EX-99.1 2 k99100exv99w1.htm PRESS RELEASE DATED OCTOBER 19, 2005 exv99w1
 

Exhibit 99.1
COMERICA REPORTS THIRD QUARTER 2005 EARNINGS
DETROIT/October 19, 2005 — Comerica Incorporated (NYSE: CMA) today reported third quarter 2005 earnings of $238 million, or $1.41 per diluted share, compared to $217 million, or $1.28 per diluted share, for the second quarter 2005 and $196 million, or $1.13 per diluted share, for the third quarter 2004.
                         
(dollar amounts in millions)   3rd Qtr ‘05   2nd Qtr ‘05   3rd Qtr ‘04
Diluted EPS
   $ 1.41     $ 1.28     $ 1.13  
Net Interest Income
   $ 512     $ 483     $ 451  
Net Interest Margin
     4.15 %     4.09 %     3.86 %
Provision for Loan Losses
   $ (30 )   $ 2     $ —  
Noninterest Income
   $ 232     $ 219     $ 206  
Noninterest Expenses
   $ 422     $ 383     $ 372  
Net Income
   $ 238     $ 217     $ 196  
Return on Equity
     18.59 %     16.99 %     15.68 %
“Comerica’s third quarter results demonstrate solid financial performance,“ said Ralph W. Babb Jr., chairman and chief executive officer. “They also reflect our continuing investments in people, branches and technology, which are aimed at improving the balance of our business mix.“
Net Interest Income
Net interest income was $512 million for the third quarter 2005, compared to $483 million for the second quarter 2005 and $451 million for the third quarter 2004. In the third quarter 2005, the Corporation changed its warrant accounting, and recorded an adjustment to reflect its portfolio of warrants for non-marketable equity securities at fair value. Since a majority of these warrants were obtained as part of the loan origination process, the adjustment that resulted from the accounting change increased net interest income by $20 million in the third quarter 2005. The $29 million increase in net interest income from the second quarter 2005 resulted from the warrant accounting change discussed above, the spread improvement provided by non-interest bearing deposits in a rising interest rate environment, and the impact of one more day in the third quarter 2005. Average earning assets of $49.1 billion for the third quarter 2005 increased $1.7 billion from the second quarter 2005, primarily as a result of a $1.4 billion, or 3 percent, increase in average loans to $44.6 billion for the third quarter 2005. The Financial Services Division contributed $1.2 billion of the increase in average loans for the third quarter 2005. Average deposits of $41.3 billion for the third quarter 2005 increased $1.3 billion, or 3 percent, from the second quarter 2005. The Financial Services Division contributed $491 million of the increase in average deposits for the third quarter 2005. Average short-term borrowings increased $622 million in the third quarter 2005, when compared to the prior quarter.
The net interest margin increased six basis points from the second quarter 2005 to 4.15 percent in the third quarter 2005. The change in warrant accounting added 16 basis points to the net interest margin in the third quarter 2005. The net interest margin was also positively impacted by a greater contribution from noninterest-bearing deposits in a higher rate environment. Partially offsetting these increases were higher levels of low rate loans provided to customers of the Corporation’s Financial Services Division.
Noninterest Income
Noninterest income was $232 million for the third quarter 2005, compared to $219 million for the second quarter 2005 and $206 million for the third quarter 2004. Included in other noninterest income in the third quarter 2005 was income (net of write-downs) from unconsolidated venture capital and private equity investments of $13 million, compared to write-downs (net of income distributions) of $5 million in the second quarter 2005. Also included in other noninterest income in the third quarter 2005 were risk management hedge ineffectiveness losses of $3 million, compared to $5 million of gains in the second quarter 2005.
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COMERICA REPORTS THIRD QUARTER 2005 EARNINGS — 2
Noninterest Expenses
Noninterest expenses were $422 million for the third quarter 2005, compared to $383 million for the second quarter 2005 and $372 million for the third quarter 2004. Salaries expense increased $12 million in the third quarter 2005, compared to the second quarter 2005, primarily from increases in business unit incentives, including a $4 million accrual related to the warrant accounting change discussed above. Customer services expense was $29 million in the third quarter 2005, compared to $10 million for the second quarter 2005. Customer services expense varies from period to period as a result of changes in the level of noninterest-bearing deposits in the Corporation’s Financial Services Division and the earnings credit allowances provided on these deposits.
Credit Quality
                         
(dollar amounts in millions)   3rd Qtr ‘05   2nd Qtr ‘05   3rd Qtr ‘04
Net Charge-offs
   $ 21     $ 29     $ 33  
Net Charge-offs/Average Total Loans
     0.18 %     0.27 %     0.33 %
Provision for Loan Losses
   $ (30 )   $ 2     $ —  
Nonperforming Assets (NPAs)
   $ 220     $ 246     $ 388  
NPAs/Total Loans, Other Real Estate & Nonaccrual Debt Securities
     0.52 %     0.57 %     0.98 %
Allowance for Loan Losses
   $ 558     $ 609     $ 729  
Allowance for Loan Losses/Total Loans
     1.33 %     1.41 %     1.83 %
Allowance for Credit Losses on Lending-related Commitments*
   $ 14     $ 15     $ 24  
 
* Included in “Accrued expenses and other liabilities” on the consolidated balance sheets.
During the third quarter 2005, $81 million of loans greater than $2 million were transferred to nonaccrual status, an increase of $34 million from the second quarter 2005. Of the loans transferred to nonaccrual during the third quarter 2005, $44 million were in the airline industry. Nonperforming assets were $220 million at September 30, 2005, a decrease of $26 million from June 30, 2005.
“Continued improvement in credit quality metrics in the third quarter 2005 resulted in a $51 million decline in the allowance for loan losses from the second quarter,” said Babb. “Nonperforming assets and net charge-offs continued to improve from already low levels.”
Balance Sheet and Capital Management
Total assets and common shareholders’ equity were $54.3 billion and $5.1 billion, respectively, at September 30, 2005, compared to $54.7 billion and $5.1 billion, respectively, at June 30, 2005. There were approximately 165 million shares outstanding at September 30, 2005, compared to approximately 167 million shares outstanding at June 30, 2005. In the third quarter 2005, approximately 2.4 million shares were repurchased in the open market for $147 million. Comerica’s third quarter 2005 estimated tier 1 common, tier 1 and total risk-based capital ratios were 8.00 percent, 8.62 percent and 11.99 percent, respectively.
Business Segments
Comerica’s operations are strategically aligned into three major business segments: the Business Bank, Small Business & Personal Financial Services, and Wealth & Institutional Management. The Finance Division also is included as a segment. The financial results below are based on the internal business unit structure of the Corporation and are presented on a fully taxable equivalent (FTE) basis.
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COMERICA REPORTS THIRD QUARTER 2005 EARNINGS — 3
The following table presents net income (loss) by business segment.
                                                 
(dollar amounts in millions)   3rd Qtr ‘05   2nd Qtr ‘05   3rd Qtr ‘04
 
Business Bank
   $ 186       75 %   $ 163       71 %   $ 173       70 %
Small Business & Personal Financial Services
     40       16       49       21       48       20  
Wealth & Institutional Management
     23       9       17       8       25       10  
 
 
     249       100 %     229       100 %     246       100 %
Finance
     (20 )             (18 )             (40 )        
Other*
     9               6               (10 )        
 
Total
   $ 238             $ 217             $ 196          
 
 
* Includes items not directly associated with the major business segments or the Finance Division
Net income for the Business Bank was $186 million for the third quarter 2005, compared to $163 million for the second quarter 2005. Net interest income (FTE) of $367 million in the third quarter 2005 increased $17 million from the second quarter 2005. Third quarter 2005 net interest income (FTE) includes a $20 million adjustment resulting from the warrant accounting change discussed above, partially offset by higher levels of low rate loans in the Financial Services Division. The provision for loan losses decreased $41 million, to a negative $23 million in the third quarter 2005, compared to $18 million in the second quarter 2005, due to improvements in credit quality and an increase in recoveries. Average loans of $35.3 billion in the third quarter 2005 increased $1.2 billion, or 3 percent, compared to the second quarter 2005, primarily due to a $1.2 billion increase in loans in the Financial Services Division. Average deposits of $20.9 billion in the third quarter 2005 increased $525 million, or 3 percent, compared to the second quarter 2005, primarily due to higher deposits in the Financial Services Division. Third quarter 2005 noninterest expenses of $184 million increased $25 million from the second quarter 2005, primarily due to a $19 million increase in customer service expenses in the Financial Services Division and $4 million in incentive compensation accrual related to the warrant accounting change discussed above.
Net income for Small Business & Personal Financial Services was $40 million for the third quarter 2005, compared to $49 million for the second quarter 2005. Net interest income (FTE) of $153 million in the third quarter 2005 increased $1 million, compared to the second quarter 2005. The provision for loan losses increased $9 million, to $7 million in the third quarter 2005, compared to a negative $2 million in the second quarter 2005. Average loans of $5.9 billion in the third quarter 2005 increased $94 million, or 2 percent, over the second quarter 2005. Average deposits were $16.8 billion in the third quarter 2005, compared to $16.9 billion in the second quarter 2005.
Net income for Wealth & Institutional Management was $23 million for the third quarter 2005, compared to $17 million for the second quarter 2005. Net interest income (FTE) of $38 million in the third quarter 2005 increased $1 million from the second quarter 2005. Average loans were $3.4 billion in the third quarter 2005, compared to $3.3 billion in the second quarter 2005. Average deposits were $2.6 billion in the third quarter 2005, compared to $2.4 billion in the second quarter 2005. Noninterest income of $83 million in the third quarter 2005 increased $4 million from the second quarter 2005, primarily due to an increase in investment advisory revenue.
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COMERICA REPORTS THIRD QUARTER 2005 EARNINGS – 4
Geographic Market Segments
Comerica also provides market segment results for four primary geographic markets: Midwest & Other Markets, Western, Texas and Florida. The financial results below are presented on a FTE basis.
The following table presents net income (loss) by market segment.
                                                 
(dollar amounts in millions)   3rd Qtr ‘05   2nd Qtr ‘05   3rd Qtr ‘04
 
Midwest & Other Markets
   $ 134       54 %   $ 111       48 %   $ 121       49 %
Western
     88       35       85       37       91       37  
Texas
     20       8       29       13       29       12  
Florida
     7       3       4       2       5       2  
 
 
     249       100 %     229       100 %     246       100 %
Finance & Other
     (11 )             (12 )             (50 )        
 
Total
   $ 238             $ 217             $ 196          
 
Net income for the Midwest & Other markets was $134 million in the third quarter 2005, compared to $111 million in the second quarter 2005. Net interest income (FTE) of $272 million in the third quarter 2005 was unchanged, compared to the second quarter 2005. The provision for loan losses declined $30 million in the third quarter 2005, compared to the second quarter 2005, due to improvements in credit quality. Average loans were $23.8 billion in the third quarter 2005, compared to $23.9 billion in the second quarter 2005. Average deposits of $18.9 billion in the third quarter 2005 remained flat, compared to the second quarter 2005.
Net income for the Western market was $88 million for the third quarter 2005, compared to $85 million for the second quarter 2005. Net interest income (FTE) of $214 million in the third quarter 2005 increased $18 million from the second quarter 2005. Third quarter 2005 net interest income (FTE) includes a $20 million adjustment resulting from the warrant accounting change discussed above, partially offset by higher levels of low rate loans in the Financial Services Division. The provision for loan losses declined $13 million in the third quarter 2005, compared to the second quarter 2005, due to improvements in credit quality. Average loans of $14.2 billion in the third quarter 2005 increased $1.3 billion, compared to the second quarter 2005, primarily due to a $1.2 billion increase in loans in the Financial Service Division. Average deposits of $17.4 billion in the third quarter 2005 increased $638 million, primarily due to higher deposits in the Financial Services Division. Third quarter 2005 noninterest expenses increased $24 million to $122 million, compared to the second quarter 2005, primarily due to a $19 million increase in customer service expenses in the Financial Services Division and $4 million in incentive compensation accrual related to the warrant accounting change discussed above.
Net income for the Texas market was $20 million for the third quarter 2005, compared to $29 million for the second quarter 2005. Net interest income (FTE) of $61 million in the third quarter 2005 increased $1 million from the second quarter 2005. The provision for loan losses increased $12 million, to $2 million in the third quarter 2005, compared to a negative $10 million in the second quarter 2005. Average loans of $5.1 billion increased $125 million, or 3 percent, compared to the second quarter 2005. Average deposits were $3.6 billion in the third quarter 2005, compared to $3.7 billion in the second quarter 2005.
Net income for the Florida market was $7 million for the third quarter 2005, compared to $4 million for the second quarter 2005.
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COMERICA REPORTS THIRD QUARTER 2005 EARNINGS – 5
Conference Call and Webcast
Comerica will host a conference call to review third quarter 2005 financial results at 8 a.m. ET Wednesday, October 19, 2005. Interested parties may access the conference call by calling (706) 679-5261 (event ID No. 9528943). The call and supplemental financial information can also be accessed on the Internet at www.comerica.com. A replay of the conference call will be available approximately two hours following the call through Saturday, November 19, 2005. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 9528943). 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 business segments: the Business Bank, Small Business & Personal Financial Services, and Wealth & Institutional Management. Comerica focuses on relationships and helping businesses and people to be successful.
Forward-looking Statements
Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “believes,” “feels,” “expects,” “estimates,” “seeks,” “strives,” “plans,” “intends,” “outlook,” “forecast,” “position,” “target,” “mission,” “assume,” “achievable,” “potential,” “strategy,” “goal,” “aspiration,” “outcome,” “continue,” “remain,” “maintain,” “trend,” “objective” and variations of such words and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica’s management based on information known to Comerica’s management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica’s management for future or past operations, products or services, and forecasts of Comerica’s revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries, estimates of credit trends and global stability. Such statements reflect the view of Comerica’s management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica’s actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in the pace of an economic recovery and related changes in employment levels, the effects of war and other armed conflicts or acts of terrorism, the effects of natural disasters including, but not limited to, hurricanes, tornadoes, earthquakes and floods, the implementation of Comerica’s strategies and business models, management’s ability to maintain and expand customer relationships, management’s ability to retain key officers and employees, changes in the accounting treatment of any particular item, the impact of regulatory examinations, declines or other changes in the businesses or industries in which Comerica has a concentration of loans, including, but not limited to, the automotive industry, 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 Contacts:
Sharon R. McMurray
      Paul E. Burdiss
(313) 222-4881
      (313) 222-2840
 
        
Wayne J. Mielke
      Paul Jaremski
(313) 222-4732
      (313) 222-6317

 

 

CONSOLIDATED FINANCIAL HIGHLIGHTS
Comerica Incorporated and Subsidiaries
                                         
    Three Months Ended   Nine Months Ended
    September 30,   June 30,   September 30,   September 30,
(in millions, except per share data)   2005   2005   2004   2005   2004
 
PER SHARE AND COMMON STOCK DATA
                                        
Diluted net income
   $ 1.41     $ 1.28     $ 1.13     $ 3.85     $ 3.15  
Cash dividends declared
     0.55       0.55       0.52       1.65       1.56  
Common shareholders’ equity (at period end)
     30.81       30.60       29.52                  
 
                                        
Average diluted shares (in thousands)
     168,387       169,608       172,864       169,687       174,346  
 
KEY RATIOS
                                        
Return on average common shareholders’ equity
     18.59 %     16.99 %     15.68 %     17.11 %     14.57 %
Return on average assets
     1.78       1.68       1.55       1.68       1.44  
Average common shareholders’ equity as a percentage of average assets
     9.57       9.88       9.91       9.81       9.88  
Tier 1 common capital ratio *
     8.00       7.88       8.16                  
Tier 1 risk-based capital ratio *
     8.62       8.49       8.81                  
Total risk-based capital ratio *
     11.99       12.08       13.06                  
Leverage ratio *
     10.10       10.36       10.28                  
 
AVERAGE BALANCES
                                        
Commercial loans
   $ 25,230     $ 24,122     $ 22,096     $ 24,207     $ 21,997  
Real estate construction loans
     3,202       3,101       3,273       3,119       3,293  
Commercial mortgage loans
     8,631       8,513       7,951       8,488       7,989  
Residential mortgage loans
     1,418       1,357       1,239       1,362       1,225  
Consumer loans
     2,703       2,673       2,671       2,703       2,650  
Lease financing
     1,300       1,283       1,266       1,281       1,276  
International loans
     2,098       2,185       2,149       2,173       2,171  
 
Total loans
   $ 44,582     $ 43,234     $ 40,645     $ 43,333     $ 40,601  
Earning assets
     49,066       47,412       46,426       47,716       46,960  
Total assets
     53,462       51,635       50,348       51,959       50,891  
Interest-bearing deposits
     25,540       25,005       25,722       25,402       26,173  
Total interest-bearing liabilities
     31,488       30,501       30,435       30,794       31,055  
Noninterest-bearing deposits
     15,734       14,995       14,012       14,955       13,910  
Common shareholders’ equity
     5,116       5,100       4,990       5,096       5,029  
 
NET INTEREST INCOME
                                        
Net interest income (fully taxable equivalent basis)
   $ 513     $ 484     $ 452     $ 1,458     $ 1,346  
Fully taxable equivalent adjustment
     1       1       1       3       2  
Net interest margin
     4.15 %     4.09 %     3.86 %     4.08 %     3.82 %
 
CREDIT QUALITY
                                        
Nonaccrual loans
   $ 186     $ 212     $ 361                  
Other real estate
     34       34       27                  
Total nonperforming assets
     220       246       388                  
Loans 90 days past due and still accruing
     14       24       20                  
Gross charge-offs
     47       43       53     $ 136     $ 213  
Recoveries
     26       14       20       48       54  
Net charge-offs
     21       29       33       88       159  
 
                                        
Allowance for loan losses as a percentage of total loans
     1.33 %     1.41 %     1.83 %                
Net loans charged off as a percentage of average total loans
     0.18       0.27       0.33       0.27 %     0.52 %
Nonperforming assets as a percentage of total loans, other real estate and nonaccrual debt securities
     0.52       0.57       0.98                  
Allowance for loan losses as a percentage of total nonperforming assets
     253       248       188                  
 
ADDITIONAL DATA
                                        
Goodwill
   $ 247     $ 247     $ 247                  
Other intangibles
     1       1       1                  
Loan servicing rights
     19       19       20                  
Deferred mutual fund distribution costs
     7       7       9                  
Amortization of intangibles
     —       —       —     $ —     $ 1  
 
* September 30, 2005 ratios are estimated

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CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
                                 
    September 30,   June 30,   December 31,   September 30,
(in millions, except share data)   2005   2005   2004   2004
 
ASSETS
                                
Cash and due from banks
   $ 1,795     $ 1,687     $ 1,139     $ 1,560  
Short-term investments
     3,619       3,402       3,230       5,055  
Investment securities available-for-sale
     4,088       3,947       3,943       4,198  
 
                                
Commercial loans
     22,754       23,690       22,039       21,146  
Real estate construction loans
     3,289       3,168       3,053       3,276  
Commercial mortgage loans
     8,700       8,536       8,236       7,931  
Residential mortgage loans
     1,444       1,394       1,294       1,263  
Consumer loans
     2,696       2,701       2,751       2,722  
Lease financing
     1,286       1,296       1,265       1,260  
International loans
     1,972       2,239       2,205       2,117  
 
Total loans
     42,141       43,024       40,843       39,715  
Less allowance for loan losses
     (558 )     (609 )     (673 )     (729 )
 
Net loans
     41,583       42,415       40,170       38,986  
 
                                
Premises and equipment
     499       481       415       399  
Customers’ liability on acceptances outstanding
     39       35       57       41  
Accrued income and other assets
     2,726       2,722       2,812       2,720  
 
Total assets
   $ 54,349     $ 54,689     $ 51,766     $ 52,959  
 
 
                                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                                
Noninterest-bearing deposits
   $ 17,702     $ 19,236     $ 15,164     $ 16,811  
Interest-bearing deposits
     25,968       24,817       25,772       25,424  
 
Total deposits
     43,670       44,053       40,936       42,235  
 
                                
Short-term borrowings
     241       108       193       225  
Acceptances outstanding
     39       35       57       41  
Accrued expenses and other liabilities
     1,242       1,067       1,189       1,021  
Medium- and long-term debt
     4,066       4,309       4,286       4,401  
 
Total liabilities
     49,258       49,572       46,661       47,923  
 
                                
Common stock — $5 par value:
                                
Authorized - 325,000,000 shares
                                
Issued - 178,735,252 shares at 9/30/05, 6/30/05, 12/31/04 and 9/30/04
     894       894       894       894  
Capital surplus
     448       433       421       408  
Accumulated other comprehensive loss
     (158 )     (99 )     (69 )     (24 )
Retained earnings
     4,683       4,546       4,331       4,222  
Less cost of common stock in treasury - 13,469,654 shares at 9/30/05, 11,513,612 shares at 6/30/05, 8,259,328 shares at 12/31/04 and 8,169,292 shares at 9/30/04
     (776 )     (657 )     (472 )     (464 )
 
Total shareholders’ equity
     5,091       5,117       5,105       5,036  
 
Total liabilities and shareholders’ equity
   $ 54,349     $ 54,689     $ 51,766     $ 52,959  
 

-7-

 

CONSOLIDATED STATEMENTS OF INCOME
Comerica Incorporated and Subsidiaries
                                 
    Three Months Ended   Nine Months Ended
    September 30,   September 30,
(in millions, except per share data)   2005   2004   2005   2004
 
INTEREST INCOME
                                
Interest and fees on loans
   $ 674     $ 514     $ 1,856     $ 1,510  
Interest on investment securities
     38       36       107       111  
Interest on short-term investments
     7       8       18       25  
 
Total interest income
     719       558       1,981       1,646  
 
                                
INTEREST EXPENSE
                                
Interest on deposits
     147       79       377       224  
Interest on short-term borrowings
     16       1       28       2  
Interest on medium— and long-term debt
     44       27       121       76  
 
Total interest expense
     207       107       526       302  
 
Net interest income
     512       451       1,455       1,344  
Provision for loan losses
     (30 )     —       (27 )     85  
 
Net interest income after provision for loan losses
     542       451       1,482       1,259  
 
                                
NONINTEREST INCOME
                                
Service charges on deposit accounts
     55       57       163       178  
Fiduciary income
     44       43       133       128  
Commercial lending fees
     16       14       44       41  
Letter of credit fees
     18       17       56       49  
Foreign exchange income
     9       9       27       28  
Brokerage fees
     10       9       27       27  
Investment advisory revenue, net
     14       8       36       26  
Card fees
     10       8       28       23  
Bank-owned life insurance
     9       10       28       28  
Equity in earnings of unconsolidated subsidiaries
     4       3       13       11  
Warrant income
     2       1       7       6  
Net securities losses
     —       (6 )     —       —  
Net gain on sales of businesses
     1       —       1       7  
Other noninterest income
     40       33       98       102  
 
Total noninterest income
     232       206       661       654  
 
                                
NONINTEREST EXPENSES
                                
Salaries
     209       185       595       567  
Employee benefits
     46       40       137       119  
 
Total salaries and employee benefits
     255       225       732       686  
Net occupancy expense
     30       32       90       93  
Equipment expense
     14       14       42       43  
Outside processing fee expense
     19       16       56       51  
Software expense
     12       11       35       31  
Customer services
     29       8       50       17  
Litigation and operational losses
     4       16       14       27  
Other noninterest expenses
     59       50       160       165  
 
Total noninterest expenses
     422       372       1,179       1,113  
 
Income before income taxes
     352       285       964       800  
Provision for income taxes
     114       89       310       250  
 
NET INCOME
   $ 238     $ 196     $ 654     $ 550  
 
 
                                
Basic net income per common share
   $ 1.43     $ 1.15     $ 3.90     $ 3.19  
Diluted net income per common share
     1.41       1.13       3.85       3.15  
 
                                
Cash dividends declared on common stock
     92       88       277       268  
Dividends per common share
     0.55       0.52       1.65       1.56  
 

-8-

 

CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
Comerica Incorporated and Subsidiaries
                                                                         
    Third   Second   First   Fourth   Third   Third Quarter 2005 Compared To:
    Quarter   Quarter   Quarter   Quarter   Quarter   Second Quarter 2005   Third Quarter 2004
(in millions, except per share data)   2005   2005   2005   2004   2004   Amount   Percent   Amount   Percent
 
INTEREST INCOME
                                                                        
Interest and fees on loans
   $ 674     $ 616     $ 566     $ 544     $ 514     $ 58       9.6 %   $ 160       31.2 %
Interest on investment securities
     38       34       35       36       36       4       10.5       2       6.8  
Interest on short-term investments
     7       5       6       11       8       2       16.6       (1 )     (22.5 )
 
Total interest income
     719       655       607       591       558       64       9.7       161       28.8  
 
                                                                        
INTEREST EXPENSE
                                                                        
Interest on deposits
     147       122       108       91       79       25       20.3       68       85.2  
Interest on short-term borrowings
     16       9       3       2       1       7       77.2       15       N/M  
Interest on medium— and long-term debt
     44       41       36       32       27       3       8.0       17       62.2  
 
Total interest expense
     207       172       147       125       107       35       20.3       100       92.7  
 
Net interest income
     512       483       460       466       451       29       5.9       61       13.6  
Provision for loan losses
     (30 )     2       1       (21 )     —       (32 )     N/M       (30 )     N/M  
 
Net interest income after provision for loan losses
     542       481       459       487       451       61       12.6       91       20.2  
 
                                                                        
NONINTEREST INCOME
                                                                        
Service charges on deposit accounts
     55       54       54       53       57       1       4.5       (2 )     (1.3 )
Fiduciary income
     44       43       46       43       43       1       1.4       1       3.8  
Commercial lending fees
     16       16       12       14       14       —       (3.3 )     2       6.2  
Letter of credit fees
     18       18       20       17       17       —       (0.6 )     1       4.5  
Foreign exchange income
     9       9       9       9       9       —       (3.9 )     —       14.7  
Brokerage fees
     10       9       8       9       9       1       10.4       1       12.7  
Investment advisory revenue, net
     14       12       10       9       8       2       22.7       6       64.7  
Card fees
     10       9       9       9       8       1       4.5       2       24.9  
Bank-owned life insurance
     9       10       9       6       10       (1 )     (11.5 )     (1 )     (9.1 )
Equity in earnings of unconsolidated subsidiaries
     4       4       5       1       3       —       19.0       1       64.9  
Warrant income
     2       3       2       1       1       (1 )     (49.1 )     1       6.3  
Net securities losses
     —       —       —       —       (6 )     —       N/M       6       N/M  
Net gain on sales of businesses
     1       —       —       —       —       1       N/M       1       N/M  
Other noninterest income
     40       32       26       32       33       8       26.4       7       20.4  
 
Total noninterest income
     232       219       210       203       206       13       6.2       26       12.8  
 
                                                                        
NONINTEREST EXPENSES
                                                                        
Salaries
     209       197       189       193       185       12       5.6       24       12.7  
Employee benefits
     46       44       47       40       40       2       3.6       6       15.9  
 
Total salaries and employee benefits
     255       241       236       233       225       14       5.3       30       13.2  
Net occupancy expense
     30       28       32       32       32       2       5.6       (2 )     (5.7 )
Equipment expense
     14       14       14       15       14       —       —       —       0.5  
Outside processing fee expense
     19       20       17       17       16       (1 )     (1.4 )     3       18.7  
Software expense
     12       11       12       12       11       1       3.5       1       8.9  
Customer services
     29       10       11       6       8       19       193.1       21       249.0  
Litigation and operational losses
     4       7       3       (3 )     16       (3 )     (51.6 )     (12 )     (79.4 )
Other noninterest expenses
     59       52       49       68       50       7       16.4       9       20.7  
 
Total noninterest expenses
     422       383       374       380       372       39       10.1       50       13.5  
 
Income before income taxes
     352       317       295       310       285       35       11.3       67       23.7  
Provision for income taxes
     114       100       96       103       89       14       14.5       25       28.5  
 
NET INCOME
   $ 238     $ 217     $ 199     $ 207     $ 196     $ 21       9.8 %   $ 42       21.5 %
 
 
                                                                        
Basic net income per common share
   $ 1.43     $ 1.29     $ 1.18     $ 1.22     $ 1.15     $ 0.14       10.9 %   $ 0.28       24.3 %
Diluted net income per common share
     1.41       1.28       1.16       1.21       1.13       0.13       10.2       0.28       24.8  
 
                                                                        
Cash dividends declared on common stock
     92       92       93       88       88       —       0.5       4       4.1  
Dividends per common share
     0.55       0.55       0.55       0.52       0.52       —       —       0.03       5.8  
 
N/M — Not meaningful

-9-

 

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
Comerica Incorporated and Subsidiaries
                                         
    2005   2004
(in millions)   3rd Qtr   2nd Qtr   1st Qtr   4th Qtr   3rd Qtr
 
Balance at beginning of period
   $ 609     $ 636     $ 673     $ 729     $ 762  
 
                                        
Loans charged-off:
                                        
Commercial
     20       29       28       39       41  
Real estate construction:
                                        
Real estate construction business line
     1       —       —       —       1  
Other
     —       —       —       —       —  
 
Total real estate construction
     1       —       —       —       1  
Commercial mortgage:
                                        
Commercial real estate business line
     —       2       2       4       —  
Other
     4       5       3       —       7  
 
Total commercial mortgage
     4       7       5       4       7  
Residential mortgage
     —       —       —       —       1  
Consumer
     6       3       3       5       2  
Lease financing
     13       3       3       4       —  
International
     3       1       7       3       1  
 
Total loans charged-off
     47       43       46       55       53  
 
                                        
Recoveries on loans previously charged-off:
                                        
Commercial
     23       12       7       14       13  
Real estate construction
     —       —       —       —       —  
Commercial mortgage
     1       1       —       1       1  
Residential mortgage
     —       —       —       —       —  
Consumer
     2       —       1       —       1  
Lease financing
     —       —       —       —       —  
International
     —       1       —       5       5  
 
Total recoveries
     26       14       8       20       20  
 
Net loans charged-off
     21       29       38       35       33  
Provision for loan losses
     (30 )     2       1       (21 )     —  
 
Balance at end of period
   $ 558     $ 609     $ 636     $ 673     $ 729  
 
 
                                        
Allowance for loan losses as a percentage of total loans
     1.33 %     1.41 %     1.52 %     1.65 %     1.83 %
 
                                        
Net loans charged-off as a percentage of average total loans
     0.18       0.27       0.36       0.34       0.33  
 
Allowance for credit losses on lending-related commitments*
   $ 14     $ 15     $ 18     $ 21     $ 24  
 
* Included in “Accrued expenses and other liabilities” on the consolidated balance sheets.

-10-

 

NONPERFORMING ASSETS
Comerica Incorporated and Subsidiaries
                                         
    2005   2004
(in millions)   3rd Qtr   2nd Qtr   1st Qtr   4th Qtr   3rd Qtr
 
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS                        
Nonaccrual loans:
                                        
Commercial
   $ 81     $ 125     $ 161     $ 161     $ 181  
Real estate construction:
                                        
Real estate construction business line
     4       8       18       31       28  
Other
     —       2       2       3       3  
 
Total real estate construction
     4       10       20       34       31  
Commercial mortgage:
                                        
Commercial real estate business line
     9       9       11       6       10  
Other
     35       32       38       58       70  
 
Total commercial mortgage
     44       41       49       64       80  
Residential mortgage
     1       2       2       1       1  
Consumer
     1       2       1       1       2  
Lease financing
     39       9       12       15       19  
International
     16       23       24       36       47  
 
Total nonaccrual loans
     186       212       269       312       361  
Reduced-rate loans
     —       —       —       —       —  
 
Total nonperforming loans
     186       212       269       312       361  
Other real estate
     34       34       42       27       27  
Nonaccrual debt securities
     —       —       —       —       —  
 
Total nonperforming assets
   $ 220     $ 246     $ 311     $ 339     $ 388  
 
 
                                        
Nonperforming loans as a percentage of total loans
     0.44 %     0.49 %     0.64 %     0.76 %     0.91 %
Nonperforming assets as a percentage of total loans, other real estate and nonaccrual debt securities
     0.52       0.57       0.75       0.83       0.98  
Allowance for loan losses as a percentage of total nonperforming assets
     253       248       204       198       188  
Loans past due 90 days or more and still accruing
   $ 14     $ 24     $ 23     $ 15     $ 20  
 
 
                                        
ANALYSIS OF NONACCRUAL LOANS
                                        
Nonaccrual loans at beginning of period
   $ 212     $ 269     $ 312     $ 361     $ 404  
Loans transferred to nonaccrual (1)
     81       47       66       71       106  
Nonaccrual business loan gross charge-offs (2)
     (40 )     (38 )     (42 )     (49 )     (48 )
Loans transferred to accrual status (1)
     —       —       (4 )     (7 )     —  
Nonaccrual business loans sold (3)
     (19 )     —       (14 )     (33 )     (16 )
Payments/Other (4)
     (48 )     (66 )     (49 )     (31 )     (85 )
 
Nonaccrual loans at end of period
   $ 186     $ 212     $ 269     $ 312     $ 361  
 
 
                                        
(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
   $ 40     $ 38     $ 42     $ 49     $ 48  
Performing watch list loans
     1       2       1       1       2  
Consumer loans and residential mortgage loans
     6       3       3       5       3  
     
Total gross loan charge-offs
   $ 47     $ 43     $ 46     $ 55     $ 53  
     
(3) Analysis of loans sold:
                                        
 
                                        
Nonaccrual business loans
   $ 19     $ —     $ 14     $ 33     $ 16  
Performing watch list loans sold
     34       7       4       7       30  
     
Total loans sold
   $ 53     $ 7     $ 18     $ 40     $ 46  
     
   
(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.

-11-

 

ANALYSIS OF NET INTEREST INCOME (FTE)
Comerica Incorporated and Subsidiaries
                                                                         
    Three Months Ended  
    September 30, 2005     June 30, 2005     September 30, 2004  
    Average             Average     Average             Average     Average             Average  
(dollar amounts in millions)   Balance     Interest     Rate     Balance     Interest     Rate     Balance     Interest     Rate  
 
Commercial loans
   $ 25,230     $ 378       5.95 %   $ 24,122     $ 329       5.46 %   $ 22,096     $ 234       4.21 %
Real estate construction loans
     3,202       60       7.40       3,101       54       6.99       3,273       46       5.58  
Commercial mortgage loans
     8,631       138       6.37       8,513       129       6.06       7,951       104       5.22  
Residential mortgage loans
     1,418       20       5.76       1,357       20       5.75       1,239       18       5.63  
Consumer loans
     2,703       41       6.04       2,673       38       5.75       2,671       31       4.68  
Lease financing
     1,300       10       2.98       1,283       13       4.08       1,266       11       3.46  
International loans
     2,098       33       6.27       2,185       31       5.77       2,149       26       4.87  
Business loan swap income
     —       (5 )     —       —       3       —       —       45       —  
     
Total loans
     44,582       675       6.01       43,234       617       5.72       40,645       515       5.04  
 
                                                                        
Investment securities available-for-sale (1)
     3,935       38       3.80       3,681       34       3.67       4,225       36       3.31  
Short-term investments
     549       7       4.76       497       5       4.54       1,556       8       2.17  
     
Total earning assets
     49,066       720       5.82       47,412       656       5.54       46,426       559       4.78  
 
                                                                        
Cash and due from banks
     1,788                       1,697                       1,652                  
Allowance for loan losses
     (601 )                     (645 )                     (774 )                
Accrued income and other assets
     3,209                       3,171                       3,044                  
 
                                                                  
Total assets
   $ 53,462                     $ 51,635                     $ 50,348                  
 
                                                                  
 
Money market and NOW deposits
   $ 16,987       89       2.09     $ 17,190       77       1.80     $ 17,526       47       1.06  
Savings deposits
     1,531       2       0.52       1,568       1       0.42       1,652       1       0.36  
Certificates of deposit
     5,912       44       2.92       5,509       36       2.57       5,826       26       1.79  
Foreign office time deposits
     1,110       12       4.21       738       8       4.23       718       5       2.76  
     
Total interest-bearing deposits
     25,540       147       2.28       25,005       122       1.96       25,722       79       1.22  
 
                                                                        
Short-term borrowings
     1,804       16       3.52       1,182       9       3.06       251       1       1.36  
Medium- and long-term debt
     4,144       44       4.26       4,314       41       3.83       4,462       27       2.45  
     
Total interest-bearing sources
     31,488       207       2.61       30,501       172       2.26       30,435       107       1.40  
                                     
 
Noninterest-bearing deposits
     15,734                       14,995                       14,012                  
Accrued expenses and other liabilities
     1,124                       1,039                       911                  
Common shareholders’ equity
     5,116                       5,100                       4,990                  
 
                                                                  
Total liabilities and shareholders’ equity
   $ 53,462                     $ 51,635                     $ 50,348                  
 
                                                                  
Net interest income/rate spread (FTE)
           $ 513       3.21             $ 484       3.28             $ 452       3.38  
 
                                                                  
FTE adjustment
           $ 1                     $ 1                     $ 1          
 
                                                                  
 
                                                                        
Impact of net noninterest-bearing sources of funds
                     0.94                       0.81                       0.48  
 
Net interest margin (as a percentage of average earning assets) (FTE)
                     4.15 %                     4.09 %                     3.86 %
 
(1)   The average rate for investment securities available-for-sale was computed using average historical cost.

-12-

 

ANALYSIS OF NET INTEREST INCOME (FTE)
Comerica Incorporated and Subsidiaries
                                                 
    Nine Months Ended  
    September 30, 2005     September 30, 2004  
    Average             Average     Average             Average  
(dollar amounts in millions)   Balance     Interest     Rate     Balance     Interest     Rate  
 
Commercial loans
   $ 24,207     $ 993       5.48 %   $ 21,997     $ 669       4.06 %
Real estate construction loans
     3,119       163       6.97       3,293       129       5.24  
Commercial mortgage loans
     8,488       385       6.07       7,989       304       5.08  
Residential mortgage loans
     1,362       58       5.70       1,225       52       5.71  
Consumer loans
     2,703       115       5.70       2,650       92       4.62  
Lease financing
     1,281       36       3.72       1,276       39       4.05  
International loans
     2,173       95       5.82       2,171       73       4.46  
Business loan swap income
     —       14       —       —       154       —  
     
Total loans
     43,333       1,859       5.73       40,601       1,512       4.97  
 
                                                
Investment securities available-for-sale (1)
     3,802       107       3.69       4,411       111       3.32  
Short-term investments
     581       18       4.18       1,948       25       1.73  
     
Total earning assets
     47,716       1,984       5.55       46,960       1,648       4.68  
 
                                                
Cash and due from banks
     1,709                       1,681                  
Allowance for loan losses
     (644 )                     (805 )                
Accrued income and other assets
     3,178                       3,055                  
 
                                            
Total assets
   $ 51,959                     $ 50,891                  
 
                                            
 
                                                
Money market and NOW deposits
   $ 17,326       235       1.81     $ 17,772       131       0.99  
Savings deposits
     1,560       6       0.45       1,636       5       0.38  
Certificates of deposit
     5,661       110       2.60       6,110       76       1.66  
Foreign office time deposits
     855       26       4.08       655       12       2.47  
     
Total interest-bearing deposits
     25,402       377       1.98       26,173       224       1.14  
 
                                                
Short-term borrowings
     1,148       28       3.26       275       2       1.05  
Medium- and long-term debt
     4,244       121       3.82       4,607       76       2.22  
     
Total interest-bearing sources
     30,794       526       2.28       31,055       302       1.30  
                         
 
                                                
Noninterest-bearing deposits
     14,955                       13,910                  
Accrued expenses and other liabilities
     1,114                       897                  
Common shareholders’ equity
     5,096                       5,029                  
 
                                            
Total liabilities and shareholders’ equity
   $ 51,959                     $ 50,891                  
 
                                            
Net interest income/rate spread (FTE)
           $ 1,458       3.27             $ 1,346       3.38  
 
                                            
FTE adjustment
           $ 3                     $ 2          
 
                                            
Impact of net noninterest-bearing sources of funds
                     0.81                       0.44  
 
Net interest margin (as a percentage of average earning assets) (FTE)
                     4.08 %                     3.82 %
 
(1)   The average rate for investment securities available-for-sale was computed using average historical cost.

-13-

 

CONSOLIDATED STATISTICAL DATA
Comerica Incorporated and Subsidiaries
                                         
    September 30,   June 30,   March 31,   December 31,   September 30,
(in millions, except per share data)   2005   2005   2005   2004   2004
 
Commercial loans:
                                        
Floor plan
   $ 2,065     $ 2,766     $ 2,668     $ 2,575     $ 2,270  
Other
     20,689       20,924       20,112       19,464       18,876  
 
Total commercial loans
     22,754       23,690       22,780       22,039       21,146  
Real estate construction loans:
                                        
Real estate construction business line
     2,674       2,587       2,451       2,461       2,641  
Other
     615       581       584       592       635  
 
Total real estate construction loans
     3,289       3,168       3,035       3,053       3,276  
Commercial mortgage loans:
                                        
Commercial real estate business line
     1,440       1,465       1,555       1,556       1,498  
Other
     7,260       7,071       6,860       6,680       6,433  
 
Total commercial mortgage loans
     8,700       8,536       8,415       8,236       7,931  
Residential mortgage loans
     1,444       1,394       1,335       1,294       1,263  
Consumer loans:
                                        
Home equity
     1,818       1,867       1,797       1,837       1,815  
Other consumer
     878       834       903       914       907  
 
Total consumer loans
     2,696       2,701       2,700       2,751       2,722  
Lease financing
     1,286       1,296       1,262       1,265       1,260  
International loans
     1,972       2,239       2,209       2,205       2,117  
 
Total loans
   $ 42,141     $ 43,024     $ 41,736     $ 40,843     $ 39,715  
 
 
                                        
Goodwill
   $ 247     $ 247     $ 247     $ 247     $ 247  
Other intangible assets
     1       1       1       1       1  
Loan servicing rights
     19       19       19       20       20  
Deferred mutual fund distribution costs
     7       7       7       8       9  
Amortization of intangibles (quarterly)
     —       —       —       —       —  
 
                                        
Tier 1 common capital ratio*
     8.00 %     7.88 %     8.04 %     8.13 %     8.16 %
Tier 1 risk-based capital ratio*
     8.62       8.49       8.66       8.77       8.81  
Total risk-based capital ratio *
     11.99       12.08       12.49       12.75       13.06  
Leverage ratio*
     10.10       10.36       10.50       10.37       10.28  
 
                                        
Book value per share
   $ 30.81     $ 30.60     $ 29.81     $ 29.94     $ 29.52  
 
                                        
Market value per share for the quarter:
                                        
High
   $ 63.38     $ 59.29     $ 61.40     $ 63.80     $ 61.48  
Low
     56.80       53.17       53.70       57.81       53.00  
Close
     58.90       57.80       55.08       61.02       59.35  
 
                                        
Quarterly ratios:
                                        
Return on average common shareholders’ equity
     18.59 %     16.99 %     15.73 %     16.39 %     15.68 %
Return on average assets
     1.78       1.68       1.57       1.63       1.55  
Efficiency ratio
     56.63       54.49       55.70       56.61       56.08  
 
Number of banking offices
     369       363       375       376       364  
 
Number of employees — full time equivalent
     10,779       10,826       10,803       10,892       10,839  
 
*   September 30, 2005 ratios are estimated

-14-

 

PARENT COMPANY ONLY BALANCE SHEETS
Comerica Incorporated
                         
    September 30,   December 31,   September 30,
(in millions, except share data)   2005   2004   2004
 
ASSETS
                        
Cash and due from subsidiary bank
   $ 16     $ 1     $ 1  
Short-term investments with subsidiary bank
     289       289       215  
Investment in subsidiaries, principally banks
     5,597       5,585       5,611  
Premises and equipment
     3       3       3  
Other assets
     256       304       294  
 
Total assets
   $ 6,161     $ 6,182     $ 6,124  
 
 
                        
LIABILITIES AND SHAREHOLDERS’ EQUITY
                        
Long-term debt
   $ 817     $ 824     $ 827  
Other liabilities
     253       253       261  
 
Total liabilities
     1,070       1,077       1,088  
 
                        
Common stock — $5 par value:
                        
Authorized - 325,000,000 shares
Issued - 178,735,252 shares at 9/30/05, 12/31/04 and 9/30/04
     894       894       894  
Capital surplus
     448       421       408  
Accumulated other comprehensive loss
     (158 )     (69 )     (24 )
Retained earnings
     4,683       4,331       4,222  
Less cost of common stock in treasury - 13,469,654 shares at 9/30/05, 8,259,328 shares at 12/31/04 and 8,169,292 shares at 9/30/04
     (776 )     (472 )     (464 )
 
Total shareholders’ equity
     5,091       5,105       5,036  
 
Total liabilities and shareholders’ equity
   $ 6,161     $ 6,182     $ 6,124  
 
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, 2004
   $ 894     $ 384     $ 74     $ 3,973     $ (215 )   $ 5,110  
Net income
     —       —       —       550       —       550  
Other comprehensive loss, net of tax
     —       —       (98 )     —       —       (98 )
 
                                                
Total comprehensive income
                                             452  
Cash dividends declared on common stock ($1.56 per share)
     —       —       —       (268 )     —       (268 )
Purchase of 5,977,723 shares of common stock
     —       —       —       —       (336 )     (336 )
Net issuance of common stock under employee
stock plans
     —       (2 )     —       (33 )     87       52  
Recognition of stock-based compensation expense
     —       26       —       —       —       26  
 
BALANCE AT SEPTEMBER 30, 2004
   $ 894     $ 408     $ (24 )   $ 4,222     $ (464 )   $ 5,036  
 
 
                                                
BALANCE AT JANUARY 1, 2005
   $ 894     $ 421     $ (69 )   $ 4,331     $ (472 )   $ 5,105  
Net income
     —       —       —       654       —       654  
Other comprehensive loss, net of tax
     —       —       (89 )     —       —       (89 )
 
                                                
Total comprehensive income
                                             565  
Cash dividends declared on common stock ($1.65 per share)
     —       —       —       (277 )     —       (277 )
Purchase of 6,516,700 shares of common stock
     —       —       —       —       (379 )     (379 )
Net issuance of common stock under employee
stock plans
     —       (5 )     —       (25 )     75       45  
Recognition of stock-based compensation expense
     —       32       —       —       —       32  
 
BALANCE AT SEPTEMBER 30, 2005
   $ 894     $ 448     $ (158 )   $ 4,683     $ (776 )   $ 5,091  
 

-15-

 

BUSINESS SEGMENT FINANCIAL RESULTS
Comerica Incorporated and Subsidiaries
                                                                             
(dollar amounts in millions)   Business Bank     Small Business & Personal Financial Services     Wealth & Institutional Management
    September 30,   June 30,   September 30,     September 30,   June 30,   September 30,     September 30,   June 30,   September 30,
Three Months Ended   2005   2005   2004     2005   2005   2004     2005   2005   2004
             
Earnings summary:
                                                                            
Net interest income (expense) (FTE)
   $ 367     $ 350     $ 345       $ 153     $ 152     $ 149       $ 38     $ 37     $ 38  
Provision for loan losses
     (23 )     18       (5 )       7       (2 )     1         (4 )     1       (1 )
Noninterest income
     71       71       65         54       53       53         83       79       75  
Noninterest expenses
     184       159       143         138       132       126         89       88       74  
Provision (benefit) for income taxes (FTE)
     91       81       99         22       26       27         13       10       15  
                 
Net income (loss)
   $ 186     $ 163     $ 173       $ 40     $ 49     $ 48       $ 23     $ 17     $ 25  
                 
Net charge-offs
   $ 16     $ 21     $ 28       $ 7     $ 5     $ 4       $ (2 )   $ 3     $ 1  
 
                                                                            
Selected average balances:
                                                                            
Assets
   $ 36,661     $ 35,435     $ 32,969       $ 6,575     $ 6,446     $ 6,348       $ 3,716     $ 3,622     $ 3,491  
Loans
     35,273       34,110       31,785         5,862       5,768       5,618         3,428       3,335       3,233  
Deposits
     20,877       20,352       19,386         16,774       16,874       16,757         2,550       2,414       2,467  
Liabilities
     21,678       21,151       20,086         16,774       16,871       16,751         2,555       2,422       2,475  
Attributed equity
     2,548       2,501       2,438         805       792       774         420       412       410  
 
                                                                            
Statistical data:
                                                                            
Return on average assets (1)
     2.03 %     1.84 %     2.10 %       0.91 %     1.10 %     1.09 %       2.45 %     1.83 %     2.91 %
Return on average attributed equity
     29.17       26.08       28.42         19.79       24.56       24.64         21.67       16.13       24.77  
Net interest margin (2)
     4.12       4.10       4.30         3.62       3.63       3.52         4.35       4.38       4.65  
Efficiency ratio
     42.08       37.89       34.88         66.96       64.34       62.29         73.61       75.74       65.64  
             
                                                                             
    Finance     Other     Total
    September 30,   June 30,   September 30,     September 30,   June 30,   September 30,     September 30,   June 30,   September 30,
Three Months Ended   2005   2005   2004     2005   2005   2004     2005   2005   2004
             
Earnings summary:
                                                                            
Net interest income (expense) (FTE)
   $ (47 )   $ (56 )   $ (80 )     $ 2     $ 1     $ —       $ 513     $ 484     $ 452  
Provision for loan losses
     —       —       —         (10 )     (15 )     5         (30 )     2       —  
Noninterest income
     11       21       16         13       (5 )     (3 )       232       219       206  
Noninterest expenses
     —       —       —         11       4       29         422       383       372  
Provision (benefit) for income taxes (FTE)
     (16 )     (17 )     (24 )       5       1       (27 )       115       101       90  
                 
Net income (loss)
   $ (20 )   $ (18 )   $ (40 )     $ 9     $ 6     $ (10 )     $ 238     $ 217     $ 196  
                 
Net charge-offs
   $ —     $ —     $ —       $ —     $ —     $ —       $ 21     $ 29     $ 33  
 
                                                                            
Selected average balances:
                                                                            
Assets
   $ 5,526     $ 5,192     $ 6,737       $ 984     $ 940     $ 803       $ 53,462     $ 51,635     $ 50,348  
Loans
     (22 )     (22 )     (17 )       41       43       26         44,582       43,234       40,645  
Deposits
     1,008       338       1,123         65       22       1         41,274       40,000       39,734  
Liabilities
     6,995       5,844       5,834         344       247       212         48,346       46,535       45,358  
Attributed equity
     517       519       616         826       876       752         5,116       5,100       4,990  
 
                                                                            
Statistical data:
                                                                            
Return on average assets (1)
     N/M       N/M       N/M         N/M       N/M       N/M         1.78 %     1.68 %     1.55 %
Return on average attributed equity
     N/M       N/M       N/M         N/M       N/M       N/M         18.59       16.99       15.68  
Net interest margin (2)
     N/M       N/M       N/M         N/M       N/M       N/M         4.15       4.09       3.86  
Efficiency ratio
     N/M       N/M       N/M         N/M       N/M       N/M         56.63       54.49       56.08  
             
(1) Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(2) Net interest margin is calculated based on the greater of average earning assets or average deposits and purchased funds.
N/M — Not Meaningful

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MARKET SEGMENT FINANCIAL RESULTS
Comerica Incorporated and Subsidiaries
                                                                             
(dollar amounts in millions)   Midwest & Other Markets     Western     Texas
    September 30,   June 30,   September 30,     September 30,   June 30,   September 30,     September 30,   June 30,   September 30,
Three Months Ended   2005   2005   2004     2005   2005   2004     2005   2005   2004
             
Earnings summary:
                                                                            
Net interest income (expense) (FTE)
   $ 272     $ 272     $ 267       $ 214     $ 196     $ 195       $ 61     $ 60     $ 60  
Provision for loan losses
     —       30       20         (18 )     (5 )     (17 )       2       (10 )     (8 )
Noninterest income
     154       148       139         30       32       31         20       19       19  
Noninterest expenses
     233       229       207         122       98       88         48       45       42  
Provision (benefit) for income taxes (FTE)
     59       50       58         52       50       64         11       15       16  
                 
Net income (loss)
   $ 134     $ 111     $ 121       $ 88     $ 85     $ 91       $ 20     $ 29     $ 29  
                 
Net charge-offs
   $ 23     $ 24     $ 19       $ (2 )   $ 5     $ 14       $ (1 )   $ —     $ —  
 
                                                                            
Selected average balances:
                                                                            
Assets
   $ 25,324     $ 25,305     $ 24,021       $ 14,920     $ 13,616     $ 12,777       $ 5,262     $ 5,127     $ 4,658  
Loans
     23,832       23,879       22,731         14,226       12,947       12,067         5,070       4,945       4,498  
Deposits
     18,857       18,918       19,067         17,415       16,777       15,517         3,611       3,671       3,791  
Liabilities
     19,621       19,679       19,772         17,458       16,821       15,521         3,612       3,671       3,787  
Attributed equity
     2,162       2,132       2,129         1,055       1,042       1,002         482       463       429  
 
                                                                            
Statistical data:
                                                                            
Return on average assets (1)
     2.11 %     1.76 %     2.01 %       1.88 %     1.89 %     2.20 %       1.54 %     2.24 %     2.55 %
Return on average attributed equity
     24.71       20.88       22.72         33.07       32.44       36.31         16.88       24.85       27.64  
Net interest margin (2)
     4.49       4.53       4.63         4.87       4.69       4.98         4.73       4.86       5.30  
Efficiency ratio
     54.77       54.43       50.92         50.17       43.02       39.03         59.79       57.28       52.67  
             
                                                                             
    Florida     Finance & Other Businesses     Total
    September 30,   June 30,   September 30,     September 30,   June 30,   September 30,     September 30,   June 30,   September 30,
Three Months Ended   2005   2005   2004     2005   2005   2004     2005   2005   2004
             
Earnings summary:
                                                                            
Net interest income (expense) (FTE)
   $ 11     $ 11     $ 10       $ (45 )   $ (55 )   $ (80 )     $ 513     $ 484     $ 452  
Provision for loan losses
     (4 )     2       —         (10 )     (15 )     5         (30 )     2       —  
Noninterest income
     4       4       4         24       16       13         232       219       206  
Noninterest expenses
     8       7       6         11       4       29         422       383       372  
Provision (benefit) for income taxes (FTE)
     4       2       3         (11 )     (16 )     (51 )       115       101       90  
                 
Net income (loss)
   $ 7     $ 4     $ 5       $ (11 )   $ (12 )   $ (50 )     $ 238     $ 217     $ 196  
                 
Net charge-offs
   $ 1     $ —     $ —       $ —     $ —     $ —       $ 21     $ 29     $ 33  
 
                                                                            
Selected average balances:
                                                                            
Assets
   $ 1,446     $ 1,455     $ 1,352       $ 6,510     $ 6,132     $ 7,540       $ 53,462     $ 51,635     $ 50,348  
Loans
     1,435       1,442       1,340         19       21       9         44,582       43,234       40,645  
Deposits
     318       274       235         1,073       360       1,124         41,274       40,000       39,734  
Liabilities
     316       273       232         7,339       6,091       6,046         48,346       46,535       45,358  
Attributed equity
     74       68       62         1,343       1,395       1,368         5,116       5,100       4,990  
 
                                                                            
Statistical data:
                                                                            
Return on average assets (1)
     2.01 %     1.04 %     1.41 %       N/M       N/M       N/M         1.78 %     1.68 %     1.55 %
Return on average attributed equity
     38.96       22.09       30.55         N/M       N/M       N/M         18.59       16.99       15.68  
Net interest margin (2)
     3.16       2.92       3.01         N/M       N/M       N/M         4.15       4.09       3.86  
Efficiency ratio
     51.08       47.94       44.35         N/M       N/M       N/M         56.63       54.49       56.08  
             
(1) Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(2) Net interest margin is calculated based on the greater of average earning assets or average deposits and purchased funds.
N/M — Not Meaningful

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