Comerica Reports Second Quarter 2009 Net Income of $18 Million
Quarter Boosts Already Strong Capital Ratios
$1.1 Billion Increase in Average Core Deposits
Net Interest Margin Expands
Residential Real Estate Development Drives Credit Metrics
EPS Impact from Preferred Stock Dividends to U.S. Treasury (22 Cents)
PRNewswire
DALLAS
(NYSE:CMA)
DALLAS, July 21 /PRNewswire-FirstCall/ -- Comerica Incorporated (NYSE: CMA) today reported second quarter 2009 net income of $18 million, compared to $9 million for the first quarter 2009 and $56 million for the second quarter 2008. After preferred dividends of $34 million in the second quarter 2009 and $33 million in the first quarter 2009, the net loss applicable to common stock was $16 million, or $0.10 per diluted share, for the second quarter 2009, compared to a net loss applicable to common stock of $24 million, or $0.16 per diluted share, for the first quarter 2009 and net income applicable to common stock of $56 million, or $0.37 per diluted share, for the second quarter 2008. Second quarter 2009 included a $312 million provision for loan losses, compared to $203 million for the first quarter 2009 and $170 million for the second quarter 2008.
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(dollar amounts in millions, except per 2nd Qtr 1st Qtr 2nd Qtr
share data) '09 '09 '08
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Net interest income $402 $384 $442
Provision for loan losses 312 203 170
Noninterest income 298 223 242
Noninterest expenses 429 397 423
Net income 18 9 56
Preferred stock dividends to U.S.
Treasury 34 33 -
Net income (loss) applicable to common
stock (16) (24) 56
Diluted earnings (loss) per common share (0.10) (0.16) 0.37
Tier 1 capital ratio 11.57%(a) 11.06% 7.45%
Tangible common equity ratio (b) 7.55 7.27 7.47
Net interest margin 2.73 2.53 2.91
(a) June 30, 2009 ratio is estimated.
(b) See Reconciliation of Non-GAAP Financial Measures.
=====================================================================
"The second quarter results reflect the difficult economic environment, particularly the residential real estate development challenges," said Ralph W. Babb Jr., chairman and chief executive officer. "We are managing through this environment by quickly identifying problem loans, building our loan loss reserve credit-by-credit, and strengthening our already solid capital position.
"While there are some signs the economy may be bottoming, businesses and individuals are still feeling the effects of this prolonged recession. They remain cautious in an environment in which unemployment rates have continued to rise.
"Like the industry as a whole, we continue to see weak loan demand across our geographic markets. This mirrors the sharp slowdown in commercial and industrial loan growth that was evident in all 10 post-World War II recessions.
"We were pleased to see continued strong growth in average core deposits in the second quarter and, as expected, expansion of the net interest margin. We remain focused on our customers and vigilant in controlling our expenses.
"Our capital ratios increased from already strong levels, as evidenced by a tangible common equity ratio of 7.55 percent."
Second Quarter 2009 Compared to First Quarter 2009
- Average earning assets decreased $2.2 billion, reflecting a $1.9 billion decrease in average loans and a $340 million decrease in investment securities, which resulted from the sale of mortgage-backed government agency securities and the redemption of auction-rate securities.
- Average loans declined in all markets and nearly all business lines. The declines reflected reduced demand from customers in a contracting economic environment.
- Average core deposits, excluding the Financial Services Division, increased $1.1 billion in the second quarter 2009, reflecting a $1.0 billion increase in noninterest-bearing deposits.
- The net interest margin of 2.73 percent increased 20 basis points, from 2.53 percent in the first quarter 2009, primarily reflecting increasing loan spreads and maturities of higher-cost time deposits.
- Net credit-related charge-offs were $248 million, or 2.08 percent of average total loans, for the second quarter 2009, compared to $157 million, or 1.26 percent of average total loans, for the first quarter 2009, with the increases concentrated primarily in Leasing and Middle Market Banking in the Midwest and residential real estate development in Florida and Other markets. Net credit-related charge-offs in the Texas and Western markets were stable. The provision for loan losses was $312 million for the second quarter 2009, compared to $203 million for the first quarter 2009, and the period-end allowance to total loans ratio increased to 1.89 percent from 1.68 percent at March 31, 2009.
- Noninterest income increased $75 million, primarily the result of a $100 million increase in net securities gains (substantially from sales of mortgage-backed government agency securities) and a $13 million increase in deferred compensation asset returns (offset by an increase in deferred compensation plan costs in noninterest expenses), partially offset by a decline resulting from a $16 million second quarter 2009 loss on the termination of leveraged leases compared to a $24 million first quarter 2009 gain on the termination of leveraged leases.
- Noninterest expenses increased $32 million from the first quarter, primarily due to a $30 million increase in FDIC insurance expense, reflecting an industry-wide FDIC special assessment charge in the second quarter 2009, and a $13 million increase in deferred compensation plan costs, partially offset by decreases in discretionary expenses and workforce. Excluding the FDIC special assessment charge, annualized noninterest expenses remain nearly 10 percent below noninterest expenses for the full-year 2008.
- The provision for income taxes decreased $58 million from the first quarter, primarily due to a change in the method of determining interim period (quarterly) federal taxes. The second quarter 2009 provision for income taxes also was reduced by approximately $8 million in net adjustments including settlements related to federal and state tax audits.
- The estimated Tier 1 common ratio was 7.65 percent and the estimated Tier 1 capital ratio was 11.57 percent at June 30, 2009, increases of 33 basis points and 51 basis points, respectively, from March 31, 2009.
Net Interest Income and Net Interest Margin
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2nd Qtr 1st Qtr 2nd Qtr
(dollar amounts in millions) '09 '09 '08
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Net interest income $402 $384 $442
Net interest margin 2.73% 2.53% 2.91%
Selected average balances:
Total earning assets $59,522 $61,752 $61,088
Total investment
securities 9,786 10,126 8,296
Total loans 47,648 49,556 52,367
Total loans, excluding
FSD loans (primarily
low-rate) 47,432 49,344 51,898
Total core deposits (a),
excluding FSD 33,059 31,946 32,057
Total noninterest-bearing
deposits 12,546 11,364 10,648
Total noninterest-bearing
deposits, excluding FSD 11,132 10,095 8,825
(a) Core deposits exclude other time deposits and foreign office time
deposits.
=====================================================================
- The $18 million increase in net interest income in the second quarter 2009, when compared to first quarter 2009, resulted primarily from an increase in the net interest margin and the impact of one more day ($4 million), partially offset by a decline in earning assets (primarily loans).
- Second quarter 2009 average core deposits, excluding the Financial Services Division, increased $1.1 billion compared to first quarter 2009, reflecting a $1.0 billion increase in noninterest-bearing deposits. The increase in noninterest-bearing deposits occurred across all business segments and from both commercial and consumer customers.
- The net interest margin of 2.73 percent increased 20 basis points, compared to first quarter 2009, primarily reflecting increasing loan spreads and maturities of higher-cost time deposits. The net interest margin was reduced by approximately eight basis points in each of the first two quarters of 2009 from excess liquidity, which was represented by $1.8 billion of average balances deposited with the Federal Reserve Bank. Excess liquidity resulted from strong deposit growth and security sales at a time when loan demand remained weak.
- Total average Financial Services Division noninterest-bearing deposits increased $145 million from the first quarter 2009. This division serves title and escrow companies that facilitate residential mortgage transactions and benefits from customer deposits related to mortgage escrow balances. Noninterest-bearing deposits increased primarily due to increased mortgage activity.
Noninterest Income
Noninterest income was $298 million for the second quarter 2009, compared to $223 million for the first quarter 2009 and $242 million for the second quarter 2008. Noninterest income in the second quarter 2009 included $113 million of net securities gains, primarily from gains from sales of mortgage-backed government agency securities ($109 million) and from redemptions of auction-rate securities ($3 million), compared to net securities gains of $13 million in the first quarter 2009. Securities were sold based on Comerica's expectation that mortgage rates will rise over time (i.e., securities prices will decline) and, with interest rates near zero, there is no longer a need to hold a large portfolio of fixed rate securities to mitigate the impact of potential future rate declines on net interest income. Noninterest income in the second quarter 2009 also reflected a $6 million gain on the sale of Comerica's proprietary defined contribution plan recordkeeping business. Deferred compensation asset returns were $8 million in the second quarter 2009, an increase of $13 million when compared to the first quarter 2009 (offset by an increase in deferred compensation plan costs in noninterest expenses). The second quarter 2009 included a $16 million loss on the termination of leveraged leases compared to a $24 million first quarter 2009 gain on the termination of leveraged leases (both the loss and the gain are included in "other noninterest income"). Selected categories of noninterest income are highlighted in the following table.
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2nd Qtr 1st Qtr 2nd Qtr
(in millions) '09 '09 '08
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Net securities gains $113 $13 $14
Other noninterest income
Gain (loss) from termination of leveraged
leases (16) 24 -
Net loss from principal investing and
warrants (4) (2) (3)
Deferred compensation asset returns (a) 8 (5) 4
Net gain on sale of business 6 - -
(a) 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 $429 million for the second quarter 2009, compared to $397 million for the first quarter 2009 and $423 million for the second quarter 2008. The $32 million increase in noninterest expenses in the second quarter 2009, compared to the first quarter 2009, reflected a $30 million increase in FDIC insurance expense, resulting from an industry-wide FDIC special assessment charge in the second quarter 2009, and a $13 million increase in deferred compensation plan costs. Regular salaries decreased $5 million, impacted by reductions in full-time equivalent staff of approximately 200 and 490 in the second quarter 2009 and first quarter 2009, respectively. Certain categories of noninterest expenses are highlighted in the table below.
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2nd Qtr 1st Qtr 2nd Qtr
'09 '09 '08
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Salaries
Regular salaries $142 $147 $151
Severance (1) 5 1
Incentives (including commissions) 15 13 35
Deferred compensation plan costs 8 (5) 4
Share-based compensation 7 11 11
---- ---- ----
Total salaries 171 171 202
Employee benefits
Pension expense 14 16 5
Other benefits 39 38 43
Severance-related benefits - 1 -
---- ---- ----
Total employee benefits 53 55 48
FDIC insurance expense 45 15 2
Customer services 1 - 3
Provision for credit losses on
lending-related commitments (4) (1) 7
Other noninterest expenses
Other real estate expense 10 7 1
=========================================================================
Tax-related items
The provision for income taxes in the second quarter 2009 decreased $58 million, when compared to the first quarter 2009, primarily due to a change in the method used to determine interim period (quarterly) federal taxes. Beginning in the second quarter 2009, Comerica calculated income taxes discretely based on actual year-to-date 2009 pre-tax results. In the first quarter 2009 and prior periods, Comerica calculated taxes by applying an estimated annual effective tax rate to year-to-date pre-tax results. The change in method resulted in an approximately $20 million decrease in the income tax provision in the second quarter 2009. If the same methodology had been applied in the first quarter, the income tax provision recorded in the first quarter 2009 would have been approximately $20 million lower. The decrease in the provision for income taxes in the second quarter 2009 also reflected approximately $8 million of net adjustments including settlements related to federal and state tax audits.
Credit Quality
"The key credit issue for us remains in our Commercial Real Estate line of business, predominantly residential real estate development," said Babb. "We have seen signs of stabilization in the residential real estate portfolio in California. Texas has held up relatively well, and we have been working through issues related to falling home prices in Michigan for several years. Florida had performed well for us, but the prolonged recession has recently taken a toll on our residential real estate development portfolio in that state, as well as in other markets.
"We are managing these problem loans effectively. We are conducting in-depth reviews, obtaining current independent appraisals, taking the appropriate charge-offs and providing incremental reserves to reflect the challenges of this difficult economic environment.
"With regard to the automotive industry, we have anticipated and planned for the restructuring now underway, and no longer have any direct exposure to Chrysler or General Motors. Our top-tier, mega-franchise auto dealer strategy continues to work well for us. We have maintained excellent credit quality within our auto dealer portfolio, with no nonaccruals or charge-offs in the second quarter. We have no material exposure to dealers which are closing.
"Within our automotive supplier portfolio, which we have continued to reduce, many of our customers who supply General Motors or Chrysler have been named essential suppliers by those automakers, and are expected to continue to operate. Excluding a $21 million charge-off related to a General Motors leveraged lease, net auto-related charge-offs in the second quarter remained at a low level."
- The allowance to total loans ratio increased to 1.89 percent at June 30, 2009, from 1.68 percent at March 31, 2009 and 1.28 percent at June 30, 2008.
- The provision for loan losses increased in the Midwest, Texas, Florida and Other markets. The provision in the Western market, which was relatively unchanged, benefited from a decline in Commercial Real Estate.
- Net credit-related charge-offs in the Commercial Real Estate business line in the second quarter 2009 were $108 million, of which $34 million were from residential real estate developers in the Western market. Comparable numbers for the first quarter 2009 were $74 million in total, of which $47 million were from residential real estate developers in the Western market. Commercial Real Estate net credit-related charge-offs were stable in the Midwest and Texas markets, and increased in Florida and Other markets.
- Net credit-related charge-offs excluding the Commercial Real Estate business line were $140 million in the second quarter 2009, or 1.35 percent of average non-Commercial Real Estate loans, compared to $83 million, or 76 basis points, in the first quarter 2009. The $57 million increase in non-Commercial Real Estate net credit-related charge-offs, when compared to the first quarter 2009, was primarily due to increases in Specialty Businesses ($21 million), reflecting a $21 million charge-off related to a General Motors leveraged lease, Middle Market ($21 million), and Global Corporate ($13 million). Small Business and Private Banking were stable.
- Nonperforming assets increased to 2.64 percent of total loans and foreclosed property at June 30, 2009. During the second quarter 2009, $419 million of loan relationships greater than $2 million were transferred to nonaccrual status, an increase of $178 million from the first quarter 2009. Of the transfers of loan relationships greater than $2 million to nonaccrual in the second quarter 2009, $204 million were in the Commercial Real Estate business line, $79 million were in Middle Market and $78 million were in Global Corporate.
- Nonaccrual loans were charged down 39 percent as of June 30, 2009, compared to 36 percent as of March 31, 2009 and 28 percent one year ago.
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2nd Qtr 1st Qtr 2nd Qtr
(dollar amounts in millions) '09 '09 '08
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Net loan charge-offs $248 $157 $112
Net lending-related commitment charge-offs - - 1
----- ----- -----
Total net credit-related charge-offs 248 157 113
Net loan charge-offs/Average total loans 2.08% 1.26% 0.86%
Net credit-related charge-offs/Average
total loans 2.08 1.26 0.86
Provision for loan losses $312 $203 $170
Provision for credit losses on
lending-related commitments (4) (1) 7
----- ----- -----
Total provision for credit losses 308 202 177
Nonperforming loans 1,130 982 731
Nonperforming assets (NPAs) 1,230 1,073 748
NPAs/Total loans and foreclosed property 2.64% 2.20% 1.44%
Loans past due 90 days or more and still
accruing 210 207 112
Allowance for loan losses $880 $816 $663
Allowance for credit losses on
lending-related commitments (a) 33 37 31
----- ----- -----
Total allowance for credit losses 913 853 694
Allowance for loan losses/Total loans 1.89% 1.68% 1.28%
Allowance for loan losses/Nonperforming
loans 78 83 91
(a) Included in "Accrued expenses and other liabilities" on the
consolidated balance sheets.
======================================================================
Balance Sheet and Capital Management
Total assets and common shareholders' equity were $63.6 billion and $5.0 billion, respectively, at June 30, 2009, compared to $67.4 billion and $5.0 billion, respectively, at March 31, 2009. There were approximately 151 million common shares outstanding at June 30, 2009.
Comerica's tangible common equity ratio was 7.55 percent at June 30, 2009. The second quarter 2009 estimated Tier 1 common, Tier 1 and total risk-based capital ratios were 7.65 percent, 11.57 percent and 15.96 percent, respectively.
2009 Outlook
- Management continues to focus on developing new and expanding existing customer relationships. Management expects subdued loan demand in light of a domestic economy that is expected to continue contracting in the near term.
- Management expects the net interest margin to benefit from improved loan pricing and maturities of higher-cost wholesale funding. Excess liquidity is expected to offset those benefits for the near-term, with the third quarter 2009 net interest margin expected to be relatively unchanged from the second quarter. Excess liquidity is expected to diminish during the fourth quarter from maturities of wholesale funding, resulting in net interest margin expansion. The target federal funds and short-term LIBOR rates are expected to remain flat for the remainder of 2009.
- Based on no significant further deterioration of the economic environment, management expects net credit-related charge-offs in the third quarter 2009 to be similar to second quarter 2009 and to improve modestly in the fourth quarter 2009. The provision for credit losses is expected to continue to exceed net charge-offs.
- Management expects additional securities gains from the sale of mortgage-backed government agency securities.
- Management expects a mid- to high-single digit decrease in full-year 2009 noninterest expenses, compared to full-year 2008, 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 June 30, 2009 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses second quarter 2009 results compared to first quarter 2009.
The following table presents net income (loss) by business segment.
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2nd Qtr 1st Qtr 2nd Qtr
(dollar amounts in millions) '09 '09 '08
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Business Bank $5 N/M% $56 91% $57 73%
Retail Bank (18) N/M (7) (12) 7 9
Wealth & Institutional
Management 15 N/M 13 21 14 18
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2 100% 62 100% 78 100%
Finance 8 (50) (5)
Other (a) 8 (3) (17)
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Total $18 $9 $56
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N/M - Not Meaningful.
(a) Includes discontinued operations and items not directly associated
with the three major business segments or the Finance Division.
======================================================================
Business Bank
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2nd Qtr 1st Qtr 2nd Qtr
(dollar amounts in millions) '09 '09 '08
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Net interest income (FTE) $328 $312 $296
Provision for loan losses 252 177 123
Noninterest income 50 93 92
Noninterest expenses 157 157 185
Net income 5 56 57
Net credit-related charge-offs 211 123 96
Selected average balances:
Assets 37,521 39,505 42,335
Loans 36,760 38,527 41,510
FSD loans 216 212 469
Deposits 14,827 14,040 15,384
FSD deposits 1,866 1,886 2,817
Net interest margin 3.58% 3.28% 2.86%
====================================================================
- Average loans decreased $1.8 billion, resulting from declines across all markets and nearly all businesses.
- Average deposits, excluding the Financial Services Division, increased $807 million, increasing in most businesses, but primarily in Global Corporate.
- The net interest margin of 3.58 percent increased 30 basis points, primarily due to an increase in loan and deposit spreads and an increase in noninterest-bearing deposits.
- The provision for loan losses increased $75 million, reflecting increases in Leasing, Commercial Real Estate, Global Corporate and Middle Market.
- Noninterest income decreased $43 million. The second quarter 2009 included a $16 million loss on the termination of leveraged leases compared to a $24 million first quarter 2009 gain on the termination of leveraged leases.
- Noninterest expenses were unchanged as increases in FDIC insurance expense, due to the special assessment charge, and other real estate expenses were offset by declines in salaries and benefit expenses and the provision for credit losses on lending-related commitments.
Retail Bank
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2nd Qtr 1st Qtr 2nd Qtr
(dollar amounts in millions) '09 '09 '08
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Net interest income (FTE) $128 $126 $146
Provision for loan losses 42 23 29
Noninterest income 46 46 54
Noninterest expenses 167 161 161
Net income (loss) (18) (7) 7
Net credit-related charge-offs 29 26 14
Selected average balances:
Assets 6,693 6,875 7,100
Loans 6,115 6,284 6,348
Deposits 17,666 17,391 17,043
Net interest margin 2.90% 2.93% 3.45%
====================================================================
- Average loans decreased $169 million, across all businesses.
- Average deposits increased $275 million. With the exception of certificates of deposit, all deposit categories increased in the second quarter 2009 compared to the first quarter 2009.
- The provision for loan losses increased $19 million, primarily due to increased provisions in Personal Banking for home equity and residential mortgage loans, and Small Business.
- Noninterest expenses increased $6 million, primarily due to the FDIC special assessment charge, partially offset by a decrease in salaries and benefit expenses.
Wealth and Institutional Management
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2nd Qtr 1st Qtr 2nd Qtr
(dollar amounts in millions) '09 '09 '08
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Net interest income (FTE) $40 $36 $37
Provision for loan losses 13 10 5
Noninterest income 73 70 74
Noninterest expenses 77 75 83
Net income 15 13 14
Net credit-related charge-offs 8 8 3
Selected average balances:
Assets 4,965 4,870 4,646
Loans 4,776 4,750 4,502
Deposits 2,599 2,429 2,493
Net interest margin 3.29% 3.11% 3.29%
========================================================================
- Average loans increased $26 million.
- Average deposits increased $170 million, primarily due to an increase in NOW and noninterest-bearing accounts.
- The net interest margin of 3.29 percent increased 18 basis points, primarily due to an increase in loan and deposit spreads and the benefit provided by an increase in NOW and noninterest-bearing accounts.
- The provision for loan losses increased $3 million.
- Noninterest income increased $3 million, due to a $6 million second quarter 2009 gain on the sale of Comerica's proprietary defined contribution plan recordkeeping business.
- Noninterest expenses increased $2 million, primarily due to the FDIC special assessment charge.
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 June 30, 2009 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses second quarter 2009 results compared to first quarter 2009.
The following table presents net income (loss) by market segment.
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2nd Qtr 1st Qtr 2nd Qtr
(dollar amounts in millions) '09 '09 '08
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Midwest $- N/M% $29 49% $52 68%
Western (7) N/M (7) (11) (20) (26)
Texas 5 N/M 15 23 17 21
Florida (8) N/M (6) (10) (1) (2)
Other Markets 6 N/M 22 34 23 29
International 6 N/M 9 15 7 10
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2 100% 62 100% 78 100%
Finance & Other Businesses (a) 16 (53) (22)
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Total $18 $9 $56
======================================================================
N/M - Not Meaningful.
(a) Includes discontinued operations and items not directly associated
with the geographic markets.
======================================================================
Midwest
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2nd Qtr 1st Qtr 2nd Qtr
(dollar amounts in millions) '09 '09 '08
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Net interest income (FTE) $200 $194 $172
Provision for loan losses 119 83 24
Noninterest income 92 127 136
Noninterest expenses 186 194 205
Net income - 29 52
Net credit-related charge-offs 99 54 42
Selected average balances:
Assets 18,122 19,139 19,846
Loans 17,427 18,267 19,224
Deposits 17,166 16,699 16,021
Net interest margin 4.56% 4.30% 3.59%
====================================================================
- Average loans decreased $840 million, resulting from declines in Middle Market, National Dealer Services, Leasing and Commercial Real Estate.
- Average deposits increased $467 million, due to increases in Global Corporate and Personal Banking.
- The net interest margin of 4.56 percent increased 26 basis points, primarily due to an increase in loan and deposit spreads and the benefit provided by an increase in noninterest-bearing deposits.
- The provision for loan losses increased $36 million, primarily due to increases in Leasing, Personal Banking, Small Business and Middle Market.
- Noninterest income decreased $35 million. The second quarter 2009 included a $16 million loss on the termination of leveraged leases compared to a $24 million first quarter 2009 gain on the termination of leveraged leases.
- Noninterest expenses decreased $8 million as an increase in FDIC insurance expense, due to the special assessment charge, was more than offset by a decrease in the provision for credit losses on lending-related commitments and nominal decreases in numerous discretionary expense categories.
Western Market
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2nd Qtr 1st Qtr 2nd Qtr
(dollar amounts in millions) '09 '09 '08
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Net interest income (FTE) $154 $146 $171
Provision for loan losses 90 88 113
Noninterest income 32 36 34
Noninterest expenses 113 104 115
Net income (loss) (7) (7) (20)
Net credit-related charge-offs 70 76 59
Selected average balances:
Assets 14,901 15,443 17,269
Loans 14,684 15,253 16,945
FSD loans 216 212 469
Deposits 10,717 10,640 12,346
FSD deposits 1,678 1,746 2,611
Net interest margin 4.20% 3.91% 4.05%
====================================================================
- Average loans decreased $569 million, due to declines in National Dealer Services, Technology and Life Sciences and Commercial Real Estate.
- Average deposits, excluding the Financial Services Division, increased $145 million, primarily due to an increase in Private Banking.
- The net interest margin of 4.20 percent increased 29 basis points, primarily due to an increase in loan and deposit spreads and the benefit provided by an increase in noninterest-bearing deposits.
- The provision for loan losses increased $2 million.
- Noninterest income decreased $4 million, reflecting nominal decreases in numerous categories.
- Noninterest expenses increased $9 million, primarily due to the FDIC special assessment charge and increases in other real estate and customer services expenses, partially offset by a decrease in salaries and benefit expenses.
Texas Market
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2nd Qtr 1st Qtr 2nd Qtr
(dollar amounts in millions) '09 '09 '08
-----------------------------------------------------------------------
Net interest income (FTE) $73 $70 $74
Provision for loan losses 28 9 6
Noninterest income 21 21 22
Noninterest expenses 60 58 63
Net income 5 15 17
Total net credit-related charge-offs 11 8 3
Selected average balances:
Assets 7,798 8,069 8,063
Loans 7,547 7,847 7,795
Deposits 4,496 4,198 4,061
Net interest margin 3.88% 3.62% 3.79%
=======================================================================
- Average loans decreased $300 million, primarily due to decreases in Middle Market and National Dealer Services.
- Average deposits increased $298 million, primarily due to increases in Global Corporate, Middle Market and Personal Banking.
- The net interest margin of 3.88 percent increased 26 basis points, primarily due to an increase in loan spreads and the benefit provided by an increase in noninterest-bearing deposits.
- The provision for loan losses increased $19 million, due to increases in Middle Market, Energy Lending and Small Business.
- Noninterest expenses increased $2 million as an increase in FDIC insurance expense, due to the special assessment charge, was partially offset by a decline in salaries and benefit expenses.
Florida Market
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2nd Qtr 1st Qtr 2nd Qtr
(dollar amounts in millions) '09 '09 '08
---------------------------------------------------------------------
Net interest income (FTE) $11 $11 $12
Provision for loan losses 20 15 7
Noninterest income 3 3 4
Noninterest expenses 9 8 11
Net income (loss) (8) (6) (1)
Net credit-related charge-offs 23 12 8
Selected average balances:
Assets 1,820 1,869 1,854
Loans 1,820 1,878 1,851
Deposits 331 253 306
Net interest margin 2.44% 2.31% 2.51%
=====================================================================
- Average loans decreased $58 million, due to a decrease in National Dealer Services.
- Average deposits increased $78 million, due to increases in the Financial Services Division and Private Banking.
- The net interest margin of 2.44 percent increased 13 basis points, primarily due to the benefit provided by an increase in noninterest-bearing deposits.
- The provision for loan losses increased $5 million, primarily due to an increase in Commercial Real Estate, partially offset by a decrease in Private Banking.
Conference Call and Webcast
Comerica will host a conference call to review second quarter 2009 financial results at 7 a.m. CT Tuesday, July 21, 2009. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 14969532). 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 July 31, 2009. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 14969532). 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.
This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Comerica's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconcilement to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Forward-looking Statements
Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "anticipates," "believes," "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 the American Recovery and Reinvestment Act of 2009, and actions taken by the U.S. Department of Treasury, the Board of Governors of the Federal Reserve System, the Texas Department of Banking 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 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 (unaudited)
Comerica Incorporated and Subsidiaries
-----------------------------------------------------------------------
Three Months Ended
-------------------------------
June 30, March 31, June 30,
(in millions, except per share data) 2009 2009 2008
-----------------------------------------------------------------------
PER COMMON SHARE AND COMMON STOCK DATA
Diluted net income (loss) $(0.10) $(0.16) $0.37
Cash dividends declared 0.05 0.05 0.66
Common shareholders' equity (at
period end) 32.70 33.32 33.78
Average diluted shares (in thousands) 151,490 151,353 150,819
-----------------------------------------------------------------------
KEY RATIOS
Return on average common
shareholders' equity (1.25)% (1.90)% 4.25%
Return on average assets 0.11 0.06 0.33
Tier 1 common capital ratio (a) (b) 7.65 7.32 6.79
Tier 1 risk-based capital ratio (b) 11.57 11.06 7.45
Total risk-based capital ratio (b) 15.96 15.36 11.21
Leverage ratio (b) 12.12 11.65 8.53
Tangible common equity ratio (a) 7.55 7.27 7.47
-----------------------------------------------------------------------
AVERAGE BALANCES
Commercial loans $25,657 $27,180 $29,280
Real estate construction loans 4,325 4,510 4,843
Commercial mortgage loans 10,476 10,431 10,374
Residential mortgage loans 1,795 1,846 1,906
Consumer loans 2,572 2,574 2,549
Lease financing 1,227 1,300 1,352
International loans 1,596 1,715 2,063
------- ------- -------
Total loans 47,648 49,556 52,367
Earning assets 59,522 61,752 61,088
Total assets 64,256 66,737 65,963
Noninterest-bearing deposits 12,546 11,364 10,648
Interest-bearing core deposits 22,379 22,468 24,226
Total core deposits 34,925 33,832 34,874
Common shareholders' equity 5,016 5,024 5,193
Total shareholders' equity 7,153 7,155 5,193
-----------------------------------------------------------------------
NET INTEREST INCOME
Net interest income (fully taxable
equivalent basis) (c) $404 $386 $443
Fully taxable equivalent adjustment 2 2 1
Net interest margin (c) 2.73% 2.53% 2.91%
-----------------------------------------------------------------------
CREDIT QUALITY
Nonaccrual loans $1,130 $982 $731
Reduced-rate loans - - -
------- ------- -------
Total nonperforming loans 1,130 982 731
Foreclosed property 100 91 17
------- ------- -------
Total nonperforming assets 1,230 1,073 748
Loans past due 90 days or more and
still accruing 210 207 112
Gross loan charge-offs 257 161 118
Loan recoveries 9 4 6
------- ------- -------
Net loan charge-offs 248 157 112
Lending-related commitment charge-offs - - 1
------- ------- -------
Total net credit-related charge-offs 248 157 113
Allowance for loan losses 880 816 663
Allowance for credit losses on lending-
related commitments 33 37 31
------- ------- -------
Total allowance for credit losses 913 853 694
Allowance for loan losses as a
percentage of total loans 1.89% 1.68% 1.28%
Net loan charge-offs as a percentage of
average total loans 2.08 1.26 0.86
Net credit-related charge-offs as a
percentage of average total loans 2.08 1.26 0.86
Nonperforming assets as a percentage of
total loans and foreclosed property 2.64 2.20 1.44
Allowance for loan losses as a
percentage of total nonperforming
loans 78 83 91
-----------------------------------------------------------------------
(a) See Reconciliation of Non-GAAP Financial Measures.
(b) June 30, 2009 ratios are estimated.
(c) Second quarter 2008 net interest income declined $30 million due to a
tax-related non-cash lease income charge. Excluding this charge, the
net interest margin would have been 3.10% and 3.17% for the three- and
six-month periods ended June 30, 2008.
--------------------------------------------------------------------------
Six Months Ended
------------------
June 30,
(in millions, except per share data) 2009 2008
--------------------------------------------------------------------------
PER COMMON SHARE AND COMMON STOCK DATA
Diluted net income (loss) $(0.26) $1.09
Cash dividends declared 0.10 1.32
Common shareholders' equity (at period end)
Average diluted shares (in thousands) 151,422 150,774
--------------------------------------------------------------------------
KEY RATIOS
Return on average common shareholders' equity (1.58)% 6.34%
Return on average assets 0.08 0.51
Tier 1 common capital ratio (a) (b)
Tier 1 risk-based capital ratio (b)
Total risk-based capital ratio (b)
Leverage ratio (b)
Tangible common equity ratio (a)
--------------------------------------------------------------------------
AVERAGE BALANCES
Commercial loans $26,413 $29,230
Real estate construction loans 4,417 4,827
Commercial mortgage loans 10,454 10,258
Residential mortgage loans 1,821 1,911
Consumer loans 2,573 2,499
Lease financing 1,263 1,349
International loans 1,655 2,036
------- -------
Total loans 48,596 52,110
Earning assets 60,631 60,303
Total assets 65,490 64,945
Noninterest-bearing deposits 11,958 10,635
Interest-bearing core deposits 22,423 24,606
Total core deposits 34,381 35,241
Common shareholders' equity 5,020 5,193
Total shareholders' equity 7,154 5,193
--------------------------------------------------------------------------
NET INTEREST INCOME
Net interest income (fully taxable
equivalent basis) (c) $790 $920
Fully taxable equivalent adjustment 4 2
Net interest margin (c) 2.63% 3.07%
--------------------------------------------------------------------------
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 $418 $234
Loan recoveries 13 12
------- -------
Net loan charge-offs 405 222
Lending-related commitment charge-offs - 1
------- -------
Total net credit-related charge-offs 405 223
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 1.67% 0.85%
Net credit-related charge-offs as a percentage of
average total loans 1.67 0.86
Nonperforming assets as a percentage of total loans and
foreclosed property
Allowance for loan losses as a percentage of total
nonperforming loans
--------------------------------------------------------------------------
(a) See Reconciliation of Non-GAAP Financial Measures.
(b) June 30, 2009 ratios are estimated.
(c) Second quarter 2008 net interest income declined $30 million due to a
tax-related non-cash lease income charge. Excluding this charge, the
net interest margin would have been 3.10% and 3.17% for the three- and
six-month periods ended June 30, 2008.
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
----------------------------------------------------------------------
(in millions, June 30, March 31, December 31, June 30,
except share data) 2009 2009 2008 2008
----------------------------------------------------------------------
(unaudited) (unaudited) (unaudited)
ASSETS
Cash and due from
banks $948 $952 $913 $1,698
Federal funds sold
and securities
purchased under
agreements to
resell 650 - 202 77
Interest-bearing
deposits with banks 3,542 2,558 2,308 30
Other short-term
investments 129 248 158 219
Investment securities
available-for-sale 7,757 10,844 9,201 8,243
Commercial loans 24,922 26,431 27,999 28,763
Real estate
construction loans 4,152 4,379 4,477 4,684
Commercial mortgage
loans 10,400 10,514 10,489 10,504
Residential mortgage
loans 1,759 1,836 1,852 1,879
Consumer loans 2,562 2,577 2,592 2,594
Lease financing 1,234 1,232 1,343 1,351
International
loans 1,523 1,655 1,753 1,976
----------------------------------------------------------------------
Total loans 46,552 48,624 50,505 51,751
Less allowance for
loan losses (880) (816) (770) (663)
----------------------------------------------------------------------
Net loans 45,672 47,808 49,735 51,088
Premises and equipment 667 676 683 674
Customers' liability
on acceptances
outstanding 7 10 14 15
Accrued income and
other assets 4,258 4,274 4,334 3,959
----------------------------------------------------------------------
Total assets $63,630 $67,370 $67,548 $66,003
======================================================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Noninterest-bearing
deposits $13,558 $12,645 $11,701 $11,860
Money market and NOW
deposits 12,352 12,240 12,437 14,506
Savings deposits 1,348 1,328 1,247 1,391
Customer certificates
of deposit 8,524 8,815 8,807 7,746
Other time deposits 4,593 6,372 7,293 5,940
Foreign office time
deposits 616 494 470 879
----------------------------------------------------------------------
Total interest-
bearing deposits 27,433 29,249 30,254 30,462
----------------------------------------------------------------------
Total deposits 40,991 41,894 41,955 42,322
Short-term
borrowings 490 2,207 1,749 4,075
Acceptances
outstanding 7 10 14 15
Accrued expenses and
other liabilities 1,478 1,464 1,625 1,651
Medium- and long-term
debt 13,571 14,612 15,053 12,858
----------------------------------------------------------------------
Total liabilities 56,537 60,187 60,396 60,921
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 6/30/09,
3/31/09 and
12/31/08 2,140 2,134 2,129 -
Common stock - $5 par
value:
Authorized -
325,000,000 shares
Issued - 178,735,252
shares at 6/30/09,
3/31/09, 12/31/08
and 6/30/08 894 894 894 894
Capital surplus 731 727 722 576
Accumulated other
comprehensive loss (342) (238) (309) (207)
Retained earnings 5,257 5,252 5,345 5,451
Less cost of common
stock in treasury -
27,620,471 shares at
6/30/09, 27,580,899
shares at 3/31/09,
28,244,967 shares at
12/31/2008 and
28,281,490 shares at
6/30/08 (1,587) (1,586) (1,629) (1,632)
----------------------------------------------------------------------
Total shareholders'
equity 7,093 7,183 7,152 5,082
----------------------------------------------------------------------
Total
liabilities and
shareholders'
equity $63,630 $67,370 $67,548 $66,003
======================================================================
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Comerica Incorporated and Subsidiaries
------------------------------------------------------------------------
Three Months Six Months
Ended Ended
June 30, June 30,
------------ ----------
(in millions, except per share data) 2009 2008 2009 2008
------------------------------------------------------------------------
INTEREST INCOME
Interest and fees on loans $447 $633 $899 $1,403
Interest on investment securities 103 101 212 189
Interest on short-term investments 2 3 4 8
------------------------------------------------------------------------
Total interest income 552 737 1,115 1,600
INTEREST EXPENSE
Interest on deposits 106 182 231 435
Interest on short-term borrowings - 19 2 48
Interest on medium- and long-term debt 44 94 96 199
------------------------------------------------------------------------
Total interest expense 150 295 329 682
------------------------------------------------------------------------
Net interest income 402 442 786 918
Provision for loan losses 312 170 515 329
------------------------------------------------------------------------
Net interest income after provision
for loan losses 90 272 271 589
NONINTEREST INCOME
Service charges on deposit accounts 55 59 113 117
Fiduciary income 41 51 83 103
Commercial lending fees 19 20 37 36
Letter of credit fees 16 18 32 33
Card fees 12 16 24 30
Brokerage fees 8 10 17 20
Foreign exchange income 11 12 20 22
Bank-owned life insurance 10 8 18 18
Net securities gains 113 14 126 36
Other noninterest income 13 34 51 64
------------------------------------------------------------------------
Total noninterest income 298 242 521 479
NONINTEREST EXPENSES
Salaries 171 202 342 402
Employee benefits 53 48 108 95
------------------------------------------------------------------------
Total salaries and employee benefits 224 250 450 497
Net occupancy expense 38 36 79 74
Equipment expense 15 16 31 31
Outside processing fee expense 25 28 50 51
Software expense 20 20 40 39
FDIC insurance expense 45 2 60 4
Customer services 1 3 1 9
Litigation and operational losses
(recoveries) 3 3 5 (5)
Provision for credit losses on lending-
related commitments (4) 7 (5) 11
Other noninterest expenses 62 58 115 115
------------------------------------------------------------------------
Total noninterest expenses 429 423 826 826
------------------------------------------------------------------------
Income (loss) from continuing operations
before income taxes (41) 91 (34) 242
Provision (benefit) for income taxes (59) 35 (60) 76
------------------------------------------------------------------------
Income from continuing operations 18 56 26 166
Income (loss) from discontinued
operations, net of tax - - 1 (1)
------------------------------------------------------------------------
NET INCOME 18 56 27 165
Preferred stock dividends 34 - 67 -
------------------------------------------------------------------------
Net income (loss) applicable to common
stock $(16) $56 $(40) $165
========================================================================
Basic earnings per common share:
Income (loss) from continuing
operations $(0.11) $0.37 $(0.27) $1.10
Net income (loss) (0.10) 0.37 (0.26) 1.09
Diluted earnings per common share:
Income (loss) from continuing
operations (0.11) 0.37 (0.27) 1.10
Net income (loss) (0.10) 0.37 (0.26) 1.09
Cash dividends declared on common stock 8 100 15 199
Cash dividends declared per common share 0.05 0.66 0.10 1.32
========================================================================
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (unaudited)
Comerica Incorporated and Subsidiaries
-----------------------------------------------------------------------
Second First Fourth Third Second
(in millions, except per Quarter Quarter Quarter Quarter Quarter
share data) 2009 2009 2008 2008 2008
-----------------------------------------------------------------------
INTEREST INCOME
Interest and fees on loans $447 $452 $612 $634 $633
Interest on investment
securities 103 109 101 99 101
Interest on short-term
investments 2 2 3 2 3
-----------------------------------------------------------------------
Total interest income 552 563 716 735 737
INTEREST EXPENSE
Interest on deposits 106 125 158 141 182
Interest on short-term
borrowings - 2 9 30 19
Interest on medium- and
long-term debt 44 52 118 98 94
-----------------------------------------------------------------------
Total interest expense 150 179 285 269 295
-----------------------------------------------------------------------
Net interest income 402 384 431 466 442
Provision for loan losses 312 203 192 165 170
-----------------------------------------------------------------------
Net interest income
after provision
for loan losses 90 181 239 301 272
NONINTEREST INCOME
Service charges on deposit
accounts 55 58 55 57 59
Fiduciary income 41 42 47 49 51
Commercial lending fees 19 18 16 17 20
Letter of credit fees 16 16 17 19 18
Card fees 12 12 13 15 16
Brokerage fees 8 9 12 10 10
Foreign exchange income 11 9 7 11 12
Bank-owned life insurance 10 8 9 11 8
Net securities gains 113 13 4 27 14
Other noninterest income 13 38 (6) 24 34
-----------------------------------------------------------------------
Total noninterest income 298 223 174 240 242
NONINTEREST EXPENSES
Salaries 171 171 187 192 202
Employee benefits 53 55 53 46 48
-----------------------------------------------------------------------
Total salaries and
employee benefits 224 226 240 238 250
Net occupancy expense 38 41 42 40 36
Equipment expense 15 16 16 15 16
Outside processing fee
expense 25 25 27 26 28
Software expense 20 20 19 18 20
FDIC insurance expense 45 15 7 6 2
Customer services 1 - 2 2 3
Litigation and
operational losses 3 2 3 105 3
Provision for credit losses
on lending-related
commitments (4) (1) (2) 9 7
Other noninterest expenses 62 53 57 55 58
-----------------------------------------------------------------------
Total noninterest expenses 429 397 411 514 423
-----------------------------------------------------------------------
Income (loss) from
continuing
operations before income
taxes (41) 7 2 27 91
Provision (benefit) for
income taxes (59) (1) (17) - 35
-----------------------------------------------------------------------
Income from continuing
operations 18 8 19 27 56
Income (loss) from
discontinued
operations, net of tax - 1 1 1 -
-----------------------------------------------------------------------
NET INCOME 18 9 20 28 56
Preferred stock dividends 34 33 17 - -
-----------------------------------------------------------------------
Net income (loss)
applicable to
common stock $(16) $(24) $3 $28 $56
=======================================================================
Basic earnings per common share:
Income (loss) from
continuing operations $(0.11) $(0.16) $0.01 $0.18 $0.37
Net income (loss) (0.10) (0.16) 0.02 0.19 0.37
Diluted earnings per
common share:
Income (loss) from
continuing operations (0.11) (0.16) 0.01 0.18 0.37
Net income (loss) (0.10) (0.16) 0.02 0.19 0.37
Cash dividends declared on
common stock 8 7 50 99 100
Cash dividends declared per
common share 0.05 0.05 0.33 0.66 0.66
=======================================================================
--------------------------------------------------------------------
Second Quarter 2009 Compared To:
-------------------------------------------
(in millions, except First Quarter 2009 Second Quarter 2008
per share data) Amount Percent Amount Percent
--------------------------------------------------------------------
INTEREST INCOME
Interest and fees on
loans $(5) (1)% $(186) (29)%
Interest on investment
securities (6) (6) 2 2
Interest on short-term
investments - 20 (1) (36)
--------------------------------------------------------------------
Total interest income (11) (2) (185) (25)
INTEREST EXPENSE
Interest on deposits (19) (15) (76) (42)
Interest on short-term
borrowings (2) (70) (19) (97)
Interest on medium- and
long-term debt (8) (14) (50) (53)
--------------------------------------------------------------------
Total interest expense (29) (16) (145) (49)
--------------------------------------------------------------------
Net interest income 18 4 (40) (9)
Provision for loan losses 109 54 142 84
--------------------------------------------------------------------
Net interest income
after provision
for loan losses (91) (51) (182) (67)
NONINTEREST INCOME
Service charges on
deposit accounts (3) (3) (4) (4)
Fiduciary income (1) (2) (10) (18)
Commercial lending fees 1 3 (1) (8)
Letter of credit fees - 5 (2) (9)
Card fees - 7 (4) (23)
Brokerage fees (1) (6) (2) (19)
Foreign exchange income 2 13 (1) (13)
Bank-owned life insurance 2 11 2 10
Net securities gains 100 N/M 99 N/M
Other noninterest income (25) (65) (21) (61)
--------------------------------------------------------------------
Total noninterest
income 75 34 56 24
NONINTEREST EXPENSES
Salaries - (1) (31) (16)
Employee benefits (2) (3) 5 12
--------------------------------------------------------------------
Total salaries and
employee benefits (2) (1) (26) (10)
Net occupancy expense (3) (7) 2 4
Equipment expense (1) (3) (1) (2)
Outside processing fee
expense - 2 (3) (9)
Software expense - 3 - 4
FDIC insurance expense 30 N/M 43 N/M
Customer services 1 N/M (2) (40)
Litigation and operational
losses 1 32 - (32)
Provision for credit
losses on lending-related
commitments (3) N/M (11) N/M
Other noninterest expenses 9 14 4 6
--------------------------------------------------------------------
Total noninterest
expenses 32 8 6 2
--------------------------------------------------------------------
Income (loss) from
continuing operations
before income taxes (48) N/M (132) N/M
Provision (benefit) for
income taxes (58) N/M (94) N/M
--------------------------------------------------------------------
Income from continuing
operations 10 N/M (38) (68)
Income (loss) from
discontinued operations,
net of tax (1) (77) - N/M
--------------------------------------------------------------------
NET INCOME 9 87 (38) (68)
Preferred stock dividends 1 - 34 N/M
--------------------------------------------------------------------
Net income (loss)
applicable to common
stock $8 34% $(72) N/M%
====================================================================
Basic earnings per common
share:
Income (loss) from
continuing
operations $0.05 31% $(0.48) N/M%
Net income (loss) 0.06 38 (0.47) N/M
Diluted earnings per
common share:
Income (loss) from
continuing
operations 0.05 31 (0.48) N/M
Net income (loss) 0.06 38 (0.47) N/M
Cash dividends declared
on common stock 1 1 (92) (92)
Cash dividends declared
per common share - - (0.61) (92)
====================================================================
N/M - Not meaningful
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)
Comerica Incorporated and Subsidiaries
---------------------------------------------------------------
2009 2008
---------- -----------------
2nd 1st 4th 3rd 2nd
(in millions) Qtr Qtr Qtr Qtr Qtr
---------------------------------------------------------------
Balance at beginning of period $816 $770 $712 $663 $605
Loan charge-offs:
Commercial 88 61 66 48 36
Real estate construction:
Commercial Real Estate
business line 81 57 35 40 57
Other business lines - - - - -
---------------------------------------------------------------
Total real estate
construction 81 57 35 40 57
Commercial mortgage:
Commercial Real Estate
business line 23 16 21 17 14
Other business lines 23 18 8 11 7
---------------------------------------------------------------
Total commercial mortgage 46 34 29 28 21
Residential mortgage 2 2 5 1 1
Consumer 12 6 7 5 3
Lease financing 24 - 1 - -
International 4 1 1 - -
---------------------------------------------------------------
Total loan charge-offs 257 161 144 122 118
Recoveries on loans previously
charged-off:
Commercial 5 3 6 3 5
Real estate construction - - 1 1 -
Commercial mortgage 2 - 2 - 1
Residential mortgage - - - - -
Consumer - 1 1 1 -
Lease financing 1 - - 1 -
International 1 - 1 - -
---------------------------------------------------------------
Total recoveries 9 4 11 6 6
---------------------------------------------------------------
Net loan charge-offs 248 157 133 116 112
Provision for loan losses 312 203 192 165 170
Foreign currency translation
adjustment - - (1) - -
---------------------------------------------------------------
Balance at end of period $880 $816 $770 $712 $663
===============================================================
Allowance for loan losses
as a percentage of total loans 1.89% 1.68% 1.52% 1.38% 1.28%
Net loan charge-offs as a
percentage of average total
loans 2.08 1.26 1.04 0.90 0.86
Net credit-related charge-offs
as a percentage of average total
loans 2.08 1.26 1.04 0.90 0.86
---------------------------------------------------------------
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS
(unaudited)
Comerica Incorporated and Subsidiaries
--------------------------------------------------------------------------
2009 2008
------------ ------------------
2nd 1st 4th 3rd 2nd
(in millions) Qtr Qtr Qtr Qtr Qtr
--------------------------------------------------------------------------
Balance at beginning of period $37 $38 $40 $31 $25
Less: Charge-offs on lending-related
commitments (a) - - - - 1
Add: Provision for credit losses on
lending-related commitments (4) (1) (2) 9 7
--------------------------------------------------------------------------
Balance at end of period $33 $37 $38 $40 $31
--------------------------------------------------------------------------
Unfunded lending-related commitments
sold $- $- $- $- $2
--------------------------------------------------------------------------
(a) Charge-offs result from the sale of unfunded lending-related
commitments.
NONPERFORMING ASSETS (unaudited)
Comerica Incorporated and Subsidiaries
-------------------------------------------------------------------------
2009 2008
---------- ----------------
2nd 1st 4th 3rd 2nd
(in millions) Qtr Qtr Qtr Qtr Qtr
-------------------------------------------------------------------------
SUMMARY OF NONPERFORMING ASSETS AND
PAST DUE LOANS
Nonaccrual loans:
Commercial $327 $258 $205 $206 $155
Real estate construction:
Commercial Real Estate business
line 472 426 429 386 322
Other business lines 4 5 5 5 4
-------------------------------------------------------------------------
Total real estate construction 476 431 434 391 326
Commercial mortgage:
Commercial Real Estate business
line 134 131 132 137 143
Other business lines 175 138 130 114 95
-------------------------------------------------------------------------
Total commercial mortgage 309 269 262 251 238
Residential mortgage 7 8 7 8 4
Consumer 7 8 6 4 5
Lease financing - 2 1 - -
International 4 6 2 3 3
-------------------------------------------------------------------------
Total nonaccrual loans 1,130 982 917 863 731
Reduced-rate loans - - - - -
-------------------------------------------------------------------------
Total nonperforming loans 1,130 982 917 863 731
Foreclosed property 100 91 66 18 17
-------------------------------------------------------------------------
Total nonperforming assets $1,230 $1,073 $983 $881 $748
=========================================================================
Nonperforming loans as a percentage
of total loans 2.43% 2.02% 1.82% 1.67% 1.41%
Nonperforming assets as a percentage
of total loans and foreclosed property 2.64 2.20 1.94 1.71 1.44
Allowance for loan losses as a
percentage of total nonperforming
loans 78 83 84 82 91
Loans past due 90 days or more and
still accruing $210 $207 $125 $97 $112
ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans at beginning of
period $982 $917 $863 $731 $538
Loans transferred to nonaccrual (a) 419 241 258 280 304
Nonaccrual business loan gross
charge-offs (b) (242) (153) (132) (116) (113)
Loans transferred to accrual
status (a) - (4) (11) - -
Nonaccrual business loans sold (c) (10) (3) (14) (18) -
Payments/Other (d) (19) (16) (47) (14) 2
-------------------------------------------------------------------------
Nonaccrual loans at end
of period $1,130 $982 $917 $863 $731
=========================================================================
(a) Based on an analysis of nonaccrual loans with book balances greater
than $2 million.
(b) Analysis of gross loan charge-offs:
Nonaccrual business loans $242 $153 $132 $116 $113
Performing watch list loans 1 - - - 1
Consumer and residential
mortgage loans 14 8 12 6 4
--------------------------------
Total gross loan charge-offs $257 $161 $144 $122 $118
================================
(c) Analysis of loans sold:
Nonaccrual business loans $10 $3 $14 $18 $-
Performing watch list loans 6 - - 3 7
--------------------------------
Total loans sold $16 $3 $14 $21 $7
================================
(d) Includes net changes related to nonaccrual loans with balances less
than $2 million, payments on non-accrual loans with book balances
greater than $2 million and transfers of nonaccrual loans to
foreclosed property. Excludes business loan gross charge-offs and
business nonaccrual loans sold.
ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)
Comerica Incorporated and Subsidiaries
---------------------------------------------------------------------
Six Months Ended
----------------------------
June 30, 2009
----------------------------
Average Average
(dollar amounts in millions) Balance Interest Rate
---------------------------------------------------------------------
Commercial loans (a) (b) $26,413 $453 3.47%
Real estate construction loans 4,417 65 2.97
Commercial mortgage loans 10,454 217 4.19
Residential mortgage loans 1,821 52 5.70
Consumer loans 2,573 48 3.72
Lease financing (c) 1,263 17 2.66
International loans 1,655 32 3.88
Business loan swap income (expense) - 17 -
----------------------------
Total loans (b) 48,596 901 3.74
Auction-rate securities available-for-
sale 1,098 9 1.60
Other investment securities
available-for-sale 8,858 205 4.76
----------------------------
Total investment securities
available-for-sale 9,956 214 4.40
Federal funds sold and securities purchased
under agreements to resell 35 - 0.32
Interest-bearing deposits with banks 1,862 2 0.26
Other short-term investments 182 2 1.78
----------------------------
Total earning assets 60,631 1,119 3.73
Cash and due from banks 915
Allowance for loan losses (872)
Accrued income and other assets 4,816
-------
Total assets $65,490
=======
Money market and NOW deposits (a) $12,319 34 0.56
Savings deposits 1,316 1 0.14
Customer certificates of deposit 8,788 113 2.60
----------------------------
Total interest-bearing core
deposits 22,423 148 1.33
Other time deposits 5,699 82 2.89
Foreign office time deposits 702 1 0.33
----------------------------
Total interest-bearing deposits 28,824 231 1.62
Short-term borrowings 1,682 2 0.26
Medium- and long-term debt 14,461 96 1.33
----------------------------
Total interest-bearing sources 44,967 329 1.48
------------------
Noninterest-bearing deposits (a) 11,958
Accrued expenses and other liabilities 1,411
Total shareholders' equity 7,154
-------
Total liabilities and
shareholders' equity $65,490
=======
Net interest income/rate spread (FTE) $790 2.25
=======
FTE adjustment $4
=======
Impact of net noninterest-bearing
sources of funds 0.38
---------------------------------------------------------------------
Net interest margin (as a percentage
of average earning assets) (FTE) (b) (c) 2.63%
=====================================================================
N/M - Not meaningful
(a) FSD balances included above:
Loans (primarily low-rate) $214 $2 1.84%
Interest-bearing deposits 534 2 0.65
Noninterest-bearing deposits 1,342
(b) Impact of FSD loans (primarily
low-rate) on the following:
Commercial loans (0.01)%
Total loans (0.01)
Net interest margin (FTE)
(assuming loans were
funded by noninterest-bearing
deposits) -
(c) 2008 net interest income declined $30 million and the net interest
margin declined 10 basis points due to a tax-related non-cash
lease income charge. Excluding this charge, the net interest margin
would have been 3.17%.
---------------------------------------------------------------------
Six Months Ended
----------------------------
June 30, 2008
----------------------------
Average Average
(dollar amounts in millions) Balance Interest Rate
---------------------------------------------------------------------
Commercial loans (a) (b) $29,230 $786 5.41%
Real estate construction loans 4,827 130 5.40
Commercial mortgage loans 10,258 300 5.88
Residential mortgage loans 1,911 58 6.02
Consumer loans 2,499 69 5.53
Lease financing (c) 1,349 (8) N/M
International loans 2,036 55 5.42
Business loan swap income (expense) - 15 -
----------------------------
Total loans (b) 52,110 1,405 5.42
Auction-rate securities available-for-
sale - - -
Other investment securities
available-for-sale 7,759 189 4.91
----------------------------
Total investment securities
available-for-sale 7,759 189 4.91
Federal funds sold and securities purchased
under agreements to resell 115 1 2.56
Interest-bearing deposits with banks 20 - 2.19
Other short-term investments 299 7 4.21
----------------------------
Total earning assets 60,303 1,602 5.34
Cash and due from banks 1,229
Allowance for loan losses (630)
Accrued income and other assets 4,043
-------
Total assets $64,945
=======
Money market and NOW deposits (a) $15,063 125 1.67
Savings deposits 1,382 4 0.54
Customer certificates of deposit 8,161 148 3.64
----------------------------
Total interest-bearing core
deposits 24,606 277 2.26
Other time deposits 7,482 139 3.73
Foreign office time deposits 1,190 19 3.29
----------------------------
Total interest-bearing deposits 33,278 435 2.63
Short-term borrowings 3,411 48 2.82
Medium- and long-term debt 10,949 199 3.66
----------------------------
Total interest-bearing sources 47,638 682 2.88
------------------
Noninterest-bearing deposits (a) 10,635
Accrued expenses and other liabilities 1,479
Total shareholders' equity 5,193
-------
Total liabilities and
shareholders' equity $64,945
=======
Net interest income/rate spread (FTE) $920 2.46
=======
FTE adjustment $2
=======
Impact of net noninterest-bearing
sources of funds 0.61
---------------------------------------------------------------------
Net interest margin (as a percentage
of average earning assets) (FTE) (b) (c) 3.07%
=====================================================================
N/M - Not meaningful
(a) FSD balances included above:
Loans (primarily low-rate) $635 $4 1.23%
Interest-bearing deposits 1,044 12 2.31
Noninterest-bearing deposits 1,858
(b) Impact of FSD loans (primarily
low-rate) on the following:
Commercial loans (0.10)%
Total loans (0.05)
Net interest margin (FTE)
(assuming loans were
funded by noninterest-bearing
deposits) (0.02)
(c) 2008 net interest income declined $30 million and the net interest
margin declined 10 basis points due to a tax-related non-cash
lease income charge. Excluding this charge, the net interest margin
would have been 3.17%.
ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)
Comerica Incorporated and Subsidiaries
---------------------------------------------------------------------
Three Months Ended
----------------------------
June 30, 2009
----------------------------
Average Average
(dollar amounts in millions) Balance Interest Rate
---------------------------------------------------------------------
Commercial loans (a) (b) $25,657 $225 3.55%
Real estate construction loans 4,325 32 2.95
Commercial mortgage loans 10,476 108 4.17
Residential mortgage loans 1,795 26 5.74
Consumer loans 2,572 24 3.65
Lease financing (c) 1,227 8 2.48
International loans 1,596 16 3.90
Business loan swap income - 9 -
----------------------------
Total loans (b) 47,648 448 3.77
Auction-rate securities available-for-
sale 1,052 4 1.48
Other investment securities
available-for-sale 8,734 100 4.70
----------------------------
Total investment securities
available-for-sale 9,786 104 4.35
Federal funds sold and securities purchased
under agreements to resell 13 - 0.33
Interest-bearing deposits with banks 1,876 1 0.28
Other short-term investments 199 1 1.88
----------------------------
Total earning assets 59,522 554 3.75
Cash and due from banks 881
Allowance for loan losses (913)
Accrued income and other assets 4,766
-------
Total assets $64,256
=======
Money market and NOW deposits (a) $12,304 15 0.49
Savings deposits 1,354 - 0.11
Customer certificates of deposit 8,721 55 2.53
----------------------------
Total interest-bearing core
deposits 22,379 70 1.26
Other time deposits 5,124 36 2.75
Foreign office time deposits 734 - 0.26
----------------------------
Total interest-bearing deposits 28,237 106 1.50
Short-term borrowings 1,010 - 0.20
Medium- and long-term debt 14,002 44 1.27
----------------------------
Total interest-bearing sources 43,249 150 1.40
------------------
Noninterest-bearing deposits (a) 12,546
Accrued expenses and other liabilities 1,308
Total shareholders' equity 7,153
-------
Total liabilities and
shareholders' equity $64,256
=======
Net interest income/rate spread (FTE) $404 2.35
=======
FTE adjustment $2
=======
Impact of net noninterest-bearing
sources of funds 0.38
---------------------------------------------------------------------
Net interest margin (as a percentage
of average earning assets) (FTE) (b) (c) 2.73%
=====================================================================
N/M - Not meaningful
(a) FSD balances included above:
Loans (primarily low-rate) $216 $1 1.71%
Interest-bearing deposits 452 1 0.70
Noninterest-bearing deposits 1,414
(b) Impact of FSD loans (primarily
low-rate) on the following:
Commercial loans (0.01)%
Total loans (0.01)
Net interest margin (FTE)
(assuming loans were
funded by noninterest-bearing
deposits) -
(c) Second quarter 2008 net interest income declined $30 million and the
net interest margin declined 19 basis points due to a tax-related
non-cash lease income charge. Excluding this charge, the net interest
margin would have been 3.10%.
---------------------------------------------------------------------
Three Months Ended
----------------------------
March 31, 2009
----------------------------
Average Average
(dollar amounts in millions) Balance Interest Rate
---------------------------------------------------------------------
Commercial loans (a) (b) $27,180 $228 3.39%
Real estate construction loans 4,510 33 2.99
Commercial mortgage loans 10,431 109 4.22
Residential mortgage loans 1,846 26 5.66
Consumer loans 2,574 24 3.79
Lease financing (c) 1,300 9 2.82
International loans 1,715 16 3.85
Business loan swap income - 8 -
----------------------------
Total loans (b) 49,556 453 3.70
Auction-rate securities available-for-
sale 1,108 5 1.71
Other investment securities
available-for-sale 9,018 105 4.82
----------------------------
Total investment securities
available-for-sale 10,126 110 4.46
Federal funds sold and securities purchased
under agreements to resell 57 - 0.32
Interest-bearing deposits with banks 1,848 1 0.23
Other short-term investments 165 1 1.67
----------------------------
Total earning assets 61,752 565 3.71
Cash and due from banks 950
Allowance for loan losses (832)
Accrued income and other assets 4,867
-------
Total assets $66,737
=======
Money market and NOW deposits (a) $12,334 19 0.63
Savings deposits 1,278 1 0.18
Customer certificates of deposit 8,856 58 2.67
----------------------------
Total interest-bearing core
deposits 22,468 78 1.41
Other time deposits 6,280 46 3.01
Foreign office time deposits 670 1 0.42
----------------------------
Total interest-bearing deposits 29,418 125 1.73
Short-term borrowings 2,362 2 0.29
Medium- and long-term debt 14,924 52 1.40
----------------------------
Total interest-bearing sources 46,704 179 1.55
------------------
Noninterest-bearing deposits (a) 11,364
Accrued expenses and other liabilities 1,514
Total shareholders' equity 7,155
-------
Total liabilities and
shareholders' equity $66,737
=======
Net interest income/rate spread (FTE) $386 2.16
=======
FTE adjustment $2
=======
Impact of net noninterest-bearing
sources of funds 0.37
---------------------------------------------------------------------
Net interest margin (as a percentage
of average earning assets) (FTE) (b) (c) 2.53%
=====================================================================
N/M - Not meaningful
(a) FSD balances included above:
Loans (primarily low-rate) $212 $1 1.97%
Interest-bearing deposits 617 1 0.61
Noninterest-bearing deposits 1,269
(b) Impact of FSD loans (primarily
low-rate) on the following:
Commercial loans (0.01)%
Total loans (0.01)
Net interest margin (FTE)
(assuming loans were
funded by noninterest-bearing
deposits) (0.01)
(c) Second quarter 2008 net interest income declined $30 million and the
net interest margin declined 19 basis points due to a tax-related
non-cash lease income charge. Excluding this charge, the net interest
margin would have been 3.10%.
---------------------------------------------------------------------
Three Months Ended
----------------------------
June 30, 2008
----------------------------
Average Average
(dollar amounts in millions) Balance Interest Rate
---------------------------------------------------------------------
Commercial loans (a) (b) $29,280 $357 4.90%
Real estate construction loans 4,843 59 4.89
Commercial mortgage loans 10,374 141 5.47
Residential mortgage loans 1,906 29 6.03
Consumer loans 2,549 32 5.06
Lease financing (c) 1,352 (19) N/M
International loans 2,063 25 4.86
Business loan swap income - 10 -
----------------------------
Total loans (b) 52,367 634 4.87
Auction-rate securities available-for-
sale - - -
Other investment securities
available-for-sale 8,296 101 4.89
----------------------------
Total investment securities
available-for-sale 8,296 101 4.89
Federal funds sold and securities purchased
under agreements to resell 150 1 2.17
Interest-bearing deposits with banks 20 - 1.61
Other short-term investments 255 2 3.90
----------------------------
Total earning assets 61,088 738 4.86
Cash and due from banks 1,217
Allowance for loan losses (664)
Accrued income and other assets 4,322
-------
Total assets $65,963
=======
Money market and NOW deposits (a) $14,784 46 1.26
Savings deposits 1,405 2 0.45
Customer certificates of deposit 8,037 64 3.20
----------------------------
Total interest-bearing core
deposits 24,226 112 1.86
Other time deposits 7,707 61 3.21
Foreign office time deposits 1,183 8 2.77
----------------------------
Total interest-bearing deposits 33,116 181 2.20
Short-term borrowings 3,326 19 2.33
Medium- and long-term debt 12,041 95 3.15
----------------------------
Total interest-bearing sources 48,483 295 2.45
------------------
Noninterest-bearing deposits (a) 10,648
Accrued expenses and other liabilities 1,639
Total shareholders' equity 5,193
-------
Total liabilities and
shareholders' equity $65,963
=======
Net interest income/rate spread (FTE) $443 2.41
=======
FTE adjustment $1
=======
Impact of net noninterest-bearing
sources of funds 0.50
---------------------------------------------------------------------
Net interest margin (as a percentage
of average earning assets) (FTE) (b) (c) 2.91%
=====================================================================
N/M - Not meaningful
(a) FSD balances included above:
Loans (primarily low-rate) $469 $2 1.42%
Interest-bearing deposits 994 4 1.81
Noninterest-bearing deposits 1,823
(b) Impact of FSD loans (primarily
low-rate) on the following:
Commercial loans (0.06)%
Total loans (0.03)
Net interest margin (FTE)
(assuming loans were
funded by noninterest-bearing
deposits) (0.01)
(c) Second quarter 2008 net interest income declined $30 million and the
net interest margin declined 19 basis points due to a tax-related
non-cash lease income charge. Excluding this charge, the net interest
margin would have been 3.10%.
CONSOLIDATED STATISTICAL DATA (unaudited)
Comerica Incorporated and Subsidiaries
-------------------------------------------------------------------
(in millions, except per June 30, March 31, December 31,
share data) 2009 2009 2008
-------------------------------------------------------------------
Commercial loans:
Floor plan $1,492 $1,763 $2,341
Other 23,430 24,668 25,658
-------------------------------------------------------------------
Total commercial loans 24,922 26,431 27,999
Real estate construction loans:
Commercial Real Estate
business line 3,500 3,711 3,831
Other business lines 652 668 646
-------------------------------------------------------------------
Total real estate
construction loans 4,152 4,379 4,477
Commercial mortgage loans:
Commercial Real Estate
business line 1,728 1,659 1,619
Other business lines 8,672 8,855 8,870
-------------------------------------------------------------------
Total commercial
mortgage loans 10,400 10,514 10,489
Residential mortgage loans 1,759 1,836 1,852
Consumer loans:
Home equity 1,801 1,791 1,781
Other consumer 761 786 811
-------------------------------------------------------------------
Total consumer loans 2,562 2,577 2,592
-------------------------------------------------------------------
Lease financing 1,234 1,232 1,343
International loans 1,523 1,655 1,753
-------------------------------------------------------------------
Total loans $46,552 $48,624 $50,505
===================================================================
Goodwill $150 $150 $150
Loan servicing rights 9 10 11
Tier 1 common capital ratio
(a) (b) 7.65% 7.32% 7.08%
Tier 1 risk-based capital
ratio (b) 11.57 11.06 10.66
Total risk-based capital
ratio (b) 15.96 15.36 14.72
Leverage ratio (b) 12.12 11.65 11.77
Tangible common equity ratio
(a) 7.55 7.27 7.21
Book value per common share $32.70 $33.32 $33.31
Market value per share for
the quarter:
High 26.47 21.20 37.01
Low 16.03 11.72 15.05
Close 21.15 18.31 19.85
Quarterly ratios:
Return on average common
shareholders' equity (1.25)% (1.90)% 0.19%
Return on average assets 0.11 0.06 0.12
Efficiency ratio 72.75 66.61 68.19
Number of banking centers 441 440 439
Number of employees - full
time equivalent 9,497 9,696 10,186
(a) See Reconciliation of Non-GAAP Financial Measures
(b) June 30, 2009 ratios are estimated
-----------------------------------------------------------------------
September 30, June 30,
(in millions, except per share data) 2008 2008
-----------------------------------------------------------------------
Commercial loans:
Floor plan $2,151 $2,645
Other 26,453 26,118
-----------------------------------------------------------------------
Total commercial loans 28,604 28,763
Real estate construction loans:
Commercial Real Estate business line 3,937 4,013
Other business lines 628 671
-----------------------------------------------------------------------
Total real estate construction loans 4,565 4,684
Commercial mortgage loans:
Commercial Real Estate business line 1,668 1,620
Other business lines 8,920 8,884
-----------------------------------------------------------------------
Total commercial mortgage loans 10,588 10,504
Residential mortgage loans 1,863 1,879
Consumer loans:
Home equity 1,693 1,649
Other consumer 951 945
-----------------------------------------------------------------------
Total consumer loans 2,644 2,594
-----------------------------------------------------------------------
Lease financing 1,360 1,351
International loans 1,931 1,976
-----------------------------------------------------------------------
Total loans $51,555 $51,751
=======================================================================
Goodwill $150 $150
Loan servicing rights 12 12
Tier 1 common capital ratio (a) (b) 6.67% 6.79%
Tier 1 risk-based capital ratio (b) 7.32 7.45
Total risk-based capital ratio (b) 11.19 11.21
Leverage ratio (b) 8.57 8.53
Tangible common equity ratio (a) 7.60 7.47
Book value per common share $33.89 $33.78
Market value per share for the quarter:
High 43.99 40.62
Low 19.31 25.61
Close 32.79 25.63
Quarterly ratios:
Return on average common shareholders'
equity 2.25% 4.25%
Return on average assets 0.18 0.33
Efficiency ratio 75.53 63.02
Number of banking centers 424 416
Number of employees - full time equivalent 10,347 10,530
(a) See Reconciliation of Non-GAAP Financial Measures
(b) June 30, 2009 ratios are estimated
PARENT COMPANY ONLY BALANCE SHEETS (unaudited)
Comerica Incorporated
-----------------------------------------------------------------------
June 30, December 31, June 30,
(in millions, except share data) 2009 2008 2008
-----------------------------------------------------------------------
ASSETS
Cash and due from subsidiary bank $5 $11 $4
Short-term investments with
subsidiary bank 2,223 2,329 179
Other short-term investments 80 80 105
Investment in subsidiaries,
principally banks 5,700 5,690 5,818
Premises and equipment 4 5 4
Other assets 190 210 169
-----------------------------------------------------------------------
Total assets $8,202 $8,325 $6,279
=======================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Medium- and long-term debt $985 $1,002 $967
Other liabilities 124 171 230
-----------------------------------------------------------------------
Total liabilities 1,109 1,173 1,197
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
6/30/09 and 12/31/08 2,140 2,129 -
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 178,735,252 shares
at 06/30/09, 12/31/08 and
06/30/08 894 894 894
Capital surplus 731 722 576
Accumulated other comprehensive
loss (342) (309) (207)
Retained earnings 5,257 5,345 5,451
Less cost of common stock in
treasury - 27,620,471 shares
at 6/30/09, 28,244,967 shares
at 12/31/08 and 28,281,490
shares at 6/30/08 (1,587) (1,629) (1,632)
-----------------------------------------------------------------------
Total shareholders' equity 7,093 7,152 5,082
-----------------------------------------------------------------------
Total liabilities and
shareholders' equity $8,202 $8,325 $6,279
=======================================================================
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)
Comerica Incorporated and Subsidiaries
-----------------------------------------------------------------------
Common Stock
(in millions, Nonredeemable ----------------------
except per Preferred Shares Capital
share data) Stock Outstanding Amount Surplus
-----------------------------------------------------------------------
BALANCE AT JANUARY 1,
2008 $- 150.0 $894 $564
Net income - - - -
Other comprehensive
loss, net of tax - - - -
Total comprehensive
income
Cash dividends
declared on
common stock
($1.32 per share) - - - -
Net issuance of common
stock under employee
stock plans - 0.5 - (19)
Share-based compensation - - - 31
-----------------------------------------------------------------------
BALANCE AT JUNE 30,
2008 $- 150.5 $894 $576
-----------------------------------------------------------------------
BALANCE AT JANUARY 1,
2009 $2,129 150.5 $894 $722
Net income - - - -
Other comprehensive
loss, net of tax - - - -
Total comprehensive loss
Cash dividends
declared on
preferred stock - - - -
Cash dividends
declared on
common stock
($0.10 per share) - - - -
Purchase of common
stock - (0.1) - -
Accretion of discount
on preferred stock 11 - - -
Net issuance of common
stock under employee
stock plans - 0.7 - (14)
Share-based
compensation - - - 18
Other - - - 5
-----------------------------------------------------------------------
BALANCE AT
JUNE 30, 2009 $2,140 151.1 $894 $731
=======================================================================
-----------------------------------------------------------------------
Accumulated
(in millions, Other Total
except per Comprehensive Retained Treasury Shareholders'
share data) Loss Earnings Stock Equity
-----------------------------------------------------------------------
BALANCE AT JANUARY 1,
2008 $(177) $5,497 $(1,661) $5,117
Net income - 165 - 165
Other comprehensive
loss, net of tax (30) - - (30)
------
Total comprehensive
income 135
Cash dividends
declared on common
stock ($1.32 per share) - (199) - (199)
Net issuance of common
stock under employee
stock plans - (12) 29 (2)
Share-based
compensation - - - 31
-----------------------------------------------------------------------
BALANCE AT JUNE 30,
2008 $(207) $5,451 $(1,632) $5,082
-----------------------------------------------------------------------
BALANCE AT JANUARY 1,
2009 $(309) $5,345 $(1,629) $7,152
Net income - 27 - 27
Other comprehensive
loss, net of tax (33) - - (33)
------
Total comprehensive
loss (6)
Cash dividends
declared on
preferred stock - (57) - (57)
Cash dividends
declared on
common stock
($0.10 per share) - (15) - (15)
Purchase of common
stock - - (1) (1)
Accretion of discount
on preferred stock - (11) - -
Net issuance of common
stock under employee
stock plans - (32) 43 (3)
Share-based
compensation - - - 18
Other - - - 5
-----------------------------------------------------------------------
BALANCE AT JUNE 30,
2009 $(342) $5,257 $(1,587) $7,093
=======================================================================
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries
-----------------------------------------------------------------------
(dollar amounts in millions) Wealth &
Three Months Ended June 30, Business Retail Institutional
2009 Bank Bank Management
-----------------------------------------------------------------------
Earnings summary:
Net interest income (expense)
(FTE) $328 $128 $40
Provision for loan losses 252 42 13
Noninterest income 50 46 73
Noninterest expenses 157 167 77
Provision (benefit) for income
taxes (FTE) (36) (17) 8
Income from discontinued
operations, net of tax - - -
--------------------------------------
Net income (loss) $5 $(18) $15
======================================
Net credit-related charge-offs $211 $29 $8
Selected average balances:
Assets $37,521 $6,693 $4,965
Loans 36,760 6,115 4,776
Deposits 14,827 17,666 2,599
Liabilities 15,110 17,639 2,593
Attributed equity 3,353 648 373
Statistical data:
Return on average assets (a) 0.05% (0.40)% 1.21%
Return on average attributed
equity 0.58 (11.41) 16.11
Net interest margin (b) 3.58 2.90 3.29
Efficiency ratio 41.79 95.00 69.77
=======================================================================
-----------------------------------------------------------------------
(dollar amounts in millions)
Three Months Ended June 30,
2009 Finance Other Total
-----------------------------------------------------------------------
Earnings summary:
Net interest income (expense)
(FTE) $(101) $9 $404
Provision for loan losses - 5 312
Noninterest income 124 5 298
Noninterest expenses 7 21 429
Provision (benefit) for income
taxes (FTE) 8 (20) (57)
Income from discontinued
operations, net of tax - - -
--------------------------------------
Net income (loss) $8 $8 $18
======================================
Net credit-related charge-offs $- $- $248
Selected average balances:
Assets $12,320 $2,757 $64,256
Loans 3 (6) 47,648
Deposits 5,669 22 40,783
Liabilities 21,484 277 57,103
Attributed equity 1,140 1,639 7,153
Statistical data:
Return on average assets (a) N/M N/M 0.11%
Return on average attributed
equity N/M N/M (1.25)
Net interest margin (b) N/M N/M 2.73
Efficiency ratio N/M N/M 72.75
=======================================================================
(a) Return on average assets is calculated based on the greater of average
assets or average liabilities and attributed equity.
(b) 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
=======================================================================
-----------------------------------------------------------------------
Wealth &
Three Months Ended March 31, Business Retail Institutional
2009 Bank Bank Management
-----------------------------------------------------------------------
Earnings summary:
Net interest income (expense)
(FTE) $312 $126 $36
Provision for loan losses 177 23 10
Noninterest income 93 46 70
Noninterest expenses 157 161 75
Provision (benefit) for income
taxes (FTE) 15 (5) 8
Income from discontinued
operations, net of tax - - -
--------------------------------------
Net income (loss) $56 $(7) $13
======================================
Net credit-related charge-offs $123 $26 $8
Selected average balances:
Assets $39,505 $6,875 $4,870
Loans 38,527 6,284 4,750
Deposits 14,040 17,391 2,429
Liabilities 14,372 17,366 2,418
Attributed equity 3,346 658 340
Statistical data:
Return on average assets (a) 0.57% (0.16)% 1.10%
Return on average attributed
equity 6.78 (4.48) 15.80
Net interest margin (b) 3.28 2.93 3.11
Efficiency ratio 38.55 94.01 74.09
=======================================================================
-----------------------------------------------------------------------
Three Months Ended March 31,
2009 Finance Other Total
-----------------------------------------------------------------------
Earnings summary:
Net interest income (expense)
(FTE) $(99) $11 $386
Provision for loan losses - (7) 203
Noninterest income 20 (6) 223
Noninterest expenses 4 - 397
Provision (benefit) for income
taxes (FTE) (33) 16 1
Income from discontinued
operations, net of tax - 1 1
--------------------------------------
Net income (loss) $(50) $(3) $9
======================================
Net credit-related charge-offs $- $- $157
Selected average balances:
Assets $12,703 $2,784 $66,737
Loans (4) (1) 49,556
Deposits 6,786 136 40,782
Liabilities 24,915 511 59,582
Attributed equity 1,177 1,634 7,155
Statistical data:
Return on average assets (a) N/M N/M 0.06%
Return on average attributed
equity N/M N/M (1.90)
Net interest margin (b) N/M N/M 2.53
Efficiency ratio N/M N/M 66.61
=======================================================================
(a) Return on average assets is calculated based on the greater of average
assets or average liabilities and attributed equity.
(b) 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
=======================================================================
-----------------------------------------------------------------------
Wealth &
Three Months Ended June 30, Business Retail Institutional
2008 Bank Bank Management
-----------------------------------------------------------------------
Earnings summary:
Net interest income (expense)
(FTE) $296 $146 $37
Provision for loan losses 123 29 5
Noninterest income 92 54 74
Noninterest expenses 185 161 83
Provision (benefit) for income
taxes (FTE) 23 3 9
Income from discontinued operations,
net of tax - - -
--------------------------------------
Net income (loss) $57 $7 $14
======================================
Net credit-related charge-offs $96 $14 $3
Selected average balances:
Assets $42,335 $7,100 $4,646
Loans 41,510 6,348 4,502
Deposits 15,384 17,043 2,493
Liabilities 16,156 17,041 2,501
Attributed equity 3,278 657 333
Statistical data:
Return on average assets (a) 0.53% 0.15% 1.19%
Return on average attributed
equity 6.86 4.13 16.57
Net interest margin (b) 2.86 3.45 3.29
Efficiency ratio 49.26 80.61 75.20
=======================================================================
-----------------------------------------------------------------------
Three Months Ended June 30,
2008 Finance Other Total
-----------------------------------------------------------------------
Earnings summary:
Net interest income (expense)
(FTE) $(28) $(8) $443
Provision for loan losses - 13 170
Noninterest income 18 4 242
Noninterest expenses 2 (8) 423
Provision (benefit) for income
taxes (FTE) (7) 8 36
Income from discontinued
operations, net of tax - - -
--------------------------------------
Net income (loss) $(5) $(17) $56
======================================
Net credit-related charge-offs $- $- $113
Selected average balances:
Assets $10,333 $1,549 $65,963
Loans 5 2 52,367
Deposits 8,409 435 43,764
Liabilities 24,334 738 60,770
Attributed equity 948 (23) 5,193
Statistical data:
Return on average assets (a) N/M N/M 0.33%
Return on average attributed
equity N/M N/M 4.25
Net interest margin (b) N/M N/M 2.91
Efficiency ratio N/M N/M 63.02
=======================================================================
(a) Return on average assets is calculated based on the greater of average
assets or average liabilities and attributed equity.
(b) 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 (unaudited)
Comerica Incorporated and Subsidiaries
----------------------------------------------------------------------
(dollar amounts in millions)
Three Months Ended
June 30, 2009 Midwest Western Texas Florida
----------------------------------------------------------------------
Earnings summary:
Net interest income
(expense) (FTE) $200 $154 $73 $11
Provision for loan losses 119 90 28 20
Noninterest income 92 32 21 3
Noninterest expenses 186 113 60 9
Provision (benefit)
for income taxes (FTE) (13) (10) 1 (7)
Income from discontinued
operations, net of tax - - - -
----------------------------------------------
Net income (loss) $- $(7) $5 $(8)
==============================================
Net credit-related
charge-offs $99 $70 $11 $23
Selected average
balances:
Assets $18,122 $14,901 $7,798 $1,820
Loans 17,427 14,684 7,547 1,820
Deposits 17,166 10,717 4,496 331
Liabilities 17,461 10,625 4,505 321
Attributed equity 1,568 1,358 694 182
Statistical data:
Return on average
assets (a) 0.01% (0.19)% 0.23% (1.78)%
Return on average
attributed equity 0.10 (2.13) 2.63 (17.76)
Net interest
margin (b) 4.56 4.20 3.88 2.44
Efficiency ratio 63.68 60.67 63.98 66.24
======================================================================
----------------------------------------------------------------------
(dollar amounts in millions) Finance
Three Months Ended Other & Other
June 30, 2009 Markets International Businesses Total
----------------------------------------------------------------------
Earnings summary:
Net interest income
(expense) (FTE) $41 $17 $(92) $404
Provision for loan
losses 43 7 5 312
Noninterest income 13 8 129 298
Noninterest expenses 25 8 28 429
Provision (benefit)
for income taxes (FTE) (20) 4 (12) (57)
Income from
discontinued
operations,
net of tax - - - -
----------------------------------------------
Net income (loss) $6 $6 $16 $18
==============================================
Net credit-related
charge-offs $42 $3 $- $248
Selected average
balances:
Assets $4,488 $2,050 $15,077 $64,256
Loans 4,157 2,016 (3) 47,648
Deposits 1,582 800 5,691 40,783
Liabilities 1,643 787 21,761 57,103
Attributed equity 415 157 2,779 7,153
Statistical data:
Return on average
assets (a) 0.53% 1.13% N/M 0.11%
Return on average
attributed equity 5.77 14.71 N/M (1.25)
Net interest
margin (b) 4.00 3.27 N/M 2.73
Efficiency ratio 48.44 30.99 N/M 72.75
======================================================================
(a) Return on average assets is calculated based on the greater of average
assets or average liabilities and attributed equity.
(b) 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
======================================================================
----------------------------------------------------------------------
Three Months Ended
March 31, 2009 Midwest Western Texas Florida
----------------------------------------------------------------------
Earnings summary:
Net interest income
(expense) (FTE) $194 $146 $70 $11
Provision for loan
losses 83 88 9 15
Noninterest income 127 36 21 3
Noninterest expenses 194 104 58 8
Provision (benefit)
for income taxes (FTE) 15 (3) 9 (3)
Income from
discontinued
operations,
net of tax - - - -
----------------------------------------------
Net income (loss) $29 $(7) $15 $(6)
==============================================
Net credit-related
charge-offs $54 $76 $8 $12
Selected average
balances:
Assets $19,139 $15,443 $8,069 $1,869
Loans 18,267 15,253 7,847 1,878
Deposits 16,699 10,640 4,198 253
Liabilities 17,014 10,571 4,211 245
Attributed equity 1,604 1,375 680 152
Statistical data:
Return on average
assets (a) 0.63% (0.18)% 0.72% (1.29)%
Return on average
attributed equity 7.57 (1.98) 8.54 (15.87)
Net interest
margin (b) 4.30 3.91 3.62 2.31
Efficiency ratio 59.91 57.17 64.45 61.06
======================================================================
----------------------------------------------------------------------
Finance
Three Months Ended Other & Other
March 31, 2009 Markets International Businesses Total
----------------------------------------------------------------------
Earnings summary:
Net interest income
(expense) (FTE) $39 $14 $(88) $386
Provision for loan
losses 15 - (7) 203
Noninterest income 14 8 14 223
Noninterest expenses 21 8 4 397
Provision (benefit)
for income taxes (FTE) (5) 5 (17) 1
Income from
discontinued
operations,
net of tax - - 1 1
----------------------------------------------
Net income (loss) $22 $9 $(53) $9
==============================================
Net credit-related
charge-offs $6 $1 $- $157
Selected average
balances:
Assets $4,553 $2,177 $15,487 $66,737
Loans 4,246 2,070 (5) 49,556
Deposits 1,357 713 6,922 40,782
Liabilities 1,413 702 25,426 59,582
Attributed equity 383 150 2,811 7,155
Statistical data:
Return on average
assets (a) 1.89% 1.69% N/M 0.06%
Return on average
attributed equity 22.45 24.55 N/M (1.90)
Net interest
margin (b) 3.65 2.74 N/M 2.53
Efficiency ratio 44.70 33.86 N/M 66.61
======================================================================
(a) Return on average assets is calculated based on the greater of average
assets or average liabilities and attributed equity.
(b) 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
======================================================================
----------------------------------------------------------------------
Three Months Ended
June 30, 2008 Midwest Western Texas Florida
----------------------------------------------------------------------
Earnings summary:
Net interest income
(expense) (FTE) $172 $171 $74 $12
Provision for loan
losses 24 113 6 7
Noninterest income 136 34 22 4
Noninterest expenses 205 115 63 11
Provision (benefit)
for income taxes (FTE) 27 (3) 10 (1)
Income from
discontinued
operations,
net of tax - - - -
----------------------------------------------
Net income (loss) $52 $(20) $17 $(1)
==============================================
Net credit-related
charge-offs $42 $59 $3 $8
Selected average
balances:
Assets $19,846 $17,269 $8,063 $1,854
Loans 19,224 16,945 7,795 1,851
Deposits 16,021 12,346 4,061 306
Liabilities 16,716 12,327 4,076 302
Attributed equity 1,649 1,337 614 118
Statistical data:
Return on average
assets (a) 1.05% (0.46)% 0.81% (0.34)%
Return on average
attributed equity 12.65 6.00 10.66 (5.31)
Net interest
margin (b) 3.59 4.05 3.79 2.51
Efficiency ratio 69.49 56.19 65.55 71.18
======================================================================
----------------------------------------------------------------------
Finance
Three Months Ended Other & Other
June 30, 2008 Markets International Businesses Total
----------------------------------------------------------------------
Earnings summary:
Net interest income
(expense) (FTE) $36 $14 $(36) $443
Provision for loan
losses 7 - 13 170
Noninterest income 16 8 22 242
Noninterest expenses 25 10 (6) 423
Provision (benefit)
for income taxes (FTE) (3) 5 1 36
Income from
discontinued
operations,
net of tax - - - -
----------------------------------------------
Net income (loss) $23 $7 $(22) $56
==============================================
Net credit-related
charge-offs $1 $- $- $113
Selected average
balances:
Assets $4,633 $2,416 $11,882 $65,963
Loans 4,244 2,301 7 52,367
Deposits 1,410 776 8,844 43,764
Liabilities 1,501 776 25,072 60,770
Attributed equity 389 161 925 5,193
Statistical data:
Return on average
assets (a) 1.94% 1.24% N/M 0.33%
Return on average
attributed equity 23.08 18.68 N/M 4.25
Net interest
margin (b) 3.40 2.45 N/M 2.91
Efficiency ratio 48.87 44.63 N/M 63.02
======================================================================
(a) Return on average assets is calculated based on the greater of average
assets or average liabilities and attributed equity.
(b) 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
======================================================================
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
Comerica Incorporated and Subsidiaries
-------------------------------------------------------------------------
June March December September June
(dollar amounts in 30, 31, 31, 30, 30,
millions) 2009 2009 2008 2008 2008
-------------------------------------------------------------------------
Tier 1 capital (a) (b) $7,774 $7,760 $7,805 $5,576 $5,635
Less:
Fixed rate cumulative
perpetual preferred
stock 2,140 2,134 2,129 - -
Trust preferred
securities 495 495 495 495 495
-------------------------------------------------------------------------
Tier 1 common
capital (b) 5,139 5,131 5,181 5,081 5,140
Risk-weighted assets
(a) (b) 67,202 70,135 73,207 76,156 75,677
Tier 1 common capital
ratio (b) 7.65% 7.32% 7.08% 6.67% 6.79%
=========================================================================
Total shareholders'
equity $7,093 $7,183 $7,152 $5,100 $5,082
Less:
Fixed rate cumulative
perpetual preferred
stock 2,140 2,134 2,129 - -
Goodwill 150 150 150 150 150
Other intangible
assets 10 11 12 12 12
-------------------------------------------------------------------------
Tangible common equity $4,793 $4,888 $4,861 $4,938 $4,920
=========================================================================
Total assets $63,630 $67,370 $67,548 $65,153 $66,003
Less:
Goodwill 150 150 150 150 150
Other intangible
assets 10 11 12 12 12
-------------------------------------------------------------------------
Tangible assets $63,470 $67,209 $67,386 $64,991 $65,841
=========================================================================
Tangible common
equity ratio 7.55% 7.27% 7.21% 7.60% 7.47%
=========================================================================
(a) Tier 1 capital and risk-weighted assets as defined by regulation.
(b) June 30, 2009 Tier 1 capital and risk-weighted assets are estimated.
=========================================================================
SOURCE Comerica Incorporated
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/
