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8-K - 8-K - COMERICA INC /NEW/cma20160331form8k.htm
EX-99.2 - EXHIBIT 99.2 - COMERICA INC /NEW/cma-20160331ex992.htm

COMERICA REPORTS FIRST QUARTER 2016 NET INCOME OF $60 MILLION,
OR 34 CENTS PER SHARE

Net Interest Income Increased $14 Million, or 3 Percent, Compared to Fourth Quarter 2015
and $34 Million, or 8 Percent, Compared to First Quarter 2015
Increased Provision for Loan Losses Reflected Reserve Build for Energy Loans
Comprehensive Revenue and Expense Initiative Expected to Drive Increased Efficiency
DALLAS/April 19, 2016 -- Comerica Incorporated (NYSE: CMA) today reported first quarter 2016 net income of $60 million, compared to $116 million for the fourth quarter 2015 and $134 million for the first quarter 2015. Earnings per diluted share were 34 cents for first quarter 2016 compared to 64 cents for fourth quarter 2015 and 73 cents for first quarter 2015.
“Our first quarter results were impacted by the current oil and gas cycle, as we significantly increased our reserve for loan losses,” said Ralph W. Babb, Jr., chairman and chief executive officer. “We continue to be prudent in our reserving approach. While this approach resulted in a higher provision this quarter, our fundamental view of the energy sector has not changed significantly. Additionally, during the quarter we benefited from the December short-term rate increase, with loan yields increasing and helping to drive a $14 million increase in net interest income.”
(dollar amounts in millions, except per share data)
1st Qtr '16
4th Qtr '15
1st Qtr '15
Net interest income
$
447

 
$
433

 
$
413

 
Provision for credit losses
148

 
60

 
14

 
Noninterest income
246

 
268

 
252

 
Noninterest expenses
460

 
484

 
456

 
Provision for income taxes
25

 
41

 
61

 
 
 
 
 
 
 
 
Net income
60

 
116

 
134

 
 
 
 
 
 
 
 
Net income attributable to common shares
59

 
115

 
132

 
 
 
 
 
 
 
 
Diluted income per common share
0.34

 
0.64

 
0.73

 
 
 
 
 
 
 
 
Average diluted shares (in millions)
176

 
179

 
182

 
 
 
 
 
 
 
 
Common equity Tier 1 capital ratio (a)
10.56
%
 
10.54
%
 
10.40
%
 
Tangible common equity ratio (b)
10.23

 
9.70

 
9.97

 
(a)
March 31, 2016 ratio is estimated.
(b)
See Reconciliation of Non-GAAP Financial Measures.

Comerica also announced today that it launched a comprehensive review of its expense and revenue base in order to meaningfully enhance profitability. The review is currently underway and will include the assistance of the Boston Consulting Group, a globally recognized consulting firm familiar with the challenges facing the U.S. banking industry. Given the breadth of the review, Comerica expects to provide more information around the opportunities identified by the next quarterly earnings announcement and deliver to shareholders, as soon as practical, a broad, enterprise-wide plan, designed to help reach tangible targets.

“We operate Comerica for the ultimate benefit of our shareholders, and all of our actions will be directed to maximize value, while not compromising our commitment to our clients, culture, regulatory standing, responsible underwriting and strong risk management," said Babb. "We have been undertaking a process through which we are identifying meaningful opportunities to enhance revenue, operate more efficiently and lower expenses, with the goal of building a more profitable organization that is better able to drive enhanced long-term value for shareholders. We are going to pursue our cost and revenue initiative with the urgency it deserves and continue to utilize our strengths and competitive position to improve our results.”

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COMERICA REPORTS FIRST QUARTER 2016 NET INCOME OF $60 MILLION - 2

First Quarter 2016 Compared to Fourth Quarter 2015
Average total loans decreased $156 million to $48.4 billion, primarily reflecting decreases in general Middle Market, Energy and Mortgage Banker Finance, partially offset by an increase in Commercial Real Estate. Period-end total loans increased $293 million, to $49.4 billion.
Average total deposits decreased $3.0 billion to $56.7 billion, reflecting seasonality, purposeful pricing discipline and strategic actions in light of new liquidity coverage ratio rules, with the largest declines in Corporate Banking, the Financial Services Division and Municipalities. Period-end total deposits decreased $3.5 billion to $56.4 billion. A majority of the decrease related to an elevated deposit level associated with the government card program at year-end.
Net interest income increased $14 million to $447 million, primarily reflecting an increase in loan yields, mostly due to increases in short-term rates, and a larger average securities portfolio, partially offset by one fewer day in the first quarter. The net interest margin increased 23 basis points to 2.81 percent, primarily reflecting higher loan yields and a decrease in Federal Reserve Bank deposits.
The provision for credit losses increased $88 million to $148 million. The allowance for loan losses increased $90 million to $724 million, primarily due to an increase in reserves in the Energy business line, partially offset by improvements in credit quality. Net credit-related charge-offs were $58 million, or 0.49 percent, including $42 million for Energy loans.
Noninterest income decreased $22 million to $246 million, primarily due to decreases of $10 million in commercial lending fees, following a strong fourth quarter 2015, and $7 million in deferred compensation asset returns.
Noninterest expenses decreased $24 million to $460 million, primarily reflecting a decrease of $14 million in salaries and benefits expense and smaller decreases in many other categories.
Capital remained solid at March 31, 2016, as evidenced by an estimated common equity Tier 1 capital ratio of 10.56 percent and a tangible common equity ratio of 10.23 percent.
Comerica repurchased approximately 1.2 million shares of common stock under the equity repurchase program.
First Quarter 2016 Compared to First Quarter 2015
Average total loans increased $241 million, primarily reflecting increases in Commercial Real Estate, Technology and Life Sciences, National Dealer Services and Mortgage Banker Finance, partially offset by decreases in general Middle Market, Energy and Corporate Banking.
Average total deposits decreased $282 million, primarily driven by a decrease in Municipalities.
Net interest income increased $34 million, primarily reflecting the benefits from higher loan yields, a larger average securities portfolio and an increase in average loans.
The provision for credit losses increased $134 million, primarily due to an increase in reserves in the Energy business line.
Noninterest income decreased $6 million, primarily reflecting decreases in deferred compensation asset returns and commercial lending fees, partially offset by an increase in card fees.
Noninterest expenses increased $4 million, primarily due to an increase in technology-related expense and higher outside processing expenses related to revenue generating activities, partially offset by a decrease in deferred compensation plan expense.

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COMERICA REPORTS FIRST QUARTER 2016 NET INCOME OF $60 MILLION - 3

Net Interest Income
(dollar amounts in millions)
1st Qtr '16
 
4th Qtr '15
 
1st Qtr '15
Net interest income
$
447

 
$
433

 
$
413

 
 
 
 
 
 
Net interest margin
2.81
%
 
2.58
%
 
2.64
%
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
Total earning assets
$
64,123

 
$
66,818

 
$
63,480

Total loans
48,392

 
48,548

 
48,151

Total investment securities
12,357

 
10,864

 
9,907

Federal Reserve Bank deposits
3,071

 
7,073

 
5,176

 
 
 
 
 
 
 
 
 
 
 
 
Total deposits
56,708

 
59,736

 
56,990

Total noninterest-bearing deposits
28,052

 
29,627

 
26,697

Net interest income increased $14 million to $447 million in the first quarter 2016, compared to the fourth quarter 2015.
Interest on loans increased $11 million, primarily reflecting an increase in yields (+$19 million), partially offset by the effect of one fewer day in the first quarter (-$4 million) and lower interest recognized on nonaccrual loans (-$3 million). The increase in loan yields primarily reflected the benefit from the increase in short-term rates, partially offset by lower loan prepayment fees and other portfolio dynamics.
Interest on investment securities increased $6 million, primarily reflecting the reinvestment of Federal Reserve Bank deposits into higher yielding Treasury securities in the second half of the fourth quarter 2015.
Interest on temporary investments decreased $2 million, reflecting a decrease in average Federal Reserve Bank deposit balances (-$5 million), partially offset by a benefit from the increase in short-term rates (+$3 million).
The net interest margin of 2.81 percent increased 23 basis points compared to the fourth quarter 2015, primarily due to higher loan yields (+12 basis points) and the impact of a decrease in lower-yielding Federal Reserve Bank deposit balances (+13 basis points), partially offset by the decrease in interest recognized on nonaccrual loans (-2 basis points).
Noninterest Income
Noninterest income decreased $22 million to $246 million in the first quarter 2016, compared to $268 million for the fourth quarter 2015. The decrease primarily reflected decreases of $10 million in commercial lending fees, $7 million in deferred compensation asset returns and other impacts including lower bank-owned life insurance income and securities activity. The decrease in commercial lending fees reflected strong fourth quarter 2015 syndication agent fees as well as a decrease in commitment fees, which resulted from a combination of higher utilization levels and lower commitment totals in the first quarter 2016. Deferred compensation asset returns are offset by deferred compensation plan expense in noninterest expenses.
Noninterest Expenses
Noninterest expenses decreased $24 million to $460 million in the first quarter 2016, compared to $484 million for the fourth quarter 2015, primarily reflecting decreases of $14 million in salaries and benefits expense and decreases of $3 million each in consulting fee expense, advertising expense and net occupancy expense. The decrease in salaries and benefits expense primarily reflected decreases in pension expense, deferred compensation plan expense, technology-related contract labor expenses, and the impact of one fewer day in the quarter, partially offset by a seasonal increase in share-based compensation expense.
Credit Quality
“The provision for credit losses was $148 million and the allowance increased $90 million,” said Babb. “The provision reflected the high end of the range in our 2016 guidance for the incremental impact of energy loans, adjusted upward for revised regulatory guidance, and includes the results of the Shared National Credit (SNC) exam. At March 31, 2016, our reserve allocation for loans in the Energy business line was nearly 8

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COMERICA REPORTS FIRST QUARTER 2016 NET INCOME OF $60 MILLION - 4

percent. While the current oil and gas cycle presents a significant challenge, we believe we are adequately reserved. And remember, those reserves may not turn into losses. Aside from the provision for Energy loans, overall credit quality continued to be solid, and we are not detecting any noteworthy deterioration in Texas. Total net credit-related charge-offs were $58 million, or 49 basis points of average loans. Excluding Energy, net credit-related charge-offs for the remainder of the portfolio were low at $16 million, or 15 basis points.”
(dollar amounts in millions)
1st Qtr '16
 
4th Qtr '15
 
1st Qtr '15
Credit-related charge-offs
$
83

 
$
76

 
$
23

Recoveries
25

 
25

 
15

Net credit-related charge-offs
58

 
51

 
8

Net credit-related charge-offs/Average total loans
0.49
%
 
0.42
%
 
0.07
%
 
 
 
 
 
 
Provision for credit losses
$
148

 
$
60

 
$
14

 
 
 
 
 
 
Nonperforming loans
689

 
379

 
279

Nonperforming assets (NPAs)
714

 
391

 
288

NPAs/Total loans and foreclosed property
1.45
%
 
0.80
%
 
0.59
%
 
 
 
 
 
 
Loans past due 90 days or more and still accruing
$
13

 
$
17

 
$
12

 
 
 
 
 
 
Allowance for loan losses
724

 
634

 
601

Allowance for credit losses on lending-related commitments (a)
46

 
45

 
39

Total allowance for credit losses
770

 
679

 
640

 
 
 
 
 
 
Allowance for loan losses/Period-end total loans
1.47
%
 
1.29
%
 
1.22
%
Allowance for loan losses/Nonperforming loans
105

 
167

 
216

(a)
Included in "Accrued expenses and other liabilities" on the consolidated balance sheets.

Energy business line loans were $3.1 billion at both March 31, 2016 and December 31, 2015. Criticized Energy loans increased $590 million, to $1.8 billion, including a $291 million increase in nonaccrual loans. Energy net charge-offs were $42 million, compared to $27 million in the fourth quarter 2015.
Net credit-related charge-offs increased $7 million to $58 million, or 0.49 percent of average loans, in the first quarter 2016, compared to $51 million, or 0.42 percent, in the fourth quarter 2015. Fourth quarter 2015 included a large charge-off resulting from irregularities associated with a single Small Business credit.
During the first quarter 2016, $446 million of borrower relationships over $2 million were transferred to nonaccrual status.
Criticized loans increased $735 million to $3.9 billion at March 31, 2016, compared to $3.2 billion at December 31, 2015.
Balance Sheet and Capital Management
Total assets and common shareholders' equity were $69.0 billion and $7.6 billion, respectively, at March 31, 2016, compared to $71.9 billion and $7.6 billion, respectively, at December 31, 2015.
There were approximately 175 million common shares outstanding at March 31, 2016. Repurchases under the equity repurchase program were $42 million (1.2 million shares). Diluted average shares decreased 3 million to 176 million for the first quarter 2016.
The estimated common equity Tier 1 capital ratio, reflective of transition provisions and excluding accumulated other comprehensive income ("AOCI"), was 10.56 percent at March 31, 2016. Certain deductions and adjustments to regulatory capital began phasing in on January 1, 2015 and will be fully implemented on January 1, 2018. The estimated ratio under fully phased-in Basel III capital rules is largely the same as the transitional ratio. Comerica's tangible common equity ratio was 10.23 percent at March 31, 2016, an increase of 53 basis points from December 31, 2015.

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COMERICA REPORTS FIRST QUARTER 2016 NET INCOME OF $60 MILLION - 5

Full-Year 2016 Outlook
Excluding the first quarter energy impact on the provision for credit losses, management expectations for full-year 2016 compared to full-year 2015, assuming the energy outlook remains stable, as well as a continuation of the current economic and low-rate environment, have not changed materially. The outlook does not reflect the impact of any revenue or expense initiatives that may be undertaken as a result of the ongoing comprehensive review. Management expects such impact to be reflected in the outlook provided on the second quarter 2016 earnings call.
Average loans modestly higher, in line with Gross Domestic Product growth, reflecting a continued decline in Energy more than offset by increases in most other lines of business.
Net interest income higher, reflecting the benefits from the December 2015 short-term rate increase, loan growth and a larger securities portfolio more than offsetting higher funding costs.
Full-year benefit from the December rise in short-term rates expected to be more than $90 million if deposit prices remain at current levels.
Provision for credit losses higher, reflecting the first quarter 2016 reserve build for Energy, with net charge-offs for the remainder of the year between 45 basis points and 55 basis points. Additional reserve changes dependent on developments in the oil and gas sector. Continued solid credit quality in the remainder of the portfolio, with metrics, absent Energy, better than historical norms.
Noninterest income modestly higher, primarily due to growth in card fees from merchant processing services and government card. Continued focus on cross-sell opportunities, including wealth management products such as fiduciary and brokerage services.
Noninterest expenses higher, reflecting continued increases in technology costs and regulatory expenses, increased outside processing in line with growing revenue, higher FDIC insurance expense in part due to regulatory surcharge, and typical inflationary pressures. Additionally, 2015 benefited from a $33 million legal reserve release, which is offset by lower pension expense in 2016.
Income tax expense to approximate 32 percent of pre-tax income.


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COMERICA REPORTS FIRST QUARTER 2016 NET INCOME OF $60 MILLION - 6

Business Segments
Comerica's operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank and Wealth Management. The Finance Division is also reported as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at March 31, 2016 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses first quarter 2016 results compared to fourth quarter 2015.
The following table presents net income (loss) by business segment.
(dollar amounts in millions)
1st Qtr '16
 
4th Qtr '15
 
1st Qtr '15
Business Bank
$
95

74
%
 
$
200

91
 %
 
$
189

85
%
Retail Bank
12

9

 
(1
)
(1
)
 
17

8

Wealth Management
22

17

 
21

10

 
16

7

 
129

100
%
 
220

100
 %
 
222

100
%
Finance
(68
)
 
 
(102
)
 
 
(89
)
 
Other (a)
(1
)
 
 
(2
)
 
 
1

 
     Total
$
60

 
 
$
116

 
 
$
134

 
(a) Includes items not directly associated with the three major business segments or the Finance Division.
Business Bank
(dollar amounts in millions)
1st Qtr '16

 
4th Qtr '15

 
1st Qtr '15

Net interest income (FTE)
$
365

 
$
387

 
$
370

Provision for credit losses
151

 
41

 
25

Noninterest income
135

 
145

 
140

Noninterest expenses
207

 
206

 
198

Net income
95

 
200

 
189

 
 
 
 
 
 
Net credit-related charge-offs
57

 
35

 
9

 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
Assets
38,635

 
38,765

 
38,654

Loans
37,561

 
37,682

 
37,623

Deposits
29,108

 
31,738

 
30,143

Average loans decreased $121 million, primarily reflecting decreases in general Middle Market, Energy and Mortgage Banker Finance, partially offset by an increase in Commercial Real Estate.
Average deposits decreased $2.6 billion, primarily reflecting decreases in Corporate Banking, the Financial Services Division and Municipalities. The decrease reflected seasonality, purposeful pricing discipline and strategic actions in light of new liquidity coverage ratio rules.
Net interest income decreased $22 million, primarily reflecting an increase in net funds transfer pricing (FTP) charges and the impact of one fewer day in the quarter, partially offset by an increase in loan yields. The increase in net FTP charges primarily reflected an increase in the cost of funds due to the increase in short-term market rates as well as lower funding credits due to the decrease in average deposits.
The provision for credit losses increased $110 million, primarily reflecting increases in Energy and general Middle Market, partially offset by a decrease in Commercial Real Estate.
Noninterest income decreased $10 million, primarily due to a decrease in commercial lending fees, which reflected strong fourth quarter 2015 syndication agent fees as well as a decrease in commitment fees, which resulted from a combination of higher utilization levels and lower commitment totals in the first quarter 2016.

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COMERICA REPORTS FIRST QUARTER 2016 NET INCOME OF $60 MILLION - 7

Retail Bank
(dollar amounts in millions)
1st Qtr '16

 
4th Qtr '15

 
1st Qtr '15

Net interest income (FTE)
$
157

 
$
160

 
$
151

Provision for credit losses
3

 
23

 
(8
)
Noninterest income
43

 
49

 
41

Noninterest expenses
179

 
191

 
174

Net income (loss)
12

 
(1
)
 
17

 
 
 
 
 
 
Net credit-related charge-offs
2

 
25

 

 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
Assets
6,544

 
6,549

 
6,368

Loans
5,867

 
5,868

 
5,694

Deposits
23,110

 
23,262

 
22,404

Average deposits decreased $152 million, primarily reflecting a decrease in Small Business.
Net interest income decreased $3 million, primarily due to a decrease in net FTP credits, largely due to the decrease in average deposits, and the impact of one fewer day in the quarter.
The provision for credit losses decreased $20 million, primarily due to a decrease in net charge-offs in Small Business.
Noninterest income decreased $6 million, primarily reflecting a securities loss and small decreases in several categories.
Noninterest expenses decreased $12 million, primarily reflecting decreases in salaries and benefits expense, outside processing expenses and smaller decreases in many other categories.
Wealth Management
(dollar amounts in millions)
1st Qtr '16

 
4th Qtr '15

 
1st Qtr '15

Net interest income (FTE)
$
43

 
$
47

 
$
43

Provision for credit losses
(5
)
 
(7
)
 
(1
)
Noninterest income
59

 
57

 
58

Noninterest expenses
73

 
81

 
77

Net income
22

 
21

 
16

 
 
 
 
 
 
Net credit-related charge-offs (recoveries)
(1
)
 
(9
)
 
(1
)
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
Assets
5,162

 
5,199

 
5,029

Loans
4,964

 
4,998

 
4,834

Deposits
4,171

 
4,355

 
3,996

Average loans decreased $34 million.
Average deposits decreased $184 million, primarily reflecting a decrease in Private Banking.
Net interest income decreased $4 million, primarily due a decrease in net FTP credits, largely due to a $184 million decrease in average deposits as well as an increase in the cost of funds, partially offset by higher loan yields.
The provision for credit losses increased $2 million to a negative provision of $5 million in the first quarter 2016, primarily reflecting credit quality improvements.
Noninterest income increased $2 million, primarily due to higher fiduciary income.
Noninterest expenses decreased $8 million, primarily reflecting decreases in operational losses, legal expenses and salaries and benefits expense.

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COMERICA REPORTS FIRST QUARTER 2016 NET INCOME OF $60 MILLION - 8

Geographic Market Segments
Comerica also provides market segment results for three primary geographic markets: Michigan, California and Texas. In addition to the three primary geographic markets, Other Markets is also reported as a market segment. Other Markets includes Florida, Arizona, the International Finance division and businesses that have a significant presence outside of the three primary geographic markets. The tables below present the geographic market results based on the methodologies in effect at March 31, 2016 and are presented on a fully taxable equivalent (FTE) basis.
The following table presents net income (loss) by market segment.
(dollar amounts in millions)
1st Qtr '16
 
4th Qtr '15
 
1st Qtr '15
Michigan
$
72

56
 %
 
$
83

37
 %
 
$
76

35
%
California
74

57

 
90

41

 
72

32

Texas
(76
)
(59
)
 
(3
)
(1
)
 
32

14

Other Markets
59

46

 
50

23

 
42

19

 
129

100
 %
 
220

100
 %
 
222

100
%
Finance & Other (a)
(69
)
 
 
(104
)
 
 
(88
)
 
     Total
$
60

 
 
$
116

 
 
$
134

 
(a) Includes items not directly associated with the geographic markets.
Average loans decreased $212 million in Michigan, largely reflecting a decrease in general Middle Market, and $130 million in Texas, primarily reflecting decreases in National Dealer Services, Energy and general Middle Market, partially offset by an increase in Commercial Real Estate. Average loans increased $250 million in California, primarily reflecting increases in Commercial Real Estate and National Dealer Services.
Average deposits decreased $1.9 billion in California, $427 million in Michigan and $433 million in Texas, reflecting seasonality, purposeful pricing discipline and strategic actions in light of new liquidity coverage ratio rules.
Net interest income decreased $14 million in California, $7 million in Michigan and $8 million in Texas. The decrease in each market primarily reflected the FTP impact of the decreases in average deposits and the impact of one fewer day in the quarter.
The provision for credit losses increased $112 million in Texas, $1 million in California and $6 million in Michigan. The increase in Texas primarily reflected increases in net charge-offs and reserves for Energy and general Middle Market. The increase in Michigan was primarily due to a charge-off in Corporate Banking.
Noninterest income decreased $5 million in Michigan, $2 million in California and $2 million in Texas. The decreases in all markets were primarily the result of lower syndication agent and commitment fees.
Noninterest expenses decreased $10 million in Michigan, $3 million in California and $3 million in Texas. The decrease in Michigan primarily reflected decreases in salaries and benefits expense, operational losses and outside processing fees, partially offset by an increase in asset disposal expense, as a benefit from the early termination of certain leveraged leases in the fourth quarter 2015 was not repeated. The decrease in California primarily reflected small decreases in many categories, and the decrease in Texas was due primarily to a decrease in salaries and benefits expense.

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COMERICA REPORTS FIRST QUARTER 2016 NET INCOME OF $60 MILLION - 9

Michigan Market
(dollar amounts in millions)
1st Qtr '16

 
4th Qtr '15

 
1st Qtr '15

Net interest income (FTE)
$
176

 
$
183

 
$
177

Provision for credit losses
(6
)
 
(12
)
 
(8
)
Noninterest income
76

 
81

 
84

Noninterest expenses
150

 
160

 
155

Net income
72

 
83

 
76

 
 
 
 
 
 
Net credit-related charge-offs (recoveries)
5

 
(2
)
 
3

 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
Assets
13,402

 
13,601

 
13,736

Loans
12,774

 
12,986

 
13,223

Deposits
21,696

 
22,123

 
21,710

California Market
(dollar amounts in millions)
1st Qtr '16

 
4th Qtr '15

 
1st Qtr '15

Net interest income (FTE)
$
179

 
$
193

 
$
176

Provision for credit losses
(6
)
 
(7
)
 
(3
)
Noninterest income
38

 
40

 
34

Noninterest expenses
104

 
107

 
97

Net income
74

 
90

 
72

 
 
 
 
 
 
Net credit-related charge-offs
8

 
1

 
1

 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
Assets
17,541

 
17,297

 
16,461

Loans
17,283

 
17,033

 
16,193

Deposits
16,654

 
18,545

 
16,837

Texas Market
(dollar amounts in millions)
1st Qtr '16

 
4th Qtr '15

 
1st Qtr '15

Net interest income (FTE)
$
123

 
$
131

 
$
131

Provision for credit losses
169

 
57

 
21

Noninterest income
30

 
32

 
34

Noninterest expenses
100

 
103

 
94

Net income (loss)
(76
)
 
(3
)
 
32

 
 
 
 
 
 
Net credit-related charge-offs
47

 
33

 
3

 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
Assets
11,295

 
11,474

 
12,192

Loans
10,763

 
10,893

 
11,535

Deposits
10,374

 
10,807

 
11,010


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COMERICA REPORTS FIRST QUARTER 2016 NET INCOME OF $60 MILLION - 10

Conference Call and Webcast
Comerica will host a conference call to review first quarter 2016 financial results at 7 a.m. CT Tuesday, April 19, 2016. Interested parties may access the conference call by calling (877) 523-5249 or (210) 591-1147 (event ID No. 63729781). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A replay of the Webcast can be accessed via Comerica's “Investor Relations” page at www.comerica.com.
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 REPORTS FIRST QUARTER 2016 NET INCOME OF $60 MILLION - 11

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, in particular the energy industry; unfavorable developments concerning credit quality; 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; reductions in Comerica's credit rating; the interdependence of financial service companies; the implementation of Comerica's strategies and business initiatives; damage to Comerica's reputation; 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, 2015. 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
 
March 31,
December 31,
March 31,
(in millions, except per share data)
2016
2015
2015
PER COMMON SHARE AND COMMON STOCK DATA
 
 
 
Diluted net income
$
0.34

$
0.64

$
0.73

Cash dividends declared
0.21

0.21

0.20

 
 
 
 
Average diluted shares (in thousands)
176,055

179,197

182,268

KEY RATIOS
 
 
 
Return on average common shareholders' equity
3.13
%
6.08
%
7.20
%
Return on average assets
0.34

0.64

0.78

Common equity tier 1 and tier 1 risk-based capital ratio (a)
10.56

10.54

10.40

Total risk-based capital ratio (a)
12.82

12.69

12.35

Leverage ratio (a)
10.60

10.22

10.53

Tangible common equity ratio (b)
10.23

9.70

9.97

AVERAGE BALANCES
 
 
 
Commercial loans
$
30,814

$
31,219

$
31,090

Real estate construction loans
2,114

1,961

1,938

Commercial mortgage loans
8,961

8,842

8,581

Lease financing
726

750

797

International loans
1,419

1,402

1,512

Residential mortgage loans
1,892

1,896

1,856

Consumer loans
2,466

2,478

2,377

Total loans
48,392

48,548

48,151

 
 
 
 
Earning assets
64,123

66,818

63,480

Total assets
69,228

71,907

68,735

 
 
 
 
Noninterest-bearing deposits
28,052

29,627

26,697

Interest-bearing deposits
28,656

30,109

30,293

Total deposits
56,708

59,736

56,990

 
 
 
 
Common shareholders' equity
7,632

7,613

7,453

NET INTEREST INCOME (fully taxable equivalent basis)
 
 
 
Net interest income
$
448

$
434

$
414

Net interest margin
2.81
%
2.58
%
2.64
%
CREDIT QUALITY
 
 
 
Total nonperforming assets
$
714

$
391

$
288

 
 
 
 
Loans past due 90 days or more and still accruing
13

17

12

 
 
 
 
Net credit-related charge-offs
58

51

8

 
 
 
 
Allowance for loan losses
724

634

601

Allowance for credit losses on lending-related commitments
46

45

39

Total allowance for credit losses
770

679

640

 
 
 
 
Allowance for loan losses as a percentage of total loans
1.47
%
1.29
%
1.22
%
Net credit-related charge-offs as a percentage of average total loans
0.49

0.42

0.07

Nonperforming assets as a percentage of total loans and foreclosed property
1.45

0.80

0.59

Allowance for loan losses as a percentage of total nonperforming loans
105

167

216

(a) March 31, 2016 ratios are estimated.
(b) See Reconciliation of Non-GAAP Financial Measures.

12



 CONSOLIDATED BALANCE SHEETS
 Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
March 31,
December 31,
March 31,
(in millions, except share data)
2016
2015
2015
 
(unaudited)
 
(unaudited)
ASSETS
 
 
 
Cash and due from banks
$
977

$
1,157

$
1,170

 
 
 
 
Interest-bearing deposits with banks
2,025

4,990

4,792

Other short-term investments
94

113

101

 
 
 
 
Investment securities available-for-sale
10,607

10,519

8,214

Investment securities held-to-maturity
1,907

1,981

1,871

 
 
 
 
Commercial loans
31,562

31,659

32,091

Real estate construction loans
2,290

2,001

1,917

Commercial mortgage loans
8,982

8,977

8,558

Lease financing
731

724

792

International loans
1,455

1,368

1,433

Residential mortgage loans
1,874

1,870

1,859

Consumer loans
2,483

2,485

2,422

Total loans
49,377

49,084

49,072

Less allowance for loan losses
(724
)
(634
)
(601
)
Net loans
48,653

48,450

48,471

 
 
 
 
Premises and equipment
541

550

531

Accrued income and other assets
4,203

4,117

4,183

Total assets
$
69,007

$
71,877

$
69,333

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Noninterest-bearing deposits
$
28,025

$
30,839

$
27,394

 
 
 
 
Money market and interest-bearing checking deposits
22,872

23,532

23,727

Savings deposits
2,006

1,898

1,817

Customer certificates of deposit
3,401

3,552

4,497

Foreign office time deposits
47

32

135

Total interest-bearing deposits
28,326

29,014

30,176

Total deposits
56,351

59,853

57,570

 
 
 
 
Short-term borrowings
514

23

80

Accrued expenses and other liabilities
1,389

1,383

1,500

Medium- and long-term debt
3,109

3,058

2,683

Total liabilities
61,363

64,317

61,833

 
 
 
 
Common stock - $5 par value:
 
 
 
Authorized - 325,000,000 shares
 
 
 
Issued - 228,164,824 shares
1,141

1,141

1,141

Capital surplus
2,158

2,173

2,188

Accumulated other comprehensive loss
(328
)
(429
)
(370
)
Retained earnings
7,097

7,084

6,841

Less cost of common stock in treasury - 53,086,733 shares at 3/31/16, 52,457,113 shares at 12/31/15, and 50,114,399 shares at 3/31/15
(2,424
)
(2,409
)
(2,300
)
Total shareholders' equity
7,644

7,560

7,500

Total liabilities and shareholders' equity
$
69,007

$
71,877

$
69,333



13



CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First
Fourth
Third
Second
First
 
First Quarter 2016 Compared To:
 
Quarter
Quarter
Quarter
Quarter
Quarter
 
Fourth Quarter 2015
 
First Quarter 2015
(in millions, except per share data)
2016
2015
2015
2015
2015
 
 Amount
  Percent
 
Amount
  Percent
INTEREST INCOME
 
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans
$
406

$
395

$
390

$
388

$
378

 
$
11

3
 %
 
$
28

7
 %
Interest on investment securities
62

56

54

53

53

 
6

10

 
9

18

Interest on short-term investments
4

6

4

3

4

 
(2
)
(21
)
 


Total interest income
472

457

448

444

435

 
15

3

 
37

9

INTEREST EXPENSE
 
 
 
 
 
 
 
 
 
 
 
Interest on deposits
10

10

11

11

11

 


 
(1
)
(9
)
Interest on medium- and long-term debt
15

14

15

12

11

 
1

8

 
4

30

Total interest expense
25

24

26

23

22

 
1

4

 
3

13

Net interest income
447

433

422

421

413

 
$
14

3

 
$
34

8

Provision for credit losses
148

60

26

47

14

 
88

n/m

 
134

n/m

Net interest income after provision
for credit losses
299

373

396

374

399

 
(74
)
(20
)
 
(100
)
(25
)
NONINTEREST INCOME
 
 
 
 
 
 
 
 
 
 
 
Card fees
74

75

72

68

64

 
(1
)
(1
)
 
10

15

Service charges on deposit accounts
55

55

57

56

55

 


 


Fiduciary income
46

45

47

48

47

 
1

3

 
(1
)
(3
)
Commercial lending fees
20

30

22

22

25

 
(10
)
(33
)
 
(5
)
(18
)
Letter of credit fees
13

14

13

13

13

 
(1
)
(5
)
 


Bank-owned life insurance
9

11

10

10

9

 
(2
)
(16
)
 


Foreign exchange income
10

11

10

9

10

 
(1
)
(3
)
 


Brokerage fees
4

4

5

4

4

 


 


Net securities losses
(2
)



(2
)
 
(2
)
n/m

 


Other noninterest income
17

23

26

27

27

 
(6
)
(29
)
 
(10
)
(37
)
Total noninterest income
246

268

262

257

252

 
(22
)
(8
)
 
(6
)
(2
)
NONINTEREST EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Salaries and benefits expense
248

262

243

251

253

 
(14
)
(5
)
 
(5
)
(2
)
Outside processing fee expense
79

81

84

82

74

 
(2
)
(2
)
 
5

7

Net occupancy expense
38

41

41

39

38

 
(3
)
(7
)
 


Equipment expense
13

14

13

13

13

 
(1
)
(4
)
 


Software expense
29

26

26

24

23

 
3

11

 
6

21

FDIC insurance expense
11

10

9

9

9

 
1

5

 
2

24

Advertising expense
4

7

6

5

6

 
(3
)
(49
)
 
(2
)
(42
)
Litigation-related expense


(3
)
(30
)
1

 


 
(1
)
(70
)
Other noninterest expenses
38

43

40

39

39

 
(5
)
(10
)
 
(1
)
(1
)
Total noninterest expenses
460

484

459

432

456

 
(24
)
(5
)
 
4

1

Income before income taxes
85

157

199

199

195

 
(72
)
(46
)
 
(110
)
(56
)
Provision for income taxes
25

41

63

64

61

 
(16
)
(39
)
 
(36
)
(58
)
NET INCOME
60

116

136

135

134

 
(56
)
(48
)
 
(74
)
(55
)
Less income allocated to participating securities
1

1

2

1

2

 


 
(1
)
(63
)
Net income attributable to common shares
$
59

$
115

$
134

$
134

$
132

 
$
(56
)
(48
)%
 
$
(73
)
(55
)%
Earnings per common share:
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.34

$
0.65

$
0.76

$
0.76

$
0.75

 
$
(0.31
)
(48
)%
 
$
(0.41
)
(55
)%
Diluted
0.34

0.64

0.74

0.73

0.73

 
(0.30
)
(47
)
 
(0.39
)
(53
)
 
 
 
 
 
 
 

 
 
 
 
Comprehensive income
161

32

187

109

176

 
129

n/m

 
(15
)
(9
)
 
 
 
 
 
 
 
 
 
 
 
 
Cash dividends declared on common stock
37

37

37

37

36

 


 
1

3

Cash dividends declared per common share
0.21

0.21

0.21

0.21

0.20

 


 
0.01

5

n/m - not meaningful

14



ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)
Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
2015
(in millions)
1st Qtr
 
4th Qtr
3rd Qtr
2nd Qtr
1st Qtr
 
 
 
 
 
 
 
Balance at beginning of period
$
634

 
$
622

$
618

$
601

$
594

 
 
 
 
 
 
 
Loan charge-offs:
 
 
 
 
 
 
Commercial
72

 
73

30

17

19

Commercial mortgage

 
1


2


Lease financing

 


1


International
3

 

1

11

2

Residential mortgage

 


1


Consumer
2

 
2

3

3

2

Total loan charge-offs
77

 
76

34

35

23

 
 
 
 
 
 
 
Recoveries on loans previously charged-off:
 
 
 
 
 
 
Commercial
12

 
6

8

10

9

Real estate construction

 


1


Commercial mortgage
12

 
11

2

5

3

Residential mortgage

 
1



1

Consumer
1

 
7

1

1

2

Total recoveries
25

 
25

11

17

15

Net loan charge-offs
52

 
51

23

18

8

Provision for loan losses
141

 
63

28

35

16

Foreign currency translation adjustment
1

 

(1
)

(1
)
Balance at end of period
$
724

 
$
634

$
622

$
618

$
601

 
 
 
 
 
 
 
Allowance for loan losses as a percentage of total loans
1.47
%
 
1.29
%
1.27
%
1.24
%
1.22
%
 
 
 
 
 
 
 
Net loan charge-offs as a percentage of average total loans
0.43

 
0.42

0.19

0.15

0.07



ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited)
Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
2015
(in millions)
1st Qtr
 
4th Qtr
3rd Qtr
2nd Qtr
1st Qtr
 
 
 
 
 
 
 
Balance at beginning of period
$
45

 
$
48

$
50

$
39

$
41

Charge-offs on lending-related commitments (a)
(6
)
 


(1
)

Provision for credit losses on lending-related commitments
7

 
(3
)
(2
)
12

(2
)
Balance at end of period
$
46

 
$
45

$
48

$
50

$
39

 
 
 
 
 
 
 
Unfunded lending-related commitments sold
$
11

 
$

$

$
12

$
1

(a)
Charge-offs result from the sale of unfunded lending-related commitments.


15



NONPERFORMING ASSETS (unaudited)
Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
2015
(in millions)
1st Qtr
 
4th Qtr
3rd Qtr
2nd Qtr
1st Qtr
 
 
 
 
 
 
 
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS
 
 
Nonaccrual loans:
 
 
 
 
 
 
Business loans:
 
 
 
 
 
 
Commercial
$
547

 
$
238

$
214

$
186

$
113

Real estate construction

 
1

1

1

1

Commercial mortgage
47

 
60

66

77

82

Lease financing
6

 
6

8

11


International
27

 
8

8

9

1

Total nonaccrual business loans
627

 
313

297

284

197

Retail loans:
 
 
 
 
 
 
Residential mortgage
26

 
27

31

35

37

Consumer:
 
 
 
 
 
 
Home equity
27

 
27

28

29

31

Other consumer
1

 

1

1

1

Total consumer
28

 
27

29

30

32

Total nonaccrual retail loans
54

 
54

60

65

69

Total nonaccrual loans
681

 
367

357

349

266

Reduced-rate loans
8

 
12

12

12

13

Total nonperforming loans
689

 
379

369

361

279

Foreclosed property
25

 
12

12

9

9

Total nonperforming assets
$
714

 
$
391

$
381

$
370

$
288

 
 
 
 
 
 
 
Nonperforming loans as a percentage of total loans
1.40
%
 
0.77
%
0.75
%
0.72
%
0.57
%
Nonperforming assets as a percentage of total loans
 and foreclosed property
1.45

 
0.80

0.78

0.74

0.59

Allowance for loan losses as a percentage of total
nonperforming loans
105

 
167

169

171

216

Loans past due 90 days or more and still accruing
$
13

 
$
17

$
5

$
18

$
12

 
 
 
 
 
 
 
ANALYSIS OF NONACCRUAL LOANS
 
 
 
 
 
 
Nonaccrual loans at beginning of period
$
367

 
$
357

$
349

$
266

$
273

Loans transferred to nonaccrual (a)
446

 
105

69

145

39

Nonaccrual business loan gross charge-offs (b)
(75
)
 
(49
)
(31
)
(31
)
(21
)
Loans transferred to accrual status (a)

 



(4
)
Nonaccrual business loans sold (c)
(21
)
 


(1
)
(2
)
Payments/Other (d)
(36
)
 
(46
)
(30
)
(30
)
(19
)
Nonaccrual loans at end of period
$
681

 
$
367

$
357

$
349

$
266

(a) Based on an analysis of nonaccrual loans with book balances greater than $2 million.
(b) Analysis of gross loan charge-offs:
 
 
 
 
 
 
Nonaccrual business loans
$
75

 
$
49

$
31

$
31

$
21

Performing business loans

 
25




Consumer and residential mortgage loans
2

 
2

3

4

2

Total gross loan charge-offs
$
77

 
$
76

$
34

$
35

$
23

(c) Analysis of loans sold:
 
 
 
 
 
 
      Nonaccrual business loans
$
21

 
$

$

$
1

$
2

      Performing criticized loans

 
3



7

Total criticized loans sold
$
21

 
$
3

$

$
1

$
9

(d) Includes net changes related to nonaccrual loans with balances less than $2 million, payments on nonaccrual loans with book balances greater than $2 million and transfers of nonaccrual loans to foreclosed property. Excludes business loan gross charge-offs and business nonaccrual loans sold.

16



ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)
Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
March 31, 2016
 
December 31, 2015
 
March 31, 2015
 
Average
 
Average
 
Average
 
Average
 
Average
 
Average
(dollar amounts in millions)
Balance
Interest
Rate
 
Balance
Interest
Rate
 
Balance
Interest
Rate
 
 
 
 
 
 
 
 
 
 
 
 
Commercial loans
$
30,814

$
250

3.25
%
 
$
31,219

$
245

3.11
%
 
$
31,090

$
234

3.06
%
Real estate construction loans
2,114

19

3.66

 
1,961

18

3.58

 
1,938

16

3.36

Commercial mortgage loans
8,961

80

3.59

 
8,842

76

3.43

 
8,581

73

3.44

Lease financing
726

6

3.33

 
750

6

3.29

 
797

6

3.05

International loans
1,419

13

3.65

 
1,402

12

3.40

 
1,512

14

3.71

Residential mortgage loans
1,892

19

3.94

 
1,896

18

3.75

 
1,856

17

3.76

Consumer loans
2,466

20

3.33

 
2,478

21

3.38

 
2,377

19

3.21

Total loans
48,392

407

3.38

 
48,548

396

3.24

 
48,151

379

3.19

 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities (a)
9,356

51

2.22

 
9,226

51

2.25

 
9,071

51

2.26

Other investment securities
3,001

11

1.50

 
1,638

5

1.37

 
836

2

1.10

Total investment securities (a)
12,357

62

2.05

 
10,864

56

2.11

 
9,907

53

2.16

 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits with banks
3,265

4

0.50

 
7,300

5

0.28

 
5,323

4

0.26

Other short-term investments
109


0.93

 
106

1

0.91

 
99


1.11

Total earning assets
64,123

473

2.97

 
66,818

458

2.73

 
63,480

436

2.78

 
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
1,068

 
 
 
1,071

 
 
 
1,027

 
 
Allowance for loan losses
(680
)
 
 
 
(641
)
 
 
 
(601
)
 
 
Accrued income and other assets
4,717

 
 
 
4,659

 
 
 
4,829

 
 
Total assets
$
69,228

 
 
 
$
71,907

 
 
 
$
68,735

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market and interest-bearing checking deposits
$
23,193

6

0.11

 
$
24,368

6

0.11

 
$
23,960

6

0.11

Savings deposits
1,936


0.02

 
1,883


0.02

 
1,786


0.03

Customer certificates of deposit
3,477

4

0.40

 
3,763

4

0.39

 
4,423

4

0.37

Foreign office time deposits
50


0.33

 
95


0.59

 
124

1

1.46

Total interest-bearing deposits
28,656

10

0.14

 
30,109

10

0.14

 
30,293

11

0.15

 
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
365


0.45

 
92


0.06

 
110


0.06

Medium- and long-term debt
3,093

15

1.94

 
3,089

14

1.79

 
2,686

11

1.73

Total interest-bearing sources
32,114

25

0.32

 
33,290

24

0.29

 
33,089

22

0.27

 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
28,052

 
 
 
29,627

 
 
 
26,697

 
 
Accrued expenses and other liabilities
1,430

 
 
 
1,377

 
 
 
1,496

 
 
Total shareholders' equity
7,632

 
 
 
7,613

 
 
 
7,453

 
 
Total liabilities and shareholders' equity
$
69,228

 
 
 
$
71,907

 
 
 
$
68,735

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income/rate spread (FTE)
 
$
448

2.65

 
 
$
434

2.44

 
 
$
414

2.51

 
 
 
 
 
 
 
 
 
 
 
 
FTE adjustment
 
$
1

 
 
 
$
1

 
 
 
$
1

 
 
 
 
 
 
 
 
 
 
 
 
 
Impact of net noninterest-bearing sources of funds
 
 
0.16

 
 
 
0.14

 
 
 
0.13

Net interest margin (as a percentage of average earning assets) (FTE)
 
 
2.81
%
 
 
 
2.58
%
 
 
 
2.64
%
(a) Includes investment securities available-for-sale and investment securities held-to-maturity.

17



CONSOLIDATED STATISTICAL DATA (unaudited)
Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
March 31,
December 31,
September 30,
June 30,
March 31,
(in millions, except per share data)
2016
2015
2015
2015
2015
 
 
 
 
 
 
Commercial loans:
 
 
 
 
 
Floor plan
$
3,902

$
3,939

$
3,538

$
3,840

$
3,544

Other
27,660

27,720

28,239

28,883

28,547

Total commercial loans
31,562

31,659

31,777

32,723

32,091

Real estate construction loans
2,290

2,001

1,874

1,795

1,917

Commercial mortgage loans
8,982

8,977

8,787

8,674

8,558

Lease financing
731

724

751

786

792

International loans
1,455

1,368

1,382

1,420

1,433

Residential mortgage loans
1,874

1,870

1,880

1,865

1,859

Consumer loans:
 
 
 
 
 
Home equity
1,738

1,720

1,714

1,682

1,678

Other consumer
745

765

777

796

744

Total consumer loans
2,483

2,485

2,491

2,478

2,422

Total loans
$
49,377

$
49,084

$
48,942

$
49,741

$
49,072

 
 
 
 
 
 
Goodwill
$
635

$
635

$
635

$
635

$
635

Core deposit intangible
9

10

10

11

12

Other intangibles
4

4

4

4

3

 
 
 
 
 
 
Common equity tier 1 capital (a)
7,331

7,350

7,327

7,280

7,230

Risk-weighted assets (a)
69,427

69,731

69,718

69,967

69,514

 
 
 
 
 
 
Common equity tier 1 and tier 1 risk-based capital ratio (a)
10.56
%
10.54
%
10.51
%
10.40
%
10.40
%
Total risk-based capital ratio (a)
12.82

12.69

12.82

12.38

12.35

Leverage ratio (a)
10.60

10.22

10.28

10.56

10.53

Tangible common equity ratio (b)
10.23

9.70

9.91

9.92

9.97

 
 
 
 
 
 
Common shareholders' equity per share of common stock
$
43.66

$
43.03

$
43.02

$
42.18

$
42.12

Tangible common equity per share of common stock (b)
39.96

39.33

39.36

38.53

38.47

Market value per share for the quarter:
 
 
 
 
 
High
41.74

47.44

52.93

53.45

47.94

Low
30.48

39.52

40.01

44.38

40.09

Close
37.87

41.83

41.10

51.32

45.13

 
 
 
 
 
 
Quarterly ratios:
 
 
 
 
 
Return on average common shareholders' equity
3.13
%
6.08
%
7.19
%
7.21
%
7.20
%
Return on average assets
0.34

0.64

0.76

0.79

0.78

Efficiency ratio (c)
66.07

69.00

66.98

63.49

68.37

 
 
 
 
 
 
Number of banking centers
477

477

477

477

482

 
 
 
 
 
 
Number of employees - full time equivalent
8,869

8,880

8,941

8,901

8,831

(a) March 31, 2016 amounts and ratios are estimated.
(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).

18



PARENT COMPANY ONLY BALANCE SHEETS (unaudited)
Comerica Incorporated
 
 
 
 
 
 
 
 
March 31,
December 31,
March 31,
(in millions, except share data)
2016
2015
2015
 
 
 
 
ASSETS
 
 
 
Cash and due from subsidiary bank
$
5

$
4

$
5

Short-term investments with subsidiary bank
546

569

1,139

Other short-term investments
84

89

95

Investment in subsidiaries, principally banks
7,612

7,523

7,479

Premises and equipment
2

3

2

Other assets
172

137

158

      Total assets
$
8,421

$
8,325

$
8,878

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Medium- and long-term debt
$
626

$
608

$
1,216

Other liabilities
151

157

162

      Total liabilities
777

765

1,378

 
 
 
 
Common stock - $5 par value:
 
 
 
    Authorized - 325,000,000 shares
 
 
 
    Issued - 228,164,824 shares
1,141

1,141

1,141

Capital surplus
2,158

2,173

2,188

Accumulated other comprehensive loss
(328
)
(429
)
(370
)
Retained earnings
7,097

7,084

6,841

Less cost of common stock in treasury - 53,086,733 shares at 3/31/16, 52,457,113 shares at 12/31/15 and 50,114,399 shares at 3/31/15
(2,424
)
(2,409
)
(2,300
)
      Total shareholders' equity
7,644

7,560

7,500

      Total liabilities and shareholders' equity
$
8,421

$
8,325

$
8,878


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, 2014
179.0

$
1,141

$
2,188

$
(412
)
$
6,744

$
(2,259
)
$
7,402

Net income




134


134

Other comprehensive income, net of tax



42



42

Cash dividends declared on common stock ($0.20 per share)




(36
)

(36
)
Purchase of common stock
(1.5
)




(66
)
(66
)
Net issuance of common stock under employee stock plans
0.6


(16
)

(2
)
25

7

Share-based compensation


16




16

Other




1


1

BALANCE AT MARCH 31, 2015
178.1

$
1,141

$
2,188

$
(370
)
$
6,841

$
(2,300
)
$
7,500

 
 
 
 
 
 
 
 
BALANCE AT DECEMBER 31, 2015
175.7

$
1,141

$
2,173

$
(429
)
$
7,084

$
(2,409
)
$
7,560

Net income




60


60

Other comprehensive income, net of tax



101



101

Cash dividends declared on common stock ($0.21 per share)




(37
)

(37
)
Purchase of common stock
(1.4
)




(49
)
(49
)
Net issuance of common stock under employee stock plans
0.8


(35
)

(10
)
34

(11
)
Share-based compensation


20




20

BALANCE AT MARCH 31, 2016
175.1

$
1,141

$
2,158

$
(328
)
$
7,097

$
(2,424
)
$
7,644



19



 BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)
 Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(dollar amounts in millions)
Business
 
Retail
 
Wealth
 
 
 
 
 
 
Three Months Ended March 31, 2016
Bank
 
Bank
 
Management
 
Finance
 
Other
 
Total
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense) (FTE)
$
365

 
$
157

 
$
43

 
$
(121
)
 
$
4

 
$
448

Provision for credit losses
151

 
3

 
(5
)
 

 
(1
)
 
148

Noninterest income
135

 
43

 
59

 
14

 
(5
)
 
246

Noninterest expenses
207

 
179

 
73

 
2

 
(1
)
 
460

Provision (benefit) for income taxes (FTE)
47

 
6

 
12

 
(41
)
 
2

 
26

Net income (loss)
$
95

 
$
12

 
$
22

 
$
(68
)
 
$
(1
)
 
$
60

Net credit-related charge-offs (recoveries)
$
57

 
$
2

 
$
(1
)
 
$

 
$

 
$
58

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
38,635

 
$
6,544

 
$
5,162

 
$
14,186

 
$
4,701

 
$
69,228

Loans
37,561

 
5,867

 
4,964

 

 

 
48,392

Deposits
29,108

 
23,110

 
4,171

 
103

 
216

 
56,708

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (a)
0.98
%
 
0.20
 %
 
1.70
%
 
N/M

 
N/M

 
0.34
%
Efficiency ratio (b)
41.41

 
88.47

 
71.32

 
N/M

 
N/M

 
66.07

 
 
 
 
 
 
 
 
 
 
 
 
 
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
145

 
49

 
57

 
15

 
2

 
268

Noninterest expenses
206

 
191

 
81

 
2

 
4

 
484

Provision (benefit) for income taxes (FTE)
85

 
(4
)
 
9

 
(47
)
 
(1
)
 
42

Net income (loss)
$
200

 
$
(1
)
 
$
21

 
$
(102
)
 
$
(2
)
 
$
116

Net credit-related 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)
38.73

 
91.68

 
77.01

 
N/M

 
N/M

 
69.00

 
 
 
 
 
 
 
 
 
 
 
 
 
Business
 
Retail
 
Wealth
 
 
 
 
 
 
Three Months Ended March 31, 2015
Bank
 
Bank
 
Management
 
Finance
 
Other
 
Total
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense) (FTE)
$
370

 
$
151

 
$
43

 
$
(152
)
 
$
2

 
$
414

Provision for credit losses
25

 
(8
)
 
(1
)
 

 
(2
)
 
14

Noninterest income
140

 
41

 
58

 
12

 
1

 
252

Noninterest expenses
198

 
174

 
77

 
2

 
5

 
456

Provision (benefit) for income taxes (FTE)
98

 
9

 
9

 
(53
)
 
(1
)
 
62

Net income (loss)
$
189

 
$
17

 
$
16

 
$
(89
)
 
$
1

 
$
134

Net credit-related charge-offs (recoveries)
$
9

 
$

 
$
(1
)
 
$

 
$

 
$
8

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
38,654

 
$
6,368

 
$
5,029

 
$
12,137

 
$
6,547

 
$
68,735

Loans
37,623

 
5,694

 
4,834

 

 

 
48,151

Deposits
30,143

 
22,404

 
3,996

 
170

 
277

 
56,990

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (a)
1.95
%
 
0.30
 %
 
1.29
%
 
N/M

 
N/M

 
0.78
%
Efficiency ratio (b)
38.88

 
90.68

 
74.59

 
N/M

 
N/M

 
68.37

(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

20



 MARKET SEGMENT FINANCIAL RESULTS (unaudited)
 Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(dollar amounts in millions)
 
 
 
 
 
 
Other
 
Finance
 
 
Three Months Ended March 31, 2016
Michigan
 
California
 
Texas
 
Markets
 
& Other
 
Total
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense) (FTE)
$
176

 
$
179

 
$
123

 
$
87

 
$
(117
)
 
$
448

Provision for credit losses
(6
)
 
(6
)
 
169

 
(8
)
 
(1
)
 
148

Noninterest income
76

 
38

 
30

 
93

 
9

 
246

Noninterest expenses
150

 
104

 
100

 
105

 
1

 
460

Provision (benefit) for income taxes (FTE)
36

 
45

 
(40
)
 
24

 
(39
)
 
26

Net income (loss)
$
72

 
$
74

 
$
(76
)
 
$
59

 
$
(69
)
 
$
60

Net credit-related charge-offs (recoveries)
$
5

 
$
8

 
$
47

 
$
(2
)
 
$

 
$
58

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
13,402

 
$
17,541

 
$
11,295

 
$
8,103

 
$
18,887

 
$
69,228

Loans
12,774

 
17,283

 
10,763

 
7,572

 

 
48,392

Deposits
21,696

 
16,654

 
10,374

 
7,665

 
319

 
56,708

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (a)
1.27
%
 
1.68
%
 
(2.52
)%
 
2.87
%
 
N/M

 
0.34
%
Efficiency ratio (b)
59.31

 
47.87

 
65.09

 
58.09

 
N/M

 
66.07

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
81

 
40

 
32

 
98

 
17

 
268

Noninterest expenses
160

 
107

 
103

 
108

 
6

 
484

Provision (benefit) for income taxes (FTE)
33

 
43

 
6

 
8

 
(48
)
 
42

Net income (loss)
$
83

 
$
90

 
$
(3
)
 
$
50

 
$
(104
)
 
$
116

Net credit-related charge-offs (recoveries)
$
(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)
60.92

 
45.99

 
62.85

 
58.01

 
N/M

 
69.00

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
 
Finance
 
 
Three Months Ended March 31, 2015
Michigan
 
California
 
Texas
 
Markets
 
& Other
 
Total
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense) (FTE)
$
177

 
$
176

 
$
131

 
$
80

 
$
(150
)
 
$
414

Provision for credit losses
(8
)
 
(3
)
 
21

 
6

 
(2
)
 
14

Noninterest income
84

 
34

 
34

 
87

 
13

 
252

Noninterest expenses
155

 
97

 
94

 
103

 
7

 
456

Provision (benefit) for income taxes (FTE)
38

 
44

 
18

 
16

 
(54
)
 
62

Net income (loss)
$
76

 
$
72

 
$
32

 
$
42

 
$
(88
)
 
$
134

Net credit-related charge-offs
$
3

 
$
1

 
$
3

 
$
1

 
$

 
$
8

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
13,736

 
$
16,461

 
$
12,192

 
$
7,662

 
$
18,684

 
$
68,735

Loans
13,223

 
16,193

 
11,535

 
7,200

 

 
48,151

Deposits
21,710

 
16,837

 
11,010

 
6,986

 
447

 
56,990

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (a)
1.36
%
 
1.61
%
 
0.99
 %
 
2.21
%
 
N/M

 
0.78
%
Efficiency ratio (b)
59.51

 
46.21

 
57.48

 
60.77

 
N/M

 
68.37

(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

21



RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
Comerica Incorporated and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
March 31,
December 31,
September 30,
June 30,
March 31,
(dollar amounts in millions)
2016
2015
2015
2015
2015
 
 
 
 
 
 
Tangible Common Equity Ratio:
 
 
 
 
 
Common shareholders' equity
$
7,644

$
7,560

$
7,622

$
7,523

$
7,500

Less:
 
 
 
 
 
Goodwill
635

635

635

635

635

Other intangible assets
13

14

14

15

15

Tangible common equity
$
6,996

$
6,911

$
6,973

$
6,873

$
6,850

 
 
 
 
 
 
Total assets
$
69,007

$
71,877

$
71,012

$
69,945

$
69,333

Less:
 
 
 
 
 
Goodwill
635

635

635

635

635

Other intangible assets
13

14

14

15

15

Tangible assets
$
68,359

$
71,228

$
70,363

$
69,295

$
68,683

 
 
 
 
 
 
Common equity ratio
11.08
%
10.52
%
10.73
%
10.76
%
10.82
%
Tangible common equity ratio
10.23

9.70

9.91

9.92

9.97

 
 
 
 
 
 
Tangible Common Equity per Share of Common Stock:
 
 
 
 
 
Common shareholders' equity
$
7,644

$
7,560

$
7,622

$
7,523

$
7,500

Tangible common equity
6,996

6,911

6,973

6,873

6,850

 
 
 
 
 
 
Shares of common stock outstanding (in millions)
175

176

177

178

178

 
 
 
 
 
 
Common shareholders' equity per share of common stock
$
43.66

$
43.03

$
43.02

$
42.18

$
42.12

Tangible common equity per share of common stock
39.96

39.33

39.36

38.53

38.47


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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