-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, M7grIG6H/X5NgqXeNG+bmKty/b/LmPI5bhXOMFmcGLycgvI6cWlH95iRnvTSWOr4 gl5+1QaqbjSXjkgnbBTClg== 0000950124-94-000655.txt : 19940331 0000950124-94-000655.hdr.sgml : 19940331 ACCESSION NUMBER: 0000950124-94-000655 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMERICA INC /NEW/ CENTRAL INDEX KEY: 0000028412 STANDARD INDUSTRIAL CLASSIFICATION: 6022 IRS NUMBER: 381998421 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-10706 FILM NUMBER: 94519034 BUSINESS ADDRESS: STREET 1: 100 RENAISCANCE CTR STREET 2: SUITE 3800 CITY: DETROIT STATE: MI ZIP: 48243 BUSINESS PHONE: 3132224000 MAIL ADDRESS: STREET 1: 411 W LAFAYETTE MAIL CODE 3415 STREET 2: ATTN: JAY K OBERG CITY: DETROIT STATE: MI ZIP: 48226 FORMER COMPANY: FORMER CONFORMED NAME: DETROITBANK CORP DATE OF NAME CHANGE: 19850311 10-K 1 10-K 1 Form 10-K -- Comerica Incorporated and Subsidiaries Securities and Exchange Commission Washington, DC 20549 Form 10-k Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (Fee Required). For the fiscal year ended December 31, 1993. Commission file number 1-10706 Comerica Incorporated 500 Woodward Avenue, Detroit, Michigan 48226 313-222-4000 Incorporated in the State of Delaware, IRS Employer Identification No. 38-1998421. Securities registered pursuant to Section 12(b) of the Act: - - Common Stock, $5 par value - - Rights to acquire Series C Preferred Stock, no par value These securities are registered on the New York Stock Exchange. Securities registered pursuant to Section 12(g) of the Act: - - 10 1/8 percent Subordinated Debentures due in 1998 The registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, but will be contained in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-k or any amendment to this Form 10-k. At February 25, 1994, the registrant's common stock, $5 par value, held by nonaffiliates had an aggregate market value of $2,839,967,862 based on the closing price on the New York Stock Exchange on that date of $27.125 per share and 104,699,276 shares of common stock held by nonaffiliates. For purposes of this Form 10-k only, it has been assumed that all common shares held by the Trust Department of Comerica affiliated banks and by the registrant's directors and executive officers are held by affiliates. At February 25, 1994, the registrant had outstanding 114,282,395 shares of its common stock, $5 par value. Documents Incorporated by Reference: 1. Parts I and II: Items 1-8--Annual Report to Shareholders for the year ended December 31, 1993. Item 9--Proxy Statement for the Annual Meeting of shareholders to be held May 20, 1994. 2. Part III: Items 10-13--Proxy Statement for the Annual Meeting of Shareholders to be held May 20, 1994. 2 PART I ITEM 1. BUSINESS GENERAL Comerica Incorporated ("Comerica" or the "Corporation") is a registered bank holding company incorporated under the laws of the State of Delaware, headquartered in Detroit, Michigan, and was formed in 1973 to acquire the outstanding common stock of Comerica Bank (formerly Comerica Bank-Detroit), a Michigan banking corporation ("Comerica Bank"). As of December 31, 1993, Comerica owned directly or indirectly all the outstanding common stock (except for directors' qualifying shares, where applicable) of eight banking and forty-two non-banking subsidiaries. At December 31, 1993, Comerica had total assets of approximately $30.3 billion, total deposits of approximately $20.9 billion, total loans (net of unearned income) of approximately $19.1 billion, and shareholders' equity of approximately $2.2 billion. At December 31, 1993, Comerica was the second largest bank holding company headquartered in Michigan in terms of both total assets and total deposits. BUSINESS STRATEGY Comerica's business strategy focuses on five core businesses in four geographic markets. Those businesses are corporate banking, consumer banking, private banking, institutional trust and investment management, and international finance and trade services. Corporate banking incorporates highly specialized units servicing a full range of company sizes with both credit and non-credit products. Consumer banking provides deposit, credit and fee-based products to individuals needing financial services but whose income or wealth do not make them prospects for private banking services. Private banking is oriented to servicing the financial needs of the affluent market as defined by individual net income or wealth. Institutional trust and investment management activities involve providing companies, municipalities and other entities a wide spectrum of investment management products and trust products such as master trust, master custody, and corporate trust services, as well as administering and serving as trustee for employee benefit plans. International finance and trade services offer importers and exporters trade financing, letters of credit, foreign exchange and international customhouse brokerage and freight forwarding products. The core businesses are tailored to each of Comerica's four primary geographic markets: the Midwest (currently Michigan and Illinois), Texas, California and Florida. The Midwest is the only market in which all five core businesses are currently pursued. In California and Texas the primary focus is on corporate banking and private banking activities. In Florida the primary focus is on private banking. ACQUISITIONS On July 17, 1992, Comerica entered into a Stock Purchase Agreement with Hibernia Corporation, a Louisiana corporation and a registered bank holding company, for the purchase of all of the issued and outstanding capital stock of Hibernia National Bank in Texas, a national banking association ("Hibernia Bank"). The transaction was closed on December 31, 1992, with Comerica paying a purchase price of approximately $56 million in cash. The acquisition was accounted for as a purchase. As of March 31, 1993, Hibernia Bank had total assets of approximately $787 million. In May 1993, Hibernia Bank was merged into Comerica Bank-Texas, a Texas chartered bank and a wholly owned subsidiary of Comerica. On September 24, 1992, Comerica entered into an Agreement and Plan of Merger with Sugar Creek National Bank ("Sugar Creek") for the acquisition by Comerica of Sugar Creek in exchange for Comerica common stock having a market value of approximately $28 million. Sugar Creek was a national banking association with offices in the Houston, Texas metropolitan area. The transaction was closed on February 25, 1993 and was accounted for using the pooling-of-interests method. At September 30, 1993, Sugar Creek had total assets of approximately $205 million. Sugar Creek merged into Comerica Bank-Texas in November 1993. On November 4, 1992, Comerica entered into Agreements and Plans of Reorganization and Merger with Nasher Financial Corporation, a Delaware corporation ("Nasher"), and NorthPark National Corporation, a Delaware corporation and a registered bank holding company ("NNC"), for the acquisition by Comerica of those two companies in exchange for Comerica common stock having a market value of approximately $79 million. Nasher's sole asset was approximately 29 percent of the outstanding common stock of NNC. NNC owned NorthPark National Bank of Dallas, a national banking association with one office in the Dallas, Texas area. The transaction was closed on May 28, 1993 and was accounted for using the pooling-of-interests method. At June 30, 1993, NNC had consolidated assets of approximately $696 million. In August 1993, NorthPark National Bank of Dallas was merged into Comerica Bank-Texas. On September 8, 1993, Comerica, Pacific Western Bancshares, Inc., a Delaware Corporation and bank holding company ("PAC WEST"), Pacific Western Bank, a California state 1 3 Form 10-K Comerica Incorporated and Subsidiaries chartered bank and wholly owned subsidiary of PAC WEST ("PWB"), and Comerica California Incorporated, a California corporation, bank holding company and wholly owned subsidiary of the Corporation ("COM CAL"), entered into an Agreement and Plan of Reorganization and Merger providing for, among other things, the merger of COM CAL into PAC WEST (the "Merger") with PAC WEST being the surviving corporation under the charter and bylaws of COM CAL and the name "Comerica California Incorporated." Subsequent to the Merger, PWB may, at the Corporation's election, be merged into a subsidiary of Comerica. PAC WEST shareholders will receive approximately 4,585,000 shares of Comerica common stock. The transaction is subject to regulatory approval and is expected to be completed in the spring of 1994. As of December 31, 1993, PAC WEST had total assets of approximately $1 billion. SUPERVISION AND REGULATION Banks, bank holding companies and financial institutions are highly regulated at both the state and federal level. As a bank holding company, Comerica is subject to supervision and regulation by the Federal Reserve Board under the Bank Holding Company Act of 1956, as amended (the "Act"). Under the Act, the Corporation is prohibited, with certain exceptions, from acquiring or retaining direct or indirect ownership or control of voting shares of any company which is not a bank or bank holding company and from engaging in activities other than those of banking or of managing or controlling banks, other than subsidiary companies and activities which the Federal Reserve Board determines to be so closely related to the business of banking as to be a proper incident thereto. Comerica Bank is chartered by the State of Michigan and is supervised and regulated by the Financial Institutions Bureau of the State of Michigan. Comerica Bank-Texas is chartered by the State of Texas and is supervised and regulated by the Texas Department of Banking. Comerica Bank-Midwest, N.A. is chartered under federal law and subject to supervision and regulation by the Office of the Comptroller of the Currency. Comerica Bank-California is chartered and regulated by the State of California. Comerica Bank & Trust, FSB is chartered under federal law and subject to supervision and regulation by the Office of Thrift Supervision. Comerica Bank-Illinois is chartered by the State of Illinois and is regulated by the State of Illinois Commissioner of Banks and Trust Companies. Comerica Bank, Comerica Bank-Illinois and Comerica Bank-Midwest, N.A. are members of the Federal Reserve System. State member banks are also regulated by the Federal Reserve Bank and state non-member banks are also regulated by the Federal Deposit Insurance Corporation. The deposits of all the banks are insured by the Bank Insurance Fund (the "BIF") of the Federal Deposit Insurance Corporation to the extent provided by law. Comerica is a legal entity separate and distinct from its banking and other subsidiaries. Most of Comerica's revenues result from dividends paid to it by its bank subsidiaries. There are statutory and regulatory requirements applicable to the payment of dividends by subsidiary banks to Comerica as well as by Comerica to its shareholders. Dividends Each state bank subsidiary that is a member of the Federal Reserve System and each national banking association is required by federal law to obtain the prior approval of the Federal Reserve Board or the Office of the Comptroller of the Currency, as the case may be, for the declaration and payment of dividends if the total of all dividends declared by the board of directors of such bank in any year will exceed the total of (i) such bank's net profits (as defined and interpreted by regulation) for that year plus (ii) the retained net profits (as defined and interpreted by regulation) for the preceding two years, less any required transfers to surplus. In addition, these banks may only pay dividends to the extent that retained net profits (including the portion transferred to surplus) exceed bad debts (as defined by regulation). Under the foregoing dividend restrictions, at January 1, 1994 Comerica's subsidiary banks, without obtaining governmental approvals, could declare aggregate dividends of approximately $273 million from retained net profits of the preceding two years, plus an amount approximately equal to the net profits (as measured under current regulations), if any, earned for the period from January 1, 1994 through the date of declaration. Dividends paid to Comerica by its subsidiary banks amounted to $311 million in 1993 and $60 million in 1992. FIRREA Recent banking legislation, including the Financial Institutions Reform and Recovery and Enforcement Act of 1989 ("FIRREA") and the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), has broadened the regulatory powers of the federal bank regulatory agencies. Under FIRREA, a depository institution insured by the Federal Deposit Insurance Corporation (the "FDIC") can be held liable for any loss incurred by, or reasonably expected to be incurred by, the FDIC in connection with (i) the default of a commonly controlled FDIC-insured depository institution, or (ii) any assistance provided by the FDIC to any commonly controlled FDIC-insured depository institution "in danger of default." "Default" is defined generally as the appointment of a conservator or receiver and "in danger of default" is defined generally as the existence of certain conditions indicating that a default is likely to occur in the absence of regulatory assistance. FDICIA In December 1991, FDICIA was enacted, substantially revising the bank regulatory and funding provisions of the Federal Deposit Insurance Act and making revisions to several other federal banking statutes. Among other things, FDICIA requires the federal banking agencies to take "prompt corrective action" in respect of depository institutions that do not meet minimum capital requirements. FDICIA establishes five capital tiers: "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized" and "critically undercapitalized." A depository institution's capital tier will depend upon where its capital levels are in relation to various relevant capital measures, which will include a risk-based capital measure and a leverage ratio capital measure, and certain other factors. Regulations establishing the specific capital tiers have been issued in final form. Under these regulations, for an institution to be well capitalized it must have a total risk-based capital ratio of at least 10 percent, a Tier 1 risk-based capital ratio of at least 6 percent, a Tier 1 leverage ratio of at least 5 percent, and not be subject to any specific capital order or directive. For an institution to be adequately capitalized it must have a total risk-based capital ratio of at least 8 percent, a Tier 1 risk-based capital ratio of at least 4 percent, and a Tier 1 leverage ratio of at least 4 percent (and in some cases 3 percent). Under these regulations, the banking subsidiaries of Comerica would be considered to be well capitalized as of December 31, 1993. FDICIA generally prohibits a depository institution from making any capital distribution (including payment of a dividend) or paying any management fee to its holding company if the depository institution would thereafter be undercapitalized. Undercapitalized depository institutions are subject to growth limitations and are required to submit a capital restoration plan. The federal banking agencies may not accept a capital plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution's capital. In addition, for a capital restoration plan to be acceptable, the depository institution's parent holding company must guarantee that the institution will comply with such capital restoration plan. The aggregate liability of the parent holding company under the guaranty is limited to the lesser of (i) an amount equal to 5 percent of the depository institution's total assets at the time it became undercapitalized, and (ii) the amount that is necessary (or would have been 2 4 necessary) to bring the institution into compliance with all capital standards applicable with respect to such institution as of the time it fails to comply with the plan. If a depository institution fails to submit an acceptable plan, it is treated as if it is significantly undercapitalized. Loans to an undercapitalized institution from its Federal Reserve Bank are generally restricted. Significantly undercapitalized depository institutions may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets and cessation of receipt of deposits from correspondent banks. Critically undercapitalized institutions are subject to the appointment of a receiver or conservator. Under FDICIA, the FDIC is permitted to provide financial assistance to an insured bank before appointment of a conservator or receiver only if (i) such assistance would be the least costly method of meeting the FDIC's insurance obligations, (ii) grounds for appointment of a conservator or a receiver exist or are likely to exist, (iii) it is unlikely that the bank can meet all capital standards without assistance and (iv) the bank's management has been competent, has complied with applicable laws, regulations, rules and supervisory directives and has not engaged in any insider dealing, speculative practice or other abusive activity. FDICIA directs that each federal banking agency prescribe standards for depository institutions and depository institution holding companies relating to internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, a maximum ratio of classified assets to capital, minimum earnings sufficient to absorb losses, a minimum ratio of market value to book value for publicly traded shares and other standards as they deem appropriate. Because most of such standards have not yet been established, management is unable to assess their overall impact. However, it appears that the cost of compliance will increase. FDICIA also contains a variety of other provisions that may affect the operations of depository institutions including new reporting requirements, regulatory standards for real estate lending, "truth in savings" provisions, the requirement that a depository institution give 90 days prior notice to customers and regulatory authorities before closing any branch and a prohibition on the acceptance or renewal of brokered deposits by depository institutions that are not well capitalized or are adequately capitalized and have not received a waiver from the FDIC. As of December 31, 1993, Comerica Bank is well capitalized under regulations relating to the brokered deposit prohibition and may accept brokered deposits without restrictions. FDIC Insurance Assessments Comerica's subsidiary banks are subject to FDIC deposit insurance assessments. On September 15, 1992, the FDIC approved the implementation of a transitional risk-based deposit premium assessment system under which each depository institution is placed in one of the nine assessment categories based on certain capital and supervisory measures. The assessment rates under the transitional system range from .23 percent to .31 percent depending upon the assessment category into which the insured institution is placed. The transitional assessment system became effective January 1, 1993. On June 17, 1993, the FDIC adopted a permanent risk-based assessment system for assessment periods beginning on and after January 1, 1994. The system retains the transitional system without substantial modification. It is possible that BIF assessments will be further increased and it is possible that there may be special additional assessments in the future. A significant increase in the assessment rate or a special additional assessment could have an adverse impact on Comerica's results of operations. COMPETITION Banking is a highly competitive business. The Michigan banking subsidiary of the Corporation competes primarily with Detroit and outstate Michigan banks for loans, deposits and trust accounts. Through its offices in Arizona, California, Colorado, Florida, Indiana, Illinois, Ohio and Texas, Comerica competes with other financial institutions for various types of loans. Through its Florida subsidiary, Comerica competes with many companies, including financial institutions, for trust business. At year-end 1993, Comerica Incorporated was the second largest bank holding company located in Michigan in terms of total assets and deposits. Based on legislation passed during 1985 that allows Michigan-based banks to acquire or be acquired by banks in states with similar laws in effect, the Corporation believes that the level of competition in Michigan will increase in the future. Comerica's banking subsidiaries also face competition from other financial intermediaries, including savings and loan associations, consumer finance companies, leasing companies and credit unions. EMPLOYEES As of December 31, 1993, Comerica and its subsidiaries had 11,424 full-time and 1,763 part-time employees. 3 5 Item 2. Properties The executive offices of the Corporation are located in the Comerica Tower at Detroit Center in Detroit, Michigan. Comerica and its subsidiaries occupies 15 floors of the building, which it leases through Comerica Bank from an unaffiliated third party. This lease extends through January 2007. As of December 31, 1993, Comerica Bank operated 360 offices within the State of Michigan, of which 260 were owned and 100 were leased. Seven other banking affiliates operate 107 offices in California, Florida, Illinois and Texas. The affiliates own 34 of their offices and lease 73 offices. One banking affiliate also operates from leased space in Toledo, Ohio. In addition, the Corporation owns an operations and check processing center in Livonia, Michigan and a ten-story building in the central business district of Detroit that houses certain departments of the Corporation and Comerica Bank. In 1983, Comerica entered into a sale/leaseback agreement with an unaffiliated party covering an operations center which was built in Auburn Hills, Michigan, and now is occupied by various departments of the Corporation and Comerica Bank. Item 5. Market for Corporation's Common Equity and Related Stockholder Matters The common stock of Comerica Incorporated is traded on the New York Stock Exchange (NYSE Trading Symbol: CMA). At January 31, 1994, there were approximately 14,420 holders of the Corporation's common stock. Quarterly cash dividends were declared during 1993 and 1992 totaling $1.07 and $.96 per common share per year, respectively. The following table sets forth, for the periods indicated, the high and low sale prices per share of the Corporation's common stock as reported on the NYSE Composite Transactions Tape for all quarters of 1993 and 1992. All of the prices are adjusted for the January 4, 1993 two-for-one stock split.
Dividend Dividend* Quarter High Low Per Share Yield 1993 Fourth $29.000 $25.125 $.28 4.1% Third 31.500 26.875 .28 3.8 Second 35.250 27.625 .26 3.3 First 33.375 28.750 .26 3.3 1992 Fourth 32.750 29.250 .26 3.3 Third 31.125 27.688 .24 3.2 Second 31.875 26.500 .24 3.2 First 30.250 26.250 .24 3.3
* Dividend yield is calculated by annualizing the quarterly dividend per share and dividing by an average of the high and low price in the quarter. 4 6 FORM 10-K CROSS REFERENCE INDEX. Comerica Incorporated and Subsidiaries Certain information required to be included in Form 10-k is also included in the 1993 Annual Report to Shareholders or in the 1994 Proxy Statement used in connection with the 1994 annual meeting of shareholders to be held on May 20, 1994. The following cross-reference index shows the page location in the 1993 Annual Report or the section of the 1994 Proxy Statement of only that information which is to be incorporated by reference into Form 10-k. All other sections of the 1993 Annual Report or the 1994 Proxy Statement are not required in Form 10-k and should not be considered a part thereof.
1994 1993 Proxy Annual Statement Report Section ----------------------------------------------------------------------------------------- --------- Part I Item 1. Business...................................................................................... 64 Item 2. Properties.................................................................................... 66 Item 3. Legal Proceedings............................................................................. 54 Item 4. Submission of Matters to a Vote of Security Holders--no matters were voted upon by security holders in the fourth quarter of 1993 Part II Item 5. Market for Registrant's Common Equity and Related Security Holder Matters..................... 66 Item 6. Selected Financial Data....................................................................... 21 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations......... 20 Item 8. Financial Statements and Supplementary Data: Comerica Incorporated and Subsidiaries Consolidated Balance Sheets................................................................. 38 Consolidated Statements of Income........................................................... 39 Consolidated Statements of Changes in Shareholders' Equity.................................. 40 Consolidated Statements of Cash Flows....................................................... 41 Notes to Consolidated Financial Statements.................................................... 42 Report of Independent Auditors................................................................ 60 Statistical Disclosure by Bank Holding Companies: Analysis of Net Interest Income--FTE........................................................ 23 Rate-Volume Analysis--FTE................................................................... 27 Analysis of Investment Securities Portfolio--FTE............................................ 31 Analysis of Investment Securities and Loans................................................. 29 Allocation of The Allowance for Loan Losses................................................. 33 Loan Maturities and Interest Rate Sensitivity............................................... 29 Summary of Nonperforming Assets and Past Due Loans.......................................... 33 Cross-border Outstandings................................................................... 28 Analysis of The Allowance for Loan Losses................................................... 25 Maturity Distribution of Domestic Certificates of Deposit of $100,000 and Over.............. 31 Historical Review-Statistical Data.......................................................... 63 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .......................... Change in Independent Accountants Part III Item 10. Directors and Executive Officers of the Registrant................... Election of Directors; Executive Officers of the Corporation Item 11. Executive Compensation............................................... Compensation of Executive Officers Item 12. Security Ownership of Certain Beneficial Owners and Management....... Security Ownership of Certain Beneficial Owners and Management Item 13. Certain Relationships and Related Transactions....................... Transactions of Directors, Executive Officers and Certain Beneficial Owners; Election of Directors
5 7 FORM 10-K CROSS REFERENCE INDEX - Comerica Incorporated and Subsidiaries
PART IV 1993 Exhibits, Financial Statement Schedules, and Reports on Form 8-k Annual Report Item 14. (a) The following documents are filed as a part of this report: 1. Financial Statements: The financial statements are filed as part of this report and are listed under Item 8 in the Form 10-k Cross-reference Index on page 67. 2. All of the schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are either not required under the related instruction, the required information is contained elsewhere in the Form 10-k, or the schedules are inapplicable and therefore have been omitted. Exhibits: Exhibit Document* Number 3.1 Restated Certificate of Incorporation of Comerica Incorporated, as amended 3.2 Amended and restated bylaws of Comerica Incorporated 4. Rights Agreement between Comerica Incorporated and Comerica Bank** 10.1 Comerica Incorporated Long-term Incentive Plan*** 10.2 Summary of Comerica Incorporated Annual Incentive Compensation Plan*** 10.3 Comerica Incorporated Plan for Deferring the Payment of Directors Fees*** 10.4 Comerica Incorporated Nonqualified Retirement Income Guaranty Plan**** 10.5 Comerica Incorporated's Directors Retirement Plan***** 10.6 Manufacturers National Corporation's 1987 and 1989 Stock Option Plans for Key Employees***** 10.7 Manufacturers National Corporation's Executive Incentive Plan***** 10.8 Manufacturers National Corporation's Key Employee Retention Plan***** 10.9 Form of Management Continuation Agreement between registrant and listed officers, October 1987*** 10.10 Form of Director Indemnification Agreement between Comerica Incorporated and its directors, dated April 1987****** 10.11 Employment Continuation Agreement with Eugene A. Miller***** 10.12 Employment Continuation Agreement with Gerald V. MacDonald***** 10.13 Comerica Incorporated Deferred Compensation Plan 11. Statement regarding Computation of Per Share Earnings 49 13. The required portions of the registrant's 1993 Annual Report to Shareholders 21. Subsidiaries of the Corporation 23.1 Consent of Ernst & Young 23.2 Consent of KPMG Peat Marwick 23.3 Opinion of KPMG Peat Marwick (b) No reports on Form 8-k were filed by the Corporation during the last quarter of 1993. Signatures 69
* This copy of the 1993 Annual Report and Form 10-k does not include any exhibits. Copies of the listed exhibits will be furnished to shareholders upon request. Requests should be directed to Comerica Incorporated, Corporate Secretary, Comerica Tower at Detroit Center, Detroit, Michigan 48226-3391. ** Incorporated by reference from Registrant's Annual Report on Form 10-k for the year ended December 31, 1987--Commission File Number 0-7269. *** Incorporated by reference from Registrant's Annual Report on Form 10-k for the year ended December 31, 1991--Commission File Number 0-7269. **** Incorporated by reference from Registrant's Form 8-A Registration Statement dated January 26, 1988--Commission File Number 0-7269. ***** Incorporated by reference from Registrant's Annual Report on Form 10-k for the year ended December 31, 1992--Commission File Number 0-7269. ****** Incorporated by reference from Registrant's Annual Report on Form 10-k for the year ended December 31, 1989--Commission File Number 0-7269. 6 8 FORM 10-K - Comerica Incorporated and Subsidiaries SIGNATURES Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized in the City of Detroit, State of Michigan on the 18th day of March, 1994. COMERICA INCORPORATED Eugene A. Miller Chairman and Chief Executive Officer Paul H. Martzowka Executive Vice President and Chief Financial Officer Arthur W. Hermann Senior Vice President and Controller (Chief Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities indicated on March 18, 1994. By Directors E. Paul Casey James F. Cordes J. Philip DiNapoli Max M. Fisher John D. Lewis Patricia Shontz Longe, Ph.D. Wayne B. Lyon Gerald V. MacDonald Donald R. Mandich Eugene A. Miller Michael T. Monahan Alfred A. Piergallini Dean E. Richardson Thomas F. Russell Alan E. Schwartz Howard F. Sims 7 EX-3.1 2 EXHIBIT 3.1 1 Ex. 3.1 STATE OF DELAWARE LETTERHEAD OFFICE OF SECRETARY OF STATE _______________________ I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF MERGER OF "MANUFACTURERS NATIONAL CORPORATION" MERGING WITH AND INTO "COMERICA INCORPORATED" UNDER THE NAME OF "COMERICA INCORPORATED" AS RECEIVED AND FILED IN THIS OFFICE THE EIGHTEENTH DAY OF JUNE, A.D. 1992, AT 8:30 O'CLOCK A.M. * * * * * * * * * * * * * /s/ Michael Rachford DEPARTMENT OF STATE -------------------- OFFICE OF THE SECRETARY OF STATE SECRETARY OF STATE DELAWARE (STATE SEAL) AUTHENTICATION: *3488359 DATE: 06/18/1992
2 STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 08:30 AM 06/18/1992 921705007 - 786580 CERTIFICATE OF MERGER OF MANUFACTURERS NATIONAL CORPORATION INTO COMERICA INCORPORATED The undersigned corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware DOES HEREBY CERTIFY: FIRST: That the name and state of incorporation of each of the constituent corporations of the merger is as follows: Name: State of Incorporation: - ----- ----------------------- Comerica Incorporated Delaware Manufacturers National Corporation Delaware SECOND: That an Agreement and Plan of Merger ("Merger Agreement"} between the parties to the merger has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations in accordance with the requirements of Section 251 of the General Corporation Law of the State of Delaware. THIRD: That Comerica Incorporated shall be the surviving corporation in the merger and the name of the surviving corporation of the merger is "Comerica Incorporated." FOURTH: That, pursuant to the merger, the Restated Certificate of Incorporation of the surviving corporation shall be amended to read in its entirety as set forth in Attachment A to this Certificate of Merger. FIFTH: That the executed Merger Agreement is on file at the principal place of business of the surviving corporation. The address of the principal place of business of the surviving corporation is 100 Renaissance Center, Detroit, MI 48243. SIXTH: That a copy of the Merger Agreement will be furnished by the surviving corporation, on request and without cost to any stockholder of any constituent corporation. IN WITNESS WHEREOF, the undersigned have executed this Certificate of Merger as of the 18th day of June, 1992. ATTEST: COMERICA INCORPORATED _____________________ _____________________ By: Judith C. Lalka By: Eugene A. Miller Its: Secretary Its: Chairman of the Board, President and Chief Executive Officer 2 3 ATTACHMENT A RESTATED CERTIFICATE OF INCORPORATION OF COMERICA INCORPORATED (THE "CORPORATION") FIRST The name of the Corporation is Comerica Incorporated. SECOND The address of the registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of the registered agent at such address is The Corporation Trust Company. THIRD The nature of the business or purposes to be conducted or promoted is: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH The total number of shares of all classes of stock which the Corporation shall have authority to issue is 260,000,000 shares which shall be divided into two classes as follows: (a) 10,000,000 shares of Preferred Stock without par value (Preferred Stock); and (b) 250,000,000 shares of Common Stock of the par value of $5.00 per share (Common Stock). The designations and the powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions of the above classes of stock shall be as follows: PART I: PREFERRED STOCK (a) Shares of Preferred Stock may be issued in one or more series at such time or times and for such consideration or considerations as the Board of Directors may determine. (b) The Board of Directors is expressly authorized at any time, and from time to time, to provide for the issuance of shares of Preferred Stock in one or more series, with 3 4 such voting powers, full or limited but not to exceed one vote per share, or without voting powers, and with such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restriction thereof, as shall be stated and expressed in the resolution or resolutions providing for the issue thereof adopted by the Board of Directors, and as are not stated and expressed in this Restated Certificate of Incorporation, or any amendment thereto, including (but without limiting the generality of the foregoing) the following: (i) The designation of such series and number of shares comprising such series, which number may (except where otherwise provided by the Board of Directors in creating such series) be increased or decreased (but not below the number of shares then outstanding) from time to time by action of the Board of Directors. (ii) The dividend rate or rates on the shares of such series and the preference or relation which such dividends shall bear to the dividends payable on any other class of capital stock or on any other series of Preferred Stock, the terms and conditions upon which and the periods in respect of which dividends shall be payable, whether and upon what condition such dividends shall be cumulative and, if cumulative, the date or dates from which dividends shall accumulate. (iii) Whether the shares of such series shall be redeemable, and, if redeemable, whether redeemable for cash, property or rights, including securities of any other corporations, at the option of either the holder or the Corporation or upon the happening of a specified event, the limitations and restrictions with respect to such redemption, the time or times when, the price or prices or rate or rates at which, the adjustments with which and the manner in which such shares shall be redeemable, including the manner of selection shares of such series for redemption if less than all shares are to be redeemed. (iv) The rights to which the holders of shares of such series shall be entitled, and the preferences, if any, over any other series (or of any other series over such series), upon the voluntary or involuntary liquidation, dissolution, distribution or winding up of the Corporation, which rights may vary depending on whether such liquidation, dissolution, distribution or winding up is voluntary or involuntary, and, if voluntary, may vary at different dates. (v) Whether the shares of such series shall be subject to the operation of a purchase, retirement or sinking fund, and, if so, whether and upon what conditions such purchase, retirement or sinking fund shall be cumulative or noncumulative, the extent to which and the manner in which such fund shall be applied to the purchase or redemption of the shares of such series for retirement or to other corporate purposes and the terms and provisions relative to the operation thereof. 2 5 (vi) Whether the shares of such series shall be convertible into, or exchangeable for, at the option of either the holder or the Corporation or upon the happening of a specified event, shares of any other class or of any other series of any class of capital stock of the Corporation, and, if so convertible or exchangeable, the times, prices, rates, adjustments, and other terms and conditions of such conversion or exchange. (vii) The voting powers, full and/or limited, if any, of the shares of such series, and whether and under what conditions the shares of such series (alone or together with the shares of one or more other series having similar Provisions) shall be entitled to vote separately as a single class, for the election of one or more directors, or additional directors, of the Corporation in case of dividend arrearages or other specified events, or upon other matters. (viii) Whether the issuance of any additional shares of such series, or of any shares of any other series, shall be subject to restrictions as to issuance, or as to the powers, preferences or rights of any such other series. (ix) Any other preferences, privileges and powers and relative, participating, option or other special rights, and qualifications, limitations or restrictions of such series, as the Board of Directors may deem advisable and as shall not be inconsistent with the provisions of this Restated Certificate of Incorporation. (c) Unless and except to the extent otherwise required by law or provided in the resolution or resolutions of the Board of Directors creating any series of Preferred Stock pursuant to this Part I, the holders of the Preferred Stock shall have no voting power with respect to any matter whatsoever. In no event shall the Preferred Stock be entitled to more than one vote in respect of each share of stock. (d) Shares of Preferred Stock redeemed, converted, exchanged, purchased, retired or surrendered to the Corporation, or which have been issued and reacquired in any manner, may, upon compliance with any applicable provisions of the General Corporation Law of the State of Delaware, be given the status of authorized and unissued shares of Preferred Stock and may be reissued by the Board of Directors as part of the series of which they were originally a part or may be reclassified into and reissued as part of a new series or as a part of any other series, all subject to the protective conditions or restrictions of any outstanding series of Preferred Stock. PART II: COMMON STOCK (a) Except as otherwise required by law or by any amendment to this Restated Certificate of Incorporation, each holder of Common Stock Shall have one vote for each share of stock held by him of record on the books of the Corporation on all matters voted upon by the stockholders. 3 6 (b) Subject to the preferential dividend rights, if any, applicable to shares of Preferred Stock and subject to applicable requirements, if any, with respect to the setting aside of sums for purchase, retirement or sinking funds for Preferred Stock, the holders of Common Stock shall be entitled to receive, to the extent permitted by law, such dividends as may be declared from time to time by the Board of Directors. (c) In the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Corporation, after distribution in full of the preferential amounts, if any, to be distributed to the holders of shares of Preferred Stock, holders of Common Stock shall be entitled to receive all of the remaining assets of the Corporation of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of Common Stock held by them respectively. The Board of Directors may distribute in kind to the holders of Common Stock such remaining assets of the Corporation or may sell, transfer or otherwise dispose of all or any part of such remaining assets to any other corporation, trust or entity, or any combination thereof, and may sell all or any part of the consideration so received and distribute any balance thereof in kind to holders of Common Stock. The merger or consolidation of the Corporation into or with any other corporation, or the merger of any other corporation into it, or any purchase or redemption of shares of stock of the Corporation of any class, shall not be deemed to be a dissolution, liquidation of winding up of the Corporation for the purposes of this paragraph. (d) Such numbers of shares of Common Stock as may from time to time be required for such purpose shall be reserved for issuance (i) upon conversion of any shares of Preferred Stock or any obligation of the Corporation convertible into shares of Common Stock which is at the time outstanding or issuable upon exercise of any options or warrants at the time outstanding and (ii) upon exercise of any options, warrants or rights at the time outstanding to purchase shares of Common Stock. FIFTH The Corporation is to have perpetual existence. SIXTH The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors, the exact number of directors to be determined from time to time by resolution adopted by affirmative vote of a majority of the entire Board of Directors. The directors shall be divided into three classes designated Class I, Class II, and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. At each annual meeting of shareholders, successors to the class of directors whose term express at the annual meeting shall be elected for a three-year term. If the number of directors is changed, any increase or 4 7 decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director. A director shall hold office until the annual meeting for the year in which his or her term expires and until his or her successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. Until June 18, 1995, vacancies on the Board of Directors may be filled, and nominations of persons on behalf of the Corporation will be made in accordance with Article III, Section 12 of the Corporation's Bylaws. Thereafter, any vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of the Board of Directors then in office, and any other vacancy occurring in the Board of Directors may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his or her predecessor. Notwithstanding the foregoing, whenever the holders of any one or more classes or series of preferred stock issued by the Corporation shall have the right, voting separately by class or series, to elect directors at an annual or special meeting of Shareholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this Restated Certificate of Incorporation applicable thereto, and such directors so elected shall not be divided into classes pursuant to this Article Sixth unless expressly provided by such terms. Any amendment, change or repeal of this Article Sixth or any other amendment or change of this Restated Certificate of Incorporation which will have the effect of modifying or permitting circumvention of this Article Sixth, shall require the favorable vote, at a meeting of the Shareholders of the Corporation, of the holders of at least 75% of the then outstanding shares of capital stock of the Corporation entitled to vote; provided, however, that such 75% vote shall not be required for any such amendment, change or repeal recommended to Shareholders by the affirmative vote of not less than three-fourths of the Board of Directors then in office, and such amendment, change, or repeal so recommended shall require only the vote, if any, required under the applicable provision of the General Corporation Law of the State of Delaware. SEVENTH The directors shall have the power to make, alter, amend, change, add to or repeal the Bylaws of the Corporation not inconsistent with the provisions of this Restated Certificate of Incorporation. The affirmative vote of the holders of not less than 75% of the outstanding shares of capital stock of the Corporation entitled to vote shall be required for the approval and adoption of any amendment, alteration, change, addition to or repeal of 5 8 Article II, Section (5) and Article III, Section (12) of the Bylaws of the Corporation proposed by any Shareholder of the Corporation. Any amendment, change or repeal of this Article Seventh, or any other amendment of this Restated Certificate of Incorporation which will have the effect of modifying or permitting circumvention of this Article Seventh, shall require the favorable vote, at a meeting of the Shareholders of the Corporation, of the holders of at least 75% of the then outstanding shares of capital stock of the Corporation entitled to vote; provided, however, that such 75% vote shall not be required for any such amendment, change or repeal recommended to Shareholders by the affirmative vote of not less than three-fourths of the Board of Directors, and such amendment, change, or repeal so recommended shall require only the vote, if any, required under the applicable provision of the General Corporation Law of the State of Delaware. EIGHTH I. The affirmative vote of (a) the holders of not less than 75% of the outstanding shares of capital stock of the Corporation entitled to vote and (b) the holders of not less than a majority of the outstanding shares of capital stock of the Corporation entitled to vote excluding for purposes of determining the affirmative vote required by this clause (b) all such shares of which a "Related Person" (as hereinafter defined) shall be a "Beneficial Owner" (as hereinafter defined), shall be required for the approval or authorization of any "Business Combination" (as hereinafter defined) involving a Related Person; provided, however, that the foregoing voting requirements set forth in clauses (a) and (b) above shall not be applicable, and the provisions of Delaware law relating to the percentage of Shareholder approval, if any, shall apply to any such Business Combination if: A. The "Continuing Directors" of the Corporation (as hereinafter defined) by a three-fourths vote thereof have expressly approved the Business Combination either in advance of or subsequent to the acquisition of outstanding shares of capital stock of the Corporation that caused the Related Person to become a Related Person; or B. If each of the following conditions are satisfied: 1. The aggregate amount of the cash and the fair market value of the property, securities or other consideration to be received per share of any class or series of capital stock of the Corporation in the Business Combination by holders of such capital stock of the Corporation, other than the Related Person involved in the Business Combination, is not less than the "Highest Per Share Price" or the "Highest Equivalent Price" (as these terms are hereinafter defined), paid or to be paid by the Related Person in acquiring any of such class or series of the capital stock of the Corporation outside of such Business Combination; and 6 9 2. A proxy statement complying with the requirements of the Securities Exchange Act of 1934, as amended, shall have been mailed to all Shareholders of the Corporation for the purpose of soliciting Shareholder approval of the Business Combination. The proxy statement shall contain at the front thereof, in a prominent place, the position of the Continuing Directors as to the advisability (or inadvisability) of the Business Combination and, if deemed advisable by a majority of the Continuing Directors, the opinion of an investment banking firm selected by the Continuing Directors as to the fairness of the terms of the Business Combination, from the point of view of the holders of the outstanding shares of capital stock of the Corporation other than any Related Person. For purposes of this Article Eighth: 1. The term "Business Combination" means (i) any merger, consolidation or share exchange of the Corporation or any of its subsidiaries into or with any member of any Related Person, in each case irrespective of which Corporation or company is the surviving entity; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition to or with any member of any Related Person (in a single transaction or a series of related transactions) of all or a Substantial Part (as hereinafter defined) of the assets of the Corporation (including without limitation any securities of a subsidiary) or a Substantial Part of the assets of any of its subsidiaries; (iii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition to or with the Corporation or to or with any of its subsidiaries (in a single transaction or series of related transactions) of all or a Substantial Part of the assets of any member of any Related Person; (iv) the issuance or transfer of any securities of the Corporation or any of its subsidiaries by the Corporation or any of its subsidiaries to any member of any Related Person (other than an issuance or transfer of securities which is effected on a pro rata basis to all Shareholders of the Corporation); (v) the acquisition by the Corporation or any of its subsidiaries of any securities of any member of any Related Person; and (vi) any agreement, contract or other arrangement providing for any of the transactions described in this definition of Business Combination. 2. The term "Related Person" shall mean any individual, corporation, partnership or other person or entity, including any member of a "group" (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934 as in effect at the date of the adoption of this Article by the Shareholders of the Corporation; such act and such Rules and Regulations promulgated thereunder, collectively and as so in effect, being hereinafter referred to as the "Exchange Act"), and any "Affiliate" or "Associate" (as defined in Rule 12b-2 of the Exchange Act) of any such individual, corporation, partnership or other person or entity which, as of the record date for the determination of Shareholders entitled to notice of and to vote on any Business Combination, or immediately prior to the consummation of such transaction, together with their Affiliates and Associates, are "Beneficial Owners" (as defined in Rule 13d-3 of the Exchange Act) in the aggregate of ten percent or more of the outstanding shares of any class or series of capital stock of the Corporation. 7 10 3. The term "Substantial Part" shall mean more than 10% of the fair market value, as determined by three-fourths of the Continuing Directors, of the total consolidated assets of the Corporation and its subsidiaries taken as a whole, as of the end of its most recent fiscal year ending prior to the time the determination is being made. 4. For the purposes of subparagraph B. 1. of Paragraph One of this Article Eighth, the term "other consideration to be received" shall include, without limitation, Common stock or other capital stock of the Corporation retained by Shareholders of the Corporation other than Related Persons or parties to such Business Combination in which the Corporation is the surviving corporation. 5. The term "Continuing Director" shall mean a director who either (i) was a member of the Board of Directors of the Corporation immediately prior to the time that the Related Person involved in a Business Combination became a Related Person, or (ii) has been designated (before his or her initial election as director) as a Continuing Director by a majority of the then Continuing Directors. 6. A "Related Person" shall be deemed to have acquired a share of the capital stock of the Corporation at the time when such Related Person became a Beneficial Owner thereof. With respect to the shares owned by Affiliates, Associates or other persons whose ownership is aggregated with that of a Related Person under the foregoing definition of Related Person, if the price paid by such Related Person for such shares is not determinable by the Continuing Directors, such price shall be deemed to be the higher of (i) the price paid upon the acquisition thereof by the Affiliate, Associate or other person or (ii) the market price of the shares in question at the time when the Related Person became a Beneficial Owner thereof. 7. The terms "Highest Per Share Price" and "Highest Equivalent Price" as used in this Article Eighth shall mean the following: If there is only one class of capital stock of the Corporation issued and outstanding, the Highest Per Share Price shall mean the highest price that can be determined to have been paid at any time, or to have been agreed to be paid, by the Related Person for any share or shares of that class of capital stock. If there is more than one class of capital stock of the Corporation issued and outstanding, the Highest Equivalent Price shall mean with respect to each class and series of capital stock of the Corporation, the amount determined by three-fourths of the Continuing Directors, on whatever basis they believe is appropriate, to be the highest per share price equivalent for each such class or series of the highest price that can be determined to have been paid at any time, or to have been agreed to be paid, by the Related Person for any share or shares of any class or series of capital stock of the Corporation. In determining the Highest Per Share Price and Highest Equivalent Price, all acquisitions by the Related Person shall be taken into account regardless of whether the shares were acquired before or after the Related Person became a Related Person. The Highest Per Shares Price and the Highest Equivalent Price shall also include any brokerage commissions, transfer taxes and soliciting 8 11 dealers' fees paid by the Related Person with respect to the shares of capital stock of the Corporation acquired by the Related Person. II. The Board of Directors of the Corporation shall have the power and duty to determine for the purposes of this Article Eighth on the basis of information then known to it, (i) whether any person is an Affiliate or Associate of another person, (ii) whether any proposed sale, lease, exchange or other disposition of part of the properties or assets of the Corporation involves a Substantial Part of the properties or assets of the Corporation and (iii) the value of the Highest Per Share Price and Highest Equivalent Price. Any such reasonable determination by the Board shall be conclusive and binding for all purposes of this Article Eighth. III. Any amendment, change or repeal of this Article Eighth, or any other amendment of this Restated Certificate of Incorporation which will have the effect of modifying or permitting circumvention of this Article Eighth, shall require the favorable vote, at a meeting of the Shareholders of the Corporation, of (a) the holders of at least 75% of the then outstanding shares of capital stock of the Corporation entitled to vote and (b) a majority of the outstanding shares of capital stock of the Corporation entitled to vote of which a Related Person is not a Beneficial Owner; provided, however, that this Paragraph III shall not apply to, and such 75% and majority vote shall not be required for, any such amendment, change or repeal recommended to Shareholders by the affirmative vote of not less than three-fourths of the Continuing Directors, and such amendment, change, or repeal so recommended shall require only the vote, if any, required under the applicable provision of the General Corporation Law of the State of Delaware. NINTH Any action required or permitted to be taken at any Annual or Special Meeting of Shareholders of the Corporation, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of not less than 75% of the outstanding shares of capital stock of the Corporation entitled to vote. Any amendment, change or repeal of this Article Ninth, or any other amendment of this Restated Certificate of Incorporation which will have the effect of modifying or permitting circumvention of this Article Ninth, shall require the favorable vote, at a meeting of the Shareholders of the Corporation, of the holders of at lease 75% of the then outstanding shares of capital stock of the Corporation entitled to vote; provided, however, that such 75% vote shall not be required for any such amendment, change or repeal recommended to Shareholders by the affirmative vote of not less than three-fourths of the Board of Directors, and such amendment, change, or repeal so recommended shall require only the vote, if any, required under the applicable provision of the General Corporation Law of the State of Delaware. 9 12 TENTH The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Restated Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of Delaware, and all rights conferred herein upon stockholders and directors are granted subject to this reservation. Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide. ELEVENTH A director of the Corporation shall not be personally liable to the Corporation or its Shareholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its Shareholders; (ii) for act or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under Section 174 of the Delaware General Corporation Law; or (iv) for any transaction from which the director derived an improper personal benefit. 10 13 PAGE 1 STATE OF DELAWARE LETTERHEAD OFFICE OF SECRETARY OF STATE ________________________ I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF STOCK DESIGNATION OF "COMERICA INCORPORATED" FILED IN THIS OFFICE ON THE EIGHTEENTH DAY OF JUNE, A.D. 1992, AT 8:31 O'CLOCK A.M. /s/ Michael Ratchford SECRETARY OF STATE AUTHENTICATION: *3488432 DATE: 06/18/1992 [seal] 921705008 14 STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 08:31 AM 06/18/1992 921705008 - 786580 CERTIFICATE OF DESIGNATION Pursuant to Section 151(g) of the General Corporation Law of the State of Delaware 860,000 SHARES OF FIXED RATE CUMULATIVE PREFERRED STOCK, SERIES B COMERICA INCORPORATED, a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), HEREBY CERTIFIES that the following resolution was duly adopted by the Board of Directors of the Corporation at meeting thereof held on August 26, 1986, duly amended by the Board of Directors and duly amended, supplemented, and completed by resolutions duly adopted by the Board of Directors of the Corporation (i) at a meeting thereof held on November 25, 1986, and (ii) at a meeting thereof held on June 23, 1987, pursuant to authority conferred upon the Board of Directors by the provisions of the Restated Certificate of Incorporation, as amended, of the Corporation, which authorizes the issuance of up to 860,000 shares of "Fixed Rate Preferred Stock, Series B" (as hereinafter defined) without par value, and that the complete text of such resolution, as so amended, supplemented, and completed, is as follows: NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby authorizes the issue of the below described series of Preferred Stock without par value of the Corporation and pursuant to authority set forth in the Corporation's Restated Certificate of Incorporation, as amended, hereby fixes the voting powers, designation, preferences and relative, participating, optional and other special rights, and qualifications, limitations and --1-- 15 restrictions thereof as follows: FIXED RATE CUMULATIVE PREFERRED STOCK, SERIES B (1) Designation. 860,000 shares of the Preferred Stock without par value of the Corporation are hereby constituted as a series of Preferred Stock without par value and designated as Fixed Rate Cumulative Preferred Stock, Series B (hereinafter called "Fixed Rate Cumulative Preferred Stock, Series B"). Shares of the Fixed Rate Cumulative Preferred Stock, Series B shall have a Stated Value of $50 per share. The number of shares constituting the Fixed Rate Cumulative Preferred Stock, Series B may be reduced by resolution duly adopted by the Board of Directors and by the filing of a certificate pursuant to the provisions of the General Corporation Law of the State of Delaware stating such reduction. (2) Dividends. The holders of shares of Fixed Rate Cumulative Preferred Stock, Series B shall be entitled to receive cash dividends, when and as declared by the Corporation's Board of Directors out of funds legally available for the purpose, as hereinafter provided in this Section (2). (a) Dividend rates on the shares of the Fixed Rate Cumulative Preferred Stock, Series B shall be 8.65% per annum on the Stated Value thereof for (i) the Initial Dividend Period and (ii) each succeeding Semi-Annual Dividend Period (the Initial Dividend Period and any Semi-Annual Dividend Period being hereinafter referred to severally as a "Dividend Period" and collectively referred to as "Dividend Periods"). Such dividends shall be cumulative from the date of original issue of such shares and shall be payable, when and as declared by the Board, on the first day of January and July of each calendar year, commencing on the first day of the first January or July following the date of original issue of such shares. Each such dividend shall be paid to the holders of record of shares of the Fixed Rate Cumulative Preferred Stock, Series B as they appear on the stock register of the Corporation on such record date, not exceeding 30 days preceding the payment date thereof, as shall be fixed by the Board. Dividends on account of arrears for any past Dividend Periods may be declared and paid at any time, without reference to any regular dividend payment date, to holders of record on such date, not exceeding 45 days preceding the payment date thereof, as may be fixed by the Board. (b) Except as provided in the following sentence or in subsection (c) of this Section (2), no dividends --2-- 16 shall be declared or paid or set apart for payment on any stock of the Corporation of any class or series ranking, as to dividends, on a parity with the Fixed Rate Cumulative Preferred Stock, Series B for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Fixed Rate Cumulative Preferred Stock, Series B outstanding for all Dividend Periods terminating on or prior to the date of payment of such dividends on the stock of such other class or series. When dividends are not paid in full, as aforesaid, upon the shares of the Fixed Rate Cumulative Preferred Stock, Series B and any other stock of the Corporation ranking on a parity as to dividends with the Fixed Rate Cumulative Preferred Stock, Series B, all dividends declared upon shares of the Fixed Rate Cumulative Preferred Stock, Series B and any other stock of the Corporation ranking on a parity as to dividends with the Fixed Rate Cumulative Preferred Stock, Series B shall be declared pro rata so that the amount of dividends declared per share on the Fixed Rate Cumulative Preferred Stock, Series B and such other stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of the Fixed Rate Cumulative Preferred Stock, Series B and such other stock bear to each other. Holders of shares of the Fixed Rate Cumulative Preferred Stock, Series B shall not be entitled to any dividend, whether payable in cash, property or stocks, in excess of full cumulative dividends, as herein provided, on the Fixed Rate Cumulative Preferred Stock, Series B. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Fixed Rate Cumulative Preferred Stock, Series B which may be in arrears. (c) So long as any shares of the Fixed Rate Cumulative Preferred Stock, Series B are outstanding, no dividend (other than a dividend in Common Stock or in any other stock of the Corporation ranking junior to this Series as to dividends and upon liquidation and other than as provided in this subsection or in subsection (b) of this Section (2)) shall be declared and paid or set aside for payment or other distribution declared or made upon the Common Stock or upon any other stock of the Corporation ranking junior to or on a parity with the Fixed Rate Cumulative Preferred Stock, Series B as to dividends or upon liquidation, nor shall any Common Stock or any other stock of the Corporation ranking junior to or on a parity with the Fixed Rate Cumulative Preferred Stock, --3-- 17 Series B as to dividends or upon liquidation be redeemed, purchased or otherwise acquired for any consideration (or any moneys paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Corporation (except by conversion into or exchange for stock of the Corporation ranking junior to the Fixed Rate Cumulative Preferred Stock, Series B as to dividends and upon liquidation) unless, in each case, the full cumulative dividends on all outstanding shares of Fixed Rate Cumulative Preferred Stock, Series B shall have been paid for all past Dividend Periods. (d) Dividends payable on each share of the Fixed Rate Cumulative Preferred Stock, Series B for each full Dividend Period shall be computed by multiplying the Stated Value per share of the Fixed Rate Cumulative Preferred Stock, Series B by 8.65% per annum. (e) For purposes of this Section (2), the term: (i) "Initial Dividend Period" shall mean the period commencing on the date of issuance and ending on and including the day next preceding the first day of the first January or July to follow such date of issuance. (ii) "Semi-Annual Dividend Period" shall mean each six month period commencing on January 1 and July 1 of each calendar year and ending on and including the day next preceding the first day of the next Semi-Annual Dividend Period. (3) Redemption. (a) Except as provided in subsection (b) of this Section (3), the Fixed Rate Cumulative Preferred Stock, Series B may not be redeemed prior to that date that is 5 years after the date of issuance. On and after that date, the Corporation, at its option, may redeem shares of the Fixed Rate Cumulative Preferred Stock, Series B, as a whole or in part, at any time or from time to time at a redemption price per share of 100% of the Stated Value plus, in each case, accrued and unpaid dividends thereon (whether or not earned or declared), if any, to the date fixed for redemption. (b) In the event the Corporation shall redeem shares of Fixed Rate Cumulative Preferred Stock, Series B, notice of such redemption shall be given by registered or certified mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the redemption date, to each holder of record of the shares to be redeemed, at such holder's address as the same --4-- 18 appears on the stock register of the Corporation. Each such notice shall state: (1) the redemption date: (2) the number of shares of Fixed Rate Cumulative Preferred Stock, Series B to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder: (3) the redemption price: (4) the place or places where certificates for such shares are to be surrendered for payment of the redemption price; and (5) that dividends on the shares to be redeemed will cease to accrue on such redemption date. Notice having been mailed as aforesaid, from and after the redemption date (unless default shall be made by the Corporation in providing money for the payment of the redemption price) dividends on the shares of the Fixed Rate Cumulative Preferred Stock, Series B so called for redemption shall cease to accrue, and said shares shall no longer be deemed to be outstanding, and all rights of the holders thereof as stockholders of the Corporation (except the right to receive from the Corporation the redemption price) shall cease. The Corporation's obligation to provide moneys in accordance with the preceding sentence shall be deemed fulfilled if, on or before the redemption date, the Corporation shall deposit with a bank or trust company (which may be an affiliate of the Corporation), having a capital and surplus of at least $50,000,000.00, funds necessary for such redemption, in trust, with irrevocable instructions that such funds be applied to the redemption of the shares of Fixed Rate Cumulative Preferred Stock, Series B so called for redemption. Any interest accrued on such funds shall be paid to the Corporation from time to time. Any funds so deposited and unclaimed at the end of six years from such redemption date shall be released or repaid to the Corporation, after which the holder or holders of such shares of Fixed Rate Cumulative Preferred Stock, Series B so called for redemption shall look only to the Corporation for payment of the redemption price. Upon surrender in accordance with said notice of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Board of Directors of the Corporation shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the redemption price aforesaid. If less than all the outstanding shares of Fixed Rate Cumulative Preferred Stock, Series B are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Fixed Rate Cumulative Preferred Stock, Series B not previously called for redemption by lot or pro rata (as nearly as --5-- 19 may be) or by any other method determined by the Corporation in its sole discretion to be equitable. In no event shall the Corporation redeem less than all the outstanding shares of Fixed Rate Cumulative Preferred Stock, Series B pursuant to subsection (a) of this Section (3) or purchase or acquire any shares of the Fixed Rate Cumulative Preferred Stock, Series B (otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of the Fixed Rate Cumulative Preferred Stock, Series B) unless full cumulative dividends shall have been paid or declared and a sum sufficient for the payment thereof set apart for such payment upon all outstanding shares of Fixed Rate Cumulative Preferred Stock, Series B for all past Dividend Periods. (c) All shares of Fixed Rate Cumulative Preferred Stock, Series B redeemed or purchased by the Corporation shall be retired and cancelled and shall be restored to the status of authorized but unissued shares of preferred stock, without designation as to series, and may thereafter be issued as and when designated as part of a particular series by the Corporation. (4) Liquidation Preference. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of any of the Common Stock or any other series or class or classes of capital stock of the Corporation ranking junior to the Fixed Rate Cumulative Preferred Stock, Series B with respect to distribution of assets on liquidation, dissolution or winding up of the Corporation ("Junior Liquidation Stock"), the holders of the shares of the Fixed Rate Cumulative Preferred Stock, Series B shall be entitled to receive an amount per share equal to the Stated Value plus an amount equal to all dividends (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of the Fixed Rate Cumulative Preferred Stock, Series B shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other stock of the Corporation ranking as to liquidation, dissolution or winding up, on a parity with the Fixed Rate Cumulative Preferred Stock, Series B, then such assets, or the proceeds --6-- 20 thereof, shall be distributed among the holders of Fixed Rate Cumulative Preferred Stock, Series B and any such other stock ratably in accordance with the respective amounts which would be payable on such shares of Fixed Rate Cumulative Preferred Stock, Series B and any such other stock if all amounts payable thereon were paid in full. For the purposes of this Section (4), a consolidation or merger of the Corporation with one or more corporations shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary. Subject to the rights of the holders of shares of any series or class or classes of stock of the Corporation ranking on a parity with or prior to the Fixed Rate Cumulative Preferred Stock, Series B upon liquidation, dissolution or winding up, upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the Fixed Rate Cumulative Preferred Stock, Series B as provided in this Section (4), but not prior thereto, any Junior Liquidation Stock shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the Fixed Rate Cumulative Preferred Stock, Series B shall not be entitled to share therein. (5) Purchase, Retirement or Sinking Fund. The shares of Fixed Rate Cumulative Preferred Stock, Series B shall not be subject to the operation of any purchase, retirement or sinking fund. (6) Conversion or Exchange. The holders of shares of Fixed Rate Cumulative Preferred Stock, Series B shall not have any rights to convert such shares into or exchange such shares for shares of any other class or classes or of any other series of any class or classes of capital stock (or any other security) of the Corporation. (7) Voting. Except as hereinafter in this Section (7) expressly provided or as otherwise from time to time required by law, the Fixed Rate Cumulative Preferred Stock, Series B shall have no voting rights. If the Fixed Rate Cumulative Preferred Stock, Series B shall be issued in fractional shares, then, whenever the holders of the Fixed Rate Cumulative Preferred Stock, Series B are entitled to vote, each such fractional share shall entitle the holder thereof to a corresponding fraction of one vote. Each holder of outstanding shares of Fixed Rate Cumulative Preferred Stock, Series B shall be entitled to one vote for each such share held, voting with the holders of outstanding shares of the Corporation s Common Stock, par --7-- 21 value $5.00 per share, as a class. The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of the Fixed Rate Cumulative Preferred Stock, Series B shall have been redeemed or sufficient funds shall have been deposited in trust to effect such redemption. (8) Ranking. Any class or classes of stock of the Corporation shall be deemed to rank: (a) prior to the Fixed Rate Cumulative Preferred Stock, Series B as to dividends or upon liquidation if the holders of such class shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of the Fixed Rate Cumulative Preferred Stock, Series B; (b) on a parity with the Fixed Rate Cumulative Preferred Stock as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates, or redemption or liquidation prices per share thereof be different from those of the Fixed Rate Cumulative Preferred Stock, Series B, if the holders of such class of stock and the Fixed Rate Cumulative Preferred Stock, Series B shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in proportion to their respective dividend rates or liquidation prices, without preference or priority one over the other; and (c) junior to the Fixed Rate Cumulative Preferred Stock, Series B, as to dividends or upon liquidation, if such class shall be Common Stock or if the holders of the Fixed Rate Cumulative Preferred Stock, Series B shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or classes. (9) Additional Stock. Except as expressly provided in Section (7) above and in the Restated Certificate of Incorporation, neither the issuance of additional shares of Fixed Rate Cumulative Preferred Stock, Series B nor the issuance of shares of any other class or series of stock of the Corporation shall be subject to restrictions as to issuance, or as to the powers, preferences, or rights --8-- 22 thereof. (10) No Other Special Rights. The Fixed Rate Cumulative Preferred Stock, Series B shall have no other preferences, privileges or powers or relative, optional or other special rights, or qualifications, limitations or restrictions, except as set forth in Sections (1) through (9) above and except as provided in the Restated Certificate of Incorporation and by applicable law. IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by Eugene A. Miller, its Chairman of the Board, President and Chief Executive Officer, and attested by Judith C. Lalka, its Secretary, as of the 18th day of June, 1992. COMERICA INCORPORATED /s/ Eugene A. Miller _____________________ By: Eugene A. Miller Its: Chairman of the Board, President and Chief Executive Officer Attest: /s/ Judith C. Lalka _________________________ By: Judith C. Lalka Its: Secretary --9-- 23 PAGE 1 STATE OF DELAWARE LETTERHEAD OFFICE OF SECRETARY OF STATE ________________________ I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF STOCK DESIGNATION OF "COMERICA INCORPORATED" FILED IN THIS OFFICE ON THE EIGHTEENTH DAY OF JUNE, A.D. 1992, AT 8:32 O'CLOCK A.M. /s/ Michael Ratchford SECRETARY OF STATE AUTHENTICATION: *3488537 DATE: 06/18/1992 [Seal] 921705009 24 STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 08:32 AM 06/18/1992 921705009 - 786580 CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES C PARTICIPATING PREFERRED STOCK COMERICA INCORPORATED Pursuant to Section 151 of the General Corporation Law of the State of Delaware We, Eugene A. Miller, President, and Judith C. Lalka, Secretary, of Comerica Incorporated, a corporation organized and existing under the General Corporation Law of the State of Delaware, in accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY: That pursuant to the authority conferred upon the Board of Directors by the Restated Certificate of Incorporation of the said Corporation, the said Board of Directors on January 26, 1988, as duly amended by the Board on January 28, 1992, adopted the following resolution creating a series of 500,000 shares of Preferred Stock designated as Series C Participating Preferred Stock: RESOLVED, that pursuant to the authority vested in the Board of Directors of this Corporation in accordance with the provisions of its Restated Certificate of Incorporation, a series of Preferred Stock of the Corporation be, and it hereby is, created and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series and the qualifications, limitations or restrictions thereof are as follows: Section 1. Designation and Amount. The shares of such series shall be designated as "Series C Participating Preferred Stock" and the number of shares constituting such series shall be 500,000. 25 Section 2. Dividends and Distributions. (A) The dividend rate on the shares of Series C Participating Preferred Stock for each quarterly dividend period (hereinafter referred to as a "quarterly dividend period"), which quarterly dividend periods shall commence on January 1, April 1, July 1 and October 1 in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date") (or in the case of original issuance, from the date of original issuance) and shall end on and include the day next preceding the first date of the next quarterly dividend period, shall be equal (rounded to the nearest cent) to the greater of (a) $10.00 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in cash, based upon the fair market value at the time the non-cash dividend or other distribution is declared as determined in good faith by the Board of Directors) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared (but not withdrawn) on the Common Stock, $5.00 par value, of this Corporation (the "Common Stock") during the immediately preceding quarterly dividend period, or, with respect to the first quarterly dividend period, since the first issuance of any share or fraction of a share of Series C Participating Preferred Stock. In the event the Corporation shall at any time after January 26, 1988 (the "Rights Declaration Date") (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount to which holders of shares of Series C Participating Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) The Corporation shall declare a dividend or distribution on the Series C Participating Preferred Stock as provided in paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $10.00 per share on the Series C Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series C Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series C Participating Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date 2 26 or is a date after the record date for the determination of holders of shares of Series C Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events, such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series C Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series C Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof. Section 3. Voting Rights. The holders of shares of Series C Participating Preferred Stock shall have the following voting rights: (A) Subject to the provision for adjustment hereinafter set forth, each share of Series C Participating Preferred Stock shall entitle the holder thereof to one vote on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series C Participating Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event, provided, however, that in no event shall any share of Series C Participating Preferred Stock have more than one vote per share. (B) Except as otherwise provided herein, by the Restated Certificate of Incorporation or by law, the holders of shares of Series C Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation. (C) (i) If at any time dividends on any Series C Participating Preferred Stock shall be in arrears in an amount equal to six (6) quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a "default period") which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all shares of Series C Participating Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of the Series C Participating Preferred Stock with dividends in arrears in an amount equal to six (6) quarterly dividends thereon, voting as a class, shall have the right to elect two (2) Directors. 3 27 (ii) During any default period, such voting right of the holders of Series C Participating Preferred Stock may be exercised initially at a special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of stockholders, and thereafter at annual meetings of stockholders, provided that neither such voting right nor the right of the holders of any other series of preferred stock, if any, to increase, in certain cases, the authorized number of Directors shall be exercised unless the holders of ten percent (10%) in number of shares of Series C Participating Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Series C Participating Preferred Stock of such voting right. At any meeting at which the holders of Series C Participating Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting as a class, to elect Directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two (2) Directors or, if such right is exercised at an annual meeting, to elect two (2) Directors. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Series C Participating Preferred Stock shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by them of the required number. After the holders of the Series C Participating Preferred Stock shall have exercised their right to elect Directors in any default period and during the continuance of such period, the number of Directors shall not be increased or decreased except by vote of the holders of Series C Participating Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the Series C Participating Preferred Stock. (iii) Unless the holders of Series C Participating Preferred Stock shall, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may order, or any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Series C Participating Preferred Stock outstanding, irrespective of series, may request, the calling of a special meeting of the holders of Series C Participating Preferred Stock, which meeting shall thereupon be called by the Chairman, the President or the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Series C Participating Preferred Stock are entitled to vote pursuant to this paragraph (C) (iii) shall be given to each holder of record of Series C Participating Preferred Stock by mailing a copy of such notice to the holder at the holder's last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 20 days and not later than 60 days after such order or request, or in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Series C Participating Preferred Stock outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of the stockholders. 4 28 (iv) In any event default period, the holders of Common Stock, and other classes of Stock of the Corporation if applicable, shall continue to be entitled to elect the whole number of Directors until the holders of Series C Participating Preferred Stock shall have exercised their right to elect two (2) Directors voting as a class, after the exercise of which right (x) the Directors so elected by the holders of Series C Participating Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may (except as provided in paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class of the stock which elected the Director whose office shall have become vacant. References in this paragraph (C) to Directors elected by the holders of a particular class of stock shall include Directors elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence. (v) Immediately upon the expiration of a default period, (x) the right of the holders of Series C Participating Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors elected by the holders of Series C Participating Preferred Stock as a Class shall terminate, and (z) the number of Directors shall be such number as may be provided for in the certificate of incorporation or by-laws irrespective of any increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number being subject, however, to change, thereafter in any manner provided by law or in the certificate of incorporation or by-laws). Any vacancies in the in the preceding sentence may be filled by a majority of the remaining directors. (D) Except as set forth herein, holders of Series C Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent that are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. Section 4. Certain Restrictions. (A) Whenever quarterly dividends or other dividends or distributions payable on the Series C Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series C Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not: (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration, any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series C Participating Preferred Stock; 5 29 (ii) declare or pay dividends on, or make any other distributions on, any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series C Participating Preferred Stock, except dividends paid ratably on the Series C Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series C Participating Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series C Participating Preferred Stock; and (iv) purchase or otherwise acquire for consideration any shares of Series C Participating Preferred Stock, or any shares of stock ranking on a parity with the Series C Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. Section 5. Reacquired Shares. Any shares of Series C Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. Section 6. Liquidation, Dissolution or Winding Up. (A) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, no distribution shall be made to the holders of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series C Participating Preferred Stock unless, prior thereto, the holders of shares of Series C Participating Preferred Stock shall have received $100.00 per share, plus accrued and unpaid 6 30 dividends to the date of distribution, whether or not earned or declared to the date of such payment (the "Series C Liquidation Preference"). Following the payment of the full amount of the Series C Liquidation Preference, no additional distributions shall be made to the holders of shares of Series C Participating Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the "Common Adjustment") equal to the quotient obtained by dividing (i) the Series C Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in subparagraph C below to reflect such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock) (such number in clause (ii), the "Adjustment Number"). Following the payment of the full amount of the Series C Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series C Participating Preferred Stock and Common Stock, respectively, holders of Series C Participating Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Preferred stock and Common Stock, on a per share basis, respectively. (B) In the event, however, that there are not sufficient assets available to permit payment in full of the Series C Liquidation Preference and the liquidation preferences of all other series of preferred stock, if any, which rank on a parity with the Series C Participating Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. In the event, however, that there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock. (C) In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount to which holders of shares of Series C Participating Preferred Stock were entitled immediately prior to such event pursuant to clause (ii) of Subsection (A) above shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series C Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on 7 31 Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series C Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 8. No Redemption. The shares of Series C Participating Preferred Stock shall not be redeemable. Section 9. Ranking. The Series C Participating Preferred Stock shall rank junior to the Adjustable Rate Cumulative Dividend Preferred Stock, Series A and the $4.32 Cumulative Preferred Stock, Series B of the Corporation as to the payment of dividends and as regards liquidation, dissolution and winding up and shall rank junior to all other series of the Corporation's Preferred Stock as to the payment of dividends and as regards liquidation, dissolution and winding up, unless the terms of any such series shall provide otherwise. Section 10. Amendment. The Restated Certificate of Incorporation of the Corporation shall not be further amended in any manner which would materially alter or change the powers, preferences or special rights of the Series C Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding shares of Series C Participating Preferred Stock, voting separately as a class. 8 32 Section 11. Fractional Shares. Series C Participating Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holders fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series C Participating Preferred Stock. IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by Eugene A. Miller, its Chairman of the Board, President and Chief Executive Officer, and attested by Judith C. Lalka, its Secretary, as of the 18th day of June, 1992. COMERICA INCORPORATED /s/ Eugene A. Miller _____________________ By: Eugene A. Miller Its: Chairman of the Board, President and Chief Executive Officer Attest: /s/ Judith C. Lalka ____________________ By: Judith C. Lalka Its: Secretary --9-- EX-3.2 3 EXHIBIT 3.2 1 Ex. 3.2 As Amended on July 16, 1993 BYLAWS OF COMERICA INCORPORATED ARTICLE I OFFICES SECTION 1. REGISTERED OFFICE. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. SECTION 2. OTHER OFFICES. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II MEETINGS SECTION 1. PLACE OF MEETING. All meetings of the shareholders of this Corporation shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. SECTION 2. ANNUAL MEETING OF SHAREHOLDERS. The annual meeting of shareholders shall be held on the fourth Tuesday of April, if not a legal holiday, and if a legal holiday then the next secular day following, at 10:00 a.m., or at such other date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. At said meeting, shareholders shall elect by a plurality vote the Directors to be elected at such meeting, and shall transact such other business as may properly be brought before the meeting. SECTION 3. NOTICE OF MEETING OF SHAREHOLDERS. Written notice of every meeting of shareholders stating the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given to each shareholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Business transacted at any special meeting of shareholders shall be limited to the purposes stated in the notice. 2 SECTION 4. LIST OF SHAREHOLDERS ENTITLED TO VOTE. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of shareholders, a complete list of the shareholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each shareholder and the number of shares registered in the name of each shareholder. Such list shall be open to the examination of any shareholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any shareholder who is present. SECTION 5. SPECIAL MEETINGS OF SHAREHOLDERS. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may be called by the Chairman of the Board of Directors or, during the absence or disability of the Chairman or while that office is vacant, by the President and shall be called by the President or Secretary at the request in writing of a majority of the Board of Directors, or at the request in writing of shareholders owning, in the aggregate, at least seventy-five percent (75%) in amount of the entire capital stock of the Corporation issued and outstanding and entitled to vote at such special meeting. Such request shall state the purpose or purposes of the proposed meeting. SECTION 6. QUORUM OF SHAREHOLDERS. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. SECTION 7. REQUIRED VOTE. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power, present in person or represented by proxy, shall decide any question brought before such meeting, unless the question is one upon which a different vote is required by statute or by the Certificate of Incorporation. 2 3 SECTION 8. VOTING. Unless otherwise provided in the Certificate of Incorporation or in a certificate filed pursuant to Section 151(g) of the General Corporation Law of Delaware, as amended, each shareholder shall at every meeting of the shareholders be entitled to one vote, in person or by proxy, for each share of the capital stock having voting power held by such shareholder, but no proxy shall be voted on after three (3) years from its date, unless the proxy provides for a longer period. ARTICLE III DIRECTORS SECTION 1. POWERS. The business of the Corporation shall be managed by or under the direction of its Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these Bylaws directed or required to be exercised or done by the shareholders. SECTION 2. LOCATION OF MEETINGS. The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware. SECTION 3. ORGANIZATION MEETING OF BOARD. The first meeting of each newly elected Board of Directors shall be held at the place of holding the annual meeting of shareholders, and immediately following the same, for the purpose of electing officers and transacting any other business properly brought before it, provided that the organization meeting in any year may be held at a different time and place than that herein provided by a consent of a majority of the Directors of such new Board. No notice of such meeting shall be necessary to the newly elected Directors in order legally to constitute the meeting, provided a quorum shall be present, unless said meeting is not held at the place of holding and immediately following the annual meeting of shareholders. SECTION 4. REGULAR MEETINGS OF BOARDS. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board. SECTION 5. SPECIAL MEETINGS OF BOARD. Special meetings of the Board may be called by the Chairman of the Board of Directors or, during the absence or disability of the Chairman or while that office is vacant by the President on one (1) day's notice to each director; and special meetings shall be called by the President or Secretary on like notice on the written request of five or more Directors. SECTION 6. QUORUM AND REQUIRED VOTE. At all meetings of the Board a majority of the total number of Directors shall constitute a quorum for the 3 4 transaction of business and the act of a majority of the Directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation. If a quorum shall not be present at any meeting of the Board of Directors the Directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. SECTION 7. CONSENT OF DIRECTORS IN LIEU OF MEETING. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any Committee thereof may be taken without a meeting if all members of the Board or Committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or Committee. SECTION 8. COMMITTEES OF DIRECTORS. (a) General Authority. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more Committees, each Committee to consist of one or more of the Directors of the Corporation. The Board may designate one or more Directors as alternate members of any Committee, who may replace any absent or disqualified member of any meeting of the Committee. In the absence or disqualification of a member of a Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such Committee, to the extent provided in the resolution of the Board of Directors, or in these Bylaws shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such Committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the Bylaws of the Corporation; and, unless the resolution of the Board of Directors or the Certificate of Incorporation expressly so provide, no such Committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. (b) Directors' Committee. Until June 18, 1995, there shall be a Directors' Committee of the Board of Directors consisting of four members of the Board of Directors, two of whom shall have been directors of the Corporation (the "Comerica Directors") immediately prior to June 18, 1992 and two of whom shall have been directors of Manufacturers National Corporation (the "MNC Directors") immediately prior to June 18, 1992. In the event that any member of the Directors' Committee shall cease to be a member of the Board of Directors for any reason whatsoever, a majority of the Board of 4 5 Directors shall replace such member with another member who shall also be a MNC Director or a Comerica Director, as the case may be. The Directors' Committee shall (i) nominate candidates for election as Directors of the Corporation at any meeting of shareholders called for election of Directors (an "Election Meeting"), (ii) nominate candidates to fill any vacancies on the Board of Directors which may exist from time to time and (iii) have such other powers and authority as the Board of Directors may delegate to it from time to time. (c) MNC Indemnification Committee. Until June 18, 1998, there shall be an MNC Indemnification Committee consisting of all of the MNC Directors. The MNC Indemnification Committee shall make all determinations necessary with respect to the Corporation's indemnification obligations pursuant to Section 5.13 of the Agreement and Plan of Merger, dated as of October 27, 1991, between the Corporation and MNC (the "Merger Agreement"). (d) Comerica Indemnification Committee. Until June 18, 1998, there shall be a Comerica Indemnification Committee consisting of all of the Comerica Directors. The Comerica Indemnification Committee shall make all determinations necessary with respect to the Corporation's indemnification obligations pursuant to the Corporation's Bylaws prior to June 18, 1992. SECTION 9. COMMITTEE MINUTES. Each Committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. SECTION 10. COMPENSATION OF DIRECTORS. Unless otherwise restricted by the Certificate of Incorporation, the Board of Directors shall have authority to fix the compensation of directors. The Directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as Director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending Committee meetings. SECTION 11. PARTICIPATION IN MEETING BY TELEPHONE. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, members of the Board of Directors or any Committee designated by the Board may participate in a meeting of the Board or Committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting. 5 6 SECTION 12. NOMINATIONS OF DIRECTOR CANDIDATES. (a) Eligibility to Make Nomination. Nominations of candidates for election as Directors of the Corporation at any Election Meeting may be made by the Directors' Committee until June 18, 1995, and thereafter by the Board of Directors. Any shareholder entitled to vote at an Election Meeting may nominate candidates for election as Directors of the Corporation if such shareholder meets the requirements of subsection (c) of this Section 12. (b) Procedure for Nominations by the Board of Directors. Nominations made by the Board of Directors or the Directors' Committee, as the case may be, shall be made at a meeting of the Board of Directors or the Directors' Committee, as the case may be, or by written consent of Directors in lieu of a meeting, not less than 30 days prior to the date of the Election Meeting, and such nominations shall be reflected in the minute books of the Corporation or the Directors' Committee, as the case may be, as of the date made. At the request of the Secretary of the Corporation each proposed nominee shall provide the Corporation with such information concerning himself as is required, under the rules of the Securities and Exchange Commission, to be included in the Corporation's proxy statement soliciting proxies for his election as a director. (c) Procedure for Nominations by Shareholders. Not less than 30 days prior to the date of the Election Meeting any shareholder who intends to make a nomination at the Election Meeting shall deliver a notice to the Secretary of the Corporation setting forth (i) the name, age, business address and residence of each nominee proposed in each such notice, (ii) the principal occupation or employment of each such nominee, (iii) the number of shares of capital stock of the Corporation which are beneficially owned by each such nominee and (iv) such other information concerning each such nominee as would be required, under the rules of the Securities and Exchange Commission, in a proxy statement soliciting proxies for the election of such nominee. (d) Substitution of Nominees. In the event that a person is validly designated as a nominee in accordance with subsection (b) or (c) hereof and shall thereafter become unable or unwilling to stand for election to the Board of Directors, the Board of Directors or the shareholder who proposed such nominee, as the case may be, may designate a substitute nominee. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to the action, suit or proceeding, or (2) if such a quorum is not obtainable, or even if obtainable a quorum of disinterested Directors so directs, by independent legal counsel chosen by the entire Board of Directors, subject to the reasonable satisfaction of the party seeking indemnification, in a written opinion, or (3) by the shareholders. (e) Determination of Compliance with Procedures. If the Chairman of the Election Meeting determines that a nomination was not in accordance with the foregoing procedures, such nomination shall be void. 6 7 ARTICLE IV NOTICES SECTION 1. NOTICE. Whenever any notice is required to be given to any director or shareholder under any provision of statute or of the Certificate of Incorporation or of these Bylaws, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or shareholder, at his address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to Directors may also be given orally in person or by telegram, telex, radiogram or cablegram, and such notice shall be deemed to be given when the recipient receives the notice personally, by telephone or when the notice, addressed as provided above, has been delivered to the company, or to the equipment transmitting such notice. SECTION 2. WAIVER OF NOTICE. Whenever any notice is required to be given under any provision of statute or of the Certificate of Incorporation or of these Bylaws, a written waiver thereof, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, Directors, or members of a Committee of Directors need be specified in any written waiver of notice unless so required by the Certificate of Incorporation or these Bylaws. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. ARTICLE V OFFICERS SECTION 1. SELECTION. The Board of Directors may appoint such officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board. The officers so appointed may include a Chairman of the Board, President, one or more Vice Chairmen, one or more Vice Presidents (including Executive, Senior, First, regular and Assistant Vice Presidents), a Secretary and a Treasurer, and one or more lesser officers as may be deemed appropriate. The Chief Executive Officer may also appoint officers of the level of Senior Vice President and below as he shall deem necessary, at any time, which officers shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board or the Chief Executive Officer. Any number of offices may be held by the same person, unless the Certificate of Incorporation otherwise provides. 7 8 SECTION 2. COMPENSATION. The salaries of all officers and agents of the Corporation shall be fixed by the Board of Directors. SECTION 3. TERM, REMOVAL AND VACANCIES. Each officer of the Corporation shall hold office until his successor is elected and qualified or until his earlier resignation or removal. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. Additionally, any officer of the level of regular Vice President or below may also be removed at any time by the Chief Executive Officer. Any vacancy occurring in any office of the Corporation may be filled by the Board of Directors. Any vacancy occurring in any office of the Corporation of the level of regular Vice President or below may also be filled by the Chief Executive Officer. SECTION 4. CHIEF EXECUTIVE OFFICER AND CHIEF OPERATING OFFICER. (a) Chief Executive Officer. At the first meeting of each newly-elected Board of Directors, the Board shall designate the Chairman of the Board or President as the chief executive officer of the Corporation; provided, however, that if a motion is not made and carried to change the designation, the designation shall be same as the designation for the preceding year; provided, further, that the designation of the chief executive officer may be changed at any regular or special meeting of the Board of Directors. The chief executive officer shall be responsible to the Board of Directors for the general supervision and management of the business and affairs of the Corporation. The Chairman of the Board or President who is not the chief executive officer shall be subject to the authority of the chief executive officer, but shall exercise all of the powers and discharge all of the duties of the chief executive officer, during the absence or disability of the chief executive officer. (b) Chief Operating Officer. At the first meeting of each newly-elected Board of Directors, the Board shall designate the chief operating officer of the Corporation; provided, however, that if a motion is not made and carried to change the designation, the designation shall be same as the designation for the preceding year; provided, further, that the designation of the chief executive officer may be changed at any regular or special meeting of the Board of Directors. The chief operating officer shall perform such duties as may be delegated to him by the Board of Directors, any executive committee or the Chairman of the Board. SECTION 5. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board of Directors shall be selected by, and from among the membership of, the Board of Directors. He shall preside at all meetings of the shareholders and of the Board of Directors. He shall perform such other duties and functions as shall be assigned to him from time to time by the Board of Directors. He shall be, ex officio, a member of all standing committees except the Select Compensation Committee and the Audit and Legal 8 9 Committee. Except where by law the signature of the President of this Corporation is required, the Chairman of the Board of Directors shall possess the same power and authority as the President to sign all certificates, contracts, instruments, papers and documents of every conceivable kind and character whatsoever, in the name of and on behalf of this Corporation, which may be authorized by the Board of Directors. During the absence or disability of the President, the Chairman of the Board of Directors shall exercise all of the powers and discharge all of the duties of the President. SECTION 6. PRESIDENT. The President shall be selected by, and from among the membership of, the Board of Directors. During the absence or disability of the Chairman of the Board of Directors, or while such office is vacant, the President shall perform all duties and functions, and while so acting shall have all of the powers and authority, of the Chairman of the Board of Directors. The President shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors. The President shall be, ex officio, a member of all standing committees except the Select Compensation Committee and the Audit and Legal Committee. SECTION 7. VICE CHAIRMEN. One or more Vice Chairmen may be chosen from the membership of the Board. Unless the Board of Directors shall otherwise provide by resolution duly adopted by it, such of the Vice Chairmen who are members of the Board of Directors in the order specified by the Board of Directors shall perform the duties and exercise the powers of the President during the absence or disability of the President. The Vice Chairmen shall perform such other duties as may be delegated to them by the Board of Directors, any executive committee, or the President. SECTION 8. SECRETARY. The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and shall record all the proceedings thereof in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The Secretary shall give, or cause to be given, all notices required by statute, Bylaw or resolution, and shall perform such other duties as may be prescribed by the Board of Directors or President. The Secretary shall have custody of the corporate seal of the Corporation and the Secretary and Assistant Secretaries shall have authority to affix the same to any instrument when its use is required or appropriate. SECTION 9. ASSISTANT SECRETARIES. The Assistant Secretary or Assistant Secretaries shall, in the absence of the Secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. SECTION 10. TREASURER. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be 9 10 designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his or her transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer shall deliver to the Corporation, and shall keep in force, a bond, in such form, amount, and with such surety or sureties as shall be satisfactory to the Board of Directors, for the faithful performance of the duties of his or her office and for the restoration to the Corporation, in case of his or her death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation. SECTION 11. ASSISTANT TREASURERS. The Assistant Treasurer or Assistant Treasurers shall, in the absence of the Treasurer or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. SECTION 12. INDEMNIFICATION AND INSURANCE. (a) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit, or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. Any person who is or was an agent of the Corporation may be indemnified to the same extent as hereinabove provided. In addition, in the event any such action, suit or proceeding is threatened or instituted against a spouse to whom a director or officer is legally married at the time such director or officer is covered under the indemnification provided herein which action, suit or proceeding arises solely out of his or her status as the spouse of a director or officer, including, without limitation, an action, suit or proceeding that seeks damages recoverable from marital community property of the director or officer and his or her spouse, property owned jointly by them or property purported to have been transferred from the director or officer to his or her spouse, the spouse of the director or officer shall be indemnified to the same extent as hereinabove provided. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith 10 11 and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, raise any inference that he or she had reasonable cause to believe that his or her conduct was unlawful. (b) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer or employee of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. Any person who is or was an agent of the Corporation may be indemnified to the same extent as hereinabove provided. In addition, in the event any such action or suit is threatened or instituted against a spouse to whom a director or officer is legally married at the time such director or officer is covered under the indemnification provided herein which action or suit arises solely out of his or her status as the spouse of a director or officer, including, without limitation, an action or suit that seeks damages recoverable from marital community property of the director or officer and his or her spouse, property owned jointly by them or property purported to have been transferred from the director or officer to his or her spouse, the spouse of the director or officer shall be indemnified to the same extent as hereinabove provided. (c) To the extent that a director, officer, spouse of the director or officer, employee, or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this Section, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith. (d) Any indemnification under subsections (a) and (b) of this Section (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, spouse of the director or officer, employee, or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in subsections (a) and (b) of this Section. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding, 11 12 or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the shareholders. (e) Expenses (including attorney's fees) incurred by an officer, director, or spouse of an officer or director, in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer or spouse to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized in this Section. Such expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate. (f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this Section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office. (g) The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, spouse of a director or officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Section. (h) For the purposes of this Section, references to "the Corporation" include, in addition to the resulting or surviving corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had the power and authority to indemnify its directors, officers, spouses of directors or officers, and employees or agents, so that any person who is or was a director, officer, spouse of a director or officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Section with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued. (i) For purposes of this Section, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed 12 13 on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he or she reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Section. (j) The indemnification and advancement of expenses provided by, or granted pursuant to, this Section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent, and with respect to any spouse of a director or officer, shall continue following the time the director or officer spouse ceases to be a director or officer even if the marriage of the individuals terminates prior to the end of the period of coverage, and shall inure to the benefit of the heirs, executors and administrators of such a person. SECTION 13. OFFICERS APPOINTED PURSUANT TO MERGER AGREEMENT. During the period in which the Employment Agreement, dated as of February 20, 1992, between the Corporation and Mr. Gerald V. MacDonald, and the Employment Agreement, entered into as of February 20, 1992, between the Corporation and Mr. Eugene A. Miller (the "Employment Agreements") are in effect, any modification, amendment or failure to honor the terms of either of such Employment Agreements shall require the affirmative vote of 75% of the members of the entire Board of Directors. ARTICLE VI STOCK AND TRANSFERS SECTION 1. CERTIFICATES OF STOCK. Every holder of stock in the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation by, the Chairman of the Board of Directors, or the President or a Vice President and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation. If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the Certificate which the Corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Corporation shall 13 14 issue to represent such class or series of stock, a statement that the Corporation will furnish without charge to each stockholder who so requests the designations, preferences and relative, participating optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Any of or all of the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. SECTION 2. LOST CERTIFICATES. The Board of Directors may direct a new certificate to be issued in the place of any certificate theretofore issued by the Corporation, alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing the issuance of a new certificate the Board of Directors may, in its discretion and as a condition present to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against it with respect to the certificate alleged to have been lost, stolen or destroyed. SECTION 3. TRANSFERS OF STOCK. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. SECTION 4. FIXING RECORD DATE. In order that the Corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 5. REGISTERED SHAREHOLDERS. The Corporation shall have the right to treat the person registered on its books as the owner of shares as the absolute owner thereof, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. 14 15 ARTICLE VII GENERAL PROVISIONS SECTION 1. DIVIDENDS. The Board of Directors, subject to any restrictions contained in its Certificate of Incorporation, may declare and pay any dividends upon the shares of its capital stock either (1) out of surplus as defined in and computed in accordance with the provisions of the governing statute, or (2) in case there shall be no such surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Dividends may be paid in cash, in property, or in shares of the Corporation's capital stock, subject to the provisions of the statute and of the Certificate of Incorporation. SECTION 2. RESERVES. The Board of Directors shall have power and authority to set apart, out of any funds available for dividends, such reserve or reserves, for any proper purpose, as the Board in its discretion shall approve, and the Board shall have the power and authority to abolish any reserve created by the Board. SECTION 3. VOTING SECURITIES. Unless otherwise directed by the Board, the Chairman of the Board or President, or, in the case of their absence or inability to act, the Vice Presidents, in order of their seniority, shall have full power and authority on behalf of the Corporation to attend and to act and to vote, or to execute in the name or on behalf of the Corporation a proxy authorizing an agent or attorney-in-fact for the Corporation to attend and vote at any meetings of security holders of Corporations in which the Corporation may hold securities, and at such meetings he or his duly authorized agent or attorney-in-fact shall possess and may exercise any and all rights and powers incident to the ownership of such securities and which, as the owner thereof, the Corporation might have possessed and exercised if present. The Board by resolution from time to time may confer like power upon any other person or persons. SECTION 4. CHECKS. All checks, drafts and orders for the payment of money shall be signed in the name of the Corporation in such manner and by such officer or officers or such other person or persons as the Board of Directors shall from time to time designate for that purpose. SECTION 5. CONTRACTS, CONVEYANCES, ETC. When the execution of any contract, conveyance or other instruments has been authorized without specification of the executing officers, the Chairman of the Board, President or any Vice President, and the Secretary or Assistant Secretary, may execute the same in the name and on behalf of this Corporation and may affix the corporate seal thereto. The Board of Directors shall have power to designate the officers and agents who shall have authority to execute any instrument in behalf of this Corporation. 15 16 SECTION 6. FISCAL YEAR. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. SECTION 7. SEAL. The corporate seal shall have inscribed thereon the name of the Corporation and the words "Corporate Seal" and "Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. SECTION 8. MICHIGAN CONTROL SHARE STATUTE. Pursuant to Section 794 of the Michigan Business Corporation Act ("MBCA"), Chapter 7B of the MBCA shall not apply to the Corporation or control share acquisitions (as such term is defined in Section 791 of the MBCA) of the shares of the Corporation's capital stock. ARTICLE VIII AMENDMENTS SECTION 1. AMENDMENT BY REGULAR VOTE. These bylaws may be altered, amended or repealed or new Bylaws may be adopted by the shareholders or by the Board of Directors, when such power is conferred upon the Board of Directors by the Certificate of Incorporation, at any regular meeting of the shareholders or of the Board of Directors or at any special meeting of the shareholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new Bylaws be contained in the notice of such special meeting. SECTION 2. AMENDMENT BY 75% VOTE. The affirmative vote of 75% of the total Board of Directors is required to alter, amend, repeal, add to or otherwise change the effects of Article III, Sections 8(b), (c) or (d); Article V, Section 13; or this Article VIII, Section 2 of the Corporation's Bylaws. 16 EX-10.13 4 EXHIBIT 10.13 1 Ex. 10.13 COMERICA INCORPORATED DEFERRED COMPENSATION PLAN 2 COMERICA INCORPORATED DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS ARTICLE I. PURPOSE AND INTENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1 ARTICLE II. DEFINITIONS A. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1 (1) Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1 (2) Adoption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1 (3) Beneficiary(ies) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1 (4) Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1 (5) Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1 (6) Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1 (7) Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1 (8) Compensation Deferral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1 (9) Deferral Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1 (10) Disabled and Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1 (11) Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1 (12) Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2 (13) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2 (14) Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2 (15) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2 (16) Plan Administrator(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2 (17) Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2 (18) Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2 (19) Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2 (20) Unforeseeable Emergency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2 ARTICLE III. ELECTION TO PARTICIPATE IN THE PLAN A. Completion of Adoption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1 B. Contents of Adoption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1 C. Effect of Entering Into Adoption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1 D. Special Rules Applicable to Adoption Agreement and Deferral of Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1 (1) Deferral Election to be Made Before Compensation is Earned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1 (2) Irrevocability of Deferral Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1 (3) Cancellation of Deferral Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-2 ARTICLE IV. DEFERRED COMPENSATION ACCOUNTS AND INVESTMENT OF DEFERRED COMPENSATION A. Deferred Compensation Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1 B. Earnings on Compensation Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1 C. Contribution of Compensation Deferrals to Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1 D. Insulation from Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-2 E. Ownership of Compensation Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-2
- i - 3 ARTICLE V. DISTRIBUTION OF COMPENSATION DEFERRALS A. In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1 (1) Employment Through Deferral Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1 (2) Termination Prior to End of Deferral Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1 (3) Death of Participant Prior to End of Installment Distribution Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2 (4) Hardship Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2 (5) Cash Out Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2 B. Designation of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2 (1) Beneficiary Designation Must be Filed Prior to Participant's Death . . . . . . . . . . . . . . . . . . . . V-3 (2) Absence of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3 ARTICLE VI. AMENDMENT OR TERMINATION A. Amendment and Termination of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1 ARTICLE VII. AUDITING OF ACCOUNTS AND STATEMENTS TO PARTICIPANTS A. Auditing of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1 B. Statements to Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1 C. Fees and Expenses of Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1 ARTICLE VIII. MISCELLANEOUS PROVISIONS A. Nonforfeitability of Participant Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1 B. Prohibition Against Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1 C. No Employment Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1 D. Successors Bound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1 E. Prohibition Against Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1 F. Administration By Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1 G. Governing Law and Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1 H. Power to Interpret . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-2 I. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-2
- ii - 4 ARTICLE I. PURPOSE AND INTENT. The Plan enables Eligible Employees to defer receipt of all or a portion of their Compensation to provide additional income for them subsequent to retirement, disability or termination of employment. It is the intention of Comerica Incorporated that the Plan cover only employees who are management or highly-compensated employees within the meaning of sections 201(2), 301(a)(3), and 401(a)(1) of ERISA. I-1 5 ARTICLE II. DEFINITIONS. A. Definitions. The following words and phrases, wherever capitalized, shall have the following meanings respectively: (1) "Account(s)" means the account established for each Participant under Article IV(A) hereof. (2) "Adoption Agreement" means the Adoption Agreement in the form attached hereto as Exhibit A, as it may be revised from time to time. (3) "Beneficiary(ies)" means the person(s), natural or corporate, in whatever capacity, designated by a Participant pursuant to this Plan, or the person otherwise deemed to constitute the Participant's beneficiary under Article V(B)(2) hereof. (4) "Board" means the Board of Directors of Comerica Incorporated. (5) "Code" means the Internal Revenue Code of 1986, as amended. (6) "Committee" means the Compensation Committee of the Board, or such other committee appointed by the Board to administer the Plan. (7) "Compensation" means gross salary from the Employer including base salary, incentive compensation, bonuses, overtime, commissions and any other form of cash remuneration approved by the Committee. (8) "Compensation Deferral(s)" means the amount of Compensation a Participant has elected to defer, pursuant to an Adoption Agreement and, where the context requires, shall also include earnings on such amounts. (9) "Deferral Period" means the period during which a Participant elects to defer receipt of Compensation under the Plan. (10) "Disabled" or "Disability" means "disabled" under the Comerica Incorporated Long-Term Disability Plan or under the Comerica Incorporated Executive Long-Term Disability Plan, whichever such plan covers the individual. (11) "Eligible Employee" means an individual employed by an Employer who is: (i) eligible to receive compensation under the Comerica Incorporated Annual Management Incentive Program; (ii) eligible to receive compensation under an incentive program sponsored by any business unit of the Employer, provided the Compensation the individual expects to earn in the year his deferred election is operative is approximately $100,000; or (iii) approved for participation by the Committee on the basis of high II-1 6 earning potential and other relevant factors consistent with the Plan. (12) "Employer" means Comerica Incorporated, a Delaware corporation, and its subsidiary corporations, and any successor entity which may succeed the Employer and its subsidiary corporations. (13) "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. (14) "Participant" means an Eligible Employee whose Adoption Agreement has been accepted by the Committee pursuant to Article III(A) hereof, and who either has a deferral election currently in effect or an Account balance under the Plan. (15) "Plan" means the unfunded, nonqualified elective deferred compensation plan the provisions of which are set forth herein, as they may be amended from time to time. (16) "Plan Administrator(s)" means the individual(s) appointed by the Committee to handle the day-to-day administration of the Plan. (17) "Retirement" means retirement under the Comerica Incorporated Retirement Plan. (18) "Trust" means such trust as may be established by Comerica Incorporated in connection with this Plan. (19) "Trustee" means the entity selected by Comerica Incorporated as trustee of the Trust. (20) "Unforeseeable Emergency" means a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent (within the meaning of Code Section 152(a)) of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. II-2 7 ARTICLE III. ELECTION TO PARTICIPATE IN THE PLAN. A. Completion of Adoption Agreement. An Eligible Employee who wishes to become a Participant in the Plan must complete and sign an Adoption Agreement. Any Adoption Agreement received by the Committee shall become binding upon the Committee's acceptance thereof. In the Adoption Agreement, the Employee shall indicate the Compensation the Participant wishes to defer. An Eligible Employee must file a separate Adoption Agreement with respect to each year's Compensation he or she wishes to defer. B. Contents of Adoption Agreement. Each Adoption Agreement shall: (i) designate the amount of Compensation to be deferred in whole percentages or in whole dollars; (ii) request that the Employer defer payment of the Compensation to the Participant until the year the Participant retires; (iii) state how the Participant wishes to receive payment of the Compensation Deferrals at retirement; and (iv) contain other provisions the Committee deems appropriate. C. Effect of Entering Into Adoption Agreement. Upon the Committee's acceptance of a Participant's Adoption Agreement, the Participant shall be (i) bound by the provisions of the Plan and by the provisions of any agreement governing the Trust; (ii) bound by the provisions of the Adoption Agreement; and (iii) deemed to have assumed the risks of deferral, including, without limitation, the risk of poor investment performance and the risk that Comerica Incorporated may become insolvent. D. Special Rules Applicable to Adoption Agreements and Deferral of Compensation. (1) Deferral Election to be Made Before Compensation is Earned. In no event shall any Compensation which has been earned by a Participant prior to the date such Participant's Adoption Agreement has been accepted by the Committee be deferred under the Plan. Further, the effective date of any Adoption Agreement shall not be earlier than the first day of the calendar year which begins after the Adoption Agreement is signed by the Participant and accepted by the Committee. Notwithstanding the preceding sentence, an Adoption Agreement delivered to the Committee within 60 days of the effective date of the Plan may defer Compensation to be earned in the remaining portion of the year in which it is delivered; and, provided further, an Adoption Agreement delivered to the Committee within 30 days of the date an individual first becomes eligible to participate in the Plan may defer Compensation to be earned in the remaining portion of the year in which it is delivered. (2) Irrevocability of Deferral Election. Except as provided in Article III(D)(3) and V(A)(4) below, the provisions of the Adoption Agreement relating to a Participant's election to defer Compensation and the Participant's selection of the time and manner of payment of Compensation Deferrals shall be irrevocable. III-1 8 (3) Cancellation of Deferral Election. In the event of an Unforeseeable Emergency, the Committee may, in its sole discretion, permit the Participant to cancel an election to defer Compensation, in whole or in part, and permit the Participant to receive at the otherwise scheduled payment date whatever portion of the amount subject to the deferral election as is necessary, in the judgment of the Committee, to alleviate the financial hardship occasioned by the Unforeseeable Emergency. Any Participant who seeks to cancel a deferral election on account of an Unforeseeable Emergency shall submit to the Committee a written request which sets forth in reasonable detail the Unforeseeable Emergency, and the amount of the Compensation Deferral which the Participant believes to be necessary to remedy it. In determining whether to grant any Participant's request to cancel a deferral election on the basis of Unforeseeable Emergency, the Committee shall adhere to the requirements of Section 1.457-2(h)(4) of the Income Tax Regulations, the provisions of which are incorporated herein by reference. Any Participant who is permitted to cancel a deferral election shall not again be eligible to submit a deferral election until the calendar year following the calendar year in which such cancellation is permitted. If a Participant receives a hardship distribution under the Comerica Incorporated Preferred Savings Plan, the Participant's deferral election hereunder shall be automatically cancelled to the extent it would defer the Participant's receipt of any Compensation the Participant would earn during a twelve-month period beginning on the date of the Participant's receipt of such hardship distribution. Any Participant whose deferral election is automatically cancelled in accordance with the provisions hereof shall not again be eligible to submit a deferral election until the next enrollment period after the elapse of at least 12 months following the Participant's receipt of a hardship distribution. III-2 9 ARTICLE IV. DEFERRED COMPENSATION ACCOUNTS AND INVESTMENT OF DEFERRED COMPENSATION. A. Deferred Compensation Accounts. The Plan Administrator shall establish a book reserve account in the name of each Participant. As soon as is administratively feasible following the date Compensation subject to a Participant's deferral election would otherwise be paid to the Participant, the Plan Administrator shall credit the Compensation being deferred to the Participant's Account. Each Participant's Account shall further be credited with earnings or charged with losses resulting from the deemed investment of the Compensation Deferrals credited to the Account as though the Compensation Deferrals had been invested in the investments selected by the Participant as provided below, and shall be charged with any distributions, any federal and state income tax withholdings, any social security tax as may be required by law and by any further amounts, including administrative fees and expenses, the Employer is either required to withhold or determines are appropriate charges to such Participant's Account. B. Earnings on Compensation Deferrals. At the time a Participant submits an Adoption Agreement, and from time to time thereafter at intervals to be determined by the Committee, each Participant shall direct, in a form approved by and in accordance with procedures established by the Committee, how the Participant chooses the balance in his Account to be deemed to be invested among investment options to be made available by the Committee. In lieu of making investment options available to Participants, Comerica Incorporated may credit deferred sums with a reasonable rate of interest to reflect the time value of money. Comerica Incorporated shall be under no obligation to acquire any of the investments selected by any Participant, and any investments actually made by it with Compensation Deferrals will be acquired solely in the name of Comerica Incorporated, and will remain the sole property of Comerica Incorporated. C. Contribution of Compensation Deferrals to Trust. In the sole discretion of Comerica Incorporated, all or any portion of the Compensation Deferrals credited to any Participant's Account may be contributed to a Trust established by Comerica Incorporated in connection with the Plan. No Participant or Beneficiary shall have the right to direct or require that Comerica Incorporated contribute the Participant's Compensation Deferrals to the Trust. Any Compensation Deferrals so contributed shall be held, invested and administered to provide benefits under the Plan except as otherwise required in the agreement governing the Trust. IV-1 10 D. Insulation from Liability. No member of the Committee or officer, employee or director of any Employer shall be liable to any person for any action taken or omitted in connection with the administration of this Plan or Trust unless attributable to such individual's own fraud or willful misconduct. E. Ownership of Compensation Deferrals. Title to and beneficial ownership of any assets, of whatever nature, which may be allocated by Comerica Incorporated to any Account in the name of any Participant shall at all times remain with Comerica Incorporated, and no Participant or Beneficiary shall have any property interest whatsoever in any specific assets of Comerica Incorporated by reason of the establishment of the Plan nor shall the rights of any Participant or Beneficiary to payments under the Plan be increased by reason of Comerica Incorporated's contribution of Compensation Deferrals to the Trust. The rights of each Participant and Beneficiary hereunder shall be limited to enforcing the unfunded, unsecured promise of the Participant's Employer to pay benefits under the Plan, and the status of any Participant or Beneficiary shall be that of an unsecured general creditor of Comerica Incorporated. Participants and Beneficiaries shall not be deemed to be parties to any trust agreement Comerica Incorporated enters into with the Trustee. IV-2 11 ARTICLE V. DISTRIBUTION OF COMPENSATION DEFERRALS. A. In General. The benefits payable hereunder as deferred compensation shall be paid to the Participant or to the Participant's Beneficiary as follows: (1) Employment Through Deferral Period. If the Participant's employment with an Employer continues until the last day of the Deferral Period, Comerica Incorporated shall, as soon as administratively feasible following the end of the Deferral Period, distribute, or commence to distribute, the balance of the Account in the name of the Participant in any manner described below which is selected by the Participant in the Participant's Adoption Agreement: (i) a single sum; (ii) annual installments over 5 years, (iii) annual installments over 10 years; or (iv) annual installments over 15 years. For purposes of determining the amount of annual installments, X shall equal the number of years over which benefits will be paid as elected by the Participant. Comerica Incorporated shall pay to the Participant or to the Participant's Beneficiary an amount equal to 1/X of the fair market value of the Account in the Participant's name, such value to be determined by the Committee as of a date as close as reasonably possible prior to the date the payment is to be made. On approximately the same date of the following year, Comerica Incorporated shall pay to the Participant or to the Participant's Beneficiary an amount equal to 1/X-1 of the fair market value of such Account, such value to be determined by the Committee as of a date as close as reasonably possible prior to the date the payment is to be made. On approximately the same date of the following year, Comerica Incorporated shall pay to the Participant or to the Participant's Beneficiary an amount equal to 1/X- 2 of the fair market value of such Account, such value to be determined by the Committee as of a date as close as reasonably possible prior to the date the payment is to be made, and similar payments shall be made on approximately the same date of each succeeding year until a total of X annual payments have been made with the last such payment being in an amount equal to the fair market value of the Account in the name of the Participant determined as of the date such amount is paid. (2) Termination Prior to End of Deferral Period. If the Participant's employment with the Employer terminates prior to the last day of the Deferral Period (unless such termination is due to the Participant's Disability), then notwithstanding the manner of distribution selected by the Participant, Comerica Incorporated shall distribute or direct the Trustee to distribute an amount equal to the fair market value of the Account determined by the Committee as of the Participant's termination date. Such amount shall be distributed to the Participant or to the Participant's V-1 12 Beneficiary in a single sum as soon as is administratively feasible following the Participant's termination date. If the Participant's employment terminates prior to the last day of the Deferral Period because the Participant has become Disabled, then notwithstanding the distribution date selected by the Participant in the Participant's Adoption Agreement, the balance of the Account in the name of the Participant shall be distributed, or commence to be distributed, as soon as administratively feasible following his termination date, such distribution to be made in the manner specified in the Participant's Adoption Agreement. (3) Death of Participant Prior to End of Installment Distribution Period. If the Participant dies before a total X annual payments are made hereunder, then an amount equal to the fair market value of the Account in the name of the Participant determined by the Committee as of the date of death of the Participant shall be distributed in a single sum to the Participant's Beneficiary, such distribution to be made as soon as is administratively feasible following the date of the Participant's death. (4) Hardship Distributions. In the event of an Unforeseeable Emergency involving a Participant which occurs prior to distribution of the entire balance of the Account in the name of the Participant, the Committee may, in its sole discretion, distribute to the Participant in a single sum an amount equal to such portion of the Account in the Participant's name as shall be necessary in the judgment of the Committee to alleviate the financial hardship occasioned by the Unforeseeable Emergency. Any Participant desiring a distribution under the Plan on account of an Unforeseeable Emergency shall submit to the Committee a written request for such distribution which sets forth in reasonable detail the Unforeseeable Emergency which would cause the Participant severe financial hardship, and the amount which the Participant believes to be necessary to alleviate the financial hardship. In determining whether to grant any requested hardship distribution, the Committee shall adhere to the requirements of the Income Tax Regulations referred to in Article III(D)(3) hereof. (5) Cash Out Distributions. If, at the time an installment distribution of an Account in the name of any Participant is scheduled to commence, the fair market value of such Account does not exceed $3,500 then, notwithstanding an election by the Participant that such Account be distributed in installments, the balance of such Account shall be distributed to the Participant in a single sum on or about the date the first installment is scheduled to be made. B. Designation of Beneficiary. A Participant shall deliver to the Committee a written designation of Beneficiary(ies) under the Plan, which designation may from time to time be amended or revoked V-2 13 without notice to, or consent of, any previously designated Beneficiary. (1) Beneficiary Designation Must be Filed Prior to Participant's Death. No designation of Beneficiary, and no amendment or revocation thereof, shall become effective if delivered to the Committee after such Participant's death, unless the Committee shall determine such designation, amendment or revocation to be valid. (2) Absence of Beneficiary. In the absence of an effective designation of Beneficiary, or if no Beneficiary designated shall survive the Participant, then the balance of the Account in the name of the Participant shall be paid to the Participant's estate. V-3 14 ARTICLE VI. AMENDMENT OR TERMINATION. A. Amendment and Termination of Plan. This Plan may be amended or terminated at any time in the sole discretion of the Committee by a written instrument executed by the Committee. No such amendment shall affect the time of payment of any Compensation earned prior to the time of such amendment or termination except as the Committee may determine to be necessary to carry out the purpose of the Plan. Written notice of any such amendment or termination shall be given to each Participant. Upon termination of the Plan, Comerica Incorporated shall distribute to each Participant or Beneficiary, or direct that the Trustee so distribute, the amounts which would have been distributed to such Participant or Beneficiary under the Plan had the Participant's employment with an Employer terminated at the time of termination of the Plan. In addition, no such amendment shall make the Trust revocable. VI-1 15 ARTICLE VII. AUDITING OF ACCOUNTS AND STATEMENTS TO PARTICIPANTS. A. Auditing of Accounts. The Plan shall be audited from time to time as directed by the Committee by auditors selected by the Committee. B. Statements to Participants. Statements will be provided to Participants under the Plan on at least an annual basis. C. Fees and Expenses of Administration. Fees of the Trustee and expenses of administration of the Plan shall be deducted from Accounts. VII-1 16 ARTICLE VIII. MISCELLANEOUS PROVISIONS. A. Nonforfeitability of Participant Accounts. Each Participant shall be fully vested in his or her Account. B. Prohibition Against Assignment. Benefits payable to Participants and their Beneficiaries under the Plan may not be anticipated, assigned (either at law or in equity), alienated, sold, transferred, pledged or encumbered in any manner, nor may they be subjected to attachment, garnishment, levy, execution or other legal or equitable process for the debts, contracts, liabilities, engagements or acts of any Participant or Beneficiary. C. No Employment Contract. Nothing in the Plan is intended to be construed, or shall be construed, as constituting an employment contract between the Employer and any Participant nor shall any Plan provision affect the Employer's right to discharge any Participant for any reason or for no reason. D. Successors Bound. The contractual agreement between Comerica Incorporated and each Participant resulting from the execution of an Adoption Agreement shall be binding upon and inure to the benefit of Comerica Incorporated, its successors and assigns, and to the Participant and to the Participant's heirs, executors, administrators and other legal representatives. E. Prohibition Against Loans. The Participant may not borrow any Compensation Deferrals from Comerica Incorporated nor utilize his or her Account as security for any loan from the Employer. F. Administration By Committee. Responsibility for administration of the Plan shall be vested in the Committee. To the extent permitted by law, the Committee may delegate any authority it possesses to the Plan Administrator(s). To the extent the Committee has delegated authority concerning a matter to the Plan Administrator(s), any reference in the Plan to the "Committee" insofar as it pertains to such matter, shall refer likewise to the Plan Administrator(s). G. Governing Law and Rules of Construction. This Plan shall be governed in all respects, whether as to construction, validity or otherwise, by applicable federal law and, to the extent that federal law is inapplicable, by the laws of the State of Michigan. Each provision of this Plan shall be treated as severable, to the end that, if any one or more provisions shall be adjudged or declared illegal, invalid or unenforceable, this Plan shall be interpreted, and shall remain in full force and effect, as though such provision or provisions had never been contained herein. It is the intention of Comerica Incorporated that the Plan established hereunder be "unfunded" for income tax purposes and for purposes of VIII-1 17 Title I of ERISA, and the provisions hereof shall be construed in a manner to carry out that intention. H. Power to Interpret. This Plan shall be interpreted and effectuated to comply with the applicable requirements of ERISA, the Code and other applicable tax law principles; and all such applicable requirements are hereby incorporated herein by reference. Subject to the above, the Committee shall have power to construe and interpret this Plan, including but not limited to all provisions of this Plan relating to eligibility for benefits and the amount, manner and time of payment of benefits, any such construction and interpretation by the Committee and any action taken thereon in good faith by the Plan Administrator(s) to be final and conclusive upon any affected party. The Committee shall also have power to correct any defect, supply any omission, or reconcile any inconsistency in such manner and to such extent as the Committee shall deem proper to carry out and put into effect this Plan; and any construction made or other action taken by the Committee pursuant to this Article VIII(H) shall be binding upon such other party and may be relied upon by such other party. I. Effective Date. The effective date of this Plan shall be January 1, 1994. VIII-2 EX-13 5 EXHIBIT 13 1 EXHIBIT 13 SUBSIDIARY DATA Comerica Incorporated and Subsidiaries - -------------------------------------------------------------------------------
December 31 California* Florida Illinois* Michigan Texas ---------------- --------------- -------------- ---------------- -------------- (dollar amounts in millions) 1993 1992 1993 1992 1993 1992 1993 1992 1993 1992 - --------------------------------------------------------------------------------------------------------------------------------- Earnings Summary Total interest income $65 $65 $7 $6 $103 $112 $1,430 $1,600 $195 $164 Total interest expense 13 16 2 3 35 48 547 690 54 60 Net interest income 52 49 5 3 68 64 883 910 141 104 Provision for loan losses 7 8 1 1 5 5 53 89 4 9 Securities gains -- -- -- -- -- -- 2 5 -- 2 Noninterest income (excluding securities gains) 6 4 8 8 11 9 383 365 43 33 Noninterest expenses 36 33 12 13 59 60 785 861 127 90 Provision for income taxes (credit) 6 5 -- (1) 3 -- 131 88 16 10 Net income (loss) 9 7 -- (2) 12 8 299 242 37 30 Year-End Balances Total assets $1,151 $980 $109 $74 $1,410 $1,426 $24,913 $22,323 $3,108 $3,147 Total earning assets 1,031 903 97 67 1,307 1,332 23,093 20,540 2,813 2,792 Total loans 823 742 84 54 1,057 951 15,659 15,185 1,659 1,529 Allowance for loan losses 13 14 2 1 15 11 236 245 35 40 Total deposits 693 621 65 60 1,011 1,194 16,690 16,652 2,557 2,765 Total borrowings 348 257 29 -- 244 84 5,088 3,881 236 118 Long-term debt -- -- -- -- -- -- 1,309 564 2 11 Common shareholder's equity 104 99 13 13 151 141 1,626 1,610 298 261 Daily Average Balances Total assets $988 $913 $89 $82 $1,408 $1,486 $22,124 $21,916 $2,991 $2,304 Total earning assets 900 839 79 71 1,297 1,362 20,501 20,421 2,677 2,058 Total loans 733 707 61 53 983 916 15,123 14,893 1,601 1,075 Total deposits 626 601 63 62 1,080 1,193 16,431 17,222 2,568 1,816 Total borrowings 258 212 11 3 175 133 2,927 2,979 121 117 Long-term debt -- -- -- 2 -- -- 917 231 7 12 Common shareholder's equity 100 96 13 12 145 148 1,665 1,490 275 188 Statistical Data Return on average assets 0.93% 0.82% 0.25% (2.84)% 0.88% 0.55% 1.35% 1.10% 1.24% 1.29% Return on average assets (excluding purchase accounting) 1.09 0.92 0.91 (2.42) 1.06 0.72 1.38 1.13 1.36 1.42 Return on average equity 9.20 7.74 1.72 (18.60) 8.55 5.55 17.94 16.24 13.44 15.79 Return on average equity (excluding purchase accounting) 12.84 11.11 12.28 (35.49) 12.44 7.28 19.31 17.38 17.20 20.95 Average equity to average assets 10.11 10.54 14.65 15.26 10.33 9.99 7.53 6.80 9.19 8.16 Tier 1 capital 10.54 12.21 10.37 10.70 10.85 11.50 7.64 8.28 11.63 11.35 Total capital 11.79 13.99 11.64 11.70 12.11 12.62 10.75 10.80 12.89 12.60 Tier 1 leverage 8.62 10.78 7.06 7.91 9.22 7.48 6.52 7.14 8.83 7.00 Number of offices 7 8 7 7 23 24 298 335 50 53 Number of employees (full-time equivalent)+ 314 342 105 102 708 747 10,209 10,698 1,334 1,433
* Amounts include loans participated to the Michigan bank. + Michigan number includes employees working in states other than California, Florida, Illinois and Texas. 17 2 FINANCIAL REVIEW AND REPORTS 19 3 HIGHLIGHTS Net income was $341 million for 1993, or $2.85 per share, compared with $240 million, or $1.99 per share for 1992. Excluding a $92 million ($0.77 per share) after-tax restructuring charge related to the merger with Manufacturers National Corporation (Manufacturers) in June 1992, net income for 1992 would have been $332 million, or $2.76 per share. In 1991, net income was $280 million, or $2.41 per share. Return on average common shareholders' equity (ROE) was 15.94 percent in 1993, compared to 12.10 percent in 1992 and 15.90 percent in 1991. Return on average assets was 1.25 percent in 1993, 0.91 percent in 1992 and 1.06 percent in 1991. Adjusted for the restructuring charge, 1992 ROE and return on average assets were 16.38 percent and 1.25 percent, respectively. In July, the board of directors increased the quarterly dividend by 9.8 percent to $0.28 per share. Total cash dividends declared per common share were $1.07 in 1993, compared to $0.96 in 1992 and $0.92 in 1991. On January 4, 1993, the Corporation effected a two-for-one stock split in the form of a stock dividend. All per share amounts in this financial review have been adjusted to reflect the split. Total average assets in 1993 were $27.2 billion, compared to $26.5 billion in 1992. This increase is due primarily to average loans, which increased 5 percent to $18.3 billion from 1992. Average common shareholders' equity was $2.1 billion in 1993, compared to $2.0 billion in 1992. During 1993, most of the conversion and integration efforts resulting from the merger with Manufacturers were completed. Noninterest expenses were inflated by over $60 million in costs incurred to complete these efforts, including a $22 million charge in the fourth quarter to accrue for costs yet to be incurred. On December 31, 1992, the Corporation acquired Hibernia National Bank in Texas (Hibernia) for $56 million in a transaction accounted for as a purchase. On February 25, 1993, the Corporation acquired the $206 million Sugar Creek National Bank in Sugar Land, Texas, for $28 million of common stock. Additionally, on May 28, 1993, the $712 million NorthPark National Corporation in Dallas, Texas, was acquired for $79 million of common stock. These transactions were accounted for as pooling-of-interests combinations and, accordingly, the historical financial statements have been restated to reflect these mergers. The Corporation entered into an Agreement and Plan of Merger on September 8, 1993, for the acquisition of the approximately $1 billion Pacific Western Bancshares in San Jose, California. The Corporation has repurchased approximately 4.6 million shares of its own stock which will be reissued to Pacific Western Bancshares shareholders, resulting in the acquisition being treated as a purchase combination for accounting purposes. The acquisition is expected to be completed in early 1994. (NET INCOME GRAPH) (RETURN ON ASSETS GRAPH) EARNINGS PERFORMANCE NET INTEREST INCOME Net interest income on a fully taxable equivalent basis (FTE) is the difference between interest and certain yield-related fees earned on assets and interest paid on liabilities, with adjustments made to present yields on tax-exempt assets as if such income was fully taxable. In 1993, FTE net interest income provided 71.6 percent of the Corporation's net revenues, compared with 73.8 percent in 1992 and 74.0 percent in 1991. Net interest margin decreased 8 basis points in 1993 to 4.65 percent. The principal factor contributing to the decline was lower yielding earning assets which were partially offset by lower cost sources of funds and higher interest rate spreads. Total FTE net interest income was relatively flat totaling $1,163 million in 1993, compared to $1,159 million and $1,093 million in 1992 and 1991, respectively. Growth in average earning assets was a nominal 2 percent, while average yields declined on high prepayment assets including investment securities, residential mortgages and installment loans. In addition, a shift in earning assets towards commercial 20 4 Table 1 SELECTED FINANCIAL DATA - --------------------------------------------------------------------------------
Year Ended December 31 (dollar amounts in millions, except per share data) 1993 1992 1991 1990 1989 - ------------------------------------------------------------------------------------------------------- Earnings Summary Total interest income $1,783 $1,933 $2,268 $2,282 $2,192 Net interest income 1,134 1,121 1,050 927 847 Provision for loan losses 69 111 105 100 147 Securities gains 2 6 5 2 2 Noninterest income (excluding securities gains) 460 405 380 346 291 Noninterest expenses 1,038 1,092 945 848 754 Net income 341 240 280 248 188 Per Share of Common Stock Primary net income $2.85 $1.99 $2.41 $2.25 $1.73 Fully diluted net income 2.85 1.98 2.38 2.23 1.71 Cash dividends declared 1.07 0.96 0.92 0.87 0.77 Common shareholders' equity 18.99 17.38 16.30 14.52 13.05 Year-end Balances Total assets $30,295 $27,556 $28,989 $26,815 $23,842 Total earning assets 27,852 25,131 26,594 24,414 21,463 Total loans 19,100 18,215 17,269 16,503 14,869 Total deposits 20,950 21,200 21,142 20,699 19,408 Total borrowings 6,861 3,963 5,522 4,016 2,528 Long-term debt 1,461 741 306 331 349 Common shareholders' equity 2,182 2,058 1,898 1,583 1,403 Daily Average Balances Total assets $27,236 $26,510 $26,365 $24,332 $22,466 Total earning assets 25,012 24,510 24,374 22,351 20,655 Total loans 18,307 17,447 16,622 15,477 14,113 Total deposits 20,721 20,913 20,785 19,381 18,397 Total borrowings 4,105 3,275 3,380 2,924 2,254 Long-term debt 1,087 414 323 348 354 Common shareholders' equity 2,136 1,957 1,741 1,485 1,322 Ratios Return on average assets 1.25% 0.91% 1.06% 1.02% 0.84% Return on average common shareholders' equity 15.94 12.10 15.90 16.47 13.94 Dividend payout ratio 36.82 45.51 33.73 31.95 36.37 Common shareholders' equity as a percent of average assets 7.84 7.38 6.60 6.11 5.89
21 5 loans, which are lower yielding than consumer and residential mortgage loans, negatively impacted net interest margin. As a percent of average earning assets, total average loans increased to 73 percent in 1993, compared to 71 percent in 1992. The interest margin was positively impacted as the average mix of sources of funds shifted toward purchased funds and shareholders' equity and there existed a higher spread between the prime and federal funds rates. Lower costing purchased funds provided additional funding to replace investment deposit run-off. During 1993, the average balances of certificates of deposit decreased $1.1 billion, while average purchased funds increased $830 million. Additionally, average shareholders' equity increased $141 million, or 7 percent from year-end 1992. Net interest margin risk is typically related to a narrowing of the prime and federal funds rate spread. The Corporation reduced this risk with a modestly asset sensitive balance sheet during most of 1993 since it was perceived that interest rates had approached their estimated low point. A more neutral stance was adopted later in the year by purchasing investment securities which lowered the interest margin in the fourth quarter but contributed to an increase in net interest income. The Corporation practices a conservative asset and liability management policy which is more fully explained on page 36 of this financial review. The growth in net interest income in 1992 over 1991 represented an improvement in the rate spread between earning assets and interest-bearing liabilities. This spread also resulted in a subsequent shift in the mix of earning assets toward higher yielding assets. Average loans as a percent of average earning assets increased to 71 percent in 1992 from 68 percent in 1991. Earning assets were also affected in 1992 by a 113 percent increase in the average balance of mortgages held for sale. (NET INTEREST INCOME GRAPH) (NET INTEREST MARGIN GRAPH) PROVISION AND ALLOWANCE FOR LOAN LOSSES The provision for loan losses is the amount necessary to adjust the allowance for loan losses to an amount which represents management's assessment of the losses inherent in the Corporation's loan portfolio. The allowance for loan losses is based on the application of projected loss ratios to the risk-ratings of loans both individually and by category. The adequacy of the allowance is reviewed on a quarterly basis. Projected loss ratios incorporate such factors as recent loss experience, current economic conditions and trends, trends in past due and nonaccrual amounts, risk characteristics of various categories and concentrations of loans, geographical dispersion of borrowers, transfer risks and other pertinent factors. The provision for loan losses was $69 million in 1993, compared to $111 million and $105 million in 1992 and 1991, respectively. The allowance for loan losses at December 31, 1993, was $299 million, a decrease of $9 million since year-end 1992. As a percent of total loans, the allowance was 1.56 percent at year-end 1993, compared to 1.69 percent in 1992. The allowance for loan losses as a percent of nonperforming assets increased to 143 percent at December 31, 1993, from 113 percent at year-end 1992. The Corporation's estimated allocation of the allowance for loan losses is shown on page 33. The majority of the loan categories experienced minor decreases in allocations while the unallocated allowance increased $28 million to $64 million at year-end 1993. The increase in the unallocated allowance reflects the overall improvement in the credit quality of the loan portfolio. Net charge-offs were $78 million in 1993, compared to $99 million in 1992 and $97 million in 1991. The commercial loan portfolio experienced decreased net charge-offs as a result of favorable economic conditions in our markets and improved financial condition of the commercial loan customers. Commercial mortgage net charge-offs increased during the year due to the effects on several borrowers of the recessionary cycle on the commercial real estate market. 22 6 Table 2 ANALYSIS OF NET INTEREST INCOME -- FTE
1993 1992 1991 ------------------------- ------------------------ ------------------------ Average Average Average Average Average Average (dollar amounts in millions) Balance Interest Rate Balance Interest Rate Balance Interest Rate Commercial loans $8,473 $556 6.56% $7,753 $542 6.98% $7,359 $663 9.01% International loans 897 45 5.04 710 41 5.70 501 41 8.14 Real estate construction loans 441 29 6.63 503 35 7.00 530 46 8.69 Commercial mortgage loans 2,629 213 8.10 2,368 202 8.54 2,190 219 9.99 Residential mortgage loans 1,979 169 8.57 2,297 219 9.53 2,438 244 10.01 Consumer loans 3,697 369 9.98 3,625 400 11.03 3,427 415 12.10 Lease financing 191 14 7.34 191 17 8.89 177 17 9.66 ----------------------- ----------------------- --------------------- Total loans (1) 18,307 1,395 7.62 17,447 1,456 8.34 16,622 1,645 9.89 U.S. Government and agency securities 4,340 275 6.35 3,541 288 8.14 3,612 337 9.34 State and municipal securities 619 64 10.25 794 82 10.35 894 96 10.70 Other securities 553 30 5.48 1,038 68 6.54 1,234 98 7.95 ----------------------- ----------------------- --------------------- Total investment securities 5,512 369 6.70 5,373 438 8.16 5,740 531 9.25 Interest-bearing deposits with banks 814 28 3.41 1,017 45 4.43 1,413 99 7.01 Federal funds sold and securities purchased under agreements to resell 135 4 2.99 399 15 3.67 454 25 5.58 Trading account securities 12 1 6.76 78 3 3.99 53 3 6.75 Mortgages held for sale 232 15 6.38 196 14 7.34 92 8 8.66 ----------------------- ---------------------- --------------------- Total earning assets 25,012 1,812 7.25 24,510 1,971 8.04 24,374 2,311 9.48 Cash and due from banks 1,490 1,322 1,201 Allowance for loan losses (311) (291) (275) Accrued income and other assets 1,045 969 1,065 ------------------------ ------------------------ ---------------------- Total assets $27,236 $26,510 $26,365 ------------------------ ------------------------ ---------------------- ------------------------ ------------------------ ---------------------- NOW accounts $1,657 37 2.23 $1,470 42 2.83 $1,289 58 4.48 Money market deposit accounts 4,723 129 2.73 4,553 152 3.34 3,841 197 5.14 Savings deposits 2,494 67 2.67 2,181 72 3.31 2,009 95 4.72 Certificates of deposit 6,161 254 4.13 7,245 372 5.14 8,794 595 6.76 Foreign office deposits (2) 1,306 43 3.29 1,668 69 4.11 1,435 88 6.14 ----------------------- ----------------------- --------------------- Total interest-bearing deposits 16,341 530 3.24 17,117 707 4.13 17,368 1,033 5.95 Federal funds purchased and securities sold under agreements to repurchase 1,586 47 3.01 1,553 53 3.44 1,530 86 5.60 Other borrowed funds 1,432 41 2.88 1,308 46 3.52 1,527 86 5.68 Long-term debt 1,087 63 5.77 414 30 7.18 323 28 8.56 Other (3) -- (32) -- -- (24) -- -- (15) -- ----------------------- ----------------------- --------------------- Total interest-bearing sources 20,446 649 3.18 20,392 812 3.98 20,748 1,218 5.87 Noninterest-bearing deposits 4,380 3,796 3,417 Accrued expenses and other liabilities 274 327 421 Preferred stock -- 38 38 Common shareholders' equity 2,136 1,957 1,741 ----------------------- ----------------------- --------------------- Total liabilities and shareholders' equity $27,236 $26,510 $26,365 ------------------------ ------------------------ ---------------------- ------------------------ ------------------------ ---------------------- Net interest income/Rate spread (FTE) $1,163 4.07 $1,159 4.06 $1,093 3.61 ------ ------- ------- ------ ------- ------- FTE adjustment (4) $29 $38 $43 ------ ------- ------- ------ ------- ------- Impact of net noninterest-bearing sources of funds 0.58 0.67 0.88 ----------------------- ----------------------- --------------------- Net interest margin (as a percent of average earning assets) (FTE) 4.65% 4.73% 4.49% ----------------------- ----------------------- --------------------- ----------------------- ----------------------- ---------------------
(1) Nonaccrual loans are included in average balances reported and are used to calculate rates. (2) Includes substantially all deposits by foreign depositors; deposits are in excess of $100,000. (3) Net interest rate swap income. (4) The FTE adjustment is computed using a federal income tax rate of 35% in 1993 and 34% in 1992 and 1991. 23 7 In May 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 114, "Accounting by Creditors for Impairment of a Loan." This statement addresses the accounting by creditors for impairment of certain loans and requires that impaired loans be measured based on the present value of the expected future cash flows arising from the loan. The statement will become effective on January 1, 1995, unless deferred. The Corporation does not expect the standard to have a material impact on its financial statements. (Allowance for Loan Losses Graph) NONINTEREST INCOME Noninterest income totaled $462 million in 1993, a 12 percent increase over 1992. The 1992 total of $411 million represented an increase of $26 million, or 7 percent, over 1991. Income from fiduciary activities increased 7 percent to $122 million in 1993. This increase occurred primarily as a result of aggressive new business development, increased trust assets, and a new personal trust fee schedule implemented during the year. Trust assets at year-end 1993 totaled $78 billion, compared to $68 billion at December 31, 1992. Included in trust assets at year-end 1993 was $29 billion for which the Corporation had discretionary management authority, reflecting a 19 percent increase over the $24 billion at year-end 1992. The increases in trust assets held and new business in 1993 reflected the Corporation's highly competitive investment management, institutional trust and corporate and personal trust products. In 1994, the Corporation intends to further expand its product base with a strategic focus on mutual fund sales. Service charges on deposit accounts totaled $120 million in 1993, compared to $113 million in 1992 and $103 million in 1991. The majority of the 1993 increase is attributable to higher service charges related to commercial noninterest-bearing accounts, which rose as a result of an increase in direct charge maintenance and activity fees on commercial accounts and a lower earnings credit allowance. Customhouse broker fees are generated through John V. Carr & Son, Inc., a provider of international trade services. These fees increased 5 percent in 1993, compared to a 6 percent increase in 1992. The growth in 1993 reflected an increased emphasis on the collection of drawback and transportation fees during the year. Revolving credit fees increased 5 percent to $36 million in 1993, compared to $34 million in 1992. The higher fees resulted from increases in bankcard interchange and merchant fees which were partially offset by a decline in bankcard annual fees due to competitive pressures to waive annual fees on revolving credit products. Although the trend of waiving annual fees is expected to continue, the fees represent less than 10 percent of total revolving credit fee income. In 1993, security gains were $2 million, compared to $6 million in 1992. Securities gains in 1993 and 1992 included recoveries on previously written down municipal securities, and early redemption premiums received on state and municipal securities. Other noninterest income increased $36 million in 1993, which included several unusual items. These nonrecurring components of other noninterest income include a $24 million gain on the sale of land adjacent to an operations center, a $5 million gain on the sale of Brazilian debt, and a $3 million gain on the sale of stock warrants. These gains were partially offset by lower mortgage servicing income due to a change in accounting method for purchased mortgage servicing rights (PMSR). The Corporation moved from a nondiscounted disaggregated method of amortization to a discounted disaggregated method using the original discount rates in effect when the mortgage servicing rights were purchased. Of the $22 million of PMSR amortization recorded in 1993, $5 million resulted from the change to the discounted disaggregated amortization method while $10 million represents increased prepayments and higher prepayment assumptions during the year. As of December 31, 1993, only $11 million of PMSR remains to be amortized in future periods. There were no significant nonrecurring components of other noninterest income in 1992 and 1991. (Noninterest Income Graph) 24 8 TABLE 3 - NONINTEREST INCOME
Increase (Decrease) Increase (Decrease) ------------------- ------------------- Year Ended December 31 1993/1992 1992/1991 ---------------------- ----------- ----------- (dollar amounts in millions) 1993 1992 1991 Amount Change Amount Change - --------------------------------------------------------------------------------------------------------------- Income from fiduciary activities $122 $114 $105 $8 7% $9 8% Service charges on deposit accounts 120 113 103 7 6 10 10 Customhouse broker fees 40 38 36 2 5 2 6 Revolving credit fees 36 34 32 2 5 2 5 Securities gains 2 6 5 (4) (69) 1 31 Other 142 106 104 36 35 2 1 --------------------- -------------- --------------- Total noninterest income $462 $411 $385 $51 12% $26 7% --------------------- -------------- --------------- --------------------- -------------- ---------------
TABLE 4 - NONINTEREST EXPENSES
Increase (Decrease) Increase (Decrease) ------------------- ------------------- Year Ended December 31 1993/1992 1992/1991 ---------------------- ----------- ----------- (dollar amounts in millions) 1993 1992 1991 Amount Change Amount Change - --------------------------------------------------------------------------------------------------------------- Salaries $434 $427 $418 $7 2% $9 2% Employee benefits 95 89 82 6 6 7 9 --------------------- -------------- --------------- Total salaries and employee benefits 529 516 500 13 2 16 3 Net occupancy expense 96 86 83 10 11 3 4 Equipment expense 62 57 54 5 9 3 6 FDIC insurance expense 44 45 41 (1) -- 4 8 Merger, integration and restructuring charge 22 128 -- (106) (83) 128 100 Other 285 260 267 25 10 (7) (3) ---------------------- -------------- --------------- Total noninterest expenses $1,038 $1,092 $945 $(54) (5)% $147 15% ---------------------- -------------- --------------- ---------------------- -------------- ---------------
TABLE 5 - ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
Year Ended December 31 (dollar amounts in millions) 1993 1992 1991 1990 1989 - --------------------------------------------------------------------------------------------------------------- Balance at beginning of period $308 $279 $265 $342 $266 Allowance of institutions and loans purchased/sold -- 17 6 5 2 Loans charged off Domestic Commercial 36 47 47 50 35 Real estate construction 1 4 8 8 12 Commercial mortgage 20 8 9 16 10 Residential mortgage 1 1 2 1 1 Consumer 52 60 59 44 36 Lease Financing -- 1 1 1 1 International -- -- -- 99 -- ------- ------- ------- ------- ------- Total loans charged off 110 121 126 219 95 Recoveries Domestic Commercial 18 9 15 15 9 Real estate construction -- 1 -- -- -- Commercial mortgage 2 1 2 3 2 Residential mortgage -- 1 1 -- -- Consumer 12 10 9 9 8 International -- -- 2 10 3 ------- ------- ------- ------- ------- Total recoveries 32 22 29 37 22 ------- ------- ------- ------- ------- Net loans charged off 78 99 97 182 73 Provision for loan losses 69 111 105 100 147 ------- ------- ------- ------- ------- Balance at end of period $299 $308 $279 $265 $342 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Ratio of allowance for loan losses to total loans at end of period 1.56% 1.69% 1.62% 1.60% 2.30% Ratio of net loans charged off during the period to average loans outstanding during the period 0.43% 0.57% 0.58% 1.18% 0.51%
25 9 NONINTEREST EXPENSES Noninterest expenses were $1,038 million in 1993, compared to $1,092 million in 1992 and $945 million in 1991. Without the respective restructuring charges, expenses were $1,016 million in 1993 and $964 million in 1992. The increase of $52 million was due, in large part, to the acquisition of Hibernia as of December 31, 1992. Without this acquisition, noninterest expenses would have increased by approximately $20 million, or only 2 percent. This low level of expense growth was accomplished as a result of the achievement in 1993 of approximately 50 percent of the anticipated $145 million cost savings from the merger with Manufacturers in June 1992. By the end of 1994, full cost savings are expected to be achieved. More than $60 million in merger, integration and restructuring expenses were incurred in 1993. Of these expenses, $22 million represents a revised estimate of the remaining costs to be incurred and was recognized as a separate line in the financial statements in the fourth quarter. The other merger, integration and restructuring costs were recognized throughout 1993 and recorded in various expense categories. Total salaries expense increased only 2 percent in both 1993 and in 1992. Regular salaries remained flat in 1993, while overtime and temporary-help salaries increased 28 percent. The higher overtime and temporary-help balances were offset by a drop in the number of full-time equivalent employees in 1993 to 12,670, a 5 percent decline, after a 4 percent decline in 1992. Since December 31, 1991, approximately 1,600 full-time equivalent positions have been eliminated through early retirement, severance and attrition, some of which were offset by the addition of 443 full-time equivalent employees from the acquisition of Hibernia, and by additions to staff in some of the Corporation's growing businesses. Employee benefits expense was $95 million in 1993 compared to $89 million and $82 million in 1992 and 1991, respectively. Excluding the impact of adopting SFAS No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions," employee benefits expense in 1993 was unchanged from 1992. SFAS No. 106 requires the accrual of the cost of providing postretirement benefits during the active service period of the employee. Prior to 1993 these benefits were expensed when paid. The Corporation's postretirement medical and life insurance benefit plans cover pre-1993 retirees and provide a significantly lower benefit level to active employees. Postretirement benefit expense under SFAS No. 106 was $12 million in 1993. In 1992 and 1991, postretirement benefits were recognized on a cash basis and were approximately $5 million and $4 million, respectively. The Corporation adopted SFAS No. 112, "Employers' Accounting for Postemployment Benefits" as of December 31, 1993. This accounting standard provides guidance on the accounting for benefits provided by an employer to former or inactive employees after active employment but before retirement. The adoption of SFAS No. 112 resulted in an additional charge to benefits expense of nearly $3 million. In 1994, the Corporation's discount rate used in determining the projected pension benefits obligation will decline from the current 8.25 percent to 7.5 percent and salary growth assumptions will decline from 6 percent to 5 percent. Based on the combination of the decreased pension discount rate and salary increases, the Corporation estimates that future pension expense will not significantly change from 1993. Net occupancy and equipment expense increased on a combined basis by $15 million or 10 percent in 1993, compared to $6 million or 5 percent in 1992. Increases in both years were caused by acquisitions and increased occupancy costs associated with interim space needs while employees were being relocated. In addition, items processing operations required duplicate technologies for much of the year until systems conversions occurred, which increased equipment maintenance expenses. Some of these increases were offset by the closing of 51 Michigan branches since the merger with Manufacturers. The Corporation has also incurred increased costs to update remaining branches and implement more efficient technology which is designed to reduce utilities expenses in the future. (Noninterest Expenses Graph) 26 10 TABLE 6- RATE-VOLUME ANALYSIS - FTE
1993/1992 1992/1991 -------------------------------------- ----------------------------------- Increase Increase Net Increase Increase Net (Decrease) (Decrease) Increase (Decrease) (Decrease) Increase (in millions) Due to Rate Due to Volume* (Decrease) Due to Rate Due to Volume* (Decrease) - ------------------------------------------------------------------------------------------------------------------------ Interest income (FTE) Commercial loans $(33) $47 $14 $(149) $28 $(121) International loans (5) 9 4 (12) 12 -- Real estate construction loans (2) (4) (6) (9) (2) (11) Commercial mortgage loans (10) 21 11 (32) 15 (17) Residential mortgage loans (23) (27) (50) (11) (14) (25) Consumer loans (38) 7 (31) (37) 22 (15) Lease financing (3) -- (3) (1) 1 -- -------------------------------------- --------------------------------- Total loans (114) 53 (61) (251) 62 (189) U.S. Government and agency securities (64) 51 (13) (43) (6) (49) State and municipal securities -- (18) (18) (4) (10) (14) Other securities (11) (27) (38) (17) (13) (30) -------------------------------------- --------------------------------- Total investment securities (75) 6 (69) (64) (29) (93) Interest-bearing deposits with banks (10) (7) (17) (36) (18) (54) Federal funds sold and securities purchased under agreements to resell (3) (8) (11) (8) (2) (10) Trading account securities 2 (4) (2) (1) 1 -- Mortgages held for sale (1) 2 1 (1) 7 6 -------------------------------------- --------------------------------- Total interest income (FTE) (201) 42 (159) (361) 21 (340) Interest expense NOW accounts (9) 4 (5) (21) 5 (16) Money market deposit accounts (28) 5 (23) (69) 24 (45) Savings deposits (14) 9 (5) (28) 5 (23) Certificates of deposit (73) (45) (118) (143) (80) (223) Foreign office deposits (14) (12) (26) (29) 10 (19) -------------------------------------- --------------------------------- Total interest-bearing deposits (138) (39) (177) (290) (36) (326) Federal funds purchased and securities sold under agreements to repurchase (7) 1 (6) (33) -- (33) Other borrowed funds (8) 3 (5) (33) (7) (40) Long-term debt (6) 39 33 (4) 6 2 Other (1) (8) -- (8) (9) -- (9) -------------------------------------- --------------------------------- Total interest expense (167) 4 (163) (369) (37) (406) -------------------------------------- --------------------------------- Net interest income (FTE) $(34) $38 $4 $8 $58 $66 -------------------------------------- --------------------------------- -------------------------------------- ---------------------------------
* Rate/volume variances are allocated to variances due to volume. (1) Net interest rate swap income. 27 11 Federal Deposit Insurance Corporation (FDIC) insurance expense remained constant between 1993 and 1992 while increasing 8 percent in 1992. Beginning in 1993, the FDIC adopted a risk-related premium system which correlates the assessment rate to a bank's risk-based capital levels. Each subsidiary bank's capital level qualified for the lowest assessment rate of 23.0 cents per $100 of deposits in 1993. In 1992, the Corporation's assessment rate was also 23.0 cents per $100 of deposits. The Corporation anticipates the assessment rate to remain constant in 1994. Consultant fees were $16 million in 1993 compared to $7 million in 1992 and $6 million in 1991. As the end of merger-related investment in systems conversions and technology upgrades nears, these costs should return to pre-merger levels. Other real estate was sold at a $2 million gain in 1993, compared to a loss of $1 million in 1992, and a loss of $8 million in 1991. Net amortization of intangible assets, excluding excess mortgage loan servicing rights, was $20 million in 1993, 1992 and 1991. The 1993 expense included amortization of goodwill from the acquisition of Hibernia on December 31, 1992, which was offset by declining core deposit intangible amortization. INCOME TAXES The provision for income taxes was $148 million in 1993, compared with $89 million in 1992 and $105 million in 1991. The effective tax rate, derived by dividing the provision for income taxes by income before income taxes, was 30.3 percent in 1993, 26.9 percent in 1992, and 27.2 percent in 1991. The increase in the effective rate in 1993 over 1992 is the net result of higher levels of taxable income combined with lower tax exempt interest income and nondeductible merger related expenses. In addition, the Revenue Reconciliation Act of 1993 changed the stated tax rate for the Corporation from 34 percent to 35 percent retroactive to January 1, 1993. BALANCE SHEET AND CAPITAL FUNDS ANALYSIS Total assets were $30.3 billion at year-end 1993, which represented a $2.7 billion increase from December 31, 1992. On an average basis, total assets increased to $27.2 billion in 1993 from $26.5 billion in 1992. This increase was funded primarily by higher average purchased funds of $830 million and higher average shareholders' equity of $141 million. These increases were partially offset by a decrease in average deposits of $192 million. EARNING ASSETS Average domestic commercial loans, consisting of commercial, real estate construction and commercial mortgage loans, increased from 1992 by $919 million. This growth of 9 percent, along with an increase of approximately 15 percent in commercial loan commitments to extend credit, resulted from the continued development of account relationship management which allowed the Corporation to take advantage of the economic recovery in the automotive industry and other primary markets and increased growth in affiliate markets. The $400 million increase in international loans at year-end 1993 was made up largely of loans to facilitate trade that represented a limited increase in cross-border risk. At the end of 1993, the only cross-border exposure to banks and other financial institutions greater than 0.75 percent of total assets were outstandings in Mexico totaling $302 million. In 1992, no cross-border outstandings exceeded the above threshold while cross-border exposure to Japan totaled $554 million in 1991. Non-trade loans to lesser-developed countries (LDC) totaled $92 million at December 31, 1993, compared to $113 million at December 31, 1992. Average residential mortgage loans decreased $318 million during 1993, reflecting an accelerated level of prepayments received and refinancing of mortgage loans. The increased prepayment and refinancing activity are a result of the declines in overall market rates. As rates are generally perceived as having reached the lower end of their range, this increased level of activity is not expected to continue. The $72 million increase in average consumer loans was the net effect of an increase in average installment loans of $184 million and a decrease of $95 million and $17 million in revolving credit and (Average Earning Assets Graph) (Average Loans Graph) 28 12 TABLE 7 -- ANALYSIS OF INVESTMENT SECURITIES AND LOANS
Year Ended December 31 (in millions) 1993 1992 1991 1990 1989 - ----------------------------------------------- -------- -------- ------- ------- -------- Investment securities available for sale U.S. Government and agency securities $ 2,164 $ -- $ -- $ -- $ -- State and municipal securities -- -- -- -- -- Other securities 158 -- -- -- -- ------ ------ ----- ----- ----- Total investment securities available for sale 2,322 -- -- -- -- Investment securities held to maturity U.S. Government and agency securities 3,232 3,824 3,542 3,680 2,549 State and municipal securities 513 693 889 937 985 Other securities 233 646 1,275 1,179 953 ------ ------ ----- ----- ----- Total investment securities held to maturity 3,978 5,163 5,706 5,796 4,487 ------ ------ ----- ----- ----- Total investment securities $ 6,300 $ 5,163 $ 5,706 $ 5,796 $ 4,487 ------ ------ ----- ----- ----- ------ ------ ----- ----- ----- Commercial loans $ 9,087 $ 8,213 $ 7,568 $ 7,608 $ 6,971 International loans Government and official institutions 143 156 156 159 289 Banks and other financial institutions 671 323 148 195 159 Other 322 257 245 83 55 ------ ------ ----- ----- ----- Total international loans 1,136 736 549 437 503 Real estate construction loans 437 471 521 499 494 Commercial mortgage loans 2,700 2,666 2,315 2,088 1,729 Residential mortgage loans 1,857 2,126 2,462 2,379 1,985 Consumer loans 3,674 3,836 3,654 3,316 3,016 Lease financing 209 167 200 176 171 ------- -------- ------- ------- -------- Total loans $ 19,100 $ 18,215 $17,269 $16,503 $ 14,869 ------- -------- ------- ------- -------- ------- -------- ------- ------- --------
TABLE 8 - LOAN MATURITIES AND INTEREST RATE SENSITIVITY
After One December 31, 1993 Within But Within After (in millions) One Year* Five Years Five Years Total - -------------------------------------------- --------- ---------- --------- -------- Commercial loans $6,598 $1,898 $591 $9,087 Commercial mortgage loans 660 1,579 461 2,700 International loans 882 145 109 1,136 Real estate construction loans 289 131 17 437 ------ ------- ------ ------- Total $8,429 $3,753 $1,178 $13,360 ------ ------- ------ ------- ------ ------- ------ ------- Loans maturing after one year Predetermined interest rates $1,999 $891 Floating interest rates 1,754 287 ------- ------ Total $3,753 $1,178 ------- ------ ------- ------
* Includes demand loans, loans having no stated repayment schedule or maturity, and overdrafts. 29 13 bankcard loans, respectively. Average installment loans increased mainly as a result of the acquisition of Hibernia, which was effective on December 31, 1992. Revolving credit and bankcard loans have declined mainly due to lower activity in products with non-tax deductible interest and the competitive impact of non-banks entering the revolving credit business. Total average investment securities increased to $5.5 billion in 1993, compared to $5.4 billion in 1992. This $139 million increase was due to an increase of $799 million in average U.S. Government agency securities and offsetting decreases of $175 million in average state and municipal securities, and $485 million in average other securities. The U.S. Government agency securities are FNMA, GNMA and FHLMC mortgage participation securities, and other securities are primarily collateralized mortgage obligations. The Corporation has invested significantly in these types of securities over the past several years because of relatively high yields, credit quality and favorable treatment received related to risk-based capital regulations. The decrease in the average balances of other securities during the current year was mainly a result of prepayments received on collateralized mortgage obligations, which accelerated with the declines in market rates and the resulting refinancing of a significant portion of outstanding mortgages. The tax-exempt portfolio of state and municipal securities continues to decrease as the securities are called or mature. The reduced tax advantages of these types of securities deter additional investment. As of December 31, 1993 the Corporation adopted SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." The accounting statement establishes standards of financial accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. The statement requires the classification of applicable securities into the three categories of held to maturity, available for sale, and trading. The required accounting for each security classification is described on page 42 in Note 1 of the consolidated financial statements. Approximately $2.3 billion of investment securities were classified as available for sale, representing, specifically, floating rate bonds, certain types of collateralized mortgage obligations and 30-year fixed rate pools of Government backed mortgages with remaining lives exceeding 15 years. These types of securities represent investments which may be liquidated if certain economic conditions or interest rate environments were to materialize in the foreseeable future. The resulting after-tax net unrealized holding gain on the available for sale securities is reported as a separate component of shareholders' equity and totaled $27 million at year-end. OTHER EARNING ASSETS The Corporation holds short-term investments in interest-bearing deposits with banks, federal funds sold, and securities purchased under agreements to resell as a way of maintaining liquidity and earning acceptable yields. All of these investments provide a range of maturities under one year. Deposits were with foreign banks' international banking facilities located in the U.S. or with banks in developed countries. Federal funds sold provide a vehicle to control the Corporation's reserve position and serve correspondent banks. On an average basis, these short-term investments declined $467 million during 1993, consisting of decreases in bank time deposits of $203 million and federal funds sold and securities purchased under agreements to resell of $264 million. The decrease in trading account securities of $106 million at December 31, 1993, reflects the Corporation's emphasis on the development of the longer-term investment portfolio. Mortgages held for sale increased by $96 million in 1993 and $75 million in 1992. These increases reflect the Corporation's strategic emphasis and expansion in the mortgage banking business as well as higher origination and refinancing activity throughout 1993 and 1992 as residential mortgage interest rates declined. A spike in interest rates near the end of 1993 prompted customers to close a large number of mortgage loans. The higher volume is reflected in the amount of mortgages held for sale at year-end. (Average Liquid Assets Graph) (Average Deposits and Borrowed Funds Graph) 30 14 Table 9 ANALYSIS OF INVESTMENT SECURITIES PORTFOLIO -- FTE
Maturity+ ------------------------------------------------------------- Weighted December 31, 1993 Within 1 Year 1-5 Years 5-10 Years After 10 Years Total Average ------------ ------------ -------------- -------------- ------------ Market Maturity (dollar amounts in millions) Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Value (Yrs./Mos.) ------------ ------------ -------------- ------------- ------------ ------ --------- Available for sale U.S. Treasury $ -- --% $ -- --% $ -- --% $ -- --% $ -- --% $ -- -- U.S. Government and agency -- -- 3 3.93 168 3.91 1,993 5.89 2,164 5.74 2,164 19/5 State and municipal securities -- -- -- -- -- -- -- -- -- -- -- -- Other bonds, notes and debentures -- -- -- -- -- -- 158 5.23 158 5.23 158 26/3 Federal Reserve Bank stock and other investments* -- -- -- -- -- -- -- -- -- -- -- -- ---------- ---------- ------------ ------------- ------------ ------ Total investment securities available for sale -- -- 3 3.93 168 3.91 2,151 5.84 2,322 5.70 2,322 Held to maturity U.S. Treasury 86 4.10 39 6.43 -- -- -- -- 125 4.82 126 0/10 U.S. Government and agency 6 7.68 64 6.99 490 7.09 2,547 6.48 3,107 6.59 3,121 14/1 State and municipal securities 60 8.79 291 11.13 118 11.13 44 11.21 513 10.88 551 5/7 Other bonds, notes and debentures 17 7.59 28 7.33 4 10.07 138 7.92 187 7.85 186 20/7 Federal Reserve Bank stock and other investments* -- -- -- -- -- -- -- -- 46 -- 46 -- ---------- ----------- ----------- ------------ ----------- ----- Total investment securities held to maturity 169 6.30 422 9.81 612 7.89 2,729 6.63 3,978 7.16 4,030 ---------- ---------- ----------- ------------ ------------ ------- Total investment securities $169 6.30% $425 9.77% $780 7.03% $4,880 6.29% $6,300 6.62% $6,352 ---------- ---------- ------------ ------------- ------------ ------- ---------- ---------- ------------ ------------- ------------ -------
* Balances are excluded in the calculation of total yield. + Based on contractual maturity. Table 10 MATURITY DISTRIBUTION OF DOMESTIC CERTIFICATES OF DEPOSIT OF $100,000 AND OVER
December 31 (in millions) 1993 - ---------------------------------------------------------------- Three months or less $682 Over three months to six months 149 Over six months to twelve months 111 Over twelve months 170 ------ Total $1,112 ------ ------
DEPOSITS AND BORROWED FUNDS Total deposits at December 31, 1993 were $20.9 billion, a decrease of $250 million, or 1 percent, over December 31, 1992. On an average basis, total deposits fell $192 million, or 1 percent, from 1992. This slight decrease primarily reflects interest-bearing deposits where interest-sensitive consumers have shifted funds away from deposits in favor of alternative investments, including mutual funds. Changes in the average mix of deposits in 1993 also reflect the declining interest rate environment present throughout the year. Average certificates of deposit decreased $1.1 billion as depositors shifted maturing certificate of deposit balances into more liquid savings and money market deposits in anticipation of rising interest rates. Earning asset growth in 1993 was funded primarily from non-core sources. Average short-term borrowings increased $157 million due primarily to higher treasury, tax and loan borrowings from the U.S. Government and the issuance of $125 million of short-term bank notes. The increase in the 1993 year-end balance of long-term debt is the result of the issuance by the Corporation's Michigan bank of subordinated notes and medium-term notes totaling $250 million and $755 million respectively, throughout the year. The subordinated notes support acquisition activity and the maintenance of the bank's total capital ratio to the level that qualifies for the lowest FDIC risk-based insurance premium. The interest rate associated with the bank's medium-term notes creates a low cost funding source with maturities ranging from three months to five years. These increases were partially offset by the early retirement of $108 million of floating rate subordinated debt and the maturation of $150 million of medium-term notes. Further information on the Corporation's long-term debt is included in Note 10 to the consolidated financial statements on page 48. 31 15 CAPITAL Common shareholders' equity increased to $2.2 billion at December 31, 1993, from $2.1 billion at year-end 1992, an increase of 6 percent. The increased equity represents the net result of several factors. Contributing to higher equity were earnings retention of $215 million, $14 million of common stock issued for stock plans and debenture conversions, and a $27 million credit to equity relating to the implementation of SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." These items were partially offset by the repurchase of 4.1 million shares of Comerica stock into treasury which will be reissued to shareholders of Pacific Western Bancshares in early 1994. Additionally, 768,500 shares of stock has been repurchased as part of a September 1992 board authorization to purchase up to one million shares of treasury stock for reissuance under employee stock plans. In January 1993, the Corporation redeemed all its preferred stock for approximately $42 million due to the stock's relatively high dividend rate. The common equity-to-assets ratio increased to 7.8 percent at year-end 1993, from 7.4 percent at year-end 1992. In accordance with the adoption of SFAS No. 115, as discussed in the analysis of earning assets, after-tax net unrealized gains of $27 million on securities classified as available for sale have been reported as a separate component of shareholders' equity. The Corporation's capital ratios exceeded the minimum levels prescribed by the Federal Reserve Board, as shown below. At December 31, 1993, all of the Corporation's banking subsidiaries exceeded the minimum ratios required of a "well capitalized" institution as defined in the final rule under the Federal Deposit Insurance Corporation Improvement Act of 1991. (Components of Capital Graph) (Risk-based Capital Graph) DIVIDENDS The common dividend payout ratio was 36.8 percent in 1993, compared to 32.8 percent in 1992, excluding the restructuring charge. The target payout ratio is currently 30 to 40 percent. The board of directors determines the target ratio based on market and industry conditions.
CAPITAL RATIOS December 31 (in millions) 1993 1992 -------- -------- Tier 1 (core) capital Common shareholders' equity $ 2,182 $ 2,058 Preferred stock -- 37 Less: Goodwill and other disallowed intangibles 132 137 Less: Unrealized gains and losses 27 -- -------- -------- Total tier 1 capital $ 2,023 $ 1,958 -------- -------- -------- -------- Tier 2 (supplemental) capital Qualifying subordinated debt $ 530 $ 384 Eligible allowance for loan losses 299 278 -------- -------- Total tier 2 capital $ 829 $ 662 -------- -------- -------- -------- Total capital $ 2,852 $ 2,620 -------- -------- -------- -------- Assets Risk-weighted assets (net) $ 24,623 $ 22,167 Average quarterly assets (net) $ 28,743 $ 26,054 Risk-based ratios Tier 1 (minimum-4.0%) 8.21% 8.83% Total (minimum-8.0%) 11.58% 11.82% Tier 1 leverage (minimum-3.0%) 7.04% 7.52%
32 16 Table 11 - ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
1993 1992 1991 1990 1989 ------------------ ------------------ ----------------- ------------------ ------------------ Percent Percent Percent Percent Percent December 31 Allocated of Total Allocated of Total Allocated of Total Allocated of Total Allocated of Total (dollar amounts in millions) Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans Domestic Commercial $ 123 48% $ 120 45% $ 81 44% $ 53 46% $ 44 47% Real estate construction 4 2 9 2 12 3 10 3 16 3 Commercial mortgage 26 14 37 15 20 14 20 13 22 12 Residential mortgage 3 10 6 12 1 14 2 14 1 13 Consumer 60 19 59 21 55 21 42 20 35 20 Lease financing 1 1 2 1 2 1 2 1 2 1 International 18 6 39 4 54 3 74 3 168 4 Unallocated 64 -- 36 -- 54 -- 62 -- 54 -- ---------------- ---------------- ---------------- ----------------- ----------------- Total $ 299 100% $ 308 100% $ 279 100% $ 265 100% $ 342 100% ---------------- ---------------- ---------------- ----------------- ----------------- ---------------- ---------------- ---------------- ----------------- -----------------
Table 12 - SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS
December 31 (dollar amounts in millions) 1993 1992 1991 1990 1989 - ------------------------------------------------------------------------------------------------------- Nonperforming assets Nonaccrual loans Commercial loans $ 71 $ 75 $ 62 $ 74 $ 45 International loans -- -- -- 13 18 Real estate construction loans 19 28 47 44 71 Real estate mortgage loans (principally commercial) 64 120 101 53 48 ----- ----- ----- ----- ----- Total nonaccrual loans 154 223 210 184 182 Reduced-rate loans 5 1 -- 14 15 ----- ----- ----- ----- ----- Total nonperforming loans 159 224 210 198 197 Other real estate 50 49 46 57 54 ----- ----- ----- ----- ----- Total nonperforming assets $ 209 $ 273 $ 256 $ 255 $ 251 ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- Nonperforming loans as a percentage of total loans 0.83% 1.23% 1.22% 1.19% 1.33% Nonperforming assets as a percentage of total loans and other real estate 1.09% 1.50% 1.48% 1.54% 1.68% Allowance for loan losses as a percentage of total nonperforming assets 143% 113% 109% 104% 137% Loans past due 90 days-domestic $ 46 $ 100 $ 54 $ 66 $ 57
33 17 ASSET QUALITY NONPERFORMING ASSETS Accounting and classification policies regarding nonaccrual loans result from the importance to the Corporation of early recognition of troubled loans. Depending on the loan type, consumer loans are directly charged off when deemed uncollectible which is typically no later than 180 days past due. Loans, other than consumer, are placed on nonaccrual status when management determines that principal or interest may not be fully collectible, but no later than when the loan is 90 days past due on principal or interest unless it is fully collateralized and in the process of collection. Loan amounts which are in excess of the probable future cash collections are normally partially charged off at the time the loan is placed on nonaccrual status to an amount that represents management's assessment of the ultimate collectibility of the loan. Interest previously accrued but not collected on nonaccrual loans is charged against current income. Income on such loans is then recognized only to the extent that cash is received and where the future collection of principal is probable. Nonaccrual loans at December 31, 1993 totaled $154 million, a 31 percent decrease from year-end 1992. The ratio of net loans charged off to average total loans also decreased to 0.43 percent in 1993, compared to 0.57 percent in 1992. The decrease in nonaccrual loans and net charge offs to average total loans reflects an improvement in the quality of the loan portfolio. The increase of $1 million in other real estate owned during 1993 includes the addition of a group of loans totaling approximately $13 million extended to one borrower and approximately $8 million related to branches closed as a result of the Manufacturers merger. These items were partially offset by write-downs and sales of other properties throughout the year. In addition to the nonaccrual loans and the loans past due 90 days or more at December 31, 1993, there were loans totaling $354 million where possible financial problems of borrowers caused management to have serious doubts as to the ability of such borrowers to comply with the present contractual repayment terms. These loans are specifically considered in management's evaluation of the adequacy of the allowance for loan losses. (Internal Capital Generation Rate Graph) (Nonperforming Assets Graph) CONCENTRATIONS OF CREDIT The Corporation believes in a diversified loan portfolio. The only significant industry concentration is loans to companies and individuals involved with the automotive industry. These loans totaled $3.0 billion, or 16 percent of total loans at December 31, 1993, compared to approximately $2.6 billion, or 15 percent of total loans at year-end 1992. Of the amounts at December 31, 1993 and 1992, floor plan loans to automobile dealers represent approximately $789 million and $642 million, respectively. All other industry concentrations individually represent less than 5 percent of total loans at year-end 1993. The Corporation has successfully operated in the Michigan economy during several downturns in the automotive industry. Although there is a loan concentration to the automotive industry, the concentration is not excessive and has not had a significant negative impact on operations. There were no automotive industry-related loans larger than $3 million in nonaccrual status as of year-end 1993. In addition, there were no significant automotive industry-related charge-offs during the year. Loans to highly leveraged companies and non-trade loans to lesser developed countries are not significant representing less than 4 percent and 1 percent of the total loan portfolio, respectively. 34 18 Table 13 - SCHEDULE OF RATE SENSITIVE ASSETS AND LIABILITIES
December 31, 1993 December 31, 1992 Interest Sensitivity Period Interest Sensitivity Period ----------------------------------- --------------------------------- Within Over Within Over (dollar amounts in millions) One Year One Year Total One Year One Year Total - ------------------------------------------------------------------------------------------------------------------- Assets Cash and due from banks $ -- $ 1,601 $ 1,601 $ -- $ 1,580 $ 1,580 Short-term investments 2,344 108 2,452 1,693 59 1,752 Investment securities 2,881 3,419 6,300 2,115 3,048 5,163 Commercial loans (including lease financing) 7,820 1,476 9,296 7,387 993 8,380 International loans 1,096 40 1,136 723 13 736 Real estate related loans 2,906 2,088 4,994 2,895 2,368 5,263 Consumer loans 1,732 1,942 3,674 1,949 1,887 3,836 ---------- ----------- ---------- ---------- ---------- ---------- Total loans 13,554 5,546 19,100 12,954 5,261 18,215 Other assets 241 601 842 -- 846 846 ---------- ----------- ---------- ---------- ---------- ---------- Total assets $ 19,020 $11,275 $ 30,295 $ 16,762 $ 10,794 $ 27,556 ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- Liabilities Deposits Noninterest-bearing $ 1,090 $ 3,849 $ 4,939 $ 693 $ 3,875 $ 4,568 NOW 296 1,487 1,783 148 1,494 1,642 Savings -- 2,453 2,453 -- 2,371 2,371 Money market 4,644 27 4,671 4,991 28 5,019 Certificates of deposit 4,375 1,361 5,736 5,250 1,452 6,702 Foreign office 1,367 1 1,368 898 -- 898 ---------- ----------- ---------- ---------- ---------- ---------- Total deposits 11,772 9,178 20,950 11,980 9,220 21,200 Short-term borrowings 5,376 24 5,400 3,220 2 3,222 Long-term debt 736 725 1,461 275 466 741 Other liabilities 1 301 302 -- 298 298 ---------- ----------- ---------- ---------- ---------- ---------- Total liabilities 17,885 10,228 28,113 15,475 9,986 25,461 Shareholders' equity 28 2,154 2,182 -- 2,095 2,095 Total liabilities and shareholders' equity $ 17,913 $ 12,382 $ 30,295 $ 15,475 $ 12,081 $ 27,556 ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- Sensitivity impact of interest rate swaps $ (1,363) $ 1,363 -- $ (304) $ 304 -- Sensitivity impact of unsettled swap and security purchases (886) 886 -- (95) 95 -- ---------- ----------- ---------- ---------- ---------- ---------- Interest sensitivity gap (1,142) 1,142 -- 888 (888) -- Gap as percentage of earning assets (4)% 4% -- 3% (3)% -- Sensitivity impact from elasticity adjustments (1) 1,474 (1,474) -- 1,572 (1,572) -- ---------- ----------- ---------- ---------- ---------- ---------- Interest sensitivity gap with elasticity adjustments $ 332 $ (332) -- $ 2,460 $ (2,460) -- Gap as a percentage of earning assets 1% (1)% -- 10% (10)% -- ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ---------- ---------- ----------
(1) Elasticity adjustments for NOW, savings and money market deposit accounts are based on historical pricing relationships dating back to 1985, as well as expected future pricing relationships. 35 19 COMMERCIAL REAL ESTATE LENDING The Corporation's real estate construction loan portfolio consists primarily of many relatively small loans to longtime customers in local markets with satisfactory project completion experience. The portfolio contains approximately 624 loans, the largest of which has a balance under $25 million. Approximately 83 percent of the loans have balances of less than $1 million. The commercial mortgage loan portfolio represents a similar customer base as the real estate construction portfolio. The commercial mortgage portfolio, 43 percent of which relates to owner-occupied properties, contains over 7,200 loans which average less than $372,000. The largest of these loans has a balance under $20 million, and 92 percent of these loans have balances under $1 million. Geographical dispersion and industry concentration are important determinants in evaluating the credit risk inherent in any commercial loan portfolio. The geographic distribution of real estate construction and commercial mortgage loans at December 31, 1993, was as follows: Geographic Distribution
December 31, 1993 Commercial (in millions) Construction Mortgage - ------------------------------------------------------------------------------------ Michigan $ 239 $ 1,819 Illinois 15 252 Texas 87 239 California 57 179 Florida 16 52 Other 23 159 ------------------------- Total $ 437 $ 2,700 ------------------------- -------------------------
ASSET AND LIABILITY MANAGEMENT The asset and liability portfolios are managed to ensure adequate liquidity and to control interest rate risk exposure. Management seeks to minimize the risk of a reduction in net interest income that could result from fluctuations in market interest rates. This process is carried out through regular meetings of executive and senior management representing the finance, lending, investment and deposit gathering areas of the Corporation. INTEREST RATE SENSITIVITY There is no single interest rate risk measurement system that satisfies all objectives. As a result, a combination of simulation modeling and asset and liability repricing schedules are used to analyze and manage interest rate risk. The repricing schedule of all interest-bearing assets and liabilities is reviewed regularly. While most assets and liabilities reprice either at maturity or in accordance with their contractual terms, several balance sheet components demonstrate characteristics that require adjustments to more accurately reflect their repricing behavior. Assumptions based on historical pricing relationships and anticipated market reactions are made to certain core deposits to reflect the elasticity of the changes in their interest rates relative to the changes in market interest rates. In addition, estimates are made regarding early loan and security repayments. These adjustments provide a more accurate picture of the Corporation's interest rate risk profile. Net interest income is frequently evaluated under various balance sheet and interest rate scenarios. The results of this analysis provide the information needed to assess the proper balance sheet structure. As market interest rates approach expected turning points, management adjusts the interest rate sensitivity of the Corporation. This sensitivity is measured as a percentage of earning assets. The Corporation's operating range for interest rate sensitivity, before elasticity adjustments, is between an asset sensitive position of 5 percent and a liability sensitive position of 10 percent. However, the elasticity adjustment made to the bank's core deposits adds asset sensitivity to the balance sheet. Accordingly, on an elasticity adjusted basis, the operating range allows for an asset sensitive position of 10 percent and a liability sensitive position of 5 percent. The schedule on page 35 shows the interest sensitive gap as of year-end 1993 and 1992. The report reflects the contractual repricing and payment schedules of assets and liabilities, as well as estimates of early loan and security repayments. In addition, the schedule reflects an adjustment for the price elasticity of core deposits. The Corporation had a one-year liability sensitive gap of $1.1 billion, or 4 percent of earning assets, as of December 31, 1993. Restated for core deposit elasticities, the gap is $332 million asset sensitive, or 1 percent of earning assets. This compares to an $888 million asset sensitive gap or $2.5 billion elasticity adjusted gap on December 31, 1992. The asset sensitive position of the bank was reduced over the course of the year to take advantage of the earnings potential provided by the steep yield curve. However, it is necessary to have in place a level of asset sensitivity to hedge the risks of rate increases. Management intends to add this sensitivity over the course of the year to grow into the desired strategic interest rate risk management position. An unexpected change in the pace of the economy's recovery, whether domestically or internationally, could translate into a materially different interest rate environment. These risks have been evaluated by performing simulation analysis on a multitude of different interest rate and balance sheet scenarios. As a result of this analysis, management is confident that the current balance sheet structure is appropriate. 36 20 OFF-BALANCE-SHEET RISK Investment securities and various funding instruments, as well as hedging vehicles such as interest rate swaps and futures contracts, are utilized to manage the interest sensitivity position and minimize the effect of interest and foreign exchange rate fluctuations on earnings and market values. Liquidity, capital requirements and yield are all considered in determining the appropriate mix of securities and off-balance-sheet derivatives. Corporate policy limits the use and dollar amount of all financial market instruments. Credit risk exposure represents the net settlement, or the difference between the calculated pay and receive amounts of each swap transaction. When credit risk is evident, collateral is obtained from counterparties in order to secure the receipt of amounts due. In accordance with generally accepted accounting principles, the notional or contract amount of interest rate swaps, forward rate agreements and futures contracts are excluded from the statement of condition. Letters of credit and loan commitments are also examples of transactions which may have a risk element without balance sheet recognition. The notional or contract amount of interest rate swaps, forward rate agreements and futures contracts was $4.1 billion at December 31, 1993. Note 18 to the consolidated financial statements on page 53 provides further information on off-balance-sheet risk. LIQUIDITY Liquidity is the ability to meet financial obligations through the maturity or sale of existing assets or acquisition of additional funds. It is necessary to have a balance between the amount of liquid assets and purchased funds. Liquid assets totaled $6.4 billion at December 31, 1993. In addition, $1.3 billion was available from a collateralized borrowing account with the Federal Reserve Bank at year-end 1993. Purchased funds at December 31, 1993, excluding certificates of deposit with maturities beyond one year, approximated $7.7 billion. PARENT COMPANY The Corporation's ability to pay dividends is primarily dependent upon the receipt of dividends from its subsidiary banks, which are limited by bank regulatory agencies. As of January 1, 1994, the subsidiary banks could pay dividends of up to $273 million without prior regulatory approval. At December 31, 1993, total assets of the Corporation's parent company, excluding the investment in subsidiaries, were 88 percent of total liabilities. This relatively high ratio value indicates that the parent company had little double leverage at year-end 1993. OTHER MATTERS As described in Note 19 of the consolidated financial statements on page 54, the Corporation has been named the defendant in a lawsuit involving hazardous waste issues. The Corporation's motion for a summary judgment was granted in the case. Management believes that even if the summary judgment is not upheld on appeal the results of this legal action will not have a material impact on the Corporation's financial position. However, depending on the amount of the ultimate liability, if any, and the consolidated results of operations in the year of final resolution, the legal action may have a materially adverse effect on the consolidated results of operations in that year. The Corporation and its subsidiary banks are subject to annual examinations by various federal and state banking regulatory agencies. During 1993, there were no significant findings resulting from these examinations. 37 21 Consolidated Balance Sheets - Comerica Incorporated and Subsidiaries
December 31 (in thousands, except share data) 1993 1992 - ---------------------------------------- ------------ ------------- Assets Cash and due from banks $ 1,600,695 $ 1,579,742 Interest-bearing deposits with banks 1,026,473 1,321,515 Federal funds sold and securities purchased under agreements to resell 1,091,789 86,632 Trading account securities 3,600 109,379 Mortgages held for sale 330,667 234,712 Investment securities available for sale 2,322,101 -- Investment securities held to maturity (estimated fair value of $4,030,492 in 1993 and $5,297,650 in 1992) 3,977,450 5,163,351 ------------ ------------ Total investment securities 6,299,551 5,163,351 Commercial loans 9,086,757 8,213,241 International loans 1,135,585 736,397 Real estate construction loans 437,481 470,831 Commercial mortgage loans 2,699,861 2,665,884 Residential mortgage loans 1,856,822 2,125,891 Consumer loans 3,674,256 3,836,109 Lease financing 209,185 166,632 ------------ ------------ Total loans 19,099,947 18,214,985 Less allowance for loan losses (298,685) (308,007) ------------ ------------ Net loans 18,801,262 17,906,978 Premises and equipment 399,123 374,291 Customers' liability on acceptances outstanding 38,212 25,664 Accrued income and other assets 703,501 753,550 ------------ ------------ Total assets $ 30,294,873 $ 27,555,814 ------------ ------------ ------------ ------------ Liabilities and Shareholders' Equity Demand deposits (noninterest-bearing) $ 4,939,234 $ 4,567,593 Interest-bearing deposits 14,642,834 15,733,980 Deposits in foreign offices 1,367,811 897,945 ------------ ------------ Total deposits 20,949,879 21,199,518 Federal funds purchased and securities sold under agreements to repurchase 450,092 1,646,291 Other borrowed funds 4,950,507 1,575,418 Acceptances outstanding 38,212 25,664 Accrued expenses and other liabilities 263,969 272,594 Long-term debt 1,460,556 741,192 ------------ ------------ Total liabilities 28,113,215 25,460,677 Redeemable preferred stock--$50 stated value Authorized--10,000,000 shares Issued--835,688 shares in 1992 -- 37,605 Common stock--$5 par value Authorized--250,000,000 shares Issued--119,294,531 shares in 1993 and 61,843,866 shares in 1992 596,473 309,219 Capital surplus 524,186 538,097 Unrealized gains and losses 27,473 -- Retained earnings 1,155,280 1,239,078 Less cost of common stock in treasury--4,423,603 shares in 1993 and 898,988 shares in 1992 (121,754) (28,862) ------------ ------------ Total shareholders' equity 2,181,658 2,095,137 ------------ ------------ Total liabilities and shareholders' equity $ 30,294,873 $ 27,555,814 ------------ ------------ ------------ ------------
See notes to consolidated financial statements. 38 22 Consolidated Statements of Income - Comerica Incorporated and Subsidiaries
Year Ended December 31 (in thousands, except per share data) 1993 1992 1991 - ------------------------------------------ ----- ----- ----- Interest Income Interest and fees on loans $1,388,169 $1,445,350 $1,633,521 Interest on investment securities Taxable 307,354 356,299 437,138 Exempt from federal income tax 40,124 54,457 61,926 ---------- --------- --------- Total interest on investment securities 347,478 410,756 499,064 Trading account interest 640 3,012 3,494 Interest on federal funds sold and securities purchased under agreements to resell 4,050 14,619 25,322 Interest on time deposits with banks 27,744 45,065 99,046 Interest on mortgages held for sale 14,772 14,387 7,976 ---------- --------- --------- Total interest income 1,782,853 1,933,189 2,268,423 Interest Expense Interest on deposits 529,802 706,873 1,033,145 Interest on short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 47,817 53,422 85,748 Other borrowed funds 41,216 45,998 86,662 Interest on long-term debt 62,719 29,742 27,703 Net interest rate swap income (32,239) (24,292) (15,448) ---------- --------- --------- Total interest expense 649,315 811,743 1,217,810 ---------- --------- --------- Net interest income 1,133,538 1,121,446 1,050,613 Provision for loan losses 69,000 111,562 105,229 ---------- --------- --------- Net interest income after provision for loan losses 1,064,538 1,009,884 945,384 Noninterest Income Income from fiduciary activities 122,280 113,895 104,990 Service charges on deposit accounts 120,125 113,099 102,890 Customhouse broker fees 39,926 38,010 35,697 Revolving credit fees 35,707 34,059 32,357 Securities gains 1,978 6,320 4,812 Other noninterest income 142,486 105,791 104,380 ---------- --------- --------- Total noninterest income 462,502 411,174 385,126 Noninterest Expenses Salaries and employee benefits 528,658 516,341 499,897 Net occupancy expense 95,736 86,041 82,547 Equipment expense 62,401 57,398 54,361 FDIC insurance expense 44,593 44,629 41,209 Merger, integration and restructuring charge 22,000 128,000 -- Other noninterest expenses 285,077 259,614 267,461 ---------- --------- --------- Total noninterest expenses 1,038,465 1,092,023 945,475 ---------- --------- --------- Income before income taxes 488,575 329,035 385,035 Provision for income taxes 147,937 88,603 104,607 ---------- --------- --------- Net Income $ 340,638 $ 240,432 $ 280,428 ---------- --------- --------- ---------- --------- --------- Net income applicable to common stock $ 340,596 $ 236,819 $ 276,814 ---------- --------- --------- ---------- --------- --------- Net Income Per Common Share Primary $ 2.85 $ 1.99 $ 2.41 Fully diluted $ 2.85 $ 1.98 $ 2.38 Primary average shares 119,569 119,113 114,713 Cash dividends declared on common stock $ 125,411 $ 107,788 $ 93,376 Dividends per common share $ 1.07 $ 0.96 $ 0.92
See notes to consolidated financial statements. 39 23 Consolidated Statements of Changes in Shareholders' Equity - Comerica Incorporated and Subsidiaries
Redeemable Unrealized Total Preferred Common Capital Gains Retained Treasury Shareholders' (in thousands, except share data) Stock Stock Surplus and (Losses) Earnings Stock Equity - -------------------------------- ---------- --------- --------- ----------- ---------- -------- ---------- Balances at January 1, 1991 $37,605 $155,937 $335,696 $ -- $1,055,644 $(7,536) $1,577,346 Balances of Sugar Creek at January 1, 1991 -- 586 920 -- 10,682 -- 12,188 Balances of NorthPark at January 1, 1991 -- 3,192 12,140 -- 17,205 (675) 31,862 Pooling-of-interests adjustment -- 17,605 5,665 -- -- (23,270) -- ------ ------- ------ ------- ---------- -------- -------- Balances at January 1, 1991, as restated 37,605 177,320 354,421 -- 1,083,531 (31,481) 1,621,396 Net income for 1991 -- -- -- -- 280,428 -- 280,428 Cash dividends declared Preferred stock -- -- -- -- (3,614) -- (3,614) Common stock -- -- -- -- (93,376) -- (93,376) Issuance of 2,760,000 shares of common stock -- 13,800 93,763 -- -- -- 107,563 Issuance of common stock under employee stock plans and for conversion of debentures -- 2,573 13,320 -- (217) 6,157 21,833 Stock splits -- 110,471 45,877 -- (156,348) -- -- Amortization of deferred compensation -- -- 1,460 -- -- -- 1,460 ------ ------- ------ ------- ---------- -------- -------- Balances at December 31, 1991 37,605 304,164 508,841 -- 1,110,404 (25,324) 1,935,690 Net income for 1992 -- -- -- -- 240,432 -- 240,432 Cash dividends declared Preferred stock -- -- -- -- (3,613) -- (3,613) Common stock -- -- -- -- (107,788) -- (107,788) Purchase of 89,383 shares of common stock -- -- -- -- -- (5,635) (5,635) Issuance of common stock under employee stock plans and for conversion of debentures -- 5,055 28,077 -- (357) 2,097 34,872 Amortization of deferred compensation -- -- 1,179 -- -- -- 1,179 ------ ------- ------ ------- ---------- -------- -------- Balances at December 31, 1992 37,605 309,219 538,097 -- 1,239,078 (28,862) 2,095,137 Net income for 1993 -- -- -- -- 340,638 -- 340,638 Cash dividends declared Preferred stock -- -- -- -- (42) -- (42) Common stock -- -- -- -- (125,411) -- (125,411) Purchase of 4,720,117 shares of common stock -- -- -- -- -- (128,848) (128,848) Retirement of treasury stock -- (4,105) (17,730) -- (505) 22,340 -- Issuance of common stock under employee stock plans and for conversion of debentures -- 3,780 3,118 -- (6,725) 13,616 13,789 Stock split -- 287,579 -- -- (287,579) -- -- Amortization of deferred compensation -- -- 701 -- -- -- 701 Redemption of preferred stock (37,605) -- -- -- (4,174) -- (41,779) Adjustment for change in accounting method, net of income taxes -- -- -- 27,473 -- -- 27,473 ------ ------- ------ ------- ---------- -------- -------- Balances at December 31, 1993 $ -- $596,473 $524,186 $27,473 $1,155,280 $(121,754) $2,181,658 ------ -------- -------- ------- ---------- --------- ---------- ------ -------- -------- ------- ---------- --------- ----------
( ) Indicates deduction. See notes to consolidated financial statements. 40 24 Consolidated Statements of Cash Flows - Comerica Incorporated and Subsidiaries
Year Ended December 31 (in thousands) 1993 1992 1991 - ------------------------------------------- ---------- -------- --------- Operating Activities Net income $ 340,638 $ 240,432 $ 280,428 Adjustments to reconcile net income to net cash provided by operating activities Provision for loan losses 69,000 111,562 105,229 Depreciation 54,473 52,788 52,286 Merger, integration and restructuring charge -- 37,618 -- Net (increase) decrease in trading account securities 105,779 (95,095) 58,730 Net increase in mortgages held for sale (95,955) (75,115) (98,628) Net (increase) decrease in accrued income receivable (2,888) 59,615 60,156 Net increase (decrease) in accrued expenses 15,967 (104,096) (139,294) Net amortization of intangibles 42,967 32,741 24,865 Other, net (132,108) 94,079 32,517 --------- -------- ------- Total adjustments 57,235 114,097 95,861 --------- -------- ------- Net cash provided by operating activities 397,873 354,529 376,289 Investing Activities Net decrease in interest-bearing deposits with banks 295,042 120,643 171,318 Net (increase) decrease in federal funds sold and securities purchased under agreements to resell (1,005,157) 2,324,632 (1,834,824) Proceeds from sale of investment securities held to maturity -- 214,110 514,368 Proceeds from maturity of investment securities held to maturity 3,316,794 3,437,288 1,381,303 Purchases of investment securities held to maturity (4,320,627) (3,304,872) (1,542,031) Net increase in loans (other than loans purchased) (927,971) (601,532) (504,556) Purchase of loans (23,868) (59,175) (279,768) Fixed assets, net (79,305) (39,474) (72,181) Net (increase) decrease in customers' liability on acceptances outstanding (12,548) 4,444 6,590 Net cash used for acquisitions -- (56,220) (19,591) --------- -------- ------- Net cash provided by (used in) investing activities (2,757,640) 2,039,844 (2,179,372) Financing Activities Net increase (decrease) in deposits (249,639) (717,097) 300,164 Net increase (decrease) in short-term borrowings 2,178,890 (2,013,389) 1,526,345 Net increase (decrease) in acceptances outstanding 12,548 (4,444) (6,590) Proceeds from issuance of long-term debt 1,005,000 450,000 4,391 Repayments and purchases of long-term debt (280,541) (13,931) (24,964) Proceeds from issuance of common stock and other capital transactions 9,395 33,057 126,469 Purchase of common stock for treasury (128,848) (5,635) -- Redemption of preferred stock (41,779) -- -- Dividends paid (124,306) (80,472) (96,681) --------- -------- ------- Net cash provided by (used in) financing activities 2,380,720 (2,351,911) 1,829,134 --------- -------- ------- Net increase in cash and due from banks 20,953 42,462 26,051 Cash and due from banks at beginning of year 1,579,742 1,537,280 1,511,229 --------- -------- ------- Cash and due from banks at end of year $1,600,695 $1,579,742 $1,537,280 --------- -------- ------- --------- -------- ------- Interest paid $ 665,297 $ 887,232 $1,317,677 --------- -------- ------- --------- -------- ------- Income taxes paid $ 109,557 $ 115,835 $ 95,397 --------- -------- ------- --------- -------- ------- Noncash investing and financing activities Loan transfers to other real estate $ 38,955 $ 20,784 $ 31,761 --------- -------- ------- --------- -------- ------- Conversion of debentures to equity $ 5,095 $ 1,348 $ 3,277 --------- -------- ------- --------- -------- -------
See notes to consolidated financial statements. 41 25 Notes to Consolidated Financial Statements - Comerica Incorporated and Subsidiaries NOTE 1 ACCOUNTING POLICIES The accounting and reporting policies of Comerica Incorporated and its subsidiaries conform to generally accepted accounting principles and prevailing practices within the banking industry. The following is a summary of the more significant accounting and reporting policies. Consolidation The consolidated financial statements include the accounts of the Corporation and its subsidiaries after elimination of all significant intercompany accounts and transactions. The historical consolidated financial statements have been restated to include the accounts and results of operations for acquisitions accounted for as pooling-of-interests combinations. For acquisitions of subsidiary banks using the purchase method of accounting, the assets acquired and liabilities assumed have been adjusted to fair market values at the date of acquisition, and the resulting net discount or premium is being accreted or amortized into income over the remaining lives of the relevant assets and liabilities. Goodwill representing the excess of cost over the net book value of identifiable assets acquired is amortized on a straight-line basis over periods ranging from 10 to 30 years. Core deposit intangible assets are amortized on an accelerated method over 10 years. Mortgages Held for Sale Mortgages held for sale are carried at the lower of cost or market. Market value is determined in the aggregate. Securities In May 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities." As permitted under the Statement, the Corporation has elected to adopt the provisions of the new standard as of the end of its current fiscal year. In accordance with the Statement, prior period financial statements have not been restated to reflect the change in accounting principle. The Statement requires the classification of applicable securities into the three categories of held to maturity, available for sale and trading. Investment securities held to maturity are those securities which management has the ability and positive intent to hold to maturity. Investment securities held to maturity are stated at cost, adjusted for amortization of premium and accretion of discount. In the event that a held-to-maturity security is sold, the adjusted cost of the specific security is used to compute the applicable gain or loss. Investment securities that fail to meet the ability and positive intent criteria are accounted for as securities available for sale, and stated at fair value with unrealized gains and losses, net of income taxes, reported as a component of shareholders' equity. Trading account securities are carried at market value. Gains or losses on the disposition of trading securities are included in noninterest income. Premises and Equipment Premises and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation, computed on the straight-line method, is charged to operations over the estimated useful lives of the properties. Leasehold improvements are amortized over the terms of their respective leases or the estimated useful lives of the improvements, whichever is shorter. Allowance for Loan Losses The allowance is maintained at a level adequate to absorb losses inherent in the loan portfolio. Management determines the adequacy of the allowance by applying projected loss ratios to the risk ratings of loans both individually and by category. The projected loss ratios incorporate such factors as recent loss experience, current economic conditions, the risk characteristics of the various categories and concentrations of loans, transfer risk problems and other pertinent factors. Loans which are deemed uncollectible are charged off and deducted from the allowance. The provision for loan losses and recoveries on loans previously charged off are added to the allowance. Nonperforming Assets Nonperforming assets are comprised of loans for which the accrual of interest has been discontinued, loans for which the terms have been renegotiated to less than market rates due to a serious weakening of the borrower's financial condition, and other real estate which has been acquired primarily through foreclosure and is awaiting disposition. Loans are generally placed on nonaccrual status when principal or interest is past due 90 days or more and/or when, in the opinion of management, full collection of principal or interest is unlikely. At the time a loan is placed on nonaccrual status, interest previously accrued but not collected is charged against current income. Income on such loans is then recognized only to the extent that cash is received and where future collection of principal is probable. 42 26 Other real estate acquired is carried at the lower of cost or fair value, minus estimated costs to sell. When the property is acquired through foreclosure, any excess of the related loan balance over fair value is charged to the allowance for loan losses. Subsequent write-downs, operating expenses, and losses upon sale, if any, are charged to noninterest expenses. Pension Costs Pension costs are charged to salaries and employee benefits expense and funded consistent with the requirements of federal law and regulations. Postretirement Benefits Effective January 1, 1993, the Corporation adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." This Statement requires that the expected cost of providing postretirement benefits be recognized in the financial statements during the employee's active service period. Prior to 1993, the Corporation's practice was to expense these benefits when paid. Interest Rate Futures, Caps and Floors, and Forward Contracts The Corporation is party to a variety of interest rate futures, caps and floors, and forward contracts in the management of the Corporation's overall interest rate risk and in its trading activities. Gains and losses on contracts which are designated as hedges are deferred and amortized over the lives of the hedged items as an adjustment to interest income or expense. Fees received on instruments sold to customers are deferred and amortized over the life of the instrument. Futures and foreign exchange forward contracts used in trading activities are carried at market value and realized and unrealized gains and losses are included in other noninterest income. Interest Rate Swaps The Corporation enters into interest rate swap agreements to manage interest rate exposure and for arbitrage purposes. Associated yield-related income or expense is accrued over the life of the agreements. Related fees are deferred and amortized over the life of the agreements. Income or expenses on interest rate swaps that are entered into for arbitrage purposes are recorded in other noninterest income. Income Taxes Provisions for income taxes are based on amounts reported in the statements of income (after exclusion of nontaxable income such as interest on state and municipal securities) and include deferred income taxes on temporary differences in the recognition of income and expense for tax and financial statement purposes. Statements of Cash Flows For the purpose of presentation in the Statements of Cash Flows, cash and cash equivalents are defined as those amounts included in the balance sheet caption, "Cash and due from banks." Loan Origination Fees and Costs Loan origination and commitment fees are deferred and recognized over the life of the related loan or over the commitment period as a yield adjustment. Loan fees on unused commitments and fees related to loans sold are recognized currently as other noninterest income. - -------------------------------------------------------------------------------- NOTE 2 MERGER AND ACQUISITIONS On June 18, 1992, the Corporation merged with Manufacturers National Corporation in a transaction accounted for as a pooling-of-interests. The merger was accomplished by issuing .81 share of common stock (25.3 million shares) for each share of Manufacturers stock. The historical financial statements have been restated to include financial information of Manufacturers. In connection with the merger with Manufacturers, the Corporation incurred a pre-tax restructuring charge of $128 million ($92 million after-tax) in the second quarter of 1992 principally as a result of the planned reduction of 1,800 positions in the combined entities; properties and equipment costs associated with writing off duplicate facilities and computer systems; and advisory fees. An additional pre-tax charge of $22 million ($14 million after-tax) was incurred in the fourth quarter of 1993 for ongoing merger and integration costs. During the years ended December 31, 1993, 1992 and 1991 Comerica made the following acquisitions: Transactions accounted for as purchases:
FMV of FMV of (Purchase Assets Liabilities Price)/ Intangibles (in millions) Acquired Assumed Assistance Recorded - --------------- --------- --------- ----------- ----------- During 1992 Hibernia National Bank in Texas $ 841 $ 785 $ (56) $11 During 1991 InBancshares 240 206 (34) 17 Other 35 249 19 8
43 27 Transactions accounted for using the pooling-of-interests method:
Common Shares Issued ------------------------------ ------------- During 1993 NorthPark National Corporation 2,677,706 Sugar Creek National Bank 892,976 During 1991 Plaza Commerce Bancorp 3,054,200
The Corporation has announced the following acquisition which is expected to be completed in 1994, pending all regulatory and shareholder approvals:
(in millions) Asset Size Purchase Price Method -------------------------- -------- ------------- ------- Pacific Western Bancshares $1,000 $133 Purchase
- -------------------------------------------------------------------------------- NOTE 3 INVESTMENT SECURITIES Information concerning investment securities as shown in the consolidated balance sheets of the Corporation at December 31 was as follows:
Gross Gross Unrealized Unrealized Estimated (in thousands) Cost Gains Losses Fair Value - -------------------------- ---------- ---------- ---------- ----------- December 31, 1993 U.S. Government and agency securities $3,232,127 $ 27,413 $12,452 $3,247,088 State and municipal securities 513,020 39,470 1,376 551,114 Other securities 232,303 2,536 2,549 232,290 --------- ------ ------ ---------- Total securities held to maturity $3,977,450 $ 69,419 $16,377 $4,030,492 --------- ------ ------ ---------- --------- ------ ------ ---------- December 31, 1992 U.S. Government and agency securities $3,823,979 $102,916 $13,495 $3,913,400 State and municipal securities 693,658 40,586 1,440 732,804 Other securities 645,714 7,095 1,363 651,446 --------- ------ ------ ---------- Total securities held to maturity $5,163,351 $150,597 $16,298 $5,297,650 --------- ------ ------ ---------- --------- ------ ------ ----------
At December 31, 1993, gross unrealized gains and losses were $46 million and $4 million respectively, for securities available for sale. The available for sale portfolio is primarily U.S. Government and agency securities. The cost and estimated fair values of debt securities by contractual maturity were as follows (securities with multiple maturity dates are classified in the period of final maturity). Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Held to Maturity Available for Sale ---------------------------- ---------------------------- December 31, 1993 Estimated Estimated (in thousands) Cost Fair Value Cost Fair Value - ----------------------- ----------- ---------- ---------- ----------- Contractual maturity Within one year $ 151,924 $ 153,383 $ -- $ -- Over one year to five years 357,970 381,266 -- -- Over five years to ten years 119,213 132,535 -- -- Over ten years 44,622 48,494 -- -- --------- --------- --------- --------- Sub-total securities 673,729 715,678 -- -- Mortgage-backed securities 3,257,899 3,268,888 2,279,835 2,322,101 Equity and other non-debt securities 45,822 45,926 -- -- --------- --------- --------- --------- Total securities $3,977,450 $4,030,492 $2,279,835 $2,322,101 --------- --------- --------- --------- --------- --------- --------- ---------
44 28 Sales of investment securities resulted in realized gains and losses as follows:
Available Year Ended December 31 Held to Maturity for Sale (in thousands) ------------------- -------- 1993 1992 1993 - ------------------------- ------ ------ ------ Securities gains $2,128 $ 7,501 $ -- Securities losses (150) (1,181) -- ----- ----- ---- Total $1,978 $ 6,320 $ -- ----- ----- ---- ----- ----- ----
Assets, principally securities, carried at approximately $4.7 billion at December 31, 1993 were pledged to secure public deposits (including State of Michigan deposits of $25 million at December 31, 1993), and for other purposes as required by law. - ----------------------------------------------------------------------------- NOTE 4 NONPERFORMING ASSETS The table below summarizes nonperforming assets, and loans which are contractually past due 90 days or more as to interest or principal payments. Nonperforming assets consist of nonaccrual loans, reduced-rate loans, and other real estate. Nonaccrual loans are those on which interest is not being recognized. Reduced-rate loans are those on which interest has been renegotiated to lower than market rates because of the weakened financial condition of the borrower. Nonaccrual and reduced-rate loans are included in loans on the consolidated balance sheet.
December 31 December 31 (in thousands) 1993 1992 - --------------------------- ----------- ----------- Nonaccrual loans Commercial loans $ 71,268 $ 75,337 International loans 215 262 Real estate construction loans 18,748 27,608 Real estate mortgage loans (principally commercial) 63,688 119,851 ------- ------- Total 153,919 223,058 Reduced-rate loans 5,057 850 ------- ------- Total nonperforming loans 158,976 223,908 Other real estate 50,174 49,188 ------- ------- Total nonperforming assets $ 209,150 $ 273,096 ------- ------- ------- ------- Loans past due 90 days $ 45,880 $ 100,480 ------- ------- ------- ------- Gross interest income that would have been recorded had the nonaccrual and reduced-rate loans performed in accordance with original terms $ 20,247 $ 19,639 ------- ------- ------- ------- Interest income recognized $ 1,394 $ 1,594 ------- ------- ------- -------
In May 1993, the Financial Accounting Standards Board issued SFAS No. 114, "Accounting by Creditors for Impairment of a Loan." This statement addresses the accounting by creditors for impairment of certain loans, and requires that impaired loans be measured based on the present value of the expected future cash flows arising from the loan. The statement will become effective on January 1, 1995. The Corporation does not expect the standard to have a material impact on its financial statements. - ------------------------------------------------------------------------- NOTE 5 ALLOWANCE FOR LOAN LOSSES An analysis of changes in the allowance for loan losses follows:
(in thousands) 1993 1992 1991 - --------------------------------------- --------- -------- ---------- Balance at January 1 $ 308,007 $ 279,342 $ 264,862 Allowance of institutions and loans purchased/sold -- 16,335 6,053 Loans charged off (110,504) (120,778) (125,750) Recoveries on loans previously charged off 32,182 21,546 28,948 ------ ------ ------- Net loans charged off (78,322) (99,232) (96,802) Provision for loan losses 69,000 111,562 105,229 ------ ------ ------- Balance at December 31 $ 298,685 $ 308,007 $ 279,342 ------ ------ ------- ------ ------ ------- As a percent of total loans 1.56% 1.69% 1.62% ------ ------ ------- ------ ------ -------
45 29 NOTE 6 INTERNATIONAL OPERATIONS The Corporation's international operations are conducted through the main office of Comerica Bank and a branch in the Cayman Islands. The following are the identifiable international assets based upon the domicile of the customer at December 31, 1993 and 1992.
(in thousands) 1993 1992 - ---------------------- ----------- ----------- International Cash and due from banks $ 6,291 $ 1,499 Interest-bearing deposits with banks 976,357 1,310,094 Investment securities 24,101 22 653 Loans, net 1,085,372 697,398 Other assets 23,008 33,793 ---------- ----------- Total 2,115,129 2,065,437 Domestic 28,179,744 25,490,377 ---------- ----------- Total assets $30,294,873 $27,555,814 ---------- ----------- ---------- -----------
Certain estimates and assumptions relating to the Corporation's international activities have been used in calculating the operating results shown below. Interest income has been determined based on the distribution of the identifiable international assets on which the income is earned. Noninterest income items attributable to international operations are not significant. Interest expense related to international sources of funding are based on actual rates. The cost of domestic funding of international assets included in interest expense is based on the average cost of interest-bearing sources of funds considered to have funded such assets. Operating expenses included an allocation for administrative and other overhead expenses. Income taxes were computed using the United States statutory federal tax rates.
Total Income Before (in thousands) Revenue Income Taxes Net Income - ---------------------- ------------ ------------- ---------- Year ended December 31, 1993 International $ 98,904 $ 25,564 $ 15,924 Domestic 2,146,451 463,011 324,714 ---------- ----------- ---------- Total $ 2,245,355 $ 488,575 $ 340,638 ---------- ----------- ---------- ---------- ----------- ---------- Year ended December 31, 1992 International $ 104,761 $ 29,512 $ 19,817 Domestic 2,239,602 299,523 220,615 ---------- ----------- ---------- Total $ 2,344,363 $ 329,035 $ 240,432 ---------- ----------- ---------- ---------- ----------- ---------- Year ended December 31, 1991 International $ 153,163 $19,953 $14,250 Domestic 2,500,386 365,082 266,178 ---------- ----------- ---------- Total $ 2,653,549 $ 385,035 $ 280,428 ---------- ----------- ---------- ---------- ----------- ----------
- -------------------------------------------------------------------------------- NOTE 7 SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK Concentrations of both on-balance-sheet and off-balance-sheet credit risk are controlled and monitored as part of the Corporation's credit policies. The Corporation is a regional bank holding company with a geographic concentration of its on-balance-sheet and off-balance-sheet activities centered in Michigan. In addition, the Corporation has an industry concentration with the automotive industry, which includes manufacturers and their finance subsidiaries, suppliers, dealers and company executives. At December 31, 1993 and 1992, the Corporation's exposure from loan commitments and guarantees to companies related to the automobile industry totaled $5.5 billion and $4.6 billion, respectively. Additionally, the Corporation's commercial real estate loans, including commercial mortgages and construction loans, totaled $3.1 billion in 1993 and 1992. Approximately $1.4 billion of the Corporation's commercial real estate exposure involves mortgages on owner-occupied properties. Those borrowers are involved in business activities other than real estate, and the sources of repayment are not dependent on the performance of the real estate market. 46 30 Note 8 PREMISES AND EQUIPMENT A summary of premises and equipment at December 31 by major category follows:
(in thousands) 1993 1992 ----------------------------------------------- ------- ------- Land $ 52,932 $ 64,487 Buildings and improvements 335,365 329,270 Furniture and equipment 409,728 392,349 ------- -------- Total cost 798,025 786,106 Less accumulated depreciation and amortization (398,902) (411,815) ------- -------- Net book value $399,123 $374,291 ------- -------- ------- --------
Other noninterest income for 1993 includes a $24 million gain on the sale of land adjacent to an operations center. Rental expense for leased properties and equipment amounted to $42 million in 1993, $41 million in 1992, and $37 million in 1991. Future minimum lease rentals under noncancelable operating lease obligations are as follows:
1999 (in thousands) 1994 1995 1996 1997 1998 and Later Total ---------------- ------- -------- ------- ------- ------- ----------- ------- Lease rentals $39,988 $36,699 $33,807 $29,186 $27,455 $256,490 $423,625
- -------------------------------------------------------------------------------- NOTE 9 SHORT-TERM BORROWINGS Federal funds purchased and securities sold under agreements to repurchase generally mature within one to four days from the transaction date. Other borrowed funds, consisting of commercial paper, borrowed securities, term federal funds purchased, short-term notes and treasury tax and loan deposits, generally mature within one to 120 days from the transaction date. The following is a summary of short-term borrowings for the three years ended December 31, 1993:
Federal Funds Purchased and Securities Sold Other Total Under Agreements Borrowed Short-term (in thousands) to Repurchase Funds Borrowings - ----------------------------------------- --------------- ------------ ----------- December 31, 1993 Amount outstanding at year-end $ 450,092 $4,950,507 $5,400,599 Weighted average interest rate at year-end 2.89% 2.66% 2.68% Daily average amount outstanding $1,586,662 $1,431,692 $3,018,354 Weighted average interest rate for the year 3.01% 2.88% 2.95% Maximum amount outstanding at any month-end $3,340,562 $4,950,507 $8,291,069 December 31, 1992 Amount outstanding at year-end $1,646,291 $1,575,418 $3,221,709 Weighted average interest rate at year-end 2.75% 2.52% 2.65% Daily average amount outstanding $1,552,616 $1,307,908 $2,860,524 Weighted average interest rate for the year 3.44% 3.52% 3.48% Maximum amount outstanding at any month-end $2,214,077 $3,302,345 $5,516,422 December 31, 1991 Amount outstanding at year-end $1,882,029 $3,333,359 $5,215,388 Weighted average interest rate at year-end 4.32% 4.12% 4.19% Daily average amount outstanding $1,530,126 $1,526,909 $3,057,035 Weighted average interest rate for the year 5.60% 5.68% 5.64% Maximum amount outstanding at any month-end $1,981,368 $3,333,359 $5,314,727
47 31 NOTE 10 LONG-TERM DEBT Long-term debt consisted of the following at December 31:
(in thousands) 1993 1992 - -------------------------------------------- --------- -------- Parent Company Floating rate subordinated notes due 1997 $ -- $ 62,500 9.75% subordinated notes due 1999 74,511 75,000 10.125% subordinated debentures due 1998 74,641 75,000 Floating rate subordinated notes due 1996 -- 45,500 9% convertible subordinated notes due 2004 -- 3,055 10% subordinated convertible debentures due 1994 to 2000 -- 2,187 12.5% notes payable due 1993 -- 2,860 ---------- ---------- Total parent company 149,152 266,102 Subsidiaries 7.25% subordinated notes due 2002 148,619 149,412 Medium-term fixed rate notes bearing interest at rates ranging from 3.28% to 5.95% and maturing on dates ranging from 1994 to 1997 904,285 300,000 6.875% subordinated notes due 2008 98,913 -- 7.125% subordinated notes due 2013 147,779 -- FDIC subordinated note due 1994 to 1995 8,941 13,293 Notes payable bearing interest at rates ranging from 6.29% to 13% and maturing on dates ranging from 1994 through 1996 2,867 12,385 ---------- ---------- Total subsidiaries 1,311,404 475,090 ---------- ---------- Total long-term debt $1,460,556 $ 741,192 ---------- ---------- ---------- ----------
The 9.75% notes are subordinated to deposits and qualify as tier 2 capital. The 10.125% subordinated debentures bear interest payable semiannually and qualify as tier 2 capital. The 7.25% subordinated notes due October 15, 2002 qualify as tier 2 capital. Under established medium-term senior bank note programs, certain of the Corporation's bank subsidiaries may offer an aggregate principal amount of up to $2 billion. The notes can be issued as fixed or floating rate notes and with terms from 9 months to 15 years. The notes do not qualify as tier 2 capital and are not insured by the FDIC. The 6.875% subordinated notes due March 1, 2008 qualify as tier 2 capital. The 7.125% subordinated notes due December 1, 2013 qualify as tier 2 capital. The FDIC subordinated note, which was assumed as part of an acquisition in 1983, has a principal balance of $9 million, and has been discounted to effect a market rate of interest as of the date of acquisition. Annual principal payments of $4.5 million are due December 31, 1994 and December 31, 1995. The interest rate is determined quarterly and is set at 50 basis points over the 52-week U.S. Treasury Bill discount rate (3.77% at December 31, 1993). The note qualifies as tier 2 capital. The following table indicates the principal maturities of the long-term debt:
1999 (in thousands) 1994 1995 1996 1997 1998 and Later - ---------------- ------- ------- ------ -------- -------- -------- Long-term debt $735,455 $31,263 $149 $150,000 $75,000 $475,000
48 32 NOTE 11 SHAREHOLDERS' EQUITY In November 1993, the board of directors authorized the repurchase of up to 5 million shares of Comerica Incorporated common stock. The Corporation intends to re-issue up to 4.6 million of the repurchased shares to shareholders of Pacific Western Bancshares, in exchange for their Pacific Western stock. Shares not used for this purpose will be held in treasury for future corporate use at the discretion of the board. At December 31, 1993, 4.1 million shares had been repurchased under this program. Additionally, 0.8 million shares have been repurchased as part of a September 1992 board authorization to purchase up to one million shares of treasury stock for reissuance under employee stock plans. The redeemable preferred stock was redeemed on January 4, 1993 for $42 million. Dividends on the redeemable preferred stock were cumulative at a fixed rate of 8.65 percent and were paid semiannually. In November 1992, the Corporation declared a two-for-one stock split, effected by means of a stock dividend paid January 4, 1993. In May 1991, the Corporation declared a three-for-two stock split and, in July 1991, Manufacturers declared a two-for-one stock split both effected by means of a stock dividend. All per share data included in the consolidated financial statements and in the related notes thereto have been retroactively adjusted to reflect all of the splits. At December 31, 1993, the Corporation had reserved 3.7 million shares of common stock for issuance to employees under the Corporation's profit sharing and long-term incentive plans. - -------------------------------------------------------------------------------- NOTE 12 NET INCOME PER COMMON SHARE Primary net income per common share is computed by dividing adjusted net income by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding during the period. Common stock equivalents consist of common stock issuable under the assumed exercise of stock options granted under the Corporation's stock plans, using the treasury stock method. Fully diluted net income per share of common stock is computed by assuming conversion of common stock equivalents and convertible subordinated notes after eliminating the related after-tax interest expense. A computation of earnings per share follows:
Year Ended December 31 (in thousands, except per share data) 1993 1992 1991 - ------------------------------------------ -------- -------- --------- Primary Average shares outstanding 118,461 117,185 113,261 Common stock equivalent Net effect of the assumed exercise of stock options 1,108 1,928 1,452 ------- -------- -------- Primary average shares 119,569 119,113 114,713 ------- -------- -------- ------- -------- -------- Net income $340,638 $240,432 $280,428 Less preferred stock dividends 42 3,613 3,614 ------- -------- -------- Income applicable to common stock $340,596 $236,819 $276,814 ------- -------- -------- ------- -------- -------- Primary net income per share $2.85 $1.99 $2.41 Fully diluted Average shares outstanding 118,461 117,185 113,261 Common stock equivalents Net effect of the assumed exercise of stock options 1,109 2,054 2,157 Average shares reserved for conversion of convertible debt 166 800 913 ------- -------- -------- Fully diluted average shares 119,736 120,039 116,331 ------- -------- -------- ------- -------- -------- Net income $340,638 $240,432 $280,428 Less preferred stock dividends 42 3,613 3,614 ------- -------- -------- Income applicable to common stock 340,596 236,819 276,814 Interest on convertible debt less related income tax effect 86 390 502 ------- -------- -------- Net income applicable to common stock excluding above interest (net of income tax effect) $340,682 $237,209 $277,316 ------- -------- -------- ------- -------- -------- Fully diluted net income per share $2.85 $1.98 $2.38
49 33 NOTE 13 LONG-TERM INCENTIVE PLAN The Corporation has long-term incentive plans under which it has awarded both shares of restricted stock to key executive officers and stock options to key executive and senior officers of the Corporation and its subsidiaries. The exercise price of the stock options is equal to the fair market value at the time the options are granted and the options may have restrictions regarding exercisability. The duration of each option is determined at the date of grant; however, no options may be exercised later than ten years from the date of grant.
Number Exercise Price Range -------------------------------------------------------------------------------------------- Outstanding--January 1, 1991 5,546,688 $ 4.58 -- $ 17.06 Granted 520,650 14.75 -- 23.57 Cancelled (20,622) 12.89 -- 17.06 Exercised (1,634,986) 4.58 -- 17.06 Expired (4,536) 17.06 ---------- ---------------------------- Outstanding--December 31, 1991 4,407,194 7.00 -- 23.57 Granted 890,000 29.75 -- 31.06 Cancelled (44,848) 12.89 -- 29.75 Exercised (1,980,776) 7.00 -- 19.32 Expired -- ---------- ---------------------------- Outstanding--December 31, 1992 3,271,570 8.71 -- 31.06 Granted 754,740 32.38 Cancelled (139,943) 11.40 -- 32.38 Exercised (445,094) 8.71 -- 29.75 Expired -- ---------- ---------------------------- Outstanding--December 31, 1993 3,441,273 $ 8.71 -- $ 32.38 ---------- ---------------------------- ---------- ---------------------------- Exercisable--December 31, 1993 2,101,192 Available for grant--December 31, 1993 145,135
- ------------------------------------------------------------------------------- NOTE 14 EMPLOYEE BENEFIT PLANS The Corporation has either defined benefit or defined contribution pension plans in effect for substantially all full-time employees. Staff expense includes expense of $2.4 million in 1993, $190 thousand in 1992 and income of $718 thousand in 1991 for defined benefit plans and expense of $866 thousand in 1993, $748 thousand in 1992 and $567 thousand in 1991 for defined contribution plans. Benefits under the defined benefit pension plan are primarily based on years of service and the levels of compensation during the five highest paid consecutive calendar years occurring during the last ten years before retirement. The plan's assets primarily consist of U.S. Government and agency securities, corporate bonds and notes, equity securities and units of certain collective investment funds administered by Comerica Bank. Contributions under the defined contribution plans are made at the discretion of the governing board and are intended to provide not only for benefits attributed to service to date but also for those expected to be earned in the future. The following table sets forth the funded status of the defined benefit pension plans and amounts recognized on the Corporation's balance sheet:
December 31 (in thousands) 1993 1992 -------------------------------------------------------------------------------------------- Accumulated benefit obligation Vested $ 305,461 $ 271,283 Nonvested 16,860 4,757 --------- --------- Accumulated benefit obligation 322,321 276,040 Effect of projected future compensation levels 68,197 74,238 --------- --------- Projected benefit obligation 390,518 350,278 Plan assets at fair value 424,024 389,339 --------- --------- Plan assets in excess of projected benefit obligation 33,506 39,061 Unrecognized net loss due to past experience different from that assumed and effects of changes in assumptions (8,350) (10,134) Unrecognized net assets being amortized over 15 years (34,693) (39,248) --------- --------- Accrued pension liability $ (9,537) $ (10,321) --------- --------- --------- ---------
50 34 Net periodic pension cost consisted of the following:
(in thousands) 1993 1992 1991 - ----------------------------------------------------------------------------------------------------------------- Service cost--benefits earned during the period $ 11,101 $ 11,923 $ 9,724 Interest cost on projected benefit obligation 28,541 24,896 21,480 Actual return on plan assets (44,094) (4,844) (54,326) Net amortization and (deferral) 6,811 (31,785) 22,404 -------- ------- --------- Net pension (income) expense $ 2,359 $ 190 $ (718) -------- ------- --------- -------- ------- ---------
Actuarial assumptions were as follows:
1993 1992 1991 - ----------------------------------------------------------------------------------------------------------------- Discount rate used in determining projected benefit obligation 7.5% 8.25% 8.25%-9% Rate of increase in compensation levels 5% 6% 6% Long-term rate of return on assets 8%-8.75% 8%-8.75% 8%-8.75%
As a result of the merger with Manufacturers, the Corporation offered its employees an early retirement program. Approximately 700 employees who met certain eligibility requirements elected to participate in the program. The termination cost of the enhanced benefits ($42 million) was included in the restructuring charge. The Corporation adopted SFAS No. 106, "Employer's Accounting for Postretirement Benefits Other Than Pensions" in the first quarter of 1993. This statement mandates the accrual of the cost of providing postretirement benefits during the active service period of the employee. The Corporation's previous practice was to expense these benefits when paid. The Corporation's plan continues postretirement health care and life insurance benefits for current retirees, provides a phase-out for employees over 50, and substantially reduces all benefits for active employees. The postretirement plan is currently unfunded. Net periodic postretirement benefit cost for the year ended December 31, 1993 included the following components:
(in thousands) 1993 - ---------------------------------------------------------------------------------------------------------------------- Service cost $ 335 Interest cost on accumulated postretirement benefit obligation 7,234 Amortization of transition obligation 4,534 -------- Net periodic postretirement benefit cost $ 12,103 -------- --------
For the years ended December 31, 1992 and 1991, postretirement benefit costs were recognized on a cash basis and approximated $5 million and $4 million, respectively. The following table sets forth the status of the postretirement plan at December 31, 1993.
(in thousands) 1993 - --------------------------------------------------------------------------------------------------------------------- Retirees $ 88,915 Other fully eligible plan participants 1,732 Other active plan participants 6,358 -------- Total accumulated postretirement benefit obligation 97,005 Unrecognized net loss (5,453) Unrecognized transition obligation (86,129) -------- Accrued postretirement benefit liability $ 5,423 -------- --------
A 13 percent health care cost trend rate was projected for 1993, and is assumed to decrease gradually to 6 percent by 2002, remaining constant thereafter. Increasing each health care rate by one percentage point would increase the accumulated postretirement benefit obligation by $8 million at December 31, 1993 and the aggregate of the service and interest cost components by $668 thousand for the year ended December 31, 1993. A weighted average discount rate of 7.5 percent was used in determining the accumulated postretirement benefit obligation. The Corporation adopted SFAS No. 112, "Employers' Accounting for Postemployment Benefits" as of December 31, 1993. This accounting standard provides guidance on the accounting for benefits provided by an employer to former or inactive employees after active employment but before retirement. The adoption of SFAS No. 112 resulted in an additional charge to benefits expense of nearly $3 million. 51 35 - ------------------------------------------------------------------------------- NOTE 15 INCOME TAXES The Corporation prospectively adopted SFAS No. 109, "Accounting for Income Taxes," in 1992, which had no material effect on the financial statements. The domestic and foreign components of income before related income taxes included in the consolidated statements of income were as follows:
(in thousands) 1993 1992 1991 - ------------------------------------------------------------------------------------------------------ Income before income taxes Domestic $ 469,681 $ 310,234 $ 367,507 Foreign 18,894 18,801 17,528 --------- --------- --------- Total $ 488,575 $ 329,035 $ 385,035 --------- --------- --------- --------- --------- ---------
The current and deferred components of income taxes were as follows:
(in thousands) 1993 1992 1991 - ------------------------------------------------------------------------------------------------------ Currently payable Federal $ 129,220 $ 106,205 $ 98,562 Foreign 1,603 1,001 1,002 State and local 2,540 1,347 504 --------- --------- --------- 133,363 108,553 100,068 Deferred federal and state and local (credit) 14,574 (19,950) 4,539 --------- --------- --------- Total $ 147,937 $ 88,603 $ 104,607 --------- --------- --------- --------- --------- ---------
There were $.7 million, $2.1 million and $1.6 million of income taxes provided on securities transactions in 1993, 1992 and 1991, respectively. The principal components of deferred tax (assets) liabilities were as follows:
(in thousands) 1993 1992 - ---------------------------------------------------------------------------------- Allowance for loan losses $ (74,166) $ (71,809) Lease financing transactions 70,303 54,346 Allowance for depreciation 5,640 3,373 Deferred loan origination fees and costs (13,170) (10,938) Investment securities available for sale 14,793 -- Employee benefits 1,150 (5,707) Other temporary differences, net (36,923) (42,782) --------- --------- Total $ (32,373) $ (73,517) --------- --------- --------- ---------
The provision for federal income taxes is less than that computed by applying the federal statutory rate of 35 percent in 1993 and 34 percent in 1992 and 1991 for the reasons in the following analysis: (in thousands) 1993 1992 1991 - ------------------------------------------------------------------------------------------------------ Tax based on statutory rate $ 171,001 $ 111,872 $ 130,912 Effect of tax-exempt interest income (18,145) (24,761) (28,164) Effect of certain merger related expenses -- 6,800 -- Other (4,919) (5,308) 1,859 --------- --------- --------- Provision for income taxes $ 147,937 $ 88,603 $ 104,607 --------- --------- --------- --------- --------- ---------
NOTE 16 TRANSACTIONS WITH RELATED PARTIES The Corporation's bank subsidiaries have had, and expect to have in the future, transactions with the Corporation's directors and their affiliates. Such transactions were made in the ordinary course of business and included extensions of credit, all of which were made on substantially the same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other customers and did not, in management's opinion, involve more than normal risk of collectibility or present other unfavorable features. The aggregate amount of loans attributable to persons who were related parties at December 31, 1993, approximated $179 million at the beginning and $139 million at the end of 1993. During 1993, new loans to related parties aggregated $123 million and repayments totaled $163 million. 52 36 - ------------------------------------------------------------------------------ Note 17 DIVIDENDS DECLARED BY BANKING SUBSIDIARIES Banking regulations limit the transfer of assets in the form of dividends, loans or advances from the bank subsidiaries to the Corporation. Under the most restrictive of these regulations, the aggregate amount of dividends which can be paid to the Corporation without obtaining prior approval from bank regulatory agencies approximated $273 million at January 1, 1994. Substantially all the assets of the Corporation's subsidiaries are restricted from transfer to the Corporation in the form of loans or advances. Dividends paid to the Corporation by its banking subsidiaries amounted to $311 million in 1993, $60 million in 1992, and $148 million in 1991. - ------------------------------------------------------------------------------ Note 18 FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK The consolidated balance sheets do not reflect various commitments and contingent liabilities which arise in the normal course of business and which, to varying degrees, involve elements of credit, interest or liquidity risk. These include commitments to extend credit; financial guarantees, including primarily standby and commercial letters of credit; interest rate floors and caps; options; when-issued securities; forward and futures interest rate and foreign exchange contracts; and interest rate swaps. The contract or notional amounts of those instruments express the extent of involvement the Corporation has in each particular financial instrument. For commitments to extend credit and financial guarantees written, exposure to credit loss in the event of nonperformance by the other party to the financial instrument is represented by the contractual amount of those instruments. The Corporation uses similar credit policies in making these commitments and conditional obligations as it does for on-balance-sheet instruments. Since these instruments generally have fixed expiration dates or other termination clauses, many of them expire without being drawn upon and do not necessarily represent future liquidity requirements. Long-term guarantees account for $581 million of total financial guarantees and generally extend for five years or more. The remaining $894 million generally matures within one year or less. Collateral is obtained if deemed necessary based on managements credit evaluation of the counterparty. Collateral held by the Corporation varies, but may include cash; marketable securities; accounts receivable; inventory; property, plant and equipment; and income-producing commercial properties. The contractual amounts of commitments to extend credit, and standby and commercial letters of credit written by the Corporation at December 31, 1993 and 1992 were as follows:
(in millions) 1993 1992 ------------------------------------------------------------------------------------------------ Commitments to extend credit (unused) $11,042 $9,763 Standby letters of credit and financial guarantees 1,475 1,359 Commercial letters of credit 518 542
Interest rate floors and caps, options, when-issued securities, forward and futures interest rate and foreign exchange contracts, and interest rate swaps are instruments which assist the Corporation and its customers in managing their interest rate and foreign currency risks. Management limits the instruments which the Corporation uses to manage its interest rate exposure to those which either act as a hedge or those which reduce a specific interest rate or foreign currency gap. Thus, market risk resulting from a particular off-balance-sheet financial instrument is normally offset by other on- or off-balance-sheet transactions. Risks which arise from the inability of counterparties to meet the terms of their contracts are minimized through normal credit reviews on those counterparties. The Corporation generally does not require collateral for these types of instruments. Interest rate floors and caps are agreements to make payments for interest rate differentials between an index rate and a specified minimum or maximum rate, computed on notional amounts. The Corporation sells interest rate floors and caps to enable its customers to manage their interest rate risk. In these transactions, the Corporation is subject to the interest rate risk that interest rate movements will create a further obligation beyond that which is recognized on the balance sheet. Option contracts allow the holder to purchase (sell) a financial instrument at a specified price within a specified period of time from (to) the writer of the option. As a writer of options, the Corporation receives a premium at the outset and then bears the risk of an unfavorable change in the price of the financial instrument underlying the option. There is also the inherent credit risk involved in financial instruments purchased as a result of holders exercising their options. The Corporation enters into option contracts only if the option creates an economic hedge on the underlying instrument. When-issued securities represent commitments to purchase or sell securities which have been authorized but not yet issued. Upon entering such commitments, the Corporation is subject to the risks of unfavorable price changes in the security before its actual issuance. The Corporation enters into these commitments mainly to secure certain rates on U.S. Government and agency securities. 53 37 Forward and futures interest rate and foreign exchange contracts represent commitments to purchase or sell securities, other money market instruments, or foreign currency at a future date and at a specified price. The Corporation enters into such contracts to assist in managing its interest rate and foreign currency exposures. Risks arise from the changes in value of the underlying financial instrument and from the possible inability of the counterparty to meet the terms of the contract. These contracts are normally closed out prior to settlement, thus the notional amount of forward and futures contracts significantly exceeds the future cash requirements of the Corporation. The gross amount of contracts to purchase securities represents the Corporation's maximum exposure to credit risk. Interest rate swaps are agreements to exchange interest rate payments, generally fixed-rate for variable-rate, computed on notional amounts. The Corporation enters into interest rate swaps mainly to assist in managing its interest rate exposure and is subject to both the market risk inherent in such agreements and the risk that a counterparty will fail to meet the terms of the agreement. The replacement costs of outstanding interest rate swap agreements were $55 million and $59 million at December 31, 1993 and 1992, respectively. Interest settlements, rather than the notional principal or contract amounts often used to express the volume of the following transactions, represent the amount potentially subject to risk. The notional or contract amounts at December 31, 1993 and 1992 were as follows:
(in millions) 1993 1992 - ------------------------------------------------------------------------------ Interest rate floors and caps and options written $ 283 $ 307 When-issued securities Commitments to purchase 657 50 Commitments to sell 250 211 Forward and futures contracts To purchase foreign currencies and U.S. dollar exchange 356 294 Forward rate agreements 65 15 Interest rate swaps 3,634 2,632
- ------------------------------------------------------------------------------ Note 19 CONTINGENT LIABILITIES The State of Michigan filed a lawsuit in District Court on July 24, 1990, against a subsidiary bank and certain former officers, directors and shareholders of a lending customer seeking recovery of amounts expended by the State (past and future) to clean up hazardous waste at two former plant sites, compensation for damages to natural resources, civil penalties for claimed violation of State Acts and attorneys fees. Plaintiff seeks cleanup costs and damages and has expressed the opinion that the claim will be well in excess of $30 million. In January 1993, the court granted the banks motion for summary judgment and denied the Attorney General's motion for summary judgment. The period during which the Attorney General may appeal the courts order has not yet lapsed. The Corporation and its subsidiaries are parties to other litigation and claims arising in the normal course of their activities. Although the amount of ultimate liability, if any, with respect to such matters cannot be determined, management, after consultation with legal counsel, believes that the litigation and claims, including the matter described above, will not have a materially adverse effect on the Corporation's consolidated financial position. 54 38 - ----------------------------------------------------------------------------- Note 20 USAGE RESTRICTIONS Included in cash and due from banks are amounts required to be deposited with the Federal Reserve Bank. These reserve balances vary, depending on the level of customer deposits in the Corporation's subsidiary banks. At December 31, 1993 and 1992, the Federal Reserve balances were $532 million and $485 million, respectively. - ----------------------------------------------------------------------------- Note 21 ESTIMATED FAIR VALUES OF FINANCIAL INSTRUMENTS Generally accepted accounting principals currently require disclosure of the estimated fair values of financial instruments. In cases where quoted market values are not available, the Corporation uses present value techniques and other valuation methods to estimate the fair values of its financial instruments. These valuation methods require considerable judgment, and the resulting estimates of fair value can be significantly affected by the assumptions made and methods used. Accordingly, the estimates provided herein do not necessarily indicate amounts which could be realized in a current exchange. Further, as the Corporation normally intends to hold the majority of its financial instruments until maturity, it does not expect to realize many of the estimated amounts disclosed. The disclosures also do not include estimated fair value amounts for items which are not defined as financial instruments, but which have significant value. These include such items as core deposit intangibles and loan servicing rights, the future earnings potential of significant customer relationships, and the value of trust operations and other fee generating businesses. The Corporation does not believe that it would be practicable to estimate a representational fair value for these types of items. The Corporation used the following methods and assumptions: Cash and short-term investments: The carrying amount approximates the estimated fair value of these instruments, which consist of cash and due from banks, interest-bearing deposits with banks, and federal funds sold. Trading account securities: These securities are carried at quoted market value or the market value for comparable securities, which represents estimated fair value. Mortgages held for sale: The market value of these loans represents estimated fair value. The market value is determined on the basis of existing forward commitments or the market values of similar loans. Investment securities: The market value of investment securities, which is based on quoted market values or the market values for comparable securities, represents estimated fair value. Domestic commercial loans: These consist of commercial, real estate construction, commercial mortgage, and equipment lease financing loans. The estimated fair value of the Corporation's variable-rate commercial loans is represented by their carrying value, adjusted by an amount which estimates the change in fair value caused by changes in the credit quality of borrowers since the loans were originated. The estimated fair value of fixed-rate commercial loans is calculated by discounting the contractual cash flows of the loans using year-end origination rates derived from the Treasury yield curve or other representative bases. The resulting amounts are adjusted to estimate the effect of changes in the credit quality of borrowers since the loans were originated. International loans: The estimated fair value of the Corporation's short-term international loans which consist of trade-related loans, or loans which have no cross-border risk due to the existence of domestic guarantors or liquid collateral, is represented by their carrying value, adjusted by an amount which estimates the effect on fair value of changes in the credit quality of borrowers or guarantors. The estimated fair value of long-term international loans is based on the quoted market values of these loans or on the market values of international loans with similar characteristics. Retail loans: This category consists of residential mortgage, consumer, and auto lease financing loans. The estimated fair value of residential mortgage loans is based on discounted contractual cash flows or market values of similar loans sold in conjunction with securitized transactions. For consumer loans, the estimated fair values are calculated by discounting the contractual cash flows of the loans using rates representative of year-end origination rates. The resulting amounts are adjusted to estimate the effect of changes in the credit quality of borrowers since the loans were originated. Customers' liability on acceptances outstanding: The carrying amount approximates the estimated fair value. Deposit liabilities: The estimated fair value of demand deposits, consisting of checking, savings and certain money market deposit accounts, is represented by the amounts payable on demand. The carrying amount of deposits in foreign offices approximates their estimated fair value, while the estimated fair value of term deposits is calculated by discounting the scheduled cash flows using the year-end rates offered on these instruments. 55 39 Short-term borrowings: The carrying amount of federal funds purchased, securities sold under agreements to repurchase, and other borrowings approximates estimated fair value. Acceptances outstanding: The carrying amount approximates the estimated fair value. Long-term debt: The estimated fair value of the majority of long-term debt is based on quoted market values. If quoted market values are not available, the estimated fair value is based on the market values of debt with similar characteristics. Commitments to extend credit: The estimated fair value of unused commitments to extend credit and stand-by and commercial letters of credit is represented by the estimated cost to terminate or otherwise settle the obligations with the counterparties. This amount is approximated by the fees currently charged to enter into similar arrangements, considering the remaining terms of the agreements and any changes in the credit quality of counterparties since the agreements were entered into. This estimate of fair value does not take into account the significant value of the customer relationships and the future earnings potential involved in such arrangements, as the Corporation does not believe that it would be practicable to estimate a representational fair value for these items. Interest rate and foreign currency exchange agreements: The estimated fair value of interest rate caps, when-issued securities, foreign currency exchange contracts, and forward rate agreements is based on quoted market values or the market values of similar instruments. The estimated fair value of interest rate swaps is represented by the estimated replacement cost or value of the agreements. The estimated fair values of the Corporation's financial instruments at December 31, 1993 and 1992 are as follows:
1993 1992 --------------------------- -------------------------- Carrying Estimated Carrying Estimated (in millions) Amount Fair Value Amount Fair Value - ------------------------------------------------------------------------------------------------------------------ ASSETS Cash and short-term investments $ 3,719 $ 3,719 $ 2,988 $ 2,988 Trading account securities 4 4 109 109 Mortgages held for sale 331 332 235 235 Investment securities available for sale 2,322 2,322 -- -- Investment securities held to maturity 3,978 4,030 5,163 5,298 Commercial loans 9,087 9,002 8,213 8,140 International loans 1,136 1,155 736 727 Real estate construction loans 437 435 471 462 Commercial mortgage loans 2,700 2,717 2,666 2,681 Residential mortgage loans 1,857 1,880 2,126 2,176 Consumer loans 3,674 3,677 3,836 3,848 Lease financing 209 210 167 167 -------------------------- ------------------------- Total loans 19,100 19,076 18,215 18,201 Less allowance for loan losses (299) -- (308) -- -------------------------- ------------------------- Net loans 18,801 19,076 17,907 18,201 Customers' liability on acceptances outstanding 38 38 26 26 LIABILITIES Demand deposits (noninterest-bearing) 4,939 4,939 4,568 4,568 Interest-bearing deposits 14,643 14,731 15,734 15,858 Deposits in foreign offices 1,368 1,368 898 898 -------------------------- ------------------------- Total deposits 20,950 21,038 21,200 21,324 Short-term borrowings 5,400 5,400 3,222 3,222 Acceptances outstanding 38 38 26 26 Long-term debt 1,461 1,502 741 743 Off-Balance-Sheet Financial Instruments Commitments to extend credit -- (11) -- (12) Interest rate and foreign currency exchange agreements -- 117 -- 56
56 40 NOTE 22 PARENT COMPANY FINANCIAL STATEMENTS
BALANCE SHEETS -- Comerica Incorporated December 31 (in thousands, except share data) 1993 1992 - ----------------------------------------------- ---------- ----------- ASSETS Cash and due from banks $ 1,111 $ 2,263 Securities purchased from bank subsidiaries under agreements to resell -- 16,538 Time deposits with banks 97,200 123,600 Investment securities held to maturity 7,507 24,320 Receivables from subsidiaries -- 100,000 Investment in subsidiaries, principally banks 2,208,710 2,132,226 Premises and equipment 49,670 31,633 Other assets 43,462 26,645 --------- ---------- Total assets $2,407,660 $2,457,225 --------- ---------- --------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY Commercial paper $ -- $ 8,502 Long-term debt 149,152 266,102 Advances from nonbanking subsidiaries 4,277 11,741 Other liabilities 72,573 75,743 --------- ---------- Total liabilities 226,002 362,088 Redeemable preferred stock--$50 stated value Authorized--10,000,000 shares Issued--835,688 shares in 1992 -- 37,605 Common stock--$5 par value Authorized--250,000,000 shares Issued--119,294,531 in 1993 and 61,843,866 in 1992 596,473 309,219 Capital surplus 524,186 538,097 Unrealized gains and losses 27,473 -- Retained earnings 1,155,280 1,239,078 Less cost of common stock in treasury--4,423,603 shares in 1993 and 898,988 shares in 1992 (121,754) (28,862) --------- ---------- Total shareholders' equity 2,181,658 2,095,137 --------- ---------- Total liabilities and shareholders' equity $2,407,660 $2,457,225 --------- ---------- --------- ----------
STATEMENTS OF INCOME -- Comerica Incorporated Year Ended December 31 (in thousands) 1993 1992 1991 - ------------------------------------------------ ----------- --------- ---------- INCOME Income from subsidiaries Dividends from subsidiaries $ 312,148 $ 60,975 $ 148,669 Interest on receivables from subsidiaries 3,303 8,839 9,151 Other interest income 1,630 5,777 9,279 Intercompany management fees 211,351 136,806 110,053 Interest on bank time deposits 51 3,326 3,094 Other noninterest income 24,818 3,038 5,409 --------- ------- ------- Total income 553,301 218,761 285,655 EXPENSES Interest on commercial paper 13 473 1,448 Interest on long-term debt 18,529 21,623 24,829 Interest on advances from subsidiaries 193 548 1,266 Salaries and employee benefits 128,509 90,643 67,667 Occupancy expense 8,515 6,438 6,924 Equipment expense 23,608 9,330 11,945 Merger, integration and restructuring charge 22,000 45,962 -- Other noninterest expenses 60,305 34,549 22,619 --------- ------- ------- Total expenses 261,672 209,566 136,698 --------- ------- ------- Income before income taxes and equity in undistributed net income of subsidiaries 291,629 9,195 148,957 Income tax credit (6,550) (10,720) (120) --------- ------- ------- 298,179 19,915 149,077 Equity in undistributed net income of subsidiaries, principally banks 42,459 220,517 131,351 --------- ------- ------- NET INCOME $340,638 $240,432 $280,428 --------- ------- ------- --------- ------- -------
57 41
STATEMENTS OF CASH FLOWS--Comerica Incorporated Year Ended December 31 (in thousands) 1993 1992 1991 - ---------------------------------------------------- ---------- ------- --------- OPERATING ACTIVITIES Net income $ 340,638 $ 240,432 $ 280,428 Adjustments to reconcile net income to net cash provided by operating activities Undistributed earnings of subsidiaries, principally banks (42,459) (220,517) (131,351) Depreciation 17,658 7,344 7,305 Merger, integration and restructuring charge 5,414 15,701 -- Net amortization of intangibles 1,207 773 407 Interest on note with subsidiary -- (1,924) (2,565) Other, net (21,962) 6,142 (12,727) -------- -------- ------- Total adjustments (40,142) (192,481) (138,931) -------- -------- ------- Net cash provided by operating activities 300,496 47,951 141,497 INVESTING ACTIVITIES Net (increase) decrease in receivables from subsidiaries 100,000 2,297 (2,297) Net (increase) decrease in securities purchased from bank subsidiary under agreements to resell 16,538 9,046 (18,652) Proceeds from maturities of investment securities held to maturity 33,548 1,024 13,985 Purchase of investment securities held to maturity (16,549) (14,194) (18,826) Proceeds from sales of fixed assets and other real estate 13,633 2,516 6,492 Purchases of fixed assets (58,086) (15,374) (7,867) Net (increase) decrease in bank time deposits 26,400 101,782 (88,400) Capital transactions with subsidiaries (4,620) (2,350) (750) Purchase of subsidiaries -- (56,220) (33,580) -------- -------- ------- Net cash provided by (used in) investing activities 110,864 28,527 (149,895) FINANCING ACTIVITIES Net increase (decrease) in advances from subsidiaries (7,464) (7,864) 5,333 Proceeds from issuance of long-term debt -- -- -- Repayments and purchases of long-term debt (111,008) (6,946) (14,679) Net decrease in short-term borrowings (8,502) (7,696) (12,727) Proceeds from issuance of common stock and other capital transactions 9,395 33,057 126,469 Purchases of treasury stock (128,848) (5,635) -- Redemption of preferred stock (41,779) -- -- Cash dividends paid (124,306) (80,472) (96,681) -------- -------- ------- Net cash provided by (used in) financing activities (412,512) (75,556) 7,715 Net increase (decrease) in cash on deposit at bank subsidiary (1,152) 922 (683) Cash on deposit at bank subsidiary at beginning of year 2,263 1,341 2,024 -------- -------- ------- Cash on deposit at bank subsidiary at end of year $1,111 $2,263 $1,341 -------- -------- ------- -------- -------- ------- Interest paid $18,652 $22,190 $27,654 -------- -------- ------- -------- -------- ------- Income taxes recovered $12,191 $12,936 $7,125 -------- -------- ------- -------- -------- ------- Noncash investing and financing activities Conversion of debentures to equity $5,095 $1,348 $3,277 -------- -------- ------- -------- -------- -------
58 42 NOTE 23 SUMMARY OF QUARTERLY FINANCIAL INFORMATION The following quarterly information is unaudited. However, in the opinion of management, the information furnished reflects all adjustments which are necessary for the fair presentation of the results of operations for the periods presented.
1993 ----------------------------------------------------------------- Fourth Third Second First (in thousands, except per share data) Quarter Quarter Quarter Quarter - -------------------------------------------- -------- -------- -------- -------- Interest income $ 451,594 $ 438,088 $ 446,024 $ 447,147 Interest expense 163,457 158,173 162,440 165,245 Net interest income 288,137 279,915 283,584 281,902 Provision for loan losses 14,000 15,000 18,000 22,000 Securities gains 411 526 407 634 Noninterest income (excluding securities gains) 130,891 109,488 111,101 109,044 Noninterest expenses 276,917 253,821 255,292 252,435 Net income 90,090 83,696 83,727 83,125 Per common share Primary net income $0.76 $0.70 $0.70 $0.69 Fully diluted net income $0.76 $0.70 $0.70 $0.69
1992 ------------------------------------------------------------------ Fourth Third Second First (in thousands, except per share data) Quarter Quarter Quarter Quarter - -------------------------------------------- -------- -------- -------- -------- Interest income $ 457,965 $ 470,623 $ 492,409 $ 512,192 Interest expense 174,660 190,034 212,632 234,417 Net interest income 283,305 280,589 279,777 277,775 Provision for loan losses 24,060 27,045 30,778 29,679 Securities gains 3,116 717 134 2,353 Noninterest income (excluding securities gains) 100,139 103,663 100,454 100,598 Noninterest expenses 246,064 236,971 367,860* 241,128 Net income (loss) 87,684 86,683 (12,456) 78,521 Per common share Primary net income (loss) $0.73 $0.72 $(0.11) $0.65 Fully diluted net income (loss) $0.72 $0.72 $(0.11) $0.65
* Included $128 million restructuring charge (Note 2). 59 43 Report of Management and Independent Auditors Management is responsible for the accompanying financial statements and all other financial information in this Annual Report. The financial statements have been prepared in conformity with generally accepted accounting principles and include amounts which of necessity are based on management's best estimates and judgments and give due consideration to materiality. The other financial information herein is consistent with that in the financial statements. In meeting its responsibility for the reliability of the financial statements, management develops and maintains systems of internal accounting controls. These controls are designed to provide reasonable assurance that assets are safeguarded and transactions are executed and recorded in accordance with management's authorization. The concept of reasonable assurance is based on the recognition that the cost of internal accounting control systems should not exceed the related benefits. The systems of control are continually monitored by the internal auditors whose work is closely coordinated with and supplements in many instances the work of independent auditors. The financial statements have been audited by independent auditors Ernst & Young. Their role is to render an independent professional opinion on management's financial statements based upon performance of procedures they deem appropriate under generally accepted auditing standards. The Corporation's Board of Directors oversees management's internal control and financial reporting responsibilities through its Audit Committee as well as various other committees. The Audit Committee, which consists of directors who are not officers or employees of the Corporation, meets periodically with management and internal and independent auditors to assure that they and the Committee are carrying out their responsibilities and to review auditing, internal control and financial reporting matters. /s/ EUGENE A. MILLER Eugene A. Miller Chairman of the Board and Chief Executive Officer /s/ PAUL H. MARTZOWKA Paul H. Martzowka Chief Financial Officer /s/ ARTHUR W. HERMANN Arthur W. Hermann Senior Vice President and Controller BOARD OF DIRECTORS, COMERICA INCORPORATED We have audited the accompanying consolidated balance sheets of Comerica Incorporated and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of income, changes in shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1993. The 1991 consolidated financial statements give retroactive effect to the merger on June 18, 1992 of Comerica Incorporated and Manufacturers National Corporation (the combining companies), which has been accounted for using the pooling-of-interests method. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the 1991 financial statements of Comerica Incorporated (the combining company) which statements reflect total revenues constituting 55 percent in 1991 of the related consolidated total. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to data included for Comerica Incorporated (the combining company) is based solely on the report of the other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Comerica Incorporated and subsidiaries at December 31, 1993 and 1992, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1993, in conformity with generally accepted accounting principles. ERNST & YOUNG Detroit, Michigan January 18, 1994 60 44
Historical Review-Average Balance Sheets - Comerica Incorporated and Subsidiaries Consolidated Financial Information (in millions) 1993 1992 1991 1990 1989 - -------------------------------------- ----- ------ ------- -------- ------ Assets Cash and due from banks $ 1,490 $ 1,322 $ 1,201 $ 1,231 $ 1,212 Interest-bearing deposits with banks 814 1,017 1,413 1,376 1,861 Federal funds sold and securities purchased under agreements to resell 135 399 454 307 612 Trading account securities 12 78 53 47 17 Mortgages held for sale 232 196 92 63 15 Investment securities 5,512 5,373 5,740 5,081 4,037 Commercial loans 8,473 7,753 7,359 7,034 6,507 International loans 897 710 501 412 602 Real estate construction loans 441 503 530 478 496 Commercial mortgage loans 2,629 2,368 2,190 1,938 1,694 Residential mortgage loans 1,979 2,297 2,438 2,317 1,850 Consumer loans 3,697 3,625 3,427 3,130 2,798 Lease financing 191 191 177 168 166 ------- ------ ------- ------ ------ Total loans 18,307 17,447 16,622 15,477 14,113 Less allowance for loan losses (311) (291) (275) (276) (292) ------- ------ ------- ------ ------ Net loans 17,996 17,156 16,347 15,201 13,821 Accrued income and other assets 1,045 969 1,065 1,026 891 ------- ------ ------- ------ ------ Total assets $27,236 $26,510 $26,365 $24,332 $22,466 ------- ------ ------- ------ ------ ------- ------ ------- ------ ------ Liabilities and Shareholders' Equity Demand deposits (noninterest-bearing) $ 4,380 $ 3,796 $ 3,417 $ 3,336 $ 3,282 Interest-bearing deposits 15,035 15,449 15,933 15,202 14,068 Deposits in foreign offices 1,306 1,668 1,435 843 1,047 ------- ------ ------- ------ ------ Total deposits 20,721 20,913 20,785 19,381 18,397 Federal funds purchased and securities sold under agreements to repurchase 1,586 1,553 1,530 1,767 1,411 Other borrowed funds 1,432 1,308 1,527 809 489 Accrued expenses and other liabilities 274 327 421 504 455 Long-term debt 1,087 414 323 348 354 ------- ------ ------- ------ ------ Total liabilities 25,100 24,515 24,586 22,809 21,106 Shareholders' equity 2,136 1,995 1,779 1,523 1,360 ------- ------ ------- ------ ------ Total liabilities and shareholders' equity $27,236 $26,510 $26,365 $24,332 $22,466 ------- ------ ------- ------ ------ ------- ------ ------- ------ ------
61 45 Historical Review-Statements of Income - Comerica Incorporated and Subsidiaries
Consolidated Financial Information (in millions, except per share data) 1993 1992 1991 1990 1989 - -------------------------------------- --------- ------- ------- ------- -------- Interest Income Interest and fees on loans $ 1,388 $ 1,445 $ 1,634 $ 1,668 $ 1,593 Interest on investment securities Taxable 307 356 437 392 290 Exempt from federal income tax 40 55 62 67 71 ------- ------ ------- ------ ------ Total interest on investment securities 347 411 499 459 361 Trading account interest 1 3 3 4 1 Interest on federal funds sold and securities purchased under agreements to resell 4 15 25 25 57 Interest on time deposits with banks 28 45 99 120 178 Interest on mortgages held for sale 15 14 8 6 2 ------- ------ ------- ------ ------ Total interest income 1,783 1,933 2,268 2,282 2,192 Interest Expense Interest on deposits 530 707 1,033 1,119 1,133 Interest on short-term borrowings Federal funds purchased and Securities sold under agreements to repurchase 47 53 86 142 129 Other borrowed funds 41 46 86 65 45 Interest on long-term debt 63 30 28 33 35 Net interest rate swap (income) expense (32) (24) (15) (4) 3 ------- ------ ------- ------ ------ Total interest expense 649 812 1,218 1,355 1,345 ------- ------ ------- ------ ------ Net interest income 1,134 1,121 1,050 927 847 Provision for loan losses 69 111 105 100 147 ------- ------ ------- ------ ------ Net interest income after provision for loan losses 1,065 1,010 945 827 700 Noninterest Income Income from fiduciary activities 122 114 105 100 92 Service charges on deposit accounts 120 113 103 89 78 Customhouse broker fees 40 38 36 35 30 Revolving credit fees 36 34 32 30 27 Securities gains 2 6 5 2 2 Other noninterest income 142 106 104 92 64 ------- ------ ------- ------ ------ Total noninterest income 462 411 385 348 293 Noninterest Expenses Salaries and employee benefits 529 516 500 454 406 Net occupancy expense 96 86 83 76 70 Equipment expense 62 57 54 50 46 FDIC insurance expense 44 45 41 22 14 Merger, integration and restructuring charge 22 128 -- -- -- Other noninterest expenses 285 260 267 246 218 ------- ------ ------- ------ ------ Total noninterest expenses 1,038 1,092 945 848 754 Income before income taxes 489 329 385 327 239 Provision for income taxes 148 89 105 79 51 ------- ------ ------- ------ ------ Net Income $341 $240 $280 $248 $188 ------- ------ ------- ------ ------ ------- ------ ------- ------ ------ Net income applicable to common stock $341 $237 $277 $245 $184 ------- ------ ------- ------ ------ ------- ------ ------- ------ ------ Net Income Per Common Share Primary $2.85 $1.99 $2.41 $2.25 $1.73 Fully diluted $2.85 $1.98 $2.38 $2.23 $1.71 Primary average shares (in thousands) 119,569 119,113 114,713 108,742 106,640 Cash dividends declared on common stock $125 $108 $93 $78 $67 Dividends per common share $1.07 $0.96 $0.92 $0.87 $0.77
62 46 Historical Review-Statistical Data - Comerica Incorporated and Subsidiaries
Consolidated Financial Information 1993 1992 1991 1990 1989 - ----------------------------------------------- ----- ----- ----- ----- ----- Average Rates (Fully Taxable Equivalent Basis) Interest-bearing deposits with banks 3.41% 4.43% 7.01% 8.73% 9.57% Federal funds sold and securities purchased under agreements to resell 2.99 3.67 5.58 8.18 9.39 Trading account securities 6.76 3.99 6.75 7.95 8.32 Mortgages held for sale 6.38 7.34 8.66 9.78 10.18 U.S. Government and agency securities 6.35 8.14 9.34 9.61 9.60 State and municipal securities 10.25 10.35 10.70 10.81 10.90 Other securities 5.48 6.54 7.95 8.99 9.43 ----- ----- ----- ----- ------ Total investment securities 6.70 8.16 9.25 9.73 9.88 Commercial loans 6.56 6.98 9.01 10.48 11.40 International loans 5.04 5.70 8.14 9.94 10.18 Real estate construction loans 6.63 7.00 8.69 10.17 10.08 Commercial mortgage loans 8.10 8.54 9.99 11.04 11.59 Residential mortgage loans 8.57 9.53 10.01 9.96 9.98 Consumer loans 9.98 11.03 12.10 12.53 12.58 Lease financing 7.34 8.89 9.66 10.06 9.69 ----- ----- ----- ----- ------ Total loans 7.62 8.34 9.89 10.86 11.35 ----- ----- ----- ----- ------ Interest income as a percent of earning assets 7.25 8.04 9.48 10.42 10.84 Domestic deposits 3.24 4.13 5.93 6.90 7.35 Deposits in foreign offices 3.29 4.11 6.14 8.31 9.41 ----- ----- ----- ----- ------ Total interest-bearing deposits 3.24 4.13 5.95 6.97 7.50 Federal funds purchased and securities sold under agreements to repurchase 3.01 3.44 5.60 8.04 9.15 Other borrowed funds 2.88 3.52 5.68 9.36 9.92 Long-term debt 5.77 7.18 8.56 8.05 9.11 ----- ----- ----- ----- ------ Interest expense as a percent of interest bearing sources 3.18 3.98 5.87 7.14 7.74 ----- ----- ----- ----- ------ Interest rate spread 4.07 4.06 3.61 3.28 3.10 Impact of net noninterest-bearing sources of funds 0.58 0.67 0.88 1.08 1.23 ----- ----- ----- ----- ------ Net interest margin as percent of earning assets 4.65 4.73 4.49 4.36 4.33 Return on Average Common Shareholders' Equity 15.94 12.10 15.90 16.47 13.94 Return on Average Assets 1.25 0.91 1.06 1.02 0.84 Per Share Data Book value at year-end $18.99 $17.38 $16.30 $14.52 $13.05 Market value--high and low for year 35-25 33-26 27-14 17-11 20-15 Other Data Number of offices 385 427 412 401 362 Number of employees (full-time equivalent) 12,670 13,322 13,836 13,423 12,846
63 47 Directors and Officers Comerica Incorporated BOARD OF DIRECTORS E. Paul Casey Managing General Partner Metapoint Partners James F. Cordes* Executive Vice President The Coastal Corporation J. Philip DiNapoli* Attorney J. Philip DiNapoli Offices Max M. Fisher Investor John D. Lewis+ Vice Chairman Comerica Incorporated Patricia Shontz Longe, Ph.D.* Economist; Senior Partner The Longe Company Wayne B. Lyon President and Chief Operating Officer Masco Corporation Gerald V. MacDonald Retired Chairman and Chief Executive Officer Comerica Incorporated Donald R. Mandich* Retired Chairman and Chief Executive Officer Comerica Incorporated Eugene A. Miller Chairman and Chief Executive Officer Comerica Incorporated and Comerica Bank Michael T. Monahan President Comerica Incorporated and Comerica Bank Alfred A. Piergallini Chairman, President and Chief Executive Officer Gerber Products Company Dean E. Richardson* Retired Chairman Manufacturers National Corporation Thomas F. Russell Retired Chairman and Chief Executive Officer Federal-Mogul Corporation Alan E. Schwartz Partner Honigman Miller Schwartz and Cohn Howard F. Sims* Chairman Sims-Varner & Associates *Audit Committee Members +Appointed to board January 21, 1994 EXECUTIVE OFFICERS Joseph J. Buttigieg III Executive Vice President Comerica Bank Richard A. Collister Executive Vice President Comerica Incorporated and Comerica Bank Robert L. Condon Executive Vice President Comerica Incorporated Judith C. Lalka Dart Executive Vice President General Counsel and Corporate Secretary Comerica Incorporated and Comerica Bank George C. Eshelman Executive Vice President Comerica Incorporated and Comerica Bank Douglas W. Fiedler President and Chief Executive Officer Comerica Bank & Trust, FSB J. Michael Fulton President and Chief Executive Officer Comerica Bank-California Charles L. Gummer President and Chief Executive Officer Comerica Bank-Texas Robert A. Herdoiza Executive Vice President Comerica Bank Arthur W. Hermann Senior Vice President and Controller Comerica Incorporated and Comerica Bank Thomas R. Johnson Executive Vice President Comerica Incorporated John D. Lewis Vice Chairman Comerica Incorporated Paul H. Martzowka Executive Vice President and Chief Financial Officer Comerica Incorporated and Comerica Bank Eugene A. Miller Chairman and Chief Executive Officer Comerica Incorporated and Comerica Bank Thomas E. Mines Senior Vice President and General Auditor Comerica Incorporated Michael T. Monahan President Comerica Incorporated and Comerica Bank David B. Stephens Executive Vice President Comerica Bank Paul D. Tobias Executive Vice President Comerica Incorporated David C. White President and Chief Executive Officer Comerica Bank-Illinois 64 48 COMERICA BANK (MICHIGAN) Eugene A. Miller Chairman and Chief Executive Officer Michael T. Monahan President DIRECTORS Wendell W. Anderson Jr. Retired Chairman Bundy Corporation Lillian Bauder President and Chief Executive Officer Cranbrook Educational Community E.L. Cox President and Chief Executive Officer Accident Fund of Michigan Roger Fridholm Chief Executive Officer Of Counsel Enterprises, Inc. Todd W. Herrick President and Chief Executive Officer Tecumseh Products Company Edward C. Levy Jr. President and Chief Executive Officer Edward C. Levy Company John D. Lewis Vice Chairman Comerica Incorporated Paul H. Martzowka Executive Vice President and Chief Financial Officer Comerica Incorporated and Comerica Bank Walter J. McCarthy Jr. Retired Chairman and Chief Executive Officer The Detroit Edison Company Eugene A. Miller Chairman and Chief Executive Officer Comerica Incorporated and Comerica Bank Michael T. Monahan President Comerica Incorporated and Comerica Bank John W. Porter Chief Executive Officer Urban Education Alliance, Inc. Heinz C. Prechter Chairman and Chief Executive ASC Incorporated Richard D. Rohr Partner Bodman, Longley & Dahling Robert S. Taubman President and Chief Executive Officer The Taubman Company, Inc. Alfred H. Taylor Jr. Retired Chairman and Chief Executive Officer Kresge Foundation William P. Vititoe Chairman and Chief Executive Officer Washington Energy Company Martin D. Walker Chairman and Chief Executive Officer M.A. Hanna Company Gail L. Warden President and Chief Executive Officer Henry Ford Health System COMERICA BANK-TEXAS Charles L. Gummer President and Chief Executive Officer DIRECTORS Carroll Baird President Mrs. Baird's Bakeries, Inc. C. Dewitt Brown Jr. President and Chief Executive Officer Dee Brown Masonry James F. Cordes Executive Vice President The Coastal Corporation Charles R. Cravens Jr. Attorney Hopkins & Sutter Thomas M. Dunning Chairman Dunning Benefit Corporation Joe R. Goyne Vice Chairman Comerica Bank-Texas Charles L. Gummer President and Chief Executive Officer Comerica Bank-Texas Rev. Zan W. Holmes Jr. Senior Pastor St. Luke Community United Methodist Church Jake Kamin Investor and Developer John D. Lewis Vice Chairman Comerica Incorporated W. Thomas McQuaid President Performance Properties Corporation Raymond D. Nasher Chairman of the Board of Directors Comerica Bank-Texas Chairman The Nasher Company Calvin E. Person Owner Calvin Person & Associates Boone Powell Jr. President and Chief Executive Officer Baylor University Medical Center Bill J. Priest, Ph.D. Chancellor Emeritus Dallas County Community College District Thomas J. Tierney Chairman of the Board Corporate Communications Center, Inc. COMERICA BANK-ILLINOIS David C. White President and Chief Executive Officer DIRECTORS Gregory R. Beard Executive Vice President Comerica Bank-Illinois Thomas F. Carey Attorney at Law Carey, Filter, White & Boland Robert E. Hughes Retired Chairman of the Board Affiliated Banc Group, Inc. John D. Lewis Vice Chairman Comerica Incorporated David C. White President and Chief Executive Officer Comerica Bank-Illinois Robert J. Zahorik President Midwest Steel Erection Company, Inc. 65 49 Directors and Officers - Comerica Incorporated and Subsidiaries COMERICA BANK-CALIFORNIA J. Michael Fulton President and Chief Executive Officer DIRECTORS Theodore J. Biagini Of Counsel Pillsbury Madison & Sutro Maxwell H. Bloom First Vice President Kemper Securities Jack C. Carsten Venture Capitalist Jack W. Conner Chairman Comerica Bank-California J. Philip DiNapoli Attorney J. Philip DiNapoli Offices Bruce C. Edwards President March Development Company J. Michael Fulton President and Chief Executive Officer Comerica Bank-California Drew Gibson Principal Gibson Speno Company Walter T. Kaczmarek Executive Vice President and Chief Operating Officer Comerica Bank-California John D. Lewis Vice Chairman Comerica Incorporated Patricia N. Lowell Retired President Comerica Bank-California Walter J. McCarthy Jr. Retired Chairman and Chief Executive Officer The Detroit Edison Company Lowell W. Morse President Cypress Ventures, Inc. Edward P. Roski Jr. Executive Vice President Majestic Realty Company Lewis N. Wolff Chairman and Chief Executive Officer Wolff Sesnon Buttery COMERICA BANK & TRUST, FSB (FLORIDA) Douglas W. Fiedler President and Chief Executive Officer DIRECTORS Arthur R. Bradley Chairman Comerica Bank & Trust, FSB Nancy H. Canary Partner Thompson, Hine and Flory E. Paul Casey Managing General Partner Metapoint Partners John F. Daly Retired Vice Chairman Johnson Controls Douglas W. Fiedler President and Chief Executive Officer Comerica Bank & Trust, FSB Don B. Dean Retired President and Chief Executive Officer Manufacturers Bank & Trust of Florida J. Russell Fowler Retired Chairman Jacobson Stores, Inc. Ronald S. Holliday, Esq. Managing Partner Rudnick & Wolf John D. Lewis Vice Chairman Comerica Incorporated Patricia Shontz Longe, Ph.D. Economist; Senior Partner The Longe Company Donald R. Mandich Retired Chairman and Chief Executive Officer Comerica Incorporated William A. Prew Retired President Prew Insurance Bill T. Smith Jr., Esq. Attorney Bill T. Smith Jr., P.A. A.V. Witbeck Retired President Witbeck Appliance, Inc. 66 50 COMERICA INCORPORATED SUBSIDIARIES COMERICA BANK-CALIFORNIA COMERICA BANK & TRUST, FSB (FLORIDA) COMERICA BANK-ILLINOIS COMERICA BANK (MICHIGAN) COMERICA BANK-TEXAS COMERICA ACCEPTANCE CORPORATION Generates consumer loans through dealers in several states. COMERICA BANK-MIDWEST, N.A. Specializes in revolving credit loans; based in Toledo, Ohio. COMERICA COMMUNITY DEVELOPMENT CORPORATION Provides a non-conventional financial resource for housing rehabilitation and small business enterprise in Comerica's Michigan markets. COMERICOMP INCORPORATED Offers employee benefit consulting services for companies outsourcing employee benefit functions. COMERICA BANK (MICHIGAN) SUBSIDIARIES COMERICA LEASING CORPORATION Provides equipment leasing and financing services for businesses throughout the United States. COMERICA MORTGAGE CORPORATION Offers residential real estate financing for new mortgages and servicing of existing mortgages owned by Comerica Bank and other investors. JOHN V. CARR & SON, INC. Provides customhouse brokerage and freight forwarding services from offices in 14 states and Ontario, Canada. COMERICA INVESTMENT SERVICES COMERICA INSURANCE SERVICES CORPORATION Offers retail and commercial insurance consulting, sales and product management services. COMERICA SECURITIES, INC. Provides investment counseling and a full range of investment products, including mutual funds and annuities. WILSON, KEMP & ASSOCIATES, INC. Offers individualized investment portfolio management services to customers in the Midwest and Florida. WOODBRIDGE CAPITAL MANAGEMENT, INC. Provides advisory services as an investment management firm for Comerica Bank's trust investment activities in Michigan, Florida, Texas, California and Illinois. WORLD ASSET MANAGEMENT, INC. Offers a full range of quantitative investment management services. 67 51 SHAREHOLDER INFORMATION STOCK Comerica's stock trades on the New York Stock Exchange (NYSE) under the symbol CMA. SHAREHOLDER ASSISTANCE Inquiries related to shareholder records, change of name, address or ownership of stock, and lost or stolen stock certificates should be directed to the transfer agent and registrar: Norwest Bank Minnesota, N.A. P.O. Box 738 South St. Paul, Minnesota 55075-0738 800-468-9716 ELIMINATION OF DUPLICATE MATERIALS If you receive duplicate mailings of quarterly and annual reports at one address, you may have multiple shareholder accounts. You can consolidate your multiple accounts into a single, more convenient account by contacting the transfer agent shown above. In addition, if more than one member of your household is receiving shareholder materials, you can eliminate the duplicate mailings by contacting the transfer agent. DIVIDEND REINVESTMENT PLAN Comerica offers a dividend reinvestment plan which permits participating shareholders of record to reinvest dividends in Comerica common stock without paying brokerage commissions or service charges. Participating shareholders may also invest up to $3,000 in additional funds each quarter for the purchase of additional shares. A brochure describing the plan in detail and an authorization form can be requested from the transfer agent shown above. DIVIDEND DIRECT DEPOSIT Common shareholders of Comerica may have their dividends deposited into their savings or checking account at any bank that is a member of the National Automated Clearing House (ACH) system. Information describing this service and an authorization form can be requested from the transfer agent shown above. DIVIDEND PAYMENTS Subject to approval of the board of directors, dividends are customarily paid on Comerica's common stock on or about April 1, July 1, September 1 and January 1. ANNUAL MEETING May 20, 1994 CORPORATE INFORMATION Comerica Incorporated Comerica Tower at Detroit Center Detroit, Michigan 48226 313-222-3300 EQUAL EMPLOYMENT OPPORTUNITY Comerica is committed to its affirmative action program and practices which ensure uniform treatment of employees without regard to race, creed, color, age, national origin, religion, handicap, marital status, veteran status, weight, height or sex. INVESTOR CONTACT Judith V. Hicks 313-222-6317 MEDIA CONTACT Sharon R. McMurray 313-222-4881 68 52
APPENDIX DESCRIPTION OF GRAPHIC MATERIAL PAGE NUMBER GRAPHIC MATERIAL - ------ ---------------- 20 Bar graph depicting the Corporation's Net Income (in millions) from 1989 to 1993. 1989 1990 1991 1992 1993 ---- ---- ---- ---- ---- Net Income 188 248 280 240 341 Excluding Restructuring Charge 332 20 Bar graph depicting the Corporation's Return on Assets (in percentages) from 1989 to 1993. 1989 1990 1991 1992 1993 ---- ---- ---- ---- ---- Return on Assets 0.84 1.02 1.06 0.91 1.25 Excluding Restructuring Charge 1.25 22 Bar graph depicting the Corporation's Net Income--Fully Taxable Equivalent (in millions) from 1989 to 1993. 1989 1990 1991 1992 1993 ---- ---- ---- ---- ---- Net Interest Income (FTE) 894 975 1,093 1,158 1,163 Bar graph depicting the Corporation's Net Interest Margin--Fully Taxable Equivalent (percent of earning assets) 22 From 1989 to 1993. 1989 1990 1991 1992 1993 ---- ---- ---- ---- ---- 4.33 4.36 4.49 4.73 4.65 24 Bar graph depicting the Corporation's Allowance for Loan Losses (in percentages) from 1989 to 1993. 1989 1990 1991 1992 1993 ---- ---- ---- ---- ---- Allowance for Loan Losses to Total Loans (period-end) 2.30 1.60 1.62 1.69 1.56 Net Loans Charged off to Average Loans 0.51 1.18 0.58 0.57 0.43
53
APPENDIX DESCRIPTION OF GRAPHIC MATERIAL PAGE NUMBER GRAPHIC MATERIAL - ------ ---------------- 24 Bar graph depicting the Corporation's Noninterest Income (in millions) from 1989 to 1993. 1989 1990 1991 1992 1993 ---- ---- ---- ---- ---- Income from Fiduciary Activities 91.500 99.852 104.990 113.895 122.280 Service Charges 78.240 88.543 102.890 113.099 120.125 Other 123.466 159.674 177.246 184.180 220.097 ------- ------- ------- ------- ------- Total 293.206 348.069 385.126 411.174 462.502 26 Bar graph depicting the Corporation's Noninterest Expense (in millions) from 1989 to 1993. 1989 1990 1991 1992 1993 ---- ---- ---- ---- ---- Salaries and Benefits 406.201 454.272 499.897 516.341 528.658 Net Occupancy 69.619 75.713 82.547 86.041 95.736 Equipment 46.245 49.532 54.361 57.398 62.401 Other 232.033 268.207 308.670 304.243 329.670 Restructuring Charge 128.000 22.000 ------- ------- ------- ------- ------- Total 754.098 847.724 945.475 1,092.023 1,038.465 28 Bar graph depicting the Corporation's Average Earning Assets (in billions) from 1989 to 1993. 1989 1990 1991 1992 1993 ---- ---- ---- ---- ---- Loans 14.113 15.477 16.622 17.447 18.307 Securities 4.037 5.081 5.740 5.373 5.512 Short-term investments 2.505 1.793 2.012 1.690 1.193 ------ ------ ------ ------ ------ Total 20.655 22.351 24.374 24.510 25.012 28 Bar graph depicting the Corporation's Average Loans (in billions) from 1989 to 1993. 1989 1990 1991 1992 1993 ---- ---- ---- ---- ---- Commercial 6.673 7.202 7.536 7.944 8.664 Consumer 2.798 3.130 3.427 3.625 3.697 Real Estate 4.040 4.733 5.158 5.168 5.049 International 0.602 0.412 0.501 0.710 0.897 ----- ----- ----- ----- ----- Total 14.113 15.477 16.622 17.447 18.307 30 Bar graph depicting the Corporation's Average Liquid Assets (in millions) from 1989 to 1993. 1989 1990 1991 1992 1993 ---- ---- ---- ---- ---- Cash and Due from Banks 1,212 1,231 1,201 1,322 1,490 Interest-bearing deposits with banks 1,861 1,376 1,413 1,017 814 U.S. Government and Agency Securities 2,111 3,279 3,612 3,541 4,340 Federal Funds Sold 612 307 454 399 135 ----- ----- ----- ----- ----- Total 5,796 6,193 6,680 6,279 6,779
54 APPENDIX DESCRIPTION OF GRAPHIC MATERIAL
PAGE NUMBER GRAPHIC MATERIAL - ------ ---------------- 30 Bar graph depicting the Corporation's Average Deposits and Borrowed Funds (in millions) for 1989 to 1993. 1989 1990 1991 1992 1993 ---- ---- ---- ---- ---- Noninterest-bearing Deposits 3,282 3,336 3,417 3,796 4,380 Interest-bearing Deposits 15,115 16,045 17,368 17,117 16,341 Federal Funds Purchased 1,411 1,778 1,546 1,553 1,586 Other Borrowed Funds 489 802 1,515 1,308 1,432 Long-term Debt 354 344 319 414 1,087 ------ ------ ------ ------ ------ Total 20,651 22,305 24,165 24,188 24,826 32 Bar graph depicting the Corporation's Components of Capital (in millions) for 1989 to 1993. 1989 1990 1991 1992 1993 ---- ---- ---- ---- ---- Tier 1 1,318 1,453 1,764 1,958 2,023 Tier 2 450 544 547 662 829 ----- ----- ----- ----- ----- Total 1,768 1,997 2,311 2,620 2,852 32 Bar graph depicting the Corporation's Risk-Based Capital (in percentages) from 1989 to 1993. 1989 1990 1991 1992 1993 ---- ---- ---- ---- ---- Leverage 5.84 5.72 6.55 7.52 7.04 Tier 1 7.3 7.28 8.17 8.83 8.21 Total 9.8 10.01 10.71 11.82 11.58 34 Bar graph depicting the Corporation's Internal Capital Generation Rate (in percentages) for 1989 to 1993. 1989 1990 1991 1992 1993 ---- ---- ---- ---- ---- Generation Rate 8.93 11.18 10.51 6.65 10.08 Excluding Restructuring Charge 11.01 34 Bar graph depicting the Corporation's Nonperforming Assets (in millions) for 1989 to 1993. 1989 1990 1991 1992 1993 ---- ---- ---- ---- ---- Nonaccrual loans 181.912 183.621 210.087 223.058 153.919 Reduced-rate loans 15.127 13.575 0.346 0.850 5.057 Other real estate 53.505 57.327 45.753 49.188 50.174 ------- ------- ------- ------- ------- Total 250.544 254.523 256.186 273.096 209.150
EX-21 6 EXHIBIT 21 1 Exhibit 21 SUBSIDIARIES OF THE REGISTRANT
State or jurisdiction of Incorporation Name or organization Comerica Bank Michigan Comerica California Incorporated California Comerica Bank-Illinois Illinois Comerica Community Development Corporation Michigan Comerica Assurance Ltd. Bermuda Stanford State Bank Illinois Comerica Bank & Trust, F.S.B. United States Comerica Bank-Midwest, N.A. United States Manufacturers Bank-Wilmington Delaware Comerica Bank-Ann Arbor, N.A. United States Comerica Texas Incorporated Delaware Comerica Acceptance Corporation Michigan Comerica Corporate Services Incorporated Michigan Comerica Insurance Company Arizona Comerica Properties Corporation Michigan ComeriCOMP Incorporated Michigan Magic Line, Inc. Michigan Manufacturers Properties Corporation Michigan Waterfront Corporation Michigan Subsidiaries of Comerica Bank Comerica Investment Services, Inc. Michigan Comerica Insurance Services Corporation Michigan Comerica Securities, Inc. Michigan Wilson, Kemp & Associates, Inc. Michigan Woodbridge Capital Management, Inc. Michigan C-Tec Ventures, Inc. Michigan Access Insurance Services, Inc. Michigan World Asset Management, Inc. Delaware Comerica Leasing Corporation d/b/a Manucor Leasing, Inc. Michigan Comerica Mortgage Corporation Michigan Manufacturers Data Corporation Michigan Manufacturers Mortgage Corporation Michigan A/H Hotel Management Co. Michigan Roca-I, Inc. Michigan
2 VRB Corp. Michigan Jefferson Development, Inc. Michigan John V. Carr & Son, Inc. Michigan Duty Drawback Service, Inc. Michigan Comerica International Corporation United States Comerica International (Canada) Limited Ontario Comerica International (Canada) Properties, Limited Ontario Manufacturers International (Australia) Properties Limited Australia Subsidiaries of Comerica California Incorporated Comerica Bank-California California Interstate Select Insurance Services, Inc. California Rowland Financial Corporation California Plaza Realty Advisors California Plaza Commerce Leasing California Subsidiary of Comerica Bank-Illinois B&E Realty Corporation Illinois Subsidiaries of Comerica Texas Incorporated Comerica Bank-Texas Texas Comerica Asset Management Incorporated Michigan Comerica Financial Services, Inc. Texas Riverside Investments Inc. Texas Riverside Investments II Inc. Texas BTXW Investments, Inc. Texas NorthPark Securities, Inc. Texas North Dallas Realty Management Corporation Texas P & SA Corp. Texas Park Properties, Inc. Texas Subsidiary of Manufacturers Properties Corporation Sunshine Canal Corporation Michigan
EX-23.1 7 EXHIBIT 23.1 1 [LOGO] ERNST & YOUNG EXHIBIT 23.1 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statements listed below, of our reports on the consolidated financial statements of Comerica Incorporated and subsidiaries dated January 18, 1994, financial statements of Comerica Incorporated Preferred Savings Plan dated March 8, 1994 and financial statements of John V. Carr & Son, Inc. Employees' Profit-Sharing Trust dated March 8, 1994, all included in the Annual Report on Form 10-K of Comerica Incorporated for the year ended December 31, 1993: Registration Statement No. 33-42485 on Form S-8 dated August 29, 1991 Registration Statement No. 33-45500 on Form S-8 dated February 11, 1992 Registration Statement No. 33-49964 on Form S-8 dated July 23, 1992 Registration Statement No. 33-49966 on Form S-8 dated July 23, 1992 Registration Statement No. 33-53220 on Form S-8 dated October 13, 1992 Registration Statement No. 33-53222 on Form S-8 dated October 13, 1992 ERNST & YOUNG Detroit, Michigan March 28, 1994 EX-23.2 8 EXHIBIT 23.2 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT AUDITORS The Board of Directors Comerica Incorporated: We consent to the incorporation by reference in the Registration Statements listed below, of our report dated January 15, 1992, on the consolidated statements of income, changes in shareholders' equity, and cash flows for the year ended December 31, 1991, which report appears in the Annual Report on Form 10-K of Comerica Incorporated for the year ended December 31, 1993: Registration Statement No. 33-42485 on Form S-8 dated August 29, 1991 Registration Statement No. 33-45500 on Form S-8 dated February 11, 1992 Registration Statement No. 33-49964 on Form S-8 dated July 23, 1992 Registration Statement No. 33-49966 on Form S-8 dated July 23, 1992 Registration Statement No. 33-53220 on Form S-8 dated October 13, 1992 Registration Statement No. 33-53222 on Form S-8 dated October 13, 1992 KPMG PEAT MARWICK Detroit, Michigan March 25, 1994 EX-23.3 9 EXHIBIT 23.3 1 EXHIBIT 23.3 REPORT OF INDEPENDENT AUDITORS To the Shareholders and Board of Directors Comerica Incorporated We have audited the consolidated statements of income, changes in shareholders' equity, and cash flows of Comerica Incorporated and subsidiaries for the year ended December 31, 1991. These consolidated financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a resonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Comerica Incorporated and subsidiaries for the year ended December 31, 1991, in conformity with generally accepted accounting principles. KPMG PEAT MARWICK January 15, 1992 -----END PRIVACY-ENHANCED MESSAGE-----