EX-99.1 2 k91206exv99w1.htm PRESS RELEASE, DATED JANUARY 20, 2005 exv99w1
 

Exhibit 99.1

COMERICA REPORTS FOURTH QUARTER AND 2004 EARNINGS

DETROIT/January 20, 2005 — Comerica Incorporated (NYSE: CMA) today reported fourth quarter 2004 earnings of $207 million, or $1.21 per diluted share, compared to $196 million, or $1.13 per diluted share, for the third quarter 2004 and $158 million, or $0.89 per diluted share, for the fourth quarter 2003.

                         
(dollar amounts in millions)   4th Qtr ‘04     3rd Qtr ‘04     4th Qtr ‘03  
Diluted EPS
   $ 1.21     $ 1.13     $ 0.89  
Net Interest Income
   $ 466     $ 451     $ 457  
Net Interest Margin
     3.96 %     3.86 %     3.83 %
Provision for Loan Losses
   $ (21 )   $ —     $ 77  
Noninterest Income
   $ 203     $ 206     $ 220  
Noninterest Expenses
   $ 380     $ 372     $ 379  
Net Income
   $ 207     $ 196     $ 158  
Return on Equity
     16.39 %     15.68 %     12.33 %

Net income for 2004 was $757 million, or $4.36 per diluted share, compared to $661 million, or $3.75 per diluted share for 2003. Return on average common shareholders’ equity was 15.03 percent and return on average assets was 1.49 percent for 2004, compared to 13.12 percent and 1.25 percent, respectively, for 2003.

“We ended 2004 on a positive note with fourth quarter financial results that underscored the improving trends we have seen all year,” said Ralph W. Babb, Jr., chairman and chief executive officer. “Net interest income increased for the third consecutive quarter, and expenses were well controlled. As we enter 2005, we remain focused on revenue growth through our investment in branches, technology and products.”

Net Interest Income
Net interest income was $466 million for the fourth quarter 2004, compared to $451 million for the third quarter 2004 and $457 million for the fourth quarter 2003. Average earning assets of $47.0 billion for the fourth quarter 2004 increased $592 million from the third quarter 2004, or one percent, primarily as a result of a $484 million increase in average loans to $41.1 billion for the fourth quarter 2004; a nearly five percent annualized increase. Average deposits of $40.3 billion for the fourth quarter 2004 increased $593 million, or one percent, from the third quarter 2004.

The net interest margin increased 10 basis points from the third quarter 2004 to 3.96 percent in the fourth quarter 2004, due to greater contribution from noninterest-bearing deposits.

Noninterest Income
Noninterest income was $203 million for the fourth quarter 2004, compared to $206 million for the third quarter 2004 and $220 million for the fourth quarter 2003. There were no net securities gains in the fourth quarter 2004, compared to $6 million of net securities losses in the third quarter 2004 and $4 million of net securities gains in the fourth quarter 2003.

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COMERICA REPORTS FOURTH QUARTER AND 2004 EARNINGS - 2

Noninterest Expenses
Noninterest expenses were $380 million for the fourth quarter 2004 compared to $372 million for the third quarter 2004 and $379 million for the fourth quarter 2003. Included in salary and employee benefits expenses in the third quarter 2004 was a $7 million reduction in expense due to employee forfeitures of stock-based compensation and revisions to employee forfeiture assumptions for stock options. Severance expenses for the fourth quarter and 2004 were $3 million and $11 million, respectively, compared to $1 million for the third quarter 2004 and $2 million for 2003. Included in the fourth quarter 2004 was a $5 million net credit to litigation-related costs, compared to litigation-related costs of $12 million that were expensed in the third quarter 2004. Other noninterest expenses in the fourth quarter 2004 included interest expense on tax liabilities of $8 million, compared to $5 million for the third quarter 2004. Also included in other noninterest expenses in the fourth quarter 2004 was an increase of $6 million in contribution expense, mostly designated for the Comerica Charitable Foundation.

                         
Credit Quality                  
(dollar amounts in millions)   4th Qtr ‘04     3rd Qtr ‘04     4th Qtr ‘03  
Net Charge-offs
   $ 35     $ 33     $ 76  
Net Charge-offs/Average Total Loans
     0.34 %     0.33 %     0.75 %
Provision for Loan Losses
   $ (21 )   $ —     $ 77  
Nonperforming Assets (NPAs)
   $ 339     $ 388     $ 538  
NPAs/Total Loans, Other Real Estate & Nonaccrual Debt Securities
     0.83 %     0.98 %     1.33 %
Allowance for Loan Losses
   $ 673     $ 729     $ 803  
Allowance for Loan Losses/Total Loans
     1.65 %     1.83 %     1.99 %
Allowance for Credit Losses on Lending-related Commitments*
   $ 21     $ 24     $ 33  

* Included in “Accrued expenses and other liabilities” on the consolidated balance sheets.

During the fourth quarter of 2004, $71 million of loans greater than $2 million were transferred to nonaccrual status. Nonperforming assets were $339 million at December 31, 2004, a decrease of $49 million from September 30, 2004.

“For the fourth quarter, net charge-offs and nonperforming loans declined from year-ago levels,” said Babb.
“In 2004, credit quality trends improved every quarter, with the pace of these improvements moderating in the second half of the year.”

Balance Sheet and Capital Management
Total assets and common shareholders’ equity were $51.8 billion and $5.1 billion, respectively, at December 31, 2004, compared to $53.0 billion and $5.0 billion, respectively, at September 30, 2004. There were approximately 170 million shares outstanding at December 31, 2004, compared to approximately 171 million shares outstanding at September 30, 2004. In the fourth quarter of 2004, approximately 500,000 shares were repurchased in the open market for $34 million. Comerica’s fourth quarter 2004 estimated tier 1 common, tier 1 and total risk-based capital ratios were 8.14 percent, 8.78 percent and 12.72 percent, respectively.

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COMERICA REPORTS FOURTH QUARTER AND 2004 EARNINGS - 3

Conference Call and Webcast
Comerica will host a conference call to review fourth quarter and full-year 2004 financial results at 8 a.m. ET Thursday, January 20, 2005. Interested parties may access the conference call by calling (706) 679-5261 (event ID No. 2941511). The call and supplemental financial information can also be accessed via a Webcast at www.comerica.com. A replay of the conference call will be available approximately two hours following the call through Sunday, February 20, 2005. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 2941511). A replay of the Webcast can also be accessed via Comerica’s “Investor Relations” page at www.comerica.com.

Comerica Incorporated is a financial services company headquartered in Detroit, strategically aligned into three major lines of business: the Business Bank, Small Business & Personal Financial Services, and Wealth & Institutional Management. Comerica focuses on relationships and helping businesses and people to be successful. To receive e-mail alerts of breaking Comerica news, go to www.comerica.com/newsalerts.

Forward-looking Statement
Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “project,” “plan,” “outlook,” “may,” “could,” “would” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica’s management based on information known to Comerica’s management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica’s management for future or past operations, products or services, and forecasts of Comerica’s revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries, estimates of credit trends and global stability. Such statements reflect the view of Comerica’s management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica’s actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in the pace of an economic recovery and related changes in employment levels, the effects of war and other armed conflicts or acts of terrorism, implementation of Comerica’s strategies and business models, management’s ability to maintain and expand customer relationships, changes in the accounting treatment of any particular item, the impact of regulatory examinations, changes in the businesses or industries in which Comerica has a concentration of loans, the anticipated performance of any new banking branches, the entry of new competitors in Comerica’s markets, changes in the level of fee income, changes in applicable laws and regulations, including those concerning taxes, banking, securities and insurance, changes in trade, monetary and fiscal policies, including the interest rate policies of the Board of Governors of the Federal Reserve System, fluctuations in inflation or interest rates, changes in general economic conditions and related credit and market conditions and adverse conditions in the stock market. Comerica cautions that the foregoing list of factors is not exclusive. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

     
Media Contacts:
  Investor Contact:
Sharon R. McMurray
  Helen L. Arsenault
(313) 222-4881
  (313) 222-2840
 
    
Wayne J. Mielke
    
(313) 222-4732
    

 

 

CONSOLIDATED FINANCIAL HIGHLIGHTS
Comerica Incorporated and Subsidiaries

                                         
 
    Three Months Ended     Years Ended  
    December 31,     September 30,     December 31,     December 31,  
(in millions, except per share data)   2004     2004     2003     2004     2003  
 
PER SHARE AND COMMON STOCK DATA
                                        
Diluted net income
   $ 1.21     $ 1.13     $ 0.89     $ 4.36     $ 3.75  
Cash dividends declared
     0.52       0.52       0.50       2.08       2.00  
Common shareholders’ equity (at period end)
     29.94       29.52       29.20                  
                                         
Average diluted shares (in thousands)
     172,224       172,864       176,559       173,816       176,222  
 
KEY RATIOS
                                        
Return on average common shareholders’ equity
     16.39 %     15.68 %     12.33 %     15.03 %     13.12 %
Return on average assets
     1.63       1.55       1.22       1.49       1.25  
Average common shareholders’ equity as a percentage of average assets
     9.93       9.91       9.92       9.90       9.50  
Tier 1 common capital ratio *
     8.14       8.16       8.04                  
Tier 1 risk-based capital ratio *
     8.78       8.81       8.72                  
Total risk-based capital ratio *
     12.72       13.06       12.71                  
Leverage ratio *
     10.41       10.28       10.13                  
 
AVERAGE BALANCES
                                        
Commercial loans (1)
   $ 22,563     $ 22,096     $ 22,190     $ 22,139     $ 23,764  
Real estate construction loans
     3,178       3,273       3,500       3,264       3,540  
Commercial mortgage loans
     7,999       7,951       7,727       7,991       7,521  
Residential mortgage loans (1)
     1,275       1,239       1,232       1,237       1,192  
Consumer loans (1)
     2,721       2,671       2,539       2,668       2,474  
Lease financing
     1,259       1,266       1,290       1,272       1,283  
International loans
     2,134       2,149       2,406       2,162       2,596  
 
Total loans
   $ 41,129     $ 40,645     $ 40,884     $ 40,733     $ 42,370  
Earning assets
     47,018       46,426       47,481       46,975       48,841  
Total assets
     51,116       50,348       51,385       50,948       52,980  
Interest-bearing deposits
     25,572       25,722       27,131       26,023       27,609  
Total interest-bearing liabilities
     30,192       30,435       32,237       30,838       33,233  
Noninterest-bearing deposits
     14,755       14,012       13,198       14,122       13,910  
Common shareholders’ equity
     5,077       4,990       5,100       5,041       5,033  
 
NET INTEREST INCOME
                                        
Net interest income (fully taxable equivalent basis)
   $ 467     $ 452     $ 458     $ 1,813     $ 1,929  
Fully taxable equivalent adjustment
     1       1       1       3       3  
Net interest margin
     3.96 %     3.86 %     3.83 %     3.86 %     3.95 %
 
CREDIT QUALITY
                                        
Nonaccrual loans
   $ 312     $ 361     $ 507                  
Other real estate
     27       27       30                  
Nonaccrual debt securities
     —       —       1                  
Total nonperforming assets
     339       388       538                  
Loans 90 days past due and still accruing
     15       20       32                  
Gross charge-offs
     55       53       97     $ 268     $ 408  
Recoveries
     20       20       21       74       43  
Net charge-offs
     35       33       76       194       365  
 
Allowance for loan losses as a percentage of total loans
     1.65 %     1.83 %     1.99 %                
Net loans charged off as a percentage of average total loans
     0.34       0.33       0.75       0.48 %     0.86 %
Nonperforming assets as a percentage of total loans, other real estate and nonaccrual debt securities
     0.83       0.98       1.33                  
Allowance for loan losses as a percentage of total nonperforming assets
     198       188       149                  
 
ADDITIONAL DATA
                                        
Goodwill
   $ 247     $ 247     $ 247                  
Core deposit intangible
     —       —       1                  
Other intangibles
     1       1       1                  
Loan servicing rights
     20       20       17                  
Deferred mutual fund distribution costs
     8       9       12                  
Amortization of intangibles
     —       —       1     $ 1     $ 1  
 

(1) Loans to individuals associated with commercial lending relationships were reclassified from commercial loans to residential mortgage loans and consumer loans in the second quarter of 2004. Prior periods have been reclassified.

* December 31, 2004 ratios are estimated

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CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries

                         
 
    December 31,     September 30,     December 31,  
(in millions , except share data)   2004     2004     2003  
 
ASSETS
                        
Cash and due from banks
   $ 1,139     $ 1,560     $ 1,527  
Short-term investments
     3,230       5,055       4,013  
Investment securities available-for-sale
     3,943       4,198       4,489  
                         
Commercial loans
     22,039       21,146       21,579  
Real estate construction loans
     3,053       3,276       3,397  
Commercial mortgage loans
     8,236       7,931       7,878  
Residential mortgage loans
     1,294       1,263       1,228  
Consumer loans
     2,751       2,722       2,610  
Lease financing
     1,265       1,260       1,301  
International loans
     2,205       2,117       2,309  
 
Total loans
     40,843       39,715       40,302  
Less allowance for loan losses
     (673 )     (729 )     (803 )
 
Net loans
     40,170       38,986       39,499  
                         
Premises and equipment
     415       399       374  
Customers’ liability on acceptances outstanding
     57       41       27  
Accrued income and other assets
     2,812       2,720       2,663  
 
Total assets
   $ 51,766     $ 52,959     $ 52,592  
 
 
                        
LIABILITIES AND SHAREHOLDERS’ EQUITY
                        
Noninterest-bearing deposits
   $ 15,164     $ 16,811     $ 14,104  
Interest-bearing deposits
     25,772       25,424       27,359  
 
                         
Total deposits
     40,936       42,235       41,463  
                         
Short-term borrowings
     193       225       262  
Acceptances outstanding
     57       41       27  
Accrued expenses and other liabilities
     1,189       1,021       929  
Medium- and long-term debt
     4,286       4,401       4,801  
 
Total liabilities
     46,661       47,923       47,482  
 
                        
Common stock - $5 par value:
                        
Authorized - 325,000,000 shares
Issued - 178,735,252 shares at 12/31/04, 9/30/04 and 12/31/03
     894       894       894  
Capital surplus
     421       408       384  
Accumulated other comprehensive income (loss)
     (69 )     (24 )     74  
Retained earnings
     4,331       4,222       3,973  
Less cost of common stock in treasury - 8,259,328 shares at 12/31/04, 8,169,292 shares at 9/30/04 and 3,735,163 shares at 12/31/03
     (472 )     (464 )     (215 )
 
Total shareholders’ equity
     5,105       5,036       5,110  
 
Total liabilities and shareholders’ equity
   $ 51,766     $ 52,959     $ 52,592  
 

-5-

 

CONSOLIDATED STATEMENTS OF INCOME
Comerica Incorporated and Subsidiaries

                                 
 
    Three Months Ended     Years Ended  
    December 31,     December 31,  
(in millions, except per share data)   2004     2003     2004     2003  
 
INTEREST INCOME
                                
Interest and fees on loans
   $ 544     $ 511     $ 2,054     $ 2,211  
Interest on investment securities
     36       41       147       165  
Interest on short-term investments
     11       8       36       36  
 
Total interest income
     591       560       2,237       2,412  
 
                                
INTEREST EXPENSE
                                
Interest on deposits
     91       77       315       370  
Interest on short-term borrowings
     2       1       4       7  
Interest on medium- and long-term debt
     32       25       108       109  
 
Total interest expense
     125       103       427       486  
 
Net interest income
     466       457       1,810       1,926  
Provision for loan losses
     (21 )     77       64       377  
 
Net interest income after provision for loan losses
     487       380       1,746       1,549  
 
                                
NONINTEREST INCOME
                                
Service charges on deposit accounts
     53       59       231       238  
Fiduciary income
     43       44       171       169  
Commercial lending fees
     14       17       55       63  
Letter of credit fees
     17       16       66       65  
Foreign exchange income
     9       6       37       36  
Brokerage fees
     9       10       36       34  
Investment advisory revenue, net
     9       8       35       30  
Card fees
     9       7       32       27  
Bank-owned life insurance
     6       9       34       42  
Equity in earnings of unconsolidated subsidiaries
     1       1       12       6  
Warrant income
     1       3       7       4  
Net securities gains
     —       4       —       50  
Net gain on sales of businesses
     —       —       7       —  
Other noninterest income
     32       36       134       123  
 
Total noninterest income
     203       220       857       887  
 
                                
NONINTEREST EXPENSES
                                
Salaries and employee benefits
     233       227       919       897  
Net occupancy expense
     32       32       125       128  
Equipment expense
     15       15       58       61  
Outside processing fee expense
     17       18       68       71  
Software expense
     12       9       43       37  
Customer services
     6       7       23       25  
Litigation and operational losses
     (3 )     4       24       18  
Other noninterest expenses
     68       67       233       246  
 
Total noninterest expenses
     380       379       1,493       1,483  
 
Income before income taxes
     310       221       1,110       953  
Provision for income taxes
     103       63       353       292  
 
NET INCOME
   $ 207     $ 158     $ 757     $ 661  
 
 
                                
Basic net income per common share
   $ 1.22     $ 0.90     $ 4.41     $ 3.78  
Diluted net income per common share
     1.21       0.89       4.36       3.75  
 
                                
Cash dividends declared on common stock
     88       88       356       350  
Dividends per common share
     0.52       0.50       2.08       2.00  
 

-6-

 

CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
Comerica Incorporated and Subsidiaries

                                                                         
 
    Fourth     Third     Second     First     Fourth     Fourth Quarter 2004 Compared To:  
    Quarter     Quarter     Quarter     Quarter     Quarter     Third Quarter 2004     Fourth Quarter 2003  
(in millions, except per share data)   2004     2004     2004     2004     2003     Amount     Percent     Amount     Percent  
 
INTEREST INCOME
                                                                        
Interest and fees on loans
   $ 544     $ 514     $ 500     $ 496     $ 511     $ 30       5.9 %   $ 33       6.6 %
Interest on investment securities
     36       36       35       40       41       —       0.1       (5 )     (15.1 )
Interest on short-term investments
     11       8       10       7       8       3       28.6       3       39.6  
 
Total interest income
     591       558       545       543       560       33       5.9       31       5.4  
 
                                                                        
INTEREST EXPENSE
                                                                        
Interest on deposits
     91       79       72       73       77       12       15.3       14       17.7  
Interest on short-term borrowings
     2       1       —       1       1       1       51.0       1       56.1  
Interest on medium- and long-term debt
     32       27       25       24       25       5       15.6       7       29.6  
 
Total interest expense
     125       107       97       98       103       18       15.7       22       20.9  
 
Net interest income
     466       451       448       445       457       15       3.6       9       2.0  
Provision for loan losses
     (21 )     —       20       65       77       (21 )     N/M       (98 )     (127.3 )
 
Net interest income after provision for loan losses
     487       451       428       380       380       36       8.2       107       28.1  
 
                                                                        
NONINTEREST INCOME
                                                                        
Service charges on deposit accounts
     53       57       59       62       59       (4 )     (5.6 )     (6 )     (9.7 )
Fiduciary income
     43       43       41       44       44       —       1.0       (1 )     (1.4 )
Commercial lending fees
     14       14       13       14       17       —       (12.4 )     (3 )     (21.9 )
Letter of credit fees
     17       17       17       15       16       —       (2.4 )     1       2.4  
Foreign exchange income
     9       9       10       9       6       —       8.8       3       42.2  
Brokerage fees
     9       9       8       10       10       —       6.5       (1 )     (0.3 )
Investment advisory revenue, net
     9       8       9       9       8       1       12.0       1       11.5  
Card fees
     9       8       8       7       7       1       8.2       2       31.4  
Bank-owned life insurance
     6       10       9       9       9       (4 )     (31.1 )     (3 )     (26.2 )
Equity in earnings of unconsolidated subsidiaries
     1       3       5       3       1       (2 )     (56.4 )     —       26.6  
Warrant income
     1       1       4       1       3       —       0.1       (2 )     (54.2 )
Net securities gains (losses)
     —       (6 )     1       5       4       6       N/M       (4 )     (95.3 )
Net gain on sales of businesses
     —       —       7       —       —       —       N/M       —       —  
Other noninterest income
     32       33       37       32       36       (1 )     (5.0 )     (4 )     (14.1 )
 
Total noninterest income
     203       206       228       220       220       (3 )     (1.3 )     (17 )     (7.6 )
 
                                                                        
NONINTEREST EXPENSES
                                                                        
Salaries and employee benefits
     233       225       235       226       227       8       3.6       6       2.5  
Net occupancy expense
     32       32       31       30       32       —       4.4       —       3.2  
Equipment expense
     15       14       14       15       15       1       2.5       —       (1.6 )
Outside processing fee expense
     17       16       18       17       18       1       3.3       (1 )     (5.7 )
Software expense
     12       11       9       11       9       1       11.7       3       21.7  
Customer services
     6       8       7       2       7       (2 )     (33.2 )     (1 )     (24.9 )
Litigation and operational losses
     (3 )     16       3       8       4       (19 )     (121.4 )     (7 )     (179.5 )
Other noninterest expenses
     68       50       55       60       67       18       38.7       1       3.1  
 
Total noninterest expenses
     380       372       372       369       379       8       2.2       1       —  
 
Income before income taxes
     310       285       284       231       221       25       9.3       89       40.9  
Provision for income taxes
     103       89       92       69       63       14       15.7       40       62.3  
 
NET INCOME
   $ 207     $ 196     $ 192     $ 162     $ 158     $ 11       6.3 %   $ 49       32.3 %
 
Basic net income per common share
   $ 1.22     $ 1.15     $ 1.11     $ 0.93     $ 0.90     $ 0.07       6.1 %   $ 0.32       35.6 %
Diluted net income per common share
     1.21       1.13       1.10       0.92       0.89       0.08       7.1       0.32       36.0  
 
Cash dividends declared on common stock
     88       88       90       90       88       —       (0.3 )     —       0.5  
Dividends per common share
     0.52       0.52       0.52       0.52       0.50       —       —       0.02       4.0  
 

N/M – Not meaningful

-7-

 

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
Comerica Incorporated and Subsidiaries

                                         
 
    2004     2003  
(in millions)   4th Qtr     3rd Qtr     2nd Qtr     1st Qtr     4th Qtr  
 
Balance at beginning of period
   $ 729     $ 762     $ 798     $ 803     $ 802  
 
                                        
Loans charged-off:
                                        
Commercial
     39       41       57       64       74  
Real estate construction:
                                        
Real estate construction business line
     —       1       1       —       1  
Other
     —       —       —       —       —  
 
Total real estate construction
     —       1       1       —       1  
Commercial mortgage:
                                        
Commercial real estate business line
     4       —       —       —       —  
Other
     —       7       6       6       6  
 
Total commercial mortgage
     4       7       6       6       6  
Residential mortgage
     —       1       —       —       —  
Consumer
     5       2       4       3       3  
Lease financing
     4       —       1       8       —  
International
     3       1       7       3       13  
 
Total loans charged-off
     55       53       76       84       97  
 
                                        
Recoveries on loans previously charged-off:
                                        
Commercial
     14       13       15       10       16  
Real estate construction
     —       —       —       —       —  
Commercial mortgage
     1       1       1       —       —  
Residential mortgage
     —       —       —       —       —  
Consumer
     —       1       1       —       —  
Lease financing
     —       —       —       1       —  
International
     5       5       3       3       5  
 
Total recoveries
     20       20       20       14       21  
 
Net loans charged-off
     35       33       56       70       76  
Provision for loan losses
     (21 )     —       20       65       77  
 
Balance at end of period
   $ 673     $ 729     $ 762     $ 798     $ 803  
 
 
                                        
Allowance for loan losses as a percentage of total loans
     1.65 %     1.83 %     1.90 %     1.99 %     1.99 %
 
                                        
Net loans charged-off as a percentage of average total loans
     0.34       0.33       0.55       0.69       0.75  
 
Allowance for credit losses on lending-related commitments*
   $ 21     $ 24     $ 28     $ 32     $ 33  
 

* Included in “Accrued expenses and other liabilities” on the consolidated balance sheets.

-8-

 

NONPERFORMING ASSETS
Comerica Incorporated and Subsidiaries

                                         
 
    2004     2003  
(in millions)   4th Qtr     3rd Qtr     2nd Qtr     1st Qtr     4th Qtr  
 
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS                                
Nonaccrual loans:
                                        
Commercial
   $ 161     $ 181     $ 229     $ 282     $ 295  
Real estate construction:
                                        
Real estate construction business line
     31       28       20       19       21  
Other
     3       3       3       5       3  
 
Total real estate construction
     34       31       23       24       24  
Commercial mortgage:
                                        
Commercial real estate business line
     6       10       12       3       3  
Other
     58       70       80       90       84  
 
Total commercial mortgage
     64       80       92       93       87  
Residential mortgage
     1       1       3       4       2  
Consumer
     1       2       2       5       7  
Lease financing
     15       19       13       13       24  
International
     36       47       42       68       68  
 
Total nonaccrual loans
     312       361       404       489       507  
Reduced-rate loans
     —       —       —       —       —  
 
Total nonperforming loans
     312       361       404       489       507  
Other real estate
     27       27       26       32       30  
Nonaccrual debt securities
     —       —       —       1       1  
 
Total nonperforming assets
   $ 339     $ 388     $ 430     $ 522     $ 538  
 
 
                                        
Nonperforming loans as a percentage of total loans
     0.76 %     0.91 %     1.01 %     1.22 %     1.26 %
Nonperforming assets as a percentage of total loans, other real estate and nonaccrual debt securities
     0.83       0.98       1.07       1.30       1.33  
Allowance for loan losses as a percentage of total nonperforming assets
     198       188       177       153       149  
Loans past due 90 days or more and still accruing
   $ 15     $ 20     $ 25     $ 35     $ 32  
 
 
                                        
ANALYSIS OF NONACCRUAL LOANS
                                        
Nonaccrual loans at beginning of period
   $ 361     $ 404     $ 489     $ 507     $ 598  
Loans transferred to nonaccrual (1)
     71       106       63       92       114  
Nonaccrual business loan gross charge-offs (2)
     (49 )     (48 )     (71 )     (80 )     (93 )
Loans transferred to accrual status (1)
     (7 )     —       —       —       —  
Nonaccrual business loans sold (3)
     (33 )     (16 )     (33 )     (14 )     (48 )
Payments/Other (4)
     (31 )     (85 )     (44 )     (16 )     (64 )
 
Nonaccrual loans at end of period
   $ 312     $ 361     $ 404     $ 489     $ 507  
 
 
                                        
(1) Based on an analysis of nonaccrual loans with book balances greater than $2 million.
(2) Analysis of gross loan charge-offs:
                                        
 
Nonaccrual business loans
   $ 49     $ 48     $ 71     $ 80     $ 93  
Performing watch list loans
     1       2       1       1       1  
Consumer loans
     5       3       4       3       3  
     
Total gross loan charge-offs
   $ 55     $ 53     $ 76     $ 84     $ 97  
     
(3) Analysis of loans sold:
                                        
 
Nonaccrual business loans
   $ 33     $ 16     $ 33     $ 14     $ 48  
Performing watch list loans
     7       30       14       18       15  
     
Total loans sold
   $ 40     $ 46     $ 47     $ 32     $ 63  
     
(4) Net change related to nonaccrual loans with balances less than $2 million, other than business loan gross charge-offs and nonaccrual loans sold, are included in Payments/Other.

-9-

 

ANALYSIS OF NET INTEREST INCOME (FTE)
Comerica Incorporated and Subsidiaries

                                                                         
 
    Three Months Ended  
    December 31, 2004     September 30, 2004     December 31, 2003  
    Average             Average     Average             Average     Average             Average  
(dollar amounts in millions)   Balance     Interest     Rate     Balance     Interest     Rate     Balance     Interest     Rate  
 
Commercial loans
   $ 22,563     $ 265       4.66 %   $ 22,096     $ 234       4.21 %   $ 22,190     $ 227       4.07 %
Real estate construction loans
     3,178       48       5.99       3,273       46       5.58       3,500       44       5.00  
Commercial mortgage loans
     7,999       111       5.53       7,951       104       5.22       7,727       100       5.11  
Residential mortgage loans
     1,275       18       5.59       1,239       18       5.63       1,232       18       5.84  
Consumer loans
     2,721       34       5.04       2,671       31       4.68       2,539       27       4.31  
Lease financing
     1,259       13       4.09       1,266       11       3.46       1,290       15       4.58  
International loans
     2,134       29       5.40       2,149       26       4.87       2,406       26       4.36  
Business loan swap income
     —       28       —       —       45       —       —       54       —  
     
Total loans
     41,129       546       5.28       40,645       515       5.04       40,884       511       4.97  
                                                                         
Investment securities available-for-sale (1)
     4,052       35       3.48       4,225       36       3.31       4,792       42       3.47  
Short-term investments
     1,837       11       2.36       1,556       8       2.17       1,805       8       1.72  
     
Total earning assets
     47,018       592       5.01       46,426       559       4.78       47,481       561       4.69  
                                                                         
Cash and due from banks
     1,698                       1,652                       1,703                  
Allowance for loan losses
     (731 )                     (774 )                     (832 )                
Accrued income and other assets
     3,131                       3,044                       3,033                  
 
                                                                  
Total assets
   $ 51,116                     $ 50,348                     $ 51,385                  
 
                                                                  
                         
Money market and NOW deposits
   $ 17,755       57       1.27     $ 17,526       47       1.06     $ 17,991       44       0.98  
Savings deposits
     1,605       2       0.41       1,652       1       0.36       1,592       2       0.42  
Certificates of deposit
     5,520       28       2.01       5,826       26       1.79       6,991       28       1.58  
Foreign office time deposits
     692       5       2.99       718       5       2.76       557       4       2.62  
     
Total interest-bearing deposits
     25,572       92       1.42       25,722       79       1.22       27,131       78       1.13  
                         
Short-term borrowings
     278       1       1.85       251       1       1.36       334       1       0.98  
Medium- and long-term debt
     4,342       32       2.91       4,462       27       2.45       4,772       24       2.04  
     
Total interest-bearing sources
     30,192       125       1.64       30,435       107       1.40       32,237       103       1.27  
 
                                        
                         
Noninterest-bearing deposits
     14,755                       14,012                       13,198                  
Accrued expenses and other liabilities
     1,092                       911                       850                  
Common shareholders’ equity
     5,077                       4,990                       5,100                  
 
                                                                  
Total liabilities and shareholders’ equity
   $ 51,116                     $ 50,348                     $ 51,385                  
 
                                                                  
                                                                         
Net interest income/rate spread (FTE)
           $ 467       3.37             $ 452       3.38             $ 458       3.42  
 
                                                                  
                                                                         
FTE adjustment
           $ 1                     $ 1                     $ 1          
 
                                                                  
                                                                         
Impact of net noninterest-bearing sources of funds
                     0.59                       0.48                       0.41  
 
Net interest margin (as a percentage of average earning assets) (FTE)
                     3.96 %                     3.86 %                     3.83 %
 

(1) The average rate for investment securities available-for-sale was computed using average historical cost.

-10-

 

ANALYSIS OF NET INTEREST INCOME (FTE)
Comerica Incorporated and Subsidiaries

                                                 
 
    Years Ended        
    December 31, 2004     December 31, 2003  
    Average             Average     Average             Average  
(dollar amounts in millions)   Balance     Interest     Rate     Balance     Interest     Rate  
 
Commercial loans
   $ 22,139     $ 933       4.22 %   $ 23,764     $ 978       4.11 %
Real estate construction loans
     3,264       177       5.43       3,540       178       5.04  
Commercial mortgage loans
     7,991       415       5.19       7,521       403       5.35  
Residential mortgage loans
     1,237       70       5.68       1,192       73       6.12  
Consumer loans
     2,668       126       4.73       2,474       122       4.94  
Lease financing
     1,272       52       4.06       1,283       59       4.59  
International loans
     2,162       102       4.69       2,596       115       4.44  
Business loan swap income
     —       182       —       —       285       —  
     
Total loans
     40,733       2,057       5.05       42,370       2,213       5.22  
     
Investment securities available-for-sale (1)
     4,321       147       3.36       4,529       166       3.65  
Short-term investments
     1,921       36       1.88       1,942       36       1.85  
     
Total earning assets
     46,975       2,240       4.76       48,841       2,415       4.94  
     
Cash and due from banks
     1,685                       1,811                  
Allowance for loan losses
     (787 )                     (831 )                
Accrued income and other assets
     3,075                       3,159                  
 
                                            
Total assets
   $ 50,948                     $ 52,980                  
 
                                            
     
Money market and NOW deposits
   $ 17,768       188       1.06     $ 17,359       204       1.18  
Savings deposits
     1,629       6       0.39       1,571       8       0.50  
Certificates of deposit
     5,962       104       1.74       8,061       139       1.72  
Foreign office time deposits
     664       17       2.60       618       19       3.15  
     
Total interest-bearing deposits
     26,023       315       1.21       27,609       370       1.34  
     
Short-term borrowings
     275       4       1.25       550       7       1.20  
Medium- and long-term debt
     4,540       108       2.39       5,074       109       2.14  
     
Total interest-bearing sources
     30,838       427       1.38       33,233       486       1.46  
 
                          
     
Noninterest-bearing deposits
     14,122                       13,910                  
Accrued expenses and other liabilities
     947                       804                  
Common shareholders’ equity
     5,041                       5,033                  
 
                                            
Total liabilities and shareholders’ equity
   $ 50,948                     $ 52,980                  
 
                                            
     
Net interest income/rate spread (FTE)
           $ 1,813       3.38             $ 1,929       3.48  
 
                                            
                         
FTE adjustment
           $ 3                     $ 3          
 
                                            
     
Impact of net noninterest-bearing sources of funds
                     0.48                       0.47  
 
Net interest margin (as a percentage of average earning assets) (FTE)
                     3.86 %                     3.95 %
 

(1) The average rate for investment securities available-for-sale was computed using average historical cost.

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CONSOLIDATED STATISTICAL DATA
Comerica Incorporated and Subsidiaries

                                         
 
    December 31,     September 30,     June 30,     March 31,     December 31,  
(in millions, except per share data)   2004     2004     2004     2004     2003  
 
Commercial loans (1):
                                        
Floor plan
   $ 2,575     $ 2,270     $ 2,802     $ 2,797     $ 2,731  
Other
     19,464       18,876       18,656       18,704       18,848  
 
Total commercial loans
     22,039       21,146       21,458       21,501       21,579  
Real estate construction loans:
                                        
Real estate construction business line
     2,461       2,641       2,661       2,628       2,754  
Other
     592       635       621       615       643  
 
Total real estate construction loans
     3,053       3,276       3,282       3,243       3,397  
Commercial mortgage loans:
                                        
Commercial real estate business line
     1,556       1,498       1,656       1,718       1,655  
Other
     6,680       6,433       6,424       6,311       6,223  
 
Total commercial mortgage loans
     8,236       7,931       8,080       8,029       7,878  
Residential mortgage loans (1)
     1,294       1,263       1,211       1,210       1,228  
Consumer loans (1):
                                        
Home equity
     1,837       1,815       1,788       1,657       1,647  
Other consumer
     914       907       884       969       963  
 
Total consumer loans
     2,751       2,722       2,672       2,626       2,610  
Lease financing
     1,265       1,260       1,266       1,268       1,301  
International loans
     2,205       2,117       2,130       2,135       2,309  
 
Total loans
   $ 40,843     $ 39,715     $ 40,099     $ 40,012     $ 40,302  
 
 
(1) Loans to individuals associated with commercial lending relationships were reclassified from commercial loans (other) to residential mortgage loans and consumer loans (both home equity and other consumer) in the second quarter of 2004. Prior periods have been reclassified.
 
Goodwill
   $ 247     $ 247     $ 247     $ 247     $ 247  
Core deposit intangible
     —       —       —       1       1  
Other intangible assets
     1       1       1       1       1  
Loan servicing rights
     20       20       19       18       17  
Deferred mutual fund distribution costs
     8       9       10       11       12  
Amortization of intangibles (quarterly)
     —       —       1       —       1  
 
                                        
Tier 1 common capital ratio*
     8.14 %     8.16 %     8.00 %     8.00 %     8.04 %
Tier 1 risk-based capital ratio*
     8.78       8.81       8.64       8.64       8.72  
Total risk-based capital ratio *
     12.72       13.06       12.91       12.60       12.71  
Leverage ratio*
     10.41       10.28       9.97       10.15       10.13  
 
                                        
Book value per share
   $ 29.94     $ 29.52     $ 28.75     $ 29.41     $ 29.20  
 
                                        
Market value per share for the quarter:
                                        
High
   $ 63.80     $ 61.48     $ 56.99     $ 59.23     $ 56.34  
Low
     57.81       53.00       50.45       52.30       46.38  
Close
     61.02       59.35       54.88       54.32       56.06  
 
                                        
Quarterly ratios:
                                        
Return on average common shareholders’ equity
     16.39 %     15.68 %     15.35 %     12.71 %     12.33 %
Return on average assets
     1.63       1.55       1.49       1.28       1.22  
Efficiency ratio
     56.61       56.08       55.08       55.84       56.34  
 
                                        
Number of banking offices
     376       364       361       362       360  
 
                                        
Number of employees - full time equivalent
     10,968       10,919       11,111       11,237       11,282  
 
                                        

* December 31, 2004 ratios are estimated

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PARENT COMPANY ONLY BALANCE SHEETS
Comerica Incorporated

                         
 
    December 31,     September 30,     December 31,  
(in millions, except share data)   2004     2004     2003  
 
ASSETS
                        
Cash and due from banks
   $ 1     $ 1     $ —  
Short-term investments with subsidiary bank
     289       215       296  
Investment in subsidiaries, principally banks
     5,591       5,611       5,599  
Premises and equipment
     3       3       3  
Other assets
     304       294       262  
 
Total assets
   $ 6,188     $ 6,124     $ 6,160  
 
                         
LIABILITIES AND SHAREHOLDERS’ EQUITY
                        
Long-term debt
   $ 824     $ 827     $ 826  
Other liabilities
     259       261       224  
 
Total liabilities
     1,083       1,088       1,050  
 
                        
Common stock - $5 par value:
                        
    Authorized - 325,000,000 shares
Issued - 178,735,252 shares at 12/31/04, 9/30/04 and 12/31/03
     894       894       894  
Capital surplus
     421       408       384  
Accumulated other comprehensive income
     (69 )     (24 )     74  
Retained earnings
     4,331       4,222       3,973  
Less cost of common stock in treasury - 8,259,328 shares at 12/31/04, 8,169,292 shares at 9/30/04 and 3,735,163 shares at 12/31/03
     (472 )     (464 )     (215 )
 
Total shareholders’ equity
     5,105       5,036       5,110  
 
Total liabilities and shareholders’ equity
   $ 6,188     $ 6,124     $ 6,160  
 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Comerica Incorporated and Subsidiaries

                                                 
 
                    Accumulated                        
                    Other                     Total  
    Common     Capital     Comprehensive     Retained     Treasury     Shareholders’  
(in millions, except share data)   Stock     Surplus     Income (Loss)     Earnings     Stock     Equity  
 
BALANCE AT JANUARY 1, 2003
   $ 894     $ 363     $ 237     $ 3,684     $ (231 )   $ 4,947  
Net income
     —       —       —       661       —       661  
Other comprehensive loss, net of tax
     —       —       (163 )     —       —       (163 )
 
                                              
Total comprehensive income
                                             498  
Cash dividends declared on common stock ($2.00 per share)
     —       —       —       (350 )     —       (350 )
Purchase of 510,500 shares of common stock
     —       —       —       —       (27 )     (27 )
Net issuance of common stock under employee stock plans
     —       (5 )     —       (22 )     43       16  
Recognition of stock-based compensation expense
     —       26       —       —       —       26  
 
BALANCE AT DECEMBER 31, 2003
   $ 894     $ 384     $ 74     $ 3,973     $ (215 )   $ 5,110  
 
BALANCE AT JANUARY 1, 2004
   $ 894     $ 384     $ 74     $ 3,973     $ (215 )   $ 5,110  
Net income
     —       —       —       757       —       757  
Other comprehensive loss, net of tax
     —       —       (143 )     —       —       (143 )
 
                                              
Total comprehensive income
                                             614  
Cash dividends declared on common stock ($2.08 per share)
     —       —       —       (356 )     —       (356 )
Purchase of 6,526,911 shares of common stock
     —       —       —       —       (370 )     (370 )
Net issuance of common stock under employee stock plans
     —       2       —       (43 )     113       72  
Recognition of stock-based compensation expense
     —       35       —       —       —       35  
 
BALANCE AT DECEMBER 31, 2004
   $ 894     $ 421     $ (69 )   $ 4,331     $ (472 )   $ 5,105  
 

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