Ended December 31, 2016
Michigan
 
California
 
Texas
 
Markets
 
& Other
 
Total
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense)
$
167

 
$
182

 
$
115

 
$
88

 
$
(97
)
 
$
455

Provision for credit losses
—

 
12

 
26

 
—

 
(3
)
 
35

Noninterest income
81

 
41

 
34

 
100

 
11

 
267

Noninterest expenses
149

 
101

 
92

 
114

 
5

 
461

Provision (benefit) for income taxes
29

 
36

 
9

 
16

 
(28
)
 
62

Net income (loss)
$
70

 
$
74

 
$
22

 
$
58

 
$
(60
)
 
$
164

Net credit-related charge-offs
$
3

 
$
1

 
$
30

 
$
2

 
$
—

 
$
36

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
13,174

 
$
17,947

 
$
10,810

 
$
9,116

 
$
23,079

 
$
74,126

Loans
12,538

 
17,666

 
10,381

 
8,330

 
—

 
48,915

Deposits
22,030

 
18,359

 
10,386

 
8,453

 
417

 
59,645

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (a)
1.23
%
 
1.53
%
 
0.74
 %
 
2.50
%
 
N/M

 
0.88
%
Efficiency ratio (b)
59.67

 
45.19

 
61.56

 
60.29

 
N/M

 
63.58

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
 
Finance
 
 
Three Months Ended September 30, 2016
Michigan
 
California
 
Texas
 
Markets
 
& Other
 
Total
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense)
$
168

 
$
179

 
$
117

 
$
89

 
$
(103
)
 
$
450

Provision for credit losses
13

 
(4
)
 
(3
)
 
5

 
5

 
16

Noninterest income
82

 
44

 
33

 
97

 
16

 
272

Noninterest expenses
161

 
110

 
102

 
112

 
8

 
493

Provision (benefit) for income taxes
26

 
43

 
18

 
18

 
(41
)
 
64

Net income (loss)
$
50

 
$
74

 
$
33

 
$
51

 
$
(59
)
 
$
149

Net credit-related charge-offs
$
1

 
$
—

 
$
10

 
$
5

 
$
—

 
$
16

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
13,174

 
$
17,933

 
$
11,014

 
$
9,324

 
$
21,464

 
$
72,909

Loans
12,488

 
17,637

 
10,566

 
8,515

 
—

 
49,206

Deposits
21,944

 
17,674

 
9,860

 
8,225

 
362

 
58,065

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (a)
0.89
%
 
1.59
%
 
1.14
 %
 
2.21
%
 
N/M

 
0.82
%
Efficiency ratio (b)
64.30

 
48.86

 
67.96

 
60.11

 
N/M

 
68.15

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
 
Finance
 
 
Three Months Ended December 31, 2015
Michigan
 
California
 
Texas
 
Markets
 
& Other
 
Total
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense)
$
182

 
$
192

 
$
130

 
$
87

 
$
(158
)
 
$
433

Provision for credit losses
(12
)
 
(7
)
 
57

 
19

 
3

 
60

Noninterest income
81

 
40

 
32

 
99

 
14

 
266

Noninterest expenses
161

 
107

 
102

 
109

 
3

 
482

Provision (benefit) for income taxes
32

 
43

 
6

 
8

 
(48
)
 
41

Net income (loss)
$
82

 
$
89

 
$
(3
)
 
$
50

 
$
(102
)
 
$
116

Net credit-related charge-offs (recoveries)
$
(2
)
 
$
1

 
$
33

 
$
19

 
$
—

 
$
51

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
13,601

 
$
17,297

 
$
11,474

 
$
8,681

 
$
20,854

 
$
71,907

Loans
12,986

 
17,033

 
10,893

 
7,636

 
—

 
48,548

Deposits
22,123

 
18,545

 
10,807

 
7,888

 
373

 
59,736

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (a)
1.43
%
 
1.82
%
 
(0.11
)%
 
2.21
%
 
N/M

 
0.64
%
Efficiency ratio (b)
61.04

 
46.14

 
63.06

 
58.50

 
N/M

 
68.92

(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 (fully taxable equivalent basis) and noninterest income excluding net securities gains.
N/M - Not Meaningful

24


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
September 30,
June 30,
March 31,
December 31,
(dollar amounts in millions)
2016
2016
2016
2016
2015
Tangible Common Equity Ratio:
 
 
 
 
 
Common shareholders' equity
$
7,796

$
7,727

$
7,694

$
7,644

$
7,560

Less:
 
 
 
 
 
Goodwill
635

635

635

635

635

Other intangible assets
10

11

12

13

14

Tangible common equity
$
7,151

$
7,081

$
7,047

$
6,996

$
6,911

 
 
 
 
 
 
Total assets
$
72,978

$
74,124

$
71,280

$
69,007

$
71,877

Less:
 
 
 
 
 
Goodwill
635

635

635

635

635

Other intangible assets
10

11

12

13

14

Tangible assets
$
72,333

$
73,478

$
70,633

$
68,359

$
71,228

 
 
 
 
 
 
Common equity ratio
10.68
%
10.42
%
10.79
%
11.08
%
10.52
%
Tangible common equity ratio
9.89

9.64

9.98

10.23

9.70

 
 
 
 
 
 
Tangible Common Equity per Share of Common Stock:
 
 
 
 
 
Common shareholders' equity
$
7,796

$
7,727

$
7,694

$
7,644

$
7,560

Tangible common equity
7,151

7,081

7,047

6,996

6,911

 
 
 
 
 
 
Shares of common stock outstanding (in millions)
175

172

174

175

176

 
 
 
 
 
 
Common shareholders' equity per share of common stock
$
44.47

$
44.91

$
44.24

$
43.66

$
43.03

Tangible common equity per share of common stock
40.79

41.15

40.52

39.96

39.33


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.

25
 EX-99.2 3 cma-20161231ex04c.htm EXHIBIT 99.2 cma-20161231ex04c
Comerica Incorporated Fourth Quarter 2016Financial Review January 17, 2017 Safe Harbor Statement Any statements in this presentation that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “believes,” “contemplates,” “feels,” “expects,” “estimates,” “seeks,” “strives,” “plans,” “intends,” “outlook,” “forecast,” “position,” “target,” “mission,” “assume,” “achievable,” “potential,” “strategy,” “goal,” “aspiration,” “opportunity,” “initiative,” “outcome,” “continue,” “remain,” “maintain,” “on 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 presentation and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica's management for future or past operations, products or services, including the GEAR Up initiative, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries as well as estimates of the economic benefits of the GEAR Up initiative, estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in general economic, political or industry conditions; changes in monetary and fiscal policies, 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, in particular the energy industry; unfavorable developments concerning credit quality; 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; reductions in Comerica's credit rating; whether Comerica may achieve opportunities for revenue enhancements and efficiency improvements under the GEAR Up initiative, or changes in the scope or assumptions underlying the GEAR Up initiative; the interdependence of financial service companies; the implementation of Comerica's strategies and business initiatives; damage to Comerica's reputation; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; competitive product and pricing pressures among financial institutions within Comerica's markets; 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 the Corporation's Annual Report on Form 10-K for the year ended December 31, 2015 and “Item 1A. Risk Factors” beginning on page 62 of the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this presentation or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. 2

 
Financial Summary 4Q16 3Q16 2016 2015 Diluted income per common share $0.92 $0.84 $2.68 $2.84 Net interest income $455 $450 $1,797 $1,689 Net interest margin 2.65% 2.66% 2.71% 2.60% Provision for credit losses 35 16 248 147 Net credit-related charge-offs to average loans 0.29% 0.13% 0.32% 0.21% Noninterest income 267 272 1,051 1,035 Noninterest expenses 461 493 1,930 1,827 Restructuring expenses 20 20 93 - Net income 164 149 477 521 Average loans $48,915 $49,206 $48,996 $48,628 Average deposits 59,645 58,065 57,741 58,326 Common equity Tier 1 capital ratio 11.07%1 10.69% 11.07%1 10.54% Average diluted shares (millions)2 177 176 177 181 Efficiency Ratio3 63.58% 68.15% $ in millions, except per share data ● 1Estimated ● 2Average diluted shares for 4Q16 included an increase of 1MM shares as a result of the impact of increased share price on common stock equivalents ● 3Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains (losses). 3 Full-Year 2016 Results $ in millions, except per share data ● 2016 compared to 2015 ● 1Included restructuring charges of $93MM in 2016 ● 2EPS based on diluted income per share ● 32016 repurchases under the equity repurchase program 2016 From FY15Chg $ Chg %Average loans $48,996 $368 1% Average deposits 57,741 (585) (1)% Net interest income 1,797 108 6% Provision for credit losses 248 101 70% Net credit-related charge-offs 157 46 46% Noninterest income 1,051 16 2% Noninterest expenses1 1,930 103 6% Net income 477 (44) (8)% Earnings per share (EPS)2 2.68 (0.16) (6)% Equity repurchases3 6.6MM shares or $303MM Key YoY Performance Drivers  Average Loans up 1% (or 2%, ex $641MM decline in Energy)  Deposits down 1% with LCR adjustments early in 2016  Net interest income grew due to rise in interest rates & earning asset growth  Provision increased due to 1Q16 reserve build for Energy loans  Noninterest income reflects growth in customer-driven fees (particularly card) partially offset by decline in non-fee categories  Expenses included $93MM in restructuring charges  Share repurchases plus dividends returned $458MM to shareholders 4

 
Fourth Quarter 2016 Results $ in millions, except per share data ● n/m = not meaningful ● 4Q16 compared to 3Q16 ● 1Included restructuring charges of $20MM in 3Q16 & 4Q16 ● 2EPS based on diluted income per share ● 34Q16 repurchases under the equity repurchase program 4Q16 Change From3Q16 4Q15Average loans $48,915 $(291) (1)% Average deposits 59,645 1,580 3% Net interest income 455 5 1% Provision for credit losses 35 19 n/m Net credit-related charge-offs 36 20 n/m Noninterest income 267 (5) (2)% Noninterest expenses1 461 (32) (6)% Net income 164 15 10% Earnings per share (EPS)2 0.92 0.08 10% Equity repurchases3 1.8MM shares or $99MM Key QoQ Performance Drivers  Average loans relatively stable, reflects seasonality & Energy portfolio reduction  Deposit growth strong with increases in nearly all lines of business  Net interest income benefitted from increase in interest rates  Provision & net charge-offs increased from low level  Noninterest income decreased with decline in commercial lending fees  Lower expenses mainly resulting from GEAR Up initiative (lower salaries & benefits)  Taxes benefitted from early termination of certain leveraged lease transactions  Active capital management continued 5 Loans Relatively StableTypical seasonality & Energy portfolio reduction 4Q16 compared to 3Q16 ● 1Utilization of commercial commitments as a percentage of total commercial commitments at period-end Total Loans($ in billions) 48.5 48.4 49.5 49.2 48.9 49.3 49.1 3.24 3.38 3.31 3.33 3.36 4Q15 1Q16 2Q16 3Q16 4Q16 3Q16 4Q16 Loan Yields Average Balances Period-end Average loans decreased $291MM - Mortgage Banker Finance- Energy- General Middle Market- Environmental Services+ National Dealer Services Loan yields +3 bps + Increase in rates - Lease residual value adjustment Commitments $52.5B  Declined 1% due to reduction in Energy & seasonal decline in Mortgage Banker  Line utilization1 remained stable at 51% Loan pipeline remains strong 6

 
4Q16 compared to 3Q16 ● 1Interest costs on interest-bearing deposits ● 2At 12/31/16 Average Balances Period-end Total Deposits($ in billions) 59.7 56.7 56.5 58.1 59.6 59.3 59.0 0.14 0.14 0.14 0.14 0.14 4Q15 1Q16 2Q16 3Q16 4Q16 3Q16 4Q16 Deposit Rates1 7 Average deposits increased $1.6B + Corporate Banking+ Energy+ General Middle Market + Retail Bank- Technology & Life Sciences  Noninterest-bearing grew $1.6B  Interest-bearing declined $57MM Loan to Deposit Ratio2 of 83% Strong Deposit GrowthDriven by increase in noninterest-bearing deposits Securities Portfolio($ in billions) 8 Securities Portfolio StableAverage yield unchanged 9.2 9.4 9.3 9.4 9.4 9.5 9.5 10.9 12.4 12.3 12.4 12.3 12.5 12.4 2.11 2.05 2.03 2.01 2.01 4Q15 1Q16 2Q16 3Q16 4Q16 3Q16 4Q16 Treasury Securities & OtherMortgage-backed Securities (MBS)Securities Yields Average Balances Period-end Securities portfolio  Duration of 3.5 years1• Extends to 3.9 years under a 200 bps instantaneous rate increase1  Net unrealized pre-tax loss of $42MM2  Net unamortized premium of $29MM3  GNMA ~49% of MBS portfolio 12/31/16 ● 1Estimated as of 12/31/16. Excludes auction rate securities (ARS). ● 2Net unrealized pre-tax gain on the available-for-sale (AFS) portfolio ● 3Net unamortized premium on the MBS portfolio

 
Net Interest Income($ in millions) Net Interest Income Increased $5MMNIM decreased 1 basis point; rate rise offset by increased liquidity 4Q16 compared to 3Q16 433 447 445 450 455 2.58 2.81 2.74 2.66 2.65 4Q15 1Q16 2Q16 3Q16 4Q16 NIM Net Interest Income and Rate NIM $450MM 3Q16 2.66% +1MM Loan impacts:+ $6MM increase in rates- $2MM lower volume- $2MM lease residual value adj.- $1MM other portfolio dynamics +0.02 +1MM Lower wholesale funding cost +0.01 +1MM Investment securities income -- +2MM $1.5B increase in Fed balances -0.04 $455MM 4Q16 2.65% 9 367 681 605 631 582 3,193 3,928 3,551 3,261 2,856 6.5 8.0 7.0 6.6 5.8 4Q15 1Q16 2Q16 3Q16 4Q16 NALsCriticized as a % of Total Loans Criticized Loans2($ in millions) Credit Quality StrongEnergy business line reserve allocation1 >7% of Energy loans 12/31/16 ●1Bank's entire allowance is available to cover any & all losses. Allocation of allowance for energy loans reflects ourrobust allowance methodology which contains quantitative and qualitative components ● 2Criticized loans are consistent withregulatory defined Special Mention, Substandard, Doubtful & Loss loan classifications ● 3Net credit-related charge-offs Allowance for Credit Losses($ in millions) 679 770 772 772 771 1.29 1.47 1.45 1.48 1.49 4Q15 1Q16 2Q16 3Q16 4Q16 Allowance for Loan Losses as a % of Total Loans $ in millions Ex-Energy TotalTotal loans $46,838 $49,088% of total 95% 100% Criticized2 1,702 2,856Ratio 3.6% 5.8%Q/Q change (86) (405) Nonaccrual 254 582Ratio 0.5% 1.2%Q/Q change 1 (49) Net charge-offs3 21 36Ratio 0.17% 0.29% $ in millions Loans Criticized NAL 4Q16 NCO3 E&P $1,587 $909 $294 $15 Midstream 374 45 7 - Services 289 200 27 - Total Energy $2,250 $1,154 $328 $15 Q/Q change (207) (319) (50) 9 Energy Credit Metrics Portfolio Credit Metrics 10

 
Noninterest Income Decreased from Record 3Q16 LevelNon-fee income decreased $4MM 4Q16 compared to 3Q16 266 244 268 272 267 4Q15 1Q16 2Q16 3Q16 4Q16 Noninterest Income ($ in millions) 11 Noninterest income decreased $5MM + $3MM Card fees- $5MM Commercial Lending fees - $2MM Net securities loss (related to Visa derivative) - $2MM Deferred comp (offset in noninterest expense) Noninterest Expenses Decreased 6%Restructuring costs of $20MM included in 4Q16 4Q16 compared to 3Q16 Noninterest expenses down $32MM - $28MM Salaries & Benefits- $ 4MM Consulting Fees- $ 3MM Gain on early termination of certain leased assets+ $ 3MM Outside processing Noninterest Expenses($ in millions) 12 53 20 20 482 458 518 493 461 4Q15 1Q16 2Q16 3Q16 4Q16 Restructuring >$25MM in GEAR Up savings realized thus far

 
Active Capital ManagementContinued to return excess capital to shareholders 12/31/16 ● 1Shares repurchased under equity repurchase program 2016 CCAR Capital Plan  Equity repurchases up to $440 million (3Q16-2Q17)  Pace of buyback linked to capital position, financial performance & market conditionsEquity repurchases1  1.8MM shares for $99MM in 4Q16  2.1MM shares for $97MM in 3Q16  5MM shares issued in 4Q16 for warrants & employee options exercised Dividends Per Share Growth 0.55 0.68 0.79 0.83 0.89 2012 2013 2014 2015 2016 13 Shareholder Payout($ in millions) 65 42 65 97 99 37 37 38 40 40 102 79 103 137 139 4Q15 1Q16 2Q16 3Q16 4Q16 Equity RepurchasesDividends Share Count(in millions) 188 182 179 176 175 192 187 185 181 177 2012 2013 2014 2015 2016 Common Shares Outstanding Average Diluted Shares 12/31/16 ● Outlook as of 1/17/17 ● 1Based on immediate parallel shock. Calculations derived from sensitivity results shown on slide 22. Potential Future Upside Significant upside from recent rate increase 14 Other Potential Upsides Well Positioned for Potential Tax Changes 2016 Tax Reconciliation ($ in millions) Amount RateTax based on federal statutory rate $235 35.0%State income taxes 8 1.2 Affordable housing and historic credits (22) (3.3)Bank-owned life insurance (15) (2.3)Lease termination transactions (15) (2.2)Tax-related interest and penalties 3 0.5Other (1) (0.1)Provision for income taxes 193 28.8%  Regulatory relief on expenses & capital management  Fiscal stimulus driving economic growth & loan demand Additional Annual Net Interest Income1 Estimated increase from interest rate movement 25 bps 50 bps 75 bps ~$50MM to~$85MM ~$95MM to~$155MM ~$120MM to~$235MM Range is driven by deposit betas, deposit reduction & incremental funding needs

 
12/31/16 ● 1Relative to when we began the initiative in June 2016 ● 2Count of total U.S. banking centers ● 3Includes Pension, Postretirement & Retirement Account Plan costs ● Estimates & outlook as of 1/1717 8,948 8,876 8,880 7,960 ~8,000 2013 2014 2015 2016 Proj2017 Achieved FY16 Workforce Reduction(# of employees – full time equivalent) 482 480 476 457 438 2013 2014 2015 2016 Proj2017 19 Banking Centers Consolidated in FY162 95 50 58 16 ~(17) 2013 2014 2015 2016 Proj2017 Revised Retirement Plan Reducing Expense3($ in millions) 15 ~270MM additional annual pre-tax income1 Double-digit ROE ≤ 60% Efficiency Ratio On Track to Reach FY18 Financial Targets GEAR Up: Growth in Efficiency And RevenueGoal: Enhance shareholder value through increased profitability Expense Achievements & Opportunities Outlook as of 1/17/17 GEAR Up initiative incorporated into this Outlook Average loans Higher • In line with growth in real GDP• Increases in most lines of business & reduced headwind from declining Energy loans Net interest income Higher • December rise in short-term rates expected to contribute approx. $70MM (assuming a 25% deposit beta)• Contribution from loan growth • Partly offset by higher funding costs & minor loan yield compression Provision Lower • Provision & net charge-offs in-line with historical normal levels of 30-40 basis points• Continued solid performance of the overall portfolio Noninterest income Higher • Execution of GEAR Up opportunities of ~$30MM• Modest growth in treasury management & card fees, as well as wealth management products such as fiduciary & brokerage services• Increase 4-6% Noninterest expenses Lower • Restructuring expenses of about $25MM-$50MM (2016 $93MM)• Remaining noninterest expense decline 1-2% • GEAR Up savings: additional $125MM relative to 2016 savings (2016 >$25MM)• Increased outside processing in line with growing revenue, continued increases in technology costs, higher FDIC insurance expense & typical inflationary pressures • No repeat of gain on leveraged lease terminations (2016 $13MM) • Decrease 4-5% including restructuring charges Income Taxes Higher • ~33% of pre-tax income Management Outlook FY17 compared to FY16Assuming continuation of current economic & low rate environment 16

 
Appendix Loans by Business and Market Average $ in billions ● Totals shown above may not foot due to rounding ● 1Other Markets includes Florida, Arizona, the International Finance Division and businesses that have a significant presence outside of the three primary geographic markets  Middle Market: Serving companies with revenues generally between $20-$500MM  Corporate Banking: Serving companies (and their U.S. based subsidiaries) with revenues generally over $500MM  Small Business: Serving companies with revenues generally under $20MM By Line of Business 4Q16 3Q16 4Q15 Middle MarketGeneralEnergyNational Dealer ServicesEntertainmentTech. & Life SciencesEnvironmental Services $12.42.46.60.73.20.8 $12.52.66.30.73.10.9 $13.03.26.20.73.30.9 Total Middle Market $26.2 $26.2 $27.3 Corporate BankingUS BankingInternational 2.41.6 2.31.7 2.41.7 Mortgage Banker Finance 2.4 2.5 1.7 Commercial Real Estate 5.4 5.5 4.6 BUSINESS BANK $37.9 $38.2 $37.7 Small Business 3.9 3.9 3.9 Retail Banking 2.0 2.0 1.9 RETAIL BANK $5.9 $5.9 $5.9 Private Banking 5.1 5.1 5.0 WEALTH MANAGEMENT 5.1 5.1 5.0 TOTAL $48.9 $49.2 $48.5 By Market 4Q16 3Q16 4Q15 Michigan $12.5 $12.5 $13.0 California 17.7 17.6 17.0 Texas 10.4 10.6 10.9 Other Markets1 8.3 8.5 7.6 TOTAL $48.9 $49.2 $48.5 18

 
Loans by Business and Market Average $ in billions ● Totals shown above may not foot due to rounding ● 1Other Markets includes Florida, Arizona, the International Finance Division and businesses that have a significant presence outside of the three primary geographic markets.  Middle Market: Serving companies with revenues generally between $20-$500MM  Corporate Banking: Serving companies (and their U.S. based subsidiaries) with revenues generally over $500MM  Small Business: Serving companies with revenues generally under $20MM By Line of Business 2016 2015 Middle MarketGeneralEnergyNational Dealer ServicesEntertainmentTech. & Life SciencesEnvironmental Services $12.62.86.40.73.20.9 $13.33.46.00.73.10.9 Total Middle Market $26.6 $27.4 Corporate BankingUS BankingInternational 2.41.7 2.51.8 Mortgage Banker Finance 2.2 1.8 Commercial Real Estate 5.2 4.4 BUSINESS BANK $38.1 $37.9 Small Business 3.9 3.9 Retail Banking 2.0 1.9 RETAIL BANK $5.9 $5.8 Private Banking 5.0 4.9 WEALTH MANAGEMENT $5.0 $4.9 TOTAL $49.0 $48.6 By Market 2016 2015 Michigan $12.6 $13.2 California 17.6 16.6 Texas 10.6 11.2 Other Markets1 8.2 7.7 TOTAL $49.0 $48.6 19 Deposits by Business and Market Average $ in billions ● Totals shown above may not foot due to rounding ● 1Other Markets includes Florida, Arizona, the International Finance Division and businesses that have a significant presence outside of the three primary geographic markets ● 2Finance/ Other includes items not directly associated with the geographic markets or the three major business segments  Middle Market: Serving companies with revenues generally between $20-$500MM  Corporate Banking: Serving companies (and their U.S. based subsidiaries) with revenues generally over $500MM  Small Business: Serving companies with revenues generally under $20MM By Line of Business 4Q16 3Q16 4Q15 Middle MarketGeneralEnergyNational Dealer ServicesEntertainmentTech. & Life SciencesEnvironmental Services $15.61.10.30.26.00.1 $15.40.60.30.16.20.1 $16.00.70.30.16.30.2 Total Middle Market $23.4 $22.7 $23.5 Corporate BankingUS BankingInternational $2.52.5 $2.12.3 $3.32.4 Mortgage Banker Finance 0.8 0.8 0.6 Commercial Real Estate 2.1 2.1 1.8 BUSINESS BANK $31.2 $30.0 $31.7 Small Business 3.4 3.3 3.2 Retail Banking 20.6 20.4 20.0 RETAIL BANK $24.0 $23.7 $23.3 Private Banking 4.1 4.0 4.4 WEALTH MANAGEMENT $4.1 $4.0 $4.4 Finance/ Other2 0.4 0.4 0.4 TOTAL $59.6 $58.1 $59.7 By Market 4Q16 3Q16 4Q15 Michigan $22.0 $21.9 $22.1 California 18.4 17.7 18.5 Texas 10.4 9.9 10.8 Other Markets1 8.5 8.2 7.9 Finance/ Other2 0.4 0.4 0.4 TOTAL $59.6 $58.1 $59.7 20

 
Deposits by Business and Market Average $ in billions ● Totals shown above may not foot due to rounding ● 1Other Markets includes Florida, Arizona, the International Finance Division and businesses that have a significant presence outside of the three primary geographic markets. ● 2Finance/ Other includes items not directly associated with the geographic markets or the three major business segments.  Middle Market: Serving companies with revenues generally between $20-$500MM  Corporate Banking: Serving companies (and their U.S. based subsidiaries) with revenues generally over $500MM  Small Business: Serving companies with revenues generally under $20MM By Line of Business 2016 2015 Middle MarketGeneralEnergyNational Dealer ServicesEntertainmentTech. & Life SciencesEnvironmental Services $15.10.80.30.26.10.1 $15.90.70.20.16.30.2 Total Middle Market $22.6 $23.4 Corporate BankingUS BankingInternational 2.22.3 2.82.2 Mortgage Banker Finance 0.7 0.6 Commercial Real Estate 1.9 1.9 BUSINESS BANK $29.7 $30.9 Small Business 3.2 3.1 Retail Banking 20.3 19.8 RETAIL BANK $23.5 $22.9 Private Banking 4.1 4.1 WEALTH MANAGEMENT $4.1 $4.1 Finance/ Other2 0.4 0.4 TOTAL $57.7 $58.3 By Market 2016 2015 Michigan $21.8 $21.9 California 17.4 17.8 Texas 10.2 10.9 Other Markets1 8.0 7.3 Finance/ Other2 0.3 0.4 TOTAL $57.7 $58.3 21 Interest Rate SensitivityRemain well positioned for rising rates 12/31/16 ● For methodology see the Company’s Form 10-Q, as filed with the SEC. Estimates are based on simulation modeling analysis. Estimated Net Interest Income: Annual (12 month) SensitivitiesBased on Various AssumptionsAdditional Scenarios are Relative to 4Q16 Standard Model($ in millions) 0.1 Interest Rates 200 bps gradual, non-parallel rise Loan Balances Modest increase Deposit Balances Moderate decrease Deposit Pricing (Beta) Historical price movements with short-term rates Securities Portfolio Held flat with prepayment reinvestment Loan Spreads Held at current levels MBS Prepayments Third-party projections and historical experience Hedging (Swaps) No additions modeled Standard Model Assumptions 22 ~95 ~140 ~190 ~190 ~210 ~250 ~325 Up 100bps Addl.$3BDepositDecline Addl.20%Increasein Beta Addl.$1BDepositDecline StandardModel Addl.~3%LoanGrowth Up 300bps

 
CRE by Property Type1($ in millions; Period-end) 24% 32% 44% Other Texas California CRE by Market1($ in millions; Period-end, based on location of property) Commercial Real Estate Line of BusinessLong history of working with well established, proven developers 12/31/16 ● 1Excludes CRE line of business loans not secured by real estate ● 2Includes CRE line of business loans not secured by real estate ● 3Criticized loans are consistent with regulatory defined Special Mention, Substandard, Doubtful & Loss loan classifications 23 CRE Period-end2($ in billions) Total Loans$4,502 Texas Market $1,441Dallas 38%Houston 26%Austin 22%Other 14% Criticized Loans3($ in millions) 17 8 8 8 9 109 99 84 46 49 2.4 1.9 1.5 0.9 0.9 4Q15 1Q16 2Q16 3Q16 4Q16 NALs Criticized as a % of Total Loans 4.6 5.1 5.5 5.4 5.3 4Q15 1Q16 2Q16 3Q16 4Q16 Multifamily46% Retail12% Commercial11% Office7% Single Family7% Multi use4% Land Carry5% Other8%Total$4,502 Energy Line of BusinessCriticized Loans2($ in millions) 479 509 467 352 374 480 426 363 332 289 2,111 2,162 1,911 1,773 1,587 3,070 3,097 2,741 2,457 2,250 4Q15 1Q16 2Q16 3Q16 4Q16 Midstream Services Exploration & Production Energy Line of Business Loans ($ in millions; Period-end) 132 423 346 378 328 1,244 1,833 1,552 1,473 1,154 4Q15 1Q16 2Q16 3Q16 4Q16 NALs Energy Line of Business Credit Quality Improved in 4Q16Granular, contracting portfolio 12/31/16 ● 1As of 1/8/17 ● 2Criticized loans are consistent with regulatory defined Special Mention, Substandard, Doubtful & Loss loan classifications ● 3Bank's entire allowance is available to cover any & all losses. Allocation of allowance for Energy loans reflects our robust allowance methodology which contains quantitative and qualitative components. Natural Gas 13% Oil40% Mixed18% 6,134 5,573 4,945 4,605 4,385 49% 54% 54% 52% 50% 4Q15 1Q16 2Q16 3Q16 4Q16 Total Commitments Utilization Rate  Maintain granular portfolio: ~200 customers  Loans decreased $207MM since 9/30/16  E&P companies1  Fall redeterminations resulted in ~11% increase in borrowing bases  96% of nonaccrual loans current on interest as of 12/31/16 24 Reserve3>7%

 
923 1,53 5 1,48 3 1,50 7 1,99 6 2,09 4 1,73 7 1,81 5 1,60 5 1,10 9 886 1, 319 1,59 5 1,39 7 1,39 9 2,0 89 2,13 6 1,74 2 1,67 4 2,14 5 2,54 4 2,35 2 200300 400500 600700 800900 3Q1 1 4Q1 1 1Q1 2 2Q1 2 3Q1 2 4Q1 2 1Q1 3 2Q1 3 3Q1 3 4Q1 3 1Q1 4 2Q1 4 3Q1 4 4Q1 4 1Q1 5 2Q1 5 3Q1 5 4Q1 5 1Q1 6 2Q1 6 3Q1 6 4Q1 6 Actual MBAMortgageOriginationVolumes 12/31/16 ● 1Source: Mortgage Bankers Association (MBA) Mortgage Finance Forecast as of 12/14/16; 4Q16 estimated ●2$ in billions Average Loans($ in millions) Mortgage Banker Finance50 Years experience with reputation for consistent, reliable approach MBA Mortgage Originations Forecast1($ in billions) 470 352 430 437 352 345 445 443 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Purchase Refinance 1,2  Provide warehouse financing: bridge from residential mortgage origination to sale to end market  Extensive backroom provides collateral monitoring and customer service  Focus on full banking relationships  Granular portfolio with 100+ relationships  Underlying mortgages are typically related to home purchases as opposed to refinancesAs of 4Q16: • Comerica: ~67% purchase • Industry: 49% purchase1  Strong credit quality• No charge-offs since 2010 25 National Dealer Services65+ years of floor plan lending Toyota/Lexus16% Honda/Acura 15% Ford 9% GM 9% Fiat/Chrysler 10%Mercedes 3% Nissan/ Infiniti 6% Other European 11% Other Asian 11% Other110% Franchise Distribution(Based on period-end loan outstandings) Geographic DispersionCalifornia 64% Texas 6%Michigan 19% Other 11% Average Loans($ in billions)  Top tier strategy  Focus on “Mega Dealer” (five or more dealerships in group)  Strong credit quality  Robust monitoring of company inventory and performance 1.5 1.9 2.3 2.3 2.5 2.8 3.1 2.9 3.2 3.2 3.5 3.2 3.4 3.5 3.6 3.5 3.7 3.8 4.0 3.8 4.0 3.4 3.8 4. 3 4.3 4.6 4.9 5.1 4.9 5. 3 5.3 5.7 5.5 5.7 5.9 6.0 6.0 6.2 6.2 6.5 6.3 6.6 4Q1 1 1Q1 2 2Q1 2 3Q1 2 4Q1 2 1Q1 3 2Q1 3 3Q1 3 4Q1 3 1Q1 4 2Q1 4 3Q1 4 4Q1 4 1Q1 5 2Q1 5 3Q1 5 4Q1 5 1Q1 6 2Q1 6 3Q1 6 4Q1 6 Floor Plan Total $6.9B 12/31/16 ● 1Other includes obligations where a primary franchise is indeterminable (rental car and leasing companies, heavy truck, recreational vehicles, and non-floor plan loans) 26

 
Early Stage~14% Growth~27% Late Stage~9% Equity Fund Services~46% Leveraged Finance~4% Technology and Life Sciences20+ Years experience provides competitive advantage Technology & Life Sciences Avg. Loans($ in billions) Customer Segment Overview(based on period-end loans)  Strong relationships with top-tier investors  Granular portfolio: ~810 customers (including ~220 customers in Equity Fund Services)  Manage concentration to numerous verticals to ensure widely diversified portfolio  Closely monitor cash balances and maintain robust backroom operation Net Charge-off Ratio1(In basis points) Total $3.3B 57 61 89 108 51 2012 2013 2014 2015 2016 l .1 12/31/16 ● 1TLS net charge-offs to avg. TLS loans 27 0.3 0.4 0.6 1.1 1.4 1.8 2.0 2.5 3.1 3.2 2012 2013 2014 2015 2016 Equity Fund Services Funding ProfileAt December 31, 2016($ in billions) Equity$7.8 11% Interest-Bearing Deposits$27.4 38% Noninterest-Bearing Deposits$31.5 44% Wholesale Debt$5.2 7% Funding and Maturity Profile 12/31/16 ● 12026 maturity ● 2Face value at maturity  Wholesale debt markets  Federal Home Loan Bank of Dallas• $2.8B outstanding1• $3.9B remaining borrowing capacity  Brokered deposits  Fed funds/ Repo markets Multiple Funding Sources Debt Profile by Maturity2($ in millions) 500 350 4,225 2017 2019 2020+ Subordinated NotesSenior NotesFHLB Advance1 28

 
Senior Unsecured/Long-Term Issuer Rating Moody’s S&P Fitch BB&T A2 A- A+ Cullen Frost A3 A- -- M&T Bank A3 A- A Comerica A3 BBB+ A BOK Financial Corporation A3 BBB+ A Huntington Baa1 BBB A- Fifth Third Baa1 BBB+ A KeyCorp Baa1 BBB+ A- SunTrust Baa1 BBB+ A- Regions Financial Baa2 BBB BBB First Horizon National Corp Baa3 BBB- BBB- Zions Bancorporation Baa3 BBB- BBB- U.S. Bancorp A1 A+ AA Wells Fargo & Company A2 A AA- PNC Financial Services Group A3 A- A+ JP Morgan A3 A- A+ Bank of America Baa1 BBB+ A Holding Company Debt Rating As of 1/13/17 ● Source: SNL Financial ● Debt Ratings are not a recommendation to buy, sell, or hold securities Pee r Ba nks Larg e Ba nks 29 30

 
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