COMERICA INC /NEW/ - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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EX-99.2 - EXHIBIT 99.2 - COMERICA INC /NEW/	cma-20180630ex992.htm
8-K - 8-K - COMERICA INC /NEW/	cma-20180630form8k.htm

Dallas, TX/July 17, 2018

COMERICA REPORTS SECOND QUARTER 2018 NET INCOME OF $326 MILLION,

$1.87 PER SHARE

Earnings Per Share Increased 18 Percent Compared to First Quarter 2018

Revenue Increased 6 Percent Compared to First Quarter 2018, Driving Efficiency Ratio to 53 Percent

Margin Expanded 21 Basis Points to 3.62 Percent

Managed Loan and Deposit Pricing as Rates Increased Along With Higher Interest Recoveries

Strong Credit Quality Led to Reduction in Allowance for Loan Losses

“Our second quarter results were solid as we continued to manage loan and deposit pricing in a rising rate environment. Loan growth and favorable credit metrics, combined with higher fee income and well-controlled expenses, helped drive an 18 percent increase in our earnings per share relative to the first quarter. The Federal Reserve recently announced we are no longer subject to certain regulations and reporting requirements. We believe we are well positioned to meaningfully increase our capital return to our shareholders. Furthermore, we expect to benefit from additional rate increases and economic growth. We remain focused on maintaining momentum and driving shareholder returns,” said Ralph W. Babb, Jr., chairman and chief executive officer.



(dollar amounts in millions, except per share data)	2nd Qtr '18			1st Qtr '18			2nd Qtr '17
Net interest income	$	590		$	549		$	500
Provision for credit losses	(29		)	12			17
Noninterest income	248			244			276			(a)
Noninterest expenses	448			446			457			(a)
Pre-tax income	419			335			302
Provision for income taxes	93			54			99
Net income	$	326		$	281		$	203

Diluted income per common share	1.87			1.59			1.13
Net interest margin	3.62		%	3.41		%	3.03		%
Efficiency ratio (b)	53.24			56.33			58.70
Common equity Tier 1 capital ratio (c)	11.90			11.98			11.51
Common equity ratio	11.22			11.06			11.18


(a)	The new revenue recognition standard became effective January 1, 2018 and is not reflected in second quarter 2017 results. See reconciliation of Non-GAAP Financial Measures for comparative adjusted amounts.


(b)	Noninterest expenses as a percentage of net interest income and noninterest income excluding net gains (losses) from securities and a derivative contract tied to the conversion rate of Visa Class B shares.


(c)	June 30, 2018 ratio is estimated and does not reflect guidance related to high volatility commercial real estate loans as indicated in the recent interagency statement regarding the impact of the Economic Growth, Regulatory Relief, and Consumer Protection Act.

The following table reconciles items presented on an adjusted basis to facilitate trend analysis.



(dollar amounts in millions, except per share data)	2nd Qtr '18			1st Qtr '18			2nd Qtr '17
Earnings per share	$	1.87		$	1.59		$	1.13
Restructuring charges, net of tax	0.05			0.07			0.05
Deferred tax adjustment	—			(0.01		)	—
Tax benefits from employee stock transactions	(0.02		)	(0.11		)	(0.03		)
Adjusted earnings per share (a)	$	1.90		$	1.54		$	1.15

-Table continues on next page-



(dollar amounts in millions, except per share data)	2nd Qtr '18			1st Qtr '18			2nd Qtr '17
Net income	$	326		$	281		$	203
Restructuring charges, net of tax	9			12			9
Deferred tax adjustment	—			(3		)	—
Tax benefits from employee stock transactions	(3		)	(19		)	(5		)
Adjusted net income (a)	$	332		$	271		$	207

Return on Average Assets (ROA)	1.85		%	1.62		%	1.14		%
Adjusted ROA (a)	1.89			1.56			1.17
Return on Average Common Shareholders' Equity (ROE)	16.40			14.37			10.26
Adjusted ROE (a)	16.70			13.85			10.49
Efficiency ratio	53.24			56.33			58.70
Adjusted efficiency ratio (a)	51.90			54.32			55.25


(a)	See Reconciliation of Non-GAAP Financial Measures.

Second Quarter 2018 Compared to First Quarter 2018

Average total loans increased $804 million, or 2 percent, to $49.2 billion.


•	Primarily reflected seasonal increases in Mortgage Banker Finance and National Dealer Services as well as growth in Technology and Life Sciences (mainly Equity Fund Services) and general Middle Market.


•	Loan yields increased 37 basis points to 4.63 percent reflecting an increase in short term rates (+27 basis points), higher interest recoveries (+8 basis points) and other dynamics (+2 basis points).

Average total deposits decreased $260 million to $55.8 billion.


•	Driven by a $553 million decrease in noninterest-bearing deposits, partially offset by a $293 million increase in interest-bearing deposits.


•	Primarily reflected a decrease in general Middle Market, driven by seasonality in Municipalities, mostly offset by increases in other lines of business.


•	Interest-bearing deposit costs increased 17 basis points to 0.42 percent as deposit rates were increased with the faster pace of LIBOR rising.

Net interest income increased $41 million to $590 million.


•	Primarily due to a net benefit from higher short-term rates, an increase in average loans, higher interest recoveries and one additional day in the second quarter.


•	Net interest margin increased 21 basis points to 3.62 percent.

Provision for credit losses decreased $41 million to a benefit of $29 million.


•	Reflected a decline in total criticized loans of $355 million, or 17 percent, and net credit-related recoveries of $3 million.

Noninterest income increased $4 million.


•	Primarily reflected an increase of $5 million in commercial lending fees, mostly due to an increase in syndication fees, partially offset by a $2 million charge related to a derivative contract tied to the conversion rate of Visa Class B shares.

Noninterest expenses increased $2 million.


•	Excluding the impact of a $5 million business tax refund in the first quarter, noninterest expenses decreased $3 million, primarily reflecting decreases of $5 million each in salaries and benefits expense and restructuring charges, partially offset by increases of $3 million in outside processing expense and $2 million in advertising expense.


•	The decrease in salaries and benefits expense primarily reflected seasonal decreases in share-based compensation and payroll taxes, partially offset by the impact of higher incentive compensation tied to financial performance, merit increases, an increase in staff insurance and one additional day in the quarter.

Provision for income taxes increased $39 million to $93 million.


•	Due to the tax impact from the $84 million increase in pre-tax earnings and a $16 million decrease in tax benefits from employee stock transactions.

Capital position remained solid at June 30, 2018.


•	Returned $227 million to shareholders, including dividends and the repurchase of $169 million of common stock (1.8 million shares) under the equity repurchase program.


•	Dividend increased 13 percent to 34 cents per share.

•

On June 21, 2018, the Federal Reserve announced that bank holding companies with less than $100 billion in total assets are no longer subject to supervisory stress testing, including both the Dodd-Frank Act stress tests and Comprehensive Capital Analysis and Review. As such, at the next scheduled meeting on July 24, 2018, Comerica’s board of directors will discuss capital actions to increase returns to shareholders while continuing to properly manage our capital base and support growth. A press release announcing planned capital actions is expected at that time.

Second Quarter 2018 Compared to Second Quarter 2017

Management of loan and deposit pricing, strong credit quality and successful execution of GEAR Up initiatives has resulted in a return on equity of 16.40 percent and an efficiency ratio of 53.24 percent, well beyond the GEAR Up financial targets set when the initiative launched in mid-2016.

Average total loans increased $502 million.


•	Reflected increases in Technology and Life Sciences and National Dealer Services, partially offset by decreases in Corporate Banking and Energy.

Average total deposits decreased $1.3 billion.


•	Primarily due to a decrease of $1.4 billion in noninterest-bearing deposits.


•	Primarily reflected decreases in general Middle Market (driven by a decrease in Municipalities) and Commercial Real Estate (due to customers using excess liquidity in their operations), partially offset by an increase in Technology and Life Sciences.

Net interest income increased $90 million.


•	Driven by the net benefit from higher short-term rates.

Provision for credit losses decreased $46 million.


•	Reflected a decline in total criticized loans of $727 million.


•	Net credit-related charge-offs decreased $21 million to net recoveries of $3 million from net charge-offs of $18 million.

Adjusted noninterest income (see Reconciliation of Non-GAAP Financial Measures) was unchanged at $248 million.


•	Reflected increases of $6 million in card fees, adjusted for the impact of adoption of the new revenue accounting standard, and $1 million in fiduciary income, offset by decreases of $3 million in warrant income and $2 million each in service charges on deposit accounts and customer derivative income.

Adjusted noninterest expenses (see Reconciliation of Non-GAAP Financial Measures) increased $22 million.


•	Reflected an increase of $19 million in salaries and benefits expense and an increase of $4 million in outside processing expense.


•	The increase in salaries and benefits expense primarily reflected higher share-based and incentive compensation tied to financial performance as well as merit increases.

Provision for income taxes decreased $6 million.


•	Due to the decrease in the statutory tax rate in 2018, partially offset by an increase in pre-tax income of $117 million and a $2 million decrease in tax benefits from employee stock transactions.

Net Interest Income



(dollar amounts in millions)	2nd Qtr '18			1st Qtr '18			2nd Qtr '17
Net interest income	$	590		$	549		$	500

Net interest margin	3.62		%	3.41		%	3.03		%

Selected average balances:
Total earning assets	$	65,114		$	65,012		$	66,310
Total loans	49,225			48,421			48,723
Total investment securities	11,799			11,911			12,232
Federal Reserve Bank deposits	3,717			4,315			5,043


Total deposits	55,830			56,090			57,128
Total noninterest-bearing deposits	29,316			29,869			30,741
Medium- and long-term debt	5,584			5,192			5,161

Net interest income increased $41 million to $590 million in the second quarter 2018, compared to the first quarter 2018.


•	Net increase from higher short-term rates of $21 million, primarily reflecting a $33 million benefit to loan interest partly offset by an $11 million increase to deposit costs.


•	Net interest income also benefited $9 million from higher average loan balances, $9 million from higher interest recoveries and $5 million from one additional day in the quarter.

The net interest margin increased 21 basis points to 3.62 percent in the second quarter 2018, compared to the first quarter 2018.


•	Net increase from higher short-term rates of 11 basis points, primarily from higher loan yields (+20 basis points), partially offset by higher deposit costs (-7 basis points) and debt costs (-4 basis points).


•	The net interest margin also benefited 6 basis points due to higher interest recoveries.

Credit Quality

“Credit quality remains strong,” said Babb. “Gross charge-offs of $20 million were more than offset by recoveries. We had a broad-based decline in problem loans. Criticized loans decreased $355 million, or 17 percent, and now represent less than 4 percent of total loans at quarter end. This included a reduction in nonperforming loans, which comprise 53 basis points of our total loans. Energy criticized and nonaccrual loans continued to decrease. The positive credit migration resulted in a reserve release and a reserve ratio of 1.36 percent.”



(dollar amounts in millions)	2nd Qtr '18			1st Qtr '18			2nd Qtr '17
Credit-related charge-offs	$	20		$	37		$	39
Recoveries	23			9			21
Net credit-related (recoveries) charge-offs	(3		)	28			18
Net credit-related (recoveries) charge-offs/Average total loans	(0.02		)%	0.23		%	0.15		%

Provision for credit losses	$	(29	)	$	12		$	17

Nonperforming loans	262			334			501
Nonperforming assets (NPAs)	264			339			519
NPAs/Total loans and foreclosed property	0.53		%	0.69		%	1.05		%

Loans past due 90 days or more and still accruing	$	20		$	36		$	30

Allowance for loan losses	677			698			705
Allowance for credit losses on lending-related commitments (a)	34			40			48
Total allowance for credit losses	711			738			753

Allowance for loan losses/Period-end total loans	1.36		%	1.42		%	1.43		%
Allowance for loan losses/Nonperforming loans	2.6x			2.1x			1.4x


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


•	The allowance for loan losses decreased to $677 million at June 30, 2018, or 1.36 percent of total loans, reflecting improvements in credit quality of the portfolio.

•

Criticized loans decreased $355 million to $1.8 billion at June 30, 2018, compared to $2.1 billion at March 31, 2018, including a $149 million decrease in Energy. Criticized loans as a percentage of total loans were 3.5 percent at June 30, 2018, compared to 4.3 percent at March 31, 2018. Criticized loans are generally consistent with the Special Mention, Substandard and Doubtful categories defined by regulatory authorities.


•	Nonperforming loans decreased $72 million to $262 million at June 30, 2018, compared to $334 million at March 31, 2018. Nonperforming loans as a percentage of total loans decreased to 0.53 percent at June 30, 2018, compared to 0.68 percent at March 31, 2018.

2018 Second-Half Outlook

For the second half of 2018, management expects the following, assuming a continuation of the current economic and rate environment as well as the benefits from the GEAR Up initiative:


•	Moderate growth in average loans


◦	Growth in most lines of business with a slower pace in general Middle Market, National Dealer Services and Mortgage Banker Finance due to seasonality.


◦	Energy and Corporate Banking to remain stable.


•	Net interest income higher, reflecting recent rate increases, loan growth and three additional days.


◦	Full-year 2018 net benefit of $70 million from the first quarter 2018 rate increase and $35 million to $40 million from the second quarter 2018 rate increase.


◦	Elevated interest recoveries not expected to repeat ($11 million in second quarter 2018).


•	Provision for credit losses of $10 million to $20 million per quarter and net charge-offs to remain low.


•	Noninterest income growth trend to continue benefiting from the execution of GEAR Up initiatives to help drive growth in treasury management income, card fees and fiduciary income.


•	Noninterest expenses modestly higher (excluding restructuring charges) primarily due to additional days.

◦GEAR Up savings remain on track.


◦	Continued higher technology expenditures.


◦	Seasonal and typical inflationary pressures leading to higher occupancy and advertising expenses.


◦	Restructuring charges of $20 million to $25 million.


•	Income tax expense to be approximately 23 percent of pre-tax income, excluding any tax impact from employee stock transactions.

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. 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. For a summary of business segment and geographic market quarterly results, see the Business Segment Financial Results and Market Segment Financial Results tables included later in this report. The financial results provided are based on the internal business unit and geographic market structures of Comerica and methodologies in effect at June 30, 2018. A discussion of business segment and geographic market year-to-date results will be included in Comerica's Second Quarter 2018 Form 10-Q.

Conference Call and Webcast

Comerica will host a conference call to review second quarter 2018 financial results at 7 a.m. CT Tuesday, July 17, 2018. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 22791269). 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.

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 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 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; 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; operational difficulties, failure of technology infrastructure or information security incidents; reliance on other companies to provide certain key components of business infrastructure; 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; unfavorable developments concerning credit quality; changes in regulation or oversight; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; transitions away from LIBOR towards new interest rate benchmarks; reductions in Comerica's credit rating; 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; the interdependence of financial service companies; the implementation of Comerica's strategies and business initiatives; changes in customer behavior; management's ability to maintain and expand customer relationships; the effectiveness of methods of reducing risk exposures; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; the effects of recent tax reform and potential legislative, administrative or judicial changes or interpretations related to these and other tax regulations; any future strategic acquisitions or divestitures; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effects of terrorist activities and other hostilities; changes in accounting standards; the critical nature of Comerica's accounting policies and the volatility of Comerica’s stock price. 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 11 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2017. 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:
Yolanda Y. Walker	Darlene P. Persons
(214) 462-4443	(214) 462-6831

	Chloe E. Dankworth
	(214) 462-4132



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)	2018			2018			2017			2018			2017
PER COMMON SHARE AND COMMON STOCK DATA
Diluted net income	$	1.87		$	1.59		$	1.13		$	3.46		$	2.24
Cash dividends declared	0.34			0.30			0.26			0.64			0.49

Average diluted shares (in thousands)	173,601			175,144			178,923			174,351			179,652
KEY RATIOS
Return on average common shareholders' equity	16.40		%	14.37		%	10.26		%	15.39		%	10.34		%
Return on average assets	1.85			1.62			1.14			1.74			1.14
Common equity tier 1 and tier 1 risk-based capital ratio (a)	11.90			11.98			11.51
Total risk-based capital ratio (a)	13.96			14.12			13.66
Leverage ratio (a)	11.35			11.24			10.80
Common equity ratio	11.22			11.06			11.18
Tangible common equity ratio (b)	10.42			10.26			10.37
AVERAGE BALANCES
Commercial loans	$	30,966		$	30,145		$	30,632		$	30,556		$	30,166
Real estate construction loans	3,189			3,067			2,910			3,129			2,934
Commercial mortgage loans	9,174			9,217			9,012			9,195			8,994
Lease financing	457			464			526			461			548
International loans	981			996			1,139			989			1,174
Residential mortgage loans	1,993			2,011			1,975			2,002			1,969
Consumer loans	2,465			2,521			2,529			2,493			2,528
Total loans	49,225			48,421			48,723			48,825			48,313

Earning assets	65,114			65,012			66,310			65,063			66,477
Total assets	70,520			70,326			71,346			70,423			71,581

Noninterest-bearing deposits	29,316			29,869			30,741			29,591			30,601
Interest-bearing deposits	26,514			26,221			26,387			26,368			26,851
Total deposits	55,830			56,090			57,128			55,959			57,452

Common shareholders' equity	7,977			7,927			7,944			7,952			7,905
NET INTEREST INCOME
Net interest income	$	590		$	549		$	500		$	1,139		$	970
Net interest margin	3.62		%	3.41		%	3.03		%	3.52		%	2.94		%
CREDIT QUALITY
Total nonperforming assets	$	264		$	339		$	519

Loans past due 90 days or more and still accruing	20			36			30

Net credit-related (recoveries) charge-offs	(3		)	28			18			$	25		$	51

Allowance for loan losses	677			698			705
Allowance for credit losses on lending-related commitments	34			40			48
Total allowance for credit losses	711			738			753

Allowance for loan losses as a percentage of total loans	1.36		%	1.42		%	1.43		%
Net credit-related (recoveries) charge-offs as a percentage of average total loans	(0.02		)	0.23			0.15			0.10		%	0.21		%
Nonperforming assets as a percentage of total loans and foreclosed property	0.53			0.69			1.05
Allowance for loan losses as a percentage of total nonperforming loans	2.6x			2.1x			1.4x


(a)	June 30, 2018 ratios are estimated and do not reflect guidance related to high volatility commercial real estate loans as indicated in the recent interagency statement regarding the impact of the Economic Growth, Regulatory Relief, and Consumer Protection Act.


(b)	See Reconciliation of Non-GAAP Financial Measures.



CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries

	June 30,			March 31,			December 31,			June 30,
(in millions, except share data)	2018			2018			2017			2017
	(unaudited)			(unaudited)						(unaudited)
ASSETS
Cash and due from banks	$	1,424		$	1,173		$	1,438		$	1,372

Interest-bearing deposits with banks	4,236			5,663			4,407			4,259
Other short-term investments	134			133			96			90

Investment securities available-for-sale	11,915			11,971			10,938			10,944
Investment securities held-to-maturity	—			—			1,266			1,430

Commercial loans	31,530			30,909			31,060			31,449
Real estate construction loans	3,257			3,114			2,961			2,857
Commercial mortgage loans	9,124			9,272			9,159			8,974
Lease financing	458			464			468			472
International loans	993			964			983			1,145
Residential mortgage loans	1,954			2,003			1,988			1,976
Consumer loans	2,476			2,514			2,554			2,535
Total loans	49,792			49,240			49,173			49,408
Less allowance for loan losses	(677		)	(698		)	(712		)	(705		)
Net loans	49,115			48,542			48,461			48,703

Premises and equipment	467			468			466			484
Accrued income and other assets	4,696			4,385			4,495			4,165
Total assets	$	71,987		$	72,335		$	71,567		$	71,447

LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits	$	30,316		$	30,961		$	32,071		$	31,210

Money market and interest-bearing checking deposits	22,544			22,355			21,500			20,952
Savings deposits	2,227			2,233			2,152			2,158
Customer certificates of deposit	2,089			2,071			2,165			2,438
Foreign office time deposits	34			15			15			23
Total interest-bearing deposits	26,894			26,674			25,832			25,571
Total deposits	57,210			57,635			57,903			56,781

Short-term borrowings	58			48			10			541
Accrued expenses and other liabilities	1,057			1,058			1,069			997
Medium- and long-term debt	5,583			5,594			4,622			5,143
Total liabilities	63,908			64,335			63,604			63,462

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	2,144			2,134			2,122			2,110
Accumulated other comprehensive loss	(589		)	(553		)	(451		)	(361		)
Retained earnings	8,374			8,110			7,887			7,580
Less cost of common stock in treasury - 57,254,526 shares at 6/30/18, 55,690,402 shares at 3/31/18, 55,306,483 shares at 12/31/17, and 52,252,023 shares at 6/30/17	(2,991		)	(2,832		)	(2,736		)	(2,485		)
Total shareholders' equity	8,079			8,000			7,963			7,985
Total liabilities and shareholders' equity	$	71,987		$	72,335		$	71,567		$	71,447



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)	2018			2017		2018			2017
INTEREST INCOME
Interest and fees on loans	$	568		$	453	$	1,077		$	874
Interest on investment securities	64			62		128			123
Interest on short-term investments	18			14		35			28
Total interest income	650			529		1,240			1,025
INTEREST EXPENSE
Interest on deposits	28			9		44			18
Interest on medium- and long-term debt	32			20		57			37
Total interest expense	60			29		101			55
Net interest income	590			500		1,139			970
Provision for credit losses	(29		)	17		(17		)	33
Net interest income after provision for credit losses	619			483		1,156			937
NONINTEREST INCOME
Card fees	60			80		119			157
Service charges on deposit accounts	53			57		107			115
Fiduciary income	52			51		104			100
Commercial lending fees	23			22		41			42
Letter of credit fees	11			11		21			23
Bank-owned life insurance	9			9		18			19
Foreign exchange income	12			11		24			22
Brokerage fees	6			6		13			11
Net securities gains	—			—		1			—
Other noninterest income	22			29		44			58
Total noninterest income (a)	248			276		492			547
NONINTEREST EXPENSES
Salaries and benefits expense	250			231		505			476
Outside processing fee expense	64			88		125			175
Net occupancy expense	37			38		75			76
Equipment expense	11			11		22			22
Restructuring charges	11			14		27			25
Software expense	32			31		63			60
FDIC insurance expense	12			12		25			25
Advertising expense	8			7		14			11
Litigation-related expense	—			—		—			(2		)
Other noninterest expenses	23			25		38			46
Total noninterest expenses (a)	448			457		894			914
Income before income taxes	419			302		754			570
Provision for income taxes	93			99		147			165
NET INCOME	326			203		607			405
Less income allocated to participating securities	2			1		4			3
Net income attributable to common shares	$	324		$	202	$	603		$	402
Earnings per common share:
Basic	$	1.90		$	1.15	$	3.52		$	2.30
Diluted	1.87			1.13		3.46			2.24

Comprehensive income	291			221		469			427

Cash dividends declared on common stock	58			46		110			88
Cash dividends declared per common share	0.34			0.26		0.64			0.49


(a)	The new revenue recognition standard became effective January 1, 2018 and is not reflected in 2017 results. See reconciliation of Non-GAAP Financial Measures for comparative adjusted amounts.



CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries

	Second			First		Fourth		Third		Second		Second Quarter 2018 Compared to:
	Quarter			Quarter		Quarter		Quarter		Quarter		First Quarter 2018					Second Quarter 2017
(in millions, except per share data)	2018			2018		2017		2017		2017		Amount			Percent		Amount			Percent
INTEREST INCOME
Interest and fees on loans	$	568		$	509	$	498	$	500	$	453	$	59		12	%	$	115		25	%
Interest on investment securities	64			64		64		63		62		—			—		2			2
Interest on short-term investments	18			17		16		16		14		1			3		4			32
Total interest income	650			590		578		579		529		60			10		121			23
INTEREST EXPENSE
Interest on deposits	28			16		13		11		9		12			73		19			N/M
Interest on short-term borrowings	—			—		—		3		—		—			—		—			—
Interest on medium- and long-term debt	32			25		20		19		20		7			25		12			65
Total interest expense	60			41		33		33		29		19			44		31			N/M
Net interest income	590			549		545		546		500		41			8		90			18
Provision for credit losses	(29		)	12		17		24		17		(41		)	N/M		(46		)	N/M
Net interest income after provision for credit losses	619			537		528		522		483		82			15		136			28
NONINTEREST INCOME
Card fees	60			59		91		85		80		1			1		(20		)	(25	)
Service charges on deposit accounts	53			54		55		57		57		(1		)	(1	)	(4		)	(7	)
Fiduciary income	52			52		50		48		51		—			—		1			5
Commercial lending fees	23			18		22		21		22		5			31		1			3
Letter of credit fees	11			10		11		11		11		1			2		—			—
Bank-owned life insurance	9			9		12		12		9		—			—		—			—
Foreign exchange income	12			12		12		11		11		—			—		1			11
Brokerage fees	6			7		6		6		6		(1		)	(18	)	—			—
Net securities gains	—			1		—		—		—		(1		)	(62	)	—			—
Other noninterest income	22			22		26		24		29		—			—		(7		)	(24	)
Total noninterest income	248			244		285		275		276		4			1		(28		)	(10	)
NONINTEREST EXPENSES
Salaries and benefits expense	250			255		248		237		231		(5		)	(2	)	19			8
Outside processing fee expense	64			61		99		92		88		3			4		(24		)	(28	)
Net occupancy expense	37			38		40		38		38		(1		)	—		(1		)	—
Equipment expense	11			11		11		12		11		—			—		—			—
Restructuring charges	11			16		13		7		14		(5		)	(29	)	(3		)	(21	)
Software expense	32			31		31		35		31		1			1		1			3
FDIC insurance expense	12			13		13		13		12		(1		)	(14	)	—			—
Advertising expense	8			6		9		8		7		2			25		1			2
Other noninterest expenses	23			15		19		21		25		8			50		(2		)	(5	)
Total noninterest expenses	448			446		483		463		457		2			—		(9		)	(2	)
Income before income taxes	419			335		330		334		302		84			25		117			39
Provision for income taxes	93			54		218		108		99		39			74		(6		)	(5	)
NET INCOME	326			281		112		226		203		45			16		123			60
Less income allocated to participating securities	2			2		—		2		1		—			—		1			10
Net income attributable to common shares	$	324		$	279	$	112	$	224	$	202	$	45		16	%	$	122		61	%
Earnings per common share:
Basic	$	1.90		$	1.62	$	0.65	$	1.29	$	1.15	$	0.28		17	%	$	0.75		65	%
Diluted	1.87			1.59		0.63		1.26		1.13		0.28			18		0.74			65

Comprehensive income	291			178		107		228		221		113			63		70			31

Cash dividends declared on common stock	58			52		52		53		46		6			12		12			27
Cash dividends declared per common share	0.34			0.30		0.30		0.30		0.26		0.04			13		0.08			31

N/M - Not Meaningful



ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)
Comerica Incorporated and Subsidiaries

	2018						2017
(in millions)	2nd Qtr			1st Qtr			4th Qtr			3rd Qtr			2nd Qtr

Balance at beginning of period	$	698		$	712		$	712		$	705		$	708

Loan charge-offs:
Commercial	17			36			26			35			34
Commercial mortgage	1			—			1			—			1
Lease financing	—			—			—			1			—
International	—			—			1			—			2
Consumer	2			1			1			1			2
Total loan charge-offs	20			37			29			37			39

Recoveries on loans previously charged-off:
Commercial	20			8			7			6			17
Real estate construction	—			—			—			1			—
Commercial mortgage	1			—			2			2			3
International	1			—			2			1			—
Residential mortgage	—			—			1			—			—
Consumer	1			1			1			2			1
Total recoveries	23			9			13			12			21
Net loan (recoveries) charge-offs	(3		)	28			16			25			18
Provision for loan losses	(23		)	14			16			31			15
Foreign currency translation adjustment	(1		)	—			—			1			—
Balance at end of period	$	677		$	698		$	712		$	712		$	705

Allowance for loan losses as a percentage of total loans	1.36		%	1.42		%	1.45		%	1.45		%	1.43		%

Net loan (recoveries) charge-offs as a percentage of average total loans	(0.02		)	0.23			0.13			0.21			0.15



ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited)
Comerica Incorporated and Subsidiaries

	2018						2017
(in millions)	2nd Qtr			1st Qtr			4th Qtr		3rd Qtr			2nd Qtr

Balance at beginning of period	$	40		$	42		$	41	$	48		$	46
Add: Provision for credit losses on lending-related commitments	(6		)	(2		)	1		(7		)	2
Balance at end of period	$	34		$	40		$	42	$	41		$	48



NONPERFORMING ASSETS (unaudited)
Comerica Incorporated and Subsidiaries

	2018						2017
(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	$	171		$	242		$	309		$	345		$	379
Commercial mortgage	29			29			31			35			41
Lease financing	2			3			4			8			8
International	4			4			6			6			6
Total nonaccrual business loans	206			278			350			394			434
Retail loans:
Residential mortgage	29			29			31			28			36
Consumer:
Home equity	19			19			21			22			23
Total nonaccrual retail loans	48			48			52			50			59
Total nonaccrual loans	254			326			402			444			493
Reduced-rate loans	8			8			8			8			8
Total nonperforming loans	262			334			410			452			501
Foreclosed property	2			5			5			6			18
Total nonperforming assets	$	264		$	339		$	415		$	458		$	519

Nonperforming loans as a percentage of total loans	0.53		%	0.68		%	0.83		%	0.92		%	1.01		%
Nonperforming assets as a percentage of total loans and foreclosed property	0.53			0.69			0.84			0.93			1.05
Allowance for loan losses as a percentage of total nonperforming loans	2.6x			2.1x			1.7x			1.6x			1.4x
Loans past due 90 days or more and still accruing	$	20		$	36		$	35		$	12		$	30

ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans at beginning of period	$	326		$	402		$	444		$	493		$	521
Loans transferred to nonaccrual (a)	49			71			73			66			54
Nonaccrual loan gross charge-offs	(20		)	(37		)	(29		)	(37		)	(39		)
Loans transferred to accrual status (a)	—			(3		)	—			—			—
Nonaccrual loans sold	(15		)	(10		)	(22		)	(10		)	—
Payments/Other (b)	(86		)	(97		)	(64		)	(68		)	(43		)
Nonaccrual loans at end of period	$	254		$	326		$	402		$	444		$	493
(a) Based on an analysis of nonaccrual loans with book balances greater than $2 million.
(b) 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.



ANALYSIS OF NET INTEREST INCOME (unaudited)
Comerica Incorporated and Subsidiaries

	Six Months Ended
	June 30, 2018							June 30, 2017
	Average					Average		Average					Average
(dollar amounts in millions)	Balance			Interest		Rate		Balance			Interest		Rate

Commercial loans	$	30,556		$	672	4.44	%	$	30,166		$	539	3.61	%
Real estate construction loans	3,129			77		4.93		2,934			57		3.95
Commercial mortgage loans	9,195			205		4.49		8,994			170		3.81
Lease financing	461			9		3.93		548			6		2.00
International loans	989			24		4.81		1,174			23		3.88
Residential mortgage loans	2,002			38		3.78		1,969			35		3.59
Consumer loans	2,493			52		4.24		2,528			44		3.52
Total loans	48,825			1,077		4.45		48,313			874		3.65

Mortgage-backed securities	9,133			104		2.23		9,321			99		2.16
Other investment securities	2,722			24		1.71		2,894			24		1.63
Total investment securities	11,855			128		2.11		12,215			123		2.03

Interest-bearing deposits with banks	4,251			35		1.68		5,857			28		0.92
Other short-term investments	132			—		0.84		92			—		0.63
Total earning assets	65,063			1,240		3.83		66,477			1,025		3.11

Cash and due from banks	1,248							1,164
Allowance for loan losses	(713		)					(733		)
Accrued income and other assets	4,825							4,673
Total assets	$	70,423						$	71,581

Money market and interest-bearing checking deposits	$	22,039		40		0.37		$	22,066		14		0.13
Savings deposits	2,205			—		0.03		2,114			—		0.02
Customer certificates of deposit	2,092			4		0.36		2,621			4		0.37
Foreign office time deposits	32			—		1.13		50			—		0.55
Total interest-bearing deposits	26,368			44		0.34		26,851			18		0.14

Short-term borrowings	45			—		1.63		85			—		1.07
Medium- and long-term debt	5,390			57		2.11		5,159			37		1.39
Total interest-bearing sources	31,803			101		0.64		32,095			55		0.35

Noninterest-bearing deposits	29,591							30,601
Accrued expenses and other liabilities	1,077							980
Total shareholders' equity	7,952							7,905
Total liabilities and shareholders' equity	$	70,423						$	71,581

Net interest income/rate spread				$	1,139	3.19					$	970	2.76

Impact of net noninterest-bearing sources of funds						0.33							0.18
Net interest margin (as a percentage of average earning assets)						3.52	%						2.94	%



ANALYSIS OF NET INTEREST INCOME (unaudited)
Comerica Incorporated and Subsidiaries

	Three Months Ended
	June 30, 2018							March 31, 2018							June 30, 2017
	Average					Average		Average					Average		Average					Average
(dollar amounts in millions)	Balance			Interest		Rate		Balance			Interest		Rate		Balance			Interest		Rate

Commercial loans	$	30,966		$	357	4.64	%	$	30,145		$	315	4.24	%	$	30,632		$	283	3.71	%
Real estate construction loans	3,189			41		5.12		3,067			36		4.74		2,910			29		4.08
Commercial mortgage loans	9,174			107		4.65		9,217			98		4.32		9,012			87		3.88
Lease financing	457			4		3.65		464			5		4.22		526			1		0.60
International loans	981			13		5.02		996			11		4.60		1,139			12		3.99
Residential mortgage loans	1,993			20		3.88		2,011			18		3.67		1,975			18		3.61
Consumer loans	2,465			26		4.35		2,521			26		4.13		2,529			23		3.62
Total loans	49,225			568		4.63		48,421			509		4.26		48,723			453		3.73

Mortgage-backed securities	9,098			52		2.25		9,168			52		2.21		9,336			50		2.17
Other investment securities	2,701			12		1.71		2,743			12		1.72		2,896			12		1.67
Total investment securities	11,799			64		2.12		11,911			64		2.09		12,232			62		2.05

Interest-bearing deposits with banks	3,957			18		1.82		4,548			17		1.55		5,263			14		1.03
Other short-term investments	133			—		0.94		132			—		0.60		92			—		0.58
Total earning assets	65,114			650		3.98		65,012			590		3.66		66,310			529		3.21

Cash and due from banks	1,235							1,261							1,148
Allowance for loan losses	(708		)					(718		)					(726		)
Accrued income and other assets	4,879							4,771							4,614
Total assets	$	70,520						$	70,326						$	71,346

Money market and interest-bearing checking deposits	$	22,187		26		0.47		$	21,891		14		0.26		$	21,661		7		0.13
Savings deposits	2,231			—		0.04		2,177			—		0.03		2,142			—		0.02
Customer certificates of deposit	2,063			2		0.38		2,122			2		0.34		2,527			2		0.36
Foreign office time deposits	33			—		1.13		31			—		1.14		57			—		0.60
Total interest-bearing deposits	26,514			28		0.42		26,221			16		0.25		26,387			9		0.15

Short-term borrowings	56			—		1.74		35			—		1.47		147			—		1.12
Medium- and long-term debt	5,584			32		2.24		5,192			25		1.96		5,161			20		1.48
Total interest-bearing sources	32,154			60		0.74		31,448			41		0.53		31,695			29		0.37

Noninterest-bearing deposits	29,316							29,869							30,741
Accrued expenses and other liabilities	1,073							1,082							966
Total shareholders' equity	7,977							7,927							7,944
Total liabilities and shareholders' equity	$	70,520						$	70,326						$	71,346

Net interest income/rate spread				$	590	3.24					$	549	3.13					$	500	2.84

Impact of net noninterest-bearing sources of funds						0.38							0.28							0.19
Net interest margin (as a percentage of average earning assets)						3.62	%						3.41	%						3.03	%



CONSOLIDATED STATISTICAL DATA (unaudited)
Comerica Incorporated and Subsidiaries

	June 30,			March 31,			December 31,			September 30,			June 30,
(in millions, except per share data)	2018			2018			2017			2017			2017

Commercial loans:
Floor plan	$	4,239		$	4,302		$	4,359		$	3,960		$	4,346
Other	27,291			26,607			26,701			27,102			27,103
Total commercial loans	31,530			30,909			31,060			31,062			31,449
Real estate construction loans	3,257			3,114			2,961			3,018			2,857
Commercial mortgage loans	9,124			9,272			9,159			8,985			8,974
Lease financing	458			464			468			475			472
International loans	993			964			983			1,159			1,145
Residential mortgage loans	1,954			2,003			1,988			1,999			1,976
Consumer loans:
Home equity	1,731			1,763			1,816			1,790			1,796
Other consumer	745			751			738			721			739
Total consumer loans	2,476			2,514			2,554			2,511			2,535
Total loans	$	49,792		$	49,240		$	49,173		$	49,209		$	49,408

Goodwill	$	635		$	635		$	635		$	635		$	635
Core deposit intangible	5			5			6			6			7
Other intangibles	2			2			2			2			2

Common equity tier 1 capital (a)	8,026			7,911			7,773			7,752			7,705
Risk-weighted assets (a)	67,468			66,039			66,575			67,341			66,928

Common equity tier 1 and tier 1 risk-based capital ratio (a)	11.90		%	11.98		%	11.68		%	11.51		%	11.51		%
Total risk-based capital ratio (a)	13.96			14.12			13.84			13.65			13.66
Leverage ratio (a)	11.35			11.24			10.89			10.87			10.80
Common equity ratio	11.22			11.06			11.13			11.16			11.18
Tangible common equity ratio (b)	10.42			10.26			10.32			10.35			10.37

Common shareholders' equity per share of common stock	$	47.27		$	46.38		$	46.07		$	46.09		$	45.39
Tangible common equity per share of common stock (b)	43.51			42.66			42.34			42.39			41.73
Market value per share for the quarter:
High	101.05			102.66			88.22			76.76			75.30
Low	90.40			86.02			74.16			64.04			64.75
Close	90.92			95.93			86.81			76.26			73.24

Quarterly ratios:
Return on average common shareholders' equity	16.40		%	14.37		%	5.58		%	11.17		%	10.26		%
Return on average assets	1.85			1.62			0.62			1.25			1.14
Efficiency ratio (c)	53.24			56.33			58.14			56.33			58.70

Number of banking centers	438			438			438			439			439

Number of employees - full time equivalent	7,868			7,942			7,999			7,974			8,017


(a)	June 30, 2018 amounts and ratios are estimated and do not reflect guidance related to high volatility commercial real estate loans as indicated in the recent interagency statement regarding the impact of the Economic Growth, Regulatory Relief, and Consumer Protection Act.


(b)	See Reconciliation of Non-GAAP Financial Measures.


(c)	Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities and a derivative contract tied to the conversion rate of Visa Class B shares.



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, 2016	175.3		$	1,141	$	2,135		$	(383	)	$	7,331		$	(2,428	)	$	7,796
Cumulative effect of change in accounting principle	—		—		3			—			(2		)	—			1
Net income	—		—		—			—			405			—			405
Other comprehensive income, net of tax	—		—		—			22			—			—			22
Cash dividends declared on common stock ($0.49 per share)	—		—		—			—			(88		)	—			(88		)
Purchase of common stock	(3.7	)	—		—			—			—			(257		)	(257		)
Net issuance of common stock under employee stock plans	2.8		—		(26		)	—			(20		)	128			82
Net issuance of common stock for warrants	1.5		—		(25		)	—			(46		)	71			—
Share-based compensation	—		—		24			—			—			—			24
Other	—		—		(1		)	—			—			1			—
BALANCE AT JUNE 30, 2017	175.9		$	1,141	$	2,110		$	(361	)	$	7,580		$	(2,485	)	$	7,985

BALANCE AT DECEMBER 31, 2017	172.9		$	1,141	$	2,122		$	(451	)	$	7,887		$	(2,736	)	$	7,963
Cumulative effect of change in accounting principles	—		—		—			1			14			—			15
Net income	—		—		—			—			607			—			607
Other comprehensive loss, net of tax	—		—		—			(139		)	—			—			(139		)
Cash dividends declared on common stock ($0.64 per share)	—		—		—			—			(110		)	—			(110		)
Purchase of common stock	(3.4	)	—		—			—			—			(328		)	(328		)
Net issuance of common stock under employee stock plans	1.3		—		(11		)	—			(21		)	69			37
Net issuance of common stock for warrants	0.1		—		(1		)	—			(3		)	4			—
Share-based compensation	—		—		34			—			—			—			34
BALANCE AT JUNE 30, 2018	170.9		$	1,141	$	2,144		$	(589	)	$	8,374		$	(2,991	)	$	8,079



BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries


(dollar amounts in millions)	Business			Retail			Wealth
Three Months Ended June 30, 2018	Bank			Bank			Management			Finance			Other				Total
Earnings summary:
Net interest income	$	341		$	169		$	40		$	26		$	14			$	590
Provision for credit losses	(17		)	(9		)	1			—			(4		)		(29		)
Noninterest income	126			42			67			12			1				248
Noninterest expenses	182			178			75			(1		)	14				448
Provision for income taxes	68			10			7			6			2			(a)	93
Net income	$	234		$	32		$	24		$	33		$	3			$	326
Net credit-related charge-offs (recoveries)	$	—		$	(4	)	$	1		$	—		$	—			$	(3	)

Selected average balances:
Assets	$	39,961		$	6,412		$	5,260		$	13,735		$	5,152			$	70,520
Loans	38,332			5,766			5,127			—			—				49,225
Deposits	26,582			24,161			3,852			1,093			142				55,830

Statistical data:
Return on average assets (b)	2.34		%	0.52		%	1.90		%	N/M			N/M				1.85		%
Efficiency ratio (c)	39.00			84.05			69.03			N/M			N/M				53.24

	Business			Retail			Wealth
Three Months Ended March 31, 2018	Bank			Bank			Management			Finance			Other				Total
Earnings summary:
Net interest income	$	330		$	165		$	41		$	1		$	12			$	549
Provision for credit losses	10			4			(4		)	—			2				12
Noninterest income	121			42			68			11			2				244
Noninterest expenses	184			177			72			(1		)	14				446
Provision (benefit) for income taxes	59			6			10			1			(22		)	(a)	54
Net income	$	198		$	20		$	31		$	12		$	20			$	281
Net credit-related charge-offs (recoveries)	$	18		$	12		$	(2	)	$	—		$	—			$	28

Selected average balances:
Assets	$	38,911		$	6,427		$	5,373		$	13,779		$	5,836			$	70,326
Loans	37,368			5,807			5,246			—			—				48,421
Deposits	27,314			24,064			3,796			823			93				56,090

Statistical data:
Return on average assets (b)	2.07		%	0.33		%	2.30		%	N/M			N/M				1.62		%
Efficiency ratio (c)	40.72			85.03			67.10			N/M			N/M				56.33

	Business			Retail			Wealth
Three Months Ended June 30, 2017	Bank			Bank			Management			Finance			Other				Total
Earnings summary:
Net interest income (expense)	$	336		$	162		$	42		$	(49	)	$	9			$	500
Provision for credit losses	12			5			(2		)	—			2				17
Noninterest income	152			48			64			10			2				276
Noninterest expenses	196			180			71			(1		)	11				457
Provision (benefit) for income taxes	100			9			14			(17		)	(7		)	(a)	99
Net income (loss)	$	180		$	16		$	23		$	(21	)	$	5			$	203
Net credit-related charge-offs (recoveries)	$	10		$	9		$	(1	)	$	—		$	—			$	18

Selected average balances:
Assets	$	38,881		$	6,487		$	5,432		$	13,936		$	6,610			$	71,346
Loans	37,580			5,865			5,278			—			—				48,723
Deposits	28,748			23,935			4,106			156			183				57,128

Statistical data:
Return on average assets (b)	1.85		%	0.27		%	1.76		%	N/M			N/M				1.14		%
Efficiency ratio (c)	40.25			84.80			66.44			N/M			N/M				58.70


(a)	Included tax benefits of $3 million, $19 million and $5 million from employee stock transactions for the second and first quarters 2018 and second quarter 2017, respectively.


(b)	Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.


(c)	Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities and a derivative contract tied to the conversion rate of Visa Class B shares.

N/M - Not Meaningful



MARKET SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries


(dollar amounts in millions)										Other			Finance
Three Months Ended June 30, 2018	Michigan			California			Texas			Markets			& Other				Total
Earnings summary:
Net interest income	$	167		$	183		$	117		$	83		$	40			$	590
Provision for credit losses	1			(9		)	(15		)	(2		)	(4		)		(29		)
Noninterest income	73			42			30			90			13				248
Noninterest expenses	144			105			92			94			13				448
Provision (benefit) for income taxes	22			32			16			15			8			(a)	93
Net income	$	73		$	97		$	54		$	66		$	36			$	326
Net credit-related charge-offs (recoveries)	$	—		$	—		$	3		$	(6	)	$	—			$	(3	)

Selected average balances:
Assets	$	13,427		$	18,697		$	10,439		$	9,070		$	18,887			$	70,520
Loans	12,641			18,435			9,862			8,287			—				49,225
Deposits	20,904			16,642			8,967			8,082			1,235				55,830

Statistical data:
Return on average assets (b)	1.37		%	2.06		%	2.08		%	2.93		%	N/M				1.85		%
Efficiency ratio (c)	59.77			46.94			62.17			53.72			N/M				53.24

										Other			Finance
Three Months Ended March 31, 2018	Michigan			California			Texas			Markets			& Other				Total
Earnings summary:
Net interest income (expense)	$	169		$	180		$	109		$	78		$	13			$	549
Provision for credit losses	33			(2		)	(13		)	(8		)	2				12
Noninterest income	73			39			31			88			13				244
Noninterest expenses	144			106			92			91			13				446
Provision for income taxes	16			30			14			15			(21		)	(a)	54
Net income (loss)	$	49		$	85		$	47		$	68		$	32			$	281
Net credit-related charge-offs	$	(1	)	$	13		$	5		$	11		$	—			$	28

Selected average balances:
Assets	$	13,395		$	18,581		$	10,373		$	8,362		$	19,615			$	70,326
Loans	12,604			18,347			9,830			7,640			—				48,421
Deposits	21,227			17,091			9,188			7,668			916				56,090

Statistical data:
Return on average assets (b)	0.88		%	1.86		%	1.85		%	3.32		%	N/M				1.62		%
Efficiency ratio (c)	59.61			48.39			65.63			54.97			N/M				56.33

										Other			Finance
Three Months Ended June 30, 2017	Michigan			California			Texas			Markets			& Other				Total
Earnings summary:
Net interest income (expense)	$	167		$	178		$	113		$	82		$	(40	)		$	500
Provision for credit losses	(2		)	24			(15		)	8			2				17
Noninterest income	81			45			33			105			12				276
Noninterest expenses	145			98			94			110			10				457
Provision (benefit) for income taxes	38			40			25			20			(24		)	(a)	99
Net income (loss)	$	67		$	61		$	42		$	49		$	(16	)		$	203
Net credit-related charge-offs (recoveries)	$	(1	)	$	8		$	5		$	6		$	—			$	18

Selected average balances:
Assets	$	13,371		$	18,474		$	10,481		$	8,474		$	20,546			$	71,346
Loans	12,712			18,194			10,015			7,802			—				48,723
Deposits	21,698			17,344			9,632			8,115			339				57,128

Statistical data:
Return on average assets (b)	1.20		%	1.33		%	1.52		%	2.24		%	N/M				1.14		%
Efficiency ratio (c)	58.18			43.85			64.39			58.59			N/M				58.70


(a)	Included tax benefits of $3 million, $19 million and $5 million from employee stock transactions for the second and first quarters 2018 and second quarter 2017, respectively.


(b)	Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.


(c)	Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding gains (losses) from securities and a derivative contract tied to the conversion rate of Visa Class B shares

N/M - Not Meaningful



RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
Comerica Incorporated and Subsidiaries

Comerica believes non-GAAP measures are meaningful 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 net income, earnings per share, ROA, ROE, noninterest income, noninterest expenses and efficiency ratio provide a greater understanding of ongoing operations and enhances comparability of results with prior periods. Tangible common equity is used by Comerica to measure the quality of capital and the return relative to balance sheet risk.



	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,
(dollar amounts in millions, except per share data)	2018			2018			2017			2018			2017

Adjusted Earnings per Common Share:

Net income attributable to common shareholders	$	324		$	279		$	202		$	603		$	402
Restructuring charges, net of tax	9			12			9			21			16
Deferred tax adjustment	—			(3		)	—			(3		)	—
Tax benefits from employee stock transactions	(3		)	(19		)	(5		)	(22		)	(29		)
Adjusted net income attributable to common shareholders	$	330		$	269		$	206		$	599		$	389

Diluted average common shares (in millions)	174			175			179			174			180
Diluted earnings per common share:
Reported	$	1.87		$	1.59		$	1.13		$	3.46		$	2.24
Adjusted	1.90			1.54			1.15			3.44			2.17

Adjusted Noninterest Income, Noninterest Expenses and Efficiency Ratio:

Noninterest income	$	248		$	244		$	276		$	492		$	547
Proforma effect of adoption of accounting standard	—			—			(28		)	—			(54		)
Adjusted noninterest income	$	248		$	244		$	248		$	492		$	493

Noninterest expenses	$	448		$	446		$	457		$	894		$	914
Proforma effect of adoption of accounting standard	—			—			(28		)	—			(54		)
Restructuring charges	(11		)	(16		)	(14		)	(27		)	(25		)
Adjusted noninterest expenses	$	437		$	430		$	415		$	867		$	835

Net interest income	$	590		$	549		$	500		$	1,139		$	970
Efficiency ratio:
Reported	53.24		%	56.33		%	58.70		%	54.74		%	60.17		%
Adjusted	51.90			54.32			55.25			53.07			56.98

Adjusted Net Income, ROA and ROE:

Net income	$	326		$	281		$	203		$	607		$	405
Restructuring charges, net of tax	9			12			9			21			16
Deferred tax adjustment	—			(3		)	—			(3		)	—
Tax benefits from employee stock transactions	(3		)	(19		)	(5		)	(22		)	(29		)
Adjusted net income	$	332		$	271		$	207		$	603		$	392

Average assets	$	70,520		$	70,326		$	71,346		$	70,423		$	71,581
ROA:
Reported	1.85		%	1.62		%	1.14		%	1.74		%	1.14		%
Adjusted	1.89			1.56			1.17			1.73			1.11

Average common shareholders' equity	$	7,977		$	7,927		$	7,944		$	7,952		$	7,905
ROE:
Reported	16.40		%	14.37		%	10.26		%	15.39		%	10.34		%
Adjusted	16.70			13.85			10.49			15.29			10.03

Adjusted net income, earnings per share, ROA and ROE remove the after tax effect of restructuring charges, the charge to adjust deferred taxes resulting from the Tax Cut and Jobs Act and tax benefits from employee stock transactions from net income and net income available to common shareholders. Adjusted noninterest income, noninterest expenses and efficiency ratio remove the proforma effect of the adoption of the new accounting standard for revenue recognition and restructuring charges from noninterest income and noninterest expenses.



	June 30,			March 31,			December 31,			September 30,			June 30,
(dollar amounts in millions)	2018			2018			2017			2017			2017

Tangible Common Equity Ratio:
Common shareholders' equity	$	8,079		$	8,000		$	7,963		$	8,034		$	7,985
Less:
Goodwill	635			635			635			635			635
Other intangible assets	7			7			8			8			9
Tangible common equity	$	7,437		$	7,358		$	7,320		$	7,391		$	7,341

Total assets	$	71,987		$	72,335		$	71,567		$	72,017		$	71,447
Less:
Goodwill	635			635			635			635			635
Other intangible assets	7			7			8			8			9
Tangible assets	$	71,345		$	71,693		$	70,924		$	71,374		$	70,803

Common equity ratio	11.22		%	11.06		%	11.13		%	11.16		%	11.18		%
Tangible common equity ratio	10.42			10.26			10.32			10.35			10.37

Tangible Common Equity per Share of Common Stock:
Common shareholders' equity	$	8,079		$	8,000		$	7,963		$	8,034		$	7,985
Tangible common equity	7,437			7,358			7,320			7,391			7,341

Shares of common stock outstanding (in millions)	171			172			173			174			176

Common shareholders' equity per share of common stock	$	47.27		$	46.38		$	46.07		$	46.09		$	45.39
Tangible common equity per share of common stock	43.51			42.66			42.34			42.39			41.73

The tangible common equity ratio removes the effect of intangible assets from capital and 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 INC /NEW/ - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - July 17, 2018

Attached files

COMERICA INC /NEW/ Reports