Comerica Reports Fourth Quarter and 2008 Earnings
PRNewswire
DALLAS
(NYSE:CMA)
Average Loans Grew $1.9 Billion from 2007
Credit Costs Stable Given Current Economic Environment
Expense Controls Include Workforce Reductions
New Preferred Stock Enhances Already Strong Capital Levels
EPS Impacts from Severance (12 Cents), Preferred Stock Dividends (11 Cents)
DALLAS, Jan. 22 /PRNewswire-FirstCall/ -- Comerica Incorporated today reported fourth quarter 2008 net income applicable to common stock of $3 million, or $0.02 per diluted share, compared to $28 million, or $0.19 per diluted share, for the third quarter 2008 and $119 million, or $0.79 per diluted share, for the fourth quarter 2007. Fourth quarter and full-year 2008 net income applicable to common stock were each net of $17 million of accumulated preferred stock dividends related to perpetual preferred shares issued to the U.S. Treasury as part of the Capital Purchase Program (the Purchase Program). Fourth quarter 2008 included a $192 million provision for loan losses, compared to $165 million for the third quarter 2008 and $108 million for the fourth quarter 2007. Fourth quarter 2008 also reflected $29 million ($18 million after-tax, or $0.12 per diluted share) of severance-related expenses.
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4th 3rd 4th
(dollar amounts in millions, except per Qtr Qtr Qtr
share data) '08 '08 '07
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Net interest income $431 $466 $489
Provision for loan losses 192 165 108
Noninterest income 174 240 230
Noninterest expenses 411 514 450
Net income 20 28 119
Preferred stock dividends 17 - -
Net income applicable to common stock 3 28 119
Diluted earnings per common share 0.02 0.19 0.79
Return on average common shareholders' equity 0.19% 2.25% 9.35%
Tier 1 capital ratio 10.67* 7.32 7.51
Tangible common equity ratio 7.21 7.60 7.97
Net interest margin 2.82 3.11 3.43
*December 31, 2008 ratio is estimated.
====================================================================
Net income applicable to common stock for full-year 2008 was $196 million, or $1.29 per diluted share, compared to $686 million, or $4.43 per diluted share, for full-year 2007. The most significant items contributing to the decrease in net income applicable to common stock were an increase in the provision for credit losses of $493 million, a decrease in net interest income of $188 million, the net $84 million loss impact in 2008 related to auction-rate securities (ARS) and $34 million of 2008 severance-related expenses. These were partially offset by a $60 million increase in securities gains.
The following table illustrates the after-tax impact of certain items on net income applicable to common stock.
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(dollar amounts in 4th Qtr '08 3rd Qtr '08 Full Year 2008
millions, except per Per Per Per
share data) Amount Share Amount Share Amount Share
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Net impact of ARS* $8 $0.05 $(61) $(0.40) $(53) $(0.35)
Gains on sales of Visa
and MasterCard shares - - 17 0.11 39 0.26
Tax-related non-cash
charges to lease income - - (6) (0.04) (24) (0.16)
Severance-related
expenses (18) (0.12) (1) (0.01) (21) (0.14)
Reversal of Visa
loss-sharing expense - - - - 8 0.05
Other tax-related items - - (1) - (9) (0.06)
Preferred stock dividends (17) (0.11) - - (17) (0.11)
* Includes net loss on offer to repurchase ARS and gains on sales of ARS.
Excludes impact of ARS on net interest margin.
=========================================================================
"Mounting job losses and an economy headed deeper into recession have dampened business and consumer confidence," said Ralph W. Babb Jr., chairman and chief executive officer. "We have stayed close to our customers during this incredibly tumultuous phase of the economic cycle, a testament to the skill and experience of our people and our strong focus on relationships.
"Our capital position is strong. Our Tier 1 capital ratio is estimated to be 10.67 percent at December 31. In addition, the quality of our capital is solid, as evidenced by a Tier 1 common capital ratio of 7.08 percent and a tangible common equity ratio of 7.21 percent. Within this uncertain economic environment, we are working diligently to leverage our strong capital, which was enhanced by our participation in the U.S. Treasury Department's Capital Purchase Program.
"With the appropriate pricing and credit standards in place, we are focusing our lending efforts on new and existing relationship customers for whom we serve as trusted advisors. This includes small businesses, middle market companies and wealth management clients in Texas and California. The additional capital also enables us to support the battered housing market through our purchase of mortgage-backed government agency securities.
"We are focused on controlling expenses, as evidenced by several initiatives to streamline operations and leverage technology. We have reduced our workforce by about 5 percent since the end of 2007 and expect to reduce it another 5 percent, largely to be completed by the end of the first quarter. In addition, we are freezing salaries in 2009 for the top 20 percent of our workforce. We also plan to slow our banking center expansion program, and will continue to reduce our capital expenditures and discretionary expenses in this challenged environment."
Fourth Quarter and Full Year 2008 Overview
Fourth Quarter 2008 Compared to Third Quarter 2008
- On an annualized basis, average loans, excluding Financial Services Division (FSD) loans, declined one percent, with declines of seven percent in the Western market and two percent in the Midwest market partially offset by growth of 15 percent in the Texas market. The declines reflected reduced demand from customers in rapidly deteriorating economic environments. Average loans, excluding Financial Services Division loans, increased three percent when compared to the fourth quarter 2007.
- On an annualized basis, excluding Financial Services Division deposits, average noninterest-bearing deposits increased seven percent.
- The net interest margin of 2.82 percent decreased from 3.11 percent in the third quarter 2008, and reflected the negative impact of three Federal Reserve rate cuts totaling 175 basis points in a challenging deposit pricing environment, partially offset by improved loan pricing.
- Net credit-related charge-offs were $133 million, or 104 basis points as a percent of average total loans, for the fourth quarter 2008, compared to $116 million, or 90 basis points as a percent of average total loans, for the third quarter 2008. The provision for loan losses was $192 million for the fourth quarter 2008, compared to $165 million for the third quarter 2008, and the period-end allowance to total loans ratio increased to 1.52 percent from 1.38 percent at September 30, 2008.
- Noninterest expenses decreased $103 million from the third quarter, primarily due to the third quarter $96 million charge related to the repurchase of ARS and an $11 million decrease in the provision for credit losses on lending-related commitments. This decrease was partially offset by severance-related expenses of $29 million in the fourth quarter 2008 related to the elimination of about five percent of the workforce.
- The estimated Tier 1 common and Tier 1 capital ratios were 7.08 percent and 10.67 percent, respectively.
Full Year 2008 Compared to Full Year 2007
- Average loan growth, excluding Financial Services Division loans, was six percent, with growth of 14 percent in the Texas market, six percent in the Western market and three percent in the Midwest market.
- Excluding Financial Services Division deposits, average noninterest-bearing deposits increased six percent.
- The net interest margin was 3.02 percent for 2008, compared to 3.66 percent for 2007. The 2008 average Federal Funds rate declined more than 300 basis points from the average rate for 2007.
- Net credit-related charge-offs were 91 basis points as a percent of average total loans for 2008, compared to 31 basis points for 2007, largely due to deterioration in the residential real estate development sector as housing prices continued to fall.
- Excluding the $88 million net charge related to the repurchase of ARS in 2008, noninterest expenses decreased $28 million, or two percent, from 2007.
Net Interest Income and Net Interest Margin
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(dollar amounts 4th Qtr 3rd Qtr 4th Qtr
in millions) '08 '08 '07
------------------------------------------------------------------
Net interest income $431 $466 $489
Net interest margin 2.82% 3.11% 3.43%
Selected average balances:
Total earning assets $61,134 $59,946 $56,621
Total investment
securities 8,734 8,146 5,533
Total loans 51,338 51,508 50,699
Total loans, excluding FSD
loans (primarily low-
rate) 51,015 51,107 49,758
Total core deposits*,
excluding FSD 30,944 31,439 32,129
Total noninterest-bearing
deposits 10,575 10,646 10,533
Total noninterest-bearing
deposits, excluding FSD 9,255 9,104 8,473
* Core deposits exclude other time deposits and foreign office time
deposits.
==================================================================
- The $35 million decrease in net interest income in the fourth quarter 2008, when compared to third quarter 2008, reflected the negative impact of three Federal Reserve rate cuts totaling 175 basis points in a challenging deposit pricing environment, partially offset by improved loan spreads.
- December 31, 2008 core deposits, excluding the Financial Services Division, decreased $224 million compared to September 30, 2008, due to a decrease in money market investment accounts, partially offset by an increase in customer certificates of deposit.
- Total average Financial Services Division deposits decreased $295 million from the third quarter 2008. This division serves title and escrow companies that facilitate residential mortgage transactions and benefits from customer deposits related to mortgage escrow balances. Deposits declined due to the impact of reduced home prices, as well as lower home mortgage financing and refinancing activity.
Noninterest Income
Noninterest income was $174 million for the fourth quarter 2008, compared to $240 million for the third quarter 2008 and $230 million for the fourth quarter 2007. Net securities gains in the fourth quarter 2008 included $4 million from the sale of ARS and net securities gains in the third quarter 2008 included $27 million from the sale of Comerica's remaining ownership of Visa shares. Decreases in deferred compensation asset returns of $12 million and net income (loss) from principal investing and warrants of $6 million also contributed to the decline in noninterest income. Certain categories of noninterest income are highlighted in the table below.
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4th 3rd 4th
Qtr Qtr Qtr
(in millions) '08 '08 '07
-------------------------------------------------------------------------
Net securities gains $4 $27 $3
Other noninterest income
Net income (loss) from principal investing
and warrants (5) 1 6
Deferred compensation asset returns* (18) (6) 2
* Compensation deferred by Comerica officers is invested in stocks and
bonds to reflect the investment selections of the officers. Income
(loss) earned on these assets is reported in noninterest income and the
offsetting increase (decrease) in the liability is reported in salaries
expense.
=========================================================================
Noninterest Expenses
Noninterest expenses were $411 million for the fourth quarter 2008, compared to $514 million for the third quarter 2008 and $450 million for the fourth quarter 2007. The $103 million decrease in noninterest expenses in the fourth quarter 2008, compared to the third quarter 2008, reflected a fourth quarter reversal of $8 million of the third quarter $96 million charge related to the repurchase of ARS (included in "litigation and operational losses"), an $11 million decrease in the provision for credit losses on lending-related commitments and a $5 million decrease in salaries expense, partially offset by a $7 million increase in employee benefits, mostly due to severance-related expenses. The fourth quarter 2008 ARS reversal resulted from fewer than expected eligible securities submitted for repurchase by customers. The decrease in salaries expense was primarily due to decreases in incentives and deferred compensation plan costs (offset by a decrease in deferred compensation asset returns in noninterest income), partially offset by an increase in severance related to the elimination of approximately 570 positions, most to occur early in first quarter 2009. Severance-related expenses were $29 million in the fourth quarter 2008. Certain categories of noninterest expenses are highlighted in the following table.
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4th 3rd 4th
Qtr Qtr Qtr
'08 '08 '07
-------------------------------------------------------------
Salaries
Regular salaries $152 $155 $163
Severance 24 2 3
Incentives 19 31 36
Deferred compensation plan costs (18) (6) 2
Share-based compensation 10 10 12
--- --- ---
Total salaries 187 192 216
Employee benefits
Regular benefits 48 46 48
Severance-related benefits 5 - -
--- --- ---
Total employee benefits 53 46 48
Litigation and operational losses 3* 105* 18
Provision for credit losses on
lending-related commitments (2) 9 3
Other noninterest expenses FDIC insurance 7 6 1
* Fourth quarter 2008 litigation and operational losses were
net of a reversal of $8 million of the $96 million charge
related to the repurchase of auction-rate securities from
customers recorded in the third quarter 2008.
=============================================================
Credit Quality
"Our credit costs remained stable, even as the economy deteriorated rapidly in the fourth quarter," said Babb. "We continue to monitor the performance of our customers very closely with credit quality reviews, risk rating migration analysis and stress testing. In addition, we are aggressively managing our problem loans by moving them to our workout area at the first sign of stress. We are working hard to stay ahead of the issues. Our strong focus on credit is evidenced by the continued reduction of exposure to California residential real estate development as well as the automotive industry, given the challenges that these sectors continue to face."
- The allowance to total loans ratio increased to 1.52 percent at December 31, 2008, from 1.38 percent at September 30, 2008 and 1.10 percent at December 31, 2007.
- The provision for loan losses and loan quality reflected increasing challenges in the Midwest and the weakened economies in other markets.
- Net credit-related charge-offs in the Commercial Real Estate business line in the fourth quarter 2008 were $59 million, of which $37 million were from residential real estate developers in the Western market. Comparable numbers for the third quarter 2008 were $57 million in total, of which $39 million were from residential real estate developers in the Western market.
- Net loan charge-offs excluding the Commercial Real Estate business line were $74 million in the fourth quarter 2008, or 66 basis points of average non-Commercial Real Estate loans, compared to $59 million, or 52 basis points, in the third quarter 2008.
- Nonperforming assets increased to 1.94 percent of total loans and foreclosed property at December 31, 2008. During the fourth quarter, $258 million of loan relationships greater than $2 million were transferred to nonaccrual status, a decrease of $22 million from the third quarter 2008. Of the transfers of loan relationships greater than $2 million to nonaccrual in the fourth quarter 2008, $163 million were in the Commercial Real Estate business line, an increase of $18 million from the third quarter 2008.
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4th 3rd 4th
Qtr Qtr Qtr
(dollar amounts in millions) '08 '08 '07
-----------------------------------------------------------------
Net loan charge-offs $133 $116 $63
Net lending-related commitment charge-offs - - 1
---- ---- ----
Total net credit-related charge-offs 133 116 64
Net loan charge-offs/Average total loans 1.04% 0.90% 0.50%
Net credit-related charge-offs/Average
total loans 1.04 0.90 0.50
Provision for loan losses $192 $165 $108
Provision for credit losses on
lending-related commitments (2) 9 3
---- ---- ----
Total provision for credit losses 190 174 111
Nonperforming loans 916 863 404
Nonperforming assets (NPAs) 982 881 423
NPAs/Total loans and foreclosed property 1.94% 1.71% 0.83%
Allowance for loan losses $770 $712 $557
Allowance for credit losses on
lending-related commitments* 38 40 21
---- ---- ----
Total allowance for credit losses 808 752 578
Allowance for loan losses/Total loans 1.52% 1.38% 1.10%
Allowance for loan losses/Nonperforming
loans 84 82 138
* Included in "Accrued expenses and other liabilities" on the
consolidated balance sheets.
=================================================================
Balance Sheet and Capital Management
Total assets and common shareholders' equity were $67.5 billion and $5.0 billion, respectively, at December 31, 2008, compared to $65.2 billion and $5.1 billion, respectively, at September 30, 2008. To preserve and enhance balance sheet strength in this uncertain economic environment, Comerica lowered the quarterly cash dividend rate by 50 percent in the fourth quarter 2008, to $0.33 per common share. The preferred stock issued under the Purchase Program in the fourth quarter 2008 qualifies as Tier 1 capital and pays a cumulative dividend rate of five percent per annum on the face value of $2.25 billion. The cash dividend combined with the accretion of a related discount results in an effective preferred dividend rate of 6.3 percent. The related discount resulted from a difference between the fair value and the face value of the preferred stock at issuance. There were approximately 150 million common shares outstanding at December 31, 2008. No shares were repurchased in the open market in 2008.
Comerica's fourth quarter 2008 estimated Tier 1 common, Tier 1 and total risk-based capital ratios were 7.08 percent, 10.67 percent and 14.73 percent, respectively.
Full-Year 2009 Outlook Compared to Full-Year 2008
Management provides the following general comments with the observation that it is increasingly difficult to forecast in the current uncertain economic environment.
- Management expects to focus on new and expanding relationships, particularly in Small Business, Middle Market and Wealth Management in Texas and California with the appropriate pricing and credit standards.
- Management expects average full-year net interest margin pressure will continue. Management anticipates no change in the Federal Funds rate. Management also expects continued improvement in loan spreads, challenging deposit pricing and demand deposits that provide less value in an historically low interest rate environment.
- Management expects full-year net credit-related charge-offs to remain consistent with full-year 2008. The provision for credit losses is expected to exceed net charge-offs.
- Management expects a mid-single digit decrease in noninterest expenses, due to control of discretionary expenses and workforce.
Business Segments
Comerica's continuing operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank, and Wealth & Institutional Management. The Finance Division also is included as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at December 31, 2008 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses fourth quarter 2008 results compared to third quarter 2008.
The following table presents net income (loss) by business segment.
------------------------------------------------------------------------
4th Qtr 3rd Qtr 4th Qtr
(dollar amounts in millions) '08 '08 '07
------------------------------------------------------------------------
Business Bank $54 164% $65 186% $93 83%
Retail Bank (34) (104) 21 57 5 5
Wealth & Institutional
Management 13 40 (51)* (143) 13 12
------------------------------------------------------------------------
33 100% 35 100% 111 100%
Finance (38) (2) (8)
Other** 25 (5) 16
------------------------------------------------------------------------
Total $20 $28 $119
========================================================================
* Third quarter 2008 included a $96 million charge ($61 million,
after-tax) related to an offer to repurchase auction-rate securities
from customers.
** Includes discontinued operations and items not directly associated
with the three major business segments or the Finance Division.
========================================================================
Business Bank
-------------------------------------------------------------------------
(dollar amounts in millions) 4th Qtr '08 3rd Qtr '08 4th Qtr '07
-------------------------------------------------------------------------
Net interest income (FTE) $329 $323 $331
Provision for loan losses 139 135 88
Noninterest income 62 75 79
Noninterest expenses 172 175 186
Net income 54 65 93
Net credit-related charge-offs 101 95 50
Selected average balances:
Assets 41,364 41,357 41,327
Loans 40,244 40,506 40,285
FSD loans 323 401 941
Deposits 13,839 14,933 15,931
FSD deposits 2,154 2,449 3,181
Net interest margin 3.23% 3.17% 3.25%
=========================================================================
- Average loans, excluding the Financial Services Division, decreased $184 million, led by declines in Middle Market and Commercial Real Estate, partially offset by an increase in Global Corporate. Financial Services Division loans decreased $78 million.
- Average deposits, excluding the Financial Services Division, decreased $799 million, primarily due to Middle Market, Technology and Life Sciences and Commercial Real Estate, partially offset by a reassignment of deposits from the Other category to the Business Bank. Financial Services Division deposits decreased $295 million.
- The net interest margin of 3.23 percent increased six basis points, mostly due to an $8 million non-cash charge to lease income in the third quarter 2008 (eight basis points) and an increase in loan spreads, partially offset by a decrease in deposit spreads.
- The provision for loan losses increased $4 million, primarily in Commercial Real Estate and Global Corporate, partially offset by a decrease in Middle Market.
- Noninterest income decreased $13 million, primarily due to declines in income from low income housing investments, income from principal investing and warrants and investment banking fees.
- Noninterest expenses decreased $3 million, due to decreases in the provision for credit losses on lending-related commitments and incentives, partially offset by increases in severance and related expenses, other real estate expenses, legal fees and the allocation of severance and related expenses of support units.
Retail Bank
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(dollar amounts in millions) 4th Qtr '08 3rd Qtr '08 4th Qtr '07
-------------------------------------------------------------------------
Net interest income (FTE) $129 $142 $160
Provision for loan losses 43 33 26
Noninterest income 49 80 55
Noninterest expenses 180 161 181
Net income (34) 21 5
Net credit-related charge-offs 23 17 14
Selected average balances:
Assets 7,007 7,046 6,998
Loans 6,380 6,362 6,229
Deposits 17,065 16,596 17,254
Net interest margin 3.00% 3.40% 3.69%
=========================================================================
- Average loans increased $18 million, or one percent on an annualized basis.
- Average deposits increased $469 million, primarily due to an increase in customer certificates of deposit, partially offset by a decrease in money market investment accounts.
- The net interest margin of 3.00 percent declined 40 basis points, primarily due to an increase in lower-spread customer certificates of deposit.
- The provision for loan losses increased $10 million, mostly due to Small Business and home equity lending.
- Noninterest income decreased $31 million, primarily due to the third quarter 2008 gain of $27 million on the sale of Visa shares and a decrease in service charges on deposit accounts.
- Noninterest expenses increased $19 million, primarily due to increases in severance and related expenses, occupancy expense and the allocation of severance and related expenses of support units.
- Fifteen new banking centers were opened in the fourth quarter 2008 (28 new banking centers were opened in the full-year 2008).
Wealth and Institutional Management
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(dollar amounts in millions) 4th Qtr '08 3rd Qtr '08 4th Qtr '07
-------------------------------------------------------------------------
Net interest income (FTE) $38 $37 $36
Provision for loan losses 13 7 1
Noninterest income 73 71 73
Noninterest expenses 80 180 87
Net income 13 (51) 13
Net credit-related charge-offs 9 4 -
Selected average balances:
Assets 4,879 4,759 4,321
Loans 4,724 4,624 4,146
Deposits 2,255 2,351 2,552
Net interest margin 3.13% 3.17% 3.43%
=========================================================================
- Average loans increased $100 million, or nine percent on an annualized basis.
- Average deposits decreased $96 million, primarily due to declines in money market investment account balances and customer certificates of deposit, partially offset by an increase in noninterest-bearing transaction accounts.
- The net interest margin of 3.13 percent declined four basis points, primarily due to a decline in deposit spreads.
- The provision for loan losses increased $6 million due to an increase in Private Banking.
- Noninterest expenses decreased $100 million, mostly due to the $96 million charge related to the offer to repurchase auction-rate securities (ARS) recorded in the third quarter 2008 and an $8 million reversal of the ARS charge recorded in the fourth quarter 2008, partially offset by an increase in severance and related expenses and the allocation of severance and related expenses of support units.
Geographic Market Segments
Comerica also provides market segment results for four primary geographic markets: Midwest, Western, Texas and Florida. In addition to the four primary geographic markets, Other Markets and International are also reported as market segments. The financial results below are based on methodologies in effect at December 31, 2008 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses fourth quarter 2008 results compared to third quarter 2008.
The following table presents net income (loss) by market segment.
------------------------------------------------------------------------
4th Qtr 3rd Qtr 4th Qtr
(dollar amounts in millions) '08 '08 '07
------------------------------------------------------------------------
Midwest $16 45% $52 146% $60 53%
Western 2 7 9 25 (3) (2)
Texas 4 13 13 36 14 13
Florida (7) (22) (1) (3) (1) (1)
Other Markets 14 44 (45)* (125) 30 27
International 4 13 7 21 11 10
------------------------------------------------------------------------
33 100% 35 100% 111 100%
Finance & Other Businesses** (13) (7) 8
------------------------------------------------------------------------
Total $20 $28 $119
========================================================================
* Third quarter 2008 included a $96 million charge ($61 million,
after-tax) related to an offer to repurchase auction-rate securities
from customers.
** Includes discontinued operations and items not directly associated
with the geographic markets.
========================================================================
Midwest
-------------------------------------------------------------------------
(dollar amounts in millions) 4th Qtr 3rd Qtr 4th Qtr
'08 '08 '07
-------------------------------------------------------------------------
Net interest income (FTE) $202 $196 $212
Provision for loan losses 59 52 20
Noninterest income 109 142 120
Noninterest expenses 217 203 218
Net income 16 52 60
Net credit-related charge-offs 38 44 38
Selected average balances:
Assets 19,945 19,754 19,176
Loans 18,966 19,070 18,564
Deposits 16,204 15,858 16,056
Net interest margin 4.20% 4.08% 4.51%
=========================================================================
- Average loans decreased $104 million, led by a decline in Middle Market, partially offset by growth in Global Corporate.
- Average deposits increased $346 million, primarily due to increases in Retail deposits and a reassignment of deposits from the Other category to the Business Bank, partially offset by a decrease in Global Corporate.
- The net interest margin of 4.20 percent increased 12 basis points due to an $8 million non-cash charge to lease income in the third quarter 2008 (17 basis points) and an increase in loan spreads, partially offset by a decrease in deposit spreads.
- The provision for loan losses increased $7 million, due to Commercial Real Estate and home equity lending, partially offset by a decrease in Middle Market.
- Noninterest income decreased $33 million, primarily due to a $22 million third quarter 2008 gain on the sale of Visa shares and a decrease in income from principal investing and warrants.
- Noninterest expenses increased $14 million, due to increases in severance and related expenses and the allocation of severance and related expenses of support units.
Western Market
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(dollar amounts in millions) 4th Qtr '08 3rd Qtr '08 4th Qtr '07
-------------------------------------------------------------------------
Net interest income (FTE) $157 $169 $178
Provision for loan losses 70 82 93
Noninterest income 34 38 35
Noninterest expenses 113 112 121
Net income (loss) 2 9 (3)
Net credit-related charge-offs 65 51 22
Selected average balances:
Assets 16,243 16,627 17,137
Loans 16,032 16,381 16,615
FSD loans 323 401 941
Deposits 10,762 11,729 13,012
FSD deposits 1,969 2,255 3,045
Net interest margin 3.87% 4.09% 4.24%
=========================================================================
- Average loans, excluding Financial Services Division, decreased $271 million, due to declines in Middle Market and Commercial Real Estate. Financial Services Division loans decreased $78 million.
- Average deposits, excluding the Financial Services Division, decreased $681 million, primarily due to decreases in Middle Market and Technology and Life Sciences. Financial Services Division deposits decreased $286 million.
- The net interest margin of 3.87 percent decreased 22 basis points, due to declines in deposit spreads and deposit balances, partially offset by increasing loan spreads.
- The provision for loan losses decreased $12 million, primarily due an improvement in Middle Market, partially offset by Residential Real Estate.
- Noninterest income decreased $4 million, primarily due to a decrease in income from principal investing and warrants.
- Noninterest expenses increased $1 million. Increases in severance and related expenses and the allocation of severance and related expenses of support units were partially offset by decreases in incentives.
- Eight new banking centers were opened in the fourth quarter 2008 (18 new banking centers were opened for the full-year 2008).
Texas Market
-------------------------------------------------------------------------
(dollar amounts in millions) 4th Qtr '08 3rd Qtr '08 4th Qtr '07
-------------------------------------------------------------------------
Net interest income (FTE) $72 $73 $74
Provision for loan losses 19 18 7
Noninterest income 21 27 23
Noninterest expenses 64 61 67
Net income 4 13 14
Total net credit-related
charge-offs 8 9 3
Selected average balances:
Assets 8,215 7,945 7,677
Loans 7,974 7,691 7,381
Deposits 4,070 3,956 3,935
Net interest margin 3.56% 3.75% 3.95%
=========================================================================
- Average loans increased $283 million, or 15 percent on an annualized basis, primarily due to increases in Energy Lending, Commercial Real Estate and Global Corporate.
- Average deposits increased $114 million, primarily due to increases in Global Corporate and Retail deposits, partially offset by a decline in Technology and Life Sciences.
- The net interest margin of 3.56 percent decreased 19 basis points, primarily due a decline in deposit spreads related to a shift from money market investment accounts to lower-spread customer certificates of deposit, partially offset by increasing loan spreads.
- Noninterest income decreased $6 million, primarily due to a $4 million gain on the sale of Visa shares in the third quarter 2008.
- Noninterest expenses increased $3 million, primarily from severance and related expenses and the allocation of severance and related expenses of support units.
- Seven new banking center were opened in the fourth quarter 2008 (nine new banking centers were opened in full-year 2008).
Florida Market
-------------------------------------------------------------------------
(dollar amounts in millions) 4th Qtr '08 3rd Qtr '08 4th Qtr '07
-------------------------------------------------------------------------
Net interest income (FTE) $11 $12 $11
Provision for loan losses 14 7 5
Noninterest income 4 4 4
Noninterest expenses 11 10 11
Net income (loss) (7) (1) (1)
Net credit-related charge-offs 6 3 -
Selected average balances:
Assets 1,938 1,900 1,732
Loans 1,942 1,900 1,719
Deposits 222 262 299
Net interest margin 2.25% 2.53% 2.67%
=========================================================================
- Average loans increased $42 million, or nine percent on an annualized basis, primarily due to growth in Private Banking, National Dealer Services and Global Corporate.
- Average deposits decreased $40 million due to declines in Commercial Real Estate and Global Corporate.
- The net interest margin of 2.25 percent decreased 28 basis points, primarily due to a decline in loan spreads in part from a higher level of nonaccrual loans.
- The provision for loan losses increased $7 million. The largest contributor to the increase was Private Banking.
Conference Call and Webcast
Comerica will host a conference call to review fourth quarter 2008 and full-year financial results at 7 a.m. CT Thursday, January 22, 2009. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 76772081). The call and supplemental financial information can also be accessed on the Internet at www.comerica.com. A replay will be available approximately two hours following the conference call through January 31, 2009. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 76772081). A replay of the Webcast can also be accessed via Comerica's "Investor Relations" page at www.comerica.com.
Comerica Incorporated is a financial services company headquartered in Dallas, Texas, and strategically aligned by three major business segments: the Business Bank, the Retail Bank, and Wealth & Institutional 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, China and Mexico.
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," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "outcome," "continue," "remain," "maintain," "trend," "objective" 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, 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 further economic downturns, changes in the pace of an economic recovery and related changes in employment levels, changes in real estate values, fuel prices, energy costs or other events that could affect customer income levels or general economic conditions, changes related to the headquarters relocation or to its underlying assumptions, the effects of recently enacted legislation, such as the Emergency Economic Stabilization Act of 2008, and actions taken by the U.S. Department of Treasury and the Federal Deposit Insurance Corporation, the effects of war and other armed conflicts or acts of terrorism, the effects of natural disasters including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods, the disruption of private or public utilities, the implementation of Comerica's strategies and business models, management's ability to maintain and expand customer relationships, changes in customer borrowing, repayment, investment and deposit practices, management's ability to retain key officers and employees, changes in the accounting treatment of any particular item, the impact of regulatory examinations, declines or other changes in the businesses or industries in which Comerica has a concentration of loans, including, but not limited to, the automotive production industry and the real estate business lines, the anticipated performance of any new banking centers, the entry of new competitors in Comerica's markets, changes in the level of fee income, changes in applicable laws and regulations, including those concerning taxes, banking, securities and insurance, changes in trade, monetary and fiscal policies, including the interest rate policies of the Board of Governors of the Federal Reserve System, fluctuations in inflation or interest rates, changes in general economic, political or industry conditions and related credit and market conditions, the interdependence of financial service companies and adverse conditions in the stock market. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of these and other factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. 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.
CONSOLIDATED FINANCIAL HIGHLIGHTS
Comerica Incorporated and Subsidiaries
----------------------------------------------------------------
Three Months Ended
-----------------------------------
(in millions, except per December September December
share data) 31, 2008 30, 2008 31, 2007
----------------------------------------------------------------
PER COMMON SHARE AND COMMON
STOCK DATA
Diluted net income $0.02 $0.19 $0.79
Cash dividends declared 0.33 0.66 0.64
Common shareholders'
equity (at period end) 33.31 33.89 34.12
Average diluted shares (in
thousands) 150,834 150,795 150,943
----------------------------------------------------------------
KEY RATIOS
Return on average common
shareholders' equity 0.19% 2.25% 9.35%
Return on average assets 0.12 0.18 0.79
Average common shareholders'
equity as a percentage of
average assets 7.89 7.82 8.41
Tier 1 common capital
ratio * 7.08 6.67 6.85
Tier 1 risk-based capital
ratio * 10.67 7.32 7.51
Total risk-based capital
ratio * 14.73 11.19 11.20
Leverage ratio * 11.78 8.57 9.26
Tangible common equity ratio 7.21 7.60 7.97
----------------------------------------------------------------
AVERAGE BALANCES
Commercial loans $28,507 $28,521 $28,393
Real estate
construction loans 4,536 4,675 4,846
Commercial mortgage loans 10,613 10,511 9,941
Residential mortgage loans 1,851 1,870 1,891
Consumer loans 2,639 2,599 2,412
Lease financing 1,359 1,365 1,327
International loans 1,833 1,967 1,889
------ ------ ------
Total loans 51,338 51,508 50,699
Earning assets 61,134 59,946 56,621
Total assets 65,981 64,863 60,507
Noninterest-bearing deposits 10,575 10,646 10,533
Interest-bearing core
deposits 22,523 23,244 24,777
Total core deposits 33,098 33,890 35,310
Common shareholders' equity 5,206 5,075 5,087
Total shareholders' equity 6,301 5,075 5,087
----------------------------------------------------------------
NET INTEREST INCOME
Net interest income (fully
taxable equivalent
basis)** $434 $467 $489
Fully taxable equivalent
adjustment 3 1 -
Net interest margin** 2.82% 3.11% 3.43%
----------------------------------------------------------------
CREDIT QUALITY
Nonaccrual loans $916 $863 $391
Reduced-rate loans - - 13
------ ------ ------
Total nonperforming loans 916 863 404
Foreclosed property 66 18 19
------ ------ ------
Total nonperforming assets 982 881 423
Loans past due 90 days or
more and still accruing 125 97 54
Gross loan charge-offs 144 122 72
Loan recoveries 11 6 9
------ ------ ------
Net loan charge-offs 133 116 63
Lending-related commitment
charge-offs - - 1
------ ------ ------
Total net credit-related
charge-offs 133 116 64
Allowance for loan losses 770 712 557
Allowance for credit losses
on lending-related
commitments 38 40 21
------ ------ ------
Total allowance for
credit losses 808 752 578
Allowance for loan
losses as a
percentage of total
loans 1.52% 1.38% 1.10%
Net loan charge-offs as a
percentage of average total
loans 1.04 0.90 0.50
Net credit-related charge-
offs as a percentage of
average total loans 1.04 0.90 0.50
Nonperforming assets as a
percentage of total loans
and foreclosed property 1.94 1.71 0.83
Allowance for loan losses
as a percentage of total
nonperforming loans 84 82 138
----------------------------------------------------------------
* December 31, 2008 ratios are estimated
** Third quarter and year-to-date 2008 net interest income declined
$8 million and $38 million, respectively, due to tax-related non-cash
lease income charges. Excluding these charges, the net interest margin
would have been 3.17% and 3.08% for the third quarter 2008 and year
ended December 31, 2008, respectively.
----------------------------------------------------------
Years Ended
---------------
December 31,
(in millions, except per share data) 2008 2007
----------------------------------------------------------
PER COMMON SHARE AND COMMON STOCK DATA
Diluted net income $1.29 $4.43
Cash dividends declared 2.31 2.56
Common shareholders' equity (at
period end)
Average diluted shares (in thousands) 151,035 154,809
----------------------------------------------------------
KEY RATIOS
Return on average common
shareholders' equity 3.79% 13.52%
Return on average assets 0.33 1.17
Average common shareholders' equity as
a percentage of average assets 7.93 8.66
Tier 1 common capital ratio *
Tier 1 risk-based capital ratio *
Total risk-based capital ratio *
Leverage ratio *
Tangible common equity ratio
----------------------------------------------------------
AVERAGE BALANCES
Commercial loans $28,870 $28,132
Real estate construction loans 4,715 4,552
Commercial mortgage loans 10,411 9,771
Residential mortgage loans 1,886 1,814
Consumer loans 2,559 2,367
Lease financing 1,356 1,302
International loans 1,968 1,883
------ ------
Total loans 51,765 49,821
Earning assets 60,422 54,688
Total assets 65,185 58,574
Noninterest-bearing deposits 10,623 11,287
Interest-bearing core deposits 23,739 24,013
Total core deposits 34,362 35,300
Common shareholders' equity 5,166 5,070
Total shareholders' equity 5,442 5,070
----------------------------------------------------------
NET INTEREST INCOME
Net interest income (fully taxable
equivalent basis)** $1,821 $2,006
Fully taxable equivalent adjustment 6 3
Net interest margin** 3.02% 3.66%
----------------------------------------------------------
CREDIT QUALITY
Nonaccrual loans
Reduced-rate loans
Total nonperforming loans
Foreclosed property
Total nonperforming assets
Loans past due 90 days or more and
still accruing
Gross loan charge-offs $500 $196
Loan recoveries 29 47
------ ------
Net loan charge-offs 471 149
Lending-related commitment charge-offs 1 4
------ ------
Total net credit-related charge-offs 472 153
Allowance for loan losses
Allowance for credit losses on lending-
related commitments
Total allowance for credit losses
Allowance for loan losses as a
percentage of total loans
Net loan charge-offs as a percentage of
average total loans 0.91% 0.30%
Net credit-related charge-offs as a
percentage of average total loans 0.91 0.31
Nonperforming assets as a percentage of
total loans and foreclosed property
Allowance for loan losses as a
percentage of total nonperforming
loans
----------------------------------------------------------
* December 31, 2008 ratios are estimated
** Third quarter and year-to-date 2008 net interest income declined
$8 million and $38 million, respectively, due to tax-related non-cash
lease income charges. Excluding these charges, the net interest margin
would have been 3.17% and 3.08% for the third quarter 2008 and year
ended December 31, 2008, respectively.
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
-------------------------------------------------------------------------
(in millions, except share December September December
data) 31, 2008 30, 2008 31, 2007
-------------------------------------------------------------------------
ASSETS
Cash and due from banks $913 $1,404 $1,440
Federal funds sold and
securities purchased under
agreements to resell 202 3 36
Interest-bearing deposits with
Federal
Reserve Bank 2,266 - -
Interest-bearing deposits with
other banks 42 25 38
Other short-term investments 158 222 335
Investment securities
available-for-sale 9,201 8,158 6,296
Commercial loans 27,999 28,604 28,223
Real estate construction loans 4,477 4,565 4,816
Commercial mortgage loans 10,489 10,588 10,048
Residential mortgage loans 1,852 1,863 1,915
Consumer loans 2,592 2,644 2,464
Lease financing 1,343 1,360 1,351
International loans 1,753 1,931 1,926
-------------------------------------------------------------------------
Total loans 50,505 51,555 50,743
Less allowance for loan losses (770) (712) (557)
-------------------------------------------------------------------------
Net loans 49,735 50,843 50,186
Premises and equipment 683 668 650
Customers' liability on
acceptances outstanding 14 21 48
Accrued income and other assets 4,334 3,809 3,302
-------------------------------------------------------------------------
Total assets $67,548 $65,153 $62,331
=========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits $11,701 $12,094 $11,920
Money market and NOW deposits 12,437 13,553 15,261
Savings deposits 1,247 1,279 1,325
Customer certificates of
deposit 8,807 8,147 8,357
Other time deposits 7,293 3,670 6,147
Foreign office time deposits 470 802 1,268
-------------------------------------------------------------------------
Total interest-bearing
deposits 30,254 27,451 32,358
-------------------------------------------------------------------------
Total deposits 41,955 39,545 44,278
Short-term borrowings 1,749 3,625 2,807
Acceptances outstanding 14 21 48
Accrued expenses and other
liabilities 1,625 1,486 1,260
Medium- and long-term debt 15,053 15,376 8,821
-------------------------------------------------------------------------
Total liabilities 60,396 60,053 57,214
Fixed rate cumulative perpetual
preferred stock, series F, no
par value, $1,000 liquidation
value per share:
Authorized - 2,250,000 shares
Issued - 2,250,000 shares at
12/31/08 2,129 - -
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 178,735,252 shares at
12/31/08, 9/30/08 and 12/31/07 894 894 894
Capital surplus 722 586 564
Accumulated other
comprehensive loss (309) (129) (177)
Retained earnings 5,345 5,379 5,497
Less cost of common stock in
treasury - 28,244,967 shares
at 12/31/08, 28,249,360 shares
at 9/30/08 and 28,747,097
shares at 12/31/07 (1,629) (1,630) (1,661)
-------------------------------------------------------------------------
Total shareholders' equity 7,152 5,100 5,117
-------------------------------------------------------------------------
Total liabilities and
shareholders' equity $67,548 $65,153 $62,331
=========================================================================
CONSOLIDATED STATEMENTS OF INCOME
Comerica Incorporated and Subsidiaries
----------------------------------------------------------------------
Three Months
Ended Years Ended
December 31, December 31,
---------------------------
(in millions, except per share data) 2008 2007 2008 2007
----------------------------------------------------------------------
INTEREST INCOME
Interest and fees on loans $612 $873 $2,649 $3,501
Interest on investment securities 101 66 389 206
Interest on short-term investments 3 5 13 23
----------------------------------------------------------------------
Total interest income 716 944 3,051 3,730
INTEREST EXPENSE
Interest on deposits 158 303 734 1,167
Interest on short-term borrowings 9 30 87 105
Interest on medium- and long-term debt 118 122 415 455
----------------------------------------------------------------------
Total interest expense 285 455 1,236 1,727
----------------------------------------------------------------------
Net interest income 431 489 1,815 2,003
Provision for loan losses 192 108 686 212
----------------------------------------------------------------------
Net interest income after provision
for loan losses 239 381 1,129 1,791
NONINTEREST INCOME
Service charges on deposit accounts 55 57 229 221
Fiduciary income 47 52 199 199
Commercial lending fees 16 23 69 75
Letter of credit fees 17 16 69 63
Card fees 13 14 58 54
Brokerage fees 12 11 42 43
Foreign exchange income 7 10 40 40
Bank-owned life insurance 9 9 38 36
Net securities gains 4 3 67 7
Net gain on sales of businesses - - - 3
Other noninterest income (6) 35 82 147
----------------------------------------------------------------------
Total noninterest income 174 230 893 888
NONINTEREST EXPENSES
Salaries 187 216 781 844
Employee benefits 53 48 194 193
----------------------------------------------------------------------
Total salaries and employee benefits 240 264 975 1,037
Net occupancy expense 42 36 156 138
Equipment expense 16 15 62 60
Outside processing fee expense 27 24 104 91
Software expense 19 17 76 63
Customer services 2 7 13 43
Litigation and operational losses 3 18 103 18
Provision for credit losses on lending-
related commitments (2) 3 18 (1)
Other noninterest expenses 64 66 244 242
----------------------------------------------------------------------
Total noninterest expenses 411 450 1,751 1,691
----------------------------------------------------------------------
Income from continuing operations before
income taxes 2 161 271 988
Provision (benefit) for income taxes (17) 44 59 306
----------------------------------------------------------------------
Income from continuing operations 19 117 212 682
Income from discontinued
operations, net of tax 1 2 1 4
----------------------------------------------------------------------
NET INCOME 20 119 213 686
Preferred stock dividends 17 - 17 -
----------------------------------------------------------------------
Net income applicable to common stock $3 $119 $196 $686
=====================================================================
Basic earnings per common share:
Income from continuing operations $0.01 $0.78 $1.30 $4.47
Net income 0.02 0.80 1.31 4.49
Diluted earnings per common share:
Income from continuing operations 0.01 0.77 1.29 4.40
Net income 0.02 0.79 1.29 4.43
Cash dividends declared on common stock 50 97 348 393
Cash dividends declared per common share 0.33 0.64 2.31 2.56
=====================================================================
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
Comerica Incorporated and Subsidiaries
-----------------------------------------------------------------
(in millions, Fourth Third Second First Fourth
except per share Quarter Quarter Quarter Quarter Quarter
data) 2008 2008 2008 2008 2007
-----------------------------------------------------------------
INTEREST INCOME
Interest and fees on
loans $612 $634 $633 $770 $873
Interest on investment
securities 101 99 101 88 66
Interest on short-term
investments 3 2 3 5 5
-----------------------------------------------------------------
Total
interest
income 716 735 737 863 944
INTEREST EXPENSE
Interest on deposits 158 141 182 253 303
Interest on short-term
borrowings 9 30 19 29 30
Interest on medium-
and long-term debt 118 98 94 105 122
-----------------------------------------------------------------
Total interest expense 285 269 295 387 455
-----------------------------------------------------------------
Net interest
income 431 466 442 476 489
Provision for loan
losses 192 165 170 159 108
-----------------------------------------------------------------
Net interest
income after
provision for loan
losses 239 301 272 317 381
NONINTEREST INCOME
Service charges on
deposit accounts 55 57 59 58 57
Fiduciary income 47 49 51 52 52
Commercial lending fees 16 17 20 16 23
Letter of credit fees 17 19 18 15 16
Card fees 13 15 16 14 14
Brokerage fees 12 10 10 10 11
Foreign exchange income 7 11 12 10 10
Bank-owned life
insurance 9 11 8 10 9
Net securities gains 4 27 14 22 3
Other noninterest
income (6) 24 34 30 35
-----------------------------------------------------------------
Total noninterest
income 174 240 242 237 230
NONINTEREST EXPENSES
Salaries 187 192 202 200 216
Employee benefits 53 46 48 47 48
-----------------------------------------------------------------
Total salaries and
employee benefits 240 238 250 247 264
Net occupancy expense 42 40 36 38 36
Equipment expense 16 15 16 15 15
Outside processing fee
expense 27 26 28 23 24
Software expense 19 18 20 19 17
Customer services 2 2 3 6 7
Litigation and
operational losses
(recoveries) 3 105 3 (8) 18
Provision for credit
losses on lending-
related commitments (2) 9 7 4 3
Other noninterest
expenses 64 61 60 59 66
-----------------------------------------------------------------
Total noninterest
expenses 411 514 423 403 450
-----------------------------------------------------------------
Income from continuing
operations before
income taxes 2 27 91 151 161
Provision (benefit) for
income taxes (17) - 35 41 44
-----------------------------------------------------------------
Income from continuing
operations 19 27 56 110 117
Income (loss) from
discontinued
operations, net of tax 1 1 - (1) 2
-----------------------------------------------------------------
NET INCOME 20 28 56 109 119
Preferred stock
dividends 17 - - - -
-----------------------------------------------------------------
Net income applicable to
common stock $3 $28 $56 $109 $119
=================================================================
Basic earnings per
common share:
Income from
continuing
operations $0.01 $0.18 $0.37 $0.74 $0.78
Net income 0.02 0.19 0.37 0.73 0.80
Diluted earnings per
common share:
Income from
continuing
operations 0.01 0.18 0.37 0.73 0.77
Net income 0.02 0.19 0.37 0.73 0.79
Cash dividends
declared on common
stock 50 99 100 99 97
Cash dividends
declared per common
share 0.33 0.66 0.66 0.66 0.64
=================================================================
N/M - Not meaningful
--------------------------------------------------------------------
(in millions, Fourth Quarter 2008 Compared To:
except per share Third Quarter 2008 Fourth Quarter 2007
data) Amount Percent Amount Percent
--------------------------------------------------------------------
INTEREST INCOME
Interest and fees on
loans $(22) (3)% $(261) (30)%
Interest on investment
securities 2 2 35 53
Interest on short-term
investments 1 16 (2) (49)
--------------------------------------------------------------------
Total interest income (19) (3) (228) (24)
INTEREST EXPENSE
Interest on deposits 17 12 (145) (48)
Interest on short-term
borrowings (21) (70) (21) (70)
Interest on medium-
and long-term debt 20 21 (4) (4)
--------------------------------------------------------------------
Total
interest
expense 16 6 (170) (37)
--------------------------------------------------------------------
Net interest
income (35) (8) (58) (12)
Provision for loan
losses 27 16 84 78
--------------------------------------------------------------------
Net interest
income after
provision for loan
losses (62) (21) (142) (37)
NONINTEREST INCOME
Service charges on
deposit accounts (2) (4) (2) (3)
Fiduciary income (2) (6) (5) (10)
Commercial lending fees (1) (6) (7) (30)
Letter of credit fees (2) (5) 1 10
Card fees (2) (10) (1) (7)
Brokerage fees 2 12 1 3
Foreign exchange income (4) (28) (3) (26)
Bank-owned life
insurance (2) (20) - 3
Net securities gains (23) (86) 1 26
Other noninterest
income (30) N/M (41) N/M
--------------------------------------------------------------------
Total noninterest
income (66) (27) (56) (25)
NONINTEREST EXPENSES
Salaries (5) (2) (29) (13)
Employee benefits 7 14 5 11
--------------------------------------------------------------------
Total salaries and
employee benefits 2 1 (24) (9)
Net occupancy expense 2 4 6 17
Equipment expense 1 9 1 9
Outside processing fee
expense 1 9 3 13
Software expense 1 3 2 12
Customer services - (27) (5) (72)
Litigation and
operational losses
(recoveries) (102) (98) (15) (88)
Provision for credit
losses on lending-
related commitments (11) N/M (5) N/M
Other noninterest
expenses 3 7 (2) -
--------------------------------------------------------------------
Total noninterest
expenses (103) (20) (39) (9)
--------------------------------------------------------------------
Income from continuing
operations before
income taxes (25) (96) (159) (99)
Provision (benefit) for
income taxes (17) N/M (61) N/M
--------------------------------------------------------------------
Income from continuing
operations (8) (29) (98) (84)
Income (loss) from
discontinued
operations, net of tax - (62) (1) (69)
--------------------------------------------------------------------
NET INCOME (8) (31) (99) (83)
Preferred stock
dividends 17 N/M 17 N/M
--------------------------------------------------------------------
Net income applicable to
common stock $(25) (91)% $(116) (98)%
====================================================================
Basic earnings per
common share:
Income from
continuing
operations $(0.17) (94)% $(0.77) (99)%
Net income (0.17) (89) (0.78) (98)
Diluted earnings per
common share:
Income from
continuing
operations (0.17) (94) (0.76) (99)
Net income (0.17) (89) (0.77) (97)
Cash dividends
declared on common
stock (49) (50) (47) (48)
Cash dividends
declared per common
share (0.33) (50.0) (0.31) (48)
===================================================================
N/M - Not meaningful
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
Comerica Incorporated and Subsidiaries
------------------------------------------------------------ -------
2008 2007
(in millions) 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
-----------------------------------------------------------------------
Balance at
beginning of period $712 $663 $605 $557 $512
Loan charge-offs:
Commercial 66 48 36 33 27
Real estate
construction:
Commercial
Real
Estate
business
line 35 40 57 52 24
Other
business
lines - - - 1 1
-----------------------------------------------------------------------
Total real
estate
construction 35 40 57 53 25
Commercial
mortgage:
Commercial
Real
Estate
business
line 21 17 14 20 7
Other
business
lines 8 11 7 2 9
-----------------------------------------------------------------------
Total
commercial
mortgage 29 28 21 22 16
Residential
mortgage 5 1 1 - -
Consumer 7 5 3 7 4
Lease
financing 1 - - - -
International 1 - - 1 -
-----------------------------------------------------------------------
Total
loan
charge-
offs 144 122 118 116 72
Recoveries on
loans
previously
charged-off:
Commercial 6 3 5 3 7
Real estate
construction 1 1 - 1 -
Commercial
mortgage 2 - 1 1 1
Residential
mortgage - - - - -
Consumer 1 1 - 1 1
Lease
financing - 1 - - -
International 1 - - - -
-----------------------------------------------------------------------
Total
recoveries 11 6 6 6 9
-----------------------------------------------------------------------
Net loan charge-offs 133 116 112 110 63
Provision for
loan losses 192 165 170 159 108
Foreign currency
translation
adjustment (1) - - (1) -
-----------------------------------------------------------------------
Balance at
end of period $770 $712 $663 $605 $557
=======================================================================
Allowance for
loan losses
as a
percentage of
total loans 1.52% 1.38% 1.28% 1.16% 1.10%
Net loan charge-
offs as a
percentage of
average total
loans 1.04 0.90 0.86 0.85 0.50
Net credit-
related
charge-offs
as a
percentage of
average total
loans 1.04 0.90 0.86 0.85 0.50
=======================================================================
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED
COMMITMENTS
Comerica Incorporated and Subsidiaries
-----------------------------------------------------------------
2008 2007
-----------------------------------------------------------------
(in millions) 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
-----------------------------------------------------------------
Balance at beginning of
period $40 $31 $25 $21 $19
Less: Charge-offs on
lending-related
commitments (1) - - 1 - 1
Add: Provision
for credit losses on
lending-related
commitments (2) 9 7 4 3
-----------------------------------------------------------------
Balance at end of
period $38 $40 $31 $25 $21
=================================================================
Unfunded lending-related
commitments sold $- $- $2 $3 $22
=================================================================
(1) Charge-offs result from the sale of unfunded lending-related
commitments.
NONPERFORMING ASSETS
Comerica Incorporated and Subsidiaries
--------------------------------------------------------------------------
2008 2007
---------------------------------------- ------
(in millions) 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
--------------------------------------------------------------------------
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS
Nonaccrual loans:
Commercial $205 $206 $155 $87 $75
Real estate
construction:
Commercial Real
Estate business
line 429 386 322 271 161
Other business
lines 5 5 4 4 6
--------------------------------------------------------------------------
Total real
estate
construction 434 391 326 275 167
Commercial mortgage:
Commercial Real
Estate business
line 132 137 143 105 66
Other business
lines 130 114 95 64 75
--------------------------------------------------------------------------
Total
commercial
mortgage 262 251 238 169 141
Residential mortgage 7 8 4 1 1
Consumer 5 4 5 3 3
Lease financing 1 - - - -
International 2 3 3 3 4
--------------------------------------------------------------------------
Total
nonaccrual
loans 916 863 731 538 391
Reduced-rate loans - - - - 13
--------------------------------------------------------------------------
Total
nonperforming
loans 916 863 731 538 404
Foreclosed property 66 18 17 22 19
--------------------------------------------------------------------------
Total
nonperforming
assets $982 $881 $748 $560 $423
==========================================================================
Nonperforming loans as a
percentage of total
loans 1.81% 1.67% 1.41% 1.03% 0.80%
Nonperforming assets as a
percentage of total loans
and foreclosed property 1.94 1.71 1.44 1.07 0.83
Allowance for loan
losses as a percentage
of total nonperforming
loans 84 82 91 112 138
Loans past due 90 days or
more and still accruing $125 $97 $112 $80 $54
ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans at
beginning of period $863 $731 $538 $391 $272
Loans transferred to
nonaccrual (1) 258 280 304 281 185
Nonaccrual business
loan gross charge-
offs (2) (132) (116) (113) (108) (68)
Loans transferred to
accrual status (1) (11) - - - -
Nonaccrual business
loans sold (3) (17) (19) - (15) -
Payments/Other (4) (45) (13) 2 (11) 2
--------------------------------------------------------------------------
Nonaccrual loans at end
of period $916 $863 $731 $538 $391
==========================================================================
(1) Based on an analysis of nonaccrual loans with book balances greater
than $2 million.
(2) Analysis of gross loan charge-offs:
Nonaccrual business
loans $132 $116 $113 $108 $68
Performing watch
list loans - - 1 1 -
Consumer and
residential
mortgage loans 12 6 4 7 4
------------------------------------------------
Total gross
loan charge-
offs $144 $122 $118 $116 $72
================================================
(3) Analysis of loans sold:
Nonaccrual
business loans $17 $19 $- $15 $-
Performing watch
list loans - 3 7 6 13
------------------------------------------------
Total loans sold $17 $22 $7 $21 $13
================================================
(4) 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. Excludes business loan gross charge-offs and
nonaccrual business loans sold.
ANALYSIS OF NET INTEREST INCOME (FTE)
Comerica Incorporated and Subsidiaries
--------------------------------------------------------------------
Years Ended
---------------------------
December 31, 2008
---------------------------
Average Average
(dollar amounts in millions) Balance Interest Rate
--------------------------------------------------------------------
Commercial loans (1) (2) $28,870 $1,468 5.08%
Real estate construction loans 4,715 231 4.89
Commercial mortgage loans 10,411 580 5.57
Residential mortgage loans 1,886 112 5.94
Consumer loans 2,559 130 5.08
Lease financing (3) 1,356 8 0.59
International loans 1,968 101 5.13
Business loan swap income (expense) - 24 -
------------------------
Total loans (2) 51,765 2,654 5.13
Auction-rate securities available-for-
sale 193 6 2.95
Other investment securities
available-for-sale 7,908 384 4.88
------------------------
Total investment securities
available-for-sale 8,101 390 4.83
Federal funds sold and securities purchased
under agreements to resell 93 2 2.08
Interest-bearing deposits with banks 219 1 0.61
Other short-term investments 244 10 3.98
------------------------
Total earning assets 60,422 3,057 5.06
Cash and due from banks 1,185
Allowance for loan losses (691)
Accrued income and other assets 4,269
-------
Total assets $65,185
=======
Money market and NOW deposits (1) $14,245 207 1.45
Savings deposits 1,344 6 0.45
Customer certificates of deposit 8,150 263 3.23
------------------------
Total interest-bearing core
deposits 23,739 476 2.01
Other time deposits 6,715 232 3.45
Foreign office time deposits 926 26 2.77
------------------------
Total interest-bearing deposits 31,380 734 2.34
Short-term borrowings 3,763 87 2.30
Medium- and long-term debt 12,457 415 3.33
------------------------
Total interest-bearing sources 47,600 1,236 2.59
-------------
Noninterest-bearing deposits (1) 10,623
Accrued expenses and other liabilities 1,520
Total shareholders' equity 5,442
-------
Total liabilities and
shareholders' equity $65,185
=======
Net interest income/rate spread (FTE) $1,821 2.47
======
FTE adjustment $6
======
Impact of net noninterest-bearing
sources of funds 0.55
--------------------------------------------------------------------
Net interest margin (as a percentage
of average earning assets) (FTE) (2) (3) 3.02%
====================================================================
N/M - Not meaningful
(1) FSD balances included above:
Loans (primarily low-rate) $498 $7 1.40%
Interest-bearing deposits 957 19 1.99
Noninterest-bearing deposits 1,643
(2) Impact of FSD loans (primarily
low-rate) on the following:
Commercial loans (0.07)%
Total loans (0.03)
Net interest margin (FTE)
(assuming loans were
funded by noninterest-bearing
deposits) (0.01)
(3) 2008 net interest income declined $38 million and the net interest
margin declined six basis points due to tax-related non-cash
lease income charges. Excluding these charges, the net interest
margin would have been 3.08%.
--------------------------------------------------------------------
Years Ended
---------------------------
December 31, 2007
---------------------------
Average Average
(dollar amounts in millions) Balance Interest Rate
--------------------------------------------------------------------
Commercial loans (1) (2) $28,132 $2,038 7.25%
Real estate construction loans 4,552 374 8.21
Commercial mortgage loans 9,771 709 7.26
Residential mortgage loans 1,814 111 6.13
Consumer loans 2,367 166 7.00
Lease financing (3) 1,302 40 3.04
International loans 1,883 133 7.06
Business loan swap income (expense) - (67) -
------------------------
Total loans (2) 49,821 3,504 7.03
Auction-rate securities available-for-
sale - - -
Other investment securities
available-for-sale 4,447 206 4.56
------------------------
Total investment securities
available-for-sale 4,447 206 4.56
Federal funds sold and securities purchased
under agreements to resell 164 9 5.28
Interest-bearing deposits with banks 15 1 4.00
Other short-term investments 241 13 5.75
------------------------
Total earning assets 54,688 3,733 6.82
Cash and due from banks 1,352
Allowance for loan losses (520)
Accrued income and other assets 3,054
-------
Total assets $58,574
=======
Money market and NOW deposits (1) $14,937 460 3.08
Savings deposits 1,389 13 0.93
Customer certificates of deposit 7,687 342 4.45
------------------------
Total interest-bearing core
deposits 24,013 815 3.39
Other time deposits 5,563 300 5.39
Foreign office time deposits 1,071 52 4.85
------------------------
Total interest-bearing deposits 30,647 1,167 3.81
Short-term borrowings 2,080 105 5.06
Medium- and long-term debt 8,197 455 5.55
------------------------
Total interest-bearing sources 40,924 1,727 4.22
-------------
Noninterest-bearing deposits (1) 11,287
Accrued expenses and other liabilities 1,293
Total shareholders' equity 5,070
-------
Total liabilities and
shareholders' equity $58,574
=======
Net interest income/rate spread (FTE) $2,006 2.60
=======
FTE adjustment $3
=======
Impact of net noninterest-bearing
sources of funds 1.06
--------------------------------------------------------------------
Net interest margin (as a percentage
of average earning assets) (FTE) (2) (3) 3.66%
====================================================================
N/M - Not meaningful
(1) FSD balances included above:
Loans (primarily low-rate) $1,318 $9 0.69%
Interest-bearing deposits 1,202 47 3.91
Noninterest-bearing deposits 2,836
(2) Impact of FSD loans (primarily
low-rate) on the following:
Commercial loans (0.32)%
Total loans (0.18)
Net interest margin (FTE)
(assuming loans were
funded by noninterest-bearing
deposits) (0.08)
(3) 2008 net interest income declined $38 million and the net interest
margin declined six basis points due to tax-related non-cash
lease income charges. Excluding these charges, the net interest
margin would have been 3.08%.
ANALYSIS OF NET INTEREST INCOME (FTE)
Comerica Incorporated and Subsidiaries
------------------------------------------------------------------------
Three Months Ended
---------------------------
December 31, 2008
---------------------------
Average Average
(dollar amounts in millions) Balance Interest Rate
------------------------------------------------------------------------
Commercial loans (1) (2) $28,507 $334 4.65%
Real estate construction loans 4,536 46 4.08
Commercial mortgage loans 10,613 138 5.17
Residential mortgage loans 1,851 27 5.80
Consumer loans 2,639 30 4.49
Lease financing (3) 1,359 12 3.63
International loans 1,833 22 4.78
Business loan swap income (expense) - 5 -
------------------------
Total loans (2) 51,338 614 4.76
Auction-rate securities available-for-sale 769 6 2.95
Other investment securities available-for-
sale 7,965 96 4.86
------------------------
Total investment securities available-for-
sale 8,734 102 4.69
Federal funds sold and securities purchased
under agreements to resell 75 - 0.83
Interest-bearing deposits with banks 811 1 0.50
Other short-term investments 176 2 3.59
------------------------
Total earning assets 61,134 719 4.68
Cash and due from banks 1,056
Allowance for loan losses (780)
Accrued income and other assets 4,571
-------
Total assets $65,981
=======
Money market and NOW deposits (1) $12,670 37 1.16
Savings deposits 1,264 1 0.29
Customer certificates of deposit 8,589 63 2.91
------------------------
Total interest-bearing core deposits 22,523 101 1.78
Other time deposits 6,702 56 3.35
Foreign office time deposits 516 1 0.81
------------------------
Total interest-bearing deposits 29,741 158 2.12
Short-term borrowings 2,808 9 1.27
Medium- and long-term debt 15,016 118 3.14
------------------------
Total interest-bearing sources 47,565 285 2.39
-----------
Noninterest-bearing deposits (1) 10,575
Accrued expenses and other liabilities 1,540
Total shareholders' equity 6,301
-------
Total liabilities and shareholders'
equity $65,981
=======
Net interest income/rate spread (FTE) $434 2.29
======
FTE adjustment $3
======
Impact of net noninterest-bearing
sources of funds 0.53
------------------------------------------------------------------------
Net interest margin (as a percentage
of average earning assets) (FTE) (2) (3) 2.82%
========================================================================
N/M - Not meaningful
(1) FSD balances included above:
Loans (primarily low-rate) $323 $1 1.60%
Interest-bearing deposits 834 3 1.55
Noninterest-bearing deposits 1,320
(2) Impact of FSD loans (primarily low-rate)
on the following:
Commercial loans (0.03)%
Total loans (0.02)
Net interest margin (FTE) (assuming
loans were funded by
noninterest-bearing deposits) -
(3) Third quarter 2008 net interest income declined $8 million and the
net interest margin declined six basis points due to a tax-related
non-cash lease income charge. Excluding this charge, the net
interest margin would have been 3.17% in the third quarter 2008.
------------------------------------------------------------------------
Three Months Ended
---------------------------
September 30, 2008
---------------------------
Average Average
(dollar amounts in millions) Balance Interest Rate
------------------------------------------------------------------------
Commercial loans (1) (2) $28,521 $347 4.85%
Real estate construction loans 4,675 55 4.65
Commercial mortgage loans 10,511 142 5.38
Residential mortgage loans 1,870 28 5.92
Consumer loans 2,599 31 4.83
Lease financing (3) 1,365 4 1.07
International loans 1,967 24 4.85
Business loan swap income (expense) - 4 -
------------------------
Total loans (2) 51,508 635 4.91
Auction-rate securities available-for-sale - - -
Other investment securities available-for-
sale 8,146 99 4.85
------------------------
Total investment securities available-for-
sale 8,146 99 4.85
Federal funds sold and securities purchased
under agreements to resell 70 - 1.87
Interest-bearing deposits with banks 20 - 1.72
Other short-term investments 202 2 3.67
------------------------
Total earning assets 59,946 736 4.89
Cash and due from banks 1,228
Allowance for loan losses (723)
Accrued income and other assets 4,412
-------
Total assets $64,863
=======
Money market and NOW deposits (1) $14,204 45 1.26
Savings deposits 1,350 1 0.42
Customer certificates of deposit 7,690 53 2.73
------------------------
Total interest-bearing core deposits 23,244 99 1.70
Other time deposits 5,209 37 2.81
Foreign office time deposits 814 5 2.51
------------------------
Total interest-bearing deposits 29,267 141 1.92
Short-term borrowings 5,413 30 2.20
Medium- and long-term debt 12,880 98 3.02
------------------------
Total interest-bearing sources 47,560 269 2.25
-----------
Noninterest-bearing deposits (1) 10,646
Accrued expenses and other liabilities 1,582
Total shareholders' equity 5,075
-------
Total liabilities and shareholders'
equity $64,863
=======
Net interest income/rate spread (FTE) $467 2.64
======
FTE adjustment $1
======
Impact of net noninterest-bearing
sources of funds 0.47
------------------------------------------------------------------------
Net interest margin (as a percentage
of average earning assets) (FTE) (2) (3) 3.11%
========================================================================
N/M - Not meaningful
(1) FSD balances included above:
Loans (primarily low-rate) $401 $2 1.74%
Interest-bearing deposits 907 4 1.65
Noninterest-bearing deposits 1,542
(2) Impact of FSD loans (primarily low-rate)
on the following:
Commercial loans (0.05)%
Total loans (0.02)
Net interest margin (FTE) (assuming
loans were funded by
noninterest-bearing deposits) (0.01)
(3) Third quarter 2008 net interest income declined $8 million and the
net interest margin declined six basis points due to a tax-related
non-cash lease income charge. Excluding this charge, the net
interest margin would have been 3.17% in the third quarter 2008.
------------------------------------------------------------------------
Three Months Ended
---------------------------
December 31, 2007
---------------------------
Average Average
(dollar amounts in millions) Balance Interest Rate
------------------------------------------------------------------------
Commercial loans (1) (2) $28,393 $500 7.00%
Real estate construction loans 4,846 92 7.48
Commercial mortgage loans 9,941 175 7.01
Residential mortgage loans 1,891 29 6.16
Consumer loans 2,412 41 6.64
Lease financing (3) 1,327 8 2.41
International loans 1,889 34 7.03
Business loan swap income (expense) - (6) -
------------------------
Total loans (2) 50,699 873 6.84
Auction-rate securities available-for-sale - - -
Other investment securities available-for-
sale 5,533 66 4.76
------------------------
Total investment securities available-for-
sale 5,533 66 4.76
Federal funds sold and securities purchased
under agreements to resell 90 1 4.79
Interest-bearing deposits with banks 25 - 2.57
Other short-term investments 274 4 5.70
------------------------
Total earning assets 56,621 944 6.62
Cash and due from banks 1,241
Allowance for loan losses (541)
Accrued income and other assets 3,186
-------
Total assets $60,507
=======
Money market and NOW deposits (1) $15,174 116 3.03
Savings deposits 1,374 4 1.00
Customer certificates of deposit 8,229 92 4.44
------------------------
Total interest-bearing core deposits 24,777 212 3.39
Other time deposits 5,779 76 5.22
Foreign office time deposits 1,278 15 4.69
------------------------
Total interest-bearing deposits 31,834 303 3.77
Short-term borrowings 2,560 30 4.64
Medium- and long-term debt 9,180 122 5.31
------------------------
Total interest-bearing sources 43,574 455 4.15
-----------
Noninterest-bearing deposits (1) 10,533
Accrued expenses and other liabilities 1,313
Total shareholders' equity 5,087
-------
Total liabilities and shareholders'
equity $60,507
=======
Net interest income/rate spread (FTE) $489 2.47
======
FTE adjustment $-
======
Impact of net noninterest-bearing
sources of funds 0.96
------------------------------------------------------------------------
Net interest margin (as a percentage
of average earning assets) (FTE) (2) (3) 3.43%
========================================================================
N/M - Not meaningful
(1) FSD balances included above:
Loans (primarily low-rate) $941 $2 0.98%
Interest-bearing deposits 1,121 11 3.78
Noninterest-bearing deposits 2,060
(2) Impact of FSD loans (primarily low-rate)
on the following:
Commercial loans (0.21)%
Total loans (0.11)
Net interest margin (FTE) (assuming
loans were funded by
noninterest-bearing deposits) (0.04)
(3) Third quarter 2008 net interest income declined $8 million and the net
interest margin declined six basis points due to a tax-related
non-cash lease income charge. Excluding this charge, the net interest
margin would have been 3.17% in the third quarter 2008.
CONSOLIDATED STATISTICAL DATA
Comerica Incorporated and Subsidiaries
---------------------------------------------------------------
(in millions, except per December September June
share data) 31, 2008 30, 2008 30, 2008
---------------------------------------------------------------
Commercial loans:
Floor plan $2,341 $2,151 $2,645
Other 25,658 26,453 26,118
---------------------------------------------------------------
Total commercial loans 27,999 28,604 28,763
Real estate construction loans:
Commercial Real Estate
business line 3,831 3,937 4,013
Other business lines 646 628 671
---------------------------------------------------------------
Total real estate
construction loans 4,477 4,565 4,684
Commercial mortgage loans:
Commercial Real Estate
business line 1,619 1,668 1,620
Other business lines 8,870 8,920 8,884
---------------------------------------------------------------
Total commercial
mortgage loans 10,489 10,588 10,504
Residential mortgage loans 1,852 1,863 1,879
Consumer loans:
Home equity 1,781 1,693 1,649
Other consumer 811 951 945
---------------------------------------------------------------
Total consumer loans 2,592 2,644 2,594
Lease financing 1,343 1,360 1,351
International loans 1,753 1,931 1,976
---------------------------------------------------------------
Total loans $50,505 $51,555 $51,751
===============================================================
Goodwill $150 $150 $150
Loan servicing rights 11 12 12
Tier 1 common capital ratio* 7.08% 6.67% 6.79%
Tier 1 risk-based capital
ratio* 10.67 7.32 7.45
Total risk-based capital
ratio * 14.73 11.19 11.21
Leverage ratio* 11.78 8.57 8.53
Tangible common equity ratio 7.21 7.60 7.47
Book value per common share $33.31 $33.89 $33.78
Market value per share for
the quarter:
High $37.01 $54.00 $40.62
Low 15.05 19.31 25.61
Close 19.85 32.79 25.63
Quarterly ratios:
Return on average common
shareholders' equity 0.19% 2.25% 4.25%
Return on average assets 0.12 0.18 0.33
Efficiency ratio 68.19 75.53 63.02
Number of banking centers 439 424 416
Number of employees - full
time equivalent 10,186 10,347 10,530
* December 31, 2008 ratios are estimated
----------------------------------------------------------------------
March 31, December 31,
(in millions, except per share data) 2008 2007
----------------------------------------------------------------------
Commercial loans:
Floor plan $2,913 $2,878
Other 26,562 25,345
----------------------------------------------------------------------
Total commercial loans 29,475 28,223
Real estate construction loans:
Commercial Real Estate business line 3,990 4,089
Other business lines 656 727
----------------------------------------------------------------------
Total real estate construction loans 4,646 4,816
Commercial mortgage loans:
Commercial Real Estate business line 1,541 1,377
Other business lines 8,941 8,671
----------------------------------------------------------------------
Total commercial mortgage loans 10,482 10,048
Residential mortgage loans 1,926 1,915
Consumer loans:
Home equity 1,619 1,616
Other consumer 829 848
----------------------------------------------------------------------
Total consumer loans 2,448 2,464
Lease financing 1,341 1,351
International loans 2,034 1,926
----------------------------------------------------------------------
Total loans $52,352 $50,743
======================================================================
Goodwill $150 $150
Loan servicing rights 12 12
Tier 1 common capital ratio* 6.75% 6.85%
Tier 1 risk-based capital ratio* 7.40 7.51
Total risk-based capital ratio * 11.06 11.20
Leverage ratio* 8.82 9.26
Tangible common equity ratio 7.62 7.97
Book value per common share $34.93 $34.12
Market value per share for the quarter:
High $45.19 $54.88
Low 34.51 39.62
Close 35.08 43.53
Quarterly ratios:
Return on average common shareholders'
equity 8.42% 9.35%
Return on average assets 0.68 0.79
Efficiency ratio 58.25 62.76
Number of banking centers 420 417
Number of employees - full time equivalent 10,643 10,782
* December 31, 2008 ratios are estimated
PARENT COMPANY ONLY BALANCE SHEETS
Comerica Incorporated
-----------------------------------------------------------------------
(in millions, except December 31, September 30, December 31,
share data) 2008 2008 2007
-----------------------------------------------------------------------
ASSETS
Cash and due from
subsidiary bank $11 $16 $1
Short-term investments with
subsidiary bank 2,329 158 224
Other short-term
investments 80 99 102
Investment in
subsidiaries,
principally banks 5,690 5,849 5,840
Premises and equipment 5 5 4
Other assets 210 163 166
-----------------------------------------------------------------------
Total assets $8,325 $6,290 $6,337
=======================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Medium- and long-term debt $1,002 $969 $968
Other liabilities 171 221 252
-----------------------------------------------------------------------
Total liabilities 1,173 1,190 1,220
Fixed rate cumulative perpetual
preferred stock, series F, no
par value, $1,000 liquidation
preference per share:
Authorized - 2,250,000
shares Issued - 2,250,000
shares at 12/31/08 2,129 - -
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 178,735,252
shares at 12/31/08, 9/30/08
and 12/31/07 894 894 894
Capital surplus 722 586 564
Accumulated other
comprehensive loss (309) (129) (177)
Retained earnings 5,345 5,379 5,497
Less cost of common stock
in treasury - 28,244,967
shares at 12/31/08,
28,249,360 shares at 9/30/08
and 28,747,097 shares
at 12/31/07 (1,629) (1,630) (1,661)
-----------------------------------------------------------------------
Total shareholders'
equity 7,152 5,100 5,117
-----------------------------------------------------------------------
Total liabilities
and shareholders'
equity $8,325 $6,290 $6,337
=======================================================================
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Comerica Incorporated and Subsidiaries
--------------------------------------------------------------------------
(in Accum-
millions, Nonre- Common Stock ulated
except deemable ------------- Other Total
per Pre- Shares Compreh- Retai- Treas- Share-
share ferred Outst- Capital ensive ned ury holders'
data) Stock anding Amount Surplus Loss Earnings Stock Equity
--------------------------------------------------------------------------
BALANCE AT
JANUARY 1,
2007 $- 157.6 $894 $520 $(324) $5,230 $(1,219) $5,101
Net income - - - - - 686 - 686
Other
comprehensive
income, net
of tax - - - - 147 - - 147
----
Total
comprehensive
income 833
Cash dividends
declared on
common stock
($2.56 per
share) - - - - - (393) - (393)
Purchase of
common stock - (10.0) - - - - (580) (580)
Net
issuance
of common
stock
under
employee
stock plans - 2.4 - (16) - (26) 139 97
Share-based
compensation - - - 59 - - - 59
Employee
deferred
compensation
obligations - - - 1 - - (1) -
--------------------------------------------------------------------------
BALANCE AT
DECEMBER 31,
2007 $- 150.0 $894 $564 $(177) $5,497 $(1,661) $5,117
Net income - - - - - 213 - 213
Other
comprehensive
loss, net of
tax - - - - (132) - - (132)
----
Total
comprehensive
income 81
Cash dividends
declared on
common stock
($2.31 per
share) - - - - - (348) - (348)
Purchase of
common stock - - - - - - (1) (1)
Issuance of
preferred
stock and
related
warrants 2,126 - - 124 - - - 2,250
Accretion
of
discount
on
preferred
stock 3 - - - - (3) - -
Net
issuance
of common
stock
under
employee
stock plans - 0.5 - (19) - (14) 33 -
Share-based
Compensation - - - 53 - - - 53
--------------------------------------------------------------------------
BALANCE AT
DECEMBER
31, 2008 $2,129 150.5 $894 $722 $(309) $5,345 $(1,629) $7,152
==========================================================================
BUSINESS SEGMENT FINANCIAL RESULTS
Comerica Incorporated and Subsidiaries
=======================================================================
(dollar amounts in millions) Wealth &
Three Months Ended Business Retail Institutional
December 31, 2008 Bank Bank Management
-----------------------------------------------------------------------
Earnings summary:
Net interest income (expense)
(FTE) $329 $129 $38
Provision for loan losses 139 43 13
Noninterest income 62 49 73
Noninterest expenses 172 180 80
Provision (benefit) for income
taxes (FTE) 26 (11) 5
Income from discontinued
operations,
net of tax - - -
-------------------------------------
Net income (loss) $54 $(34) $13
=====================================
Net credit-related charge-offs $101 $23 $9
Selected average balances:
Assets $41,364 $7,007 $4,879
Loans 40,244 6,380 4,724
Deposits 13,839 17,065 2,255
Liabilities 14,417 17,053 2,300
Attributed equity 3,341 665 341
Statistical data:
Return on average assets (1) 0.51% (0.76)% 1.05%
Return on average attributed
equity 6.36 (20.18) 15.03
Net interest margin (2) 3.23 3.00 3.13
Efficiency ratio 44.10 100.79 75.73
=======================================================================
Wealth &
Three Months Ended September Business Retail Institutional
30, 2008 Bank Bank Management
-----------------------------------------------------------------------
Earnings summary:
Net interest income (expense)
(FTE) $323 $142 $37
Provision for loan losses 135 33 7
Noninterest income 75 80 71
Noninterest expenses 175 161 180
Provision (benefit) for income
taxes (FTE) 23 7 (28)
Income from discontinued
operations,
net of tax - - -
-------------------------------------
Net income (loss) $65 $21 $(51)
=====================================
Net credit-related charge-offs $95 $17 $4
Selected average balances:
Assets $41,357 $7,046 $4,759
Loans 40,506 6,362 4,624
Deposits 14,933 16,596 2,351
Liabilities 15,633 16,583 2,359
Attributed equity 3,318 656 340
Statistical data:
Return on average assets (1) 0.64% 0.48% (4.29)%
Return on average attributed
equity 7.98 12.53 (60.04)
Net interest margin (2) 3.17 3.40 3.17
Efficiency ratio 43.92 82.39 N/M
=======================================================================
Wealth &
Three Months Ended Business Retail Institutional
December 31, 2007 Bank Bank Management
-----------------------------------------------------------------------
Earnings summary:
Net interest income (expense)
(FTE) $331 $160 $36
Provision for loan losses 88 26 1
Noninterest income 79 55 73
Noninterest expenses 186 181 87
Provision (benefit) for income
taxes (FTE) 43 3 8
Income from discontinued
operations,
net of tax - - -
-------------------------------------
Net income (loss) $93 $5 $13
=====================================
Net credit-related charge-offs $50 $14 $-
Selected average balances:
Assets $41,327 $6,998 $4,321
Loans 40,285 6,229 4,146
Deposits 15,931 17,254 2,552
Liabilities 16,765 17,266 2,561
Attributed equity 3,073 872 353
Statistical data:
Return on average assets (1) 0.89% 0.11% 1.21%
Return on average attributed
equity 12.02 2.33 14.88
Net interest margin (2) 3.25 3.69 3.43
Efficiency ratio 45.54 84.52 79.55
=======================================================================
(1) Return on average assets is calculated based on the greater of
average assets or average liabilities and attributed equity.
(2) Net interest margin is calculated based on the greater of average
earning assets or average deposits and purchased funds.
FTE - Fully Taxable Equivalent
N/M - Not Meaningful
=======================================================================
=======================================================================
(dollar amounts in millions)
Three Months Ended
December 31, 2008 Finance Other Total
-----------------------------------------------------------------------
Earnings summary:
Net interest income (expense)
(FTE) $(66) $4 $434
Provision for loan losses - (3) 192
Noninterest income 12 (22) 174
Noninterest expenses 3 (24) 411
Provision (benefit) for income
taxes (FTE) (19) (15) (14)
Income from discontinued
operations,
net of tax - 1 1
-------------------------------------
Net income (loss) $(38) $25 $20
=====================================
Net credit-related charge-offs $- $- $133
Selected average balances:
Assets $10,927 $1,804 $65,981
Loans (4) (6) 51,338
Deposits 6,842 315 40,316
Liabilities 25,170 740 59,680
Attributed equity 975 979 6,301
Statistical data:
Return on average assets (1) N/M N/M 0.12%
Return on average attributed
equity N/M N/M 0.19
Net interest margin (2) N/M N/M 2.82
Efficiency ratio N/M N/M 68.19
=======================================================================
Three Months Ended September
30, 2008 Finance Other Total
-----------------------------------------------------------------------
Earnings summary:
Net interest income (expense)
(FTE) $(26) $(9) $467
Provision for loan losses - (10) 165
Noninterest income 20 (6) 240
Noninterest expenses 3 (5) 514
Provision (benefit) for income
taxes (FTE) (7) 6 1
Income from discontinued
operations,
net of tax - 1 1
-------------------------------------
Net income (loss) $(2) $(5) $28
=====================================
Net credit-related charge-offs $- $- $116
Selected average balances:
Assets $10,096 $1,605 $64,863
Loans (3) 19 51,508
Deposits 5,588 445 39,913
Liabilities 24,359 854 59,788
Attributed equity 878 (117) 5,075
Statistical data:
Return on average assets (1) N/M N/M 0.18%
Return on average attributed
equity N/M N/M 2.25
Net interest margin (2) N/M N/M 3.11
Efficiency ratio N/M N/M 75.53
=======================================================================
Three Months Ended
December 31, 2007 Finance Other Total
-----------------------------------------------------------------------
Earnings summary:
Net interest income (expense)
(FTE) $(30) $(8) $489
Provision for loan losses - (7) 108
Noninterest income 16 7 230
Noninterest expenses 3 (7) 450
Provision (benefit) for income
taxes (FTE) (9) (1) 44
Income from discontinued
operations,
net of tax - 2 2
-------------------------------------
Net income (loss) $(8) $16 $119
=====================================
Net credit-related charge-offs $- $- $64
Selected average balances:
Assets $6,785 $1,076 $60,507
Loans 5 34 50,699
Deposits 6,622 8 42,367
Liabilities 18,472 356 55,420
Attributed equity 724 65 5,087
Statistical data:
Return on average assets (1) N/M N/M 0.79%
Return on average attributed
equity N/M N/M 9.35
Net interest margin (2) N/M N/M 3.43
Efficiency ratio N/M N/M 62.76
=======================================================================
(1) Return on average assets is calculated based on the greater of
average assets or average liabilities and attributed equity.
(2) Net interest margin is calculated based on the greater of average
earning assets or average deposits and purchased funds.
FTE - Fully Taxable Equivalent
N/M - Not Meaningful
=======================================================================
MARKET SEGMENT FINANCIAL RESULTS
Comerica Incorporated and Subsidiaries
====================================================================
(dollar amounts
in millions)
Three Months
Ended December
31, 2008 Midwest Western Texas Florida
--------------------------------------------------------------------
Earnings
summary:
Net interest
income
(expense) (FTE) $202 $157 $72 $11
Provision for
loan losses 59 70 19 14
Noninterest
income 109 34 21 4
Noninterest
expenses 217 113 64 11
Provision
(benefit) for
income taxes
(FTE) 19 6 6 (3)
Income from
discontinued
operations,
net of tax - - - -
-----------------------------------------------
Net income
(loss) $16 $2 $4 $(7)
===============================================
Net credit-
related charge-
offs $38 $65 $8 $6
Selected average
balances:
Assets $19,945 $16,243 $8,215 $1,938
Loans 18,966 16,032 7,974 1,942
Deposits 16,204 10,762 4,070 222
Liabilities 16,733 10,716 4,090 216
Attributed
equity 1,613 1,381 650 146
Statistical
data:
Return on
average
assets (1) 0.30% 0.06% 0.20% (1.47)%
Return on
average
attributed
equity 3.70 0.65 2.49 (19.50)
Net interest
margin (2) 4.20 3.87 3.56 2.25
Efficiency ratio 70.07 59.48 68.41 72.92
====================================================================
Three Months
Ended
September 30,
2008 Midwest Western Texas Florida
--------------------------------------------------------------------
Earnings
summary:
Net interest
income
(expense) (FTE) $196 $169 $73 $12
Provision for
loan losses 52 82 18 7
Noninterest
income 142 38 27 4
Noninterest
expenses 203 112 61 10
Provision
(benefit) for
income taxes
(FTE) 31 4 8 -
Income from
discontinued
operations,
net of tax - - - -
-----------------------------------------------
Net income
(loss) $52 $9 $13 $(1)
===============================================
Net credit-
related charge-
offs $44 $51 $9 $3
Selected average
balances:
Assets $19,754 $16,627 $7,945 $1,900
Loans 19,070 16,381 7,691 1,900
Deposits 15,858 11,729 3,956 262
Liabilities 16,475 11,698 3,973 258
Attributed
equity 1,631 1,367 623 131
Statistical
data:
Return on
average
assets (1) 1.07% 0.21% 0.65% (0.25)%
Return on
average
attributed
equity 12.91 2.61 8.22 (3.62)
Net interest
margin (2) 4.08 4.09 3.75 2.53
Efficiency ratio 64.14 54.68 63.16 67.40
====================================================================
Three Months
Ended December
31, 2007 Midwest Western Texas Florida
--------------------------------------------------------------------
Earnings
summary:
Net interest
income
(expense) (FTE) $212 $178 $74 $11
Provision for
loan losses 20 93 7 5
Noninterest
income 120 35 23 4
Noninterest
expenses 218 121 67 11
Provision
(benefit) for
income taxes
(FTE) 34 2 9 -
Income from
discontinued
operations,
net of tax - - - -
-----------------------------------------------
Net income
(loss) $60 $(3) $14 $(1)
===============================================
Net credit-
related charge-
offs $38 $22 $3 $-
Selected average
balances:
Assets $19,176 $17,137 $7,677 $1,732
Loans 18,564 16,615 7,381 1,719
Deposits 16,056 13,012 3,935 299
Liabilities 16,737 13,044 3,953 297
Attributed
equity 1,766 1,264 634 112
Statistical
data:
Return on
average
assets (1) 1.24% (0.06)% 0.73% (0.21)%
Return on
average
attributed
equity 13.51 (0.81) 8.79 (3.29)
Net interest
margin (2) 4.51 4.24 3.95 2.67
Efficiency ratio 65.68 56.97 69.30 73.50
====================================================================
(1) Return on average assets is calculated based on the greater of
average assets or average liabilities and attributed equity.
(2) Net interest margin is calculated based on the greater of average
earning assets or average deposits and purchased funds.
FTE - Fully Taxable Equivalent
N/M - Not Meaningful
====================================================================
(dollar amounts
in millions)
Three Months Finance
Ended December Other & Other
31, 2008 Markets International Businesses Total
--------------------------------------------------------------------
Earnings
summary:
Net interest
income
(expense) (FTE) $38 $16 $(62) $434
Provision for
loan losses 27 6 (3) 192
Noninterest
income 9 7 (10) 174
Noninterest
expenses 17 10 (21) 411
Provision
(benefit) for
income taxes
(FTE) (11) 3 (34) (14)
Income from
discontinued
operations,
net of tax - - 1 1
-----------------------------------------------
Net income
(loss) $14 $4 $(13) $20
===============================================
Net credit-
related charge-
offs $16 $- $- $133
Selected average
balances:
Assets $4,608 $2,301 $12,731 $65,981
Loans 4,248 2,186 (10) 51,338
Deposits 1,206 695 7,157 40,316
Liabilities 1,330 685 25,910 59,680
Attributed
equity 405 152 1,954 6,301
Statistical
data:
Return on
average
assets (1) 1.22% 0.72% N/M 0.12%
Return on
average
attributed
equity 13.93 10.96 N/M 0.19
Net interest
margin (2) 3.55 2.82 N/M 2.82
Efficiency ratio 39.75 43.13 N/M 68.19
====================================================================
Three Months
Ended Finance
September 30, Other & Other
2008 Markets International Businesses Total
--------------------------------------------------------------------
Earnings
summary:
Net interest
income
(expense) (FTE) $37 $15 $(35) $467
Provision for
loan losses 15 1 (10) 165
Noninterest
income 7 8 14 240
Noninterest
expenses 119 11 (2) 514
Provision
(benefit) for
income taxes
(FTE) (45) 4 (1) 1
Income from
discontinued
operations,
net of tax - - 1 1
-----------------------------------------------
Net income
(loss) $(45) $7 $(7) $28
===============================================
Net credit-
related charge-
offs $9 $- $- $116
Selected average
balances:
Assets $4,559 $2,377 $11,701 $64,863
Loans 4,189 2,261 16 51,508
Deposits 1,299 776 6,033 39,913
Liabilities 1,396 775 25,213 59,788
Attributed
equity 406 156 761 5,075
Statistical
data:
Return on
average
assets (1) (3.93)% 1.24% N/M 0.18%
Return on
average
attributed
equity (44.21) 18.83 N/M 2.25
Net interest
margin (2) 3.48 2.64 N/M 3.11
Efficiency ratio N/M 44.21 N/M 75.53
====================================================================
Three Months Finance
Ended December Other & Other
31, 2007 Markets International Businesses Total
--------------------------------------------------------------------
Earnings
summary:
Net interest
income
(expense) (FTE) $36 $16 $(38) $489
Provision for
loan losses (7) (3) (7) 108
Noninterest
income 16 9 23 230
Noninterest
expenses 26 11 (4) 450
Provision
(benefit) for
income taxes
(FTE) 3 6 (10) 44
Income from
discontinued
operations,
net of tax - - 2 2
-----------------------------------------------
Net income
(loss) $30 $11 $8 $119
===============================================
Net credit-
related charge-
offs $1 $- $- $64
Selected average
balances:
Assets $4,643 $2,281 $7,861 $60,507
Loans 4,229 2,152 39 50,699
Deposits 1,556 879 6,630 42,367
Liabilities 1,673 888 18,828 55,420
Attributed
equity 369 153 789 5,087
Statistical
data:
Return on
average
assets (1) 2.57% 1.87% N/M 0.79%
Return on
average
attributed
equity 32.36 27.81 N/M 9.35
Net interest
margin (2) 3.38 2.80 N/M 3.43
Efficiency ratio 50.04 47.13 N/M 62.76
====================================================================
(1) Return on average assets is calculated based on the greater of
average assets or average liabilities and attributed equity.
(2) Net interest margin is calculated based on the greater of average
earning assets or average deposits and purchased funds.
FTE - Fully Taxable Equivalent
N/M - Not Meaningful
====================================================================
Photo: http://www.newscom.com/cgi-bin/prnh/20010807/CMALOGOhttp://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
SOURCE: Comerica Incorporated
Web site: http://www.comerica.com/
