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| 8-K - 8-K - COMERICA INC /NEW/ | cma-20141231xform8xk.htm |
| EX-99.1 - EXHIBIT - COMERICA INC /NEW/ | cma-20141231ex991.htm |
Comerica Incorporated Fourth Quarter 2014Financial Review January 16, 2015 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 Financial Summary $ in millions, except per share data ● 1Reflected 4Q14 actions of $4MM, or $3MM after-tax and 3Q14 actions which resulted in a net benefit of $8MM, or $5MM after-tax. ● 2See Supplemental Financial Data slides for a reconciliation of non-GAAP financial measures ● 3Included litigation-related expense of $52MM in 4Q13, related to an unfavorable jury verdict in a lender liability case. ● 4Estimated 4Q14 3Q14 2014 2013 Diluted income per common share $0.80 $0.82 $3.16 $2.85 Impact from certain actions1 ($0.02) $0.03 Net interest income $415 $414 $1,655 $1,672 Loan accretion 9 3 34 49 Provision for credit losses 2 5 27 46 Noninterest income 225 215 868 882 Noninterest expenses 4191 3971 1,626 1,7223 Efficiency-related & Other Actions1 4 (8) Net income 149 154 593 541 Total average loans $47,361 $47,159 $46,588 $44,412 Total average deposits 57,760 55,163 54,784 51,711 Tier 1 common capital ratio2 10.53%4 10.59% 10.53%4 10.64% Basel III Tier 1 common capital ratio2,4 10.3% 10.4% 10.3% 10.3% Average diluted shares (millions) 184 185 185 187 4 Full-Year 2014 Results $ in millions, except per share data ● Full-year 2014 compared to full-year 2013 ● 1EPS based on diluted income per share ● 2See Supplemental Financial Data slides for reconciliation of non-GAAP financial measures ● 3Shares repurchased under the share repurchase program Key YoY Performance Drivers EPS increased 11% Solid average loan & deposit growth with increases in all businesses Net interest income modestly lower due to accretion decline. Impact from loan portfolio dynamics & low rates predominately offset by loan growth Credit quality remained strong Noninterest income declined due to noncustomer-driven categories Expenses remained well controlled; Litigation-related ($48MM) & pension ($47MM) expenses declined Share repurchases3, combined with dividends, returned $392MM to shareholders FY14 From FY13Chg $ Chg %Total average loans 46,588 2,176 5% Total average deposits 54,784 3,073 6% Net interest income 1,655 (17) (1%) Loan accretion 34 (15) (31%) Provision for credit losses 27 (19) (41%) Net loan charge-offs 25 (48) N/M Noninterest income 868 (14) (2%) Customer-driven fee income 768 5 1% Noninterest expenses 1,626 (96) (6%) Net income 593 52 10% Earnings per share (EPS)1 3.16 0.31 11% Tangible Book Value Per Share2 37.72 2.08 6% Shares repurchased3 5.2MM shares or $249MM
5 Fourth Quarter 2014 Results $ in millions, except per share data ● 4Q14 compared to 3Q14 ● 1Included litigation-related expense of $52MM in 4Q13, related to an unfavorable jury verdict in a lender liability case. ● 2Reflected 4Q14 actions of $4MM, or $3MM after-tax. 3Q14 actions resulted in a net benefit of $8MM, or $5MM after-tax. ● 3EPS based on diluted income per share ● 4Shares repurchased under the share repurchase program Key QoQ Performance Drivers Average loans increased slightly across most businesses Robust deposit growth of 5% Net interest income stable Credit quality was strong Noninterest income reflects higher customer derivative income Expenses increased from efficiency-related actions along with increases in technology-related contract labor and seasonal increases in other categories Share repurchases4, combined with dividends, returned $95 million to shareholders 4Q14 Change From3Q14 4Q13Total average loans 47,361 202 3,307 Total average deposits 57,760 2,597 4,991 Net interest income 415 1 (15) Loan accretion 9 6 (14) Provision for credit losses 2 (3) (7) Net loan charge-offs 1 (2) (12) Noninterest income 225 10 6 Customer-driven fee income 201 11 11 Noninterest expenses 4192 222 (54)1 Efficiency-related & Other Actions2 4 12 N/A Net income 149 (5) 32 Earnings per share (EPS)3 0.80 (0.02) 0.18 Tangible Book Value Per Share2 37.72 0.07 2.08 Shares repurchased4 1.3MM shares or $59MM 6 Diverse Footprint Drives Growth $ in billions 9.8 10.4 11.0 11.1 11.3 4Q13 1Q14 2Q14 3Q14 4Q14 Average Loans 10.5 10.9 10.7 10.6 10.8 4Q13 1Q14 2Q14 3Q14 4Q14 Average Deposits 14.4 14.8 15.4 15.5 15.8 4Q13 1Q14 2Q14 3Q14 4Q14 Average Loans 15.2 14.8 15.4 16.4 18.0 4Q13 1Q14 2Q14 3Q14 4Q14 Average Deposits 13.4 13.5 13.5 13.3 13.2 4Q13 1Q14 2Q14 3Q14 4Q14 Average Loans 20.6 20.6 20.7 21.2 21.6 4Q13 1Q14 2Q14 3Q14 4Q14 Average Deposits +16% +3% +9% +19% +5% -1% +2% +2% +2% +10% -1% +2%
7 Loan Growth Reflects Slight Increases in Most BusinessesLoan Yields Stable 4Q14 compared to 3Q14 ● 1At period-end ● 2Utilization of commercial commitments as a percentage of total commercial commitments at period-end Total Loans($ in billions) Loan yields stable with higher accretion (+5bps), lease residual charge (-5bps), nonaccrual interest (+1 bp), and other loan portfolio dynamics (-1 bp) Commitments grew $1.1B to $56.2B1, driven by increases in nearly all business lines Line utilization of 48.8%, up from 48.2%2 Loan pipeline remains solid 44.1 45.1 46.7 47.2 47.4 47.7 48.6 3.58 3.39 3.31 3.22 3.22 4Q13 1Q14 2Q14 3Q14 4Q14 3Q14 4Q14 Loan Yields Average Balances Period-end Commercial Loans($ in billions) 3.2 3.2 3.5 3.2 3.4 3.2 3.81.1 0.9 1.3 1.6 1.4 1.9 1.727.7 28.4 29.9 30.2 30.4 30.8 31.5 4Q13 1Q14 2Q14 3Q14 4Q14 3Q14 4Q14 National Dealer Floor Plan Mortgage Banker Average Balances Period-end 8 Robust Average Deposit Growth of $2.6B or 5% Increases in All Business Lines & Markets 1Interest cost on interest-bearing deposits ● 24Q14 compared to 3Q14 ● 3At 12/31/14 Average Balances Period-end Strong Deposit Base($ in billions) 52.8 52.8 53.4 55.2 57.8 57.6 57.5 0.17 0.15 0.15 0.15 0.15 4Q13 1Q14 2Q14 3Q14 4Q14 3Q14 4Q14 Deposit Rates1 Total average deposits increased $2.6B2: Noninterest-bearing deposits increased $2.2B to $27.5B, driven by:+ $729MM Corporate Banking+ $448MM Commercial Real Estate+ $393MM General Middle Market+ $182MM Tech. & Life Sciences+ $159MM Retail Banking+ $108MM Small Business Interest-bearing deposits increased $368MM to $30.3B About 2/3 of total deposits are commercial Loan to Deposit Ratio3 of 85%
9 Securities PortfolioPurchased ~$500MM in Treasury Securities, Positioning for LCR3 At 12/31/14 ● 1Estimated as of 12/31/14 ● 2Outlook as of 1/16/15. Prepayments include both scheduled principal amortization and mortgage prepayments ● 3Liquidity Coverage Ratio MBS Portfolio: Duration of 3.8 years1 • Extends to 4.7 years under a 200 bps instantaneous rate increase1 Net unrealized pre-tax gain of $81MM Net unamortized premium of $53MM Expect prepayments of $350MM-$500MM for 1Q152 GNMA about 25% of MBS portfolio9.0 8.9 9.0 9.0 9.0 9.1 9.2 9.4 9.3 9.4 9.4 9.4 9.5 10.1 2.46 2.42 2.35 2.29 2.27 4Q13 1Q14 2Q14 3Q14 4Q14 3Q14 4Q14 Other (Incl. Treasury Securities)MBSMBS Yield Securities Portfolio($ in billions) Average Balances Period-end 10 Net Interest Income StableNet Interest Margin Decline Due to Higher Balances at the Fed 14Q14 compared to 3Q14 Net Interest Income and Rate NIM1: $414MM 3Q14 2.67% +6-5+1 Loan Impacts:Loan accretionLease residual value adj.Interest on nonaccrual loans +0.03-0.03+0.01 -1 Lower securities yields -0.01 -1 Higher interest-bearing deposit balances -- +1 Higher balances at the Fed -0.10 $415MM 4Q14 2.57% 23 12 10 3 9 430 410 416 414 415 2.86 2.77 2.78 2.67 2.57 4Q13 1Q14 2Q14 3Q14 4Q14 Accretion NIM Net Interest Income($ in millions)
11 Continued Strong Credit QualityNet Charge-offs of 1 bp At 12/31/14 ● 1Criticized loans are consistent with regulatory defined Special Mention, Substandard, Doubtful and Loss loan classifications. 2,260 2,139 2,188 2,094 1,893 0.84 0.76 0.75 0.75 0.62 4Q13 1Q14 2Q14 3Q14 4Q14 NPAs as a Percentage of Total Loans + ORE Net Loan Charge-offs($ in millions) Criticized Loans1($ in millions) Allowance for Loan Losses($ in millions) 598 594 591 592 594 1.6 1.8 1.7 1.7 2.1 4Q13 1Q14 2Q14 3Q14 4Q14 NPL Coverage 13 12 9 3 1 12 10 8 3 14Q13 1Q14 2Q14 3Q14 4Q14 NCO Ratio Provision decreased to $2MM, reflecting positive credit trends and an additional allowance allocation for Energy Nonperforming Assets (NPAs) decreased $57MM to $300MM Foreclosed Property of $10MM Credit Quality (In basis points) 12 Energy: 7% of Total Loan Portfolio30+ Years Experience With Strong Performance Through Cycles At 12/31/14 ● 1Criticized loans are consistent with regulatory defined Special Mention, Substandard, Doubtful and Loss loan classifications. ● 2Based on period-end outstandings Granular portfolio: >200 customers Focus on larger middle market companies Strong credit quality: • -0- Nonaccrual loans• ~$100MM, or 3%, criticized loans1 Utilization rate of 49% More than 95% Secured Semi-annual borrowing base re-determinations Advance rate guideline of up to 65% on proven reserves Review price deck quarterly, or as appropriate Diverse customer base2: Exploration & Production 70% Average Loans($ in millions) 1,81 1 1,65 6 1,46 9 1,32 7 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 3,33 2 3,49 2 1Q0 9 2Q0 9 3Q0 9 4Q0 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 3Q1 4 4Q1 4 48 26 15 31 91 188 139 82 39 16 5 0 0 0 0 36 69 19 10 13 6 02004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Strong Credit Quality Despite Oil & Gas Price Volatility Total CMA Net Charge-offs to Avg. Total Loans (In basis points)Energy Net Charge-offs to Avg. Energy Loans (In basis points) Midstream13% Service17% Natural Gas 11% Oil42% Mixed17%
13 Noninterest Income Grew 5% 4Q14 compared to 3Q14 ● 1Customer-driven fee income includes service charges on deposit accounts, fiduciary income, commercial lending fees, letter of credit fees, card fees, foreign exchange income, brokerage fees and customer-driven components of other noninterest income. Customer-driven fee income increased $11MM: + $6MM Customer Derivative Income + $3MM Commercial Lending Fees Noncustomer-driven income stable 190 184 193 190 20129 24 27 25 24 219 208 220 215 225 4Q13 1Q14 2Q14 3Q14 4Q14 Noncustomer-DrivenCustomer-Driven1 Noninterest Income ($ in millions) 763 768 119 100 882 868 2013 2014 14 Expense IncreaseDue to Certain Actions Taken, Technology & Seasonal Impacts 4Q14 compared to 3Q14 397 (8) 4 52 473 406 404 419 4Q13 1Q14 2Q14 3Q14 4Q14 Impact of 3Q & 4Q Actions4Q13 Litigation-related Expense Noninterest Expenses($ in millions) 52 1,722 1,626 2013 2014 Expenses increased $22MM $12MM increase from 3Q14 & 4Q14 actions: 3Q14 $8MM net benefit, primarily includes:+ $32MM Gain on early redemption of debt- $9MM Charitable foundation donation- $8MM Real estate optimization- $6MM Severance 4Q14 $4MM charge, primarily for real estate optimization $10MM increase, excluding actions:+ $5MM Technology-related contract labor+ Seasonal increases in:• Consulting• Advertising• Staff Insurance
15 Active Capital ManagementReturned $392MM to Shareholders in FY14 1Shares repurchased under share repurchase program ● 2See Supplemental Financial Data slides for reconciliation of non-GAAP financial measures 197.3 188.3 182.3 179.0 $31.40 $33.36 $35.64 $37.72 2011 2012 2013 2014 Tangible Book Value Per Share Common Shares Outstanding (in millions) 19% 21% 23% 24% 28% 58% 53% 42% 47% 79% 76% 66% 2011 2012 2013 2014 Dividends Share Repurchases Payout RatioRepurchased 5.2MM Shares in FY141 1 2 16 Managing Through Headwinds At 12/31/14 ● Estimated, Outlook as of 1/16/15 ● 1Excludes maintenance costs associated with projects; includes hardware/software depreciation and labor costs directly expensed associated with technology-related projects. Facing Headwinds… …While Remaining Focused on Growing Relationships 34 ~4-6 2014 2015 Revenue:Accretion($ in millions) 68 ~100 2014 2015 Expense:Technology Projects1 ($ in millions) 22 ~30 2014 2015 Expense: Regulatory RelatedExcluding Technology($ in millions) 39 ~46 2014 2015 Expense:Pension($ in millions) 43.3 44.4 46.6 2012 2013 2014 Average Loans($ in billions) 49.5 51.7 54.8 2012 2013 2014 Average Deposits($ in billions) + ~7MM- ~30MM +~8MM+~32MM
17 Management 2015 OutlookAssuming Continuation of Current Economic & Low Rate Environment Outlook as of 1/16/15 FY15 compared to FY14 Average loans Continued Growth, Consistent with FY14 • Typical seasonality throughout year (Mortgage Banker & National Dealer)• Continued focus on pricing and structure discipline Net interest income Relatively Stable, Assuming no rise in interest rates• Contribution from asset growth offset by impact from low rate environment on asset yields and decrease in purchase accounting accretion of ~$30MM Provision Higher• Consistent with modest net charge-offs and continued loan growth Noninterest income Relatively Stable• Growth in fee income, particularly Card and Fiduciary, mostly offset by continued regulatory impacts on letters of credit, derivatives and warrant income Noninterest expenses Higher• Increases in technology, regulatory and pension expenses• Typical inflationary pressures• Continued focus on driving efficiencies for the long-term (run rate savings ~$12-14MM by year-end from actions taken in 2014) Income taxes ~33% of pre-tax income 18 Interest Rate SensitivityRemain Well Positioned for Rising Rates At 12/31/14 ● 1Source: Bloomberg ● For methodology see the Company’s Form 10Q, as filed with the SEC. Estimates are based on simulation modeling analysis. The analysis does not capture possible regulatory impacts. ~115 ~190 ~200 ~215 224 ~250 ~330 Up 100bps Addl. $3BDepositDecline Addl.20%Increasein Beta Addl. $1BDepositDecline 4Q14StandardModel Addl.~3%LoanGrowth Up 300bps Estimated Net Interest Income: Annual (12 month) SensitivitiesBased on Various AssumptionsAdditional Scenarios are Relative to 4Q14 Standard Model($ in millions) Estimated Net Interest Income: 2015 Sensitivity Based on Market Expectations for 1 Month LIBOR($ in millions) ~1 ~5 ~15 ~25 1Q15 2Q15 3Q15 4Q15 ~65 bpsAvg. 1 month LIBOR from Implied Forward Curve1Projected Quarterly Increase to Net Interest Income ~20 bps ~25 bps ~45 bps
Appendix 20 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 4Q14 3Q14 4Q13 Middle MarketGeneralEnergyNational Dealer ServicesEntertainmentTech. & Life SciencesEnvironmental Services $13.43.55.70.62.71.0 $13.63.35.50.62.60.9 $13.22.85.30.62.10.8 Total Middle Market $26.9 $26.5 $24.8 Corporate BankingUS BankingInternational 2.71.8 2.81.8 2.61.8 Mortgage Banker Finance 1.4 1.6 1.1 Commercial Real Estate 4.2 4.2 3.8 BUSINESS BANK $37.0 $36.9 $34.1 Small Business 3.7 3.7 3.6 Retail Banking 1.8 1.8 1.7 RETAIL BANK $5.5 $5.5 $5.3 Private Banking 4.9 4.8 4.7 WEALTH MANAGEMENT $4.9 $4.8 $4.7 TOTAL $47.4 $47.2 $44.1 By Market 4Q14 3Q14 4Q13 Michigan $13.2 $13.3 $13.4 California 15.8 15.5 14.4 Texas 11.3 11.1 9.8 Other Markets 7.1 7.3 6.5 TOTAL $47.4 $47.2 $44.1
21 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 4Q14 3Q14 4Q13 Middle MarketGeneralEnergyNational Dealer ServicesEntertainmentTech. & Life SciencesEnvironmental Services $15.80.70.20.16.20.1 $15.30.50.20.15.90.1 $13.90.60.20.25.20.2 Total Middle Market $23.1 $22.1 $20.3 Corporate BankingUS BankingInternational 3.31.9 2.71.8 2.81.8 Mortgage Banker Finance 0.5 0.5 0.6 Commercial Real Estate 2.1 1.7 1.5 BUSINESS BANK $30.9 $28.8 $27.0 Small Business 2.9 2.8 2.8 Retail Banking 19.2 19.0 18.6 RETAIL BANK $22.1 $21.8 $21.4 Private Banking 4.3 4.2 3.9 WEALTH MANAGEMENT $4.3 $4.2 $3.9 Finance/ Other 0.5 0.4 0.5 TOTAL $57.8 $55.2 $52.8 By Market 4Q14 3Q14 4Q13 Michigan $21.6 $21.2 $20.6 California 18.0 16.4 15.2 Texas 10.8 10.6 10.5 Other Markets 6.9 6.6 6.0 Finance/ Other 0.5 0.4 0.5 TOTAL $57.8 $55.2 $52.8 22 Mortgage Banker Finance Average Deposits($ 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 5 645 665 643 566 565 516 516 526 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 3Q1 4 4Q1 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 1,59 5 1,39 7 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 3Q1 4 4Q1 4 At 12/31/14
23 National Dealer Services At 12/31/14 ● 1Other includes obligations where a primary franchise is indeterminable (rental car and leasing companies, heavy truck, recreational vehicles, and non-floor plan loans) Toyota/Lexus16% Honda/Acura 14% Ford 9% GM 10% Chrysler 8% Mercedes 3%Nissan/ Infiniti 7% Other European 11% Other Asian 12% Other110% Franchise Distribution(Based on period-end loan outstandings) Geographic DispersionCalifornia 63% Texas 8%Michigan 18% Other 11% Average Loans($ in billions) 65+ years of Floor Plan lending, with 20+ years on a national basis Top tier strategy Focus on “Mega Dealer” (five or more dealerships in group) Strong credit quality Robust monitoring of company inventory and performance 1.9 1.7 1.3 1.5 1.9 2.3 2.3 2.5 2.8 3.1 2.9 3.2 3.2 3.5 3.2 3.4 3.8 3.6 3.1 3.4 3.8 4.3 4.3 4.6 4.9 5.1 4.9 5.3 5.3 5.7 5.5 5.7 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 3Q1 4 4Q1 4 Floor Plan 24 Technology and Life Sciences At 12/31/14 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 2.6 2.7 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 3Q1 4 4Q1 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 5.9 6 .2 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 3Q1 4 4Q1 4 Average Deposits($ in billions)
25 Commercial Real Estate Line of Business At 12/31/14 ● 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 4.2 4.2 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 3Q1 4 4Q1 4 Commercial MortgagesReal Estate ConstructionCommercial & Other Average Loans($ in billions) 5.2 5.4 5.6 6.0 6.4 4Q13 1Q14 2Q14 3Q14 4Q14 Commitments($ in billions; Based on period-end) 160+ years experience with focus on well-established developers, primarily in our footprint Provide construction and mini-perm mortgage financing +22% 1 26 Shared National Credit (SNC) Relationships At 12/31/14 ● SNCs are not a line of business. The balances shown above are included in the line of business balances shown on slide #20 ● SNCs are 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 $10.8B Commercial Real Estate$0.7B 7% Corporate $2.7B 24% General$2.3B 22%National Dealer $0.5B 4% Energy$3.3B 30% Entertainment$0.3B 3% Tech. & Life Sciences$0.3B 3% Environmental Services $0.4B 4% Mortgage Banker$0.3B 3% = Total Middle Market (66%) SNC relationships included in business line balances Approximately 855 borrowers Strategy: Pursue full relationships with ancillary business Comerica is agent for approx. 19% Adhere to same credit underwriting standards as rest of loan book Credit quality mirrors total portfolio
27 Government Card ProgramsGenerates Valuable Retail Deposits 720 948 1,221 1,444 2011 2012 2013 2014 US Treasury ProgramState Card Programs At 12/31/14 ● 1Source: the Nilson Report July 2014, based on 2013 data ● 2Based on a 2014 survey conducted by KRC Research ● 3Source: U.S. Department of the Treasury ● 4Source: Social Security Administration Growing Average Noninterest-Bearing Deposits($ in millions) #1 prepaid card issuer in US1 State/ Local government benefit programs:• 49 distinct programs US Treasury DirectExpress Program:• Exclusive provider of prepaid debit cards since 2008; contract extended to January 2020• ~80k new accounts per month• 95% of Direct Express card holders report they are satisfied2• Eliminating monthly benefit checks, resulting in significant taxpayer savings3 # of Social Security Beneficiaries4(in millions) 25 30 35 40 45 50 55 60 1970 1975 1980 1985 1990 1995 2000 2005 2010 Key Facts 28 Maintaining Focus on Long-Term Goals Goal as of 1/16/15 Efficiency Ratio Return on Average Assets (ROA) 71.2% 67.9% 67.3% 64.3% 2011 2012 2013 2014 0.69% 0.83% 0.85% 0.89% 2011 2012 2013 2014 Long-TermGoal: Above 1.30%Long-TermGoal: Below 60%
29 Holding Company Debt Rating As of 1/8/15 ● 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- Ba3 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.2December 31, 2014 Tier 1 Capital and Risk-Weighted assets are estimated. 12/31/14 9/30/14 12/31/13 12/31/12 12/31/11 Tier 1 and Tier 1 common capital1,2Risk-weighted assets1,2Tier 1 and Tier 1 common capital ratio2 7,16868,10110.53% 7,10567,10610.59% 6,89564,82510.64% Common shareholders’ equityLess: GoodwillLess: Other intangible assets $7,40263515 $7,43363515 $7,15063517Tangible common equity $6,752 $6,783 $6,498Total assetsLess: GoodwillLess: Other intangible assets $69,19063515 $68,88763515 $65,22463517Tangible assets $68,540 $68,237 $64,572Common equity ratio 10.85% 10.79% 10.97%Tangible common equity ratio 9.85 9.94 10.07 Common shareholders’ equity $7,402 $7,433 $7,150 $6,939 $6,865Tangible common equity $6,752 $6,783 $6,498 $6,282 $6,198Shares of common stock outstanding (in millions) 179 180 182 188 197 Common shareholders’ equity per share of common stock $41.35 $41.26 $39.22 $36.86 $34.79Tangible common equity per share of common stock 37.72 37.65 35.64 33.36 31.40
Supplemental Financial DataTier 1 Common Equity under Basel III ($ 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).3December 31, 2014 Tier 1 Capital and Risk-Weighted assets are estimated. Basel III Tier 1 Common Capital Ratio 12/31/14 9/30/14 6/30/14 3/31/14 12/31/13 Tier 1 common capital3Basel III adjustments2 $7,168-- $7,105(1) $7,027(1) $6,962(2) $6,895(6) Basel III Tier 1 common capital2 $7,168 $7,104 $7,026 $6,960 $6,889 Risk-weighted assets1,3Basel III adjustments2 $68,1011,751 $67,1061,492 $66,9111,594 $65,7881,590 $64,8251,754Basel III risk-weighted assets2 $69,852 $68,598 $68,505 $67,378 $66,579 Tier 1 common capital ratio3Basel III Tier 1 common capital ratio2 10.5%10.3% 10.6%10.4% 10.5%10.3% 10.6%10.3% 10.6%10.3%