Attached files
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| 8-K - 8-K - COMERICA INC /NEW/ | cma-20170331form8xk.htm |
| EX-99.1 - EXHIBIT 99.1 - COMERICA INC /NEW/ | cma20170331ex991.htm |
Comerica Incorporated
First Quarter 2017Financial Review
April 18, 2017
Safe Harbor Statement
Any statements in this presentation that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “believes,” “contemplates,” “feels,” “expects,” “estimates,” “seeks,” “strives,” “plans,” “intends,” “outlook,” “forecast,” “position,” “target,” “mission,” “assume,” “achievable,” “potential,” “strategy,” “goal,” “aspiration,” “opportunity,” “initiative,” “outcome,” “continue,” “remain,” “maintain,” “on course,” “trend,” “objective,” “looks forward,” “projects,” “models” and variations of such words and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica's management based on information known to Comerica's management as of the date of this presentation and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica's management for future or past operations, products or services, including the Growth in Efficiency and Revenue initiative (“GEAR Up”), and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries as well as estimates of the economic benefits of the GEAR Up initiative, estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in general economic, political or industry conditions; changes in monetary and fiscal policies, including changes in interest rates; whether Comerica may achieve opportunities for revenue enhancements and efficiency improvements under the GEAR Up initiative, or changes in the scope or assumptions underlying the GEAR Up initiative; Comerica's ability to maintain adequate sources of funding and liquidity; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers, in particular the energy industry; unfavorable developments concerning credit quality; operational difficulties, failure of technology infrastructure or information security incidents; changes in regulation or oversight; reliance on other companies to provide certain key components of business infrastructure; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; reductions in Comerica's credit rating; the interdependence of financial service companies; the implementation of Comerica's strategies and business initiatives; damage to Comerica's reputation; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; any future strategic acquisitions or divestitures; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; potential legislative, administrative or judicial changes or interpretations related to the tax treatment of corporations; changes in accounting standards and the critical nature of Comerica's accounting policies. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. In particular, please refer to “Item 1A. Risk Factors” beginning on page 12 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2016. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this presentation or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
2
Financial Summary
1Q17 4Q16 1Q16
Diluted income per common share $1.11 $0.92 $0.34
Net interest income $470 $455 $447Net interest margin 2.86% 2.65% 2.81%Provision for credit losses 16 35 148Net credit-related charge-offs to average loans 0.28% 0.29% 0.49%Noninterest income 271 267 244Noninterest expenses 457 461 458Restructuring expenses 11 20 -Net income 202 164 60
Average loans $47,900 $48,915 $48,392Average deposits 57,779 59,645 56,708
Efficiency ratio2 61.63% 63.58% 65.99%Return on average common shareholders’ equity 10.42 8.43 3.14Return on average assets 1.14 0.88 0.35
Common equity Tier 1 capital ratio 11.54%1 11.09% 10.58%Average diluted shares (millions) 180 177 176
$ in millions, except per share data ● 1Estimated ● 2Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains (losses).
3
First Quarter 2017 ResultsNet income increased 23% over 4Q16
$ in millions, except per share data ● 1Q17 compared to 4Q16 ●1Included restructuring charge of $11MM ($0.04 per share, after tax) in 1Q17 & $20MM ($0.07 per share, after tax) in the 4Q16 ● 2Included tax benefit of $24MM ($0.13 per share) from employee stock transactions● 3EPS based on diluted income per share ● 41Q17 repurchases under the equity repurchase program
1Q17 Change From4Q16 1Q16
Average loans $47,900 $(1,015) $(492)
Average deposits 57,779 (1,866) 1,071
Net interest income 470 15 23
Provision for credit losses 16 (19) (132)
Net credit-related charge-offs 33 (3) (19)
Noninterest income 271 4 27
Noninterest expenses1 457 (4) (1)
Provision for income tax2 66 4 41
Net income 202 38 142
Earnings per share (EPS)3 1.11 0.19 0.77
Equity repurchases4 105 6 63
Key QoQ Performance Drivers
Loans reflect Mortgage Banker seasonality & Energy portfolio reduction
Deposits show typical 1Q decline
Net interest income benefitted from increase in interest rates
Provision & net charge-offs decreased with Energy credit improvement
Noninterest income grew with higher deposit service charges, investment banking & fiduciary income
Expenses reflect lower restructuring charges & GEAR Up driven expense cuts partly offset by seasonally elevated comp
Lower tax rate due to benefit from employee stock transactions
Active capital management continued
4
Loans Declined with Typical Seasonality & Energy Portfolio Reduction Loan yield increased 21 basis points
1Q17 compared to 4Q16 ● 1Utilization of commercial commitments as a percentage of total commercial commitments at period-end
Total Loans($ in billions) Average loans decreased
- $902MM Mortgage Banker Finance- $289MM Energy+ $144MM National Dealer Services
Loan yield +21 bps + 20 bps due to increase in rates + 4Q16 lease residual value adjustment
Period-end commitments $51.3B
Line utilization1 remained stable at 51%
Loan pipeline increased significantly
Period-end commitments to commit up 44% to $1.2B
5
Average Balances Period-end
48.4 49.5 49.2 48.9 47.9 49.1 48.3
3.38 3.31 3.33 3.36
3.57
1Q16 2Q16 3Q16 4Q16 1Q17 4Q16 1Q17
Loan Yields
1Q17 compared to 4Q16 ● 1Interest costs on interest-bearing deposits ● 2At 3/31/17
Total Deposits($ in billions)
56.7 56.5 58.1 59.6 57.8 59.0 58.9
0.14 0.14 0.14 0.14 0.14
1Q16 2Q16 3Q16 4Q16 1Q17 4Q16 1Q17
Deposit Rates1 Average deposits decreased
- $920MM Corporate Banking- $280MM Technology & Life Sciences- $155MM Small Business- $143MM Mortgage Banker Finance- $121MM Energy
Noninterest-bearing declined $1.6B
Loan to Deposit Ratio2 of 82%
Seasonal Decline in Noninterest-bearing DepositsDeposit cost unchanged
6
Average Balances Period-end
Securities Portfolio($ in billions)
Securities Portfolio StableAverage portfolio yield increased 1 basis point
9.4 9.3 9.4 9.4 9.3 9.5 9.4
12.4 12.3 12.4 12.3 12.2 12.4 12.3
2.05 2.03 2.01 2.01 2.02
1Q16 2Q16 3Q16 4Q16 1Q17 4Q16 1Q17
Treasury Securities & OtherMortgage-backed Securities (MBS)Securities Yields
Average Balances
Duration of 3.5 years1
Extends to 4.0 years under a 200 bps instantaneous rate increase1Net unrealized pre-tax loss of $43MM2
Net unamortized premium of $26MM3
GNMA ~51% of MBS portfolio
3/31/17 ● 1Estimated as of 3/31/17. Excludes auction rate securities (ARS). ● 2Net unrealized pre-tax gain on the available-for-sale (AFS) portfolio ● 3Net unamortized premium on the MBS portfolio
7
Period-end
Net Interest Income($ in millions)
Net Interest Income Increased $15MMNIM increased 21 basis points with benefit from rising rates
1Q17 compared to 4Q16
447 445 450 455
470
2.81 2.74 2.66 2.65 2.86
1Q16 2Q16 3Q16 4Q16 1Q17
NIM $455MM 4Q16 2.65%
+9MM Loan impacts+ $23MM increase in rates+ $ 2MM 4Q16 lease residualvalue adjustment- $ 8MM 2 less days- $ 8MM lower balances
+0.17
+ 3MM Fed balance impact+ $ 4MM increase in rates- $ 1MM lower balances
+0.03
+ 2MM Lower wholesale funding cost+ $ 5MM lower balances- $ 3MM increase in rates
+0.01
+1MM Lower deposit costs --
$470MM 1Q17 2.86%
8
Criticized Loans2($ in millions)
Credit Quality StrongEnergy business line reserve allocation1 ~7% of Energy loans
3/31/17 ●1Bank's entire allowance is available to cover any & all losses. Allocation of allowance for energy loans reflects our robust allowance methodology which contains quantitative and qualitative components ● 2Criticized loans are consistent with regulatory defined Special Mention, Substandard, & Doubtful categories ● 3Net credit-related charge-offs
Allowance for Credit Losses($ in millions)
770 772 772 771 754
1.47 1.45 1.48 1.49 1.47
1Q16 2Q16 3Q16 4Q16 1Q17
Allowance for Loan Losses as a % of Total Loans
$ in millions Ex-Energy TotalTotal loans $46,348 $48,303% of total 96% 100%
Criticized2 1,765 2,636Ratio 3.8% 5.5%Q/Q change 63 (220)
Nonaccrual 255 521Ratio 0.6% 1.1%Q/Q change 1 (61)
Net charge-offs3 20 33Ratio 0.18% 0.28%
$ in millions Loans Criticized NAL NCO3E&P $1,360 $649 $234 $9
Midstream 327 38 7 -
Services 268 184 25 4
Total Energy $1,955 $871 $266 $13Q/Q change (295) (283) (62) (2)
Energy Credit Metrics
Portfolio Credit Metrics
9
681 605 631 582 521
3,928 3,551 3,261 2,856 2,6368.0 7.0 6.6 5.8 5.5
1Q16 2Q16 3Q16 4Q16 1Q17
NALs Criticized as a % of Total Loans
Noninterest Income Increased $4MM, or 2%Increased $27MM, or 11%, from 1Q16
1Q17 compared to 4Q16
244
268 272 267 271
1Q16 2Q16 3Q16 4Q16 1Q17
Noninterest Income ($ in millions) + $4MM Deposit service charges
+ $2MM Investment banking
+ $1MM Fiduciary
- $2MM Card fees
+ $2MM 4Q16 Net securities loss (related to Visa derivative)
+ $2MM Deferred comp (offset in noninterest expense)
- $2MM Bank-owned life insurance
- $2MM Principal investing & warrants
10
Noninterest Expenses Declined $4MM, or 1% Seasonality in comp offset by lower restructuring costs & broad-based expense reduction
1Q17 compared to 4Q16 ● 1Estimated as of 4/18/17
+ $14MM Salaries & benefits+ Annual stock comp+ Higher payroll taxes
+ $ 4MM 4Q16 Gain on early terminationof certain leased assets
- $ 9MM Restructuring charges
- $ 3MM Litigation-related expenses
- $ 2MM Outside processing
- $ 2MM Occupancy
- $ 2MM Equipment
- $ 2MM FDIC insurance
- $ 2MM Advertising
Noninterest Expenses($ in millions)
GEAR Up savings continue to be on track1
11
53 20
20 11458
518
493
461 457
1Q16 2Q16 3Q16 4Q16 1Q17
Restructuring
42 65 97 99
10537
38
40 40 4279 103
137 139 147
1Q16 2Q16 3Q16 4Q16 1Q17
Equity Repurchases Dividends
3/31/17 ● 1Shares repurchased under equity repurchase program through 3/31/17
Active Capital ManagementContinued to return excess capital to shareholders
2016 CCAR Capital Plan (3Q16-2Q17)
Equity repurchases up to $440 million
$301MM repurchased (5.4MM shares)1 through 1Q17• 1Q17 $105MM repurchased (1.5MM shares)Additional Share Activity in 1Q17
4.1MM from employee stock activity & warrants exercised• $24MM tax benefit from employee stock transactions
2.9MM increase in average diluted shares due to employee stock activity & higher stock price• 180 million diluted shares at 3/31/17
Dividends Per Share Growth
0.55 0.68
0.79 0.83 0.89 0.92
2012 2013 2014 2015 2016 1Q17Annualized
Increasing Shareholder Payout($ in millions)
1Q17 Share Count Up with Stock Price(in millions)
12
188 182 179 176 175 177
192 187 185 181 177 180
2012 2013 2014 2015 2016 1Q17
Common Shares Outstanding (PE) Average Diluted Shares
90% of loans are floating rate & reprice quickly
Fixed rate securities < 20% of earning assets
Non-maturity noninterest bearing deposits are 54% of deposit base
3/31/17 ● Outlook as of 4/18/17 ● 1Based on immediate parallel shock. Assumes 25 bps increase in Fed Funds, Prime & LIBOR. Calculations derived from sensitivity results shown on slide 19 ● 2Source: Bloomberg as of 4/17/17
Fed Funds Futures2
Additional Annual Net Interest Income1 Estimate over 12 months following interest rate movement
Dec ‘16 +25 bps
Mar ‘17+25 bps
Next +25 bps
~$85MM
~$70MM
~$40MM to~$85MM
Interest Rate Sensitivity Significant upside from rate increase
Why is Comerica Asset Sensitive?
Outcome may vary due to a number of variables including balance sheet movements (loan & deposit levels as well as incremental funding needs)
13
RateIncrease Deposit Beta Assumptions 0% 25% 0-75%
0.70%
0.95%
1.20%
1.45%
1.70%
5.18 4.96 ~4.70
2015 2016 Proj 2017
1Relative to when we began the initiative in June 2016 ● 2Count of total U.S. banking centers ● 3Includes Pension, Postretirement & Retirement Account Plan costs ● Estimates & outlook as of 4/18/17
8,880 7,960 8,044 ~8,000
2015 2016 1Q17 Proj 2017
Workforce Reduction(# of employees – full time equivalent)
476 457 438
2015 2016 Proj 2017
Banking Centers2
58
16
~(17)
2015 2016 Proj 2017
Revised Retirement Plans3($ in millions)
GEAR Up: Growth in Efficiency And RevenueOn Track to Reach FY18 Target: ~$270MM additional annual pre-tax income1
Real Estate(sq. ft. in millions)
GEAR Up: 2017 Focus
Revenue enhancements
Standardize training
Launch new Customer Relationship Management platform
Roll-out share of wallet analysis Rationalize & modernize IT applications
Expand operational process automation
Optimize infrastructure platformsEnd-to-End Credit
Simplify governance process
Introduce new technology to support digital approach
Pool back office resources across all markets
Continue to gain efficiencies even as rates rise & economy improves
14
Outlook as of 4/18/17 ● 1Estimated based on simulation modeling analysis. Refer to page F-33 of Comerica’s 2016 Annual Report for further information.
GEAR Up initiative incorporated into this Outlook
Average loans Higher • 1-2% increase, including reduction in Mortgage Banker & Energy loans • 3-4% increase in remainder of portfolio
Net interest income Higher
• ~$85MM contribution from December rate rise (assuming no deposit beta)1• ~$50MM+ contribution from March rate rise for remainder of 2017 (assuming 25% deposit beta)1• Benefit from loan growth & wholesale debt maturities
Provision Lower • Provision of 20-30 bps (net charge-offs remainder of year in line with 1Q17)• Continued solid performance of the overall portfolio
Noninterest income Higher
• Increase 4-6%• Execution of GEAR Up opportunities of ~$30MM• Modest growth in treasury management, card, fiduciary & brokerage services
Noninterest expenses Lower
• Restructuring expenses of about $25MM-$50MM (2016 $93MM)• Remaining noninterest expenses decrease 1-2% (excluding restructuring charges)• GEAR Up savings: additional $125MM relative to 2016 savings (2016 >$25MM)• Increased outside processing in line with growing revenue, continued increases in technology costs & typical inflationary pressures • No repeat of gain on leveraged lease terminations (2016 $13MM) • Decrease 4-5% including restructuring chargesIncome Taxes Higher • ~31% of pre-tax income (33% for each remaining quarter assuming no further tax benefit from employee stock transactions)
Management Outlook FY17 compared to FY16Assuming continuation of current economic & low rate environment
15
Appendix
Loans by Business and Market
Average $ in billions ● Totals shown above may not foot due to rounding ● 1Other Markets includes Florida, Arizona, the International Finance Division and businesses that have a significant presence outside of the three primary geographic markets
Middle Market: Serving companies with revenues generally between $20-$500MM
Corporate Banking: Serving companies (and their U.S. based subsidiaries) with revenues generally over $500MM
Small Business: Serving companies with revenues generally under $20MM
By Line of Business 1Q17 4Q16 1Q16
Middle MarketGeneralEnergyNational Dealer ServicesEntertainmentTech. & Life SciencesEnvironmental Services
$12.42.16.80.73.20.9
$12.42.46.60.73.20.8
$12.83.16.20.73.30.9
Total Middle Market $26.0 $26.2 $27.0
Corporate BankingUS BankingInternational 2.51.5 2.41.6 2.41.7
Mortgage Banker Finance 1.5 2.4 1.7
Commercial Real Estate 5.3 5.4 4.8
BUSINESS BANK $36.8 $37.9 $37.6
Small Business 3.8 3.9 3.9
Retail Banking 2.1 2.0 1.9
RETAIL BANK $5.9 $5.9 $5.9
Private Banking 5.3 5.1 5.0
WEALTH MANAGEMENT $5.3 $5.1 $5.0
TOTAL $47.9 $48.9 $48.4
By Market 1Q17 4Q16 1Q16
Michigan $12.7 $12.5 $12.8
California 17.5 17.7 17.3
Texas 10.1 10.4 10.8
Other Markets1 7.5 8.3 7.6
TOTAL $47.9 $48.9 $48.4
17
By Market 1Q17 4Q16 1Q16
Michigan $22.2 $22.0 $21.7
California 17.2 18.4 16.7
Texas 10.1 10.4 10.4
Other Markets1 7.9 8.5 7.7
Finance/ Other2 0.4 0.4 0.3
TOTAL $57.8 $59.6 $56.7
Deposits by Business and Market
Average $ in billions ● Totals shown above may not foot due to rounding ● 1Other Markets includes Florida, Arizona, the International Finance Division and businesses that have a significant presence outside of the three primary geographic markets ● 2Finance/ Other includes items not directly associated with the geographic markets or the three major business segments
Middle Market: Serving companies with revenues generally between $20-$500MM
Corporate Banking: Serving companies (and their U.S. based subsidiaries) with revenues generally over $500MM
Small Business: Serving companies with revenues generally under $20MM
By Line of Business 1Q17 4Q16 1Q16
Middle MarketGeneralEnergyNational Dealer ServicesEntertainmentTech. & Life SciencesEnvironmental Services
$15.51.00.30.15.70.1
$15.61.10.30.26.00.1
$14.90.60.30.26.20.1Total Middle Market $22.8 $23.4 $22.2Corporate BankingUS BankingInternational $1.82.2 $2.52.5 $2.22.4Mortgage Banker Finance 0.7 0.8 0.6Commercial Real Estate 2.1 2.1 1.7BUSINESS BANK $29.6 $31.2 $29.1Small Business 3.2 3.4 3.1Retail Banking 20.6 20.6 20.0RETAIL BANK $23.8 $24.0 $23.1Private Banking 4.0 4.1 4.2WEALTH MANAGEMENT $4.0 $4.1 $4.2Finance/ Other2 0.4 0.4 0.3TOTAL $57.8 $59.6 $56.7
18
Interest Rate SensitivityRemain well positioned for rising rates
3/31/17 ● For methodology see the Company’s Form 10-K, as filed with the SEC. Estimates are based on simulation modeling analysis.
Estimated Net Interest Income: Annual (12 month) SensitivitiesBased on Various AssumptionsAdditional Scenarios are Relative to 1Q17 Standard Model($ in millions)
0.1
Interest Rates 200 bps gradual, non-parallel rise
Loan Balances Modest increase
Deposit Balances Moderate decrease
Deposit Pricing (Beta) Historical price movements with short-term rates
Securities Portfolio Held flat with prepayment reinvestment
Loan Spreads Held at current levels
MBS Prepayments Third-party projections and historical experience
Hedging (Swaps) No additions modeled
Standard Model Assumptions
~90
~150
~185 ~185 ~200
~240
~310
Up 100bps Addl. $3BDepositDecline
Addl.20%Increasein Beta
Addl. $1BDepositDecline
StandardModel Addl.~3% LoanGrowth
Up 300bps
19
Other24%
California45%
Dallas12%
Houston8%
Austin 7%
Other4%
Multifamily49%
Retail11%
Commercial12%
Office7%
Single Family7% Multi use4% Land Carry4%Other6%
99 84
46 49 73 1.9 1.5 0.9 0.9 1.4
1Q16 2Q16 3Q16 4Q16 1Q17
Criticized as a % of Total Loans
3/31/17 ● 1Excludes CRE line of business loans not secured by real estate ● 2Includes CRE line of business loans notsecured by real estate ● 3Criticized loans are consistent with regulatory defined Special Mention, Substandard & Doubtful categories
5.1 5.5 5.4 5.3 5.3
1Q16 2Q16 3Q16 4Q16 1Q17
CRE Period-end2($ in billions) Criticized Loans3($ in millions)
CRE by Property Type1($ in millions; Period-end) CRE by Market1($ in millions; Period-end, based on location of property)
Commercial Real Estate Line of BusinessLong history of working with well established, proven developers
$4,502
Total$4,583
Texas 31%
Total$4,583
Net Charge-offs (Recoveries)($ in millions)
(11) (1) 1 (2) 0
1Q16 2Q16 3Q16 4Q16 1Q17
20
5,573 4,945 4,605 4,385 4,151
54% 54% 52% 50% 45%
1Q16 2Q16 3Q16 4Q16 1Q17
Total Commitments Utilization Rate
Energy Line of BusinessCriticized Loans2($ in millions)509 467 352 374 327
426 363 332 289 268
2,162 1,911 1,773 1,587 1,360
3,097 2,741 2,457 2,250 1,955
1Q16 2Q16 3Q16 4Q16 1Q17
Midstream Services Exploration & Production
Energy Line of Business Loans ($ in millions; Period-end)
423 346 378 328 266
1,833 1,552 1,473 1,155 871
1Q16 2Q16 3Q16 4Q16 1Q17
NALs
Energy Line of Business Credit Quality Continues to ImproveGranular, contracting portfolio
3/31/17 ● 1As of 4/7/17 ● 2Criticized loans are consistent with regulatory defined Special Mention, Substandard & Doubtful categories ● 3Bank's entire allowance is available to cover any & all losses. Allocation of allowance for Energy loans reflects our robust allowance methodology which contains quantitative and qualitative components.
Mixed18%
Maintain granular portfolio: ~180 customers
Loans decreased $1.1B since 3/31/16
Spring redeterminations 12% complete1
• Borrowing bases modestly higher
>90% of nonaccrual loans current on interest as of 3/31/17
Reserve3~7%
21
1,48
3
1,50
7 1,99
6 2,09
4
1,73
7 1,81
5
1,60
5
1,10
9
886 1,3
19 1,59
5
1,39
7 1,39
9 2,0
89 2,13
6
1,74
2
1,67
4 2,14
5 2,54
4
2,35
2
1,45
0
200300
400500
600700
800900
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
Actual MBA Mortgage Origination Volumes
3/31/17 ● 1Source: Mortgage Bankers Association (MBA) Mortgage Finance Forecast as of 3/15/17; 1Q17 Estimated ● 2$ in billions
Average Loans($ in millions)
Mortgage Banker Finance50 Years experience with reputation for consistent, reliable approach
MBA Mortgage Originations Forecast1($ in billions)
1,2 Provide warehouse financing: bridge from residential mortgage origination to sale to end market
Extensive backroom provides collateral monitoring and customer service
Focus on full banking relationships
Granular portfolio with 100+ relationships
Underlying mortgages are typically related to home purchases as opposed to refinancesAs of 1Q17: • Comerica: ~77% purchase • Industry: 59% purchase1
Strong credit quality• No charge-offs since 2010
22
361 450 437 352 345 445 443 355
1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
Purchase Refinance
National Dealer Services65+ years of floor plan lending
Toyota/Lexus16%
Honda/Acura 15%
Ford 9%
GM 9%
Fiat/Chrysler 10%
Mercedes 3%
Nissan/ Infiniti 7%
Other European 10%
Other Asian 11%
Other110%
Franchise Distribution(Based on period-end loan outstandings)
Geographic DispersionCalifornia 64% Texas 6%Michigan 19% Other 11%
Average Loans($ in billions)
Top tier strategy
Focus on “Mega Dealer” (five or more dealerships in group)
Strong credit quality
Robust monitoring of company inventory and performance
1.9 2.3 2.3 2.5 2.8 3.1 2.9 3.2 3.2 3.5 3.2 3.4 3.5 3.6 3.5 3.7 3.8 4.0 3.8 4.0 4.1
3.8 4
.3 4.3 4.6
4.9 5.1 4.9 5.3
5.3 5.7
5.5 5.7 5.9
6.0 6.0 6.2 6.2 6.5
6.3 6.6 6.8
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
Floor Plan
Total $6.9B
3/31/17 ● 1Other includes obligations where a primary franchise is indeterminable (rental car and leasing companies, heavy truck, recreational vehicles, and non-floor plan loans)
23
Early Stage~12%Growth~20%Late Stage~12%
Equity Fund Services~50%
Leveraged Finance~6%
Technology and Life Sciences20+ Years experience provides competitive advantage
Technology & Life Sciences Avg. Loans($ in billions)
Customer Segment Overview(based on period-end loans)
Strong relationships with top-tier investors
Granular portfolio: ~800 customers (including ~190 customers in Equity Fund Services)
Manage concentration to numerous verticals to ensure widely diversified portfolio
Closely monitor cash balances and maintain robust backroom operation
15 offices throughout US & Canada
Recent growth driven by Equity Fund Services• Commercial banking services for venture capital & private equity firms• Bridge financing for capital calls• Strong credit profile
Total $3.1B
3/31/17
24
0.4 0.6 1.1 1.4 1.6
2.0 2.5
3.1 3.2 3.2
2013 2014 2015 2016 1Q17
Equity Fund Services
Senior Unsecured/Long-Term Issuer Rating Moody’s S&P Fitch
BB&T A2 A- A+
Cullen Frost A3 A- --
M&T Bank A3 A- A
Comerica A3 BBB+ A
BOK Financial Corporation A3 BBB+ A
Huntington Baa1 BBB A-
Fifth Third Baa1 BBB+ A
KeyCorp Baa1 BBB+ A-
SunTrust Baa1 BBB+ A-
Regions Financial Baa2 BBB BBB
First Horizon National Corp Baa3 BBB- BBB-
Zions Bancorporation Baa3 BBB- BBB-
U.S. Bancorp A1 A+ AA
Wells Fargo & Company A2 A AA-
PNC Financial Services Group A3 A- A+
JP Morgan A3 A- A+
Bank of America Baa1 BBB+ A
Holding Company Debt Rating
As of 4/13/17 ● Source: SNL Financial ● Debt Ratings are not a recommendation to buy, sell, or hold securities
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