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| 8-K - 8-K - COMERICA INC /NEW/ | a2014barclaysform8-k.htm |
Comerica Incorporated Barclays GlobalFinancial Services ConferenceSeptember 9, 2014 Ralph W. Babb, Jr.Chairman and Chief Executive Officer Karen ParkhillVice Chairman andChief Financial Officer 2 Safe Harbor Statement Any statements in this presentation that are not historical facts are forward-looking statements as defined in the Private Securities LitigationReform Act of 1995. Words such as “anticipates,” “believes,” “contemplates,” “feels,” “expects,” “estimates,” “seeks,” “strives,” “plans,” “intends,”“outlook,” “forecast,” “position,” “target,” “mission,” “assume,” “achievable,” “potential,” “strategy,” “goal,” “aspiration,” “opportunity,” “initiative,”“outcome,” “continue,” “remain,” “maintain,” “on course,” “trend,” “objective,” “looks forward,” “projects,” “models” and variations of such words andsimilar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions, as theyrelate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated onthe beliefs and assumptions of Comerica's management based on information known to Comerica's management as of the date of thispresentation and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives ofComerica's management for future or past operations, products or services, and forecasts of Comerica's revenue, earnings or other measures ofeconomic 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 anduncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual resultscould differ materially from those discussed. Factors that could cause or contribute to such differences are changes in general economic, politicalor industry conditions; changes in monetary and fiscal policies, including changes in interest rates; volatility and disruptions in global capital andcredit markets; changes in Comerica's credit rating; the interdependence of financial service companies; changes in regulation or oversight;unfavorable developments concerning credit quality; the effects of more stringent capital or liquidity requirements; declines or other changes in thebusinesses or industries of Comerica's customers; operational difficulties, failure of technology infrastructure or information security incidents; theimplementation of Comerica's strategies and business initiatives; Comerica's ability to utilize technology to efficiently and effectively develop,market and deliver new products and services; changes in the financial markets, including fluctuations in interest rates and their impact on depositpricing; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; anyfuture strategic acquisitions or divestitures; management's ability to maintain and expand customer relationships; management's ability to retainkey officers and employees; the impact of legal and regulatory proceedings or determinations; the effectiveness of methods of reducing riskexposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes,tornadoes, earthquakes, fires and floods; changes in accounting standards and the critical nature of Comerica's accounting policies. Comericacautions that the foregoing list of factors is not exclusive. For discussion of factors that may cause actual results to differ from expectations, pleaserefer to our filings with the Securities and Exchange Commission. In particular, please refer to “Item 1A. Risk Factors” beginning on page 12 ofComerica's Annual Report on Form 10-K for the year ended December 31, 2013. Forward-looking statements speak only as of the date they aremade. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur afterthe date the forward-looking statements are made. For any forward-looking statements made in this presentation or in any documents, Comericaclaims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
3 Comerica: A Brief Overview Loans by Business Line(2Q14 Average) Wealth Management$4.8B10% Business Bank$36.5B78% Retail Bank$5.4B12% Finance & Other$0.5B1% Deposits by Business Line(2Q14 Average) Business Bank$27.4B51% Retail Bank$21.7B41% Wealth Management$3.8B7% Comerica Strengths Strong capital position,Weathered credit cycle relatively well CONSERVATIVE Complemented by Retail Bank and Wealth Management PRIMARILY A BUSINESS BANK Strong presence in Texas, California, & Michigan ATTRACTIVE FOOTPRINT Products & services of a large bank with the culture of a community bank NIMBLE SIZE$65B in Assets Founded 165 years ago LONG HISTORY Trusted Advisor approach RELATIONSHIP BANKING STRATEGY At 6/30/14 4 Diverse Footprint Drives Growth At 6/30/14 California33% Texas24% Michigan29% Other Markets14% Average Loans by Geography Deposits by Geography 2014 2004 Michigan Texas California Florida Arizona 71% 44% 14% 28% 13% 22% 2% 2% 4% 375 Banking Centers 481 Banking Centers 4% California29% Texas20% Michigan39% Other Markets11% Finance & Other1% 2Q14 California29% Texas11% Michigan44% Other Markets16% 2Q04 2Q14 California39% Texas10% Michigan41% Other Markets7% Finance & Other3% 2Q04
5 TexasLargest U.S. Commercial Bank Headquartered in Texas At 6/30/14 ● 1For the 12 months ended 7/31/14 ● 2Source: Moody’s Analytics Established presence: 1988 Acquired 21 banks in Texas from 1988 to 1995 and completed the acquisition of Sterling in July 2011 Moved headquarters to Dallas: 2007 Texas added nearly 400,000 payroll jobs1,2 7.7 9.6 10.0 10.7 2011 2012 2013 2014YTD 7.8 10.0 10.2 10.8 2011 2012 2013 2014YTD 6.4% 5.1% 7.3% 6.2% July 2013 July 2014 U.S. AverageUnemployment2 Average Loans($ in billions) Average Deposits($ in billions) +38% +38% 2.9% 3.5% 1.7% 1.9% July 2013 July 2014 U.S. Average Job Growth2 6 CaliforniaConsiderable Opportunities in Growth Industries At 6/30/14 ● 1For the 12 months ended 7/31/14 ● 2Source: Moody’s Analytics Established presence: 1991 Acquired 5 banks in California from 1991 to 1996 Northern CA economy is driven by high-tech sector – Silicon Valley 150 Stock Index increased by 21%1 Increased payroll employment by nearly 325,000 jobs1,2 11.8 12.7 14.0 15.1 2011 2012 2013 2014YTD 12.7 14.6 14.7 15.1 2011 2012 2013 2014YTD 9.0% 7.4%7.3% 6.2% July 2013 July 2014 U.S. Average Average Loans($ in billions) Average Deposits($ in billions) 3.1% 2.1% 1.7% 1.9% July 2013 July 2014 U.S. Average Unemployment2 Job Growth2 +28% +19%
7 MichiganMaintaining Leadership Position At 6/30/14 ● 1Source: FDIC June 2013 ● 2Source: Moody’s Analytics ● 3Source: Automotive News. As of August 2014. Established presence: 1849 #2 deposit market share in Michigan1 State economy benefitting from strong auto sales – 17.5MM annual rate3 June & July has seen an increase in payroll jobs after being stable in the first half of 20142 13.9 13.6 13.5 13.5 2011 2012 2013 2014YTD 18.5 19.6 20.3 20.7 2011 2012 2013 2014YTD 9.0% 7.7%7.3% 6.2% July 2013 July 2014 U.S. Average Average Loans($ in billions) Average Deposits($ in billions) 1.5% 1.4% 1.7% 1.9% July 2013 July 2014 U.S. Average Unemployment2 Job Growth2 +12% -3% 8 3Q14 average balance through 8/31/14, compared to 2Q14. These results are preliminary and subject to change. ● 1Source: SNL Financial ● 2Outlook as of 9/5/14 ● 3Source: Federal Reserve H.8 as of 8/20/14 for large domestically chartered commercial banks. ● 4Utilization of commercial commitments as a percentage of total commercial commitments at period-end (8/31/14) Average Loans($ in billions) Outlook for moderate average loan growth year over year remains unchanged2 H.8 data shows commercial loan growth has slowed, compared to 1H143 National Dealer seasonally lower Mortgage Banker seasonally higher General Middle Market modestly lower Commitments increased over $500MM and utilization4 declined to 47.8% from 6/30/14 Pressure on yield persists from low rate environment Maintaining credit underwriting and pricing discipline Average deposits increase over $1B 44.1 44.1 45.1 46.7 47.1 3Q13 4Q13 1Q14 2Q14 3Q14thru 8/31 Third Quarter Update July and August Trends 2Q14 Average Loan Growth1(2Q14 vs. 1Q14) 3.7% 3.7% 2.4% 2.1% 1.8% 1.7% 1.7% 1.6% 1.4% 1.1% 1.1% 0.4 % HBA N CMA BOK F FHN BBT ST I RF KEY SNV FITB ZIO N MTB Peer Average: 1.7%
9 Advisory ServicesGrowing Fiduciary Income 1Balances at end of period ● 2Last 12 months, ended 6/30/14 Since 1995 Agreement with broker/dealers to provide trust services to their clients 13 alliance partners Unique fee generating business Dedicated team with 14 offices in the US 117 126 145 143 2011 2012 2013 6/30/14 Assets Under Mgmt. & Admin.1($ in billions) 240218 232 238 2011 2012 2013 2014 Last 12 Months Total Advisory Services Fee Income($ in millions) +9% +22% 47.3 30.3 35.7 44.8 2011 2012 2013 2014 Last 12 Months Trust Alliance Fee Income($ in millions) +48% Comerica Professional Trust Alliance 22 10 Controlling What We Can ControlStriving to Reach Long-Term Goals 1Goal as of 9/5/14 Long-TermGoal1: Below 60% Return on Average Assets (ROA) Long-TermGoal1: Above 1.30% Sustainability Focus = Cost Savings71.2% 67.9% 67.3% 65.8% 63.4% 2011 2012 2013 1Q14 2Q14 20 Year History:Avg. 59% / Low 47% Efficiency Ratio 0.69% 0.83% 0.85% 0.86% 0.93% 2011 2012 2013 1Q14 2Q14 20 Year History:Avg. 1.16% / High 1.78%
11 Interest Rate SensitivityWell Positioned for Rising Rates At 6/30/14 ● 1Source: SNL Financial 28% 28% 28% 29% 31 % 33% 33% 37 % 37% 38% 4 3% 46% FHN SNV BBT HBA N STI RF FITB KEY MTB BOK F ZIO N CMA Noninterest-Bearing as a Percent of Total Deposits1(2Q14 average balances) Fixed Rate~15% Libor-Based Prime-Based Loan Portfolio: Primarily Floating Rate Predominately floating rate loans, < 5% have floors Fixed rate securities only ≈15% of earning assets Relatively large non-maturity deposit base Anomalously low interest rate environment Why is Comerica Asset Sensitive? Faster Loan Re-pricing/Maturity Date1 Floating Rate~85% 0% 20% 40% 60% 80% 100% CMA FHN KE Y MTB FITB R F STI HBA N BOK F ZIO N SNV BBT Less Than 3 Months Greater Than 3 Months 0.1 Interest Rates 200 bps gradual, non-parallel rise Loan Balances Modest increase Deposit Balances Modest decrease Deposit Pricing Historical price movements with short-term rates Securities Portfolio Held at current levels Loan Spreads Held at current levels MBS Prepayments Third-party projections and historical experience Hedging (swaps) No additions modeled 12 Interest Rate SensitivityAssumptions and Alternatives At 6/30/14 ● 1Analysis based on non-parallel gradual 200 basis point increase in interest rates over 12 months. For methodology see the Company’s Form 10Q, as filed with the SEC. Estimates are based on simulation modeling analysis. Standard Model Assumptions ~180 ~200 ~210 216 ~230 ~260 DepositDecline DepositPricing DepositDecline 2Q14 RateShock LoanGrowth Sensitivity AnalysisEstimated Increase in Net Interest Income Over 12 monthsAdditional Scenarios are Relative to 2Q14 Standard Model($ in millions) Incr eme ntal $1B dec reas e in non inte rest -bea ring dep osit s1 Incr eme ntal $3B dec reas e in non inte rest -bea ring dep osit s1 Incr eme ntal inc reas e of app rox. 3% 1 Imm edia te 1 00 b ps r ate rise Incr eme ntal 20% rela tive incr eas e in bet a1 Stan dard Mo del1
13 Deposit Performance Through the Cycle 1Source: SNL Financial ● 2Source: SNL Financial. 2Q14 interest incurred on deposits as a percentage of average deposits. 23% 18% 18% 16% 14% 13% 13% 12% 11% 9% 8% -1% BOK F BBT HBA N MTB KEY FITB CMA ZIO N STI SNV RF FHN 100 % 100 % 98% 95% 95% 93% 92% 88% 87% 83% 82% 67% STI FHN SNV HBA N FITB MTB BB T CMA ZIO N KEY RF BOK F Loan to Deposit Ratio1(2Q14 period-end) Industry Deposit Considerations Balances may grow with economy or decline as the Fed reduces liquidity in the system Potential mix shift as customers seek higher returns Pricing may be driven by competitive environment or continued discipline Noninterest-bearing Deposit Growth1(CAGR 2Q14 vs. 2Q09) Lowest Cost of Deposits2(In basis points) 26 25 20 19 18 18 18 17 11 11 9 8 SNV BOK F FITB BB T KEY ST I HBA N FHN RF ZIO N MTB CMA Peer Average: 13% 2014 Capital Plan Target3: Up to $236MM share repurchases over four quarters (2Q14 through 1Q15)• $59MM or 1.2MM shares repurchased in 2Q14 Increased quarterly dividend 5% to $0.20 per share in 2Q14 Capital Actions: Issued $350MM senior debt at 2.125% in May Called $150MM sub-debt at par in July Issued $250MM sub-debt at 3.8% in July Capital Ratios2: Tangible common equity ratio: 10.39% Basel III Tier 1 common ratio: 10.3% 14 Active Capital Management 1Shares repurchased under share repurchase program ● 2See Supplemental Financial Data slides for reconciliation of non-GAAP financial measures ● 3Outlook as of 7/15/14 185.2 183.7 182.3 181.7 181.0 $33.77 $34.37 $35.64 $36.50 $37.12 2Q13 3Q13 4Q13 1Q14 2Q14 Tangible Book Value Per Share Common Shares Outstanding (in MM) 19% 21% 23% 25% 24% 28% 58% 53% 52% 39% 47% 79% 76% 77% 63% 2011 2012 2013 1Q14 2Q14 Dividends Share RepurchasesShareholder Payout Ratio1 2
15 Well Positioned for the Future As of 6/30/14 ● 1Analysis based on non-parallel gradual increase in interest rates over 12 months; For methodology see the Company’s Form 10Q for the quarter ended 6/30/14, as filed with the SEC ● 2See Supplemental Financial Data slides for reconciliation of non-GAAP financial measures. Estimated ratios based on the standardized approach in the final rule and excluding most elements of accumulated other comprehensive income (AOCI) GROWING LOANS & FEE INCOME CONTROLLING EXPENSES MAINTAINING ASSET QUALITY MANAGING CAPITAL POSITIONED FOR RISING RATES • Positioned in faster growing markets and industries• Focus on cross-sell to drive fee income • Continued tight expense control • Strong Capital base; Estimated Basel III Tier 1 common capital: 10.3%2• Continue share buyback; Increased dividend in 2Q14 • Strong credit culture leads to solid credit metrics• Weathered cycle well relative to peers • 200 bps increase in rates expected to result in >10% increase in net interest income1 Appendix
17 Net Interest Income GrowsLoan Growth More than Offsets Yield Decline 12Q14 compared to 1Q14 Net Interest Income and Rate NIM1: $410MM 1Q14 2.77% +12 $1.7B in loan growth -- +4 1 additional day in 2Q14 -- -3 Loan portfolio dynamics -0.02 -2 Interest on nonaccrual loans -0.01 -2 Loan accretion -0.01 -2 Lower securities yields:-$2MM decline in retrospectiveadjustment to premium amortization -0.01 -1 Excess liquidity decrease +0.06 $416MM 2Q14 2.78% 407 404 407 398 406 7 8 23 12 10 414 412 430 410 416 2.83 2.79 2.86 2.77 2.78 2Q13 3Q13 4Q13 1Q14 2Q14 Accretion NIM Net Interest Income($ in millions) 18 Deposits Remain Strong At 6/30/14 ● 1Interest cost on interest-bearing deposits ● 2Source: SNL Financial ● 3Source: SNL Financial. Excludes MTB as amounts were not available. 51.4 51.9 52.8 52.8 53.4 53.8 54.2 0.19 0.18 0.17 0.15 0.15 2Q13 3Q13 4Q13 1Q14 2Q14 1Q14 2Q14 Deposit Rates Average Balances Period-end Strong Deposit Base($ in billions)1 56 67 67 71 73 77 9 0 94 99 10 9 113 RF HBA N KEY BBT FITB SNV ST I FHN ZIO N BOK F CMA Higher Deposits per Banking Center3($ in millions) Total Deposit Growth2(2Q14 vs. 2Q13) 6.1% 5.0% 5.0% 4.5% 3.8% 2.9% 2.6% 1.1% 0.9% 0.4% -0.3 % -0.4 % MTB FITB BOK F HBA N CMA ST I KEY ZIO N SNV RF BBT FHN
19 Loans by Business and Market Average $ in billions Middle Market: Serving companies with revenues generally between $20-$500MM Corporate Banking: Serving companies (and their U.S. based subsidiaries) with revenues generally over $500MM Small Business: Serving companies with revenues generally under $20MM By Line of Business 2Q14 1Q14 2Q13 Middle MarketGeneralEnergyNational Dealer ServicesEntertainmentTech. & Life SciencesEnvironmental Services $13.73.25.70.62.50.9 $13.53.05.30.52.30.9 $13.53.05.10.61.90.8 Total Middle Market $26.6 $25.5 $24.9 Corporate BankingUS BankingInternational 2.81.7 2.71.8 2.71.7 Mortgage Banker Finance 1.3 0.9 1.8 Commercial Real Estate 4.1 4.0 3.8 BUSINESS BANK $36.5 $34.9 $34.9 Small Business 3.6 3.6 3.6 Retail Banking 1.8 1.8 1.7 RETAIL BANK $5.4 $5.4 $5.3 Private Banking 4.8 4.8 4.7 WEALTH MANAGEMENT $4.8 $4.8 $4.7 TOTAL $46.7 $45.1 $44.9 By Market 2Q14 1Q14 2Q13 Michigan $13.5 $13.5 $13.6 California 15.4 14.8 13.9 Texas 11.0 10.4 10.2 Other Markets 6.8 6.4 7.2 TOTAL $46.7 $45.1 $44.9 20 Deposits by Business and Market Average $ in billions Middle Market: Serving companies with revenues generally between $20-$500MM Corporate Banking: Serving companies (and their U.S. based subsidiaries) with revenues generally over $500MM Small Business: Serving companies with revenues generally under $20MM By Line of Business 2Q14 1Q14 2Q13 Middle MarketGeneralEnergyNational Dealer ServicesEntertainmentTech. & Life SciencesEnvironmental Services $14.60.50.20.15.60.1 $14.10.50.20.15.70.1 $13.80.50.20.15.00.2 Total Middle Market $21.1 $20.7 $19.8 Corporate BankingUS BankingInternational 2.61.7 2.51.7 2.61.6 Mortgage Banker Finance 0.5 0.6 0.7 Commercial Real Estate 1.5 1.5 1.3 BUSINESS BANK $27.4 $27.0 $26.0 Small Business 2.7 2.6 2.7 Retail Banking 19.0 18.8 18.5 RETAIL BANK $21.7 $21.4 $21.2 Private Banking 3.8 3.8 3.7 WEALTH MANAGEMENT $3.8 $3.8 $3.7 Finance/ Other 0.5 0.6 0.5 TOTAL $53.4 $52.8 $51.4 By Market 2Q14 1Q14 2Q13 Michigan $20.7 $20.6 $20.1 California 15.4 14.8 14.7 Texas 10.7 10.9 10.2 Other Markets 6.1 5.9 5.9 Finance/ Other 0.5 0.6 0.5 TOTAL $53.4 $52.8 $51.4
21 Mortgage Banker Finance Average Deposits($ in millions) Average Loans($ in millions) 40+ years’ experience with reputation for consistent, reliable approach Provide short-term warehouse financing: bridge from origination of residential mortgage until sale into end market Extensive backroom provides collateral monitoring and customer service Focus on full banking relationships 360 481 52 3 551 6 37 513 372 399 4 41 454 49 7 62 5 645 665 643 566 565 516 1Q1 0 2Q1 0 3Q1 0 4Q1 0 1Q1 1 2Q1 1 3Q1 1 4Q1 1 1Q1 2 2Q1 2 3Q1 2 4Q1 2 1Q1 3 2Q1 3 3Q1 3 4Q1 3 1Q1 4 2Q1 4 425 707 943 1 ,101 566 61 4 923 1,53 5 1,48 3 1,50 7 1,99 6 2,09 4 1,73 7 1,81 5 1,60 5 1,10 9 886 1,31 9 1Q1 0 2Q1 0 3Q1 0 4Q1 0 1Q1 1 2Q1 1 3Q1 1 4Q1 1 1Q1 2 2Q1 2 3Q1 2 4Q1 2 1Q1 3 2Q1 3 3Q1 3 4Q1 3 1Q1 4 2Q1 4 22 Energy At 6/30/14 30+ years’ experience through the cycles Focus on middle market companies Excellent credit quality Deep relationships with significant ancillary noncredit products Average Loans($ in millions) 1,29 6 1,14 9 1,19 6 1,26 9 1,42 3 1,45 6 1,63 5 1,94 7 2,30 5 2,45 2 2,64 1 2,85 1 3,00 2 2,95 1 2,89 5 2,75 2 2,98 2 3,23 6 1Q1 0 2Q1 0 3Q1 0 4Q1 0 1Q1 1 2Q1 1 3Q1 1 4Q1 1 1Q1 2 2Q1 2 3Q1 2 4Q1 2 1Q1 3 2Q1 3 3Q1 3 4Q1 3 1Q1 4 2Q1 4 152 233 430 444 50 1 493 492 865 686 567 533 512 411 48 8 529 60 8 493 528 1Q1 0 2Q1 0 3Q1 0 4Q1 0 1Q1 1 2Q1 1 3Q1 1 4Q1 1 1Q1 2 2Q1 2 3Q1 2 4Q1 2 1Q1 3 2Q1 3 3Q1 3 4Q1 3 1Q1 4 2Q1 4 Average Deposits($ in millions) Natural Gas Oil Mixed Midstream11% Service16% Exploration & Production 73% Diverse Customer Base(Based on period-end loan outstandings)
23 Technology and Life Sciences At 6/30/14 20+ year history Products and services tailored to meet the needs of emerging companies throughout their lifecycle Strong relationships with top-tier investors National business headquartered in Palo Alto, CA, operating from 13 offices in the U.S. and Toronto Top notch relationship managers with extensive industry expertise Average Loans($ in billions) 1.1 1.1 1.1 1.2 1.2 1.2 1 .3 1.5 1. 6 1.7 1. 8 1.9 2.0 1.9 2.0 2 .1 2.3 2 .5 1Q1 0 2Q1 0 3Q1 0 4Q1 0 1Q1 1 2Q1 1 3Q1 1 4Q1 1 1Q1 2 2Q1 2 3Q1 2 4Q1 2 1Q1 3 2Q1 3 3Q1 3 4Q1 3 1Q1 4 2Q1 4 3.3 3.4 3.3 3.5 3. 7 4.1 4.2 4.4 4 .7 5.1 5.2 5.2 5.0 5.0 5.1 5.2 5 .7 5.6 1Q1 0 2Q1 0 3Q1 0 4Q1 0 1Q1 1 2Q1 1 3Q1 1 4Q1 1 1Q1 2 2Q1 2 3Q1 2 4Q1 2 1Q1 3 2Q1 3 3Q1 3 4Q1 3 1Q1 4 2Q1 4 Average Deposits($ in billions) 24 Commercial Real Estate Line of Business At 6/30/14 ● 1Includes CRE line of business loans not secured by real estate 5.7 5.4 5.1 4.8 4.4 4.0 4.4 4.6 4.4 4.3 3.9 3.7 3.7 3.8 3.8 3.8 4 .0 4.1 1Q1 0 2Q1 0 3Q1 0 4Q1 0 1Q1 1 2Q1 1 3Q1 1 4Q1 1 1Q1 2 2Q1 2 3Q1 2 4Q1 2 1Q1 3 2Q1 3 3Q1 3 4Q1 3 1Q1 4 2Q1 4 Commercial MortgagesReal Estate ConstructionCommercial & Other Average Loans($ in billions) 4.8 4.9 5.2 5.4 5.6 2Q13 3Q13 4Q13 1Q14 2Q14 Commitments($ in billions; Based on Period-end commitments) 160+ years experience with focus on well-established developers, primarily in our footprint Provide construction and mini-perm mortgage financing Real Estate Construction average loans up for the past 7 quarters +16% 1
25 Shared National Credit Relationships At 6/30/14 ● Shared National Credit (SNC): Facilities greater than $20 million shared by three or more federally supervised financial institutions which are reviewed by regulatory authorities at the agent bank level. Period-end Loans of $10.2BCompared to $10.1B at 1Q14 Commercial Real Estate$0.5B 6% Corporate $2.7B 25% General$2.4B 24%National Dealer $0.4B 4% Energy$3.0B 29% Entertainment$0.3B 3% Tech. & Life Sciences$0.3B 3% Environmental Services $0.4B 4% Mortgage Banker$0.2B 2% = Total Middle Market (67%) Approximately 870 borrowers Strategy: Pursue full relationships with ancillary business Comerica is agent for approx. 16% Adhere to same credit underwriting standards as rest of loan book Credit quality mirrors total portfolio 26 Continued Strong Credit QualityOne of the Lowest NCO Ratios Among Peers 1Source: SNL Financial ● 2Criticized loans are consistent with regulatory defined Special Mention, Substandard, Doubtful and Loss loan classifications 17 19 13 12 9 15 18 12 10 8 2Q13 3Q13 4Q13 1Q14 2Q14 NCO Ratio Net Loan Charge-offs($ in millions) Criticized Loans2($ in millions) (In basis points) Allowance for Loan Losses($ in millions) -6 6 8 18 21 22 25 34 35 40 44 69 BOK F ZIO N CMA MTB KE Y FHN HBA N STI RF BBT FITB SNV 2Q14 Net Charge-Off Ratio vs. Peers1(In basis points) 2,695 2,461 2,260 2,139 2,188 1.10 1.08 0.84 0.76 0.75 2Q13 3Q13 4Q13 1Q14 2Q14 NPAs as a Percentage of Total Loans + ORE 613 604 598 594 591 1.3 1.3 1.6 1.8 1.7 2Q13 3Q13 4Q13 1Q14 2Q14 NPL Coverage
27 Securities Portfolio Stable At 6/30/14 ● 1Estimated as of 6/30/14 MBS Portfolio: • Duration of 4.0 years1 • Duration extends to 4.7 years under a 200 bps instantaneous rate increase1 • Net unrealized pre-tax loss of $12MM • Net unamortized premium of $61MM • Interest on securities declined $2MM, reflecting a $2MM reduction in the retrospective adjustment to premium amortization (from $3MM in 1Q14) • Investing prepayments into Level 1 High Quality Liquid Assets (HQLA), such as GNMA securities • GNMA approx. 15% of MBS portfolio 9.4 9.0 9.0 8.9 9.0 9.1 9.1 9.8 9.4 9.4 9.3 9.4 9.5 9.5 2.22 2.41 2.46 2.42 2.35 2Q13 3Q13 4Q13 1Q14 2Q14 1Q14 2Q14 MBS Other MBS Yield Securities Portfolio($ in billions) Average Balances Period-end 28 Factors Expected to Drive Long-Term Efficiency Ratio Goal Goal as of 9/5/14 2013 Long-Term Goal1 Efficiency Ratio:67% Efficiency Ratio:<60% Expense Growth of 0 - 2% Fee Income Growth of 2 - 4% Loan Growth of 3 - 5% • Increase cross-sell penetration • Collaboration between businesses Focused growth:• Target markets • Allocation of resources to faster growing businesses • Relationship driven • Normalized rates not necessary to reach long-term goal • Continued focus on operating leverage ≈1% ≈2% Normal (≈3.5%) Fed Funds
29 Holding Company Debt Rating As of 9/2/14 ● Source: SNL Financial ● Debt Ratings are not a recommendation to buy, sell, or hold securities Senior Unsecured/Long-Term Issuer Rating S&P Moody’s Fitch BB&T A- A2 A+ BOK Financial A- A2 A Comerica A- A3 A M&T Bank A- A3 A- KeyCorp BBB+ Baa1 A- Fifth Third BBB+ Baa1 A SunTrust BBB Baa1 BBB+ Huntington BBB Baa1 A- Regions Financial BBB- Ba1 BBB- Zions Bancorporation BBB- Ba1 BBB- First Horizon National Corp BB+ Baa3 BBB- Synovus Financial Corp BB- B1 BB Wells Fargo & Company A+ A2 AA- U.S. Bancorp A+ A1 AA- JP Morgan A A3 A+ PNC Financial Services Group A- A3 A+ Bank of America A- Baa2 A Pee r Ba nks Larg e Ba nks Supplemental Financial DataReconciliation of non-GAAP financial measures with financial measures defined by GAAP ($ in millions) 30 The Tier 1 common capital ratio removes preferred stock and qualifying trust preferred securities from Tier 1 capital as defined by and calculated in conformity with bank regulations. The tangible common equity ratio removes preferred stock and the effect of intangible assets from capital and the effect of intangible assets from total assets. Tangible common equity per share of common stock removed the effect of intangible assets from common shareholders equity per share of common stock.The Corporation believes these measurements are meaningful measures of capital adequacy used by investors, regulators, management and others to evaluate the adequacy of common equity and to compare against other companies in the industry.1Tier 1 Capital and risk-weighted assets as defined and calculated in accordance with regulation. 6/30/14 3/31/14 12/31/13 9/30/13 6/30/13 Tier 1 and Tier 1 common capital1Risk-weighted assets1Tier 1 and Tier 1 common capital ratio 7,02766,99110.50% 6,96265,78810.58% 6,89564,82510.64% 6,86264,02710.72% 6,80065,22010.43% Common shareholders’ equityLess: GoodwillLess: Other intangible assets $7,36963515 $7,28363516 $7,15063517 $6,96663518 $6,90863520Tangible common equity $6,719 $6,632 $6,498 $6,313 $6,253Total assetsLess: GoodwillLess: Other intangible assets $65,32563515 $65,68163516 $65,22463517 $64,66763518 $62,94463520Tangible assets $64,675 $65,030 $64,572 $64,014 $62,289Common equity ratio 11.28% 11.09% 10.97% 10.78% 10.98%Tangible common equity ratio 10.39 10.20 10.07 9.87 10.04 Common shareholders’ equity $7,369 $7,283 $7,150 $6,966 $6,908Tangible common equity $6,719 $6,632 $6,498 $6,313 $6,253Shares of common stock outstanding (in millions) 181 182 182 184 185 Common shareholders’ equity per share of common stock $40.72 $40.09 $39.22 $37.93 $37.31Tangible common equity per share of common stock 37.12 36.50 35.64 34.37 33.77
Supplemental Financial DataTier 1 Common Equity under Basel III ($ in millions) 31 The Tier 1 common capital ratio removes preferred stock and qualifying trust preferred securities from Tier 1 capital as defined by and calculated in conformity with bank regulations. The Basel III Tier 1 common capital ratio further adjusts Tier 1 common capital and risk-weighted assets to account for the final rule approved by U.S. banking regulators in July 2013 for the U.S. adoption of the Basel III regulatory capital framework. The final Basel III capital rules are effective January 1, 2015 for banking organizations subject to the standardized approach. The Corporation believes these measurements are meaningful measures of capital adequacy used by investors, regulators, management and others to evaluate the adequacy of common equity and to compare against other companies in the industry.1Tier 1 Capital and risk-weighted assets as defined in accordance with regulation.2Estimated ratios based on the standardized approach in the final rule, as fully phased-in, and excluding most elements of accumulated other comprehensive income (AOCI). Basel III Tier 1 Common Capital Ratio 6/30/14 3/31/14 12/31/13 9/30/13 6/30/13 Tier 1 common capitalBasel III adjustments2 $7,027(1) $6,962(2) $6,895(6) $6,862(4) $6,800-- Basel III Tier 1 common capital2 $7,026 $6,960 $6,889 $6,858 $6,800 Risk-weighted assets1Basel III adjustments2 $66,9911,594 $65.7881,590 $64,8251,754 $64,0271,726 $65,2202,091Basel III risk-weighted assets2 $68,505 $67,378 $66,579 $65,753 $67,311 Tier 1 common capital ratioBasel III Tier 1 common capital ratio2 10.5%10.3% 10.6%10.3% 10.6%10.3% 10.7%10.4% 10.4%10.1%