Attached files
| file | filename |
|---|---|
| EX-99.3 - EXHIBIT 99.3 - COMERICA INC /NEW/ | gearupfactsheet.htm |
| EX-99.2 - EXHIBIT 99.2 - COMERICA INC /NEW/ | cma-20160630ex992.htm |
| 8-K - 8-K - COMERICA INC /NEW/ | cma-20160630form8k.htm |
COMERICA REPORTS SECOND QUARTER 2016 FINANCIAL RESULTS
Launched Growth in Efficiency and Revenue Initiative
Actions Identified To-Date Expected to Drive an Additional $230 Million
in Annual Pre-Tax Income by Year-End 2018
Related Estimated Total Pre-Tax Restructuring Charges of $140 Million to $160 Million
Net Income of $104 Million or 58 Cents Per Share
Includes After-Tax Impact of Restructuring Charge of $34 Million, or 19 Cents Per Share
Average Loan Growth of $1.1 Billion, or 2 Percent, Compared to First Quarter 2016
DALLAS/July 19, 2016 -- Comerica Incorporated (NYSE: CMA) today reported second quarter 2016 net income of $104 million, compared to $60 million for the first quarter 2016 and $135 million for the second quarter 2015. Earnings per diluted share were 58 cents for second quarter 2016 compared to 34 cents for first quarter 2016 and 73 cents for second quarter 2015. Comerica also announced the implementation of its efficiency and revenue initiative ("GEAR Up"), which is expected to drive additional annual pre-tax income of approximately $230 million by year-end 2018 from the actions identified to-date. Second quarter results include after-tax restructuring charges of $34 million, or 19 cents per share, associated with the initial phase of this initiative.
"Our second quarter results were solid with a $1.1 billion increase in average loans, improved credit quality in our energy portfolio as well as increases in most fee-based noninterest income categories,” said Ralph W. Babb, Jr., chairman and chief executive officer. "Noninterest expenses were well controlled. Through share repurchases of $65 million and an increase in our dividend, we returned $103 million to shareholders in the second quarter 2016, compared to $79 million in the first quarter.”
Growth in Efficiency and Revenue Initiative
"Based on our initial extensive review, we are announcing the actions we are taking through Gear Up that are expected to deliver additional annual pre-tax income of approximately $230 million by year-end 2018. This initiative fundamentally transforms the way we operate to drive further efficiency and revenue growth. We are confident the initiative will improve profitability, despite current market conditions and a tough banking environment," said Babb. "We expect our efficiency ratio to improve, declining to the low 60 percent range by the end of 2017, and at or below 60 percent by year-end 2018, without any increase in interest rates. The initial actions will take us a long way to achieving a double-digit return on equity and enhanced shareholder value. Management will continue to identify additional opportunities to further enhance profitability."
The initial GEAR Up initiative includes approximately $140 million in pre-tax benefits expected to be achieved by fiscal year-end 2017 and an anticipated annual run-rate benefit of approximately $230 million by year-end 2018.
• | Revenue enhancements expected to be approximately $30 million by year-end 2017, which increase to approximately $70 million by year-end 2018, through expanded product offerings, enhanced sales tools and training, re-aligned employee incentives and enhanced customer analytics to drive opportunities. |
• | Expense reductions targeted to be approximately $110 million, which increases to approximately $160 million by year-end 2018. This is to be achieved through an approximately 9 percent reduction in workforce, streamlining operational processes, real estate optimization including consolidating about 40 banking centers, selective outsourcing of technology functions and reduction of technology system applications. |
• | Pre-tax restructuring charges of $140 million to $160 million in total are expected to be incurred through 2018. |
• | For further information, see the accompanying Fact Sheet. |
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COMERICA REPORTS SECOND QUARTER 2016 FINANCIAL RESULTS - 2
(dollar amounts in millions, except per share data) | 2nd Qtr '16 | 1st Qtr '16 | 2nd Qtr '15 | |||||||||
Net interest income | $ | 445 | $ | 447 | $ | 421 | ||||||
Provision for credit losses | 49 | 148 | 47 | |||||||||
Noninterest income | 269 | 246 | 258 | |||||||||
Noninterest expenses | 519 | (a) | 460 | 433 | (b) | |||||||
Pre-tax income | 146 | 85 | 199 | |||||||||
Provision for income taxes | 42 | 25 | 64 | |||||||||
Net income | $ | 104 | $ | 60 | $ | 135 | ||||||
Net income attributable to common shares | $ | 103 | $ | 59 | $ | 134 | ||||||
Diluted income per common share | 0.58 | 0.34 | 0.73 | |||||||||
Average diluted shares (in millions) | 177 | 176 | 182 | |||||||||
Common equity Tier 1 capital ratio (c) | 10.48 | % | 10.58 | % | 10.40 | % | ||||||
Common equity ratio | 10.79 | 11.08 | 10.76 | |||||||||
Tangible common equity ratio (d) | 9.98 | 10.23 | 9.92 | |||||||||
(a) | Included restructuring charge of $53 million in the second quarter 2016. |
(b) | Included net release of litigation reserves of $30 million in the second quarter 2015. |
(c) | June 30, 2016 ratio is estimated. |
(d) | See Reconciliation of Non-GAAP Financial Measures. |
Second Quarter 2016 Compared to First Quarter 2016
Average total loans increased $1.1 billion, or 2 percent, to $49.5 billion.
• | Primarily reflected continued growth in Commercial Real Estate and seasonal increases in Mortgage Banker Finance and National Dealer Services; partially offset by an expected decline in Energy. The growth in Commercial Real Estate primarily reflected construction draws and term financing, mainly with existing customers who are proven developers on projects with favorable risk profiles. |
• | Period-end total loans increased $1.0 billion to $50.4 billion. |
Average total deposits decreased $187 million to $56.5 billion.
• | Driven by a $511 million decrease in interest-bearing deposits, partially offset by a $324 million increase in noninterest-bearing deposits. |
• | Average total deposits increased seasonally in the Retail Bank; this was more than offset by a seasonal decrease in Municipalities and purposeful pricing in Corporate Banking. |
• | Period-end deposits were unchanged at $56.4 billion. |
Net interest income decreased $2 million to $445 million.
• | Primarily the result of the impact of nonaccrual loans and higher funding costs, partially offset by the benefit from the increase in average loans. |
The provision for credit losses decreased $99 million to $49 million.
• | Net credit-related charge-offs were $47 million, or 0.38 percent of average loans, compared to $58 million, or 0.49 percent, in the first quarter 2016. Energy net credit-related charge-offs were $32 million compared to $42 million in the first quarter 2016. |
• | The allowance for loan losses increased $5 million to $729 million, or 1.45 percent of total loans. The reserve allocation for Energy exceeded 8 percent of loans in the Energy business line. |
Noninterest income increased $23 million to $269 million.
• | Noninterest income increased $13 million, or 5 percent, excluding a $10 million increase in deferred compensation asset returns (offset by an increase in deferred compensation plan expense in noninterest expense). |
• | Fee-based income increased $11 million, primarily attributed to increases of $3 million each in card fees, fiduciary income and customer derivative income, as well as a $2 million increase in commercial lending fees. The increase in commercial lending fees resulted primarily from higher syndication agent fees. |
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COMERICA REPORTS SECOND QUARTER 2016 FINANCIAL RESULTS - 3
Noninterest expenses increased $59 million to $519 million.
• | Second quarter restructuring charges of $53 million related to the initiatives previously discussed included $46 million of severance-related expenses and $7 million of professional services and other charges. |
• | Excluding the $53 million restructuring charge, noninterest expenses increased $6 million, primarily including a $10 million increase in deferred compensation plan expense (offset by an increase in deferred compensation asset returns in noninterest income), partially offset by an $8 million gain from the sale of leased assets, as well as increases of $5 million in outside processing fees, $3 million in FDIC insurance premiums and $2 million in advertising expense. |
• | Salaries and benefits expense decreased $1 million, primarily reflecting seasonal decreases in share-based compensation and payroll taxes, partially offset by the $10 million increase in deferred compensation plan expense noted above, the impact of merit increases, a seasonal increase in 401(k) contributions and incentive compensation tied to revenue growth. |
Capital position remained solid at June 30, 2016.
• | Repurchased approximately 1.5 million shares of common stock under the equity repurchase program. |
• | Including dividends, returned a total of $103 million to shareholders. |
• | Dividend increased 5 percent to 22 cents per share. |
• | As announced on June 29, 2016, the Federal Reserve did not object to Comerica’s 2016 capital plan which includes equity repurchases up to $440 million for the four-quarter period ending in the second quarter 2017. The timing and ultimate amount of equity repurchases will be subject to various factors, including the Company’s capital position, financial performance and market conditions, including interest rates. Restructuring charges associated with the GEAR Up initiative are not expected to impact the pace of repurchases. In addition, at its meeting on July 26, 2016, Comerica's board of directors will consider increasing the quarterly dividend to 23 cents per common share. |
Second Quarter 2016 Compared to Second Quarter 2015
Average total loans increased $636 million, or 1 percent.
• | Primarily reflected continued growth in Commercial Real Estate and National Dealer Services, partially offset by declines in Energy and general Middle Market. |
Average total deposits decreased $877 million, or 2 percent.
• | Primarily driven by decreases in Municipalities, Corporate Banking and the Financial Services Division. |
Net interest income increased $24 million, or 6 percent.
• | Primarily due to higher yields on loans and Federal Reserve Bank deposits, as well as earning asset growth; partially offset by an increase in funding costs. |
The provision for credit losses increased $2 million, or 5 percent.
Noninterest income increased $11 million, or 4 percent.
• | Excluding a $4 million increase in deferred compensation asset returns, noninterest income increased $7 million, or 3 percent. Fee-based income increased $6 million, primarily reflecting an $8 million increase in card fees, mostly due to increased revenue from merchant payment processing services and government card programs, and smaller increases in most other fee-based categories; partially offset by a decrease of $4 million in investment banking fees. |
Noninterest expense increased $86 million.
• | Noninterest expense increased $3 million excluding the second quarter 2016 restructuring charges of $53 million and the impact of a $30 million net release of litigation reserves in second quarter 2015. The remaining increase primarily reflected increases of $6 million in software expense and $5 million in FDIC insurance premiums, partially offset by a decrease of $4 million in salaries and benefits and an $8 million benefit from the sale of leased assets in the second quarter 2016. |
◦ | Salaries and benefits expense primarily reflected decreases of $8 million in pension expense and $4 million in share-based compensation, partially offset by a $4 million increase in deferred compensation plan expense (offset by an increase in deferred compensation asset |
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COMERICA REPORTS SECOND QUARTER 2016 FINANCIAL RESULTS - 4
returns in noninterest income) and an increase of $4 million in regular salaries, mostly due to the impact of merit raises.
Net Interest Income
(dollar amounts in millions) | 2nd Qtr '16 | 1st Qtr '16 | 2nd Qtr '15 | ||||||||
Net interest income | $ | 445 | $ | 447 | $ | 421 | |||||
Net interest margin | 2.74 | % | 2.81 | % | 2.65 | % | |||||
Selected average balances: | |||||||||||
Total earning assets | $ | 65,597 | $ | 64,123 | $ | 63,981 | |||||
Total loans | 49,469 | 48,392 | 48,833 | ||||||||
Total investment securities | 12,334 | 12,357 | 9,936 | ||||||||
Federal Reserve Bank deposits | 3,495 | 3,071 | 4,968 | ||||||||
Total deposits | 56,521 | 56,708 | 57,398 | ||||||||
Total noninterest-bearing deposits | 28,376 | 28,052 | 27,365 | ||||||||
Medium- and long-term debt | 5,072 | 3,093 | 2,661 | ||||||||
Net interest income decreased $2 million to $445 million in the second quarter 2016, compared to the first quarter 2016.
• | Interest on loans was unchanged, as the benefit from an increase in average loan balances (+$8 million) was offset by a decrease in yields. The decrease in loan yields primarily reflected lower nonaccrual interest recoveries in the second quarter 2016, the impact of a negative residual value adjustment to assets in the leasing portfolio and the full-quarter impact of loans transferred to nonaccrual in the first quarter 2016. |
• | Interest expense on debt increased $3 million, primarily due to higher funding costs from new Federal Home Loan Bank (FHLB) borrowings during the quarter. |
The net interest margin of 2.74 percent decreased 7 basis points compared to the first quarter 2016, primarily due to the impact of increased FHLB borrowings (-2 basis points), lower loan yields (-4 basis points) and an increase in lower-yielding Federal Reserve Bank deposit balances (-1 basis point). The impact of lower loan yields included -3 basis points related to nonaccrual loans.
Credit Quality
“Energy loans continue to decline as expected, with a $356 million decrease since the end of the first quarter, as our customers continue to take the necessary actions to reduce their bank debt. We have completed 88 percent of the spring redeterminations for our E&P customers, and borrowing bases have come down about 22 percent on average. Criticized energy loans have declined $281 million to 57 percent of energy loans as of the end of the second quarter,” said Babb. “While oil and gas prices have improved, we remain cautious and believe with our reserve allocation at over 8 percent of energy loans as of June 30, we are adequately reserved. Credit quality in the remainder of the portfolio remains strong.”
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COMERICA REPORTS SECOND QUARTER 2016 FINANCIAL RESULTS - 5
(dollar amounts in millions) | 2nd Qtr '16 | 1st Qtr '16 | 2nd Qtr '15 | ||||||||
Credit-related charge-offs | $ | 59 | $ | 83 | $ | 35 | |||||
Recoveries | 12 | 25 | 17 | ||||||||
Net credit-related charge-offs | 47 | 58 | 18 | ||||||||
Net credit-related charge-offs/Average total loans | 0.38 | % | 0.49 | % | 0.15 | % | |||||
Provision for credit losses | $ | 49 | $ | 148 | $ | 47 | |||||
Nonperforming loans | 613 | 689 | 361 | ||||||||
Nonperforming assets (NPAs) | 635 | 714 | 370 | ||||||||
NPAs/Total loans and foreclosed property | 1.26 | % | 1.45 | % | 0.74 | % | |||||
Loans past due 90 days or more and still accruing | $ | 35 | $ | 13 | $ | 18 | |||||
Allowance for loan losses | 729 | 724 | 618 | ||||||||
Allowance for credit losses on lending-related commitments (a) | 43 | 46 | 50 | ||||||||
Total allowance for credit losses | 772 | 770 | 668 | ||||||||
Allowance for loan losses/Period-end total loans | 1.45 | % | 1.47 | % | 1.24 | % | |||||
Allowance for loan losses/Nonperforming loans | 119 | 105 | 171 | ||||||||
(a) | Included in "Accrued expenses and other liabilities" on the consolidated balance sheets. |
• | Energy business line loans were $2.7 billion at June 30, 2016 compared to $3.1 billion at March 31, 2016. |
◦ | Criticized Energy loans decreased $281 million, to $1.6 billion, including a $77 million decrease in nonaccrual loans. |
◦ | Energy net charge-offs were $32 million, compared to $42 million in the first quarter 2016. |
◦ | The reserve allocation for loans in the Energy business line exceeded 8 percent at June 30, 2016, up slightly compared to March 31, 2016. |
• | Net charge-offs decreased $11 million to $47 million, or 0.38 percent of average loans, in the second quarter 2016, compared to $58 million, or 0.49 percent, in the first quarter 2016. Aside from Energy, net charge-offs were $15 million, or 13 basis points, for the remainder of the portfolio. |
• | During the second quarter 2016, $107 million of borrower relationships over $2 million were transferred to nonaccrual status, a decrease of $339 million compared to $446 million transferred during the first quarter. Second quarter 2016 transfers to nonaccrual included $51 million from Energy, compared to $349 million in the first quarter. |
• | Criticized loans decreased $377 million to $3.6 billion at June 30, 2016, compared to $3.9 billion at March 31, 2016, primarily as a result of the decrease in criticized Energy loans. Criticized loans are generally consistent with the Special Mention, Substandard and Doubtful categories defined by regulatory authorities. |
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COMERICA REPORTS SECOND QUARTER 2016 FINANCIAL RESULTS - 6
Full-Year 2016 Outlook
Management expectations for full-year 2016 compared to full-year 2015, assuming a continuation of the current economic and low-rate environment, are as follows.
• | 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. Seasonality in National Dealer Services, Mortgage Banker and Middle Market to impact the second half of the year. |
• | Net interest income higher, primarily reflecting the benefits from the December 2015 short-term rate increase, loan growth and a larger securities portfolio. |
• | 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 35 basis points and 45 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, with continued focus on cross-sell opportunities, including card, fiduciary and brokerage services offset by lower market-driven fees, including commercial lending fees, investment banking fees, derivative income and warrant income. Benefits from GEAR Up expected to begin in early 2017. |
• | Noninterest expenses higher, with an estimated $90 million to $110 million in restructuring expense, related GEAR Up expense savings of approximately $20 million, 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 $33 million in legal reserve releases, which is offset by lower pension expense in 2016. |
• | Income tax expense to approximate 30 percent of pre-tax income. |
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COMERICA REPORTS SECOND QUARTER 2016 FINANCIAL RESULTS - 7
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 June 30, 2016. The accompanying narrative addresses second quarter 2016 results compared to first quarter 2016.
The following table presents net income (loss) by business segment.
(dollar amounts in millions) | 2nd Qtr '16 | 1st Qtr '16 | 2nd Qtr '15 | ||||||||||||||
Business Bank | $ | 154 | 93 | % | $ | 94 | 74 | % | $ | 181 | 81 | % | |||||
Retail Bank | (2 | ) | (1 | ) | 11 | 9 | 18 | 8 | |||||||||
Wealth Management | 13 | 8 | 22 | 17 | 26 | 11 | |||||||||||
165 | 100 | % | 127 | 100 | % | 225 | 100 | % | |||||||||
Finance | (62 | ) | (66 | ) | (89 | ) | |||||||||||
Other (a) | 1 | (1 | ) | (1 | ) | ||||||||||||
Total | $ | 104 | $ | 60 | $ | 135 | |||||||||||
(a) Includes items not directly associated with the three major business segments or the Finance Division.
Business Bank
(dollar amounts in millions) | 2nd Qtr '16 | 1st Qtr '16 | 2nd Qtr '15 | |||||||||
Net interest income | $ | 355 | $ | 362 | $ | 373 | ||||||
Provision for credit losses | 46 | 151 | 61 | |||||||||
Noninterest income | 142 | 135 | 138 | |||||||||
Noninterest expenses | 222 | (a) | 207 | 175 | ||||||||
Net income | 154 | 94 | 181 | |||||||||
Net credit-related charge-offs | 42 | 57 | 23 | |||||||||
Selected average balances: | ||||||||||||
Assets | 39,617 | 38,635 | 39,134 | |||||||||
Loans | 38,574 | 37,561 | 38,109 | |||||||||
Deposits | 28,429 | 29,108 | 30,229 | |||||||||
(a) | Included restructuring charge of $26 million in the second quarter 2016. |
• | Average loans increased $1.0 billion, primarily reflecting increases in Commercial Real Estate, Mortgage Banker Finance and National Dealer Services, partially offset by a decrease in Energy. |
• | Average deposits decreased $679 million, primarily reflecting decreases in Municipalities and Corporate Banking, partially offset by an increase in Mortgage Banker Finance. |
• | Net interest income decreased $7 million, primarily reflecting the impact of an increase in net funds transfer pricing (FTP) charges and lower loan yields, largely due to the impact of nonaccrual loans and a negative residual value adjustment to assets in the leasing portfolio, partially offset by the benefit from the increase in average loans. The increase in net FTP charges primarily reflected an increase in the cost of funds as well as lower funding credits due to the decrease in average deposits. |
• | The provision for credit losses decreased $105 million, primarily reflecting a decrease in Energy, partially offset by increases in Commercial Real Estate, National Dealer Services, and Technology and Life Sciences. |
• | Noninterest income increased $7 million, primarily due to increases in syndication agent fees, card fees and customer derivative income. |
• | Noninterest expenses increased $15 million, primarily due to second quarter 2016 restructuring charges. Excluding restructuring charges, noninterest expenses decreased $11 million, primarily reflecting an $8 million gain from the sale of leased assets and a decrease in salaries and benefits expense, partially offset by an increase in outside processing fees tied to revenue generating activities. |
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COMERICA REPORTS SECOND QUARTER 2016 FINANCIAL RESULTS - 8
Retail Bank
(dollar amounts in millions) | 2nd Qtr '16 | 1st Qtr '16 | 2nd Qtr '15 | |||||||||
Net interest income | $ | 155 | $ | 156 | $ | 155 | ||||||
Provision for credit losses | 1 | 3 | (8 | ) | ||||||||
Noninterest income | 48 | 43 | 46 | |||||||||
Noninterest expenses | 205 | (a) | 179 | 181 | ||||||||
Net income | (2 | ) | 11 | 18 | ||||||||
Net credit-related charge-offs | 1 | 2 | 1 | |||||||||
Selected average balances: | ||||||||||||
Assets | 6,557 | 6,544 | 6,459 | |||||||||
Loans | 5,879 | 5,867 | 5,770 | |||||||||
Deposits | 23,546 | 23,110 | 22,747 | |||||||||
(a) | Included restructuring charge of $19 million in the second quarter 2016. |
• | Average deposits increased $436 million, primarily reflecting seasonal increases. Balances increased in both interest-bearing and noninterest-bearing deposits. |
• | Net interest income decreased $1 million, primarily due to lower loan yields, partially offset by the benefit provided by the increase in average deposits. |
• | The provision for credit losses decreased $2 million, primarily due to a decrease in Small Business. |
• | Noninterest income increased $5 million, primarily reflecting the impact of a securities loss in the first quarter 2016 and an increase in card fees. |
• | Noninterest expenses increased $26 million, primarily due to second quarter 2016 restructuring charges. Excluding restructuring charges, noninterest expenses increased $7 million, primarily reflecting an increase in outside processing expenses and smaller increases in several other categories. |
Wealth Management
(dollar amounts in millions) | 2nd Qtr '16 | 1st Qtr '16 | 2nd Qtr '15 | |||||||||
Net interest income | $ | 42 | $ | 43 | $ | 45 | ||||||
Provision for credit losses | 3 | (5 | ) | (9 | ) | |||||||
Noninterest income | 62 | 59 | 60 | |||||||||
Noninterest expenses | 81 | (a) | 73 | 74 | ||||||||
Net income | 13 | 22 | 26 | |||||||||
Net credit-related charge-offs (recoveries) | 4 | (1 | ) | (5 | ) | |||||||
Selected average balances: | ||||||||||||
Assets | 5,215 | 5,162 | 5,153 | |||||||||
Loans | 5,016 | 4,964 | 4,954 | |||||||||
Deposits | 4,213 | 4,171 | 4,060 | |||||||||
(a) | Included restructuring charge of $8 million in the second quarter 2016. |
• | Average loans increased $52 million, primarily reflecting an increase in Private Banking. |
• | Average deposits increased $42 million, primarily reflecting increases in money market and checking deposits as well as noninterest-bearing deposits. |
• | The provision for credit losses increased $8 million, from a negative provision of $5 million in the first quarter 2016 to a provision of $3 million in the second quarter 2016. |
• | Noninterest income increased $3 million, primarily due to an increase in fiduciary income. |
• | Noninterest expenses increased $8 million, primarily due to second quarter 2016 restructuring charges. Excluding restructuring charges, noninterest expenses were stable. |
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COMERICA REPORTS SECOND QUARTER 2016 FINANCIAL RESULTS - 9
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 June 30, 2016.
The following table presents net income (loss) by market segment.
(dollar amounts in millions) | 2nd Qtr '16 | 1st Qtr '16 | 2nd Qtr '15 | ||||||||||||||
Michigan | $ | 57 | 34 | % | $ | 71 | 56 | % | $ | 98 | 44 | % | |||||
California | 50 | 30 | 73 | 58 | 71 | 31 | |||||||||||
Texas | 3 | 2 | (76 | ) | (60 | ) | 14 | 6 | |||||||||
Other Markets | 55 | 34 | 59 | 46 | 42 | 19 | |||||||||||
165 | 100 | % | 127 | 100 | % | 225 | 100 | % | |||||||||
Finance & Other (a) | (61 | ) | (67 | ) | (90 | ) | |||||||||||
Total | $ | 104 | $ | 60 | $ | 135 | |||||||||||
(a) Includes items not directly associated with the geographic markets.
• | Average loans increased $689 million in Other Markets, primarily reflecting an increase in Mortgage Banker Finance; $425 million in California, primarily reflecting increases in Commercial Real Estate and National Dealer Services; and $77 million in Texas, mostly due to increases in Commercial Real Estate and Private Banking, partially offset by a decrease in Energy. Average loans decreased $114 million in Michigan. |
• | Average deposits decreased $322 million in Texas and $143 million in Michigan, with both markets primarily reflecting decreases in Municipalities and Corporate Banking, partially offset by an increase in Retail Banking. Average deposits increased $279 million in California, reflecting increases in most lines of business. |
• | Net interest income decreased $9 million in Michigan and $4 million in Texas, and increased $1 million in California. The decrease in Michigan primarily reflected a decrease in loan yields, largely due to the impact of the negative residual value adjustment to assets in the leasing portfolio and lower nonaccrual interest recoveries in the second quarter, lower FTP credits resulting from a decrease in average deposits, and the impact of a decrease in average loans. The decrease in Texas primarily reflected lower FTP credits resulting from a decrease in average deposits and lower loan yields, largely due to the full quarter impact of loans transferred to nonaccrual in the first quarter 2016 and a decrease in accretion on the acquired loan portfolio. In California, the benefit from an increase in average loans was partially offset by an increase in net FTP charges, reflecting an increase in the cost of funds and a decrease in the deposit crediting rate. |
• | The provision for credit losses decreased $137 million in Texas, and increased $23 million California and $9 million in Michigan. The decrease in Texas primarily reflected the impact of the reserve build for Energy in the first quarter 2016. In California, the increased provision primarily reflected increases in National Dealer Services, Private Banking and general Middle Market. The increase in Michigan primarily reflected an increased provision in Commercial Real Estate. |
• | Noninterest income increased $5 million in Michigan, $1 million in Texas and $1 million in California. The increase in Michigan was primarily due to the impact of a securities loss in the first quarter 2016, an increase in customer derivative income and smaller increases in several other categories. |
• | Noninterest expenses increased $16 million in California, $13 million in Texas and $8 million in Michigan. Excluding restructuring charges, noninterest expenses were unchanged in California, and decreased $2 million in Texas and $7 million in Michigan. The decrease in Michigan primarily reflected an $8 million gain from the sale of leased assets in the second quarter. |
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COMERICA REPORTS SECOND QUARTER 2016 FINANCIAL RESULTS - 10
Michigan Market
(dollar amounts in millions) | 2nd Qtr '16 | 1st Qtr '16 | 2nd Qtr '15 | |||||||||
Net interest income | $ | 166 | $ | 175 | $ | 178 | ||||||
Provision for credit losses | 3 | (6 | ) | (13 | ) | |||||||
Noninterest income | 81 | 76 | 86 | |||||||||
Noninterest expenses | 159 | (a) | 151 | 129 | ||||||||
Net income | 57 | 71 | 98 | |||||||||
Net credit-related charge-offs (recoveries) | — | 5 | (1 | ) | ||||||||
Selected average balances: | ||||||||||||
Assets | 13,299 | 13,402 | 13,851 | |||||||||
Loans | 12,660 | 12,774 | 13,290 | |||||||||
Deposits | 21,553 | 21,696 | 21,706 | |||||||||
(a) | Included restructuring charge of $15 million in the second quarter 2016. |
California Market
(dollar amounts in millions) | 2nd Qtr '16 | 1st Qtr '16 | 2nd Qtr '15 | |||||||||
Net interest income | $ | 178 | $ | 177 | $ | 180 | ||||||
Provision for credit losses | 17 | (6 | ) | 4 | ||||||||
Noninterest income | 39 | 38 | 36 | |||||||||
Noninterest expenses | 120 | (a) | 104 | 99 | ||||||||
Net income | 50 | 73 | 71 | |||||||||
Net credit-related charge-offs | 17 | 8 | 6 | |||||||||
Selected average balances: | ||||||||||||
Assets | 17,997 | 17,541 | 16,696 | |||||||||
Loans | 17,708 | 17,283 | 16,429 | |||||||||
Deposits | 16,933 | 16,654 | 17,275 | |||||||||
(a) | Included restructuring charge of $16 million in the second quarter 2016. |
Texas Market
(dollar amounts in millions) | 2nd Qtr '16 | 1st Qtr '16 | 2nd Qtr '15 | |||||||||
Net interest income | $ | 119 | $ | 123 | $ | 130 | ||||||
Provision for credit losses | 32 | 169 | 43 | |||||||||
Noninterest income | 31 | 30 | 30 | |||||||||
Noninterest expenses | 113 | (a) | 100 | 93 | ||||||||
Net income (loss) | 3 | (76 | ) | 14 | ||||||||
Net credit-related charge-offs | 31 | 47 | 5 | |||||||||
Selected average balances: | ||||||||||||
Assets | 11,287 | 11,295 | 11,878 | |||||||||
Loans | 10,840 | 10,763 | 11,254 | |||||||||
Deposits | 10,052 | 10,374 | 10,959 | |||||||||
(a) | Included restructuring charge of $15 million in the second quarter 2016. |
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COMERICA REPORTS SECOND QUARTER 2016 FINANCIAL RESULTS - 11
Conference Call and Webcast
Comerica will host a conference call to review second quarter 2016 financial results at 7 a.m. CT Tuesday, July 19, 2016. Interested parties may access the conference call by calling (877) 523-5249 or (210) 591-1147 (event ID No. 22809119). 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 SECOND QUARTER 2016 FINANCIAL RESULTS - 12
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, including the GEAR Up initiative, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries as well as estimates of the economic benefits of the GEAR Up initiative, 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; whether Comerica may achieve opportunities for revenue enhancements and efficiency improvements under the GEAR Up initiative, or changes in the scope or assumptions underlying the GEAR Up initiative; 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 and “Item 1A. Risk Factors” beginning on page 54 of Comerica’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016. 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 | Six Months Ended | |||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||
(in millions, except per share data) | 2016 | 2016 | 2015 | 2016 | 2015 | |||||||||||
PER COMMON SHARE AND COMMON STOCK DATA | ||||||||||||||||
Diluted net income | $ | 0.58 | $ | 0.34 | $ | 0.73 | $ | 0.92 | $ | 1.46 | ||||||
Cash dividends declared | 0.22 | 0.21 | 0.21 | 0.43 | 0.41 | |||||||||||
Average diluted shares (in thousands) | 177,240 | 176,055 | 182,422 | 176,614 | 182,281 | |||||||||||
KEY RATIOS | ||||||||||||||||
Return on average common shareholders' equity | 5.44 | % | 3.13 | % | 7.21 | % | 4.28 | % | 7.20 | % | ||||||
Return on average assets | 0.59 | 0.34 | 0.79 | 0.47 | 0.78 | |||||||||||
Common equity tier 1 and tier 1 risk-based capital ratio (a) | 10.48 | 10.58 | 10.40 | |||||||||||||
Total risk-based capital ratio (a) | 12.73 | 12.84 | 12.38 | |||||||||||||
Leverage ratio (a) | 10.41 | 10.60 | 10.56 | |||||||||||||
Common equity ratio | 10.79 | 11.08 | 10.76 | |||||||||||||
Tangible common equity ratio (b) | 9.98 | 10.23 | 9.92 | |||||||||||||
AVERAGE BALANCES | ||||||||||||||||
Commercial loans | $ | 31,511 | $ | 30,814 | $ | 31,788 | $ | 31,162 | $ | 31,442 | ||||||
Real estate construction loans | 2,429 | 2,114 | 1,807 | 2,272 | 1,872 | |||||||||||
Commercial mortgage loans | 9,033 | 8,961 | 8,672 | 8,997 | 8,627 | |||||||||||
Lease financing | 730 | 726 | 795 | 728 | 796 | |||||||||||
International loans | 1,396 | 1,419 | 1,453 | 1,408 | 1,482 | |||||||||||
Residential mortgage loans | 1,880 | 1,892 | 1,877 | 1,886 | 1,866 | |||||||||||
Consumer loans | 2,490 | 2,466 | 2,441 | 2,478 | 2,409 | |||||||||||
Total loans | 49,469 | 48,392 | 48,833 | 48,931 | 48,494 | |||||||||||
Earning assets | 65,597 | 64,123 | 63,981 | 64,860 | 63,732 | |||||||||||
Total assets | 70,668 | 69,228 | 68,963 | 69,948 | 68,852 | |||||||||||
Noninterest-bearing deposits | 28,376 | 28,052 | 27,365 | 28,214 | 27,033 | |||||||||||
Interest-bearing deposits | 28,145 | 28,656 | 30,033 | 28,401 | 30,163 | |||||||||||
Total deposits | 56,521 | 56,708 | 57,398 | 56,615 | 57,196 | |||||||||||
Common shareholders' equity | 7,654 | 7,632 | 7,512 | 7,643 | 7,482 | |||||||||||
NET INTEREST INCOME | ||||||||||||||||
Net interest income | $ | 445 | $ | 447 | $ | 421 | $ | 892 | $ | 834 | ||||||
Net interest margin (fully taxable equivalent) | 2.74 | % | 2.81 | % | 2.65 | % | 2.78 | % | 2.65 | % | ||||||
CREDIT QUALITY | ||||||||||||||||
Total nonperforming assets | $ | 635 | $ | 714 | $ | 370 | ||||||||||
Loans past due 90 days or more and still accruing | 35 | 13 | 18 | |||||||||||||
Net credit-related charge-offs | 47 | 58 | 19 | $ | 105 | $ | 27 | |||||||||
Allowance for loan losses | 729 | 724 | 618 | |||||||||||||
Allowance for credit losses on lending-related commitments | 43 | 46 | 50 | |||||||||||||
Total allowance for credit losses | 772 | 770 | 668 | |||||||||||||
Allowance for loan losses as a percentage of total loans | 1.45 | % | 1.47 | % | 1.24 | % | ||||||||||
Net credit-related charge-offs as a percentage of average total loans | 0.38 | 0.49 | 0.15 | 0.43 | % | 0.11 | % | |||||||||
Nonperforming assets as a percentage of total loans and foreclosed property | 1.26 | 1.45 | 0.74 | |||||||||||||
Allowance for loan losses as a percentage of total nonperforming loans | 119 | 105 | 171 | |||||||||||||
(a) | June 30, 2016 ratios are estimated. |
(b) | See Reconciliation of Non-GAAP Financial Measures. |
13
CONSOLIDATED BALANCE SHEETS | ||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||
June 30, | March 31, | December 31, | June 30, | |||||||||
(in millions, except share data) | 2016 | 2016 | 2015 | 2015 | ||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||
ASSETS | ||||||||||||
Cash and due from banks | $ | 1,172 | $ | 977 | $ | 1,157 | $ | 1,148 | ||||
Interest-bearing deposits with banks | 2,938 | 2,025 | 4,990 | 4,817 | ||||||||
Other short-term investments | 100 | 94 | 113 | 119 | ||||||||
Investment securities available-for-sale | 10,712 | 10,607 | 10,519 | 8,267 | ||||||||
Investment securities held-to-maturity | 1,807 | 1,907 | 1,981 | 1,952 | ||||||||
Commercial loans | 32,360 | 31,562 | 31,659 | 32,723 | ||||||||
Real estate construction loans | 2,553 | 2,290 | 2,001 | 1,795 | ||||||||
Commercial mortgage loans | 9,038 | 8,982 | 8,977 | 8,674 | ||||||||
Lease financing | 684 | 731 | 724 | 786 | ||||||||
International loans | 1,365 | 1,455 | 1,368 | 1,420 | ||||||||
Residential mortgage loans | 1,856 | 1,874 | 1,870 | 1,865 | ||||||||
Consumer loans | 2,524 | 2,483 | 2,485 | 2,478 | ||||||||
Total loans | 50,380 | 49,377 | 49,084 | 49,741 | ||||||||
Less allowance for loan losses | (729 | ) | (724 | ) | (634 | ) | (618 | ) | ||||
Net loans | 49,651 | 48,653 | 48,450 | 49,123 | ||||||||
Premises and equipment | 544 | 541 | 550 | 541 | ||||||||
Accrued income and other assets | 4,356 | 4,203 | 4,117 | 3,978 | ||||||||
Total assets | $ | 71,280 | $ | 69,007 | $ | 71,877 | $ | 69,945 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
Noninterest-bearing deposits | $ | 28,559 | $ | 28,025 | $ | 30,839 | $ | 28,167 | ||||
Money market and interest-bearing checking deposits | 22,539 | 22,872 | 23,532 | 23,786 | ||||||||
Savings deposits | 2,022 | 2,006 | 1,898 | 1,841 | ||||||||
Customer certificates of deposit | 3,230 | 3,401 | 3,552 | 4,367 | ||||||||
Foreign office time deposits | 24 | 47 | 32 | 99 | ||||||||
Total interest-bearing deposits | 27,815 | 28,326 | 29,014 | 30,093 | ||||||||
Total deposits | 56,374 | 56,351 | 59,853 | 58,260 | ||||||||
Short-term borrowings | 12 | 514 | 23 | 56 | ||||||||
Accrued expenses and other liabilities | 1,279 | 1,389 | 1,383 | 1,265 | ||||||||
Medium- and long-term debt | 5,921 | 3,109 | 3,058 | 2,841 | ||||||||
Total liabilities | 63,586 | 61,363 | 64,317 | 62,422 | ||||||||
Common stock - $5 par value: | ||||||||||||
Authorized - 325,000,000 shares | ||||||||||||
Issued - 228,164,824 shares | 1,141 | 1,141 | 1,141 | 1,141 | ||||||||
Capital surplus | 2,165 | 2,158 | 2,173 | 2,158 | ||||||||
Accumulated other comprehensive loss | (295 | ) | (328 | ) | (429 | ) | (396 | ) | ||||
Retained earnings | 7,157 | 7,097 | 7,084 | 6,908 | ||||||||
Less cost of common stock in treasury - 54,247,325 shares at 6/30/16, 53,086,733 shares at 3/31/16, 52,457,113 shares at 12/31/15, and 49,803,515 shares at 6/30/15 | (2,474 | ) | (2,424 | ) | (2,409 | ) | (2,288 | ) | ||||
Total shareholders' equity | 7,694 | 7,644 | 7,560 | 7,523 | ||||||||
Total liabilities and shareholders' equity | $ | 71,280 | $ | 69,007 | $ | 71,877 | $ | 69,945 | ||||
14
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) | |||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
(in millions, except per share data) | 2016 | 2015 | 2016 | 2015 | |||||||||
INTEREST INCOME | |||||||||||||
Interest and fees on loans | $ | 406 | $ | 388 | $ | 812 | $ | 766 | |||||
Interest on investment securities | 62 | 53 | 124 | 106 | |||||||||
Interest on short-term investments | 5 | 3 | 9 | 7 | |||||||||
Total interest income | 473 | 444 | 945 | 879 | |||||||||
INTEREST EXPENSE | |||||||||||||
Interest on deposits | 10 | 11 | 20 | 22 | |||||||||
Interest on medium- and long-term debt | 18 | 12 | 33 | 23 | |||||||||
Total interest expense | 28 | 23 | 53 | 45 | |||||||||
Net interest income | 445 | 421 | 892 | 834 | |||||||||
Provision for credit losses | 49 | 47 | 197 | 61 | |||||||||
Net interest income after provision for credit losses | 396 | 374 | 695 | 773 | |||||||||
NONINTEREST INCOME | |||||||||||||
Card fees | 77 | 69 | 151 | 132 | |||||||||
Service charges on deposit accounts | 55 | 56 | 110 | 111 | |||||||||
Fiduciary income | 49 | 48 | 95 | 95 | |||||||||
Commercial lending fees | 22 | 22 | 42 | 47 | |||||||||
Letter of credit fees | 13 | 13 | 26 | 26 | |||||||||
Bank-owned life insurance | 9 | 10 | 18 | 19 | |||||||||
Foreign exchange income | 11 | 9 | 21 | 19 | |||||||||
Brokerage fees | 5 | 4 | 9 | 8 | |||||||||
Net securities losses | (1 | ) | — | (3 | ) | (2 | ) | ||||||
Other noninterest income | 29 | 27 | 46 | 54 | |||||||||
Total noninterest income | 269 | 258 | 515 | 509 | |||||||||
NONINTEREST EXPENSES | |||||||||||||
Salaries and benefits expense | 247 | 251 | 495 | 504 | |||||||||
Outside processing fee expense | 84 | 83 | 163 | 156 | |||||||||
Net occupancy expense | 39 | 39 | 77 | 77 | |||||||||
Equipment expense | 14 | 13 | 27 | 26 | |||||||||
Restructuring charges | 53 | — | 53 | — | |||||||||
Software expense | 30 | 24 | 59 | 47 | |||||||||
FDIC insurance expense | 14 | 9 | 25 | 18 | |||||||||
Advertising expense | 6 | 5 | 10 | 11 | |||||||||
Litigation-related expense | — | (30 | ) | — | (29 | ) | |||||||
Other noninterest expenses | 32 | 39 | 70 | 78 | |||||||||
Total noninterest expenses | 519 | 433 | 979 | 888 | |||||||||
Income before income taxes | 146 | 199 | 231 | 394 | |||||||||
Provision for income taxes | 42 | 64 | 67 | 125 | |||||||||
NET INCOME | 104 | 135 | 164 | 269 | |||||||||
Less income allocated to participating securities | 1 | 1 | 2 | 3 | |||||||||
Net income attributable to common shares | $ | 103 | $ | 134 | $ | 162 | $ | 266 | |||||
Earnings per common share: | |||||||||||||
Basic | $ | 0.60 | $ | 0.76 | $ | 0.94 | $ | 1.51 | |||||
Diluted | 0.58 | 0.73 | 0.92 | 1.46 | |||||||||
Comprehensive income | 137 | 109 | 298 | 285 | |||||||||
Cash dividends declared on common stock | 38 | 37 | 75 | 73 | |||||||||
Cash dividends declared per common share | 0.22 | 0.21 | 0.43 | 0.41 | |||||||||
15
CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited) | |||||||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||||||
Second | First | Fourth | Third | Second | Second Quarter 2016 Compared To: | ||||||||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Quarter | First Quarter 2016 | Second Quarter 2015 | |||||||||||||||||||||
(in millions, except per share data) | 2016 | 2016 | 2015 | 2015 | 2015 | Amount | Percent | Amount | Percent | ||||||||||||||||||
INTEREST INCOME | |||||||||||||||||||||||||||
Interest and fees on loans | $ | 406 | $ | 406 | $ | 395 | $ | 390 | $ | 388 | $ | — | — | % | $ | 18 | 5 | % | |||||||||
Interest on investment securities | 62 | 62 | 56 | 54 | 53 | — | — | 9 | 18 | ||||||||||||||||||
Interest on short-term investments | 5 | 4 | 6 | 4 | 3 | 1 | 10 | 2 | 44 | ||||||||||||||||||
Total interest income | 473 | 472 | 457 | 448 | 444 | 1 | — | 29 | 7 | ||||||||||||||||||
INTEREST EXPENSE | |||||||||||||||||||||||||||
Interest on deposits | 10 | 10 | 10 | 11 | 11 | — | — | (1 | ) | (11 | ) | ||||||||||||||||
Interest on medium- and long-term debt | 18 | 15 | 14 | 15 | 12 | 3 | 20 | 6 | 49 | ||||||||||||||||||
Total interest expense | 28 | 25 | 24 | 26 | 23 | 3 | 10 | 5 | 22 | ||||||||||||||||||
Net interest income | 445 | 447 | 433 | 422 | 421 | (2 | ) | — | 24 | 6 | |||||||||||||||||
Provision for credit losses | 49 | 148 | 60 | 26 | 47 | (99 | ) | (67 | ) | 2 | 5 | ||||||||||||||||
Net interest income after provision for credit losses | 396 | 299 | 373 | 396 | 374 | 97 | 33 | 22 | 6 | ||||||||||||||||||
NONINTEREST INCOME | |||||||||||||||||||||||||||
Card fees | 77 | 74 | 75 | 72 | 69 | 3 | 4 | 8 | 11 | ||||||||||||||||||
Service charges on deposit accounts | 55 | 55 | 55 | 57 | 56 | — | — | (1 | ) | (3 | ) | ||||||||||||||||
Fiduciary income | 49 | 46 | 45 | 47 | 48 | 3 | 6 | 1 | 1 | ||||||||||||||||||
Commercial lending fees | 22 | 20 | 30 | 22 | 22 | 2 | 9 | — | — | ||||||||||||||||||
Letter of credit fees | 13 | 13 | 14 | 13 | 13 | — | — | — | — | ||||||||||||||||||
Bank-owned life insurance | 9 | 9 | 11 | 10 | 10 | — | — | (1 | ) | (4 | ) | ||||||||||||||||
Foreign exchange income | 11 | 10 | 11 | 10 | 9 | 1 | 3 | 2 | 16 | ||||||||||||||||||
Brokerage fees | 5 | 4 | 4 | 5 | 4 | 1 | 16 | 1 | 6 | ||||||||||||||||||
Net securities losses | (1 | ) | (2 | ) | — | — | — | 1 | 89 | (1 | ) | n/m | |||||||||||||||
Other noninterest income | 29 | 17 | 23 | 26 | 27 | 12 | 70 | 2 | 12 | ||||||||||||||||||
Total noninterest income | 269 | 246 | 268 | 262 | 258 | 23 | 9 | 11 | 4 | ||||||||||||||||||
NONINTEREST EXPENSES | |||||||||||||||||||||||||||
Salaries and benefits expense | 247 | 248 | 262 | 243 | 251 | (1 | ) | (1 | ) | (4 | ) | (2 | ) | ||||||||||||||
Outside processing fee expense | 84 | 79 | 81 | 84 | 83 | 5 | 7 | 1 | 2 | ||||||||||||||||||
Net occupancy expense | 39 | 38 | 41 | 41 | 39 | 1 | 4 | — | — | ||||||||||||||||||
Equipment expense | 14 | 13 | 14 | 13 | 13 | 1 | 6 | 1 | 7 | ||||||||||||||||||
Restructuring charges | 53 | — | — | — | — | 53 | n/m | 53 | n/m | ||||||||||||||||||
Software expense | 30 | 29 | 26 | 26 | 24 | 1 | 7 | 6 | 28 | ||||||||||||||||||
FDIC insurance expense | 14 | 11 | 10 | 9 | 9 | 3 | 14 | 5 | 55 | ||||||||||||||||||
Advertising expense | 6 | 4 | 7 | 6 | 5 | 2 | 93 | 1 | 22 | ||||||||||||||||||
Litigation-related expense | — | — | — | (3 | ) | (30 | ) | — | — | 30 | n/m | ||||||||||||||||
Other noninterest expenses | 32 | 38 | 43 | 40 | 39 | (6 | ) | (17 | ) | (7 | ) | (19 | ) | ||||||||||||||
Total noninterest expenses | 519 | 460 | 484 | 459 | 433 | 59 | 13 | 86 | 20 | ||||||||||||||||||
Income before income taxes | 146 | 85 | 157 | 199 | 199 | 61 | 73 | (53 | ) | (27 | ) | ||||||||||||||||
Provision for income taxes | 42 | 25 | 41 | 63 | 64 | 17 | 68 | (22 | ) | (34 | ) | ||||||||||||||||
NET INCOME | 104 | 60 | 116 | 136 | 135 | 44 | 74 | (31 | ) | (23 | ) | ||||||||||||||||
Less income allocated to participating securities | 1 | 1 | 1 | 2 | 1 | — | — | — | — | ||||||||||||||||||
Net income attributable to common shares | $ | 103 | $ | 59 | $ | 115 | $ | 134 | $ | 134 | $ | 44 | 74 | % | $ | (31 | ) | (23 | )% | ||||||||
Earnings per common share: | |||||||||||||||||||||||||||
Basic | $ | 0.60 | $ | 0.34 | $ | 0.65 | $ | 0.76 | $ | 0.76 | $ | 0.26 | 76 | % | $ | (0.16 | ) | (21 | )% | ||||||||
Diluted | 0.58 | 0.34 | 0.64 | 0.74 | 0.73 | 0.24 | 71 | (0.15 | ) | (21 | ) | ||||||||||||||||
Comprehensive income | 137 | 161 | 32 | 187 | 109 | (24 | ) | (15 | ) | 28 | 27 | ||||||||||||||||
Cash dividends declared on common stock | 38 | 37 | 37 | 37 | 37 | 1 | 4 | 1 | 7 | ||||||||||||||||||
Cash dividends declared per common share | 0.22 | 0.21 | 0.21 | 0.21 | 0.21 | 0.01 | 5 | 0.01 | 5 | ||||||||||||||||||
n/m - not meaningful
16
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited) | ||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||
2016 | 2015 | |||||||||||||||
(in millions) | 2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | |||||||||||
Balance at beginning of period | $ | 724 | $ | 634 | $ | 622 | $ | 618 | $ | 601 | ||||||
Loan charge-offs: | ||||||||||||||||
Commercial | 48 | 72 | 73 | 30 | 17 | |||||||||||
Commercial mortgage | — | — | 1 | — | 2 | |||||||||||
Lease financing | — | — | — | — | 1 | |||||||||||
International | 4 | 3 | — | 1 | 11 | |||||||||||
Residential mortgage | — | — | — | — | 1 | |||||||||||
Consumer | 2 | 2 | 2 | 3 | 3 | |||||||||||
Total loan charge-offs | 54 | 77 | 76 | 34 | 35 | |||||||||||
Recoveries on loans previously charged-off: | ||||||||||||||||
Commercial | 9 | 12 | 6 | 8 | 10 | |||||||||||
Real estate construction | — | — | — | — | 1 | |||||||||||
Commercial mortgage | 2 | 12 | 11 | 2 | 5 | |||||||||||
Residential mortgage | — | — | 1 | — | — | |||||||||||
Consumer | 1 | 1 | 7 | 1 | 1 | |||||||||||
Total recoveries | 12 | 25 | 25 | 11 | 17 | |||||||||||
Net loan charge-offs | 42 | 52 | 51 | 23 | 18 | |||||||||||
Provision for loan losses | 47 | 141 | 63 | 28 | 35 | |||||||||||
Foreign currency translation adjustment | — | 1 | — | (1 | ) | — | ||||||||||
Balance at end of period | $ | 729 | $ | 724 | $ | 634 | $ | 622 | $ | 618 | ||||||
Allowance for loan losses as a percentage of total loans | 1.45 | % | 1.47 | % | 1.29 | % | 1.27 | % | 1.24 | % | ||||||
Net loan charge-offs as a percentage of average total loans | 0.34 | 0.43 | 0.42 | 0.19 | 0.15 | |||||||||||
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited) | ||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||
2016 | 2015 | |||||||||||||||
(in millions) | 2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | |||||||||||
Balance at beginning of period | $ | 46 | $ | 45 | $ | 48 | $ | 50 | $ | 39 | ||||||
Charge-offs on lending-related commitments (a) | (5 | ) | (6 | ) | — | — | (1 | ) | ||||||||
Provision for credit losses on lending-related commitments | 2 | 7 | (3 | ) | (2 | ) | 12 | |||||||||
Balance at end of period | $ | 43 | $ | 46 | $ | 45 | $ | 48 | $ | 50 | ||||||
Unfunded lending-related commitments sold | $ | 12 | $ | 11 | $ | — | $ | — | $ | 12 | ||||||
(a) | Charge-offs result from the sale of unfunded lending-related commitments. |
17
NONPERFORMING ASSETS (unaudited) | ||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||
2016 | 2015 | |||||||||||||||
(in millions) | 2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | |||||||||||
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS | ||||||||||||||||
Nonaccrual loans: | ||||||||||||||||
Business loans: | ||||||||||||||||
Commercial | $ | 482 | $ | 547 | $ | 238 | $ | 214 | $ | 186 | ||||||
Real estate construction | — | — | 1 | 1 | 1 | |||||||||||
Commercial mortgage | 44 | 47 | 60 | 66 | 77 | |||||||||||
Lease financing | 6 | 6 | 6 | 8 | 11 | |||||||||||
International | 18 | 27 | 8 | 8 | 9 | |||||||||||
Total nonaccrual business loans | 550 | 627 | 313 | 297 | 284 | |||||||||||
Retail loans: | ||||||||||||||||
Residential mortgage | 26 | 26 | 27 | 31 | 35 | |||||||||||
Consumer: | ||||||||||||||||
Home equity | 28 | 27 | 27 | 28 | 29 | |||||||||||
Other consumer | 1 | 1 | — | 1 | 1 | |||||||||||
Total consumer | 29 | 28 | 27 | 29 | 30 | |||||||||||
Total nonaccrual retail loans | 55 | 54 | 54 | 60 | 65 | |||||||||||
Total nonaccrual loans | 605 | 681 | 367 | 357 | 349 | |||||||||||
Reduced-rate loans | 8 | 8 | 12 | 12 | 12 | |||||||||||
Total nonperforming loans | 613 | 689 | 379 | 369 | 361 | |||||||||||
Foreclosed property | 22 | 25 | 12 | 12 | 9 | |||||||||||
Total nonperforming assets | $ | 635 | $ | 714 | $ | 391 | $ | 381 | $ | 370 | ||||||
Nonperforming loans as a percentage of total loans | 1.22 | % | 1.40 | % | 0.77 | % | 0.75 | % | 0.72 | % | ||||||
Nonperforming assets as a percentage of total loans and foreclosed property | 1.26 | 1.45 | 0.80 | 0.78 | 0.74 | |||||||||||
Allowance for loan losses as a percentage of total nonperforming loans | 119 | 105 | 167 | 169 | 171 | |||||||||||
Loans past due 90 days or more and still accruing | $ | 35 | $ | 13 | $ | 17 | $ | 5 | $ | 18 | ||||||
ANALYSIS OF NONACCRUAL LOANS | ||||||||||||||||
Nonaccrual loans at beginning of period | $ | 681 | $ | 367 | $ | 357 | $ | 349 | $ | 266 | ||||||
Loans transferred to nonaccrual (a) | 107 | 446 | 105 | 69 | 145 | |||||||||||
Nonaccrual business loan gross charge-offs (b) | (52 | ) | (75 | ) | (49 | ) | (31 | ) | (31 | ) | ||||||
Nonaccrual business loans sold (c) | (40 | ) | (21 | ) | — | — | (1 | ) | ||||||||
Payments/Other (d) | (91 | ) | (36 | ) | (46 | ) | (30 | ) | (30 | ) | ||||||
Nonaccrual loans at end of period | $ | 605 | $ | 681 | $ | 367 | $ | 357 | $ | 349 | ||||||
(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 | $ | 52 | $ | 75 | $ | 49 | $ | 31 | $ | 31 | ||||||
Performing business loans | — | — | 25 | — | — | |||||||||||
Consumer and residential mortgage loans | 2 | 2 | 2 | 3 | 4 | |||||||||||
Total gross loan charge-offs | $ | 54 | $ | 77 | $ | 76 | $ | 34 | $ | 35 | ||||||
(c) Analysis of loans sold: | ||||||||||||||||
Nonaccrual business loans | $ | 40 | $ | 21 | $ | — | $ | — | $ | 1 | ||||||
Performing criticized loans | — | — | 3 | — | — | |||||||||||
Total criticized loans sold | $ | 40 | $ | 21 | $ | 3 | $ | — | $ | 1 | ||||||
(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. | ||||||||||||||||
18
ANALYSIS OF NET INTEREST INCOME (unaudited) | |||||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||||
Six Months Ended | |||||||||||||||||
June 30, 2016 | June 30, 2015 | ||||||||||||||||
Average | Average | Average | Average | ||||||||||||||
(dollar amounts in millions) | Balance | Interest | Rate (a) | Balance | Interest | Rate (a) | |||||||||||
Commercial loans | $ | 31,162 | $ | 500 | 3.24 | % | $ | 31,442 | $ | 475 | 3.06 | % | |||||
Real estate construction loans | 2,272 | 41 | 3.64 | 1,872 | 32 | 3.43 | |||||||||||
Commercial mortgage loans | 8,997 | 158 | 3.53 | 8,627 | 146 | 3.41 | |||||||||||
Lease financing | 728 | 10 | 2.66 | 796 | 12 | 3.12 | |||||||||||
International loans | 1,408 | 26 | 3.64 | 1,482 | 27 | 3.69 | |||||||||||
Residential mortgage loans | 1,886 | 36 | 3.85 | 1,866 | 35 | 3.77 | |||||||||||
Consumer loans | 2,478 | 41 | 3.35 | 2,409 | 39 | 3.23 | |||||||||||
Total loans | 48,931 | 812 | 3.34 | 48,494 | 766 | 3.19 | |||||||||||
Mortgage-backed securities (b) | 9,341 | 102 | 2.21 | 9,064 | 101 | 2.24 | |||||||||||
Other investment securities | 3,004 | 22 | 1.50 | 858 | 5 | 1.13 | |||||||||||
Total investment securities (b) | 12,345 | 124 | 2.04 | 9,922 | 106 | 2.15 | |||||||||||
Interest-bearing deposits with banks | 3,478 | 9 | 0.50 | 5,216 | 7 | 0.25 | |||||||||||
Other short-term investments | 106 | — | 0.76 | 100 | — | 0.75 | |||||||||||
Total earning assets | 64,860 | 945 | 2.94 | 63,732 | 879 | 2.79 | |||||||||||
Cash and due from banks | 1,071 | 1,034 | |||||||||||||||
Allowance for loan losses | (714 | ) | (607 | ) | |||||||||||||
Accrued income and other assets | 4,731 | 4,693 | |||||||||||||||
Total assets | $ | 69,948 | $ | 68,852 | |||||||||||||
Money market and interest-bearing checking deposits | $ | 22,989 | 13 | 0.11 | $ | 23,809 | 13 | 0.11 | |||||||||
Savings deposits | 1,973 | — | 0.02 | 1,810 | — | 0.02 | |||||||||||
Customer certificates of deposit | 3,399 | 7 | 0.40 | 4,423 | 8 | 0.37 | |||||||||||
Foreign office time deposits | 40 | — | 0.34 | 121 | 1 | 1.36 | |||||||||||
Total interest-bearing deposits | 28,401 | 20 | 0.14 | 30,163 | 22 | 0.14 | |||||||||||
Short-term borrowings | 262 | — | 0.45 | 94 | — | 0.05 | |||||||||||
Medium- and long-term debt | 4,083 | 33 | 1.62 | 2,675 | 23 | 1.78 | |||||||||||
Total interest-bearing sources | 32,746 | 53 | 0.32 | 32,932 | 45 | 0.28 | |||||||||||
Noninterest-bearing deposits | 28,214 | 27,033 | |||||||||||||||
Accrued expenses and other liabilities | 1,345 | 1,405 | |||||||||||||||
Total shareholders' equity | 7,643 | 7,482 | |||||||||||||||
Total liabilities and shareholders' equity | $ | 69,948 | $ | 68,852 | |||||||||||||
Net interest income/rate spread | $ | 892 | 2.62 | $ | 834 | 2.51 | |||||||||||
Impact of net noninterest-bearing sources of funds | 0.16 | 0.14 | |||||||||||||||
Net interest margin (as a percentage of average earning assets) | 2.78 | % | 2.65 | % | |||||||||||||
(a) | Fully taxable equivalent. |
(b) | Includes investment securities available-for-sale and investment securities held-to-maturity. |
19
ANALYSIS OF NET INTEREST INCOME (unaudited) | ||||||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | ||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||
June 30, 2016 | March 31, 2016 | June 30, 2015 | ||||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | |||||||||||||||||||||
(dollar amounts in millions) | Balance | Interest | Rate (a) | Balance | Interest | Rate (a) | Balance | Interest | Rate (a) | |||||||||||||||||
Commercial loans | $ | 31,511 | $ | 251 | 3.23 | % | $ | 30,814 | $ | 249 | 3.25 | % | $ | 31,788 | $ | 242 | 3.07 | % | ||||||||
Real estate construction loans | 2,429 | 22 | 3.62 | 2,114 | 19 | 3.66 | 1,807 | 16 | 3.51 | |||||||||||||||||
Commercial mortgage loans | 9,033 | 78 | 3.47 | 8,961 | 80 | 3.59 | 8,672 | 73 | 3.38 | |||||||||||||||||
Lease financing | 730 | 4 | 1.98 | 726 | 6 | 3.33 | 795 | 6 | 3.19 | |||||||||||||||||
International loans | 1,396 | 13 | 3.63 | 1,419 | 13 | 3.65 | 1,453 | 13 | 3.68 | |||||||||||||||||
Residential mortgage loans | 1,880 | 17 | 3.76 | 1,892 | 19 | 3.94 | 1,877 | 18 | 3.78 | |||||||||||||||||
Consumer loans | 2,490 | 21 | 3.37 | 2,466 | 20 | 3.33 | 2,441 | 20 | 3.25 | |||||||||||||||||
Total loans | 49,469 | 406 | 3.31 | 48,392 | 406 | 3.38 | 48,833 | 388 | 3.20 | |||||||||||||||||
Mortgage-backed securities (b) | 9,326 | 51 | 2.21 | 9,356 | 51 | 2.22 | 9,057 | 50 | 2.23 | |||||||||||||||||
Other investment securities | 3,008 | 11 | 1.50 | 3,001 | 11 | 1.50 | 879 | 3 | 1.16 | |||||||||||||||||
Total investment securities (b) | 12,334 | 62 | 2.03 | 12,357 | 62 | 2.05 | 9,936 | 53 | 2.13 | |||||||||||||||||
Interest-bearing deposits with banks | 3,690 | 5 | 0.50 | 3,265 | 4 | 0.50 | 5,110 | 3 | 0.25 | |||||||||||||||||
Other short-term investments | 104 | — | 0.58 | 109 | — | 0.93 | 102 | — | 0.42 | |||||||||||||||||
Total earning assets | 65,597 | 473 | 2.91 | 64,123 | 472 | 2.97 | 63,981 | 444 | 2.79 | |||||||||||||||||
Cash and due from banks | 1,074 | 1,068 | 1,041 | |||||||||||||||||||||||
Allowance for loan losses | (749 | ) | (680 | ) | (613 | ) | ||||||||||||||||||||
Accrued income and other assets | 4,746 | 4,717 | 4,554 | |||||||||||||||||||||||
Total assets | $ | 70,668 | $ | 69,228 | $ | 68,963 | ||||||||||||||||||||
Money market and interest-bearing checking deposits | $ | 22,785 | 6 | 0.11 | $ | 23,193 | 6 | 0.11 | $ | 23,659 | 6 | 0.11 | ||||||||||||||
Savings deposits | 2,010 | — | 0.02 | 1,936 | — | 0.02 | 1,834 | — | 0.02 | |||||||||||||||||
Customer certificates of deposit | 3,320 | 4 | 0.40 | 3,477 | 4 | 0.40 | 4,422 | 4 | 0.37 | |||||||||||||||||
Foreign office time deposits | 30 | — | 0.35 | 50 | — | 0.33 | 118 | 1 | 1.26 | |||||||||||||||||
Total interest-bearing deposits | 28,145 | 10 | 0.14 | 28,656 | 10 | 0.14 | 30,033 | 11 | 0.14 | |||||||||||||||||
Short-term borrowings | 159 | — | 0.45 | 365 | — | 0.45 | 78 | — | 0.04 | |||||||||||||||||
Medium- and long-term debt | 5,072 | 18 | 1.42 | 3,093 | 15 | 1.94 | 2,661 | 12 | 1.83 | |||||||||||||||||
Total interest-bearing sources | 33,376 | 28 | 0.33 | 32,114 | 25 | 0.32 | 32,772 | 23 | 0.28 | |||||||||||||||||
Noninterest-bearing deposits | 28,376 | 28,052 | 27,365 | |||||||||||||||||||||||
Accrued expenses and other liabilities | 1,262 | 1,430 | 1,314 | |||||||||||||||||||||||
Total shareholders' equity | 7,654 | 7,632 | 7,512 | |||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 70,668 | $ | 69,228 | $ | 68,963 | ||||||||||||||||||||
Net interest income/rate spread | $ | 445 | 2.58 | $ | 447 | 2.65 | $ | 421 | 2.51 | |||||||||||||||||
Impact of net noninterest-bearing sources of funds | 0.16 | 0.16 | 0.14 | |||||||||||||||||||||||
Net interest margin (as a percentage of average earning assets) | 2.74 | % | 2.81 | % | 2.65 | % | ||||||||||||||||||||
(a) | Fully taxable equivalent. |
(b) | Includes investment securities available-for-sale and investment securities held-to-maturity. |
20
CONSOLIDATED STATISTICAL DATA (unaudited) | |||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
(in millions, except per share data) | 2016 | 2016 | 2015 | 2015 | 2015 | ||||||||||
Commercial loans: | |||||||||||||||
Floor plan | $ | 4,120 | $ | 3,902 | $ | 3,939 | $ | 3,538 | $ | 3,840 | |||||
Other | 28,240 | 27,660 | 27,720 | 28,239 | 28,883 | ||||||||||
Total commercial loans | 32,360 | 31,562 | 31,659 | 31,777 | 32,723 | ||||||||||
Real estate construction loans | 2,553 | 2,290 | 2,001 | 1,874 | 1,795 | ||||||||||
Commercial mortgage loans | 9,038 | 8,982 | 8,977 | 8,787 | 8,674 | ||||||||||
Lease financing | 684 | 731 | 724 | 751 | 786 | ||||||||||
International loans | 1,365 | 1,455 | 1,368 | 1,382 | 1,420 | ||||||||||
Residential mortgage loans | 1,856 | 1,874 | 1,870 | 1,880 | 1,865 | ||||||||||
Consumer loans: | |||||||||||||||
Home equity | 1,779 | 1,738 | 1,720 | 1,714 | 1,682 | ||||||||||
Other consumer | 745 | 745 | 765 | 777 | 796 | ||||||||||
Total consumer loans | 2,524 | 2,483 | 2,485 | 2,491 | 2,478 | ||||||||||
Total loans | $ | 50,380 | $ | 49,377 | $ | 49,084 | $ | 48,942 | $ | 49,741 | |||||
Goodwill | $ | 635 | $ | 635 | $ | 635 | $ | 635 | $ | 635 | |||||
Core deposit intangible | 9 | 9 | 10 | 10 | 11 | ||||||||||
Other intangibles | 3 | 4 | 4 | 4 | 4 | ||||||||||
Common equity tier 1 capital (a) | 7,346 | 7,331 | 7,350 | 7,327 | 7,280 | ||||||||||
Risk-weighted assets (a) | 70,097 | 69,319 | 69,731 | 69,718 | 69,967 | ||||||||||
Common equity tier 1 and tier 1 risk-based capital ratio (a) | 10.48 | % | 10.58 | % | 10.54 | % | 10.51 | % | 10.40 | % | |||||
Total risk-based capital ratio (a) | 12.73 | 12.84 | 12.69 | 12.82 | 12.38 | ||||||||||
Leverage ratio (a) | 10.41 | 10.60 | 10.22 | 10.28 | 10.56 | ||||||||||
Common equity ratio | 10.79 | 11.08 | 10.52 | 10.73 | 10.76 | ||||||||||
Tangible common equity ratio (b) | 9.98 | 10.23 | 9.70 | 9.91 | 9.92 | ||||||||||
Common shareholders' equity per share of common stock | $ | 44.24 | $ | 43.66 | $ | 43.03 | $ | 43.02 | $ | 42.18 | |||||
Tangible common equity per share of common stock (b) | 40.52 | 39.96 | 39.33 | 39.36 | 38.53 | ||||||||||
Market value per share for the quarter: | |||||||||||||||
High | 47.55 | 41.74 | 47.44 | 52.93 | 53.45 | ||||||||||
Low | 36.27 | 30.48 | 39.52 | 40.01 | 44.38 | ||||||||||
Close | 41.13 | 37.87 | 41.83 | 41.10 | 51.32 | ||||||||||
Quarterly ratios: | |||||||||||||||
Return on average common shareholders' equity | 5.44 | % | 3.13 | % | 6.08 | % | 7.19 | % | 7.21 | % | |||||
Return on average assets | 0.59 | 0.34 | 0.64 | 0.76 | 0.79 | ||||||||||
Efficiency ratio (c) | 72.48 | 66.07 | 69.00 | 66.98 | 63.49 | ||||||||||
Number of banking centers | 473 | 477 | 477 | 477 | 477 | ||||||||||
Number of employees - full time equivalent | 8,792 | 8,869 | 8,880 | 8,941 | 8,901 | ||||||||||
(a) | June 30, 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). |
21
PARENT COMPANY ONLY BALANCE SHEETS (unaudited) | |||||||||
Comerica Incorporated | |||||||||
June 30, | December 31, | June 30, | |||||||
(in millions, except share data) | 2016 | 2015 | 2015 | ||||||
ASSETS | |||||||||
Cash and due from subsidiary bank | $ | 8 | $ | 4 | $ | 7 | |||
Short-term investments with subsidiary bank | 563 | 569 | 861 | ||||||
Other short-term investments | 87 | 89 | 94 | ||||||
Investment in subsidiaries, principally banks | 7,666 | 7,523 | 7,500 | ||||||
Premises and equipment | 2 | 3 | 2 | ||||||
Other assets | 163 | 137 | 122 | ||||||
Total assets | $ | 8,489 | $ | 8,325 | $ | 8,586 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Medium- and long-term debt | $ | 632 | $ | 608 | $ | 903 | |||
Other liabilities | 163 | 157 | 160 | ||||||
Total liabilities | 795 | 765 | 1,063 | ||||||
Common stock - $5 par value: | |||||||||
Authorized - 325,000,000 shares | |||||||||
Issued - 228,164,824 shares | 1,141 | 1,141 | 1,141 | ||||||
Capital surplus | 2,165 | 2,173 | 2,158 | ||||||
Accumulated other comprehensive loss | (295 | ) | (429 | ) | (396 | ) | |||
Retained earnings | 7,157 | 7,084 | 6,908 | ||||||
Less cost of common stock in treasury - 54,247,325 shares at 6/30/16, 52,457,113 shares at 12/31/15 and 49,803,515 shares at 6/30/15 | (2,474 | ) | (2,409 | ) | (2,288 | ) | |||
Total shareholders' equity | 7,694 | 7,560 | 7,523 | ||||||
Total liabilities and shareholders' equity | $ | 8,489 | $ | 8,325 | $ | 8,586 | |||
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 | — | — | — | — | 269 | — | 269 | |||||||||||||
Other comprehensive income, net of tax | — | — | — | 16 | — | — | 16 | |||||||||||||
Cash dividends declared on common stock ($0.41 per share) | — | — | — | — | (73 | ) | — | (73 | ) | |||||||||||
Purchase of common stock | (2.5 | ) | — | — | — | — | (115 | ) | (115 | ) | ||||||||||
Purchase and retirement of warrants | — | — | (10 | ) | — | — | — | (10 | ) | |||||||||||
Net issuance of common stock under employee stock plans | 0.9 | — | (23 | ) | — | (10 | ) | 43 | 10 | |||||||||||
Net issuance of common stock for warrants | 1.0 | — | (21 | ) | — | (22 | ) | 43 | — | |||||||||||
Share-based compensation | — | — | 24 | — | — | — | 24 | |||||||||||||
BALANCE AT JUNE 30, 2015 | 178.4 | $ | 1,141 | $ | 2,158 | $ | (396 | ) | $ | 6,908 | $ | (2,288 | ) | $ | 7,523 | |||||
BALANCE AT DECEMBER 31, 2015 | 175.7 | $ | 1,141 | $ | 2,173 | $ | (429 | ) | $ | 7,084 | $ | (2,409 | ) | $ | 7,560 | |||||
Net income | — | — | — | — | 164 | — | 164 | |||||||||||||
Other comprehensive income, net of tax | — | — | — | 134 | — | — | 134 | |||||||||||||
Cash dividends declared on common stock ($0.43 per share) | — | — | — | — | (75 | ) | — | (75 | ) | |||||||||||
Purchase of common stock | (2.9 | ) | — | — | — | — | (114 | ) | (114 | ) | ||||||||||
Net issuance of common stock under employee stock plans | 1.1 | — | (33 | ) | — | (16 | ) | 49 | — | |||||||||||
Share-based compensation | — | — | 25 | — | — | — | 25 | |||||||||||||
BALANCE AT JUNE 30, 2016 | 173.9 | $ | 1,141 | $ | 2,165 | $ | (295 | ) | $ | 7,157 | $ | (2,474 | ) | $ | 7,694 | |||||
22
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited) | |||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||
(dollar amounts in millions) | Business | Retail | Wealth | ||||||||||||||||||||
Three Months Ended June 30, 2016 | Bank | Bank | Management | Finance | Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) | $ | 355 | $ | 155 | $ | 42 | $ | (111 | ) | $ | 4 | $ | 445 | ||||||||||
Provision for credit losses | 46 | 1 | 3 | — | (1 | ) | 49 | ||||||||||||||||
Noninterest income | 142 | 48 | 62 | 13 | 4 | 269 | |||||||||||||||||
Noninterest expenses | 222 | 205 | 81 | 2 | 9 | 519 | |||||||||||||||||
Provision (benefit) for income taxes | 75 | (1 | ) | 7 | (38 | ) | (1 | ) | 42 | ||||||||||||||
Net income (loss) | $ | 154 | $ | (2 | ) | $ | 13 | $ | (62 | ) | $ | 1 | $ | 104 | |||||||||
Net credit-related charge-offs | $ | 42 | $ | 1 | $ | 4 | $ | — | $ | — | $ | 47 | |||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 39,617 | $ | 6,557 | $ | 5,215 | $ | 14,135 | $ | 5,144 | $ | 70,668 | |||||||||||
Loans | 38,574 | 5,879 | 5,016 | — | — | 49,469 | |||||||||||||||||
Deposits | 28,429 | 23,546 | 4,213 | 62 | 271 | 56,521 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.55 | % | (0.03 | )% | 1.02 | % | N/M | N/M | 0.59 | % | |||||||||||||
Efficiency ratio (b) | 44.46 | 101.12 | 77.65 | N/M | N/M | 72.48 | |||||||||||||||||
Business | Retail | Wealth | |||||||||||||||||||||
Three Months Ended March 31, 2016 | Bank | Bank | Management | Finance | Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) | $ | 362 | $ | 156 | $ | 43 | $ | (118 | ) | $ | 4 | $ | 447 | ||||||||||
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 | 45 | 6 | 12 | (40 | ) | 2 | 25 | ||||||||||||||||
Net income (loss) | $ | 94 | $ | 11 | $ | 22 | $ | (66 | ) | $ | (1 | ) | $ | 60 | |||||||||
Net credit-related charge-offs (recoveries) | $ | 57 | $ | 2 | $ | (1 | ) | $ | — | $ | — | $ | 58 | ||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 38,635 | $ | 6,544 | $ | 5,162 | $ | 14,162 | $ | 4,725 | $ | 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) | 0.97 | % | 0.19 | % | 1.69 | % | N/M | N/M | 0.34 | % | |||||||||||||
Efficiency ratio (b) | 41.62 | 88.91 | 71.47 | N/M | N/M | 66.07 | |||||||||||||||||
Business | Retail | Wealth | |||||||||||||||||||||
Three Months Ended June 30, 2015 | Bank | Bank | Management | Finance | Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) | $ | 373 | $ | 155 | $ | 45 | $ | (154 | ) | $ | 2 | $ | 421 | ||||||||||
Provision for credit losses | 61 | (8 | ) | (9 | ) | — | 3 | 47 | |||||||||||||||
Noninterest income | 138 | 46 | 60 | 14 | — | 258 | |||||||||||||||||
Noninterest expenses | 175 | 181 | 74 | 2 | 1 | 433 | |||||||||||||||||
Provision (benefit) for income taxes | 94 | 10 | 14 | (53 | ) | (1 | ) | 64 | |||||||||||||||
Net income (loss) | $ | 181 | $ | 18 | $ | 26 | $ | (89 | ) | $ | (1 | ) | $ | 135 | |||||||||
Net credit-related charge-offs (recoveries) | $ | 23 | $ | 1 | $ | (5 | ) | $ | — | $ | — | $ | 19 | ||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 39,134 | $ | 6,459 | $ | 5,153 | $ | 11,697 | $ | 6,520 | $ | 68,963 | |||||||||||
Loans | 38,109 | 5,770 | 4,954 | — | — | 48,833 | |||||||||||||||||
Deposits | 30,229 | 22,747 | 4,060 | 93 | 269 | 57,398 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.86 | % | 0.30 | % | 2.01 | % | N/M | N/M | 0.79 | % | |||||||||||||
Efficiency ratio (b) | 33.96 | 89.88 | 70.28 | N/M | N/M | 63.49 | |||||||||||||||||
(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 (fully taxable equivalent basis) and noninterest income excluding net securities gains. |
N/M - Not Meaningful
23
MARKET SEGMENT FINANCIAL RESULTS (unaudited) | |||||||||||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||
(dollar amounts in millions) | Other | Finance | |||||||||||||||||||||
Three Months Ended June 30, 2016 | Michigan | California | Texas | Markets | & Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) | $ | 166 | $ | 178 | $ | 119 | $ | 89 | $ | (107 | ) | $ | 445 | ||||||||||
Provision for credit losses | 3 | 17 | 32 | (2 | ) | (1 | ) | 49 | |||||||||||||||
Noninterest income | 81 | 39 | 31 | 101 | 17 | 269 | |||||||||||||||||
Noninterest expenses | 159 | 120 | 113 | 116 | 11 | 519 | |||||||||||||||||
Provision (benefit) for income taxes | 28 | 30 | 2 | 21 | (39 | ) | 42 | ||||||||||||||||
Net income (loss) | $ | 57 | $ | 50 | $ | 3 | $ | 55 | $ | (61 | ) | $ | 104 | ||||||||||
Net credit-related charge-offs (recoveries) | $ | — | $ | 17 | $ | 31 | $ | (1 | ) | $ | — | $ | 47 | ||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 13,299 | $ | 17,997 | $ | 11,287 | $ | 8,806 | $ | 19,279 | $ | 70,668 | |||||||||||
Loans | 12,660 | 17,708 | 10,840 | 8,261 | — | 49,469 | |||||||||||||||||
Deposits | 21,553 | 16,933 | 10,052 | 7,650 | 333 | 56,521 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.01 | % | 1.10 | % | 0.11 | % | 2.52 | % | N/M | 0.59 | % | ||||||||||||
Efficiency ratio (b) | 64.13 | 55.30 | 74.91 | 60.98 | N/M | 72.48 | |||||||||||||||||
Other | Finance | ||||||||||||||||||||||
Three Months Ended March 31, 2016 | Michigan | California | Texas | Markets | & Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) | $ | 175 | $ | 177 | $ | 123 | $ | 86 | $ | (114 | ) | $ | 447 | ||||||||||
Provision for credit losses | (6 | ) | (6 | ) | 169 | (8 | ) | (1 | ) | 148 | |||||||||||||
Noninterest income | 76 | 38 | 30 | 93 | 9 | 246 | |||||||||||||||||
Noninterest expenses | 151 | 104 | 100 | 104 | 1 | 460 | |||||||||||||||||
Provision (benefit) for income taxes | 35 | 44 | (40 | ) | 24 | (38 | ) | 25 | |||||||||||||||
Net income (loss) | $ | 71 | $ | 73 | $ | (76 | ) | $ | 59 | $ | (67 | ) | $ | 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) | 1.26 | % | 1.66 | % | (2.54 | )% | 2.84 | % | N/M | 0.34 | % | ||||||||||||
Efficiency ratio (b) | 59.59 | 48.10 | 65.37 | 58.36 | N/M | 66.07 | |||||||||||||||||
Other | Finance | ||||||||||||||||||||||
Three Months Ended June 30, 2015 | Michigan | California | Texas | Markets | & Other | Total | |||||||||||||||||
Earnings summary: | |||||||||||||||||||||||
Net interest income (expense) | $ | 178 | $ | 180 | $ | 130 | $ | 85 | $ | (152 | ) | $ | 421 | ||||||||||
Provision for credit losses | (13 | ) | 4 | 43 | 10 | 3 | 47 | ||||||||||||||||
Noninterest income | 86 | 36 | 30 | 92 | 14 | 258 | |||||||||||||||||
Noninterest expenses | 129 | 99 | 93 | 109 | 3 | 433 | |||||||||||||||||
Provision (benefit) for income taxes | 50 | 42 | 10 | 16 | (54 | ) | 64 | ||||||||||||||||
Net income (loss) | $ | 98 | $ | 71 | $ | 14 | $ | 42 | $ | (90 | ) | $ | 135 | ||||||||||
Net credit-related charge-offs (recoveries) | $ | (1 | ) | $ | 6 | $ | 5 | $ | 9 | $ | — | $ | 19 | ||||||||||
Selected average balances: | |||||||||||||||||||||||
Assets | $ | 13,851 | $ | 16,696 | $ | 11,878 | $ | 8,321 | $ | 18,217 | $ | 68,963 | |||||||||||
Loans | 13,290 | 16,429 | 11,254 | 7,860 | — | 48,833 | |||||||||||||||||
Deposits | 21,706 | 17,275 | 10,959 | 7,096 | 362 | 57,398 | |||||||||||||||||
Statistical data: | |||||||||||||||||||||||
Return on average assets (a) | 1.73 | % | 1.54 | % | 0.45 | % | 2.03 | % | N/M | 0.79 | % | ||||||||||||
Efficiency ratio (b) | 48.09 | 45.90 | 58.13 | 61.56 | N/M | 63.49 | |||||||||||||||||
(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 (fully taxable equivalent basis) and noninterest income excluding net securities gains. |
N/M - Not Meaningful
24
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited) | |||||||||||||||
Comerica Incorporated and Subsidiaries | |||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
(dollar amounts in millions) | 2016 | 2016 | 2015 | 2015 | 2015 | ||||||||||
Tangible Common Equity Ratio: | |||||||||||||||
Common shareholders' equity | $ | 7,694 | $ | 7,644 | $ | 7,560 | $ | 7,622 | $ | 7,523 | |||||
Less: | |||||||||||||||
Goodwill | 635 | 635 | 635 | 635 | 635 | ||||||||||
Other intangible assets | 12 | 13 | 14 | 14 | 15 | ||||||||||
Tangible common equity | $ | 7,047 | $ | 6,996 | $ | 6,911 | $ | 6,973 | $ | 6,873 | |||||
Total assets | $ | 71,280 | $ | 69,007 | $ | 71,877 | $ | 71,012 | $ | 69,945 | |||||
Less: | |||||||||||||||
Goodwill | 635 | 635 | 635 | 635 | 635 | ||||||||||
Other intangible assets | 12 | 13 | 14 | 14 | 15 | ||||||||||
Tangible assets | $ | 70,633 | $ | 68,359 | $ | 71,228 | $ | 70,363 | $ | 69,295 | |||||
Common equity ratio | 10.79 | % | 11.08 | % | 10.52 | % | 10.73 | % | 10.76 | % | |||||
Tangible common equity ratio | 9.98 | 10.23 | 9.70 | 9.91 | 9.92 | ||||||||||
Tangible Common Equity per Share of Common Stock: | |||||||||||||||
Common shareholders' equity | $ | 7,694 | $ | 7,644 | $ | 7,560 | $ | 7,622 | $ | 7,523 | |||||
Tangible common equity | 7,047 | 6,996 | 6,911 | 6,973 | 6,873 | ||||||||||
Shares of common stock outstanding (in millions) | 174 | 175 | 176 | 177 | 178 | ||||||||||
Common shareholders' equity per share of common stock | $ | 44.24 | $ | 43.66 | $ | 43.03 | $ | 43.02 | $ | 42.18 | |||||
Tangible common equity per share of common stock | 40.52 | 39.96 | 39.33 | 39.36 | 38.53 | ||||||||||
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.
25