Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - COMERICA INC /NEW/ | cma-20160930ex991.htm |
| EX-10.1 - EXHIBIT 10.1 - COMERICA INC /NEW/ | supplementalretirementinco.htm |
| 8-K - 8-K - COMERICA INC /NEW/ | cma-20160930form8xk.htm |
Comerica Incorporated
Third Quarter 2016Financial Review
October 18, 2016
Safe Harbor Statement
Any statements in this presentation 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 presentation 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 62 of Comerica’s Quarterly Report on Form 10-Q for the quarter ended June 30, 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 presentation 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. 2
GEAR Up: Growth in Efficiency And Revenue Goal: Enhance shareholder value through increased profitability
Double-digitROE
FY18
Income
3
9/30/16 ● Pre-tax $ ● Estimates & outlook as of 10/18/16 ● For illustrative purposes; not drawn to scale
Return on Equity
~$270MM Additional Annual Pre-Tax Income in FY18Added $40MM to initial target
~$70MM in Revenue Enhancements ~$200MM in Expense Savings
Efficiency Ratio
Efficiency Ratio ≤60% by FY18
Business growth, net of investments GEAR Up revenue & expense initiative
Growth inline with GDP Continued investment Normal credit ~30-40bps Buyback same as 2016/17
25–50 bps rate riseGEAR Up
Workforce Reductions3New Retirement Program1
GEAR Up: Growth in Efficiency And RevenueExpense Opportunities
Pre-tax $ ● 1Additional opportunities identified ● 2Assuming current actuarial assumptions ● 3Number of employees – full time equivalent ● Estimates and outlook as of 10/18/16
4
Management layers removed
Consolidate key functions & responsibilities
Streamline backroom & admin. Support1
Consolidate 38 Banking Centers Reduce Operational & Office Space
Redesigned program amending current pension & retirement account plans
Estimated savings2• FY16 ~$7MM ($4MM credit in 4Q16)• FY17 & FY18 ~$35MM, each
Retirement benefits remain in top quartile among peers
~8% of total banking centers
Banking center consolidation:• 4 in 2Q16 • 15 in November 2016• 19 in April & May 2017
Total expected net savings of $10-13MM per annum1
Consolidate locations
Shed excess space
Implement alternative workplace solutions
30+ locations under review
Targeting ~500,000 sq. ft. reduction
Includes energy/sustainability opportunities
FY18 estimated savings of $7MM
8,792 8,476 ~8,200 ~8,000
2Q16 3Q16 Proj4Q16 Proj4Q17
Financial Summary
3Q16 2Q16 3Q15
Diluted income per common share $0.84 $0.58 $0.74
Net interest income $450 $445 $422
Net interest margin 2.66% 2.74% 2.54%
Provision for credit losses 16 49 26
Net credit-related charge-offs to average loans 0.13% 0.38% 0.19%
Noninterest income 272 268 260
Noninterest expenses 493 518 457
Restructuring expenses 20 53 -
Net income 149 104 136
Average loans $49,206 $49,469 $48,972
Average deposits 58,065 56,521 59,140
Basel III common equity Tier 1 capital ratio 10.68%1 10.49% 10.51%
Average diluted shares (millions) 176 177 181
$ in millions, except per share data ● 1Estimated
5
Third Quarter 2016 Results
$ in millions, except per share data ● 3Q16 compared to 2Q16 ● 1Included restructuring charges of $20MM in 3Q16 & $53MMin 2Q16 ● 2EPS based on diluted income per share ● 3See Supplemental Financial Data slides for a reconciliation of non-GAAP financial measures ● 43Q16 repurchases under the equity repurchase program
3Q16 Change From2Q16 3Q15Average loans $49,206 ($263) $234
Average deposits 58,065 1,544 (1,075)
Net interest income 450 5 28
Provision for credit losses 16 (33) (10)
Net credit-related charge-offs 16 (31) (7)
Noninterest income 272 4 12
Noninterest expenses1 493 (25) 36
Net income 149 45 13
Earnings per share (EPS)2 0.84 0.26 0.10
Book Value Per Share 44.91 0.67 1.89
Tangible Book Value Per Share3 41.15 0.63 1.79
Equity repurchases4 2.1MM shares or $97MM
Key QoQ Performance Drivers
Loans impacted by reducing Energy portfolio & normal seasonality
Strong deposit growth driven by increase in noninterest-bearing deposits
Net interest income reflects increase in LIBOR, one more day & excess balances at the Federal Reserve
Provision & net charge-offs reflect general improvement in Energy portfolio
Noninterest income increased 2%
Expenses included $33MM decline in restructuring charges partially offset by smaller gain on disposal of fixed assets & increased outside processing
Dividend raised 4.5% to $0.23 per share
6
Loans Relatively Stable, as Expected Typical seasonality & Energy portfolio reduction
3Q16 compared to 2Q16 ● 1Utilization of commercial commitments as a percentage of total commercial commitments at period-end
Total Loans($ in billions)
49.0 48.5 48.4 49.5 49.2 50.4 49.3
3.17 3.24
3.38 3.31 3.33
3Q15 4Q15 1Q16 2Q16 3Q16 2Q16 3Q16
Loan Yields
Average Balances Period-end
Average loans decreased $263MM
- Energy- National Dealer Services- Technology & Life Sciences+ Mortgage Banker Finance+ Commercial Real Estate
Loan yields +2 bps + Increase in LIBOR+ 2Q16 lease residual value adjustment- Nonaccrual activity
Commitments $53.0B
Declined $719MM (-$340MM Energy)
Line utilization1 declined to 51%
Loan pipeline remains strong
7
3Q16 compared to 2Q16 ● 1Interest costs on interest-bearing deposits ● 2At 9/30/16
Average Balances Period-end
Total Deposits($ in billions)
59.1 59.7 56.7 56.5 58.1 56.4
59.3
0.14 0.14 0.14 0.14 0.14
3Q15 4Q15 1Q16 2Q16 3Q16 2Q16 3Q16
Deposit Rates 1
8
Average deposits increased $1.5B
+ General Middle Market+ Commercial Real Estate+ Corporate Banking + Mortgage Banker+ Small Business- Private Banking
Noninterest-bearing grew $2.1B
Interest-bearing declined $534MM
Loan to Deposit Ratio2 of 83%
Strong Deposit GrowthDriven by increased noninterest-bearing deposits
Securities Portfolio($ in billions)
9/30/16 ● 1Estimated as of 9/30/16. Excludes auction rate securities (ARS). ● 2Net unrealized pre-tax gain on the available-for-sale (AFS) portfolio ● 3Net unamortized premium on the MBS portfolio
9.1 9.2 9.4 9.3 9.4 9.5 9.5
10.2 10.9
12.4 12.3 12.4 12.5 12.5
2.11 2.11 2.05 2.03 2.01
3Q15 4Q15 1Q16 2Q16 3Q16 2Q16 3Q16
Treasury Securities & OtherMortgage-backed Securities (MBS)Securities Yields
Average Balances Period-end
Securities Portfolio StableModest pressure on yield
9
Securities portfolio
Duration of 3.1 years1• Extends to 3.9 years under a 200 bps instantaneous rate increase1
Net unrealized pre-tax gain of $168MM2
Net unamortized premium of $31M3
GNMA ~46% of MBS portfolio
Net Interest Income($ in millions)
Net Interest Income Increased $5MMNIM decreased 8 bps with increase in liquidity
3Q16 compared to 2Q16
422 433
447 445 450
2.54 2.58
2.81 2.74 2.66
3Q15 4Q15 1Q16 2Q16 3Q16
NIM Net Interest Income and Rate NIM
$445MM 2Q16 2.74%
+5MM Loan impacts:+ $4MM increase in LIBOR+ $4MM one more day+ $2MM 2Q16 lease residual value adj.- $2MM lower volume- $1MM nonaccrual impact- $1MM fees in the margin - $1MM other portfolio dynamics
+0.01
-2MM Higher wholesale funding cost -0.01
-1MM Securities portfolio lower yields 0.00
+3MM $2.3B increase in Fed balances -0.08
$450MM 3Q16 2.66%
10
357 367 681 605 631
2,898 3,193
3,928 3,551 3,261
5.9 6.5
8.0 7.0 6.6
3Q15 4Q15 1Q16 2Q16 3Q16
NALsCriticized as a % of Total Loans
Criticized Loans2($ in millions)
Credit Quality StrongEnergy business line reserve allocation1 remains >8%
9/30/16 ●1Bank's entire allowance is available to cover any & all losses. Allocation of allowance for energy loans reflects ourrobust allowance methodology which contains quantitative and qualitative components ● 2Criticized loans are consistent withregulatory defined Special Mention, Substandard, Doubtful & Loss loan classifications ● 3Net credit-related charge-offs
Allowance for Credit Losses($ in millions)
670 679 770 772 772
1.27 1.29
1.47 1.45 1.48
3Q15 4Q15 1Q16 2Q16 3Q16
Allowance for Loan Losses as a % of Total Loans
$ in millions Ex-Energy TotalTotal loans $46,817 $49,274% of total 95% 100%
Criticized2 1,788 3,261Ratio 3.8% 6.6%Q/Q change (211) (290)
Nonaccrual 253 631Ratio 0.5% 1.3%Q/Q change (6) 26
Net charge-offs3 10 16Ratio 0.08% 0.13%
$ in millions Loans Criticized NAL 3Q16 NCO3
E&P $1,772 $1,173 $343 $6
Midstream 353 58 8 -
Services 332 242 27 -
Total Energy $2,457 $1,473 $378 $6
Q/Q change (284) (79) 32 (26)
Energy Credit Metrics
Portfolio Credit Metrics
11
Noninterest Income Increased 2%Customer-driven fees increased $3MM
3Q16 compared to 2Q16
260 266
244
268 272
3Q15 4Q15 1Q16 2Q16 3Q16
Noninterest Income ($ in millions)
12
Noninterest income increased $4MM
+ $ 4MM Commercial lending fees+ $ 2MM Investment Banking (Other noninterest income)- $ 2MM Fiduciary
+ $ 3MM Bank-owned life insurance- $ 3MM Deferred comp (Other noninterest income; offset in noninterest expense)
Noninterest Expenses Well-ControlledIncludes restructuring costs of $20MM
3Q16 compared to 2Q16
Noninterest expenses down $25MM
- $33MM Restructuring charge + $ 6MM 2Q16 gain on sale of leased assets (other expenses)+ $ 3MM Outside processing fees + $-0-MM Salaries+ one more day+ 2Q16 stock forfeiture+ seasonal increase in staff insurance- reduction in workforce- deferred comp (offset in noninterest income)
53 20457
482
458
518
493
3Q15 4Q15 1Q16 2Q16 3Q16
Restructuring
Noninterest Expenses($ in millions)
13
Active Capital ManagementContinued to reduce share count & increased dividend
1Shares & warrants repurchased under equity repurchase program ● 2Payable 10/1/16 to shareholders of record on 9/15/16 ●3LTM = last twelve months
2016 CCAR Capital Plan
Equity repurchases up to $440 million (3Q16-2Q17)
Pace of buyback linked to capital position, financial performance & market conditions3Q16 Equity repurchases1
2.1MM shares for $97MMQuarterly Dividend increased
4.5% to $0.23/share2
$34.79
$39.86 $39.22 $41.35 $43.03
$44.91
2011 2012 2013 2014 2015 3Q16
Book Value Per Share Dividends Per Share Growth
0.40
0.55
0.68 0.79
0.83 0.87
2011 2012 2013 2014 2015 LTM3Q16
197 188 182 179 176 172
2011 2012 2013 2014 2015 3Q16
Common Shares Outstanding(in millions)
3
14
9/30/16 ● 1Estimated outlook as of 10/18/16 based on calculations derived from sensitivity results shown in slide 21 ●2Reflects impacts of swaps ● 3The interest rate resets every four weeks, based on the Federal Home Loan Bank auction rate, with a reset date of each note scheduled at one-week intervals ● 4Maturity date 11/16
Interest Rate Sensitivity Well positioned for rising rates
15
Additional Annual Net Interest Income1Estimated Increase From Movement in Fed Rates
Deposit Beta
($ in millions) 0% 25% 50% 75%
+25 bps ~$85 ~$70 ~$55 ~$40
+50 bps ~175 ~140 ~110 ~80
+100 bps ~345 ~285 ~220 ~155
Subordinated notes $1.7
Medium-term notes$1.0
FHLB advances$2.8
Fixed-rate subordinated notes4$0.4
Wholesale Funding2($ in billions, Period-end)
Total$5.96-mo LIBOR 1-mo FHLB auction rate3
Fixed Rate~10%
30-day LIBOR ~60%
60-day+ LIBOR~10%
Prime-Based~20%
Loan Portfolio ($ in billions, Average)
Total $49.2
Outlook as of 10/18/16
4Q16 compared to 3Q16
Average loans
Stable• Growth in National Dealer Services, Technology & Life Sciences and small increases in several businesses• Mortgage Banker seasonally lower and continued decline in Energy
Net interest income Slightly higher• Decline in wholesale funding costs & increase in LIBOR
Provision Remains low • Net charge-offs below historical norm• Provision and NCOs between 2Q16 and 3Q16 levels
Noninterest income Relatively stable, excl. BOLI & deferred comp which are difficult to predict • Fees remain strong at 3Q16 level
Noninterest expenses
Lower, excluding restructuring expense of $30-35MM • GEAR Up savings of ~$25MM, primarily in Salaries & Benefits• Seasonal increase in outside processing, marketing and occupancy partially offset by 3Q16 level of deferred comp expense not expected to repeat
Income Taxes ~30% of pre-tax income
Management Outlook Assuming continuation of current economic & low rate environment
16
Appendix
Stock Price Performance of Comerica vs. Peer Banks
December 31, 2015 – October 14, 2016
Source: SNL Financial
S&P 500 4%
KBW Bank -3%
Peer Average 3%
18
$72.11
$48.40 $68.95 $30.86
$45.03 $10.05 $14.81 $37.89
$19.80
$12.52 $113.87
$9.82
20%
16% 15% 13%
5% 5% 2% 0% -1% -5% -6%
-11%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
CFR CMA BOKF ZION STI RF FHN BBT FITB KEY MTB HBAN
Loans by Business and Market
Average $ in billions ● 1Other Markets includes Florida, Arizona, the International Finance Division and businesses that have a significant presence outside of the three primary geographic markets
Middle Market: Serving companies with revenues generally between $20-$500MM
Corporate Banking: Serving companies (and their U.S. based subsidiaries) with revenues generally over $500MM
Small Business: Serving companies with revenues generally under $20MM
By Line of Business 3Q16 2Q16 3Q15
Middle MarketGeneralEnergyNational Dealer ServicesEntertainmentTech. & Life SciencesEnvironmental Services
$12.62.66.30.73.10.9
$12.72.96.50.73.30.9
$13.33.36.00.73.30.9
Total Middle Market $26.2 $27.0 $27.5
Corporate BankingUS BankingInternational 2.31.8 2.41.8 2.41.7
Mortgage Banker Finance 2.5 2.1 2.1
Commercial Real Estate 5.4 5.3 4.4
BUSINESS BANK $38.2 $38.6 $38.1
Small Business 3.9 3.9 4.0
Retail Banking 2.0 2.0 1.9
RETAIL BANK $5.9 $5.9 $5.9
Private Banking 5.1 5.0 5.0
WEALTH MANAGEMENT 5.1 5.0 $5.0
TOTAL $49.2 $49.5 $49.0
By Market 3Q16 2Q16 3Q15
Michigan $12.5 $12.7 $13.2
California 17.6 17.7 16.8
Texas 10.6 10.8 11.0
Other Markets1 8.5 8.3 8.0
TOTAL $49.2 $49.5 $49.0
19
Deposits by Business and Market
Average $ in billions ● 1Other Markets includes Florida, Arizona, the International Finance Division and businesses that have a significant presence outside of the three primary geographic markets ● 2Finance/ Other includes items not directly associated with the geographic markets or the three major business segments
Middle Market: Serving companies with revenues generally between $20-$500MM
Corporate Banking: Serving companies (and their U.S. based subsidiaries) with revenues generally over $500MM
Small Business: Serving companies with revenues generally under $20MM
By Line of Business 3Q16 2Q16 3Q15
Middle MarketGeneralEnergyNational Dealer ServicesEntertainmentTech. & Life SciencesEnvironmental Services
$15.40.60.30.16.20.1
$14.50.60.30.16.20.1
$16.20.60.20.16.70.2
Total Middle Market $22.7 $21.8 $24.0
Corporate BankingUS BankingInternational $2.12.3 $2.12.0 2.72.2
Mortgage Banker Finance 0.8 0.7 0.7
Commercial Real Estate 2.1 1.8 1.8
BUSINESS BANK $30.0 $28.4 $31.4
Small Business 3.3 3.2 3.1
Retail Banking 20.4 20.4 20.0
RETAIL BANK $23.7 $23.6 $23.1
Private Banking 4.0 4.2 4.2
WEALTH MANAGEMENT $4.0 $4.2 $4.2
Finance/ Other2 0.4 0.3 0.4
TOTAL $58.1 $56.5 $59.1
By Market 3Q16 2Q16 3Q15
Michigan $21.9 $21.6 $21.9
California 17.7 16.9 18.4
Texas 9.9 10.1 10.8
Other Markets1 8.2 7.6 7.6
Finance/ Other2 0.4 0.3 0.4
TOTAL $58.1 $56.5 $59.1
20
Interest Rate SensitivityRemain well positioned for rising rates
9/30/16 ● For methodology see the Company’s Form 10-Q, as filed with the SEC. Estimates are based on simulation modeling analysis.
Estimated Net Interest Income: Annual (12 month) SensitivitiesBased on Various AssumptionsAdditional Scenarios are Relative to 3Q16 Standard Model($ in millions)
~100
~165 ~185
~195 ~210
~250
~310
Up 100bps Addl.$3BDepositDecline
Addl.20%Increasein Beta
Addl.$1BDepositDecline
StandardModel Addl.~3%LoanGrowth
Up 300bps
0.1
Interest Rates 200 bps gradual, non-parallel rise
Loan Balances Modest increase
Deposit Balances Moderate decrease
Deposit Pricing (Beta)
Historical price movements with short-term rates
Securities Portfolio Held flat with prepayment reinvestment
Loan Spreads Held at current levels
MBS Prepayments Third-party projections and historical experience
Hedging (Swaps) No additions modeled
Standard Model Assumptions
21
CRE by Market1($ in millions; Period-end, based on location of property)
Multifamily47%
Retail12%
Commercial11%
Office7%
Single Family7% Multi use4%
Land Carry5%
Other7%
Dallas38%
Houston24%
Austin24%
San Antonio7%
Other7%
Commercial Real Estate Line of BusinessLong history of working with well established, proven developers
9/30/16 ● 1Excludes CRE line of business loans not secured by real estate ● 2Includes CRE line of business loans not secured by real estate ● 3Criticized loans are consistent with regulatory defined Special Mention, Substandard, Doubtful & Loss loan classifications
CRE by Property Type1($ in millions; Period-end)
Michigan6% California45%
Texas31%Florida2%
Other16%
Total$4,567
Total$4,567
Total$1,445
22
$ in millions; Period-end2 1Q16 2Q16 3Q16Total loans $5,137 $5,512 $5,394Criticized3 99 84 48Ratio 1.9% 1.5% 0.9%Nonaccrual 8 8 8Ratio 0.15% 0.14% 0.15%Net charge-offs (recoveries) (11) (1) 1
Credit Quality Strong
80 132 423 346 378
893
1,244
1,833 1,552 1,473
3Q15 4Q15 1Q16 2Q16 3Q16
NALs
Energy Line of BusinessCriticized Loans2($ in millions)
Energy Line of Business Credit Quality Improved in 3Q16Granular, contracting portfolio
9/30/16 ● 1As of 9/30/16 ● 2Criticized loans are consistent with regulatory defined Special Mention, Substandard, Doubtful & Loss loan classifications ● 3Bank's entire allowance is available to cover any & all losses. Allocation of allowance for Energy loans reflects our robust allowance methodology which contains quantitative and qualitative components.
Natural Gas 13% Oil40%
481 479 509 467 353
513 480 426 363 332
2,249 2,111 2,162 1,911 1,772
3,243 3,070 3,097 2,741 2,457
3Q15 4Q15 1Q16 2Q16 3Q16
Midstream Services Exploration & Production
Energy Line of Business Loans ($ in millions; Period-end)
Mixed18%
6,541 6,134 5,573 4,945 4,605
48% 49% 54% 54% 52%
3Q15 4Q15 1Q16 2Q16 3Q16
Total Commitments Utilization Rate
Maintain granular portfolio: ~200 customers
Loans decreased $284MM since 6/30/16
E&P companies1
Spring redeterminations complete
Borrowing bases declined ~22% on average
96% of nonaccrual loans current on interest as of 9/30/16
23
Reserve3>8%Reserve3~3%
9/30/16 ● 1Source: Mortgage Bankers Association (MBA) Mortgage Finance Forecast as of 9/12/16; 3Q16 estimated ● 2$ in billions
923
1,53
5
1,48
3
1,50
7 1,99
6
2,09
4
1,73
7
1,81
5
1,60
5
1,10
9
886 1,
319 1,59
5
1,39
7
1,39
9 2,0
89 2,13
6
1,74
2
1,67
4 2,14
5 2,55
4
200300
400500
600700
800900
3Q1
1
4Q1
1
1Q1
2
2Q1
2
3Q1
2
4Q1
2
1Q1
3
2Q1
3
3Q1
3
4Q1
3
1Q1
4
2Q1
4
3Q1
4
4Q1
4
1Q1
5
2Q1
5
3Q1
5
4Q1
5
1Q1
6
2Q1
6
3Q1
6
Actual MBAMortgageOriginationVolumes
Average Loans($ in millions)
Mortgage Banker Finance50 Years experience with reputation for consistent, reliable approach
MBA Mortgage Originations Forecast1($ in billions)
461 426 405 350
510 561 417 366 430
2Q15Actual 3Q15Actual 4Q15Actual 1Q16Actual 2Q16Actual 3Q16 4Q16 1Q17 2Q17
Purchase Refinance
1,2
Provide warehouse financing: bridge from residential mortgage origination to sale to end market
Extensive backroom provides collateral monitoring and customer service
Focus on full banking relationships
Granular portfolio with 100+ relationships
Underlying mortgages are typically related to home purchases as opposed to refinancesAs of 3Q16: • Comerica: ~67% purchase • Industry: 53% purchase1
Strong credit quality• No charge-offs since 2010
24
National Dealer Services65+ years of floor plan lending
Toyota/Lexus16%
Honda/Acura 14%
Ford 10%
GM 9%
Fiat/Chrysler 10%
Mercedes 3%
Nissan/ Infiniti 6%
Other European 11%
Other Asian 12%
Other19%
Franchise Distribution(Based on period-end loan outstandings)
Geographic DispersionCalifornia 63% Texas 7%Michigan 19% Other 11%
Average Loans($ in billions)
Top tier strategy
Focus on “Mega Dealer” (five or more dealerships in group)
Strong credit quality
Robust monitoring of company inventory and performance
1.3 1.5 1.9 2.3 2.3 2.5 2.8 3.1 2.9 3.2 3.2 3.5 3.2 3.4 3.5 3.6 3.5 3.7 3.8 4.0 3.8
3.1 3
.4 3.8
4.3 4.3 4.6
4.9 5.1
4.9 5.
3 5.3 5.7
5.5 5.7
5.9 6.0
6.0 6.2
6.2 6.5
6.3
3Q1
1
4Q1
1
1Q1
2
2Q1
2
3Q1
2
4Q1
2
1Q1
3
2Q1
3
3Q1
3
4Q1
3
1Q1
4
2Q1
4
3Q1
4
4Q1
4
1Q1
5
2Q1
5
3Q1
5
4Q1
5
1Q1
6
2Q1
6
3Q1
6
Floor Plan
Total $6.3B
9/30/16 ● 1Other includes obligations where a primary franchise is indeterminable (rental car and leasing companies, heavy truck, recreational vehicles, and non-floor plan loans)
25
0.3 0.4 0.6 1.1 1.4 1.4 1.4
1.8 2.0
2.5 3.1
3.3 3.3 3.1
2012 2013 2014 2015 1Q16 2Q16 3Q16
Equity Fund Services
Technology and Life Sciences20+ Years experience provides competitive advantage
Technology & Life Sciences Avg. Loans($ in billions)
Customer Segment Overview(based on period-end loans)
Strong relationships with top-tier investors
Granular portfolio: ~810 customers (including ~220 customers in Equity Fund Services)
Manage concentration to numerous verticals to ensure widely diversified portfolio
Closely monitor cash balances and maintain robust backroom operation
Net Charge-off Ratio1(In basis points)
Total $3.3B 57 61
89 108 86
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20
2012 2013 2014 2015 1Q16 2Q16 3Q16
Early Stage~15%
Growth~22%Late Stage~13%
Equity Fund Services~45%
Leveraged Finance~5%
l .1
9/30/16 ● 1TLS net charge-offs to avg. TLS loans
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Shared National Credit (SNC) Relationships
9/30/16 ● SNCs are not a line of business. The balances shown above are included in the line of business balances.
● SNCs are facilities greater than $20 million shared by three or more federally supervised financial institutions which are reviewed by regulatory authorities at the agent bank level
SNC loans decreased $360MM over 2Q16
SNC relationships included in business line balances
Approximately 760 borrowers
Comerica is agent for approx. 20%
Strategy: Pursue full relationships with ancillary business
Adhere to same credit underwriting standards as rest of loan book
Period-end Loans($ in billions)
Commercial Real Estate$0.9 9%
Corporate Banking$2.3 22%
General$2.2 22%
National Dealer Services$0.5 5%
Energy$2.4 23%
Entertainment$0.3 3%
Environmental Services$0.2 2%
Tech. & Life Sciences$0.99%
Mortgage Banker$0.5 5%
= Total Middle Market (64%)
Total$10.2
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Funding ProfileAt September 30, 2016($ in billions)
Equity$7.7 10%
Interest-Bearing Deposits$27.5 38%
Noninterest-Bearing Deposits$31.8 44%
Wholesale Debt$5.9 8%
Funding and Maturity Profile
9/30/16 ● 12026 maturity ● 2Face value at maturity
Wholesale debt markets
Federal Home Loan Bank of Dallas• $2.8B outstanding1• $3.9B remaining borrowing capacity
Brokered deposits• $-0-outstanding
Fed funds/ Repo markets
Multiple Funding Sources
Debt Profile by Maturity2($ in millions)
650 500 350
4,225
2016 2017 2019 2020+
Subordinated NotesSenior NotesFHLB Advance1
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Senior Unsecured/Long-Term Issuer Rating Moody’s S&P Fitch
BB&T A2 A- A+
Cullen Frost A3 A- --
M&T Bank A3 A- A
Comerica A3 BBB+ A
BOK Financial Corporation A3 BBB+ A
Huntington Baa1 BBB A-
Fifth Third Baa1 BBB+ A
KeyCorp Baa1 BBB+ A-
SunTrust Baa1 BBB+ A-
First Horizon National Corp Baa3 BB+ BBB-
Regions Financial Baa3 BBB BBB
Zions Bancorporation Ba1 BBB- BBB-
U.S. Bancorp A1 A+ AA
Wells Fargo & Company A2 A AA-
PNC Financial Services Group A3 A- A+
JP Morgan A3 A- A+
Bank of America Baa1 BBB+ A
Holding Company Debt Rating
As of 10/13/16 ● Source: SNL Financial ● Debt Ratings are not a recommendation to buy, sell, or hold securities
Pee
r Ba
nks
Larg
e Ba
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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.● The Corporation believes these measurements are meaningful measures of capital adequacy used by investors, regulators, management and others to evaluate the adequacy of common equity and to compare against other companies in the industry.
Supplemental Financial DataReconciliation of non-GAAP financial measures with financial measures defined by GAAP ($ in millions)
9/30/16 6/30/16 12/31/15 09/30/15 12/31/14 12/31/13 12/31/12 12/31/11Common shareholders’ equityLess: GoodwillLess: Other intangible assets
$7,72763511
$7,69463512
$7,56063514
$7,62263514
$7,40263515
$7,15063517
$6,93963522
$6,86563532
Tangible common equity $7,081 $7,047 $6,911 $6,973 $6,752 $6,498 $6,282 $6,198
Total assetsLess: GoodwillLess: Other intangible assets
$74,12463511
$71,28063512
$71,87763514
$71,01263514
$69,18663515
$65,22463517
$65,06663522
$61,00563532
Tangible assets $73,478 $70,633 $71,228 $70,363 $68,536 $64,572 $64,409 $60,338Common equity ratio 10.42% 10.79% 10.52% 10.73% 10.70% 10.97% 10.67% 11.26%Tangible common equity ratio 9.64 9.98 9.70 9.91 9.85 10.07 9.76 10.27
Common shareholders’ equity $7,727 $7,694 $7,560 $7,622 $7,402 $7,150 $6,939 $6,865Tangible common equity 7,081 7,047 6,911 6,973 6,752 6,498 6,282 6,198Shares of common stock outstanding (in millions) 172 174 176 177 179 182 188 197Common shareholders’ equity per share of common stock $44.91 $44.24 $43.03 $43.02 $41.35 $39.22 $36.86 $34.79Tangible common equity per share of common stock 40.15 40.52 39.33 39.36 37.72 35.64 33.36 31.40
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