Attached files
| file | filename |
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| EX-99.1 - EXHIBIT 99.1 - COMERICA INC /NEW/ | cma20170630ex991.htm |
| 8-K - 8-K - COMERICA INC /NEW/ | cma-20170630form8xk.htm |
Comerica Incorporated
Second Quarter 2017Financial Review
July 18, 2017
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 track,” “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 Growth in Efficiency and Revenue initiative (“GEAR Up”), 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; 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; 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; changes in regulation or oversight; reliance on other companies to provide certain key components of business infrastructure; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; reductions in Comerica's credit rating; the interdependence of financial service companies; the implementation of Comerica's strategies and business initiatives; damage to Comerica's reputation; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; any future strategic acquisitions or divestitures; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; potential legislative, administrative or judicial changes or interpretations related to the tax treatment of corporations; changes in accounting standards and the critical nature of Comerica's accounting policies. Comerica cautions that the foregoing list of factors is not all-inclusive. 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, 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
Financial Summary
2Q17 1Q17 2Q16
Diluted income per common share $1.13 $1.11 $0.58Adjusted earnings per share1 1.15 1.02 0.77
Net interest income $500 $470 $445Net interest margin 3.03% 2.86% 2.74%Provision for credit losses 17 16 49Net credit-related charge-offs to average loans 0.15% 0.28% 0.38%Noninterest income 276 271 268Noninterest expenses 457 457 518Restructuring expenses 14 11 53Net income 203 202 104
Average loans $48,723 $47,900 $49,469Average deposits 57,128 57,779 56,521
Efficiency ratio2 58.63% 61.63% 72.43%Return on average common shareholders’ equity 10.28% 10.42 5.47Return on average assets 1.14 1.14 0.59
Common equity Tier 1 capital ratio 11.51%3 11.55% 10.49%Average diluted shares (millions) 179 180 177
$ in millions, except per share data ● 1See Supplemental Financial Data slides for reconciliation of non-GAAP financial measures ●2Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains (losses) ● 3Estimated 3
Second Quarter 2017 ResultsEPS increased 2%; adjusted EPS1 increased 13%
Key QoQ Performance Drivers
Solid loan growth of 2%
Deposits decline due to seasonality & customers using funds in their businesses
Net interest income increased 6% with higher interest rates & loan growth
Credit quality continued to be strong
Noninterest income grew 2% with higher card fees, commercial lending fees, customer derivative & fiduciary income
Restructuring charges increased $3MM; ex-restructuring charges noninterest expenses decreased 1%
Tax provision up with $19MM decrease in the credit for employee stock transactions
Active capital management; Completed 2016 Capital Plan repurchasing $440MM in shares & increased dividend
4
2Q17 Change From1Q17 2Q16
Average loans $48,723 $823 ($746)
Average deposits 57,128 (651) 607
Net interest income 500 30 55
Provision for credit losses 17 1 (32)
Net credit-related charge-offs 18 (15) (29)
Noninterest income 276 5 8
Noninterest expenses2 457 -0- (61)
Provision for income tax3 99 33 57
Net income 203 1 99
Earnings per share (EPS)4 1.13 0.02 0.55
Adjusted EPS1 1.15 0.13 0.38
Equity repurchases5 139 34 74
$ in millions, except per share data ● 2Q17 compared to 1Q17 ● 1See Supplemental Financial Data slides for reconciliation of non-GAAPfinancial measures ● 2Included restructuring charge of $14MM ($0.05 per share, after tax) in 2Q17, $11MM ($0.04 per share, after tax) in 1Q17 & $53MM ($0.19 per share, after tax) in 2Q16.● 3Included tax benefits of $5MM ($0.02 per share) and $24MM ($0.13 per share) from employee stock transactions for 2Q17 & 1Q17, respectively..● 4EPS based on diluted income per share ● 52Q17 repurchases under the equity repurchase program
Solid Loan Growth of $823MMLoan yield increased 17 basis points
2Q17 compared to 1Q17
Total Loans($ in billions)
Average loans increased 2%
+ $330MM Mortgage Banker Finance+ $322MM National Dealer Services+ $193MM General Middle Market - $123MM Energy
Period-end loans increased $1.1B
Loan yield +17bps + 19 bps from higher rates- 3 bps lease residual value adjustment
Loan pipeline increased
5
Average Balances Period-end
49.5 49.2 48.9 47.9 48.7 48.3 49.4
3.31 3.33 3.36
3.57 3.74
2Q16 3Q16 4Q16 1Q17 2Q17 1Q17 2Q17
Loan Yields
2Q17 compared to 1Q17 ● 1Interest costs on interest-bearing deposits ● 2Subset of General Middle Market line of business ● 3Average noninterest bearing deposits ● 4At 6/30/17
Total Deposits($ in billions)
56.5 58.1 59.6 57.8 57.1 58.9 56.8
0.14 0.14 0.14 0.14 0.15
2Q16 3Q16 4Q16 1Q17 2Q17 1Q17 2Q17
Deposit Rates1 Average deposits declined 1%
- $476MM Middle Market Lending2- $410MM Municipalities2- $265MM Energy+ $258MM Commercial Real Estate+ $193MM Retail Banking (consumer)+ $128MM Wealth Management
Noninterest-bearing increased $282MM3
Loan to Deposit Ratio4 of 87%
Continue to prudently manage deposit pricing
Deposits Decline ModestlyBalances reflect seasonality & customers funding increased working capital needs
6
Average Balances Period-end
Securities Portfolio($ in billions)
Securities Portfolio StableAverage portfolio yield increased 4 basis points
9.3 9.4 9.4 9.3 9.3 9.4 9.4
12.3 12.4 12.3 12.2 12.2 12.3 12.4
2.03 2.01 2.01 2.02 2.06
2Q16 3Q16 4Q16 1Q17 2Q17 1Q17 2Q17
Treasury Securities & OtherMortgage-backed Securities (MBS)Securities Yields
Average Balances
Duration of 3.3 years1
Extends to 3.9 years under a 200 bps instantaneous rate increase1Net unrealized pre-tax loss of $21MM2
Net unamortized premium of $25MM3
GNMA ~54% of MBS portfolio
6/30/17 ● 1Estimated as of 6/3017. Excludes auction rate securities (ARS). ● 2Net unrealized pre-tax gain/loss on the available-for-sale (AFS) portfolio ● 3Net unamortized premium on the MBS portfolio
7
Period-end
Net Interest Income($ in millions)
Net Interest Income Increased $30MM, or 6%NIM increased 17 basis points with benefit from rising rates
2Q17 compared to 1Q17
445 450 455
470
500
2.74 2.66 2.65 2.86
3.03
2Q16 3Q16 4Q16 1Q17 2Q17
NIM
$470MM 1Q17 2.86%
+32MM Loan impacts+ $22MM higher rates+ $ 8MM higher balances+ $ 4MM 1 more day+ $ 2MM other portfolio dynamics- $ 4MM lease residual value adj.
+0.13
+ 1MM Fed balance impact+ $ 4MM higher rates- $ 3MM lower balances
+0.06
- 3MM Wholesale funding cost- $ 3MM higher rates -0.02
$500MM 2Q17 3.03%
8
605 631 582 521 493
3,551 3,261 2,856 2,636 2,492
7.0 6.6 5.8 5.5 5.0
2Q16 3Q16 4Q16 1Q17 2Q17
NALs Criticized as a % of Total Loans
Criticized Loans1($ in millions)
Credit Quality StrongCriticized, nonaccrual & net charge-offs declined
6/30/17 ●1Criticized loans are consistent with regulatory defined Special Mention, Substandard, & Doubtful categories ● 2Net credit-related charge-offs ● 3Net credit-related charge-offs (annualized) to average loans
Allowance for Credit Losses($ in millions)
772 772 771 754 753
1.45 1.48 1.49 1.47 1.43
2Q16 3Q16 4Q16 1Q17 2Q17
Allowance for Loan Losses as a % of Total Loans
$ in millions Ex-Energy TotalTotal loans $47,361 $49,408% of total 96% 100%
Criticized1 1,723 2,492Ratio 3.6% 5.0%Q/Q change (42) (144)
Nonaccrual 268 493Ratio 0.6% 1.0%Q/Q change 13 (28)
Net charge-offs2 16 18Ratio3 0.13% 0.15%
$ in millions Loans Criticized NAL NCO2E&P $1,443 $569 $205 $9
Midstream 346 32 - (10)
Services 258 168 20 3
Total Energy $2,047 $769 $225 $2Q/Q change 92 (102) (41) (11)
Energy Credit Metrics
Portfolio Credit Metrics
9
Noninterest Income Increased $5MM, or 2%GEAR Up success evident in customer-driven fee growth
2Q17 compared to 1Q17
268 272 267 271 276
2Q16 3Q16 4Q16 1Q17 2Q17
Noninterest Income ($ in millions) + $3MM Card fees
+ $2MM Commercial lending + $2MM Fiduciary+ $2MM Customer derivative income + $1MM Brokerage- $3MM Investment Banking - $1MM Letters of credit- $1MM Service charges on deposits
+ $3MM Principal investing & warrants - $2MM Net securities losses (related to Visa derivative) - $1MM Bank owned life insurance
10
Noninterest Expenses Well Controlled Expenses stable even with increase in restructuring charges
2Q17 compared to 1Q17 ● 1Estimated as of 7/18/17
- $14MM Salaries & benefits- Annual stock compensation- Seasonal payroll taxes+ Annual merit+ One additional day
+ $3MM Restructuring + $ 3MM Advertising+ $ 3MM Operational losses (other expense)+ $ 2MM Software+ $ 2MM Litigation-related expenses (1Q17 benefit from settlement)
Noninterest Expenses($ in millions)
11
53 20
20 11 14
518
493
461 457 457
2Q16 3Q16 4Q16 1Q17 2Q17
Restructuring
GEAR Up savings continue to be on track1
42 65 97 99
105 13937
38
40 40 42
46
79 103
137 139 147
185
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17
Equity Repurchases Dividends
6/30/17 ● 1Shares repurchased under equity repurchase program
Active Capital ManagementReceived ‘no objection’ for 2017 Capital Plan
2017 CCAR Capital Plan (3Q17-2Q18)
Equity repurchases up to $605 million
Consider dividend increase at next Board Meeting
2016 CCAR Plan Completed (3Q16-2Q17)
Equity repurchases of $440 million1• 2Q17 $139MM repurchased (2MM shares)
7/1 dividend increased 13% to $0.26 per share
Additional Share Activity in 2Q17
424K shares issued from employee stock activity• $5MM tax benefit from employee stock transactions
1.4MM decrease in average diluted shares to 179MM
Dividends Per Share Growth
0.55 0.68
0.79 0.83 0.89
1.04
2012 2013 2014 2015 2016 2Q17Annualized
Increasing Shareholder Payout($ in millions)
12
6/30/17 ● Outlook as of 7/18/17 ● 1Assumes 25 bps increase in Fed Funds, Prime & LIBOR. For methodology see the Company’s Form 10-Q, as filed with the SEC. Estimates are based on simulation modeling analysis. ● 2FY18 financial targets are relative to when we began the initiative in June 2016
Benefit from Rate Increases FY17 Estimated Additional Net Interest Income1
Increased Interest Rates & GEAR Up Initiatives Significant drivers of financial performance
13
Fed Funds +25 bpsDeposit Beta -0-
Fed Funds +25 bpsDeposit Beta ~25%
~$85MM
~$65MM
~$30MM to~$40MM
Fed Funds +25 bpsDeposit Beta -0-
June ‘17
Mar ‘17
Dec ’16
Outcome may also vary due to a number of other variables including balance sheet movements, such as loan & deposit levels, as well as incremental funding needs
TOTAL FY17
~10% increase over 2016 net interest income
~$180MM to~$185MM
72.43 68.15 63.58 61.63 58.63
2Q16 3Q16 4Q16 1Q17 2Q17
Efficiency Ratio (In percentage points)
Reduced workforce
Enhance technology
Streamline credit
Rationalize Real Estate
~$200MM in Expense Savings2
GEAR Up on Track to Achieving ~$270MM Additional Annual Pre-Tax Income2
~$70MM in Revenue Enhancements2
Deepen customer relationships
Accelerate growth in Middle Market
Outlook as of 7/18/17 ● 1For methodology see the Company’s Form 10-Q, as filed with the SEC. Estimates are based on simulation modeling analysis.
GEAR Up initiative incorporated into this Outlook
Average loans Higher • ~1% increase, including reduction in Mortgage Banker & Energy loans • ~3% increase in remainder of portfolio
Net interest income Higher
• ~$150MM contribution from December & March rate rises (assuming no deposit beta)1• ~$30MM+ contribution from June rate rise (assuming 25% deposit beta)1• Benefit from loan growth & wholesale debt maturities
Provision Lower • Provision of 20-25 bps & net charge-offs to remain low (full-year 2017) • Continued solid performance of the overall portfolio
Noninterest income Higher
• Increase 4-6%• Execution of GEAR Up opportunities • Modest growth in treasury management, card, fiduciary & brokerage services
Noninterest expenses Lower
• Restructuring expenses of about $40MM-$50MM (2016 $93MM)• ~1% decline in remaining noninterest expenses (excluding restructuring charges)• GEAR Up savings: additional $125MM relative to 2016 savings (2016 >$25MM)• No repeat of gain on leveraged lease terminations (2016 $13MM) • 2H17 impacted by items tied to revenue growth (marketing expense, incentive compensation & outside processing expense) & as expected, higher technology expense. Also, 3 additional days, and seasonal & inflationary pressure on higher occupancy & benefits expenses• ~4% decrease including restructuring chargesIncome Taxes Higher • ~31% of pre-tax income (33% for 2H17 assuming no further tax benefit from employee stock transactions)
Management Outlook FY17 compared to FY16Assuming continuation of current economic & low rate environment
14
Appendix
Loans by Business and Market
Average $ in billions ● Totals shown above may not foot due to rounding ● 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 2Q17 1Q17 2Q16
Middle MarketGeneralEnergyNational Dealer ServicesEntertainmentTech. & Life SciencesEnvironmental Services
$12.12.07.10.73.20.9
$11.92.16.80.73.20.9
$12.12.96.50.73.30.9
Total Middle Market $25.9 $25.4 $26.4
Corporate BankingUS BankingInternational 3.11.5 3.01.5 3.01.8
Mortgage Banker Finance 1.8 1.5 2.1
Commercial Real Estate 5.3 5.3 5.3
BUSINESS BANK $37.6 $36.8 $38.6
Small Business 3.8 3.8 3.9
Retail Banking 2.1 2.1 2.0
RETAIL BANK $5.9 $5.9 $5.9
Private Banking 5.3 5.3 5.0
WEALTH MANAGEMENT $5.3 $5.3 5.0
TOTAL $48.7 $47.9 $49.5
By Market 2Q17 1Q17 2Q16
Michigan $12.7 $12.6 $12.5
California 18.2 17.7 17.9
Texas 10.0 10.1 10.8
Other Markets1 7.8 7.5 8.3
TOTAL $48.7 $47.9 $49.5
16
By Market 2Q17 1Q17 2Q16
Michigan $21.7 $22.2 $21.5
California 17.3 17.2 17.0
Texas 9.6 10.1 10.1
Other Markets1 8.1 7.9 7.7
Finance/ Other2 0.3 0.4 0.3
TOTAL $57.1 $57.8 $56.5
Deposits by Business and Market
Average $ in billions ● Totals shown above may not foot due to rounding ● 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 2Q17 1Q17 2Q16Middle MarketGeneralEnergyNational Dealer ServicesEntertainmentTech. & Life SciencesEnvironmental Services
$14.00.70.30.25.70.1
$15.01.00.30.15.70.1
$14.00.60.30.16.20.1Total Middle Market $21.0 $22.3 $21.4Corporate BankingUS BankingInternational 2.22.4 2.42.2 2.62.0Mortgage Banker Finance 0.7 0.7 0.7Commercial Real Estate 2.4 2.1 1.8BUSINESS BANK $28.7 $29.6 $28.4
Small Business 3.2 3.2 3.2Retail Banking 20.8 20.6 20.4RETAIL BANK $23.9 $23.8 $23.5Private Banking 4.1 4.0 4.2WEALTH MANAGEMENT $4.1 $4.0 $4.2Finance/ Other2 0.3 0.4 0.3TOTAL $57.1 $57.8 $56.5
17
Interest Rate SensitivityRemain well positioned for rising rates
6/30/17 ● For methodology see the Company’s Form 10-Q, as filed with the SEC. Estimates are based on simulation modeling analysis.
Estimated Net Interest Income: Annual (12 month) SensitivitiesBased on Various AssumptionsAdditional Scenarios are Relative to 2Q17 Standard Model($ in millions)
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
~85
~145
~190 ~190 ~205
~245
~325
Up 100bps Addl. $3BDepositDecline
Addl.20%Increasein Beta
Addl. $1BDepositDecline
StandardModel Addl.~3% LoanGrowth
Up 300bps
18
Retail & Automotive Production Loans
19
Retail Loans1
~$480MM Retail CRE loans
• ~60% neighborhood retail centers• Primarily located in TX & CA• ~$10MM average commitment per project• Weighted average occupancy ~95%
~$700MM Retail Commercial loans
• Well diversified, granular portfolio• Avg. outstanding per borrower ~$1MM
~$300MM Retail Investor Owned Real Estate
• Primarily Wealth Management (Private Banking) customers
Automotive Production Loans(Period-end at 6/30/17)
Michigan Middle Market67%
International26%
US Banking5%
Other2%
Total$1.3B
~150 borrowers
Primarily Tier 1 & Tier 2 suppliers
~4% criticized with no nonaccrual loans
6/30/17 ● 1Includes loans to retailers (excluding auto dealers) or real estate developments where retailers are the primary tenants
Other23%
California45%
Dallas12%
Houston9%
Austin 7%
Other4%
Multifamily48%
Retail11%
Commercial12%
Office8%
Single Family7% Multi use3% Land Carry4%Other7%
6/30/17 ● 1Excludes CRE line of business loans not secured by real estate ● 2Includes CRE line of business loans not secured by real estate ● 3Criticized loans are consistent with regulatory defined Special Mention, Substandard & Doubtful categories
5.5 5.4 5.3 5.3 5.2
2Q16 3Q16 4Q16 1Q17 2Q17
CRE Period-end2($ in billions) Criticized Loans3($ in millions)
CRE by Property Type1($ in millions; Period-end) CRE by Market1($ in millions; Period-end, based on location of property)
Commercial Real Estate Line of BusinessLong history of working with well established, proven developers
$4,502
Total$4,387
Texas 32%
Total$4,387
Net Charge-offs (Recoveries)($ in millions)
(1)
1
(2)
-
(2)
2Q16 3Q16 4Q16 1Q17 2Q17
20
84
46 49 73
96
1.5 0.9 0.9 1.4 1.9
2Q16 3Q16 4Q16 1Q17 2Q17
Criticized as a % of Total Loans
4,945 4,605 4,385 4,151 4,175
54% 52% 50% 45% 47%
2Q16 3Q16 4Q16 1Q17 2Q17
Total Commitments Utilization Rate
Energy Line of BusinessCriticized Loans1($ in millions)
Energy Line of Business Loans ($ in millions; Period-end)
346 378 328 266 225
1,552 1,473
1,155
871 769
2Q16 3Q16 4Q16 1Q17 2Q17
NALs
Energy Line of BusinessCredit quality continues to improve; balances beginning to stabilize
6/30/17 ● 1Criticized loans are consistent with regulatory defined Special Mention, Substandard & Doubtful categories ● 2Bank'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.
Mixed18%
Maintain granular portfolio: ~180 customers
Loans decreased 25% since 6/30/16
Loans up slightly at period-end due to reduced asset sales & capital markets activity
Spring redeterminations ~97% complete• Borrowing bases ~10% higher on average with increases in oil & gas reserves due to drilling activity & acquisitions
97% of nonaccrual loans current on interest
Reserve2~6%
21
467 352 374 327 346
363 332 289 268 258
1,911 1,773 1,587 1,360 1,443
2,741 2,457 2,250 1,955 2,047
2Q16 3Q16 4Q16 1Q17 2Q17
Midstream Services Exploration & Production
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 1,3
19 1,59
5
1,39
7 1,39
9 2,0
89 2,13
6
1,74
2
1,67
4 2,14
5 2,54
4
2,35
2
1,45
0 1,78
0
200300
400500
600700
800900
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17
Actual MBA Mortgage Origination Volumes
6/30/17 ● 1Source: Mortgage Bankers Association (MBA) Mortgage Finance Forecast as of 6/12/17; 2Q17 also estimated ● 2$ in billions
Average Loans($ in millions)
Mortgage Banker Finance50+ years experience with reputation for consistent, reliable approach
MBA Mortgage Originations Forecast1($ in billions)
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 2Q17: • Comerica: 85% purchase • Industry: 68% purchase1
Strong credit quality• No charge-offs since 2010
22
463 440 348 345 445 443 355
2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
Purchase Refinance
National Dealer Services65+ years of floor plan lending
Toyota/Lexus16%
Honda/Acura 15%
Ford 10%
GM 9%
Fiat/Chrysler 9%Mercedes 3%
Nissan/ Infiniti 6%Other European 10%
Other Asian 11%
Other111%
Franchise Distribution(Based on period-end loan outstandings)
Geographic DispersionCalifornia 61% Texas 7%Michigan 21% 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
1.9 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 4.0 4.1 4.3
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 6.6
6.8 7.1
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17
Floor Plan
Total $7.2B
6/30/17 ● 1Other includes obligations where a primary franchise is indeterminable (rental car and leasing companies, heavy truck, recreational vehicles, and non-floor plan loans)
23
Customer Segment Overview(based on period-end loans)
Early Stage~12%
Growth~20%Late Stage~10%
Equity Fund Services~52%
Leveraged Finance~6%
Technology and Life Sciences20+ years experience provides competitive advantage
Technology & Life Sciences Avg. Loans($ in billions)
Strong relationships with top-tier investors
Granular portfolio: ~800 customers (including ~200 customers in Equity Fund Services)
Manage concentration to numerous verticals to ensure widely diversified portfolio
Closely monitor cash balances and maintain robust backroom operation
15 offices throughout US & Canada
Recent growth driven by Equity Fund Services• Commercial banking services for venture capital & private equity firms• Bridge financing for capital calls• Strong credit profile
Total $3.0B
6/30/17
24
0.6 1.1 1.4 1.6 1.7
2.5 3.1
3.2 3.2 3.2
2014 2015 2016 1Q17 2Q17
Equity Fund Services
Senior Unsecured/Long-Term Issuer Rating Moody’s S&P Fitch
BB&T A2 A- A+
Cullen Frost A3 A- --
M&T Bank A3 A- A
Comerica A3 BBB+ A
BOK Financial Corporation A3 BBB+ A
Huntington Baa1 BBB A-
Fifth Third Baa1 BBB+ A
KeyCorp Baa1 BBB+ A-
SunTrust Baa1 BBB+ A-
Regions Financial Baa2 BBB BBB
First Horizon National Corp Baa3 BBB- BBB-
Zions Bancorporation Baa3 BBB- BBB-
U.S. Bancorp A1 A+ AA
Wells Fargo & Company A2 A AA-
PNC Financial Services Group A3 A- A+
JP Morgan A3 A- A+
Bank of America Baa1 BBB+ A
Holding Company Debt Rating
As of 7/13/17 ● Source: SNL Financial ● Debt Ratings are not a recommendation to buy, sell, or hold securities
Peer
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25
26
Comerica believes these are meaningful measures, because they reflect adjustments commonly made by management, investors, regulators and analysts to evaluate the adequacy of common equity and our performance trends. Comerica believes adjusted earnings per share provides a greater understanding of ongoing operations and enhances comparability of results with prior periods.
Supplemental Financial DataReconciliation of non-GAAP financial measures with financial measures defined by GAAP
Three Months Ended($ in millions, except per share data) 6/30/17 3/31/17 6/30/16Adjusted Earnings per Common Share:
Net income available to common shareholders $202 $200 $103Add: Restructuring charges, net of tax 9 7 34Deduct: Tax benefits from employee stock transactions 5 24 —
Adjusted net income available to common shareholders $206 $183 $137
Diluted average common shares 179 180 177
Diluted earnings per common share:
Reported $1.13 $1.11 $0.58
Adjusted 1.15 1.02 0.77