Filed by Comerica Incorporated

Pursuant to Rule 425 under the Securities Act of 1933

 

Subject Company: Sterling Bancshares, Inc.

(Commission File No. 1-34768)

 

The following document is filed herewith pursuant to Rule 425 under the Securities Act of 1933:

 

·                  Press Release of Comerica Incorporated dated July 19, 2011

 

Any statements in this filing 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,” “opportunity,” “initiative,” “outcome,” “continue,” “remain,” “maintain,” “trend,” “objective,” “pending,” “looks forward” 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 filing 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 changes in general economic, political or industry conditions and related credit and market conditions; changes in trade, monetary and fiscal policies, including the interest rate policies of the Federal Reserve Board; adverse conditions in the capital markets; the interdependence of financial service companies; changes in regulation or oversight, including the effects of recently enacted legislation, actions taken by or proposed by the U.S. Treasury, the Board of Governors of the Federal Reserve System, the Texas Department of Banking and the Federal Deposit Insurance Corporation, legislation or regulations enacted in the future, and the impact and expiration of such legislation and regulatory actions; unfavorable developments concerning credit quality; the proposed acquisition of Sterling Bancshares, Inc. (“Sterling”), or any future acquisitions; the effects of more stringent capital or liquidity requirements; 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 implementation of Comerica’s strategies and business models, including the anticipated performance of any new banking centers; Comerica’s ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; operational difficulties or information security problems; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; the entry of new competitors in Comerica’s markets; changes in customer borrowing, repayment, investment and deposit practices; 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; the effectiveness of methods of reducing risk exposures; the effects of war and other armed conflicts or acts of terrorism and the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods. 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 (“SEC”). In particular, please refer to “Item 1A. Risk Factors” beginning on page 16 of Comerica’s Annual Report on Form 10-K for the year ended December 31, 2010. 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 filing 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.

 



 

In connection with the proposed merger transaction, Comerica has filed with the SEC a Registration Statement on Form S-4 that includes a Proxy Statement of Sterling and a Prospectus of Comerica, and Sterling mailed the definitive Proxy Statement/Prospectus to its shareholders on or about April 6, 2011. Each of Comerica and Sterling may file other relevant documents concerning the proposed transaction. SHAREHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE DEFINITIVE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION.

 

A free copy of the definitive Proxy Statement/Prospectus, as well as other filings containing information about Comerica and Sterling, may be obtained at the SEC’s Internet site (http://www.sec.gov). You may be able to obtain these documents, free of charge, from Comerica at www.comerica.com under the tab “Investor Relations” and then under the heading “SEC Filings” or from Sterling by accessing Sterling’s website at www.banksterling.com under the tab “Investor Relations” and then under the heading “SEC Filings.”

 



 

GRAPHIC

 

COMERICA REPORTS SECOND QUARTER 2011 NET INCOME OF $96 MILLION

 

Commercial Loan Growth Driven by Middle Market, Global Corporate Banking

and Specialty Businesses

 

Pending Acquisition of Sterling Bancshares, Inc. (Sterling) Expected to Close July 28, 2011

 

DALLAS/July 19, 2011 — Comerica Incorporated (NYSE: CMA) today reported second quarter 2011 net income of $96 million, a decrease of $7 million compared to $103 million for the first quarter 2011, primarily due to the impact of a federal income tax settlement. Second quarter 2011 also included $5 million of costs incurred in connection with the pending acquisition of Sterling.

 

(dollar amounts in millions, except per share data)

 

2nd Qtr ‘11

 

1st Qtr ‘11

 

2nd Qtr ‘10

 

Net interest income

 

$

391

 

$

395

 

$

422

 

Provision for loan losses

 

47

 

49

 

126

 

Noninterest income

 

202

 

207

 

194

 

Noninterest expenses

 

409

 

415

 

397

 

Provision for income taxes

 

41

 

35

 

23

 

 

 

 

 

 

 

 

 

Net income

 

96

 

103

 

70

 

 

 

 

 

 

 

 

 

Net income attributable to common shares

 

95

 

102

 

69

 

 

 

 

 

 

 

 

 

Diluted income per common share

 

0.53

 

0.57

 

0.39

 

 

 

 

 

 

 

 

 

Tier 1 capital ratio

 

10.53

%(a)

10.35

%

10.64

%

Tangible common equity ratio (b)

 

10.90

 

10.43

 

10.11

 

 

 

 

 

 

 

 

 

Net interest margin

 

3.14

 

3.25

 

3.28

 

 


(a) June 30, 2011 ratio is estimated.

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

 

“Total average loans were down one percent and period-end loans were up modestly from March 31, 2011. We were pleased to see commercial loan growth in the second quarter, driven primarily by increases in Middle Market, Global Corporate Banking and Specialty Businesses, partially offset by a decrease in floor plan loans in National Dealer Services,” said Ralph W. Babb Jr., chairman and chief executive officer.  “Commercial Real Estate declined, offsetting the commercial loan growth.  We expect the pace of decline in Commercial Real Estate to lessen in the second half of 2011 and National Dealer Services to rebound in the fourth quarter. Our core deposits continued to increase in the second quarter, which led to higher excess liquidity and a lower net interest margin.  Credit quality continued to improve and expenses were well controlled.

 

“We are excited about our pending acquisition of Sterling Bancshares, Inc., a strategically compelling transaction that significantly boosts our presence in the growing state of Texas.  Following the expiration of the required 15-day Department of Justice waiting period associated with the Federal Reserve Board’s approval order, we expect the acquisition will close on July 28, 2011. Sterling’s solid deposit base and well located branch network are expected to triple our Houston market share, provide us entry into the attractive San Antonio and Kerrville regions and complement our existing footprint in the Dallas-Fort Worth area. In short, it is a unique opportunity that provides us enhanced growth opportunities going forward.

 

“The Sterling integration plans remain on track.  We expect a smooth transition, given the size of the acquisition and our in-depth knowledge of the Texas market.  We look forward to welcoming Sterling customers and employees to Comerica as we begin this new chapter in our Texas banking history.”

 

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COMERICA REPORTS SECOND QUARTER 2011 NET INCOME OF $96 MILLION — 2

 

Second Quarter 2011 Highlights Compared to First Quarter 2011

 

·                  Average loans increased in the Middle Market ($160 million; one percent), Global Corporate Banking ($136 million; 3 percent), and Specialty Businesses ($62 million; one percent) business lines.  These increases were more than offset by decreases in the Commercial Real Estate ($393 million; 9 percent) and National Dealer Services ($194 million; 5 percent) business lines, resulting in a decrease in average total loans of $377 million, or one percent.  Period-end loans increased $17 million from March 31, 2011 to June 30, 2011.

·                  Average core deposits increased $881 million in the second quarter 2011, with increases in all major markets, led by the Texas market.

·                  The net interest margin of 3.14 percent decreased 11 basis points compared to the first quarter 2011, primarily resulting from an increase in excess liquidity (represented by average balances deposited with the Federal Reserve Bank), and a decrease in loan pricing based on a decrease in LIBOR.

·                  Average earning assets increased $789 million in the second quarter 2011.

·                  Credit quality improvement continued in the second quarter 2011.  Net credit-related charge-offs decreased $11 million to $90 million.  Internal watch list loans declined $339 million to $4.8 billion and nonperforming assets decreased $60 million.

·                  Noninterest expenses decreased $6 million to $409 million in the second quarter 2011, compared to the first quarter 2011.  Noninterest expenses included $5 million of costs incurred in connection with the pending Sterling acquisition in the second quarter 2011, which were more than offset by declines in numerous noninterest expense categories.

·                  The second quarter 2011 provision for income taxes included net after-tax charges of $8 million, which primarily reflected a $19 million charge related to a final settlement agreement with the Internal Revenue Service (IRS) involving repatriation of foreign earnings on a structured investment transaction, partially offset by a release of tax reserves of $9 million resulting from Comerica’s planned participation in a recently enacted State of California voluntary compliance initiative.  Comerica has no other investment structures with uncertain tax positions.

·                  The estimated Tier 1 capital ratio increased 18 basis points, to 10.53 percent at June 30, 2011, from March 31, 2011.

 

Net Interest Income and Net Interest Margin

 

(dollar amounts in millions)

 

2nd Qtr ‘11

 

1st Qtr ‘11

 

2nd Qtr ‘10

 

Net interest income

 

$

391

 

$

395

 

$

422

 

 

 

 

 

 

 

 

 

Net interest margin

 

3.14

%

3.25

%

3.28

%

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

Total earning assets

 

$

50,136

 

$

49,347

 

$

51,835

 

Total investment securities

 

7,407

 

7,311

 

7,262

 

Federal Reserve Bank deposits (excess liquidity) (a)

 

3,382

 

2,297

 

3,719

 

Total loans

 

39,174

 

39,551

 

40,672

 

 

 

 

 

 

 

 

 

Total core deposits (b)

 

41,067

 

40,186

 

38,928

 

Total noninterest-bearing deposits

 

15,786

 

15,459

 

15,218

 

 


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

(b) Core deposits exclude other time deposits and foreign office time deposits.

 

- more -

 



 

COMERICA REPORTS SECOND QUARTER 2011 NET INCOME OF $96 MILLION — 3

 

·                  The $4 million decrease in net interest income in the second quarter 2011, when compared to the first quarter 2011, resulted primarily from a decline in the net interest margin, the first quarter 2011 maturities of interest rate swaps at positive spreads and a decrease in average loans, partially offset by one more day in the quarter.

·                  The net interest margin of 3.14 percent declined 11 basis points compared to the first quarter 2011.  The decline in the net interest margin primarily reflected the impact of an increase in excess liquidity (7 basis points), a decrease in loan pricing based on a decrease in LIBOR, and the first quarter 2011 maturities of interest rate swaps at positive spreads.

·                  Average earning assets increased $789 million, primarily due to increases of $1.1 billion in excess liquidity and $96 million in average investment securities available-for-sale, partially offset by a $377 million decrease in average loans.

·                  Second quarter 2011 average core deposits increased $881 million compared to first quarter 2011, primarily reflecting increases in money market and NOW deposits ($410 million), noninterest-bearing deposits ($327 million) and customer certificates of deposit ($100 million).

 

Noninterest Income

Noninterest income was $202 million for the second quarter 2011, compared to $207 million for the first quarter 2011.  The $5 million decrease primarily resulted from a decrease in deferred compensation asset returns ($3 million) (offset by a decrease in deferred compensation plan costs in noninterest expense).

 

Noninterest Expenses

Noninterest expenses totaled $409 million in the second quarter 2011, a decrease of $6 million from the first quarter 2011. The decrease in noninterest expenses was primarily due to decreases in salaries expense ($3 million), FDIC insurance expense ($3 million), software expense ($3 million) and other real estate expense ($2 million), partially offset by certain pre-integration and transaction costs incurred in connection with the pending Sterling acquisition ($5 million).

 

Provision for Income Taxes

The second quarter 2011 provision for income taxes included net after-tax charges of $8 million, which primarily reflected a $19 million charge related to a final settlement agreement with the IRS involving repatriation of foreign earnings on a structured investment transaction, partially offset by a release of tax reserves of $9 million resulting from Comerica’s planned participation in a recently enacted State of California voluntary compliance initiative.

 

Credit Quality

“Broad-based, steady improvement in credit quality continued in the second quarter,” said Babb.  “This was the eighth consecutive quarter of decline in net charge offs, with an $11 million decrease.  We had strong recoveries of $35 million in the second quarter, up from $22 million in the first quarter.   Credit quality migration remains positive, as demonstrated by the $339 million decline in watch list loans, which provide our best early indicator of future credit quality, as well as the $60 million decline in nonperforming assets.  As a result of these overall improvements to our credit metrics, the provision for loan losses decreased to $47 million.  Also, of note, the results of the recently received Shared National Credit Exam are reflected in our second quarter credit metrics.”

 

- more -

 



 

COMERICA REPORTS SECOND QUARTER 2011 NET INCOME OF $96 MILLION — 4

 

·                  Net credit-related charge-offs decreased $11 million to $90 million in the second quarter 2011, from $101 million in the first quarter 2011. The decrease in net credit-related charge-offs primarily reflected a decrease of $22 million in the Middle Market business line, partially offset by an increase of $9 million in the Private Banking business line.

·                  Internal watch list loans declined $339 million to $4.8 billion from March 31, 2011 to June 30, 2011.

·                  During the second quarter 2011, $163 million of loan relationships greater than $2 million were transferred to nonaccrual status, a decrease of $3 million from the first quarter 2011.  Of the transfers of loan relationships greater than $2 million to nonaccrual in the second quarter 2011, $76 million were from the Middle Market business line, primarily in the Midwest and Western markets, and $29 million were from the Commercial Real Estate business line, distributed across the Florida, Western and Other markets.

·                  Nonperforming assets decreased $60 million, compared to March 31, 2011, to $1.0 billion, or 2.66 percent of total loans and foreclosed property, at June 30, 2011.

·                  The allowance for loan losses to total loans ratio was 2.06 percent and 2.17 percent at June 30, 2011 and March 31, 2011, respectively.

 

(dollar amounts in millions)

 

2nd Qtr ‘11

 

1st Qtr ‘11

 

2nd Qtr ‘10

 

Net credit-related charge-offs

 

$

90

 

$

101

 

$

146

 

Net credit-related charge-offs/Average total loans

 

0.92

%

1.03

%

1.44

%

 

 

 

 

 

 

 

 

Provision for loan losses

 

$

47

 

$

49

 

$

126

 

Provision for credit losses on lending-related commitments

 

(2

)

(3

)

 

Total provision for credit losses

 

45

 

46

 

126

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

974

 

1,030

 

1,121

 

Nonperforming assets (NPAs)

 

1,044

 

1,104

 

1,214

 

NPAs/Total loans and foreclosed property

 

2.66

%

2.81

%

2.98

%

 

 

 

 

 

 

 

 

Loans past due 90 days or more and still accruing

 

$

64

 

$

72

 

$

115

 

 

 

 

 

 

 

 

 

Allowance for loan losses

 

806

 

849

 

967

 

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

 

30

 

32

 

44

 

Total allowance for credit losses

 

836

 

881

 

1,011

 

 

 

 

 

 

 

 

 

Allowance for loan losses/Total loans

 

2.06

%

2.17

%

2.38

%

Allowance for loan losses/Nonperforming loans

 

83

 

82

 

86

 

 


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

 

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COMERICA REPORTS SECOND QUARTER 2011 NET INCOME OF $96 MILLION — 5

 

Balance Sheet and Capital Management

Total assets and common shareholders’ equity were $54.1 billion and $6.0 billion, respectively, at June 30, 2011, compared to $55.0 billion and $5.9 billion, respectively, at March 31, 2011. There were approximately 177 million common shares outstanding at June 30, 2011.  Comerica did not repurchase any shares of common stock in the open market in the second quarter 2011 under the share repurchase program due to the pending Sterling acquisition.  Management expects to resume repurchases in the third quarter 2011.

 

Comerica’s tangible common equity ratio was 10.90 percent at June 30, 2011, an increase of 47 basis points from March 31, 2011. The estimated Tier 1 capital ratio increased 18 basis points, to 10.53 percent at June 30, 2011, from March 31, 2011.

 

Second-Half 2011 Outlook (Combined Comerica and Sterling Results) Compared to First-Half 2011 (Comerica Only Results)

For the second half of 2011, management expects the following combined results, based on the incorporation of the projected results of Sterling operations from the expected acquisition closing date of July 28, 2011 through year-end 2011, compared to Comerica-only results for the first half of 2011, assuming a continuation of modest growth in the economy.  The acquisition is subject to customary closing conditions.  The estimated purchase accounting impacts incorporated in this outlook are preliminary and may not be indicative of actual amounts that will be recorded as additional information becomes available and as additional analyses are performed.

 

·                  A mid-single digit increase in average loans due to the acquisition of Sterling loans at fair value.

·                  Average earning assets of approximately $52.5 billion, reflecting increases, primarily related to Sterling, in average loans and average investment securities available-for-sale, partially offset by a decrease in excess liquidity.

·                  An average net interest margin of 3.35 percent to 3.40 percent, reflecting the benefit from the accretion of the purchase discount on the acquired Sterling loan portfolio ($35 million to $45 million; 13 basis points to 17 basis points), a reduction in excess liquidity, no increase in the Federal Funds rate, and LIBOR consistent with second quarter 2011 levels.

·                  Net credit-related charge-offs between $165 million and $185 million for the second half of 2011. The provision for credit losses is expected to be between $65 million and $85 million for the second half of 2011.

·                  A mid-single digit decline in noninterest income in the second half of 2011 compared to the first half of 2011, primarily due to the impact of regulatory changes, partially offset by the inclusion of Sterling.

·                  Excluding merger and restructuring charges, a high single-digit increase in noninterest expenses in the second half of 2011 compared to the first half of 2011, primarily due to the addition of Sterling.

·                  Total merger and restructuring charges of approximately $80 million, after-tax, with about $25 million, after-tax, recognized in each of the third and fourth quarters of 2011, and the remainder recognized in 2012.

·                  Total acquisition synergies of approximately 35 percent of Sterling expenses, or about $56 million, with the majority realized in 2012.

·                  For the second half of 2011, income tax expense to approximate 36 percent of income before income taxes less approximately $33 million in tax benefits.

·                  Continue share repurchase program that, combined with dividend payments, results in a payout up to 50 percent of full-year earnings.

 

-more-

 



 

COMERICA REPORTS SECOND QUARTER 2011 NET INCOME OF $96 MILLION — 6

 

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 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, 2011 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses second quarter 2011 results compared to first quarter 2011.

 

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

 

(dollar amounts in millions)

 

2nd Qtr ‘11

 

1st Qtr ‘11

 

2nd Qtr ‘10

 

Business Bank

 

$

176

 

95

%

$

167

 

93

%

$

135

 

98

%

Retail Bank

 

(3

)

(2

)

(2

)

(1

)

(3

)

(2

)

Wealth Management

 

12

 

7

 

14

 

8

 

5

 

4

 

 

 

185

 

100

%

179

 

100

%

137

 

100

%

Finance

 

(87

)

 

 

(76

)

 

 

(57

)

 

 

Other (a)

 

(2

)

 

 

 

 

 

(10

)

 

 

Total

 

$

96

 

 

 

$

103

 

 

 

$

70

 

 

 

 


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

 

Business Bank

 

(dollar amounts in millions)

 

2nd Qtr ‘11

 

1st Qtr ‘11

 

2nd Qtr ‘10

 

Net interest income (FTE)

 

$

342

 

$

341

 

$

351

 

Provision for loan losses

 

6

 

18

 

83

 

Noninterest income

 

79

 

77

 

78

 

Noninterest expenses

 

158

 

160

 

157

 

Net income

 

176

 

167

 

135

 

 

 

 

 

 

 

 

 

Net credit-related charge-offs

 

54

 

73

 

113

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

Assets

 

29,893

 

30,091

 

30,609

 

Loans

 

29,380

 

29,609

 

30,353

 

Deposits

 

20,396

 

20,084

 

19,069

 

 

 

 

 

 

 

 

 

Net interest margin

 

4.65

%

4.66

%

4.63

%

 

·                  Average loans decreased $229 million, reflecting increases in Middle Market, Global Corporate Banking and Specialty Businesses, more than offset by decreases in Commercial Real Estate and National Dealer Services.

·                  Average deposits increased $312 million, primarily due to increases in Specialty Businesses and Global Corporate Banking, partially offset by a decrease in Middle Market.

·                  The net interest margin of 4.65 percent decreased one basis point, primarily due to a decrease in deposit spreads.

·                  The provision for loan losses decreased $12 million, primarily reflecting decreases in Middle Market and Commercial Real Estate, partially offset by increases in Global Corporate Banking and Specialty Businesses.

 

-more-

 



 

COMERICA REPORTS SECOND QUARTER 2011 NET INCOME OF $96 MILLION — 7

 

Retail Bank

 

(dollar amounts in millions)

 

2nd Qtr ‘11

 

1st Qtr ‘11

 

2nd Qtr ‘10

 

Net interest income (FTE)

 

$

141

 

$

139

 

$

134

 

Provision for loan losses

 

24

 

23

 

20

 

Noninterest income

 

46

 

42

 

42

 

Noninterest expenses

 

162

 

162

 

160

 

Net loss

 

(3

)

(2

)

(3

)

 

 

 

 

 

 

 

 

Net credit-related charge-offs

 

22

 

23

 

22

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

Assets

 

5,453

 

5,558

 

5,937

 

Loans

 

4,999

 

5,106

 

5,446

 

Deposits

 

17,737

 

17,360

 

16,930

 

 

 

 

 

 

 

 

 

Net interest margin

 

3.22

%

3.25

%

3.17

%

 

·                  Average loans decreased $107 million, reflecting declines across all markets and business lines.

·                  Average deposits increased $377 million, primarily due to increases in transaction and money market deposits, partially offset by a decrease in customer certificates of deposit.

·                  The net interest margin of 3.22 percent decreased three basis points, primarily due to a decrease in deposit spreads.

·                  Noninterest income increased $4 million, reflecting nominal increases in numerous categories.

 

Wealth Management

 

(dollar amounts in millions)

 

2nd Qtr ‘11

 

1st Qtr ‘11

 

2nd Qtr ‘10

 

Net interest income (FTE)

 

$

48

 

$

44

 

$

45

 

Provision for loan losses

 

14

 

8

 

19

 

Noninterest income

 

63

 

64

 

61

 

Noninterest expenses

 

76

 

78

 

79

 

Net income

 

12

 

14

 

5

 

 

 

 

 

 

 

 

 

Net credit-related charge-offs

 

14

 

5

 

11

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

Assets

 

4,728

 

4,809

 

4,903

 

Loans

 

4,742

 

4,807

 

4,840

 

Deposits

 

2,978

 

2,800

 

2,924

 

 

 

 

 

 

 

 

 

Net interest margin

 

4.07

%

3.76

%

3.73

%

 

·                  Average loans decreased $65 million.

·                  Average deposits increased $178 million, primarily reflecting increases in noninterest-bearing transaction accounts.

·                  The net interest margin of 4.07 percent increased 31 basis points, primarily due to increases in loan spreads and deposit balances.

·                  The provision for loan losses increased $6 million, due to an increase in Private Banking in the Western Market.

 

- more -

 



 

COMERICA REPORTS SECOND QUARTER 2011 NET INCOME OF $96 MILLION — 8

 

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, 2011 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses second quarter 2011 results compared to first quarter 2011.

 

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

 

(dollar amounts in millions)

 

2nd Qtr ‘11

 

1st Qtr ‘11

 

2nd Qtr ‘10

 

Midwest

 

$

62

 

34

%

$

53

 

30

%

$

61

 

44

%

Western

 

50

 

27

 

51

 

28

 

38

 

28

 

Texas

 

33

 

18

 

29

 

16

 

26

 

19

 

Florida

 

(5

)

(3

)

(4

)

(2

)

(8

)

(6

)

Other Markets

 

30

 

16

 

38

 

21

 

4

 

3

 

International

 

15

 

8

 

12

 

7

 

16

 

12

 

 

 

185

 

100

%

179

 

100

%

137

 

100

%

Finance & Other Businesses (a)

 

(89

)

 

 

(76

)

 

 

(67

)

 

 

Total

 

$

96

 

 

 

$

103

 

 

 

$

70

 

 

 

 


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

 

Midwest Market

 

(dollar amounts in millions)

 

2nd Qtr ‘11

 

1st Qtr ‘11

 

2nd Qtr ‘10

 

Net interest income (FTE)

 

$

204

 

$

203

 

$

211

 

Provision for loan losses

 

15

 

34

 

34

 

Noninterest income

 

100

 

100

 

97

 

Noninterest expenses

 

183

 

188

 

180

 

Net income

 

62

 

53

 

61

 

 

 

 

 

 

 

 

 

Net credit-related charge-offs

 

37

 

46

 

44

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

Assets

 

14,267

 

14,307

 

14,626

 

Loans

 

14,051

 

14,104

 

14,592

 

Deposits

 

18,319

 

18,230

 

17,988

 

 

 

 

 

 

 

 

 

Net interest margin

 

4.46

%

4.49

%

4.66

%

 

·                  Average loans decreased $53 million, with increases in Middle Market and Global Corporate Banking more than offset by declines in most other business lines.

·                  Average deposits increased $89 million, primarily due to increases in Personal Banking, Small Business Banking, Commercial Real Estate and Middle Market, partially offset by decreases in Global Corporate Banking and Specialty Businesses.

·                  The net interest margin of 4.46 percent decreased three basis points, primarily due to decreases in deposit spreads and loan balances, partially offset by an increase in loan spreads.

·                  The provision for loan losses decreased $19 million, primarily reflecting decreases in Middle Market and Commercial Real Estate, partially offset by an increase in Global Corporate Banking.

·                  Noninterest expenses decreased $5 million, primarily due to decreases in other real estate expenses, net allocated corporate overhead expenses and FDIC insurance expense, partially offset by an increase in the provision for credit losses on lending-related commitments.

 

- more -

 



 

COMERICA REPORTS SECOND QUARTER 2011 NET INCOME OF $96 MILLION — 9

 

Western Market

 

(dollar amounts in millions)

 

2nd Qtr ‘11

 

1st Qtr ‘11

 

2nd Qtr ‘10

 

Net interest income (FTE)

 

$

166

 

$

164

 

$

163

 

Provision for loan losses

 

20

 

11

 

27

 

Noninterest income

 

37

 

37

 

33

 

Noninterest expenses

 

108

 

109

 

110

 

Net income

 

50

 

51

 

38

 

 

 

 

 

 

 

 

 

Net credit-related charge-offs

 

26

 

26

 

47

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

Assets

 

12,329

 

12,590

 

13,006

 

Loans

 

12,121

 

12,383

 

12,792

 

Deposits

 

12,458

 

12,235

 

11,951

 

 

 

 

 

 

 

 

 

Net interest margin

 

5.35

%

5.37

%

5.13

%

 

·                  Average loans decreased $262 million, primarily due to decreases in National Dealer Services, Commercial Real Estate and Private Banking, partially offset by increases in Middle Market and Global Corporate Banking.

·                  Average deposits increased $223 million, primarily due to increases in Specialty Businesses and Private Banking, partially offset by a decrease in Middle Market.

·                  The net interest margin of 5.35 percent decreased two basis points, primarily due to a decrease in loan balances.

·                  The provision for loan losses increased $9 million, primarily due to increases in Private Banking and Specialty Businesses.

 

Texas Market

 

(dollar amounts in millions)

 

2nd Qtr ‘11

 

1st Qtr ‘11

 

2nd Qtr ‘10

 

Net interest income (FTE)

 

$

89

 

$

87

 

$

81

 

Provision for loan losses

 

(2

)

4

 

(1

)

Noninterest income

 

25

 

23

 

23

 

Noninterest expenses

 

63

 

61

 

65

 

Net income

 

33

 

29

 

26

 

 

 

 

 

 

 

 

 

Total net credit-related charge-offs

 

3

 

8

 

8

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

Assets

 

7,081

 

7,031

 

6,652

 

Loans

 

6,871

 

6,824

 

6,428

 

Deposits

 

6,175

 

5,786

 

5,316

 

 

 

 

 

 

 

 

 

Net interest margin

 

5.19

%

5.17

%

5.05

%

 

·                  Average loans increased $47 million, primarily due to increases in Middle Market and Global Corporate Banking, partially offset by a decrease in Commercial Real Estate.

·                  Average deposits increased $389 million, reflecting increases across most business lines.

·                  The net interest margin of 5.19 percent increased two basis points, primarily due to increases in loan spreads and deposit balances, partially offset by a decrease in deposit spreads.

·                  The provision for loan losses decreased $6 million, with decreases across most business lines.

 

- more -

 



 

COMERICA REPORTS SECOND QUARTER 2011 NET INCOME OF $96 MILLION — 10

 

Florida Market

 

(dollar amounts in millions)

 

2nd Qtr ‘11

 

1st Qtr ‘11

 

2nd Qtr ‘10

 

Net interest income (FTE)

 

$

12

 

$

11

 

$

12

 

Provision for loan losses

 

11

 

8

 

17

 

Noninterest income

 

4

 

4

 

4

 

Noninterest expenses

 

12

 

12

 

12

 

Net loss

 

(5

)

(4

)

(8

)

 

 

 

 

 

 

 

 

Net credit-related charge-offs

 

15

 

8

 

7

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

Assets

 

1,534

 

1,553

 

1,576

 

Loans

 

1,565

 

1,580

 

1,575

 

Deposits

 

396

 

367

 

404

 

 

 

 

 

 

 

 

 

Net interest margin

 

3.14

%

2.82

%

2.94

%

 

·                  Average loans decreased $15 million, primarily due to decreases in Commercial Real Estate and National Dealer Services, partially offset by increases in Global Corporate Banking and Private Banking.

·                  Average deposits increased $29 million, primarily due to an increase in Private Banking.

·                  The net interest margin of 3.14 percent increased 32 basis points, primarily due to increases in loan spreads and deposit balances.

·                  The provision for loan losses increased $3 million, primarily due to increases in Middle Market, Commercial Real Estate and Private Banking.

 

Conference Call and Webcast

Comerica will host a conference call to review second quarter 2011 financial results at 7 a.m. CT Tuesday, July 19, 2011. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 77355589). The call and supplemental financial information can also be accessed on the Internet at www.comerica.com.  A telephone replay will be available approximately two hours following the conference call through July 31, 2011. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 77355589). 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 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 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.

 

- more -

 



 

COMERICA REPORTS SECOND QUARTER 2011 NET INCOME OF $96 MILLION — 11

 

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,” “opportunity,” “initiative,” “outcome,” “continue,” “remain,” “maintain,” “trend,” “objective,” “pending,” “looks forward” 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 changes in general economic, political or industry conditions and related credit and market conditions; changes in trade, monetary and fiscal policies, including the interest rate policies of the Federal Reserve Board; adverse conditions in the capital markets; the interdependence of financial service companies; changes in regulation or oversight, including the effects of recently enacted legislation, actions taken by or proposed by the U.S. Treasury, the Board of Governors of the Federal Reserve System, the Texas Department of Banking and the Federal Deposit Insurance Corporation, legislation or regulations enacted in the future, and the impact and expiration of such legislation and regulatory actions; unfavorable developments concerning credit quality; the proposed acquisition of Sterling Bancshares, Inc. (“Sterling”), or any future acquisitions; the effects of more stringent capital or liquidity requirements; 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 implementation of Comerica’s strategies and business models, including the anticipated performance of any new banking centers; Comerica’s ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; operational difficulties or information security problems; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; the entry of new competitors in Comerica’s markets; changes in customer borrowing, repayment, investment and deposit practices; 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; the effectiveness of methods of reducing risk exposures; the effects of war and other armed conflicts or acts of terrorism and the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods. 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 (“SEC”). In particular, please refer to “Item 1A. Risk Factors” beginning on page 16 of Comerica’s Annual Report on Form 10-K for the year ended December 31, 2010. 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.

 

-more-

 



 

COMERICA REPORTS SECOND QUARTER 2011 NET INCOME OF $96 MILLION — 12

 

Additional Information for Shareholders

 

In connection with the proposed merger transaction, Comerica has filed with the SEC a Registration Statement on Form S-4 that includes a Proxy Statement of Sterling and a Prospectus of Comerica, and Sterling mailed the definitive Proxy Statement/Prospectus to its shareholders on or about April 6, 2011. Each of Comerica and Sterling may file other relevant documents concerning the proposed transaction. SHAREHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE DEFINITIVE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION.

 

A free copy of the definitive Proxy Statement/Prospectus, as well as other filings containing information about Comerica and Sterling, may be obtained at the SEC’s Internet site (http://www.sec.gov). You may be able to obtain these documents, free of charge, from Comerica at www.comerica.com under the tab “Investor Relations” and then under the heading “SEC Filings” or from Sterling by accessing Sterling’s website at www.banksterling.com under the tab “Investor Relations” and then under the heading “SEC Filings.”

 

Media Contact:

Investor Contacts:

Wayne J. Mielke

Darlene P. Persons

(214) 462-4463

(214) 462-6831

 

 

 

Tracy Fralick

 

(214) 462-6834

 



 

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)

 

2011

 

2011

 

2010

 

2011

 

2010

 

PER COMMON SHARE AND COMMON STOCK DATA

 

 

 

 

 

 

 

 

 

 

 

Diluted net income (loss)

 

$

0.53

 

$

0.57

 

$

0.39

 

$

1.10

 

$

(0.01

)

Cash dividends declared

 

0.10

 

0.10

 

0.05

 

0.20

 

0.10

 

Common shareholders’ equity (at period end)

 

34.15

 

33.25

 

32.85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average diluted shares (in thousands)

 

177,602

 

178,425

 

178,432

 

178,011

 

165,100

 

KEY RATIOS

 

 

 

 

 

 

 

 

 

 

 

Return on average common shareholders’ equity

 

6.41

%

7.08

%

4.89

%

6.74

%

(0.05

)%

Return on average assets

 

0.70

 

0.77

 

0.50

 

0.73

 

0.43

 

Tier 1 common capital ratio (a) (b)

 

10.53

 

10.35

 

9.81

 

 

 

 

 

Tier 1 risk-based capital ratio (b)

 

10.53

 

10.35

 

10.64

 

 

 

 

 

Total risk-based capital ratio (b)

 

14.81

 

14.80

 

15.03

 

 

 

 

 

Leverage ratio (b)

 

11.39

 

11.37

 

11.36

 

 

 

 

 

Tangible common equity ratio (a)

 

10.90

 

10.43

 

10.11

 

 

 

 

 

AVERAGE BALANCES

 

 

 

 

 

 

 

 

 

 

 

Commercial loans

 

$

21,677

 

$

21,496

 

$

20,910

 

$

21,586

 

$

20,961

 

Real estate construction loans:

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate business line (c)

 

1,486

 

1,754

 

2,537

 

1,619

 

2,726

 

Other business lines (d)

 

395

 

425

 

450

 

410

 

459

 

Commercial mortgage loans:

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate business line (c)

 

1,912

 

1,978

 

1,947

 

1,945

 

1,896

 

Other business lines (d)

 

7,724

 

7,812

 

8,425

 

7,768

 

8,484

 

Residential mortgage loans

 

1,525

 

1,599

 

1,607

 

1,562

 

1,620

 

Consumer loans

 

2,243

 

2,281

 

2,448

 

2,262

 

2,464

 

Lease financing

 

958

 

987

 

1,108

 

972

 

1,119

 

International loans

 

1,254

 

1,219

 

1,240

 

1,237

 

1,261

 

Total loans

 

39,174

 

39,551

 

40,672

 

39,361

 

40,990

 

 

 

 

 

 

 

 

 

 

 

 

 

Earning assets

 

50,136

 

49,347

 

51,835

 

49,743

 

52,385

 

Total assets

 

54,517

 

53,775

 

56,258

 

54,148

 

56,885

 

Noninterest-bearing deposits

 

15,786

 

15,459

 

15,218

 

15,623

 

14,923

 

Interest-bearing core deposits

 

25,281

 

24,727

 

23,710

 

25,005

 

23,165

 

Total core deposits

 

41,067

 

40,186

 

38,928

 

40,628

 

38,088

 

Common shareholders’ equity

 

5,972

 

5,835

 

5,708

 

5,904

 

5,391

 

Total shareholders’ equity

 

5,972

 

5,835

 

5,708

 

5,904

 

6,283

 

NET INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

Net interest income (fully taxable equivalent basis)

 

$

392

 

$

396

 

$

424

 

$

788

 

$

840

 

Fully taxable equivalent adjustment

 

1

 

1

 

2

 

2

 

3

 

Net interest margin (fully taxable equivalent basis)

 

3.14

%

3.25

%

3.28

%

3.19

%

3.23

%

CREDIT QUALITY

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

$

941

 

$

996

 

$

1,098

 

 

 

 

 

Reduced-rate loans

 

33

 

34

 

23

 

 

 

 

 

Total nonperforming loans

 

974

 

1,030

 

1,121

 

 

 

 

 

Foreclosed property

 

70

 

74

 

93

 

 

 

 

 

Total nonperforming assets

 

1,044

 

1,104

 

1,214

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans past due 90 days or more and still accruing

 

64

 

72

 

115

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross loan charge-offs

 

125

 

123

 

158

 

$

248

 

$

342

 

Loan recoveries

 

35

 

22

 

12

 

57

 

23

 

Net loan charge-offs

 

90

 

101

 

146

 

191

 

319

 

Lending-related commitment charge-offs

 

 

 

 

 

 

Total net credit-related charge-offs

 

90

 

101

 

146

 

191

 

319

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses

 

806

 

849

 

967

 

 

 

 

 

Allowance for credit losses on lending-related commitments

 

30

 

32

 

44

 

 

 

 

 

Total allowance for credit losses

 

836

 

881

 

1,011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses as a percentage of total loans

 

2.06

%

2.17

%

2.38

%

 

 

 

 

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

 

0.92

 

1.03

 

1.44

 

0.97

%

1.56

%

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

 

0.92

 

1.03

 

1.44

 

0.97

 

1.56

 

Nonperforming assets as a percentage of total loans and foreclosed property

 

2.66

 

2.81

 

2.98

 

 

 

 

 

Allowance for loan losses as a percentage of total nonperforming loans

 

83

 

82

 

86

 

 

 

 

 

 


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

(b) June 30, 2011 ratios are estimated.

(c) Primarily loans to real estate investors and developers.

(d) Primarily loans secured by owner-occupied real estate.

 

13



 

CONSOLIDATED BALANCE SHEETS

Comerica Incorporated and Subsidiaries

 

 

 

June 30,

 

March 31,

 

December 31,

 

June 30,

 

(in millions, except share data)

 

2011

 

2011

 

2010

 

2010

 

 

 

(unaudited)

 

(unaudited)

 

 

 

(unaudited)

 

ASSETS

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

987

 

$

875

 

$

668

 

$

816

 

Interest-bearing deposits with banks

 

2,479

 

3,570

 

1,415

 

3,409

 

Other short-term investments

 

124

 

154

 

141

 

134

 

Investment securities available-for-sale

 

7,537

 

7,406

 

7,560

 

7,188

 

Commercial loans

 

22,052

 

21,360

 

22,145

 

21,151

 

Real estate construction loans

 

1,728

 

2,023

 

2,253

 

2,774

 

Commercial mortgage loans

 

9,579

 

9,697

 

9,767

 

10,318

 

Residential mortgage loans

 

1,491

 

1,550

 

1,619

 

1,606

 

Consumer loans

 

2,232

 

2,262

 

2,311

 

2,443

 

Lease financing

 

949

 

958

 

1,009

 

1,084

 

International loans

 

1,162

 

1,326

 

1,132

 

1,226

 

Total loans

 

39,193

 

39,176

 

40,236

 

40,602

 

Less allowance for loan losses

 

(806

)

(849

)

(901

)

(967

)

Net loans

 

38,387

 

38,327

 

39,335

 

39,635

 

 

 

 

 

 

 

 

 

 

 

Premises and equipment

 

641

 

637

 

630

 

634

 

Customers’ liability on acceptances outstanding

 

10

 

14

 

9

 

24

 

Accrued income and other assets

 

3,976

 

4,034

 

3,909

 

4,045

 

Total assets

 

$

54,141

 

$

55,017

 

$

53,667

 

$

55,885

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

16,344

 

$

16,357

 

$

15,538

 

$

15,769

 

Money market and NOW deposits

 

18,033

 

17,888

 

17,622

 

16,062

 

Savings deposits

 

1,462

 

1,457

 

1,397

 

1,407

 

Customer certificates of deposit

 

5,551

 

5,672

 

5,482

 

5,893

 

Other time deposits

 

 

 

 

165

 

Foreign office time deposits

 

368

 

499

 

432

 

484

 

Total interest-bearing deposits

 

25,414

 

25,516

 

24,933

 

24,011

 

Total deposits

 

41,758

 

41,873

 

40,471

 

39,780

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

67

 

61

 

130

 

200

 

Acceptances outstanding

 

10

 

14

 

9

 

24

 

Accrued expenses and other liabilities

 

1,062

 

1,076

 

1,126

 

1,048

 

Medium- and long-term debt

 

5,206

 

6,116

 

6,138

 

9,041

 

Total liabilities

 

48,103

 

49,140

 

47,874

 

50,093

 

 

 

 

 

 

 

 

 

 

 

Common stock - $5 par value:

 

 

 

 

 

 

 

 

 

Authorized - 325,000,000 shares

 

 

 

 

 

 

 

 

 

Issued - 203,878,110 shares

 

1,019

 

1,019

 

1,019

 

1,019

 

Capital surplus

 

1,472

 

1,464

 

1,481

 

1,467

 

Accumulated other comprehensive loss

 

(308

)

(382

)

(389

)

(240

)

Retained earnings

 

5,395

 

5,317

 

5,247

 

5,124

 

Less cost of common stock in treasury - 27,092,427 shares at 6/30/11, 27,103,941 shares at 3/31/11, 27,342,518 shares at 12/31/10, and 27,561,412 shares at 6/30/10

 

(1,540

)

(1,541

)

(1,565

)

(1,578

)

Total shareholders’ equity

 

6,038

 

5,877

 

5,793

 

5,792

 

Total liabilities and shareholders’ equity

 

$

54,141

 

$

55,017

 

$

53,667

 

$

55,885

 

 

14



 

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

Comerica Incorporated and Subsidiaries

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

(in millions, except per share data)

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

369

 

$

412

 

$

744

 

$

824

 

Interest on investment securities

 

59

 

61

 

116

 

122

 

Interest on short-term investments

 

3

 

3

 

5

 

6

 

Total interest income

 

431

 

476

 

865

 

952

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

Interest on deposits

 

23

 

29

 

45

 

64

 

Interest on medium- and long-term debt

 

17

 

25

 

34

 

51

 

Total interest expense

 

40

 

54

 

79

 

115

 

Net interest income

 

391

 

422

 

786

 

837

 

Provision for loan losses

 

47

 

126

 

96

 

301

 

Net interest income after provision for loan losses

 

344

 

296

 

690

 

536

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

51

 

52

 

103

 

108

 

Fiduciary income

 

39

 

38

 

78

 

77

 

Commercial lending fees

 

21

 

22

 

42

 

44

 

Letter of credit fees

 

18

 

19

 

36

 

37

 

Card fees

 

15

 

15

 

30

 

28

 

Foreign exchange income

 

10

 

10

 

19

 

20

 

Bank-owned life insurance

 

9

 

9

 

17

 

17

 

Brokerage fees

 

6

 

6

 

12

 

12

 

Net securities gains

 

4

 

1

 

6

 

3

 

Other noninterest income

 

29

 

22

 

66

 

42

 

Total noninterest income

 

202

 

194

 

409

 

388

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSES

 

 

 

 

 

 

 

 

 

Salaries

 

185

 

179

 

373

 

348

 

Employee benefits

 

50

 

45

 

100

 

89

 

Total salaries and employee benefits

 

235

 

224

 

473

 

437

 

Net occupancy expense

 

38

 

39

 

78

 

80

 

Equipment expense

 

17

 

15

 

32

 

32

 

Outside processing fee expense

 

25

 

23

 

49

 

46

 

Software expense

 

20

 

22

 

43

 

44

 

FDIC insurance expense

 

12

 

16

 

27

 

33

 

Legal fees

 

8

 

9

 

17

 

17

 

Advertising expense

 

7

 

7

 

14

 

15

 

Other real estate expense

 

6

 

5

 

14

 

17

 

Litigation and operational losses

 

5

 

2

 

8

 

3

 

Merger and restructuring charges

 

5

 

 

5

 

 

Provision for credit losses on lending-related commitments

 

(2

)

 

(5

)

7

 

Other noninterest expenses

 

33

 

35

 

69

 

70

 

Total noninterest expenses

 

409

 

397

 

824

 

801

 

Income from continuing operations before income taxes

 

137

 

93

 

275

 

123

 

Provision for income taxes

 

41

 

23

 

76

 

18

 

Income from continuing operations

 

96

 

70

 

199

 

105

 

Income from discontinued operations, net of tax

 

 

 

 

17

 

NET INCOME

 

96

 

70

 

199

 

122

 

Less:

 

 

 

 

 

 

 

 

 

Preferred stock dividends

 

 

 

 

123

 

Income allocated to participating securities

 

1

 

1

 

2

 

 

Net income (loss) attributable to common shares

 

$

95

 

$

69

 

$

197

 

$

(1

)

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share:

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.54

 

$

0.40

 

$

1.12

 

$

(0.11

)

Net income (loss)

 

0.54

 

0.40

 

1.12

 

(0.01

)

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share:

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

0.53

 

0.39

 

1.10

 

(0.11

)

Net income (loss)

 

0.53

 

0.39

 

1.10

 

(0.01

)

 

 

 

 

 

 

 

 

 

 

Cash dividends declared on common stock

 

18

 

8

 

35

 

18

 

Cash dividends declared per common share

 

0.10

 

0.05

 

0.20

 

0.10

 

 

15



 

CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (unaudited)

Comerica Incorporated and Subsidiaries

 

 

 

Second

 

First

 

Fourth

 

Third

 

Second

 

Second Quarter 2011 Compared To:

 

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

First Quarter 2011

 

Second Quarter 2010

 

(in millions, except per share data)

 

2011

 

2011

 

2010

 

2010

 

2010

 

Amount

 

Percent

 

Amount

 

Percent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

369

 

$

375

 

$

394

 

$

399

 

$

412

 

$

(6

)

(1

)%

$

(43

)

(10

)%

Interest on investment securities

 

59

 

57

 

49

 

55

 

61

 

2

 

2

 

(2

)

(4

)

Interest on short-term investments

 

3

 

2

 

2

 

2

 

3

 

1

 

9

 

 

(12

)

Total interest income

 

431

 

434

 

445

 

456

 

476

 

(3

)

(1

)

(45

)

(9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

23

 

22

 

24

 

27

 

29

 

1

 

(1

)

(6

)

(21

)

Interest on short-term borrowings

 

 

 

1

 

 

 

 

(46

)

 

(77

)

Interest on medium- and long-term debt

 

17

 

17

 

15

 

25

 

25

 

 

4

 

(8

)

(30

)

Total interest expense

 

40

 

39

 

40

 

52

 

54

 

1

 

1

 

(14

)

(25

)

Net interest income

 

391

 

395

 

405

 

404

 

422

 

(4

)

(1

)

(31

)

(7

)

Provision for loan losses

 

47

 

49

 

57

 

122

 

126

 

(2

)

(4

)

(79

)

(63

)

Net interest income after provision for loan losses

 

344

 

346

 

348

 

282

 

296

 

(2

)

(1

)

48

 

16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

51

 

52

 

49

 

51

 

52

 

(1

)

(4

)

(1

)

(5

)

Fiduciary income

 

39

 

39

 

39

 

38

 

38

 

 

2

 

1

 

3

 

Commercial lending fees

 

21

 

21

 

29

 

22

 

22

 

 

4

 

(1

)

(1

)

Letter of credit fees

 

18

 

18

 

20

 

19

 

19

 

 

(1

)

(1

)

(1

)

Card fees

 

15

 

15

 

15

 

15

 

15

 

 

7

 

 

6

 

Foreign exchange income

 

10

 

9

 

11

 

8

 

10

 

1

 

7

 

 

(4

)

Bank-owned life insurance

 

9

 

8

 

14

 

9

 

9

 

1

 

1

 

 

1

 

Brokerage fees

 

6

 

6

 

7

 

6

 

6

 

 

(8

)

 

(8

)

Net securities gains

 

4

 

2

 

 

 

1

 

2

 

82

 

3

 

N/M

 

Other noninterest income

 

29

 

37

 

31

 

18

 

22

 

(8

)

(20

)

7

 

32

 

Total noninterest income

 

202

 

207

 

215

 

186

 

194

 

(5

)

(2

)

8

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries

 

185

 

188

 

205

 

187

 

179

 

(3

)

(1

)

6

 

3

 

Employee benefits

 

50

 

50

 

43

 

47

 

45

 

 

(1

)

5

 

11

 

Total salaries and employee benefits

 

235

 

238

 

248

 

234

 

224

 

(3

)

(1

)

11

 

5

 

Net occupancy expense

 

38

 

40

 

42

 

40

 

39

 

(2

)

(3

)

(1

)

 

Equipment expense

 

17

 

15

 

16

 

15

 

15

 

2

 

5

 

2

 

5

 

Outside processing fee expense

 

25

 

24

 

27

 

23

 

23

 

1

 

5

 

2

 

8

 

Software expense

 

20

 

23

 

23

 

22

 

22

 

(3

)

(8

)

(2

)

(4

)

FDIC insurance expense

 

12

 

15

 

15

 

14

 

16

 

(3

)

(16

)

(4

)

(24

)

Legal fees

 

8

 

9

 

9

 

9

 

9

 

(1

)

 

(1

)

 

Advertising expense

 

7

 

7

 

8

 

7

 

7

 

 

 

 

(5

)

Other real estate expense

 

6

 

8

 

5

 

7

 

5

 

(2

)

(35

)

1

 

9

 

Litigation and operational losses

 

5

 

3

 

6

 

2

 

2

 

2

 

60

 

3

 

N/M

 

Merger and restructuring charges

 

5

 

 

 

 

 

5

 

N/M

 

5

 

N/M

 

Provision for credit losses on lending-related commitments

 

(2

)

(3

)

(3

)

(6

)

 

1

 

21

 

(2

)

N/M

 

Other noninterest expenses

 

33

 

36

 

41

 

35

 

35

 

(3

)

(11

)

(2

)

(8

)

Total noninterest expenses

 

409

 

415

 

437

 

402

 

397

 

(6

)

(1

)

12

 

3

 

Income before income taxes

 

137

 

138

 

126

 

66

 

93

 

(1

)

(1

)

44

 

48

 

Provision for income taxes

 

41

 

35

 

30

 

7

 

23

 

6

 

19

 

18

 

81

 

NET INCOME

 

96

 

103

 

96

 

59

 

70

 

(7

)

(7

)

26

 

37

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income allocated to participating securities

 

1

 

1

 

1

 

 

1

 

 

(6

)

 

N/M

 

Net income (loss) attributable to common shares

 

$

95

 

$

102

 

$

95

 

$

59

 

$

69

 

$

(7

)

(7

)%

$

26

 

36

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.54

 

$

0.58

 

$

0.54

 

$

0.34

 

$

0.40

 

$

(0.04

)

(7

)%

$

0.14

 

35

%

Diluted

 

0.53

 

0.57

 

0.53

 

0.33

 

0.39

 

(0.04

)

(7

)

0.14

 

36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared on common stock

 

18

 

17

 

18

 

9

 

8

 

1

 

 

10

 

N/M

 

Cash dividends declared per common share

 

0.10

 

0.10

 

0.10

 

0.05

 

0.05

 

 

 

0.05

 

N/M

 

 


N/M - Not meaningful

 

16



 

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)

Comerica Incorporated and Subsidiaries

 

 

 

2011

 

2010

 

(in millions)

 

2nd Qtr

 

1st Qtr

 

4th Qtr

 

3rd Qtr

 

2nd Qtr

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

849

 

$

901

 

$

957

 

$

967

 

$

987

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan charge-offs:

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

66

 

65

 

43

 

38

 

65

 

Real estate construction:

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate business line (a)

 

12

 

8

 

34

 

40

 

30

 

Other business lines (b)

 

 

1

 

 

1

 

 

Total real estate construction

 

12

 

9

 

34

 

41

 

30

 

Commercial mortgage:

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate business line (a)

 

8

 

9

 

9

 

16

 

12

 

Other business lines (b)

 

23

 

25

 

34

 

40

 

36

 

Total commercial mortgage

 

31

 

34

 

43

 

56

 

48

 

Residential mortgage

 

7

 

2

 

5

 

2

 

5

 

Consumer

 

9

 

8

 

15

 

7

 

9

 

Lease financing

 

 

 

 

 

1

 

International

 

 

5

 

 

1

 

 

Total loan charge-offs

 

125

 

123

 

140

 

145

 

158

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries on loans previously charged-off:

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

13

 

4

 

7

 

7

 

4

 

Real estate construction

 

5

 

2

 

3

 

1

 

6

 

Commercial mortgage

 

5

 

9

 

10

 

2

 

1

 

Residential mortgage

 

1

 

 

1

 

 

 

Consumer

 

1

 

1

 

2

 

1

 

1

 

Lease financing

 

6

 

5

 

4

 

1

 

 

International

 

4

 

1

 

 

1

 

 

Total recoveries

 

35

 

22

 

27

 

13

 

12

 

Net loan charge-offs

 

90

 

101

 

113

 

132

 

146

 

Provision for loan losses

 

47

 

49

 

57

 

122

 

126

 

Balance at end of period

 

$

806

 

$

849

 

$

901

 

$

957

 

$

967

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses as a percentage of total loans

 

2.06

%

2.17

%

2.24

%

2.38

%

2.38

%

 

 

 

 

 

 

 

 

 

 

 

 

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

 

0.92

 

1.03

 

1.13

 

1.32

 

1.44

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

0.92

 

1.03

 

1.13

 

1.32

 

1.44

 

 


(a) Primarily charge-offs of loans to real estate investors and developers.

(b) Primarily charge-offs of loans secured by owner-occupied real estate.

 

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

Comerica Incorporated and Subsidiaries

 

 

 

2011

 

2010

 

(in millions)

 

2nd Qtr

 

1st Qtr

 

4th Qtr

 

3rd Qtr

 

2nd Qtr

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

32

 

$

35

 

$

38

 

$

44

 

$

44

 

Add: Provision for credit losses on lending-related commitments

 

(2

)

(3

)

(3

)

(6

)

 

Balance at end of period

 

$

30

 

$

32

 

$

35

 

$

38

 

$

44

 

 

 

 

 

 

 

 

 

 

 

 

 

Unfunded lending-related commitments sold

 

$

3

 

$

2

 

$

 

$

 

$

2

 

 

17



 

NONPERFORMING ASSETS (unaudited)

Comerica Incorporated and Subsidiaries

 

 

 

2011

 

2010

 

(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

 

$

261

 

$

226

 

$

252

 

$

258

 

$

239

 

Real estate construction:

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate business line (a)

 

137

 

195

 

259

 

362

 

385

 

Other business lines (b)

 

2

 

3

 

4

 

4

 

4

 

Total real estate construction

 

139

 

198

 

263

 

366

 

389

 

Commercial mortgage:

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate business line (a)

 

186

 

197

 

181

 

153

 

135

 

Other business lines (b)

 

269

 

293

 

302

 

304

 

257

 

Total commercial mortgage

 

455

 

490

 

483

 

457

 

392

 

Lease financing

 

6

 

7

 

7

 

10

 

11

 

International

 

7

 

4

 

2

 

2

 

3

 

Total nonaccrual business loans

 

868

 

925

 

1,007

 

1,093

 

1,034

 

Retail loans:

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage

 

60

 

58

 

55

 

59

 

53

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

Home equity

 

4

 

6

 

5

 

5

 

7

 

Other consumer

 

9

 

7

 

13

 

6

 

4

 

Total consumer

 

13

 

13

 

18

 

11

 

11

 

Total nonaccrual retail loans

 

73

 

71

 

73

 

70

 

64

 

Total nonaccrual loans

 

941

 

996

 

1,080

 

1,163

 

1,098

 

Reduced-rate loans

 

33

 

34

 

43

 

28

 

23

 

Total nonperforming loans

 

974

 

1,030

 

1,123

 

1,191

 

1,121

 

Foreclosed property

 

70

 

74

 

112

 

120

 

93

 

Total nonperforming assets

 

$

1,044

 

$

1,104

 

$

1,235

 

$

1,311

 

$

1,214

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans as a percentage of total loans

 

2.49

%

2.63

%

2.79

%

2.96

%

2.76

%

Nonperforming assets as a percentage of total loans and foreclosed property

 

2.66

 

2.81

 

3.06

 

3.24

 

2.98

 

Allowance for loan losses as a percentage of total nonperforming loans

 

83

 

82

 

80

 

80

 

86

 

Loans past due 90 days or more and still accruing

 

$

64

 

$

72

 

$

62

 

$

104

 

$

115

 

 

 

 

 

 

 

 

 

 

 

 

 

ANALYSIS OF NONACCRUAL LOANS

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans at beginning of period

 

$

996

 

$

1,080

 

$

1,163

 

$

1,098

 

$

1,145

 

Loans transferred to nonaccrual (c)

 

163

 

166

 

180

 

294

 

199

 

Nonaccrual business loan gross charge-offs (d)

 

(109

)

(111

)

(120

)

(136

)

(143

)

Loans transferred to accrual status (c)

 

 

(4

)

(4

)

(10

)

 

Nonaccrual business loans sold (e)

 

(9

)

(60

)

(41

)

(12

)

(47

)

Payments/Other (f)

 

(100

)

(75

)

(98

)

(71

)

(56

)

Nonaccrual loans at end of period

 

$

941

 

$

996

 

$

1,080

 

$

1,163

 

$

1,098

 

 


(a) Primarily loans to real estate investors and developers.

(b) Primarily loans secured by owner-occupied real estate.

(c) Based on an analysis of nonaccrual loans with book balances greater than $2 million.

(d) Analysis of gross loan charge-offs:

 

Nonaccrual business loans

 

$

109

 

$

111

 

$

120

 

$

136

 

$

143

 

Performing watch list loans

 

 

2

 

 

 

1

 

Consumer and residential mortgage loans

 

16

 

10

 

20

 

9

 

14

 

Total gross loan charge-offs

 

$

125

 

$

123

 

$

140

 

$

145

 

$

158

 

 

(e) Analysis of loans sold:

 

Nonaccrual business loans

 

$

9

 

$

60

 

$

41

 

$

12

 

$

47

 

Performing watch list loans

 

6

 

35

 

29

 

7

 

15

 

Total loans sold

 

$

15

 

$

95

 

$

70

 

$

19

 

$

62

 

 

(f) 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.

 

18



 

ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)

Comerica Incorporated and Subsidiaries

 

 

 

Six Months Ended

 

 

 

June 30, 2011

 

June 30, 2010

 

 

 

Average

 

 

 

Average

 

Average

 

 

 

Average

 

(dollar amounts in millions)

 

Balance

 

Interest

 

Rate

 

Balance

 

Interest

 

Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans

 

$

21,586

 

$

396

 

3.70

%

$

20,961

 

$

411

 

3.95

%

Real estate construction loans

 

2,029

 

36

 

3.62

 

3,185

 

48

 

3.03

 

Commercial mortgage loans

 

9,713

 

191

 

3.96

 

10,380

 

216

 

4.19

 

Residential mortgage loans

 

1,562

 

42

 

5.37

 

1,620

 

44

 

5.43

 

Consumer loans

 

2,262

 

39

 

3.42

 

2,464

 

44

 

3.57

 

Lease financing

 

972

 

17

 

3.56

 

1,119

 

21

 

3.73

 

International loans

 

1,237

 

24

 

3.83

 

1,261

 

25

 

4.00

 

Business loan swap income

 

 

1

 

 

 

17

 

 

Total loans

 

39,361

 

746

 

3.82

 

40,990

 

826

 

4.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auction-rate securities available-for-sale

 

527

 

2

 

0.80

 

847

 

5

 

1.06

 

Other investment securities available-for-sale

 

6,832

 

114

 

3.39

 

6,475

 

118

 

3.72

 

Total investment securities available-for-sale

 

7,359

 

116

 

3.19

 

7,322

 

123

 

3.40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold and securities purchased under agreements to resell

 

2

 

 

0.32

 

1

 

 

1.17

 

Interest-bearing deposits with banks (a)

 

2,897

 

4

 

0.25

 

3,944

 

5

 

0.25

 

Other short-term investments

 

124

 

1

 

2.05

 

128

 

1

 

1.70

 

Total earning assets

 

49,743

 

867

 

3.51

 

52,385

 

955

 

3.67

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

878

 

 

 

 

 

792

 

 

 

 

 

Allowance for loan losses

 

(883

)

 

 

 

 

(1,048

)

 

 

 

 

Accrued income and other assets

 

4,410

 

 

 

 

 

4,756

 

 

 

 

 

Total assets

 

$

54,148

 

 

 

 

 

$

56,885

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market and NOW deposits

 

$

18,003

 

23

 

0.26

 

$

15,709

 

25

 

0.32

 

Savings deposits

 

1,443

 

1

 

0.09

 

1,407

 

 

0.07

 

Customer certificates of deposit

 

5,559

 

20

 

0.73

 

6,049

 

30

 

0.97

 

Total interest-bearing core deposits

 

25,005

 

44

 

0.36

 

23,165

 

55

 

0.48

 

Other time deposits

 

 

 

 

584

 

9

 

3.18

 

Foreign office time deposits

 

413

 

1

 

0.50

 

453

 

 

0.22

 

Total interest-bearing deposits

 

25,418

 

45

 

0.36

 

24,202

 

64

 

0.54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

103

 

 

0.21

 

241

 

 

0.19

 

Medium- and long-term debt

 

5,974

 

34

 

1.15

 

10,169

 

51

 

0.99

 

Total interest-bearing sources

 

31,495

 

79

 

0.51

 

34,612

 

115

 

0.67

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

15,623

 

 

 

 

 

14,923

 

 

 

 

 

Accrued expenses and other liabilities

 

1,126

 

 

 

 

 

1,067

 

 

 

 

 

Total shareholders’ equity

 

5,904

 

 

 

 

 

6,283

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

54,148

 

 

 

 

 

$

56,885

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/rate spread (FTE)

 

 

 

$

788

 

3.00

 

 

 

$

840

 

3.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FTE adjustment

 

 

 

$

2

 

 

 

 

 

$

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of net noninterest-bearing sources of funds

 

 

 

 

 

0.19

 

 

 

 

 

0.23

 

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

 

 

 

 

 

3.19

%

 

 

 

 

3.23

%

 


(a)

Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 18 basis points and 24 basis points year-to-date in 2011 and 2010, respectively. Excluding excess liquidity, the net interest margin would have been 3.37% in 2011 and 3.47% in 2010. See Reconciliation of Non-GAAP Financial Measures.

 

19



 

ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)

Comerica Incorporated and Subsidiaries

 

 

 

Three Months Ended

 

 

 

June 30, 2011

 

March 31, 2011

 

June 30, 2010

 

 

 

Average

 

 

 

Average

 

Average

 

 

 

Average

 

Average

 

 

 

Average

 

(dollar amounts in millions)

 

Balance

 

Interest

 

Rate

 

Balance

 

Interest

 

Rate

 

Balance

 

Interest

 

Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans

 

$

 

21,677

 

$

196

 

3.65

%

$

21,496

 

$

200

 

3.76

%

$

20,910

 

$

206

 

3.95

%

Real estate construction loans

 

1,881

 

17

 

3.75

 

2,179

 

19

 

3.51

 

2,987

 

23

 

3.13

 

Commercial mortgage loans

 

9,636

 

96

 

3.98

 

9,790

 

95

 

3.95

 

10,372

 

109

 

4.20

 

Residential mortgage loans

 

1,525

 

21

 

5.50

 

1,599

 

21

 

5.24

 

1,607

 

22

 

5.44

 

Consumer loans

 

2,243

 

20

 

3.42

 

2,281

 

19

 

3.42

 

2,448

 

22

 

3.56

 

Lease financing

 

958

 

8

 

3.50

 

987

 

9

 

3.62

 

1,108

 

10

 

3.72

 

International loans

 

1,254

 

12

 

3.80

 

1,219

 

12

 

3.87

 

1,240

 

13

 

4.07

 

Business loan swap income

 

 

 

 

 

1

 

 

 

9

 

 

Total loans

 

39,174

 

370

 

3.79

 

39,551

 

376

 

3.85

 

40,672

 

414

 

4.07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auction-rate securities available-for-sale

 

500

 

1

 

0.71

 

554

 

1

 

0.88

 

816

 

3

 

1.19

 

Other investment securities available-for-sale

 

6,907

 

58

 

3.40

 

6,757

 

56

 

3.37

 

6,446

 

58

 

3.71

 

Total investment securities available-for-sale

 

7,407

 

59

 

3.20

 

7,311

 

57

 

3.17

 

7,262

 

61

 

3.41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold and securities purchased under agreements to resell

 

2

 

 

0.33

 

3

 

 

0.32

 

1

 

 

1.35

 

Interest-bearing deposits with banks (a)

 

3,433

 

3

 

0.25

 

2,354

 

1

 

0.26

 

3,768

 

3

 

0.25

 

Other short-term investments

 

120

 

 

1.39

 

128

 

1

 

2.68

 

132

 

 

1.65

 

Total earning assets

 

50,136

 

432

 

3.46

 

49,347

 

435

 

3.57

 

51,835

 

478

 

3.70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

872

 

 

 

 

 

884

 

 

 

 

 

795

 

 

 

 

 

Allowance for loan losses

 

(859

)

 

 

 

 

(908

)

 

 

 

 

(1,037

)

 

 

 

 

Accrued income and other assets

 

4,368

 

 

 

 

 

4,452

 

 

 

 

 

4,665

 

 

 

 

 

Total assets

 

$

 

54,517

 

 

 

 

 

$

53,775

 

 

 

 

 

$

56,258

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market and NOW deposits

 

$

 

18,207

 

11

 

0.26

 

$

17,797

 

12

 

0.26

 

$

16,354

 

13

 

0.32

 

Savings deposits

 

1,465

 

1

 

0.09

 

1,421

 

 

0.09

 

1,429

 

 

0.07

 

Customer certificates of deposit

 

5,609

 

10

 

0.70

 

5,509

 

10

 

0.76

 

5,927

 

15

 

0.92

 

Total interest-bearing core deposits

 

25,281

 

22

 

0.35

 

24,727

 

22

 

0.36

 

23,710

 

28

 

0.45

 

Other time deposits

 

 

 

 

 

 

 

295

 

1

 

2.14

 

Foreign office time deposits

 

413

 

1

 

0.52

 

412

 

 

0.49

 

448

 

 

0.23

 

Total interest-bearing deposits

 

25,694

 

23

 

0.35

 

25,139

 

22

 

0.37

 

24,453

 

29

 

0.47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

112

 

 

0.14

 

94

 

 

0.31

 

248

 

 

0.27

 

Medium- and long-term debt

 

5,821

 

17

 

1.20

 

6,128

 

17

 

1.10

 

9,571

 

25

 

1.04

 

Total interest-bearing sources

 

31,627

 

40

 

0.51

 

31,361

 

39

 

0.51

 

34,272

 

54

 

0.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

15,786

 

 

 

 

 

15,459

 

 

 

 

 

15,218

 

 

 

 

 

Accrued expenses and other liabilities

 

1,132

 

 

 

 

 

1,120

 

 

 

 

 

1,060

 

 

 

 

 

Total shareholders’ equity

 

5,972

 

 

 

 

 

5,835

 

 

 

 

 

5,708

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

 

54,517

 

 

 

 

 

$

53,775

 

 

 

 

 

$

56,258

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/rate spread (FTE)

 

 

 

$

392

 

2.95

 

 

 

$

396

 

3.06

 

 

 

$

424

 

3.07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FTE adjustment

 

 

 

$

1

 

 

 

 

 

$

1

 

 

 

 

 

$

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of net noninterest-bearing sources of funds

 

 

 

 

 

0.19

 

 

 

 

 

0.19

 

 

 

 

 

0.21

 

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

 

 

 

 

 

3.14

%

 

 

 

 

3.25

%

 

 

 

 

3.28

%

 


(a)

Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 21 basis points and by 14 points in the second and first quarters of 2011, respectively and by 23 basis points in the second quarter of 2010. Excluding excess liquidity, the net interest margin would have been 3.35%, 3.39% and 3.51% in each respective period. See Reconciliation of Non-GAAP Financial Measures.

 

20



 

CONSOLIDATED STATISTICAL DATA (unaudited)

Comerica Incorporated and Subsidiaries

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

(in millions, except per share data)

 

2011

 

2011

 

2010

 

2010

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans:

 

 

 

 

 

 

 

 

 

 

 

Floor plan

 

$

1,478

 

$

1,893

 

$

2,017

 

$

1,693

 

$

1,586

 

Other

 

20,574

 

19,467

 

20,128

 

19,739

 

19,565

 

Total commercial loans

 

22,052

 

21,360

 

22,145

 

21,432

 

21,151

 

Real estate construction loans:

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate business line (a)

 

1,343

 

1,606

 

1,826

 

2,023

 

2,345

 

Other business lines (b)

 

385

 

417

 

427

 

421

 

429

 

Total real estate construction loans

 

1,728

 

2,023

 

2,253

 

2,444

 

2,774

 

Commercial mortgage loans:

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate business line (a)

 

1,930

 

1,918

 

1,937

 

2,091

 

2,035

 

Other business lines (b)

 

7,649

 

7,779

 

7,830

 

8,089

 

8,283

 

Total commercial mortgage loans

 

9,579

 

9,697

 

9,767

 

10,180

 

10,318

 

Residential mortgage loans

 

1,491

 

1,550

 

1,619

 

1,586

 

1,606

 

Consumer loans:

 

 

 

 

 

 

 

 

 

 

 

Home equity

 

1,622

 

1,661

 

1,704

 

1,736

 

1,761

 

Other consumer

 

610

 

601

 

607

 

667

 

682

 

Total consumer loans

 

2,232

 

2,262

 

2,311

 

2,403

 

2,443

 

Lease financing

 

949

 

958

 

1,009

 

1,053

 

1,084

 

International loans

 

1,162

 

1,326

 

1,132

 

1,182

 

1,226

 

Total loans

 

$

39,193

 

$

39,176

 

$

40,236

 

$

40,280

 

$

40,602

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$

150

 

$

150

 

$

150

 

$

150

 

$

150

 

Loan servicing rights

 

4

 

4

 

5

 

5

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 common capital ratio (c) (d)

 

10.53

%

10.35

%

10.13

%

9.96

%

9.81

%

Tier 1 risk-based capital ratio (d)

 

10.53

 

10.35

 

10.13

 

9.96

 

10.64

 

Total risk-based capital ratio (d)

 

14.81

 

14.80

 

14.54

 

14.37

 

15.03

 

Leverage ratio (d)

 

11.39

 

11.37

 

11.26

 

10.91

 

11.36

 

Tangible common equity ratio (c)

 

10.90

 

10.43

 

10.54

 

10.39

 

10.11

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per common share

 

$

34.15

 

$

33.25

 

$

32.82

 

$

33.19

 

$

32.85

 

Market value per share for the quarter:

 

 

 

 

 

 

 

 

 

 

 

High

 

39.00

 

43.53

 

43.44

 

40.21

 

45.85

 

Low

 

33.08

 

36.20

 

34.43

 

33.11

 

35.44

 

Close

 

34.57

 

36.72

 

42.24

 

37.15

 

36.83

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly ratios:

 

 

 

 

 

 

 

 

 

 

 

Return on average common shareholders’ equity

 

6.41

%

7.08

%

6.53

%

4.07

%

4.89

%

Return on average assets

 

0.70

 

0.77

 

0.71

 

0.43

 

0.50

 

Efficiency ratio

 

69.33

 

69.05

 

70.38

 

67.88

 

64.47

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of banking centers

 

446

 

445

 

444

 

441

 

437

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of employees - full time equivalent

 

8,915

 

8,955

 

9,001

 

9,075

 

9,107

 

 


(a) Primarily loans to real estate investors and developers.

(b) Primarily loans secured by owner-occupied real estate.

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

(d) June 30, 2011 ratios are estimated.

 

21



 

PARENT COMPANY ONLY BALANCE SHEETS (unaudited)

Comerica Incorporated

 

 

 

June 30,

 

December 31,

 

June 30,

 

(in millions, except share data)

 

2011

 

2010

 

2010

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Cash and due from subsidiary bank

 

$

14

 

$

 

$

15

 

Short-term investments with subsidiary bank

 

413

 

327

 

659

 

Other short-term investments

 

90

 

86

 

83

 

Investment in subsidiaries, principally banks

 

6,122

 

5,957

 

5,961

 

Premises and equipment

 

3

 

4

 

4

 

Other assets

 

162

 

181

 

190

 

Total assets

 

$

6,804

 

$

6,555

 

$

6,912

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Medium- and long-term debt

 

$

635

 

$

635

 

$

999

 

Other liabilities

 

131

 

127

 

121

 

Total liabilities

 

766

 

762

 

1,120

 

 

 

 

 

 

 

 

 

Common stock - $5 par value:

 

 

 

 

 

 

 

Authorized - 325,000,000 shares

 

 

 

 

 

 

 

Issued - 203,878,110 shares

 

1,019

 

1,019

 

1,019

 

Capital surplus

 

1,472

 

1,481

 

1,467

 

Accumulated other comprehensive loss

 

(308

)

(389

)

(240

)

Retained earnings

 

5,395

 

5,247

 

5,124

 

Less cost of common stock in treasury - 27,092,427 shares at 6/30/11, 27,342,518 shares at 12/31/10, and 27,561,412 shares at 6/30/10

 

(1,540

)

(1,565

)

(1,578

)

Total shareholders’ equity

 

6,038

 

5,793

 

5,792

 

Total liabilities and shareholders’ equity

 

$

6,804

 

$

6,555

 

$

6,912

 

 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited)

Comerica Incorporated and Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

Other

 

 

 

 

 

Total

 

 

 

Preferred

 

Shares

 

 

 

Capital

 

Comprehensive

 

Retained

 

Treasury

 

Shareholders’

 

(in millions, except per share data)

 

Stock

 

Outstanding

 

Amount

 

Surplus

 

Loss

 

Earnings

 

Stock

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE AT DECEMBER 31, 2009

 

$

2,151

 

151.2

 

$

894

 

$

740

 

$

(336

)

$

5,161

 

$

(1,581

)

$

7,029

 

Net income

 

 

 

 

 

 

122

 

 

122

 

Other comprehensive income, net of tax

 

 

 

 

 

96

 

 

 

96

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

218

 

Cash dividends declared on preferred stock

 

 

 

 

 

 

(38

)

 

(38

)

Cash dividends declared on common stock ($0.10 per share)

 

 

 

 

 

 

(18

)

 

(18

)

Purchase of common stock

 

 

 

 

 

 

 

(4

)

(4

)

Issuance of common stock

 

 

25.1

 

125

 

724

 

 

 

 

849

 

Redemption of preferred stock

 

(2,250

)

 

 

 

 

 

 

(2,250

)

Redemption discount accretion on preferred stock

 

94

 

 

 

 

 

(94

)

 

 

Accretion of discount on preferred stock

 

5

 

 

 

 

 

(5

)

 

 

Net issuance of common stock under employee stock plans

 

 

 

 

(5

)

 

(4

)

6

 

(3

)

Share-based compensation

 

 

 

 

11

 

 

 

 

11

 

Other

 

 

 

 

(3

)

 

 

1

 

(2

)

BALANCE AT JUNE 30, 2010

 

$

 

176.3

 

$

1,019

 

$

1,467

 

$

(240

)

$

5,124

 

$

(1,578

)

$

5,792

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE AT DECEMBER 31, 2010

 

$

 

176.5

 

$

1,019

 

$

1,481

 

$

(389

)

$

5,247

 

$

(1,565

)

$

5,793

 

Net income

 

 

 

 

 

 

199

 

 

199

 

Other comprehensive income, net of tax

 

 

 

 

 

81

 

 

 

81

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

280

 

Cash dividends declared on common stock ($0.20 per share)

 

 

 

 

 

 

(35

)

 

(35

)

Purchase of common stock

 

 

(0.5

)

 

 

 

 

(21

)

(21

)

Net issuance of common stock under employee stock plans

 

 

0.8

 

 

(30

)

 

(16

)

46

 

 

Share-based compensation

 

 

 

 

21

 

 

 

 

21

 

BALANCE AT JUNE 30, 2011

 

$

 

176.8

 

$

1,019

 

$

1,472

 

$

(308

)

$

5,395

 

$

(1,540

)

$

6,038

 

 

22



 

BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)

Comerica Incorporated and Subsidiaries

 

(dollar amounts in millions)

 

Business

 

Retail

 

Wealth

 

 

 

 

 

 

 

Three Months Ended June 30, 2011

 

Bank

 

Bank

 

Management

 

Finance

 

Other

 

Total

 

Earnings summary:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (expense) (FTE)

 

$

342

 

$

141

 

$

48

 

$

(147

)

$

8

 

$

392

 

Provision for loan losses

 

6

 

24

 

14

 

 

3

 

47

 

Noninterest income

 

79

 

46

 

63

 

11

 

3

 

202

 

Noninterest expenses

 

158

 

162

 

76

 

3

 

10

 

409

 

Provision (benefit) for income taxes (FTE)

 

81

 

4

 

9

 

(52

)

 

42

 

Net income (loss)

 

$

176

 

$

(3

)

$

12

 

$

(87

)

$

(2

)

$

96

 

Net credit-related charge-offs

 

$

54

 

$

22

 

$

14

 

$

 

$

 

$

90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

$

29,893

 

$

5,453

 

$

4,728

 

$

9,406

 

$

5,037

 

$

54,517

 

Loans

 

29,380

 

4,999

 

4,742

 

48

 

5

 

39,174

 

Deposits

 

20,396

 

17,737

 

2,978

 

239

 

130

 

41,480

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistical data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (a)

 

2.35

%

(0.06

)%

1.03

%

N/M

 

N/M

 

0.70

%

Net interest margin (b)

 

4.65

 

3.22

 

4.07

 

N/M

 

N/M

 

3.14

 

Efficiency ratio

 

37.41

 

86.48

 

71.40

 

N/M

 

N/M

 

69.33

 

 

 

 

Business

 

Retail

 

Wealth

 

 

 

 

 

 

 

Three Months Ended March 31, 2011

 

Bank

 

Bank

 

Management

 

Finance

 

Other

 

Total

 

Earnings summary:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (expense) (FTE)

 

$

341

 

$

139

 

$

44

 

$

(135

)

$

7

 

$

396

 

Provision for loan losses

 

18

 

23

 

8

 

 

 

49

 

Noninterest income

 

77

 

42

 

64

 

16

 

8

 

207

 

Noninterest expenses

 

160

 

162

 

78

 

3

 

12

 

415

 

Provision (benefit) for income taxes (FTE)

 

73

 

(2

)

8

 

(46

)

3

 

36

 

Net income (loss)

 

$

167

 

$

(2

)

$

14

 

$

(76

)

$

 

$

103

 

Net credit-related charge-offs

 

$

73

 

$

23

 

$

5

 

$

 

$

 

$

101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

$

30,091

 

$

5,558

 

$

4,809

 

$

9,314

 

$

4,003

 

$

53,775

 

Loans

 

29,609

 

5,106

 

4,807

 

22

 

7

 

39,551

 

Deposits

 

20,084

 

17,360

 

2,800

 

249

 

105

 

40,598

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistical data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (a)

 

2.22

%

(0.05

)%

1.14

%

N/M

 

N/M

 

0.77

%

Net interest margin (b)

 

4.66

 

3.25

 

3.76

 

N/M

 

N/M

 

3.25

 

Efficiency ratio

 

38.14

 

89.19

 

74.38

 

N/M

 

N/M

 

69.05

 

 

 

 

Business

 

Retail

 

Wealth

 

 

 

 

 

 

 

Three Months Ended June 30, 2010

 

Bank

 

Bank

 

Management

 

Finance

 

Other

 

Total

 

Earnings summary:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (expense) (FTE)

 

$

351

 

$

134

 

$

45

 

$

(103

)

$

(3

)

$

424

 

Provision for loan losses

 

83

 

20

 

19

 

 

4

 

126

 

Noninterest income

 

78

 

42

 

61

 

13

 

 

194

 

Noninterest expenses

 

157

 

160

 

79

 

2

 

(1

)

397

 

Provision (benefit) for income taxes (FTE)

 

54

 

(1

)

3

 

(35

)

4

 

25

 

Net income (loss)

 

$

135

 

$

(3

)

$

5

 

$

(57

)

$

(10

)

$

70

 

Net credit-related charge-offs

 

$

113

 

$

22

 

$

11

 

$

 

$

 

$

146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

$

30,609

 

$

5,937

 

$

4,903

 

$

9,343

 

$

5,466

 

$

56,258

 

Loans

 

30,353

 

5,446

 

4,840

 

36

 

(3

)

40,672

 

Deposits

 

19,069

 

16,930

 

2,924

 

653

 

95

 

39,671

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistical data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (a)

 

1.75

%

(0.06

)%

0.43

%

N/M

 

N/M

 

0.50

%

Net interest margin (b)

 

4.63

 

3.17

 

3.73

 

N/M

 

N/M

 

3.28

 

Efficiency ratio

 

36.92

 

89.14

 

77.57

 

N/M

 

N/M

 

64.47

 

 


(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

 

23



 

MARKET SEGMENT FINANCIAL RESULTS (unaudited)

Comerica Incorporated and Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance

 

 

 

(dollar amounts in millions)

 

 

 

 

 

 

 

 

 

Other

 

 

 

& Other

 

 

 

Three Months Ended June 30, 2011

 

Midwest

 

Western

 

Texas

 

Florida

 

Markets

 

International

 

Businesses

 

Total

 

Earnings summary:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (expense) (FTE)

 

$

204

 

$

166

 

$

89

 

$

12

 

$

41

 

$

19

 

$

(139

)

$

392

 

Provision for loan losses

 

15

 

20

 

(2

)

11

 

5

 

(5

)

3

 

47

 

Noninterest income

 

100

 

37

 

25

 

4

 

13

 

9

 

14

 

202

 

Noninterest expenses

 

183

 

108

 

63

 

12

 

21

 

9

 

13

 

409

 

Provision (benefit) for income taxes (FTE)

 

44

 

25

 

20

 

(2

)

(2

)

9

 

(52

)

42

 

Net income (loss)

 

$

62

 

$

50

 

$

33

 

$

(5

)

$

30

 

$

15

 

$

(89

)

$

96

 

Net credit-related charge-offs (recoveries)

 

$

37

 

$

26

 

$

3

 

$

15

 

$

11

 

$

(2

)

$

 

$

90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

$

14,267

 

$

12,329

 

$

7,081

 

$

1,534

 

$

3,101

 

$

1,762

 

$

14,443

 

$

54,517

 

Loans

 

14,051

 

12,121

 

6,871

 

1,565

 

2,823

 

1,690

 

53

 

39,174

 

Deposits

 

18,319

 

12,458

 

6,175

 

396

 

2,451

 

1,312

 

369

 

41,480

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistical data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (a)

 

1.28

%

1.48

%

1.84

%

(1.29

)%

3.89

%

3.33

%

N/M

 

0.70

%

Net interest margin (b)

 

4.46

 

5.35

 

5.19

 

3.14

 

5.88

 

4.40

 

N/M

 

3.14

 

Efficiency ratio

 

60.30

 

53.19

 

55.16

 

77.62

 

40.47

 

33.16

 

N/M

 

69.33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

& Other

 

 

 

Three Months Ended March 31, 2011

 

Midwest

 

Western

 

Texas

 

Florida

 

Markets

 

International

 

Businesses

 

Total

 

Earnings summary:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (expense) (FTE)

 

$

203

 

$

164

 

$

87

 

$

11

 

$

41

 

$

18

 

$

(128

)

$

396

 

Provision for loan losses

 

34

 

11

 

4

 

8

 

(7

)

(1

)

 

49

 

Noninterest income

 

100

 

37

 

23

 

4

 

11

 

8

 

24

 

207

 

Noninterest expenses

 

188

 

109

 

61

 

12

 

21

 

9

 

15

 

415

 

Provision (benefit) for income taxes (FTE)

 

28

 

30

 

16

 

(1

)

 

6

 

(43

)

36

 

Net income (loss)

 

$

53

 

$

51

 

$

29

 

$

(4

)

$

38

 

$

12

 

$

(76

)

$

103

 

Net credit-related charge-offs

 

$

46

 

$

26

 

$

8

 

$

8

 

$

9

 

$

4

 

$

 

$

101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

$

14,307

 

$

12,590

 

$

7,031

 

$

1,553

 

$

3,242

 

$

1,735

 

$

13,317

 

$

53,775

 

Loans

 

14,104

 

12,383

 

6,824

 

1,580

 

2,960

 

1,671

 

29

 

39,551

 

Deposits

 

18,230

 

12,235

 

5,786

 

367

 

2,298

 

1,328

 

354

 

40,598

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistical data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (a)

 

1.08

%

1.54

%

1.65

%

(0.93

)%

4.70

%

2.79

%

N/M

 

0.77

%

Net interest margin (b)

 

4.49

 

5.37

 

5.17

 

2.82

 

5.73

 

4.34

 

N/M

 

3.25

 

Efficiency ratio

 

61.99

 

54.36

 

55.39

 

80.08

 

42.38

 

34.62

 

N/M

 

69.05

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

& Other

 

 

 

Three Months Ended June 30, 2010

 

Midwest

 

Western

 

Texas

 

Florida

 

Markets

 

International

 

Businesses

 

Total

 

Earnings summary:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (expense) (FTE)

 

$

211

 

$

163

 

$

81

 

$

12

 

$

44

 

$

19

 

$

(106

)

$

424

 

Provision for loan losses

 

34

 

27

 

(1

)

17

 

50

 

(5

)

4

 

126

 

Noninterest income

 

97

 

33

 

23

 

4

 

15

 

9

 

13

 

194

 

Noninterest expenses

 

180

 

110

 

65

 

12

 

21

 

8

 

1

 

397

 

Provision (benefit) for income taxes (FTE)

 

33

 

21

 

14

 

(5

)

(16

)

9

 

(31

)

25

 

Net income (loss)

 

$

61

 

$

38

 

$

26

 

$

(8

)

$

4

 

$

16

 

$

(67

)

$

70

 

Net credit-related charge-offs

 

$

44

 

$

47

 

$

8

 

$

7

 

$

40

 

$

 

$

 

$

146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

$

14,626

 

$

13,006

 

$

6,652

 

$

1,576

 

$

3,934

 

$

1,655

 

$

14,809

 

$

56,258

 

Loans

 

14,592

 

12,792

 

6,428

 

1,575

 

3,661

 

1,591

 

33

 

40,672

 

Deposits

 

17,988

 

11,951

 

5,316

 

404

 

2,212

 

1,052

 

748

 

39,671

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistical data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (a)

 

1.25

%

1.15

%

1.54

%

(2.18

)%

0.46

%

3.90

%

N/M

 

0.50

%

Net interest margin (b)

 

4.66

 

5.13

 

5.05

 

2.94

 

4.91

 

4.62

 

N/M

 

3.28

 

Efficiency ratio

 

58.16

 

56.15

 

62.38

 

76.90

 

38.26

 

30.48

 

N/M

 

64.47

 

 


(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

 

24



 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited) (page 1 of 2)

Comerica Incorporated and Subsidiaries

 

 

 

Six Months Ended June 30,

 

(dollar amounts in millions)

 

2011

 

2010

 

Impact of Excess Liquidity on Net Interest Margin (FTE):

 

 

 

 

 

Net interest income (FTE)

 

$

788

 

$

840

 

Less:

 

 

 

 

 

Interest earned on excess liquidity (a)

 

3

 

5

 

Net interest income (FTE), excluding excess liquidity

 

$

785

 

$

835

 

 

 

 

 

 

 

Average earning assets

 

$

49,743

 

$

52,385

 

Less:

 

 

 

 

 

Average net unrealized gains on investment securities available-for-sale

 

48

 

71

 

Average earning assets for net interest margin (FTE)

 

49,695

 

52,314

 

Less:

 

 

 

 

 

Excess liquidity (a)

 

2,843

 

3,905

 

Average earning assets for net interest margin (FTE), excluding excess liquidity

 

$

46,852

 

$

48,409

 

 

 

 

 

 

 

Net interest margin (FTE)

 

3.19

%

3.23

%

Net interest margin (FTE), excluding excess liquidity

 

3.37

 

3.47

 

 

 

 

 

 

 

Impact of excess liquidity on net interest margin (FTE)

 

(0.18

)

(0.24

)

 

 

 

2011

 

2010

 

 

 

2nd Qtr

 

1st Qtr

 

4th Qtr

 

3rd Qtr

 

2nd Qtr

 

Impact of Excess Liquidity on Net Interest Margin (FTE):

 

 

 

 

 

 

 

 

 

 

 

Net interest income (FTE)

 

$

392

 

$

396

 

$

406

 

$

405

 

$

424

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Interest earned on excess liquidity (a)

 

2

 

1

 

1

 

2

 

2

 

Net interest income (FTE), excluding excess liquidity

 

$

390

 

$

395

 

$

405

 

$

403

 

$

422

 

 

 

 

 

 

 

 

 

 

 

 

 

Average earning assets

 

$

50,136

 

$

49,347

 

$

49,102

 

$

50,189

 

$

51,835

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Average net unrealized gains on investment securities available-for-sale

 

74

 

22

 

139

 

180

 

80

 

Average earning assets for net interest margin (FTE)

 

50,062

 

49,325

 

48,963

 

50,009

 

51,755

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Excess liquidity (a)

 

3,382

 

2,297

 

1,793

 

2,983

 

3,719

 

Average earning assets for net interest margin (FTE), excluding excess liquidity

 

$

46,680

 

$

47,028

 

$

47,170

 

$

47,026

 

$

48,036

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (FTE)

 

3.14

%

3.25

%

3.29

%

3.23

%

3.28

%

Net interest margin (FTE), excluding excess liquidity

 

3.35

 

3.39

 

3.41

 

3.42

 

3.51

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of excess liquidity on net interest margin (FTE)

 

(0.21

)

(0.14

)

(0.12

)

(0.19

)

(0.23

)

 


(a) Excess liquidity represented by interest earned on and average balances deposited with the FRB.

 

The net interest margin (FTE), excluding excess liquidity, removes interest earned on balances deposited with the FRB from net interest income (FTE) and average balances deposited with the FRB from average earning assets from the numerator and denominator of the net interest margin (FTE) ratio, respectively. Comerica believes this measurement provides meaningful information to investors, regulators, management and others of the impact on net interest income and net interest margin resulting from Comerica’s short-term investment in low yielding instruments.

 

25



 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited) (page 2 of 2)

Comerica Incorporated and Subsidiaries

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

 

 

2011

 

2011

 

2010

 

2010

 

2010

 

Tier 1 Common Capital Ratio:

 

 

 

 

 

 

 

 

 

 

 

Tier 1 capital (a) (b) 

 

$

6,193

 

$

6,107

 

$

6,027

 

$

5,940

 

$

6,371

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Trust preferred securities

 

 

 

 

 

495

 

Tier 1 common capital (b) 

 

$

6,193

 

$

6,107

 

$

6,027

 

$

5,940

 

$

5,876

 

Risk-weighted assets (a) (b) 

 

$

58,790

 

$

58,998

 

$

59,506

 

$

59,608

 

$

59,877

 

Tier 1 capital ratio (b)

 

10.53

%

10.35

%

10.13

%

9.96

%

10.64

%

Tier 1 common capital ratio (b)

 

10.53

 

10.35

 

10.13

 

9.96

 

9.81

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible Common Equity Ratio:

 

 

 

 

 

 

 

 

 

 

 

Total common shareholders’ equity

 

$

6,038

 

$

5,877

 

$

5,793

 

$

5,857

 

$

5,792

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

150

 

150

 

150

 

150

 

150

 

Other intangible assets

 

4

 

5

 

6

 

6

 

6

 

Tangible common equity

 

$

5,884

 

$

5,722

 

$

5,637

 

$

5,701

 

$

5,636

 

Total assets

 

$

54,141

 

$

55,017

 

$

53,667

 

$

55,004

 

$

55,885

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

150

 

150

 

150

 

150

 

150

 

Other intangible assets

 

4

 

5

 

6

 

6

 

6

 

Tangible assets

 

$

53,987

 

$

54,862

 

$

53,511

 

$

54,848

 

$

55,729

 

Common equity ratio

 

11.15

%

10.68

%

10.80

%

10.65

%

10.36

%

Tangible common equity ratio

 

10.90

 

10.43

 

10.54

 

10.39

 

10.11

 

 


(a) Tier 1 capital and risk-weighted assets as defined by regulation.

(b) June 30, 2011 Tier 1 capital and risk-weighted assets are estimated.

 

The Tier 1 common capital ratio removes preferred stock and qualifying trust preferred securities from Tier 1 capital as defined by and calculated in conformity with bank regulations.  The tangible common equity removes preferred stock and the effect of intangible assets from capital and the effect of intangible assets from total assets.  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.

 

26