July 19, 2016 - 6:40 AM EDT
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Comerica Reports Second Quarter 2016 Financial Results

Launched Growth in Efficiency and Revenue Initiative Actions Identified To-Date Expected to Drive an Additional $230 Million in Annual Pre-Tax Income by Year-End 2018 Related Estimated Total Pre-Tax Restructuring Charges of $140 Million to $160 Million Net Income of $104 Million or 58 Cents Per Share Includes After-Tax Impact of Restructuring Charge of $34 Million, or 19 Cents Per Share Average Loan Growth of $1.1 Billion, or 2 Percent, Compared to First Quarter 2016

DALLAS, July 19, 2016 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported second quarter 2016 net income of $104 million, compared to $60 million for the first quarter 2016 and $135 million for the second quarter 2015. Earnings per diluted share were 58 cents for second quarter 2016 compared to 34 cents for first quarter 2016 and 73 cents for second quarter 2015. Comerica also announced the implementation of its efficiency and revenue initiative ("GEAR Up"), which is expected to drive additional annual pre-tax income of approximately $230 million by year-end 2018 from the actions identified to-date. Second quarter results include after-tax restructuring charges of $34 million, or 19 cents per share, associated with the initial phase of this initiative.

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"Our second quarter results were solid with a $1.1 billion increase in average loans, improved credit quality in our energy portfolio as well as increases in most fee-based noninterest income categories," said Ralph W. Babb, Jr., chairman and chief executive officer.  "Noninterest expenses were well controlled. Through share repurchases of $65 million and an increase in our dividend, we returned $103 million to shareholders in the second quarter 2016, compared to $79 million in the first quarter."

Growth in Efficiency and Revenue Initiative

"Based on our initial extensive review, we are announcing the actions we are taking through Gear Up that are expected to deliver additional annual pre-tax income of approximately $230 million by year-end 2018. This initiative fundamentally transforms the way we operate to drive further efficiency and revenue growth. We are confident the initiative will improve profitability, despite current market conditions and a tough banking environment," said Babb. "We expect our efficiency ratio to improve, declining to the low 60 percent range by the end of 2017, and at or below 60 percent by year-end 2018, without any increase in interest rates. The initial actions will take us a long way to achieving a double-digit return on equity and enhanced shareholder value. Management will continue to identify additional opportunities to further enhance profitability."

The initial GEAR Up initiative includes approximately $140 million in pre-tax benefits expected to be achieved by fiscal year-end 2017 and an anticipated annual run-rate benefit of approximately $230 million by year-end 2018.


  • Revenue enhancements expected to be approximately $30 million by year-end 2017, which increase to approximately $70 million by year-end 2018, through expanded product offerings, enhanced sales tools and training, re-aligned employee incentives and enhanced customer analytics to drive opportunities.
  • Expense reductions targeted to be approximately $110 million, which increases to approximately $160 million by year-end 2018. This is to be achieved through an approximately 9 percent reduction in workforce, streamlining operational processes, real estate optimization including consolidating about 40 banking centers, selective outsourcing of technology functions and reduction of technology system applications.
  • Pre-tax restructuring charges of $140 million to $160 million in total are expected to be incurred through 2018.
  • For further information, see the accompanying Fact Sheet.














(dollar amounts in millions, except per share data)

2nd Qtr '16

1st Qtr '16

2nd Qtr '15

Net interest income

$

445



$

447



$

421



Provision for credit losses

49



148



47



Noninterest income

269



246



258



Noninterest expenses

519


(a)

460



433


(b)

Pre-tax income

146



85



199



Provision for income taxes

42



25



64



Net income

$

104



$

60



$

135










Net income attributable to common shares

$

103



$

59



$

134










Diluted income per common share

0.58



0.34



0.73










Average diluted shares (in millions)

177



176



182










Common equity Tier 1 capital ratio (c)

10.48

%


10.58

%


10.40

%


Common equity ratio

10.79



11.08



10.76



Tangible common equity ratio (d)

9.98



10.23



9.92



(a)  Included restructuring charge of $53 million in the second quarter 2016.

(b)  Included net release of litigation reserves of $30 million in the second quarter 2015.

(c)  June 30, 2016 ratio is estimated.

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

Second Quarter 2016 Compared to First Quarter 2016

Average total loans increased $1.1 billion, or 2 percent, to $49.5 billion.

  • Primarily reflected continued growth in Commercial Real Estate and seasonal increases in Mortgage Banker Finance and National Dealer Services; partially offset by an expected decline in Energy. The growth in Commercial Real Estate primarily reflected construction draws and term financing, mainly with existing customers who are proven developers on projects with favorable risk profiles.
  • Period-end total loans increased $1.0 billion to $50.4 billion.

Average total deposits decreased $187 million to $56.5 billion.

  • Driven by a $511 million decrease in interest-bearing deposits, partially offset by a $324 million increase in noninterest-bearing deposits.
  • Average total deposits increased seasonally in the Retail Bank; this was more than offset by a seasonal decrease in Municipalities and purposeful pricing in Corporate Banking.
  • Period-end deposits were unchanged at $56.4 billion.

Net interest income decreased $2 million to $445 million.

  • Primarily the result of the impact of nonaccrual loans and higher funding costs, partially offset by the benefit from the increase in average loans.

The provision for credit losses decreased $99 million to $49 million.

  • Net credit-related charge-offs were $47 million, or 0.38 percent of average loans, compared to $58 million, or 0.49 percent, in the first quarter 2016. Energy net credit-related charge-offs were $32 million compared to $42 million in the first quarter 2016.
  • The allowance for loan losses increased $5 million to $729 million, or 1.45 percent of total loans. The reserve allocation for Energy exceeded 8 percent of loans in the Energy business line.

Noninterest income increased $23 million to $269 million.

  • Noninterest income increased $13 million, or 5 percent, excluding a $10 million increase in deferred compensation asset returns (offset by an increase in deferred compensation plan expense in noninterest expense).
  • Fee-based income increased $11 million, primarily attributed to increases of $3 million each in card fees, fiduciary income and customer derivative income, as well as a $2 million increase in commercial lending fees. The increase in commercial lending fees resulted primarily from higher syndication agent fees.

Noninterest expenses increased $59 million to $519 million.

  • Second quarter restructuring charges of $53 million related to the initiatives previously discussed included $46 million of severance-related expenses and $7 million of professional services and other charges.
  • Excluding the $53 million restructuring charge, noninterest expenses increased $6 million, primarily including a $10 million increase in deferred compensation plan expense (offset by an increase in deferred compensation asset returns in noninterest income), partially offset by an $8 million gain from the sale of leased assets, as well as increases of $5 million in outside processing fees, $3 million in FDIC insurance premiums and $2 million in advertising expense.
  • Salaries and benefits expense decreased $1 million, primarily reflecting seasonal decreases in share-based compensation and payroll taxes, partially offset by the $10 million increase in deferred compensation plan expense noted above, the impact of merit increases, a seasonal increase in 401(k) contributions and incentive compensation tied to revenue growth.

Capital position remained solid at June 30, 2016.

  • Repurchased approximately 1.5 million shares of common stock under the equity repurchase program.
  • Including dividends, returned a total of $103 million to shareholders.
  • Dividend increased 5 percent to 22 cents per share.
  • As announced on June 29, 2016, the Federal Reserve did not object to Comerica's 2016 capital plan which includes equity repurchases up to $440 million for the four-quarter period ending in the second quarter 2017. The timing and ultimate amount of equity repurchases will be subject to various factors, including the Company's capital position, financial performance and market conditions, including interest rates. Restructuring charges associated with the GEAR Up initiative are not expected to impact the pace of repurchases. In addition, at its meeting on July 26, 2016, Comerica's board of directors will consider increasing the quarterly dividend to 23 cents per common share.

Second Quarter 2016 Compared to Second Quarter 2015

Average total loans increased $636 million, or 1 percent.

  • Primarily reflected continued growth in Commercial Real Estate and National Dealer Services, partially offset by declines in Energy and general Middle Market.

Average total deposits decreased $877 million, or 2 percent.

  • Primarily driven by decreases in Municipalities, Corporate Banking and the Financial Services Division.

Net interest income increased $24 million, or 6 percent.

  • Primarily due to higher yields on loans and Federal Reserve Bank deposits, as well as earning asset growth; partially offset by an increase in funding costs.

The provision for credit losses increased $2 million, or 5 percent.

Noninterest income increased $11 million, or 4 percent.

  • Excluding a $4 million increase in deferred compensation asset returns, noninterest income increased $7 million, or 3 percent. Fee-based income increased $6 million, primarily reflecting an $8 million increase in card fees, mostly due to increased revenue from merchant payment processing services and government card programs, and smaller increases in most other fee-based categories; partially offset by a decrease of $4 million in investment banking fees.

Noninterest expense increased $86 million.

  • Noninterest expense increased $3 million excluding the second quarter 2016 restructuring charges of $53 million and the impact of a $30 million net release of litigation reserves in second quarter 2015. The remaining increase primarily reflected increases of $6 million in software expense and $5 million in FDIC insurance premiums, partially offset by a decrease of $4 million in salaries and benefits and an $8 million benefit from the sale of leased assets in the second quarter 2016.
    • Salaries and benefits expense primarily reflected decreases of $8 million in pension expense and $4 million in share-based compensation, partially offset by a $4 million increase in deferred compensation plan expense (offset by an increase in deferred compensation asset returns in noninterest income) and an increase of $4 million in regular salaries, mostly due to the impact of merit raises.

Net Interest Income













(dollar amounts in millions)

2nd Qtr '16


1st Qtr '16


2nd Qtr '15

Net interest income

$

445



$

447



$

421








Net interest margin

2.74

%


2.81

%


2.65

%







Selected average balances:






Total earning assets

$

65,597



$

64,123



$

63,981


Total loans

49,469



48,392



48,833


Total investment securities

12,334



12,357



9,936


Federal Reserve Bank deposits

3,495



3,071



4,968














Total deposits

56,521



56,708



57,398


Total noninterest-bearing deposits

28,376



28,052



27,365


Medium- and long-term debt

5,072



3,093



2,661


Net interest income decreased $2 million to $445 million in the second quarter 2016, compared to the first quarter 2016.

  • Interest on loans was unchanged, as the benefit from an increase in average loan balances (+$8 million) was offset by a decrease in yields. The decrease in loan yields primarily reflected lower nonaccrual interest recoveries in the second quarter 2016, the impact of a negative residual value adjustment to assets in the leasing portfolio and the full-quarter impact of loans transferred to nonaccrual in the first quarter 2016.
  • Interest expense on debt increased $3 million, primarily due to higher funding costs from new Federal Home Loan Bank (FHLB) borrowings during the quarter.

The net interest margin of 2.74 percent decreased 7 basis points compared to the first quarter 2016, primarily due to the impact of increased FHLB borrowings (-2 basis points), lower loan yields (-4 basis points) and an increase in lower-yielding Federal Reserve Bank deposit balances (-1 basis point). The impact of lower loan yields included -3 basis points related to nonaccrual loans.

Credit Quality

"Energy loans continue to decline as expected, with a $356 million decrease since the end of the first quarter, as our customers continue to take the necessary actions to reduce their bank debt. We have completed 88 percent of the spring redeterminations for our E&P customers, and borrowing bases have come down about 22 percent on average. Criticized energy loans have declined $281 million to 57 percent of energy loans as of the end of the second quarter," said Babb. "While oil and gas prices have improved, we remain cautious and believe with our reserve allocation at over 8 percent of energy loans as of June 30, we are adequately reserved. Credit quality in the remainder of the portfolio remains strong."















(dollar amounts in millions)

2nd Qtr '16


1st Qtr '16


2nd Qtr '15

Credit-related charge-offs

$

59



$

83



$

35


Recoveries

12



25



17


Net credit-related charge-offs

47



58



18


Net credit-related charge-offs/Average total loans

0.38

%


0.49

%


0.15

%







Provision for credit losses

$

49



$

148



$

47








Nonperforming loans

613



689



361


Nonperforming assets (NPAs)

635



714



370


NPAs/Total loans and foreclosed property

1.26

%


1.45

%


0.74

%







Loans past due 90 days or more and still accruing

$

35



$

13



$

18








Allowance for loan losses

729



724



618


Allowance for credit losses on lending-related commitments (a)

43



46



50


Total allowance for credit losses

772



770



668








Allowance for loan losses/Period-end total loans

1.45

%


1.47

%


1.24

%

Allowance for loan losses/Nonperforming loans

119



105



171


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



  • Energy business line loans were $2.7 billion at June 30, 2016 compared to $3.1 billion at March 31, 2016.
    • Criticized Energy loans decreased $281 million, to $1.6 billion, including a $77 million decrease in nonaccrual loans.
    • Energy net charge-offs were $32 million, compared to $42 million in the first quarter 2016.
    • The reserve allocation for loans in the Energy business line exceeded 8 percent at June 30, 2016, up slightly compared to March 31, 2016.
  • Net charge-offs decreased $11 million to $47 million, or 0.38 percent of average loans, in the second quarter 2016, compared to $58 million, or 0.49 percent, in the first quarter 2016. Aside from Energy, net charge-offs were $15 million, or 13 basis points, for the remainder of the portfolio.
  • During the second quarter 2016, $107 million of borrower relationships over $2 million were transferred to nonaccrual status, a decrease of $339 million compared to $446 million transferred during the first quarter. Second quarter 2016 transfers to nonaccrual included $51 million from Energy, compared to $349 million in the first quarter.
  • Criticized loans decreased $377 million to $3.6 billion at June 30, 2016, compared to $3.9 billion at March 31, 2016, primarily as a result of the decrease in criticized Energy loans. Criticized loans are generally consistent with the Special Mention, Substandard and Doubtful categories defined by regulatory authorities.

Full-Year 2016 Outlook

Management expectations for full-year 2016 compared to full-year 2015, assuming a continuation of the current economic and low-rate environment, are as follows.

  • Average loans modestly higher, in line with Gross Domestic Product growth, reflecting a continued decline in Energy more than offset by increases in most other lines of business. Seasonality in National Dealer Services, Mortgage Banker and Middle Market to impact the second half of the year.
  • Net interest income higher, primarily reflecting the benefits from the December 2015 short-term rate increase, loan growth and a larger securities portfolio.
  • Provision for credit losses higher, reflecting the first quarter 2016 reserve build for Energy, with net charge-offs for the remainder of the year between 35 basis points and 45 basis points. Additional reserve changes dependent on developments in the oil and gas sector. Continued solid credit quality in the remainder of the portfolio, with metrics, absent Energy, better than historical norms.
  • Noninterest income modestly higher, with continued focus on cross-sell opportunities, including card, fiduciary and brokerage services offset by lower market-driven fees, including commercial lending fees, investment banking fees, derivative income and warrant income. Benefits from GEAR Up expected to begin in early 2017.
  • Noninterest expenses higher, with an estimated $90 million to $110 million in restructuring expense, related GEAR Up expense savings of approximately $20 million, increased outside processing in line with growing revenue, higher FDIC insurance expense in part due to regulatory surcharge, and typical inflationary pressures. Additionally, 2015 benefited from $33 million in legal reserve releases, which is offset by lower pension expense in 2016.
  • Income tax expense to approximate 30 percent of pre-tax income.

Business Segments

Comerica's operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank and Wealth Management. The Finance Division is also reported as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at June 30, 2016. The accompanying narrative addresses second quarter 2016 results compared to first quarter 2016.

The following table presents net income (loss) by business segment.




















(dollar amounts in millions)

2nd Qtr '16


1st Qtr '16


2nd Qtr '15

Business Bank

$

154


93

%


$

94


74

%


$

181


81

%

Retail Bank

(2)


(1)



11


9



18


8


Wealth Management

13


8



22


17



26


11



165


100

%


127


100

%


225


100

%

Finance

(62)




(66)




(89)



Other (a)

1




(1)




(1)



     Total

$

104




$

60




$

135



(a) Includes items not directly associated with the three major business segments or the Finance Division.

 

Business Bank














(dollar amounts in millions)

2nd Qtr '16

1st Qtr '16

2nd Qtr '15

Net interest income

$

355



$

362



$

373



Provision for credit losses

46



151



61



Noninterest income

142



135



138



Noninterest expenses

222


(a)

207



175



Net income

154



94



181










Net credit-related charge-offs

42



57



23










Selected average balances:







Assets

39,617



38,635



39,134



Loans

38,574



37,561



38,109



Deposits

28,429



29,108



30,229



(a)  Included restructuring charge of $26 million in the second quarter 2016.

  • Average loans increased $1.0 billion, primarily reflecting increases in Commercial Real Estate, Mortgage Banker Finance and National Dealer Services, partially offset by a decrease in Energy.
  • Average deposits decreased $679 million, primarily reflecting decreases in Municipalities and Corporate Banking, partially offset by an increase in Mortgage Banker Finance.
  • Net interest income decreased $7 million, primarily reflecting the impact of an increase in net funds transfer pricing (FTP) charges and lower loan yields, largely due to the impact of nonaccrual loans and a negative residual value adjustment to assets in the leasing portfolio, partially offset by the benefit from the increase in average loans. The increase in net FTP charges primarily reflected an increase in the cost of funds as well as lower funding credits due to the decrease in average deposits.
  • The provision for credit losses decreased $105 million, primarily reflecting a decrease in Energy, partially offset by increases in Commercial Real Estate, National Dealer Services, and Technology and Life Sciences.
  • Noninterest income increased $7 million, primarily due to increases in syndication agent fees, card fees and customer derivative income.
  • Noninterest expenses increased $15 million, primarily due to second quarter 2016 restructuring charges. Excluding restructuring charges, noninterest expenses decreased $11 million, primarily reflecting an $8 million gain from the sale of leased assets and a decrease in salaries and benefits expense, partially offset by an increase in outside processing fees tied to revenue generating activities.

 

Retail Bank














(dollar amounts in millions)

2nd Qtr '16

1st Qtr '16

2nd Qtr '15

Net interest income

$

155



$

156



$

155



Provision for credit losses

1



3



(8)



Noninterest income

48



43



46



Noninterest expenses

205


(a)

179



181



Net income

(2)



11



18










Net credit-related charge-offs

1



2



1










Selected average balances:







Assets

6,557



6,544



6,459



Loans

5,879



5,867



5,770



Deposits

23,546



23,110



22,747



(a) Included restructuring charge of $19 million in the second quarter 2016.

  • Average deposits increased $436 million, primarily reflecting seasonal increases. Balances increased in both interest-bearing and noninterest-bearing deposits.
  • Net interest income decreased $1 million, primarily due to lower loan yields, partially offset by the benefit provided by the increase in average deposits.
  • The provision for credit losses decreased $2 million, primarily due to a decrease in Small Business.
  • Noninterest income increased $5 million, primarily reflecting the impact of a securities loss in the first quarter 2016 and an increase in card fees.
  • Noninterest expenses increased $26 million, primarily due to second quarter 2016 restructuring charges. Excluding restructuring charges, noninterest expenses increased $7 million, primarily reflecting an increase in outside processing expenses and smaller increases in several other categories.

 

Wealth Management














(dollar amounts in millions)

2nd Qtr '16

1st Qtr '16

2nd Qtr '15

Net interest income

$

42



$

43



$

45



Provision for credit losses

3



(5)



(9)



Noninterest income

62



59



60



Noninterest expenses

81


(a)

73



74



Net income

13



22



26










Net credit-related charge-offs (recoveries)

4



(1)



(5)










Selected average balances:







Assets

5,215



5,162



5,153



Loans

5,016



4,964



4,954



Deposits

4,213



4,171



4,060



(a) Included restructuring charge of $8 million in the second quarter 2016.

  • Average loans increased $52 million, primarily reflecting an increase in Private Banking.
  • Average deposits increased $42 million, primarily reflecting increases in money market and checking deposits as well as noninterest-bearing deposits.
  • The provision for credit losses increased $8 million, from a negative provision of $5 million in the first quarter 2016 to a provision of $3 million in the second quarter 2016.
  • Noninterest income increased $3 million, primarily due to an increase in fiduciary income.
  • Noninterest expenses increased $8 million, primarily due to second quarter 2016 restructuring charges. Excluding restructuring charges, noninterest expenses were stable.

Geographic Market Segments

Comerica also provides market segment results for three primary geographic markets: Michigan, California and Texas. In addition to the three primary geographic markets, Other Markets is also reported as a market segment. Other Markets includes Florida, Arizona, the International Finance division and businesses that have a significant presence outside of the three primary geographic markets. The tables below present the geographic market results based on the methodologies in effect at June 30, 2016.

The following table presents net income (loss) by market segment.




















(dollar amounts in millions)

2nd Qtr '16


1st Qtr '16


2nd Qtr '15

Michigan

$

57


34

%


$

71


56

%


$

98


44

%

California

50


30



73


58



71


31


Texas

3


2



(76)


(60)



14


6


Other Markets

55


34



59


46



42


19



165


100

%


127


100

%


225


100

%

Finance & Other (a)

(61)




(67)




(90)



     Total

$

104




$

60




$

135



 (a) Includes items not directly associated with the geographic markets.

  • Average loans increased $689 million in Other Markets, primarily reflecting an increase in Mortgage Banker Finance; $425 million in California, primarily reflecting increases in Commercial Real Estate and National Dealer Services; and $77 million in Texas, mostly due to increases in Commercial Real Estate and Private Banking, partially offset by a decrease in Energy. Average loans decreased $114 million in Michigan.
  • Average deposits decreased $322 million in Texas and $143 million in Michigan, with both markets primarily reflecting decreases in Municipalities and Corporate Banking, partially offset by an increase in Retail Banking. Average deposits increased $279 million in California, reflecting increases in most lines of business.
  • Net interest income decreased $9 million in Michigan and $4 million in Texas, and increased $1 million in California. The decrease in Michigan primarily reflected a decrease in loan yields, largely due to the impact of the negative residual value adjustment to assets in the leasing portfolio and lower nonaccrual interest recoveries in the second quarter, lower FTP credits resulting from a decrease in average deposits, and the impact of a decrease in average loans. The decrease in Texas primarily reflected lower FTP credits resulting from a decrease in average deposits and lower loan yields, largely due to the full quarter impact of loans transferred to nonaccrual in the first quarter 2016 and a decrease in accretion on the acquired loan portfolio. In California, the benefit from an increase in average loans was partially offset by an increase in net FTP charges, reflecting an increase in the cost of funds and a decrease in the deposit crediting rate.
  • The provision for credit losses decreased $137 million in Texas, and increased $23 million California and $9 million in Michigan. The decrease in Texas primarily reflected the impact of the reserve build for Energy in the first quarter 2016. In California, the increased provision primarily reflected increases in National Dealer Services, Private Banking and general Middle Market. The increase in Michigan primarily reflected an increased provision in Commercial Real Estate.
  • Noninterest income increased $5 million in Michigan, $1 million in Texas and $1 million in California. The increase in Michigan was primarily due to the impact of a securities loss in the first quarter 2016, an increase in customer derivative income and smaller increases in several other categories.
  • Noninterest expenses increased $16 million in California, $13 million in Texas and $8 million in Michigan. Excluding restructuring charges, noninterest expenses were unchanged in California, and decreased $2 million in Texas and $7 million in Michigan. The decrease in Michigan primarily reflected an $8 million gain from the sale of leased assets in the second quarter.

 

Michigan Market














(dollar amounts in millions)

2nd Qtr '16

1st Qtr '16

2nd Qtr '15

Net interest income

$

166



$

175



$

178



Provision for credit losses

3



(6)



(13)



Noninterest income

81



76



86



Noninterest expenses

159


(a)

151



129



Net income

57



71



98










Net credit-related charge-offs (recoveries)



5



(1)










Selected average balances:







Assets

13,299



13,402



13,851



Loans

12,660



12,774



13,290



Deposits

21,553



21,696



21,706



(a) Included restructuring charge of $15 million in the second quarter 2016.

 

California Market














(dollar amounts in millions)

2nd Qtr '16

1st Qtr '16

2nd Qtr '15

Net interest income

$

178



$

177



$

180



Provision for credit losses

17



(6)



4



Noninterest income

39



38



36



Noninterest expenses

120


(a)

104



99



Net income

50



73



71










Net credit-related charge-offs

17



8



6










Selected average balances:







Assets

17,997



17,541



16,696



Loans

17,708



17,283



16,429



Deposits

16,933



16,654



17,275



(a)  Included restructuring charge of $16 million in the second quarter 2016.

 

Texas Market














(dollar amounts in millions)

2nd Qtr '16

1st Qtr '16

2nd Qtr '15

Net interest income

$

119



$

123



$

130



Provision for credit losses

32



169



43



Noninterest income

31



30



30



Noninterest expenses

113


(a)

100



93



Net income (loss)

3



(76)



14










Net credit-related charge-offs

31



47



5










Selected average balances:







Assets

11,287



11,295



11,878



Loans

10,840



10,763



11,254



Deposits

10,052



10,374



10,959



(a)  Included restructuring charge of $15 million in the second quarter 2016.

Conference Call and Webcast

Comerica will host a conference call to review second quarter 2016 financial results at 7 a.m. CT Tuesday, July 19, 2016. Interested parties may access the conference call by calling (877) 523-5249 or (210) 591-1147 (event ID No. 22809119). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A replay of the Webcast can be accessed via Comerica's "Investor Relations" page at www.comerica.com.

Comerica Incorporated is a financial services company headquartered in Dallas, Texas, and strategically aligned by three major business segments: The Business Bank, The Retail Bank and Wealth Management. Comerica focuses on relationships and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico.

This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Comerica's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as a reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Forward-looking Statements

Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "anticipates," "believes," "contemplates," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "opportunity," "initiative," "outcome," "continue," "remain," "maintain," "on course," "trend," "objective," "looks forward," "projects," "models" and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "might," "can," "may" or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica's management based on information known to Comerica's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica's management for future or past operations, products or services, including the GEAR Up initiative, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries as well as estimates of the economic benefits of the GEAR Up initiative, estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in general economic, political or industry conditions; changes in monetary and fiscal policies, including changes in interest rates; changes in regulation or oversight; Comerica's ability to maintain adequate sources of funding and liquidity; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers, in particular the energy industry; unfavorable developments concerning credit quality; operational difficulties, failure of technology infrastructure or information security incidents; reliance on other companies to provide certain key components of business infrastructure; factors impacting noninterest expenses which are beyond Comerica's control; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; reductions in Comerica's credit rating; whether Comerica may achieve opportunities for revenue enhancements and efficiency improvements under the GEAR Up initiative, or changes in the scope or assumptions underlying the GEAR Up initiative; the interdependence of financial service companies; the implementation of Comerica's strategies and business initiatives; damage to Comerica's reputation; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; any future strategic acquisitions or divestitures; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; changes in accounting standards and the critical nature of Comerica's accounting policies. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. In particular, please refer to "Item 1A. Risk Factors" beginning on page 12 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2015 and "Item 1A. Risk Factors" beginning on page 54 of Comerica's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this 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


Six Months Ended


June 30,

March 31,

June 30,


June 30,

(in millions, except per share data)

2016

2016

2015


2016

2015

PER COMMON SHARE AND COMMON STOCK DATA







Diluted net income

$

0.58


$

0.34


$

0.73



$

0.92


$

1.46


Cash dividends declared

0.22


0.21


0.21



0.43


0.41









Average diluted shares (in thousands)

177,240


176,055


182,422



176,614


182,281


KEY RATIOS







Return on average common shareholders' equity

5.44

%

3.13

%

7.21

%


4.28

%

7.20

%

Return on average assets

0.59


0.34


0.79



0.47


0.78


Common equity tier 1 and tier 1 risk-based capital ratio (a)

10.48


10.58


10.40





Total risk-based capital ratio (a)

12.73


12.84


12.38





Leverage ratio (a)

10.41


10.60


10.56





Common equity ratio

10.79


11.08


10.76





Tangible common equity ratio (b)

9.98


10.23


9.92





AVERAGE BALANCES







Commercial loans

$

31,511


$

30,814


$

31,788



$

31,162


$

31,442


Real estate construction loans

2,429


2,114


1,807



2,272


1,872


Commercial mortgage loans

9,033


8,961


8,672



8,997


8,627


Lease financing

730


726


795



728


796


International loans

1,396


1,419


1,453



1,408


1,482


Residential mortgage loans

1,880


1,892


1,877



1,886


1,866


Consumer loans

2,490


2,466


2,441



2,478


2,409


Total loans

49,469


48,392


48,833



48,931


48,494









Earning assets

65,597


64,123


63,981



64,860


63,732


Total assets

70,668


69,228


68,963



69,948


68,852









Noninterest-bearing deposits

28,376


28,052


27,365



28,214


27,033


Interest-bearing deposits

28,145


28,656


30,033



28,401


30,163


Total deposits

56,521


56,708


57,398



56,615


57,196









Common shareholders' equity

7,654


7,632


7,512



7,643


7,482


NET INTEREST INCOME







Net interest income

$

445


$

447


$

421



$

892


$

834


Net interest margin (fully taxable equivalent)

2.74

%

2.81

%

2.65

%


2.78

%

2.65

%

CREDIT QUALITY







Total nonperforming assets

$

635


$

714


$

370












Loans past due 90 days or more and still accruing

35


13


18












Net credit-related charge-offs

47


58


19



$

105


$

27









Allowance for loan losses

729


724


618





Allowance for credit losses on lending-related commitments

43


46


50





Total allowance for credit losses

772


770


668












Allowance for loan losses as a percentage of total loans

1.45

%

1.47

%

1.24

%




Net credit-related charge-offs as a percentage of average total loans

0.38


0.49


0.15



0.43

%

0.11

%

Nonperforming assets as a percentage of total loans and foreclosed property

1.26


1.45


0.74





Allowance for loan losses as a percentage of total nonperforming loans

119


105


171





(a)  June 30, 2016 ratios are estimated.

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

 















 CONSOLIDATED BALANCE SHEETS

 Comerica Incorporated and Subsidiaries








June 30,

March 31,

December 31,

June 30,

(in millions, except share data)

2016

2016

2015

2015


(unaudited)

(unaudited)


(unaudited)

ASSETS





Cash and due from banks

$

1,172


$

977


$

1,157


$

1,148







Interest-bearing deposits with banks

2,938


2,025


4,990


4,817


Other short-term investments

100


94


113


119







Investment securities available-for-sale

10,712


10,607


10,519


8,267


Investment securities held-to-maturity

1,807


1,907


1,981


1,952







Commercial loans

32,360


31,562


31,659


32,723


Real estate construction loans

2,553


2,290


2,001


1,795


Commercial mortgage loans

9,038


8,982


8,977


8,674


Lease financing

684


731


724


786


International loans

1,365


1,455


1,368


1,420


Residential mortgage loans

1,856


1,874


1,870


1,865


Consumer loans

2,524


2,483


2,485


2,478


Total loans

50,380


49,377


49,084


49,741


Less allowance for loan losses

(729)


(724)


(634)


(618)


Net loans

49,651


48,653


48,450


49,123







Premises and equipment

544


541


550


541


Accrued income and other assets

4,356


4,203


4,117


3,978


Total assets

$

71,280


$

69,007


$

71,877


$

69,945







LIABILITIES AND SHAREHOLDERS' EQUITY





Noninterest-bearing deposits

$

28,559


$

28,025


$

30,839


$

28,167







Money market and interest-bearing checking deposits

22,539


22,872


23,532


23,786


Savings deposits

2,022


2,006


1,898


1,841


Customer certificates of deposit

3,230


3,401


3,552


4,367


Foreign office time deposits

24


47


32


99


Total interest-bearing deposits

27,815


28,326


29,014


30,093


Total deposits

56,374


56,351


59,853


58,260







Short-term borrowings

12


514


23


56


Accrued expenses and other liabilities

1,279


1,389


1,383


1,265


Medium- and long-term debt

5,921


3,109


3,058


2,841


Total liabilities

63,586


61,363


64,317


62,422







Common stock - $5 par value:





Authorized - 325,000,000 shares





Issued - 228,164,824 shares

1,141


1,141


1,141


1,141


Capital surplus

2,165


2,158


2,173


2,158


Accumulated other comprehensive loss

(295)


(328)


(429)


(396)


Retained earnings

7,157


7,097


7,084


6,908


Less cost of common stock in treasury - 54,247,325 shares at 6/30/16, 53,086,733 shares at 3/31/16, 52,457,113 shares at 12/31/15, and 49,803,515 shares at 6/30/15

(2,474)


(2,424)


(2,409)


(2,288)


Total shareholders' equity

7,694


7,644


7,560


7,523


Total liabilities and shareholders' equity

$

71,280


$

69,007


$

71,877


$

69,945


 
















CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries











Three Months Ended


Six Months Ended


June 30,


June 30,

(in millions, except per share data)

2016

2015


2016

2015

INTEREST INCOME






Interest and fees on loans

$

406


$

388



$

812


$

766


Interest on investment securities

62


53



124


106


Interest on short-term investments

5


3



9


7


Total interest income

473


444



945


879


INTEREST EXPENSE






Interest on deposits

10


11



20


22


Interest on medium- and long-term debt

18


12



33


23


Total interest expense

28


23



53


45


Net interest income

445


421



892


834


Provision for credit losses

49


47



197


61


Net interest income after provision for credit losses

396


374



695


773


NONINTEREST INCOME






Card fees

77


69



151


132


Service charges on deposit accounts

55


56



110


111


Fiduciary income

49


48



95


95


Commercial lending fees

22


22



42


47


Letter of credit fees

13


13



26


26


Bank-owned life insurance

9


10



18


19


Foreign exchange income

11


9



21


19


Brokerage fees

5


4



9


8


Net securities losses

(1)




(3)


(2)


Other noninterest income

29


27



46


54


Total noninterest income

269


258



515


509


NONINTEREST EXPENSES






Salaries and benefits expense

247


251



495


504


Outside processing fee expense

84


83



163


156


Net occupancy expense

39


39



77


77


Equipment expense

14


13



27


26


Restructuring charges

53




53



Software expense

30


24



59


47


FDIC insurance expense

14


9



25


18


Advertising expense

6


5



10


11


Litigation-related expense


(30)




(29)


Other noninterest expenses

32


39



70


78


Total noninterest expenses

519


433



979


888


Income before income taxes

146


199



231


394


Provision for income taxes

42


64



67


125


NET INCOME

104


135



164


269


Less income allocated to participating securities

1


1



2


3


Net income attributable to common shares

$

103


$

134



$

162


$

266


Earnings per common share:






Basic

$

0.60


$

0.76



$

0.94


$

1.51


Diluted

0.58


0.73



0.92


1.46








Comprehensive income

137


109



298


285








Cash dividends declared on common stock

38


37



75


73


Cash dividends declared per common share

0.22


0.21



0.43


0.41


 






























CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries





















Second

First

Fourth

Third

Second


Second Quarter 2016 Compared To:


Quarter

Quarter

Quarter

Quarter

Quarter


First Quarter 2016


Second Quarter 2015

(in millions, except per share data)

2016

2016

2015

2015

2015


 Amount

  Percent


Amount

  Percent

INTEREST INCOME












Interest and fees on loans

$

406


$

406


$

395


$

390


$

388



$


%


$

18


5

%

Interest on investment securities

62


62


56


54


53






9


18


Interest on short-term investments

5


4


6


4


3



1


10



2


44


Total interest income

473


472


457


448


444



1




29


7


INTEREST EXPENSE












Interest on deposits

10


10


10


11


11






(1)


(11)


Interest on medium- and long-term debt

18


15


14


15


12



3


20



6


49


Total interest expense

28


25


24


26


23



3


10



5


22


Net interest income

445


447


433


422


421



(2)




24


6


Provision for credit losses

49


148


60


26


47



(99)


(67)



2


5


Net interest income after provision

for credit losses

396


299


373


396


374



97


33



22


6


NONINTEREST INCOME












Card fees

77


74


75


72


69



3


4



8


11


Service charges on deposit accounts

55


55


55


57


56






(1)


(3)


Fiduciary income

49


46


45


47


48



3


6



1


1


Commercial lending fees

22


20


30


22


22



2


9





Letter of credit fees

13


13


14


13


13








Bank-owned life insurance

9


9


11


10


10






(1)


(4)


Foreign exchange income

11


10


11


10


9



1


3



2


16


Brokerage fees

5


4


4


5


4



1


16



1


6


Net securities losses

(1)


(2)






1


89



(1)


n/m


Other noninterest income

29


17


23


26


27



12


70



2


12


Total noninterest income

269


246


268


262


258



23


9



11


4


NONINTEREST EXPENSES












Salaries and benefits expense

247


248


262


243


251



(1)


(1)



(4)


(2)


Outside processing fee expense

84


79


81


84


83



5


7



1


2


Net occupancy expense

39


38


41


41


39



1


4





Equipment expense

14


13


14


13


13



1


6



1


7


Restructuring charges

53







53


n/m



53


n/m


Software expense

30


29


26


26


24



1


7



6


28


FDIC insurance expense

14


11


10


9


9



3


14



5


55


Advertising expense

6


4


7


6


5



2


93



1


22


Litigation-related expense




(3)


(30)






30


n/m


Other noninterest expenses

32


38


43


40


39



(6)


(17)



(7)


(19)


Total noninterest expenses

519


460


484


459


433



59


13



86


20


Income before income taxes

146


85


157


199


199



61


73



(53)


(27)


Provision for income taxes

42


25


41


63


64



17


68



(22)


(34)


NET INCOME

104


60


116


136


135



44


74



(31)


(23)


Less income allocated to participating securities

1


1


1


2


1








Net income attributable to common shares

$

103


$

59


$

115


$

134


$

134



$

44


74

%


$

(31)


(23)%


Earnings per common share:












Basic

$

0.60


$

0.34


$

0.65


$

0.76


$

0.76



$

0.26


76

%


$

(0.16)


(21)%


Diluted

0.58


0.34


0.64


0.74


0.73



0.24


71



(0.15)


(21)














Comprehensive income

137


161


32


187


109



(24)


(15)



28


27














Cash dividends declared on common stock

38


37


37


37


37



1


4



1


7


Cash dividends declared per common share

0.22


0.21


0.21


0.21


0.21



0.01


5



0.01


5



n/m - not meaningful

 



















ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)

Comerica Incorporated and Subsidiaries











2016


2015

(in millions)

2nd Qtr

1st Qtr


4th Qtr

3rd Qtr

2nd Qtr








Balance at beginning of period

$

724


$

634



$

622


$

618


$

601









Loan charge-offs:







Commercial

48


72



73


30


17


Commercial mortgage




1



2


Lease financing






1


International

4


3




1


11


Residential mortgage






1


Consumer

2


2



2


3


3


Total loan charge-offs

54


77



76


34


35









Recoveries on loans previously charged-off:







Commercial

9


12



6


8


10


Real estate construction






1


Commercial mortgage

2


12



11


2


5


Residential mortgage




1




Consumer

1


1



7


1


1


Total recoveries

12


25



25


11


17


Net loan charge-offs

42


52



51


23


18


Provision for loan losses

47


141



63


28


35


Foreign currency translation adjustment


1




(1)



Balance at end of period

$

729


$

724



$

634


$

622


$

618









Allowance for loan losses as a percentage of total loans

1.45

%

1.47

%


1.29

%

1.27

%

1.24

%








Net loan charge-offs as a percentage of average total loans

0.34


0.43



0.42


0.19


0.15


 



















ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited)

Comerica Incorporated and Subsidiaries










2016


2015

(in millions)

2nd Qtr

1st Qtr


4th Qtr

3rd Qtr

2nd Qtr








Balance at beginning of period

$

46


$

45



$

48


$

50


$

39


Charge-offs on lending-related commitments (a)

(5)


(6)





(1)


Provision for credit losses on lending-related commitments

2


7



(3)


(2)


12


Balance at end of period

$

43


$

46



$

45


$

48


$

50









Unfunded lending-related commitments sold

$

12


$

11



$


$


$

12


(a)  Charge-offs result from the sale of unfunded lending-related commitments.

 



















NONPERFORMING ASSETS (unaudited)

Comerica Incorporated and Subsidiaries










2016


2015

(in millions)

2nd Qtr

1st Qtr


4th Qtr

3rd Qtr

2nd Qtr








SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS



Nonaccrual loans:







Business loans:







Commercial

$

482


$

547



$

238


$

214


$

186


Real estate construction




1


1


1


Commercial mortgage

44


47



60


66


77


Lease financing

6


6



6


8


11


International

18


27



8


8


9


Total nonaccrual business loans

550


627



313


297


284


Retail loans:







Residential mortgage

26


26



27


31


35


Consumer:







Home equity

28


27



27


28


29


Other consumer

1


1




1


1


    Total consumer

29


28



27


29


30


Total nonaccrual retail loans

55


54



54


60


65


Total nonaccrual loans

605


681



367


357


349


Reduced-rate loans

8


8



12


12


12


Total nonperforming loans

613


689



379


369


361


Foreclosed property

22


25



12


12


9


Total nonperforming assets

$

635


$

714



$

391


$

381


$

370









Nonperforming loans as a percentage of total loans

1.22

%

1.40

%


0.77

%

0.75

%

0.72

%

Nonperforming assets as a percentage of total loans

 and foreclosed property

1.26


1.45



0.80


0.78


0.74


Allowance for loan losses as a percentage of total

nonperforming loans

119


105



167


169


171


Loans past due 90 days or more and still accruing

$

35


$

13



$

17


$

5


$

18









ANALYSIS OF NONACCRUAL LOANS







Nonaccrual loans at beginning of period

$

681


$

367



$

357


$

349


$

266


Loans transferred to nonaccrual (a)

107


446



105


69


145


Nonaccrual business loan gross charge-offs (b)

(52)


(75)



(49)


(31)


(31)


Nonaccrual business loans sold (c)

(40)


(21)





(1)


Payments/Other (d)

(91)


(36)



(46)


(30)


(30)


Nonaccrual loans at end of period

$

605


$

681



$

367


$

357


$

349


(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

$

52


$

75



$

49


$

31


$

31


Performing business loans




25




Consumer and residential mortgage loans

2


2



2


3


4


    Total gross loan charge-offs

$

54


$

77



$

76


$

34


$

35


(c) Analysis of loans sold:






      Nonaccrual business loans

$

40


$

21



$


$


$

1


      Performing criticized loans




3




    Total criticized loans sold

$

40


$

21



$

3


$


$

1


(d) Includes net changes related to nonaccrual loans with balances less than $2 million, payments on nonaccrual loans with book balances greater than $2 million and transfers of nonaccrual loans to foreclosed property. Excludes business loan gross charge-offs and business nonaccrual loans sold.

 




















ANALYSIS OF NET INTEREST INCOME (unaudited)

Comerica Incorporated and Subsidiaries














Six Months Ended


June 30, 2016


June 30, 2015


Average


Average


Average


Average

(dollar amounts in millions)

Balance

Interest

Rate (a)


Balance

Interest

Rate (a)









Commercial loans

$

31,162


$

500


3.24

%


$

31,442


$

475


3.06

%

Real estate construction loans

2,272


41


3.64



1,872


32


3.43


Commercial mortgage loans

8,997


158


3.53



8,627


146


3.41


Lease financing

728


10


2.66



796


12


3.12


International loans

1,408


26


3.64



1,482


27


3.69


Residential mortgage loans

1,886


36


3.85



1,866


35


3.77


Consumer loans

2,478


41


3.35



2,409


39


3.23


Total loans

48,931


812


3.34



48,494


766


3.19










Mortgage-backed securities (b)

9,341


102


2.21



9,064


101


2.24


Other investment securities

3,004


22


1.50



858


5


1.13


Total investment securities (b)

12,345


124


2.04



9,922


106


2.15










Interest-bearing deposits with banks

3,478


9


0.50



5,216


7


0.25


Other short-term investments

106



0.76



100



0.75


Total earning assets

64,860


945


2.94



63,732


879


2.79










Cash and due from banks

1,071





1,034




Allowance for loan losses

(714)





(607)




Accrued income and other assets

4,731





4,693




Total assets

$

69,948





$

68,852












Money market and interest-bearing checking deposits

$

22,989


13


0.11



$

23,809


13


0.11


Savings deposits

1,973



0.02



1,810



0.02


Customer certificates of deposit

3,399


7


0.40



4,423


8


0.37


Foreign office time deposits

40



0.34



121


1


1.36


Total interest-bearing deposits

28,401


20


0.14



30,163


22


0.14










Short-term borrowings

262



0.45



94



0.05


Medium- and long-term debt

4,083


33


1.62



2,675


23


1.78


Total interest-bearing sources

32,746


53


0.32



32,932


45


0.28










Noninterest-bearing deposits

28,214





27,033




Accrued expenses and other liabilities

1,345





1,405




Total shareholders' equity

7,643





7,482




Total liabilities and shareholders' equity

$

69,948





$

68,852












Net interest income/rate spread


$

892


2.62




$

834


2.51










Impact of net noninterest-bearing sources of funds



0.16





0.14


Net interest margin (as a percentage of average earning assets)



2.78

%




2.65

%

(a)  Fully taxable equivalent.

(b)  Includes investment securities available-for-sale and investment securities held-to-maturity.

 





























ANALYSIS OF NET INTEREST INCOME (unaudited)

Comerica Incorporated and Subsidiaries




















Three Months Ended


June 30, 2016


March 31, 2016


June 30, 2015


Average


Average


Average


Average


Average


Average

(dollar amounts in millions)

Balance

Interest

Rate (a)


Balance

Interest

Rate (a)


Balance

Interest

Rate (a)













Commercial loans

$

31,511


$

251


3.23

%


$

30,814


$

249


3.25

%


$

31,788


$

242


3.07

%

Real estate construction loans

2,429


22


3.62



2,114


19


3.66



1,807


16


3.51


Commercial mortgage loans

9,033


78


3.47



8,961


80


3.59



8,672


73


3.38


Lease financing

730


4


1.98



726


6


3.33



795


6


3.19


International loans

1,396


13


3.63



1,419


13


3.65



1,453


13


3.68


Residential mortgage loans

1,880


17


3.76



1,892


19


3.94



1,877


18


3.78


Consumer loans

2,490


21


3.37



2,466


20


3.33



2,441


20


3.25


Total loans

49,469


406


3.31



48,392


406


3.38



48,833


388


3.20














Mortgage-backed securities (b)

9,326


51


2.21



9,356


51


2.22



9,057


50


2.23


Other investment securities

3,008


11


1.50



3,001


11


1.50



879


3


1.16


Total investment securities (b)

12,334


62


2.03



12,357


62


2.05



9,936


53


2.13














Interest-bearing deposits with banks

3,690


5


0.50



3,265


4


0.50



5,110


3


0.25


Other short-term investments

104



0.58



109



0.93



102



0.42


Total earning assets

65,597


473


2.91



64,123


472


2.97



63,981


444


2.79














Cash and due from banks

1,074





1,068





1,041




Allowance for loan losses

(749)





(680)





(613)




Accrued income and other assets

4,746





4,717





4,554




Total assets

$

70,668





$

69,228





$

68,963
















Money market and interest-bearing checking deposits

$

22,785


6


0.11



$

23,193


6


0.11



$

23,659


6


0.11


Savings deposits

2,010



0.02



1,936



0.02



1,834



0.02


Customer certificates of deposit

3,320


4


0.40



3,477


4


0.40



4,422


4


0.37


Foreign office time deposits

30



0.35



50



0.33



118


1


1.26


Total interest-bearing deposits

28,145


10


0.14



28,656


10


0.14



30,033


11


0.14














Short-term borrowings

159



0.45



365



0.45



78



0.04


Medium- and long-term debt

5,072


18


1.42



3,093


15


1.94



2,661


12


1.83


Total interest-bearing sources

33,376


28


0.33



32,114


25


0.32



32,772


23


0.28














Noninterest-bearing deposits

28,376





28,052





27,365




Accrued expenses and other liabilities

1,262





1,430





1,314




Total shareholders' equity

7,654





7,632





7,512




Total liabilities and shareholders' equity

$

70,668





$

69,228





$

68,963
















Net interest income/rate spread


$

445


2.58




$

447


2.65




$

421


2.51














Impact of net noninterest-bearing sources of funds



0.16





0.16





0.14


Net interest margin (as a percentage of average earning assets)



2.74

%




2.81

%




2.65

%

(a)  Fully taxable equivalent.

(b)  Includes investment securities available-for-sale and investment securities held-to-maturity.

 


















CONSOLIDATED STATISTICAL DATA (unaudited)

Comerica Incorporated and Subsidiaries










June 30,

March 31,

December 31,

September 30,

June 30,

(in millions, except per share data)

2016

2016

2015

2015

2015







Commercial loans:






Floor plan

$

4,120


$

3,902


$

3,939


$

3,538


$

3,840


Other

28,240


27,660


27,720


28,239


28,883


Total commercial loans

32,360


31,562


31,659


31,777


32,723


Real estate construction loans

2,553


2,290


2,001


1,874


1,795


Commercial mortgage loans

9,038


8,982


8,977


8,787


8,674


Lease financing

684


731


724


751


786


International loans

1,365


1,455


1,368


1,382


1,420


Residential mortgage loans

1,856


1,874


1,870


1,880


1,865


Consumer loans:






Home equity

1,779


1,738


1,720


1,714


1,682


Other consumer

745


745


765


777


796


Total consumer loans

2,524


2,483


2,485


2,491


2,478


Total loans

$

50,380


$

49,377


$

49,084


$

48,942


$

49,741








Goodwill

$

635


$

635


$

635


$

635


$

635


Core deposit intangible

9


9


10


10


11


Other intangibles

3


4


4


4


4








Common equity tier 1 capital (a)

7,346


7,331


7,350


7,327


7,280


Risk-weighted assets (a)

70,097


69,319


69,731


69,718


69,967








Common equity tier 1 and tier 1 risk-based capital ratio (a)

10.48

%

10.58

%

10.54

%

10.51

%

10.40

%

Total risk-based capital ratio (a)

12.73


12.84


12.69


12.82


12.38


Leverage ratio (a)

10.41


10.60


10.22


10.28


10.56


Common equity ratio

10.79


11.08


10.52


10.73


10.76


Tangible common equity ratio (b)

9.98


10.23


9.70


9.91


9.92








Common shareholders' equity per share of common stock

$

44.24


$

43.66


$

43.03


$

43.02


$

42.18


Tangible common equity per share of common stock (b)

40.52


39.96


39.33


39.36


38.53


Market value per share for the quarter:






High

47.55


41.74


47.44


52.93


53.45


Low

36.27


30.48


39.52


40.01


44.38


Close

41.13


37.87


41.83


41.10


51.32








Quarterly ratios:






Return on average common shareholders' equity

5.44

%

3.13

%

6.08

%

7.19

%

7.21

%

Return on average assets

0.59


0.34


0.64


0.76


0.79


Efficiency ratio (c)

72.48


66.07


69.00


66.98


63.49








Number of banking centers

473


477


477


477


477








Number of employees - full time equivalent

8,792


8,869


8,880


8,941


8,901


(a)

June 30, 2016 amounts and ratios are estimated.

(b)

See Reconciliation of Non-GAAP Financial Measures.

(c)

Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains (losses).

 












PARENT COMPANY ONLY BALANCE SHEETS (unaudited)

Comerica Incorporated








June 30,

December 31,

June 30,

(in millions, except share data)

2016

2015

2015





ASSETS




Cash and due from subsidiary bank

$

8


$

4


$

7


Short-term investments with subsidiary bank

563


569


861


Other short-term investments

87


89


94


Investment in subsidiaries, principally banks

7,666


7,523


7,500


Premises and equipment

2


3


2


Other assets

163


137


122


      Total assets

$

8,489


$

8,325


$

8,586






LIABILITIES AND SHAREHOLDERS' EQUITY




Medium- and long-term debt

$

632


$

608


$

903


Other liabilities

163


157


160


      Total liabilities

795


765


1,063






Common stock - $5 par value:




    Authorized - 325,000,000 shares




    Issued - 228,164,824 shares

1,141


1,141


1,141


Capital surplus

2,165


2,173


2,158


Accumulated other comprehensive loss

(295)


(429)


(396)


Retained earnings

7,157


7,084


6,908


Less cost of common stock in treasury - 54,247,325 shares at 6/30/16, 52,457,113 shares at 12/31/15 and 49,803,515 shares at 6/30/15

(2,474)


(2,409)


(2,288)


      Total shareholders' equity

7,694


7,560


7,523


      Total liabilities and shareholders' equity

$

8,489


$

8,325


$

8,586


 























CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)

Comerica Incorporated and Subsidiaries

















Accumulated





Common Stock


Other



Total


Shares


Capital

Comprehensive

Retained

Treasury

Shareholders'

(in millions, except per share data)

 Outstanding

Amount

Surplus

Loss

Earnings

Stock

Equity









BALANCE AT DECEMBER 31, 2014

179.0


$

1,141


$

2,188


$

(412)


$

6,744


$

(2,259)


$

7,402


Net income





269



269


Other comprehensive income, net of tax




16




16


Cash dividends declared on common stock ($0.41 per share)





(73)



(73)


Purchase of common stock

(2.5)






(115)


(115)


Purchase and retirement of warrants



(10)





(10)


Net issuance of common stock under employee stock plans

0.9



(23)



(10)


43


10


Net issuance of common stock for warrants

1.0



(21)



(22)


43



Share-based compensation



24





24


BALANCE AT JUNE 30, 2015

178.4


$

1,141


$

2,158


$

(396)


$

6,908


$

(2,288)


$

7,523










BALANCE AT DECEMBER 31, 2015

175.7


$

1,141


$

2,173


$

(429)


$

7,084


$

(2,409)


$

7,560


Net income





164



164


Other comprehensive income, net of tax




134




134


Cash dividends declared on common stock ($0.43 per share)





(75)



(75)


Purchase of common stock

(2.9)






(114)


(114)


Net issuance of common stock under employee stock plans

1.1



(33)



(16)


49



Share-based compensation



25





25


BALANCE AT JUNE 30, 2016

173.9


$

1,141


$

2,165


$

(295)


$

7,157


$

(2,474)


$

7,694


 


























 BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)

 Comerica Incorporated and Subsidiaries

































(dollar amounts in millions)

Business


Retail


Wealth







Three Months Ended June 30, 2016

Bank


Bank


Management


Finance


Other


Total

Earnings summary:












Net interest income (expense)

$

355



$

155



$

42



$

(111)



$

4



$

445


Provision for credit losses

46



1



3





(1)



49


Noninterest income

142



48



62



13



4



269


Noninterest expenses

222



205



81



2



9



519


Provision (benefit) for income taxes

75



(1)



7



(38)



(1)



42


Net income (loss)

$

154



$

(2)



$

13



$

(62)



$

1



$

104


Net credit-related charge-offs

$

42



$

1



$

4



$



$



$

47














Selected average balances:












Assets

$

39,617



$

6,557



$

5,215



$

14,135



$

5,144



$

70,668


Loans

38,574



5,879



5,016







49,469


Deposits

28,429



23,546



4,213



62



271



56,521














Statistical data:












Return on average assets (a)

1.55

%


(0.03)%



1.02

%


N/M



N/M



0.59

%

Efficiency ratio (b)

44.46



101.12



77.65



N/M



N/M



72.48















Business


Retail


Wealth







Three Months Ended March 31, 2016

Bank


Bank


Management


Finance


Other


Total

Earnings summary:












Net interest income (expense)

$

362



$

156



$

43



$

(118)



$

4



$

447


Provision for credit losses

151



3



(5)





(1)



148


Noninterest income

135



43



59



14



(5)



246


Noninterest expenses

207



179



73



2



(1)



460


Provision (benefit) for income taxes

45



6



12



(40)



2



25


Net income (loss)

$

94



$

11



$

22



$

(66)



$

(1)



$

60


Net credit-related charge-offs (recoveries)

$

57



$

2



$

(1)



$



$



$

58














Selected average balances:












Assets

$

38,635



$

6,544



$

5,162



$

14,162



$

4,725



$

69,228


Loans

37,561



5,867



4,964







48,392


Deposits

29,108



23,110



4,171



103



216



56,708














Statistical data:












Return on average assets (a)

0.97

%


0.19

%


1.69

%


N/M



N/M



0.34

%

Efficiency ratio (b)

41.62



88.91



71.47



N/M



N/M



66.07















Business


Retail


Wealth







Three Months Ended June 30, 2015

Bank


Bank


Management


Finance


Other


Total

Earnings summary:












Net interest income (expense)

$

373



$

155



$

45



$

(154)



$

2



$

421


Provision for credit losses

61



(8)



(9)





3



47


Noninterest income

138



46



60



14





258


Noninterest expenses

175



181



74



2



1



433


Provision (benefit) for income taxes

94



10



14



(53)



(1)



64


Net income (loss)

$

181



$

18



$

26



$

(89)



$

(1)



$

135


Net credit-related charge-offs (recoveries)

$

23



$

1



$

(5)



$



$



$

19














Selected average balances:












Assets

$

39,134



$

6,459



$

5,153



$

11,697



$

6,520



$

68,963


Loans

38,109



5,770



4,954







48,833


Deposits

30,229



22,747



4,060



93



269



57,398














Statistical data:












Return on average assets (a)

1.86

%


0.30

%


2.01

%


N/M



N/M



0.79

%

Efficiency ratio (b)

33.96



89.88



70.28



N/M



N/M



63.49


(a)

Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.

(b)

Noninterest expenses as a percentage of the sum of net interest income (fully taxable equivalent basis) and noninterest income excluding net securities gains.

N/M - Not Meaningful

 


























 MARKET SEGMENT FINANCIAL RESULTS (unaudited)

 Comerica Incorporated and Subsidiaries
































(dollar amounts in millions)




Other


Finance



Three Months Ended June 30, 2016

Michigan


California


Texas


Markets


& Other


Total

Earnings summary:












Net interest income (expense)

$

166



$

178



$

119



$

89



$

(107)



$

445


Provision for credit losses

3



17



32



(2)



(1)



49


Noninterest income

81



39



31



101



17



269


Noninterest expenses

159



120



113



116



11



519


Provision (benefit) for income taxes

28



30



2



21



(39)



42


Net income (loss)

$

57



$

50



$

3



$

55



$

(61)



$

104


Net credit-related charge-offs (recoveries)

$



$

17



$

31



$

(1)



$



$

47














Selected average balances:












Assets

$

13,299



$

17,997



$

11,287



$

8,806



$

19,279



$

70,668


Loans

12,660



17,708



10,840



8,261





49,469


Deposits

21,553



16,933



10,052



7,650



333



56,521














Statistical data:












Return on average assets (a)

1.01

%


1.10

%


0.11

%


2.52

%


N/M



0.59

%

Efficiency ratio (b)

64.13



55.30



74.91



60.98



N/M



72.48





















Other


Finance



Three Months Ended March 31, 2016

Michigan


California


Texas


Markets


& Other


Total

Earnings summary:












Net interest income (expense)

$

175



$

177



$

123



$

86



$

(114)



$

447


Provision for credit losses

(6)



(6)



169



(8)



(1)



148


Noninterest income

76



38



30



93



9



246


Noninterest expenses

151



104



100



104



1



460


Provision (benefit) for income taxes

35



44



(40)



24



(38)



25


Net income (loss)

$

71



$

73



$

(76)



$

59



$

(67)



$

60


Net credit-related charge-offs (recoveries)

$

5



$

8



$

47



$

(2)



$



$

58














Selected average balances:












Assets

$

13,402



$

17,541



$

11,295



$

8,103



$

18,887



$

69,228


Loans

12,774



17,283



10,763



7,572





48,392


Deposits

21,696



16,654



10,374



7,665



319



56,708














Statistical data:












Return on average assets (a)

1.26

%


1.66

%


(2.54)%



2.84

%


N/M



0.34

%

Efficiency ratio (b)

59.59



48.10



65.37



58.36



N/M



66.07





















Other


Finance



Three Months Ended June 30, 2015

Michigan


California


Texas


Markets


& Other


Total

Earnings summary:












Net interest income (expense)

$

178



$

180



$

130



$

85



$

(152)



$

421


Provision for credit losses

(13)



4



43



10



3



47


Noninterest income

86



36



30



92



14



258


Noninterest expenses

129



99



93



109



3



433


Provision (benefit) for income taxes

50



42



10



16



(54)



64


Net income (loss)

$

98



$

71



$

14



$

42



$

(90)



$

135


Net credit-related charge-offs (recoveries)

$

(1)



$

6



$

5



$

9



$



$

19














Selected average balances:












Assets

$

13,851



$

16,696



$

11,878



$

8,321



$

18,217



$

68,963


Loans

13,290



16,429



11,254



7,860





48,833


Deposits

21,706



17,275



10,959



7,096



362



57,398














Statistical data:












Return on average assets (a)

1.73

%


1.54

%


0.45

%


2.03

%


N/M



0.79

%

Efficiency ratio (b)

48.09



45.90



58.13



61.56



N/M



63.49


(a)

Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.

(b)

Noninterest expenses as a percentage of the sum of net interest income (fully taxable equivalent basis) and noninterest income excluding net securities gains.

N/M - Not Meaningful

 


















RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

Comerica Incorporated and Subsidiaries









June 30,

March 31,

December 31,

September 30,

June 30,

(dollar amounts in millions)

2016

2016

2015

2015

2015







Tangible Common Equity Ratio:






Common shareholders' equity

$

7,694


$

7,644


$

7,560


$

7,622


$

7,523


Less:






Goodwill

635


635


635


635


635


Other intangible assets

12


13


14


14


15


Tangible common equity

$

7,047


$

6,996


$

6,911


$

6,973


$

6,873








Total assets

$

71,280


$

69,007


$

71,877


$

71,012


$

69,945


Less:






Goodwill

635


635


635


635


635


Other intangible assets

12


13


14


14


15


Tangible assets

$

70,633


$

68,359


$

71,228


$

70,363


$

69,295








Common equity ratio

10.79

%

11.08

%

10.52

%

10.73

%

10.76

%

Tangible common equity ratio

9.98


10.23


9.70


9.91


9.92








Tangible Common Equity per Share of Common Stock:






Common shareholders' equity

$

7,694


$

7,644


$

7,560


$

7,622


$

7,523


Tangible common equity

7,047


6,996


6,911


6,973


6,873








Shares of common stock outstanding (in millions)

174


175


176


177


178








Common shareholders' equity per share of common stock

$

44.24


$

43.66


$

43.03


$

43.02


$

42.18


Tangible common equity per share of common stock

40.52


39.96


39.33


39.36


38.53


The tangible common equity ratio removes preferred stock and the effect of intangible assets from capital and the effect of intangible assets from total assets. Tangible common equity per share of common stock removes the effect of intangible assets from common shareholders equity per share of common stock. Comerica believes these measurements are meaningful measures of capital adequacy used by investors, regulators, management and others to evaluate the adequacy of common equity and to compare against other companies in the industry.

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/comerica-reports-second-quarter-2016-financial-results-300300374.html

SOURCE Comerica Incorporated


Source: PR Newswire (July 19, 2016 - 6:40 AM EDT)

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