Attached files
| file | filename |
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| EX-99.2 - EX-99.2 - COMERICA INC /NEW/ | comerica2q20earningspres.htm |
| 8-K - 8-K - COMERICA INC /NEW/ | cma-20200721.htm |
Dallas, TX/July 21, 2020
SECOND QUARTER 2020 NET INCOME OF $113 MILLION, OR $0.80 PER SHARE
Loan and Deposit Growth Drove Average Balances to Record Highs
Including $2.6 Billion in Paycheck Protection Program Loans
Credit Quality Remained Solid with Net Charge-offs of 37 basis points
Excluding Energy, Net Charge-offs of 4 basis points
Allowance for Credit Losses Increased to 1.99% of Total Loans
"Today we reported earnings of 80 cents per share," said Curt C. Farmer, Comerica Chairman, President and Chief Executive Officer. "The highlight of the quarter was significant loan and deposit growth, which drove average balances to record highs and partly offset the impact of lower interest rates on net interest income. Overall, credit quality remained solid; however, with the unprecedented, rapid decline in the economy and high level of uncertainty, we prudently increased our credit reserves. Capital levels continued to be strong and we remain focused on maintaining an attractive dividend yield for our shareholders, as our book value per share grew to $53.28.
“We have quickly adapted to the COVID-19 pandemic and are continuing to make adjustments as the crisis evolves. The health and safety of our employees and our customers remains our top priority. Across the bank, our colleagues have continued to ensure that our customers are well taken care of, working tirelessly to provide sound financial advice, credit expertise and payment flexibility where needed. Particularly, I am proud of the tremendous dedication our colleagues have displayed in supporting the Paycheck Protection Program. Through our long history, Comerica has successfully managed through many challenging times. Helping our customers and communities endure stressful situations and achieve long-term success is at the heart of Comerica’s relationship banking strategy.”
| (dollar amounts in millions, except per share data) | 2nd Qtr '20 | 1st Qtr '20 | 2nd Qtr '19 | ||||||||||||||
| FINANCIAL RESULTS | |||||||||||||||||
| Net interest income | $ | 471 | $ | 513 | $ | 603 | |||||||||||
| Provision for credit losses | 138 | 411 | 44 | ||||||||||||||
| Noninterest income | 247 | 237 | 250 | ||||||||||||||
| Noninterest expenses | 440 | 425 | 424 | ||||||||||||||
| Pre-tax income (loss) | 140 | (86) | 385 | ||||||||||||||
| Provision (benefit) for income taxes | 27 | (21) | 87 | ||||||||||||||
| Net income (loss) | $ | 113 | $ | (65) | $ | 298 | |||||||||||
| Diluted earnings (losses) per common share | $ | 0.80 | $ | (0.46) | $ | 1.94 | |||||||||||
| Average loans | 53,498 | 49,604 | 50,963 | ||||||||||||||
| Average deposits | 64,282 | 56,768 | 54,995 | ||||||||||||||
| Net interest margin | 2.50 | % | 3.06 | % | 3.66 | % | |||||||||||
| Common equity Tier 1 capital ratio (a) | 9.97 | 9.52 | 10.18 | ||||||||||||||
| Tier 1 capital ratio (a) | 10.56 | 9.52 | 10.18 | ||||||||||||||
| Common equity ratio | 8.78 | 9.70 | 10.10 | ||||||||||||||
| Common shareholders' equity per share of common stock | $ | 53.28 | $ | 53.24 | $ | 48.89 | |||||||||||
| Tangible common equity per share of common stock (b) | 48.69 | 48.65 | 44.61 | ||||||||||||||
(a)Estimated for June 30, 2020; reflects deferral of CECL model impact as calculated per regulatory guidance.
(b)See Reconciliations of Non-GAAP Financial Measures and Regulatory Ratios.
Committed to Supporting Customers, Colleagues and Communities
Significant amount of time, effort and resources spent during second quarter 2020 to support stakeholders impacted by the COVID-19 pandemic, including assistance provided through Paycheck Protection Program (PPP) loans.
•Funded $3.9 billion in loans under the PPP, granted payment deferrals for $4.5 billion in loans, primarily commercial, through June 30, 2020, which included $57 million of loans on their second deferral, and waived overdraft, late payment, ATM and other customer fees.
•Supported our colleagues through additional compensation and benefits to those most impacted by the pandemic, as well as awarded bonuses for extraordinary service in support of the PPP process.
•Together with the Comerica Charitable Foundation, pledged $8 million to support business needs and community service organizations that care for and provide critical services to our communities, including a $1 million commitment to the National Business League to help Black-owned small businesses.
Second Quarter 2020 Compared to First Quarter 2020 Overview
Balance sheet items discussed in terms of average balances.
Loans increased $3.9 billion, or 8 percent, to $53.5 billion.
•Reflected a $1.2 billion increase in Mortgage Banker Finance due to seasonality and elevated refinancing activity, as well as growth of $767 million in Corporate Banking, $737 million in general Middle Market, $567 million in Business Banking and $449 million in Commercial Real Estate, partially offset by a $535 million decrease in National Dealer Services.
◦Average PPP loans totaled $2.6 billion, driving the growth in general Middle Market and Business Banking.
•The average yield on loans decreased 93 basis points to 3.26 percent, mostly reflecting the impact of lower interest rates, as the average one-month LIBOR declined by 105 basis points.
Deposits increased $7.5 billion, or 13 percent, to $64.3 billion.
•Growth in nearly every business line, including an increase of $5.9 billion in noninterest-bearing deposits, as customers conserved cash in response to uncertainty, including funds from government stimulus programs such as PPP and consumer economic impact payments.
•The average cost of interest-bearing deposits decreased 50 basis points to 26 basis points, reflecting prudent management of relationship pricing in a lower rate environment.
Net interest income decreased $42 million to $471 million.
•The benefit from higher average loan balances was more than offset by the net impact of lower interest rates.
Provision for credit losses decreased $273 million to $138 million.
•The allowance for credit losses increased $88 million to $1.1 billion, or 1.99 percent of total loans, reflecting the expected impact of the COVID-19 pandemic. Excluding PPP loans, allowance for credit losses totaled 2.15 percent of total loans.
•Net credit-related charge-offs totaled $50 million, or 0.37 percent of average loans.
Noninterest income increased $10 million to $247 million.
•Reflected increases of $9 million in card fees, $8 million in securities trading income and $5 million in deferred compensation asset returns (offset in noninterest expenses), as well as smaller increases in other categories, partially offset by decreases of $7 million in service charges on deposit accounts, $3 million in bank-owned life insurance and $2 million each in fiduciary income and brokerage fees.
◦The increase in card fees was primarily driven by interchange revenue from stimulus payments under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), partially offset by a decrease in merchant and commercial card volumes due to the impact of social distancing restrictions.
Noninterest expenses increased $15 million to $440 million.
•Reflected increases of $7 million in salaries and benefits expense, $5 million in outside processing fee expense and $2 million in software expense.
◦The increase in salaries and benefits expense primarily reflected annual merit increases and the payment of COVID-19-related stipends and hazard pay for colleagues who could not work remotely, as well as a $5 million increase in deferred compensation expense (offset in noninterest income), partially offset by a seasonal decrease in payroll taxes.
2
Provision for income taxes increased $48 million to $27 million.
Capital position remained solid with a common equity Tier 1 capital ratio of 9.97 percent and a Tier 1 capital ratio of 10.56 percent.
•On May 26, 2020, issued $400 million of 5.625% non-cumulative perpetual preferred stock.
•Returned a total of $98 million to shareholders through dividends.
•Average diluted shares outstanding declined by 1.1 million due to the repurchase of 3.2 million shares of common stock in the first quarter prior to the Corporation's suspension of its repurchase program.
Second Quarter 2020 Compared to Second Quarter 2019 Overview
Balance sheet items discussed in terms of average balances.
Loans increased $2.5 billion, or 5 percent.
•Reflected increases in Mortgage Banker Finance, Commercial Real Estate and Corporate Banking, as well as the addition of $2.6 billion in PPP loans that led to an increase in Business Banking, partially offset by a decrease in National Dealer Services.
•Loan yields declined 174 basis points, consistent with the lower interest rate environment.
Deposits increased $9.3 billion, or 17 percent.
•Included $6.3 billion, or 24 percent, increase in noninterest-bearing deposits.
•Interest-bearing deposit costs declined 68 basis points to 26 basis points, with prudent management of relationship pricing in a lower rate environment.
Net interest income decreased $132 million.
•Reflected the impact of lower short-term rates, partially offset by higher loan volumes.
Provision for credit losses, calculated using the CECL model effective first quarter 2020, increased $94 million.
•Reflected the expected impact of the COVID-19 pandemic, including the economic impacts of social distancing, and sustained pressures on Energy.
Noninterest income decreased $3 million.
•Increases in securities trading income, customer derivative income and card fees were more than offset by decreases in service charges on deposit accounts, commercial lending fees (primarily syndication fees) and smaller decreases in other categories.
Noninterest expenses increased $16 million.
•Reflected increases in salaries and benefits expense as well as software expense, which included an $8 million reclassification from outside processing fee expense due to a change in accounting classification effective first quarter 2020.
3
Net Interest Income
Balance sheet items presented and discussed in terms of average balances.
| (dollar amounts in millions) | 2nd Qtr '20 | 1st Qtr '20 | 2nd Qtr '19 | ||||||||||||||
| Net interest income | $ | 471 | $ | 513 | $ | 603 | |||||||||||
| Net interest margin | 2.50 | % | 3.06 | % | 3.66 | % | |||||||||||
| Selected balances: | |||||||||||||||||
| Total earning assets | $ | 75,989 | $ | 67,496 | $ | 65,890 | |||||||||||
| Total loans | 53,498 | 49,604 | 50,963 | ||||||||||||||
| Total investment securities | 12,642 | 12,331 | 12,091 | ||||||||||||||
| Federal Reserve Bank deposits | 9,483 | 5,147 | 2,479 | ||||||||||||||
| Total deposits | 64,282 | 56,768 | 54,995 | ||||||||||||||
| Total noninterest-bearing deposits | 32,686 | 26,761 | 26,398 | ||||||||||||||
| Short-term borrowings | 882 | 157 | 927 | ||||||||||||||
| Medium- and long-term debt | 7,206 | 7,324 | 6,712 | ||||||||||||||
Net interest income decreased $42 million, and net interest margin decreased 56 basis points, compared to first quarter 2020.
•Interest income on loans decreased $83 million and reduced net interest margin by 60 basis points, primarily due to the impact of lower short-term rates (-$105 million, -57 basis points) as well as lower nonaccrual interest (-$2 million, -1 basis point), which were partially offset by higher loan balances (+$15 million, -7 basis points), fees (+$7 million, +4 basis points) and other portfolio dynamics (+$2 million, +1 basis point).
•Interest income on short-term investments decreased $15 million and reduced net interest margin by 26 basis points, reflecting lower rates (-$16 million, -9 basis points), partially offset by an increase in lower-yielding deposits with the Federal Reserve Bank (+$1 million, -17 basis points).
•Interest expense on deposits decreased $36 million and improved net interest margin by 19 basis points, due to lower pay rates on deposits.
•Interest expense on debt decreased $20 million and increased net interest margin by 11 basis points, primarily due to lower rates.
The net impact of lower rates, including the change to deposit rates, to the second quarter of 2020 net interest income was a reduction of $67 million and 37 basis points to the net interest margin.
4
Credit Quality
"Overall, our portfolio performed well in the second quarter, with net charge-offs of 37 basis points and only 4 basis points excluding Energy loans," said Farmer. "Nonperforming assets remained low at 53 basis points, a modest increase over the first quarter. The economy improved through the quarter, including a rise in employment, higher energy prices, and consumer spending has started to come back. However, the economic outlook continues to be uncertain with the unprecedented impacts of the COVID-19 pandemic. Therefore, we prudently increased our credit reserves to 2.15 percent of average loans, excluding PPP loans, and our reserve to nonperforming loans is strong at 3.9 times. The allocation of reserves to Energy loans remains above 10 percent. We continue to work closely with our customers, carefully reviewing current and projected financial performance, providing assistance as warranted, and adjusting risk ratings as appropriate, which is reflected in the increase in criticized loans."
| (dollar amounts in millions) | 2nd Qtr '20 | 1st Qtr '20 | 2nd Qtr '19 | ||||||||||||||
| Credit-related charge-offs | $ | 57 | $ | 89 | $ | 44 | |||||||||||
| Recoveries | 7 | 5 | 11 | ||||||||||||||
| Net credit-related charge-offs | 50 | 84 | 33 | ||||||||||||||
Net credit-related charge-offs/Average total loans | 0.37 | % | 0.68 | % | 0.26 | % | |||||||||||
| Provision for credit losses | $ | 138 | $ | 411 | $ | 44 | |||||||||||
| Nonperforming loans | 271 | 239 | 230 | ||||||||||||||
| Nonperforming assets (NPAs) | 282 | 250 | 233 | ||||||||||||||
| NPAs/Total loans and foreclosed property | 0.53 | % | 0.47 | % | 0.45 | % | |||||||||||
| Loans past due 90 days or more and still accruing | $ | 41 | $ | 64 | $ | 17 | |||||||||||
| Allowance for loan losses | 1,007 | 916 | 657 | ||||||||||||||
| Allowance for credit losses on lending-related commitments (a) | 59 | 62 | 31 | ||||||||||||||
| Total allowance for credit losses | 1,066 | 978 | 688 | ||||||||||||||
| Allowance for loan losses/Period-end total loans | 1.88 | % | 1.71 | % | 1.27 | % | |||||||||||
| Allowance for loan losses/Period-end total loans excluding PPP loans | 2.03 | n/a | n/a | ||||||||||||||
| Allowance for credit losses/Period-end total loans | 1.99 | 1.83 | 1.33 | ||||||||||||||
| Allowance for credit losses/Period-end total loans excluding PPP loans | 2.15 | n/a | n/a | ||||||||||||||
| Allowance for credit losses/Nonperforming loans | 3.9x | 4.1x | 3.0x | ||||||||||||||
(a) Included in accrued expenses and other liabilities on the Consolidated Balance Sheets.
n/a - not applicable
•The allowance for credit losses increased $88 million to $1.1 billion, or 1.99 percent of total loans, reflecting the expected impact of the COVID-19 pandemic, including the economic impacts of social distancing, and sustained pressures on Energy. Excluding PPP loans, which are guaranteed by the Small Business Administration, allowance for credit losses totaled 2.15 percent of total loans.
◦Energy loans totaled $2.1 billion, or 4 percent of total loans at June 30, 2020. The allocation of reserves for Energy loans remained over 10 percent.
•Criticized loans increased $922 million to $3.4 billion, or 6 percent of total loans. Criticized loans are generally consistent with the Special Mention, Substandard and Doubtful categories defined by regulatory authorities.
◦Criticized Energy loans increased $348 million to $841 million, or 25 percent of total criticized loans; 40 percent of Energy loans are criticized.
◦General Middle Market criticized loans increased $519 million; 14 percent of general Middle Market loans are criticized.
•Net charge-offs were $50 million, or 0.37 percent of average loans.
◦Energy net charge-offs were $45 million compared to $67 million in first quarter 2020. Excluding Energy, net charge-offs totaled $5 million, or 0.04 percent of average loans.
5
•Nonperforming assets increased $32 million to $282 million. Nonperforming assets as a percentage of total loans and foreclosed property increased to 0.53 percent compared to 0.47 percent in first quarter 2020.
◦Nonperforming Energy loans increased $37 million to $102 million.
Outlook for Third Quarter 2020 Compared to Second Quarter 2020
Based on management expectations for recessionary conditions:
•Decline in average loans reflects lending to small businesses with a full quarter benefit of PPP, more than offset by decreases in Mortgage Banker Finance, Large Corporate and National Dealer Services.
•Average deposits relatively stable as customers utilize economic stimulus proceeds.
•Decrease in net interest income resulting from a $10 million to $15 million net impact of lower interest rates (assumes 1-month LIBOR of 17 basis points and deposit cost of 20 basis points) and lower loan balances, offset by lower wholesale debt and one additional day.
•Provision for credit losses reflective of economic environment, including the effects resulting from the duration and severity of the COVID-19 pandemic.
•Decline in noninterest income due to reduced card fees related to transaction activity and lower market-based investment banking and derivative fees, partially offset by higher service charges on deposit accounts due to increased activity. Higher securities trading income and deferred compensation levels in second quarter 2020 not expected to repeat.
•Increase in noninterest expenses, reflecting technology and occupancy projects, as well as higher charitable contributions and seasonal impacts of marketing and staff insurance expenses, mostly offset by continued expense discipline and reduction in COVID-19-related costs.
•Capital reflects declaration of first preferred stock dividend and a focus on supporting customers' financing needs, as well as maintaining an attractive common dividend.
6
Business Segments
Comerica's operations are strategically aligned into three major business segments: the Commercial 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, Comerica 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. The financial results provided are based on the internal business unit and geographic market structures of Comerica and methodologies in effect at June 30, 2020. A discussion of business segment and geographic market year-to-date results will be included in Comerica's Second Quarter 2020 Form 10-Q.
Conference Call and Webcast
Comerica will host a conference call to review second quarter 2020 financial results at 7 a.m. CT Tuesday, July 21, 2020. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (Event ID No. 3854013). 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 Commercial 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.
7
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, 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 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 include credit risks (unfavorable developments concerning credit quality; declines or other changes in the businesses or industries of Comerica's customers, in particular the energy industry; and changes in customer behavior); market risks (changes in monetary and fiscal policies; fluctuations in interest rates and their impact on deposit pricing; and transitions away from LIBOR towards new interest rate benchmarks); liquidity risks (Comerica's ability to maintain adequate sources of funding and liquidity; reductions in Comerica's credit rating; and the interdependence of financial service companies); technology risks (cybersecurity risks and heightened legislative and regulatory focus on cybersecurity and data privacy); operational risks (operational, systems or infrastructure failures; reliance on other companies to provide certain key components of business infrastructure; the impact of legal and regulatory proceedings or determinations; losses due to fraud; and controls and procedures failures); compliance risks (changes in regulation or oversight; the effects of stringent capital requirements; and the impacts of future legislative, administrative or judicial changes to tax regulations); financial reporting risks (changes in accounting standards and the critical nature of Comerica's accounting policies); strategic risks (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 implementation of Comerica's strategies and business initiatives; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; and any future strategic acquisitions or divestitures); and other general risks (changes in general economic, political or industry conditions; the effectiveness of methods of reducing risk exposures; the effects of catastrophic events; impacts from the COVID-19 global pandemic; 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 12 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2019 and "Item 1A. Risk Factors" beginning on page 60 of Comerica's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020. 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 Contacts: | Investor Contacts: | ||||
| Wendy Bridges | Darlene P. Persons | ||||
| (214) 462-4443 | (214) 462-6831 | ||||
| Louis H. Mora | Amanda Perkins | ||||
| (214) 462-6669 | (214) 462-6731 | ||||
| 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) | 2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
| PER COMMON SHARE AND COMMON STOCK DATA | ||||||||||||||||||||
| Diluted earnings (losses) per common share | $ | 0.80 | $ | (0.46) | $ | 1.94 | $ | 0.34 | $ | 4.06 | ||||||||||
| Cash dividends declared | 0.68 | 0.68 | 0.67 | 1.36 | 1.34 | |||||||||||||||
| Average diluted shares (in thousands) | 139,453 | 140,554 | 153,189 | 140,529 | 156,351 | |||||||||||||||
| PERFORMANCE RATIOS | ||||||||||||||||||||
| Return on average common shareholders' equity | 6.09 | % | (3.49) | % | 16.41 | % | 1.30 | % | 17.43 | % | ||||||||||
| Return on average assets | 0.55 | (0.35) | 1.68 | 0.12 | 1.82 | |||||||||||||||
| Efficiency ratio (a) | 61.14 | 56.57 | 49.65 | 58.80 | 50.23 | |||||||||||||||
| CAPITAL | ||||||||||||||||||||
| Common equity tier 1 capital (b), (c) | $ | 6,698 | $ | 6,654 | $ | 7,060 | ||||||||||||||
| Tier 1 capital (b), (c) | 7,093 | 6,654 | 7,060 | |||||||||||||||||
| Risk-weighted assets (b) | 67,156 | 69,874 | 69,371 | |||||||||||||||||
| Common equity tier 1 capital ratio (b), (c) | 9.97 | % | 9.52 | % | 10.18 | % | ||||||||||||||
| Tier 1 capital ratio (b), (c) | 10.56 | 9.52 | 10.18 | |||||||||||||||||
| Total capital ratio (b) | 12.93 | 11.85 | 12.17 | |||||||||||||||||
| Leverage ratio (b) | 8.76 | 9.12 | 9.90 | |||||||||||||||||
| Common shareholders' equity per share of common stock | $ | 53.28 | $ | 53.24 | $ | 48.89 | ||||||||||||||
| Tangible common equity per share of common stock (c) | 48.69 | 48.65 | 44.61 | |||||||||||||||||
| Common equity ratio | 8.78 | % | 9.70 | % | 10.10 | % | ||||||||||||||
| Tangible common equity ratio (c) | 8.08 | 8.93 | 9.30 | |||||||||||||||||
| AVERAGE BALANCES | ||||||||||||||||||||
| Commercial loans | $ | 33,944 | $ | 30,697 | $ | 32,607 | $ | 32,321 | $ | 32,037 | ||||||||||
| Real estate construction loans | 3,887 | 3,564 | 3,319 | 3,725 | 3,279 | |||||||||||||||
| Commercial mortgage loans | 9,800 | 9,638 | 9,060 | 9,719 | 9,028 | |||||||||||||||
| Lease financing | 592 | 582 | 546 | 587 | 533 | |||||||||||||||
| International loans | 1,137 | 1,004 | 1,025 | 1,071 | 1,019 | |||||||||||||||
| Residential mortgage loans | 1,895 | 1,855 | 1,943 | 1,875 | 1,954 | |||||||||||||||
| Consumer loans | 2,243 | 2,264 | 2,463 | 2,253 | 2,473 | |||||||||||||||
| Total loans | 53,498 | 49,604 | 50,963 | 51,551 | 50,323 | |||||||||||||||
| Earning assets | 75,989 | 67,496 | 65,890 | 71,742 | 65,257 | |||||||||||||||
| Total assets | 81,644 | 73,265 | 71,252 | 77,454 | 70,515 | |||||||||||||||
| Noninterest-bearing deposits | 32,686 | 26,761 | 26,398 | 29,723 | 26,634 | |||||||||||||||
| Interest-bearing deposits | 31,596 | 30,007 | 28,597 | 30,801 | 27,864 | |||||||||||||||
| Total deposits | 64,282 | 56,768 | 54,995 | 60,524 | 54,498 | |||||||||||||||
| Common shareholders' equity | 7,436 | 7,438 | 7,285 | 7,437 | 7,371 | |||||||||||||||
| Total shareholders' equity | 7,592 | 7,438 | 7,285 | 7,515 | 7,371 | |||||||||||||||
| NET INTEREST INCOME | ||||||||||||||||||||
| Net interest income | $ | 471 | $ | 513 | $ | 603 | $ | 984 | $ | 1,209 | ||||||||||
| Net interest margin | 2.50 | % | 3.06 | % | 3.66 | % | 2.77 | % | 3.73 | % | ||||||||||
| CREDIT QUALITY | ||||||||||||||||||||
| Nonperforming assets | $ | 282 | $ | 250 | $ | 233 | ||||||||||||||
| Loans past due 90 days or more and still accruing | 41 | 64 | 17 | |||||||||||||||||
| Net credit-related charge-offs | 50 | 84 | 33 | $ | 134 | $ | 44 | |||||||||||||
| Allowance for loan losses | 1,007 | 916 | 657 | |||||||||||||||||
| Allowance for credit losses on lending-related commitments | 59 | 62 | 31 | |||||||||||||||||
| Total allowance for credit losses (d) | 1,066 | 978 | 688 | |||||||||||||||||
| Allowance for credit losses as a percentage of total loans | 1.99 | % | 1.83 | % | 1.33 | % | ||||||||||||||
Net credit-related charge-offs as a percentage of average total loans | 0.37 | 0.68 | 0.26 | 0.52 | % | 0.17 | % | |||||||||||||
Nonperforming assets as a percentage of total loans and foreclosed property | 0.53 | 0.47 | 0.45 | |||||||||||||||||
| Allowance for credit losses as a multiple of total nonperforming loans | 3.9x | 4.1x | 3.0x | |||||||||||||||||
| OTHER KEY INFORMATION | ||||||||||||||||||||
| Number of banking centers | 434 | 436 | 436 | |||||||||||||||||
| Number of employees - full time equivalent | 7,777 | 7,753 | 7,693 | |||||||||||||||||
(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) Estimated for June 30, 2020, reflects deferral of CECL model impact as calculated per regulatory guidance.
(c) See Reconciliations of Non-GAAP Financial Measures and Regulatory Ratios.
(d) Allowance for credit losses for June 30, 2020 and March 31, 2020 calculated using the CECL model effective first quarter 2020.
9
| CONSOLIDATED BALANCE SHEETS | ||||||||||||||
| Comerica Incorporated and Subsidiaries | ||||||||||||||
| June 30, | March 31, | December 31, | June 30, | |||||||||||
| (in millions, except share data) | 2020 | 2020 | 2019 | 2019 | ||||||||||
| (unaudited) | (unaudited) | (unaudited) | ||||||||||||
| ASSETS | ||||||||||||||
| Cash and due from banks | $ | 1,048 | $ | 848 | $ | 973 | $ | 1,029 | ||||||
| Interest-bearing deposits with banks | 12,263 | 4,007 | 4,845 | 2,552 | ||||||||||
| Other short-term investments | 153 | 138 | 155 | 140 | ||||||||||
| Investment securities available-for-sale | 12,759 | 13,041 | 12,398 | 12,338 | ||||||||||
| Commercial loans | 33,826 | 34,249 | 31,473 | 33,326 | ||||||||||
| Real estate construction loans | 3,952 | 3,756 | 3,455 | 3,292 | ||||||||||
| Commercial mortgage loans | 9,925 | 9,698 | 9,559 | 9,217 | ||||||||||
| Lease financing | 589 | 584 | 588 | 575 | ||||||||||
| International loans | 1,104 | 1,035 | 1,009 | 1,024 | ||||||||||
| Residential mortgage loans | 1,886 | 1,821 | 1,845 | 1,924 | ||||||||||
| Consumer loans | 2,164 | 2,315 | 2,440 | 2,443 | ||||||||||
| Total loans | 53,446 | 53,458 | 50,369 | 51,801 | ||||||||||
| Less allowance for loan losses | (1,007) | (916) | (637) | (657) | ||||||||||
| Net loans | 52,439 | 52,542 | 49,732 | 51,144 | ||||||||||
| Premises and equipment | 450 | 454 | 457 | 470 | ||||||||||
| Accrued income and other assets | 5,285 | 5,307 | 4,842 | 4,864 | ||||||||||
| Total assets | $ | 84,397 | $ | 76,337 | $ | 73,402 | $ | 72,537 | ||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||
| Noninterest-bearing deposits | $ | 35,582 | $ | 27,646 | $ | 27,382 | $ | 27,001 | ||||||
| Money market and interest-bearing checking deposits | 26,895 | 24,475 | 24,527 | 22,195 | ||||||||||
| Savings deposits | 2,500 | 2,258 | 2,184 | 2,162 | ||||||||||
| Customer certificates of deposit | 2,656 | 2,958 | 2,978 | 2,441 | ||||||||||
| Other time deposits | — | — | 133 | 1,726 | ||||||||||
| Foreign office time deposits | 87 | 29 | 91 | 12 | ||||||||||
| Total interest-bearing deposits | 32,138 | 29,720 | 29,913 | 28,536 | ||||||||||
| Total deposits | 67,720 | 57,366 | 57,295 | 55,537 | ||||||||||
| Short-term borrowings | 752 | 2,263 | 71 | 1,733 | ||||||||||
| Accrued expenses and other liabilities | 1,602 | 1,872 | 1,440 | 1,386 | ||||||||||
| Medium- and long-term debt | 6,521 | 7,434 | 7,269 | 6,558 | ||||||||||
| Total liabilities | 76,595 | 68,935 | 66,075 | 65,214 | ||||||||||
Fixed-rate reset non-cumulative perpetual preferred stock, series A, no par value, $1,000 liquidation value per share: | ||||||||||||||
| Authorized - 4,000 shares | ||||||||||||||
| Issued - 4,000 shares at 6/30/20 | 395 | — | — | — | ||||||||||
| 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 | 2,173 | 2,168 | 2,174 | 2,168 | ||||||||||
| Accumulated other comprehensive income (loss) | 158 | 174 | (235) | (382) | ||||||||||
| Retained earnings | 9,404 | 9,389 | 9,538 | 9,176 | ||||||||||
Less cost of common stock in treasury - 89,124,560 shares at 6/30/20, 89,127,359 shares at 3/31/20, 86,069,234 shares at 12/31/19 and 78,367,534 shares at 6/30/19 | (5,469) | (5,470) | (5,291) | (4,780) | ||||||||||
| Total shareholders' equity | 7,802 | 7,402 | 7,327 | 7,323 | ||||||||||
| Total liabilities and shareholders' equity | $ | 84,397 | $ | 76,337 | $ | 73,402 | $ | 72,537 | ||||||
10
| 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) | 2020 | 2019 | 2020 | 2019 | |||||||||||||
| INTEREST INCOME | |||||||||||||||||
| Interest and fees on loans | $ | 434 | $ | 635 | $ | 951 | $ | 1,256 | |||||||||
| Interest on investment securities | 74 | 75 | 148 | 147 | |||||||||||||
| Interest on short-term investments | 3 | 17 | 21 | 34 | |||||||||||||
| Total interest income | 511 | 727 | 1,120 | 1,437 | |||||||||||||
| INTEREST EXPENSE | |||||||||||||||||
| Interest on deposits | 20 | 67 | 76 | 119 | |||||||||||||
| Interest on short-term borrowings | 1 | 6 | 1 | 7 | |||||||||||||
| Interest on medium- and long-term debt | 19 | 51 | 59 | 102 | |||||||||||||
| Total interest expense | 40 | 124 | 136 | 228 | |||||||||||||
| Net interest income | 471 | 603 | 984 | 1,209 | |||||||||||||
| Provision for credit losses | 138 | 44 | 549 | 31 | |||||||||||||
| Net interest income after provision for credit losses | 333 | 559 | 435 | 1,178 | |||||||||||||
| NONINTEREST INCOME | |||||||||||||||||
| Card fees | 68 | 65 | 127 | 128 | |||||||||||||
| Fiduciary income | 52 | 52 | 106 | 101 | |||||||||||||
| Service charges on deposit accounts | 42 | 51 | 91 | 102 | |||||||||||||
| Commercial lending fees | 17 | 21 | 34 | 43 | |||||||||||||
| Foreign exchange income | 9 | 11 | 20 | 22 | |||||||||||||
| Bank-owned life insurance | 9 | 11 | 21 | 20 | |||||||||||||
| Letter of credit fees | 9 | 10 | 18 | 19 | |||||||||||||
| Brokerage fees | 5 | 7 | 12 | 14 | |||||||||||||
| Net securities gains (losses) | 1 | — | — | (8) | |||||||||||||
| Other noninterest income | 35 | 22 | 55 | 47 | |||||||||||||
| Total noninterest income | 247 | 250 | 484 | 488 | |||||||||||||
| NONINTEREST EXPENSES | |||||||||||||||||
| Salaries and benefits expense | 249 | 245 | 491 | 510 | |||||||||||||
| Outside processing fee expense | 62 | 65 | 119 | 128 | |||||||||||||
| Occupancy expense | 37 | 37 | 74 | 74 | |||||||||||||
| Software expense | 39 | 28 | 76 | 57 | |||||||||||||
| Equipment expense | 12 | 12 | 24 | 24 | |||||||||||||
| Advertising expense | 8 | 9 | 15 | 14 | |||||||||||||
| FDIC insurance expense | 8 | 6 | 16 | 11 | |||||||||||||
| Other noninterest expenses | 25 | 22 | 50 | 39 | |||||||||||||
| Total noninterest expenses | 440 | 424 | 865 | 857 | |||||||||||||
| Income before income taxes | 140 | 385 | 54 | 809 | |||||||||||||
| Provision for income taxes | 27 | 87 | 6 | 172 | |||||||||||||
| NET INCOME | 113 | 298 | 48 | 637 | |||||||||||||
| Less income allocated to participating securities | 1 | 1 | 1 | 3 | |||||||||||||
| Net income attributable to common shares | $ | 112 | $ | 297 | $ | 47 | $ | 634 | |||||||||
| Earnings per common share: | |||||||||||||||||
| Basic | $ | 0.81 | $ | 1.95 | $ | 0.34 | $ | 4.10 | |||||||||
| Diluted | 0.80 | 1.94 | 0.34 | 4.06 | |||||||||||||
| Comprehensive income | 97 | 429 | 441 | 864 | |||||||||||||
| Cash dividends declared on common stock | 98 | 100 | 192 | 205 | |||||||||||||
| Cash dividends declared per common share | 0.68 | 0.67 | 1.36 | 1.34 | |||||||||||||
11
| CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited) | |||||||||||||||||||||||||||||||||||
| Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||||||||||||||
| Second | First | Fourth | Third | Second | Second Quarter 2020 Compared to: | ||||||||||||||||||||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | First Quarter 2020 | Second Quarter 2019 | |||||||||||||||||||||||||||||
| (in millions, except per share data) | 2020 | 2020 | 2019 | 2019 | 2019 | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||
| INTEREST INCOME | |||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 434 | $ | 517 | $ | 564 | $ | 619 | $ | 635 | $ | (83) | (16) | % | $ | (201) | (32) | % | |||||||||||||||||
| Interest on investment securities | 74 | 74 | 75 | 75 | 75 | — | — | (1) | (1) | ||||||||||||||||||||||||||
| Interest on short-term investments | 3 | 18 | 20 | 17 | 17 | (15) | (85) | (14) | (83) | ||||||||||||||||||||||||||
| Total interest income | 511 | 609 | 659 | 711 | 727 | (98) | (16) | (216) | (30) | ||||||||||||||||||||||||||
| INTEREST EXPENSE | |||||||||||||||||||||||||||||||||||
| Interest on deposits | 20 | 56 | 70 | 73 | 67 | (36) | (64) | (47) | (70) | ||||||||||||||||||||||||||
| Interest on short-term borrowings | 1 | — | — | 2 | 6 | 1 | 74 | (5) | (90) | ||||||||||||||||||||||||||
| Interest on medium- and long-term debt | 19 | 40 | 45 | 50 | 51 | (21) | (50) | (32) | (62) | ||||||||||||||||||||||||||
| Total interest expense | 40 | 96 | 115 | 125 | 124 | (56) | (58) | (84) | (67) | ||||||||||||||||||||||||||
| Net interest income | 471 | 513 | 544 | 586 | 603 | (42) | (8) | (132) | (22) | ||||||||||||||||||||||||||
| Provision for credit losses | 138 | 411 | 8 | 35 | 44 | (273) | (66) | 94 | n/m | ||||||||||||||||||||||||||
Net interest income after provision for credit losses | 333 | 102 | 536 | 551 | 559 | 231 | n/m | (226) | (41) | ||||||||||||||||||||||||||
| NONINTEREST INCOME | |||||||||||||||||||||||||||||||||||
| Card fees | 68 | 59 | 62 | 67 | 65 | 9 | 17 | 3 | 5 | ||||||||||||||||||||||||||
| Fiduciary income | 52 | 54 | 52 | 53 | 52 | (2) | (4) | — | — | ||||||||||||||||||||||||||
| Service charges on deposit accounts | 42 | 49 | 50 | 51 | 51 | (7) | (13) | (9) | (18) | ||||||||||||||||||||||||||
| Commercial lending fees | 17 | 17 | 25 | 23 | 21 | — | — | (4) | (21) | ||||||||||||||||||||||||||
| Foreign exchange income | 9 | 11 | 11 | 11 | 11 | (2) | (18) | (2) | (19) | ||||||||||||||||||||||||||
| Bank-owned life insurance | 9 | 12 | 10 | 11 | 11 | (3) | (18) | (2) | (8) | ||||||||||||||||||||||||||
| Letter of credit fees | 9 | 9 | 9 | 10 | 10 | — | — | (1) | (7) | ||||||||||||||||||||||||||
| Brokerage fees | 5 | 7 | 7 | 7 | 7 | (2) | (25) | (2) | (25) | ||||||||||||||||||||||||||
| Net securities gains (losses) | 1 | (1) | 1 | — | — | 2 | n/m | 1 | 84 | ||||||||||||||||||||||||||
| Other noninterest income | 35 | 20 | 39 | 23 | 22 | 15 | 72 | 13 | 54 | ||||||||||||||||||||||||||
| Total noninterest income | 247 | 237 | 266 | 256 | 250 | 10 | 4 | (3) | (1) | ||||||||||||||||||||||||||
| NONINTEREST EXPENSES | |||||||||||||||||||||||||||||||||||
| Salaries and benefits expense | 249 | 242 | 257 | 253 | 245 | 7 | 3 | 4 | 2 | ||||||||||||||||||||||||||
| Outside processing fee expense | 62 | 57 | 70 | 66 | 65 | 5 | 7 | (3) | (6) | ||||||||||||||||||||||||||
| Occupancy expense | 37 | 37 | 41 | 39 | 37 | — | — | — | — | ||||||||||||||||||||||||||
| Software expense | 39 | 37 | 30 | 30 | 28 | 2 | 3 | 11 | 36 | ||||||||||||||||||||||||||
| Equipment expense | 12 | 12 | 13 | 13 | 12 | — | — | — | — | ||||||||||||||||||||||||||
| Advertising expense | 8 | 7 | 10 | 10 | 9 | 1 | 6 | (1) | (12) | ||||||||||||||||||||||||||
| FDIC insurance expense | 8 | 8 | 6 | 6 | 6 | — | — | 2 | 38 | ||||||||||||||||||||||||||
| Other noninterest expenses | 25 | 25 | 24 | 18 | 22 | — | — | 3 | 17 | ||||||||||||||||||||||||||
| Total noninterest expenses | 440 | 425 | 451 | 435 | 424 | 15 | 3 | 16 | 4 | ||||||||||||||||||||||||||
| Income (loss) before income taxes | 140 | (86) | 351 | 372 | 385 | 226 | n/m | (245) | (64) | ||||||||||||||||||||||||||
| Provision (benefit) for income taxes | 27 | (21) | 82 | 80 | 87 | 48 | n/m | (60) | (68) | ||||||||||||||||||||||||||
| NET INCOME (LOSS) | 113 | (65) | 269 | 292 | 298 | 178 | n/m | (185) | (62) | ||||||||||||||||||||||||||
| Less income allocated to participating securities | 1 | — | 2 | 2 | 1 | 1 | 19 | — | — | ||||||||||||||||||||||||||
| Net income (loss) attributable to common shares | $ | 112 | $ | (65) | $ | 267 | $ | 290 | $ | 297 | $ | 177 | n/m | $ | (185) | (62) | % | ||||||||||||||||||
| Earnings (losses) per common share: | |||||||||||||||||||||||||||||||||||
| Basic | $ | 0.81 | $ | (0.46) | $ | 1.87 | $ | 1.98 | $ | 1.95 | $ | 1.27 | n/m | $ | (1.14) | (59) | % | ||||||||||||||||||
| Diluted | 0.80 | (0.46) | 1.85 | 1.96 | 1.94 | 1.26 | n/m | (1.14) | (58) | ||||||||||||||||||||||||||
| Comprehensive income | 97 | 344 | 370 | 338 | 429 | (247) | (72) | (332) | (77) | ||||||||||||||||||||||||||
| Cash dividends declared on common stock | 98 | 94 | 96 | 97 | 100 | 4 | 4 | (2) | (2) | ||||||||||||||||||||||||||
| Cash dividends declared per common share | 0.68 | 0.68 | 0.67 | 0.67 | 0.67 | — | — | 0.01 | 1 | ||||||||||||||||||||||||||
n/m - not meaningful
12
| ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES (unaudited) | ||||||||||||||||||||
| Comerica Incorporated and Subsidiaries | ||||||||||||||||||||
| 2020 | 2019 | |||||||||||||||||||
| (in millions) | 2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | |||||||||||||||
| Balance at beginning of period: | ||||||||||||||||||||
| Allowance for loan losses | $ | 916 | $ | 637 | $ | 652 | $ | 657 | $ | 647 | ||||||||||
| Allowance for credit losses on lending-related commitments | 62 | 31 | 29 | 31 | 30 | |||||||||||||||
| Allowance for credit losses | 978 | 668 | 681 | 688 | 677 | |||||||||||||||
| Cumulative effect of change in accounting principle | — | (17) | — | — | — | |||||||||||||||
| Loan charge-offs: | ||||||||||||||||||||
| Commercial | 55 | 87 | 24 | 59 | 42 | |||||||||||||||
| Commercial mortgage | 1 | — | 2 | — | — | |||||||||||||||
| International | — | — | — | — | 1 | |||||||||||||||
| Residential mortgage | — | — | — | 1 | — | |||||||||||||||
| Consumer | 1 | 2 | 1 | 1 | 1 | |||||||||||||||
| Total loan charge-offs | 57 | 89 | 27 | 61 | 44 | |||||||||||||||
| Recoveries on loans previously charged-off: | ||||||||||||||||||||
| Commercial | 5 | 3 | 3 | 17 | 7 | |||||||||||||||
| Commercial mortgage | 1 | 2 | 1 | — | 3 | |||||||||||||||
| International | — | — | 1 | — | — | |||||||||||||||
| Residential mortgage | — | — | — | 1 | — | |||||||||||||||
| Consumer | 1 | — | 1 | 1 | 1 | |||||||||||||||
| Total recoveries | 7 | 5 | 6 | 19 | 11 | |||||||||||||||
| Net loan charge-offs | 50 | 84 | 21 | 42 | 33 | |||||||||||||||
| Provision for credit losses: | ||||||||||||||||||||
| Provision for loan losses | 141 | 380 | 6 | 37 | 43 | |||||||||||||||
| Provision for credit losses on lending-related commitments | (3) | 31 | 2 | (2) | 1 | |||||||||||||||
| Provision for credit losses | 138 | 411 | 8 | 35 | 44 | |||||||||||||||
| Balance at end of period: | ||||||||||||||||||||
| Allowance for loan losses | 1,007 | 916 | 637 | 652 | 657 | |||||||||||||||
| Allowance for credit losses on lending-related commitments | 59 | 62 | 31 | 29 | 31 | |||||||||||||||
| Allowance for credit losses | $ | 1,066 | $ | 978 | $ | 668 | $ | 681 | $ | 688 | ||||||||||
| Allowance for loan losses as a percentage of total loans | 1.88 | % | 1.71 | % | 1.27 | % | 1.27 | % | 1.27 | % | ||||||||||
| Allowance for loan losses as a percentage of total loans excluding PPP loans | 2.03 | n/a | n/a | n/a | n/a | |||||||||||||||
| Allowance for credit losses as a percentage of total loans | 1.99 | 1.83 | 1.33 | 1.32 | 1.33 | |||||||||||||||
| Allowance for credit losses as a percentage of total loans excluding PPP loans | 2.15 | n/a | n/a | n/a | n/a | |||||||||||||||
| Net loan charge-offs as a percentage of average total loans | 0.37 | 0.68 | 0.16 | 0.33 | 0.26 | |||||||||||||||
n/a - not applicable
13
| NONPERFORMING ASSETS (unaudited) | ||||||||||||||||||||
| Comerica Incorporated and Subsidiaries | ||||||||||||||||||||
| 2020 | 2019 | |||||||||||||||||||
| (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 | $ | 200 | $ | 173 | $ | 148 | $ | 152 | $ | 155 | ||||||||||
| Commercial mortgage | 21 | 19 | 14 | 13 | 12 | |||||||||||||||
| Lease financing | 1 | 1 | — | — | 1 | |||||||||||||||
| International | — | — | — | 2 | 3 | |||||||||||||||
| Total nonaccrual business loans | 222 | 193 | 162 | 167 | 171 | |||||||||||||||
| Retail loans: | ||||||||||||||||||||
| Residential mortgage | 24 | 20 | 20 | 36 | 35 | |||||||||||||||
| Consumer: | ||||||||||||||||||||
| Home equity | 21 | 22 | 17 | 17 | 18 | |||||||||||||||
| Total nonaccrual retail loans | 45 | 42 | 37 | 53 | 53 | |||||||||||||||
| Total nonaccrual loans | 267 | 235 | 199 | 220 | 224 | |||||||||||||||
| Reduced-rate loans | 4 | 4 | 5 | 6 | 6 | |||||||||||||||
| Total nonperforming loans | 271 | 239 | 204 | 226 | 230 | |||||||||||||||
| Foreclosed property | 11 | 11 | 11 | 3 | 3 | |||||||||||||||
| Total nonperforming assets | $ | 282 | $ | 250 | $ | 215 | $ | 229 | $ | 233 | ||||||||||
| Nonperforming loans as a percentage of total loans | 0.51 | % | 0.45 | % | 0.40 | % | 0.44 | % | 0.44 | % | ||||||||||
Nonperforming assets as a percentage of total loans and foreclosed property | 0.53 | 0.47 | 0.43 | 0.44 | 0.45 | |||||||||||||||
| Allowance for credit losses as a multiple of total nonperforming loans | 3.9x | 4.1x | 3.3x | 3.0x | 3.0x | |||||||||||||||
| Loans past due 90 days or more and still accruing | $ | 41 | $ | 64 | $ | 26 | $ | 31 | $ | 17 | ||||||||||
| ANALYSIS OF NONACCRUAL LOANS | ||||||||||||||||||||
| Nonaccrual loans at beginning of period | $ | 235 | $ | 199 | $ | 220 | $ | 224 | $ | 191 | ||||||||||
| Loans transferred to nonaccrual (a) | 96 | 137 | 48 | 85 | 93 | |||||||||||||||
| Nonaccrual loan gross charge-offs | (57) | (89) | (27) | (61) | (44) | |||||||||||||||
| Loans transferred to accrual status (a) | — | — | (7) | — | — | |||||||||||||||
| Nonaccrual loans sold | — | — | (10) | — | (5) | |||||||||||||||
| Payments/Other (b) | (7) | (12) | (25) | (28) | (11) | |||||||||||||||
| Nonaccrual loans at end of period | $ | 267 | $ | 235 | $ | 199 | $ | 220 | $ | 224 | ||||||||||
(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.
14
| ANALYSIS OF NET INTEREST INCOME (unaudited) | |||||||||||||||||||||||
| Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||
| Six Months Ended | |||||||||||||||||||||||
| June 30, 2020 | June 30, 2019 | ||||||||||||||||||||||
| Average | Average | Average | Average | ||||||||||||||||||||
| (dollar amounts in millions) | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||
| Commercial loans (a) | $ | 32,321 | $ | 585 | 3.51 | % | $ | 32,037 | $ | 799 | 5.04 | % | |||||||||||
| Real estate construction loans | 3,725 | 78 | 4.19 | 3,279 | 93 | 5.74 | |||||||||||||||||
| Commercial mortgage loans | 9,719 | 177 | 3.66 | 9,028 | 230 | 5.13 | |||||||||||||||||
| Lease financing | 587 | 10 | 3.49 | 533 | 8 | 3.08 | |||||||||||||||||
| International loans | 1,071 | 21 | 3.96 | 1,019 | 27 | 5.33 | |||||||||||||||||
| Residential mortgage loans | 1,875 | 34 | 3.58 | 1,954 | 38 | 3.89 | |||||||||||||||||
| Consumer loans | 2,253 | 46 | 4.12 | 2,473 | 61 | 5.00 | |||||||||||||||||
| Total loans | 51,551 | 951 | 3.71 | 50,323 | 1,256 | 5.03 | |||||||||||||||||
| Mortgage-backed securities | 9,649 | 114 | 2.40 | 9,275 | 114 | 2.43 | |||||||||||||||||
| Other investment securities | 2,837 | 34 | 2.47 | 2,748 | 33 | 2.40 | |||||||||||||||||
| Total investment securities | 12,486 | 148 | 2.42 | 12,023 | 147 | 2.42 | |||||||||||||||||
| Interest-bearing deposits with banks | 7,558 | 20 | 0.55 | 2,773 | 33 | 2.38 | |||||||||||||||||
| Other short-term investments | 147 | 1 | 0.80 | 138 | 1 | 1.34 | |||||||||||||||||
| Total earning assets | 71,742 | 1,120 | 3.15 | 65,257 | 1,437 | 4.43 | |||||||||||||||||
| Cash and due from banks | 843 | 912 | |||||||||||||||||||||
| Allowance for loan losses | (812) | (666) | |||||||||||||||||||||
| Accrued income and other assets | 5,681 | 5,012 | |||||||||||||||||||||
| Total assets | $ | 77,454 | $ | 70,515 | |||||||||||||||||||
| Money market and interest-bearing checking deposits | $ | 25,486 | 57 | 0.45 | $ | 22,763 | 100 | 0.88 | |||||||||||||||
| Savings deposits | 2,298 | — | 0.04 | 2,169 | — | 0.04 | |||||||||||||||||
| Customer certificates of deposit | 2,900 | 19 | 1.32 | 2,258 | 11 | 0.96 | |||||||||||||||||
| Other time deposits | 35 | — | 2.00 | 661 | 8 | 2.45 | |||||||||||||||||
| Foreign office time deposits | 82 | — | 0.82 | 13 | — | 1.54 | |||||||||||||||||
| Total interest-bearing deposits | 30,801 | 76 | 0.50 | 27,864 | 119 | 0.86 | |||||||||||||||||
| Short-term borrowings | 519 | 1 | 0.34 | 576 | 7 | 2.45 | |||||||||||||||||
| Medium- and long-term debt | 7,266 | 59 | 1.63 | 6,703 | 102 | 3.07 | |||||||||||||||||
| Total interest-bearing sources | 38,586 | 136 | 0.71 | 35,143 | 228 | 1.30 | |||||||||||||||||
| Noninterest-bearing deposits | 29,723 | 26,634 | |||||||||||||||||||||
| Accrued expenses and other liabilities | 1,630 | 1,367 | |||||||||||||||||||||
| Total shareholders' equity | 7,515 | 7,371 | |||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 77,454 | $ | 70,515 | |||||||||||||||||||
| Net interest income/rate spread | $ | 984 | 2.44 | $ | 1,209 | 3.13 | |||||||||||||||||
| Impact of net noninterest-bearing sources of funds | 0.33 | 0.60 | |||||||||||||||||||||
Net interest margin (as a percentage of average earning assets) | 2.77 | % | 3.73 | % | |||||||||||||||||||
(a)Includes PPP loans with average balance of $1.3 billion, interest income of $14 million and average yield of 2.21% for the six months ended June 30, 2020.
15
| ANALYSIS OF NET INTEREST INCOME (unaudited) | |||||||||||||||||||||||||||||||||||
| Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| June 30, 2020 | March 31, 2020 | June 30, 2019 | |||||||||||||||||||||||||||||||||
| Average | Average | Average | Average | Average | Average | ||||||||||||||||||||||||||||||
| (dollar amounts in millions) | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||||||||||
| Commercial loans (a) | $ | 33,944 | $ | 271 | 2.99 | % | $ | 30,697 | $ | 314 | 4.07 | % | $ | 32,607 | $ | 405 | 5.00 | % | |||||||||||||||||
| Real estate construction loans | 3,887 | 35 | 3.60 | 3,564 | 43 | 4.85 | 3,319 | 47 | 5.74 | ||||||||||||||||||||||||||
| Commercial mortgage loans | 9,800 | 76 | 3.12 | 9,638 | 101 | 4.21 | 9,060 | 116 | 5.12 | ||||||||||||||||||||||||||
| Lease financing | 592 | 5 | 3.34 | 582 | 5 | 3.63 | 546 | 3 | 2.32 | ||||||||||||||||||||||||||
| International loans | 1,137 | 10 | 3.51 | 1,004 | 11 | 4.48 | 1,025 | 14 | 5.30 | ||||||||||||||||||||||||||
| Residential mortgage loans | 1,895 | 17 | 3.49 | 1,855 | 17 | 3.67 | 1,943 | 19 | 3.92 | ||||||||||||||||||||||||||
| Consumer loans | 2,243 | 20 | 3.62 | 2,264 | 26 | 4.60 | 2,463 | 31 | 5.02 | ||||||||||||||||||||||||||
| Total loans | 53,498 | 434 | 3.26 | 49,604 | 517 | 4.19 | 50,963 | 635 | 5.00 | ||||||||||||||||||||||||||
| Mortgage-backed securities | 9,785 | 57 | 2.39 | 9,514 | 57 | 2.42 | 9,326 | 58 | 2.45 | ||||||||||||||||||||||||||
| Other investment securities | 2,857 | 17 | 2.47 | 2,817 | 17 | 2.48 | 2,765 | 17 | 2.47 | ||||||||||||||||||||||||||
| Total investment securities | 12,642 | 74 | 2.41 | 12,331 | 74 | 2.43 | 12,091 | 75 | 2.45 | ||||||||||||||||||||||||||
| Interest-bearing deposits with banks | 9,709 | 2 | 0.11 | 5,407 | 18 | 1.34 | 2,694 | 16 | 2.37 | ||||||||||||||||||||||||||
| Other short-term investments | 140 | 1 | 0.48 | 154 | — | 1.09 | 142 | 1 | 1.34 | ||||||||||||||||||||||||||
| Total earning assets | 75,989 | 511 | 2.71 | 67,496 | 609 | 3.64 | 65,890 | 727 | 4.42 | ||||||||||||||||||||||||||
| Cash and due from banks | 848 | 838 | 900 | ||||||||||||||||||||||||||||||||
| Allowance for loan losses | (932) | (693) | (660) | ||||||||||||||||||||||||||||||||
| Accrued income and other assets | 5,739 | 5,624 | 5,122 | ||||||||||||||||||||||||||||||||
| Total assets | $ | 81,644 | $ | 73,265 | $ | 71,252 | |||||||||||||||||||||||||||||
| Money market and interest-bearing checking deposits | $ | 26,320 | 12 | 0.18 | $ | 24,654 | 45 | 0.73 | $ | 22,913 | 53 | 0.93 | |||||||||||||||||||||||
| Savings deposits | 2,394 | — | 0.02 | 2,202 | — | 0.06 | 2,169 | — | 0.03 | ||||||||||||||||||||||||||
| Customer certificates of deposit | 2,801 | 8 | 1.21 | 2,999 | 11 | 1.42 | 2,346 | 7 | 1.10 | ||||||||||||||||||||||||||
| Other time deposits | — | — | — | 70 | — | 2.00 | 1,156 | 7 | 2.46 | ||||||||||||||||||||||||||
| Foreign office time deposits | 81 | — | 0.34 | 82 | — | 1.30 | 13 | — | 1.54 | ||||||||||||||||||||||||||
| Total interest-bearing deposits | 31,596 | 20 | 0.26 | 30,007 | 56 | 0.76 | 28,597 | 67 | 0.94 | ||||||||||||||||||||||||||
| Short-term borrowings | 882 | 1 | 0.25 | 157 | — | 0.82 | 927 | 6 | 2.46 | ||||||||||||||||||||||||||
| Medium- and long-term debt | 7,206 | 19 | 1.09 | 7,324 | 40 | 2.15 | 6,712 | 51 | 3.05 | ||||||||||||||||||||||||||
| Total interest-bearing sources | 39,684 | 40 | 0.41 | 37,488 | 96 | 1.03 | 36,236 | 124 | 1.37 | ||||||||||||||||||||||||||
| Noninterest-bearing deposits | 32,686 | 26,761 | 26,398 | ||||||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 1,682 | 1,578 | 1,333 | ||||||||||||||||||||||||||||||||
| Total shareholders' equity | 7,592 | 7,438 | 7,285 | ||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 81,644 | $ | 73,265 | $ | 71,252 | |||||||||||||||||||||||||||||
| Net interest income/rate spread | $ | 471 | 2.30 | $ | 513 | 2.61 | $ | 603 | 3.05 | ||||||||||||||||||||||||||
| Impact of net noninterest-bearing sources of funds | 0.20 | 0.45 | 0.61 | ||||||||||||||||||||||||||||||||
Net interest margin (as a percentage of average earning assets) | 2.50 | % | 3.06 | % | 3.66 | % | |||||||||||||||||||||||||||||
(a)Includes PPP loans with average balance of $2.6 billion, interest income of $14 million and average yield of 2.21% for the three months ended June 30, 2020.
16
| CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) | ||||||||||||||||||||||||||
| Comerica Incorporated and Subsidiaries | ||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||
| Nonredeemable | Common Stock | Other | Total | |||||||||||||||||||||||
| Preferred | Shares | Capital | Comprehensive | Retained | Treasury | Shareholders' | ||||||||||||||||||||
| (in millions, except per share data) | Stock | Outstanding | Amount | Surplus | Income (Loss) | Earnings | Stock | Equity | ||||||||||||||||||
| BALANCE AT MARCH 31, 2019 | $ | — | 155.4 | $ | 1,141 | $ | 2,159 | $ | (513) | $ | 8,979 | $ | (4,357) | $ | 7,409 | |||||||||||
| Net income | — | — | — | — | — | 298 | — | 298 | ||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | 131 | — | — | 131 | ||||||||||||||||||
| Cash dividends declared on common stock ($0.67 per share) | — | — | — | — | — | (100) | — | (100) | ||||||||||||||||||
| Purchase of common stock | — | (5.7) | — | — | — | — | (425) | (425) | ||||||||||||||||||
| Net issuance of common stock under employee stock plans | — | 0.1 | — | 1 | — | (1) | 2 | 2 | ||||||||||||||||||
| Share-based compensation | — | — | — | 8 | — | — | — | 8 | ||||||||||||||||||
| BALANCE AT JUNE 30, 2019 | $ | — | 149.8 | $ | 1,141 | $ | 2,168 | $ | (382) | $ | 9,176 | $ | (4,780) | $ | 7,323 | |||||||||||
| BALANCE AT MARCH 31, 2020 | $ | — | 139.0 | $ | 1,141 | $ | 2,168 | $ | 174 | $ | 9,389 | $ | (5,470) | $ | 7,402 | |||||||||||
| Net income | — | — | — | — | — | 113 | — | 113 | ||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | (16) | — | — | (16) | ||||||||||||||||||
| Cash dividends declared on common stock ($0.68 per share) | — | — | — | — | — | (98) | — | (98) | ||||||||||||||||||
| Purchase of common stock | — | — | — | — | — | — | 1 | 1 | ||||||||||||||||||
| Issuance of preferred stock | 395 | — | — | — | — | — | — | 395 | ||||||||||||||||||
| Net issuance of common stock under employee stock plans | — | — | — | 1 | — | — | — | 1 | ||||||||||||||||||
| Share-based compensation | — | — | — | 4 | — | — | — | 4 | ||||||||||||||||||
| BALANCE AT JUNE 30, 2020 | $ | 395 | 139.0 | $ | 1,141 | $ | 2,173 | $ | 158 | $ | 9,404 | $ | (5,469) | $ | 7,802 | |||||||||||
| BALANCE AT DECEMBER 31, 2018 | $ | — | 160.1 | $ | 1,141 | $ | 2,148 | $ | (609) | $ | 8,781 | $ | (3,954) | $ | 7,507 | |||||||||||
| Cumulative effect of change in accounting principle | — | — | — | — | — | (14) | — | (14) | ||||||||||||||||||
| Net income | — | — | — | — | — | 637 | — | 637 | ||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | 227 | — | — | 227 | ||||||||||||||||||
| Cash dividends declared on common stock ($1.34 per share) | — | — | — | — | — | (205) | — | (205) | ||||||||||||||||||
| Purchase of common stock | — | (10.9) | — | — | — | — | (859) | (859) | ||||||||||||||||||
| Net issuance of common stock under employee stock plans | — | 0.6 | — | (12) | — | (23) | 33 | (2) | ||||||||||||||||||
| Share-based compensation | — | — | — | 32 | — | — | — | 32 | ||||||||||||||||||
| BALANCE AT JUNE 30, 2019 | $ | — | 149.8 | $ | 1,141 | $ | 2,168 | $ | (382) | $ | 9,176 | $ | (4,780) | $ | 7,323 | |||||||||||
| BALANCE AT DECEMBER 31, 2019 | $ | — | 142.1 | $ | 1,141 | $ | 2,174 | $ | (235) | $ | 9,538 | $ | (5,291) | $ | 7,327 | |||||||||||
| Cumulative effect of change in accounting principle | — | — | — | — | — | 13 | — | 13 | ||||||||||||||||||
| Net income | — | — | — | — | — | 48 | — | 48 | ||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | 393 | — | — | 393 | ||||||||||||||||||
| Cash dividends declared on common stock ($1.36 per share) | — | — | — | — | — | (192) | — | (192) | ||||||||||||||||||
| Purchase of common stock | — | (3.4) | — | — | — | — | (194) | (194) | ||||||||||||||||||
| Issuance of preferred stock | 395 | — | — | — | — | — | — | 395 | ||||||||||||||||||
| Net issuance of common stock under employee stock plans | — | 0.3 | — | (13) | — | (3) | 16 | — | ||||||||||||||||||
| Share-based compensation | — | — | — | 12 | — | — | — | 12 | ||||||||||||||||||
| BALANCE AT JUNE 30, 2020 | $ | 395 | 139.0 | $ | 1,141 | $ | 2,173 | $ | 158 | $ | 9,404 | $ | (5,469) | $ | 7,802 | |||||||||||
17
| BUSINESS SEGMENT FINANCIAL RESULTS (unaudited) | |||||||||||||||||||||||||||||||||||
| Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||||||||||||||
| (dollar amounts in millions) | Commercial | Retail | Wealth | ||||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2020 | Bank | Bank | Management | Finance | Other | Total | |||||||||||||||||||||||||||||
| Earnings summary: | |||||||||||||||||||||||||||||||||||
| Net interest income (expense) | $ | 402 | $ | 120 | $ | 40 | $ | (95) | $ | 4 | $ | 471 | |||||||||||||||||||||||
| Provision for credit losses | 117 | 5 | 16 | — | — | 138 | |||||||||||||||||||||||||||||
| Noninterest income | 144 | 24 | 66 | 11 | 2 | 247 | |||||||||||||||||||||||||||||
| Noninterest expenses | 207 | 155 | 73 | 1 | 4 | 440 | |||||||||||||||||||||||||||||
| Provision (benefit) for income taxes | 47 | (4) | 3 | (20) | 1 | 27 | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 175 | $ | (12) | $ | 14 | $ | (65) | $ | 1 | $ | 113 | |||||||||||||||||||||||
| Net credit-related charge-offs | $ | 48 | $ | 1 | $ | 1 | $ | — | $ | — | $ | 50 | |||||||||||||||||||||||
| Selected average balances: | |||||||||||||||||||||||||||||||||||
| Assets | $ | 47,392 | $ | 3,306 | $ | 5,191 | $ | 14,500 | $ | 11,255 | $ | 81,644 | |||||||||||||||||||||||
| Loans | 45,914 | 2,479 | 5,077 | — | 28 | 53,498 | |||||||||||||||||||||||||||||
| Deposits | 36,318 | 22,647 | 4,217 | 950 | 150 | 64,282 | |||||||||||||||||||||||||||||
| Statistical data: | |||||||||||||||||||||||||||||||||||
| Return on average assets (a) | 1.49 | % | (0.21) | % | 1.00 | % | n/m | n/m | 0.55 | % | |||||||||||||||||||||||||
| Efficiency ratio (b) | 37.67 | 107.15 | 69.86 | n/m | n/m | 61.14 | |||||||||||||||||||||||||||||
| Commercial | Retail | Wealth | |||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2020 | Bank | Bank | Management | Finance | Other | Total | |||||||||||||||||||||||||||||
| Earnings summary: | |||||||||||||||||||||||||||||||||||
| Net interest income (expense) | $ | 380 | $ | 125 | $ | 41 | $ | (44) | $ | 11 | $ | 513 | |||||||||||||||||||||||
| Provision for credit losses | 396 | 3 | 12 | — | — | 411 | |||||||||||||||||||||||||||||
| Noninterest income | 127 | 28 | 70 | 14 | (2) | 237 | |||||||||||||||||||||||||||||
| Noninterest expenses | 194 | 149 | 72 | — | 10 | 425 | |||||||||||||||||||||||||||||
| (Benefit) provision for income taxes | (20) | — | 6 | (8) | 1 | (21) | |||||||||||||||||||||||||||||
| Net (loss) income | $ | (63) | $ | 1 | $ | 21 | $ | (22) | $ | (2) | $ | (65) | |||||||||||||||||||||||
| Net credit-related charge-offs | $ | 83 | $ | 1 | $ | — | $ | — | $ | — | $ | 84 | |||||||||||||||||||||||
| Selected average balances: | |||||||||||||||||||||||||||||||||||
| Assets | $ | 44,254 | $ | 2,864 | $ | 5,078 | $ | 14,285 | $ | 6,784 | $ | 73,265 | |||||||||||||||||||||||
| Loans | 42,593 | 2,075 | 4,936 | — | — | 49,604 | |||||||||||||||||||||||||||||
| Deposits | 30,230 | 21,195 | 4,025 | 1,136 | 182 | 56,768 | |||||||||||||||||||||||||||||
| Statistical data: | |||||||||||||||||||||||||||||||||||
| Return on average assets (a) | (0.58) | % | 0.03 | % | 1.69 | % | n/m | n/m | (0.35) | % | |||||||||||||||||||||||||
| Efficiency ratio (b) | 38.47 | 96.03 | 64.28 | n/m | n/m | 56.57 | |||||||||||||||||||||||||||||
| Commercial | Retail | Wealth | |||||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2019 | Bank | Bank | Management | Finance | Other | Total | |||||||||||||||||||||||||||||
| Earnings summary: | |||||||||||||||||||||||||||||||||||
| Net interest income (expense) | $ | 420 | $ | 146 | $ | 46 | $ | (23) | $ | 14 | $ | 603 | |||||||||||||||||||||||
| Provision for credit losses | 52 | 1 | (5) | — | (4) | 44 | |||||||||||||||||||||||||||||
| Noninterest income | 136 | 33 | 68 | 13 | — | 250 | |||||||||||||||||||||||||||||
| Noninterest expenses | 195 | 147 | 67 | — | 15 | 424 | |||||||||||||||||||||||||||||
| Provision (benefit) for income taxes | 71 | 7 | 13 | (4) | — | 87 | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 238 | $ | 24 | $ | 39 | $ | (6) | $ | 3 | $ | 298 | |||||||||||||||||||||||
| Net credit-related charge-offs (recoveries) | $ | 35 | $ | — | $ | (2) | $ | — | $ | — | $ | 33 | |||||||||||||||||||||||
| Selected average balances: | |||||||||||||||||||||||||||||||||||
| Assets | $ | 45,321 | $ | 2,839 | $ | 5,071 | $ | 13,907 | $ | 4,114 | $ | 71,252 | |||||||||||||||||||||||
| Loans | 43,932 | 2,107 | 4,930 | — | (6) | 50,963 | |||||||||||||||||||||||||||||
| Deposits | 28,251 | 20,649 | 3,740 | 2,174 | 181 | 54,995 | |||||||||||||||||||||||||||||
| Statistical data: | |||||||||||||||||||||||||||||||||||
| Return on average assets (a) | 2.11 | % | 0.44 | % | 3.10 | % | n/m | n/m | 1.68 | % | |||||||||||||||||||||||||
| Efficiency ratio (b) | 34.98 | 82.26 | 58.99 | n/m | n/m | 49.65 | |||||||||||||||||||||||||||||
(a)Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b)Noninterest expenses as a percentage of the sum of net interest income 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
18
| MARKET SEGMENT FINANCIAL RESULTS (unaudited) | |||||||||||||||||||||||||||||||||||
| Comerica Incorporated and Subsidiaries | |||||||||||||||||||||||||||||||||||
| (dollar amounts in millions) | Other | Finance | |||||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2020 | Michigan | California | Texas | Markets | & Other | Total | |||||||||||||||||||||||||||||
| Earnings summary: | |||||||||||||||||||||||||||||||||||
| Net interest income (expense) | $ | 159 | $ | 176 | $ | 116 | $ | 111 | $ | (91) | $ | 471 | |||||||||||||||||||||||
| Provision for credit losses | 40 | 51 | 31 | 16 | — | 138 | |||||||||||||||||||||||||||||
| Noninterest income | 64 | 36 | 30 | 104 | 13 | 247 | |||||||||||||||||||||||||||||
| Noninterest expenses | 139 | 103 | 91 | 102 | 5 | 440 | |||||||||||||||||||||||||||||
| Provision (benefit) for income taxes | 8 | 13 | 4 | 21 | (19) | 27 | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 36 | $ | 45 | $ | 20 | $ | 76 | $ | (64) | $ | 113 | |||||||||||||||||||||||
| Net credit-related charge-offs | $ | — | $ | 4 | $ | 46 | $ | — | $ | — | $ | 50 | |||||||||||||||||||||||
| Selected average balances: | |||||||||||||||||||||||||||||||||||
| Assets | $ | 13,643 | $ | 18,948 | $ | 11,597 | $ | 11,732 | $ | 25,724 | $ | 81,644 | |||||||||||||||||||||||
| Loans | 13,014 | 18,663 | 11,184 | 10,640 | (3) | 53,498 | |||||||||||||||||||||||||||||
| Deposits | 23,460 | 18,463 | 10,209 | 11,050 | 1,100 | 64,282 | |||||||||||||||||||||||||||||
| Statistical data: | |||||||||||||||||||||||||||||||||||
| Return on average assets (a) | 0.59 | % | 0.93 | % | 0.68 | % | 2.53 | % | n/m | 0.55 | % | ||||||||||||||||||||||||
| Efficiency ratio (b) | 62.08 | 48.61 | 61.88 | 47.41 | n/m | 61.14 | |||||||||||||||||||||||||||||
| Other | Finance | ||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2020 | Michigan | California | Texas | Markets | & Other | Total | |||||||||||||||||||||||||||||
| Earnings summary: | |||||||||||||||||||||||||||||||||||
| Net interest income (expense) | $ | 163 | $ | 182 | $ | 115 | $ | 86 | $ | (33) | $ | 513 | |||||||||||||||||||||||
| Provision for credit losses | 24 | 51 | 290 | 46 | — | 411 | |||||||||||||||||||||||||||||
| Noninterest income | 72 | 36 | 30 | 87 | 12 | 237 | |||||||||||||||||||||||||||||
| Noninterest expenses | 140 | 98 | 84 | 93 | 10 | 425 | |||||||||||||||||||||||||||||
| Provision (benefit) for income taxes | 15 | 17 | (50) | 4 | (7) | (21) | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 56 | $ | 52 | $ | (179) | $ | 30 | $ | (24) | $ | (65) | |||||||||||||||||||||||
| Net credit-related charge-offs | $ | 3 | $ | 11 | $ | 70 | $ | — | $ | — | $ | 84 | |||||||||||||||||||||||
| Selected average balances: | |||||||||||||||||||||||||||||||||||
| Assets | $ | 12,899 | $ | 18,377 | $ | 11,154 | $ | 9,766 | $ | 21,069 | $ | 73,265 | |||||||||||||||||||||||
| Loans | 12,191 | 18,027 | 10,566 | 8,820 | — | 49,604 | |||||||||||||||||||||||||||||
| Deposits | 20,748 | 17,466 | 9,204 | 8,032 | 1,318 | 56,768 | |||||||||||||||||||||||||||||
| Statistical data: | |||||||||||||||||||||||||||||||||||
| Return on average assets (a) | 1.05 | % | 1.12 | % | (6.45) | % | 1.24 | % | n/m | (0.35) | % | ||||||||||||||||||||||||
| Efficiency ratio (b) | 58.91 | 44.99 | 58.25 | 53.76 | n/m | 56.57 | |||||||||||||||||||||||||||||
| Other | Finance | ||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2019 | Michigan | California | Texas | Markets | & Other | Total | |||||||||||||||||||||||||||||
| Earnings summary: | |||||||||||||||||||||||||||||||||||
| Net interest income (expense) | $ | 186 | $ | 208 | $ | 124 | $ | 94 | $ | (9) | $ | 603 | |||||||||||||||||||||||
| Provision for credit losses | (10) | (4) | 49 | 13 | (4) | 44 | |||||||||||||||||||||||||||||
| Noninterest income | 72 | 40 | 34 | 91 | 13 | 250 | |||||||||||||||||||||||||||||
| Noninterest expenses | 134 | 99 | 84 | 92 | 15 | 424 | |||||||||||||||||||||||||||||
| Provision (benefit) for income taxes | 30 | 39 | 6 | 16 | (4) | 87 | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 104 | $ | 114 | $ | 19 | $ | 64 | $ | (3) | $ | 298 | |||||||||||||||||||||||
| Net credit-related charge-offs | $ | — | $ | 7 | $ | 26 | $ | — | $ | — | $ | 33 | |||||||||||||||||||||||
| Selected average balances: | |||||||||||||||||||||||||||||||||||
| Assets | $ | 13,239 | $ | 19,108 | $ | 11,342 | $ | 9,542 | $ | 18,021 | $ | 71,252 | |||||||||||||||||||||||
| Loans | 12,704 | 18,806 | 10,684 | 8,775 | (6) | 50,963 | |||||||||||||||||||||||||||||
| Deposits | 19,816 | 16,314 | 8,668 | 7,842 | 2,355 | 54,995 | |||||||||||||||||||||||||||||
| Statistical data: | |||||||||||||||||||||||||||||||||||
| Return on average assets (a) | 2.01 | % | 2.38 | % | 0.69 | % | 2.75 | % | n/m | 1.68 | % | ||||||||||||||||||||||||
| Efficiency ratio (b) | 52.04 | 40.07 | 52.86 | 49.36 | n/m | 49.65 | |||||||||||||||||||||||||||||
(a)Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b)Noninterest expenses as a percentage of the sum of net interest income 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
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| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES AND REGULATORY RATIOS (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. Tangible common equity is used by Comerica to measure the quality of capital and the return relative to balance sheet risk.
Common equity tier 1 capital ratio removes preferred stock from the Tier 1 capital ratio as defined by and calculated in conformity with bank regulations. 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.
| June 30, | March 31, | June 30, | |||||||||
| (dollar amounts in millions) | 2020 | 2020 | 2019 | ||||||||
| Common Equity Tier 1 Capital (a): | |||||||||||
| Tier 1 capital | $ | 7,093 | $ | 6,654 | $ | 7,060 | |||||
| Less: | |||||||||||
| Fixed-rate reset non-cumulative perpetual preferred stock | 395 | — | — | ||||||||
| Common equity tier 1 capital | $ | 6,698 | $ | 6,654 | $ | 7,060 | |||||
| Risk-weighted assets | $ | 67,156 | $ | 69,874 | $ | 69,371 | |||||
| Tier 1 capital ratio | 10.56 | % | 9.52 | % | 10.18 | % | |||||
| Common equity tier 1 capital ratio | 9.97 | % | 9.52 | % | 10.18 | % | |||||
| Tangible Common Equity: | |||||||||||
| Total shareholders' equity | $ | 7,802 | $ | 7,402 | $ | 7,323 | |||||
| Less: | |||||||||||
| Fixed-rate reset non-cumulative perpetual preferred stock | 395 | — | — | ||||||||
| Goodwill | 635 | 635 | 635 | ||||||||
| Other intangible assets | 3 | 3 | 4 | ||||||||
| Tangible common equity | $ | 6,769 | $ | 6,764 | $ | 6,684 | |||||
| Total assets | $ | 84,397 | $ | 76,337 | $ | 72,537 | |||||
| Less: | |||||||||||
| Goodwill | 635 | 635 | 635 | ||||||||
| Other intangible assets | 3 | 3 | 4 | ||||||||
| Tangible assets | $ | 83,759 | $ | 75,699 | $ | 71,898 | |||||
| Common equity ratio | 8.78 | % | 9.70 | % | 10.10 | % | |||||
| Tangible common equity ratio | 8.08 | 8.93 | 9.30 | ||||||||
Tangible Common Equity per Share of Common Stock: | |||||||||||
| Common shareholders' equity | $ | 7,407 | $ | 7,402 | $ | 7,323 | |||||
| Tangible common equity | 6,769 | 6,764 | 6,684 | ||||||||
| Shares of common stock outstanding (in millions) | 139 | 139 | 150 | ||||||||
| Common shareholders' equity per share of common stock | $ | 53.28 | $ | 53.24 | $ | 48.89 | |||||
| Tangible common equity per share of common stock | 48.69 | 48.65 | 44.61 | ||||||||
(a)Tier 1 capital as defined by regulation; estimated for June 30, 2020, reflects deferral of CECL model impact.
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