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

Attached files

file	filename
EX-99.2 - EXHIBIT 99.2 - COMERICA INC /NEW/	cma-20180930ex992.htm
8-K - 8-K - COMERICA INC /NEW/	cma-20180930form8k.htm

Dallas, TX/October 16, 2018

COMERICA REPORTS THIRD QUARTER 2018 NET INCOME OF $318 MILLION,

$1.86 PER SHARE

Returned $600 Million to Shareholders Through Share Repurchases and Dividends

Continued Net Interest Income Growth, Strong Credit Quality and Controlled Expenses

Earnings Per Share Increased 48 Percent Compared to Third Quarter 2017

“In the third quarter, we continued to grow revenue, excluding securities losses, as well as maintain favorable credit metrics and well-controlled expenses," said Ralph W. Babb, Jr., chairman and chief executive officer. “We took action to enhance our future returns by significantly increasing our share repurchases and dividend. We expect to continue to return excess capital to shareholders as we work toward a target common equity Tier 1 capital ratio of 9.5 to 10 percent by the end of 2019. In addition, discrete tax benefits provided us the opportunity to reposition a portion of our securities portfolio. With increased loan commitments and seasonal factors, we expect loan growth to trend positive into the end of the year. We remain well positioned to meaningfully benefit from rising rates as we judiciously manage loan and deposit pricing. Our return on assets, return on equity and efficiency ratio clearly demonstrate our commitment to enhancing shareholder value.”



(dollar amounts in millions, except per share data)	3rd Qtr '18			2nd Qtr '18			3rd Qtr '17
FINANCIAL RESULTS
Net interest income	$	599		$	590		$	546
Provision for credit losses	—			(29		)	24
Noninterest income	234			248			275
Noninterest expenses	452			448			463
Pre-tax income	381			419			334
Provision for income taxes	63			93			108
Net income	$	318		$	326		$	226

Diluted earnings per common share	$	1.86		$	1.87		$	1.26
Efficiency ratio (a)	52.93		%	53.24		%	56.33		%
Net interest margin	3.60			3.62			3.28
Common equity Tier 1 capital ratio (b)	11.66			11.89			11.51
Common equity ratio	10.90			11.22			11.16

ADJUSTED FINANCIAL RESULTS (c)
Net interest income	$	599		$	590		$	546
Provision for credit losses	—			(29		)	24
Noninterest income	254			248			245
Noninterest expenses	440			437			426
Pre-tax income	413			430			341
Provision for income taxes	94			98			113
Net income	$	319		$	332		$	228

Diluted earnings per common share	$	1.86		$	1.90		$	1.27
Efficiency ratio	51.59		%	51.90		%	53.71		%


(a)	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.


(b)	September 30, 2018 ratio is estimated.


(c)	Financial results presented on an adjusted basis to facilitate trend analysis. See Reconciliation of Non-GAAP Financial Measures.

The following table includes items used to arrive at adjusted net income in the Adjusted Financial Results (see Reconciliation of Non-GAAP Financial Measures).



	3rd Qtr '18						2nd Qtr '18						3rd Qtr '17
(in millions, except per share data)	Amount			Per Share			Amount			Per Share			Amount			Per Share
Securities repositioning, net of tax	$	15		$	0.09		$	—		$	—		$	—		$	—
Restructuring charges, net of tax	9			0.05			9			0.05			4			0.02
Discrete tax benefits	(23		)	(0.14		)	(3		)	(0.02		)	(2		)	(0.01		)

Third Quarter 2018 Compared to Second Quarter 2018

Average total loans decreased $641 million to $48.6 billion.


•	Primarily reflected seasonality, with decreases in National Dealer Services and general Middle Market as well as an increase in Mortgage Banker Finance.


•	Also included a decline in Private Banking, partially offset by an increase in Technology and Life Sciences.


•	Loan yields increased 11 basis points to 4.74 percent, reflecting increases in short-term rates (+15 basis points), partially offset by a decrease in interest recoveries (-6 basis points).

Average total deposits increased $263 million to $56.1 billion.


•	Driven by a $386 million increase in interest-bearing deposits, partially offset by a $123 million decrease in noninterest-bearing deposits.


•	Interest-bearing deposit costs increased 9 basis points to 0.51 percent due to continued focus on relationship-based deposit pricing as short-term interest rates increased.

Net interest income increased $9 million to $599 million.


•	Includes a net benefit from higher short-term interest rates of $13 million from managing loan and deposit pricing in a rising rate environment.


•	Net interest margin decreased 2 basis points to 3.60 percent, including a 8-basis-point increase due to short-term interest rates, offset by decreases from lower interest recoveries and excess liquidity.

No provision for credit losses in third quarter 2018 compared to $29 million release in second quarter 2018.


•	Credit quality remains strong as reflected by a decline in total criticized loans of $95 million or 5 percent and net credit-related charge-offs of $15 million.

Excluding a $20 million loss related to repositioning the securities portfolio, noninterest income increased $6 million.


•	Primarily reflecting increases of $2 million each in customer derivative and investment banking income, as well as smaller increases in other noninterest income categories, partially offset by decreases of $2 million each in syndication fees (a component of commercial lending fees) and letter of credit fees.


•	Additionally reflecting increases of $2 million each in bank-owned life insurance (BOLI) relating to an annual dividend and deferred compensation asset returns (offset in noninterest expenses) as well as an increase of $2 million due to a charge incurred in the second quarter relating to a derivative contract tied to the conversion rate of Visa Class B shares.


•	The $20 million loss on sale of securities resulted from repositioning $1.3 billion of treasury securities by purchasing securities yielding approximately $4 million additional interest per quarter while retaining a duration of 3 years.

Noninterest expenses increased $4 million to $452 million.


•	Primarily reflecting a $4 million increase in salaries and benefits expense driven by higher contract labor related to technology projects, deferred compensation (offset in noninterest income) and one additional day in the quarter, partly offset by a decrease in workforce.

Provision for income taxes decreased $30 million to $63 million.


•	Discrete tax benefit items of $23 million primarily resulting from a review of certain tax capitalization and recovery positions related to software and fixed assets included in the 2017 tax return.


•	Also included the impact from lower pre-tax earnings, primarily as a result of the securities losses from repositioning the securities portfolio and the change in the provision for credit losses.

Capital position remained solid at September 30, 2018.


•	Returned a record $600 million to shareholders, including dividends and the repurchase of $500 million of common stock (5.1 million shares) under the equity repurchase program.


•	Dividend increased 76 percent to 60 cents per share.

Third Quarter 2018 Compared to Third Quarter 2017

Effective January 1, 2018, the Corporation adopted Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers." As a result, revenue from certain products is now presented net of costs. The commentary below discusses noninterest income and noninterest expenses on an adjusted basis to eliminate the variances attributable to the impact of adoption. See Reconciliation of Non-GAAP Financial Measures.

Average total loans remained stable.


•	Reflected decreases in Corporate Banking, Energy and Private Banking, offset by increases in Technology and Life Sciences, Commercial Real Estate and National Dealer Services.

Average total deposits decreased $400 million.


•	Due to a $1.9 billion decrease in noninterest-bearing deposits, offset by a $1.5 billion increase in interest-bearing deposits.


•	Primarily reflected a decrease in general Middle Market (nearly $1 billion decrease in Municipalities), partially offset by a $752 million increase in Technology and Life Sciences and smaller increases in other lines of business.

Net interest income increased $53 million.


•	Driven by the net benefit from higher short-term rates, partially offset by a $13 million decrease in interest recoveries from elevated third quarter 2017 levels.

Provision for credit losses decreased $24 million.


•	Reflected declines in total criticized loans of $764 million and net credit-related charge-offs of $10 million.

Adjusted noninterest income increased $9 million.


•	Reflected increases of $5 million in card fees, adjusted for the impact of adoption of the new revenue accounting standard, $3 million in fiduciary income and smaller increases in other noninterest income categories, partially offset by a $3 million decrease in service charges on deposit accounts.

Adjusted noninterest expenses increased $14 million.


•	Reflected a $17 million increase in salaries and benefits expense, driven by higher share-based and incentive compensation tied to financial performance as well as merit increases, partially offset by a decrease in workforce.


•	Also included decreases of $3 million in software expense and $2 million in FDIC insurance expense, partially offset by a $3 million increase in outside processing expense.

Provision for income taxes decreased $45 million.


•	Discrete tax benefit items of $23 million, primarily resulting from a review of certain tax capitalization and recovery positions related to software and fixed assets included in the 2017 tax return.


•	Also included the impact of the decrease in the statutory tax rate in 2018, partially offset by an increase in pre-tax income.

Net Interest Income



(dollar amounts in millions)	3rd Qtr '18			2nd Qtr '18			3rd Qtr '17
Net interest income	$	599		$	590		$	546

Net interest margin	3.60		%	3.62		%	3.28		%

Selected average balances:
Total earning assets	$	65,842		$	65,114		$	66,084
Total loans	48,584			49,225			48,663
Total investment securities	11,761			11,799			12,244
Federal Reserve Bank deposits	5,180			3,717			4,889


Total deposits	56,093			55,830			56,493
Total noninterest-bearing deposits	29,193			29,316			31,057
Medium- and long-term debt	6,153			5,584			4,936

Net interest income increased $9 million to $599 million in the third quarter 2018, compared to the second quarter 2018.


•	The net increase from higher short-term rates was $13 million, reflecting interest benefits to loans (+$19 million), short-term investments (+$2 million) and securities (+$2 million), partly offset by increases in deposit (-$6 million) and debt (-$4 million) costs.


•	Net interest income also benefited from higher average short-term investments (+$8 million) and one additional day in the quarter (+$6 million), offset by lower interest recoveries (-$8 million), lower average loan balances (-$7 million) and higher wholesale funding (-$5 million).

The net interest margin decreased 2 basis points to 3.60 percent in the third quarter 2018, compared to the second quarter 2018.


•	The net benefit from short-term rates (+8 basis points) was more than offset by the expected decrease in interest recoveries from elevated second quarter levels (-5 basis points), higher average debt from a third quarter 2018 issuance (-3 basis points) and an increase in lower-yielding average short-term investments (-3 basis points).


•	The net benefit from higher short-term rates primarily reflected higher loan (+12 basis points) and securities yields (+1 basis point), partially offset by higher deposit (-4 basis points) and debt (-2 basis points) costs.

Credit Quality

“With net charge-offs of 13 basis points and a further decline in criticized loans, which now represent 3.4 percent of total loans at quarter end, our credit quality is strong,” said Babb. “Gross charge-offs remained low at $25 million, while recoveries declined to $10 million, following unusually high recoveries in the second quarter. Nonaccrual loans comprised only 47 basis points of our total loans. The positive credit migration resulted in a reserve release and a reserve ratio of 1.35 percent. The economy is strong and our customers are performing well. We remain vigilant; however, at this point, we are not seeing any concerning trends.”



(dollar amounts in millions)	3rd Qtr '18			2nd Qtr '18			3rd Qtr '17
Credit-related charge-offs	$	25		$	20		$	37
Recoveries	10			23			12
Net credit-related charge-offs (recoveries)	15			(3		)	25
Net credit-related charge-offs (recoveries)/Average total loans	0.13		%	(0.02		)%	0.21		%

Provision for credit losses	$	—		$	(29	)	$	24

Nonperforming loans	239			262			452
Nonperforming assets (NPAs)	240			264			458
NPAs/Total loans and foreclosed property	0.49		%	0.53		%	0.93		%

Loans past due 90 days or more and still accruing	$	28		$	20		$	12

Allowance for loan losses	664			677			712
Allowance for credit losses on lending-related commitments (a)	33			34			41
Total allowance for credit losses	697			711			753

Allowance for loan losses/Period-end total loans	1.35		%	1.36		%	1.45		%
Allowance for loan losses/Nonperforming loans	2.8x			2.6x			1.6x


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


•	The allowance for loan losses decreased to $664 million at September 30, 2018, or 1.35 percent of total loans, reflecting improvements in credit quality of the portfolio.

•

Criticized loans decreased $95 million to $1.7 billion at September 30, 2018, compared to $1.8 billion at June 30, 2018, including a $50 million decrease in Energy. Criticized loans as a percentage of total loans were 3.4 percent at September 30, 2018, compared to 3.5 percent at June 30, 2018. Criticized loans are generally consistent with the Special Mention, Substandard and Doubtful categories defined by regulatory authorities.


•	Nonperforming loans decreased $23 million to $239 million at September 30, 2018, compared to $262 million at June 30, 2018. Nonperforming loans as a percentage of total loans decreased to 0.49 percent at September 30, 2018, compared to 0.53 percent at June 30, 2018.

Fourth Quarter 2018 Outlook

For the fourth quarter 2018 compared to the third quarter 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:


•	Average loans stable with a positive trend, reflecting increases in most lines of business and a seasonal increase in National Dealer Services, mostly offset by a seasonal decrease in Mortgage Banker Finance.


•	Continued growth in net interest income from the net benefit due to rising short-term interest rates and repositioning the securities portfolio, partially offset by higher average debt as well as lower interest recoveries and loan fees.


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


•	Relatively stable noninterest income, excluding securities losses, BOLI and deferred compensation asset returns.


◦	Levels of customer derivative and investment banking income may not repeat.


◦	GEAR Up initiatives continue to help drive growth in card fees and fiduciary income.


•	Noninterest expenses modestly higher, excluding approximately $10 million of restructuring charges.


◦	GEAR Up savings remain on track.


◦	Continued higher outside processing and technology expenditures.


◦	Seasonal and typical inflationary pressures.


•	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. From time to time, the Corporation may make reclassifications among the segments to reflect management's current view of the segments, and methodologies may be modified as the management accounting system is enhanced and changes occur in the organizational structure and/or product lines. During the third quarter 2018, the Small Business component was reclassified from Retail Bank to Business Bank. The financial results provided are based on the internal business unit and geographic market structures of Comerica and methodologies in effect at September 30, 2018. A discussion of business segment and geographic market year-to-date results will be included in Comerica's Third Quarter 2018 Form 10-Q.

Conference Call and Webcast

Comerica will host a conference call to review third quarter 2018 financial results at 7 a.m. CT Tuesday, October 16, 2018. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 22791270). 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 and "Item 1A. Risk Factors" beginning on page 59 of Comerica's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018. 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

	Chelsea R. Smith
	(214) 462-6834



CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
Comerica Incorporated and Subsidiaries

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
(in millions, except per share data)	2018			2018			2017			2018			2017
PER COMMON SHARE AND COMMON STOCK DATA
Diluted net income	$	1.86		$	1.87		$	1.26		$	5.32		$	3.50
Cash dividends declared	0.60			0.34			0.30			1.24			0.79

Average diluted shares (in thousands)	170,057			173,601			177,411			172,862			178,899
PERFORMANCE RATIOS
Return on average common shareholders' equity	16.15		%	16.40		%	11.17		%	15.64		%	10.62		%
Return on average assets	1.77			1.85			1.25			1.75			1.18
Efficiency ratio (a)	52.93			53.24			56.33			54.12			58.82
CAPITAL
Common equity tier 1 capital (b)	$	7,750		$	8,026		$	7,752
Risk-weighted assets (b)	66,476			67,508			67,341
Common shareholders' equity per share of common stock	46.92			47.27			46.09
Tangible common equity per share of common stock	43.05			43.51			42.39
Common equity tier 1 and tier 1 risk-based capital ratio (b)	11.66		%	11.89		%	11.51		%
Total risk-based capital ratio (b)	13.74			13.96			13.65
Leverage ratio (b)	10.85			11.36			10.87
Common equity ratio	10.90			11.22			11.16
Tangible common equity ratio (c)	10.09			10.42			10.35
AVERAGE BALANCES
Commercial loans	$	30,371		$	30,966		$	30,603		$	30,494		$	30,313
Real estate construction loans	3,198			3,189			2,933			3,152			2,934
Commercial mortgage loans	9,084			9,174			8,977			9,158			8,988
Lease financing	464			457			470			462			522
International loans	1,072			981			1,156			1,017			1,168
Residential mortgage loans	1,962			1,993			2,005			1,988			1,981
Consumer loans	2,433			2,465			2,519			2,473			2,525
Total loans	48,584			49,225			48,663			48,744			48,431

Earning assets	65,842			65,114			66,084			65,326			66,346
Total assets	71,210			70,520			71,251			70,689			71,470

Noninterest-bearing deposits	29,193			29,316			31,057			29,457			30,754
Interest-bearing deposits	26,900			26,514			25,436			26,547			26,374
Total deposits	56,093			55,830			56,493			56,004			57,128

Common shareholders' equity	7,817			7,977			8,008			7,907			7,939
NET INTEREST INCOME
Net interest income	$	599		$	590		$	546		$	1,738		$	1,516
Net interest margin	3.60		%	3.62		%	3.28		%	3.54		%	3.05		%
CREDIT QUALITY
Total nonperforming assets	240			264			458

Loans past due 90 days or more and still accruing	28			20			12

Net credit-related charge-offs (recoveries)	15			(3		)	25			$	40		$	76

Allowance for loan losses	664			677			712
Allowance for credit losses on lending-related commitments	33			34			41
Total allowance for credit losses	697			711			753

Allowance for loan losses as a percentage of total loans	1.35		%	1.36		%	1.45		%
Net credit-related charge-offs (recoveries) as a percentage of average total loans	0.13			(0.02		)	0.21			0.11		%	0.21		%
Nonperforming assets as a percentage of total loans and foreclosed property	0.49			0.53			0.93
Allowance for loan losses as a percentage of total nonperforming loans	2.8x			2.6x			1.6x
OTHER KEY INFORMATION
Number of banking centers	435			438			439
Number of employees - full time equivalent	7,834			7,868			7,974


(a)	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.


(b)	September 30, 2018 ratios are estimated.


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



CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries

	September 30,			June 30,			December 31,			September 30,
(in millions, except share data)	2018			2018			2017			2017
	(unaudited)			(unaudited)						(unaudited)
ASSETS
Cash and due from banks	$	945		$	1,424		$	1,438		$	1,351

Interest-bearing deposits with banks	4,894			4,236			4,407			4,853
Other short-term investments	136			134			96			92

Investment securities available-for-sale	11,862			11,915			10,938			10,998
Investment securities held-to-maturity	—			—			1,266			1,344

Commercial loans	30,889			31,530			31,060			31,062
Real estate construction loans	3,158			3,257			2,961			3,018
Commercial mortgage loans	9,019			9,124			9,159			8,985
Lease financing	471			458			468			475
International loans	1,090			993			983			1,159
Residential mortgage loans	1,947			1,954			1,988			1,999
Consumer loans	2,436			2,476			2,554			2,511
Total loans	49,010			49,792			49,173			49,209
Less allowance for loan losses	(664		)	(677		)	(712		)	(712		)
Net loans	48,346			49,115			48,461			48,497

Premises and equipment	472			467			466			467
Accrued income and other assets	4,793			4,696			4,495			4,415
Total assets	$	71,448		$	71,987		$	71,567		$	72,017

LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits	$	29,301		$	30,316		$	32,071		$	32,391

Money market and interest-bearing checking deposits	22,449			22,544			21,500			20,869
Savings deposits	2,192			2,227			2,152			2,147
Customer certificates of deposit	2,051			2,089			2,165			2,342
Foreign office time deposits	13			34			15			70
Total interest-bearing deposits	26,705			26,894			25,832			25,428
Total deposits	56,006			57,210			57,903			57,819

Short-term borrowings	84			58			10			509
Accrued expenses and other liabilities	1,154			1,057			1,069			1,018
Medium- and long-term debt	6,418			5,583			4,622			4,637
Total liabilities	63,662			63,908			63,604			63,983

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			2,144			2,122			2,112
Accumulated other comprehensive loss	(611		)	(589		)	(451		)	(359		)
Retained earnings	8,587			8,374			7,887			7,746
Less cost of common stock in treasury - 62,224,198 shares at 9/30/18, 57,254,526 shares at 6/30/18, 55,306,483 shares at 12/31/17 and 53,835,135 shares at 9/30/17	(3,475		)	(2,991		)	(2,736		)	(2,606		)
Total shareholders' equity	7,786			8,079			7,963			8,034
Total liabilities and shareholders' equity	$	71,448		$	71,987		$	71,567		$	72,017



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

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in millions, except per share data)	2018			2017		2018			2017
INTEREST INCOME
Interest and fees on loans	$	581		$	500	$	1,658		$	1,374
Interest on investment securities	66			63		194			186
Interest on short-term investments	28			16		63			44
Total interest income	675			579		1,915			1,604
INTEREST EXPENSE
Interest on deposits	35			11		79			29
Interest on short-term borrowings	1			3		1			3
Interest on medium- and long-term debt	40			19		97			56
Total interest expense	76			33		177			88
Net interest income	599			546		1,738			1,516
Provision for credit losses	—			24		(17		)	57
Net interest income after provision for credit losses	599			522		1,755			1,459
NONINTEREST INCOME
Card fees	61			85		180			242
Service charges on deposit accounts	53			57		160			172
Fiduciary income	51			48		155			148
Commercial lending fees	21			21		62			63
Letter of credit fees	9			11		30			34
Bank-owned life insurance	11			12		29			31
Foreign exchange income	12			11		36			33
Brokerage fees	7			6		20			17
Net securities losses	(20		)	—		(19		)	—
Other noninterest income	29			24		73			82
Total noninterest income	234			275		726			822
NONINTEREST EXPENSES
Salaries and benefits expense	254			237		759			713
Outside processing fee expense	65			92		190			267
Net occupancy expense	38			38		113			114
Equipment expense	12			12		34			34
Restructuring charges	12			7		39			32
Software expense	32			35		95			95
FDIC insurance expense	11			13		36			38
Advertising expense	8			8		22			19
Litigation-related expense	—			—		—			(2		)
Other noninterest expenses	20			21		58			67
Total noninterest expenses	452			463		1,346			1,377
Income before income taxes	381			334		1,135			904
Provision for income taxes	63			108		210			273
NET INCOME	318			226		925			631
Less income allocated to participating securities	2			2		6			5
Net income attributable to common shares	$	316		$	224	$	919		$	626
Earnings per common share:
Basic	$	1.89		$	1.29	$	5.41		$	3.58
Diluted	1.86			1.26		5.32			3.50

Comprehensive income	296			228		764			655

Cash dividends declared on common stock	100			53		210			141
Cash dividends declared per common share	0.60			0.30		1.24			0.79



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

	Third			Second			First		Fourth		Third		Third Quarter 2018 Compared to:
	Quarter			Quarter			Quarter		Quarter		Quarter		Second Quarter 2018					Third Quarter 2017
(in millions, except per share data)	2018			2018			2018		2017		2017		Amount			Percent		Amount			Percent
INTEREST INCOME
Interest and fees on loans	$	581		$	568		$	509	$	498	$	500	$	13		2	%	$	81		16	%
Interest on investment securities	66			64			64		64		63		2			2		3			5
Interest on short-term investments	28			18			17		16		16		10			52		12			71
Total interest income	675			650			590		578		579		25			4		96			16
INTEREST EXPENSE
Interest on deposits	35			28			16		13		11		7			24		24			N/M
Interest on short-term borrowings	1			—			—		—		3		1			74		(2		)	(82	)
Interest on medium- and long-term debt	40			32			25		20		19		8			28		21			N/M
Total interest expense	76			60			41		33		33		16			26		43			N/M
Net interest income	599			590			549		545		546		9			1		53			10
Provision for credit losses	—			(29		)	12		17		24		29			N/M		(24		)	(98	)
Net interest income after provision for credit losses	599			619			537		528		522		(20		)	(3	)	77			15
NONINTEREST INCOME
Card fees	61			60			59		91		85		1			1		(24		)	(28	)
Service charges on deposit accounts	53			53			54		55		57		—			—		(4		)	(7	)
Fiduciary income	51			52			52		50		48		(1		)	(4	)	3			4
Commercial lending fees	21			23			18		22		21		(2		)	(8	)	—			—
Letter of credit fees	9			11			10		11		11		(2		)	(7	)	(2		)	(8	)
Bank-owned life insurance	11			9			9		12		12		2			26		(1		)	(9	)
Foreign exchange income	12			12			12		12		11		—			—		1			6
Brokerage fees	7			6			7		6		6		1			14		1			19
Net securities (losses) gains	(20		)	—			1		—		—		(20		)	N/M		(20		)	N/M
Other noninterest income	29			22			22		26		24		7			38		5			21
Total noninterest income	234			248			244		285		275		(14		)	(5	)	(41		)	(15	)
NONINTEREST EXPENSES
Salaries and benefits expense	254			250			255		248		237		4			2		17			7
Outside processing fee expense	65			64			61		99		92		1			3		(27		)	(29	)
Net occupancy expense	38			37			38		40		38		1			1		—			—
Equipment expense	12			11			11		11		12		1			6		—			—
Restructuring charges	12			11			16		13		7		1			2		5			54
Software expense	32			32			31		31		35		—			—		(3		)	(11	)
FDIC insurance expense	11			12			13		13		13		(1		)	(1	)	(2		)	(10	)
Advertising expense	8			8			6		9		8		—			—		—			—
Other noninterest expenses	20			23			15		19		21		(3		)	(20	)	(1		)	(14	)
Total noninterest expenses	452			448			446		483		463		4			1		(11		)	(2	)
Income before income taxes	381			419			335		330		334		(38		)	(9	)	47			14
Provision for income taxes	63			93			54		218		108		(30		)	(33	)	(45		)	(42	)
NET INCOME	318			326			281		112		226		(8		)	(2	)	92			41
Less income allocated to participating securities	2			2			2		—		2		—			—		—			—
Net income attributable to common shares	$	316		$	324		$	279	$	112	$	224	$	(8	)	(3	)%	$	92		41	%
Earnings per common share:
Basic	$	1.89		$	1.90		$	1.62	$	0.65	$	1.29	$	(0.01	)	(1	)%	$	0.60		47	%
Diluted	1.86			1.87			1.59		0.63		1.26		(0.01		)	(1	)	0.60			48

Comprehensive income	296			290			178		107		228		6			2		68			30

Cash dividends declared on common stock	100			58			52		52		53		42			72		47			89
Cash dividends declared per common share	0.60			0.34			0.30		0.30		0.30		0.26			76		0.30			N/M

N/M - Not Meaningful



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

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

Balance at beginning of period	$	677		$	698		$	712		$	712		$	705

Loan charge-offs:
Commercial	23			17			36			26			35
Commercial mortgage	—			1			—			1			—
Lease financing	—			—			—			—			1
International	1			—			—			1			—
Consumer	1			2			1			1			1
Total loan charge-offs	25			20			37			29			37

Recoveries on loans previously charged-off:
Commercial	8			20			8			7			6
Real estate construction	—			—			—			—			1
Commercial mortgage	1			1			—			2			2
International	—			1			—			2			1
Residential mortgage	—			—			—			1			—
Consumer	1			1			1			1			2
Total recoveries	10			23			9			13			12
Net loan charge-offs (recoveries)	15			(3		)	28			16			25
Provision for loan losses	1			(23		)	14			16			31
Foreign currency translation adjustment	1			(1		)	—			—			1
Balance at end of period	$	664		$	677		$	698		$	712		$	712

Allowance for loan losses as a percentage of total loans	1.35		%	1.36		%	1.42		%	1.45		%	1.45		%

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



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

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

Balance at beginning of period	$	34		$	40		$	42		$	41	$	48
Add: Provision for credit losses on lending-related commitments	(1		)	(6		)	(2		)	1		(7		)
Balance at end of period	$	33		$	34		$	40		$	42	$	41



NONPERFORMING ASSETS (unaudited)
Comerica Incorporated and Subsidiaries

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

SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS
Nonaccrual loans:
Business loans:
Commercial	$	149		$	171		$	242		$	309		$	345
Commercial mortgage	22			29			29			31			35
Lease financing	2			2			3			4			8
International	4			4			4			6			6
Total nonaccrual business loans	177			206			278			350			394
Retail loans:
Residential mortgage	34			29			29			31			28
Consumer:
Home equity	19			19			19			21			22
Total nonaccrual retail loans	53			48			48			52			50
Total nonaccrual loans	230			254			326			402			444
Reduced-rate loans	9			8			8			8			8
Total nonperforming loans	239			262			334			410			452
Foreclosed property	1			2			5			5			6
Total nonperforming assets	$	240		$	264		$	339		$	415		$	458

Nonperforming loans as a percentage of total loans	0.49		%	0.53		%	0.68		%	0.83		%	0.92		%
Nonperforming assets as a percentage of total loans and foreclosed property	0.49			0.53			0.69			0.84			0.93
Allowance for loan losses as a multiple of total nonperforming loans	2.8x			2.6x			2.1x			1.7x			1.6x
Loans past due 90 days or more and still accruing	$	28		$	20		$	36		$	35		$	12

ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans at beginning of period	$	254		$	326		$	402		$	444		$	493
Loans transferred to nonaccrual (a)	35			49			71			73			66
Nonaccrual loan gross charge-offs	(25		)	(20		)	(37		)	(29		)	(37		)
Loans transferred to accrual status (a)	—			—			(3		)	—			—
Nonaccrual loans sold	(9		)	(15		)	(10		)	(22		)	(10		)
Payments/Other (b)	(25		)	(86		)	(97		)	(64		)	(68		)
Nonaccrual loans at end of period	$	230		$	254		$	326		$	402		$	444
(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

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

Commercial loans	$	30,494		$	1,037	4.54	%	$	30,313		$	851	3.76	%
Real estate construction loans	3,152			120		5.08		2,934			90		4.09
Commercial mortgage loans	9,158			315		4.61		8,988			265		3.94
Lease financing	462			13		3.85		522			9		2.40
International loans	1,017			37		4.88		1,168			35		3.96
Residential mortgage loans	1,988			56		3.76		1,981			55		3.71
Consumer loans	2,473			80		4.32		2,525			69		3.63
Total loans	48,744			1,658		4.55		48,431			1,374		3.79

Mortgage-backed securities	9,109			158		2.25		9,335			150		2.16
Other investment securities	2,714			36		1.72		2,890			36		1.66
Total investment securities	11,823			194		2.13		12,225			186		2.04

Interest-bearing deposits with banks	4,625			63		1.82		5,598			44		1.03
Other short-term investments	134			—		0.90		92			—		0.66
Total earning assets	65,326			1,915		3.90		66,346			1,604		3.23

Cash and due from banks	1,200							1,187
Allowance for loan losses	(702		)					(728		)
Accrued income and other assets	4,865							4,665
Total assets	$	70,689						$	71,470

Money market and interest-bearing checking deposits	$	22,219		72		0.43		$	21,645		23		0.14
Savings deposits	2,205			1		0.04		2,127			—		0.02
Customer certificates of deposit	2,093			6		0.40		2,543			6		0.37
Foreign office time deposits	30			—		1.17		59			—		0.60
Total interest-bearing deposits	26,547			79		0.40		26,374			29		0.15

Short-term borrowings	59			1		1.79		331			3		1.14
Medium- and long-term debt	5,647			97		2.27		5,084			56		1.46
Total interest-bearing sources	32,253			177		0.73		31,789			88		0.37

Noninterest-bearing deposits	29,457							30,754
Accrued expenses and other liabilities	1,072							988
Total shareholders' equity	7,907							7,939
Total liabilities and shareholders' equity	$	70,689						$	71,470

Net interest income/rate spread				$	1,738	3.17					$	1,516	2.86

Impact of net noninterest-bearing sources of funds						0.37							0.19
Net interest margin (as a percentage of average earning assets)						3.54	%						3.05	%



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

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

Commercial loans	$	30,371		$	365	4.74	%	$	30,966		$	357	4.64	%	$	30,603		$	312	4.05	%
Real estate construction loans	3,198			43		5.38		3,189			41		5.12		2,933			33		4.36
Commercial mortgage loans	9,084			110		4.84		9,174			107		4.65		8,977			95		4.20
Lease financing	464			4		3.69		457			4		3.65		470			3		3.34
International loans	1,072			13		4.99		981			13		5.02		1,156			12		4.13
Residential mortgage loans	1,962			18		3.71		1,993			20		3.88		2,005			20		3.95
Consumer loans	2,433			28		4.49		2,465			26		4.35		2,519			25		3.84
Total loans	48,584			581		4.74		49,225			568		4.63		48,663			500		4.08

Mortgage-backed securities	9,063			54		2.30		9,098			52		2.25		9,361			51		2.17
Other investment securities	2,698			12		1.72		2,701			12		1.71		2,883			12		1.67
Total investment securities	11,761			66		2.17		11,799			64		2.12		12,244			63		2.05

Interest-bearing deposits with banks	5,362			28		2.03		3,957			18		1.82		5,086			16		1.26
Other short-term investments	135			—		1.04		133			—		0.94		91			—		0.72
Total earning assets	65,842			675		4.05		65,114			650		3.98		66,084			579		3.48

Cash and due from banks	1,107							1,235							1,234
Allowance for loan losses	(681		)					(708		)					(718		)
Accrued income and other assets	4,942							4,879							4,651
Total assets	$	71,210						$	70,520						$	71,251

Money market and interest-bearing checking deposits	$	22,573		32		0.56		$	22,187		26		0.47		$	20,819		9		0.15
Savings deposits	2,208			1		0.05		2,231			—		0.04		2,152			—		0.02
Customer certificates of deposit	2,094			2		0.48		2,063			2		0.38		2,390			2		0.36
Foreign office time deposits	25			—		1.25		33			—		1.13		75			—		0.66
Total interest-bearing deposits	26,900			35		0.51		26,514			28		0.42		25,436			11		0.16

Short-term borrowings	85			1		1.95		56			—		1.74		815			3		1.15
Medium- and long-term debt	6,153			40		2.55		5,584			32		2.24		4,936			19		1.60
Total interest-bearing sources	33,138			76		0.90		32,154			60		0.74		31,187			33		0.42

Noninterest-bearing deposits	29,193							29,316							31,057
Accrued expenses and other liabilities	1,062							1,073							999
Total shareholders' equity	7,817							7,977							8,008
Total liabilities and shareholders' equity	$	71,210						$	70,520						$	71,251

Net interest income/rate spread				$	599	3.15					$	590	3.24					$	546	3.06

Impact of net noninterest-bearing sources of funds						0.45							0.38							0.22
Net interest margin (as a percentage of average earning assets)						3.60	%						3.62	%						3.28	%



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	—		—		—			—			631			—			631
Other comprehensive income, net of tax	—		—		—			24			—			—			24
Cash dividends declared on common stock ($0.79 per share)	—		—		—			—			(141		)	—			(141		)
Purchase of common stock	(5.7	)	—		—			—			—			(396		)	(396		)
Net issuance of common stock under employee stock plans	3.0		—		(26		)	—			(22		)	138			90
Net issuance of common stock for warrants	1.7		—		(28		)	—			(51		)	79			—
Share-based compensation	—		—		29			—			—			—			29
Other	—		—		(1		)	—			—			1			—
BALANCE AT SEPTEMBER 30, 2017	174.3		$	1,141	$	2,112		$	(359	)	$	7,746		$	(2,606	)	$	8,034

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	—		—		—			—			925			—			925
Other comprehensive loss, net of tax	—		—		—			(161		)	—			—			(161		)
Cash dividends declared on common stock ($1.24 per share)	—		—		—			—			(210		)	—			(210		)
Purchase of common stock	(8.7	)	—		(7		)	—			—			(821		)	(828		)
Net issuance of common stock under employee stock plans	1.5		—		(9		)	—			(24		)	74			41
Net issuance of common stock for warrants	0.2		—		(3		)	—			(5		)	8			—
Share-based compensation	—		—		41			—			—			—			41
BALANCE AT SEPTEMBER 30, 2018	165.9		$	1,141	$	2,144		$	(611	)	$	8,587		$	(3,475	)	$	7,786



BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries


(dollar amounts in millions)	Business			Retail			Wealth
Three Months Ended September 30, 2018	Bank			Bank			Management			Finance			Other				Total
Earnings summary:
Net interest income (expense)	$	413		$	141		$	46		$	(16	)	$	15			$	599
Provision for credit losses	(1		)	1			2			—			(2		)		—
Noninterest income	137			35			66			(7		)	3				234
Noninterest expenses	210			153			72			(1		)	18				452
Provision (benefit) for income taxes	77			5			9			(8		)	(20		)	(a)	63
Net income (loss)	$	264		$	17		$	29		$	(14	)	$	22			$	318
Net credit-related charge-offs	$	14		$	—		$	1		$	—		$	—			$	15

Selected average balances:
Assets	$	43,165		$	2,621		$	5,068		$	13,696		$	6,660			$	71,210
Loans	41,591			2,057			4,936			—			—				48,584
Deposits	30,286			20,765			3,988			929			125				56,093

Statistical data:
Return on average assets (b)	2.43		%	0.31		%	2.28		%	N/M			N/M				1.77		%
Efficiency ratio (c)	38.24			86.81			63.93			N/M			N/M				52.93

	Business			Retail			Wealth
Three Months Ended June 30, 2018	Bank			Bank			Management			Finance			Other				Total
Earnings summary:
Net interest income (expense)	$	405		$	135		$	44		$	(7	)	$	13			$	590
Provision for credit losses	(25		)	(1		)	1			—			(4		)		(29		)
Noninterest income	135			32			67			12			2				248
Noninterest expenses	211			149			75			(1		)	14				448
Provision (benefit) for income taxes	81			4			8			(2		)	2			(a)	93
Net income	$	273		$	15		$	27		$	8		$	3			$	326
Net credit-related (recoveries) charge-offs	$	(4	)	$	—		$	1		$	—		$	—			$	(3	)

Selected average balances:
Assets	$	43,740		$	2,633		$	5,260		$	13,735		$	5,152			$	70,520
Loans	42,041			2,057			5,127			—			—				49,225
Deposits	29,735			21,008			3,852			1,093			142				55,830

Statistical data:
Return on average assets (b)	2.50		%	0.28		%	2.10		%	N/M			N/M				1.85		%
Efficiency ratio (c)	39.12			87.71			66.81			N/M			N/M				53.24

	Business			Retail			Wealth
Three Months Ended September 30, 2017	Bank			Bank			Management			Finance			Other				Total
Earnings summary:
Net interest income (expense)	$	397		$	118		$	45		$	(24	)	$	10			$	546
Provision for credit losses	12			4			9			—			(1		)		24
Noninterest income	158			39			62			13			3				275
Noninterest expenses	227			156			70			(1		)	11				463
Provision (benefit) for income taxes	109			(1		)	10			(8		)	(2		)	(a)	108
Net income (loss)	$	207		$	(2	)	$	18		$	(2	)	$	5			$	226
Net credit-related charge-offs (recoveries)	$	27		$	—		$	(2	)	$	—		$	—			$	25

Selected average balances:
Assets	$	42,749		$	2,623		$	5,416		$	13,996		$	6,467			$	71,251
Loans	41,334			2,059			5,270			—			—				48,663
Deposits	31,251			20,782			4,054			270			136				56,493

Statistical data:
Return on average assets (b)	1.92		%	(0.03		)%	1.30		%	N/M			N/M				1.25		%
Efficiency ratio (c)	40.88			99.05			64.96			N/M			N/M				56.33


(a)	Included discrete tax benefits of $23 million, $3 million and $2 million for the third quarter 2018, second quarter 2018 and third 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 September 30, 2018	Michigan			California			Texas			Markets			& Other				Total
Earnings summary:
Net interest income (expense)	$	185		$	199		$	121		$	95		$	(1	)		$	599
Provision for credit losses	4			3			(9		)	4			(2		)		—
Noninterest income	75			43			33			86			(3		)		234
Noninterest expenses	143			104			90			98			17				452
Provision (benefit) for income taxes	25			34			16			15			(27		)	(a)	63
Net income	$	88		$	101		$	57		$	64		$	8			$	318
Net credit-related charge-offs (recoveries)	$	8		$	5		$	4		$	(2	)	$	—			$	15

Selected average balances:
Assets	$	13,055		$	18,336		$	10,271		$	9,193		$	20,355			$	71,210
Loans	12,424			18,074			9,702			8,384			—				48,584
Deposits	20,721			16,894			8,904			8,520			1,054				56,093

Statistical data:
Return on average assets (b)	1.63		%	2.18		%	2.18		%	2.75		%	N/M				1.77		%
Efficiency ratio (c)	54.90			43.12			58.05			53.97			N/M				52.93

										Other			Finance
Three Months Ended June 30, 2018	Michigan			California			Texas			Markets			& Other				Total
Earnings summary:
Net interest income	$	181		$	194		$	122		$	86		$	7			$	590
Provision for credit losses	—			(5		)	(14		)	(6		)	(4		)		(29		)
Noninterest income	72			42			31			90			13				248
Noninterest expenses	144			105			92			93			14				448
Provision for income taxes	25			34			17			17			—			(a)	93
Net income	$	84		$	102		$	58		$	72		$	10			$	326
Net credit-related charge-offs (recoveries)	$	—		$	1		$	2		$	(6	)	$	—			$	(3	)

Selected average balances:
Assets	$	13,427		$	18,687		$	10,439		$	9,080		$	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)	1.55		%	2.18		%	2.22		%	3.18		%	N/M				1.85		%
Efficiency ratio (c)	56.45			44.48			60.22			52.81			N/M				53.24

										Other			Finance
Three Months Ended September 30, 2017	Michigan			California			Texas			Markets			& Other				Total
Earnings summary:
Net interest income (expense)	$	170		$	184		$	122		$	84		$	(14	)		$	546
Provision for credit losses	8			25			(22		)	14			(1		)		24
Noninterest income	79			41			33			107			15				275
Noninterest expenses	144			103			92			114			10				463
Provision (benefit) for income taxes	34			37			31			17			(11		)	(a)	108
Net income	$	63		$	60		$	54		$	46		$	3			$	226
Net credit-related charge-offs	$	2		$	10		$	9		$	4		$	—			$	25

Selected average balances:
Assets	$	13,367		$	18,161		$	10,435		$	8,825		$	20,463			$	71,251
Loans	12,612			17,916			9,959			8,176			—				48,663
Deposits	21,641			17,316			9,400			7,730			406				56,493

Statistical data:
Return on average assets (b)	1.11		%	1.31		%	2.00		%	2.07			N/M				1.25		%
Efficiency ratio (c)	57.78			45.62			59.46			59.82			N/M				56.33


(a)	Included discrete tax benefits of $23 million, $3 million and $2 million for the third quarter 2018, second quarter 2018 and third 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 the adjusted financial results provide a greater understanding of ongoing operations and enhance the 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.



ADJUSTED FINANCIAL RESULTS	Three Months Ended
	September 30,			June 30,			September 30,
(dollar amounts in millions, except per share data)	2018			2018			2017

Noninterest Income:
Noninterest income	$	234		$	248		$	275
Securities repositioning	20			—			—
Proforma effect of adoption of accounting standard	—			—			(30		)
Adjusted noninterest income	$	254		$	248		$	245

Noninterest Expenses:
Noninterest expenses	$	452		$	448		$	463
Proforma effect of adoption of accounting standard	—			—			(30		)
Restructuring charges	(12		)	(11		)	(7		)
Adjusted noninterest expenses	$	440		$	437		$	426

Pre-tax Income:
Pre-tax income	$	381		$	419		$	334
Securities repositioning	20			—			—
Restructuring charges	12			11			7
Adjusted pre-tax income	$	413		$	430		$	341

Provision for Income Taxes:
Provision for income taxes	$	63		$	93		$	108
Discrete tax benefits	23			3			2
Tax on securities repositioning	5			—			—
Tax on restructuring charges	3			2			3
Adjusted provision for income taxes	$	94		$	98		$	113

Net Income:
Net income	$	318		$	326		$	226
Discrete tax benefits	(23		)	(3		)	(2		)
Securities repositioning, net of tax	15			—			—
Restructuring charges, net of tax	9			9			4
Adjusted net income	$	319		$	332		$	228

Diluted Earnings per Common Share:
Diluted earnings per common share	$	1.86		$	1.87		$	1.26
Securities repositioning, net of tax	0.09			—			—
Restructuring charges, net of tax	0.05			0.05			0.02
Discrete tax benefits	(0.14		)	(0.02		)	(0.01		)
Adjusted diluted earnings per common share	$	1.86		$	1.90		$	1.27

Efficiency Ratio:
Reported	52.93		%	53.24		%	56.33		%
Adjusted	51.59			51.90			53.71

Securities repositioning refers to losses incurred on the sale of $1.3 billion of treasury securities that were replaced by higher-yielding treasuries with a similar duration of 3 years. Proforma effect of the adoption of accounting standard relates to the proforma 2017 impact of the new revenue recognition standard that became effective January 1, 2018 that is not reflected in 2017 results. Discrete tax benefits primarily include tax benefits from the review of tax capitalization and recovery positions on fixed assets and software on the 2017 tax return and from employee stock transactions.



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

Tangible Common Equity Ratio:
Common shareholders' equity	$	7,786		$	8,079		$	8,034
Less:
Goodwill	635			635			635
Other intangible assets	6			7			8
Tangible common equity	$	7,145		$	7,437		$	7,391

Total assets	$	71,448		$	71,987		$	72,017
Less:
Goodwill	635			635			635
Other intangible assets	6			7			8
Tangible assets	$	70,807		$	71,345		$	71,374

Common equity ratio	10.90		%	11.22		%	11.16		%
Tangible common equity ratio	10.09			10.42			10.35

Tangible Common Equity per Share of Common Stock:
Common shareholders' equity	$	7,786		$	8,079		$	8,034
Tangible common equity	7,145			7,437			7,391

Shares of common stock outstanding (in millions)	166			171			174

Common shareholders' equity per share of common stock	$	46.92		$	47.27		$	46.09
Tangible common equity per share of common stock	43.05			43.51			42.39

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 - October 16, 2018

Attached files

COMERICA INC /NEW/ Reports