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Comerica Reports Third Quarter 2016 Net Income Of $149 Million

Dienstag, 18.10.2016 12:50 von

PR Newswire

DALLAS, Oct. 18, 2016 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported third quarter 2016 net income of $149 million, compared to $104 million for the second quarter 2016 and $136 million for the third quarter 2015. Earnings per diluted share were 84 cents for third quarter 2016 compared to 58 cents for second quarter 2016 and 74 cents for third quarter 2015. Comerica also continued the implementation of its efficiency and revenue initiative ("GEAR Up"), which is expected to drive additional annual pre-tax income of approximately $180 million by year-end 2017 and $270 million by year-end 2018.

Comerica logo.

"On our last earnings call, we announced that we had identified more than 20 work streams in our GEAR Up initiative that are expected to drive a significant improvement in our bottom line.  At that time, we also indicated there was more to come, as we were still identifying and analyzing opportunities.  We have determined that those new opportunities add about $40 million to our initial financial target.  As a result, we are now expecting to drive at least $270 million in additional pre-tax income for full-year 2018," said Ralph W. Babb, Jr., chairman and chief executive officer.  "These actions, which we have already begun to execute with urgency, take us a long way towards achieving a double-digit return on equity.  We expect to meet or exceed this goal with sustained growth, net of investment, normal credit costs, continued equity buybacks, and assuming only a 25 to 50 basis point increase in rates.  We are not relying on a significantly better economic environment or a substantial increase in rates to reach our goal.  We remain confident that as we deliver on this initiative, we will create greater shareholder value."

The GEAR Up initiative now includes expected pre-tax benefits of approximately $180 million in full-year 2017 and approximately $270 million in full-year 2018. Additional initiatives include a new retirement program that will replace the current pension plan and retirement account plan for most employees effective January 1, 2017. Active pension plan participants age 60 or older as of December 31, 2016 and current retirees will not be impacted. This initiative is expected to result in annual savings of approximately $35 million in full-year 2017 (assuming current actuarial assumptions). The initiative is also expected to reduce full-year 2016 pension expense to $7 million, resulting in a $4 million credit in the fourth quarter. In addition, streamlining additional operations and administrative support functions is expected to add about $5 million to the initial target.

  • Expense reduction targets have been increased to approximately $150 million for full-year 2017, which increases to approximately $200 million for full-year 2018. This is to be achieved through the additional actions identified above as well as the previously announced reduction in workforce, streamlining operational processes, real estate optimization including consolidating 38 banking centers, selective outsourcing of technology functions and reduction of technology system applications. Approximately two-thirds of the workforce reduction target will be completed by year-end 2016.
  • Revenue enhancements are unchanged and are expected to be approximately $30 million for full-year 2017, which increase to approximately $70 million for full-year 2018, through expanded product offerings, enhanced sales tools and training and improved customer analytics to drive opportunities.
  • Total expected pre-tax restructuring charges of $140 million to $160 million to be incurred through 2018 are unchanged.














(dollar amounts in millions, except per share data)

3rd Qtr '16

2nd Qtr '16

3rd Qtr '15

Net interest income

$

450



$

445



$

422



Provision for credit losses

16



49



26



Noninterest income

272



268



260



Noninterest expenses

493


(a)

518


(a)

457



Pre-tax income

213



146



199



Provision for income taxes

64



42



63



Net income

$

149



$

104



$

136










Net income attributable to common shares

$

148



$

103



$

134










Diluted income per common share

0.84



0.58



0.74










Average diluted shares (in millions)

176



177



181










Common equity Tier 1 capital ratio (b)

10.68

%


10.49

%


10.51

%


Common equity ratio

10.42



10.79



10.73



Tangible common equity ratio (c)

9.64



9.98



9.91





(a) Included restructuring charge of $20 million (8 cents per share, after tax) in the third quarter 2016 and $53 million (19 cents per
share, after tax) in the second quarter 2016.

(b) September 30, 2016 ratio is estimated.

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

 

"Quarter over quarter, our earnings per share increased 45 percent. This reflected strong credit quality, a reduction in restructuring charges, solid revenue growth and well-managed expenses," said Babb. "While loans were relatively stable, average deposit growth was robust, increasing $1.5 billion. Criticized loans declined and net charge-offs were only 13 basis points of average loans. Our capital position remains solid. In line with our CCAR plan, we increased our share repurchases to 2.1 million shares for a total of $97 million, compared to $65 million in the second quarter.

"We believe we are well positioned for the future," said Babb. "We benefit meaningfully from any increase in interest rates and we continue to adeptly navigate the energy cycle. Yet, we are not waiting for the environment to improve. We are moving with urgency to execute our GEAR Up initiatives and are fully committed to delivering on these efficiency and revenue opportunities to further enhance our profitability."

Third Quarter 2016 Compared to Second Quarter 2016

Average total loans decreased $263 million to $49.2 billion.

  • Primarily reflected decreases in Energy, National Dealer Services and Technology and Life Sciences; partially offset by increases in Mortgage Banker Finance and Commercial Real Estate.
  • Period-end total loans decreased $1.1 billion to $49.3 billion, primarily due to decreases in National Dealer Services and Energy.

Average total deposits increased $1.5 billion to $58.1 billion.

  • Driven by a $2.1 billion increase in noninterest-bearing deposits, partially offset by a $534 million decrease in interest-bearing deposits.
  • Average total deposits increased in general Middle Market, Commercial Real Estate and Corporate Banking; partially offset by a decrease in Wealth Management.
  • Period-end deposits increased $2.9 billion to $59.3 billion, in part reflecting an elevated deposit level associated with the government card program on the final day of the quarter.

Net interest income increased $5 million to $450 million.

  • Primarily the result of one additional day in the third quarter and the benefit from an increase in LIBOR rates, partially offset by higher funding costs.

The provision for credit losses decreased $33 million to $16 million.

  • Net credit-related charge-offs were $16 million, or 0.13 percent of average loans, compared to $47 million, or 0.38 percent, in the second quarter 2016. Energy net credit-related charge-offs were $6 million compared to $32 million in the second quarter 2016.
  • The allowance for loan losses was $727 million, or 1.48 percent of total loans. The reserve allocation for Energy remained above 8 percent of loans in the Energy business line.

Noninterest income increased $4 million to $272 million.

  • Increases in commercial lending fees, largely due to an increase in syndication agent fees, partially offset by a decrease in fiduciary income.
  • Non-fee categories increased modestly, primarily due to an increase in income from bank-owned life insurance partially offset by a decrease in deferred compensation plan asset returns.

Noninterest expenses decreased $25 million to $493 million.

  • Excluding a $33 million decrease in restructuring charges, noninterest expenses increased $8 million, primarily due to a $6 million decrease in gains from the sale of leased assets and a $3 million increase in outside processing fees.

Capital position remained solid at September 30, 2016.

  • Increased repurchases by 640,000 shares to approximately 2.1 million shares of common stock under the equity repurchase program.
  • Dividend increased 4.5 percent to 23 cents per share.
  • Including dividends, returned a total of $137 million to shareholders.

Third Quarter 2016 Compared to Third Quarter 2015

Average total loans increased $234 million.

  • Primarily reflected continued growth in Commercial Real Estate and Mortgage Banker Finance, partially offset by declines in Energy and general Middle Market.

Average total deposits decreased $1.1 billion, or 2 percent.

  • Primarily driven by decreases in Municipalities, Corporate Banking, Technology and Life Sciences and the Financial Services Division; partially offset by increases in Retail Bank and Commercial Real Estate.

Net interest income increased $28 million, or 6 percent.

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

The provision for credit losses decreased $10 million, or 38 percent.

Noninterest income increased $12 million, or 5 percent.

  • Excluding a $6 million increase in deferred compensation asset returns, noninterest income increased $6 million, primarily reflecting a $5 million increase in card fees and a $4 million increase in commercial lending fees, largely due to an increase in syndication agent fees; partially offset by decreases in warrant income and risk management hedge ineffectiveness.

Noninterest expense increased $36 million.

  • Noninterest expense increased $10 million excluding third quarter 2016 restructuring charges of $20 million and a $6 million increase in deferred compensation plan expense. The remaining increase primarily reflected increases of $5 million each in software expense and FDIC insurance premiums.

Net Interest Income













(dollar amounts in millions)

3rd Qtr '16


2nd Qtr '16


3rd Qtr '15

Net interest income

$

450



$

445



$

422








Net interest margin

2.66

%


2.74

%


2.54

%







Selected average balances:






Total earning assets

$

67,648



$

65,597



$

66,191


Total loans

49,206



49,469



48,972


Total investment securities

12,373



12,334



10,232


Federal Reserve Bank deposits

5,781



3,495



6,710














Total deposits

58,065



56,521



59,140


Total noninterest-bearing deposits

30,454



28,376



28,623


Medium- and long-term debt

5,907



5,072



3,175


 

Net interest income increased $5 million to $450 million in the third quarter 2016, compared to the second quarter 2016.

  • Interest on loans increased $5 million, primarily reflecting the benefit from increases in LIBOR rates (+$4 million), one additional day in the third quarter (+$4 million) and the impact of a second quarter 2016 negative residual value adjustment to assets in the leasing portfolio (+$2 million), partially offset by the impact of a decrease in average loan balances (-$2 million), the impact of nonaccrual loans (-$1 million), lower fees (-$1 million) and other portfolio dynamics (-$1 million).
  • Interest on investment securities decreased $1 million due to a decrease in yields.
  • Interest on short-term investments increased $3 million due to an increase in average Federal Reserve Bank deposit balances.
  • Interest expense on debt increased $2 million, primarily due to higher costs on variable rate debt tied to LIBOR and the full-quarter impact of Federal Home Loan Bank (FHLB) borrowings during the second quarter.

The net interest margin of 2.66 percent decreased 8 basis points compared to the second quarter 2016, primarily due to the impact of an increase in lower-yielding Federal Reserve Bank deposit balances (-8 basis points).

Credit Quality

"Credit quality was strong, with total net charge-offs of $16 million, or 13 basis points, which is well below our historical norm," said Babb. "Criticized loans declined almost $300 million and comprised less than 7 percent of our total loans.  Energy loans were 5 percent of total loans as they continued to decrease. While the overall performance of the Energy portfolio has improved, as evidenced by net charge-offs of only $6 million in the third quarter, and oil and gas prices have remained relatively stable for the past several months, we remain cautious and continued to maintain a reserve allocation of over 8 percent for Energy loans and a total reserve of 1.48 percent of total loans as of September 30, 2016.  The solid performance of our total loan portfolio contributed to a reduction in our provision expense to $16 million."














(dollar amounts in millions)

3rd Qtr '16


2nd Qtr '16


3rd Qtr '15

Credit-related charge-offs

$

35



$

59



$

34


Recoveries

19



12



11


Net credit-related charge-offs

16



47



23


Net credit-related charge-offs/Average total loans

0.13

%


0.38

%


0.19

%







Provision for credit losses

$

16



$

49



$

26








Nonperforming loans

639



613



369


Nonperforming assets (NPAs)

660



635



381


NPAs/Total loans and foreclosed property

1.34

%


1.26

%


0.78

%







Loans past due 90 days or more and still accruing

$

48



$

35



$

5








Allowance for loan losses

727



729



622


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

45



43



48


Total allowance for credit losses

772



772



670








Allowance for loan losses/Period-end total loans

1.48

%


1.45

%


1.27

%

Allowance for loan losses/Nonperforming loans

114



119



169





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

 

  • Energy business line loans were $2.5 billion at September 30, 2016 compared to $2.7 billion at June 30, 2016.
    • Criticized Energy loans decreased $79 million, to $1.5 billion.
    • Energy net charge-offs were $6 million, compared to $32 million in the second quarter 2016.
    • The reserve allocation for loans in the Energy business line remained above 8 percent at September 30, 2016.
  • Net charge-offs decreased $31 million to $16 million, or 0.13 percent of average loans, in the third quarter 2016, compared to $47 million, or 0.38 percent, in the second quarter 2016. Aside from Energy, net charge-offs were $10 million, or 8 basis points, for the remainder of the portfolio.
  • During the third quarter 2016, $105 million of borrower relationships over $2 million were transferred to nonaccrual status, a decrease of $2 million compared to $107 million transferred during the second quarter. Third quarter 2016 transfers to nonaccrual included $63 million from Energy, compared to $51 million in the second quarter.
  • Criticized loans decreased $290 million to $3.3 billion at September 30, 2016, compared to $3.6 billion at June 30, 2016. Criticized loans are generally consistent with the Special Mention, Substandard and Doubtful categories defined by regulatory authorities.

Fourth Quarter 2016 Outlook

For fourth quarter 2016 compared to third quarter 2016, management expects the following, assuming a continuation of the current economic and low-rate environment:

  • Average loans stable, reflecting growth in National Dealer Services, Technology and Life Sciences and small increases in several other lines of business, offset by seasonality in Mortgage Banker and a continued decline in Energy.
  • Net interest income slightly higher, reflecting benefits from a decline in wholesale funding costs and an increase in LIBOR.
  • Provision for credit losses expected to remain low, with net charge-offs below historical norms. Provision and net charge-offs expected to be between second quarter 2016 and third quarter 2016 levels.
  • Noninterest income relatively stable, excluding income from bank-owned life insurance and deferred compensation asset returns, with fee income expected to remain strong at third quarter 2016 levels.
  • Noninterest expenses lower, excluding an estimated $30 million to $35 million in restructuring expense, with GEAR Up expense savings of approximately $25 million, primarily salaries and benefits (including pension); seasonal increases in outside processing, marketing and occupancy expected to be partially offset by third quarter 2016 level of deferred compensation expense not expected to repeat.
  • Income tax expense to approximate 30 percent of pre-tax income.

Business Segments

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

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




















(dollar amounts in millions)

3rd Qtr '16


2nd Qtr '16


3rd Qtr '15

Business Bank

$

192


91

%


$

155


93

%


$

195


85

%

Retail Bank

1




(2)


(1)



13


6


Wealth Management

18


9



13


8



21


9



211


100

%


166


100

%


229


100

%

Finance

(61)




(63)




(94)



Other (a)

(1)




1




1



     Total

$

149




$

104




$

136



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

 

Business Bank














(dollar amounts in millions)

3rd Qtr '16

2nd Qtr '16

3rd Qtr '15

Net interest income

$

361



$

355



$

378



Provision for credit losses

2



46



30



Noninterest income

145



144



144



Noninterest expenses

215


(a)

222


(a)

198



Net income

192



155



195










Net credit-related charge-offs

14



42



23










Selected average balances:







Assets

39,618



39,983



39,768



Loans

38,243



38,574



38,113



Deposits

30,019



28,441



31,405






(a)

Included restructuring charges of $10 million in the third quarter 2016 and $26 million in the second quarter 2016.
















 

  • Average loans decreased $331 million, primarily reflecting decreases in Energy, National Dealer Services and Technology and Life Sciences, partially offset by an increase in Mortgage Banker Finance.
  • Average deposits increased $1.6 billion, primarily reflecting increases in general Middle Market, Commercial Real Estate and Corporate Banking.
  • Net interest income increased $6 million, primarily reflecting the benefit from one additional day in the third quarter, the impact of a second quarter 2016 negative residual value adjustment to assets in the leasing portfolio and an increase in net funds transfer pricing (FTP) credits, partially offset by the impact of a decrease in average loan balances. The increase in net FTP credits primarily reflected the benefit from the increase in average deposits partially offset by the impact of higher funding costs.
  • The provision for credit losses decreased $44 million, primarily reflecting decreases in Energy and Technology and Life Sciences, in part due to lower loan balances, partially offset by an increase in general Middle Market.
  • Noninterest income increased $1 million, primarily due to an increase in syndication agent fees.
  • Noninterest expenses decreased $7 million, primarily reflecting a decrease in restructuring charges, partially offset by a decrease in gains from the sale of leased assets and an increase in outside processing fees.

Retail Bank














(dollar amounts in millions)

3rd Qtr '16

2nd Qtr '16

3rd Qtr '15

Net interest income

$

156



$

155



$

158



Provision for credit losses

10



1



2



Noninterest income

50



48



49



Noninterest expenses

195


(a)

205


(a)

185



Net income

1



(2)



13










Net credit-related charge-offs

3



1



1










Selected average balances:







Assets

6,544



6,558



6,518



Loans

5,871



5,879



5,835



Deposits

23,654



23,546



23,079






(a)

Included restructuring charges of $8 million in the third quarter 2016 and $19 million in the second quarter 2016.
















 

  • Average deposits increased $108 million, primarily reflecting an increase in noninterest-bearing Small Business deposits.
  • Net interest income increased $1 million, primarily the result of the FTP benefit provided by the increase in average deposits.
  • The provision for credit losses increased $9 million, primarily due to an increase in reserves for Small Business.
  • Noninterest income increased $2 million, primarily reflecting an increase in customer derivative income.
  • Noninterest expenses decreased $10 million, primarily reflecting a decrease in restructuring charges.

Wealth Management














(dollar amounts in millions)

3rd Qtr '16

2nd Qtr '16

3rd Qtr '15

Net interest income

$

41



$

42



$

45



Provision for credit losses

(1)



3



(3)



Noninterest income

61



62



59



Noninterest expenses

75


(a)

81


(a)

75



Net income

18



13



21










Net credit-related charge-offs (recoveries)

(1)



4



(1)










Selected average balances:







Assets

5,283



5,215



5,228



Loans

5,092



5,016



5,024



Deposits

4,030



4,213



4,188






(a)

Included restructuring charges of $2 million in the third quarter 2016 and $8 million in the second quarter 2016.
















 

  • Average loans increased $76 million, primarily reflecting an increase in Private Banking.
  • Average deposits decreased $183 million, primarily reflecting decreases in money market and checking deposits, partially offset by an increase in noninterest-bearing deposits.
  • The provision for credit losses decreased $4 million, primarily reflecting a decrease in net charge-offs.
  • Noninterest income decreased $1 million, primarily due to a decrease in fiduciary income.
  • Noninterest expenses decreased $6 million, primarily reflecting a decrease in restructuring charges.

Geographic Market Segments

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

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




















(dollar amounts in millions)

3rd Qtr '16


2nd Qtr '16


3rd Qtr '15

Michigan

$

51


24

%


$

57


34

%


$

70


31

%

California

75


35



50


30



62


27


Texas

33


16



3


2



36


16


Other Markets

52


25



56


34



61


26



211


100

%


166


100

%


229


100

%

Finance & Other (a)

(62)




(62)




(93)



     Total

$

149




$

104




$

136



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

 

  • Average loans decreased $274 million in Texas, $172 million in Michigan and $71 million in California. The decrease in Texas primarily reflected a decrease in Energy, partially offset by an increase in Commercial Real Estate, while the decrease in Michigan primarily reflected a decrease in general Middle Market and the decrease in California primarily reflected a decrease in Technology and Life Sciences, partially offset by an increase in Commercial Real Estate.
  • Average deposits increased $741 million in California and $391 million in Michigan, and decreased $192 million in Texas. General Middle Market deposits increased in California and Michigan, and decreased in Texas. The increase in California also reflected an increase in Commercial Real Estate, while the decrease in Texas also reflected a decrease in Technology and Life Sciences.
  • Net interest income increased $3 million in Michigan and $3 million in California, and decreased $1 million in Texas. The increases in Michigan and California primarily reflected the FTP benefit from higher deposit balances and one additional day in the third quarter, partially offset by the impact of lower loan balances and higher FTP funding costs. The decrease in Texas primarily reflected an increase in FTP funding costs.
  • The provision for credit losses decreased $35 million in Texas and $21 million in California, and increased $10 million in Michigan. The decrease in Texas primarily reflected a decrease in Energy, in part due to lower loan balances. In California, the decrease primarily reflected decreases in Technology and Life Sciences and general Middle Market. The increase in Michigan primarily reflected an increase in general Middle Market.
  • Noninterest income increased $5 million in California, $2 million in Texas and $1 million in Michigan. The increase in California was primarily due to increases in warrant income, syndication agent fees and card fees. The increases in both Texas and Michigan were primarily due to increases in syndication agent fees.
  • Noninterest expenses decreased $11 million in Texas and $10 million in California and increased $2 million in Michigan. Restructuring charges decreased in all three primary markets. In addition to the impact of restructuring charges, the decrease in Texas reflected small decreases in several other categories and the increase in Michigan reflected a decrease in gains from the sale of leased assets.

Michigan Market














(dollar amounts in millions)

3rd Qtr '16

2nd Qtr '16

3rd Qtr '15

Net interest income

$

169



$

166



$

179



Provision for credit losses

13



3



6



Noninterest income

82



81



84



Noninterest expenses

161


(a)

159


(a)

152



Net income

51



57



70










Net credit-related charge-offs (recoveries)

1





9










Selected average balances:







Assets

13,174



13,299



13,856



Loans

12,488



12,660



13,223



Deposits

21,944



21,553



21,946






(a)

Included restructuring charges of $5 million in the third quarter 2016 and $15 million in the second quarter 2016.
















 

California Market














(dollar amounts in millions)

3rd Qtr '16

2nd Qtr '16

3rd Qtr '15

Net interest income

$

181



$

178



$

186



Provision for credit losses

(4)



17



24



Noninterest income

44



39



38



Noninterest expenses

110


(a)

120


(a)

101



Net income

75



50



62










Net credit-related charge-offs



17



10










Selected average balances:







Assets

17,933



17,998



17,060



Loans

17,637



17,708



16,789



Deposits

17,674



16,933



18,371






(a)

Included restructuring charges of $5 million in the third quarter 2016 and $16 million in the second quarter 2016.
















 

Texas Market














(dollar amounts in millions)

3rd Qtr '16

2nd Qtr '16

3rd Qtr '15

Net interest income

$

118



$

119



$

129



Provision for credit losses

(3)



32



10



Noninterest income

33



31



34



Noninterest expenses

102


(a)

113


(a)

97



Net income (loss)

33



3



36










Net credit-related charge-offs

10



31



4










Selected average balances:







Assets

11,014



11,287



11,578



Loans

10,566



10,840



10,997



Deposits

9,860



10,052



10,753






(a)

Included restructuring charges of $7 million in the third quarter 2016 and $15 million in the second quarter 2016.
















 

Conference Call and Webcast

Comerica will host a conference call to review third quarter 2016 financial results at 7 a.m. CT Tuesday, October 18, 2016. Interested parties may access the conference call by calling (877) 523-5249 or (210) 591-1147 (event ID No. 67807311). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A replay of the Webcast can be accessed via Comerica's "Investor Relations" page at www.comerica.com.

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

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

Forward-looking Statements

Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "anticipates," "believes," "contemplates," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "opportunity," "initiative," "outcome," "continue," "remain," "maintain," "on course," "trend," "objective," "looks forward," "projects," "models" and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "might," "can," "may" or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica's management based on information known to Comerica's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica's management for future or past operations, products or services, including the GEAR Up initiative, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries as well as estimates of the economic benefits of the GEAR Up initiative, estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in general economic, political or industry conditions; changes in monetary and fiscal policies, including changes in interest rates; changes in regulation or oversight; Comerica's ability to maintain adequate sources of funding and liquidity; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers, in particular the energy industry; unfavorable developments concerning credit quality; operational difficulties, failure of technology infrastructure or information security incidents; reliance on other companies to provide certain key components of business infrastructure; factors impacting noninterest expenses which are beyond Comerica's control; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; reductions in Comerica's credit rating; whether Comerica may achieve opportunities for revenue enhancements and efficiency improvements under the GEAR Up initiative, or changes in the scope or assumptions underlying the GEAR Up initiative; the interdependence of financial service companies; the implementation of Comerica's strategies and business initiatives; damage to Comerica's reputation; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; any future strategic acquisitions or divestitures; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; changes in accounting standards and the critical nature of Comerica's accounting policies. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. In particular, please refer to "Item 1A. Risk Factors" beginning on page 12 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2015, "Item 1A. Risk Factors" on page 54 of Comerica's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 and "Item 1A. Risk Factors" on page 62 of Comerica's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)




Comerica Incorporated and Subsidiaries










Three Months Ended


Nine Months Ended

 

(in millions, except per share data)

September 30,

June 30,

September 30,


September 30,

2016

2016

2015


2016

2015

PER COMMON SHARE AND COMMON STOCK DATA







Diluted net income

$

0.84


$

0.58


$

0.74



$

1.76


$

2.20


Cash dividends declared

0.23


0.22


0.21



0.66


0.62









Average diluted shares (in thousands)

176,184


177,195


180,714



176,476


181,807


KEY RATIOS







Return on average common shareholders' equity

7.80

%

5.44

%

7.19

%


5.46

%

7.20

%

Return on average assets

0.82


0.59


0.76



0.59


0.78


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

10.68


10.49


10.51





Total risk-based capital ratio (a)

12.82


12.74


12.82





Leverage ratio (a)

10.14


10.39


10.28





Common equity ratio

10.42


10.79


10.73





Tangible common equity ratio (b)

9.64


9.98


9.91





AVERAGE BALANCES







Commercial loans

$

31,132


$

31,511


$

31,900



$

31,152


$

31,596


Real estate construction loans

2,646


2,429


1,833



2,397


1,859


Commercial mortgage loans

9,012


9,033


8,691



9,002


8,648


Lease financing

662


730


788



706


793


International loans

1,349


1,396


1,401



1,388


1,455


Residential mortgage loans

1,883


1,880


1,882



1,885


1,872


Consumer loans

2,522


2,490


2,477



2,493


2,432


Total loans

49,206


49,469


48,972



49,023


48,655









Earning assets

67,648


65,597


66,191



65,796


64,561


Total assets

72,909


70,668


71,333



70,942


69,688









Noninterest-bearing deposits

30,454


28,376


28,623



28,966


27,569


Interest-bearing deposits

27,611


28,145


30,517



28,136


30,282


Total deposits

58,065


56,521


59,140



57,102


57,851









Common shareholders' equity

7,677


7,654


7,559



7,654


7,508


NET INTEREST INCOME







Net interest income

$

450


$

445


$

422



$

1,342


$

1,256


Net interest margin (fully taxable equivalent)

2.66

%

2.74

%

2.54

%


2.74

%

2.61

%

CREDIT QUALITY







Total nonperforming assets

$

660


$

635


$

381












Loans past due 90 days or more and still accruing

48


35


5












Net credit-related charge-offs

16


47


23



$

121


$

49









Allowance for loan losses

727


729


622





Allowance for credit losses on lending-related commitments

45


43


48





Total allowance for credit losses

772


772


670












Allowance for loan losses as a percentage of total loans

1.48

%

1.45

%

1.27

%




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

0.13


0.38


0.19



0.33

%

0.14

%

Nonperforming assets as a percentage of total loans and foreclosed property

1.34


1.26


0.78





Allowance for loan losses as a percentage of total nonperforming loans

114


119


169








(a)

September 30, 2016 ratios are estimated.


(b)

See Reconciliation of Non-GAAP Financial Measures.

 

 CONSOLIDATED BALANCE SHEETS

 Comerica Incorporated and Subsidiaries











September 30,

June 30,

December 31,

September 30,

(in millions, except share data)

2016

2016

2015

2015


(unaudited)

(unaudited)


(unaudited)

ASSETS





Cash and due from banks

$

1,292


$

1,172


$

1,157


$

1,101







Interest-bearing deposits with banks

6,748


2,938


4,990


6,099


Other short-term investments

92


100


113


107







Investment securities available-for-sale

10,789


10,712


10,519


8,749


Investment securities held-to-maturity

1,695


1,807


1,981


1,863







Commercial loans

31,152


32,360


31,659


31,777


Real estate construction loans

2,743


2,553


2,001


1,874


Commercial mortgage loans

9,013


9,038


8,977


8,787


Lease financing

648


684


724


751


International loans

1,303


1,365


1,368


1,382


Residential mortgage loans

1,874


1,856


1,870


1,880


Consumer loans

2,541


2,524


2,485


2,491


Total loans

49,274


50,380


49,084


48,942


Less allowance for loan losses

(727)


(729)


(634)


(622)


Net loans

48,547


49,651


48,450


48,320







Premises and equipment

528


544


550


541


Accrued income and other assets

4,433


4,356


4,117


4,232


Total assets

$

74,124


$

71,280


$

71,877


$

71,012







LIABILITIES AND SHAREHOLDERS' EQUITY





Noninterest-bearing deposits

$

31,776


$

28,559


$

30,839


$

28,697







Money market and interest-bearing checking deposits

22,436


22,539


23,532


23,948


Savings deposits

2,052


2,022


1,898


1,853


Customer certificates of deposit

2,967


3,230


3,552


4,126


Foreign office time deposits

30


24


32


144


Total interest-bearing deposits

27,485


27,815


29,014


30,071


Total deposits

59,261


56,374


59,853


58,768







Short-term borrowings

12


12


23


109


Accrued expenses and other liabilities

1,234


1,279


1,383


1,413


Medium- and long-term debt

5,890


5,921


3,058


3,100


Total liabilities

66,397


63,586


64,317


63,390







Common stock - $5 par value:





Authorized - 325,000,000 shares





Issued - 228,164,824 shares

1,141


1,141


1,141


1,141


Capital surplus

2,174


2,165


2,173


2,165


Accumulated other comprehensive loss

(292)


(295)


(429)


(345)


Retained earnings

7,262


7,157


7,084


7,007


Less cost of common stock in treasury - 56,096,416 shares at 9/30/16, 54,247,325 shares at 6/30/16, 52,457,113 shares at 12/31/15, and 51,010,418 shares at 9/30/15

(2,558)


(2,474)


(2,409)


(2,346)


Total shareholders' equity

7,727


7,694


7,560


7,622


Total liabilities and shareholders' equity

$

74,124


$

71,280


$

71,877


$

71,012


 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries











Three Months Ended


Nine Months Ended


September 30,


September 30,

(in millions, except per share data)

2016

2015


2016

2015

INTEREST INCOME






Interest and fees on loans

$

411


$

390



$

1,223


$

1,156


Interest on investment securities

61


54



185


160


Interest on short-term investments

8


4



17


11


Total interest income

480


448



1,425


1,327


INTEREST EXPENSE






Interest on deposits

10


11



30


33


Interest on medium- and long-term debt

20


15



53


38


Total interest expense

30


26



83


71


Net interest income

450


422



1,342


1,256


Provision for credit losses

16


26



213


87


Net interest income after provision for credit losses

434


396



1,129


1,169


NONINTEREST INCOME






Card fees

76


71



224


203


Service charges on deposit accounts

55


57



165


168


Fiduciary income

47


47



142


142


Commercial lending fees

26


22



68


69


Letter of credit fees

12


13



38


39


Bank-owned life insurance

12


10



30


29


Foreign exchange income

10


10



31


29


Brokerage fees

5


5



14


13


Net securities losses




(3)


(2)


Other noninterest income

29


25



75


79


Total noninterest income

272


260



784


769


NONINTEREST EXPENSES






Salaries and benefits expense

247


243



742


747


Outside processing fee expense

86


83



247


239


Net occupancy expense

40


41



117


118


Equipment expense

13


13



40


39


Restructuring charges

20




73



Software expense

31


26



90


73


FDIC insurance expense

14


9



39


27


Advertising expense

5


6



15


17


Litigation-related expense


(3)




(32)


Other noninterest expenses

37


39



106


117


Total noninterest expenses

493


457



1,469


1,345


Income before income taxes

213


199



444


593


Provision for income taxes

64


63



131


188


NET INCOME

149


136



313


405


Less income allocated to participating securities

1


2



3


5


Net income attributable to common shares

$

148


$

134



$

310


$

400


Earnings per common share:






Basic

$

0.87


$

0.76



$

1.80


$

2.27


Diluted

0.84


0.74



1.76


2.20








Comprehensive income

152


187



450


472








Cash dividends declared on common stock

40


37



115


110


Cash dividends declared per common share

0.23


0.21



0.66


0.62


 

CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Comerica Incorporated and Subsidiaries



















 

(in millions, except per share data)

Third

Second

First

Fourth

Third


Third Quarter 2016 Compared To:

Quarter

Quarter

Quarter

Quarter

Quarter


Second Quarter 2016


Third Quarter 2015

2016

2016

2016

2015

2015


 Amount

  Percent


Amount

  Percent

INTEREST INCOME












Interest and fees on loans

$

411


$

406


$

406


$

395


$

390



$

5


1

%


$

21


5

%

Interest on investment securities

61


62


62


56


54



(1)


(1)



7


14


Interest on short-term investments

8


5


4


6


4



3


62



4


67


Total interest income

480


473


472


457


448



7


1



32


7


INTEREST EXPENSE












Interest on deposits

10


10


10


10


11






(1)


(9)


Interest on medium- and long-term debt

20


18


15


14


15



2


12



5


37


Total interest expense

30


28


25


24


26



2


8



4


18


Net interest income

450


445


447


433


422



5


1



28


6


Provision for credit losses

16


49


148


60


26



(33)


(67)



(10)


(38)


Net interest income after provision

for credit losses

434


396


299


373


396



38


9



38


9


NONINTEREST INCOME












Card fees

76


76


72


73


71






5


7


Service charges on deposit accounts

55


55


55


55


57






(2)


(2)


Fiduciary income

47


49


46


45


47



(2)


(3)





Commercial lending fees

26


22


20


30


22



4


12



4


12


Letter of credit fees

12


13


13


14


13



(1)


(1)



(1)


(3)


Bank-owned life insurance

12


9


9


11


10



3


37



2


18


Foreign exchange income

10


11


10


11


10



(1)






Brokerage fees

5


5


4


4


5








Net securities losses


(1)


(2)





1


38





Other noninterest income

29


29


17


23


25






4


14


Total noninterest income

272


268


244


266


260



4


2



12


5


NONINTEREST EXPENSES












Salaries and benefits expense

247


247


248


262


243






4


2


Outside processing fee expense

86


83


78


79


83



3


3



3


3


Net occupancy expense

40


39


38


41


41



1




(1)


(3)


Equipment expense

13


14


13


14


13



(1)


(5)





Restructuring charges

20


53






(33)


(63)



20


n/m


Software expense

31


30


29


26


26



1


1



5


20


FDIC insurance expense

14


14


11


10


9






5


62


Advertising expense

5


6


4


7


6



(1)


(22)



(1)


(13)


Litigation-related expense





(3)






3


n/m


Other noninterest expenses

37


32


37


43


39



5


15



(2)


(7)


Total noninterest expenses

493


518


458


482


457



(25)


(5)



36


8


Income before income taxes

213


146


85


157


199



67


45



14


7


Provision for income taxes

64


42


25


41


63



22


48



1



NET INCOME

149


104


60


116


136



45


44



13


10


Less income allocated to participating securities

1


1


1


1


2






(1)


(4)


Net income attributable to common shares

$

148


$

103


$

59


$

115


$

134



$

45


44

%


$

14


10

%

Earnings per common share:












Basic

$

0.87


$

0.60


$

0.34


$

0.65


$

0.76



$

0.27


45

%


$

0.11


14

%

Diluted

0.84


0.58


0.34


0.64


0.74



0.26


45



0.10


14














Comprehensive income

152


137


161


32


187



15


11



(35)


(19)














Cash dividends declared on common stock

40


38


37


37


37



2


3



3


6


Cash dividends declared per common share

0.23


0.22


0.21


0.21


0.21



0.01


5



0.02


10


n/m - not meaningful

 

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)

Comerica Incorporated and Subsidiaries















2016


2015

(in millions)

3rd Qtr

2nd Qtr

1st Qtr


4th Qtr

3rd Qtr








Balance at beginning of period

$

729


$

724


$

634



$

622


$

618









Loan charge-offs:







Commercial

24


48


72



73


30


Commercial mortgage

2





1



International

8


4


3




1


Consumer

1


2


2



2


3


Total loan charge-offs

35


54


77



76


34









Recoveries on loans previously charged-off:







Commercial

15


9


12



6


8


Commercial mortgage

3


2


12



11


2


Residential mortgage





1



Consumer

1


1


1



7


1


Total recoveries

19


12


25



25


11


Net loan charge-offs

16


42


52



51


23


Provision for loan losses

14


47


141



63


28


Foreign currency translation adjustment



1




(1)


Balance at end of period

$

727


$

729


$

724



$

634


$

622









Allowance for loan losses as a percentage of total loans

1.48

%

1.45

%

1.47

%


1.29

%

1.27

%








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

0.13


0.34


0.43



0.42


0.19


 

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

Comerica Incorporated and Subsidiaries












2016


2015

(in millions)

3rd Qtr

2nd Qtr

1st Qtr


4th Qtr

3rd Qtr








Balance at beginning of period

$

43


$

46


$

45



$

48


$

50


Charge-offs on lending-related commitments (a)


(5)


(6)





Provision for credit losses on lending-related commitments

2


2


7



(3)


(2)


Balance at end of period

$

45


$

43


$

46



$

45


$

48









Unfunded lending-related commitments sold

$


$

12


$

11



$


$





(a)

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


 

NONPERFORMING ASSETS (unaudited)

Comerica Incorporated and Subsidiaries













2016


2015

(in millions)

3rd Qtr

2nd Qtr

1st Qtr


4th Qtr

3rd Qtr








SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS




Nonaccrual loans:







Business loans:







  Commercial

$

508


$

482


$

547



$

238


$

214


  Real estate construction





1


1


  Commercial mortgage

44


44


47



60


66


  Lease financing

6


6


6



6


8


  International

19


18


27



8


8


  Total nonaccrual business loans

577


550


627



313


297


Retail loans:







  Residential mortgage

23


26


26



27


31


  Consumer:







  Home equity

27


28


27



27


28


  Other consumer

4


1


1




1


    Total consumer

31


29


28



27


29


  Total nonaccrual retail loans

54


55


54



54


60


Total nonaccrual loans

631


605


681



367


357


Reduced-rate loans

8


8


8



12


12


Total nonperforming loans

639


613


689



379


369


Foreclosed property

21


22


25



12


12


Total nonperforming assets

$

660


$

635


$

714



$

391


$

381









Nonperforming loans as a percentage of total loans

1.30

%

1.22

%

1.40

%


0.77

%

0.75

%

Nonperforming assets as a percentage of total loans

 and foreclosed property

1.34


1.26


1.45



0.80


0.78


Allowance for loan losses as a percentage of total

nonperforming loans

114


119


105



167


169


Loans past due 90 days or more and still accruing

$

48


$

35


$

13



$

17


$

5









ANALYSIS OF NONACCRUAL LOANS







Nonaccrual loans at beginning of period

$

605


$

681


$

367



$

357


$

349


Loans transferred to nonaccrual (a)

105


107


446



105


69


Nonaccrual business loan gross charge-offs (b)

(34)


(52)


(75)



(49)


(31)


Nonaccrual business loans sold (c)

(2)


(40)


(21)





Payments/Other (d)

(43)


(91)


(36)



(46)


(30)


Nonaccrual loans at end of period

$

631


$

605


$

681



$

367


$

357


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

(b) Analysis of gross loan charge-offs:







    Nonaccrual business loans

$

34


$

52


$

75



$

49


$

31


    Performing business loans





25



    Consumer and residential mortgage loans

1


2


2



2


3


   Total gross loan charge-offs

$

35


$

54


$

77



$

76


$

34


(c) Analysis of loans sold:







      Nonaccrual business loans

$

2


$

40


$

21



$


$


      Performing criticized loans





3



    Total criticized loans sold

$

2


$

40


$

21



$

3


$


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

 

ANALYSIS OF NET INTEREST INCOME (unaudited)

Comerica Incorporated and Subsidiaries















Nine Months Ended


September 30, 2016


September 30, 2015

(dollar amounts in millions)

Average


Average


Average


Average

Balance

Interest

Rate (a)


Balance

Interest

Rate (a)









Commercial loans

$

31,152


$

753


3.24

%


$

31,596


$

718


3.05

%

Real estate construction loans

2,397


65


3.61



1,859


48


3.44


Commercial mortgage loans

9,002


236


3.50



8,648


220


3.40


Lease financing

706


15


2.86



793


19


3.13


International loans

1,388


38


3.61



1,455


39


3.63


Residential mortgage loans

1,885


54


3.81



1,872


53


3.78


Consumer loans

2,493


62


3.34



2,432


59


3.23


Total loans

49,023


1,223


3.34



48,655


1,156


3.19










Mortgage-backed securities (b)

9,347


152


2.20



9,076


151


2.23


Other investment securities

3,008


33


1.50



950


9


1.18


Total investment securities (b)

12,355


185


2.03



10,026


160


2.13










Interest-bearing deposits with banks

4,313


16


0.50



5,774


11


0.25


Other short-term investments

105


1


0.65



106



0.78


Total earning assets

65,796


1,425


2.90



64,561


1,327


2.76










Cash and due from banks

1,098





1,054




Allowance for loan losses

(726)





(614)




Accrued income and other assets

4,774





4,687




Total assets

$

70,942





$

69,688












Money market and interest-bearing checking deposits

$

22,797


20


0.11



$

23,973


20


0.11


Savings deposits

1,996



0.02



1,827



0.02


Customer certificates of deposit

3,308


10


0.40



4,359


12


0.37


Foreign office time deposits

35



0.34



123


1


1.13


Total interest-bearing deposits

28,136


30


0.14



30,282


33


0.14










Short-term borrowings

180



0.45



93



0.05


Medium- and long-term debt

4,695


53


1.51



2,843


38


1.80


Total interest-bearing sources

33,011


83


0.33



33,218


71


0.28










Noninterest-bearing deposits

28,966





27,569




Accrued expenses and other liabilities

1,311





1,393




Total shareholders' equity

7,654





7,508




Total liabilities and shareholders' equity

$

70,942





$

69,688












Net interest income/rate spread


$

1,342


2.57




$

1,256


2.48










Impact of net noninterest-bearing sources of funds



0.17





0.13


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



2.74

%




2.61

%




(a)

Fully taxable equivalent.


(b)

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

 

ANALYSIS OF NET INTEREST INCOME (unaudited)

Comerica Incorporated and Subsidiaries





















Three Months Ended


September 30, 2016


June 30, 2016


September 30, 2015

(dollar amounts in millions)

Average


Average


Average


Average


Average


Average

Balance

Interest

Rate (a)


Balance

Interest

Rate (a)


Balance

Interest

Rate (a)













Commercial loans

$

31,132


$

253


3.25

%


$

31,511


$

251


3.23

%


$

31,900


$

243


3.04

%

Real estate construction loans

2,646


24


3.57



2,429


22


3.62



1,833


16


3.47


Commercial mortgage loans

9,012


78


3.43



9,033


78


3.47



8,691


74


3.39


Lease financing

662


5


3.30



730


4


1.98



788


6


3.16


International loans

1,349


12


3.56



1,396


13


3.63



1,401


13


3.51


Residential mortgage loans

1,883


18


3.74



1,880


17


3.76



1,882


18


3.79


Consumer loans

2,522


21


3.31



2,490


21


3.37



2,477


20


3.21


Total loans

49,206


411


3.33



49,469


406


3.31



48,972


390


3.17














Mortgage-backed securities (b)

9,359


50


2.17



9,326


51


2.21



9,099


50


2.21


Other investment securities

3,014


11


1.51



3,008


11


1.50



1,133


4


1.26


Total investment securities (b)

12,373


61


2.01



12,334


62


2.03



10,232


54


2.11














Interest-bearing deposits with banks

5,967


8


0.51



3,690


5


0.50



6,869


4


0.25


Other short-term investments

102



0.43



104



0.58



118



0.82


Total earning assets

67,648


480


2.84



65,597


473


2.91



66,191


448


2.70














Cash and due from banks

1,152





1,074





1,095




Allowance for loan losses

(749)





(749)





(628)




Accrued income and other assets

4,858





4,746





4,675




Total assets

$

72,909





$

70,668





$

71,333
















Money market and interest-bearing checking deposits

$

22,415


7


0.12



$

22,785


6


0.11



$

24,298


7


0.11


Savings deposits

2,042



0.03



2,010



0.02



1,860



0.02


Customer certificates of deposit

3,129


3


0.40



3,320


4


0.40



4,232


4


0.37


Foreign office time deposits

25



0.37



30



0.35



127



0.70


Total interest-bearing deposits

27,611


10


0.14



28,145


10


0.14



30,517


11


0.14














Short-term borrowings

17



0.47



159



0.45



91



0.04


Medium- and long-term debt

5,907


20


1.36



5,072


18


1.42



3,175


15


1.85


Total interest-bearing sources

33,535


30


0.36



33,376


28


0.33



33,783


26


0.30














Noninterest-bearing deposits

30,454





28,376





28,623




Accrued expenses and other liabilities

1,243





1,262





1,368




Total shareholders' equity

7,677





7,654





7,559




Total liabilities and shareholders' equity

$

72,909





$

70,668





$

71,333
















Net interest income/rate spread


$

450


2.48




$

445


2.58




$

422


2.40














Impact of net noninterest-bearing sources of funds



0.18





0.16





0.14


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



2.66

%




2.74

%




2.54

%




(a)

Fully taxable equivalent.


(b)

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

 

CONSOLIDATED STATISTICAL DATA (unaudited)

Comerica Incorporated and Subsidiaries










(in millions, except per share data)

September 30,

June 30,

March 31,

December 31,

September 30,

2016

2016

2016

2015

2015







Commercial loans:






Floor plan

$

3,778


$

4,120


$

3,902


$

3,939


$

3,538


Other

27,374


28,240


27,660


27,720


28,239


Total commercial loans

31,152


32,360


31,562


31,659


31,777


Real estate construction loans

2,743


2,553


2,290


2,001


1,874


Commercial mortgage loans

9,013


9,038


8,982


8,977


8,787


Lease financing

648


684


731


724


751


International loans

1,303


1,365


1,455


1,368


1,382


Residential mortgage loans

1,874


1,856


1,874


1,870


1,880


Consumer loans:






Home equity

1,792


1,779


1,738


1,720


1,714


Other consumer

749


745


745


765


777


Total consumer loans

2,541


2,524


2,483


2,485


2,491


Total loans

$

49,274


$

50,380


$

49,377


$

49,084


$

48,942








Goodwill

$

635


$

635


$

635


$

635


$

635


Core deposit intangible

8


9


9


10


10


Other intangibles

3


3


4


4


4








Common equity tier 1 capital (a)

7,378


7,346


7,331


7,350


7,327


Risk-weighted assets (a)

69,100


70,056


69,319


69,731


69,718








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

10.68

%

10.49

%

10.58

%

10.54

%

10.51

%

Total risk-based capital ratio (a)

12.82


12.74


12.84


12.69


12.82


Leverage ratio (a)

10.14


10.39


10.60


10.22


10.28


Common equity ratio

10.42


10.79


11.08


10.52


10.73


Tangible common equity ratio (b)

9.64


9.98


10.23


9.70


9.91








Common shareholders' equity per share of common stock

$

44.91


$

44.24


$

43.66


$

43.03


$

43.02


Tangible common equity per share of common stock (b)

41.15


40.52


39.96


39.33


39.36


Market value per share for the quarter:






High

47.81


47.55


41.74


47.44


52.93


Low

38.39


36.27


30.48


39.52


40.01


Close

47.32


41.13


37.87


41.83


41.10








Quarterly ratios:






Return on average common shareholders' equity

7.80

%

5.44

%

3.13

%

6.08

%

7.19

%

Return on average assets

0.82


0.59


0.34


0.64


0.76


Efficiency ratio (c)

68.15


72.43


65.99


68.92


66.87








Number of banking centers

473


473


477


477


477








Number of employees - full time equivalent

8,476


8,792


8,869


8,880


8,941


(a)

September 30, 2016 amounts and ratios are estimated.


(b)

See Reconciliation of Non-GAAP Financial Measures.

(c)

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

 

PARENT COMPANY ONLY BALANCE SHEETS (unaudited)

Comerica Incorporated









September 30,

December 31,

September 30,

(in millions, except share data)

2016

2015

2015





ASSETS




Cash and due from subsidiary bank

$


$

4


$

5


Short-term investments with subsidiary bank

588


569


563


Other short-term investments

88


89


89


Investment in subsidiaries, principally banks

7,685


7,523


7,596


Premises and equipment

2


3


2


Other assets

161


137


138


      Total assets

$

8,524


$

8,325


$

8,393






LIABILITIES AND SHAREHOLDERS' EQUITY




Medium- and long-term debt

$

626


$

608


$

618


Other liabilities

171


157


153


      Total liabilities

797


765


771






Common stock - $5 par value:




    Authorized - 325,000,000 shares




    Issued - 228,164,824 shares

1,141


1,141


1,141


Capital surplus

2,174


2,173


2,165


Accumulated other comprehensive loss

(292)


(429)


(345)


Retained earnings

7,262


7,084


7,007


Less cost of common stock in treasury - 56,096,416 shares at 9/30/16, 52,457,113 shares at 12/31/15 and 51,010,418 shares at 9/30/15

(2,558)


(2,409)


(2,346)


      Total shareholders' equity

7,727


7,560


7,622


      Total liabilities and shareholders' equity

$

8,524


$

8,325


$

8,393


 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)

Comerica Incorporated and Subsidiaries


















Accumulated





Common Stock


Other



Total

(in millions, except per share data)

Shares


Capital

Comprehensive

Retained

Treasury

Shareholders'

 Outstanding

Amount

Surplus

Loss

Earnings

Stock

Equity









BALANCE AT DECEMBER 31, 2014

179.0


$

1,141


$

2,188


$

(412)


$

6,744


$

(2,259)


$

7,402


Net income





405



405


Other comprehensive income, net of tax




67




67


Cash dividends declared on common stock ($0.62 per share)





(110)



(110)


Purchase of common stock

(3.8)






(175)


(175)


Purchase and retirement of warrants



(10)





(10)


Net issuance of common stock under employee stock plans

1.0



(21)



(10)


45


14


Net issuance of common stock for warrants

1.0



(21)



(22)


43



Share-based compensation



29





29


BALANCE AT SEPTEMBER 30, 2015

177.2


$

1,141


$

2,165


$

(345)


$

7,007


$

(2,346)


$

7,622










BALANCE AT DECEMBER 31, 2015

175.7


$

1,141


$

2,173


$

(429)


$

7,084


$

(2,409)


$

7,560


Net income





313



313


Other comprehensive income, net of tax




137




137


Cash dividends declared on common stock ($0.66 per share)





(115)



(115)


Purchase of common stock

(5.0)






(211)


(211)


Net issuance of common stock under employee stock plans

1.4



(29)



(20)


62


13


Share-based compensation



30





30


BALANCE AT SEPTEMBER 30, 2016

172.1


$

1,141


$

2,174


$

(292)


$

7,262


$

(2,558)


$

7,727


 

 BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)

 Comerica Incorporated and Subsidiaries



















(dollar amounts in millions)












Three Months Ended September 30, 2016

Business


Retail


Wealth







Bank


Bank


Management


Finance


Other


Total

Earnings summary:












Net interest income (expense)

$

361



$

156



$

41



$

(114)



$

6



$

450


Provision for credit losses

2



10



(1)





5



16


Noninterest income

145



50



61



13



3



272


Noninterest expenses

215



195



75



(1)



9



493


Provision (benefit) for income taxes

97





10



(39)



(4)



64


Net income (loss)

$

192



$

1



$

18



$

(61)



$

(1)



$

149


Net credit-related charge-offs (recoveries)

$

14



$

3



$

(1)



$



$



$

16














Selected average balances:












Assets

$

39,618



$

6,544



$

5,283



$

14,144



$

7,320



$

72,909


Loans

38,243



5,871



5,092







49,206


Deposits

30,019



23,654



4,030



98



264



58,065














Statistical data:












Return on average assets (a)

1.94

%


0.01

%


1.39

%


N/M



N/M



0.82

%

Efficiency ratio (b)

42.38



94.57



73.07



N/M



N/M



68.15














Three Months Ended June 30, 2016

Business


Retail


Wealth







Bank


Bank


Management


Finance


Other


Total

Earnings summary:












Net interest income (expense)

$

355



$

155



$

42



$

(113)



$

6



$

445


Provision for credit losses

46



1



3





(1)



49


Noninterest income

144



48



62



10



4



268


Noninterest expenses

222



205



81



(1)



11



518


Provision (benefit) for income taxes

76



(1)



7



(39)



(1)



42


Net income (loss)

$

155



$

(2)



$

13



$

(63)



$

1



$

104


Net credit-related charge-offs

$

42



$

1



$

4



$



$



$

47














Selected average balances:












Assets

$

39,983



$

6,558



$

5,215



$

13,927



$

4,985



$

70,668


Loans

38,574



5,879



5,016







49,469


Deposits

28,441



23,546



4,213



50



271



56,521














Statistical data:












Return on average assets (a)

1.55

%


(0.03)

%


1.02

%


N/M



N/M



0.59

%

Efficiency ratio (b)

44.31



101.12



77.65



N/M



N/M



72.43














Three Months Ended September 30, 2015

Business


Retail


Wealth







Bank


Bank


Management


Finance


Other


Total

Earnings summary:












Net interest income (expense)

$

378



$

158



$

45



$

(163)



$

4



$

422


Provision for credit losses

30



2



(3)





(3)



26


Noninterest income

144



49



59



12



(4)



260


Noninterest expenses

198



185



75





(1)



457


Provision (benefit) for income taxes

99



7



11



(57)



3



63


Net income (loss)

$

195



$

13



$

21



$

(94)



$

1



$

136


Net credit-related charge-offs (recoveries)

$

23



$

1



$

(1)



$



$



$

23














Selected average balances:












Assets

$

39,768



$

6,518



$

5,228



$

11,761



$

8,058



$

71,333


Loans

38,113



5,835



5,024







48,972


Deposits

31,405



23,079



4,188



203



265



59,140














Statistical data:












Return on average assets (a)

1.96

%


0.23

%


1.62

%


N/M



N/M



0.76

%

Efficiency ratio (b)

37.98



89.33



71.12



N/M



N/M



66.87





(a)

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


(b)

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

N/M - Not Meaningful

 

 MARKET SEGMENT FINANCIAL RESULTS (unaudited)

 Comerica Incorporated and Subsidiaries
































(dollar amounts in millions)







Other


Finance



Three Months Ended September 30, 2016

Michigan


California


Texas


Markets


& Other


Total

Earnings summary:












Net interest income (expense)

$

169



$

181



$

118



$

90



$

(108)



$

450


Provision for credit losses

13



(4)



(3)



5



5



16


Noninterest income

82



44



33



97



16



272


Noninterest expenses

161



110



102



112



8



493


Provision (benefit) for income taxes

26



44



19



18



(43)



64


Net income (loss)

$

51



$

75



$

33



$

52



$

(62)



$

149


Net credit-related charge-offs

$

1



$



$

10



$

5



$



$

16














Selected average balances:












Assets

$

13,174



$

17,933



$

11,014



$

9,324



$

21,464



$

72,909


Loans

12,488



17,637



10,566



8,515





49,206


Deposits

21,944



17,674



9,860



8,225



362



58,065














Statistical data:












Return on average assets (a)

0.90

%


1.61

%


1.18

%


2.23

%


N/M



0.82

%

Efficiency ratio (b)

64.10



48.56



67.29



59.87



N/M



68.15





















Other


Finance



Three Months Ended June 30, 2016

Michigan


California


Texas


Markets


& Other


Total

Earnings summary:












Net interest income (expense)

$

166



$

178



$

119



$

89



$

(107)



$

445


Provision for credit losses

3



17



32



(2)



(1)



49


Noninterest income

81



39



31



103



14



268


Noninterest expenses

159



120



113



116



10



518


Provision (benefit) for income taxes

28



30



2



22



(40)



42


Net income (loss)

$

57



$

50



$

3



$

56



$

(62)



$

104


Net credit-related charge-offs (recoveries)

$



$

17



$

31



$

(1)



$



$

47














Selected average balances:












Assets

$

13,299



$

17,998



$

11,287



$

9,172



$

18,912



$

70,668


Loans

12,660



17,708



10,840



8,261





49,469


Deposits

21,553



16,933



10,052



7,662



321



56,521














Statistical data:












Return on average assets (a)

1.01

%


1.10

%


0.11

%


2.46

%


N/M



0.59

%

Efficiency ratio (b)

64.13



55.30



74.91



60.43



N/M



72.43





















Other


Finance



Three Months Ended September 30, 2015

Michigan


California


Texas


Markets


& Other


Total

Earnings summary:












Net interest income (expense)

$

179



$

186



$

129



$

87



$

(159)



$

422


Provision for credit losses

6



24



10



(11)



(3)



26


Noninterest income

84



38



34



96



8



260


Noninterest expenses

152



101



97



108



(1)



457


Provision (benefit) for income taxes

35



37



20



25



(54)



63


Net income (loss)

$

70



$

62



$

36



$

61



$

(93)



$

136


Net credit-related charge-offs

$

9



$

10



$

4



$



$



$

23














Selected average balances:












Assets

$

13,856



$

17,060



$

11,578



$

9,020



$

19,819



$

71,333


Loans

13,223



16,789



10,997



7,963





48,972


Deposits

21,946



18,371



10,753



7,602



468



59,140














Statistical data:












Return on average assets (a)

1.23

%


1.27

%


1.16

%


2.70

%


N/M



0.76

%

Efficiency ratio (b)

57.42



45.19



59.48



59.00



N/M



66.87





(a)

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


(b)

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

N/M - Not Meaningful

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

Comerica Incorporated and Subsidiaries










(dollar amounts in millions)

September 30,

June 30,

March 31,

December 31,

September 30,

2016

2016

2016

2015

2015







Tangible Common Equity Ratio:






Common shareholders' equity

$

7,727


$

7,694


$

7,644


$

7,560


$

7,622


Less:






Goodwill

635


635


635


635


635


Other intangible assets

11


12


13


14


14


Tangible common equity

$

7,081


$

7,047


$

6,996


$

6,911


$

6,973








Total assets

$

74,124


$

71,280


$

69,007


$

71,877


$

71,012


Less:






Goodwill

635


635


635


635


635


Other intangible assets

11


12


13


14


14


Tangible assets

$

73,478


$

70,633


$

68,359


$

71,228


$

70,363








Common equity ratio

10.42

%

10.79

%

11.08

%

10.52

%

10.73

%

Tangible common equity ratio

9.64


9.98


10.23


9.70


9.91








Tangible Common Equity per Share of Common Stock:






Common shareholders' equity

$

7,727


$

7,694


$

7,644


$

7,560


$

7,622


Tangible common equity

7,081


7,047


6,996


6,911


6,973








Shares of common stock outstanding (in millions)

172


174


175


176


177








Common shareholders' equity per share of common stock

$

44.91


$

44.24


$

43.66


$

43.03


$

43.02


Tangible common equity per share of common stock

41.15


40.52


39.96


39.33


39.36


 

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

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/comerica-reports-third-quarter-2016-net-income-of-149-million-300346319.html

SOURCE Comerica Incorporated