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| 8-K - 8-K - COMERICA INC /NEW/ | cma-20151231form8k.htm |
COMERICA ADJUSTS FOURTH QUARTER AND FULL YEAR 2015 RESULTS - 1
COMERICA ADJUSTS FOURTH QUARTER AND FULL YEAR 2015 RESULTS
Revision Due to Recently Discovered Isolated Event Associated with Single Customer Loan
DALLAS/February 16, 2016 -- Comerica Incorporated (NYSE: CMA) today announced that it is adjusting its fourth quarter and full year 2015 financial results, from those reported on January 19, 2016, as a result of recently discovered irregularities with a single customer loan relationship in the Retail Bank. Following the discovery, Comerica increased its provision for credit losses, recorded a charge-off for the amount in question, and decreased incentive compensation expense based on the revised results, effective as of December 31, 2015.
Comerica had approximately $26 million outstanding from an Arizona-based sales and appraisal company at December 31, 2015. Following an extensive analysis of the situation, Comerica has determined that there was significant doubt as to collectibility of the loan and, given the unique irregularities, it is believed to be an isolated incident.
Comerica Chairman and Chief Executive Officer Ralph W. Babb, Jr. said, "Our investigation is ongoing and we are assessing all circumstances surrounding this matter. We remain confident in our systems and processes and will vigorously prosecute all legal options available to us to recover on this isolated loss."
The adjustments will reduce Comerica's 2015 net income by $14 million after-tax, or 8 cents per share, from $535 million, or $2.92 per share, to $521 million, or $2.84 per share. Adjusted fourth quarter 2015 net income was $116 million, or 64 cents per share, compared to previously reported net income of $130 million, or 71 cents per share.
The following table summarizes the impact of the adjustments on the previously reported financial results.
December 31, 2015 | |||||||||||||||||||||||
Quarter Ended | Year Ended | ||||||||||||||||||||||
(dollar amounts in millions, except per share data) | As Reported | As Adjusted | As Reported | As Adjusted | |||||||||||||||||||
Provision for credit losses | $ | 35 | $ | 60 | $ | 122 | $ | 147 | |||||||||||||||
Noninterest expenses | 489 | 486 | 1,845 | 1,842 | |||||||||||||||||||
Salaries and benefits expense | 265 | 262 | 1,012 | 1,009 | |||||||||||||||||||
Income before income taxes | 179 | 157 | 772 | 750 | |||||||||||||||||||
Provision for income taxes | 49 | 41 | 237 | 229 | |||||||||||||||||||
Net income | 130 | 116 | 535 | 521 | |||||||||||||||||||
Net income attributable to common shares | 129 | 115 | 529 | 515 | |||||||||||||||||||
Diluted income per common share | 0.71 | 0.64 | 2.92 | 2.84 | |||||||||||||||||||
Total shareholders' equity at year end | 7,574 | 7,560 | |||||||||||||||||||||
Basel III common equity Tier 1 capital ratio | 10.53 | % | (a) | 10.54 | % | ||||||||||||||||||
Tangible common equity ratio (b) | 9.72 | % | 9.70 | % | |||||||||||||||||||
(a) | Estimated as of January 19,2016. Prior to the adjustments, the final Basel III common equity Tier 1 ratio would have been 10.56%. |
(b) | See Reconciliation of Non-GAAP Financial Measures. |
Comerica’s Annual Report on Form 10-K will reflect these adjustments when it is filed with the U.S. Securities and Exchange Commission. The revisions primarily impacted the Retail Bank and Other Markets. Revised fourth quarter and full year 2015 financial information is included with this release.
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COMERICA ADJUSTS FOURTH QUARTER AND FULL YEAR 2015 RESULTS - 2
Comerica Incorporated is a financial services company headquartered in Dallas, Texas, and strategically aligned by three major business segments: The Business Bank, The Retail Bank and Wealth Management. Comerica focuses on relationships and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico.
This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Comerica's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as a reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
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COMERICA ADJUSTS FOURTH QUARTER AND FULL YEAR 2015 RESULTS - 3
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,” “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 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 general economic, political or industry conditions; changes in monetary and fiscal policies, including changes in interest rates; changes in regulation or oversight; Comerica's ability to maintain adequate sources of funding and liquidity; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers, including the energy industry; operational difficulties, failure of technology infrastructure or information security incidents; reliance on other companies to provide certain key components of business infrastructure; factors impacting noninterest expenses which are beyond Comerica's control; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; changes in Comerica's credit rating; unfavorable developments concerning credit quality; the interdependence of financial service companies; the implementation 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; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; any future strategic acquisitions or divestitures; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; changes in accounting standards and the critical nature of Comerica's accounting policies. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. In particular, please refer to “Item 1A. Risk Factors” beginning on page 12 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2014. 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 Contact: | Investor Contacts: |
Wayne J. Mielke | Darlene P. Persons |
(214) 462-4463 | (214) 462-6831 |
Chelsea R. Smith | |
(214) 462-6834 | |
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited) | ||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||
Three Months Ended | Years Ended | |||||||||||||||
December 31, | September 30, | December 31, | December 31, | |||||||||||||
(in millions, except per share data) | 2015 | 2015 | 2014 | 2015 | 2014 | |||||||||||
PER COMMON SHARE AND COMMON STOCK DATA | ||||||||||||||||
Diluted net income | $ | 0.64 | $ | 0.74 | $ | 0.80 | $ | 2.84 | $ | 3.16 | ||||||
Cash dividends declared | 0.21 | 0.21 | 0.20 | 0.83 | 0.79 | |||||||||||
Average diluted shares (in thousands) | 179,197 | 180,714 | 183,728 | 181,104 | 185,474 | |||||||||||
KEY RATIOS | ||||||||||||||||
Return on average common shareholders' equity | 6.08 | % | 7.19 | % | 7.96 | % | 6.91 | % | 8.05 | % | ||||||
Return on average assets | 0.64 | 0.76 | 0.86 | 0.74 | 0.89 | |||||||||||
Common equity tier 1 risk-based capital ratio (a) | 10.54 | 10.51 | n/a | |||||||||||||
Tier 1 common risk-based capital ratio (b) | n/a | n/a | 10.50 | |||||||||||||
Tier 1 risk-based capital ratio (a) | 10.54 | 10.51 | 10.50 | |||||||||||||
Total risk-based capital ratio (a) | 12.69 | 12.82 | 12.51 | |||||||||||||
Leverage ratio (a) | 10.22 | 10.28 | 10.35 | |||||||||||||
Tangible common equity ratio (b) | 9.70 | 9.91 | 9.85 | |||||||||||||
AVERAGE BALANCES | ||||||||||||||||
Commercial loans | 31,219 | 31,900 | 30,391 | 31,501 | 29,715 | |||||||||||
Real estate construction loans | 1,961 | 1,833 | 1,920 | 1,884 | 1,909 | |||||||||||
Commercial mortgage loans | 8,842 | 8,691 | 8,609 | 8,697 | 8,706 | |||||||||||
Lease financing | 750 | 788 | 818 | 783 | 834 | |||||||||||
International loans | 1,402 | 1,401 | 1,455 | 1,441 | 1,376 | |||||||||||
Residential mortgage loans | 1,896 | 1,882 | 1,821 | 1,878 | 1,778 | |||||||||||
Consumer loans | 2,478 | 2,477 | 2,347 | 2,444 | 2,270 | |||||||||||
Total loans | 48,548 | 48,972 | 47,361 | 48,628 | 46,588 | |||||||||||
Earning assets | 66,818 | 66,191 | 64,453 | 65,129 | 61,560 | |||||||||||
Total assets | 71,907 | 71,333 | 69,307 | 70,247 | 66,336 | |||||||||||
Noninterest-bearing deposits | 29,627 | 28,623 | 27,504 | 28,087 | 25,019 | |||||||||||
Interest-bearing deposits | 30,109 | 30,517 | 30,256 | 30,239 | 29,765 | |||||||||||
Total deposits | 59,736 | 59,140 | 57,760 | 58,326 | 54,784 | |||||||||||
Common shareholders' equity | 7,613 | 7,559 | 7,518 | 7,534 | 7,373 | |||||||||||
NET INTEREST INCOME (fully taxable equivalent basis) | ||||||||||||||||
Net interest income | $ | 434 | $ | 423 | $ | 416 | $ | 1,693 | $ | 1,659 | ||||||
Net interest margin | 2.58 | % | 2.54 | % | 2.57 | % | 2.60 | % | 2.70 | % | ||||||
CREDIT QUALITY | ||||||||||||||||
Total nonperforming assets | $ | 391 | $ | 381 | $ | 300 | ||||||||||
Loans past due 90 days or more and still accruing | 17 | 5 | 5 | |||||||||||||
Net loan charge-offs | 51 | 23 | 1 | $ | 100 | $ | 25 | |||||||||
Allowance for loan losses | 634 | 622 | 594 | |||||||||||||
Allowance for credit losses on lending-related commitments | 45 | 48 | 41 | |||||||||||||
Total allowance for credit losses | 679 | 670 | 635 | |||||||||||||
Allowance for loan losses as a percentage of total loans | 1.29 | % | 1.27 | % | 1.22 | % | ||||||||||
Net loan charge-offs as a percentage of average total loans | 0.42 | 0.19 | 0.01 | 0.21 | % | 0.05 | % | |||||||||
Nonperforming assets as a percentage of total loans and foreclosed property | 0.80 | 0.78 | 0.62 | |||||||||||||
Allowance for loan losses as a percentage of total nonperforming loans | 167 | 169 | 205 | |||||||||||||
(a) | Basel III rules became effective on January 1, 2015, with transitional provisions. All prior period data is based on Basel I rules. |
(b) | See Reconciliation of Non-GAAP Financial Measures. |
n/a - not applicable.
4
CONSOLIDATED BALANCE SHEETS | |||||||||
Comerica Incorporated and Subsidiaries | |||||||||
December 31, | September 30, | December 31, | |||||||
(in millions, except share data) | 2015 | 2015 | 2014 | ||||||
(unaudited) | (unaudited) | ||||||||
ASSETS | |||||||||
Cash and due from banks | $ | 1,157 | $ | 1,101 | $ | 1,026 | |||
Interest-bearing deposits with banks | 4,990 | 6,099 | 5,045 | ||||||
Other short-term investments | 113 | 107 | 99 | ||||||
Investment securities available-for-sale | 10,519 | 8,749 | 8,116 | ||||||
Investment securities held-to-maturity | 1,981 | 1,863 | 1,935 | ||||||
Commercial loans | 31,659 | 31,777 | 31,520 | ||||||
Real estate construction loans | 2,001 | 1,874 | 1,955 | ||||||
Commercial mortgage loans | 8,977 | 8,787 | 8,604 | ||||||
Lease financing | 724 | 751 | 805 | ||||||
International loans | 1,368 | 1,382 | 1,496 | ||||||
Residential mortgage loans | 1,870 | 1,880 | 1,831 | ||||||
Consumer loans | 2,485 | 2,491 | 2,382 | ||||||
Total loans | 49,084 | 48,942 | 48,593 | ||||||
Less allowance for loan losses | (634 | ) | (622 | ) | (594 | ) | |||
Net loans | 48,450 | 48,320 | 47,999 | ||||||
Premises and equipment | 550 | 541 | 532 | ||||||
Accrued income and other assets | 4,117 | 4,232 | 4,434 | ||||||
Total assets | $ | 71,877 | $ | 71,012 | $ | 69,186 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Noninterest-bearing deposits | $ | 30,839 | $ | 28,697 | $ | 27,224 | |||
Money market and interest-bearing checking deposits | 23,532 | 23,948 | 23,954 | ||||||
Savings deposits | 1,898 | 1,853 | 1,752 | ||||||
Customer certificates of deposit | 3,552 | 4,126 | 4,421 | ||||||
Foreign office time deposits | 32 | 144 | 135 | ||||||
Total interest-bearing deposits | 29,014 | 30,071 | 30,262 | ||||||
Total deposits | 59,853 | 58,768 | 57,486 | ||||||
Short-term borrowings | 23 | 109 | 116 | ||||||
Accrued expenses and other liabilities | 1,383 | 1,413 | 1,507 | ||||||
Medium- and long-term debt | 3,058 | 3,100 | 2,675 | ||||||
Total liabilities | 64,317 | 63,390 | 61,784 | ||||||
Common stock - $5 par value: | |||||||||
Authorized - 325,000,000 shares | |||||||||
Issued - 228,164,824 shares | 1,141 | 1,141 | 1,141 | ||||||
Capital surplus | 2,173 | 2,165 | 2,188 | ||||||
Accumulated other comprehensive loss | (429 | ) | (345 | ) | (412 | ) | |||
Retained earnings | 7,084 | 7,007 | 6,744 | ||||||
Less cost of common stock in treasury - 52,457,113 shares at 12/31/15; 51,010,418 shares at 9/30/15 and 49,146,225 shares at 12/31/14 | (2,409 | ) | (2,346 | ) | (2,259 | ) | |||
Total shareholders' equity | 7,560 | 7,622 | 7,402 | ||||||
Total liabilities and shareholders' equity | $ | 71,877 | $ | 71,012 | $ | 69,186 | |||
5
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) | |||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||
Three Months Ended | Years Ended | ||||||||||||
December 31, | December 31, | ||||||||||||
(in millions, except per share data) | 2015 | 2014 | 2015 | 2014 | |||||||||
INTEREST INCOME | |||||||||||||
Interest and fees on loans | $ | 395 | $ | 383 | $ | 1,551 | $ | 1,525 | |||||
Interest on investment securities | 56 | 51 | 216 | 211 | |||||||||
Interest on short-term investments | 6 | 4 | 17 | 14 | |||||||||
Total interest income | 457 | 438 | 1,784 | 1,750 | |||||||||
INTEREST EXPENSE | |||||||||||||
Interest on deposits | 10 | 12 | 43 | 45 | |||||||||
Interest on medium- and long-term debt | 14 | 11 | 52 | 50 | |||||||||
Total interest expense | 24 | 23 | 95 | 95 | |||||||||
Net interest income | 433 | 415 | 1,689 | 1,655 | |||||||||
Provision for credit losses | 60 | 2 | 147 | 27 | |||||||||
Net interest income after provision for credit losses | 373 | 413 | 1,542 | 1,628 | |||||||||
NONINTEREST INCOME | |||||||||||||
Card fees | 77 | 24 | 290 | 92 | |||||||||
Service charges on deposit accounts | 55 | 53 | 223 | 215 | |||||||||
Fiduciary income | 45 | 47 | 187 | 180 | |||||||||
Commercial lending fees | 30 | 29 | 99 | 98 | |||||||||
Letter of credit fees | 14 | 14 | 53 | 57 | |||||||||
Bank-owned life insurance | 11 | 8 | 40 | 39 | |||||||||
Foreign exchange income | 11 | 10 | 40 | 40 | |||||||||
Brokerage fees | 4 | 4 | 17 | 17 | |||||||||
Net securities losses | — | — | (2 | ) | — | ||||||||
Other noninterest income | 23 | 36 | 103 | 130 | |||||||||
Total noninterest income | 270 | 225 | 1,050 | 868 | |||||||||
NONINTEREST EXPENSES | |||||||||||||
Salaries and benefits expense | 262 | 245 | 1,009 | 980 | |||||||||
Outside processing fee expense | 83 | 33 | 332 | 122 | |||||||||
Net occupancy expense | 41 | 46 | 159 | 171 | |||||||||
Equipment expense | 14 | 14 | 53 | 57 | |||||||||
Software expense | 26 | 23 | 99 | 95 | |||||||||
FDIC insurance expense | 10 | 8 | 37 | 33 | |||||||||
Advertising expense | 7 | 7 | 24 | 23 | |||||||||
Litigation-related expense | — | — | (32 | ) | 4 | ||||||||
Gain on debt redemption | — | — | — | (32 | ) | ||||||||
Other noninterest expenses | 43 | 43 | 161 | 173 | |||||||||
Total noninterest expenses | 486 | 419 | 1,842 | 1,626 | |||||||||
Income before income taxes | 157 | 219 | 750 | 870 | |||||||||
Provision for income taxes | 41 | 70 | 229 | 277 | |||||||||
NET INCOME | 116 | 149 | 521 | 593 | |||||||||
Less income allocated to participating securities | 1 | 1 | 6 | 7 | |||||||||
Net income attributable to common shares | $ | 115 | $ | 148 | $ | 515 | $ | 586 | |||||
Earnings per common share: | |||||||||||||
Basic | $ | 0.65 | $ | 0.83 | $ | 2.93 | $ | 3.28 | |||||
Diluted | 0.64 | 0.80 | 2.84 | 3.16 | |||||||||
Comprehensive income | 31 | 54 | 504 | 572 | |||||||||
Cash dividends declared on common stock | 37 | 36 | 148 | 143 | |||||||||
Cash dividends declared per common share | 0.21 | 0.20 | 0.83 | 0.79 | |||||||||
6
CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited) | |||||||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||||||
Fourth | Third | Second | First | Fourth | Fourth Quarter 2015 Compared To: | ||||||||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Quarter | Third Quarter 2015 | Fourth Quarter 2014 | |||||||||||||||||||||
(in millions, except per share data) | 2015 | 2015 | 2015 | 2015 | 2014 | Amount | Percent | Amount | Percent | ||||||||||||||||||
INTEREST INCOME | |||||||||||||||||||||||||||
Interest and fees on loans | $ | 395 | $ | 390 | $ | 388 | $ | 378 | $ | 383 | $ | 5 | 1 | % | $ | 12 | 3 | % | |||||||||
Interest on investment securities | 56 | 54 | 53 | 53 | 51 | 2 | 6 | 5 | 12 | ||||||||||||||||||
Interest on short-term investments | 6 | 4 | 3 | 4 | 4 | 2 | 19 | 2 | 8 | ||||||||||||||||||
Total interest income | 457 | 448 | 444 | 435 | 438 | 9 | 2 | 19 | 4 | ||||||||||||||||||
INTEREST EXPENSE | |||||||||||||||||||||||||||
Interest on deposits | 10 | 11 | 11 | 11 | 12 | (1 | ) | (3 | ) | (2 | ) | (7 | ) | ||||||||||||||
Interest on medium- and long-term debt | 14 | 15 | 12 | 11 | 11 | (1 | ) | (6 | ) | 3 | 21 | ||||||||||||||||
Total interest expense | 24 | 26 | 23 | 22 | 23 | (2 | ) | (4 | ) | 1 | 7 | ||||||||||||||||
Net interest income | 433 | 422 | 421 | 413 | 415 | $ | 11 | 3 | $ | 18 | 4 | ||||||||||||||||
Provision for credit losses | 60 | 26 | 47 | 14 | 2 | 34 | N/M | 58 | N/M | ||||||||||||||||||
Net interest income after provision for credit losses | 373 | 396 | 374 | 399 | 413 | (23 | ) | (6 | ) | (40 | ) | (10 | ) | ||||||||||||||
NONINTEREST INCOME | |||||||||||||||||||||||||||
Card fees | 77 | 74 | 72 | 67 | 24 | 3 | 3 | 53 | N/M | ||||||||||||||||||
Service charges on deposit accounts | 55 | 57 | 56 | 55 | 53 | (2 | ) | (3 | ) | 2 | 4 | ||||||||||||||||
Fiduciary income | 45 | 47 | 48 | 47 | 47 | (2 | ) | (4 | ) | (2 | ) | (4 | ) | ||||||||||||||
Commercial lending fees | 30 | 22 | 22 | 25 | 29 | 8 | 35 | 1 | 5 | ||||||||||||||||||
Letter of credit fees | 14 | 13 | 13 | 13 | 14 | 1 | 2 | — | — | ||||||||||||||||||
Bank-owned life insurance | 11 | 10 | 10 | 9 | 8 | 1 | 1 | 3 | 18 | ||||||||||||||||||
Foreign exchange income | 11 | 10 | 9 | 10 | 10 | 1 | 5 | 1 | 11 | ||||||||||||||||||
Brokerage fees | 4 | 5 | 4 | 4 | 4 | (1 | ) | (12 | ) | — | — | ||||||||||||||||
Net securities losses | — | — | — | (2 | ) | — | — | N/M | — | — | |||||||||||||||||
Other noninterest income | 23 | 26 | 27 | 27 | 36 | (3 | ) | (7 | ) | (13 | ) | (33 | ) | ||||||||||||||
Total noninterest income | 270 | 264 | 261 | 255 | 225 | 6 | 2 | 45 | 20 | ||||||||||||||||||
NONINTEREST EXPENSES | |||||||||||||||||||||||||||
Salaries and benefits expense | 262 | 243 | 251 | 253 | 245 | 19 | 8 | 17 | 7 | ||||||||||||||||||
Outside processing fee expense | 83 | 86 | 86 | 77 | 33 | (3 | ) | (5 | ) | 50 | N/M | ||||||||||||||||
Net occupancy expense | 41 | 41 | 39 | 38 | 46 | — | — | (5 | ) | (10 | ) | ||||||||||||||||
Equipment expense | 14 | 13 | 13 | 13 | 14 | 1 | 1 | — | — | ||||||||||||||||||
Software expense | 26 | 26 | 24 | 23 | 23 | — | — | 3 | 9 | ||||||||||||||||||
FDIC insurance expense | 10 | 9 | 9 | 9 | 8 | 1 | 24 | 2 | 31 | ||||||||||||||||||
Advertising expense | 7 | 6 | 5 | 6 | 7 | 1 | 13 | — | — | ||||||||||||||||||
Litigation-related expense | — | (3 | ) | (30 | ) | 1 | — | 3 | N/M | — | — | ||||||||||||||||
Other noninterest expenses | 43 | 40 | 39 | 39 | 43 | 3 | 8 | — | — | ||||||||||||||||||
Total noninterest expenses | 486 | 461 | 436 | 459 | 419 | 25 | 5 | 67 | 16 | ||||||||||||||||||
Income before income taxes | 157 | 199 | 199 | 195 | 219 | (42 | ) | (21 | ) | (62 | ) | (29 | ) | ||||||||||||||
Provision for income taxes | 41 | 63 | 64 | 61 | 70 | (22 | ) | (35 | ) | (29 | ) | (41 | ) | ||||||||||||||
NET INCOME | 116 | 136 | 135 | 134 | 149 | (20 | ) | (15 | ) | (33 | ) | (23 | ) | ||||||||||||||
Less income allocated to participating securities | 1 | 2 | 1 | 2 | 1 | (1 | ) | (14 | ) | — | — | ||||||||||||||||
Net income attributable to common shares | $ | 115 | $ | 134 | $ | 134 | $ | 132 | $ | 148 | $ | (19 | ) | (15 | )% | $ | (33 | ) | (23 | )% | |||||||
Earnings per common share: | |||||||||||||||||||||||||||
Basic | $ | 0.65 | $ | 0.76 | $ | 0.76 | $ | 0.75 | $ | 0.83 | $ | (0.11 | ) | (14 | )% | $ | (0.18 | ) | (22 | )% | |||||||
Diluted | 0.64 | 0.74 | 0.73 | 0.73 | 0.80 | (0.10 | ) | (14 | ) | (0.16 | ) | (20 | ) | ||||||||||||||
Comprehensive income | 31 | 187 | 109 | 176 | 54 | (156 | ) | (83 | ) | (23 | ) | (43 | ) | ||||||||||||||
Cash dividends declared on common stock | 37 | 37 | 37 | 36 | 36 | — | — | 1 | 3 | ||||||||||||||||||
Cash dividends declared per common share | 0.21 | 0.21 | 0.21 | 0.20 | 0.20 | — | — | 0.01 | 5 | ||||||||||||||||||
N/M - not meaningful
7
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited) | ||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||
2015 | 2014 | |||||||||||||||
(in millions) | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | |||||||||||
Balance at beginning of period | $ | 622 | $ | 618 | $ | 601 | $ | 594 | $ | 592 | ||||||
Loan charge-offs: | ||||||||||||||||
Commercial | 73 | 30 | 17 | 19 | 8 | |||||||||||
Commercial mortgage | 1 | — | 2 | — | 2 | |||||||||||
Lease financing | — | — | 1 | — | — | |||||||||||
International | — | 1 | 11 | 2 | 6 | |||||||||||
Residential mortgage | — | — | 1 | — | 1 | |||||||||||
Consumer | 2 | 3 | 3 | 2 | 3 | |||||||||||
Total loan charge-offs | 76 | 34 | 35 | 23 | 20 | |||||||||||
Recoveries on loans previously charged-off: | ||||||||||||||||
Commercial | 6 | 8 | 10 | 9 | 6 | |||||||||||
Real estate construction | — | — | 1 | — | 2 | |||||||||||
Commercial mortgage | 11 | 2 | 5 | 3 | 10 | |||||||||||
Residential mortgage | 1 | — | — | 1 | — | |||||||||||
Consumer | 7 | 1 | 1 | 2 | 1 | |||||||||||
Total recoveries | 25 | 11 | 17 | 15 | 19 | |||||||||||
Net loan charge-offs | 51 | 23 | 18 | 8 | 1 | |||||||||||
Provision for loan losses | 63 | 28 | 35 | 16 | 4 | |||||||||||
Foreign currency translation adjustment | — | (1 | ) | — | (1 | ) | (1 | ) | ||||||||
Balance at end of period | $ | 634 | $ | 622 | $ | 618 | $ | 601 | $ | 594 | ||||||
Allowance for loan losses as a percentage of total loans | 1.29 | % | 1.27 | % | 1.24 | % | 1.22 | % | 1.22 | % | ||||||
Net loan charge-offs as a percentage of average total loans | 0.42 | 0.19 | 0.15 | 0.07 | 0.01 | |||||||||||
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited) | ||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||
2015 | 2014 | |||||||||||||||
(in millions) | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | |||||||||||
Balance at beginning of period | $ | 48 | $ | 50 | $ | 39 | $ | 41 | $ | 43 | ||||||
Less: Charge-offs on lending-related commitments (a) | — | — | 1 | — | — | |||||||||||
Add: Provision for credit losses on lending-related commitments | (3 | ) | (2 | ) | 12 | (2 | ) | (2 | ) | |||||||
Balance at end of period | $ | 45 | $ | 48 | $ | 50 | $ | 39 | $ | 41 | ||||||
Unfunded lending-related commitments sold | $ | — | $ | — | $ | 12 | $ | 1 | $ | — | ||||||
(a) | Charge-offs result from the sale of unfunded lending-related commitments. |
8
CONSOLIDATED STATISTICAL DATA (unaudited) | |||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
(in millions, except per share data) | 2015 | 2015 | 2015 | 2015 | 2014 | ||||||||||
Commercial loans: | |||||||||||||||
Floor plan | $ | 3,939 | $ | 3,538 | $ | 3,840 | $ | 3,544 | $ | 3,790 | |||||
Other | 27,720 | 28,239 | 28,883 | 28,547 | 27,730 | ||||||||||
Total commercial loans | 31,659 | 31,777 | 32,723 | 32,091 | 31,520 | ||||||||||
Real estate construction loans | 2,001 | 1,874 | 1,795 | 1,917 | 1,955 | ||||||||||
Commercial mortgage loans | 8,977 | 8,787 | 8,674 | 8,558 | 8,604 | ||||||||||
Lease financing | 724 | 751 | 786 | 792 | 805 | ||||||||||
International loans | 1,368 | 1,382 | 1,420 | 1,433 | 1,496 | ||||||||||
Residential mortgage loans | 1,870 | 1,880 | 1,865 | 1,859 | 1,831 | ||||||||||
Consumer loans: | |||||||||||||||
Home equity | 1,720 | 1,714 | 1,682 | 1,678 | 1,658 | ||||||||||
Other consumer | 765 | 777 | 796 | 744 | 724 | ||||||||||
Total consumer loans | 2,485 | 2,491 | 2,478 | 2,422 | 2,382 | ||||||||||
Total loans | $ | 49,084 | $ | 48,942 | $ | 49,741 | $ | 49,072 | $ | 48,593 | |||||
Goodwill | $ | 635 | $ | 635 | $ | 635 | $ | 635 | $ | 635 | |||||
Core deposit intangible | 10 | 10 | 11 | 12 | 13 | ||||||||||
Other intangibles | 4 | 4 | 4 | 3 | 2 | ||||||||||
Common equity tier 1 capital (a) | 7,350 | 7,327 | 7,280 | 7,230 | n/a | ||||||||||
Tier 1 common capital (b) | n/a | n/a | n/a | n/a | 7,169 | ||||||||||
Risk-weighted assets (a) | 69,731 | 69,718 | 69,967 | 69,514 | 68,273 | ||||||||||
Common equity tier 1 risk-based capital ratio (a) | 10.54 | % | 10.51 | % | 10.40 | % | 10.40 | % | n/a | ||||||
Tier 1 common risk-based capital ratio (b) | n/a | n/a | n/a | n/a | 10.50 | % | |||||||||
Tier 1 risk-based capital ratio (a) | 10.54 | 10.51 | 10.40 | 10.40 | 10.50 | ||||||||||
Total risk-based capital ratio (a) | 12.69 | 12.82 | 12.38 | 12.35 | 12.51 | ||||||||||
Leverage ratio (a) | 10.22 | 10.28 | 10.56 | 10.53 | 10.35 | ||||||||||
Tangible common equity ratio (b) | 9.70 | 9.91 | 9.92 | 9.97 | 9.85 | ||||||||||
Common shareholders' equity per share of common stock | $ | 43.03 | $ | 43.02 | $ | 42.18 | $ | 42.12 | $ | 41.35 | |||||
Tangible common equity per share of common stock (b) | 39.33 | 39.36 | 38.53 | 38.47 | 37.72 | ||||||||||
Market value per share for the quarter: | |||||||||||||||
High | 47.44 | 52.93 | 53.45 | 47.94 | 50.14 | ||||||||||
Low | 39.52 | 40.01 | 44.38 | 40.09 | 42.73 | ||||||||||
Close | 41.83 | 41.10 | 51.32 | 45.13 | 46.84 | ||||||||||
Quarterly ratios: | |||||||||||||||
Return on average common shareholders' equity | 6.08 | % | 7.19 | % | 7.21 | % | 7.20 | % | 7.96 | % | |||||
Return on average assets | 0.64 | 0.76 | 0.79 | 0.78 | 0.86 | ||||||||||
Efficiency ratio (c) | 69.11 | 67.08 | 63.68 | 68.50 | 65.26 | ||||||||||
Number of banking centers | 477 | 477 | 477 | 482 | 481 | ||||||||||
Number of employees - full time equivalent | 8,880 | 8,941 | 8,901 | 8,831 | 8,876 | ||||||||||
(a) | Basel III rules became effective January 1, 2015, with transitional provisions. All prior period data is based on Basel I rules. |
(b) | See Reconciliation of Non-GAAP Financial Measures. |
(c) | Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains (losses). |
n/a - not applicable.
9
PARENT COMPANY ONLY BALANCE SHEETS (unaudited) | |||||||||
Comerica Incorporated | |||||||||
December 31, | September 30, | December 31, | |||||||
(in millions, except share data) | 2015 | 2015 | 2014 | ||||||
ASSETS | |||||||||
Cash and due from subsidiary bank | $ | 4 | $ | 5 | $ | — | |||
Short-term investments with subsidiary bank | 569 | 563 | 1,133 | ||||||
Other short-term investments | 89 | 89 | 94 | ||||||
Investment in subsidiaries, principally banks | 7,523 | 7,596 | 7,411 | ||||||
Premises and equipment | 3 | 2 | 2 | ||||||
Other assets | 137 | 138 | 138 | ||||||
Total assets | $ | 8,325 | $ | 8,393 | $ | 8,778 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Medium- and long-term debt | $ | 608 | $ | 618 | $ | 1,208 | |||
Other liabilities | 157 | 153 | 168 | ||||||
Total liabilities | 765 | 771 | 1,376 | ||||||
Common stock - $5 par value: | |||||||||
Authorized - 325,000,000 shares | |||||||||
Issued - 228,164,824 shares | 1,141 | 1,141 | 1,141 | ||||||
Capital surplus | 2,173 | 2,165 | 2,188 | ||||||
Accumulated other comprehensive loss | (429 | ) | (345 | ) | (412 | ) | |||
Retained earnings | 7,084 | 7,007 | 6,744 | ||||||
Less cost of common stock in treasury - 52,457,113 shares at 12/31/15; 51,010,418 shares at 9/30/15 and 49,146,225 shares at 12/31/14 | (2,409 | ) | (2,346 | ) | (2,259 | ) | |||
Total shareholders' equity | 7,560 | 7,622 | 7,402 | ||||||
Total liabilities and shareholders' equity | $ | 8,325 | $ | 8,393 | $ | 8,778 | |||
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) | ||||||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||||||
Accumulated | ||||||||||||||||||||
Common Stock | Other | Total | ||||||||||||||||||
Shares | Capital | Comprehensive | Retained | Treasury | Shareholders' | |||||||||||||||
(in millions, except per share data) | Outstanding | Amount | Surplus | Loss | Earnings | Stock | Equity | |||||||||||||
BALANCE AT DECEMBER 31, 2013 | 182.3 | $ | 1,141 | $ | 2,179 | $ | (391 | ) | $ | 6,318 | $ | (2,097 | ) | $ | 7,150 | |||||
Net income | — | — | — | — | 593 | — | 593 | |||||||||||||
Other comprehensive loss, net of tax | — | — | — | (21 | ) | — | — | (21 | ) | |||||||||||
Cash dividends declared on common stock ($0.79 per share) | — | — | — | — | (143 | ) | — | (143 | ) | |||||||||||
Purchase of common stock | (5.4 | ) | — | — | — | — | (260 | ) | (260 | ) | ||||||||||
Net issuance of common stock under employee stock plans | 2.1 | — | (27 | ) | — | (24 | ) | 96 | 45 | |||||||||||
Share-based compensation | — | — | 38 | — | — | — | 38 | |||||||||||||
Other | — | — | (2 | ) | — | — | 2 | — | ||||||||||||
BALANCE AT DECEMBER 31, 2014 | 179.0 | $ | 1,141 | $ | 2,188 | $ | (412 | ) | $ | 6,744 | $ | (2,259 | ) | $ | 7,402 | |||||
Net income | — | — | — | — | 521 | — | 521 | |||||||||||||
Other comprehensive loss, net of tax | — | — | — | (17 | ) | — | — | (17 | ) | |||||||||||
Cash dividends declared on common stock ($0.83 per share) | — | — | — | — | (148 | ) | — | (148 | ) | |||||||||||
Purchase of common stock | (5.3 | ) | — | — | — | — | (240 | ) | (240 | ) | ||||||||||
Purchase and retirement of warrants | — | — | (10 | ) | — | — | — | (10 | ) | |||||||||||
Net issuance of common stock under employee stock plans | 1.0 | — | (22 | ) | — | (11 | ) | 47 | 14 | |||||||||||
Net issuance of common stock for warrants | 1.0 | — | (21 | ) | — | (22 | ) | 43 | — | |||||||||||
Share-based compensation | — | — | 38 | — | — | — | 38 | |||||||||||||
BALANCE AT DECEMBER 31, 2015 | 175.7 | $ | 1,141 | $ | 2,173 | $ | (429 | ) | $ | 7,084 | $ | (2,409 | ) | $ | 7,560 | |||||
10
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited) | |||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||
(dollar amounts in millions) | Business | Retail | Wealth | ||||||||||||||||||||
Three Months Ended December 31, 2015 | Bank | Bank | Management | Finance | Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 387 | $ | 160 | $ | 47 | $ | (162 | ) | $ | 2 | $ | 434 | ||||||||||
Provision for credit losses | 41 | 23 | (7 | ) | — | 3 | 60 | ||||||||||||||||
Noninterest income | 147 | 49 | 57 | 15 | 2 | 270 | |||||||||||||||||
Noninterest expenses | 208 | 191 | 81 | 2 | 4 | 486 | |||||||||||||||||
Provision (benefit) for income taxes (FTE) | 85 | (4 | ) | 9 | (47 | ) | (1 | ) | 42 | ||||||||||||||
Net income (loss) | $ | 200 | $ | (1 | ) | $ | 21 | $ | (102 | ) | $ | (2 | ) | $ | 116 | ||||||||
Net loan charge-offs (recoveries) | $ | 35 | $ | 25 | $ | (9 | ) | $ | — | $ | — | $ | 51 | ||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 38,765 | $ | 6,549 | $ | 5,199 | $ | 12,678 | $ | 8,716 | $ | 71,907 | |||||||||||
Loans | 37,682 | 5,868 | 4,998 | — | — | 48,548 | |||||||||||||||||
Deposits | 31,738 | 23,262 | 4,355 | 120 | 261 | 59,736 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 2.06 | % | (0.03 | )% | 1.68 | % | N/M | N/M | 0.64 | % | |||||||||||||
Efficiency ratio (b) | 39.00 | 91.69 | 77.02 | N/M | N/M | 69.11 | |||||||||||||||||
Business | Retail | Wealth | |||||||||||||||||||||
Three Months Ended September 30, 2015 | Bank | Bank | Management | Finance | Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 380 | $ | 158 | $ | 45 | $ | (162 | ) | $ | 2 | $ | 423 | ||||||||||
Provision for credit losses | 30 | 2 | (3 | ) | — | (3 | ) | 26 | |||||||||||||||
Noninterest income | 145 | 49 | 59 | 15 | (4 | ) | 264 | ||||||||||||||||
Noninterest expenses | 202 | 185 | 74 | 2 | (2 | ) | 461 | ||||||||||||||||
Provision (benefit) for income taxes (FTE) | 99 | 7 | 12 | (56 | ) | 2 | 64 | ||||||||||||||||
Net income (loss) | $ | 194 | $ | 13 | $ | 21 | $ | (93 | ) | $ | 1 | $ | 136 | ||||||||||
Net loan charge-offs (recoveries) | $ | 23 | $ | 1 | $ | (1 | ) | $ | — | $ | — | $ | 23 | ||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 39,210 | $ | 6,518 | $ | 5,228 | $ | 12,177 | $ | 8,200 | $ | 71,333 | |||||||||||
Loans | 38,113 | 5,835 | 5,024 | — | — | 48,972 | |||||||||||||||||
Deposits | 31,397 | 23,079 | 4,188 | 212 | 264 | 59,140 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.98 | % | 0.23 | % | 1.62 | % | N/M | N/M | 0.76 | % | |||||||||||||
Efficiency ratio (b) | 38.41 | 89.33 | 71.11 | N/M | N/M | 67.08 | |||||||||||||||||
Business | Retail | Wealth | |||||||||||||||||||||
Three Months Ended December 31, 2014 | Bank | Bank | Management | Finance | Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 387 | $ | 152 | $ | 47 | $ | (177 | ) | 7 | $ | 416 | |||||||||||
Provision for credit losses | 8 | (2 | ) | (9 | ) | — | 5 | 2 | |||||||||||||||
Noninterest income | 104 | 45 | 60 | 16 | — | 225 | |||||||||||||||||
Noninterest expenses | 148 | 182 | 80 | 3 | 6 | 419 | |||||||||||||||||
Provision (benefit) for income taxes (FTE) | 119 | 6 | 14 | (64 | ) | (4 | ) | 71 | |||||||||||||||
Net income (loss) | $ | 216 | $ | 11 | $ | 22 | $ | (100 | ) | $ | — | $ | 149 | ||||||||||
Net loan charge-offs (recoveries) | $ | (1 | ) | $ | 4 | $ | (2 | ) | $ | — | $ | — | $ | 1 | |||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 37,896 | $ | 6,298 | $ | 5,034 | $ | 12,218 | $ | 7,861 | $ | 69,307 | |||||||||||
Loans | 36,890 | 5,626 | 4,845 | — | — | 47,361 | |||||||||||||||||
Deposits | 30,897 | 22,301 | 4,094 | 195 | 273 | 57,760 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 2.28 | % | 0.19 | % | 1.79 | % | N/M | N/M | 0.86 | % | |||||||||||||
Efficiency ratio (b) | 30.09 | 92.33 | 74.48 | N/M | N/M | 65.26 | |||||||||||||||||
(a) Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b) Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains.
FTE - Fully Taxable Equivalent
N/M - Not Meaningful
11
MARKET SEGMENT FINANCIAL RESULTS (unaudited) | |||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||
(dollar amounts in millions) | Other | Finance | |||||||||||||||||||||
Three Months Ended December 31, 2015 | Michigan | California | Texas | Markets | & Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 183 | $ | 193 | $ | 131 | $ | 87 | $ | (160 | ) | $ | 434 | ||||||||||
Provision for credit losses | (12 | ) | (7 | ) | 57 | 19 | 3 | 60 | |||||||||||||||
Noninterest income | 82 | 41 | 32 | 98 | 17 | 270 | |||||||||||||||||
Noninterest expenses | 161 | 108 | 103 | 108 | 6 | 486 | |||||||||||||||||
Provision (benefit) for income taxes (FTE) | 33 | 43 | 6 | 8 | (48 | ) | 42 | ||||||||||||||||
Net income (loss) | $ | 83 | $ | 90 | $ | (3 | ) | $ | 50 | $ | (104 | ) | $ | 116 | |||||||||
Net loan charge-offs | $ | (2 | ) | $ | 1 | $ | 33 | $ | 19 | $ | — | $ | 51 | ||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 13,601 | $ | 17,297 | $ | 11,474 | $ | 8,141 | $ | 21,394 | $ | 71,907 | |||||||||||
Loans | 12,986 | 17,033 | 10,893 | 7,636 | — | 48,548 | |||||||||||||||||
Deposits | 22,123 | 18,545 | 10,807 | 7,880 | 381 | 59,736 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.43 | % | 1.83 | % | (0.10 | )% | 2.36 | % | N/M | 0.64 | % | ||||||||||||
Efficiency ratio (b) | 61.06 | 46.17 | 62.94 | 58.11 | N/M | 69.11 | |||||||||||||||||
Other | Finance | ||||||||||||||||||||||
Three Months Ended September 30, 2015 | Michigan | California | Texas | Markets | & Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 180 | $ | 187 | $ | 129 | $ | 87 | $ | (160 | ) | $ | 423 | ||||||||||
Provision for credit losses | 6 | 24 | 10 | (11 | ) | (3 | ) | 26 | |||||||||||||||
Noninterest income | 85 | 38 | 34 | 96 | 11 | 264 | |||||||||||||||||
Noninterest expenses | 152 | 102 | 97 | 110 | — | 461 | |||||||||||||||||
Provision (benefit) for income taxes (FTE) | 36 | 37 | 20 | 25 | (54 | ) | 64 | ||||||||||||||||
Net income (loss) | $ | 71 | $ | 62 | $ | 36 | $ | 59 | $ | (92 | ) | $ | 136 | ||||||||||
Net loan charge-offs (recoveries) | $ | 9 | $ | 10 | $ | 4 | $ | — | $ | — | $ | 23 | |||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 13,856 | $ | 17,060 | $ | 11,578 | $ | 8,462 | $ | 20,377 | $ | 71,333 | |||||||||||
Loans | 13,223 | 16,789 | 10,997 | 7,963 | — | 48,972 | |||||||||||||||||
Deposits | 21,946 | 18,372 | 10,753 | 7,593 | 476 | 59,140 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.23 | % | 1.27 | % | 1.16 | % | 2.82 | % | N/M | 0.76 | % | ||||||||||||
Efficiency ratio (b) | 57.49 | 45.28 | 59.54 | 59.86 | N/M | 67.08 | |||||||||||||||||
Other | Finance | ||||||||||||||||||||||
Three Months Ended December 31, 2014 | Michigan | California | Texas | Markets | & Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) (FTE) | $ | 173 | $ | 192 | $ | 139 | $ | 82 | $ | (170 | ) | $ | 416 | ||||||||||
Provision for credit losses | (19 | ) | (10 | ) | 18 | 8 | 5 | 2 | |||||||||||||||
Noninterest income | 89 | 37 | 38 | 45 | 16 | 225 | |||||||||||||||||
Noninterest expenses | 157 | 100 | 95 | 58 | 9 | 419 | |||||||||||||||||
Provision (benefit) for income taxes (FTE) | 45 | 55 | 24 | 15 | (68 | ) | 71 | ||||||||||||||||
Net income (loss) | $ | 79 | $ | 84 | $ | 40 | $ | 46 | $ | (100 | ) | $ | 149 | ||||||||||
Net loan charge-offs (recoveries) | $ | (5 | ) | $ | 1 | $ | 2 | $ | 3 | $ | — | $ | 1 | ||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 13,605 | $ | 16,035 | $ | 12,003 | $ | 7,585 | $ | 20,079 | $ | 69,307 | |||||||||||
Loans | 13,142 | 15,777 | 11,327 | 7,115 | — | 47,361 | |||||||||||||||||
Deposits | 21,530 | 18,028 | 10,825 | 6,909 | 468 | 57,760 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.41 | % | 1.77 | % | 1.32 | % | 2.42 | % | N/M | 0.86 | % | ||||||||||||
Efficiency ratio (b) | 59.92 | 43.61 | 53.62 | 45.47 | N/M | 65.26 | |||||||||||||||||
(a) Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b) Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains.
FTE - Fully Taxable Equivalent
N/M - Not Meaningful
12
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited) | |||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
(dollar amounts in millions) | 2015 | 2015 | 2015 | 2015 | 2014 | ||||||||||
Tier 1 Common Capital Ratio: | |||||||||||||||
Tier 1 and Tier 1 common capital (a) | n/a | n/a | n/a | n/a | $ | 7,169 | |||||||||
Risk-weighted assets (a) | n/a | n/a | n/a | n/a | 68,269 | ||||||||||
Tier 1 and Tier 1 common risk-based capital ratio | n/a | n/a | n/a | n/a | 10.50 | % | |||||||||
Tangible Common Equity Ratio: | |||||||||||||||
Common shareholders' equity | $ | 7,560 | $ | 7,622 | $ | 7,523 | $ | 7,500 | $ | 7,402 | |||||
Less: | |||||||||||||||
Goodwill | 635 | 635 | 635 | 635 | 635 | ||||||||||
Other intangible assets | 14 | 14 | 15 | 15 | 15 | ||||||||||
Tangible common equity | $ | 6,911 | $ | 6,973 | $ | 6,873 | $ | 6,850 | $ | 6,752 | |||||
Total assets | $ | 71,877 | $ | 71,012 | $ | 69,945 | $ | 69,333 | $ | 69,186 | |||||
Less: | |||||||||||||||
Goodwill | 635 | 635 | 635 | 635 | 635 | ||||||||||
Other intangible assets | 14 | 14 | 15 | 15 | 15 | ||||||||||
Tangible assets | $ | 71,228 | $ | 70,363 | $ | 69,295 | $ | 68,683 | $ | 68,536 | |||||
Common equity ratio | 10.52 | % | 10.73 | % | 10.76 | % | 10.82 | % | 10.70 | % | |||||
Tangible common equity ratio | 9.70 | 9.91 | 9.92 | 9.97 | 9.85 | ||||||||||
Tangible Common Equity per Share of Common Stock: | |||||||||||||||
Common shareholders' equity | $ | 7,560 | $ | 7,622 | $ | 7,523 | $ | 7,500 | $ | 7,402 | |||||
Tangible common equity | 6,911 | 6,973 | 6,873 | 6,850 | 6,752 | ||||||||||
Shares of common stock outstanding (in millions) | 176 | 177 | 178 | 178 | 179 | ||||||||||
Common shareholders' equity per share of common stock | $ | 43.03 | $ | 43.02 | $ | 42.18 | $ | 42.12 | $ | 41.35 | |||||
Tangible common equity per share of common stock | 39.33 | 39.36 | 38.53 | 38.47 | 37.72 | ||||||||||
(a) Tier 1 capital and risk-weighted assets as defined by Basel I risk-based capital rules.
n/a - not applicable.
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 Basel I risk-based capital rules in effect through December 31, 2014. Effective January 1, 2015, regulatory capital components and risk-weighted assets are defined by and calculated in conformity with Basel III risk-based capital rules. 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 removes the effect of intangible assets from common shareholders equity per share of common stock. Comerica 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.
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